## HICL Annual ## Report 2024 ## Enriching ## lives through ## infrastructure HICL Annual Report 2024 ## Contents ## Strategic Report | 2024 Highlights 2 | Top 10 Assets 26 | | --- | --- | | Chair’s Statement 3 | Sustainability 36 | | HICL at a glance 6 | Financial Review 40 | | The Infrastructure Market 10 | Valuation of the Portfolio 46 | | HICL’s Business Model 14 | Risk and Risk Management 53 | | Key Performance and 18 | Viability Statement 62 | ### Quality Indicators ### Strategic Report Disclosures 63 ### Investment Manager’s Report 20 ### TCFD 65 For definitions of our financial terms used throughout this report, please see our Glossary on pages 162 to 163 FinancialsGovernanceStrategic ReportHICL Annual Report 2024 ## Governance Financials | Board and Governance 72 | KPMG LLP’s Independent Auditor’s Report 100 | | --- | --- | | Board of Directors 74 | Income statement 112 | | The Investment Manager 76 | Statement of financial position 113 | | Corporate Governance Statement 77 | Statement of changes in shareholders’ equity 114 | | Management Engagement 81 | Cash flow statement 115 | Committee (MEC) Notes to the financial statements 116 Market Disclosure Committee 81 Appendix 1: SFDR Disclosures 148 Nomination Committee 82 Appendix 2: Valuation Policy 160 Risk Committee Report 83 Appendix 3: Infrastructure Market – Sources 161 Audit Committee Report 85 Glossary 162 Directors’ Remuneration Report 91 Directors and Advisers 164 Report of the Directors 95 Statement of Directors’ Responsibilities 98 1 1  HICL Annual Report 2024 ## 2024 Highlights ## Delivering sustainable income and capital growth ## from a diversified core infrastructure portfolio ## 158.2p 8.35p 8.7% p.a. 1 2 NAV per share New Dividend Guidance Total Shareholder 3 2023: 164.9p for 2026 Return since IPO Reaffirmed Dividend Guidance 8.25p for 2025 ## 0.7x £736m 1.37x/1.05x 4 Inflation correlation Transactions announced Dividend cash cover including/excluding 5 2023: 0.8x inthe year profits on disposal 2023: 1.31x / 1.03x ## Total return of 8.7% p.a. since IPO ### The chart below shows how the combination of dividend and Net Asset Value (NAV) ### growth has delivered a total return of 8.7% p.a. from IPO to 31 March 2024. 124 133 116 108 91 100 83 75 68 60 53 | | | | | | | 46 | | | | | | | | 161 | 163 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | 155 | | | | 156 | | | | | | | 39 | | | | | | | | 150 150 | | | | | | | | | | | | | | | 147 | 148 | | | | | | | 6 | | | | 32 | | | | | 140 | | | | | | | | | | 12 | | 25 | | | | | 135 | | | | | | | | | | | | 19 | | | | | 123 | | | | | | | | | | | 118 | 120 | | | | | 116 | | | | | | | | | | | | | | | | 110 | 113 | | | | | | | | | | | | 107 107 98 IPO FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Cumulative Dividends (p) NAV per share (p) References are made throughout to Alternative Performance Measures ‘APMs’. These APMs, which include the Investment Basis, are provided alongside IFRS accounting measures to provide additional information to shareholders. A full reconciliation of the APMs used is disclosed on page 43 1 Net Asset Value, including the dividend of 2.07p declared on 15 May 2024 2 Expressed in pence per Ordinary Share for the financial year ending 31 March. This is a target only and not a profit forecast. There can be no assurance that this target will be met 3 Based on interim dividends paid plus change in NAV per share in the year 4 If outturn inflation was 1% p.a. higher than the valuation assumption in each and every forecast period, the expected return from the portfolio (before Corporate Group expenses) would increase by 0.7% 5 Stated on an Investment Basis, including profits on disposal versus original acquisition cost of £53.4m (2023: £45.5m). Excluding this, dividend cash cover is 1.05x 2 HICL Annual Report 2024 Strategic Report Governance Financials # Chair's Statement I am pleased to present resilient annual results for HICL. The significant level of transactions completed over the year has materially reduced gearing and enabled a share buyback programme, whilst enhanced cash flow generation and improved prospects for longer-term earnings support a return to sustainable dividend growth. ![img-0.jpeg](img-0.jpeg) With the uncertain macroeconomic backdrop persisting, the Board and Investment Manager prioritised balance sheet management and disciplined capital allocation in the year. The acceleration of HICL's (HICL Infrastructure PLC and its subsidiaries, defined as "HICL" or "the Group") strategic asset disposal programme, generating over £500m of proceeds, will enable the complete repayment of HICL's Revolving Credit Facility ("RCF") and the launch of a £50m share buyback. These are responsible, long-term decisions which have created value and demonstrate the Board's approach to capital allocation. HICL's diversified portfolio of high-quality core infrastructure assets is, by design, substantially insulated from market volatility and performed in line with expectations during the period. Despite this, the Company's shares have traded at a significant discount to their Net Asset Value ("NAV"). The Board and Investment Manager have been aligned in their view that sustained transaction activity is fundamental to demonstrating the robustness of the Company's valuation. With this in mind, HICL disposed of nine assets, all at or above carrying value and representing 13.5% of the opening investment portfolio by value. The most recent was Northwest Parkway in February 2024 at a 30% premium to its most recent valuation. These transactions reinforce the Board's conviction that the Company's stock remains materially undervalued. The share price at 31 March 2024 implies a long-term expected return from the portfolio of 8.9% p.a. net of costs, representing a 4.8% implied equity risk premium which has widened by 60bps since the Company's interim results at 30 September 2023. The Board believes this represents compelling risk-adjusted value, as demonstrated by its commitment to undertake up to £50m in share buybacks over a 12-month period. ## Financial performance HICL's NAV per share at 31 March 2024 was 158.2p (March 2023: 164.9p). This resilient result was underpinned by the underlying return from the portfolio of 9.0% (March 2023: 10.2%), which exceeded HICL's weighted average discount rate of 7.2% as at 31 March 2023. This outperformance was offset by the effects of macroeconomic assumptions, particularly increased discount rates, which resulted in earnings per share for the year of 1.5p (March 2023: earnings of 9.9p). Total Shareholder Return ("TSR") was 1.0% (March 2023: 6.3%). “ ” HICL invests in assets with strong social foundations such as healthcare and education, assets that connect communities from rail and road to communications; and assets that support the transition to a low-carbon modern economy. 1 HICL Infrastructure PLC and its subsidiaries is defined as either HICL or the Group throughout the Report 2 HICL Infrastructure PLC, the Company only, is defined as the Company throughout the Report 3 Based on discount rate, less Ongoing Charges Ratio, adjusted to reflect the share price discount to the NAV using published discount rate sensitivities 4 Based on interim dividends paid plus change in NAV per share in the year 3 HICL Annual Report 2024 Chair’s Statement continued ### Portfolio evolution | | 158.2p | HICL’s strategic approach to portfolio construction | | --- | --- | --- | | | NAV per share | underpins its ability to deliver an attractive investment | | The Board is pleased to issue | at 31 March 2024 | proposition for decades to come. Careful and considered | transaction activity in recent years has deliberately ## new dividend guidance of 8.35pps extended HICL’s revenue streams, introducing assets positioned to capture real growth and to balance the ## for the year to 31 March 2026, 8.35pps increasing maturity of the Group’s PPP concessions. New dividend ## signifying a return to sustainable, guidance This strategic evolution is now reflected in HICL’s asset ## long-term dividend growth. for FY 2026 base: mature shorter-life assets providing a strong yield (“Yielders”), complemented by assets with longer asset life, stronger inflation correlation and greater growth potential (“Growers”). HICL’s Yielders deliver a forecast ## £736m 10-year cash yield of c.10% against a weighted average of transactions life of 14 years, contrasted with HICL’s Growers which are announced forecast to deliver a 10-year growth rate of 7% p.a. and The primary driver of the decrease in NAV per share in benefit from a weighted average asset life of 48 years. the year was an 80bps increase in the weighted average The combination of these two asset groups provides a discount rate used to value the portfolio, reflecting robust and enduring earnings platform from which the increased long-term government bond yields in HICL’s Company expects to deliver dividend and NAV growth for key markets. This was materially offset by higher shareholders over the long term. near-term forecast inflation rates as well as profitable transaction activity in the year. ### Return to dividend growth A more detailed explanation of the portfolio’s valuation and discount rate movements over the year is given in the The Board reconfirms the dividend guidance of 8.25pps Valuation of the Portfolio section, starting on page 46. for the year to 31 March 2025, and is pleased to issue new dividend guidance of 8.35pps for the year to 31 March 2026, signifying a return to sustainable, long-term ### Business model in action 1 dividend growth . Accretive asset rotation has long been a key component The Board recognises the important role played by the of HICL’s differentiated strategy, with 26 disposals Company’s dividend in delivering its compelling total contributing over 10.1p to NAV per share since its IPO return proposition, and remains focused on providing in 2006. During the year, the Board and Investment investors with an attractive income stream alongside Manager accelerated HICL’s disposal programme across a growing earnings base. This approach requires a range of sectors and geographies generating over appropriate balance, over the long term, between £500m in cash proceeds. This decisive action enabled distributions to shareholders and reinvestment for future HICL to self-fund portfolio evolution, repay the RCF and growth. launch a £50m buyback programme. The impact of high inflation over the past 18 months is The combined £736m of transactions announced during increasingly flowing through into higher cash receipts the year have contributed c.3.3p to HICL’s NAV per share, across the portfolio, and is supported by real growth improved portfolio composition and contributed positively in HICL’s demand-based assets, all of which are now to key portfolio metrics. making regular distributions. In addition, the asset More information on these transactions can be found in rotation undertaken in the year has improved the the Investment Manager’s Report starting on page 20. portfolio’s yield profile. Together this provides the Board with the confidence that dividend cash cover will continue to improve in the coming years and that a growing dividend will be appropriately supported both by cash and earnings over the long term. The Board will continue to assess the ability for further dividend growth over the coming year, as Affinity Water progresses through its regulatory review. Race Bank OFTO 1 This is a target only and not a profit forecast. There can be no assurance that this target will be met 4 HICL Annual Report 2024 Strategic Report Governance Financials ### Sustainability progress ## HICL’s critical infrastructure investments form the 8.7% foundations of societies, economies and local | communities. The Group’s assets respond to | p.a. | | --- | --- | | fundamental socioeconomic needs and provide critical | Total return | | services. Over 35 million people worldwide use HICL’s | since IPO in | | assets in their daily lives, with the underlying assets | 2006 | employing over 2,300 people directly and thousands more through their supply chains. The Board recognises that positive outcomes for HICL shareholders are ## 0.7x intrinsically linked to positive outcomes for the communities served by HICL’s assets. Inflation correlation Lewisham School The Board’s strategy is to improve both the impact and disclosure of HICL’s sustainability approach. Improvements this year have included an investor survey, ## 29.4 led by a third party, on HICL’s sustainability approach. ### Outlook HICL received an average rating of 7.8 out of 10 for its ## years The Board and Investment Manager’s disciplined ESG disclosures and 7.6 out of 10 for its ESG metrics and approach to balance sheet management has provided a Weighted targets. The survey also provided valuable perspectives platform from which HICL can execute its strategy with average on the evolving landscape of ESG reporting frameworks, flexibility and enhanced financial firepower. assetlife and the metrics most commonly used by investors. This information will enable the Company to continue The growth potential in the infrastructure sector, to meet sustainability reporting expectations and offer particularly in those areas that support the modern ## accountability to investors. £50m economy, is considered vast. Alongside HICL’s resilient concession-based portfolio, more recent growth-oriented Announced Further information on this shareholder survey, as well as investments enhance the Company’s long-term earnings share buyback an in-depth review of HICL’s and Investment Manager’s drivers and provide greater potential for outperformance programme sustainability performance and ambitions, can be found through active management. I invite you to look at the in HICL’s standalone Sustainability Report, available on increased disclosure on the key growth drivers for these the Company’s website under Reports & Publications, assets which are included in the Top 10 assets section the highlights of which are on page 36 of this report. starting on page 26. Driven by the Manager’s proven ability to consistently ### Capital allocation realise investments at attractive valuations, the Company The Board maintains a strong focus on capital allocation. expects to continue to progress strategic and accretive This was evidenced during the year by the acceleration asset rotation. Prevailing market dislocation is anticipated of HICL’s strategic asset disposal programme, to provide opportunities to further enhance portfolio the prioritisation of reducing RCF drawings, the construction and generate shareholder value through announcement of a share buyback programme and the selective investments, without recourse to equity markets. execution of highly selective accretive investments. HICL’s diversified portfolio of over 100 high-quality, Going forward, the Board will continue to apply a highly- inflation-linked assets reflects the evolution of the core disciplined approach to capital allocation, with a suitably infrastructure market – offering shareholders attractive high bar for new acquisitions, guided by the relative risk-adjusted value for today, with exposure to the attraction of further share buybacks. powerful infrastructure megatrends driving the returns of tomorrow. Mike Bane Chair 21 May 2024 ## The Board recognises that ## positive outcomes for HICL ## shareholders are intrinsically ## linked to positive outcomes ## for the communities served by Download the ## HICL’s assets. HICL Sustainability Report online www.HICL.com 5 HICL Annual Report 2024 ## HICL at a glance ## Our purpose is to be a pre-eminent ## investorinessential core infrastructure ## inour chosen markets ## Our vision is to enrich lives through infrastructure ## Strong social Connecting Sustainable modern ## foundations communities economies ## 45% 37% 18% of portfolio of portfolio of portfolio Assets that constitute the Assets that link people to Assets supporting the energy foundation of our societies, the economy and each other, transition and continued such as: suchas: resource security, such as: – Health – Availability or toll roads – Water – Education – Rail and rolling stock – OFTOs – Fire, Law and Order – Fibre networks – Electricity transmission – Accommodation – Mobile towers Read more about our Top 10 investments on page 26 ## A commitment to sustainability ## As a prominent long-term investor ## incore infrastructure, HICL has a ## As a trusted steward of ## rolein society that extends beyond ## essential infrastructure that ## itsshareholders. ## sits at the heart of communities, ## sustainability and a focus on ## creating positive societal impacts ## are firmly embedded in HICL’s ## business model. Mike Bane Read more about HICL’s sustainability highlights on page 36 Chair of the Board of Directors 6 HICL Annual Report 2024 Strategic Report Governance Financials ## InfraRed is the Investment Manager, operating ## for the investment portfolio and responsible for ## delivering HICL’s purposeand vision ## US$13bn+ 230+ 100+ Equity under Investments Infrastructure 1 | | management | | professionals | | --- | --- | --- | --- | | | 25+ yr | 160+ | | | | Track record | Employees in five | | | Read more at www.ircp.com | | international offices | | ## HICL’s Investment Proposition is ## A strong investment ## to deliver sustainable income and ## proposition capital growth from a diversified ## portfolio of investments in core Read more on page 14 ## infrastructure. ## Diversification Sustainability Total return | We provide shareholders | We invest in assets that sit | Since IPO we have delivered | | --- | --- | --- | | withimmediate access to | at the heart of communities. | a Total Shareholder Return of | | a portfolio of | 35 million people have access | | to our infrastructure ## 100+ 35m 8.7% p.a. assets people ## Yield Inflation correlation Asset life We deliver a We deliver a return We offer cash flow sustainable dividend that correlates to visibility from long-life long-term inflation infrastructure assets ## 8.25p 0.7x 29.4 yr per share 2024 weighted average asset life 7 HICL Annual Report 2024 HICL at a glance continued ## 1 ### Affinity Water Sector: Electricity & Water Location: UK ## A diverse portfolio % of portfolio: 8.3% HICL holding: 33.2% ### 1 ## with over 100 assets Read more about out Top 10 investments on page 26 1 1 2 2 s 3 t n e m t s e v n I 4 g ## n 49.5% i n i a m e R 5 6 7 | | | 8 8 | | | --- | --- | --- | --- | | | 9 | | 5 | | 10 | 9 | | | 10 ### High Speed 1 Sector: Transport Location: UK % of portfolio: 4.6% HICL holding: 21.8% ### A diverse portfolio of over 100 assets 4 7 1 3 2 2 Geography 6 Sector 3 1 5 4 1 UK 64% 1 Accommodation 9% ## 8 2 EU 22% 2 Education 10% 3 North America 7% 3 Electricity & Water 18% ### Pinderfields & | 4 Australia/New Zealand 7% | 4 Health 22% | | | --- | --- | --- | | | 5 Fire, Law & Order 5% | Pontefract Hospitals | | | 6 Transport 27% | | Sector: Health 7 Communications 9% Location: UK % of portfolio: 3.5% HICL holding: 100.0% 1 By value, at 31 March 2024, using Directors’ Valuation 8 HICL Annual Report 2024 Strategic Report Governance Financials ## 3 ### Fortysouth Sector: Communications Location: New Zealand % of portfolio: 6.5% HICL holding: 40.0% ## 2 4 ### A63 Motorway Texas Nevada ### Transmission Sector: Transport | Location: France | Sector: Electricity & Water | | --- | --- | | % of portfolio: 7.9% | Location: USA | | HICL holding: 24.0% | % of portfolio: 5.6% | HICL holding: 45.8% | 6 | 7 | | --- | --- | | Southmead | Royal School of | | Hospital | Military Engineering | | Sector: Health | Sector: Accommodation | | Location: UK | Location: UK | | % of portfolio: 3.9% | % of portfolio: 3.5% | | HICL holding: 62.5% | HICL holding: 100.0% | ## 9 10 ### Home Office Cross London ### Trains Sector: Accommodation | Location: UK | Sector: Transport | | --- | --- | | % of portfolio: 3.0% | Location: UK | | HICL holding: 100.0% | % of portfolio: 2.7% | HICL holding: 6.5% 9 HICL Annual Report 2024 ## The infrastructure market ## HICL’s market directly connects with its vision, ## to develop strong social foundations, connect ## communities and support sustainable modern ## economies. In the OECD, the core infrastructure sectorsin need of investment ### Underpinning each of these three themes include transport, healthcare, electricity grid infrastructure and ### is a fundamental need for infrastructure digitalisation. Investment decisions in infrastructure, which are inherently long term, will increasingly be viewed through ### investment across the world, driven asustainability lens as developed economies look to harness ### bydemographic shifts, increasing technology to combat climate change andgrow economies. ### urbanisation, technological advancement Driven by the fundamental trends set out in this section, ### and climate change. thescale of investment required across HICL’s target sectors and geographies is significant. As a result, the HICL invests in core infrastructure, the segment of the infrastructure Company expects to benefit from attractive opportunities market at the lower end of the risk spectrum, and informed toinvest in a range of core infrastructure assets. by HICL’s core infrastructure framework (see page 14). Core infrastructure captures those critical assets that underpin the functioning of economies and societies, and therefore represents the most pressing investment need. ## The scale of the investment challenge | McKinsey estimates that | The World Bank estimates | The G20 Global | | --- | --- | --- | | an average of $3.7 trillion | that roughly $2.6 trillion is | Infrastructure Outlook | | per year of infrastructure | required annually until 2030 | estimates that the world | | investment is required | in sustainability-related | needs to invest $94 trillion | | globally by 2035, just to | infrastructure spending | in infrastructure by 2040 | | keep pace with economic | alone, to meet the UN | to meet global economic | | growth. | SDGs and stay on a path to | growth and development | | | a net zero society by 2050. | goals. | ## $3.7 $2.6 $94 | trillion | trillion | trillion | | --- | --- | --- | | per year of infrastructure | required annually in sustainability- | investment needed to meet | | investment is required globally | related infrastructure spending | global economic growth | | by 2035 | to meet the UN SDGs | | Sources: Please see Appendix 3 on page 161 10 HICL Annual Report 2024 Strategic Report Governance Financials ## Strong social ## foundations For over 30 years, governments across developed markets have ### From schools and hospitals to police and utilised the Public Private Partnership (“PPP”) procurement model ### firestations, social infrastructure assets to deliver social infrastructure assets, working collaboratively with long-term private investors, such as HICL. Although use of the ### are critical to the functioning of communities PPP framework is now more limited in the UK, it continues to be ### and play a crucial role in the global economy. employed across Europe, North America and Australasia. ### Asnew technologies emerge, existing assets Key policy and market developments in the year: ### decay and the needs of societies shift over – c.£24.7bn of PPP transactions across the EU, North America, ### time, upgrading and building new social Australia and New Zealand over FY24. ### infrastructure is critical to people’s quality – In the UK, sporadic adoption of PPP for small scale projects, noting more recent adoption in growth areas such as district ### oflife. heating; no clear national successor framework to PFI/PF2, abolished in 2018. In response, investment is required to both adequately replace ageing infrastructure, and to adapt infrastructure, old and new, – The Welsh government committed to deliver £1bn of to changing patterns of service delivery, urbanisation and infrastructure through a new Mutual Investment Model (“MIM”), demographic shifts, including rapidly ageing populations across reaching financial close in April 2024 on the first facility, a £180m developed markets. hospital in Cardiff. – In November 2023, the UK’s Shadow Chancellor Rachel Reeves convened a new British Infrastructure Council that will work to unlock private investment for national infrastructure projects. Relevant sectors include: AccommodationFire, Law and OrderEducationHealth ## Exploring the PPP model PPPs benefit from availability-based Flexibility Meeting community demand revenues, underpinned by long-term Collaborative partnership under the Harnessing private capital has proved inflation-linked contracts with public PPP model enables facilities and a valuable enabler of the delivery of sector clients. For HICL, these high- services to evolve with public sector much-needed critical social infrastructure. quality revenues play an important role needs, including responding to complex Between 1999-2014, c.100 new hospital in supporting yield. For the community, requests from clients in a timely and facilities were delivered in the UK under these critical assets deliver a range of cooperative manner. the PPP model. Since the UK reduced its benefits to key stakeholders: adoption of the PPP model, only nine new Recent examples of such 1 hospitals were built between 2015-2024 | Facility condition | ‘variations’include: | | | --- | --- | --- | | The consequences of ageing social | – The recent conversion of | | | infrastructure is increasingly apparent. | administrative areas into clinical | InfraRed is a leading player | | Various public reports in the year detailed | accommodation to provide 30 | in the PPP space | | widespread and serious issues with UK | additional patient beds at Southmead | | HICL’s Investment Manager, InfraRed, public sector facility condition, affecting Hospital (see page 32) has over 25 years of experience schools, hospitals and prisons leading in – The completion of bespoke contract developing and managing social some cases to evacuation of the facilities. variations across 24 hospitals in infrastructure assets around the world | The issues relate to outdated construction | response to the Covid-19 pandemic, | under PPP frameworks. During the | | --- | --- | --- | | materials and methods, in particular | predominantly to increase capacity | year, InfraRed, alongside peers, formed | | aerated concrete (RAAC) and asbestos. | | The Association of Infrastructure | In these cases, the Company has Investors in Public Private Partnerships In response, InfraRed surveyed HICL’s prioritised the delivery of augmented (AIIP) to provide a co-ordinated voice entire portfolio and did not identify works, with the formal contractual on industry issues with stakeholders RAAC in any PPP-procured facilities. variations being agreed subsequently including the UK Government. In This reflects the modern construction withthe relevant clients. addition, InfraRed is a member of techniques employed for PPPs, as the IPA’s PPP steering committee, as well as its specialised working groups well as the high standard of facility focused on handback and net zero. maintenance delivered through the PPP contractual framework, requiring whole- of-life capex optimisation and clear performance regimes. 1 As at 21 February 2024 11 HICL Annual Report 2024 The infrastructure market continued ## Connecting ## communities ### Infrastructure that connects communities, Key policy and market developments in the year: – Over €9.1bn of European transport concessions launched in ### such as roads, bridges and digital 2023, a 75% increase from 2022. ### communication networks, plays a vital – In December 2023, the UK government announced a new ### role in driving development, connecting target to grow rail freight by at least 75% by 2050, reinforcing its commitment to modal shift to cut congestion and ### people to employment and education and carbonemissions. ### isfundamental to our social wellbeing. – In April 2024, the European Council adopted the Gigabit Infrastructure Act which aims to simplify and accelerate the Investment in transport infrastructure is essential to meet the growing roll-out of high-speed networks including fibre and 5G. demand for mobility, inter-regional connectivity, and decarbonisation. The trends of ageing infrastructure, urbanisation and decarbonisation – As at September 2023, there were over 18,500 5G continue to drive further investment in this space. Physical deploymentsin place in the UK across c.81,000 sites, connectivity is complemented by the rapidly growing adoption of upfromc.12,000 deployments reported in 2022. digital connectivity, with material increases in data consumption driving investment across fibre, mobile and data centres. Digital infrastructure remains in various stages of maturity, with a wide range of market structures available. For example, in certain mature geographies, such as the UK and Germany, the fibre industry remains in development and presents higher risk versus mature, regulated and wholesale fibre markets such as France, where HICL has an investment in Altitude fibre. InfraRed’s deep experience across the digital space is crucial to evaluate and navigate market and asset risks in the sector. Relevant sectors include: TowersFibreTransport Data centres ## Growth sector case study: Data centres What is a data centre? The investment case InfraRed has been actively involved in the data centre market for several A data centre is a building and fordatacentres years, and believes that within its adjoining utilities, designed to – Alongside the rapid growth in the the next one to three years, the provide a highly secure environment sector, pockets of the market are now sector will increasingly exhibit core to host customer servers at scale. mature and represent derisked and infrastructure characteristics: yielding core infrastructure investment The growing role – Long term leases are agreed with opportunities. Mature “hyperscale” ofdatacentres data centres house critical computing investment grade counterparties and and network infrastructure for big often benefit from a degree of inflation – The amount of digital data created data-producing companies, who linkage worldwide in 2017 32 zettabytes; isexpected to reach 291 zettabytes lease dedicated space to manage – Sticky customer base due to high 1 their cloud computing, big data switching costs and barriers to entry by 2027 analytics and storage requirements. In – Risks related to energy consumption – The need to store these increasing Europe, the most mature hyperscale and server equipment often sit with amounts of data has accelerated datacentres are found in Frankfurt, the end user demand for data centres London, Amsterdam, and Paris – In 2022, Savills estimated that Europe’s – Critical infrastructure supporting and pipeline of data centres would need to enabling core digital services more than double by 2025 Typical data centre layout: The portfolio company would own and be responsible for all items excluding computing and server equipment 1 IDC intelligence 12 HICL Annual Report 2024 Strategic Report Governance Financials ## Sustainable modern ## economies ### In the face of a changing climate, sustainable Key policy and market developments in the year: – A 2024 GB Electricity System Operator (ESO) report proposes ### modern economies need to increasingly a£58 billion investment in the electricity grid to meet the growing ### manage essential resource scarcity and decarbonising demand for electricity in Great Britain by 2035. ### (e.g.water) and the transition to a low-carbon – Annual spending on electricity transmission grids across EUmember states is currently c.€63bn, exceeding the EuropeanCommission’s ### economy. Significant investment in the €58.4bn estimate for annual grid investment until 2030. ### generation, transmission, distribution and – A US consultancy Grid Strategies 2023 forecast of US electricity ### storage of clean energy is essential to deliver demand growth over the next five years rose from 2.6% in 2022 to4.7%. ### net zero by 2050. – The UK government has allocated £65m to supporting Energy planning continues to be driven by the three concerns of five district heating networks that will use waste heat from decarbonisation, security and affordability – together the ‘energy data centres to provide heating and hot water to more than trilemma’. Over the year, focus on security and affordability has been 10,000homes. heightened due to enduring geopolitical volatility and cost of living – The UK government, alongside Ofgem, published Connections stress, respectively. These considerations are expected to continue Action Plan setting out its intention to improve access to the to drive significant investment in energy infrastructure across the electricity grid. electricity system value chain (generation, transmission, distribution). Addressing this trilemma requires new sources of green electricitysupply, substantial shifts in electricity demand due to the decarbonisation of heat and transport, and substantially evolved gridinfrastructure to accommodate these material shifts in both. Relevant sectors include: TransmissionOFTOsWater District heating ## Growth sector case study: District heating What are district The growing role – Many European countries are pursuing district heating within their heatingnetworks? of district heating decarbonisation strategies (see chart District heating networks distribute – In the UK, heating represents 37% of above for projected district heating heat from centralised sources to total greenhouse gas emissions market shares in 2050 relative to 2020 customers via underground pipes, – District heating networks can harness positions). In recent years, district | more efficiently delivering heat | various low-carbon energy sources | heating has accounted for over 50% | | --- | --- | --- | | versus traditional in-house boilers. | such as biomass and geothermal | of heat delivered across certain | | | – The UK government has committed to | Nordiccountries | growing the proportion of its heat from these networks to 20% by 2050, up The investment case from less than 3% in 2022 fordistrictheating InfraRed has been tracking the district heating market for several years, and believes that within the next one to three years, the sector will increasingly exhibit core 1 District heating market shares in district heating areas within the EU infrastructure characteristics: 53 – Revenues underpinned by availability- based payments and consumption 80 80 75 75 75 charges 70 – Pass-through pricing mechanisms 55 mitigate underlying commodity price exposure – High barriers to entry and sticky 32 29 26 customer base 15 15 – High quality counterparties e.g.universities, hospitals, supported Austria Belgium Germany France Luxemburg Netherlands by local authorities 1 A district heating area is defined as an area within a region where a district heating system partially or fully supplies heat to the buildings 13 2020 2050 HICL Annual Report 2024 ## Business model ## How we create value | | | 1. | | 2. | | --- | --- | --- | --- | --- | | | Core infrastructure | | to deliver on | | | characteristics we look for… | | | our strategy… | | ### InfraRed evaluates the infrastructure Developed by the Board and ### marketsystematically using Investment Manager to ensure we ### HICL’s coreinfrastructure framework: deliver on our Investment Proposition ## Cash flow quality Deliver a sustainabledividend – Low volatility in a range An annual distribution of at least that of macro environments achieved in the prior year, fully cash – Suitable / diverse counterparties coveredand supported by long-term – Inflation protection portfolio earnings. – High capital cost – Low operational complexity ## Grow Net Asset Value Preserve and grow the capital value of the investment portfolio over the ## Market positioning long term. – Monopolistic characteristics – Regulated in some circumstances – Capital intensive business model – Structural protections ## Build a diversified portfolio ## tomanage risk Spanning high-quality assets across the core infrastructure market. ## Criticality – Strong social licence and public benefit – Real assets supporting essential services or facilitating important ## Provide a compelling social function ## cost proposition Evidenced through a competitive Ongoing Charges Ratio. 14 HICL Annual Report 2024 Strategic Report Governance Financials ## 3. 4. ## through our sustainable for the benefit of ## approach to value creation… our key stakeholders ### See next page for more detail on the three Our communities ### and end-users ### pillars of HICL’s business model We invest in essential assets which have a social purpose and will have a beneficial impact on the quality of life for the communities where they are located. ## 8m+ 500km+ people with of road and direct access high-speed to healthcare railways facilities ## 120,000 student places across schools, ## Value colleges and university facilities ## Enhancement ### Our clients We work together with corporate partners ## Accretive and public sector clients, including the UK’s National Health Service (NHS), local ## Investment councils, National Highways, and various government departments. ## 19 ## Value NHS Trusts in the portfolio ## Preservation ### Our shareholders A long-term sustainable mindset is imperative to achieve outperformance for shareholders. We offer long-term real returns from core infrastructure assets. ## 8.7% p.a. 158.2p Total Shareholder NAV per share Return since IPO 15 HICL Annual Report 2024 ## The three pillars of ## 2 ## our business model ## 1 ## 3 | | Accretive | | Value | | Value | | --- | --- | --- | --- | --- | --- | | 1 | | 2 | | 3 | | | | Investment | | Enhancement | | Preservation | HICL has a clearly defined Investment InfraRed’s Asset Management InfraRed’s Asset Management and Policy. This sets the overarching and Portfolio Management teams Portfolio Management teams work framework within which HICL pursue opportunities to deliver closely together, in partnership with seeks to construct a resilient core outperformance from the existing the management teams in HICL’s infrastructure portfolio that delivers portfolio through a systematic, portfolio companies, to deliver the Investment Proposition and is strategic programme of value HICL’s Investment Proposition by consistent with HICL’s overall risk enhancement. This upside is often preserving the value of investments appetite. shared between HICL’s shareholders for shareholders and stakeholders. and public sector clients for PPP The objective is to ensure portfolio Fundamentally it does this through: projects, or with the customers of companies continue to operate – A structured asset quality evaluation regulated assets through periodic with the endorsement of their key framework focusing on cash flow regulatory price reviews. stakeholders, including through the quality, market positioning and criticality delivery of contractual and regulatory Fundamentally it does this through: requirements, in order to deliver the – Careful and deliberate portfolio – Sponsoring the implementation of base-case investment return. construction to limit exposure to any initiatives within portfolio companies to one factor and in so doing improve Fundamentally it does this through: optimise asset business plans, pursue portfolio resilience growth initiatives or enhance capital – Providing effective governance of – An overarching focus on sustainability structures (for example, refinancing portfolio companies, usually through that is built into the investment process existing senior debt facilities) board representation (see HICL’s 2024 Sustainability Report) – Developing and implementing – Building relationships with key portfolio – An objective that acquisitions are procurement efficiencies across HICL’s company counterparties, in particular generally accretive to key portfolio large and diverse portfolio, in particular public sector clients/regulators metrics by leveraging economies of scale (for – Facilitating and/or driving resolution of example, management services and Working within investment parameters operational issues, including disputes insurances for PPP projects) approved by the HICL Board, InfraRed is and critical issues responsible for the selection and pricing – Exploring opportunities to add to or – Delivering HICL’s sustainability strategy of new investments and, from time-to- upgrade asset level facilities to improve at the asset level by promoting greater time, disposals. The Acquisition Strategy stakeholder outcomes whilst supporting awareness within portfolio company is periodically reviewed by the Board and long-term shareholder returns (for management teams and driving the agreed with InfraRed. example, undertaking contract pursuit of specific initiatives to comply variations on PPP projects that add to with regulation and support sustainable, InfraRed’s Investments team, in the scope of services) responsible business operations coordination with the Fund Management – Driving efficient financial and treasury team, uses a variety of channels to source – Oversight of financial performance management of HICL, seeking accretive transactions for HICL. against HICL’s forecasts opportunities to reduce ongoing costs – Optimising cash efficiency by managing The following summarises – Considering where value can be cash flow from HICL investments and HICL’s Acquisition Strategy: improved, or portfolio risk profile minimising cash drag on returns improved, through selective disposals Geography – Managing the process and analysis Located in mature infrastructure markets required for valuations of HICL’s portfolio Segmentation – Following prudent financial Core infrastructure market positioning management practices (e.g. accounting and tax policies, treasury processes) Asset quality Defined by: – Cash flow quality – Market positioning – Criticality Value-add Accretive to HICL’s Investment Proposition 16 HICL Annual Report 2024 Strategic Report Governance Financials ### As a responsible owner of essential public assets, ## Engaging with ### HICL’s ability to deliver its Investment Proposition over the ## our stakeholders long term is inextricably linked to the delivery of positive ### stakeholder outcomes for the broader community. Stakeholder expectations Our approach and touchpoints ### Our communities and the end-users of our assets We invest in infrastructure projects that provide Communities expect seamless – We support community engagement essential services to local communities. In access to essential services like initiatives at the company level some instances, we deliver those services water, transport, and energy. – At the portfolio level, we facilitate the sharing directly, such as the provision of clean energy of best practice for engagement and design or water, and in other instances these services of scalable solutions are performed by our public sector clients – At the Manager level, InfraRed forms such as healthcare services. dedicated groups to drive key initiatives ### Our clients We work together with corporate partners Infrastructure assets are built and – Direct and proactive client engagement at and public sector clients, including the UK’s maintained in line with contractual the portfolio company level NHS, local councils, National Highways, requirements, so that clients can offer – Client surveys to understand the needs of and various international government critical services to their communities. our clients and their communities. departments to deliver many of our essential – This is a fundamental driver of InfraRed’s infrastructure services. Portfolio Impact Strategy – We engage in public-private working groups to identify solutions to industry challenges such as net zero and handback requirements ### Our people | HICL portfolio companies employ over 2,300 | Make a positive impact on the | – Through our governance rights, we ensure | | --- | --- | --- | | people, and thousands more through each | environment and society whilst | portfolio companies who employ staff | | asset’s supply chain. InfraRed has a talented, | growing personally and professionally. | directly have current and appropriate | | diverse team of over 160 people worldwide | | policies in place such as diversity and | | which comprises over 20 nationalities | | inclusion and modern slavery | speaking 20 different languages. – At the Manager level, InfraRed implements initiatives around the principles of attracting, retaining and cultivating diverse talent and empowering its employees ### Our delivery and other partners To enable high-quality infrastructure assets, Collaborate with each company to – Targeted engagement with business we partner with many specialist organisations fulfil their own business objectives partners at the asset and portfolio levels which include management service whilst enabling the sustainable – Quarterly and annual monitoring providers, construction companies, facilities delivery of high-quality services to – Manager-led semi-annual ESG summits with management companies, financiers, infrastructure assets. all portfolio companies co-shareholders and advisers. ### Our shareholders We invest in infrastructure assets using Maximise long-term sustainable – Investor presentations targeted at both the capital provided by our investors. Our financial returns for a given level of risk. institutional and retail investors shareholders range from individuals to Accessible and transparent reporting – Responding to investor information requests substantial international institutions, and on the Company and portfolio. – Transparent ESG reporting pension funds which have a long-term investment horizon. ### AGM ### 2:00pm Wednesday, ### 17 July 2024 Brewers Hall, Aldermanbury Square, Barbican, London EC2V 7HR 17 HICL Annual Report 2024 ### The Board has identified metrics to measure ## Key Performance ### HICL’sperformance against its strategic objectives. ## and Quality Indicators The results for the year ended 31 March 2024 ### aresetout below. ## Key Performance Indicators 1 3 Dividends Total Shareholder Return Cash-covered Dividends ### 4 ## 8.25p 8.7% p.a. 1.37x / 1.05x 2023: 8.25p 2023: 8.9% p.a. Including / excluding profits on disposal Measure Measure 4 2023: 1.31x / 1.03x Aggregate interim dividends declared NAV growth and dividends paid per pershare for the year. share since IPO. Measure Operational cash flow/dividends paid to Objective Objective shareholders. | An annual distribution of at least that | A long-term IRR target of 7% to 8% | | | | --- | --- | --- | --- | | | | 2 | Objective | | achieved in the prior year. | asset out at IPO | . | | Dividend payments are covered by cash received from the portfolio. | Performance | Performance | Performance | | --- | --- | --- | | 2022 8.25p | 2022 9.0% | 2022 1.05x | | 2023 8.25p | 2023 8.9% | 2023 1.31x | | 2024 8.25p | 2024 8.7% | 2024 1.37x | | Link to strategy | Link to strategy | Link to strategy | | Positive Inflation Correlation | Competitive Cost Proposition | | --- | --- | | 0.7x | 1.14% | | 2023: 0.8x | 2023: 1.09% | | Measure | Measure | | Changes in the expected portfolio return | Annualised ongoing charges/average | 6 for 1% p.a. inflation change for each and undiluted NAV . every future period. | Objective | Objective | | --- | --- | | Maintain positive correlation with a | Efficient gross (portfolio level) to net | | correlation of at least 0.5x. | (investor level) returns, with the intention | to reduce ongoing charges where possible. Maintain within the range for FTSE 250 listed infrastructure peers. Performance Performance 1 Return based on NAV growth and dividends paid per share since IPO 2 Set by reference to the issue price of 100p/share, at the 2022 0.8x 2022 1.06% time of HICL’s IPO in February 2006 3 Further details on this APM are provided in the Financial 2023 0.8x 2023 1.09% review on page 43 4 Including profits on disposals versus original acquisition 2024 0.7x 2024 1.14% cost of £53.4m (2023: £45.5m). Excluding this, dividend cash cover would have been 1.05x (2023: 1.03x) 5 Including profits on disposals versus original acquisition Link to strategy Link to strategy cost of £45.5m. Excluding this, dividend cash cover would have been 1.03x 6 Calculated in accordance with Association of Investment Companies guidelines. Ongoing charges excluding non-recurring items such as acquisition costs 18 HICL Annual Report 2024 Strategic Report Governance Financials ### Link to strategy Deliver a Build a diversified Provide a compelling Grow Net Asset Value sustainabledividend portfolioto manage risk cost proposition ## Key Quality Indicators | Investment Concentration Risk | | | Risk/Reward Characteristics | Weighted Average Asset Life | | --- | --- | --- | --- | --- | | | 1 | 2 | | | | 49.5% | , 8.3% | | 17.1% | 29.4 years | | 2023: 49%, 7.3% | | | 2023: 21.8% | 2023: 32.2 years | | Measure | | | Measure | Measure | | Percentage of portfolio value represented | | | Percentage of portfolio value represented | Portfolio’s weighted average unexpired | 3 by the ten largest investments . by the aggregate value of projects with concession length. 4 construction and/or demand-based risk . Percentage of portfolio value represented 3 by the single largest investment . Objective Objective Compliance with HICL’s Investment Seek where possible investments Objective Policy, to be lower than the aggregate that maintain or extend the portfolio Maintain a diversified portfolio of limit of 35% for such investment. concession life such that it remains investments (thereby mitigating above 20 years. concentration risk) and, at all times, remain compliant with HICL’s Investment Policy. Single asset concentration < 15%. | Performance | Performance | Performance | | --- | --- | --- | | 2022 48% | 2022 25% | 2022 29.8 yrs | | 2023 49% | 2023 22% | 2023 32.2 yrs | | 2024 49% | 2024 17% | 2024 29.4 yrs | | Link to strategy | Link to strategy | Link to strategy | Refinancing Risk Sustainability Stewardship ### 5 ## 2.5% 98% 5 | 2023: 0.6% | 2023: 97% | | --- | --- | | Measure | Measure | | Investments with refinancing risk within | Percentage of the portfolio that is rated | 7 24 months as a percentage ofportfolio ‘high’ for ESG performance . 6 value . Objective Objective 1 49.5% is the sum of the Top 10 assets in HICL’s portfolio Manage exposure to refinancing risk > 75% of the portfolio rated high in ESG by value to20% of portfolio value. performance. 2 8.3% is the size of the largest asset in HICL’s portfolio, Affinity Water, by value 3 HICL’s Investment Policy stipulates that any single investment (being, for this purpose, the sum of all incremental interests acquired by HICL in the same project) must be less than 20% (by value) of the gross assets of HICL, such assessment to be made immediately post- acquisition of any interest in a project Performance Performance 4 More diverse infrastructure investments which are made with the intention ‘to enhance returns for shareholders’ as permitted under the terms of HICL’s Investment Policy – 2022 0.0% 2022 98% namely pre-operational projects, demand-based assets and/or other vehicles making infrastructure investments. 2023 0.6% 2023 97% Further details are set out in the Investment Policy, available from HICL’s website 2024 2.5% 2024 98% 5 Refinancing required on Texas Nevada Transmission and Affinity Water 6 Calculated as required asset refinancings within 24 Link to strategy Link to strategy months: lower of: (i) HICL’s share of debt to be refinanced; and (ii) the valuation of HICL’s equity investment; divided by HICL’s total Directors’ Valuation at 31 March 7 ‘High’ rating in ESG performance means scoring 4/5 stars in the HICL Sustainability Survey or subsequent metrics as ESG reporting evolves 19 HICL Annual Report 2024 Right: ## Investment Manager’s Report Edward Hunt Head of Core Infrastructure Funds, InfraRed Edward leads the InfraRed team that manages HICL Left: Helen Price CFO, InfraRed Helen is responsible for managing the financial activities carried out by InfraRed for HICL ## HICL has performed well operationally in theyear, with the portfolio ## well insulated from rising interest rates and benefitting from strong ## inflation correlation. This solid foundationwas supported by the ## enhancement of the Group’s balance sheet and the continued ## strategic evolution of the portfolio during the year. These achievements were underpinned by the ## acceleration of the Group’s asset rotation strategy, InfraRed acts as the Investment resulting in over £700m of transactions, including over ## £500m of accretive disposals and complemented with Manager to HICL with day-to-day highly targeted acquisitions. This activity improved key ## responsibility for the following activities: portfolio metrics, strengthened HICL’s balance sheet andsupported the valuations of the Group’s portfolio. – Development and execution of HICL’s strategy This active management of the portfolio, supported – Stewardship of portfolio assets through by inflation pass-through and real growth in HICL’s demand-based assets, continues to bolster actual proactive asset and portfolio management, and expected growth in distributable cash, enabling andthe resolution of critical issues the recommencement of sustainable dividend growth – Stakeholder engagement across both public from FY26. andprivate sectors With a robust balance sheet, keen investment discipline – Investment origination, due diligence and a rapidly growing addressable market, HICL is in a strong position to deliver value for shareholders through and execution both income and capital growth over the long term. – Capital raising, investor relations and preparation of key external communications ### Operational highlights The underlying return from the portfolio was solid for the year ended 31 March 2024, delivering an underlying return of 9.0% (10.2% at 31 March 2023), ahead of the HICL’s Investment Committee is the principal expected return of 7.2% for the year (as at 31 March 2023) before the impact of changes to reference discount executive decision-making body for HICL within rates and macroeconomic assumptions. InfraRed and comprises: This portfolio outperformance was primarily driven by accretive transaction activity and value enhancement – Chris Gill (Chair of Investment Committees) at the asset level, partially offset by lower than forecast – Jack Paris (CEO) inflation in the second half of the year and increased lifecycle costs in the UK PPP sector. – Helen Price (CFO) – Edward Hunt (Head of Core Infrastructure Funds) Further details can be found in the Valuation section ofthis report starting on page 46. – Stewart Orrell (Head of Asset Management) 20 HICL Annual Report 2024 Strategic Report Governance Financials # Highlights 9.0% Underlying portfolio return in FY24 8.3% Largest single asset concentration (Affinity Water) # Operational performance overview HICL's diversified portfolio of high-quality core infrastructure assets performed in line with the Investment Manager's expectations over the year. The Group's more recently acquired modern economy assets – Fortysouth, Texas Nevada Transmission ("TNT"), Hornsea II OFTO and Altitude Infra – are now fully integrated into the portfolio and are performing broadly in line with their respective business plans. Affinity Water submitted its business plan to Ofwat in September 2023 as part of the 2024 periodic price review ("PR24") and is due to receive a draft determination over the summer months. As a water only company, Affinity Water has no direct exposure to sewerage services. Financially, Affinity Water goes into PR24 with a robust capital structure, owing to proactive balance sheet management. This has enabled the company to submit a business plan which envisages 32% growth in its regulatory capital value over the next regulatory period of five years, whilst maintaining the lowest bill increases in the sector. Importantly, Affinity Water continues to be well placed to resume shareholder distributions in FY26, further supporting the Group's cash generation and dividend cover forecast. High Speed 1 ("HS1") recommenced shareholder distributions in the year, driven by the continuing recovery in international train travel following the Covid-19 pandemic. During the second half of the year, three potential new operators announced their intention to utilise HS1 from 2026 to provide competing services to a variety of European destinations. The possibility of additional international operators was a key attraction of the investment at the time of acquisition; and InfraRed will continue to work closely with the HS1 management team to support greater utilisation of the line. The introduction of one or more new international operators would be expected to result in an increase in revenues, benefitting HS1's valuation. Enhanced disclosure on the operational performance of each of HICL's Top 10 assets is set out starting on page 26. # HICL's business model delivering value The proactive management of the Company's balance sheet and portfolio composition is central to HICL's business model. # Investment activity Consistently improving portfolio composition through accretive asset rotation has been a core part of the differentiated approach since IPO. In that time, the Investment Manager has made over £1bn of strategic asset disposals. This gives HICL a more extensive track record of asset rotation than any of its core infrastructure peers. In the year, HICL's focus was on disposal activity, which enabled accretive rotation into highly attractive new assets, alongside repayment of the Group's RCF and the announcement of a £50m share buyback programme. £509m of asset disposals were made during the year, with all realisations made either at or above carrying value. This first-hand transaction experience reinforces the Investment Manager's view that HICL's portfolio remains fundamentally undervalued by public markets given that high-quality, inflation-linked core infrastructure assets continue to attract strong valuations in private markets. Disposals announced during the year: - A portfolio sale comprising four UK PPP projects, namely: Queens (Romford) Hospital, Oxford John Radcliffe Hospital, Priority Schools North East Batch and South Ayrshire Schools, in addition to half of the Group's investment in the Hornsea II OFTO, for an aggregate c.£204m, at a modest premium to their combined carrying value; - Northwest Parkway (US) a partial disposal of a toll-road in Colorado for $86m, in line with its carrying value; - Bradford BSF Phase 1 & 2 (UK), the combined sale of two PPP schools for c.£37m at an 8% premium to its carrying value; - University of Sheffield Accommodation (UK), the sale of a concession with demand-based revenues for £18m, in line with its carrying value; and - Northwest Parkway (US), the disposal of HICL's remaining stake in the project, with the net proceeds of $232m representing a 30% premium to its carrying value. In combination with the partial disposal completed earlier in the year, the sale of Northwest Parkway crystallised a 13.0% holding period IRR and 2.2x multiple on invested capital since HICL's initial investment in December 2016. ![img-1.jpeg](img-1.jpeg) 21 HICL Annual Report 2024 Investment Manager’s Report continued HICL also signed and completed three targeted Specialist asset management Highlights investments in the year totalling £227m: The consistent delivery of investment performance – Altitude Infra (France), the largest independent throughout the entire investment lifecycle is only possible ## £509m wholesale fibre network in rural France (3% of the through InfraRed’s dedicated team of over 30 specialist Directors’ Valuation); across ten asset managers, situated across London, New York and disposals Sydney and supported by specialist operating partners – Hornsea II OFTO (UK), the offshore transmission completed or in certain sectors and markets. This asset management assets associated with the world’s largest installed announced in capability continues to evolve with the investment windfarm (2% of the Directors’ Valuation); and the year (or activities across InfraRed’s wider platform, spanning both – An incremental investment in A63 Motorway (France), post-year end) core and value-add strategies. a high-performing toll road the Investment Manager knows well, having initially developed the asset through Since HICL’s IPO, the Investment Manager has another InfraRed-managed fund (now 7.9% of the successfully delivered 18 construction assets, generating ## Directors’ Valuation). £227m over 5.0p of NAV outperformance. This specialisation was demonstrated again in the year at Blankenburg across three In combination, the significant transaction activity Tunnel, where final major construction milestones were acquisitions completed during the year improved the portfolio’s achieved. InfraRed’s strong track record in greenfield, announced in yield profile, and was a contributing factor to the construction stage investments, positions HICL to the year (or Board’s decision to guide a return to dividend growth pursue suitable opportunities in the space as and when post-year end) for the Company for the year ending 31 March 2026. they arise. This demonstrates the value that can be generated for shareholders through active asset management. As long-standing responsible investors in critical ## 2.2x infrastructure, InfraRed’s active asset management Buyback programme approach is predicated on maintaining appropriate Multiple on cash In March 2024 the Company announced a £50m share quality, safety and service levels for HICL’s clients invested achieved buyback programme. The Investment Manager believes and end-users. In cases where remediation works from Northwest that buying back HICL’s shares when the share price is at are required to address construction-related defects, Parkway a significant discount to NAV has economic merit, serves InfraRed is overseeing delivery of appropriate capital realisation as a sign of confidence in the Company, and illustrates works programmes alongside responsible construction the range of levers available to the Board and Manager to contractors, where relevant. In these cases, it is only by enhance shareholder value. working proactively with our partners to ensure continuity of service for the community, that shareholder value can The risk and return proposition available to the Company be protected. through buying back its shares will continue to be a key benchmark for future capital allocation decisions. Additional information on asset management initiatives which help to preserve and enhance value across HICL’s largest investments is set out starting on page 26. Altitude Infra 22 HICL Annual Report 2024 Strategic Report Governance Financials ### Financial highlights Sustainability Highlights HICL’s NAV per share decreased by 6.7p over the year Sustainability is embedded throughout HICL’s business to 158.2p at 31 March 2024 (31 March 2023: 164.9p). model, focused on four key areas where HICL’s ## 68% This reflected an increase in the portfolio’s weighted investments can generate the strongest outcomes: Portfolio average discount rate from 7.2% to 8.0%, partially offset Environment, Communities, People and Governance. company gearing by higher forecast inflation, higher interest on cash InfraRed recognises that providing HICL’s shareholders deposits, and positive underlying portfolio performance. with sustainable, long-term income is intrinsically linked Further detail on the approach to valuation can be found to the delivery of favourable outcomes, across these four in the Valuation section of this report starting on page 46. pillars, to the communities served by its assets. ## £150m Private Placement The Group issued long-term debt in the year via a HICL has now released its second ‘live’ year of issued May 2023 £150m Private Placement, diversifying HICL’s capital emissions data, which covers 100% of the portfolio and base. The instrument, with 10- and 12-year maturities serves to benchmark progress towards the Group’s 1 and an all-in effective interest rate of 5.75%, was sought goal of achieving a carbon-neutral portfolio by 2050 . to responsibly manage a portion of the Group’s floating InfraRed has developed an action plan which envisages rate exposure at a lower long-term rate, manage the proportion of HICL’s investments anticipated to be the refinancing risk and strategically align the term aligning, aligned to or at net zero increasing from 25% repayment with expected capital redemptions from the today to 45% in 2027. PPP portfolio. Beyond the portfolio’s inherent social contribution Proceeds from the disposals announced in the year have through the delivery of essential services, HICL’s enabled the Group’s RCF to be substantially repaid post- assets are a source of direct employment for over year end, down from £494m at its peak in April 2023, 2,300 individuals and indirectly support thousands reducing HICL’s pro-forma fund borrowing ratio to 7% more through the supply chain. To further integrate a (31 March 2024: 16%). sustainability-first mindset into this supply chain, InfraRed has introduced diversity, equity, and inclusion guidelines Following the completion of the Northwest Parkway sale, across portfolio companies, with compliance monitored the Group’s RCF was reduced from £650m to £400m, via the annual ESG survey. In a move towards greater recognising that its requirements had reduced in this accountability, key Group service providers are now higher interest rate environment. The RCF’s expiry date also asked to endorse a code of conduct in addition to remains 30 June 2026. self-assessments, enabling more formal oversight of adherence to policies and standards. Further information on HICL’s financial performance can be found in the Financial Review section starting on Sustainability highlights are provided on pages 36 page 40. to 39. Full details are set out in the Company’s 2024 Sustainability Report, available on the HICL website. ### Governance As part of the Investment Manager’s succession plan, Jack Paris officially took over from Werner von Guionneau as InfraRed CEO in July 2023. At the HICL Investment Committee level, Jack replaced Werner, with Chris Gill taking over as Chair of the Committee. Download the HICL Sustainability Report online www.HICL.com Pinderfields & Pontefract Hospitals 1 HICL outlines in detail its transition plan and targets towards a carbon neutral and, therefore, net zero portfolio by 2050 on pages 15 to 19 of its 2024 Sustainability Report 23 HICL Annual Report 2024 Investment Manager’s Report continued The Investment Manager also notes the heightened ### Risk management Highlights political and regulatory scrutiny of the water sector more HICL’s risk appetite statement, approach to risk broadly, including reports of financial issues affecting management and governance structure are set out in ## certain water and sewerage companies. Affinity Water 35m Risk and Risk Management, starting on page 53. benefits from a stable capital structure withvery people worldwide Commentary relating to the Group’s key risks is set little holdco debt, no refinancing requirement until use and depend out below. AMP8 (which starts 1 April 2025), and no exposure to on HICL-owned sewerage services. infrastructure in Political and regulatory risk their day-to-day More broadly, InfraRed mitigates this risk by managing Geopolitics lives regulatory exposures across jurisdictions and regulators. Geopolitical risk remained elevated, noting the continued TNT and Altitude Infra both benefit from stable regulatory unrest in Ukraine and the Middle-East. The Company’s frameworks which differ considerably from the UK’s portfolio is not directly exposed to these regions. incentive-based framework. ## >2,300 Secondary impacts, including supply chain disruption PFI handback people employed and inflation, have had a limited impact on a subset of directly by HICL’s projects during the period, with risks to equity mitigated The acceleration of PPP projects returning to public underlying assets through contractual pass-through mechanisms. control is increasingly a key issue for both public and UK elections private sectors. InfraRed is a key voice on this issue, actively contributing to the Infrastructure and Projects National elections will take place in the UK during the Authority’s (IPA) industry working group focused on coming financial year, with the inherent potential to shift this transition, as well as its industry steering group. the policy framework around infrastructure ownership, InfraRed has initiated a systematic programme to handback and future procurement. review its preparedness for all future project handbacks InfraRed observes broad political consensus on the within HICL’s portfolio. HICL has 33 projects scheduled significant levels of investment needed to upgrade the for transfer within the next ten years, which account UK’s ageing or outdated infrastructure. This bipartisan for 13% of the Directors’ Valuation at 31 March 2024. support, combined with stretched public sector This preparatory work, supported by a specialist third- balance sheets, is expected to provide a framework party adviser, is shaping InfraRed’s strategic planning for constructive discussions between the public and and asset management approach to effectively mitigate private sectors on the important role that private capital this transition risk. can continue to play in delivering much-needed critical The proactive management of lifecycle spending is public infrastructure. InfraRed actively contributes an important factor as projects approach handback. to this discussion through its various industry and PPP projects make up 58% of HICL’s portfolio, and trade organisation memberships and through direct lifecycle risk and reward is borne by the project on 59% engagement with both major political parties. of these assets. In these cases, InfraRed continues Regulatory determinations to closely monitor the appropriateness of the lifecycle forecast reflected in each asset’s valuation. For the HICL’s primary exposure to regulatory risk is through remaining 41% of the PPP portfolio, lifecycle risk is Affinity Water, which expects to receive its PR24 draft passed down to the facilities management contractor, determination in June 2024. Recognising that there is which is an important part of InfraRed’s risk management uncertainty around the outcome of PR24, InfraRed has strategy in relation to handback. collaborated closely with the Affinity Water management team and Ofwat throughout the process and is confident that HICL’s valuation of the asset reasonably weighs the risks and opportunities associated with the price review. Fortysouth 24 HICL Annual Report 2024 Strategic Report Governance Financials Client relationships ### Market and outlook Highlights Long-term partnership frameworks inherently carry HICL has continued to prove its resilience in an uncertain certain risks, which are heightened by the broader macro environment, underpinned by carefully considered ## 0.7x operational and financial challenges facing the UK portfolio construction, robust balance sheet management public sector. In certain sectors, such as healthcare, and disciplined transaction activity. Active management Inflation this pressure can translate into behaviour by specific during the year has provided HICL with the financial correlation clients, and their advisers, that could prove adverse strength and flexibility to continue to execute its strategy to the interests of the PFI, including with respect to and deliver an attractive investment proposition for HICL service delivery. While these isolated instances have shareholders over the long term. ## 100% not had a material impact on the overall portfolio to date, these practices increase the risk of dispute, and in InfraRed continues to observe attractive opportunities of the portfolio extreme cases could lead to reduced or non-payment for HICL to pursue. Conditions across the market covered in of contracted revenues, presenting a risk to the Group’s for infrastructure assets remain variable and favour newly published cash flow stability. experienced investors with deep networks and flexible emissions data balance sheets, such as HICL. These attributes enable Macroeconomic risk the Group to identify special situations with favourable The macroeconomic climate continues to weigh on competitive dynamics and with outsized returns. In this listed market valuations for real assets, including for way, the Group’s approach remains highly selective within HICL. Notwithstanding, InfraRed remains confident in its core sectors (see the Infrastructure Market section on the valuation of the portfolio, and has demonstrated the pages 10-13). validity of HICL’s NAV through multiple disposals in the The marginal return threshold for assessing new year across sectors and geographies. investments remains high, with the benchmark for The persistence of the high interest rate environment new opportunities informed by potential NAV accretion is likely to limit HICL’s opportunities to raise new equity available through additional share repurchases, as capital in the near future. However, acquisition and well as the contribution to HICL’s key portfolio metrics. disposal activity undertaken during the year has clearly Funding for such investments will continue to be demonstrated InfraRed’s ability to progress HICL’s supported by selective disposals, as appropriate, and strategic objectives without reliance on equity capital where these divestments align with long-term portfolio markets. If equity markets remain inaccessible for a composition objectives. protracted period, the Investment Manager is confident HICL’s portfolio has been structured to perform in a in its ability to continue to rotate assets to enhance HICL’s variety of macroeconomic environments; it has resilient portfolio and investment proposition. inflation-linked cash flows, largely insulated from higher If inflation continues to fall faster than the Group’s interest rates and with long-term growth potential. projections, there is the risk of downward pressure on These attributes underpin the Group’s long-term earnings cash generation and dividend cover. However, HICL’s base and ensure HICL is well positioned to generate valuation forecasts remain conservative relative to long- shareholder value through both sustainable income and term market expectations, and the impact of short-term long-term capital growth. variations in inflation on dividend cover is not expected to be material. As part of the process undertaken to recommend a return to dividend growth, the proposed dividend increase has undergone rigorous stress testing against various macroeconomic scenarios, including a rapid return to a low inflation environment. Texas Nevada Transmission 25 HICL Annual Report 2024 ## Top 10 assets – Investing in infrastructure: ## operational highlights ## 20% leakage reduction by 2025 ## providing on average 950 million litres ## of clean water each day to a population ## of more than 3.9 million people Enriching lives: ## 950m ## litres clean water daily ## Clean ## water 26 HICL Annual Report 2024 Strategic Report Governance Financials ## 1. Affinity Water Affinity Water provides on average 950 million litres of clean water each day to a population of more than 3.9 million people in Southern and Eastern England. 1 On 28 September 2023, Affinity Water submitted its PR24 business plan to Ofwat. The plan sets out the company’s operational approach and the £2.1bn capital investment it is expecting to make over the five-year period to March 2030, representing a 19% increase from the previous five years. The significant investment envisaged under the plan is expected to result in the company’s RCV growing by over 32% in real terms between April 2025 and March 2030. Affinity Water’s plan is fully funded, and HICL will consider financing a portion of the growth outlined in the plan with equity during AMP8, contingent on receiving a fair final determination from Ofwat in December 2024, including the resumption of shareholder distributions. The company’s operational performance over the year was broadly in line with expectations. In September 2023, Ofwat published its latest Water Company Performance Report showing the company’s leakage reduction performance to 2 be sector leading . As at 31 March 2024, Affinity Water’s three-year average leakage reduction remained ahead of target at 19% with the company also exceeding its commitments in limiting supply interruptions and mains bursts. Although Affinity Water did incur a penalty in relation to per-capita consumption, this was in line with previous periods and will be recalibrated for PR24 to account for changes in water usage patterns post-Covid-19. HICL’s valuation benefitted from the application of Ofwat’s PR24 methodology in certain areas, including RCV adjustments that are due to be made at the start of AMP8. This was offset by increases to the discount rate to reflect increased government bond yields as well as sector-wide uncertainty around the outcome of PR24. As a result of proactive balance sheet management, Affinity Water’s performance is underpinned by a resilient capital structure. The company’s investment grade credit ratings remain two notches above Ofwat’s required thresholds notwithstanding the volatile macroeconomic environment, and there is no refinancing requirement until the next regulatory period, at which point the impact of increased interest rates is expected to be mitigated through the regulatory mechanism. In January 2024, Affinity Water’s Chair Ian Tyler confirmed his intention to step down from his role once the PR24 process has concluded. InfraRed will work closely with the Affinity Water board throughout the recruitment process and continue to support CEO Keith Haslett as he leads the business into the next regulatory period. Valuation sensitivity Sector: Electricity & Water Location: UK RCV multiple -/+0.05x % of portfolio: 8.3% (March 2023: 7.3%) HICL holding: 33.2% (1.5) 1.5 ## Clean Concession life remaining: Indefinite Change in NAV in pence per share Status: Operational 1 The Ofwat 2024 price review process that sets prices for the period from April 2025 to March 2030 2 www.ofwat.gov.uk/publication/water-company-performance-report-2022-23/ ## water 27 HICL Annual Report 2024 Top 10 assets – Investing in operational highlights infrastructure: ## 105km dual carriageway ## connecting Bordeaux to the Spanish ## border via the A63 Autoroute Enriching lives: ## 21m journeys in FY24 plaza repair costs and the lost revenue has expectation that compensation will be due ## 2. A63 motorway | | been recovered through insurance, with the | through higher tolls in the event that the legal | | --- | --- | --- | | | remainder expected to be recovered in due | challenge is unsuccessful. However, even if | | HICL’s investment relates to a 105km | course. Industrial action observed throughout | the levy were to be imposed in full with no | | stretch of the A63 Autoroute in France, | France in January 2024 had a negligible | compensation, the impact on HICL’s valuation | | which connects Bordeaux to the Spanish | impact on the road’s performance, reinforcing | is not anticipated to be material given the | border. As such, the road is an important the benefit of its strategic positioning. relatively small amount of revenue above the trans-European transport corridor for €120m threshold. both freight and leisure travel, enabling Amidst sustained high inflation, effective cost journeys from the Iberian Peninsula and control has enabled the asset to achieve Sector: Transport Southwestern France to the whole of savings against budget for both operating Northern Europe. Location: France and capital expenditures, which has driven a modest valuation uplift relative to 31 March % of portfolio: 7.9% (March 2023: 6.5%) As set out in the Investment Manager’s 2023. The asset’s financial performance was HICL holding: 24.0% report, the Company acquired a further further supported by inflation-linked tariff Concession life remaining: 27 years 3.1% interest in the asset in January 2024 on highly accretive terms. This enhanced HICL’s increases of c.2.6% on average across heavy Status: Operational | governance position through the appointment | and light vehicles which were enacted on | | | --- | --- | --- | | of an additional director to the project | 1 February 2024. The project’s fixed-rate, | | | company board. | long-term financing allows it to continue to | Valuation sensitivity | fully benefit from the impact of higher interest Over the financial year, light vehicle traffic rates on cash deposits. Traffic growth rate -/+0.5% continued to grow due to healthy leisure | demand, with heavy vehicle traffic broadly flat. | | The levy on revenues earned by companies | | | --- | --- | --- | --- | | Despite this robust underlying performance, | | operating long-distance transport | (1.1) 0.7 | | revenue over the period was slightly behind | | infrastructure in France was enacted as | | | HICL’s valuation assumption due to a traffic | | part of the 2024 Finance Law. The portfolio | Change in NAV in pence per share | | | Driving | | Valuation assumption: 1.4% CAGR | | accident in August 2023 that required toll | | company, along with several other large | | | collection to be paused for approximately two | | concessionaires, has challenged the law with | | | weeks. As at 31 March 2024, 60% of the toll | | the constitutional court, and it remains HICL’s | | ## 28 ambition HICL Annual Report 2024 Strategic Report Governance Financials ### 3. Fortysouth **Fortysouth is a leading independent mobile tower operator in New Zealand. With over 1,500 wholly owned towers covering 98% of New Zealand's population, Fortysouth enables mobile network operators, fixed wireless providers, and critical communications operators to deliver communications services that connect New Zealanders to each other and the world.** Following HICL's acquisition in 2022, the 'carve-out' of the passive infrastructure from One NZ has been completed and Fortysouth now operates as a standalone entity. This process was supported by the close working relationship held between Fortysouth and InfraRed's local asset management team. A key priority of Fortysouth's management team has been to secure incremental co-location opportunities under long-term contractual arrangements to enhance the company's revenue visibility. Although the number of new co-locations secured was below expectations, the impact was mitigated by an agreement reached with the New Zealand emergency services network operator that will see public safety equipment installed on some of Fortysouth's towers. The company also progressed contract renewals with its current co-location customers, with the aim of increasing long-term visibility of this incremental revenue stream. Fortysouth's proactive approach to site management also saw over 100 ground lease renewals executed in the year, which is a key risk mitigant for the business. Fortysouth's financial performance was broadly aligned with HICL's valuation assumption, with revenues underpinned by its availability-based, inflation-linked anchor tenancy contract with One NZ. The company also benefitted from maintenance cost savings and higher than expected ground rent revenue over the year, partially offset by one-off transition costs. Tower upgrades budgeted for the financial year were completed ahead of schedule, highlighting the management team's effective collaboration with One NZ and the role Fortysouth expects to play in supporting New Zealand's longer-term 5G rollout ambitions. New tower deployments were broadly as budgeted, keeping the company on track to deliver over 290 new towers by March 2027. Potential measures to enhance the efficiency of capital expenditure associated with these activities are being explored. Shareholder distributions were slightly higher than expected over the year and Fortysouth has no refinancing requirement before 2027. **Sector:** Communications **Location:** New Zealand **% of portfolio:** 6.5% (March 2023: 5.8%) **HICL holding:** 40.0% **Concession life remaining:** Indefinite **Status:** Operational #### Valuation sensitivity Tenancy Ratio -/+0.05x New tower roll-out -/+10% ![img-2.jpeg](img-2.jpeg) Change in NAV in pence per share 29 HICL Annual Report 2024 ## 4. Texas Nevada Transmission Texas Nevada Transmission (“TNT”) ensured that shareholder distributions were Sector: Electricity & Water | comprises two distinct electricity | in line with expectations. CTT is expected | | | --- | --- | --- | | transmission systems: Cross Texas | to issue new debt in 2024 but the impact | Location: USA | | Transmission (“CTT”) and One Nevada | of higher interest rates is expected to be | % of portfolio: 5.6% (March 2023: 5.5%) | | Transmission (“ON Line”). Together, | mitigated through the regulatory mechanism. | | HICL holding: 45.8% the networks consist of over 800km LS Power also finalised its Annual Planning Concession life remaining: Indefinite of high-voltage transmission lines, as Assessment for CTT early in the period. Status: Operational well as a number ofswitching stations This involved an evaluation of future system and substations, which have been fully performance and the results indicated that operational since 2014. the network’s transmission facilities met Valuation sensitivity or exceeded standards set by the North Since completing the acquisition of this asset American Electric Reliability Corporation and Regulated ROE -/+1.0% in April 2023, InfraRed has fostered a strong the Electric Reliability Council of Texas, while Capex -/+10% working relationship with co-shareholder and also meeting CTT’s own planning criteria. operator LS Power, a highly reputable owner, (1.2) 1.1 operator and developer of transmission assets With InfraRed’s support, TNT’s management in North America. Operational performance team is working to drive growth by connecting (0.3) 0.3 | was in line with expectations over the year, | new power generation to the transmission | | | --- | --- | --- | | as evidenced by CTT and ON Line achieving | systems and has identified interconnection | | | average availabilities of 99.99%% and | opportunities that would represent over | Change in NAV in pence per share | | 100% respectively, with facility inspections | 3GW of additional capacity by 2030 (of | | | carried out at both systems identifying no | which c.90% would come from renewable | | | significant issues despite record high summer | energy generation and the remainder from | | | temperatures in Texas. | battery energy storage systems). To deliver | | this additional capacity, higher capital Both CTT and ON Line benefit from expenditure would be required, which could predominantly fixed borrowing costs, reduce TNT’s short-term yield but enhance its however, partial exposure to floating rates long-term earnings profile. These incremental resulted in interest expenses being higher than interconnection opportunities reflect the forecast. This was partially mitigated by an asset’s strategic positioning and the important improved interest rate hedging contract, and role it plays in bringing power from Texas’s active treasury management coupled with the rural, energy-generating regions toitsmain asset’s robust operational performance population centres. 30 FinancialsGovernanceStrategic ReportHICL Annual Report 2024 ## 5. High Speed 1 | High Speed 1 (“HS1”) is the UK’s only | It was announced in the year that a new | Domestic services remain under UK | | --- | --- | --- | | high-speed rail line, linking London | international rail operator, Evolyn, was looking | government control and HS1 continues to | | St Pancras with the Channel Tunnel. | to purchase 12 high-speed trains to launch a | benefit from the contractual underpin from the | | It is a vital component of the UK’s | service between London and Paris in 2025, | Department for Transport, guaranteeing 96% | | green gateway to Continental Europe, | and that the Dutch start-up Huero plans | of pre-Covid domestic track access revenues. | | and also enables fast and frequent | to introduce high-speed services between | Despite a modest increase in service levels | | domestic rail services between Kent | London and Amsterdam within the next | during the year, HICL’s forecast continues to | | andGreater London. | five years. Enabling greater competition on | assume that domestic train path bookings | | | the line has been a key priority for HS1’s | will remain below pre-Covid levels until March | | In the year to 31 March 2024, international | board and management team since the time | 2028. HS1’s fixed-rate borrowings, which are | | train path bookings were 89% of pre-Covid | of acquisition, and InfraRed will continue | termed to match the concession length, also | | levels on average. This was marginally above | to support the company as discussions | insulate HICL’s investment from the impact of | | HICL’s valuation assumption, reflecting | progress. HICL’s valuation of HS1 takes a | higher interest rates on debt costs. | | strong demand from leisure travellers and | probability-weighted view of the likely impact | | | contributing to a 28% increase in international | of any new international operator. | Robert Sinclair, formerly CEO of London City | | train path revenue relative to FY23. | | Airport, joined as CEO of HS1 on 4 March | | Eurostar has also pre-booked train paths | Border congestion in London and Paris | 2024. He replaced Dyan Perry (née Crowther) | | between June and December 2024 equivalent | continues to restrict growth in international | OBE, who retired at the end of 2023. Robert’s | | to 94% of pre-Covid levels. This strong | services, and the EU’s ETIAS scheme, which | vast and relevant experience in the European | | operational performance, alongside higher- | is expected to be implemented in late 2024, | short-haul transport sector makes him ideally | | than-expected retail sales, enabled HS1 to | may result in further increases in passenger | placed to lead the company into the next | | resume shareholder distributions in the year. | processing times. HS1 is working with | phase of its growth journey. | Eurostar to ensure it is equipped to manage HS1 suffered flooding in its Thames tunnel, the changes and has included a budget in its Sector: Transport resulting in the cancellation of most services latest business plan for the capital expenditure on 30 December 2023. A full investigation is Location: UK that may be required to do so. HICL’s valuation ongoing, but HS1 currently expects to be able assumption that bookings return to pre-Covid % of portfolio: 4.6% (March 2023: 4.3%) to pass down the costs of any rectification levels in March 2025 remains unchanged. HICL holding: 21.8% works and the loss of train path revenue to Concession life remaining: 17 years its subcontractors. Status: Operational Valuation sensitivity Investing in International train path growth rate -/+0.5% infrastructure: (0.8) 0.8 ## 300kph Change in NAV in pence per share top speed of Valuation assumption: 2.1% CAGR trains on HS1 ## the UK’s rail link with ## Continental Europe ## Green Enriching lives: ## 100% ## gateway renewable electricity used to power trains 31 HICL Annual Report 2024 ## 6. Southmead Hospital Southmead Hospital is a major 996-bed acute hospital, providing accident and emergency and specialist medical services to a population of almost one million people in Bristol, South Gloucestershire, and North Somerset. Following the previously agreed commercial settlement, InfraRed, alongside the client and other project stakeholders, continued to progress the suite of works relating to the contractual obligations of Carillion Plc, the original construction contractor for the hospital which was liquidated in 2018. This included agreeing the core remedial works programme and the construction of temporary theatres needed to facilitate this. As much of the remaining works require access to critical areas such as operating theatres, they are planned to be phased over several years, and InfraRed’s latest view on the complexity of the works programme is reflected in the discount rate and lifecycle cost forecast used to value the asset. The project’s average availability during the financial year was over 99.9%, allowing shareholder distributions to be received in line with expectations. In the year, InfraRed also oversaw the completion of works to convert administrative areas into clinical accommodation, which provided 30 additional patient beds in time to relieve winter pressures. This was well received by the NHS Trust, and reflected the ability of InfraRed, the portfolio company and its subcontractors to work flexibly and efficiently to expedite complex requests from its public sector clients. The project’s strong operational performance was reflected in Southmead Hospital being shortlisted for Best Operational Project – Healthcare at the HSJ Partnership Awards in the year. Sector: Health Location: UK % of portfolio: 3.9% (March 2023: 3.6%) HICL holding: 62.5% Concession life remaining: 22 years Status: Operational 32 HICL Annual Report 2024 Strategic Report Governance Financials ## 7. Royal School of Military Engineering HICL’s investment covers over 50 buildings and five training facilities used by the Royal School of Military Engineering (“RSME”) Group, which provides a wide range of training to the British Army and defence forces. The project continued to operate well, with an average availability during the financial year of over 99.9%. As a result, the project continued to make regular distributions to HICL in line with forecast. RSME’s robust performance continues to underpin its strong contribution to HICL’s short-term yield profile. During the year, InfraRed engaged external consultants to assist with reviewing options to enhance the asset’s lifecycle cost efficiency and an action plan based on that review is in development. Upgrades were also made to fire-stopping structures in refurbished accommodation blocks to facilitate new kitchen units for military staff and students. The portfolio company has also developed a strong working relationship with its new client contact at RSME following the introduction of the school’s new commandant in the year. Sector: Accommodation Location: UK % of portfolio: 3.5% (March 2023: 3.6%) HICL holding: 100.0% Concession life remaining: 14 years Status: Operational ## 8. Pinderfields and Pontefract Hospitals Pinderfields and Pontefract Hospitals provide In late 2023, volunteers from HICL’s portfolio company acute hospital services to more than half a million and the facilities management provider partnered with the people living in the Wakefield and North Kirklees NHS Trust to plant 1,000 trees at the Pinderfields Hospital districts of West Yorkshire. Pinderfields Hospital grounds in celebration of National Tree Week and to support is a designated major trauma centre and is home the site’s biodiversity (see HICL’s 2024 Sustainability Report). to two specialist regional services in burns and The portfolio company continues to work closely with the spinal injuries for the North of England. NHS Trust to support its wider sustainability plan. InfraRed and other key stakeholders progressed a major programme of capital works scheduled to take place over the next six years, including ventilation Sector: Health upgrades as well as improvements to intensive care Location: UK units and haematology wards. To facilitate these works, % of portfolio: 3.5% (March 2023: 3.4%) the portfolio company’s construction partner has been building a large temporary ward, which holds over 40 HICL holding: 100.0% 2 beds and spans 1,400m of floor space. This facility Concession life remaining: 18 years was completed shortly after the year end and has Status: Operational now been handed over to the NHS Trust, which will gradually begin to use it to accommodate patients whilst various components of the main hospital are being upgraded. InfraRed has continued to work closely with its construction partner to progress the remediation of fire-related defects, and good progress was made during the year. Operationally, the project performed in line with expectations despite heightened pressure on the NHS over the winter months. This enabled distributions for the year to remain broadly aligned with expectations. Responsibility for lifecycle costs rests with the portfolio company, and HICL’s valuation as at 31 March 2024 continues to acknowledge the potential risk of short- term cost increases. A lifecycle adequacy review was carried out by the management service provider in the year which confirmed the appropriateness of HICL’s assumptions. 33 HICL Annual Report 2024 ## 9. Home Office HICL’s investment relates to the state-of-the-art headquarters of the Home Office and the Department for Environment, Food & Rural Affairs in central London. The award-winning building has a number of energy- saving features and has been designed to enhance the experience of its 3,450 users. Operationally, the project continued to perform well, achieving 99.9% availability over the financial year despite day-to-day occupancy of the building remaining well below maximum levels due to changes in working patterns. The portfolio company continues to work closely with its facilities management partner to ensure the building remains available and that the internal environment is adapted to the number of users. With seven years of concession length remaining, expiry planning discussions with relevant stakeholders have commenced, covering topics such as asset condition and forward maintenance requirements. Drawing on its wider handback strategy as set out in the Investment Manager’s Report, InfraRed worked closely with the portfolio company and its contractors to ensure that preparations progressed in a timely fashion, liaising with the client and IPA where appropriate. In its first full year of operating with energy-efficient LED lighting, the project’s electricity consumption and carbon emissions were reduced by 7% and 4% respectively relative to the prior year. InfraRed and the facilities management contractor continue to work closely with the client to deliver against its decarbonisation objectives and prepare the building for longer-term usage beyond the life of the PPP concession. Sector: Accommodation Location: UK % of portfolio: 3.0% (March 2023: 2.9%) HICL holding: 100% Concession life remaining: 7 years Status: Operational 34 HICL Annual Report 2024 FinancialsGovernanceStrategic Report ## 10. Cross London Trains (“XLT”) HICL’s investment covers a fleet of direct contractual arrangement with Govia Sector: Transport electric rolling stock operating on the Thameslink Railway and therefore continue Thameslink passenger rail route, a North Location: UK to sit outside of the portfolio company’s -South London commuter rail corridor % of portfolio: 2.7% (March 2023: 2.8%) delivery responsibilities. During the year, that serves both Luton and Gatwick HICL holding: 6.5% the project reached the key milestone of airports. The project benefits from | | | Assumed asset life remaining | : 32 years | | --- | --- | --- | --- | | a 20-year availability contract which | fleet acceptance on all 115 units, which will | | | | commenced in 2016 and provides a | enable the XLT management team to focus | Status: Operational | | | guaranteed revenue stream fully backed | on delivering operational performance | | | | by the UK Department for Transport. | improvements and plan for mid-life | | | enhancement works. Since acquisition in 2022, the fleet of 115 | Siemens Desiro City Class 700 trains has | After the 20-year availability contract term, | | --- | --- | | performed in line with expectations, with | XLT will retain full ownership of the fleet | | miles per casualty remaining above the | and have the option to re-lease it. HICL’s | | minimum acceptable level stipulated in | valuation assumes a useful life of 40 | | the availability contract and shareholder | years in line with market practice, which | | distributions received in line with HICL’s | is underpinned by the Class 700’s unique | | acquisition assumption. XLT’s long-term | positioning as a large, homogenous fleet of | | maintenance obligations remain with the | bi-mode electric trains, built specifically for | | fleet manufacturer, Siemens, under a | the Thameslink corridor. | 35 HICL Annual Report 2024 ## Our sustainability strategy ## Environment Communities ### Preserve the natural environment and mitigate Positively impact the communities in ### the impacts of climate change by investing which HICL’s assets are located by actively ### in the energy transition, delivering climate addressing the needs of clients, end users ### resilient infrastructure and working to reduce and other key stakeholders. ### carbon emissions from HICL’s portfolio. | FY24 Sustainability Highlights | | | | FY24 Sustainability Highlights | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | – Creation of a detailed net zero | | o b | j e | – InfraRed Portfolio Impact initiatives | | o b | j e | | | | 4 | c t | | | 4 | c t | | | | 2 | i v | | | 2 | i v | | | | Y | e | | | Y | e | | | transition plan for HICL’s portfolio, | F | | | were rolled out across several HICL | F | | | | including specific asset transition | | | | assets to address client challenges | | | | | plans for the next three years | | | | raised in InfraRed’s latest Client | | | ### Insights Survey ### – InfraRed contributed to the IPA Guidance ### Document on Operational Decarbonisation – Seven HICL projects obtained a ‘gold ### at PFIs standard’ award in InfraRed’s annual ### CreatingBetter Futures awards | FY24 key stats | | FY24 key stats | | | --- | --- | --- | --- | | 89,559 | 88% | 94% | 200+ | | | Portfolio companies | Portfolio companies | Community initiatives | | | with Water Reduction | gave voluntary charity | implemented across | ## tCO | | 2 | Initiatives | contributions to | the portfolio during | | --- | --- | --- | --- | --- | | Total Attributable | | | environmental or social | the period | | GHG Emissions across | | | initiatives over the year | | HICL’s portfolio Tablet donations: West Middlesex Hospital Decarbonisation planning at M17/M18 Road 36 HICL Annual Report 2024 Strategic Report Governance Financials ## People Governance ### Promote fair and safe conditions as well Ensure that HICL maintains high standards ### asdiverse and inclusive workplaces within of ethics and integrity through the rigorous ### implementation of policies andthe provision ### HICL’s portfolio companies and across the ### oftransparent and balanced disclosure. ### supply chain. | FY24 Sustainability Highlights | | | | | FY24 Sustainability Highlights | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | – Code of conduct forms were introduced for | | | | | – Disclosed HICL’s first set of | | o b | j e | | | | | | | | | 4 | c t | | | | | | | | | 2 | i v | | | | | | | | | Y | e | | | completion by HICL’s main service providers, | | | | | year-on-year comparisons of | F | | | | allowing the Company to formally monitor | | | | | SFDR Principal Adverse Impact “PAI” | | | | | compliance withkey policies and standards | | | | | Disclosures andGHG emissions | | | | – Developed, implemented and | | | b j e | | – ESG-specific investor perception | | | | | | | | o | c | | | | | | | | 4 | | t i | | | | | | | | 2 | | v | | | | | | | | Y | | e | | | | | | | rolled out DEI guidance for portfolio | F | | | | surveycarried out with c.25% of | | | | | companies that directly employ staff | | | | | HICL’sshareholderregister | | | ### andmonitored performance against ### – Case studies demonstrating InfraRed’s ### this via the annual ESG survey ### investment framework in practice FY24 key stats FY24 key stats | 23% | 0.28 | | | | --- | --- | --- | --- | | | | 97% | 100% | | Gender diversity | RIDDORs | | | | | | Portfolio companies | Portfolio companies | | at portfolio | per project | | | | | | conduct modern | have Anti-bribery and | company boards slavery training Corruption policies Healthcare 2023 Staff Excellence Awards Hornsea II OFTO 37 HICL Annual Report 2024 ## Our impact SDG ### This page demonstrates the reach of HICL’s Ensure healthy lives and ### portfolio. By facilitating access to essential promote well-being for all ### services in a socially responsible manner, at all ages ### our projects contribute to many of the UN ### Sustainable Development Goals (“SDGs”) ### and deliver an inherent social good. However, ### both the Board and the Investment Manager ### acknowledge that making a genuine social Ensure inclusive and equitable ### contribution involves going above and beyond quality education and promote lifelong learning opportunities ### the reliable provision of infrastructure. for all ### The nature of HICL’s investment proposition ### means the Company contributes most to the ### following two SDGs: Ensure availability and sustainable management of water and sanitation for all Ensure access to affordable, reliable, sustainable and modern energy for all ### Aligning HICL’s portfolio and SDGs % byvaluation as at March 2024 Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation Make cities and human settlements inclusive, safe, resilient and sustainable | 3: Good health and well-being 22% | Promote peaceful and inclusive | | --- | --- | | 4: Quality education 10% | societies for sustainable | | 6: Clean water and sanitation 8% | development, provide access to | | 7: Affordable and clean energy 10% | justice for all and build effective, | accountable and inclusive 9: Industry, innovation and infrastructure 18% institutions at all levels 11: Sustainable cities and communities 28% 16: Peace, justice and strong institutions 4% 38 HICL Annual Report 2024 Strategic Report Governance Financials How we support HICL invests in 32 assets that directly promote good health and wellbeing including hospitals, People with access to primary care centres andfire stations. HICL’s healthcare facilities ## 8.7m HICL invests in 42 educational assets including schools, colleges, libraries, training facilities and universities that facilitate the ## 120k provison of essential learning outcomes. Student places across school, college and university facilities Affinity Water is one of the UK’s largest water-only companies, owning and managing People served with clean water projects and networks in an area water by Affinity Water 2 approximately 4,500km across three supply regions in the southeast of England. ## 3.9m HICL invests in six electricity transmission assets with a total capacity of 4,500 MW Homes connected to renewable which support the provision of clean energy. electricity by HICL’s OFTOs ## 3.1m HICL invests in six assets supporting industry innovation and infrastructure Accommodation places across fibre, telecommunications towers ## and accommodation. These assets provide >5m essential services required to support the ## Homes connected to high-speed 35,000 functioning of modern eco. internet by Altitude Infra HICL invests in 17 assets supporting sustainable cities and communities including Unique users of HICL’s roads, railways and rolling stock. These assets roads and railways contribute to affordable and sustainable transport systems. ## >5m HICL invests in eight assets promoting peace, justice and strong institutions including prisons, police stations, judicial courts, and custodial centres. ## 2.3m People served by HICL’s courts, fire stations and police stations 39 HICL Annual Report 2024 ## Financial Review HICL prepares its financial statements in accordance with UK- The table below shows the breakdown of Other income: adopted International Financial Reporting Standards (“IFRS”). | Consistent with the 2023 Annual Report, the Company’s financial | | | For the | | For the | | --- | --- | --- | --- | --- | --- | | performance is reported under the non-UK-adopted international | Investment Basis | year ended | | year ended | | | | £m | 31 March 2024 | | 31 March 2023 | | accounting standards Investment Basis which consolidates the results of the Company, together with HICL Infrastructure 2 S.a.r.l. Project directors’ fees 6.5 5.5 (“Luxco”) and Infrastructure Investments Limited Partnership (“IILP”), Interest on bank deposits 0.6 0.1 referred to as the “Corporate Group” throughout the Financial Early repayment fees 3.7 3.3 Review. As noted in the Chair’s statement, Group is defined as the HICL Infrastructure PLC group of companies, which includes all of Other income 10.8 8.9 its subsidiaries. Total return, which is defined as total comprehensive income for Other income principally represents project directors’ fees charged the year, net assets or NAV, and EPS, are the same under IFRS to project companies, which are recognised in other income when and the Investment Basis. The Board and the Investment Manager invoiced, and loan early repayment fees. manage the Company on an Investment Basis, which is an APM The Group’s hedging policy targets NAV per share volatility of no and is reconciled on page 43. Reconciliation of the Investment Basis more than 2% for a 10% movement in foreign exchange rates. financial information to the IFRS statements is provided from page 44. During the year, the net impact of foreign exchange movements was a £9.8m loss (2023: £26.3m gain), which represents 0.3% of the closing NAV (2023: 0.8%). This follows a 2.3% movement in weighted average | Summary income statement | | | | | | | FX rates in the year (2023: 7.9%). | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | For the | | | For the | The below table shows the impact of hedging on non-sterling assets: | | | | | | | | | | Investment Basis | | year ended | | | year ended | | | | | | | | | | | | £m | 31 March 2024 | | | 31 March 2023 | | | | | | | | | FX hedge | | 1% | | | | | | | | | Foreign exchange | Rate as at | | | | | as % of | sensitivity to | | | Dividend income 207.2 191.1 | | | | | | | hedging | 31 March | | Non-UK | | | non-UK | movement | | | | | | | | | | £m | | 2024 | assets | 1 | FX hedge | assets % | in FX rates | 2 | Interest income 134.6 122.1 Euro 1.17 644 439 68% 2.0 Fair value movement (237.4) (94.2) USA 1.26 187 107 57% 0.8 Foreign exchange movement on investments (37.3) 39.4 Canada 1.71 48 18 37% 0.3 Gain/(loss) on foreign exchange New Zealand 2.11 214 105 49% 1.1 derivatives 27.5 (13.1) Total 1,093 669 61% 4.2 Other income 10.8 8.9 Total Investment Income 105.4 254.2 1 US hedging is for TNT only. The proceeds from Northwest Parkway are fully hedged 2 Sensitivity impact is net of derivatives Expenses and finance costs (74.8) (55.7) Profit before tax 30.6 198.5 ### Expenses and finance costs Tax (0.1) (0.1) For the For the Total Return 30.5 198.4 Investment Basis year ended year ended £m 31 March 2024 31 March 2023 Earnings per share 1.5 9.9 Finance costs 36.2 16.1 Total investment income decreased by 59% to £105.4m Investment Manager fees 33.9 32.7 (2023: £254.2m). The decrease in total investment income is Directors’ fees and expenses 0.5 0.5 principally due to a reduction in the fair value of investments by Acquisition bid costs (0.2) 1.9 £237.4m (2023: loss of £94.2m) which was driven by the 0.8% Professional fees 4.4 4.5 increase (2023: 0.6% increase) in the weighted average discount rate to 8.0% (2023: 7.2%). This was partially offset by the positive Expenses and finance costs 74.8 55.7 impact of actual and forecast inflation on the investment valuations. Dividend income increased to £207.2m (2023: £191.1m) primarily due Finance costs increased to £36.2m (2023: £16.1m), principally due to to the receipt of £115.9m in dividends following the multiple disposals higher absolute borrowing levels and interest rates. The average total in the year (2023: £85.0m dividend from the sale of Queen Alexandra borrowing in the year was £478.4m (2023: £111.3m), while the average Hospital (“QAH”)). Further detail on the valuation movements is given all-in interest rate was 6.4% (2023: 2.8%). in the Valuation of the Portfolio section starting on page 46. The Investment Manager fees were £33.9m (2023: £32.7m). The increase was due to the higher average Directors’ Valuation of £3,793.7m during the period (2023: £3,621.6), calculated in line with the Investment Manager fee agreement as detailed on page 76. 40 HICL Annual Report 2024 Strategic Report Governance Financials Investments at fair value decreased by 7% to £3,268.9m ### Tax (2023: £3,498.6m), mainly due to the net acquisition and disposal Tax charged to the Income Statement under the Investment Basis activity in the period. During the year, the Group completed £274.2m relates to HICL’s immediate subsidiary, Luxco. As HICL Infrastructure and announced a further £234.5m of disposals, and increased PLC has Investment Trust Company (“ITC”) status, it is exempt the weighted average discount rate by 0.8% to 8.0% (31 March from tax on certain items on the basis that tax is already paid at the 2023: 7.2%). These two items were offset by acquisitions of £226.9m operating company level, thus protecting shareholders from suffering and updates to forecast interest rate and inflation assumptions. double taxation. The Directors monitor compliance with the ITC rules Further detail on the movement in Investments at fair value, which are through reporting prepared by the Investment Manager and are of the net of commitments and therefore not in the Directors’ Valuation, is opinion that the Company has complied with its obligations as an ITC given on pages 46-52, Valuation of the Portfolio. for the year. Net other assets increased to £248.0m (31 March 2023: £1.0m liabilities), due to the expected proceeds of £233.2m from the ### Ongoing Charges Ratio (“OCR”) disposals of Northwest Parkway and Hornsea II OFTO, in addition to the fair value of FX forwards. | | | | For the | | | For the | | | --- | --- | --- | --- | --- | --- | --- | --- | | Investment Basis | | year ended | | | year ended | | An analysis of the movements in net debt is shown in the Summary | | £m | 31 March 2024 | | | 31 March 2023 | | | cash flow on the following page. The increase relative to 31 March | 2023 is principally driven by the issuance in May 2023 of £150m of Investment Manager 33.9 32.7 Private Placement loan notes in the Company’s Corporate Subsidiary, Auditor fee for the Corporate Group 0.4 0.4 IILP. The notes were issued in two tranches: £100m expiring in 2033 Non-audit fee paid to the Auditor: and £50m expiring in 2035. The weighted average interest rate is Interim review 0.1 0.1 5.80% (5.75% after hedging). In June 2023, IILP purchased a £200m Directors’ fees and expenses 0.5 0.5 SONIA interest rate cap at 6.5% to mitigate against the risk of rising interest rates. Other ongoing expenses 2.4 2.0 Total expenses 37.3 35.7 NAV per share was 158.2p (2023: 164.9p) before the 2.07p fourth quarterly distribution. The 6.7p decrease in NAV per share was Average NAV 3,267.6 3,282.3 primarily due to earnings per share of 1.5p, net of 8.3p distributions, Ongoing charges 1.14% 1.09% for the year ending 31 March 2024. NAV per share and earnings per share are the same under the Investment Basis and the IFRS Basis. The OCR is calculated in line with the Association of Investment Companies’ (“AIC”) guidance. It is defined as the annualised ongoing charges (which excludes acquisition costs and other non-recurring ### Key accounting estimates and judgements items) divided by the average published undiluted Net Asset Value of In preparing these accounts, the key accounting estimate is the £3,267.6m for the year (2023: £3,282.3m). carrying value of the Group’s investments, which are stated at fair The OCR for the period is 1.14% (2023: 1.09%). The increase in the value. Given the importance of the valuation of investments, the OCR is principally due to the higher management fee, which is in Board’s Audit Committee has oversight of the Investment Manager’s turn driven by the higher Gross Asset Value in the year. As the Group valuation process and challenges the Valuation Policy, process and has been selling assets to repay the RCF, the management fee is application to individual investments on a semi-annual basis. A third expected to reduce in FY2025 with a corresponding reduction in party is also appointed to carry out an independent review of the the OCR. Investment Manager’s valuation. Despite the above, asset valuations for unquoted investments are inherently subjective, as they are based on assumptions which may not prove to be accurate. ### Summary balance sheet and NAV The Group’s investments are predominantly unquoted and are therefore valued using a discounted cash flow analysis of the forecast Investment Basis investment cash flows from each project. The exception to this is the £m 31 March 2024 31 March 2023 listed senior debt in the A13 Road project. Investments at fair value 3,268.9 3,498.6 A key judgement is the assessment of whether the Company meets Net other assets / (liabilities) 248.0 (1.0) the definition of an investment entity. IFRS 10 requires the Group’s Net debt (303.9) (147.6) intermediate holding companies to be presented at fair value, which reduces the transparency of the underlying investment performance. Net assets 3,213.0 3,350.0 As a result, the Group presents limited financial information on the NAV per share (before dividend) 158.2p 164.9p Investment Basis to ensure that the commentary in the Strategic Report remains fair, balanced and understandable. The reconciliation NAV per share (post-dividend) 156.1p 162.8p of the Investment Basis to IFRS is shown on pages 44 and 45. 41 HICL Annual Report 2024 # Financial Review continued # Summary cash flow | Investment Basis £m | 31 March 2024 | 31 March 2023 | | --- | --- | --- | | Cash from investments | **244.4** | 222.7 | | Operating costs | **(39.8)** | (43.8) | | Finance costs | **(29.0)** | (7.9) | | **Net cash inflow before capital movements** | **175.6** | **171.0** | | Cost of new investments | **(435.1)** | (339.1) | | Investment disposal proceeds | **269.4** | 96.8 | | Share capital raised, net of costs | – | 158.0 | | Net cash flow from derivatives | **6.8** | (15.9) | | Debt arrangement fees paid | **(2.5)** | (6.7) | | Short-term intercompany borrowings | **(0.3)** | – | | Dividends paid | **(167.6)** | **(165.5)** | | **Movement in the year** | **(153.7)** | **(101.4)** | | Net (debt) at start of year | **(147.6)** | (46.2) | | Foreign exchange on cash | **(2.6)** | – | | **Net debt at end of year** | **(303.9)** | **(147.6)** | The Corporate Group ended the year with net debt of £303.9m (31 March 2023: £147.6m net debt). This is made up of drawings on the RCF of £187.2m (31 March 2023: £219.4m) and the Private Placement of £150.0m (31 March 2023: £nil) net of cash of £33.3m (31 March 2023: £71.8m). The debt arrangement fees decreased to £2.5m (2023: £6.7m) as prior year fees reflected the costs of renegotiating the Corporate Group's £650m RCF. Dividends paid in the year were £167.6m (2023: £165.5m). Dividend cash cover excluding disposals increased marginally to 1.05x (2023: 1.03x). Including profit versus original cost on disposals of £53.4m, the dividend cash cover is 1.37x (2023: including profit versus original cost on disposals of £45.5m, cash cover was 1.31x). # Debt and gearing levels The Corporate Group's debt and borrowing facilities are held by IILP. As at 31 March 2024, IILP had drawn £187.2m on its RCF (31 March 2023: £219.4m) and £6.0m by way of letters of credit (31 March 2023: £15.7m). In addition, IILP had drawn £109.6m on its LCF facility of (31 March 2023: £67.3m), with the increase due to the acquisition of the Homsea II OFTO. In May 2023 IILP issued loan notes of £150.0m via a Private Placement. Overall, the Corporate Group had £490.1m of liquidity as at 31 March 2024, comprising £456.8m headroom on its RCF and £33.3m of cash. After the year end, the Corporate Group reduced the capacity in the RCF from £650m to £400m, reflecting a reduced forecast utilisation profile until expiry on 30 June 2026. HICL makes prudent use of its available leverage. Under the Articles, the Corporate Group's outstanding borrowings, including any financial guarantees to support outstanding subscription obligations but excluding internal company borrowings of the Corporate Group's underlying investments, are limited to 50% of the Adjusted Gross Asset Value, being the Directors' Valuation plus cash balances of the Company and Luxco and IILP (together the "Corporate Subsidiaries"). The ratio of debt to Adjusted Gross Asset Value at the end of the year was as follows: | | 31 March 2024 £m | 31 March 2023 £m | | --- | --- | --- | | **Outstanding drawings** | | | | Bank borrowings | **187.2** | 219.4 | | Letter of credit facility | **99.7** | 74.8 | | Private Placement | **150.0** | – | | | **436.9** | **294.2** | | **Adjusted Gross Asset Value** | | | | Directors' Valuation | **3,333.4** | 3,772.8 | | Announced disposals | **233.2** | – | | Cash and cash equivalents | **33.3** | 71.8 | | | **3,599.9** | **3,844.6** | | Borrowing ratio | **12.1%** | 7.7% | # Capital management From time to time the Company issues its own shares to the market; the timing of these issuances depends on market prices. Should the Ordinary Shares continue to trade at a discount to the Net Asset Value and there are sufficient funds to transact, at the sole discretion of the Directors, the Company may: - make market purchases of up to 14.99% per annum of its issued Ordinary Shares; and As noted above, in May 2023, IILP issued £150.0m of Private Placement loan notes, which diversified the Company's long-term capital. During the period the Group has also used disposal proceeds to repay the RCF which is expected to be fully paid off once expected proceeds are received. The Group also announced a share buyback programme of up to £50m, funded using disposal proceeds. The borrowing ratio is expected to decline to 7.0% once the proceeds are received from Northwest Parkway and Homsea II and the RCF is repaid. 1 Adjusted gearing ratio includes cancellation of 50% of the current Homsea II LC 42 HICL Annual Report 2024 Strategic Report Governance Financials ### Alternative Performance Measures (“APMs”) The Directors assess the Group’s performance using a variety of APMs that are not specifically defined under IFRS, which provide additional information to investors as to how the Company is managed and assessed. The APMs may not be directly comparable with those used by other companies and therefore the Directors wish to draw users’ attention to GAAP measures in the financial statements from page 112 onwards. The Directors’ Investment Basis is itself an APM. The explanation and rationale for the Investment Basis is shown on page 40 and itsreconciliation to IFRS is shown from page 44. The table below defines the Group’s APMs. 2024 Investment | APM Purpose | | Basis Calculation Reconciliation to IFRS | | | | --- | --- | --- | --- | --- | | Annualised | A measure of underlying | 9.0% | £285.5m rebased return divided | The calculation uses figures which are | | | portfolio performance within a | | by £3,180.5m rebased valuation as | reconciled to the Investment Basis on page | return from given year shown on the Valuation Report on 44 which, in turn, is reconciled to IFRS in the the portfolio page 46 compounded for a year Reconciliation of Investment Basis to IFRS section below The calculation is not an APM under IFRS Directors’ A measure of the size of the £3,333.4m £3,268.9m investments at fair The calculation uses portfolio assets shown investment portfolio including value plus £64.5m contracted in the reconciliation in the ‘Reconciliation of Valuation the value of further contracted commitments Investment Basis to IFRS’ section below future investments committed by HICL The IFRS valuation is £3,212.5m as at 31 March 2024 | Distributable | A measure of cash received | £229.0m | Calculated as net cash inflow before | The calculation uses distributions received | | --- | --- | --- | --- | --- | | | from underlying projects in the | | capital movements of £175.6m | from investments plus profit ondisposal | | cash | year | | shown in the ‘Investment Basis | | | | | | Summary Cash Flow’ plus £53.4m | This is not applicable under IFRS as dividend | | | | | profit versus original cost on disposal | income is that paid by Luxco to service the | | | | | of Northwest Parkway, Bradford | dividend by HICL Infrastructure PLC | Schools Phase 1 & Phase 2, Queens (Romford) Hospital, Oxford John Radcliffe Hospital, Priority Schools NE Batch, South Ayrshire Schools and Sheffield Student Accommodation | | A measure of cash received | | 1 | £175.6m distributable cash received | The calculation uses the dividend paid in the | | --- | --- | --- | --- | --- | --- | | Dividend | | 1.37x | | | | | | from underlying projects in the | | | in addition to £53.4m profit on | ‘Statement of Changes in Equity’ divided by | cash cover | period enabling distributions to | disposals of Northwest Parkway, | distributable cash | | --- | --- | --- | | shareholders | Bradford Schools Phase 1 & Phase | | | | 2, Queens (Romford) Hospital, | The calculation uses cashflows in the | | | Oxford John Radcliffe Hospital, | corporate subsidiaries and therefore does | | | Priority Schools NE Batch, South | nothave a like-for-like IFRS equivalent | Ayrshire Schools and Sheffield Student Accommodation divided by £167.6m dividend for the year | Cash | Identifying new opportunities | £435.1m | £435.1m Investment Basis cash paid | The equivalent balance under IFRS is | | --- | --- | --- | --- | --- | | | in which to invest capital is a | | to acquire investments in the year | shownin the ‘Reconciliation of Statement | | investments | driver of HICL’s ability to deliver | | | ofCash Flows’ | attractive returns There were no cash investments and therefore there is no like-for-like IFRS equivalent Cash Cash proceeds from our £269.4m £269.4m cash received into IILP, The equivalent balance under IFRS is investments support our directly or indirectly, from the shown in the ‘Reconciliation of Statement proceeds returns to shareholders, as well disposal of investments in the year ofCashFlows’ as our ability to invest in new opportunities There were no cash proceeds received by the Company Net cash/ A measure of the available liquid £(303.9)m £33.3m cash and cash equivalents, The equivalent balance under IFRS and cash to invest in the business less £337.2m of loans and the reconciliation to the Investment Basis is (debt) offset by the Corporate Group’s borrowings shown in the Reconciliation of Statement of borrowings. This is an indicator Financial Position of the financial risk in the Group’s Statement of Financial Net cash is £1.1m under IFRS as at 31 March Position 2024, being the working capital held by theCompany 1 The calculation includes total profit versus original cost on disposal of £53.4m. Excluding this, dividend cash cover is 1.05x 43 HICL Annual Report 2024 Financial Review continued 2024 Investment | APM Purpose | | Basis Calculation Reconciliation to IFRS | | | | --- | --- | --- | --- | --- | | Borrowing | A measure of debt as a | 12.1% | £436.9m debt (including letters of | The equivalent balance under IFRS and the | | | percentage of gross assets of | | credit) divided by adjusted Gross | reconciliation to the Investment Basis is shown | ratio | the Corporate Group | Asset Value of £3,599.9m. Adjusted | in the Reconciliation of Statement of Financial | | --- | --- | --- | | | Gross Asset Value is the Directors’ | Position. Noting that the calculation includes | | | Valuation plus announced disposals | letters of credit (£99.7m) and commitments | | | plus cash and cash equivalents | (£64.5m) which are not included in the IFRS | Statement of Financial Position The Company holds no debt, therefore the borrowing ratio is nil under IFRS ### Reconciliation of Investment Basis to IFRS Reconciliation of Statement of Comprehensive Income For the year ended 31 March 2024 For the year ended 31 March 2023 Investment Consolidation IFRS Investment Consolidation IFRS £m Basis adjustments Basis Basis adjustments Basis Dividends received 207.2 (9.2) 198.0 191.1 (39.6) 151.5 Interest received 134.6 (134.6) – 122.1 (104.6) 17.5 Net (loss)/gain on revaluation of investments (237.4) 74.6 (162.8) (94.2) 127.5 33.3 Foreign exchange movement on investments (37.3) 37.3 – 39.4 (39.4) – Profit/(Loss) on foreign exchange derivatives 27.5 (27.5) – (13.1) 13.1 – Other income 10.8 (10.8) – 8.9 (8.9) – 1 Total investment income 105.4 (70.2) 35.2 254.2 (51.9) 202.3 Management fee (33.9) 33.9 – (32.7) 32.7 – Finance costs (36.2) 36.2 – (16.1) 16.1 – 2 Other fund expenses (4.7) – (4.7) (6.9) 3.0 (3.9) Total expenses (74.8) 70.1 (4.7) (55.7) 51.8 (3.9) Profit before tax 30.6 (0.1) 30.5 198.5 (0.1) 198.4 Tax (0.1) 0.1 – (0.1) 0.1 – Earnings 30.5 – 30.5 198.4 – 198.4 Earnings per share 1.5p – 1.5p 9.9p – 9.9p Notes: 1 Total income shown in the IFRS accounts relates only to HICL Infrastructure PLC and not the portfolio companies that are held through investment entity subsidiaries. The consolidation adjustments relate to the results recorded in the Corporate Subsidiaries 2 Other fund expenses comprise audit, valuation and other professional fees 44 HICL Annual Report 2024 Strategic Report Governance Financials ## Reconciliation of Statement of Financial Position | £m | For the year ended 31 March 2024 | | | For the year ended 31 March 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Investment Basis | Consolidation adjustments | IFRS Basis | Investment Basis | Consolidation adjustments | IFRS Basis | | **Investments at fair value** | **3,268.9** | **(56.4)** | **3,212.5** | **3,498.6** | **(148.9)** | **3,349.7** | | Trade and other receivables | 237.7 | (237.4) | 0.3 | 18.7 | (18.3) | 0.4 | | Other financial assets | 25.9 | (25.9) | – | 8.5 | (8.5) | – | | Trade and other payables | (15.0) | 14.1 | (0.9) | (22.3) | 21.2 | (1.1) | | Other current financial liabilities | (0.6) | 0.6 | – | (5.9) | 5.9 | – | | Cash and cash equivalents | 33.3 | (32.2) | 1.1 | 71.8 | (70.8) | 1.0 | | Loans and borrowings | (337.2) | 337.2 | – | (219.4) | 219.4 | – | | **Net assets attributable to Ordinary Shares** | **3,213.0** | **–** | **3,213.0** | **3,350.0** | **–** | **3,350.0** | | NAV per share (before dividend) | 158.2p | – | 158.2p | 164.9p | – | 164.9p | | NAV per share (post-dividend) | 156.1p | – | 156.1p | 162.8p | – | 162.8p | Note: The Investment Basis financial information is prepared for performance measurement and therefore reserves are not analysed separately ## Reconciliation of Statement of Cash Flows | £m | For the year ended 31 March 2024 | | | For the year ended 31 March 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Investment Basis | Consolidation adjustments | IFRS Basis | Investment Basis | Consolidation adjustments | IFRS Basis | | Investment income received | 244.4 | (72.0) | 172.4 | 222.7 | (53.7) | 169.0 | | Operating expenses paid | (39.8) | 35.1 | (4.7) | (43.8) | 40.0 | (3.8) | | Finance costs paid | (29.0) | 29.0 | – | (7.9) | 7.9 | – | | **Net cash inflow before capital movements** | **175.6** | **(7.9)** | **167.7** | **171.0** | **(5.8)** | **165.2** | | Purchase of investments | (435.1) | 435.1 | – | (339.1) | 181.2 | (157.9) | | Proceeds from investments | 269.4 | (269.4) | – | 96.8 | (96.8) | – | | Share capital raised net of costs | – | – | – | 158.0 | – | 158.0 | | Net cash flow from derivatives | 6.8 | (6.8) | – | (15.9) | 15.9 | – | | Debt arrangement fees paid | (2.5) | 2.5 | – | (6.7) | 6.7 | – | | Intercompany borrowings | (0.3) | 0.3 | – | – | – | – | | Dividends paid | (167.6) | – | (167.6) | (165.5) | – | (165.5) | | Movement in the year | (153.7) | 153.8 | 0.1 | (101.4) | 101.2 | (0.2) | | Net cash/(debt) at start of year | (147.6) | 148.6 | 1.0 | (46.2) | 47.4 | 1.2 | | Foreign exchange on cash | (2.6) | 2.6 | – | – | – | – | | **Net cash/(debt) at end of year** | **(303.9)** | **305.0** | **1.1** | **(147.6)** | **148.6** | **1.0** | Note: There is a difference between the change in cash and cash equivalents of the Investment Basis and the IFRS financial statements due to the cash balances held in the Corporate Subsidiaries Cash held within the Corporate Subsidiaries is not shown in the IFRS statements but is shown in the Investment Basis financial information 45 HICL Annual Report 2024 ## Valuation of the Portfolio Valuation methodology and approach overview The fair value for each investment is then derived from the application of an appropriate market discount rate and year-end currency InfraRed is responsible for preparing the valuation of HICL’s exchange rate. The discount rate takes into account risks associated investment portfolio for the Directors’ approval. This investment with the financing of the investment (e.g. liquidity, currency risks, valuation is called the Directors’ Valuation. It is an Alternative 4 market appetite) and its earnings quality (e.g. predictability and Performance Measure (“APM”) and comprises the investment covenant of the revenues and service delivery challenges). These are portfolio and future commitments adjusted for disposals committed generally differentiated by the phase of the investment’s life (e.g. to by the Group at the reporting period end. in construction or in operation). The Directors’ Valuation is the Group’s preferred valuation measure More information on the Valuation Policy can be found on page 160. because it better represents the Group’s total value at risk at the 5 balance sheet date. The valuation methodology and policy are The Directors’ Valuation is the key component in determining HICL’s unchanged from previous reporting periods. Net Asset Value (“NAV”) and so the Audit Committee receives and challenges an independent report and opinion on the Investment The valuation is carried out on a six-monthly basis as at 31 March and Manager’s valuation from a third-party valuation expert. 30 September each year. The Group’s investments are predominantly unquoted and are mainly valued using a discounted cash flow 6 analysis of forecast investment cash flows . Directors’ Valuation at 31 March 2024 There is a secondary market for infrastructure investments and, The Directors’ Valuation of the portfolio at 31 March 2024 was where appropriate and publicly available, external data points are £3,333.4m, a decrease of 11.6% (31 March 2023: £3,772.8m) considered. The Directors’ Valuation is a sum-of-the-parts valuation, versus prior year. The FY2024 Directors’ Valuation includes £64.5m hence no further adjustment is made to reflect the size, scarcity, and of outstanding equity commitments (31 March 2023: £274.5m) in diversification of the overall portfolio. respect of two projects: the Blankenburg Tunnel (Netherlands) and the B247 Road (Germany). The key external (macroeconomic and fiscal) factors affecting the forecast of each portfolio company’s cash flows in local currency A breakdown of the movement in the Directors’ Valuation is shown in are inflation rates, interest rates, GDP growth rates and applicable the chart below. tax rates. The Investment Manager makes forecast assumptions for each of these external metrics using market data and economic forecasts. The Investment Manager also exercises its judgement to assess the expected future cash flows from each investment based on the detailed financial models produced by each portfolio company. The data in these models are adjusted to reflect specific operating assumptions and to replace metrics used by portfolio companies with those used by the Group where they are different. Movement in the Directors’ Valuation in the year ended 31 March 2024: Future commitments 226.9 (508.7) 3,772.8 285.5 (280.3) (244.3) 120.5 (37.3) (1.7) 3,333.4 3,246.7 3,498.6 3,268.9 3,180.5 Income Statement Revenue 9.0% (8.8)% 3.8% (1.2)% | 31 March | Acquisitions Divestments Cash | | Return | Rebased | 1 | Change in | Change in | Change in | | Change in | 31 March | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2023 | | distributions | | Valuation | | discount rate | economic | FX on net | | FX on equity | 2024 | | | Valuation | | | | | | | assumptions | valuation | 2 | commitments | Valuation | 3 | 1 ‘Return’ comprises the unwinding of the discount rate and project outperformance, including actual inflation 2 FX movement net of hedging is a loss of £9.7m 3 £3,333.4m reconciles, on an Investment Basis, to £3,268.9m investments at fair value (IFRS) together with £64.5m of future commitments 4 Further detail on the Group’s APMs, including a reconciliation to the IFRS financial statements, is shown on page 43 5 Refer to Appendix 2 on page 160 for further details on the valuation policy 6 The exception to this is the listed senior debt in the A13 Road project which is valued using the quoted market price of the bonds 46 HICL Annual Report 2024 Strategic Report Governance Financials ## Acquisitions The acquisitions in the year include the Hornsea II OFTO, Altitude Infra (France), TNT (US) and an additional 3.1% interest in A63 Motorway (France). As at 31 March 2024, the commitments have reduced to £64.5m (31 March 2023: £274.2m) due to the completion of the TNT acquisition. ## Divestments During the year, the Group entered into agreements to divest its total equity interest in eight assets (Northwest Parkway$^{1}$, Bradford Schools Phase 1 & Phase 2, Queens (Romford) Hospital, Oxford John Radcliffe Hospital, Priority Schools NE Batch, South Ayrshire Schools and Sheffield Student Accommodation). The Group also agreed to dispose of 50% of its investment in Hornsea II OFTO, retaining a 37.5% stake in the project. The total consideration of all these divestments is £508.7m. ## Rebased net valuation The three valuations shown in the chart have been split between investments at fair value$^{2}$ and future commitments. The percentage movements have been calculated on the rebased valuation of £3,180.5m to reflect the returns generated on the capital employed in the year. The rebased portfolio delivered Income Statement revenue of 2.8% in the year (2023: 8.0%). The reduction in income return when compared to 2023 was principally due to the increase in discount rates in 2024 for all jurisdictions, recognised in September 2023. ## Return from the portfolio The return from the underlying portfolio of £285.5m (2023: £331.2m) represents a 9.0% (2023: 10.2%) increase in the rebased valuation, versus the discount rate, or expected annualised return, of 7.2% at the start of the year. The outperformance was principally generated from sale premiums on the assets sold, together with a revaluation uplift on the incremental investment in the A63 Motorway (France). This was partially offset by lower than expected actual inflation and, in the UK PPP sector, increased lifecycle costs and costs of pursuing third parties for defect rectifications. ## Inflation The portfolio is highly correlated to inflation, and since 2021 it has benefitted from heightened levels of inflation across all jurisdictions. Over the past six months, inflation in all regions has declined faster than the Group's forecast assumptions had expected, particularly in the UK, where RPI reduced to 4.0% for the year ended 31 March 2024 (2023: 13.5%). Other jurisdictions also saw a lower reduction in inflation. In France, CPI was 2.3% (2023: 5.7%) and, in the USA, 3.0% (2023: 5.0%). The impact of the decrease in actual inflation versus forecast assumptions resulted in a reduction in NAV of £24.3m (2023: £136.4m upside). In the short to medium term, inflation forecasts are expected to decline further and this has been reflected in the Company's short-term UK inflation assumptions for 2024 and 2025. No changes to assumptions have been made in other jurisdictions. ## Demand assets Following the sale of Northwest Parkway, HICL has five demand-based assets in the portfolio, representing 14% of the portfolio by value at 31 March 2024 (31 March 2023: 19%). Four of these demand-based assets, namely HS1, the A63 Motorway, RMG Roads and M1-A1, are sensitive to GDP. Over the past year, demand on the A63 was in line with the forecast. HS1 saw an increase in train paths due to greater demand on international routes. In addition, HS1 continues to benefit from the contractual underpin in relation to domestic track access revenues. For further information on these assets, refer to the Top 10 assets – operational highlights on pages 26 to 35. 1 A 10% equity stake in Northwest Parkway sold in April 2023 with the remaining 23.3% sold as part of the 100% disposal, announced in February 2024 2 On an IFRS Basis 47 HICL Annual Report 2024 ## Valuation of the Portfolio continued ### Discount rates The discount rate is determined based on the Investment Manager's knowledge of the market, which includes data points across the Company's target markets and in other sectors and geographies it operates in, government bond yields and the implied equity risk premium. Although there is increasing market confidence that interest rates may have peaked across HICL's jurisdictions, the Investment Manager believes that the increase in discount rates, recognised in the September 2023 valuation, remains appropriate for the 31 March 2024 valuation and continues to be in line with external transaction data points. This assessment is underpinned by the material level of transaction activity the Group has completed over the last 12 months. Throughout FY2024, the Group has sold and purchased assets worth over £700m. In particular, the Group has carried out ten disposals across sectors and geographies to multiple buyers, generating proceeds of over £500m. The assets sold, which total 13.5% of the 31 March 2023 portfolio value, were all realised at or above carrying value. This level of investment activity shows that the market for high-quality core infrastructure assets remains in good health and that a range of investor types have capital to invest. Going forward, demand for high-quality assets is expected to remain strong and should present both acquisition and divestment opportunities for HICL. In addition to the transaction data, the Investment Manager continues to apply a greater weight to the level of equity risk premium implied by current government bond yields when reviewing and setting the discount rate. In the six months to 30 September 2023, the average 20–30-year UK government bond yields increased by 120 basis points to 4.9% at 30 September 2023 before a small reduction in the second half of the year to 4.4% at 31 March 2024. Overall, the UK discount rate has increased by 100 basis points since 31 March 2023. This results in a UK weighted average discount rate of 8.3% at 31 March 2024 (31 March 2023: 7.3%) and a risk premium of 3.9% (31 March 2023: 3.4%). The Investment Manager believes that the risk premium is appropriate for HICL's core infrastructure UK assets. In New Zealand, North America and the Eurozone, there have been increases in long-term government bond yields but to a lesser degree than those observed in the UK. For the portfolio as a whole, the overall weighted average discount rate has increased by 80 basis points to 8.0% (2023: 7.2%) and the risk premium has increased to 3.9% (2023: 3.5%). There were two projects in construction at 31 March 2024, both of which are located in the Eurozone (31 March 2023: two). An investment in a project under construction can offer a higher overall return (i.e. require a higher discount rate) compared to buying an investment in an operational project, but it does not usually yield during the construction period and there is the risk that delays or cost increases in construction affect the investment value. ### Changes in economic assumptions Changes in economic assumptions resulted in a positive impact of £120.5m (2023: £72.0m). The increase was principally due to changes in forecast inflation assumptions in all jurisdictions as well as various changes in interest rate assumptions outlined in the assumptions on page 49. ### Forex GBP strengthened against the Euro and the USD in the period resulting in a negative impact of £(37.3)m pre-hedging. Net of hedging, the impact was £(9.7)m. 1 Nine assets disposed, while ten instances of disposals occurred where a 10% equity stake in Northwest Parkway sold in May 2023 with the remaining 23.3% sold as part of the 100% disposal 48 HICL Annual Report 2024 Strategic Report Governance Financials Valuation assumptions Apart from the discount rates, the other key economic assumptions used in determining the Directors’ Valuation of the portfolio are as follows: 31 March 2024 31 March 2023 1 | Inflation rates | UK (RPI and RPIx) | 3.00% to March 2025 | 5.0% year ending March 2024, | | --- | --- | --- | --- | | | | 2.75% to March 2026 | 2.75% p.a. to March 2030, | | | | 3.25% to March 2030 | 2.0% thereafter | 2.50% thereafter 2 UK (CPI/CPIH ) 2.25% to March 2025 4.25% year ending March 2024, 2.00% to March 2026 2.0% thereafter 2.50% thereafter | Eurozone (CPI) 2.25% to March 2025 | | 5.0% year ending March 2024, | | --- | --- | --- | | | 2.00% thereafter | 2.0% p.a. thereafter | | Canada (CPI) 2.25% to March 2025 | | 3.0% year ending March 2024, | | | 2.00% thereafter | 2.0% p.a. thereafter | | USA (CPI) 2.00% to March 2025 | | 3.0% year ending March 2024, | | | 2.00% thereafter | 2.0% p.a. thereafter | | New Zealand (CPI) 2.75% to March 2025 | | 5.0% to 31 March 2024, | | | 2.25% thereafter | 2.50% to 31 March 2025, | 2.25% thereafter Interest rates UK 4.50% p.a. to March 2025, 3.25% p.a. thereafter 3.25% p.a. to March 2025, 2.50% p.a. thereafter Eurozone 3.00% p.a. to March 2025, 2.00% p.a. thereafter 2.25% p.a. to March 2025, 2.00% p.a. thereafter Canada 3.75% p.a. to March 2025, 3.00% p.a. thereafter 3.50% p.a. to March 2025, 3.00% p.a. thereafter USA 4.25% p.a. to March 2025, 3.25% p.a. thereafter 4.00% p.a. to March 2025, 3.00% p.a. thereafter New Zealand 4.25% p.a. to March 2025, 4.00% p.a. thereafter 4.00% p.a. to March 2024, 4.25% p.a. thereafter Foreign GBP / EUR 1.17 1.14 exchange GBP / CAD 1.71 1.67 rates GBP / USD 1.26 1.23 GBP / NZD 2.11 1.97 | Tax rates | UK 25% 25% | | | | --- | --- | --- | --- | | | Eurozone Ireland 12.5% | | Ireland 12.5% | | | | France 25% | France 25% | | | | Netherlands 25.8% | Netherlands 25.8% | Canada 23% and 27% 23% and 27% USA 21% Federal and 4.6% Colorado State 21% Federal and 4.6% Colorado State New Zealand 28% 28% GDP growth UK 2.0% p.a. 2.0% p.a. Eurozone 1.8% p.a. 1.8% p.a. USA 2.5% p.a. 2.5% p.a. 1 Retail Price Index and Retail Price Index excluding Mortgage Interest Payments 2 Consumer Prices Index including owner-occupiers’ housing costs; used in the valuation of Affinity Water 49 HICL Annual Report 2024 Valuation of the Portfolio continued Valuation sensitivities The portfolio’s valuation is sensitive to each of the macroeconomic assumptions listed above. An explanation of the reason for the sensitivity 1,2,3 and an analysis of how each variable in isolation (i.e. while keeping the other assumptions constant) impacts the valuation as follows below . The sensitivities are also contained in Note 14 to the financial statements Valuation sensitivities – impact in pence per share | Discount Rate +/- 0.5% | | (7.8) | | | | | | | | 8.6 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Inflation -/+ 0.5% | | | (6.8) | | | | | | 7.8 | | | | Tax Rate +/- 5% | | | | (4.2) | | | | 4.2 | | | | | GDP -/+ 0.5% | | | | | (2.7) | | 1.9 | | | | | | Cash Deposit Rate -/+ 1% | | | | | (2.2) | | 2.2 | | | | | | Lifecycle +/- 5% | | | | | | (1.6) | 1.5 | | | | | | Debt Interest Rate +/- 1% | | | | | | (1.4) 1.3 | | | | | | | FX Rates -/+ 5% | | | | | | (1.0) 1.0 | | | | | | | | -12p -10p -8p -6p -2p 0p 2p 4p 6p 8p 10p | | | | -4p | | | | | | 12p | Change in NAV in pence per share Negative correlation Positive correlation 1 NAV per share based on 2,031 million Ordinary Shares as at 31 March 2024 2 Sensitivities for inflation, interest rates, tax rates and lifecycle are based on the 35 largest investments extrapolated for the whole portfolio 3 Foreign exchange rate sensitivity is net of Group hedging as at 31 March 2024 50 HICL Annual Report 2024 Strategic Report Governance Financials ## Discount rate sensitivity Whilst not a macroeconomic assumption, the discount rate that is applied to each portfolio company's forecast cash flows, for the purposes of valuing the portfolio, is the single most important judgement and variable. The impact of a 0.5% change in the discount rate on the Directors' Valuation and the NAV per share is shown above. This sensitivity to a movement in discount rates is of a linear relationship meaning that for a 1.0% movement in discount rates the impact would be broadly twice as large as shown for a 0.5% movement. Following the sale of Northwest Parkway, the portfolio has become less sensitive to discount rate movements. ## Inflation rate sensitivity PPP projects in the portfolio have contractual income streams derived from public sector clients, which are rebased every year for inflation. For the demand-based assets, the concession agreement usually prescribes how user fees are set, which is generally reset annually for inflation. For Affinity Water, revenues are regulated by Ofwat in a five-year cycle with the pricing of water bills set with the aim of providing an agreed return for equity that is constant in real terms for the five-year period by reference to RPI currently and CPIH in the next regulatory period. The chart shows that the Directors' Valuation and NAV per share are both positively correlated to inflation. The portfolio's inflation correlation at 31 March 2024 was 0.7x (31 March 2023: 0.8x) such that should inflation be 1.0% p.a. higher than the valuation assumption for all future periods the expected return from the portfolio would increase from 8.0% to 8.7%. The portfolio's inflation correlation has declined due to the disposal of Northwest Parkway, where the inflation correlation was above the portfolio average correlation. The portfolio valuation assumes UK inflation of 3.0% for the year ending March 2025, 2.75% to March 2026, 3.25% to March 2030 and 2.5% thereafter. The March 2024 forecasts for RPI out to December 2024 range from 1.2% to 4.6% from 22 independent forecasters as compiled by HM Treasury, with an average forecast of 3.3%. ## Gross Domestic Product ("GDP") sensitivity Following the sale of Northwest Parkway, the proportion of the portfolio considered sensitive to GDP has reduced to 14% (18% at 31 March 2023). At 31 March 2024, the portfolio had four assets sensitive to GDP, namely the A63, M1-A1 Road, RMG Roads and HS1. These assets are classified as GDP-sensitive because at times of higher economic activity there will be greater traffic volumes using them, generating increased revenues for the projects compared to periods of lower economic activity. If outturn GDP growth was 0.5% p.a. lower for all future periods than those in the valuation assumptions set out on page 49, expected return from the portfolio (before Group expenses) would decrease 0.2% from 8.0% to 7.8% (31 March 2023: 7.0%). ## Interest rate sensitivity The majority of HICL's portfolio company's interest costs are at fixed rates, either through fixed-rate bonds, bank debt which is hedged with an interest rate swap or linked to inflation through index-linked bonds. However, there are five investments – Affinity Water, Fortysouth (NZ), TNT (USA), Altitude Infra (France), and XLT – which have refinancing requirements, exposing these investments to interest rate risk. The average gearing of the assets is 50% (31 March 2023: 45%), which is lower than the portfolio gearing at 68% (31 March 2023: 66%). As set out on page 50, were interest rates to be 1.0% higher in all future valuation periods, the expected return from the portfolio would decrease by 0.04% as a result of higher financing costs, before accounting for the offsetting positive impact of higher interest rates on cash balances. In the case of other investments, sensitivity to interest rates predominantly relates to the cash deposits which the portfolio company is required to maintain as part of its senior debt funding. For example, most PPP projects would have a debt service reserve account in which six months of debt service payments are held. At 31 March 2024, cash deposits for the portfolio were earning interest at a rate of 4.9% per annum on average (31 March 2023: 3.0%). ## Lifecycle expenditure sensitivity Lifecycle (also called asset renewal or major maintenance) concerns the replacement of material parts of the asset to maintain it over the concession life. It involves larger items that are not covered by routine maintenance and for a building will include items like the replacement of boilers, chillers, carpets and doors when they reach the end of their useful economic lives. The lifecycle obligation, together with the budget and the risk, is either taken by the project company (and hence the investor) or is subcontracted to the FM contractor. Of the 112 investments, PPPs make up 58% of the overall portfolio by value. For 59% of these PPP investments, the risk and reward is borne by the project company while for the remaining 41%, the risk is borne by the facilities management contractor. ## Corporation tax rate sensitivity The profits of each portfolio company are subject to corporation tax in the country where the project is located. The sensitivity considers a 5% movement in tax rates in all jurisdictions. The UK corporation tax assumption for the portfolio valuation is 25% (2023: 25%). ## Foreign exchange rate sensitivity 36% of the portfolio by Directors' Valuation, has exposure to foreign exchange rates. The sensitivity shows, post-hedging, the impact of GBP appreciating or depreciating against these currencies by +/- 5%. 51 HICL Annual Report 2024 Valuation of the Portfolio continued | Ten Largest Exposures – Counterparty | Ten Largest Exposures – Counterparty | | --- | --- | | FM counterparty | Construction counterparty | | March 2024 | March 2024 | 1 Bouygues 13% 1 1 Colas 8% 1 2 | | 2 In-house 9% | | | | 2 Balfour Beatty 4% | | --- | --- | --- | --- | --- | --- | | | | 12 | 3 | | | | | | | | 5 | 3 Siemens 3% | | | 3 Equans 9% | | 4 | | | | 2 | | | | 6 | | | | 4 EGIS 8% | | | 7 | 4 DEME 3% | 11 5 Vodafone NZ 6% 8 5 Strabag 2% 9 3 6 Siemens 5% 10 6 Bouygues 1% 7 Network Rail 5% 7 Fluor 1% 4 8 Babcock 3% 8 Laing O'Rourke 0% 10 | 9 | | | 5 | 9 Mitie 3% | | 9 Vinci 0% | | | --- | --- | --- | --- | --- | --- | --- | --- | | 8 | | | | | 11 | | | | | 7 | 6 | | | | | | | | | | | 10 Sodexo 3% | | 10 Other contractors 0% | | | | | | | 11 Other 36% | | 11 Latent defects | 54% | limitation/Warranty period expired 12 Assets subject to 25% regulatory regimes 2 Ten Largest Exposures – Counterparty Latent defect warranty periods March 2024 1 1 Within 1 year 3% 2 3 2 1-2 years 8% 7 | 4 | 3 2-5 years 3% | | | | --- | --- | --- | --- | | 5 | 4 5-10 years 4% | | | | | 5 | 10+ years 3% | | | | 6 | Latent defects | 54% | limitation/Warranty period expired 7 Assets subject to 25% regulatory regimes 2 6 1 By value, at 31 March 2024, using Directors’ Valuation excluding A13 senior bonds. Where a project has more than one operations contractor in a joint and several contract, the better credit counterparty has been selected (based on analysis by the Investment Manager). Where a project has more than one operations contractor, not in a joint and several contract, the exposure is split equally among the contractors, so the sum of the pie segments equals the Directors’ Valuation 2 Assets subject to regulatory regimes that help mitigate the potential impact of defects on equity 52 HICL Annual Report 2024 Strategic Report Governance Financials ## Risk and Risk Management The Investment Manager uses its experience, insight from ### Risk management framework investments within the Group’s portfolio and the wider infrastructure HICL’s risk management framework covers all aspects of its market to consider future risks and develop appropriate mitigation business. The Board monitors, challenges and evaluates InfraRed’s strategies. The Investment Manager oversees the deployment of management of risk through the consideration of scenarios that these strategies and directs portfolio company management teams could materially impact the performance of HICL were they to as required. Relevant systems, policies, oversight and third-party occur. Having considered and analysed key risks, mitigating action assurance are utilised to ensure effective risk management. may be undertaken to reduce the likelihood and impact of each risk manifesting. The Board’s Management Engagement Committee reviews the performance of the Investment Manager (as well as all key service The Board has ultimate responsibility for setting HICL’s risk policy and providers) at least annually. The Risk Committee reviews the risk appetite. It has convened a Risk Committee to assist the Board Investment Manager’s internal controls and their effectiveness on by assessing the Group’s overall risk profile, recommending a risk a quarterly basis, and the Audit Committee also reviews InfraRed’s appetite, and ensuring its framework is appropriately designed and financial control environment. No material issues were identified effective. The terms of reference for the Risk Committee can be found by any committee during the year. The Investment Manager also on HICL’s website. undertakes an annual assessment of the Company’s other key Day-to-day monitoring, evaluation and management of risk service providers, which requires each supplier to sign a code is undertaken by InfraRed as HICL’s Investment Manager. of conduct and fill in a questionnaire confirming compliance with Working closely with portfolio company management teams, relevant laws and regulations. The Management Engagement InfraRed’s Asset Management Team ensures the timely reporting of Committee reviews the results of this assessment, and any actual or project-specific risks to the HICL Fund Management Team as and potential issues which could result in a material risk to the Group are when they arise; the HICL Investment Committee also undertakes shared with the Risk Committee and Board. a formal review of project-specific risks on a quarterly basis. The Investment Manager’s Risk team has developed a detailed The Investment Manager is monitored and challenged by the Risk self-assessment internal control report, and this is reviewed on a Committee, which reports to the Board. quarterly basis by the Risk Committee alongside similar control reports from the Administrator and Company Secretary as well as HICL’s Depositary. This schematic sets out the Company’s risk management framework: Oversight and feedback HICL Infrastructure PLC Board Risk Committee InfraRed Capital Partners Limited Investment Committee Fund Management team Market intelligence Third-party advisers Asset Portfolio Central Investments Management Management Support team team team functions Project / Business Management teams Risk assessment and reporting 53 HICL Annual Report 2024 Risk and Risk Management continued HICL’s investments in Altitude Infra and Hornsea II OFTO helped to ### Risk classes mitigate portfolio performance risks by improving diversification by Risk is evaluated across seven primary risk classes. These are sector, geography, revenue type and counterparty. These assets have set out in the table below along with the Investment Manager’s been successfully integrated into the portfolio and are performing assessment of: well operationally. Targeted disposals in the period also reduced risk, – The potential financial impact of plausible 12-month downside notably through reducing the Company’s exposure to the historical scenarios, which are developed by the Investment Manager and obligations of Carillion plc through the sale of the Oxford John reviewed by the Risk Committee. They represent the estimated Radcliffe Hospital. impact of severe but plausible scenarios, meaning they are not worst case. Each scenario is presented before (inherent) and after Despite short-term liquidity risk being materially mitigated through (residual) the effect of mitigation strategies is considered; and asset disposals and proactive management of the Company’s 1 balance sheet by the Investment Manager, the residual risk rating – A residual risk rating based on the likelihood and mitigated impact for the Financial / Market Risk class was changed from Medium to of the prudent downside scenario for each risk class. High in the year. This is due to the higher interest rate environment If any one of the plausible 12-month downside scenarios described increasing HICL’s cost of debt and impacting its share price, which above were to materialise, the NAV / share impact would be impacted has been at a material discount to NAV since February 2023. HICL’s immediately, but the effect on cash flow may extend beyond the strong positive inflation correlation worked as expected to partially current year, with a consequential impact on dividend cash cover. offset the NAV reduction arising from the increase to the portfolio’s The Risk Committee therefore focuses on the five-year cash flow weighted average discount rate from 7.2% to 8.0%. HICL also impact of each scenario. evidenced the robustness of its NAV with the completion of over £500m of asset disposals in the year at or above carrying values. The Investment Manager regularly presents stress scenarios and associated mitigation strategies to the Risk Committee to assist its The residual risk rating for the political risk class continues to be assessment of more severe but lower-probability downside scenarios. assessed as medium. Political and regulatory risk is an inherent feature of the infrastructure asset class which can evolve at relatively Although the residual risk from portfolio performance is still short notice. Affinity Water’s PR24 business plan was submitted considered to be high, the Investment Manager achieved several in September 2023, with Ofwat expected to publish its Draft key milestones which successfully mitigated the impact on the Determination in June 2024. The risks associated with an uncertain Group. Notably, the risk of underperformance across HICL’s outcome from PR24 have been appropriately reflected in Affinity demand-based assets reduced further during the year, with HS1 Water’s discount rate. The Company’s primary political and regulatory resuming distributions, A63 performing ahead of expectations and risk mitigation is through its diverse portfolio, which is exposed to a overall demand exposure being reduced following the disposal wide range of clients, sectors, regulatory regimes and geographies. of Northwest Parkway. The remediation of construction-related defects remains a priority, with works progressing well across ### several projects. InfraRed successfully mitigated the risk of adverse Principal risks behaviour from public sector clients through active engagement, The tables on the following pages summarise the principal risks which including participation in UK Infrastructure and Projects Authority are regularly reviewed by the Risk Committee and have the potential (IPA) handback and net zero working groups and forming The to reduce the Company’s ability to achieve its strategic objectives Association of Infrastructure Investors in Public Private Partnerships and materially impact HICL’s financial performance and reputation. (AIIP) to provide a co-ordinated voice on industry issues with They are not an exhaustive list of risks and uncertainties faced by the stakeholders including the UK government. However, there remains group. Further information on the principal risks and uncertainties a risk that high inflation places heightened financial pressure on facing HICL can be found in HICL’s March 2019 Prospectus which is public sector counterparties. However, supply chain disruption and available on the Company’s website at www.hicl.com. cost inflation had a limited impact on a subset of projects during the The Directors have carried out a robust assessment of the period, with the wider risk to HICL mitigated by contractual pass- Company’s emerging and principal risks. The movement in risk status through mechanisms. for each principal risk, when compared with the previous financial year, is set out in the tables below. The Investment Manager’s Report (starting on page 20) provides additional commentary on how the risk landscape faced by the Group has evolved during the year. The risks posed by climate change, whilst not expected to be material to the Group, are an integral part of the Investment Manager’s risk management framework. Further information on the assessment and management of climate-related risks can be found in the Task Force on Climate-related Financial Disclosures, starting on page 65. 1 There are five residual risk ratings: the lowest being ‘Very Low’, then ‘Low’, ‘Medium’, ‘High’ and ‘Very High’ 54 HICL Annual Report 2024 Strategic Report Governance Financials Link to strategy Deliver a Build a diversified Provide a compelling Grow Net Asset Value sustainabledividend portfolioto manage risk cost proposition Change in risk level No change Decreased risk Increased risk Residual Change NAV/share impact Five-year cash flow impact Primary risk classes risk rating in year Inherent vs Residual Inherent vs Residual Portfolio performance risk High Financial / market risk High Political risk Medium Operational risk – execution Low Operational risk – portfolio and asset Very Low management HICL central management risk Very Low Operational risk – regulation and compliance Very Low ResidualInherent ## Portfolio performance risk Principal risk ### Adjustments to contracted orregulatedrevenues Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Reduced income from PPP – Contractual pass-through of – Low overall level of deductions projects due to availability deductions to subcontractors, across the PPP portfolio, deductions because of poor which can be terminated and with the vast majority passed operational performance or a replaced if performance is poor down to subcontractors disputed approach to contract for an extended period of time – Formation of the AIIP to share management by clients – Collaborative and proactive expertise on best approaches and advisers agreement with public sector to managing PPP projects Link to strategic – Under certain regulated clients where disagreements and provide a co-ordinated objectives regimes, failure to meet arise over performance voice on industry issues with specified delivery outcomes can key stakeholders including the – Diversity of regulatory result in penalties being earned, UK government mechanisms and reducing income performance regimes – No issues with contractual – Projects may be prevented from inflation pass-through – For most regulated making distributions by lenders mechanisms across the assets, management or in severe cases, default on PPP portfolio team compensation linked financing arrangements to performance against – Restructuring plan launched – Adverse reputational impacts regulatory outcomes in response to ongoing from loss of revenue linked to dispute with client at acute operational issues Tameside Hospital – Relatively low level of penalties incurred by Affinity Water, in line with expectations – Revenues at Fortysouth (largely contracted) and TNT (regulated and contracted) in line with expectations 55 0 25 0 25 0 25 0 25 0 25 0 25 0 25 0 25 25 0 25 HICL Annual Report 2024 Risk and Risk Management continued ## Portfolio performance risk (continued) Principal risk ### Revenue variability Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 | – Actual usage of demand- | – Detailed analysis of demand risk | – HS1 resumed shareholder | | --- | --- | --- | | based assets below | as part of due diligence process | distributions. The Group’s | | valuation assumptions | at acquisition | demand-based assets are all | making regular distributions | – Potential default of financing | – Use of independent third- | | | --- | --- | --- | | arrangements in the case of | party traffic forecasts | – Reduced short-term risk from | | significant underperformance | where appropriate | Covid-19 related restrictions | of movement and behavioural Link to strategic – Uncertain and unpredictable – Assessment of risk of long-term changes, with demand-based objectives impact on usage from long-term behavioural changes as part of assets experiencing year-on- behavioural changes, such as the Directors’ Valuation year growth in usage increased home working – Strategic and critical nature – Reduced demand exposure – Take up or adoption of new of the Group’s demand- through the Northwest communications technology based assets Parkway sale slower or less than expected – Communications assets benefit – Take-up of fibre behind from monopolistic wholesale expectations for Altitude Infra market positioning or long- partially due to connection term contracts backlogs for the internet service providers; network roll-out ahead of schedule Principal risk ### Construction defects Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Disputes with the – Legal rights of portfolio – Construction of a temporary subcontractor on the scope of companies to make claims ward at Pinderfields and remediation required against construction Pontefract Hospitals was subcontractors for identified completed post year end, – Increased cost to the defects during the statutory enabling improvement portfolio company where the limitations period works to begin in the main construction contractor is no hospital building longer solvent or the statutory – Construction defects identified Link to strategic limitations period has expired through targeted surveys as – Reduced exposure to objectives well as a regular programme of the historical obligations – Lenders preventing the operations and maintenance of Carillion plc through project from distributing or the sale of Oxford John in severe cases, default on – Adjudication or court Radcliffe Hospital financing arrangements process used where disputes arise and cannot be – Across the portfolio more – Availability deductions may be commercially resolved broadly, proactive leadership levied depending on the extent and control of the delivery of the defects and the works – Lifecycle budget to offset some of remediation works required for remediation costs following the expiry of the by responsible parties statutory limitations period – Adverse reputational impact where necessary from material defect issues 56 HICL Annual Report 2024 Strategic Report Governance Financials Link to strategy Deliver a Build a diversified Provide a compelling Grow Net Asset Value sustainabledividend portfolioto manage risk cost proposition Change in risk level No change Decreased risk Increased risk Principal risk ### Construction, operations and maintenance counterparties Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Operational underperformance – Well-diversified portfolio, – Counterparty diversification reducing a portfolio company’s mitigating concentration risk improved by the acquisitions ability to fulfil its contractual of Hornsea II OFTO and – Counterparty credit risk obligations, potentially leading Altitude Infra alongside assessed on a regular basis to revenue adjustments asset disposals by InfraRed’s internal credit (see above) risk team – No material deterioration in – Failure of a counterparty, any counterparty rating – Continuous review of which is likely to lead to Link to strategic contingency plans for a scenario – Construction of Blankenburg lenders preventing projects objectives in which a key subcontractor Tunnel largely completed from distributing until the enters administration during the year, reducing counterparty is replaced or liquidation HICL’s overall construction risk exposure – A number of potential replacement service providers from InfraRed’s wide network Principal risk ### Operational costs Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Budgets for management – Risk for several types of – Supply chain pressures services contracts, lifecycle operational cost generally continuing to affect costs and insurance premia passed down through lifecycle costs in the prove to be insufficient fixed price contracts to UK PPP sector, with industry specialists particular focus on lifecycle – For certain regulated assets, adequacy for those projects overspend against allowances – Regular assessment of lifecycle approaching handback Link to strategic may reduce returns budget adequacy objectives – Operational costs at Affinity – Overspends can also occur – For regulated businesses, Water in line with budget where portfolio company set stretching but achievable management teams are expenditure allowances responsible for operational – For some assets, management service delivery team compensation linked to performance business plan – For 41% of HICL’s PPP portfolio (58 projects), lifecycle obligations sit with facilities management contractors as opposed to HICL’s project companies 57 HICL Annual Report 2024 Risk and Risk Management continued ## Financial and market risk Principal risk ### Investor sentiment Movement in risk Potential impact Risk mitigation Outcome during the year status in FY2024 | – Prolonged periods where | – Ability to refinance HICL’s | – HICL’s share price has traded | | --- | --- | --- | | the share price trades below | Revolving Credit Facility (“RCF”) | below the prevailing NAV | | HICL’s prevailing NAV, inhibiting | to extend maturity and size (if | since February 2023 as a | | HICL’s ability to issue new | deemed appropriate) | result of the higher interest | | equity capital | | rate environment | – Use of HICL’s Letter of Credit | | – Inability to capitalise | Facility (“LCF”) for longer-term | – Floating rate debt exposure | | --- | --- | --- | --- | | | on attractive | drawings for construction | reduced by completing a | | Link to strategic | investment opportunities | assets, where equity | £150m Private Placement and | | objectives | | commitments are deferred for | purchasing an option to cap | | | | a number of years, to release | £200m of its SONIA exposure | | | | RCF capacity | to 6.5% for three years | | | | – Strategic disposal to generate | – Proceeds from the ten | | | | cash to pay down drawings | disposals announced in the | | | | under the RCF and facilitate | period both help to prove the | | | | opportunistic acquisitions | investment valuations and will | | | | without substantially increasing | be used to fully pay down the | | | | HICL’s gearing | Company’s RCF and launch a | share buyback programme for – Issue of Private Placement up to £50m which diversifies sources of capital, extends the maturity of debt to a longer tenor at a fixed rate Principal risk ### Inflation Movement in risk Potential impact Risk mitigation Outcome during the year status in FY2024 | – Adverse impact on portfolio | – HICL’s inflation assumptions are | – Actual inflation ahead of | | --- | --- | --- | | valuation and distributable cash | carefully considered as part of | expectations for H1, offset by | | flows if inflation levels below | the Directors’ Valuation, drawing | lower than expected inflation | | HICL’s long-term assumptions | from a wide range of forecasts | in H2. Portfolio valuation | saw an overall benefit from – Potential defaults under loan – Lower inflation usually coincides changes to inflation forecasts arrangements in sustained with lower interest rates, during the year periods of deflation elements which materially Link to strategic offset each other in the – In the medium and long – Sustained high inflation may objectives portfolio valuation term, HICL’s inflation lead to increases in interest forecasts remain well below rates and therefore discount – Negative impact of discount market expectations rates (see below) rate increases should be largely offset by positive impact of – Valuation assumptions – In some cases, inflation may inflation (see below) assume a modest decrease in impact costs to a greater extent inflation over the coming year than revenues – In many cases, both costs and revenues are contractually linked to the same inflation index 58 HICL Annual Report 2024 Strategic Report Governance Financials Link to strategy Deliver a Build a diversified Provide a compelling Grow Net Asset Value sustainabledividend portfolioto manage risk cost proposition Change in risk level No change Decreased risk Increased risk Principal risk ### Discount and interest rates Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Increases in interest rates may – Higher interest rates usually – Impact of increased discount lead to increases in long-term coincide with higher inflation, rates during the year partially government bond yields, which elements which materially offset by the portfolio’s in turn may lead to increases offset each other in the positive correlation to inflation in the discount rate used for portfolio valuation and deposit rates comparable market transactions – Higher deposit interest income – Discount rates used in Link to strategic – All other things being equal, when interest rates increase the Directors’ Valuation objectives higher discount rates would partly mitigates the value corroborated by market result in a reduction in the reduction arising from increased transactions and the Board’s portfolio valuation discount rates third-party expert opinion on the valuation – Low overall sensitivity to the impact of increased interest – Increase in risk premium rates on financing costs at during the year as a result portfolio level of increased discount rates in H1, followed by reduced – Adequate and reasonable risk government bond yields in H2 premium added to risk-free reference rate (long-dated – Market expectation is government bonds) used that interest rates have to corroborate reference now peaked across discount rates HICL’s geographies ## Political risk Principal risk ### Policy changes Movement in risk Potential impact Risk mitigation Outcome during the year status in FY2024 – Clients of HICL’s portfolio – PPPs generally have a – Although the Labour Party in companies or national contractual right to receive the UK has announced plans governments may choose to compensation in the event to nationalise train operating terminate contracts of counterparties voluntarily companies if elected, this is terminating a PPP contract not expected to impact HICL’s – Heightened public sector activity investments in HS1 or XLT around the prospect of PPP – InfraRed’s active involvement in ‘handback’ and the mobilisation various industry bodies which, – The broader need for Link to strategic of public sector resources for on behalf of the infrastructure infrastructure procurement objectives the transition of UK PPP facilities sector, engage with politicians, and the role of private back to the public sector at civil servants, other policy capital in providing essential their expiry shapers, and regulators infrastructure enjoys bipartisan political support – Governments may consider – InfraRed’s direct interaction with taking certain assets back into stakeholders of the portfolio’s – Heightened political scrutiny public ownership projects to extol the value that of UK water companies as the private sector brings to the a result of sewage overflow delivery of public infrastructure events and broader concerns around financial management; negative sentiment may indirectly impact Affinity Water despite it having no sewerage exposure 59 HICL Annual Report 2024 Risk and Risk Management continued ## Political risk (continued) Principal risk ### Legal or regulatory changes Movement in risk Potential impact Risk mitigation Outcome during the year status in FY2024 – Exposure to higher contractual – Continuous monitoring of – Affinity Water was rated costs or obligations due to legal potential and actual changes to as an ‘average’ performer and regulatory changes regulations by the Investment (in line with the highest Manager and its advisers awarded grade) in Ofwat’s – Adverse impact on the assets to ensure both the Group most recent Water Company that are subject to regular price and its service providers Performance Report control reviews in the event of remain compliant | Link to strategic | failure to deliver the specified | | – Affinity Water submitted its | | --- | --- | --- | --- | | objectives | levels of service or investment | – Protection in relation to | PR24 business plan to Ofwat | | | | changes in legislation is | in September 2023; Ofwat’s | | | | provided by most social | draft determination of the | | | | and transport infrastructure | company’s price control | | | | concessions through their | package is due in June 2024 | contractual structures – Exposure to regulatory – InfraRed’s participation in regimes further diversified relevant consultation processes through the acquisition of to ensure that the legislature Altitude Infra, which operates and regulators hear the under a pricing framework concerns and views of HICL, which is regulated by French in its capacity as a private telecoms regulator ARCEP sector investor – HS1 has limited direct – Well-diversified portfolio across exposure to regulatory clients, sectors and countries price control Principal risk ### Taxation changes Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Adverse impact on the Group – Closely monitor relevant – The levy on revenues earned and portfolio value due to cross-border tax rules and by long-distance transport taxation legislation or treaty broader taxation legislation infrastructure operators changes, such as corporation developments for any potential in France was enacted. tax rates and cross-border adverse impact on the Group A legal challenge has been tax rules issued and it remains HICL’s expectation that Link to strategic compensation will be due objectives through higher tolls if the challenge is unsuccessful; in any case the valuation impact on the A63 is expected to be immaterial because the revenue threshold for this tax is €120m – No other material changes in tax legislation 60 HICL Annual Report 2024 Strategic Report Governance Financials Link to strategy Deliver a Build a diversified Provide a compelling Grow Net Asset Value sustainabledividend portfolioto manage risk cost proposition Change in risk level No change Decreased risk Increased risk ## Operational risk – execution Principal risk ### Inadequate due diligence Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Underperformance against – InfraRed’s Investment team – New acquisitions well acquisition assumptions adopts a thorough due diligence integrated into the portfolio due to poor or inadequate approach and have a depth of and performing in line due diligence experience in buying and selling with expectations infrastructure assets – The passive infrastructure – Support of specialist advisers carve-out process at Link to strategic (e.g. lawyers, technical Fortysouth was completed on objectives consultants, sustainability schedule and the business advisers and tax advisers) has operated as a standalone entity since 1 April 2024 – Oversight is provided by the HICL Investment Committee, and by the Risk Committee and Board in respect of matters falling outside the Investment Manager’s Approved Investment Parameters (“AIP”) Principal risk ### Asset pricing Movement in risk Potential impact Risk mitigation FY24 outcome status in FY2024 – Infrastructure assets become – InfraRed’s disciplined – Discount rates used to value less attractive due to high and selective acquisition new acquisitions corroborated asset pricing strategy, leveraging the by market data points, Investment Manager’s including HICL’s disposal – Overpayment for assets leads international Origination and activity, and acquisitions and to lower realised investment Execution platform disposals made by other returns than expected InfraRed-managed funds – New acquisitions can provide Link to strategic inherent protection against rising objectives interest rates through inflation correlation or regulated cost of capital structures 61 HICL Annual Report 2024 # Viability Statement The AIC Code of Corporate Governance (the "AIC Code") requires the Directors to make a statement regarding HICL's viability in the Annual Report, explaining how they have assessed the Group's prospects, the period of time for which they have made the assessment and why they consider that period to be appropriate. The Directors have determined that the five-year period to March 2029 remains an appropriate period over which to assess HICL's viability due to the following reasons: - The period aligns with the Group's business planning processes, including how the Directors assess the Group at their annual strategy Board meeting; - It is the period over which the internal stress testing is performed; and, - Although the long-term and/or contractual nature of our investments means that the Directors have a higher level of confidence over the endurance and longevity of the Company, it is challenging to assess and determine the regulatory, tax and political environment outside of the five-year period with any certainty. ## Assessment of HICL's prospects ### Business planning process The Directors' primary assessment of the Group's prospects is achieved through the annual strategic and business planning exercise. The Directors review a five-year budget and business plan, which is prepared by the Investment Manager and includes cash flow projections to aid strategic planning and provide support for the dividend approval process. The projections consider cash balances, investment commitments, key covenants and limits, dividend cover, investment policy compliance and other key financial indicators over that five-year period. These projections are based on the Investment Manager's expectations of future asset performance, income and costs and are consistent with the methodology applied to provide the valuation of investments. ### Portfolio diversification HICL's portfolio consists of over 100 companies whose underlying assets are predominantly fully constructed and operating PPPs (58% of the portfolio at 31 March 2024) or similar highly revenue-contracted projects with public sector counterparties in jurisdictions with established and proven legal systems. The Group benefits from predictable long-term, contracted and inflation-linked cash flows together with a set of risks that can be identified and assessed (see Risk and Risk Management on page 53). The projects are each financed on a non-recourse basis to the Corporate Group and are supported by detailed financial models. The Directors believe that the non-recourse financing and diversification within the investment portfolio (the Top 10 make up 49% of the portfolio) helps to withstand and mitigate the risks it is most likely to meet. Finally, the Corporate Group has a low level of operating expenses relative to forecast receipts from its portfolio investments, with its largest single cost being the management fee. ### Approach to debt and gearing The Group funds its investments using equity and a long-term £150m Private Placement, which is due for repayment in two tranches in 2033 and 2035. The Corporate Group's gearing is well within its Board-approved investment parameters in the five-year period. In addition, the Corporate Group can withstand a material increase in interest costs due to the purchase of a £200m cap which protects the Corporate Group if SONIA rates exceed 6.5%. The cap runs until 30 June 2026. ## Capital allocation process Consistent with others in the alternative assets investment company sector, HICL has suffered from uncertain macroeconomic backdrop and its shares have traded at a discount to NAV since February 2023. Against this backdrop, the Group has demonstrated its disciplined capital approach to capital allocation, by launching its strategic asset disposal programme. This programme generated proceeds of over £500m and will allow the full repayment of the drawings on its RCF. Should capital markets remain closed for an extended period, IILP has access to its £400m RCF, and the Group will look to rotate assets in the portfolio to repay the drawn balance. ## Assessment of viability In making this statement, the Directors have considered the resilience of HICL, considering both its current position and its principal risks, in severe but plausible downside scenarios, and the effectiveness of any mitigating actions. Consideration has been given to the current increased market volatility and heightened political environment and geopolitical risk. The Investment Manager has prepared sensitivity analysis including various stress scenarios which have been considered previously by the Risk Committee. These include: - Increasing tax rate assumptions by 5% for all assets; - Increasing lifecycle costs by 33%; - Inflation is 2% lower in every period than the base case assumptions; - Assuming an increase in projects not distributing of 20% of the portfolio (note this represents projects entering distribution lock-up for a period of 24 months after which they are released); - A 15% reduction in distribution from HICL's operational assets highlighting hypothetical operational challenges; - Delay of capital raising for a period of at least 12 months, funding HICL's committed acquisitions with an average forecast RCF cost of at least 200 basis points above base case; and - Combined scenario assuming: - Delay of capital raising for a period of at least 12 months and increased interest rates; - Funding a hypothetical £50m equity injection to continue operating one or multiple assets; - 15% reduction in distributions from operational assets; - Increase in lifecycle costs of 33%; and - 50% reduction in final distributions from assets whose concessions end within the viability period. Individually, due to the diversified nature of the Group's portfolio, these scenarios pose a minimal threat to its solvency. A severe scenario was also prepared to assess the loss in revenue necessary to cause insolvency. Even under this scenario the analysis demonstrated that HICL would remain viable over the five-year assessment period. ## Viability Statement The Directors have a reasonable expectation that HICL will be able to continue in operation and meet its liabilities as they fall due over the five-year period to March 2029, on the assumption that there is sufficient liquidity in the debt market to allow it to refinance or repay obligations becoming due under IILP's Revolving Credit Facility and Letter of Credit Facility, and that its investments are not materially affected by retrospective changes to government policy, laws or regulations. 62 HICL Annual Report 2024 Strategic Report Governance Financials ## Strategic Report Disclosures ### Investment Policy Geographic focus HICL’s Investment Policy is to ensure a diversified portfolio which has The Directors believe that attractive opportunities for HICL to enhance a number of similarly sized investments and is not dominated by any returns for investors are likely to arise outside as well as within the single investment. HICL will seek to acquire Infrastructure Equity with UK (where the majority of the projects in the current portfolio are similar risk / reward characteristics to the current portfolio, which may based). HICL may therefore make investments in the European Union, include (but is not limited to): Norway, Switzerland, the Americas and selected territories in Asia and Australasia. HICL may also make investments in other markets – Public sector, government-backed or regulated revenues; should suitable opportunities arise. HICL will seek to mitigate country – Concessions which are predominantly ‘availability’ based risk by concentrating on investment opportunities in jurisdictions (i.e. the payments from the concession do not generally depend where it considers that contract structures and enforceability are on the level of use of the project asset); and / or reliable and where (to the extent applicable) public sector obligations – Companies in the regulated utilities sector. carry what the Investment Manager believes to be a satisfactory credit rating and where financial markets are relatively mature. HICL will also seek to enhance returns for shareholders by acquiring more diverse infrastructure investments. The Directors currently ### intend that HICL may invest in aggregate up to 35% of its total assets Single investment limit and diversity ### (at the time the relevant investment is made) in: ofclients and suppliers – Project companies which have not yet completed the construction For each new acquisition made, HICL will ensure that such phases of their concessions but where prospective yield investment acquired does not have an acquisition value (or, if it is a characteristics and associated risks are deemed appropriate to further stake in an existing investment, the combined value of both the the investment objectives of HICL. This may include investment in existing stake and the further stake acquired is not) greater than 20% companies which are in the process of bidding for concessions, of the total gross assets of HICL immediately post-acquisition. to the extent that such companies form part of a more mature The total gross assets will be calculated based on the last published portfolio of investments which HICL considers appropriate gross investment valuation of the portfolio plus acquisitions made to acquire; since the date of such valuation at their cost of acquisition. – Project companies with ‘demand-based’ concessions where the Investment Manager considers that demand and stability of The purpose of this limit is to ensure the portfolio has a number of revenues are not yet established, and / or project companies which investments and is not dominated by any single investment. do not have public sector sponsored / awarded or government- backed concessions; and In selecting new investments to acquire, the Investment Manager will seek to ensure that the portfolio of investments has a range of public – To a lesser extent (but counting towards the same aggregate sector clients and supply chain contractors, in order to avoid over- 35% limit, and again at the time the relevant investment is made) reliance on either a single client or a single contractor. in limited partnerships, other funds that make infrastructure investments and / or financial instruments and securities issued ### by companies that make infrastructure investments, or whose Restrictions under the Listing Rules activities are similar or comparable. In accordance with the requirements of the Financial Conduct Authority, HICL has adopted the policies set out below: – HICL’s primary objective is investing and managing its assets with a view to spreading or otherwise managing investment risk. HICL must, at all times, invest and manage its assets in a way which is in accordance with its Investment Policy; – HICL will not conduct a trading activity which is significant in the context of HICL as a whole. HICL will not cross-finance businesses forming part of HICL’s investment portfolio; and – No more than 10%, in aggregate, of HICL’s assets will be invested in other listed closed-ended investment funds. The Listing Rules may be amended or replaced over time. To the extent that the above investment restrictions are no longer imposed under the Listing Rules, those investment restrictions shall cease to apply to HICL. 63 HICL Annual Report 2024 ## Strategic Report Disclosures continued ### Risks and uncertainties The principal risks and uncertainties facing HICL can be found in HICL's March 2019 Prospectus which is available on the Company's website at www.hicl.com. An update on the key risks currently faced by the Company and associated mitigants are set out in the Risk and Risk Management section of this report starting on page 53. ### Environmental, social and community matters For a detailed explanation of HICL's approach to Environmental, Social and Governance / Responsible Investment, please see HICL's Sustainability Policy, which can be found on the Company's website at www.hicl.com. A comprehensive review of the year, including case studies from the portfolio, can be found in HICL's Sustainability Report 2024, also available on the website. ### Research and development activities None. ### Section 172(1) Statement The Directors discharge their duties under Section 172 of the Companies Act 2006 to act in good faith and to promote the success of the Company for the benefit of shareholders as a whole. As a closed-ended investment company, HICL has no employees. Explanations of the impact of HICL's activities on other stakeholders are included in the Strategic Report. ### Gender diversity At the year end, the Board of Directors comprised seven non-executives: four male and three female. HICL has no employees. ### Leverage HICL is required under the Alternative Fund Managers Directive ("AIFMD") to make available to investors information in relation to its leverage. Leverage is considered in terms of HICL's overall exposure to financial or synthetic gearing and includes any method by which its exposure is increased whether through borrowing of cash or securities, foreign currency holdings, leverage embedded in derivative positions or by any other means. It is expressed as the ratio between the total exposure of HICL and its Net Asset Value such that if its exposure was equal to its Net Asset Value, leverage would be disclosed as 100%; a value above 100% means that HICL has leverage equal to the percentage amount above 100%. Exposure values are calculated by two methods, gross and commitment, as defined within the AIFMD. Exposure under the gross method represents the aggregate of all HICL's exposures other than cash balances held in base currency; the commitment method takes into account the effect of different treatment of certain cash and cash equivalent items and of offsetting instruments between eligible assets to reflect netting and hedging arrangements in line with regulatory requirements. Maximum leverage levels have been set by the Board and InfraRed and are in accordance with the maximum borrowing allowed by HICL's Articles of Association. The table below sets out the current maxima, and permitted limit and actual level of leverage for HICL as a percentage of its Net Asset Value as at 31 March 2024. | Leverage | Gross Method | Commitment Method | | --- | --- | --- | | Maximum limit | 150% | 125% | | Actual level | 129% | 103% | **Mike Bane** **Chair** 21 May 2024 64 HICL Annual Report 2024 Strategic Report Governance Financials ## TCFD HICL’s robust and ambitious corporate governance framework helps ### Governance to ensure this is delivered and provides investors with transparency ### The Board and Investment Manager strongly on the Company’s sustainability strategy and the wider impact environmental and societal impact of their investment, including in ### believe that making a proactive and positive relation to climate change. ### contribution to climate action is in the best The Board has overall responsibility for the oversight of HICL’s ### interests of HICL’s shareholders, clients and sustainability risks and opportunities, of which climate change is an important subset. The Board and the Investment Manager meet ### wider stakeholders. This has become clearer on a quarterly basis, during which they review the risks facing the ### in recent years as extreme weather events Company, including risks related to climate change. Sustainability is also a key topic at the Board’s annual ### and rising sea levels are increasingly visible strategy meetings. ### consequences of greenhouse gas emissions. Some of the Board’s committees also have key roles: On behalf of HICL, InfraRed actively identifies and mitigates the – The Risk Committee oversees and challenges InfraRed’s risk risks that climate change poses to the Company whilst also looking management processes and analysis, and has a specific remit to to reduce the actual and potential adverse impacts of business examine ‘horizon’ risks such as the long-term consequences of decisions on societies and the environment. The disclosures below climate change provide key climate-related information, and cross-references to – The Management Engagement Committee considers how where additional information can be found (either within this report, HICL service providers, including InfraRed, adhere to HICL’s or within HICL’s 2024 Sustainability Report, published on the HICL Sustainability Policy website on the same day as this report). – The Audit Committee reviews the Company’s approach to HICL began voluntarily reporting against a subset of the 11 TCFD disclosures, including those relating to climate change disclosure recommendations in its 2020 Annual Report and Financial Statements and has reported against all 11 recommendations since In relation to climate-related opportunities, the Investment Manager 2021. We confirm that we have complied with the requirements of presents a review of the market to the Board on a quarterly basis. LR 9.8.6R, by including climate-related financial disclosures that As part of this review, potential new acquisition opportunities are are consistent with the four TCFD pillars and the 11 recommended highlighted, including those which directly support the transition to disclosures that are set out on page 70. We also acknowledge that alow-carbon economy. there is always scope for improvement, and that there are certain areas where the Company is in the process of gathering and Although management of the portfolio, as well as investment publishing more data. decisions within agreed parameters, is delegated to InfraRed as the Investment Manager, the Board has overall responsibility for the Company’s investment policy. Further information on HICL’s corporate governance framework is provided on page 72 of this Report. A diagram setting out HICL’s reporting and risk management framework is set out on page 53 of this Report. 65 HICL Annual Report 2024 # TCFD continued # Strategy In FY24, InfraRed engaged Willis Towers Watson ("WTW") to conduct a refreshed climate change impact assessment of HICL's portfolio¹. Since November 2021, when this portfolio-wide exercise was first completed, all new investments have been subject to a climate change impact assessment as part of InfraRed's pre-investment process. The process and methodology undertaken by the Manager to analyse potential physical and transition risks consists of four stages: The Investment Manager has identified that in the short term, based on current climate conditions, a subset of HICL's assets remain exposed to acute and chronic physical risks arising from different extreme weather events, but the overall exposure is limited, and mitigations are in place. The Group may also be exposed to transition risks if there are rapid, unexpected changes to government policy, which are more likely under the 1.5°C scenario as set out below. In general, the portfolio-level findings of the climate change impact assessment demonstrate that the Group remains highly resilient to both physical and transition risks associated with climate change. # Process and methodology The flow chart below sets out the process undertaken by the Investment Manager and WTW: # 1 Portfolio physical risk assessment A location-based quantitative and qualitative physical risk assessment of HICL's portfolio based on three scenarios: | Scenario | Assumed global temperature increase from pre-industrial times by the end of the century | Representative Concentration Pathways (RCP)² | | --- | --- | --- | | Hothouse world | 4°C | 8.5 | | Middle of the road | 2-3°C | 4.5 | | Net zero by 2050 scenario | 1.5°C | 2.6 | # 2 Impact assessment Assessment of acute and chronic hazards with the potential to reduce the availability and capacity of specific assets using proprietary in-house developed vulnerability models. # 3 Modelling Modelling of potential financial losses associated with current and future physical risks arising from climate change. These were modelled over short-term (now until 2030) and long-term (beyond 2040) time horizons. # 4 Transitional risk assessment As part of the assessment, transitional risks were also identified. # Key outputs Overall level of exposure to physical risks based on current and future conditions (by project value), assuming no mitigation Potential financial exposure from flooding/wind storm (project-level costs, 100% level) assuming no mitigation Transition risks and opportunities by sector # Next steps Flow down of climate risk information to project company management teams Update of operational procedures and processes at project level if required Focused engagement with clients Reporting back to HICL Risk Committee 1 Excluding the Company's investments in A13 senior bonds 2 RCPs specify concentrations of greenhouse gases that will result in total radiative forcing increasing by a target amount by 2100, relative to pre-industrial levels 66 HICL Annual Report 2024 Strategic Report Governance Financials TCFD continued Physical risk analysis: The potential annual loss across the portfolio from windstorms and flooding is not expected to be material, with mitigation measures The primary impact of climate change for HICL is likely to be borne further reducing any impact in ‘severe’ years. HICL’s assets benefit by its portfolio companies: increased operating costs or reduced from comprehensive insurance policies, which include physical revenues as a result of physical risks materialising. In many cases damage as a result of climate-related events. physical mitigation measures already exist and there is a degree of contractual protection from increased costs to implement further measures. Such risks are likely to be exacerbated under a 4°C Transition risks analysis: scenario, whereas under a 1.5°C scenario assets are more likely Examples of transition risks under a 1.5°C scenario include increased to be impacted by transition risks. public transport use, a reduction in overall journeys and car sharing, As part of the assessment, assets were given an overall hazard which could impact some of HICL’s demand-based assets. exposure score considering their respective exposures to acute and A transition to a low-carbon economy also presents a number of chronic hazards. Under the ‘current’ climate scenario, 17% of HICL’s 1 opportunities. The primary example is the need for related investment portfolio by value has a hazard exposure score above 3 (medium). such as rapid charging or retrofitting of energy efficiency solutions. This falls to 7% under the 4°C scenario beyond 2040, demonstrating A key tenet of HICL’s vision is to support sustainable modern the resilience of the portfolio even in the event ofextreme economies by investing in assets linked to the energy transition, climate change. and a 1.5°C scenario is likely to increase the number of investable Beyond 2040, under a 1.5°C scenario the impact of transition risks opportunities in this space. could be greater, but many assets have inherent protection as they As is common with real assets, insurance is one of the primary risk provide vital services and have low direct emissions. Conversely, mitigants against the financial impact of physical damage. In the there is likely to be greater scope to take advantage of opportunities future, and particularly under a 4°C scenario, it is possible that the arising from the energy transition, such as asset repurposing and cost of obtaining insurance increases as a result of the increased additional investment. likelihood of severe weather events, although this is likely to be limited HICL’s main physical risk exposures based on both current and future to a small number of assets. The impact of climate change risks on conditions are to winter storms, subsidence, river flooding and coastal future insurance premia is factored into the assumptions used in the flooding which is expected based on the weighting of the portfolio valuation of each of HICL’s assets. towards Northern Europe. Geographical location is also an inherent mitigant against other physical risks such as drought and heat stress. Although some assets have very high exposure to flooding, significant physical mitigation already exists in the form of flood defences, particularly in low-lying countries such as the Netherlands. Summary of material risks and opportunities: TCFD Category Climate-related trend Potential financial impact Potential materiality Physical Flooding Risk: Damage to physical structures resulting in unavailability / increased cost 4°C – Low 1.5°C – Low Physical Winter storm Risk: Damage to physical structures resulting in unavailability / increased cost 4°C – Low 1.5°C – Low Physical Drought Risk: Usage restrictions or increased costs at Affinity Water 4°C – Med | | | Opportunity: Increased long-term investment required at Affinity Water | 1.5°C – Low | | --- | --- | --- | --- | | Transition Retrofitting of energy | | Opportunity: Variation contracts awarded for existing PPP assets 4°C – Low | | | | efficiency solutions | | 1.5°C – Low | | Transition Increased public | | Risk: Lower traffic using toll roads | 4°C – Low | | | transport use | Opportunity: greater usage of HS1 | 1.5°C – Med | | Transition Move towards electric | | Opportunity: Co-located EV charging at HICL’s toll road projects | 4°C – Low | | | vehicles and trains | Opportunity: Long-term use case for XLT | 1.5°C – Low | | Transition Increased need for | | Opportunity: Long-term use case for OFTO 4°C – Low | | | | renewable energy | | 1.5°C – Low | | Transition Remote working Risk: Reduced traffic volumes using demand-based transport assets | | | 4°C – Low | | | | Opportunity: Greater take-up and adoption of technology benefitting | 1.5°C – Med | communications assets 1 By value, using the Directors’ Valuation as at 31 March 2024 67 HICL Annual Report 2024 TCFD continued HICL’s core infrastructure investments provide essential services to ### Risk management communities, and as a result are inherently well positioned. For HICL’s How we identify and assess climate risk: PPP projects, energy use is driven by the client, with the portfolio For new acquisitions, climate-related risks are considered throughout company generally responsible for maintaining the equipment which the investment process by the Investment Manager. At the deal provides the building’s heating, cooling and lighting. Any changes screening phase, the identification of climate-related risks (physical to these systems required under a 1.5°C scenario would usually be or transition) and the potential impact (positive or negative) are accounted for under existing lifecycle budgets or alternatively treated mandatory requirements. Furthermore, the completion of a climate as a contract variation. In relation to HICL’s GDP-correlated demand- change risk assessment prior to entering into a transaction is now a based assets such as toll roads, which may be exposed to transition formal condition of approval. risks and opportunities under a 1.5°C scenario, these benefit from strong strategic positioning. The Company also invests directly in For existing projects, risks have been identified and assessed through assets which are likely to benefit from a low-carbon transition, such a detailed climate change impact assessment, as set out on page 66 as OFTOs. and 67. The Company’s portfolio companies use the results of this assessment to undertake proactive monitoring and assessment at More broadly, InfraRed’s exclusion policy specifically covers carbon- the project level. intensive industries such as coal, oil and gas (where not aligned to a low-carbon transition) and HICL does not invest in assets whose Over the year, InfraRed’s Asset Management team engaged with the primary purpose is electricity generation. management teams of HICL’s portfolio companies. Using the climate Sustainability considerations are incorporated into the Investment change impact assessment, the vast majority of HICL’s portfolio Manager’s risk management framework, which is used as the basis of companies have adopted the findings by discussing climate-related risk reporting to the HICL Risk Committee. In particular, sustainability risks and opportunities at board level, updating risk matrices, and features as a material risk in the following risk classes: developing and implementing mitigation and resilience strategies as appropriate. – Political risk: in particular, policies associated with the transition to net zero carbon emissions – Operational risk – execution: through transaction due diligence How we manage our risks: and investment decisions InfraRed’s Asset Management team ensures the timely reporting of project-specific risks relating to climate change to the HICL Fund – Portfolio performance risk: sustainability risks can affect Management team as and when they arise; the HICL Investment operational performance, including transitional and physical risks Committee also undertakes a formal review of all project-specific risks associated with adverse climate change on a quarterly basis. This process ensures that material climate- Climate change risk is an explicit building block of portfolio related risks feed into the Investment Manager’s quarterly reporting to performance risk. Individual project companies submit regular the Risk Committee, which in turn reports to the Board. progress reports to InfraRed on the mitigation measures they are The Company’s positioning with respect to a transition to taking in response to the climate change impact assessment. In turn, a low-carbon economy is primarily considered through the this enables the HICL Risk Committee to consider the overall impact Investment Manager’s active approach to asset management and and opportunities of climate change at fund level. portfolio construction. Further details are provided in the Risk and Risk Management on page 53 of this Report. 68 HICL Annual Report 2024 Strategic Report Governance Financials TCFD continued ### Metrics and targets Year ended Emissions (Attributable basis) 31 December 2023 GHG emissions Scope 1 Nil HICL has disclosed the combined Scope 1, 2 and 3 greenhouse gas Scope 2 Nil emissions of its entire portfolio for calendar year 2023. The accurate Scope 3 (tCO 2 e) 89,733 measurement and disclosure of emissions forms an important part of InfraRed’s wider strategy relating to InfraRed’s net zero commitments, Weighted average carbon intensity (tCO 2 e/£m) 280 further details of which are provided below. Due to the nature of its business, HICL has no Scope 1 or Scope M PAI indicators – Mandatory 2 greenhouse gas emissions. The Company’s Scope 3 emissions primarily relate to the emissions of its portfolio companies, although there is also a small contribution from office use and business travel V PAI indicators – Voluntary (which is offset using an accredited scheme). 1 ### Other metrics and targets Our specific climate and environment related metrics and targets, as set out in this report have been made considering the TCFD recommendations and are set out below: % PORTFOLIO METRIC Current Year Previous Year REPORTING PAI? TARGETS 2 Carbon Reduction Initiatives 76% 83% 100% Net zero targets: M 50% Portfolio coverage 90% Engagement threshold by 2030 Water Reduction Initiatives 88% 92% 100% For portfolio companies where V 3 wehaveoperational control: 100% of portfolio companies with material Waste Reduction Initiatives 87% 92% 100% water and consumption to have reduction initiatives in place by 2025 Positive Biodiversity Impacts 76% 83% 100% Climate change risk register 83% 91% 100% andBoard meetings 4 | Total Attributable GHG | 89,733 | | 146,190 | | 100% | | 90% | | --- | --- | --- | --- | --- | --- | --- | --- | | | tCO | e | tCO | e | | M | | | Emissions (Scopes 1, 2 and 3) | | 2 | | 2 | | | of emissions to be subject to direct or | collective engagement and stewardship actions by 2030 1 Commentary on the changes in HICL’s metrics in comparison to FY23 can be found on pages 14, 28, 34 and 38 of HICL’s 2024 Sustainability Report 2 A more detailed explanation of HICL’s net zero targets and methodology can be found on pages 15 to 21 of HICL’s 2024 Sustainability Report 3 Note this target relates to portfolio companies where we have operational control in relation to setting and implementing water and waste reduction initiatives. Where we do not have operational control (such as PPP/PFI projects), we will still engage on these initiatives 4 100% of HICL’s portfolio by valuation has emissions data reflected in the Total GHG Emissions calculations. For more information on HICL’s methodology for estimating and reporting GHG emissions, please see pages 22 and 23 of HICL’s 2024 Sustainability Report 69 HICL Annual Report 2024 # TCFD continued ## Net zero Currently, 25% of HICL's portfolio by value is aligning, aligned to or at net zero$^{1}$. This represents Affinity Water, HS1, XLT, TNT and HICL's OFTO projects (Burbo Bank, Galloper, Hornsea II, Race Bank and Walney Extension). These assets either inherently outperform the required decarbonisation trajectory for their sector or have put in place science-based net zero targets. As set out in this report, the Company has set interim targets relating to net zero: **Portfolio Coverage:** 50% of HICL's portfolio to be net zero, aligned to net zero, or aligning to net zero by 2030. **Engagement Threshold:** 90% of all portfolio company emissions to be subject to direct or collective engagement and stewardship actions by 2030. The Company commits to reviewing these targets every five years at a minimum. As of 31 March 2024, 26% of the portfolio is currently invested in climate solutions. While the Company anticipates that this will grow over time and commits to maintaining transparency on the percentage of the portfolio invested in climate solutions, the Net Zero Investment Framework for Infrastructure recognises the difficulty in setting a Climate Solutions target for funds of HICL's nature. The Company is therefore not setting a formal target at this time. The chart below sets out the portfolio exposure (by Directors' valuation as at 31 March 2024 excluding A13 senior bonds) to physical climate risks based on current climate conditions, without mitigation: ### Portfolio exposure (by percentage of Directors' valuation as at 31 March 2024 excluding A13 senior bonds) ![img-3.jpeg](img-3.jpeg) The table below sets out the 11 TCFD recommendations, and where the related information can be found. | Recommendation | Recommended Disclosure | Pages | | --- | --- | --- | | **Governance** | - Describe the board's oversight of climate-related risks and opportunities. - Describe management's role in assessing and managing climate-related risks and opportunities. | Pages 53 and 54, | | **Strategy** | - Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. - Describe the impact of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning. - Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. | Page 53 and 54, 65, 72 and 73, 83 and 84 | | **Risk Management** | - Describe the organization's processes for identifying and assessing climate-related risks. - Describe the organization's processes for managing climate-related risks. - Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management. | Page 68 | | **Metrics and Targets** | - Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. - Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks. - Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. | Page 69 | $^{1}$ The Investment Manager's definition and approach to net zero is aligned with the Science Based Targets initiative ("SBTi") methodology which informs the investee companies plan to transition to net zero by 2050. Further details are provided in HICL's 2024 Sustainability Report 70 HICL Annual Report 2024 Strategic Report Governance Financials ## Governance WHAT’S IN THIS SECTION ### Board and Governance 72 ### Board of Directors 74 ### The Investment Manager 76 ### Corporate Governance Statement 77 ### Management Engagement 81 ### Committee (MEC) ### Market Disclosure Committee 81 ### Nomination Committee 82 ### Risk Committee Report 83 ### Audit Committee Report 85 ### Directors’ Remuneration Report 91 ### Report of the Directors 95 ### Statement of Directors’ Responsibilities 98 71 HICL Annual Report 2024 ## Board and Governance HICL’s portfolio comprises over 100 infrastructure investments. ### Operational structure The Company’s strategy relies on the expertise of its Investment HICL Infrastructure PLC (“HICL”, or the “Company” and, together Manager, InfraRed Capital Partners Limited (“InfraRed”) and is with its subsidiaries, the “Group”) is a registered investment centred around protecting and enhancing the value of the existing company with an independent Board of Directors. Its shares have portfolio, in addition to sourcing new, appropriately priced assets. a premium listing on the Official List of the UK Listing Authority and HICL has a 31 March year end, announces its full year results in trade on the main market of the London Stock Exchange. May and interim results in November. It also publishes two Interim Update Statements each year, normally in March and August. ### Equity Independent Directors Dividends ### HICL’s Shareholders Interest + Principal – Governance – Oversight – Strategy Investment Manager ### HICL Infrastructure PLC – HICL’s AIFM AIF subject to the full scope of the AIFMD (UK Investment Trust Company) – Management – Strategy – Reporting – Acquisition Pipeline – Asset Management – Risk and Portfolio Management ### HICL Infrastructure 2 S.a.r.l Administrator and Company Secretary ### Infrastructure Investments LP ### – Aztec Financial (English limited partnership) Services (UK) Limited Advisers and Service Providers – Legal ### HICL’s portfolio companies – Corporate Broking Portfolio of underlying investments – Public Relations 72 HICL Annual Report 2024 Strategic Report Governance Financials Group structure The Board and the Committees Investments are made via the Corporate Subsidiaries, which As at 31 March 2024, the Board of HICL comprised seven comprise a group structure involving a Luxembourg-domiciled independent, non-executive Directors whose role is to manage HICL investment company and an English limited partnership (the in the interests of shareholders and other stakeholders. In particular, “Partnership”), together the Corporate Subsidiaries. HICL’s assets the Board approves and monitors adherence to the Investment Policy are therefore held indirectly through the Corporate Subsidiaries and Acquisition Strategy, determines risk appetite, sets policies, and any subsidiaries are wholly owned by the general partner of agrees levels of delegation to key service providers and monitors the Partnership on behalf of the Partnership. InfraRed has been their activities and performance (including, specifically, that of the appointed the Investment Manager of HICL and the Operator of Investment Manager) against agreed objectives. The Board will the Partnership. take advice from the Investment Manager, where appropriate – for example, on matters concerning the market, the portfolio and new InfraRed has been appointed AIFM in accordance with the AIFM acquisition opportunities. Directive, and also provides the registered office of HICL. The Board meets regularly – at least five times a year, each time for The Company invests in infrastructure investments indirectly via the two consecutive days – for formal Board and Committee meetings. Corporate Subsidiaries: One of these Board meetings is devoted to considering the strategy – HICL Infrastructure 2 S.a.r.l., a société à responsabilité limitée of HICL, both in terms of potential acquisitions and the management established in Luxembourg, is the sole limited partner in the of the current portfolio. There are also a number of ad hoc meetings Partnership, an English limited partnership which has a special dependent upon business needs. In addition, the Board has purpose vehicle, the General Partner, as its general partner. formed six Committees (Audit, Management Engagement, Market Disclosure, Nomination, Remuneration and Risk) which manage risk – The General Partner is a wholly owned indirect subsidiary of and governance. InfraRed Partners LLP. The General Partner, on behalf of the Partnership, has appointed InfraRed as Operator of the Partnership. Management of the portfolio, as well as investment decisions within HICL Infrastructure 2 S.a.r.l. invests the contributions it receives in agreed parameters, is delegated to InfraRed as the Investment capital contributions and partner loans to the Partnership, which Manager, which reports regularly to the Board. acquires and holds the infrastructure investments. At the quarterly Board and Committee meetings, the operating – HICL Infrastructure 2 S.a.r.l. has an independent Board, on which and financial performance of the portfolio, its valuation and the a HICL Board Director sits, and takes advice on administration appropriateness of the risk and controls are reviewed. matters from RSM Tax & Accounting Luxembourg Sàrl. Aztec Financial Services (UK) Limited is the Administrator to HICL and also provides company secretarial services. HICL’s infrastructure investments are registered in the name of the General Partner or wholly owned subsidiaries of the Partnership. Each of the underlying investments is made by a portfolio company (not shown in the structure diagram on the previous page), which through its contractual structure ensures no cross-collateralisation of the liabilities (being, principally, the debt repayment obligations). 73 HICL Annual Report 2024 ## Board of Directors Mr Mike Bane Mr Kenneth Reid Chair of Board of Directors Senior Independent Director Chair of Nomination Chair of Management Committee EngagementCommittee Background and experience Background and experience Mike Bane (British) has been a Guernsey resident for over Kenneth D. Reid (British), resident in Singapore, has 25 years. He is a retired chartered accountant with over more than 35 years of international experience in the sectors 35 years of professional experience providing services to of construction, development and infrastructure investment. the asset management industry including the infrastructure Working initially with Kier Group, and then from 1990 with sector. He was a member of EY’s EMEIA Wealth and Bilfinger Berger AG, he has been a project leader and senior Asset Management Board and led EY’s services to the management executive responsible for businesses and asset management industry in the Channel Islands. He is projects across all continents. From 2007 to 2010, Ken served non-executive chair of the Guernsey Health Improvement as a member of the Group Executive Board of Bilfinger Berger Commission. Mike graduated with a BA in Mathematics from AG. He graduated in Civil Engineering from Heriot-Watt Oxford University. University with First Class Honours (BSc), and subsequently from Edinburgh Business School with an MBA. Ken is a Chartered Engineer, a non-executive director of Sicon Limited and is a member of the Singapore Institute of Directors. | Date of appointment* | Date of appointment* | | --- | --- | | Appointed to the Board on 1 July 2018 | Appointed to the Board 1 September 2016 | | Other public company directorships | Other public company directorships | | (listed in London unless noted otherwise)**: | (listed in London unless noted otherwise)**: | | – Apax Global Alpha Limited | – None | – abrdn Property Income Trust Limited Ms Rita Akushie Chair of Audit Committee Ms Liz Barber Background and experience Background and experience Rita Akushie (British) has more than 20 years’ experience Liz Barber (British) was previously at Kelda Group (Yorkshire acting in leadership and finance roles for housing associations Water) where she served as Chief Executive Officer from 2019 and charities, including at Newlon Group, where she was until 2022, having previously served as Chief Financial Officer Chief Financial Officer and then Deputy Chief Executive; and from 2010. Prior to that Liz held a number of senior partner subsequently as Group Finance Director for Thames Valley roles with Ernst & Young. Housing. Rita has recently served as CFO for Cancer Research UK, and currently serves as CFO & Pro Vice-Chancellor Liz is a chartered accountant and graduated with a BSc in Geography (Operations) for the University of London. Rita graduated with from the University of Leeds, where she previously served a BA in Economics and French from the University of Ghana. as Deputy Chair, and is the Chair of the Yorkshire and Humber Climate | She is a Fellow of the Institute of Chartered Accountants | Commission. Liz is the Senior Independent Director and interim | | --- | --- | | of England and Wales and a Fellow of the Association of | Remuneration Committee Chair of Cranswick plc and was formerly | | Corporate Treasurers. | a non-executive director of KCOM Plc, a UK fibre broadband provider. | | Date of appointment | Date of appointment | | Appointed to the Board on 1 January 2020 | Appointed to the Board on 1 September 2022 | | Other public company directorships | Other public company directorships | | (listed in London unless noted otherwise)**: | (listed in London unless noted otherwise)**: | | – None | – Cranswick plc | – Renew Holdings plc * Assuming a continuation of the years of service as a Director of HICL Infrastructure Company Limited ** Certain of the Directors maintain additional directorships that are also listed but not actively traded on various exchanges. Details may be obtained from the Company Secretary 74 HICL Annual Report 2024 Strategic Report Governance Financials Ms Frances Davies Chair of Remuneration Mr Simon Holden Committee Chair of Risk Committee Background and experience Background and experience Frances Davies (British) has more than 30 years of experience Simon Holden (British) is a Chartered Director (CDir) accredited across various roles within the banking and asset management by the Institute of Directors. Previously an investment director industries. Since 2007, she has been a partner of Opus at Terra Firma Capital Partners (Candover Investments prior to Corporate Finance, a corporate finance advisory business. that), Simon has been an active independent director to listed Frances is also on the Aegon UK plc Group Board and serves investment company, private equity fund and trading company as Chair of the Federated Hermes Property Unit Trust. boards since 2015. In addition, Simon acts as the pro-bono Business Advisor to Guernsey Ports, a States of Guernsey Previously Frances served as Head of Global Institutional enterprise that operates all of the Bailiwick’s critical airport and Business at Gartmore Investment Management. She had also harbour infrastructure. Simon is a member of several industry been a Director at Morgan Grenfell Asset Management and interest groups in both financial services and intellectual SG Warburg. Ms Davies graduated with a MA in Philosophy, property and graduated from the University of Cambridge with Politics and Economics and a MPhil in Management Studies, an MEng and MA (Cantab) in Manufacturing Engineering. both from Oxford University. | Date of appointment | Date of appointment* | | --- | --- | | Appointed to the Board on 1 April 2019 | Appointed to the Board 1 July 2016 | | Other public company directorships | Other public company directorships | | (listed in London unless noted otherwise)**: | (listed in London unless noted otherwise)**: | | – Supermarket Income REIT PLC | – Hipgnosis Songs Fund Limited | – JPMorgan Global Core Real Assets Limited – Chrysalis Investments Limited – Trian Investors 1 Limited (traded on the Specialist Funds Segment of the LSE) – retired 26 April 2023 as part of a members voluntary liquidation following the successful conclusion of the investment strategy and subsequent company closure Mr Martin Pugh Background and experience Martin Pugh (British) has over 35 years in the infrastructure industry, spanning roles in construction, development, investment, asset management and strategic projects. Most recently he has provided executive management support to several major infrastructure projects and prior to this he held senior executive positions within Bilfinger Project Investments, overseeing the investment performance of assets in multiple sectors and across the UK and Europe. Martin graduated in Civil & Structural Engineering and is a Chartered Engineer. Date of appointment Appointed to the Board on 1 September 2022 Other public company directorships (listed in London unless noted otherwise)**: – None 75 HICL Annual Report 2024 # The Investment Manager InfraRed is the Investment Manager to HICL. In addition, InfraRed is the Operator of the Partnership by the General Partner, on behalf of the Partnership. Under the terms of the Limited Partnership Agreement, the Operator has full discretion to acquire, dispose of or manage the assets of the Partnership, subject to investment guidelines set out by the Board. InfraRed is part of the InfraRed Group, an infrastructure investment business, managing a range of infrastructure funds and investments. InfraRed's infrastructure investment team has a strong record of delivering attractive returns for its investors, which include pension funds, insurance companies, funds of funds, asset managers and high net worth investors domiciled in the UK, Europe, North America, Middle East and Asia. Since 1990, the InfraRed Group (including predecessor organisations) has launched 22 investment funds investing in infrastructure and property, including HICL. Since July 2020, InfraRed has been owned by Sun Life Financial Inc. (together with its subsidiaries and joint ventures, "Sun Life"), although InfraRed continues to operate as a distinct business under SLC Management, Sun Life's alternatives asset management business. The Sun Life acquisition has continued to provide further support to InfraRed in its role as Investment Manager to HICL. Sun Life is a leading international financial services organisation providing insurance, wealth and asset management solutions to individual and corporate clients. As of 31 March 2024, Sun Life had total assets under management of C$1,470bn. For more information please visit www.sunlife.com. The InfraRed Group currently manages eight infrastructure funds (including HICL). The InfraRed Group currently has a staff of over 160 employees and partners, based mainly in offices in London and with regional offices in New York, Seoul, Madrid and Sydney. Its infrastructure team comprises over 100 professionals, all with an infrastructure investment background and a broad range of relevant skills, including private equity, structured finance, construction, renewable energy and facilities management. Within the infrastructure team, there is: - a Management team with overall responsibility for the activities provided to HICL; - an Investments team responsible for business development and sourcing new investments; - an Asset Management team responsible for managing the portfolio of investments; and - a Portfolio Management team responsible for financial reporting, cash flow management, debt, foreign exchange hedging and tax. Five senior members of the InfraRed team make up InfraRed's Investment Committee on behalf of HICL. The Investment Committee has combined experience of over 100 years in making infrastructure investments and managing investments and projects. Further details on the InfraRed Group can be found at www.ircp.com. Under the terms of the Investment Management Agreement, InfraRed is entitled to a fixed management fee of £100,000 per annum, together with all reasonable out-of-pocket expenses. InfraRed will not receive any directors' or other fees from any project company. InfraRed, in its capacity as Operator, and the General Partner are together entitled to annual fees calculated on the following basis and in the following order: (i) 1.1 per cent of the proportion of the Adjusted Gross Asset Value of HICL's investments which have a value of up to (and including) £750m in aggregate; (ii) 1.0 per cent of the proportion of the Adjusted Gross Asset Value of HICL's investments that is not accounted for under which, together with the investments under (i) above, have an Adjusted Gross Asset Value of up to (and including) £1.5bn in aggregate; (iii) 0.9 per cent of the proportion of the Adjusted Gross Asset Value of HICL's investments not accounted for under (i) or (ii) above which, together with investments under (i) and (ii) above, have an Adjusted Gross Asset Value of up to (and including) £2.25bn; (iv) 0.8 per cent of the proportion of the Adjusted Gross Asset Value of HICL's investments not accounted for under (i), (ii) or above which, together with investments under (i), (ii) and above, have an Adjusted Gross Asset Value of up to (and including) £3.0bn; and (v) 0.65 per cent of the proportion of the Adjusted Gross Asset Value of HICL that is not accounted for under (i), (ii), (iii), (iv) above. There are no acquisition or performance fees payable. These fees are calculated and payable quarterly in arrears and are based on the Adjusted Gross Asset Value of HICL's assets at the beginning of the period concerned, adjusted on a time basis for acquisitions and disposals during the period. The Investment Management Agreement may be terminated by either party giving the other party 36 months' written notice (or, at HICL's option, making a payment in lieu of such notice). InfraRed's appointment as Operator has corresponding termination provisions, and if InfraRed's appointment as Investment Manager is terminated it may unilaterally terminate its appointment as Operator, and vice versa. 76 HICL Annual Report 2024 Strategic Report Governance Financials # Corporate Governance Statement ## Introduction The Board recognises the importance of a strong corporate governance culture that meets the requirements of the UK Governance framework, including the UK Listing Authority as well as other relevant bodies such as the Association of Investment Companies ("AIC") of which HICL is a member. The Board has put in place a framework for corporate governance which it believes is appropriate for an investment company. All Directors contribute to the Board discussions and debates. The Board believes in providing as much transparency for investors and other stakeholders as is reasonably possible within the boundaries of client and commercial confidentiality. ## AIFM Directive The Alternative Investment Fund Managers Directive seeks to regulate AIFMs and imposes obligations on Managers who manage alternative investment funds ("AIF") in the EU or who market shares in such funds to EU investors. HICL is categorised as an externally managed AIF for the purposes of the AIFM Directive. In order to maintain compliance with the AIFM Directive, HICL complies with various organisational, operational and transparency obligations, including the pre-investment disclosure information required by Article 23 of the AIFM Directive. ## Non-mainstream pooled investments HICL conducts its affairs as an investment trust. On this basis, the Ordinary Shares should qualify as an "excluded security" and therefore be excluded from the FCA's restrictions in COBS 4.12 of the FCA Handbook that apply to non-mainstream pooled investment products. ## The AIC Code of Corporate Governance As a member of the AIC, the Board has considered the Principles and Provisions of the 2019 AIC Code of Corporate Governance (the "AIC Code"), a framework of best practice in respect of the governance of investment companies. The 2019 AIC Code applies to accounting periods beginning on or after 1 January 2019. The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of specific relevance to investment companies. The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information to shareholders. HICL has complied with the Principles and Provisions of the AIC Code. The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies. ## Board As at 31 March 2024, the Board comprised seven non-executive Directors. In accordance with Provision 10 of the AIC Code all of the non-executives who served during the year are independent of the Investment Manager. The Chair, Mike Bane, met the independence criteria of the AIC Code Provision 11 upon appointment and has continued to meet this condition throughout his term of service. Although not a requirement of the AIC Code, in accordance with guidance in Provision 11, the Board has a Senior Independent Director, Kenneth Reid. Kenneth met the independence criteria of the AIC Code Provision 11 upon appointment and has continued to meet this condition throughout his term of service. Being non-executive Directors, none of the Directors have a service contract with the Company. The Articles of Incorporation provide that each of the Directors shall retire at each Annual General Meeting in accordance with Provision 23 of the AIC Code. All seven Directors intend to retire and will offer themselves for re-election at the forthcoming Annual General Meeting in July 2024. The Board believes that the composition of the Board and its Committees reflects a suitable mix of skills and experience and that the Board, as a whole, and its Committees functioned effectively during the last 12 months. An external review was finalised in Q1 2024, with further detail included on page 82. The Board is scheduled to meet at least five times a year and between these formal meetings there is regular contact with the Investment Manager, the Secretary and the Company's Joint Corporate Brokers. The Directors are kept fully informed of investment and financial controls, and other matters that are relevant to the business of the Company that should be brought to the attention of the Directors. The Directors also have access, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company. The attendance record of Directors for the year to 31 March 2024 is set out on page 79. During the period to 31 March 2024 a further six ad hoc and Committee meetings of the Board took place. In addition to the statutory matters discussed at each quarterly Board meeting, the principal focus is on the reports provided by the Investment Manager, as well as those put forward by HICL's Corporate Brokers and financial public relations ("PR") Agent. These are all standing agenda items. Papers are sent to Directors electronically, normally at least a week in advance of the Board meetings by the Company Secretary. Board papers include: - investment activity in the period and the pipeline of potential new investment opportunities; - a review of portfolio performance in the period with material issues identified and discussed; - a review of any sustainability issues and Group sustainability initiatives from the period; - a review of any health and safety matters in the period; - a detailed financial review, including detailed management accounts, valuation and treasury matters; and - reports from HICL's Corporate Brokers and from the financial PR company. Matters relating to HICL's risk management and internal control systems (including associated stress tests), are considered by the Risk Committee (which, in turn, reports any significant matters / findings to the Board) and these are set out in more detail in the Risk Committee Report on page 83. The Board regularly requests further information on topics of interest to allow informed decisions to be taken. On a semi-annual basis, the Board, through the Audit Committee, also considers the Interim and Annual Reports as well as the detailed valuation of the investment portfolio prepared by the Investment Manager and the third-party expert opinion on the proposed valuation. On at least an annual basis, the Board considers a detailed analysis of HICL's Budget and Business Plan for the coming year. 77 HICL Annual Report 2024 Corporate Governance Statement continued Diversity policy The executive management of HICL is provided by its Investment Manager, InfraRed, with the senior decision-making body being The Board believes that a diversity of viewpoints and personal InfraRed’s Investment Committee. InfraRed is a global business with a experiences, along with broad professional expertise, lead to broad cultural representation of employees reflecting the international better decisions, is critical to innovation and provide a competitive nature of its activities. advantage in HICL’s marketplace. When recruiting new Directors, the Board searches for candidates from a diverse range of backgrounds InfraRed supports equal opportunities regardless of age, race, gender and communities to attract the widest breadth of talent, skills and or personal beliefs and preferences, both in their recruitment and outlook. The Board’s policy is to appoint individuals on merit, based when managing existing employees. InfraRed prioritises workforce on their skills, experience and expertise. engagement and implements a range of initiatives to enhance employee wellbeing, including fitness and mental health schemes, HICL has achieved the key targets of the Hampton−Alexander Review mentorship programmes, promotion of charity work and recognises and the Parker Review, that 33% of the Board of Directors should be social activities. HR systems are in place to allow employees to women by the end of 2020 and at least one Director is from an ethnic raise any concerns in confidence. InfraRed recognises that when its minority by 2024. As at 31 March 2024, 43% (three) of the Board of employees are engaged, it will benefit from elevated productivity and Directors were women and 14% (one) was from an ethnic minority. increased employee loyalty. The FCA’s Listing Rules require a listed company to disclose in its The data shown in the table below reflects the gender and ethnic annual report whether it has met its diversity target of at least one background of the Investment Committee and Company Secretary, senior position on its board of directors (i.e. Chair, Chief Executive, and was collected on the basis of self-reporting by the individuals Senior Independent Director or Chief Financial Officer) being held concerned. The questions asked were “Which of the Parker Review by a woman. Furthermore, the Listing Rules recognise that such ethnicity categories do you consider yourself to fall within?” and a disclosure requirement might not be appropriate in the context “What is the gender with which you identify?” of Chapter 15 closed-ended investment companies, the boards of which are typically comprised wholly of non-executive directors. However, the HICL Board believes it important that this target should be substantively met, and accordingly would highlight that both the Chair of the Audit Committee and the Investment Manager’s CFO, who is responsible for managing the financial activities carried out by the Investment Manager for the Company, are female. HICL has no employees beyond its non-executive Board. Gender identity and ethnic background reporting as at 31 March 2024 Number of senior Percentage Number of HICL Percentage of the positions on the Number in Executive of Executive Board members HICL Board HICL Board Management Management Gender identity Men 4 57% 2 5 71% Women 3 43% 2 29% Ethnic background White British or other White (including minority-white groups) 6 86% 2 7 100% Black/African/Caribbean/Black British 1 14% 0 0 0% Other ethnic group 0 0% 0 0 0% 78 HICL Annual Report 2024 Strategic Report Governance Financials Committees of the Board Delegation of responsibilities As well as regular Board meetings, the following Committees met The Board has delegated the day-to-day administration of the during the course of the year (as set out in the table below): Company to Aztec Financial Services (UK) Limited in its capacity as Company Secretary and Administrator. Audit, Management Engagement, Market Disclosure, Nomination, Remuneration and Risk. The formal terms of reference for each HICL delegates the majority of the day-to-day activities required to Committee have been approved by the Board of HICL and are deliver the business model, including responsibility for the majority of available on the Investor Relations section of HICL’s website. HICL’s risk and portfolio management, to the Investment Manager, InfraRed, subject to the overall oversight and supervision of the For efficiency and as all Directors are non-executive, all Committees Directors. InfraRed also operates and manages the Partnership and (apart from the Audit Committee) comprise all the Directors of its assets in accordance with and subject to the Investment Policy, the Board. investment guidelines and approved investment parameters that are adopted by the Directors from time to time in conjunction with (and The respective reports of the Remuneration Committee, the Risk with the agreement of) InfraRed. Committee and the Audit Committee are set out on pages 91, 83 and 85, respectively, of this Annual Report. The strategies and policies which govern the delegated activities have been set by the Board in accordance with section 172 of the The Chair and members of each Committee as at 31 March 2024 Companies Act 2016. were as follows below: Board Committee membership Management Audit Engagement Market Disclosure Nomination Remuneration Risk Committee Committee Committee Committee Committee Committee Chair Ms R Akushie Mr K Reid Mr M Bane Mr M Bane Ms F Davies Mr S Holden Members Ms E Barber Ms R Akushie Ms R Akushie Ms R Akushie Ms R Akushie Ms R Akushie Ms F Davies Mr M Bane Ms E Barber Ms E Barber Mr M Bane Mr M Bane Mr S Holden Ms E Barber Ms F Davies Ms F Davies Ms E Barber Ms E Barber Mr M Pugh Ms F Davies Mr S Holden Mr S Holden Mr S Holden Ms F Davies Mr K Reid Mr S Holden Mr M Pugh Mr M Pugh Mr M Pugh Mr M Pugh Mr M Pugh Mr K Reid Mr K Reid Mr K Reid Mr K Reid By invitation Mr M Bane Board attendance | | | Management | Market | | | | | --- | --- | --- | --- | --- | --- | --- | | Formal Board | Audit | Engagement | Disclosure | Nomination | Remuneration | Risk | | Meetings (5) | Committee (9) | Committee (1) | Committee (1) | Committee (3) | Committee (3) | Committee (4) | Mr M Bane* 5 9 1 1 3 3 4 Ms R Akushie 5 9 1 1 3 3 4 Mr S Holden 5 9 1 1 3 3 4 Mr K Reid 5 8 1 1 2 3 4 Ms F Davies 5 8 1 1 3 3 4 Ms E Barber 5 8 1 1 2 3 3 Mr M Pugh 5 8 1 1 3 3 4 Retired following 2023 AGM: Mr F Nelson 2 2 0 1 1 1 1 * Mr Bane attends Audit by invitation 79 HICL Annual Report 2024 Corporate Governance Statement continued Conflict of interest The Board has reviewed the need for an internal audit function and it has decided that the systems and procedures employed by the As at 31 March 2024, the Board comprised seven non-executive Investment Manager and the Secretary, including their own internal Directors, all of whom are independent of the Investment Manager. review processes, and the work carried out by HICL’s external None of the Directors sit on boards of other entities managed by the Auditors, provide sufficient assurance that a sound system of internal Investment Manager. control, which safeguards HICL’s assets, is maintained. An internal Each Director is required to inform the Board of any potential or actual audit function specific to HICL is therefore considered unnecessary conflicts of interest prior to any Board discussion. albeit, from time to time, independent assurance assignments may becommissioned by the Board. It is expected that further investments for HICL will be sourced by InfraRed and it is likely that some of these will be investments that The Board recognises that these control systems can only be have been originated and developed by, and may be acquired designed to manage rather than eliminate the risk of failure to achieve from InfraRed or from a fund managed by, InfraRed. In order to business objectives, and to provide reasonable, but not absolute, deal with these potential conflicts of interest, detailed procedures assurance against material misstatement or loss, and rely on the and arrangements have been established to manage transactions operating controls established by both the Company Administrator between HICL, InfraRed or funds managed by InfraRed (the “Rules and the Investment Manager. of Engagement”). If HICL invests in funds managed or operated The Audit Committee also plays a vital role in overseeing internal by InfraRed, HICL shall bear any management or similar fees controls. For more information please see the Audit Committee charged in relation to such fund provided, however, that the value of Report starting on page 85. HICL’s investments in such funds shall not be counted towards the valuation of HICL’s investments for the purposes of calculating the The Board and the Investment Manager have agreed clearly defined management fees payable to InfraRed. investment criteria, return targets, risk appetite and exposure limits. Reports on these performance measures, coupled with cash It is possible that in the future HICL may seek to purchase certain projections and investment valuations, are submitted to the Board investments from funds managed or operated by InfraRed once those and the relevant Committees at each quarterly meeting. investments have matured and to the extent that the investments suit HICL’s investment objectives and strategy. If such acquisitions are made, appropriate procedures from the Rules of Engagement will be Relations with shareholders put in place to manage the conflict. The Board welcomes the views of shareholders and places great Key features of the Rules of Engagement are described in HICL’s importance on communication with HICL’s shareholders. March 2019 Prospectus, available on the website at www.hicl.com. HICL reports its full year results to shareholders in May and interim results in November as well as publishing two Interim Update Risk management and internal controls Statements each year, normally in March and August. HICL also holdsan AGM in July. The Board is responsible for HICL’s system of internal control and for reviewing its effectiveness. To help achieve this end, the Board Results of Extraordinary and Annual General Meetings are has a designated Risk Committee. It follows a process designed to announced by the Company promptly after the relevant meeting. meet the particular needs of HICL in managing the risks to which it Additionally, other notices and information are provided to is exposed. shareholders on an ongoing basis through the Company’s website inorder to assist in keeping shareholders informed. The Secretary At each Board meeting, the Board also monitors HICL’s investment and Registrar monitor the voting of the shareholders and proxy voting performance in comparison to its stated objectives and it reviews is taken into consideration when votes are cast at the AGM. HICL’s activities since the last Board meeting to ensure adherence to approved investment guidelines. The pipeline of new potential Senior members of the Investment Manager make themselves opportunities is considered and the prices paid for new or available to meet with principal shareholders and key sector analysts. incremental investments during the quarter are also reviewed. Feedback from these meetings is provided to the Board on a The Investment Manager prepares management accounts and regular basis. updates business forecasts on a quarterly basis, which allow the Board to assess HICL’s activities and review its performance. Shareholders may contact any of the Directors via the Company Secretary – including any in his or her capacity as Chair of one of HICL’s Committees, as appropriate – whose contact details are on HICL’s website. During the year Mike Bane (Chair), Kenneth Reid (SID) and Frances Davies held individual meetings with certain large institutional shareholders. The Board’s intention is to continue to foster an open, two-way communication with its shareholders. 80 HICL Annual Report 2024 Strategic Report Governance Financials ## Management Market Disclosure ## Engagement Committee ## Committee (MEC) | The MEC of the Board is responsible | The Committee has responsibility for | | --- | --- | | for reviewing all major service providers | overseeing the disclosure of information | | to HICL, which includes the Investment | by the Company to meet its obligations | | Manager. The terms of reference of this | under the Market Abuse Regulation and | | Committee are approved by the Board of | theFinancial Conduct Authority’s Listing | | HICL and are available on HICL’s website. | Rules and Disclosure Guidance and | | The MEC met in February 2024 to review the performance of | Transparency Rules. | the key service providers including the Investment Manager. The Market Disclosure Committee met once in the year to No material weaknesses were identified in relation to the 31 March 2024. Investment Manager; the recommendation to the Board was that the current arrangements are appropriate and that the Investment Manager provides good quality services and advice to HICL. The full terms of reference for the Market Disclosure Committee A review of key service providers was also undertaken. Overall, are available from HICL’s website. the feedback on performance throughout the year was that key services had been delivered to a very high standard and the Committee resolved that the continued appointment of all providers, including InfraRed, be recommended to the Board for approval, which was duly granted. The full terms of reference for the MEC are available from HICL’swebsite. 81 HICL Annual Report 2024 ## Nomination Committee Succession planning for all roles, including the Chair and ### The Nomination Committee has assessed Committee Chairs, is a key responsibility of the Nomination ### the composition of the Board and its Committee. During the year, the Committee explicitly considered new Director recruitment recognising anticipated future retirements ### Committees taking account of the balance from the Board. As a result of this process, which included the ### of skills, gender, experience, knowledge and profile and skillsets that would best complement remaining Directors, an external recruitment process has been launched. ### length of service of Directors. These provide A further update will be provided in the 2024 Interim Report. ### a sound base from which the interests of Other than in exceptional circumstances, it is the policy of the Board ### investors can be served to a high standard. that Directors, including the Chair, will not serve for more than nine There is an appropriate spread of skills on the Board, combining years including time spent on the Board of HICL Infrastructure suitable knowledge of regulatory requirements, multiple Directors Company Limited. As a general rule, a Director who has served with accounting qualifications and relevant practical experience, a more than nine years will not be considered independent. depth of infrastructure expertise, and a strong understanding of the The Nomination Committee met twice in the year to 31 March 2024. specific requirements of investment companies. The full terms of reference for the Nomination Committee are available from HICL’s website. Board Evaluation Having last undertaken an external review in 2021, the Nomination Committee engaged Lintstock Ltd to conduct In line with recognised best practice, the Nomination Committee an external review of the performance of the Board and its undertakes an externally facilitated Board evaluation at least once Committees which was finalised in early 2024. Lintstock is an every three years. In the intervening periods, the Nomination advisory firm that specialises in board reviews and has no other Committee undertakes an annual self-evaluation which considers connection with the Company or individual Directors. The scope the performance, tenure, and independence of each non- and findings of the evaluation are set out below: executive Director. Scoping and tailoring The review was designed to consider core aspects of governance such as information, composition, and dynamics, as well as strategy and risk areas ## 1 relevant to the performance of HICL. Completion of surveys Board members and senior representatives of the Investment Manager completed surveys assessing the performance of the Board and each of its ## 2 Committees, as well as the performance of the Chair. Interviews In-depth interviews with Board members and senior InfraRed staff were conducted by two Lintstock Partners. The findings from the survey stage ## 3 enabled Lintstock to focus discussions on the key priorities for each Director. Analysis and delivery Lintstock analysed the findings from the surveys and interviews and delivered focused reports documenting the findings, including a number of ## 4 recommendations to increase effectiveness. Key findings Lintstock found that the HICL Board benefits from a dedicated Investment Manager, in a session facilitated by Lintstock, group of non-executives who are focused on discharging and will inform a set of specific actions which will enable the diligent oversight, and maintain a constructive dialogue with the Nomination Committee and Board to monitor progress. Investment Manager. The core aspects of Board effectiveness As part of the review, Lintstock delivered an analysis informed drew positive feedback, with the standard of rigour and the by the Lintstock Governance Index, which comprises around oversight of the acquisition and disposal of assets drawing 60 core board performance metrics from over 100 board particular praise. reviews that Lintstock has recently facilitated for UK investment The review identified a small number of areas where there was companies. This helped the Directors to understand how the scope for continuous improvement, which included maintaining HICL Board and its Committees compares with other similar a strong focus on asset management to deliver outperformance, organisations, putting the findings into context. board succession planning, seeking additional opportunities for strategic dialogue, and identifying efficiencies in the meeting process and supporting materials. These findings were discussed openly by the Nomination Committee and 82 HICL Annual Report 2024 Strategic Report Governance Financials ## Risk Committee Report ### The following pages set out the Risk Statement of the Chair of the ### RiskCommittee ### Committee’s report on its activities for The Company has a risk management framework covering all aspects ### the year ended 31 March 2024. The Risk of the Group’s business. The Company is an Alternative Investment ### Committee operates within clearly defined Fund (“AIF”) and the Investment Manager (as Alternative Investment Fund Manager, (“AIFM”)) is responsible for risk management and has ### terms of reference, which are available on well-established systems and controls to manage and monitor risk. ### the Company’s website. The Risk Committee The Board places reliance on the Investment Manager’s systems and controls and through its Risk Committee (and its Audit Committee), ### comprises all Directors and meets four times monitors, reviews and challenges their effectiveness. ### a year, coinciding with the quarterly Board The risk management framework operates across a range of ### meetings, and is available to convene ad hoc timeframes and likelihoods, from: i) previously identified risks with mitigating actions already underway, ii) the identification of near-term ### should material matters arise. emerging risks, including potential catalysts of ‘black swan’ events, and iii) longer-term ‘horizon risks’ that might influence HICL’s portfolio In discharging its responsibilities, the duties of the Risk Committee and investment policy in the decades ahead. comprise defining the risk appetite of the Group, assessing, monitoring and managing the principal risks to which the Group is The risk management framework follows a cascade approach, exposed, as well as establishing and overseeing mitigating action. with three ‘lines of defence’, to effectively safeguard and protect In particular, we consider risk exposure and controls, stress and the interests of the Company and its shareholders. The Investment scenario planning, regulatory compliance, portfolio company controls Manager implements mitigation strategies, which are regularly and the three lines of defence. reported to and assessed by the Risk Committee: – The first line is the development of systems to implement effective Simon Holden controls. These are set out in documents such as the Company’s Risk Committee Chair and the Investment Manager’s Policies and Controls Manuals. 21 May 2024 The Company must generally be satisfied that the Investment Manager’s systems and processes ensure that risk is effectively anticipated, controlled, reported and overseen. InfraRed, as the Company’s Investment Manager and the Operator of HICL’s Main duties and general approach portfolio, is responsible for the identification, classification, The Risk Committee’s main duties are, as set out in its terms of assessment and management of risk both within the existing reference, to consider and where necessary make recommendations to portfolio and in evaluating new investment opportunities. the Board, on the following: – the Company’s implementation of an effective governance – The second line is that of oversight and engagement from the Risk structure and control framework which covers key risk areas with Committee, who scrutinise and challenge InfraRed’s approach to appropriate reporting; risk management. At each quarterly meeting, the Risk Committee – the Group’s risk appetite statement (reviewed annually at a minimum), conducts an in-depth review of the most material risks faced by taking account of the current economic, political, and business the Group, which are assessed quantitatively (based on potential environment, as well as any short-term shocks or longer-term trends valuation and cash flow impact) and qualitatively (reputational (such as climate change) which might affect portfolio performance or impacts). The Committee also considers longer-term factors to the reputation of the Company; which the Company may need to adapt in the future (‘horizon – risk limits and tolerances, and risk management; risks’) such as climate change, as well as risks which may impact – ongoing regulatory compliance; – the Group’s risk profile, challenging the assessment and the future delivery of the Company’s Investment Proposition, measurement of key risks whilst monitoring the actions taken to including ‘black swan’ risks. Mitigation strategies are proposed by manage and mitigate them; the Investment Manager, with progress being monitored by the – scenario analysis to determine whether proposed mitigation is Risk Committee. The Risk Committee also ensures that all relevant sufficient to manage the business risk profile within the Company’s policies are up to date and that delegated authorities are observed. appetite; and – the Investment Manager’s advice on material changes to the – The third line is third-party assurance which is used on an as- investment strategy, the treasury policy, the hedging policy and the needed basis to provide independent scrutiny of the Company’s risk policy. risk management framework, an audit of key controls and specialist guidance. The results are reported to each of the Risk Committee and the Audit Committee as appropriate. 83 HICL Annual Report 2024 Risk Committee Report continued ### Routine business Process and reporting updates The Committee considered and noted compliance with HICL’s Over the course of the year, the Investment Manager continued to Investment Policy and other policies relating to gearing, hedging and refine its risk management process and its quarterly reporting to the risk reportable events, which are fundamental to the Company’s Risk Committee in a number of areas: risk appetite. Health and safety Within the Investment Policy, the Risk Committee has established The management of health and safety is delegated to the Investment Approved Investment Parameters (“AIPs”). These are designated Manager who, at every HICL Risk Committee meeting, will report thresholds that are approved by the Board in coordination with the 1 on significant (RIDDOR notifiable) health and safety events for all Investment Manager. These set the perimeter of HICL’s risk appetite projects and make recommendations in respect of actual or potential as it relates to portfolio construction, fund level gearing and hedging. matters of concern. The Investment Manager worked with the Risk The AIPs have served as intended during the year, with compliance Committee in the year to enhance its RIDDOR reporting, primarily monitored by the Risk Committee and any proposed investment with greater focus on root cause analysis. It also undertook ‘deep which would exceed the limits set by the AIPs appropriately dives’ into health and safety considerations at specific assets in considered in advance. AIPs are adjusted from time to time based response to concerns raised by the Committee. A full external on the evolution of the Company’s investment strategy and operating review of HICL’s legal duties regarding health and safety was also environment, with the current framework having been most recently undertaken by a third party on behalf of InfraRed and the Company. refreshed in February 2023. In response to the volatile macroeconomic environment and the Stress testing and scenario analysis consequential impacts on the Company’s share price and its A rolling programme of stress testing and scenario analysis for ability to access equity capital markets, the Risk Committee and HICL was presented to the Risk Committee at each of its meetings the Investment Manager agreed to temporarily implement a more throughout the year. The Investment Manager continued to refine rigorous oversight framework. Whilst HICL’s shares trade below the scenarios included within each Primary Risk Class based on the the Company’s Net Asset Value, all potential new investments Company’s evolving portfolio and operating environment. Given the are reviewed by the Board with approval sought to enter into the volatile macroeconomic backdrop over the year, the Investment transaction. The Risk Committee also considered and assisted the Manager presented four new stress tests covering the Financial/ Board with capital allocation decisions during the year, particularly Market and Political Primary Risk Classes. Existing stress testing with respect to the use of disposal proceeds. scenarios were also adjusted where relevant to better reflect these macroeconomic dynamics, with a particular focus on the Group’s The Committee’s routine quarterly agenda covers, inter alia, a direct and indirect exposure to interest rates. summary of key risks faced by the Group (including changes to the potential impact or timing of known risks as well as a consideration New investments of emerging and longer-term ‘horizon’ risks, with climate and Given the Company’s relatively recent investments in Fortysouth, TNT environmental risks notable amongst these), an assessment of ‘black and Altitude Infra, the Committee placed greater focus on risks faced swan’ risks (which are by definition unlikely to occur but could arise by assets that are more operational in nature. New bespoke stress with limited warning and have a potentially significant impact on the testing scenarios and key risk indicators related to management team Company), a review of HICL’s risk management policies and updates performance and the validity of assumptions made at acquisition on relevant fund or portfolio company matters as required. for key value drivers were introduced specifically for these assets. The Committee received quarterly reporting from the Investment The Risk Committee is also actively evaluating the role these assets Manager in relation to health and safety matters. The safe working play in future portfolio construction, particularly in relation to the practices of HICL’s service providers, portfolio companies and potential they represent for delivering outperformance for HICL’s contractors and the avoidance of injuries are always of paramount shareholders in the medium to long term. concern and are closely monitored. During the year, a thorough review of health and safety was undertaken as set out below. Risk appetite statement The Investment Manager worked with the Risk Committee to The Committee considered, at each meeting, regulatory compliance complete a detailed review of the Company’s Risk Appetite reports from Aztec, the Company’s Administrator and Secretary and Statement, which considers the economic, political, and business also from HICL’s Depositary. No significant action points or notable environment, as well as any short-term shocks or longer-term trends comments arose in respect of these regular reviews. that may affect portfolio performance. The residual risk rating for the The Committee concluded each quarterly meeting with an Financial / Market Risk class was increased in July 2023, primarily assessment of whether HICL was performing in compliance with its due to increases in interest rates and bond yields which impacted stated risk appetite and, confirmed that, taken as a whole, this was HICL’s weighted average discount rate and increased borrowing the case. The Committee also concludes by ensuring the Investment costs. The Investment Manager also provided more quantitative Manager’s attention focuses on any areas the Chair wishes to see and qualitative risk measures to support the Committee with its closer scrutiny of and reporting against in subsequent quarters as assessment of risk appetite for each Primary Risk Class at each matters arising. quarterly meeting. 1 Reporting of Injuries, Diseases, and Dangerous Occurrences Regulations 1985 84 HICL Annual Report 2024 Strategic Report Governance Financials ## Audit Committee Report ### I am pleased to present the Audit Committee Governance and responsibilities All members of the Committee are independent non-executive ### report for the year ended 31 March 2024. Directors. The Board believes members have the necessary range ### Myreport outlines the work performed by of financial, risk, control and commercial experience required to provide effective challenge to the Investment Manager, external ### theCommittee in the year. Auditor, and other advisers as appropriate. In particular, the Board is We held regular scheduled meetings during the year, four satisfied that Rita Akushie, Mike Bane, by invitation of the Committee, of which were aligned with the Company’s reporting cycle. and LizBarber have the recent and relevant financial experience as Member attendance can be found on page 79. Other regular outlined in the FRC’s Corporate Governance Code. attendees at these meetings included: the Company Chair, members of the Investment Manager including the CFO, and the external The external Auditor and the third-party valuation expert are invited 1 Auditor, KPMG LLP. In accordance with the Committee’s role in to attend the Audit Committee meetings at which the Annual and the investment valuations, separate meetings were held to review Interim Reports are considered, and at which they can meet with the and challenge the Investment Manager’s valuation assumptions, Audit Committee without representatives of the Investment Manager judgements and resulting valuations of the Company’s underlying being present. The Audit Committee has direct access to KPMG portfolio of infrastructure assets. The full list of Committee roles and LLP and to key senior staff of the Investment Manager, and it reports responsibilities can be found in the terms of reference available on its findings and recommendations to the Board, which retains the HICL’s website. ultimate responsibility for the Company’s financial statements. The Audit Committee is the formal forum through which the external ### Auditor reports to the Board of Directors. Committee effectiveness The results of the Committee effectiveness review for 2024 We have reviewed the independence, objectivity and effectiveness confirm the Committee is operating effectively. It is considered well of KPMG and recommended to the Board that KPMG be appointed constituted and chaired, providing an effective and appropriate level as external Auditor of the Company in respect of the coming of challenge and oversight of the areas within its remit. financial year. In advance of each Committee meeting, I met with the CFO, to discuss their reports as well as any relevant issues. I also met privately with KPMG as part of my ongoing review of their effectiveness and, periodically, with other members of the Investment Manager who have responsibility for HICL. I, or another member of the Audit Committee, will continue to be available at each AGM to respond to any questions from shareholders regarding our activities. Rita Akushie Audit Committee Chair 21 May 2024 1 The external Auditor is invited to all Audit Committee meetings, not solely those covering the Annual and Interim Reports 85 HICL Annual Report 2024 Audit Committee Report continued ### Compliance with Corporate Governance code ### What the Committee reviewed in the year The Committee received two updates on the changes to the UK ### ended 31 March 2024 Corporate Governance code, with a focus at this stage being on Internal Controls. Further updates will be provided in FY25 with a view to being ready to adopt the code when it comes into force. Financial reporting – Annual and interim reports The Company’s internal control and risk management systems, including those in relation to the financial reporting process include: – Key accounting judgements and estimates – an overview of the Investment Manager’s system of key control – Application of APMs, including the Investment Basis and oversight processes, line manager reviews and systems’ – The Annual Report to ensure that it is fair, balanced access controls; and understandable – updates for the Committee on accounting developments, including – Valuation process and policy review by an independent draft and new accounting standards and legislation; third party, on behalf of InfraRed – approval of the Group’s budget in February 2024 by the Board and a comprehensive system of financial reporting to the Board, based on the annual budget with quarterly reporting of actual results, analysis of variances, scrutiny of key performance indicators and regular reforecasting; External audit – Confirmation of the external Auditor’s independence – reports from the Investment Manager on matters relevant to the financial reporting process, including quarterly assessments of – Policy and approval for non-audit fees internal controls, processes and fraud risk; – FY2024 audit plan, including significant audit risks – independent updates and reports from the external Auditor on (being the valuation of investments in investment accounting developments, application of accounting standards, entity subsidiaries) key accounting judgements and observations on systems and – Audit results report, including the results from audit controls, where appropriate; procedures performed to address significant audit risks – an overview of the Investment Manager’s appointment of – External Auditor performance and effectiveness experienced and professional staff, both by recruitment and promotion, of the necessary calibre to fulfil their allotted responsibilities as part of the Management Engagement Committee in February 2024; and Internal control, compliance – appropriate Board oversight of external reporting. and risk management – HICL’s system of control and risk management ### Going concern and viability – The Viability Statement and the supporting stress test scenarios The Directors are required to make a statement in the Annual Report as to HICL’s long-term viability. The Committee provides advice to – An update on compliance with HMRC’s Senior Accounting the Board on the form and content of the statement, including the Officer (“SAO”) Regime including wider tax controls underlying assumptions, shown on page 62. To enable it to provide – An update on the changes to UK Corporate Governance this advice, the Committee evaluated a report from the Investment Code, covering Board responsibility around risk Manager setting out its view of HICL’s long-term viability and content management and internal control framework, with changes of the proposed Viability Statement. This report was based on the effective from 1 January 2025. Group’s five-year strategic plan and covered forecasts for investments and realisations, liquidity and gearing, including forecast outcomes of the stress test of the plan and forecast capital and liquidity Risk review performance against an assessment of the Group’s risk profile. – Valuation reports and the investment portfolio valuation – Updates on compliance with regulatory rules and ### Areas of accounting judgement compliance monitoring findings ### and controlfocus – Reports on approach to tax policy and strategy The Committee pays particular attention to matters it considers to – Annual tax update be important by virtue of their complexity, level of judgement and – Going concern and liquidity potential impact on the financial statements and wider business model. Significant areas of focus considered by the Committee are detailed in the table below, alongside the actions taken by the Committee (with appropriate challenge from the external Auditor) to address them. 86 HICL Annual Report 2024 Strategic Report Governance Financials Significant issue considered Audit Committee actions and conclusions ### Valuation of investments The total carrying value of 'Investments at fair value through profit or loss' at 31 March 2024 was £3,212.5m (2023: £3,349.7m). See Note 12 to the financial statements. The fair value of the Company's investment is based on the Net Asset Value of Infrastructure Investments Limited Partnership ('IILP') and the sundry assets and liabilities of the direct Corporate Subsidiary, Luxco. IILP's Net Asset Value is based on the fair value of the underlying investments in its portfolio of infrastructure assets. Other than the A13 Senior Secured Bonds (which are listed and therefore valued based on the quoted market price), market quotations are not available for the Company's underlying investments, so their valuation is undertaken using a discounted cash flow methodology. This methodology requires a series of material judgements to be made as further explained in the Valuation of the Portfolio starting on page 46 of this report. The Audit Committee discussed the valuation process and methodology with the Investment Manager in September, October, November 2023, and March and April 2024 as part of its review of the September 2023 Interim Report and early NAV releases in October 2023 and April 2024, as well as in March and May 2024 as part of its review of the March 2024 Annual Report. The Investment Manager carries out valuations semi-annually and provides detailed valuation reports to the Audit Committee. The Audit Committee also receives a half-year and year-end valuation report and opinion from a third-party valuation expert. The Audit Committee considered and challenged the valuation assumptions, with particular focus on inflation, judgements, and methodology. The Audit Committee met with KPMG five times during the year. In November 2023, the Audit Committee reviewed and agreed KPMG's initial audit plan, while in April 2024 the Audit Committee discussed the audit approach as well as in May 2023 following the conclusion of the audit. KPMG explained the results of their audit and confirmed that the results of KPMG's audit testing were satisfactory. ### Valuation of investments – key forecast assumptions The key forecast assumptions are future inflation rates, interest rates, rates of gross domestic product and tax rates. These assumptions are explained in further detail in the Valuation of the Portfolio starting on page 46 of this report. The Audit Committee considered in detail and provided robust challenge to the economic assumptions that are subject to judgement and that may have a material impact on the valuation. In addition, the Audit Committee considered the impact (both actual and potential) of geopolitical issues on these key economic assumptions as well as on the investments underlying cash flows, in particular for those investments with demand risk. The Audit Committee reviewed the Investment Manager's valuation reports, in conjunction with a report and opinion on the valuation from a third-party valuation expert. The Investment Manager confirmed to the Audit Committee that the economic assumptions were consistent with those used for acquisitions, and the third-party valuation expert confirmed that the economic assumptions were within an acceptable range. Whilst inflation has reduced during the year end March 2024 it is still at an elevated level compared to historic periods and therefore the Audit Committee paid particular focus to the assumptions applied to short-term inflation assumptions. The third-party valuation expert confirmed that the inflation assumptions were within an acceptable range. The Investment Manager provided sensitivities showing the impact of changing these assumptions, which have been considered by the Audit Committee and the external Auditor. The external Auditor challenged, with support of their internal valuation specialist, discount rates and macroeconomic assumptions applied in the valuation by benchmarking these to independent market data, including recent market transactions, and using their specialist's experience in valuing similar investments. They further assessed the reasonableness of the Company's assumptions by comparing these to the assumptions used by comparator companies, sales processes, back-testing of disposals and other third-party information. During the year the Investment Manager commissioned a suitably qualified accounting firm to review their valuation process. The Audit Committee was able to review the final report. The approach to valuations was deemed to be appropriate with recommendations provided to enhance the process further. The Audit Committee concluded that the Investment Manager's valuation process was robust, that a consistent valuation methodology had been applied throughout the year and that the key forecast assumptions applied were appropriate. 87 HICL Annual Report 2024 Audit Committee Report continued Significant issue considered Audit Committee actions and conclusions Valuation of investments – discount rates The Audit Committee challenged the Investment Manager on their material judgements and compared this to feedback from the third- The discount rates used to determine the valuation are selected party valuation expert. and recommended by the Investment Manager. The discount rate is applied to the expected future cash flows from each investment’s The Investment Manager highlighted to the Audit Committee the financial forecasts to arrive at a valuation (discounted cash flow forecast impact on cash flows of several stress scenarios alongside its valuation). The resulting valuation is therefore sensitive to the discount assessment of the risk to these cash flows. rate selected. The Investment Manager presented analysis of the risk free rate The Investment Manager is experienced in valuing these investments movement and implied risk premium when determining discount rates. and adopts discount rates reflecting their current and extensive experience of the market. The Investment Manager sets out the The Audit Committee was satisfied that the range of discount rates was discount rate assumptions and the sensitivity of the valuation of the appropriate for the valuation carried out by the Investment Manager. investments to this discount rate in the Valuation of the Portfolio starting on page 46 of this report. Going concern and Viability Statement The Investment Manager provided a paper explaining the rationale for the going concern basis of preparation, which has been considered by The financial statements have been prepared on a going concern the Audit Committee and the external Auditor. basis, with the assessment period of five years unchanged in the viability statement. See Note 2 for details. The Audit Committee met with the Investment Manager to discuss the rationale and challenge key assumptions applied, as part of its review of the Annual Report. The Audit Committee also reviewed the Company’s viability statement and accompanying commentary, as well as projections and sensitivities prepared by the Investment Manager to support the statement. The Audit Committee concluded that the Investment Manager’s judgement applied to the going concern basis of preparation and the Company’s viability statement was appropriate. Alternative Performance Measures (“APMs”) The Audit Committee reviewed the Investment Manager’s assessment of the Investment Basis including its presentation by challenging the There are various APMs used throughout the Annual Report to give disclosures made in the Annual Report and whether due attention was investors more information. One of these is the Investment Basis given to the distinction between the Investment Basis and IFRS. which is included to aid users of the Annual Report to assess the Company’s underlying operating performance and its gearing as well Other APMs and their relevance to investors was challenged by the as providing greater transparency into HICL’s Statement of Financial Audit Committee in order that the Annual Report provides meaningful Position, including its capacity for investment and ability to make disclosure to investors. The Financial Review starting on page 40 details distributions. Total return, NAV, and EPS are the same under IFRS the assessment and calculation of APMs. and the Investment Basis. The Board and the Investment Manager manage the Company on an Investment Basis. Fair, balanced and understandable The Audit Committee reviewed the March 2024 Annual Report to ensure that, when taken as a whole, it presents a fair, balanced and The 2019 AIC Code of Corporate Governance requires the Board understandable assessment of the Company’s position and prospects. to present a fair, balanced and understandable assessment of the Company’s position and prospects. The Audit Committee received a draft version of the March 2024 Annual Report for their review and comment, as well as a specific paper from As noted above, the Company prepares pro forma summary the Investment Manager to aid their assessment of the March 2024 financial information under the Investment Basis, as well as reporting Annual Report being fair, balanced and understandable. in accordance with IFRS in order to report the relevant financial performance and position to stakeholders. As such, the Audit Committee was able to provide positive confirmation to the Board, for it to fulfil its obligations under the AIC Code of Corporate Governance. 88 HICL Annual Report 2024 Strategic Report Governance Financials ### Accounting policies and practices External Auditor The Audit Committee reviewed the appropriateness of, and was The Audit Committee notes the requirements of the UK Corporate satisfied with, the Company’s accounting policies. Governance Code and in particular the requirement to put the external audit out to tender at least every ten years. The external audit The Directors exercised judgement in determining whether the was most recently tendered for the years commencing after 31 March Company and the Corporate Subsidiaries meet the IFRS 10 definition 2015. As reported in the March 2015 Annual Report, KPMG Channel of an investment entity. By virtue of the Company and Corporate Islands was re-appointed as auditor at the completion of the tender Subsidiaries’ status as investment entities, all investments (including process. Since then, KPMG UK was the auditor for the external audits the Corporate Subsidiaries) are accounted for at fair value through commencing after 31 March 2020. It is expected that the audit will be profit or loss. Further detail is contained within Note 12 of the tendered within the next financial year. financial statements. The Audit Committee continues to monitor developments on ‘Restoring trust in audit and corporate governance’ originally ### Internal controls published by the Department of Business, Energy and Industrial The Audit Committee reviewed the Company’s statement on internal Strategy. They remain supportive of the stated aims to strengthen controls in relation to accounting records, the valuation process and the UK’s framework for major companies and the way in which they accounts preparation, prior to endorsement by the Board. are audited. The Management Engagement Committee reviews the adequacy The Company is in compliance with the requirements of The Statutory and effectiveness of the Investment Manager’s internal controls as Audit Services for Large Companies Market Investigation (Mandatory part of its annual review of the Investment Manager’s performance. Use of Competitive Tender Processes and Audit Committee In addition, the Board reviews and debates a quarterly self- Responsibilities) Order 2014, which relates to the frequency and assessment internal control report prepared by the Investment governance of tenders for the appointment of the external Auditor and Manager – see the Risk and Risk Management section of this report the setting of a policy on the provision of non-audit services. starting on page 53 for further detail. ### Auditor independence ### Internal audit The Audit Committee is responsible for reviewing KPMG’s In line with FRC guidance, the Audit Committee keeps under review independence and performance. It establishes policies for the the need for an internal audit function. The Audit Committee is provision of non-audit services by the external Auditor and reviews satisfied that the systems of internal control of the Company, the the terms under which the external Auditor may be appointed to Investment Manager and the Administrator are adequate to fulfil the perform non-audit services, and the scope and results of the audit, Board’s obligation in this regard and that currently an internal audit including KPMG’s effectiveness. To safeguard the independence function is not necessary. Additionally, HICL’s Depositary provides and objectivity of the external Auditor, the Audit Committee ensures cash flow monitoring, asset ownership verification and oversight that any advisory and/or consulting services provided by the external services to the Company. The Committee considers the need for Auditor do not conflict with their statutory audit responsibilities. discrete internal audit engagements as appropriate. Permitted audit and audit-related services include the statutory audit In September 2023, the Committee received a report commissioned of HICL and of its subsidiaries, the Company’s interim review and by the Investment Manager on InfraRed’s valuation policies and other permitted audit-related services. The Audit Committee has procedures, including the reporting to Audit Committee. The report pre-approved these services up to £20,000, which are reported after was prepared by an independent third party and concluded that the the event to the Audit Committee. Non-audit services above this limit valuation processes were operating as expected. Small changes require prior approval from the Committee. were recommended to the Company’s policies and these were enacted inthe year. 89 HICL Annual Report 2024 # Audit Committee Report continued # Audit and non-audit fees The Audit Committee reviews the scope and results of the audit, its effectiveness and the independence and objectivity of the external Auditor, with particular regard to the level of non-audit fees. Current year fees were: | | March 2024 £m | March 2023 £m | | --- | --- | --- | | **Audit services** | | | | Audit of the Company and intermediate holding entities | **0.9** | 0.5 | | Audit of HICL's project subsidiaries and other audit-related services | **–** | – | | | **0.9** | 0.5 | | **Non-audit services** | | | | Interim review of the Company | **0.1** | 0.1 | | Other non-audit services | **–** | 0.1 | | | **0.1** | 0.2 | | **Total** | **1.0** | 0.7 | Non-audit services in the table above consisted of audit-related assurance services for the Company's Interim Report. In total, it represented 10% (2023: 29%) of total audit fees. The Audit Committee considers KPMG to be independent of the Company and that the provision of permitted non-audit services in line with HICL's policy is not a threat to the objectivity and independence of the conduct of the audit. KPMG confirmed their compliance with their standard independence and objectivity procedures to the Audit Committee. # Assessment of independence and effectiveness To fulfil its responsibility regarding the independence of the external Auditor, the Audit Committee considered: - changes in the other audit personnel in the audit plan for the current year; - a report from the external Auditor describing their arrangements to identify, report and manage any conflicts of interest; and - the extent of non-audit services provided by the external Auditor and its member network firms. To assess the effectiveness of the external Auditor, the Audit Committee reviewed: - the external Auditor's fulfilment of the agreed audit plan and variations from it; - the external Auditor's UK Transparency Report 2024; - reports highlighting the major issues that arose during the course of the audit; - feedback from the Investment Manager evaluating the performance of the audit team; and - the FRC's annual report on audit quality inspections. The Audit Committee is satisfied with KPMG's effectiveness and independence as auditor, having considered the degree of diligence and professional scepticism demonstrated by them. 90 HICL Annual Report 2024 Strategic Report Governance Financials ## Directors’ Remuneration Report ### The Remuneration Committee’s report Directors’ Remuneration Policy The Directors’ Remuneration Policy is determined by the ### includes the Directors’ Remuneration Policy, Remuneration Committee. In accordance with the provisions ### an explanation of the Committee’s structure of the AIC Code of Corporate Governance (the “AIC Code”), Directors’ remuneration is designed to reflect their duties and time ### and responsibilities, a report on its activities commitments. Remuneration is set at a reasonable level to attract and ### in the year ended 31 March 2024 and retain Directors of the necessary quality and experience to execute effective governance and oversight of the Company, to support ### relevantrequired reporting on remuneration strategy and to promote long-term sustainable success. The specific ### and shareholdings. additional responsibilities of the Chair, Senior Independent Director, and the Chairs of the various Committees of the Board are taken This report is prepared in accordance with the Listing Rules of the into account. The policy aims to be fair and reasonable compared to FCA, the relevant sections of the Companies Act 2006 and the equivalent investment trusts, investment companies and other similar- Large and Medium-sized Companies and Groups (Accounts and sized financial companies. The effects of inflation are also considered. Reports) Regulations 2008, (as amended by the Large and Medium- Reasonable travel and associated expenses are reimbursed. sized Companies and Groups (Accounts and Reports) Amendment Regulations 2013, the Companies (Miscellaneous Reporting) HICL’s Articles of Association limit the aggregate fees payable to Regulations 2018 and the Companies (Directors’ Remuneration the Board to a total of £700,000 p.a. (or such amount as HICL’s Policy and Directors’ Remuneration Report) Regulations 2019). shareholders, in a general meeting, shall determine from time to Those aspects of the report that are required to be audited are time) excluding reimbursable expenses. Within that limit it is the labelled as such. responsibility of the Remuneration Committee, as a Committee of the Board, to determine Directors’ remuneration in conjunction with the The Committee met three times during the year. The most notable Chair of the Board, and in this case, by the Remuneration Committee activity in the year was the triennial independent review of Directors’ only. Relevant comparative information is considered in forming these remuneration. In accordance with the Remuneration Policy, the recommendations and the views expressed by shareholders are Committee engaged an independent consultant to support this taken into consideration. The Remuneration Committee seeks the work, as explained in more detail in this report. The review highlighted views of an independent external remuneration consultant at least that the existing fee levels had fallen behind the market levels and every three years to assist its review of remuneration. This was carried therefore fee increases were proposed for all Board positions, out in late 2023 and the results duly reflected in the Remuneration reflecting the evolution of the Company’s portfolio and the time Committee’s recommendations. commitment and specialisms required from Directors to carry out their duties. Directors’ fees are fixed and are payable in cash. As all Directors are non-executive, they are not eligible for share options, long- There have been no changes to the Directors’ Remuneration Policy or term incentive schemes or other benefits, performance-related or the terms of reference of the Remuneration Committee. otherwise. Directors do not have service contracts and there is no This Directors’ Remuneration Report was adopted by the Board and provision for compensation for loss of office. Each new Director is signed on its behalf by: provided with a letter of appointment. Additional fees are payable at the discretion of the Remuneration Committee where Directors are involved in duties beyond those normally expected, for example, in relation to the issue of a prospectus. Frances Davies This policy and the level of Directors’ fees is reviewed annually by the Remuneration Committee Chair Remuneration Committee and applies with effect from 1 April of each 21 May 2024 year, subject to shareholder approval at the AGM. ### Committee structure and responsibilities The Remuneration Committee is composed of all the Directors including the Chair of the Company, as he was deemed to be independent at the time of his appointment. This membership is deemed appropriate on the basis that all Directors are independent and have the requisite experience and knowledge of the Company to appropriately determine remuneration. The membership of all seven Independent Directors ensures that no single Director has undue influence on the outcome of their own remuneration. The Committee operates in accordance with the Directors’ Remuneration Policy and with Principles P, Q and R of the 2019 AIC Code. 91 HICL Annual Report 2024 ## Directors' Remuneration Report continued ### Relevant performance information In setting the Directors' remuneration, consideration is given to the size, complexity and relative performance of the Company. The graph below highlights the comparative Total Shareholder Return (share price and dividends) ("TSR") for an investment in the Company$^{1}$ for the 17-year period from inception until 31 March 2024 compared with an investment in the FTSE All Share, FTSE 250 and the Morningstar Investment Trust Infrastructure indices over the same period. During that period the TSR was 6.7% p.a. compared with the FTSE All share index return of 5.7% p.a., the FTSE 250 return of 6.9% p.a. and the Morningstar Investment Trust Infrastructure index which returned 3.5% p.a. The table below is provided to enable shareholders to assess the relative importance of Directors' remuneration. It compares remuneration against dividends paid and share buybacks of the Company in the year ended 31 March 2024. | Actual expenditure | 31 March 2024 | 31 March 2023 | | --- | --- | --- | | Aggregate Directors' remuneration | £520,645 | £528,831 | | Aggregate dividends paid to shareholders^{2} | £167,597,765 | £165,638,002 | | Aggregate cost of Ordinary Shares repurchased | £0 | £0 | ### Review of remuneration The Remuneration Committee commenced its triennial independent review of Board remuneration in the second half of 2023 with the objective of ensuring that Board remuneration reflects the evolution of the Company and its market and is set at an appropriate level to attract and retain high-calibre Directors. To support the review, the Remuneration Committee commissioned FIT Remuneration Consultants ("FIT"), an independent professional remuneration consultant with highly relevant experience in non-executive fee structures. Fees of £10,000 (plus VAT) were paid to FIT for this work which included market research, Director questionnaires and interviews. The report from FIT, which contained recommendations for the financial year to 31 March 2025, was considered by the Committee in February 2024. An increase in remuneration was proposed by FIT for all roles, with consideration given to inflation, relevant market comparables, the experience and specialisms required by Directors and the upward trend in the dedicated time commitment required from the Board, in line with the evolution of the Company and its operating environment since the previous reviews conducted in 2020 and 2021. In the Committee's review of the FIT report, it elected to reduce the observed gap in proposed remuneration between the Audit and Risk Chairs, reflecting the substance of each role in the HICL-specific context. The adjustments in fee ascribed to each role was subsequently confirmed by FIT as resulting in levels better aligned with the market. The proposed remuneration, analysed by role, for the year ending 31 March 2025 is set out in the table on the following page, together with comparatives. ![img-4.jpeg](img-4.jpeg) 1 Including its predecessor, HICL Infrastructure Company Limited, from inception in March 2006 until March 2019 2 Dividends paid in the year rounded to £167.6m for the purposes of the financial statements (2023: £165.5m) 92 HICL Annual Report 2024 Strategic Report Governance Financials Total fees | | | | proposed | Fees approved | | | --- | --- | --- | --- | --- | --- | | | | (Year ended 31 | | (Year ended 31 | | | Role | 1 | March 2025) | | March 2024) | 2 | Chair £119,000 £110,000 Senior Independent Director £84,000 £74,000 Audit Committee Chair £84,000 £73,000 Risk Committee Chair £82,000 £70,500 Director £67,500 £58,500 Luxembourg representative £9,000 £8,000 3 Total £580,500 £511,000 Statement of implementation of Remuneration Policy in the current financial year The Board have adopted the proposals for Directors’ remuneration as recommended by the Remuneration Committee and will seek shareholder approval for the Directors’ Remuneration Policy and this report including the proposed remuneration at the AGM on 17 July 2024. The total fees paid to Directors in the year were within the annual fee cap of £700,000, contained in the Remuneration Policy approved by shareholders at the AGM on 19 July 2023. Directors’ remuneration – audited Year ended Year ended Total remuneration paid/due in year 31 March 2024 31 March 2023 M Bane*^ £118,000 £97,435 I Russell^ – £31,957 F Nelson^ £22,320 £70,500 K Reid^ £69,325 £55,500 R Akushie £73,000 £65,239 L Barber^ £58,500 £32,274 F Davies £58,500 £55,500 S Farnon^ – £21,152 S Holden £70,500 £67,000 M Pugh^ £58,500 £32,274 4 Total £528,646 £528,831 Figures rounded to nearest £ *The Chair was the highest paid Director, includes £8,000 in respect of Luxembourg subsidiary ^ Remuneration pro-rated for the year 1 The fees approved/proposed relate to the roles performed and not to individuals per se 2 Approved at the AGM on 19 July 2023 3 The total proposed fee presented is based on the full year remuneration for seven Directors (2024: seven Directors) and does not include pro-rata allocations which have not yet been confirmed 4 Frank Nelson stepped down from the HICL Board in July 2023, following the Company’s AGM and received pro-rata remuneration for the period served within the financial year to 31 March 2024. Kenneth Reid received additional pro-rata remuneration for the period served as Senior Independent Director within the financial year to 31 March 2024 after Frank Nelson retired 93 HICL Annual Report 2024 ## Directors' Remuneration Report continued ### Statement of Directors' shareholdings – audited The Directors of the Company on 31 March 2024, and their interests in the shares of the Company, are shown in the table below: | Number of Ordinary Shares | 31 March 2024 | 31 March 2023 | | --- | --- | --- | | M Bane | 94,602 | 14,394 | | K Reid | 29,011 | 11,991 | | R Akushie | 16,500 | 6,500 | | L Barber | 29,662 | 15,000 | | F Davies | 25,000 | 15,000 | | S Holden | 27,694 | 27,694 | | M Pugh | 22,000 | 14,000 | | **Total** | **244,603** | **104,579** | *F Nelson stood down as a Director during the year and therefore his holdings are no longer reported All of the holdings of the Directors and their families are beneficial. No changes to these holdings had been notified up to the date of this report. ### Statement of shareholder voting At the last AGM held on 19 July 2023, the resolutions relating to the Directors' Remuneration Report for the year ended 31 March 2023 and the Directors' remuneration. The percentage of votes cast was 67%. The results of the votes on resolutions relating to remuneration are summarised in the table below: | Resolution | In Favour | | Discretion | | Against | | Withheld | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Votes | % age | Votes | % age | Votes | % age | Votes | % age | | 8 Remuneration Report | 1,281,641,004 | 99.95 | 58,535 | 0.01 | 515,903 | 0.04% | 201,160 | 0.02 | | 9 Remuneration Policy | 1,275,625,294 | 99.48 | 58,535 | 0.01 | 6,523,713 | 0.51% | 209,060 | 0.02 | 94 HICL Annual Report 2024 Strategic Report Governance Financials # Report of the Directors The Directors present their Annual Report on the affairs of HICL, together with the financial statements and auditor's report, for the year to 31 March 2024. The Corporate Governance Statement forms part of this report. Details of significant events since the balance sheet date are contained in Note 20 to the financial statements. An indication of likely future developments in the business of HICL and details of research and development activities are included in the Strategic Report. Information about the use of financial instruments by HICL and its subsidiaries is given in Note 14 to the financial statements. ## Principal activity HICL is a registered investment company under section 833 of the Companies Act 2006, incorporated in the UK. Its shares have a premium listing on the Official List of the UK Listing Authority and trade on the main market of the London Stock Exchange. ## Investment Trust status The Company has been approved as an Investment Trust Company ("ITC") under sections 1158 and 1159 of the Corporation Taxes Act 2010. The Company had to meet relevant eligibility conditions to obtain approval as an ITC, and must adhere to ongoing requirements to maintain its ITC status including, but not limited to, retaining no more than 15% of its annual income. The Company has conducted its affairs to ensure it complies with these requirements. ## Dividend history | Interim dividend | Year ended 31 March 2024 | Year ended 31 March 2023 | Year ended 31 March 2022 | Year ended 31 March 2021 | Year ended 31 March 2020 | | --- | --- | --- | --- | --- | --- | | 3-month period ending 30 June | **2.06** | 2.06 | 2.06 | 2.06 | 2.06 | | 3-month period ending 30 September | **2.06** | 2.06 | 2.06 | 2.06 | 2.06 | | 3-month period ending 31 December | **2.06** | 2.06 | 2.06 | 2.06 | 2.06 | | 3-month period ending 31 March | **2.07** | 2.07 | 2.07 | 2.07 | 2.07 | | **Paid/declared** | **8.25p** | **8.25p** | **8.25p** | **8.25p** | **8.25p** | ## Directors The Directors who held office during the year to 31 March 2024 were: | Director | Role(s) | Years of service* | | --- | --- | --- | | Mr M Bane* | Chair of the Board and Nomination Committee | 5 years 9 months | | Mr F Nelson* /** | Senior Independent Director until 20 July 23 | 9 years 10 months | | Ms R Akushie | Chair of the Audit Committee | 4 years 3 months | | Mr S Holden* | Chair of the Risk Committee | 7 years 9 months | | Ms F Davies | Chair of the Remuneration Committee | 5 years 0 months | | Mr K Reid* | Senior Independent Director | 7 years 7 months | | Ms E Barber | | 1 year and 7 months | | Mr M Pugh | | 1 year and 7 months | * Assuming a continuation of the years of service as a Director of HICL Infrastructure Company Limited ** Retired 20 July 2023. The Director was considered to remain independent throughout his term served. Service was greater than nine years to facilitate handover to his successor as Senior Independent Director, prior to retirement ## Results HICL's results for the year are summarised in the Financial Review on page 40 and are set out in detail in the financial statements. ## Distributions and share capital HICL declared four quarterly interim distributions, totalling 8.25p per share, for the year ended 31 March 2024 as follows: | Amount | Declared | Record date | Paid/to be paid | | --- | --- | --- | --- | | 2.06p | 19/07/2023 | 25/08/2023 | 30/09/2023 | | 2.06p | 15/11/2024 | 24/11/2023 | 29/12/2023 | | 2.06p | 21/02/2024 | 01/03/2024 | 28/03/2024 | The fourth quarterly interim distribution, of 2.07p per share, for the year ended 31 March 2024 was declared by HICL on 15 May 2024, and is due to be paid on 28 June 2024. HICL has one class of share capital, Ordinary Shares, of which there were 2,031,488,061 in issue as at 1 April 2023. This number remained unchanged in the year. Shareholders may reinvest their dividends via a Dividend Reinvestment Plan ("DRIP"), the details of which can be obtained by emailing shares@linkgroup.co.uk. 95 HICL Annual Report 2024 # Report of the Directors continued # Corporate governance The Corporate Governance Statement on page 77 outlines the code of corporate governance against which HICL reports and its compliance, or otherwise, with the individual principles. It includes detail on the various Committees of the Board, their composition and their terms of reference. # Annual General Meeting ("AGM") HICL's AGM is held in July each year. The forthcoming meeting is scheduled for 17 July 2024. # Investment Manager and Operator InfraRed Capital Partners Limited (the "Investment Manager" or "InfraRed") acts as Investment Manager to HICL and acts as Operator of the limited partnership which holds and manages HICL's investments. A summary of the contract between HICL, its subsidiaries and InfraRed in respect of services provided is set out in Note 18 to the financial statements. Further information on the Investment Manager, including fee arrangements with HICL can be found in the Investment Manager section on page 76. The Investment Management Agreement was entered into in March 2019 and was reviewed and approved by the Board in connection with the change in domicile of HICL from Guernsey to the United Kingdom and shareholders had an opportunity to vote on the Investment Management Agreement as part of those proposals. The Board assesses InfraRed's performance as Investment Manager annually through the Management Engagement Committee. For more information, see the Corporate Governance Statement on page 77. The Directors are of the opinion that the continued appointment of InfraRed as HICL's Investment Manager is in the best interests of the shareholders of HICL. # AIFMD disclosures In accordance with the Alternative Investment Fund Managers Directive: - information in relation to HICL's leverage can be found in the Strategic Report; - remuneration of InfraRed as HICL's AIFM can be found below in AIFM Remuneration; - a summary of the activities of HICL can be found in the Investment Manager's Report starting on page 20; - a full list of the risks facing HICL can be found in HICL's March 2019 Prospectus, available from the Company's website (see also the Risk Committee Report on page 83); and - none of HICL's assets are subject to special arrangements arising from their illiquid nature. # AIFM remuneration The AIFMD Remuneration Code requires InfraRed in its capacity as AIFM of HICL, to make relevant remuneration disclosures available to investors. InfraRed assesses its list of AIFMD Code Staff. AIFMD Code Staff are notified of their status and the associated implications. InfraRed has established a remuneration policy. A summary of InfraRed's remuneration policy is contained in the Annual Report and accounts of InfraRed Partners LLP, which are available from Companies House. The aggregate total remuneration paid by the InfraRed Group for the year ended 31 March 2024 was £43,053,674. This was divided into fixed remuneration of £21,666,799 attributable to 176 beneficiaries and variable remuneration of £21,386,875 attributable to 153 beneficiaries. The aggregate total remuneration paid by the Group which contains InfraRed to AIFMD Code Staff in the year was £9,604,037 and the number of senior management and risk takers was 18. The Investment Manager fees charged to the Company were £0.1m (disclosed as Investment Manager fees in Note 18), of which the full balance remained payable at 31 March 2024. InfraRed is also the Operator of IILP, the Corporate Subsidiary through which HICL holds its investments. The total Operator fees were £33.8m, of which £8.1m remained payable at 31 March 2024. # Brokers, Administrator and Company Secretary HICL's joint corporate brokers at 31 March 2024 are Investec Bank plc and RBC Capital Markets. The Administrator and Company Secretary is Aztec Financial Services (UK) Limited. # Disclosure of information to auditor The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which HICL's auditor is unaware; and each Director has taken all the steps that he or she ought to have taken as a Director to make him or herself aware of any relevant audit information and to establish that HICL's auditor is aware of that information. # Other information An indication of likely future developments in the business and particulars of significant events which have occurred since the end of the financial year have been included in the Strategic Report. The Strategic Report includes information required by the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2008. # Auditor In accordance with Section 489 of the Companies Act 2006, a resolution for the reappointment of KPMG LLP as auditor of HICL is to be proposed at the forthcoming Annual General Meeting. 96 HICL Annual Report 2024 Strategic Report Governance Financials ## Substantial interests in share capital As at 31 March 2024, HICL is aware of or has received notification in accordance with the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 5 of the following interests in 3% or more of HICL's shares to which voting rights are attached (at the date of notification): | | Number of shares held | Percentage held | | --- | --- | --- | | Brewin Dolphin Limited | 168,510,482 | 8.29% | | Rathbones Investment Management | 149,006,243 | 7.33% | | Investec Wealth & Investment Limited | 123,534,058 | 6.08% | | M&G Investments | 70,104,100 | 3.45% | | Hargreaves Lansdown | 64,590,078 | 3.18% | ## Payment of suppliers It is the policy of HICL to settle all investment transactions in accordance with the terms and conditions of the relevant market in which it operates. HICL continues to meet the criteria to qualify for Payment Practice Reporting. This requires HICL Infrastructure PLC to report on its payment policies and specific data on payments and suppliers that demonstrate achieved performance every six months. For the purpose of this reporting HICL Infrastructure PLC is required to state a standard payment term. As HICL Infrastructure PLC does not have standard payment terms defined, the standard payment period in line with government guidance is the contractual payment period most commonly used in the period; this has been deemed to be 30 days. ## Greenhouse gas emissions (GHG) reporting See page 69 – Metrics and targets. ## Political contributions HICL made no political donations during the year (2023: none). ## Going concern The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in HICL's Business Model on page 14. The financial position of the Group, its cash flow and liquidity position are described in the Investment Manager's Report on page 20 and the Financial Review on page 40. In addition, the Notes of the financial statements include: the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Directors have assessed going concern by considering areas of financial risk, the Group's access to credit facilities and by reviewing cash flow forecasts with a number of stress scenarios. They also considered the Group's considerable financial resources, including investments in a significant number of project assets and access to credit facilities (details of which are set out in the Financial Review on page 40 and Note 15 to the financial statements). The majority of these project assets operate long-term contracts with various public sector customers and suppliers across a range of infrastructure projects. The financing for these projects is non-recourse to the Company. Based on this analysis, the Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future, a period of at least 12 months from the date of approving these financial statements. Thus, they consider it appropriate to adopt the going concern basis of accounting in preparing the annual financial statements. ## Share repurchases No shares have been bought back in the year. The latest authority to purchase shares for cancellation was granted to the Directors on 19 July 2023. ## Sustainability The Board is committed to sustainability leadership in the sector. To minimise the environmental impact of HICL's corporate affairs, all reporting to the Board and its various Committees is paperless. In addition, the Investment Manager has offset all emissions associated with Directors' travel with an accredited scheme and will continue to do so going forward. For more information, see pages 36 and 37 for the Sustainability Highlights. ## Treasury shares Section 724 of the UK 2006 Companies Act allows companies to hold shares acquired by market purchase as treasury shares, rather than having to cancel them. Issued shares may be held in treasury and may be subsequently cancelled or sold for cash in the market. This gives HICL the ability to reissue shares quickly and cost efficiently, thereby improving liquidity and providing HICL with additional flexibility in the management of its capital base. While there are currently no shares held in treasury, the Board would only authorise the resale of such shares from treasury at prices at or above the prevailing Net Asset Value per share (plus costs of the relevant sale). If such a measure were to be implemented, this would result in a positive overall effect on HICL's Net Asset Value. In the interests of all shareholders the Board will keep the matter of treasury shares under review. 97 HICL Annual Report 2024 ## Statement of Directors’ Responsibilities in respect of the Annual Report and the financial statements The Directors are responsible for preparing the Annual Report ### Responsibility statement of the Directors in and the financial statements in accordance with applicable law ### respect of the annual financial report and regulations. We confirm that to the best of our knowledge: Company law requires the Directors to prepare financial statements – the financial statements, prepared in accordance with the for each financial year. Under that law they have elected to prepare applicable set of accounting standards, give a true and fair view the financial statements in accordance with UK-adopted international of the assets, liabilities, financial position and profit or loss of the accounting standards and applicable law. Company; and Under company law the Directors must not approve the financial – the Strategic Report/Directors’ Report includes a fair review of the statements unless they are satisfied that they give a true and fair view development and performance of the business and the position of the state of affairs of the Company and of its profit or loss for that of the issuer, together with a description of the principal risks and period. In preparing these financial statements, the Directors are uncertainties that they face. required to: We consider the Annual Report and accounts, taken as a whole, – select suitable accounting policies and then apply is fair, balanced and understandable and provides the information them consistently; necessary for shareholders to assess the Company’s position and – make judgements and estimates that are reasonable, relevant performance, business model and strategy. and reliable; By order of the Board authorised signatory: – state whether they have been prepared in accordance with UK- Aztec Financial Services (UK) Limited adopted international accounting standards; Company Secretary – assess the Company’s ability to continue as a going concern, 21 May 2024 disclosing, as applicable, matters related to going concern; and Registered Office: – use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have Aztec Financial Services (UK) Limited: norealistic alternative but to do so. Forum 4, Solent Business Park, Parkway South, Whiteley, Fareham PO15 7AD 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 its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The Directors are responsible for the maintenance and integrity ofthe corporate and financial information included on the Company’swebsite. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation inother jurisdictions. 98 HICL Annual Report 2024 Strategic Report Governance Design tbc Financials # Financials WHAT'S IN THIS SECTION | KPMG LLP's Independent Auditor's Report | 100 | | --- | --- | | Income statement | 112 | | Statement of financial position | 113 | | Statement of changes in shareholders' equity | 114 | | Cash flow statement | 115 | | Notes to the financial statements | 116 | | Appendix 1: SFDR Disclosures | 148 | | Appendix 2: Valuation Policy | 160 | | Appendix 3: Infrastructure Market – Sources | 161 | | Glossary | 162 | | Directors and Advisers | 164 | ![img-5.jpeg](img-5.jpeg) HICL Annual Report 2024 ## KPMG LLP’s Independent Auditor’s Report To the members of HICL Infrastructure plc ### 1. Our opinion is unmodified In our opinion, the financial statements of HICL Infrastructure plc (‘the Company’): – give a true and fair view of the state of the Company’s affairs as at 31 March 2024, and of its profit for the year then ended; – have been properly prepared in accordance with UK-adopted international accounting standards; and – have been prepared in accordance with the requirements of the Companies Act 2006. What our opinion covers We have audited the financial statements of HICL infrastructure plc for the year ended 31 March 2024 (FY24) included in the Annual Report, which comprise the Income Statement, Statement of Financial Position, Statement of Changes in Shareholders’ Equity, Cash Flow Statement and the related Notes, including the accounting policies in note 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our reporting to the Audit Committee (“AC”). We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. ### 2. Overview of our audit | Factors driving | We considered the developments affecting the Company | Key Audit Matter Vs FY23 Item | | --- | --- | --- | | ourview of risks | since the last audit for the year ended 31 March 2023 and | | | | have updated our risk assessment. | Valuation of Investments | in Investment Geopolitical tension and global macroeconomic volatility Entity subsidiary 4.1 continue to be the dominant themes for the year ended 31 March 2024. During the year, the infrastructure investment industry continues to experience challenges, primarily driven by the persistent high interest rate environment and low investor confidence during a period of geopolitical and macroeconomic uncertainty. This means the level of judgement required to be exercised by the Company in the valuation of investments in the investment entity subsidiary, which is primarily driven by the valuation of the underlying infrastructure, PFI and PPP projects, continued to be a focus area. As part of our risk assessment, we have maintained our focus on the valuation of the investments in the investment entity subsidiary. This has included specific focus on the discount rate used in the valuation models, macroeconomic assumptions (such as inflation, GDP growth and interest rates), and project specific cash flow forecasts and adjustments made by the Company. Audit committee During the year, the AC met 9 times. KPMG are invited to attend all AC meetings and are provided with an opportunity interaction to meet with the AC in private sessions. For the Key Audit Matter, we have set out communications with the AC in section 4, including matters that required particular judgement. The matters included in the Audit Committee Chair’s report on page 85 are materially consistent with our observations of those meetings. 100 HICL Annual Report 2024 Strategic Report Governance Financials Our independence We have fulfilled our ethical responsibilities and we Total audit fee £0.9m remain independent of the Company in accordance Audit related fees £0.1m with UK ethical requirements including the FRC Ethical (including interim review) Standard as applied to listed public interest entities. Other services £0.3m We have not performed any non-audit services during FY24 or subsequently which are prohibited by the FRC Non-audit fee as a % 30% Ethical Standard. of total audit and audit related fee % We were first appointed as auditor by the directors for the period ended 31 March 2019. The period Date first appointed 26 February 2019 of total uninterrupted engagement, including HICL Infrastructure Company Limited (the previous Guernsey Uninterrupted audit tenure 6 years listed entity) is for the eighteen financial years ended 31 March 2024. Next financial period 2026 which requires a tender The engagement partner is required to rotate every 5 Tenure of engagement 2 years years. As these are the second set of the Company’s partner financial statements signed by Fang Fang Zhou, she willbe required to rotate off after the FY27 audit. | Materiality | The scope of our work is influenced by our | Materiality levels used in our audit | | | | --- | --- | --- | --- | --- | | (item 6 below) | view of materiality and our assessed risk of | | | | | | material misstatement. | | 2023 | £33.5m | | | | | 2024 | £32.1m | We have determined overall materiality for the financial statements as a whole at £32.1m (FY23: £33.5m). 2023 £25m PM Consistent with FY23, we determined that total 2024 £24m assets remains the benchmark for the Company as this is directly driven by the valuation of Investment in | | | 2023 | £1.6m | | --- | --- | --- | --- | | Investment Entity subsidiary which ultimately is most | AMPT | | | | | | 2024 | £1.6m | influential to the users of the financial statements. As such, we based our Group materiality on total Materiality: Company Materiality assets,of which it represents 1% (FY23: 1%). PM: Performance Materiality AMPT: Audit Misstatement Posting Threshold The impact of Climate change is an area of increased focus for investors and stakeholders. HICL, as an Investment Trust is impacted climate change by climate change to the extent that shareholders are interested in how climate change and associated risks affect onour audit investment decisions and investment valuations. We have considered the potential impacts of climate change on the financial statements as part of planning our audit. This included the impacts on the infrastructure, PPP and PFI projects held indirectly by the Company through its investment entity subsidiaries. As a part of our audit, we have made enquiries of management to understand the extent of the potential impact of climate change risk on the Company’s financial statements. We also performed a risk assessment of how the impact of climate change may affect the financial statements and our audit, in particular over the valuation of Investment in Investment Entity subsidiary. We considered the impact of climate change on the performance of investee companies with particular focus on the reasonableness of the free cash flow forecast. Taking into account the nature of the Company’s underlying investments in infrastructure, PPP and PFI projects, our assessment is that the climate related risks to the Company’s business strategy and financial planning did not have a significant impact on our audit, includingour key audit matter. We have also read the disclosure of climate related information in the front half of the annual report as set out on pages65-70 and considered consistency with the financial statements and our audit knowledge. Materiality 101 HICL Annual Report 2024 KPMG LLP’s Independent Auditor’s Report continued To the members of HICL Infrastructure plc ### 3. Going concern, viability and principal risks and uncertainties The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease their operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”). ### Going concern We used our knowledge of the Company, its industry, and the Our conclusions general economic environment to identify the inherent risks to its – We consider that the directors’ use of the going concern basis business model and analysed how those risks might affect the of accounting in the preparation of the financial statements Company’s financial resources or ability to continue operations over is appropriate. the going concern period. The risks that we considered most likely to – We have not identified, and concur with the directors’ assessment adversely affect the available financial resources over this period are; that there is not, a material uncertainty related to events or conditions – Operational or performance issues within the portfolio which that, individually or collectively, may cast significant doubt on the increases the number of infrastructure, PPP and PFI investments Company’s ability to continue as a going concern for the going not distributing and its impact on the Company’s distribution concern period; income and cash flows; and – We have nothing material to add or draw attention to in relation to – Continued geopolitical tension and macroeconomic downturns the directors’ statement in note 2 to the financial statements on contributing to a prolonged high interest rate and low investor the use of the going concern basis of accounting with no material confidence environment leading to a need to provide further uncertainties that may cast significant doubt over the Company’s use liquidity support to underlying infrastructure, PPP and of that basis for the going concern period, and we found the going PFI investments concern disclosure in note 2 to be acceptable; and We considered whether these risks could plausibly affect the liquidity – The related statement under the Listing Rules set out on page of the Company in the going concern period by comparing severe, 97 is materially consistent with the financial statements and our but plausible downside scenarios that could arise from these risks audit knowledge. individually and collectively against the level of available financial resources included in the Company’s financial forecasts. Our procedures also included an assessment of whether the going concern disclosure in note 2 of the financial statements gives a complete and accurate description of the Directors’ assessment of going concern. Accordingly, based on those procedures, we found the directors’ use of the going concern basis of accounting without any material uncertainty for the Company to be acceptable. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation. 102 HICL Annual Report 2024 Strategic Report Governance Financials ### Disclosures of emerging and principal risks and longer-term viability Our responsibility Our reporting between the directors’ disclosures in respect of emerging and We have nothing material to add or draw attention to in relation to principal risks and the viability statement, and the financial statements these disclosures. and our audit knowledge. We have concluded that these disclosures are materially consistent Based on those procedures, we have nothing material to add or draw withthe financial statements and our audit knowledge. attention to in relation to: – the directors’ confirmation on page 53 that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. – the Emerging and Principal Risks disclosures describing these risks and how emerging risks are identified and explaining how they are being managed and mitigated; and – the directors’ explanation in the viability statement of how they have assessed the prospects of the Company, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. We are also required to review the viability statement set out on page62 under the Listing Rules. Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Company’s longer-term viability. ### 4. Key audit matter What we mean Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: – the overall audit strategy. – the allocation of resources in the audit; and – directing the efforts of the engagement team. We include below the Key Audit Matter (unchanged from FY23) together with our key audit procedures to address this matter and our results from those procedures. This matter was addressed, and our results are based on procedures undertaken, for the purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on this matter. 103 HICL Annual Report 2024 KPMG LLP’s Independent Auditor’s Report continued To the members of HICL Infrastructure plc ### 4.1 Valuation of investments held at fair value through profit and loss Financial Statement Elements | | | FY24 FY23 | Our assessment of risk vs FY23 Our results | | | | | --- | --- | --- | --- | --- | --- | --- | | Investments | £3,212.5m £3,349.7m | | | Our assessment is the risk | | FY24: Acceptable | | in Investment | | | | | issimilar to FY23 | FY23: Acceptable | Entity subsidiary Description of the Key Audit Matter Our response to the risk Subjective valuation Control design The Company’s investments in the investment entity subsidiary We obtained an understanding of the Company’s processes to are measured at fair value and represent a significant proportion of determine the fair value of investments. We documented and assessed the Company’s net assets. The fair value of the investment entity the design and implementation of the investment valuation processes and controls. subsidiary reflects its net asset value and is determined primarily based on the valuation of the underlying infrastructure, PPP and We performed the tests below rather than seeking to rely on any of the PFI projects. Company’s controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed The fair value is determined using the income approach whereby the procedures described. long term forecasted cash flows of individual assets are discounted, Our procedures included: with their cashflows and/ or discount rate adjusted to reflect risk profile associated with these investments. In addition, inherent Our valuations expertise We challenged the Company on the assumptions inherent in the to these long term forecasted cash flows are macro-economic valuation of infrastructure, PPP and PFI projects by using our own assumptions such as inflation, foreign exchange rates, tax rates, valuations specialists to assess whether those assumptions are within deposit rates and, for certain demand-based investments, Gross a reasonable range independently developed by them based on Domestic Product (GDP). The financial statements (note 14) disclose market data. the sensitivity estimated by the Company. Test of detail For the purposes of our audit, we have assessed the risk of We reperformed the discounted cash flow calculation using the misstatement of the valuation related to these assumptions and Company’s inputs and assumptions. We constructed our own data points. discounted cash flow models for each underlying asset tested and compared the results with the Company’s valuation. Discount rate Assessing valuer’s credentials The discount rate is highly subjective and has a significant degree of We assessed the objectivity, capabilities and competence of the third estimation uncertainty with a potential range of reasonable outcomes party valuation expert engaged by the Company to challenge the (valuations) greater than our materiality for the financial statements as reasonableness of the Company’s investment valuations. a whole, and possibly many times that amount. We considered the methodology applied by the valuation expert in performing their work. We obtained and assessed the valuation Other assumptions and data points expert’s findings, held discussions with them and considered the We considered that there is a lower level of audit risk associated with impact, if any, on our audit work. other assumptions and data points as these are less judgemental and, in some cases, are more readily comparable to third party data Assessing transparency sources. However, due to the relevance of these assumptions to the We considered the appropriateness, in accordance with relevant overall valuation, we nonetheless consider these areas to also have accounting standards, of the disclosures in respect of investments in had the greatest effect on the overall audit strategy and planning of the investment entity subsidiary and the effect of changing one or more the audit. Those assumptions and data points are: inputs to reasonably possible alternative valuation assumptions. – Inflation In addition, in respect of the other data points, our procedures included: – GDP growth rates Test of detail – Deposit rates For a selection of investments, we agreed key revenue inputs and relevant overlay adjustments to the forecasted cash flows to external – Project revenue and expenses sources, such as third party contracts and invoices. Material expenses – Management overlay adjustments to cash flow and relevant overlay adjustments were agreed to the supplier invoices received and where possible to underlying agreements for leases and firm/finance maintenance contracts. We obtained the audited financial statements (where available) of the portfolio companies. We compared historic cashflow projections to the audited financial information in order to evaluate the accuracy of forecasts. Additionally, we used this information to assess the reasonableness of the cashflow projection for the next financial period. We inspected the financial statements for any material uncertainty on going concern for the portfolio companies. Where identified, we held discussions with management to understand the circumstances and assess any impact on the valuation 104 HICL Annual Report 2024 Strategic Report Governance Financials Communications with HICL Infrastructure plc’s Audit Committee Our discussions with and reporting to the Audit Committee included: – Our approach to the audit of the fair value of the investment in investment entity subsidiary including details of our planned substantive procedures and details of our assessment of the design and implementation of the controls relevant to the key audit matter. – Our conclusions on the appropriateness of the Company’s fair value methodology. – Our conclusions on the appropriateness of the valuation of the investments in investment entity subsidiary and, for investments subject tospecialist review, an indication of where the Company’s valuation point lay within our reasonable range. – The adequacy of the disclosures, particularly as it relates to the sensitivity of the valuation inputs. Areas of particular auditor judgement We identified the following as the areas of particular auditor judgement: – The identification of the discount rate as being the assumption over which there is the highest degree of subjectivity, and our assessment ofthe reasonableness of the discount rates used by the directors in the valuation Our results Based on the risk identified and our procedures performed, we consider the valuation of the investments in investment entity subsidiaries tobe acceptable (FY2023: acceptable). Further information in the Annual Report and Accounts: See the Audit Committee Report on pages 86-88 for details on how the Audit Committee considered the valuation of the investments in investment entity subsidiaries as an area of significant attention, pages 116-118 forthe accounting policy on Key Audit Matter Area, and pages 122-124/notes 12 and 14 for the financial disclosures. 105 HICL Annual Report 2024 KPMG LLP’s Independent Auditor’s Report continued To the members of HICL Infrastructure plc ### 5. Our ability to detect irregularities, and our response ### Fraud – identifying and responding to risks of material misstatement due to fraud Fraud risk To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment assessment procedures included: – enquiring of the Investment Manager, the Directors and the Audit Committee, as to the Company’s high-level policies and procedures to prevent and detect fraud, including the Investment Manager’s policy and channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud. – reading Board and Audit Committee minutes. – considering the investment manager’s fee arrangement and how closely it is linked to the valuation oftheCompany’s Investments in Investment Entity subsidiary. – Discussions among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. The engagement team includes audit partners and staff who have extensive experience of working with companies in the same sectors as the Company operates, and this experience was relevant to the discussion about where fraud risks may arise. Risk We communicated identified fraud risks throughout the audit team and remained alert to any indications offraud throughout the audit. communications Fraud risks As required by auditing standards, and taking into account possible pressures to meet performance targets, we perform procedures to address the risk of management override of controls, in particular the risk that the Company may be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates and judgements. On this audit we do not believe there is a fraud risk related to revenue recognition because of the simplistic nature of income, which principally comprises dividend income. The simple nature and low volume of individual revenue transactions means there is a remote risk of material misstatement from fraudulent manipulation; and opportunities for a material misstatement due to fraudulent revenue recognition are limited due to the nature ofthe dividend income received. We did not identify any additional fraud risks. Procedures to Our audit procedures included evaluating the design and implementation of controls over journal entries and other adjustments and inquiring the Investment Manager about any inappropriate or unusual activity relating address fraud risks tothe processes of journal entries and other adjustments. We substantively tested all material post-closing journal entries by comparing the identified journal entries tosupporting documentation. Based on the results of our risk assessment procedures and understanding ofthe process, no further high-risk journal entries or other adjustments were identified. We also assessed the accounting estimate related to the valuation of investments in investment entity subsidiary for any indicator of management bias. ### Laws and regulations – identifying and responding to risks of material misstatement ### relating to compliance with laws and regulations Laws and regulations We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors risk assessment and Investment Manager (as required by auditing standards), and discussed with the directors and Investment Manager the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements. Risk communications We communicated identified laws and regulations throughout our team and remained alert to any indications ofnon-compliance throughout the audit. 106 HICL Annual Report 2024 Strategic Report Governance Financials Direct laws context The potential effect of these laws and regulations on the financial statements varies considerably. andlink to audit The company is subject to laws and regulations that directly affect the financial statements including: – financial reporting legislation (including related companies’ legislation), – distributable profits legislation, – taxation legislation including the company’s status as an Investment Trust Company. We assessed the extent of compliance with these laws and regulations as part of our procedures ontherelatedfinancial statement items. Most significant The Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through indirect law/ theimposition of fines or litigation. regulationareas We identified the following areas as those most likely to have such an effect: – Anti-bribery and corruption; – Competition legislation; – Market abuse regulations; and Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident fromrelevant correspondence, an audit will not detect that breach. ### Context Context of the ability Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our of the audit to detect audit in accordance with auditing standards. For example, the further removed non-compliance with laws and fraud or breaches of regulations is from the events and transactions reflected in the financial statements, the less likely the inherently law or regulation limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non- compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations. 107 HICL Annual Report 2024 # **KPMG LLP's Independent Auditor's Report continued** **To the members of HICL Infrastructure plc** # **6. Our determination of materiality** The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as a whole. # **£32.1M** **(FY23: £33.5M)** **Materiality for the financial statements as a whole** # **What we mean** A quantitative reference for the purpose of planning and performing our audit. # **Basis for determining materiality and judgements applied** Materiality for the financial statements as a whole was set at £32.1m (FY23: £33.5m). This was determined with reference to a benchmark of total assets. Consistent with FY23, we determined that total assets remains the main benchmark for the Company as shareholders consider the valuation of the investment portfolio as the primary financial indicator to understand the Company's performance. Our materiality of £32.1m was determined by applying a percentage to total assets. When using a benchmark of total assets to determine overall materiality, KPMG's approach for listed entities considers a guideline range of 0.5%-1% of the measure. In setting overall materiality, we applied a percentage of 1% (FY23: 1%) to the benchmark. # **£24M** **(FY23: £25M)** **Performance materiality** # **What we mean** Our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. # **Basis for determining performance materiality and judgements applied** We have considered performance materiality at a level of 75% (FY23: 75%) of materiality for HICL Infrastructure plc financial statements as a whole to be appropriate. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. # **£1.6M** **(FY23: £1.6M)** **Audit misstatement posting threshold** # **What we mean** This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative point of view. We may become aware of misstatements below this threshold which could alter the nature, timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators of fraud. This is also the amount above which all misstatements identified are communicated to HICL Infrastructure Plc's Audit Committee. # **Basis for determining the audit misstatement posting threshold and judgements applied** We set our audit misstatement posting threshold at 5% (FY23: 5%) of our materiality for the financial statements. We also report to the Audit Committee any other identified misstatements that warrant reporting on qualitative grounds. The overall materiality for the financial statements of £32.1m compares as follows to the main financial statement caption amounts: | | Total income | | Profit before tax | | Net assets | | | --- | --- | --- | --- | --- | --- | --- | | | FY24 | FY23 | FY24 | FY23 | FY24 | FY23 | | Financial statement caption | £35.2m | £202.3m | £30.5m | £198.4m | £3,213m | £3,350m | | Materiality as % of caption | 91% | 16.6% | 105% | 16.9% | 1% | 1% | 108 HICL Annual Report 2024 Strategic Report Governance Financials ### 7. Other information in the annual report The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion onthefinancial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. All other information Our responsibility Our reporting Our responsibility is to read the other information and, in doing so, Based solely on that work we have not identified material misstatements consider whether, based on our financial statements audit work, the or inconsistencies in the other information. information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Strategic report and directors’ report Our responsibility and reporting – Based solely on our work on the other information described above we report to you as follows: – we have not identified material misstatements in the strategic report and the directors’ report; – in our opinion the information given in those reports for the financial year is consistent with the financial statements; and – in our opinion those reports have been prepared in accordance with the Companies Act 2006. Directors’ remuneration report Our responsibility Our reporting We are required to form an opinion as to whether the part of the In our opinion the part of the Directors’ Remuneration Report Directors’ Remuneration Report to be audited has been properly tobeaudited has been properly prepared in accordance with prepared in accordance with the Companies Act 2006. theCompanies Act 2006. 109 HICL Annual Report 2024 KPMG LLP’s Independent Auditor’s Report continued To the members of HICL Infrastructure plc Corporate governance disclosures Our responsibility Our reporting We are required to perform procedures to identify whether there is a Based on those procedures, we have concluded that each of these material inconsistency between the financial statements and our audit disclosures is materially consistent with the financial statements and knowledge, and: ouraudit knowledge. – the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; – the section of the annual report describing the work of the Audit Committee, including the significant issues that the Audit Committee considered in relation to the financial statements, and how these issues were addressed; and – the section of the annual report that describes the review of the effectiveness of the Company’s risk management and internal control systems. We are also required to review the part of the Corporate Governance We have nothing to report in this respect. Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. Other matters on which we are required to report by exception Our responsibility Our reporting Under the Companies Act 2006, we are required to report to you if, We have nothing to report in these respects. inour opinion: – adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or – the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or – certain disclosures of directors’ remuneration specified by law are not made; or – we have not received all the information and explanations we require for our audit. 110 HICL Annual Report 2024 Strategic Report Governance Financials ### 8. Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on page 98, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as agoing concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless theyeither intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. The Company will be including these financial statements in an annual financial report prepared using the single electronic reporting format prepared under Disclosure Guidance and Transparency Rule (“DTR”) 4.1.17R and 4.1.18R. The auditor’s report on these financial statements provides no assurance over whether the annual financial report has been prepared in accordance with those requirements. ### 9. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Ouraudit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in anauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone otherthan the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Fang Fang Zhou (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square Canary Wharf London E14 5GL 21 May 2024 111 HICL Annual Report 2024 ## Income statement For the year ended 31 March 2024 | | | Year ended | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 March 2024 | | | 31 March 2023 | | | Note | | | £m | | £m | Dividends received 198.0 151.5 Interest received – 17.5 Net (loss)/gain on revaluation of investment in Investment Entity subsidiary (162.8) 33.3 Total investment income 5 35.2 202.3 Company expenses 6 (4.7) (3.9) Profit before tax 30.5 198.4 Tax – – Profit for the year 9 30.5 198.4 Earnings per share – basic and diluted (pence) 9 1.5 9.9 All results are derived from continuing operations. There is no other comprehensive income or expense and consequently a statement of other comprehensive income has not been prepared. The accompanying Notes are an integral part of these financial statements. 112 HICL Annual Report 2024 Strategic Report Governance Financials ## Statement of financial position As at 31 March 2024 31 March 2024 31 March 2023 Note £m £m Non-current assets Investments in Investment Entity subsidiary 12,14 3,212.5 3,349.7 Total non-current assets 3,212.5 3,349.7 Current assets Trade and other receivables 0.3 0.4 Cash and cash equivalents 1.1 1.0 Total current assets 1.4 1.4 Total assets 3,213.9 3,351.1 Current liabilities Trade and other payables (0.9) (1.1) Total current liabilities (0.9) (1.1) Total liabilities (0.9) (1.1) Net assets 3,213.0 3,350.0 Equity Share capital 16 0.2 0.2 Share premium 16 1,213.3 1,213.3 Revenue reserve 16 1,902.8 1,992.9 | Capital reserve | 16 96.7 143.6 | | --- | --- | | Total equity | 11 3,213.0 3,350.0 | | Net assets per Ordinary Share (pence) | 11 158.2 164.9 | The accompanying Notes are an integral part of these financial statements. The financial statements were approved and authorised for issue by the Board of Directors on 21 May 2024, and signed on its behalf by: M Bane R Akushie Director Director Company registered number: 11738373 113 HICL Annual Report 2024 ## Statement of changes in shareholders’ equity For the year ended 31 March 2024 Total | | Share | Share | Revenue | | Capital | | | shareholders’ | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | capital | premium | reserve | 1 | reserve | | 1 | | equity | | Note | £m | £m | | £m | | £m | | | £m | Shareholders’ equity as at 31 March 2023 0.2 1,213.3 1,992.9 143.6 3,350.0 1 Profit for the year – – 77.4 (46.9) 30.5 Issue of share capital – – – – – Cost of share issue – – – – – Dividends paid 10 – – (167.6) – (167.6) Shareholders’ equity at 31 March 2024 0.2 1,213.3 1,902.8 96.7 3,213.0 1 Revenue reserve and Capital reserve are described in accounting policies Note 16 Share capital and reserves For the year ended 31 March 2023 Total | | Share | Share | Revenue | | Capital | | | shareholders’ | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | capital | premium | reserve | 1 | reserve | | 1 | | equity | | Note | £m | £m | | £m | | £m | | | £m | Shareholders’ equity as at 31 March 2022 0.2 1,055.3 1,993.3 110.3 3,159.1 1 Profit for the year – – 165.1 33.3 198.4 Issue of share capital – 160.0 – – 160.0 Cost of share issue – (2.0) – – (2.0) Dividends paid 10 – – (165.5) – (165.5) Shareholders’ equity at 31 March 2023 0.2 1,213.3 1,992.9 143.6 3,350.0 1 Revenue reserve and Capital reserve are described in accounting policies Note 16 Share capital and reserves The accompanying Notes are an integral part of these financial statements. 114 HICL Annual Report 2024 Strategic Report Governance Financials ## Cash flow statement For the year ended 31 March 2024 | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | | 31 March 2024 | | 31 March 2023 | | | | Note | | £m | | | £m | Cash flows from operating activities Profit before tax 9 30.5 198.4 Adjustments for: Total investment income 5 (35.2) (202.3) Operating cash flows before movements in working capital (4.7) (3.9) Changes in working capital: Decrease/(Increase) in receivables 0.1 (0.2) (Decrease)/Increase in payables (0.1) 0.3 Cash flow from operations (4.7) (3.8) Investment income received 172.4 169.0 Net cash from operating activities 167.7 165.2 Cash flow from investing activities Investment in subsidiary – (157.9) Net cash used in investing activities – (157.9) Cash flows from financing activities Gross proceeds from issue of share capital 16 – 160.0 Cost of share issue – (2.0) Dividends paid 10 (167.6) (165.5) Net cash used in financing activities (167.6) (7.5) Net (decrease)/increase in cash and cash equivalents 0.1 (0.2) Cash and cash equivalents at beginning of year 1.0 1.2 Cash and cash equivalents at end of year 1.1 1.0 The accompanying Notes are an integral part of these financial statements. 115 HICL Annual Report 2024 # Notes to the financial statements For the year ended 31 March 2024 ## 1. Reporting entity HICL Infrastructure PLC (the "Company" or "HICL") is a public limited company incorporated, domiciled and registered in England and Wales in the United Kingdom. The financial statements as at and for the year ended 31 March 2024 comprise the financial statements for the Company only as explained in Note 2. The Company has two corporate subsidiaries being HICL Infrastructure 2 S.a.r.l. ("Luxco") and Infrastructure Investments Limited Partnership ("IILP") (each a "Corporate Subsidiary" and together the "Corporate Subsidiaries"). IILP is a direct subsidiary of Luxco. The Company and its Corporate Subsidiaries (together the "Corporate Group") invest in infrastructure projects in the UK, Eurozone, North America and New Zealand. ## 2. Key accounting policies ### Basis of preparation The financial statements have been prepared in accordance with UK-adopted International Accounting Standards ("IFRSs"). The financial statements are presented in pounds sterling, which is the Company's functional currency. The principal accounting policies applied in the preparation of the Company's financial statements are shown below. These policies have been consistently applied. ### Going concern The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in HICL's Business Model section on the Investment Manager's Report starting on page 20. The financial position of the Company, its cash flows, and liquidity position are described from page 40 in the Financial Review. In addition, Notes 14 to 17 of the financial statements include: the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Directors have assessed going concern by considering areas of financial risk, the Group's access to the Revolving Credit Facility and Letter of Credit Facility (details of which are set out in the Financial Review starting on page 40) as well as considering the £150m Private Placement debt raised in May 2023 and by reviewing cash flow forecasts. The Directors also performed stress testing under severe but plausible scenarios including a significant increase in lifecycle costs, operational assets underperformance and reduction in final distributions from assets whose concessions end within the viability period (details of which are set out in the Viability section of the report on page 62). Judgement is applied in determining when the cash flows from underlying assets is assumed to be received when determining the cash flow forecast, based on the contractual nature or demand assumptions of each asset. The Directors also considered the Company's considerable financial resources, including indirect investments in a significant number of project assets. The going concern analysis included an assessment of the potential variability in returns and cash flows from project companies including the effects of the heightened macroeconomic volatility on demand assets as well as availability assets. The Directors also noted that the financing for project companies is non-recourse to the Company. Based on this analysis, the Directors have concluded that the Company has adequate resources to meet its liabilities as they fall due for a period of at least 12 months from the date of approving these financial statements ('the going concern period'). Thus, they consider it appropriate to adopt the going concern basis of accounting in preparing the annual financial statements. ### New and revised standards There are no new or amended accounting standards or interpretations adopted during the year that have a material impact on the financial statements. The Company notes the following standards and interpretations which were in issue and effective at the date of these financial statements. - IFRS 17 including Amendments to IFRS 17: Insurance Contracts (effective for accounting periods beginning on or after 1 January 2023) - Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies (effective for accounting periods beginning on or after 1 January 2023) - Amendments to IAS 8: Definition of Accounting Estimate (effective for accounting periods beginning on or after 1 January 2023) - Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective for accounting periods beginning on or after 1 January 2023) - Amendments to IAS 12: International Tax Reform – Pillar Two Model Rules (issued on 23 May 2023 with immediate effectiveness) The Company also notes the following standards and interpretations which were in issue but not effective at the date of these financial statements. They are not expected to have a material impact on the Company's financial statements. - Amendments to IAS 1: Classification of Liabilities as Current or Non-current (effective for accounting periods beginning on or after 1 January 2024) - Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements (effective for accounting periods beginning on or after 1 January 2024) - Amendments to IFRS 16: Lease Liability in a Sale and Leaseback (effective for accounting periods beginning on or after 1 January 2024) - Amendments to IAS1: Non-current Liabilities with Covenants (effective for accounting periods beginning on or after 1 January 2024) - Amendments to IAS 21: Lack of Exchangeability (effective date 1 January 2025) - IFRS 18: Presentation and Disclosure in Financial Statements (effective date 1 January 2027) ### Financial instruments Financial assets and liabilities are recognised in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are derecognised when the contractual rights to the cash flows from the instrument expire or the asset or liability is transferred and the transfer qualifies for derecognition in accordance with IFRS 9. 116 HICL Annual Report 2024 Strategic Report Governance Financials Non-derivative financial instruments Share capital and share premium Non-derivative financial instruments comprise the Company’s Ordinary Shares are classified as equity. Costs associated with investment in the equity and debt of its direct Corporate Subsidiary, the establishment of the Company or directly attributable to the Luxco trade and other receivables, cash and cash equivalents, loans issue of new shares are recognised as a deduction from the share and borrowings and trade and other payables. premium account. Non-derivative financial instruments are recognised initially at fair value including directly attributable transaction costs, except for Equity and reserves financial instruments measured at fair value through profit or loss. The Company is a UK approved Investment Trust Company. Subsequent to initial recognition, non-derivative financial instruments Financial statements prepared under IFRS are not strictly required to are measured as described below. apply the provisions of the Statements of Recommended Practice issued by the UK Association of Investment Companies for the financial statements of Investment Trust Companies (the “SORP”). Investments in equity and debt securities However, where relevant and appropriate, the Directors have looked Investments in the equity and loan stock of entities engaged in to follow the recommendations of the SORP. The Directors have infrastructure activities, which are not classified as subsidiaries of chosen to rename distributable and other reserves into a Revenue the Company or which are subsidiaries not consolidated in the reserve and a Capital reserve respectively. The Directors have Company’s results, are designated at fair value through profit or loss exercised their judgement in applying the SORP and a summary of since the Company manages these investments and makes purchase these judgements are as follows: and sale decisions based on their fair value. – Net gains on investments are applied wholly to the Capital reserve as they relate to the revaluation or disposal of investments; Other – Dividends are applied to the Revenue reserve except under specific Other non-derivative financial instruments are measured at amortised circumstances where a dividend arises from a return of capital cost using the effective interest method, less any impairment losses or proceeds from a refinancing, when they are applied to the for financial assets. Interest income or expenses, foreign exchange Capital reserve; gains and losses and impairment are recognised in the Income – Fees payable are applied to the Capital reserve where the service Statement. Any gain or loss on derecognition is recognised in the provided is, in substance, an intrinsic part of an intention to acquire Income Statement. or dispose of an investment; – Operating costs are applied wholly to the Revenue reserve as there Fair values is no clear connection between the operating expenses of the Fair value is the price that would be received to sell an asset or Company and the purchase and sale of an investment; and paid to transfer a liability in an orderly transaction between market – Foreign exchange movements are applied to the Revenue reserve participants at the measurement date in the principal or, in absence, where they relate to movements on non-portfolio assets. the most advantageous market to which the Company has access at that date. Cash and cash equivalents The fair value of the Company’s investment in Luxco is based on the Cash and cash equivalents held by the Company comprise cash Net Asset Value of IILP and the sundry assets and liabilities of Luxco. balances, deposits held at call with banks and other short-term, IILP’s Net Asset Value is based on the fair value of the underlying highly liquid investments with original maturities of three months or investments in its portfolio of infrastructure assets, since IILP less. Cash equivalents, including demand deposits, are held for the manages these investments and makes purchase and sale decisions purpose of meeting short-term cash commitments rather than for based on their fair value. investment or other purposes. The fair value of IILP’s underlying investments are determined using the income approach, which discounts the expected cash flows attributable to each asset at an appropriate rate to arrive at its fair value. In determining the appropriate discount rate, regard is given to relevant long-term government bond yields, the specific risks of each investment and the evidence of recent transactions. Further detail on methods and assumptions used in estimating the fair values of the financial instruments is included in Note 14. IILP has issued a £150m private placement. This note is held at amortised cost. Investment income Investment income comprises interest income, dividend income and gains/(losses) on investments, which comprise the change in fair value of the Company’s direct subsidiary. Interest income is recognised in the Income Statement based on a calculation specified within the financing loan agreement with Luxco. Dividend income is recognised when the Company’s right to receive payment is established. 117 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 2. Key accounting policies continued Key judgements Investment Entities Income tax The Company has applied IFRS 10 Consolidated Financial Income tax represents the sum of the tax currently payable and Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of deferred tax. Current tax is based on the taxable profit for the year. Interests in Other Entities in these financial statements, which require Taxable profit differs from net profit as reported in the Income investment entities to measure certain subsidiaries, including those Statement because it excludes items of income or expense that are that are themselves investment entities, at fair value through the taxable or deductible in other years and it further excludes items Income Statement, rather than consolidating their results. that are never taxable or deductible. Tax is calculated using tax rates that have been enacted or substantively enacted by the balance To determine that the Company continues to meet the definition of sheet date. an investment entity, the Company is required to satisfy the following three criteria: – It obtains funds from one or more investors for the purpose Foreign exchange gains and losses of providing these investors with professional investment Transactions entered into by the Company in a currency other management services; than its functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and – It commits to its investors that its business purpose is to invest liabilities are translated at the rates ruling at the balance sheet date. its funds solely for returns from capital appreciation, investment Exchange differences arising on the re-translation of unsettled income or both; and monetary assets and liabilities are recognised immediately in the – It measures and evaluates the performance of substantially all of its Income Statement. investments on a fair value basis. The Corporate Subsidiaries carry out investment activities and incur Expenses overheads and borrowings on behalf of the Company. They are All expenses are accounted for on an accruals basis. The Company’s considered investment entities themselves and are therefore investment management fee, administration fees and all other measured at fair value in these financial statements. expenses are charged through the Income Statement. Consistent with previous years, the Company meets the criteria due to the following reasons: Dividends payable – It delivers stable returns to shareholders through a mix of income Dividends payable to the Company’s shareholders are recognised yield and capital appreciation; when they become legally payable. In the case of interim dividends, – It provides investment management services and has several this is when they are paid. In the case of final dividends, this investors who pool their funds to gain access to infrastructure- is when they are approved by the shareholders at the Annual related investment opportunities that they might not have had General Meeting. access to individually; and – It has elected to measure and evaluate the performance of all its Segmental reporting investments on a fair value basis. The fair value method is used The Chief Operating Decision Maker (the “CODM”) has been to represent the Company’s performance in its communication determined to be the Board, who are of the opinion that the Company to the market, including investor presentations. In addition, the is engaged in a single segment of business, being the investment in Company reports fair value information internally to Directors, infrastructure. The Company has no single major customer. who use fair value as the primary measurement attribute to evaluate performance. The internal financial information used by the CODM on a quarterly basis to allocate resources, assess performance and manage the The Directors are of the opinion that the Company has all the typical Company presents the business as a single segment comprising the characteristics of an investment entity and continues to meet the portfolio of investments in infrastructure assets. definition in the standard. This conclusion is reassessed on an annual basis. The Company holds significant stakes in the majority of its portfolio ### 3. Critical accounting judgements, estimates companies and must exercise judgement in the level of control of ### and assumptions the underlying portfolio company that is obtained in order to assess whether the Company should be classified as a subsidiary. The preparation of financial statements in accordance with UK- adopted IFRS requires management to make judgements, estimates Key estimation uncertainties and assumptions in certain circumstances that affect reported The key area where estimates are significant to the financial amounts. The judgements, estimates and assumptions that have a statements and have a significant risk of causing a material significant risk of causing a material adjustment to the disclosure or to adjustment to the carrying amounts of assets and liabilities within the carrying amounts of assets and liabilities are outlined below. the next financial year is the valuation of the Company’s Investment Entity subsidiary. Luxco holds the investment in IILP, which in turn holds investments in infrastructure assets which are held at fair value. The portfolio is well-diversified by sector, geography and underlying risk exposures. The underlying investments are all valued based on a discounted cash flow methodology with the exception of the A13 investment. Management exercise judgement in determining the appropriate assumptions that underpin these valuations. Note 14 setsout the sensitivity of key assumptions to reasonably possible changes in assumptions. 118 HICL Annual Report 2024 Strategic Report Governance Financials ### 4. Geographical analysis The tables below provide an analysis based on the geographical location of the Company’s underlying investments. Rest of Investment income UK Eurozone the World Total 31 March 2024 £24.0m £8.8m £2.4m £35.2m 31 March 2023 £115.8m £69.5m £17.0m £202.3m Rest of Investment in investment entity subsidiaries UK Eurozone the World Total 31 March 2024 £2,124.3m £645.0m £433.2m £3,212.5m 31 March 2023 £2,318.0m £535.6m £496.1m £3,349.7m ### 5. Total investment income | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Dividends received 198.0 151.5 Interest received – 17.5 Net (loss)/gain on revaluation of investment in Investment Entity subsidiary (162.8) 33.3 Total 35.2 202.3 ### 6. Company expenses | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Fees to auditor 0.5 0.4 Investment Manager fees (Note 18) 0.1 0.1 Directors’ fees (Note 18) 0.5 0.5 Professional fees 3.6 2.9 Total 4.7 3.9 Fees to auditor comprise the Company’s £0.4m audit fees as well as £0.1m fees to KPMG LLP, in respect of their interim review of the Company’s accounts (2023: £0.3m audit fees and £0.1m interim review fees). Additional fees relating to the audit of the Company’s subsidiaries were £0.5m (2023: £0.2m). The non-audit services for the Company, its subsidiaries and affiliates were £0.3m (2023: £0.4m) 119 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### Information regarding the Group’s Auditor During the year, the Group received the following services from its External auditor, KPMG LLP. The table below is prepared in accordance with Companies Act requirements, which is consistent with both IFRS and the Investment basis. | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Audit Services Statutory audit Company 0.4 0.3 UK Subsidiaries 0.5 0.2 Total audit services 0.9 0.5 Non-audit services Other assurance services 0.4 0.5 Total audit and non-audit services 1.3 1.0 ### 7. Employees The Company had no employees during the year (31 March 2023: Nil). ### 8. Income tax | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Current taxes Current year – – – – The effective rate of corporation tax in the UK for a large company is 25% (2023: 19%). The tax charge in the year was lower than the standard and effective tax rate due to differences explained below. | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Profit before tax Profit before tax multiplied by the UK corporation tax rate of 25% (2023: 19%) 7.6 37.7 Effect of: Non-deductible capital losses/(gains) 40.7 (6.3) Non-taxable dividend income (49.5) (28.8) Dividends designated as interest distributions – (3.3) Other 1.2 0.7 Total – – The Directors are of the opinion that the Company has complied with the requirements for maintaining investment trust status for the purposes of section 1158 of the Corporation Tax Act 2010. This allows certain capital profits of the Company to be exempt from UK tax. Additionally, the Company may designate dividends wholly or partly as interest distributions for UK tax purposes. Interest distributions are treated as tax deductions against taxable income of the Company so that investors do not suffer double taxation on their returns. The Company is not expected to generate taxable profits not covered by the Investment Trust exemption in the foreseeable future. Therefore nodeferred tax asset has been recognised in respect of these losses. Tax payable by investments The financial statements do not directly include the tax charges for any of the Company’s intermediate holding companies or investments as these are held at fair value. All of these investments and intermediate holding companies are subject to taxes in the countries in which they operate. 120 HICL Annual Report 2024 Strategic Report Governance Financials ### 9. Earnings per share Basic and diluted earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of Ordinary Shares in issue during the year. Year ended Year ended 31 March 2024 31 March 2023 Profit attributable to equity holders of the Company £30.5m £198.4m 1 Weighted average number of Ordinary Shares in issue 2,031.5m 2,004.3m Total basic and diluted earnings per Ordinary Share 1.5 pence 9.9 pence 1 No new shares were issued in the year (31 March 2023: 94,674,560 new shares issued). At 31 March 2024 the Company had 2,031,488,061 shares in issue (31 March 2023: 2,031,488,061). ### 10. Distributions to Company shareholders | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | | 31 March 2024 | | 31 March 2023 | | | | | £m | | | £m | Amounts paid and recognised as distributions to equity holders during the year: Fourth quarterly interim dividend for the year ended 31 March 2023 of 2.07p 42.2 40.1 First quarterly interim dividend for the year ended 31 March 2024 of 2.06p per share 41.8 41.8 Second quarterly interim dividend for the year ended 31 March 2024 of 2.06p per share 41.8 41.8 Third quarterly interim dividend for the year ended 31 March 2024 of 2.06p per share 41.8 41.8  167.6 165.5 Amounts not recognised as distributions to equity holders during the year: Fourth quarterly interim dividend proposed for the year ended 31 March 2024 of 2.07p 42.2 42.1 The Company has elected to distribute a percentage of the dividends paid to shareholders as an interest distribution for tax purposes. Quarterly interest streaming fluctuates due to several factors, including the forecast annual effective interest received from underlying projects (which moves with acquisitions and disposals) and FX hedging gains/losses. ### 11. Net assets per Ordinary Share 31 March 2024 31 March 2023 Shareholders’ equity as at 31 March £3,213.0m £3,350.0m Less: fourth interim dividend £(42.2)m £(42.1)m £3,170.8m £3,307.9m Number of Ordinary Shares as at 31 March 2,031.5m 2,031.5m Net assets per Ordinary Share after deducting fourth interim dividend 156.1p 162.8p Add fourth interim dividend 2.07p 2.07p Net assets per Ordinary Share at 31 March 158.2p 164.9p 121 HICL Annual Report 2024 # Notes to the financial statements continued For the year ended 31 March 2024 # 12. Investment in Investment Entity subsidiary | Carrying amount of the investment in Luxembourg Corporate Subsidiary | 31 March 2024 | | | 31 March 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Equity Investment £m | Loan Investment £m | Total carry amount £m | Equity Investment £m | Loan Investment £m | Total carry amount £m | | Opening balance | **2,152.1** | **1,197.6** | **3,349.7** | 1,912.4 | 1,246.1 | 3,158.5 | | Additions to investment in the year | – | – | – | 157.9 | – | 157.9 | | (Loss)/gain on revaluation of investment (Note 5) | **(3.6)** | **(159.2)** | **(162.8)** | 81.8 | (48.5) | 33.3 | | Additional loan drawdown | – | **25.6** | **25.6** | – | – | – | | **Carrying amount at year end** | **2,148.5** | **1,064.0** | **3,212.5** | 2,152.1 | 1,197.6 | 3,349.7 | The Company records the fair value of its direct Corporate Subsidiary, Luxco, based on the Net Asset Value of IILP and the sundry assets and liabilities of Luxco. IILP's Net Asset Value is based on the aggregate fair value of each of its investments along with the working capital of its intermediate holding companies. Refer to page 46 for the valuation techniques and key model inputs used for determining investment fair values. The Investment Manager has carried out fair market valuations of IILP's portfolio companies as at 31 March 2024. The Directors have satisfied themselves as to the methodology used, the discount rates applied, and the valuation. The Directors have also engaged an independent third party with experience in valuing these types of investments to assess and opine on the appropriateness of the assumptions and valuations determined by the Investment Manager. This work included using independent market information, reviewing a selection of underlying data and determining an appropriate range. Based on this, the Directors received an independent opinion supporting the reasonableness of the valuation. All investments are valued using a discounted cash flow methodology except for the A13 investment in listed senior bonds which is valued based on quoted market price at the balance sheet date. The valuation techniques and methodologies have been applied consistently with the prior year. Discount rates (including the effective rate on A13) range from 1.6% to 9.6% (weighted average of 8.0%) (31 March 2023: weighted average of 7.2%). The fair values of the Group's financial assets and liabilities not held at fair value, which include the £150m private placement issued by IILP, are not materially different from their carrying values. In general, the terms of senior funding arrangements may restrict the ability of portfolio companies to make distributions. Significant restrictions include: - Historic and projected debt service and loan life cover ratios exceed a given threshold; - Required cash reserve account levels are met; - Senior lenders have agreed the current financial model that forecasts the economic performance of the project company and have approved the annual budget for the company; and - Portfolio company compliance with the terms of senior funding arrangements. # 13. Investments – acquisitions and disposals via the Corporate Subsidiaries # Acquisitions The Company, via its Corporate Subsidiaries, made the following acquisitions during the year ended 31 March 2024: - The acquisition of a 5.9% stake in Altitude Infra's fibre-to-the-home platform for £88.4m; - The acquisition of a 45.75% stake in Texas Nevada Transmission LLC for £207.3m; - The acquisition of a 75% stake in the Hornsea II OFTO for £119.1m; and - The incremental acquisition of a 3.1% stake in the A63 Motorway for £20.1m. 122 HICL Annual Report 2024 Strategic Report Governance Financials ## Disposals The Company, via its Corporate Subsidiaries, made the following disposal and divestment during the year ended 31 March 2024: - The partial disposal of Northwest Parkway ("NWP") generated net proceeds of $82.8m (£68.5m); - A portfolio disposal comprising Queens (Romford) Hospital, Oxford John Radcliffe Hospital, Priority Schools North East Batch and South Ayrshire Schools and half of the Group's investment in the Hornsea II OFTO which generated combined final proceeds received of £197.4m¹. - The disposal of Bradford BSF Schools PPP, phases 1 and 2 (UK) generated combined proceeds of £37.6m; - The disposal of University of Sheffield accommodation generated proceeds of £18.5m; - The disposal of the Group's remaining 22.3% stake in NWP generated proceeds net of costs and taxes of $215.5m (£172.4m)¹. Note 20 details the acquisitions and disposals made by the Company, via its Corporate Subsidiaries, since the year end. The amounts above reflect the acquisitions and disposals recognised under the IFRS Basis. Amounts shown in the Valuation of the Portfolio section on pages 46 to 52 are under the Directors' Valuation basis, which includes commitments. ## 14. Financial instruments ### Fair value estimation The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments: ### Financial instruments The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. Where applicable, further information about the assumptions used in determining fair value is disclosed in the Notes specific to that asset or liability. ### Classification of financial instruments | | 31 March 2024 £m | 31 March 2023 £m | | --- | --- | --- | | **Financial assets** | | | | Investment in Investment Entity subsidiary | **3,212.5** | 3,349.7 | | **Financial assets at fair value through profit or loss** | **3,212.5** | **3,349.7** | | Trade and other receivables | **0.3** | 0.4 | | Cash and cash equivalents | **1.1** | 1.0 | | **Financial assets – amortised cost** | **1.4** | **1.4** | | **Financial liabilities – other financial liabilities** | | | | Trade and other payables | **(0.9)** | **(1.1)** | | **Financial liabilities** | **(0.9)** | **(1.1)** | The Directors are of the opinion that the carrying values of all financial instruments are approximately equal to their fair values. ### Fair value hierarchy The fair value hierarchy is defined as follows: - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities - Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) | | Level 1 £m | Level 2 £m | Level 3 £m | 31 March 2024 Total £m | | --- | --- | --- | --- | --- | | **Investment in Investment Entity subsidiary (Note 12)** | **–** | **–** | **3,212.5** | **3,212.5** | 1 By 21 May 2024, the proceeds from the disposals of Northwest Parkway and Hornsea II had been received 123 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 14. Financial instruments continued 31 March 2023 Level 1 Level 2 Level 3 Total £m £m £m £m Investment in Investment Entity subsidiary (Note 12) – – 3,349.7 3,349.7 There were no transfers between Level 1, 2 or 3 during the year. A reconciliation of the movement in Level 3 assets is disclosed in Note 12. Level 3 Valuation methodology Fair value impact | | | | Fair value at | Sensitivity on key | of sensitivities (£m) | | | --- | --- | --- | --- | --- | --- | --- | | Methodology Description Inputs | | | 31 March (£m) | unobservable input | | +5%/-5% | | NAV The fair value of the investment | | Inputs that are not based on observable | £3,212.5 (31 | A 5% sensitivity | | £160.6 | | | in HICL’s Investment Entity | market data. The fair value of HICL’s | March 2023: | on closing NAV | | | | | Subsidiary, Luxco, which is | investment in Luxco is based on Luxco’s | £3,349.7) | chosen due to | | | | | equal to its carrying value | holding in IILP that is held at fair value | | historical volatility | | | The value of the Company’s investment in its Investment Entity subsidiary is sensitive to changes in the macroeconomic assumptions used as part of the portfolio valuation process. As part of its analysis, the Directors have considered the potential impact of a change in a number of the macroeconomic assumptions used in the valuation process. By considering these potential scenarios, the Directors are well positioned to assess how the Company is likely to perform if affected by variables and events that are inherently outside of the control of the Directors and the Investment Manager. Sensitivities In order to give investors a meaningful sensitivity analysis, the Directors have considered how changes in macroeconomic assumptions in the underlying assets for which the Company holds an indirect interest would affect the investment that the Company has in its direct Investment Entity subsidiary, rather than the sensitivity in the Investment Entity subsidiary. Consequently, the following numbers are presented on the Investment Basis, with the sensitivity having the same impact on both net assets and total investment income. See also the Valuation of the Portfolio section on page 46. Investment at fair -0.5% p.a. value through +0.5% p.a. Sensitivities change profit or loss change Discount rates 31 March 2024 £173.8m £3,268.9m £(158.2)m 31 March 2023 £195.4m £3,498.6 £(177.1)m Inflation rates 31 March 2024 £(141.3)m £3,268.9m £160.0m 31 March 2023 £(176.1)m £3,498.6 £207.5m GDP 31 March 2024 £(55.3)m £3,268.9m £38.4m 31 March 2023 £(86.9)m £3,498.6m £82.6m Investment at fair -1% p.a. value through +1 p.a. change profit or loss change Cash deposit rates 31 March 2024 £(46.9)m £3,268.9m £46.5m 31 March 2023 £(58.8)m £3,498.6 £58.2m Debt interest rates 31 March 2024 £25.5m £3,268.9m £(27.7)m 31 March 2023 £28.7m £3,498.6 £(20.4)m Investment at fair -5% p.a. value through +5% p.a. change profit or loss change Tax 31 March 2024 £107.1m £3,268.9m £(107.9)m 31 March 2023 £132.6m £3,498.6m £(131.6)m 124 HICL Annual Report 2024 Strategic Report Governance Financials The sensitivity assumes that the changes are for all future periods. The increase is consistent with that shown by the Company's listed infrastructure peers and this allows for comparisons to be made. A higher sensitivity is not considered necessary as the mix of the portfolio means that the sensitivity is linear and it is possible to estimate the impact if percentage changes are in multiples of this sensitivity. The Directors recognise that current levels of macroeconomic volatility are likely to give rise to materially greater possible ranges of values than has been the case for a number of years. ## 15. Loans and borrowings The Group's multi-currency £650m facility is held by its Corporate Subsidiary, IILP. It has a three-year tenor, which runs to 30 June 2026. Post-year end, the facility size was reduced from £650m to £400m at the Group's request. In May 2023, the Company's Corporate Subsidiary, IILP, issued £150m of Private Placement loan notes. The notes were issued in two tranches: £100m expiring in 2033 and £50m expiring in 2035. The weighted average interest rate is 5.80% (5.75% after hedging). The notes are held at amortised cost by IILP. ## 16. Share capital and reserves | Ordinary Shares | 31 March 2024 m | 31 March 2023 m | | --- | --- | --- | | Authorised and issued at the beginning of the year | 2,031.5 | 1,936.8 | | Issued for cash | – | 94.7 | | **Authorised and issued at end of year – fully paid** | **2,031.5** | **2,031.5** | The holders of the 2,031,488,061 Ordinary Shares (31 March 2023: the 2,031,488,061) are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. ### For the year ended 31 March 2024 No new share issuances occurred during the year ended 31 March 2024. ### For the year ended 31 March 2023 In July 2022, 94.7 million new Ordinary Shares of 0.01p each were issued to various institutional investors at an issue price per share (before expenses) of 169.0p. | Share capital | 31 March 2024 £m | 31 March 2023 £m | | --- | --- | --- | | Opening balance | 0.2 | 0.2 | | **Balance at end of year** | **0.2** | **0.2** | | Share premium | 31 March 2024 £m | 31 March 2023 £m | | --- | --- | --- | | Opening balance | 1,213.3 | 1,055.3 | | Issue of Ordinary Shares | – | 160.0 | | Costs of issue of Ordinary Shares | – | (2.0) | | **Balance at end of year** | **1,213.3** | **1,213.3** | ### Revenue reserve and Capital reserve Revenue reserve and Capital reserve are detailed in the Statement of Changes in Equity. The Capital reserve represents the accumulated unrealised fair value gains/losses on the Company's investment in its Investment Entity subsidiary since acquisition on 1 April 2019. ## 17. Financial risk management The Corporate Group is exposed to market risk (which includes currency risk, interest rate risk and inflation risk), credit risk and liquidity risk arising from the financial instruments it holds through IILP as disclosed below. The Corporate Group, via IILP, owns a portfolio of investments predominantly in the subordinated loanstock and equity of project companies. These companies are structured at the outset to minimise financial risks where possible. Ongoing risk management occurs through the individual boards of the project companies and monitored through regular financial and operational performance reports. 125 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 17. Financial risk management continued Market risk Returns from HICL’s investments are affected by market events giving rise to changes in the value of underlying portfolio assets. The value of these investments will be a function of the discounted value of their expected future cash flows and as such will vary with, inter alia, movements in interest rates, market prices and the competition for such assets. As at 31 March 2024, and following the sale of Northwest Parkway, the proportion of the portfolio considered sensitive to GDP as at 31 March 2024 has reduced to 14% (18% at 31 March 2023), with four assets sensitive to GDP, namely, the A63, M1-A1 Road, RMG Roads and HS1. At times of higher economic activity there will be greater traffic volumes using these roads and railways, generating increased revenues for theprojects than compared to periods of lower economic activity and therefore we assess these as GDP sensitive investments. Interest rate risk The Corporate Group has indirect exposure to interest rates through changes to the financial performance and the valuation of portfolio companies caused by interest rate fluctuations in loans and borrowings. The Company itself does not have any borrowings but does have an interest-bearing loan with Luxco and therefore is exposed to interest rate risk. The sensitivity of the portfolio companies to interest rates is shown in Note 14. Inflation risk The infrastructure project companies in which the Corporate Group invests are generally structured so that contractual income and costs are either wholly or partially linked to specific inflation where possible to minimise the risks of mismatch between income and costs due to movements in inflation. The Corporate Group’s overall cash flows vary with inflation, although they are not fully correlated as not all flows are indexed. The effects of inflation changes do not always immediately flow through to the Corporate Group’s cash flows, particularly where a project’s loanstock debt carries a fixed coupon and the inflation changes flow through by way of changes to dividends in future periods. As RPIis to be aligned with CPIH from 2030, RPI-linked project companies have been aligned to CPIH from this date. The sensitivity of the Corporate Group to inflation is shown in the sensitivities table in Note 14 on page 124. Currency risk The Corporate Group monitors its foreign exchange exposures using its near-term and long-term cash flow forecasts. Its policy is to use foreign exchange hedging to provide protection against the effect of exchange rate fluctuations on the level of sterling distributions that the Corporate Group expects to receive over the medium term, where considered appropriate. This may involve the use of forward exchange and other currency hedging contracts at IILP level, as well as the use of Euro, Canadian dollar, US dollar, NZ dollar and other currency denominated borrowings. At 31 March 2024, the Corporate Group, via IILP, hedged its currency exposure through Euro, Canadian dollar, New Zealand dollar and US dollar forward contracts. This has reduced the volatility in the NAV from foreign exchange movements. The hedging policy is designed to provide confidence in the near-term yield and to limit NAV per share sensitivity to no more than 2% for a 10% foreign exchange movement. The sensitivity of the Corporate Group to currency risk is shown in the sensitivities table in Note 14 on page 124. The proceeds from the NWP disposal were fully hedged from the date the sale was signed. Credit risk Credit risk is the risk that a counterparty of the Corporate Group will be unable or unwilling to meet a commitment that it has entered into with the Corporate Group. The Corporate Group is subject to credit risk on its loans, receivables, cash and deposits. The Corporate Group’s cash and deposits are heldwith reputable banks. The credit quality of loans and receivables within the investment portfolio is based on the financial performance of the individual portfolio companies. For those assets that are not past due, it is believed that the risk of default is small and capital repayments and interest payments will be made in accordance with the agreed terms and conditions of the investment. The Corporate Group’s maximum exposure to credit risk over financial assets is the carrying value of those assets in the balance sheet. The Corporate Group does not hold any collateral as security. Liquidity risk The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. | | Less than | | Between 1 | | Between 2 | | More than | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 year | and 2 years | | and 5 years | | | 5 years | | | 31 March 2024 | | £m | | £m | | £m | | | £m | Trade and other payables 0.9 – – – Total 0.9 – – – | | | Between 1 | | Between 2 | | More than | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Less than | and 2 years | | and 5 years | | | 5 years | | | 31 March 2023 | 1 year £m | | £m | | £m | | | £m | Trade and other payables 1.1 – – – Total 1.1 – – – 126 HICL Annual Report 2024 Strategic Report Governance Financials ## 18. Related party transactions and transactions with the Investment Manager InfraRed was appointed under an Investment Management Agreement, dated 4 March 2019, as Investment Manager to, and as the AIFM of HICL. The Investment Management Agreement may be terminated by either party to the agreement, being HICL or InfraRed, giving three years' written notice or if InfraRed's appointment as Operator (see below) is terminated. Under the Investment Management Agreement, InfraRed is entitled to a fee of £0.1m p.a., payable half-yearly in arrears by the Company and which is subject to review, from time to time. The Investment Manager fees charged to the Company were £0.1m (2023: £0.1m) (disclosed as Investment Manager fees in Note 6). InfraRed is also the Operator of IILP, the Corporate Subsidiary through which HICL holds its investments. InfraRed has been appointed as the Operator by the General Partner of IILP, Infrastructure Investments General Partner Limited, a company within the same group as InfraRed. The Operator and the General Partner may each terminate the appointment of the Operator by either party giving three years' written notice. Either the Operator or the General Partner may terminate the appointment of the Operator by written notice if the Investment Management Agreement is terminated in accordance with its terms. The General Partner's appointment does not have a fixed term; however, if InfraRed ceases to be the Operator, HICL has the option to buy the entire share capital of the General Partner and the InfraRed Group has the option to sell the entire share capital of the General Partner to HICL, in both cases for nominal consideration. The Directors consider the value of the option to be insignificant. In the year to 31 March 2024, in aggregate InfraRed and the General Partner were entitled to fees and/or profit share equal to: 1.1 per cent per annum of the Adjusted Gross Asset Value of all investments of HICL up to £750m, 1.0 per cent per annum for the incremental value in excess of £750m up to £1,500m, 0.9 per cent for the incremental value in excess of £1,500m, 0.8 per cent for the incremental value in excess of £2,250m and 0.65 per cent for the incremental value in excess of £3,000m. The total Operator fees were £33.9m (2023: £32.5m), of which £8.1m remained payable at 31 March 2024 (2023: £8.3m). InfraRed is 80% owned by Sun Life Financial Inc. (together with its subsidiaries and joint ventures, "Sun Life"). InfraRed is a distinct business under SLC Management, the alternatives asset manager of Sun Life under a put and call framework agreed with the InfraRed owners, exercisable after four and five years respectively from 1 July 2020. In May 2023, Sun Life subscribed for £50.0m on an arm's length basis of the Private Placement Notes issued by IILP. As at 31 March 2024, £50.0m remained outstanding and £1.0m of interest had been accrued. Total interest paid to Sun Life in the year was £1.5m. The Directors of the Company, who are considered to be key management, received fees for their services. Their fees were £0.5m (2023: £0.5m) for the year ended 31 March 2024 (see Note 6). One Director also receives fees for serving as Director of the Luxembourg subsidiary – the annual fees are £8.0k (2023: £7.5k). (Further detail is included in the Directors' Remuneration Report on page 91.) All of the above transactions were undertaken on an arm's length basis. ## 19. Guarantees and other commitments As at 31 March 2024, the Company, via a Corporate Subsidiary, had £64.5m of commitments for future project investments (31 March 2023: £274.2m). ## 20. Events after balance sheet date By 21 May 2024, proceeds from the disposals of Northwest Parkway and Hornsea II had been received. This represents the remaining 23.3% stake in Northwest Parkway and a 37.5% stake in Hornsea II. On 21 May 2024, the RCF was fully repaid using proceeds from the disposal of Hornsea II and NWP. 127 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings Below is a list of the Company’s subsidiaries and related undertakings – incorporated in the United Kingdom unless otherwise stated. Further, the following subsidiaries have not been consolidated in these financial statements, as a result of applying IFRS 10 and Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Academy Services (Norwich) | 10 St. Giles Square, London, | 75% 75% N/A | | | N/A | | | N/A | | | HoldingsLimited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Academy Services (Norwich) Limited 10 St. Giles Square, London, | | 75% 75% N/A | | | N/A | | | N/A | | UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Academy Services (Oldham) | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | HoldingsLimited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Academy Services (Oldham) Limited 10 St. Giles Square, London, | | 75% 75% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Academy Services (Sheffield) | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | HoldingsLimited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Academy Services (Sheffield) Limited 10 St. Giles Square, London, | | 75% 75% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP 2 2 2 ADAGIA B.V. (Incorporated in Holland) Strawinskylaan 1021, 1077 XX, 100% 100% N/A N/A N/A Amsterdam, The Netherlands 2 2 2 Addiewell Prison (Holdings) Ltd C/O Sodexo Remote Sites Limited 4th 67% 67% N/A N/A N/A Floor, Exchange No.1, 62 Market Street, Aberdeen, Scotland, AB11 5PJ Addiewell Prison Ltd C/O Sodexo Remote Sites Limited 4th 33% 33% 31 Mar 23 (1.6) 176.1 Floor, Exchange No.1, 62 Market Street, Aberdeen, Scotland, AB11 5PJ Affinity Water Capital Funds Limited The Hub, Tamblin Way, Hatfield, 33% 33% 31 Mar 23 2.6 65.3 Hertfordshire, United Kingdom, AL10 9EZ 2 2 2 Affinity Water East Limited The Hub, Tamblin Way, Hatfield, 33% 33% N/A N/A N/A Hertfordshire, United Kingdom, AL10 9EZ 2 2 2 Affinity Water Finance (2004) PLC The Hub, Tamblin Way, Hatfield, 33% 33% N/A N/A N/A Hertfordshire, United Kingdom, AL10 9EZ Affinity Water Finance PLC The Hub, Tamblin Way, Hatfield, 33% 33% 31 Mar 23 (1.7) 285.4 Hertfordshire, United Kingdom, AL10 9EZ Affinity Water Holdco Finance Limited The Hub, Tamblin Way, Hatfield, 33% 33% 31 Mar 23 – 291.7 Hertfordshire, United Kingdom, AL10 9EZ 2 2 2 Affinity Water Holdings Limited The Hub, Tamblin Way, Hatfield, 33% 33% N/A N/A N/A Hertfordshire, United Kingdom, AL10 9EZ 2 2 2 Affinity Water Limited The Hub, Tamblin Way, Hatfield, 33% 33% N/A N/A N/A Hertfordshire, United Kingdom, AL10 9EZ Affinity Water Pension Trustees Limited The Hub, Tamblin Way, Hatfield, 33% 33% 31 Mar 23 2.2 66.8 Hertfordshire, United Kingdom, AL10 9EZ Affinity Water Southeast Limited The Hub, Tamblin Way, Hatfield, 37% 37% 31 Mar 23 2,222.0 66,764.0 Hertfordshire, United Kingdom, AL10 9EZ 2 2 2 AGP (2) Limited 8 White Oak Square, London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG 2 2 2 AGP Holdings (1) Limited 8 White Oak Square, London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Albion Healthcare (Doncaster) | Third Floor Broad Quay House, Prince | 50% 50% N/A | | N/A | | N/A | | | Holdings Limited | Street, Bristol, United Kingdom, BS1 4DJ | | | | | | | 128 HICL Annual Report 2024 Strategic Report Governance Financials | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Albion Healthcare (Doncaster) Limited Third Floor, Broad Quay House, Prince | 50% 50% N/A | | | N/A | | | N/A | | Street, Bristol, United Kingdom, BS1 4DJ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Albion Healthcare (Oxford) | Third Floor, Broad Quay House, Prince | 25% 25% N/A | | N/A | | N/A | | | HoldingsLimited | Street, Bristol, United Kingdom, BS1 4DJ | | | | | | | | | | | 2 | | 2 | | 2 | | Albion Healthcare (Oxford) Limited Third Floor, Broad Quay House, Prince | | 25% 25% N/A | | N/A | | N/A | | Street, Bristol, United Kingdom, BS1 4DJ Altitude Infra (Incorporated in France) Tour Trinity – 1bis Place de la Défense, 6% – 31 Dec 23 (23.5) 375.1 92400 Courbevoie | Altitude Infrastructure Construction | 1bis Place de la Défense, 92400 | | 6% – 31 Dec 22 48.4 51.2 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | (Incorporated in France) | Courbevoie, France | | | | | | | | | Altitude Infrastructure Exploitation | 1bis Place de la Défense, 92400 | | 6% – 31 Dec 22 40.9 33.1 | | | | | | | (Incorporated in France) | Courbevoie, France | | | | | | | | | | | | | 2 | | 2 | | 2 | | Altitude Infrastructure THD | 1bis Place de la Défense, 92400 | | 3% – N/A | | N/A | | N/A | | | (Incorporated in France) | Courbevoie, France | | | | | | | | | | | | | 2 | | 2 | | 2 | | Amalie Infrastructure Limited Level 7, One Bartholomew Close, | | 100% 100% N/A | | | N/A | | N/A | | Barts Square, London, United Kingdom, EC1A 7BL Amalie PFI (UK) Limited Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 1.8 33.7 Barts Square, London, United Kingdom, EC1A 7BL 2 2 2 Annes Gate Property Plc 8 White Oak Square, London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Aotearoa Towers GP Limited | 15 Customs Street West, Auckland | 40% 40% N/A | | N/A | | N/A | | | (Incorporated in New Zealand) | Central, Auckland, 1010, New Zealand | | | | | | | | | | | 2 | | 2 | | 2 | | Aotearoa Towers Group Limited | 15 Customs Street West, Auckland | 40% 40% N/A | | N/A | | N/A | | | Partnership (Incorporated in | Central, Auckland, 1010, New Zealand | | | | | | | New Zealand) | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Aotearoa Towers Hold Limited | 15 Customs Street West, Auckland | 40% 40% N/A | | N/A | | N/A | | | Partnership (Incorporated in | Central, Auckland, 1010, New Zealand | | | | | | | New Zealand) 2 2 2 Ashburton Services (Holdings) Limited Cannon Place, 78 Cannon Street, 100% 100% N/A N/A N/A London, United Kingdom, EC4N 6AF 2 2 2 Ashburton Services Limited Cannon Place, 78 Cannon Street, 100% 100% N/A N/A N/A London, United Kingdom, EC4N 6AF 2 2 2 Aspire Defence Finance plc Aspire Business Centre, Ordnance 12% 12% N/A N/A N/A Road, Tidworth, United Kingdom, SP9 7QD 2 2 2 Aspire Defence Holdings Limited Aspire Business Centre, Ordnance 12% 12% N/A N/A N/A Road, Tidworth, United Kingdom, SP9 7QD Aspire Defence Limited Aspire Business Centre, Ordnance 12% 12% 31 Dec 22 31.6 16.7 Road, Tidworth, United Kingdom, SP9 7QD Atlandes 15, avenue Léonard de Vinci, CS60024, 24% 21% 31 Dec 23 40.1 0.1 Cedex, Pessac, 33615, France | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Axiom Education (Edinburgh) | Blake House 3 Frayswater Place, | 100% 100% N/A | | N/A | | N/A | | | HoldingsLimited | Cowley, Uxbridge, Middlesex, | | | | | | | United Kingdom, UB8 2AD 129 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Axiom Education (Edinburgh) Limited Blake House 3 Frayswater Place, | 100% 100% N/A | | | N/A | | | N/A | | Cowley, Uxbridge, Middlesex, United Kingdom, UB8 2AD | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Axiom Education (Perth & Kinross) | Blake House 3 Frayswater Place, | 100% 100% N/A | | N/A | | N/A | | | Holdings Limited | Cowley, Uxbridge, Middlesex, | | | | | | | UnitedKingdom, UB8 2AD | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Axiom Education (Perth & Kinross) | Blake House 3 Frayswater Place, | 100% 100% N/A | | N/A | | N/A | | | Limited | Cowley, Uxbridge, Middlesex, | | | | | | | UnitedKingdom, UB8 2AD | BAAK Blankenburg-Verbinding B.V. | Ringwade 71, 3439 LM Nieuwegein, | 70% 70% 31 Mar 23 12.0 821.8 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | (Incorporated in Holland) | TheNetherlands | | | | | | | | | | | 2 | | 2 | | 2 | | Bangor and Nendrum Schools | 50 Bedford Street, Belfast, United | 26% 26% N/A | | N/A | | N/A | | | Services Holdings Limited | Kingdom, BT2 7FW | | | | | | | | | | | 2 | | 2 | | 2 | | Bangor and Nendrum Schools | 50 Bedford Street, Belfast, United | 26% 26% N/A | | N/A | | N/A | | | Services Limited | Kingdom, BT2 7FW | | | | | | | | | | | 2 | | 2 | | 2 | | BaSS LIFT Holdings Limited 5 The Triangle, Wildwood Drive, | | 100% 100% N/A | | N/A | | N/A | | Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Bee Invest 1 91 rue du Faubourg Saint-Honoré 100% 100% N/A N/A N/A 75008 Paris, France Betjeman Holdings JvCO Limited 5th Floor, Kings Place, 90 York Way 22% 22% 31 Mar 23 36.9 157.2 London, N1 9AG 2 2 2 CTRL (UK) Limited 5th Floor Kings Place 90 York Way, 22% 22% N/A N/A N/A London, N1 9AG Betjeman Holdings Limited 5th Floor, Kings Place, 90 York 22% 22% 31 Mar 23 (0.7) 80.9 WayLondon, United Kingdom, N1 9AG Betjeman Holdings Midco Limited 5th Floor, Kings Place, 90 York Way, 22% 22% 31 Mar 23 63.4 320.8 London, United Kingdom, N1 9AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Birmingham and Solihull LIFT (Fundco | 5 The Triangle, Wildwood Drive, | 60% 60% N/A | | N/A | | N/A | | | 1) Limited | Worcester, Worcestershire, | | | | | | | UnitedKingdom, WR5 2QX | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Birmingham and Solihull LIFT (Fundco | 5 The Triangle, Wildwood Drive, | 60% 60% N/A | | N/A | | N/A | | | 2) Limited | Worcester, Worcestershire, | | | | | | | UnitedKingdom, WR5 2QX | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Birmingham and Solihull LIFT (Fundco | 5 The Triangle, Wildwood Drive, | 60% 60% N/A | | N/A | | N/A | | | 3) Limited | Worcester, Worcestershire, | | | | | | | UnitedKingdom, WR5 2QX | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Birmingham and Solihull LIFT (Fundco | 5 The Triangle, Wildwood Drive, | 60% 60% N/A | | N/A | | N/A | | | 4) Limited | Worcester, Worcestershire, | | | | | | | UnitedKingdom, WR5 2QX Birmingham and Solihull Local 5 The Triangle, Wildwood Drive, 60% 60% 31 Dec 22 2.0 50.3 Improvement Finance Trust Limited Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Blue Light Holdings Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A Barts Square, London, United Kingdom, EC1A 7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Blue3 (Gloucestershire Fire) (Holdings) | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | 130 HICL Annual Report 2024 Strategic Report Governance Financials | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Blue3 (Gloucestershire Fire) Limited 10 St. Giles Square, London, | 75% 75% N/A | | | N/A | | | N/A | | UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | BNC IXAS SPC Holding B.V | Herikerbergweg 292, 1101CT | 100% 80% N/A | | N/A | | N/A | | | (Incorporated in Holland) | Amsterdam, The Netherlands | | | | | | | | | | | 2 | | 2 | | 2 | | BNC Pi2 Holding B.V. (Incorporated | Runnenburg 9, 381 AZ Bunnik, | 100% 100% N/A | | N/A | | N/A | | | inHolland) | TheNetherlands | | | | | | | | | | | 2 | | 2 | | 2 | | Boldon School (Holdings) Limited Cannon Place, 78 Cannon Street, | | 100% 100% N/A | | N/A | | N/A | | London, United Kingdom, EC4N 6AF 2 2 2 Boldon School Limited Cannon Place, 78 Cannon Street, 100% 100% N/A N/A N/A London, United Kingdom, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Brentwood Healthcare Partnerships | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Holdings Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Brentwood Healthcare Partnerships | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | By Education (Barking) Holdings | Quadrant House Floor 6, 4 Thomas | 100% 100% N/A | | N/A | | N/A | | | Limited | More Square, London, UK E1W 1YW | | | | | | | | | | | 2 | | 2 | | 2 | | By Education (Barking) Limited Quadrant House Floor 6, 4 Thomas | | 100% 100% N/A | | N/A | | N/A | | More Square, London, UK E1W 1YW 2 2 2 ByCentral Holdings Limited 8 White Oak Square London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG 2 2 2 ByCentral Limited 8 White Oak Square London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG 2 2 2 ByWest (Holdings) Limited 8 White Oak Square London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG 2 2 2 ByWest Limited 8 White Oak Square London Road, 100% 100% N/A N/A N/A Swanley, United Kingdom, BR8 7AG 2 2 2 CAE Aircrew Training Services Plc RAF Benson, Wallingford, Oxfordshire, 22% 22% N/A N/A N/A United Kingdom, OX10 6AA | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Catalyst Healthcare (Romford) | C/O Albany Spc Services Ltd 3rd Floor, | – 67% N/A | | N/A | | N/A | | | Financing Plc | 3-5 Charlotte Street, Manchester, UK, | | | | | | | M1 4HB | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Catalyst Healthcare (Romford) | C/O Albany Spc Services Ltd 3rd Floor, | – 67% N/A | | N/A | | N/A | | | Holdings Limited | 3-5 Charlotte Street, Manchester, UK, | | | | | | | M1 4HB 2 2 2 Catalyst Healthcare (Romford)Limited C/O Albany Spc Services Ltd 3rd Floor, – 67% N/A N/A N/A 3-5 Charlotte Street, Manchester, UK, M1 4HB | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Catalyst Higher Education (Sheffield) | C/O Albany Spc Services Ltd 3rd Floor, | – 50% N/A | | N/A | | N/A | | | Holdings Limited | 3-5 Charlotte Street, Manchester, UK, | | | | | | | M1 4HB 2 2 2 Catalyst Higher Education (Sheffield) plc C/O Albany Spc Services Ltd 3rd Floor, – 50% N/A N/A N/A 3-5 Charlotte Street, Manchester, UK, M1 4HB | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Central Blackpool PCC Holding | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Company Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Central Blackpool PCC Limited 10 St. Giles Square, London, | | 75% 75% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP 131 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Children’s Ark Partnerships Holdings | 10 St. Giles Square, London, | 50% 50% N/A | | | N/A | | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Children’s Ark Partnerships Limited 10 St. Giles Square, London, | | 50% 50% N/A | | | N/A | | | N/A | | UnitedKingdom, WC2H 8AP 2 2 2 Claymore Roads (Holdings) Limited Cannon Place, 78 Cannon Street, 50% 50% N/A N/A N/A London, United Kingdom, EC4N 6AF 2 2 2 Claymore Roads Limited Cannon Place, 78 Cannon Street, 50% 50% N/A N/A N/A London, United Kingdom, EC4N 6AF Connect M1-A1 Holdings Limited Q14 Quorum Business Park, 30% 30% 31 Mar 23 2.7 35.6 Benton Lane, Newcastle Upon Tyne, United Kingdom, NE12 8BU Connect M1-A1 Limited Q14 Quorum Business Park, 30% 30% 31 Mar 23 2.7 35.6 Benton Lane, Newcastle Upon Tyne, United Kingdom, NE12 8BU | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Birmingham) | 18 Riversway Business Village, | 30% 30% N/A | | N/A | | N/A | | | Funding plc | Navigation Way, Preston, | | | | | | | United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Birmingham) | 18 Riversway Business Village, | 30% 30% N/A | | N/A | | N/A | | | Holdings Limited | Navigation Way, Preston, | | | | | | | United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Birmingham) | 18 Riversway Business Village, | 30% 30% N/A | | N/A | | N/A | | | Intermediate Limited | Navigation Way, Preston, | | | | | | | United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Birmingham) | 18 Riversway Business Village, | 30% 30% N/A | | N/A | | N/A | | | Limited | Navigation Way, Preston, | | | | | | | United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Blackburn) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Funding plc | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Blackburn) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Blackburn) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Intermediate Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Blackburn) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Mid Yorkshire) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Funding plc | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Mid Yorkshire) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Mid Yorkshire) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Intermediate Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Mid Yorkshire) | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG 132 HICL Annual Report 2024 Strategic Report Governance Financials | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Consort Healthcare (Salford) Holdings | 8 White Oak Square, London Road, | 50% 50% N/A | | | N/A | | | N/A | | | Limited | Swanley, Kent, United Kingdom, | | | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Salford) | 8 White Oak Square, London Road, | 50% 50% N/A | | N/A | | N/A | | | Intermediate Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG 2 2 2 Consort Healthcare (Salford) Plc 8 White Oak Square, London Road, 50% 50% N/A N/A N/A Swanley, Kent, United Kingdom, BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Tameside) | 8 White Oak Square, London Road, | 50% 50% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Consort Healthcare (Tameside) | 8 White Oak Square, London Road, | 50% 50% N/A | | N/A | | N/A | | | Intermediate Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG 2 2 2 Consort Healthcare (Tameside) Plc 8 White Oak Square, London Road, 50% 50% N/A N/A N/A Swanley, Kent, United Kingdom, BR87AG 2 2 2 Criterion Healthcare Holdings Limited 2nd Floor, Toronto Square, Toronto 36% 36% N/A N/A N/A Street, Leeds, United Kingdom, LS12HJ 2 2 2 Criterion Healthcare Plc 2nd Floor, Toronto Square, Toronto 36% 36% N/A N/A N/A Street, Leeds, United Kingdom, LS1 2HJ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Cross London Trains Finance | 8 White Oak Square, London Road, | 6% 6% N/A | | N/A | | N/A | | | Company Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG Cross London Trains Holdco Limited 8 White Oak Square, London Road, 6% 6% 30 Jun 23 (11.8) 561.2 Swanley, Kent, United Kingdom, BR87AG Cross London Trains Holdco 2 Limited 8 White Oak Square, London Road, 6% 6% 30 Jun 23 32.8 (185.4) Swanley, Kent, United Kingdom, BR87AG Cross London Trains Limited 8 White Oak Square, London Road, 6% 6% 30 Jun 23 36.5 (28.4) Swanley, Kent, United Kingdom, BR87AG | Cross Texas Transmission, LLC (OpCo | 251 Little Falls Drive, Wilmington, | 46% – 31 Dec 23 27.9 597.8 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Debt) (Incorporated in USA) | NewCastle, DE, 19808 | | | | | | | | | | | 2 | | 2 | | 2 | | CSES (Dorset) Limited Level 7, One Bartholomew Close, | | 100% 100% N/A | | N/A | | N/A | | BartsSquare, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | CSM PPP Services (Holdings) Limited | Suite 54, Morrison Chambers, | 100% 100% N/A | | N/A | | N/A | | | (Incorporated in Ireland) | 32Nassau Street, Dublin 2, Ireland | | | | | | | | | | | 2 | | 2 | | 2 | | CSM PPP Services Limited | Suite 54, Morrison Chambers, | 100% 100% N/A | | N/A | | N/A | | | (Incorporated in Ireland) | 32Nassau Street, Dublin 2, Ireland | | | | | | | | | | | 2 | | 2 | | 2 | | CVS Leasing Limited RAF Benson, Wallingford, Oxfordshire, | | 87% 87% N/A | | N/A | | N/A | | United Kingdom, OX10 6AA | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | D3 – Société de la deviation de | 21 rue Hippolyte Bayard, PAE du | 90% 90% N/A | | N/A | | N/A | | | Troissereux (Incorporated in France) | Haut-Ville, 60000 Beauvais, France | | | | | | | 133 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | Shareholding | | | Aggregate | | | --- | --- | --- | --- | --- | --- | | | | | Profit/ | Capital & | | | | | | (Loss) | Reserves | | | Entity Registered address | | Year end | £m | | £m31-Mar-24 31-Mar-23 | | Daiwater Investment Limited The Hub, Tamblin Way, Hatfield, | 33% 33% 31 Mar 23 9.3 757.2 | | | | | Hertfordshire, United Kingdom, AL10 9EZ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Derby School Solutions (Holdings) | Cannon Place, 78 Cannon Street, | 100% 100% N/A | | N/A | | N/A | | | Limited | London, UK, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | Derby School Solutions Limited Cannon Place, 78 Cannon Street, | | 100% 100% N/A | | N/A | | N/A | | London, UK, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Diamond Transmission Partners BBE | Mid City Place, 71 High Holborn, | 50% 50% N/A | | N/A | | N/A | | | Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners BBE | Mid City Place, 71 High Holborn, | 50% 50% N/A | | N/A | | N/A | | | (Holdings) Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 49% 49% N/A | | N/A | | N/A | | | Galloper (Holdings) Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 49% 49% N/A | | N/A | | N/A | | | Galloper Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 75% – N/A | | N/A | | N/A | | | Hornsea Two (Holdings) Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 75% – N/A | | N/A | | N/A | | | Hornsea Two Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners RB | Mid City Place, 71 High Holborn, | 50% 50% N/A | | N/A | | N/A | | | (Holdings) Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners RB | Mid City Place, 71 High Holborn, | 50% 50% N/A | | N/A | | N/A | | | Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 29% 29% N/A | | N/A | | N/A | | | Walney Extension (Holdings) Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Diamond Transmission Partners | Mid City Place, 71 High Holborn, | 29% 29% N/A | | N/A | | N/A | | | Walney Extension Limited | London, United Kingdom, WC1V 6BA | | | | | | | | | | | 2 | | 2 | | 2 | | Directroute (Tuam) Holdings Limited M17/M18 Operations Centre, Furzy Park, | | 100% 100% N/A | | N/A | | N/A | | Athenry, Co Galway, Ireland 2 2 2 Directroute (Tuam) Limited M17/M18 Operations Centre, Furzy Park, 100% 100% N/A N/A N/A Athenry, Co Galway, Ireland | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Dorset Emergency Services PPP | Unit 18 Riversway Business Village, | 100% 100% N/A | | N/A | | N/A | | | (Holdings) Limited | Navigation Way, Ashton-On-Ribble, | | | | | | | Preston, United Kingdom, PR2 2YP 2 2 2 Ealing Care Alliance (Holdings) Limited 10 St. Giles Square, London, 63% 63% N/A N/A N/A UnitedKingdom, WC2H 8AP 2 2 2 Ealing Care Alliance Limited 10 St. Giles Square, London, 63% 63% N/A N/A N/A UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Ealing Schools Partnerships Holdings | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Ealing Schools Partnerships Limited 10 St. Giles Square, London, | | 50% 50% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP Eastbury Park (Holdings) Limited 8 White Oak Square, London Road, 50% 50% 31 Dec 22 – 38.1 Swanley, Kent, United Kingdom, BR87AG 134 HICL Annual Report 2024 Strategic Report Governance Financials | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Eastbury Park Limited 8 White Oak Square, London Road, | 50% 50% N/A | | | N/A | | | N/A | | Swanley, Kent, United Kingdom, BR87AG 2 2 2 Education 4 Ayrshire (Holdings) Limited 2nd Floor 2 Lochside View, Edinburgh, – 100% N/A N/A N/A United Kingdom, EH12 9DH 2 2 2 Educations 4 Ayrshire Limited 2nd Floor 2 Lochside View, Edinburgh, – 100% N/A N/A N/A United Kingdom, EH12 9DH 2 2 2 Emblem Schools (Holdings) Limited 2nd Floor Drum Suite, Saltire Court, 30% 30% N/A N/A N/A 20 Castle Terrace, Edinburgh, UnitedKingdom, EH1 2EN 2 2 2 Emblem Schools Limited 2nd Floor Drum Suite, Saltire Court, 30% 30% N/A N/A N/A 20 Castle Terrace, Edinburgh, UnitedKingdom, EH1 2EN | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Enterprise Civic Buildings (Holdings) | Unit 18 Navigation Way, Ashton-On-Ribble, | 100% 100% N/A | | N/A | | N/A | | | Limited | Preston, United Kingdom, PR22YP | | | | | | | | | | | 2 | | 2 | | 2 | | Enterprise Civic Buildings Limited Unit 18 Navigation Way, Ashton-On-Ribble, | | 100% 100% N/A | | N/A | | N/A | | Preston, United Kingdom, PR22YP 2 2 2 Enterprise Education Conwy Limited Unit 18 Riversway Business Village 90% 90% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Enterprise Education Holdings Conwy | Unit 18 Riversway Business Village | 90% 90% N/A | | N/A | | N/A | | | Limited | Navigation Way, Ashton-On-Ribble, | | | | | | | Preston, United Kingdom, PR2 2YP 2 2 2 Enterprise Healthcare Holdings Limited Unit 18 Riversway Business Village 100% 100% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP 2 2 2 Enterprise Healthcare Limited Unit 18 Riversway Business Village 100% 100% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP 2 2 2 European Healthcare Projects Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL 2 2 2 Falkirk Schools Gateway HC Limited Exchange Tower, 19 Canning Street, 29% 29% N/A N/A N/A Edinburgh, Scotland, EH3 8EH 2 2 2 Falkirk Schools Gateway Limited Exchange Tower, 19 Canning Street, 29% 29% N/A N/A N/A Edinburgh, Scotland, EH3 8EH 2 2 2 FCC (East Ayrshire) Holdings Limited 2nd Floor Drum Suite, Saltire Court, 26% 26% N/A N/A N/A 20 Castle Terrace, Edinburgh, UnitedKingdom, EH1 2EN 2 2 2 FCC (East Ayrshire) Limited 2nd Floor Drum Suite, Saltire Court, 26% 26% N/A N/A N/A 20 Castle Terrace, Edinburgh, UnitedKingdom, EH1 2EN 2 2 2 Fibre Business Infrastructure 2 Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A Barts Square, London, United Kingdom, EC1A7BL Galvani Bidco Limited 3rd Floor, South Building, 200 19% 19% 31 Dec 22 141.0 460.3 Aldersgate Street, London, UnitedKingdom, EC1A 4HD 135 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Galvani JVCo Limited 3rd Floor, South Building, | 19% 19% N/A | | | N/A | | | N/A | | 200Aldersgate Street, London, United Kingdom, EC1A 4HD 2 2 2 Galvani Midco Limited 3rd Floor, South Building, 19% 19% N/A N/A N/A 200Aldersgate Street, London, United Kingdom, EC1A HD | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | GGB inBalans B.V (Incorporated in | Hagenweg 3 c, 4131 LX,Vianen, | 85% 85% N/A | | N/A | | N/A | | | Holland) | TheNetherlands | | | | | | | | | | | 2 | | 2 | | 2 | | GGB inBalans Investco B.V | Hagenweg 3 c, 4131 LX,Vianen, | 100% 100% N/A | | N/A | | N/A | | | (Incorporated in Holland) | TheNetherlands | | | | | | | | | | | 2 | | 2 | | 2 | | Glasgow Healthcare Facilities | 2nd Floor Drum Suite, Saltire Court, | 25% 25% N/A | | N/A | | N/A | | | (Holdings) Limited | 20 Castle Terrace, Edinburgh, | | | | | | | UnitedKingdom, EH1 2EN 2 2 2 Glasgow Healthcare Facilities Limited 2nd Floor Drum Suite, Saltire Court, 25% 25% N/A N/A N/A 20 Castle Terrace, Edinburgh, UnitedKingdom, EH1 2EN | | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | GO-PASS Mobility Services LLC | 2711 Centerville Road, Suite 400, | – 33% N/A | | | N/A | | N/A | | | (Incorporated in USA) | Wilmington, Delaware 19808, USA | | | | | | | | | | | | | 2 | | 2 | | 2 | | Great Basin Investment, LLC | 251 Little Falls Drive, Wilmington, | 45% – N/A | | | N/A | | N/A | | | (Incorporated in USA) | New Castle, DE, 19808, USA | | | | | | | | | | | | | 2 | | 2 | | 2 | | Great Basin Transmission Holdings, | 251 Little Falls Drive, Wilmington, | 45% – N/A | | | N/A | | N/A | | | LLC ("GBTH") (Incorporated in USA) | New Castle, DE, 19808, USA | | | | | | | | | Great Basin Transmission South, LLC | "FL 21, 1 Tower Center Blvd | 45% – | 31 Dec 23 10.0 370.5 | | | | | | | ("GBTS") (OpCo Debt) (Incorporated | East Brunswick, NJ 08816-1145" | | | | | | | | in USA) 2 2 2 GT NEPS (Holdings) Limited Blake House 3 Frayswater Place, 90% – N/A N/A N/A Cowley, Uxbridge, Middlesex, United Kingdom, UB8 2AD 2 2 2 GT NEPS Limited Blake House 3 Frayswater Place, 90% – N/A N/A N/A Cowley, Uxbridge, Middlesex, United Kingdom, UB8 2AD | Green Timbers GP Limited | 1060 – 1500 West Georgia Street, | 100% 100% 31 Mar 24 9.6 70.3 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | (Incorporated in Canada) | Vancouver, BC, V6G 2Z6, Canada | | | | | | | | | | | 2 | | 2 | | 2 | | Green Timbers Holdings Limited | 1060 – 1500 West Georgia Street, | 100% 100% N/A | | N/A | | N/A | | | (Incorporated in Canada) | Vancouver, BC, V6G 2Z6, Canada | | | | | | | | Green Timbers Limited Partnership | 1060 – 1500 West Georgia Street, | 100% 100% 31 Mar 24 8.5 69.2 | | | | | | | (Incorporated in Canada) | Vancouver, BC, V6G 2Z6, Canada | | | | | | | | | | | 2 | | 2 | | 2 | | H&D Support Services (Holdings) | Cannon Place, 78 Cannon Street, | 100% 100% N/A | | N/A | | N/A | | | Limited | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | H&D Support Services Limited Cannon Place, 78 Cannon Street, | | 100% 100% N/A | | N/A | | N/A | | London, United Kingdom, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Hadfield Healthcare Partnerships | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Holding Limited | United Kingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Hadfield Healthcare Partnerships | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | HDM Schools Solution Limited Collins House, Rutland Square, | | 75% 75% N/A | | N/A | | N/A | | Edinburgh, Scotland, EH1 2AA 136 HICL Annual Report 2024 Strategic Report Governance Financials | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | HDM Schools Solutions (Holdings) | Collins House, Rutland Square, | 75% 75% N/A | | | N/A | | | N/A | | | Limited | Edinburgh, Scotland, EH1 2AA | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Healthcare Centres PPP Holdings | Suite 54 Morrison Chambers, | 60% 60% N/A | | | N/A | | | N/A | | | Limited (Incorporated in Ireland) | 32 Nassau Street, Dublin 2, Ireland | | | | | | | | | | Healthcare Centres PPP Limited | Suite 54 Morrison Chambers, | 60% 60% 31 Dec 22 (1.2) 152.8 | | | | | | | | | (Incorporated in Ireland) | 32 Nassau Street, Dublin 2, Ireland | | | | | | | | | | Helix Acquisition Limited 5th Floor, Kings Place, 90 York Way, | | 22% 22% 31 Mar 23 34.8 (2.2) | | | | | | | | London, United Kingdom, N1 9AG Helix Bufferco Limited 5th Floor, Kings Place, 90 York Way, 22% 22% 31 Mar 23 34.8 (2.1) London, United Kingdom, N1 9AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Helix Holdings Limited (Incorporated | 5th Floor, Kings Place, 90 York Way, | 22% 22% N/A | | N/A | | N/A | | | in Jersey) | London, United Kingdom, N1 9AG | | | | | | | | Helix MidCo Limited 5th Floor, Kings Place, 90 York Way, | | 22% 22% 31 Mar 23 34.8 (2.1) | | | | | | London, United Kingdom, N1 9AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | HICL Infrastructure (Green Timbers) | 1060 – 1500 West Georgia Street, | 100% 100% N/A | | N/A | | N/A | | | Inc (Incorporated in Canada) | Vancouver, BC, V6G 2Z6, Canada | | | | | | | 1 HICL Infrastructure 2 SARL 6, rue Adolphe, L-1116, Luxembourg 100% 100% 31 Mar 23 201.4 1,515.6 (Incorporated in Luxembourg) | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | HICL Infrastructure 3 SARL | 42, Rue de la Vallee, L-2661, | 100% 100% N/A | | N/A | | N/A | | | (Incorporated in Luxembourg) | Luxembourg | | | | | | | | HICL Infrastructure Canada Inc. | Suite 2600, Three Bentall Centre, | 100% 100% 31 Mar 23 12.6 101.2 | | | | | | | (Incorporated in Canada) | PO BOX 49314, 595 Burrard Street, | | | | | | | Vancouver BC V7X 1L3, Canada 2 2 2 High Speed One (HS1) Limited 5th Floor, Kings Place, 90 York Way, 22% 22% N/A N/A N/A London, United Kingdom, N1 9AG 2 2 2 High Speed Rail Finance (1) PLC 5th Floor, Kings Place, 90 York Way, 22% 22% N/A N/A N/A London, United Kingdom, N1 9AG 2 2 2 High Speed Rail Finance PLC 5th Floor, Kings Place, 90 York Way, 22% 22% N/A N/A N/A London, United Kingdom, N1 9AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Highway Management M80 | Part First Floor, 1 Grenfell | 50% 50% N/A | | N/A | | N/A | | | Investment Limited | Road, Maidenhead, Berkshire, | | | | | | | UnitedKingdom, SL6 1HN | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Highway Management (Scotland) | Part First Floor, 1 Grenfell | 50% 50% N/A | | N/A | | N/A | | | Holdings Limited | Road, Maidenhead, Berkshire, | | | | | | | UnitedKingdom, SL6 1HN | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Highway Management (Scotland) | Part First Floor, 1 Grenfell | 50% 50% N/A | | N/A | | N/A | | | Limited | Road, Maidenhead, Berkshire, | | | | | | | UnitedKingdom, SL6 1HN 2 2 2 Holdfast Training Services Limited Building 29, Hq Rsme Brompton 100% 100% N/A N/A N/A Barracks, Chatham, Kent, UnitedKingdom, ME4 4UG HS1 Limited 5th Floor, Kings Place, 90 York Way, 22% 22% 31 Mar 23 36.9 157.2 London, United Kingdom, N1 9AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Information Resources (Oldham) | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Holdings Limited | United Kingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Information Resources (Oldham) | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Investment Limited | United Kingdom, WC2H 8AP | | | | | | | 137 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Information Resources (Oldham) | 10 St. Giles Square, London, | 75% 75% N/A | | | N/A | | | N/A | | | Limited | United Kingdom, WC2H 8AP | | | | | | | | | | InfraRed Towers Investments Limited Level 7, One Bartholomew Close, | | 100% 100% 31 Mar 23 5.7 279.8 | | | | | | | | Barts Square, London, United Kingdom, EC1A7BL | Infraspeed (Holdings) B.V. | 2132 LS Hoofddorp, Taurusavenue 155, | 43% 43% 31 Dec 23 13.1 46.0 | | --- | --- | --- | | (Incorporated in Holland) | The Netherlands | | | Infraspeed B.V. (Incorporated in | 2132 LS Hoofddorp, Taurusavenue 155, | 43% 43% 31 Dec 23 44.8 45.0 | | Holland) | The Netherlands | | | Infrastructure Central Limited Level 7, One Bartholomew Close, | | 100% 100% 31 Mar 23 (11.3) 265.7 | Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investment Limited Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 202.4 3,350.4 Partnership Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments (A63) Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 25.2 214.1 Holdings Limited Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments (Affinity) Level 7, One Bartholomew Close, 91% 91% 31 Mar 23 (13.5) 302.3 Limited Barts Square, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments Aria Holdco | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments Aria TopCo | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL Infrastructure Investments (Australia) Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 (31.5) 127.2 LLP Barts Square, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Bond) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Holdings LLP | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL Infrastructure Investments (Colorado) Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 2.5 244.2 Limited Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments (Defence) Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 18.3 97.7 Limited Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments (Defence) Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 14.8 97.7 Holdings Limited Barts Square, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Germany) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Health) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL 138 HICL Annual Report 2024 Strategic Report Governance Financials | | | Shareholding | | | Aggregate | | | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | Capital & | | | | | | | (Loss) | Reserves | | | Entity Registered address | | | Year end | £m | | £m31-Mar-24 31-Mar-23 | | Infrastructure Investments (HSL ZUID) | Level 7, One Bartholomew Close, | 100% 100% 31 Mar 23 26.0 66.7 | | | | | | Limited | Barts Square, London, United Kingdom, | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (No 7) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (No 8) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments OFTO 1 | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Portal) GP | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Portal) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL Infrastructure Investments (Portal) L.P. Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 7.0 53.5 Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments Level 7, One Bartholomew Close, Barts 100% 100% 31 Mar 23 16.5 86.3 (Portsmouth) Limited Square, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (Roads) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments (TNT) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments Betjeman | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | (Holdco) Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments Betjeman | Level 7, One Bartholomew Close, | 62% 62% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL Infrastructure Investments Galvani Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 3.2 61.1 Limited Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments Group Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 36.5 1,563.5 Limited Barts Square, London, United Kingdom, EC1A7BL Infrastructure Investments Holdings Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 (6.2) 429.2 Limited Barts Square, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments NWP (US) | 701 Northwest Parkway, Broomfield, | – 100% N/A | | N/A | | N/A | | | LLC (Incorporated in USA) | CO80023, USA | | | | | | | | | | | 2 | | 2 | | 2 | | Infrastructure Investments OFTO 2 | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | Barts Square, London, United Kingdom, | | | | | | | EC1A7BL 139 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | | Shareholding | | | Aggregate | | | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | Capital & | | | | | | | (Loss) | Reserves | | | Entity Registered address | | | Year end | £m | | £m31-Mar-24 31-Mar-23 | | Infrastructure Investments PPP OFTO | Level 7, One Bartholomew Close, | 100% 100% 31 Mar 23 (31.3) 114.3 | | | | | | Holdings LLP | BartsSquare, London, United Kingdom, | | | | | | EC1A7BL Infrastructure Investments PPP OFTO Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 0.0 0.2 LLP BartsSquare, London, United Kingdom, EC1A7BL Infrastructure Investments PPP OFTO Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 31.4 114.2 Midco LLP BartsSquare, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Infrastructure Investments Roads | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Management Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL Infrastructure Investments TNT (US) Level 7, One Bartholomew Close, 100% 100% 31 Dec 23 1.5 65.5 LLC, (Incorporated in USA) BartsSquare, London, United Kingdom, EC1A7BL 2 2 2 Integrated Bradford Holco One Limited 3rd Floor 3 – 5 Charlotte Street, – 48% N/A N/A N/A Manchester, UK, M1 4HB | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Integrated Bradford Holdco Two | 3rd Floor 3 – 5 Charlotte Street, | – 48% N/A | | N/A | | N/A | | | Limited | Manchester, UK, M1 4HB | | | | | | | | | | | 2 | | 2 | | 2 | | Integrated Bradford SPV One Limited 3rd Floor 3 – 5 Charlotte Street, | | – 62% N/A | | N/A | | N/A | | Manchester, UK, M1 4HB 2 2 2 Integrated Bradford SPV Two Limited 3rd Floor 3 – 5 Charlotte Street, – 62% N/A N/A N/A Manchester, UK, M1 4HB 2 2 2 Ivywood Colleges Holdings Limited 7 Queens Road, Belfast, 75% 75% N/A N/A N/A United Kingdom, BT3 9DT 2 2 2 Ivywood Colleges Limited 7 Queens Road, Belfast, 75% 75% N/A N/A N/A United Kingdom, BT3 9DT 2 2 2 Ivywood Colleges Parking Limited 7 Queens Road, Belfast, 75% 75% N/A N/A N/A United Kingdom, BT3 9DT | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | IXAS Zuid-Oost B.V. (Incorporated in | Langbroekdreef 18, 1108 EB, | 25% 25% N/A | | N/A | | N/A | | | Holland) | Amsterdam | | | | | | | | | | | 2 | | 2 | | 2 | | Kajima Darlington Schools Holding | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Kajima Darlington Schools Limited 10 St. Giles Square, London, | | 50% 50% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP 2 2 2 Kajima Haverstock Holding Limited 10 St. Giles Square, London, 50% 50% N/A N/A N/A UnitedKingdom, WC2H 8AP 2 2 2 Kajima Haverstock Limited 10 St. Giles Square, London, 50% 50% N/A N/A N/A UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Kajima Newcastle Libraries Holding | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Kajima Newcastle Libraries Limited 10 St. Giles Square, London, | | 50% 50% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Kajima North Tyneside Holdings | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | 140 HICL Annual Report 2024 Strategic Report Governance Financials | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Kajima North Tyneside Limited 10 St. Giles Square, London, | 50% 50% N/A | | | N/A | | | N/A | | UnitedKingdom, WC2H 8AP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Kent Education Partnership (Holdings) | Part First Floor, 1 Grenfell | 50% 50% N/A | | N/A | | N/A | | | Limited | Road, Maidenhead, Berkshire, | | | | | | | UnitedKingdom, SL6 1HN 2 2 2 Kent Education Partnership Limited Part First Floor, 1 Grenfell 50% 50% N/A N/A N/A Road, Maidenhead, Berkshire, UnitedKingdom, SL6 1HN 2 2 2 Kluster (Incorporated in France) 1 avenue Eugène Freyssinet, 78280 85% 85% N/A N/A N/A Guyancourt, France | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Liaison Infrastructure Routiere | 91, rue du Faubourg Saint-Honoré | 100% 100% N/A | | N/A | | N/A | | | Investissement (Incorporated in | 75008 Paris, France | | | | | | | France) | Mahi Tahi Towers Investment Pty | Level 4, Suite 4, 225 George Street, | 100% 100% 30 Jun 23 0.0 197.8 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Limited (Incorporated in Australia) | Sydney NSW, 2000, Australia | | | | | | | | Mahi Tahi Towers Limited | 15 Customs Street West, Auckland | 40% 40% 31 Mar 23 (8.1) 493.8 | | | | | | | (Incorporated in New Zealand) | Central, Auckland, 1010, New Zealand | | | | | | | | | | | 2 | | 2 | | 2 | | Manchester Housing (MP Equity) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Manchester Housing (MP Subdebt) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Manchester Housing (MP TopCo) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Manchester School Services Holdings | Cannon Place, 78 Cannon Street, | 76% 76% N/A | | N/A | | N/A | | | Limited | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | Manchester School Services Limited Cannon Place, 78 Cannon Street, | | 76% 76% N/A | | N/A | | N/A | | London, United Kingdom, EC4N 6AF 2 2 2 Medway Community Estates Limited 55 Station Road, Beaconsfield, 60% 60% N/A N/A N/A Buckinghamshire, United Kingdom, HP91QL 2 2 2 Medway Fundco Limited 55 Station Road, Beaconsfield, 60% 60% N/A N/A N/A Buckinghamshire, United Kingdom, HP91QL 2 2 2 Medway Fundco Two Limited 55 Station Road, Beaconsfield, 60% 60% N/A N/A N/A Buckinghamshire, United Kingdom, HP91QL 2 2 2 Metier Healthcare Limited 4 Estates Yard, Wellhouse Lane, 100% 100% N/A N/A N/A Barnet, Hertfordshire, United Kingdom, EN5 3DG 2 2 2 Metier Holdings Limited 4 Estates Yard, Wellhouse Lane, 100% 100% N/A N/A N/A Barnet, Hertfordshire, United Kingdom, EN5 3DG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Minerva Education and Training | 3rd Floor, 3-5 Charlotte Street, | 45% 45% N/A | | N/A | | N/A | | | (Holdings) Limited | Manchester, UK, M1 4HB | | | | | | | | | | | 2 | | 2 | | 2 | | Minerva Education and Training | 3rd Floor, 3-5 Charlotte Street, | 45% 45% N/A | | N/A | | N/A | | | Limited | Manchester, United Kingdom, M1 4HB | | | | | | | 141 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | | Shareholding | | | Aggregate | | | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | Capital & | | | | | | | (Loss) | Reserves | | | Entity Registered address | 3 | | Year end | £m | | £m31-Mar-24 31-Mar-23 | | Motorway Infrastructure SAS 92 Avenue de Wagram 75017 Paris, | | 100% 70% 31 Dec 23 40.0 0.1 | | | | | France 2 2 2 New Intermediate Care Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | New Schools Investment Company | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Newham Learning Partnership (Hold | Third Floor Broad Quay House, | 80% 80% N/A | | N/A | | N/A | | | Co) Limited | Prince Street, Bristol, United Kingdom, | | | | | | | BS1 4DJ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Newham Learning Partnership (Project | Third Floor Broad Quay House, | 80% 80% N/A | | N/A | | N/A | | | Co) Limited | Prince Street, Bristol, United Kingdom, | | | | | | | BS1 4DJ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Newham Learning Partnership (PSP) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Newham Transformation Partnership | Third Floor Broad Quay House, | 80% 80% N/A | | N/A | | N/A | | | Limited | Prince Street, Bristol, United Kingdom, | | | | | | | BS1 4DJ 2 2 2 Newport School Solutions Limited Astral House, Imperial Way, Watford, 100% 100% N/A N/A N/A Hertfordshire, United Kingdom, WD244WW | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Newport School Solutions (Holdings) | Astral House, Imperial Way, Watford, | 100% 100% N/A | | N/A | | N/A | | | Limited | Hertfordshire, United Kingdom, | | | | | | | WD244WW | | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Newton Abbot Health Holdings | Unit 18 Riversway Business Village | 100% | 100% N/A | | N/A | | N/A | | | Limited | Navigation Way, Ashton-On-Ribble, | | | | | | | | Preston, United Kingdom, PR2 2YP 2 2 2 Newton Abbot Health Limited Unit 18 Riversway Business Village 100% 100% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP Nordie 2 Limited Level 7 One Bartholomew Close, Barts 39% 39% 31 Dec 23 9.9 139.1 Square, London, United Kingdom, EC1A 7BL | Nordie France Limited (Incorporated | 92 avenue de Wagram, 75017 Paris, | 39% – 31 Dec 23 (6.4) 144.8 | | --- | --- | --- | | in France) | France | | | Nordie Limited Level 7 One Bartholomew Close, Barts | | 39% 39% 31 Dec 23 9.9 139.1 | Square, London, United Kingdom, EC1A 7BL | Northwest Connect General | 10060 Jasper Avenue, Suite 1201, | 50% 50% 31 Dec 23 8.5 48.4 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Partnership (Incorporated in Canada) | Edmonton, AB T5J 4E5, Canada | | | | | | | | | | | 2 | | 2 | | 2 | | Northwest Connect Holdings Inc. | 10060 Jasper Avenue, Suite 1201, | 50% 50% N/A | | N/A | | N/A | | | (Incorporated in Canada) | Edmonton, AB T5J 4E5, Canada | | | | | | | | | | | 2 | | 2 | | 2 | | Northwest Connect Inc. (Incorporated | 10060 Jasper Avenue, Suite 1201, | 50% 50% N/A | | N/A | | N/A | | | in Canada) | Edmonton, AB T5J 4E5, Canada | | | | | | | | | | | 2 | | 2 | | 2 | | Northwest Connect Investment Inc. | 10060 Jasper Avenue, Suite 1201, | 50% 50% N/A | | N/A | | N/A | | | (Incorporated in Canada) | Edmonton, AB T5J 4E5, Canada | | | | | | | 142 HICL Annual Report 2024 Strategic Report Governance Financials | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | Northwest Parkway LLC (Incorporated | 701 Northwest Parkway, Broomfield, | – 33% 31 Dec 23 (1.2) 248.4 | | | | | | | | | in USA) | CO 80023, USA | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | NWP Holdco LLC (Incorporated in | 701 Northwest Parkway, Broomfield, | – 33% N/A | | | N/A | | | N/A | | | USA) | CO 80023, USA | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Ochre Solutions (Holdings) Limited Third Floor Broad Quay House, | | 40% 40% N/A | | | N/A | | | N/A | | PrinceStreet, Bristol, United Kingdom, BS1 4DJ 2 2 2 Ochre Solutions Limited Third Floor Broad Quay House, 40% 40% N/A N/A N/A Prince Street, Bristol, United Kingdom, BS1 4DJ | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Paradigm (Sheffield BSF) Holdings | Third Floor Broad Quay House, | 59% 59% N/A | | N/A | | N/A | | | Limited | Prince Street, Bristol, United Kingdom, | | | | | | | BS1 4DJ 2 2 2 Paradigm (Sheffield BSF) Limited Third Floor Broad Quay House, 59% 59% N/A N/A N/A Prince Street, Bristol, United Kingdom, BS1 4DJ 2 2 2 PFF (Dorset) Limited Unit 18 Riversway Business Village 100% 100% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP 2 2 2 Pi2 B.V. (Incorporated in Holland) Ringwade 71, 3439 LM Nieuwegein, 100% 100% N/A N/A N/A TheNetherlands | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Pi2 Holding B.V. (Incorporated in | Ringwade 71, 3439 LM Nieuwegein, | 100% 100% N/A | | N/A | | N/A | | | Holland) | TheNetherlands | | | | | | | | | | | 2 | | 2 | | 2 | | PIP Infrastructure Investments | Cannon Place, 78 Cannon Street, | 25% 25% N/A | | N/A | | N/A | | | (Southmead) Ltd | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | Platon- Saclay 1 Avenue Eugène Freyssinet, 78280 | | 85% 85% N/A | | N/A | | N/A | | Guyancourt, France | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | PPP Services (North Ayrshire) Holdings | Infrastructure Managers Limited, | 26% 26% N/A | | N/A | | N/A | | | Limited | 2ndFloor, 11 Thistle Street, Edinburgh, | | | | | | | EH21DF 2 2 2 PPP Services (North Ayrshire) Limited Infrastructure Managers Limited, 26% 26% N/A N/A N/A 2ndFloor, 11 Thistle Street, Edinburgh, EH21DF 2 2 2 Prima 200 Fundco No 1 Limited 5 The Triangle, Wildwood Drive, 60% 60% N/A N/A N/A Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Prima 200 Fundco No 2 Limited 5 The Triangle, Wildwood Drive, 60% 60% N/A N/A N/A Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Prima 200 Fundco No 3 Limited 5 The Triangle, Wildwood Drive, 60% 60% N/A N/A N/A Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Prima 200 Limited 5 The Triangle, Wildwood Drive, 60% 60% N/A N/A N/A Worcester, Worcestershire, UnitedKingdom, WR5 2QX | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Prime Infrastructure Investments | 5 The Triangle, Wildwood Drive, | 100% 100% N/A | | N/A | | N/A | | | Limited | Worcester, Worcestershire, | | | | | | | UnitedKingdom, WR5 2QX 143 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Prime LIFT Investments Limited 5 The Triangle, Wildwood Drive, | 100% 100% N/A | | | N/A | | | N/A | | Worcester, Worcestershire, UnitedKingdom, WR5 2QX 2 2 2 Prisma 21 (Incorporated in France) 1 avenue Eugène Freyssinet, 78280 85% 85% N/A N/A N/A Guyancourt, France | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Prospect Healthcare (Hinchingbrooke) | 8 White Oak Square, London Road, | 75% 75% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Prospect Healthcare (Hinchingbrooke) | 8 White Oak Square, London Road, | 75% 75% N/A | | N/A | | N/A | | | Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Ravensbourne Health Services | Cannon Place, 78 Cannon Street, | 100% 100% N/A | | N/A | | N/A | | | Holdings Limited | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | Ravensbourne Health Services | Cannon Place, 78 Cannon Street, | 100% 100% N/A | | N/A | | N/A | | | (Holdings) Limited | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | RBLH Limited Level 7, One Bartholomew Close, | | 100% 100% N/A | | N/A | | N/A | | BartsSquare, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | RBLH Medway Investment Company | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | RBLH RWF Investment Company | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Redwood Partnership Ventures 2 | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Redwood Partnership Ventures 3 | 10 St. Giles Square, London, | 75% 75% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Redwood Partnership Ventures | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Renaissance Miles Platting Holding | 3rd Floor Suite 6c, Sevendale House, | 50% 50% N/A | | N/A | | N/A | | | Company Limited | 5-7 Dale Street, Manchester, | | | | | | | United Kingdom, M1 1JB 2 2 2 Renaissance Miles Platting Limited 3rd Floor Suite 6c, Sevendale 50% 50% N/A N/A N/A House, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 RL Investment Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL Road Infrastructure (Ireland) Limited Level 7, One Bartholomew Close, 100% 100% 31 Mar 23 11.7 85.2 BartsSquare, London, United Kingdom, EC1A7BL 2 2 2 Road Management Consolidated PLC Cannon Place, 78 Cannon Street, 58% 58% N/A N/A N/A London, UK, EC4N 6AF Road Management Group Limited Cannon Place, 78 Cannon Street, 58% 58% 31 Dec 22 (4.9) 80.1 London, UK, EC4N 6AF 2 2 2 Road Management Limited Cannon Place, 78 Cannon Street, 58% 58% N/A N/A N/A London, UK, EC4N 6AF 144 HICL Annual Report 2024 Strategic Report Governance Financials | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Profit/ | | Capital & | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | 2 | | 2 | | | 2 | | Road Management Services (A13) PLC 43 Orchard Place, London, | 42% 42% N/A | | | N/A | | | N/A | | UnitedKingdom, E14 0JW | Road Management Services | Cannon Place, 78 Cannon Street, | 58% 58% 31 Dec 22 (2.5) 41.3 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | (Gloucester) Limited | London, EC4N 6AF | | | | | | | | Road Management Services | Cannon Place, 78 Cannon Street, | 58% 58% 31 Dec 22 (2.5) 38.9 | | | | | | | (Peterborough) Limited | London, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | RSP (Holdings) Limited Precision House, Mcneil Drive, | | 30% 30% N/A | | N/A | | N/A | | Motherwell, Scotland, ML1 4UR | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | RWF Health and Community | 55 Station Road, Beaconsfield, | 60% 60% N/A | | N/A | | N/A | | | Developers (Tranche 1) Limited | Buckinghamshire, United Kingdom, | | | | | | | HP91QL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | RWF Health and Community | 55 Station Road, Beaconsfield, | 60% 60% N/A | | N/A | | N/A | | | Developers Limited | Buckinghamshire, United Kingdom, | | | | | | | HP91QL 2 2 2 S&W TLP (Hold Co Two) Limited Suite 6c, 3rd Floor Sevendale 80% 80% N/A N/A N/A House, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 S&W TLP (Hold Co One) Limited Suite 6c, 3rd Floor Sevendale 80% 80% N/A N/A N/A House, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 S&W TLP (Project Co One) Limited Suite 6c, 3rd Floor Sevendale 80% 80% N/A N/A N/A House, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 S&W TLP (Project Co Two) Limited Sevendale House 3rd Floor, Suite 80% 80% N/A N/A N/A 6c, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 S&W TLP (PSP One) Limited Level 7, One Bartholomew Close, 80% 80% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL 2 2 2 S&W TLP (PSP Three) Limited Level 7, One Bartholomew Close, 80% 80% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL 2 2 2 S&W TLP (PSP Two) Limited Level 7, One Bartholomew Close, 80% 80% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A7BL | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | S&W TLP Education Partnership | Suite 6c, 3rd Floor Sevendale | 80% 80% N/A | | N/A | | N/A | | | Limited | House, 5-7 Dale Street, Manchester, | | | | | | | UnitedKingdom, M1 1JB | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Salford Schools Solutions HoldCo | 3rd Floor Suite 6c, Sevendale | 26% 26% N/A | | N/A | | N/A | | | Limited | House, 5-7 Dale Street, Manchester, | | | | | | | UnitedKingdom, M1 1JB 2 2 2 Salford Schools Solutions Limited 3rd Floor Suite 6c, Sevendale 26% 26% N/A N/A N/A House, 5-7 Dale Street, Manchester, UnitedKingdom, M1 1JB 2 2 2 Schools Capital Limited Cannon Place, 78 Cannon Street, 51% 51% N/A N/A N/A London, United Kingdom, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Schools Investment Company (Irl) | Level 7, One Bartholomew Close, | 100% 100% N/A | | N/A | | N/A | | | Limited | BartsSquare, London, United Kingdom, | | | | | | | EC1A7BL 145 HICL Annual Report 2024 Notes to the financial statements continued For the year ended 31 March 2024 ### 21. Related undertakings continued | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Schools Public/Private Partnership | Suite 54, Morrison Chambers, | 50% 50% N/A | | | N/A | | | N/A | | | (Ireland) Limited (Incorporated in | 32 Nassau Street, Dublin 2, Ireland | | | | | | | | | Ireland) | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Services Support (Gravesend) | 8 White Oak Square, London Road, | 73% 73% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG 2 2 2 Services Support (Gravesend) Limited 8 White Oak Square, London Road, 73% 73% N/A N/A N/A Swanley, Kent, United Kingdom, BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Services Support (Manchester) | 8 White Oak Square, London Road, | 73% 73% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, Kent, United Kingdom, | | | | | | | BR87AG 2 2 2 Services Support (Manchester) Limited 8 White Oak Square, London Road, 73% 73% N/A N/A N/A Swanley, Kent, United Kingdom, BR87AG | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Services Support (Cleveland) Holdings | 8 White Oak Square, London Road, | 100% 100% N/A | | N/A | | N/A | | | Limited | Swanley, Kent, BR8 7AG | | | | | | | | | | | 2 | | 2 | | 2 | | Services Support (Cleveland) Limited 8 White Oak Square, London Road, | | 100% 100% N/A | | N/A | | N/A | | Swanley, Kent, BR8 7AG 2 2 2 Sheffield LEP Limited Third Floor Broad Quay House, 50% 50% N/A N/A N/A PrinceStreet, Bristol, United Kingdom, BS1 4DJ 2 2 2 Sheff Schools Topco Limited 10 St. Giles Square, London, 75% 75% N/A N/A N/A UnitedKingdom, WC2H 8AP 2 2 2 Sheppey Route (Holdings) Limited Cannon Place, 78 Cannon Street, 50% 50% N/A N/A N/A London, United Kingdom, EC4N 2 2 2 Sheppey Route Limited Cannon Place, 78 Cannon Street, 50% 50% N/A N/A N/A London, United Kingdom, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Sussex Custodial Services (Holdings) | Unit 18 Riversway Business Village | 100% 100% N/A | | N/A | | N/A | | | Limited | Navigation Way, Ashton-On-Ribble, | | | | | | | Preston, United Kingdom, PR2 2YP 2 2 2 Sussex Custodial Services Limited Unit 18 Riversway Business Village 100% 100% N/A N/A N/A Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP | Texas Nevada Transmission, LLC | 251 Little Falls Drive, Wilmington, | 46% – 31 Dec 23 34.5 609.4 | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | (HoldCo Debt) (Incorporated in USA) | NewCastle, DE, 19808, USA | | | | | | | | | | | 2 | | 2 | | 2 | | The Hospital Company (Oxford John | Unit 18 Riversway Business Village, | – 100% N/A | | N/A | | N/A | | | Radcliffe) Holdings Limited | Navigation Way, Ashton-On-Ribble, | | | | | | | Preston, United Kingdom, PR2 2YP The Hospital Company (Oxford John Unit 18 Riversway Business Village, – 100% 31 Dec 22 0.9 (59.1) Radcliffe) Limited Navigation Way, Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | The Hospital Company (Southmead) | 8 White Oak Square, London Road, | 63% 63% N/A | | N/A | | N/A | | | Limited | Swanley, United Kingdom, BR8 7AG | | | | | | | | | | | 2 | | 2 | | 2 | | The Hospital Company (Southmead) | 8 White Oak Square, London Road, | 63% 63% N/A | | N/A | | N/A | | | Holdings Limited | Swanley, United Kingdom, BR8 7AG | | | | | | | | | | | 2 | | 2 | | 2 | | The Renfrewshire Schools Partnership | Precision House, Mcneil Drive, | 30% 30% N/A | | N/A | | N/A | | | Limited | Motherwell, Scotland, ML1 4UR | | | | | | | 146 HICL Annual Report 2024 Strategic Report Governance Financials | | | Shareholding | | | | | Aggregate | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Profit/ | | Capital & | | | | | | | | | (Loss) | | Reserves | | | | Entity Registered address | | | Year end | | £m | | | £m31-Mar-24 31-Mar-23 | | | | | | | 2 | | 2 | | | 2 | | Transpark Highway Finance Inc. | 2800 Park Place, 666 Burrard Street, | 50% 50% N/A | | | N/A | | | N/A | | | (Incorporated in Canada) | Vancouver BC V6C 2Z7, Canada | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Transpark Highway General | 2800 Park Place, 666 Burrard Street, | 50% 50% N/A | | | N/A | | | N/A | | | Partnership (Incorporated in Canada) | Vancouver BC V6C 2Z7, Canada | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Transpark Highway Holdings Inc. | 2800 Park Place, 666 Burrard Street, | 50% 50% N/A | | | N/A | | | N/A | | | (Incorporated in Canada) | Vancouver BC V6C 2Z7, Canada | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Transpark Highway Inc. (Incorporated | 2800 Park Place, 666 Burrard Street, | 50% 50% N/A | | | N/A | | | N/A | | | in Canada) | Vancouver BC V6C 2Z7, Canada | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | Transpark Highway Investment Inc. | 2800 Park Place, 666 Burrard Street, | 50% 50% N/A | | | N/A | | | N/A | | | (Incorporated in Canada) | Vancouver BC V6C 2Z7, Canada | | | | | | | | | | | | | | 2 | | 2 | | | 2 | | TW Accommodation Services Limited Cannon Place, 78 Cannon Street, | | 100% 100% N/A | | | N/A | | | N/A | | London, United Kingdom, EC4N 6AF | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | TW Accommodation Services | Cannon Place, 78 Cannon Street, | 100% 100% N/A | | N/A | | N/A | | | (Holdings) Limited | London, United Kingdom, EC4N 6AF | | | | | | | | | | | 2 | | 2 | | 2 | | UK GDN Investments Holdco Limited Level 7, One Bartholomew Close, | | 100% 100% N/A | | N/A | | N/A | | BartsSquare, London, United Kingdom, EC1A 7BL 2 2 2 UK GDN Investments Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A 7BL 2 2 2 UK GDN Investments Topco Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A Barts Square, London, United Kingdom, EC1A 7BL 2 2 2 Via Erste Beteiligungsgesellschaft mbH Franz-Ehrlich-Str. 5 12489, Berlin, 100% 100% N/A N/A N/A Germany 2 2 2 Via Muehlhausen GmbH & Co KG Vor dem Riedtor 7, 99998 Mühlhausen, 50% 50% N/A N/A N/A Germany 2 2 2 Willcare (MIM) Limited 128 Buckingham Palace Road, London, 100% 100% N/A N/A N/A United Kingdom, SW1W 9SA 2 2 2 Willcare Holdings Limited 128 Buckingham Palace Road, London, 100% 100% N/A N/A N/A United Kingdom, SW1W 9SA | | | | 2 | | 2 | | 2 | | --- | --- | --- | --- | --- | --- | --- | --- | | Wooldale Partnerships Holdings | 10 St. Giles Square, London, | 50% 50% N/A | | N/A | | N/A | | | Limited | UnitedKingdom, WC2H 8AP | | | | | | | | | | | 2 | | 2 | | 2 | | Wooldale Partnerships Limited 10 St. Giles Square, London, | | 50% 50% N/A | | N/A | | N/A | | UnitedKingdom, WC2H 8AP 2 2 2 Yorker Holdings PKR Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A 7BL 2 2 2 Zealburg Holdings Limited Level 7, One Bartholomew Close, 100% 100% N/A N/A N/A BartsSquare, London, United Kingdom, EC1A 7BL 1 Denotes a direct shareholding 2 In line with the Companies Act requirements, no disclosure has been made where capital and reserves and profit or loss are not considered to be material 147 HICL Annual Report 2024 ## Appendix 1 The Sustainability Report outlines the actions already taken as well ## SFDR Principal Adverse as actions planned in order for HICL to improve performance against these PAIs. To read about those specific metrics and targets, please ## Impact (“PAI”) Disclosures see pages 12-13 of HICL’s 2024 Sustainability Report. All PAIs have been calculated in accordance with the requirements of The indicators set out below outline HICL’s non-financial impact of its Annex 1 of the SFDR Regulatory Technical Standards (RTS) and as investments in accordance with Article 7 of the SFDR. The Company indicated in the notes below. has reported in line with all 14 mandatory PAIs and 7 voluntary PAIs to provide a high level of transparency as to HICL’s ESG performance and to enable HICL’s shareholders to meet their own regulatory and voluntary reporting requirements. Mandatory indicators Metric as at | | | | 31 December | | Portfolio | | --- | --- | --- | --- | --- | --- | | Adverse sustainability indicator Metric Unit | | | | 2023 | Coverage | | Greenhouse | 1. GHG emissions Scope 1 GHG emissions tCO | 2 e 30,400 100% | | | | 1 gas emissions | | Scope 2 GHG emissions tCO | | 2 e 23,534 100% | | | --- | --- | --- | --- | --- | | | Scope 3 GHG emissions tCO | | 2 e 35,625 100% | | | | Total GHG emissions tCO | | 2 e 89,559 100% | | | 2. Carbon footprint Carbon footprint tCO | | 2 e/€m | | 23 100% | invested | 3. GHG intensity of | | GHG intensity of investee companies tCO | 2 e/€m | | 239 100% | | --- | --- | --- | --- | --- | --- | | | investeecompanies | | revenue | | | | 4. Exposure to | | Share of investments in companies | | % 0 100% | | | | companiesactive in | activeinthe fossil fuel sector | | | | thefossil fuel sector 5. Share of non-renewable Share of non-renewable energy % 86 93% energy consumption consumption and non-renewable energy 2 andproduction production of investee companies from non-renewable energy sources compared to renewable energy sources, expressed asa percentage of total energy sources 6. Energy consumption Energy consumption in GWh per million GWh/€m 0.01 100% intensity per high impact EUR of revenue of investee companies, 3 | | | climate sector | perhigh impact climate sector | | | --- | --- | --- | --- | --- | | Biodiversity | 7. Activities negatively | | Share of investments in investee companies | % 0 99% | | | | affecting biodiversity- | with sites/operations located in or near to | | | | | sensitiveareas | biodiversity-sensitive areas where activities | | of those investee companies negatively affect those areas Water 8. Emissions to water Tonnes of emissions to water generated Tonnes/€m 0 99% by investee companies per million EUR invested, expressed as a weighted average Waste 9. Hazardous waste and Tonnes of hazardous waste and radioactive Tonnes/€m 0.80 100% 4 radioactive waste ratio waste generated by investee companies per million EUR invested, expressed as aweighted average 148 HICL Annual Report 2024 Strategic Report Governance Financials Metric as at | | | | | | 31 December | | Portfolio | | --- | --- | --- | --- | --- | --- | --- | --- | | Adverse sustainability indicator Metric Unit | | | | | | 2023 | Coverage | | Social and | 10. Violations of UN Global | | Share of investments in investee companies | % 0 99% | | | | | employee | | Compact principles | that have been involved in violations of the | | | | | | matters | | and Organisation for | UNGC principles or OECD Guidelines for | | | | | | | | Economic Cooperation | Multinational Enterprises | | | | | and Development (OECD) Guidelines for Multinational Enterprises 5 | 11. Lack of processes and | | Share of investments in investee | % 18 | 99% | | --- | --- | --- | --- | --- | | | compliance mechanisms | companieswithout policies to | | | | | to monitor compliance | monitor compliance with the UNGC | | | | | with UN Global Compact | principles or OECD Guidelines for | | | | | principles and OECD | Multinational Enterprises or grievance/ | | | | | Guidelines for Multinational | complaints handling mechanisms | | | | | Enterprises | to address violationsof the UNGC | | | principles orOECDGuidelines for MultinationalEnterprises 12. Unadjusted gender Average unadjusted gender pay % 20 32% 6 pay gap gapofinvestee companies 7 13. Board gender diversity Average ratio of female to male board % 23 99% members in investee companies, expressed as a percentage of all boardmembers | 14. Exposure to controversial | | Share of investments in investee | % 0 100% | | --- | --- | --- | --- | | | weapons (anti-personnel | companiesinvolved in the manufacture | | | | mines, cluster munitions, | orselling of controversial weapons | | chemical weapons and biological weapons) 149 HICL Annual Report 2024 Appendix 1 continued Voluntary climate and other environment-related indicators Metric as at 31 December Portfolio Adverse sustainability indicator Metric Unit 2023 Coverage 8 | Greenhouse | 4. Investments in companies | | Share of investments in investee companies | % 24 | 99% | | --- | --- | --- | --- | --- | --- | | gas emissions | | without carbon emission | without carbon emission reduction initiatives | | | | | | reduction initiatives | aimed at aligning with the Paris Agreement | | | 8 | Water, waste | 7. Investments in | | Share of investments in investee companies | % 11 | 99% | | --- | --- | --- | --- | --- | --- | | and material | | companieswithout water | without water management policies | | | | emissions | | management policies | | | | Voluntary indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters Metric as at | | | | | | | | 31 December | | Portfolio | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Adverse sustainability indicator Metric Unit | | | | | | | | 2023 | Coverage | | Social and | 1. Investments in companies | | Share of investments in investee | | | % 3 99% | | | | | employee | | without workplace accident | companies without a workplace | | | | | | | | matters | | prevention policies | accidentprevention policy | | | | | | | | | 2. Rate of accidents Rate of accidents in investee companies | | | RIDDORs per | | | | 0.28 120 | | | | | | expressed as a proportion of the total | | project | | | | projects | number of investee companies 6. Insufficient whistleblower Share of investments in entities % 2 99% 8 protection without policies on the protection ofwhistleblowers Human 11. Lack of processes and Share of investments in investee % 6 99% rights measures for preventing companies without policies against 9 | | | trafficking in human beings | trafficking in human beings | | | --- | --- | --- | --- | --- | | Anti-corruption | 15. Lack of anti-corruption | | Share of investments in entities without | % 0 99% | | and anti- | | andanti-bribery policies | policies on anti-corruption and anti- | | | bribery | | | bribery consistent with the United | | Nations Convention against Corruption 1 Calculated using valuation information as at 31 March 2024 2 Calculated as the average of each investee companies’ share of non-renewable energy as a proportion of its total energy consumption. 3 As per our interpretation of the material sectors based on NACE code categories A-H and J-L, the following sectors would be considered as high impact climate sectors: road, rail, power transmission and water treatment 4 Calculated as the weighted average based on investment value to date 5 The UN Global Compact is a newer framework which has been recently introduced as a requirements in respect to human rights. Hence, a number of the projects or subcontractors haven’t updated their processes to align with this framework yet. Given its prominence, through InfraRed, HICL will look to work with portfolio companies to improve alignment over the coming years. 6 This metric refers to Affinity Water and Altitude Infra only, as these are the two assets in HICL’s portfolio with the required number of employees to meet the criteria of this PAI. Portfolio coverage for this metric is shown as a proportion of the valuation of portfolio companies which have direct employees 7 Calculated as the average of each investee companies’ board gender diversity 8 Share of investments calculated by valuation as at 31 March 2024 9 Share of investments calculated by valuation as at 31 March 2024. For the purposes of this metric we have assessed whether a project undertakes training and audit procedures in respect totheUK Modern Slavery Act 2015 or equivalent 150 HICL Annual Report 2024 Strategic Report Governance Financials Legal entity identifier: 213800BVXR1E5L7PEV94 ## Environmental and/or social characteristics investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the ANNEX investment does not investments with an characteristics and Product name: HICL Infrastructure PLC significantly harm environmental objective: ___% while it did not have as its objective a any environmental or social objective and sustainable investment, it had a proportion of that the investee in economic activities that ___% of sustainable investments companies follow qualify as environmentally good governance sustainable under the EU with an environmental objective in economic practices. Taxonomy activities that qualify as environmentally sustainable under the EU Taxonomy in economic activities that do not qualify as environmentally with an environmental objective in a classification sustainable under the EU economic activities that do not qualify as system laid down in environmentally sustainable under the EU Taxonomy Regulation (EU) Taxonomy 2020/852, establishing a list of with a social objective environmentally sustainable economic activities. That Regulation with a social objective: ___% make any sustainable investments does not lay down a list of socially sustainable economic activities. Sustainable investments with an environmental objective might be aligned with the To what extent were the environmental and/or social characteristics Taxonomy or not. promoted by this financial product met? HICL Infrastructure PLC’s (the "Company" or "HICL") investment proposition is to deliver sustainable income and capital growth from a diversified portfolio of investments in core infrastructure. The Company offers investors stable, long-term returns from core infrastructure assets that are vital to communities. HICL's vision is to The EU Taxonomy is enrich lives through infrastructure and to attain the E/S Characteristics. The Company's E/S Characteristics were met by focusing on the following sustainability themes: It promoted Environmental/Social (E/S) It made sustainable • Strong Social Foundation, through investments in health, education, law & order, Sustainable and accommodation; It promoted E/S characteristics, but did not It made sustainable investments 151 No Yes Did this financial product have a sustainable investment objective? \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Appendix 1 continued • Connecting Communities, through investments in rail and rolling stock, fibre net works and telecom towers; and • Sustainable Modern Economies, through investments in assets that contributi ng to the energy transition to achieve net zero carbon emissions and deliver climate resilient infrastructure, including water, offshore electricity transmission, district energy and electricity distribution. (together, the "E/S Characteristics"). HICL’s Manager, InfraRed Capital Partners, (“The Investment Manager”, “The Manager” or “InfraRed”) ensured that, through the reporting period, HICL: • invested in assets with a social purpose and proactively engaged with it s st akeholders to improve sustainability outcomes across the portfolio; • promoted environmental initiatives for the benefit of current and future generations; • made a positive overall impact on the communities in which our assets are located; and • through all of the above, aligned the interests of stakeholder groups of HICL’ s i nvestments which typically have long asset lives. How did the sustainability indicators perform? InfraRed used the following key performance indicators to measure the attainment of the E/S Characteristics that the Company promotes: • Environmental: Energy, water and waste management, consideration of climat e r isks and Scope 1, 2, 3 emissions; and • Social: community contributions to environmental or social initiatives, and healt h & safety polices and performance, assessment of human rights and diversity and inclusion policies (together, the "Sustainability Indicators"). Information regarding the performance of HICL's investments against all sustainability indicators besides Scope 1, 2 and 3 Emissions is provided in the table on page 148 of this Annual Report. Information regarding the Company's investments' performance against Scope 1, 2 and 3 Emissions is provided in the table on page 69 of this Annual Report. …and compared to previous periods? 152 \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Strategic Report Governance Financials Financials 153 HICL Annual Report 2024 Appendix 1 continued How did this financial product consider principal adverse impacts on sustainability factors? Prior to acquisition of an investment, the Investment Manager considers performance against the mandatory principal adverse impact indicators in Table 1 Annex 1 of the SFDR RTS, to the extent that relevant data is available from each potential investee company. Post-acquisition, the Manager ensured assessment of the mandatory principal adverse impacts on an ongoing basis through an annual ESG Survey which portfolio companies are asked to complete, the results of which are published in HICL’s Sustainability Report each year. Information regarding InfraRed’s consideration of the principal adverse impacts in respect of HICL’s investments is provided in HICL’s Sustainability Report. What were the top investments of this financial product? The information shown in the table below has also been provided on page 26 of this Annual Report. the investments constituting the greatest proportion of investments of the financial product during the reference period which is: 1 January to 31 December 2023 What was the proportion of sustainability-related investments? N/A What was the asset allocation? allocation describes the 99.6% of HICL’s investments were made to attain the E/S Characteristics in the share of reporting period. investments in specific To confirm, the Company's asset allocation has been calculated based on market values in respect of "#1 Aligned with E/S Characteristics" investments and mark-to- market value in respect of the "#2 Other" assets. The list includes Asset % Assets 154 Largest investments Sector Country Royal School of Military Engineering Education Fortysouth Communications Pinderfields & Pontefract Hospital Healthcare Home Office Fire, Law & Order Texas Nevada Transmission Water & Electricity Cross London Trains Transport High Speed 1 Transport Southmead Hospital Healthcare Affinity Water Water & Electricity A63 Motorway Transport 3.5% UK 6.5% New Zealand 3.5% UK 3.0% UK 5.6% USA 2.7% UK 4.6% UK 3.9% UK 8.3% UK 7.9% France assets. \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Strategic Report Governance Financials activities are expressed as a share of: - turnover reflects the “greenness” of #1 Aligned with E/S investee characteristics - 80% companies today. Investments - capital expenditure #2 Other - 20% (CapEx) shows the green investments #1 Aligned with E/S characteristics includes the investments of the financial product used to made by attain the environmental or social characteristics promoted by the financial product. investee companies, #2 Other includes the remaining investments of the financial product which are neither aligned relevant for a with the environmental or social characteristics, nor are qualified as sustainable investments. transition to a green economy. - operational expenditure In which economic sectors were the investments made? (OpEx) reflects the green The Company’s investments were in core infrastructure assets, in the following sectors: operational Accommodation, Communications, Education, Electricity & Water, Healthcare, Fire, activities of Law & Order and Transport. investee companies. To what extent were the sustainable investments with an environmental objective aligned with the EU Taxonomy? InfraRed is not currently in a position to disclose how and to what extent the investments underlying the Company are in economic activities that qualify as environmentally sustainable economic activities (as defined in Article 3 of the EU Taxonomy). This is Taxonomy-aligned because HICL's investments are in social infrastructure, which cannot at present be assessed against the EU Taxonomy. In accordance with the European Commission’s Decision Notice of 13 May 2022 (C(2022) 3051), InfraRed confirms that the Company's investments are 0% EU Taxonomy-aligned. Did the financial product invest in fossil gas and/or nuclear energy related activities 1 complying with the EU Taxonomy ? Yes X No 1 Fossil gas and/or nuclear related activities will only compy with the EU Taxonomy where they contribute to limiting climate change (“climate change mitigation”) and do not significantly harm any EU Taxonomy objective – see explanatory not in the left hand margin. The full criteria for fossil gas and nuclear energy economy activities that comply with the EU Taxonomy are laid down in Commission Delegated Regulation (EU) 2022/1214. 155 \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Appendix 1 continued the EU Taxonomy, the criteria for fossil gas include Taxonomy. As there is no appropriate methodology to determine the taxonomy-alignment of sovereign limitations on bonds*, the first graph shows the Taxonomy alignment in relation to all the investments of the financial emissions and product including sovereign bonds, while the second graph shows the Taxonomy alignment only in switching to relation to the investments of the financial product other than sovereign bonds. fully renewable power or low- carbon fuels by 1. Taxonomy-alignment of investments 2. Taxonomy-alignment of investments including sovereign bonds* excluding sovereign bonds* the end of 2035. For nuclear energy, the Turnover Turnover criteria include comprehensive CapEx CapEx safety and waste OpEx OpEx management rules. 0% 50% 100% 0% 20% 40% 60% 80% 100% Other investments Other investments Enabling activities To comply with directly enable other activities to make a substantial contribution to an environmental objective. What was the share of investments made in transitional and enabling activities? Transitional As noted above, the Company is not currently in a position to disclose how and to what activities are extent the investments underlying the Company align with the EU Taxonomy. Therefore, activities for the Company is not in a position to disclose the minimum share of investments in which low-carbon transitional and enabling activities. alternatives are not yet available How did the percentage of investments that were aligned with the EU Taxonomy compare and among others with previous reference periods? have greenhouse gas emission N/A levels corresponding to the best performance. The graphs below show in green the percentage of investments that were aligned with the EU 156 *For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Strategic Report Governance Financials are objective not aligned with the EU Taxonomy? sustainable investments with an N/A environmental objective that do not take into What was the share of socially sustainable investments? account the criteria for environmentally N/A sustainable What was the share of sustainable investments with an environmental economic activities under Regulation (EU) 2020/852. What investments were included under “other”, what was their purpose and were there any minimum environmental or social safeguards? In relation to “other” investments, currency, interest rate and power price hedging is carried out to seek to provide protection against foreign exchange risk and increasing costs of servicing Group Debt (as defined in the Prospectus) drawn down to finance investments. However, currency and interest rate hedging transactions will only be undertaken for the purpose of efficient portfolio management and will not be carried out for speculative purposes. In respective of this reporting period specifically, the value of investments in “other” was 0%. What actions have been taken to meet the environmental and/or social characteristics during the reference period? HICL took several actions during the period to meet its E/S Characteristics. An outline and a few examples are provided below, for more detailed information please refer to HICL’s 2024 Sustainability Report. Social impact: As a trusted steward of essential infrastructure assets, HICL sits at the heart of communities and plays a key role in modern society. HICL therefore encourages its portfolio companies to create impact initiatives which address the needs of their local communities. An example of one of HICL's social initiatives over the past year was by its largest asset by value, Affinity Water. In March 2024, Affinity Water announced its grant funding allocation to the Red Shed Garden Project, a charity aimed at supporting individuals living with dementia in Hertfordshire by offering horticultural therapy, gardening activities, and social interaction opportunities. The grant funding will enable the Red Shed Garden Project to expand its services to reach more beneficiaries and will support the operation of four garden clubs offering tailored activities designed to meet the diverse needs and abilities of participants. The funding, facilitated in partnership with the Hertfordshire Community Foundation, also highlights Affinity Water’s commitment to addressing local needs and promoting social well-being. Just as important as creating and implementing community initiatives is recognising and rewarding HICL’s portfolio company teams that are already making a positive impact in their local communities. InfraRed’s Creating Better Futures Awards are an annual event designed to celebrate success, share best practice and drive increased ESG activity across HICL’s portfolio. Judged on the four criteria of innovation, community need, collaboration and 157 \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Appendix 1 continued HICL and its Investment Manager on creating a positive impact for the communities served by its assets. Of the 38 submissions, 12 achieved the Gold Standard award, 7 of which were initiatives put forward by HICL assets. With more than 220 ESG Community initiatives reported across HICL’s portfolio during the period, the Creating Better Futures Awards highlight only a subset of these but serve as a further incentive for HICL and InfraRed to continually seek to work for local communities and reward those assets making a positive difference. resource efficiency, the Creating Better Futures Awards illustrate the importance placed by Environment: HICL's key themes for environment surround biodiversity, resources and climate change. In 2023 for biodiversity the project company at Pinderfields & Pontefract Hospitals, one of HICL’s assets, donated funds and resources to the Mid Yorkshire Teaching NHS Trust to support the delivery of biodiversity enhancement initiatives across this site. These initiatives are expected to include the trials of new weed removal methods, the installation of structures to support local wildlife, and the creation of a native hedgerow within which 1,500 of the trees are supplied by the facilities management provider. In November 2023, volunteers from the project company and the facilities management provider partnered with the NHS Trust to plant 1,000 of these trees at the hospital site in celebration of National Tree Week. In addition to providing homes for wildlife, these will help to reduce air pollution, benefitting the hospital outpatients of 250,000 each year and their extended family members, local communities and Trust colleagues. In regards to resources, InfraRed’s annual ESG survey reported that 88% of assets in HICL’s portfolio have water consumption reduction initiatives in places and 87% of assets in HICL’s portfolio have waste reduction initiatives in place. These results, a slight decline from 2023, informed the Investment Manager on where to direct its resources to target resource consumption across the portfolio. Some of the outcomes of this exercise came in the form of a water saving initiative at Affinity Water and an investment into waste management technology at High Speed 1. HICL’s actions this year in the field of climate change are presented below in two parts; Net zero and Emissions. Net zero: In 2023 HICL’s Investment Manager, InfraRed, created a detailed net zero transition plan for HICL’s portfolio, including specific asset transition plans for the next three years and reinforced its 2030 net zero targets. Details on this plan can be found on pages 15-19 of HICL’s 2024 Sustainability Report. InfraRed’s chosen methodology for its net zero targets is the Paris-aligned Investment 2 Initiative’s (PAII) Net Zero Investment Framework (NZIF) for Infrastructure. Following this methodology, HICL has two types of net zero targets that have been approved by the Net Zero Asset Managers initiative. HICL commits to reviewing these targets every five years at a minimum: 2 Framework developed by the Institutional Investor Group on Climate Change (IIGCC) 158 \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 Strategic Report Governance Financials Engagement Threshold Target = 90% portfolio engagement The Investment Manager has also set interim net zero targets, which include HICL, outlined in this report: https://www.ircp.com/sites/default/files/2022-11/infrared_2022_net_zero_progress_report.pdf Emissions Reporting: HICL's financed emissions decreased over the period, largely due to Scope 3 emissions. In Portfolio Coverage Target = 50% aligned or aligning by 2030 2023, HICL’s Manager adopted EXIOBASE as its data source to estimate Scope 3 emissions. Recommended by the GHG Protocol, it usesmore recent data, with greater granularity across sectors and countries than the methodology previously adopted. The use of this newer database has contributed to a material reduction in the Scope 3 emissions reported this year. While the revised methodology provides a more accurate reflection of impact, we anticipate further movements in emissions as data quality and methodologies improve. How did this financial product perform compared to the reference ### ? benchmark? N/A How does the reference benchmark differ from a broad market index? N/A How did this financial product perform with regard to the sustainability indicators to determine the alignment of the reference benchmark with the environmental or social characteristics promoted? benchmarks are N/A indexes to measure whether How did this financial product perform compared with the reference benchmark? the financial product attains N/A the environmental or How did this financial product perform compared with the broad market index? social N/A characteristics that they promote. Reference 159 \\1082507 4159-1671-0727 v2 Hogan Lovells HICL Annual Report 2024 ## Appendix 2 ### Valuation Policy Regulated assets – Affinity Water As described in the Valuation of the Portfolio section on page 46, the The valuation drivers and metrics for certain regulated assets are Group’s investments are predominantly valued using a discounted different in certain aspects from the Company’s other market cash flow (“DCF”) analysis of the forecast investment cash flows from segments – in particular, it is necessary to forecast future regulatory each portfolio company. outcomes as well as operational performance against targets and allowances agreed with the regulator. The following is an overview of the key assumptions and principles applied in the valuation and forecasting of future cash flows: The Regulated Capital Value (“RCV”) multiple, which measures a – Discount rates and other key valuation assumptions (as outlined company’s enterprise value as a multiple of RCV, is the most widely above) continue to be applicable used valuation metric for UK regulated assets and forms a useful cross-check to the DCF-derived valuation. An RCV multiple will vary – Contracts for PPP projects and demand-based assets are not depending on a company’s risk profile and operational performance, terminated before their contractual expiry date influenced by factors such as whether the business is listed, its level – A reasonable assessment is made of operational performance, of gearing, whether it is responsible for funding a pension deficit, and including in relation to PPP projects, payment deductions and the its business scope and complexity. ability to pass these down to subcontractors – Distributions from each portfolio company reflect reasonable expectations, including consideration of financial covenant restrictions from senior lenders – Lifecycle and capital maintenance risks are either not borne by the portfolio company because they are passed down to a subcontractor or, where borne by the portfolio company, are incurred per current forecasts – For demand-based assets, a reasonable assessment is made of future revenue growth, typically supported by forecasts made by an independent third party – Where assets are in construction, a reasonable assessment is made as to the timing of completion and the ability to pass down any costs of delay to subcontractors – Where a portfolio company expects to receive residual value from an asset, that the projected amount for this value is realised – Non-UK investments are valued in local currency and converted to sterling at the period end exchange rates – A reasonable assessment is made of regulatory changes in the future which may impact cash flow forecasts – Perpetual investments are assumed to have a finite life (e.g. Affinity Water is valued using a terminal value assumption) – In forming the above assessments, the Investment Manager works with portfolio companies’ management teams, as well as engaging with suitably qualified third parties such as technical advisers, traffic consultants, legal advisers and regulatory experts 160 HICL Annual Report 2024 Strategic Report Governance Financials ## Appendix 3 ### The Infrastructure Market – Sources Page 13 – ESO publishes “Beyond 2030”, ESO (2024) – Putting the mission in transmission: Grids for Europe’s energy Page 10 transition, Ember (2024) – Bridging infrastructure gaps: Has the world made progress? – Resurgent US electricity demand sparks power grid warnings, McKinsey Global Institute (2017) Financial Times (2024) – Mind the gap: Time to rethink infrastructure finance, – Thousands of homes to be kept warm by waste heat from WorldBank.Org (2022) computer data centres in UK first, News Story, Gov.UK (2023) – Global Infrastructure Outlook, Global Infrastructure Hub (2018) – Connections Action Plan, Department for Energy Security and Net Zero & Ofgem (2023) Page 11 – UK Heat Networks Market Overview, Department for Energy – Deals, Inframation News (2024) Security & Net Zero (2023) – £180m Cardiff cancer centre seals financial close, Construction – District heating potential in the EU-27: Evaluating the impacts of Enquirer (2024) heat demand reduction and market share growth, Applied Energy, – Annual Report on the Mutual Investment Model 2021-22, Gov. Volume 353, Part B (2024) Wales (2022) – The Role of District Heating in the Energy System in Denmark, – New British Infrastructure Council meets to discuss investment Danish District Heating Association (2024) opportunities, New Civil Engineer (2023) – The DHC Market Outlook 2023, Euroheat & Power (2023) – Progress with the New Hospital Programme, Department of Health & Social Care, NHS England (2023) – Hospital building in England: Plans and progress, House of Commons Library (2024) Page 12 – Market Update, 2023 edition, European PPP Expertise Centre (2024) – Government sets ambitious target to grow rail freight by at least 75%, News Story, Gov.UK (2023) – Gigabit infrastructure act: Council gives final green light to faster deployment of high-speed networks in the EU, Press Release, Council of the EU (2024) – Connected Nations, UK Report 2023, Ofcom (2023) – How to take advantage of the world’s demand for data, Investors’ Chronicle (2024) – Savills: Pipeline of data centres needs to more than double by 2025 to meet demand for storage in Europe, Savills News (2022) – What is a Data Center, Server Labs (2019) – Completion of the One New Zealand acquisition, Infratil (2023) – Corporate Governance Statement – 2023, Infratil (2023) 161 HICL Annual Report 2024 ## Glossary Item Definition Acquisition Strategy This identifies the scope for current acquisitions; further details can be found in HICL’s Business Model section of this report AIPs Approved Investment Parameters AIF Alternative Investment Fund AIFM Alternative Investment Fund Manager AIFMD The Alternative Investment Fund Managers Directive seeks to regulate alternative investment fund managers (“AIFM”) and imposes obligations on managers who manage alternative investment funds (“AIF”) in the EU or who market shares in such funds to EU investors AIC The Association of Investment Companies is a UK trade association for the closed-ended investment company industry AIC Code The 2019 AIC Code of Corporate Governance AMP8 The UK water industry regulatory period from 2025 to 2030 Corporate assets These are assets that provide services or access to essential assets for corporate counterparties. The relationship between the infrastructure asset owner and the corporate counterparty is usually contractual, with prices set through a commercial negotiation or a market-clearing price Corporate Group Refers to HICL and its Corporate Subsidiaries Corporate Subsidiaries HICL Infrastructure 2 S.a.r.l. and Infrastructure Investments Limited Partnership Demand-based assets Infrastructure assets with revenues linked to the usage of the underlying assets Directors’ Valuation Fair market valuation of HICL’s investments and commitments at the balance sheet date. Further details can be found in the Valuation of the Portfolio section of the report ESG Environmental, Social and Governance EPS Earnings per share FATCA The Foreign Account Tax Compliance Act provisions of the US Hiring Incentives to Restore Employment Act FCA UK Financial Conduct Authority FM Facilities Management IFRS Basis Basis on which HICL prepares its IFRS financial statements. HICL applies IFRS 10 and Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) and therefore does not consolidate any of its subsidiaries, including those that are themselves investment entities HICL HICL Infrastructure Company Limited prior to 31 March 2019 and HICL Infrastructure PLC from 1 April 2019 InfraRed InfraRed Capital Partners and its Group, more details of which can be found at www.ircp.com Investment Manager InfraRed Capital Partners Limited acting in its capacity as Investment Manager to HICL pursuant to the Investment Advisory Agreement Investment Basis Pro forma financial information on the basis that HICL consolidates the results of the Corporate Subsidiaries Investment Policy HICL’s Investment Policy has not materially changed since IPO and can be found on the website at /www.hicl.com/about-us/strategy-investment-policy/ 162 HICL Annual Report 2024 Strategic Report Governance Financials Item Definition IPO Initial Public Offering, the act of offering the stock of a company on a public stock exchange for the first time. HICL completed its IPO in March 2006 Lifecycle Concerns the replacement of material parts of an asset to maintain it over its concession life Market capitalisation A measure of the size of a company calculated by multiplying the number of shares in issue by the price of the shares NAV Net Asset Value, the value of the investment company’s assets, less any liabilities it has. The NAV per share is the NAV divided by the number of shares in issue. The difference between the NAV per share and theshare price is known as the discount or premium Net zero A portfolio coverage target, defined by the Net Zero Investment Framework for Infrastructure, is the percentage of assets under management that will be net zero, aligned or aligning by a given year. To be considered aligning, an asset must have short- and medium-term targets that are underpinned by science-based pathways for its sector; it must disclose all material scope emissions (including Scope 3) and evidence the governance of net zero plans. The requirements of aligned status have a greater focus on implementation. The asset must have forecast emissions performance against targets set as well as a decarbonisation strategy to support the reduction projection. To be considered net zero, actual emissions must match or outperform the science-based decarbonisation pathway Ofwat The UK Water Services Regulation Authority Ongoing charges A measure of the regular, recurring costs of running an investment company, expressed as a percentage ofNAV Operating company A company that owns and operates infrastructure assets Partnership Infrastructure Investments Limited Partnership Portfolio company Companies that own or operate infrastructure assets, in which HICL has an investment PPP project Public–Private Partnership projects involving long-term contracts between a public sector client and a private company for the delivery of a service or facility for the use by the general public, public bodies, authorities oragencies, usually in return for an availability payment PR19 Ofwat’s final methodology for the 2019 Price Review, covering the regulatory period from 2020 to 2025 (“AMP7”) PR24 Ofwat’s proposed methodology for the 2024 Price Review, covering the regulatory period from 2025 to 2030(“AMP8”) PRI Principles for Responsible Investment Project company An infrastructure project or concession with a defined expiry date, including a special purpose company (orother entity) formed with the specific purpose of undertaking an infrastructure project Regulated assets Infrastructure assets with monopolistic characteristics and which are subject to regulatory price controls Revolving Credit Facility An acquisition facility provided by lenders, held via a Corporate Subsidiary and expiring in June 2026. Seethe Financial Review section of the report RIDDOR Reporting of Injuries, Diseases and Dangerous Occurrences Regulations Total Shareholder Return Return based on interim dividends paid plus movement in the period, divided by opening NAV per share UN SDGs United Nations Sustainable Development Goals 163 HICL Annual Report 2024 ## Directors and Advisers Directors Investment Manager Mike Bane (Chair) and Operator Rita Akushie InfraRed Capital Liz Barber Partners Limited Frances Davies One Bartholomew Close Simon Holden Barts Square Martin Pugh London Kenneth Reid EC1A 7BL +44 (0)20 7484 1800 Registered Office | One Bartholomew Close | Auditor | | --- | --- | | Barts Square | KPMG LLP | | London | 15 Canada Square | | EC1A 7BL | London | E14 5GL Registrar | Link Asset Services | Financial PR | | --- | --- | | The Registry | Brunswick Group Advisory Ltd | | 34 Beckenham Road | 16 Lincoln’s Inn Fields | | Beckenham | London | | Kent BR3 4TU | WC2A 3ED | Helpline: 0871 664 0300 Company Secretary Joint Corporate Brokers | and Administrator | Investec Bank plc | | --- | --- | | Aztec Financial Services (UK) | 30 Gresham Street | | Limited | London | | Forum 4, Solent Business Park | EC2V 7QP | Parkway South | Whiteley | RBC Capital Markets | | --- | --- | | Fareham | 2 Swan Lane | | PO15 7AD | London | EC4R 3BF 164 Company ISA, NISA, PEP and SIPP status HICL Infrastructure PLC is incorporated in England and Wales under The shares are eligible for inclusion in NISAs, ISAs and PEPs (subject the Companies Act 2006 with registered no. 11738373 and registered to applicable subscription limits) provided that they have been as an investment company under Section 833 of the Companies acquired by purchase in the market, and they are permissible assets Act 2006. for SIPPs. Investment Manager and Operator NMPI status InfraRed Capital Partners Limited is an English limited company HICL conducts its affairs as an investment trust. On this basis, registered in England & Wales under number 03364976 and the Ordinary Shares should qualify as an ‘excluded security’ authorised and regulated by the Financial Conduct Authority and therefore be excluded from the FCA’s restrictions in COBS (authorisation number 195766). InfraRed is a part of SLC 4.12 of the FCA Handbook that apply to non-mainstream pooled Management which is the institutional alternatives and traditional investment products. asset management business of Sun Life. AIFMD status Shareholders’ funds HICL is a UK domiciled and tax-resident public limited company, £3.2bn as at 31 March 2023 which will operate its affairs as a UK Investment Trust Company, and an Alternative Investment Fund under the AIFM Directive. Market capitalisation HICL has appointed InfraRed Capital Partners Limited as £2.6bn as at 31 March 2023 its Investment Manager and AIFM under the Investment Management Agreement. Investment Manager and Operator fees 1 1.1% per annum of the Adjusted Gross Asset Value of the portfolio FATCA up to £750m, 1.0% from £750m up to £1.5bn, 0.9% from £1.5bn up HICL has registered for FATCA and has GIIN number E6TB47.99999. to £2.25bn, 0.8% from £2.25bn to £3.0bn, 0.65% above £3.0bn plus SL.826 £0.1m per annum investment management fee No fee on new acquisitions Investment Policy HICL’s Investment Policy can be found in full on the website at No performance fee www.hicl.com Fees relating to shareholder matters from underlying ISIN and SEDOL project companies are paid to the Group (and not to the ISIN: GB00BJLP1Y77 SEDOL: BJLP1Y7 Investment Manager). Website www.hicl.com 1 Adjusted Gross Asset Value means fair market value, without deductions for borrowed money or other liabilities or accruals, and including outstanding subscription obligations Printed by Park Communications on FSC® certified paper. This document is printed on paper containing 100% recycled fibres. This publication has been manufactured using 100% offshore wind electricity sourced from UK wind and 99% of any waste associated with this production will be recycled and the remaining 1% used to generate energy. It is both recyclable and biodegradable. The FSC® label on this product ensures responsible use of the world’s forest resources. Design and production by Radley Yeldar | ry.com Find out more hicl.com Registered address HICL Infrastructure PLC (Registered number: 11738373) Level 7, One Bartholomew Close Barts Square London, EC1A 7BL