ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2026

HICL Infrastructure PLC

27 May 2026

 

27 May 2026

HICL Infrastructure PLC

ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2026

This announcement contains Inside Information.

The Board of HICL Infrastructure PLC ("HICL", or the "Company") announces Annual Results for the Company for the year ending 31 March 2026. The Annual Report is available at the following link: https://www.hicl.com/investors/reports-publications/

Highlights

For the year ended 31 March 2026

·	NAV per share of 160.2p, delivering a Total NAV Return of 10.3%, driven by accretive portfolio rotation, strong operational performance and disciplined capital allocation (31 March 2025: 153.1p; 2.0%).
·	Strong underlying portfolio performance, with a 12.2% portfolio return, significantly ahead of expectations, supported by outperformance from growth assets and active asset management. Growth assets delivered 9% EBITDA growth year-on-year.
·	Dividends of 8.35p per share, fully supported by portfolio cash generation, with dividend cash cover of 2.38x including disposals and 1.10x excluding disposals, reflecting improved underlying cash flow strength (31 March 2025: 1.56x / 1.07x).
·	£536m of disposals completed in the year, materially exceeding the Company's target, and demonstrating the resilience and value of the portfolio, with over £1bn realised over the past three years at an average premium to carrying value of 11%.
·	FY27 dividend target1 reiterated at 8.50p per share and a new FY28 dividend guidance of 8.65p per share, reflecting strong cash flow visibility and confidence in the portfolio's long-term earnings profile.
·	Disciplined and active capital allocation, including £103m of share buybacks completed in the year, and a further £25m completed post year-end, alongside selective reinvestment, supporting NAV accretion and ongoing portfolio optimisation.
·	Strong and flexible liquidity position, comprising £87.7m of cash, £333.3m of disposal proceeds and an undrawn RCF, providing significant capital flexibility to support allocation priorities.
·	Improved management terms agreed2, moving to a 100% market capitalisation fee basis and a step-down in the notice period to 2 years, enhancing alignment with shareholders and materially reducing vehicle costs to a proforma OER of 0.90%3. Fees continue to be capped at the level under the previous GAV-based approach.
·	Board to propose a biennial continuation vote from the 2028 AGM, to be triggered if the Company's shares trade at an average discount to NAV per share of more than 10% over the preceding financial year.
·	Board succession planning underway, with Mike Bane approaching his nine-year term in mid-2027. A Chair search process has commenced.

1.     This is a target only and not a profit forecast. There can be no assurance that this target will be met

2.     Subject to finalisation of contractual arrangements

3.     Operating Expenses Ratio (OER) 1.10% for year to 31 March 2025. Pro forma OER assumes revised management fee charged for the full year at the same discount.

Mike Bane, Chair of HICL, said:

"HICL delivered a strong financial performance in FY26, with a total NAV return of 10.3% driven by disciplined capital allocation, accretive portfolio rotation and operational outperformance. The realisation of £536m of disposals highlights the quality of the portfolio and has the Company's strengthened capital flexibility. The Board is pleased to reiterate the FY27 dividend target of 8.50p and introduce FY28 guidance of 8.65p, supporting the Company's compelling total return offering.

This strong result underscores HICL's investment proposition and strategic prospects. It highlights InfraRed's strong delivery, exceeding capital recycling and portfolio performance targets, and is evidence of its active management approach and execution capabilities. Enhanced management agreement terms, together with the proposed introduction of a biennial continuation vote, further strengthen alignment and accountability to shareholders as the Company continues to deliver resilient income and long-term capital growth."

Edward Hunt, Head of Core Infrastructure at InfraRed Capital Partners, HICL's Investment Manager, added:

"The Company's portfolio delivered strong underlying performance in FY26, with a 12.2% return supported by HICL's growth assets, which delivered 9% EBITDA growth in the year. Performance has been driven by active asset management and disciplined asset recycling, enhancing capital flexibility. The portfolio continues to deliver consistent cash yields, strengthening dividend cover and organic reinvestment of free cash.

Looking ahead, we are in the midst of a long-term infrastructure supercycle, underpinned by significant global investment needs across energy, digital, transport and social infrastructure. This is expanding the opportunity set and HICL is well positioned to benefit through its diversified portfolio, strong liquidity and active capital allocation, combining resilient income with the opportunity to capture greater capital growth."

Summary Financial Results (On an investment basis)

For the year to	31 March 2026	31 March 2025
Income	£323.9m	£97.1m
Total Return	£266.6m	£46.0m
Earnings per share	13.8p	2.3p
Dividend per share	8.35p	8.25p

Net Asset Value	31 March 2026	31 March 2025
NAV per share	160.2p	153.1p
Q4 Dividend	2.09p	2.07p
NAV per share after deducting Q4 dividend	158.1p	151.0p

Chair's Statement

I am pleased to report a strong financial result for HICL¹, with a total NAV return for the year of 10.3% underpinned by accretive portfolio rotation, operational outperformance and disciplined capital allocation. The Company has continued to realise assets at very attractive valuations, demonstrating the quality and value of our portfolio. We have deployed proceeds into both accretive buybacks and selective investments using a disciplined capital framework, underlining the robustness of HICL's strategy against an uncertain macroeconomic backdrop. 

It is disappointing that the Company's encouraging NAV performance and the fundamental strengths of the portfolio are not, as yet, fully reflected in the Company's share price. The cogency of HICL's standalone strategy and its long-term investment proposition are recognised and highly valued by investors, a message that we have heard repeatedly from the shareholder engagement work undertaken by the Board since the proposed combination with TRIG last year. The Board and Investment Manager recognise that the most effective way to drive the share price forward is through a continuation of the Company's disciplined approach to capital allocation, the delivery of compelling capital growth and income and the execution of a compelling forward looking strategy.

The Board's Senior Independent Director and I have engaged extensively with shareholders this year. This engagement has informed the Board's approach to the Company's strategic evolution and to further enhancing its corporate governance arrangements. These improvements are reflected throughout this Annual Report, including in this statement, the Investment Manager's Report and the Governance section.

More broadly, this year marks HICL's twentieth year as a listed company, a milestone that underscores the durability of the Company's long‑term strategy and investment proposition. Since IPO, HICL has delivered an average annual NAV total return of 8.5%, distributed cumulative dividends of 149.0p per share, generated capital growth of 60.2p per share and completed over £1.5bn of divestments, demonstrating a disciplined and proactive history of capital rotation. As the Company looks ahead, HICL is in a strong position to build on this successful track record, supported by a high‑quality, inflation‑linked portfolio, significant capital flexibility and favourable long‑term fundamentals as global infrastructure investment enters a period of sustained expansion.

Proactive Capital Allocation 

Proactive capital allocation remained a key priority for the Board throughout the year. The ability to rotate assets effectively is the cornerstone of the Board's capital allocation framework. InfraRed, the Company's Investment Manager, has a long track record of making selective disposals on behalf of HICL, having sold 34 assets since 2012. Notwithstanding more subdued transaction activity in the wider market in recent years, InfraRed has continued to deliver accretive disposals proving the inherent quality of the portfolio. Disposals during the year amounted to over £500m comprising the £225m sale of seven UK PPP assets, followed by the £311m disposal of the A63 Motorway, significantly ahead of the £200m target for the year set for InfraRed by the Board.

Over the past three years, more than £1bn of asset realisations have been achieved at a weighted average premium to NAV of 11.1%. This enables the Company to refine portfolio construction and to realise value at opportune times. These sales also demonstrate InfraRed's ability to crystallise value through disciplined, repeatable capital rotation across market cycles. Further details on these transactions are set out in the Investment Manager's Report on page 18.

Proceeds from asset sales were applied to repay the Revolving Credit Facility ("RCF"), held by IILP, in full and to fund future investment commitments of £117.4m. They also supported an increased rate of the Company's share buybacks, with £103m repurchased during the financial year, increasing NAV per share by 1.6p.

Up to the date of publication, the Company has repurchased 158.2m shares for a total consideration of £188.8m, representing 8% of the Company's market capitalisation. The Board will continue to undertake buybacks where they represent an attractive allocation of capital compared with alternative uses, in the context of the return available and the ability to enhance portfolio construction. This disciplined approach to capital allocation reflects the Board's conviction that sustained long‑term NAV growth, rather than the pace of share buybacks alone, will be the principal driver of a durable re‑rating of the Company's shares and long‑term shareholder value.

A good illustration of this assessment is the Company's recent incremental investment in Cross London Trains, which was signed in March 2026 and completed shortly after the period end. The acquisition of a further 6.65% stake was secured at an attractive valuation, exceeding the return available from share buybacks, while enhancing HICL's governance position in a high‑quality, operational asset. This demonstrates the selective and dynamic approach the Board applies when redeploying capital. 

Our capital allocation strategy and flexibility is underpinned by strong operational performance within the portfolio, with distributable cash flow meeting the Company's target and covering the Company's dividend 1.10x or 2.38x including profits on disposal (31 March 2025: 1.07x or 1.56x including profits on disposal). HICL benefits from highly visible, inflation-correlated cash flows and a portfolio designed to provide long-term earnings growth; fundamentals that support the Board's decision to reiterate dividend guidance of 8.50p per share for the year to 31 March 2027 and to provide a new dividend target of 8.65p for the year to 31 March 2028.

With this capital flexibility, the Board is encouraged by the depth and quality of the investment pipeline curated for the Company by the Investment Manager across its international platform. This pipeline reflects a disciplined focus on assets that are aligned with HICL's strategy and return requirements. The Board remains confident in the Investment Manager's ability to deploy capital selectively at attractive returns as opportunities arise, supporting the execution of the Company's strategy.

Financial Performance 

The Company delivered strong financial performance during the year. Total Shareholder Return with dividends re-invested was 13.1%.² NAV per share increased to 160.2p from 153.1p at 31 March 2025 resulting in Total NAV Return of 10.3% (31 March 2025: 2.0%), and earnings per share of 13.8p (31 March 2025: 2.3p).

Gross return for the year at the portfolio level was 12.2% (31 March 2025: 7.7%) and 10.5% (31 March 2025: 7.7%) excluding the impact of disposals. This was comfortably ahead of the expected performance of 8.4% (the weighted average discount rate at 31 March 2025), underpinning sustained NAV growth into the future as earnings growth exceeds income distributions, supported by the reinvestment of surplus cash flows.

The portfolio's growth assets delivered expected EBITDA expansion during the year, including Affinity Water, which resumed distributions in line with guidance. PPP assets provided stable cash generation through predictable, contracted and inflation‑linked revenues. Overall cash generation remained in line with expectations, demonstrating the resilient nature of HICL's diversified core infrastructure holdings. Detailed information on operational performance is included in the Investment Manager's Report on pages 18 to 23 of the HICL Annual Report 2026.

Macroeconomic assumptions are unchanged, except for a modest increase of 0.50% in near-term UK inflation assumptions. The weighted average discount rate applied to the portfolio has increased to 8.5% from 8.4%, as a result of the sale of the A63 and the increase in the valuation of HICL's growth assets. Movements in long-term government bond yields observed at the end of the financial year were balanced by strong transaction evidence, including HICL's disposals achieved in excess of valuations. Accordingly, discount rates were left unchanged. Further detail on the portfolio's valuation and the discount rate can be found in the Valuation of the portfolio section, starting on page 45 of the HICL Annual Report 2026.

Governance 

The Board remains committed to maintaining high standards of governance, including regular interaction with the Company's shareholders. Over recent months, the Board has undertaken an extensive shareholder consultation, meeting with holders that represent over 50% of the Company's shares in issue. Discussions were wide-ranging and constructive, spanning risk appetite, capital allocation and corporate governance. Feedback has directly informed our strategic priorities.

It is evident from these discussions that investors are supportive of, and encouraged by, HICL's continued progression on growth and delivering strong total returns, on a risk-adjusted basis. The Board and its advisors continue to observe those companies investing in real assets that emphasise total returns are trading on the narrowest discounts to NAV, and we are encouraged by the extent of investor support for HICL's continued evolution in this direction.

In line with the Board's well-developed succession plan, the process to identify my successor as Chair has begun. Search consultants were appointed in April and the process is being led by our Senior Independent Director, Frances Davies. I will remain in post until a smooth and orderly succession has been completed as further described in the report of the Nomination Committee.

Strong corporate governance includes testing management structures, contractual arrangements and value for money. Over the last six months these have been subject to a comprehensive review by the Board. The review included bottom-up financial and risk analysis by an independent third-party adviser of the existing management model and alternative delivery models such as internalisation and partial internalisation. This exercise has confirmed the value and strength of the externally managed model for HICL's strategy.

The Board also continues to ensure that its management arrangements remain highly competitive and aligned with shareholders. At the start of the financial year the Board agreed with the Investment Manager to change the management fee basis to an equal blend of NAV and market capitalisation, which materially reduced fees at the prevailing share price. Following further discussions with the Investment Manager, we are now pleased to announce that with effect from 1 July 2026, the management fee will move to a 100% market capitalisation-based structure. In addition, the notice period under the Investment Management Agreement will reduce from three years to two years, effective from 1 July 2027. If the new fee basis had applied over the year to 31 March, it would have translated into an 11% reduction in the management fee versus the current arrangements and a 24% reduction versus the GAV-based fee. The revised fee will continue to be subject to a cap at the level that would have been payable under the historic GAV-based approach.

These changes further enhance management alignment with shareholders. They provide the Company with substantial and immediate cost savings, as well as greater flexibility, while maintaining continuity and stability of management within the most appropriate model for the Company's strategy. The Board recognises the value in retaining the benefit of the Investment Manager's services, having regard for the team's successful track record and the strongly supportive shareholder feedback. Importantly the arrangements will still allow InfraRed to continue to invest in its platform and capabilities in support of the Company's long-term strategy.

Finally, notwithstanding that recent shareholder consultation has confirmed widespread shareholder support for the Company and its strategy, in line with evolving corporate governance standards the Board believes it appropriate to introduce a biennial continuation vote at its AGMs, any such vote being conditional upon the Company's shares having traded at an average discount to NAV per share in excess of 10% over the financial year ending immediately prior to the relevant AGM. A resolution will therefore be included at the forthcoming AGM to amend the Company's Articles of Association accordingly. If that resolution is passed, a continuation vote will be proposed as an ordinary resolution at the Company's 2028 AGM, and every two years thereafter, in the event that the discount test is triggered. Further details on the resolution will be included in the Company's Notice of AGM and the supporting notes.

Outlook

The Company enters the 2027 financial year in a position of financial strength. Cash and earnings generation have strong inflation linkage, the balance sheet is robust, and portfolio companies continue to perform well. These factors provide a stable and flexible foundation from which the Board can continue to take disciplined capital allocation decisions and progress the strategy. The share price continues to be at an unacceptable discount to NAV, though it has been encouraging to see it increase by 8% since 31 March 2025 to 127.8p at the date of publication, reducing the discount to 20%.

The broader environment for core infrastructure continues to strengthen. The acceleration of structural megatrends such as the energy transition, energy security, demographic shifts and the surging demand for data are driving growth in existing assets, and creating attractive investment opportunities. At the same time, governments across our core markets are signalling renewed commitment to infrastructure investment. Together, these conditions favour patient, well‑capitalised owners with scale, such as HICL. This is set against a backdrop of continued macroeconomic uncertainty, driven in part by geopolitical tensions, which are expected to contribute to ongoing market volatility over the coming year.

Our Investment Manager has a strong track record of realising value through accretive disposals and effective reinvestment, and the Board is encouraged by the range of opportunities emerging from InfraRed's active origination efforts across its international platform. These strengths, coupled with the Board's disciplined capital allocation framework and supportive sector tailwinds, underpin the Board's confidence in delivering sustainable NAV progression, attractive risk adjusted returns and a progressive dividend.

To support this strategic direction, the Company intends to host a Capital Markets Seminar in the summer, at which the Board and the Investment Manager will set out clearly how HICL is positioning its strategy to harness these long‑term opportunities to drive sustained value creation for shareholders, through NAV growth, dividend progression and closing of the discount.

Mike Bane, Chair 
26 May 2026 
 

¹ HICL Infrastructure PLC standalone company is defined as the "Company" or "HICL" throughout the report. The Company has a direct subsidiary, HICL Infrastructure 2 S.à.r.l. ("Luxco"). Luxco in turn has a direct subsidiary, Infrastructure Investments LP ("IILP"). HICL and these subsidiaries are defined as the "Corporate Group". Including the porfolio companies, this is referred to as the "HICL Group" or "Group"

² Total Shareholder Return measures the overall return for shareholders over the reporting period, aggregating share price performance and dividends received, divided by the period's opening share price

Investment Manager's Report

InfraRed's active management is fundamental to HICL's investment proposition, underpinning the successful delivery of capital and income growth to shareholders over the 20 years since IPO. The disciplined execution of asset‑level business plans and accretive portfolio rotation undertaken during the year has increased cash cover, driven NAV growth and improved overall portfolio construction. In this way, InfraRed has better positioned the Company to capitalise on future growth opportunities and further enhance long‑term value for shareholders.

Operational highlights

HICL's portfolio delivered a strong return of 12.2% for the year ended 31 March 2026 (31 March 2025: 7.7%), driven primarily by the c.£311m disposal of the A63 Motorway at a 21% premium to carrying value. Excluding the impact of accretive disposal activity, the portfolio's underlying return was 10.5%, in excess of the weighted average discount rate of 8.4% at 31 March 2025. This predominantly reflected continued outperformance from the Group's growth assets, most notably Affinity Water and Fortysouth (HICL's two largest holdings by value), as detailed below.

Further information can be found in the 'Valuation of the portfolio' section of the HICL Annual Report 2026 starting on page 45.

Operational performance overview

Operational performance of the portfolio exceeded the Investment Manager's expectations for the year, reflecting the strong and sustained underlying performance of the Group's largest assets.

Growth assets

At Affinity Water ("Affinity"), EBITDA grew significantly, in line with the Company's expectations. Alongside this, the most significant development during the year was the resumption of shareholder distributions, modestly exceeding budget. This is expected to mark the beginning of a consistent programme of distributions across the current regulatory period (which runs to 31 March 2030), in line with the stable, inflation‑linked cash flow characteristics that underpinned HICL's original investment case. The resumption of distributions supported an uplift to HICL's valuation, with the explicit uncertainty premium embedded in the asset's discount rate partially reduced to reflect improved cash flow visibility. In addition, this year saw the publication of the Cunliffe Review and the subsequent UK Government white paper on water sector reform, both of which set out proposals to streamline the regulatory framework. These developments are expected to be supportive for strong performers in the sector such as Affinity Water.

Fortysouth saw EBITDA growth ahead of HICL's valuation assumptions, driven primarily by continued progress on new tower deployments and upgrades. This strong operational performance was further supported by the high degree of inflation correlation embedded within the business's revenues, coupled with inflation being above forecast in New Zealand over the period. Building on this momentum, Fortysouth reached a new agreement with a major mobile network operator customer on a structured 75‑site co‑location programme to be rolled out over the next five years, which is expected to increase revenues and improve cash flow quality.

London St. Pancras Highspeed ("LSPH", formerly known as High Speed 1) saw EBITDA rise in line with expectations, supported by growing revenues from international train paths. During the year, further progress was made towards the introduction of a second international operator on the route, with Virgin Trains announcing its intentions for cross‑Channel services and rolling stock procurement, following the award of depot capacity by the UK rail regulator. While the launch of new services remains subject to further regulatory approvals and delivery milestones, substantive advances have been made over the period towards reducing barriers to more international train services over time.

Texas Nevada Transmission and Altitude Infra continue to be well-positioned for the structural expansion of their respective markets, supporting increasing power demand, the energy transition and data demand growth. During the year, both assets performed well against their key operational priorities, with Texas Nevada Transmission maintaining 100% asset availability, while Altitude Infra continued to improve customer uptake following the near‑completion of its network rollout, albeit with volumes in the higher‑value business services sector still building towards planned levels. In the case of both assets, debt refinancings completed during the period enhanced balance sheet resilience and were accompanied by continued investment to optimise scale, while also supporting long‑term earnings potential as these assets mature.

Overall, HICL's growth assets are expected to deploy over £550m of capital expenditure over the next five years, materially increasing the asset base from which additional revenues can be generated.

Yield assets

HICL's PPP assets, which represent 57.3% of the Directors' Valuation excluding disposal proceeds, benefit from availability‑based contracted revenues and fixed‑rate debt, providing high levels of cash flow visibility. Accordingly, cash generation from this portfolio segment generally remained consistent with expectations, supporting dividend cover in line with market guidance. Day‑to‑day service delivery was strong throughout the year, as reflected in asset availability of over 99% across the portfolio during FY26. Asset‑specific valuation adjustments were made where appropriate, including a targeted increase in the discount rate at Lewisham Hospital (0.6% of the Directors' Valuation excluding disposal proceeds), alongside a related cash flow provision. This reflected an elevated risk of performance deductions arising from an ongoing contractual dispute with the Trust, with the Investment Manager actively pursuing mitigation actions. Taken together, these actions reflect prudent portfolio management, with the PPP assets continuing to deliver resilient operational performance and dependable long‑term income.

HICL's business model delivering value

InfraRed's proactive management of portfolio composition is integral to HICL's business model and has remained a central focus during the year. With the benefit of carefully considered portfolio evolution over recent years, HICL is now well positioned to deliver long-term organic earnings progression, supported by enhanced capital growth potential and stronger dividend cash cover, which in turn increases capacity for ongoing reinvestment.

HICL's selective approach to portfolio construction, combined with the Investment Manager's transaction capabilities across markets, has enabled the Company to use accretive portfolio rotation activity to accelerate this organic value creation. This approach allows the Company to continue to grow sustainably even in a macroeconomic environment where access to capital markets remained constrained.

Transaction activity and portfolio construction

At the start of the year, the Board set a target to achieve at least £200m of disposals over the 12‑month period. Against this target, InfraRed delivered disposals in excess of £500m, at a premium to NAV, materially exceeding expectations and demonstrating its ability to execute consistently across a range of sectors, geographies and market conditions.

In August 2025, the Company announced the sale of a portfolio of seven UK PPP assets to APG for c.£225m, comprising half of the Group's interests in Southmead Hospital and Pinderfields and Pontefract Hospitals, together with its full interests in four UK LIFT projects and Edinburgh Schools. The transaction was achieved in line with HICL's 31 March 2025 valuation and was accretive to several key portfolio metrics, including expected return, yield, inflation correlation and weighted average asset life, while also materially reducing exposure to UK healthcare assets and lifecycle risk.

Subsequently, HICL completed the disposal of its 24.0% stake in the A63 Motorway in France for gross proceeds of £311m, representing a 21% premium to the valuation as at 30 September 2025. The disposal crystallised an annualised holding period return of 14% and NAV accretion of 2.2p per share. The transaction was also a positive contributor to HICL's key portfolio metrics, including return, yield, inflation correlation and asset life, and reduced the Group's exposure to ongoing political uncertainty in France. InfraRed developed the asset from its greenfield stage through construction, ramp‑up and steady‑state operations, demonstrating its ability to originate, de‑risk and selectively realise investments across the full asset lifecycle.

The £536m of disposals completed during the year, which have contributed to the overall disposal proceeds figure of more than £1bn over the past three years, reflect InfraRed's long‑standing and disciplined approach to asset recycling and strategic portfolio construction. Disposal candidates are identified through regular screening of the portfolio, with assets assessed on their contribution to key portfolio metrics before consideration of the resulting impact on portfolio diversification and risk concentration. InfraRed will also consider more opportunistic disposals where the economic rationale is compelling and outsized value can be realised, as illustrated by the A63 transaction.

Capital generated through these disposals has begun to be recycled into attractive opportunities. Shortly before the period end, HICL agreed to acquire an additional 6.65% equity interest in Cross London Trains ("XLT") for c.£52m, increasing the Company's total interest to 13.13%. The acquisition was completed at a valuation that is expected to offer a more attractive long‑term return than alternative uses of capital, including share buybacks, reflecting the minority nature of the stake being divested and HICL's existing shareholder rights. HICL's increased ownership interest will also result in increased board representation and governance oversight. Since the Company's initial investment in 2022, XLT has established a strong operational track record, performing in line with the Company's assumptions consistently.

Looking ahead, InfraRed's specialist, multi‑disciplinary and geographically diverse investment team will continue to actively explore selective disposal opportunities, while building a pipeline of potential new investments across its core markets. Opportunities will be assessed within the context of the HICL Board's broader capital allocation framework, ensuring that decisions on asset recycling and reinvestment remain focused on enhancing portfolio construction, managing risk and delivering an attractive return proposition for shareholders.

Specialist asset management

The Company's strong operational performance is underpinned by InfraRed's team of over 25 expert asset managers tasked with maximising long-term infrastructure asset value throughout the investment lifecycle. Based in London, New York, Miami and Sydney, the team is supported by specialist operating partners in key sectors and markets. This substantial asset management capability continues to develop alongside InfraRed's broader investment activities across core and value-add strategies.

Across HICL's growth investments, InfraRed's asset managers work closely with asset-level management teams to execute business plans, explore expansion opportunities and enhance capital structures. This was evidenced during the year on several of HICL's larger investments: securing a resumption of shareholder distributions at Affinity Water; making further progress towards a potential second international operator on the London St. Pancras Highspeed route; achieving a regulatory outcome at Texas Nevada Transmission consistent with assumptions; and the completion of value‑accretive debt refinancings at Fortysouth and Altitude Infra. This active, hands‑on approach to management supports the long‑term earnings profile of these investments and underpins HICL's proposition of sustainable income alongside capital growth.

InfraRed's active asset management approach is also evident in the context of critical infrastructure, where there is a strong focus on maintaining quality, safety and service for HICL's clients and end users. For the Company's PPP investments, maintaining facility condition remains integral to long‑term investment performance. This encompasses a proactive approach to handback, the effective and timely delivery of lifecycle works, and the appropriate management of construction defects as they arise. During the period, good progress was made in delivering capital works to improve facility condition across the PPP portfolio, including at the Company's largest healthcare assets such as Birmingham Hospital, Southmead Hospital, and Pinderfields and Pontefract Hospital. At Lewisham Hospital (0.6% of portfolio value), a targeted service improvement plan is being implemented by InfraRed in collaboration with the facilities management provider in the context of an ongoing contractual dispute with the Trust relating to performance deductions. While this plan is intended to address the underlying performance challenges over time, the associated risks remain appropriately reflected in HICL's valuation.

InfraRed utilises in-house expertise alongside industry partners to coordinate capital works programmes with responsible contractors for specific sectors and geographies. By collaborating proactively with partners, the Investment Manager ensures service continuity for the communities served by HICL's assets, while protecting and enhancing long-term shareholder value.

Additional information on asset management initiatives, which help to preserve and enhance value across HICL's largest investments is set out starting on page 24.

Capital allocation

HICL's capital allocation strategy, as determined and directed by the Board, remains clear and is being executed in a disciplined manner. While the relative attractiveness of near-term returns, including those available through share buybacks1, is an important consideration, capital allocation decisions are ultimately shaped by the Board's assessment of how best to support sustained long-term NAV growth. Over time, it is this NAV growth that is expected to underpin a durable narrowing of the discount to NAV, and capital is, therefore, allocated with this longer-term objective firmly in mind.

In this context, asset acquisition opportunities will be considered where prospective long-term returns exceed those available from share buybacks. In this context, the Investment Manager continues to identify opportunities, particularly within the existing portfolio, to acquire incremental equity stakes and follow‑on investments that support asset growth. Such opportunities allow the Company to leverage its incumbent positions in high‑quality assets to maximise value creation in an appropriately risk-adjusted approach.

Looking ahead, and as signalled in the Chair's statement, InfraRed expects HICL's portfolio evolution to be supported by highly selective investments that enhance overall portfolio construction through their return profile and earnings characteristics. While resilient income will remain fundamental to the strategy, InfraRed anticipates scope over time to increase exposure to assets offering higher capital growth potential. This is expected to include investments within sectors where the Investment Manager has established experience across the broader infrastructure return spectrum. This measured evolution reflects shareholder feedback and the prevailing market context, in which listed real‑asset strategies combining resilient income with a more prominent capital growth component have demonstrated increasing relevance for investors. HICL benefits from a strong liquidity position and an undrawn RCF, providing ample capacity to selectively pursue attractive opportunities. Further detail on how the Company's strategy may be progressed is set out in the Market and outlook section.

Financial highlights

HICL's NAV per share increased by 7.1p over the year to 160.2p at 31 March 2026 (31 March 2025: 153.1p). The increase reflected a combination of factors, most notably the highly accretive disposal of the A63 Motorway, inflation exceeding forecasts in the first half of the year, and strong performance across the Group's growth assets. Asset‑specific headwinds over the period primarily reflected higher risk provisions at a small number of PPP projects.

HICL delivered dividends in line with guidance for the year, with payments to shareholders of 8.35p per share for the 12 months ended 31 March 2026. Portfolio performance again fully supported these distributions, with dividend cover excluding profits on disposals strengthening to a milestone level of 1.10x, up from 1.07x in the prior year. This represents stronger cash inflows from the portfolio relative to shareholder distributions, which enhances the long‑term sustainability of the dividend. Reflecting the continued visibility of cash distributions from the portfolio and the Company's focus on delivering progressive income, the Board has reaffirmed its target of 8.50p per share for the year to 31 March 2027 and introduced new guidance of 8.65p per share for the year to 31 March 2028.

The weighted average discount rate used to value the portfolio increased marginally over the year to 8.5% (31 March 2025: 8.4%), reflecting changes in portfolio composition following the disposal of the A63 Motorway, and the valuation increase in HICL's growth assets. Underlying regional reference rates were unchanged. Asset‑level discount rates reflect the risk and return profile of each investment and are informed by relevant market evidence, including pricing achieved on the Company's asset disposals during the year.

HICL's weighted average discount rate of 8.5% implies a weighted average equity risk premium of 3.5%, which InfraRed believes to be appropriate for HICL's high-quality portfolio of core infrastructure assets. In line with HICL's well-established processes, InfraRed's proposed valuation is reviewed by an independent third-party external valuation expert and is one of the primary areas of focus during the year-end reporting process. HICL's disposal activity during the year enabled the full repayment of amounts previously utilised under its RCF, which consequently was undrawn at 31 March 2026; and as a result, the Corporate Group had a cash balance of £87.7m at the period end with £333.3m of disposal proceeds held at year end within the HICL Group beneath the Corporate Group. At the same time, the RCF's maturity has been extended to 30 June 2028, enhancing the Company's balance‑sheet flexibility. Disposal proceeds are also being deployed in line with the Company's stated capital allocation priorities, including funding the £50m equity commitment to Affinity Water and earmarking c.£66m against the Group's commitments to the Blankenburg Tunnel and B247 road, due in September and December 2026 respectively. Remaining proceeds provide capacity for redeployment into attractive investment opportunities that support HICL's return and growth objectives, including continued share buybacks where these represent the most compelling use of capital (see Capital allocation section above).

Further information on HICL's financial performance can be found in the Financial Review section starting on page 38 of the HICL Annual Report 2026.

Governance

The Investment Manager continues to regard proactive shareholder engagement as an important component of HICL's governance framework and anticipates further dialogue with investors during the Annual Results investor roadshow, ahead of a capital markets event planned for 2 July 2026.

As explained in HICL's 2025 Annual Report, the Investment Manager agreed to amend its fee structure from 1 July 2025 such that fees would be based on an equal weighting of the Company's average closing daily market capitalisation and its most recently published NAV. Following further engagement with the Board, InfraRed has now agreed a further enhancement under which, effective from 1 July 2026, the management fee will be calculated entirely by reference to the Company's market capitalisation. This adjustment to HICL's management fee arrangements represents a significant further step in demonstrating InfraRed's continued commitment to delivering a high-quality and cost-effective proposition for HICL; and ensures even closer alignment of the Manager with the successful delivery of the Company's strategy and the associated share price outcomes for shareholders. With the Company's shares currently trading at a discount to NAV, the revised basis will reduce the management fee payable, providing a substantially lower operating expenses ratio on a pro forma basis.

The move also takes HICL's fee basis significantly beyond that of its listed infrastructure peers in terms of alignment with shareholders. The revised basis is expected to deliver further savings for shareholders, reducing the management fee payable relative to the historic basis and contributing to a lower operating expenses ratio on a pro forma basis.

Sustainability

Against a backdrop of evolving policy developments across HICL's core markets, including a growing emphasis on mobilising private capital to support priority infrastructure, the Investment Manager has introduced a new societal value framework for the portfolio. The framework provides a more structured articulation of the socioeconomic benefits arising from the ownership and operation of HICL's assets, recognising that many of these impacts are inherently delivered through day-to-day infrastructure services and operating company business models. It builds on the Investment Manager's established approach of embedding sustainability considerations within investment decisions and active asset management, supporting asset performance and long-term value creation. Combining portfolio-wide indicators with asset level insights, the framework enhances transparency around how HICL's infrastructure supports local economies, public services, communities and the environment. These indicators and associated narrative are set out in the Company's Sustainability Report 2026 on pages 5-10.

Risk management

HICL's key risk appetite statement, approach to risk management and governance structure are set out in the Risk and risk management section, starting on page 52. Commentary relating to the Group's principal risks is set out below.

Political and regulatory risk

Geopolitics

Geopolitical risk remained elevated during the year, with conflicts in the Middle East and Ukraine contributing significantly to volatility in public markets. HICL has no direct exposure to either region and the portfolio remains well insulated from secondary effects such as supply chain disruption.

In the latter part of the financial year, an escalation of conflict in the Middle East contributed to a period of heightened volatility across global equity and bond markets as investors reassessed supply‑side impacts on inflation and interest rate expectations. In the UK, ten‑year gilt yields rose by 55bps over March 2026 and traded at their highest levels since 2008 at points during the month, while borrowing costs also moved higher across the Eurozone and the USA amid similar inflation‑related concerns. These trends were indicative of heightened late‑period market volatility. To date, these changes have had limited direct impact on the performance of the Group's assets, with HICL's core infrastructure investments benefitting from characteristics that help mitigate exposure to rising interest rates, including inflation‑linked revenues or regulated cost‑of‑capital frameworks.

UK infrastructure policy

UK infrastructure policy developments over the year indicated a modest shift towards a more supportive stance on the use of private capital, reflecting fiscal constraints and the scale of investment required to deliver against public infrastructure objectives. The government's Ten‑Year Infrastructure Strategy signalled an intention to crowd-in private investment across targeted areas of social infrastructure, marking a change in tone from recent years. This shift was reflected in developments within the healthcare sector, where privately financed models were explored to support the delivery of new neighbourhood health centres in England. In parallel, InfraRed, through its role as a founding member of the Association of Infrastructure Investors in Public Private Partnerships ("AIIP"), continued to contribute to industry engagement with policymakers, drawing on investor and manager experience to help inform the evolution of future delivery models.

Regulatory risk

Regulatory risk reduced further in relation to HICL's largest asset, Affinity Water, following the publication of the Cunliffe Review of the UK water sector and the subsequent UK Government white paper on water sector reform, both of which set out proposals to streamline the regulatory framework. These developments are expected to support the attractiveness of the UK regulatory regime to the advantage of strong performers such as Affinity Water. HICL will continue to monitor their implementation and implications over time.

At TNT, the conclusion of the regulatory settlement with the Public Utility Commission of Texas during the period reduced the asset's regulatory risk exposure for the current regulatory cycle. The outcome provided greater certainty over medium‑term cash flows, with the final allowed return on equity aligned with HICL's assumptions. This supported the Group's valuation of TNT and provides further comfort around the robustness of the asset's regulatory framework.

At LSPH, The Office of Rail and Road approved Virgin Trains' application to access the Temple Mills Depot, a facility of strategic importance for supporting cross channel rail operations. This decision enhances the prospect of a second international operator being introduced to the line and reduces regulatory risk for the asset.

More broadly, InfraRed mitigates regulatory risk by managing regulatory exposures across jurisdictions and regulators. The 29% of the portfolio with regulated revenues comprises eight investments, in three countries, spanning four different regulatory frameworks.

Facility condition risk

Maintaining high standards of facility condition remains a core asset management priority for InfraRed. This is reflected in the ongoing remedial works at Birmingham Hospitals, which continue to be delivered on schedule, with the support of the NHS Trust. This programme forms part of a broader set of targeted initiatives across the portfolio aimed at enhancing asset quality and supporting long‑term operational resilience. HICL's portfolio valuation continues to include appropriate provisions in respect of facility condition‑related risks. The Investment Manager maintains proactive oversight with a continued focus on high standards of asset condition for HICL's clients and end‑users, supported by active portfolio management.

During the year, InfraRed further increased its focus on lifecycle delivery risk across the portfolio, developing enhanced asset‑level reporting covering asset condition, lifecycle spending and delivery performance. Lifecycle risk currently sits with HICL's portfolio companies for 31% of the portfolio by value (31 March 2025: 42%), with enhanced analysis in the period reinforcing the appropriateness of the lifecycle‑related discount‑rate premia and cash‑flow provisions applied at the September 2024 valuation. This work also helped inform InfraRed's disciplined approach to asset recycling, with the c.£225m disposal of PPP assets during the year materially reducing exposure to projects with lifecycle delivery obligations. In parallel, InfraRed continued to strengthen HICL's preparedness for PPP handback, with c.52 assets (c.18% of portfolio value) scheduled to transfer to the public sector over the next ten years. During the period, three concessions expired, marking the start of a broader programme of handbacks over the coming years and providing practical evidence supporting the effectiveness of InfraRed's approach.

Client relationships

Long‑term partnership frameworks, such as those underpinning HICL's PPP portfolio, inherently carry certain risks, particularly in areas such as UK healthcare where wider public sector pressures can affect performance and make contractual disputes more likely. A valuation reduction was recognised at Lewisham Hospital during the year, reflecting a higher assessed level of risk related to these factors. In response, InfraRed is implementing a targeted service improvement plan with the facilities management provider to address the matters identified and support sustained asset performance.

While HICL generally maintains highly collaborative relationships with its public sector clients, the Investment Manager continues to monitor the risk of disputes that could result in reduced or withheld payments of contracted revenues. Alongside active asset management, HICL's approach to articulating and enhancing the social value delivered by its assets, including through initiatives that support local communities beyond the intrinsic operation of the infrastructure, provides an additional basis for constructive engagement with clients and stakeholders. As part of its proactive approach, InfraRed also contributes to the broader policy dialogue on private finance in UK infrastructure through its involvement in industry bodies, including as a founding member of the Association of Infrastructure Investors in PPPs ("AIIP").

Macroeconomic risk

The macroeconomic environment continues to weigh on listed market valuations for real assets, including for HICL. Financial markets remain volatile, with heightened geopolitical risk and concerns around sovereign indebtedness contributing to increasingly uncertain interest rate outlooks across HICL's key geographies.

Within this context, inflation dynamics remain a key sensitivity for the Company. If inflation were to exceed current projections, this would support cash generation and dividend cover, given the Company's inflation‑linked cash flows. However, such an outcome would also be expected to place upward pressure on sovereign bond yields and potentially discount rates, which are also referenced to actual market transaction data points. The Board's dividend guidance and the Directors' valuation have been rigorously stress tested by InfraRed across a range of macroeconomic scenarios.

Market and outlook

The medium-term outlook for infrastructure investment remains strong, underpinned by the enduring need for essential assets and a growing reliance on private capital to support their long-term development. While resilient income remains central to the appeal of core infrastructure, the environment in which assets operate continues to evolve. Infrastructure networks are increasingly required to adapt to structural changes in demand, technology and external market conditions over long asset lives. As a result, value is shaped not only by contractual protections but, to a growing degree, by the effectiveness of active asset management, including the disciplined reinvestment of growth capex at asset level and the targeted deployment of incremental capital to support long‑term growth. Across sectors aligned with HICL's existing investment focus, this evolution is expanding the opportunity set and where value can be actively created, while preserving the defensive characteristics of core infrastructure.

Private market conditions reflect this shift. Demand for high-quality infrastructure assets remains deep, particularly for assets that have benefitted from active management and where value creation has been delivered. HICL's disposal activity over recent years illustrates InfraRed's ability to create, de-risk and crystallise value, with mature availability-based PPP assets realised successfully alongside disposals of assets where operational management and asset-level initiatives formed a central part of the investment case. This is evidenced by the divestments of the A63 Motorway and the Northwest Parkway toll road, both of which were sold at strong premia to carrying value, reflecting InfraRed's ability to add value through active asset management.

Against this backdrop, HICL is well positioned to capitalise on a broad and attractive opportunity set. The Investment Manager's experience across its specialist sectors and its established origination capability enable it to identify opportunities where active ownership can support long-term value creation from acquisition through to exit, without compromising HICL's core infrastructure focus. The strengthening of the Company's balance sheet position during the year, together with ongoing surplus cash generation, provides the capacity and flexibility to act decisively as opportunities arise, supported by InfraRed's proven investment and asset management expertise.

1 Based on discount rate, adjusted to reflect the prevailing share price discount to the NAV, using published discount rate sensitivities as at 31 March 2026

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

·	the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
·	the Strategic Report/Directors' Report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

In accordance with Disclosure Guidance and Transparency Rule ("DTR") 4.1.16R around electronic tagging of Annual Reports, the financial statements will form part of the annual financial report prepared under 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.

We consider the Annual Report and accounts, 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.

On behalf of the Board of Directors of HICL

Mike Bane

26 May 2026

Registered Office:

Forum 4, Solent Business Park, Parkway South,

Whiteley, Fareham PO15 7AD

Publication of documentation

The above information is an extract of information from HICL's Annual Report. The Annual Report has been submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. It can also be obtained from the Company Secretary or from the Investors section of the Company's website, at www.HICL.com.

 

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