HICL Infrastructure PLC

Annual Report 2022

Delivering Real Value.

University of Bourgogne, France

1HICL ANNUAL REPORT 2022

Overview

1.1 Chairman’s Statement 6

1.2 The Investment Portfolio – Top 10 Assets 10

1.3 The Investment Portfolio – At a Glance 12

Strategic Report

2.1 HICL’s Investment Proposition 16

2.2 HICL’s Business Model 17

2.3 Core Infrastructure 18

2.4 Key Performance & Quality Indicators 19

2.5 Investment Manager’s Report 20

2.6 Top 10 Assets – Operational Highlights 26

2.7 Sustainability Highlights 30

Performance & Risk

3.1 Financial Review 36

3.2 Valuation of the Portfolio 43

3.3 Portfolio Analysis 51

3.4 Risk & Risk Management 52

3.5 Viability Statement 63

3.6 Risk Committee Report 64

3.7 Task Force on Climate-related Financial Disclosures 68

3.8 Strategic Report Disclosures 74

Directors’ Report

4.1 Board and Governance 78

4.2 Board of Directors 80

4.3 The Investment Manager 82

4.4 Corporate Governance Statement 83

4.5 Audit Committee Report 87

4.6 Directors’ Remuneration Report 95

4.7 Report of the Directors 98

4.8 Statement of Directors’ Responsibilities 101

Financial Statements

5.1 Independent Auditor’s Report 104

5.2 Financial Statements 110

5.3 Notes to the Financial Statements 114

Appendix: Valuation Policy 140

Glossary 141

Directors & Advisers 143

2022 Highlights 2

Contents

Front cover image: Newcastle Libraries, UK

01 / OVERVIEW

2 HICL ANNUAL REPORT 2022

2022 Highlights

12.8%

Total Shareholder Return

(2021: 5.5%)

8.25p

New Dividend Guidance

for 2024

Reaffirmed Dividend Guidance

8.25p for 2023

163.1p

NAV

per share +10.8p

(152.3p at 31 March 2021)

1.05x

Dividend cash cover

(2021: 0.90x)

Net Asset Value

Stated on an Investment Basis and including profits on disposal versus original acquisition cost of £4.8m (2021: £11.9m). Excluding this, dividend cash cover is

1.02x (2021: 0.83x)

Based on interim dividends paid plus change in NAV per share in the year, divided by opening NAV per share

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

Based on the daily share price returns of HICL and the FTSE All-Share index for the year to 31 March 2022

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 0.8%

Differentiated Investment Proposition

LOW SINGLE ASSET

CONCENTRATION RISK

STRONG INFLATION

CORRELATION

48% 0.8x

Ten largest assets as a proportion of

the portfolio as at 31 March 2022

Correlation of portfolio returns to

inflation

as at 31 March 2022

GOOD CASH FLOW

LONGEVITY

29.8years

Weighted average asset life

as at 31 March 2022

9.0%

Total Shareholder Return

since IPO

0.32

Beta against FTSE

All-Share

(31 March 2021: 0.27)

Demand-based assets Remaining investments

Regulated

assets

PPP projects

Top Ten Investments

350,000

300,000

250,000

200,000

150,000

100,000

50,000

Annual project distributions (£’000’s)

Distribution Forecast March 2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051

2052

2053

2054

2055

2056

Long-term predictable cash flows from the existing portfolio

Cash flows expected from the portfolio,

as at 31 March 2022, including

commitments and assuming no further

acquisitions, disposals or changes in

assumptions to the Directors’ Valuation.

3HICL ANNUAL REPORT 2022

HICL’s investment proposition is to deliver

sustainable income from a diversified core

infrastructure portfolio

Active management

V Generate base case cash flows

V Deliver well-maintained infrastructure for end users

Outperformance

V Improve financial performance

V Enhance communities’ experience of infrastructure

Resilience

V Build a sustainable portfolio of investments

V Benefits from a strong, long-term social purpose

ACCRETIVE

INVESTMENT

VALUE

PRESERVATION

VALUE

ENHANCEMENT

“The Company continues to position itself for growth,

to capture the significant opportunity identified

across HICL’s core markets in both traditional

and modern economy infrastructure sectors.”

Ian Russell CBE, Chairman

56% of portfolio

Assets that constitute

the foundation of our

societies, such as:

32% of portfolio

Assets that link people

to the economy and

each other, such as:

12 % of portfolio

Assets supporting the energy

transition and continued

resource security, such as:

Availability

or toll roads Water

Rail and

rolling stock OFTOs

Strong Social

Foundations

Connecting

Communities

Sustainable Modern

Economies

District energy

Towers

Electricity

distribution

Health Education

Fire, Law

& order Accommodation

HICL’s vision is to enrich lives through infrastructure, by delivering:

Added to the portfolio

post period end

Fibre

networks

By Directors Valuation at 31 March 2022, excluding Queen Alexandra Hospital

Examples of possible future holdings

01 / OVERVIEW

4 HICL ANNUAL REPORT 2022

Hinchingbrooke Hospital, UK

01 / OVERVIEW

5HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT 03 / PERFORMANCE & RISK 04 / DIRECTORS’ REPORT 05 / FINANCIAL STATEMENTS01 / OVERVIEW

Overview

01 / OVERVIEW

6 HICL ANNUAL REPORT 2022

1.1

Chairman’s Statement

I am pleased to present these

strong financial and operational

results for the Company.

Against an uncertain

macroeconomic and

geopolitical backdrop, HICL’s

performance over the past 12

months clearly demonstrates

the resilient and defensive

nature of its investment

proposition, delivering a Total

Shareholder Return for the

year of 12.8%

HICL offers its shareholders liquid access to a portfolio of

diversified, high quality private infrastructure assets, whose

returns benefit from strong inflation linkage and low correlation

to wider equity markets

. These attributes have supported the

long-term delivery of a 9.0% p.a. total shareholder return over

the 16 years since IPO

in a range of market conditions. This

stable and consistent performance is maintained by considered

portfolio composition, coupled with InfraRed’s active approach

to asset management.

“Stable and consistent performance is

maintained by considered portfolio

composition, coupled with InfraRed’s

active approach to asset management”

Over the year, these two elements have been demonstrated

successfully. The strategic management of portfolio composition,

via acquisitions and disposals, added substantial shareholder

value. Additionally, InfraRed’s active asset management approach

achieved closer alignment with the Company’s key public sector

stakeholders, including clients and the Infrastructure and Projects

Authority, while also de-risking future equity cash flows for the

Company. Section 2.5 – the Investment Manager’s Report gives

further details of InfraRed’s activities in these areas.

Financial Performance

Financial performance in the year to 31 March 2022 has been

strong, with Net Asset Value (“NAV”) growth of 10.8p per share

to 163.1p.

Ian Russell, CBE

Chairman

Based on interim dividends paid plus change in NAV per share in the year, divided by opening NAV per share

Inflation correlation of 0.8x; Beta of 0.32 against FTSE All-Share for 12 months to 31 March 2022

01 / OVERVIEW

7HICL ANNUAL REPORT 2022

01 / OVERVIEW

The NAV growth in the year was principally driven by: the impact of

the current high inflationary environment on both the actual and

forecast financial performance of HICL’s portfolio companies; the

agreed sale of the Queen Alexandra Hospital PPP project (“QAH”)

in March 2022; the robust recovery in the performance of the

Company’s demand assets; and continued upward pressure on the

market pricing of infrastructure assets, recognised in HICL’s Interim

Results in November 2021. This positive performance was partially

offset by asset-specific costs, including expected costs associated

with defect remediation on selected healthcare projects.

Value Creation and Preservation

The optimisation of HICL’s portfolio composition is a central tenet of

the Company’s strategy to deliver shareholder value. During the year,

HICL announced, signed or completed a combined total of c. £237m

of acquisitions and disposals. Additionally the Company has signed

its first fibre broadband investment following the year end.

“Generating additional shareholder value

through selective disposals further

differentiates HICL’s approach”

The Company agreed investments in the year totalling £110m.

The acquisitions exemplified the Investment Manager’s

differentiated approach, in particular by leveraging InfraRed’s

expertise and deep networks to source investments through less

competitive situations – see Section 2.5 – the Investment

Manager’s Report for further details. Following the year end, this

extended to the Company completing its first investment in

Germany, a greenfield PPP in partnership with Vinci, and signing

HICL’s first fibre broadband investment, ADTIM, which holds two

fibre-to-the-home concessions in South-Eastern France.

Generating additional shareholder value through selective disposals

further differentiates HICL’s approach to portfolio composition versus

the listed core infrastructure peer group. Since IPO in 2006, c. 7.5p

of outperformance has been delivered through the Company’s

disposal strategy. HICL agreed three divestments in the year,

generating proceeds of £126m. Accretive disposals were achieved

on the Health & Safety Executive Headquarters PPP project and

Queen Alexandra Hospital. QAH is a flagship, acute public hospital

which HICL, via the Investment Manager, had successfully stabilised

following the liquidation of Carillion plc in 2018. Additionally, during the

year, a small PPP project was handed back to the client – see

Sections 2.5 – Investment Manager’s Report and 3.2 Valuation for

further details.

The easing of the challenges associated with Covid-19 has resulted

in a return to a more normal operating environment for the Company.

Within this context, we have seen a robust recovery in the

performance of the Company’s demand assets, which has

contributed to this strong financial result.

A proactive approach is taken by the Investment Manager towards

key value preservation activities across the portfolio. In the year,

this included collaborative industry engagement, including with the

public sector, on key issues such as PFI asset handback, the

transition from LIBOR to SONIA and the pursuit of net zero

greenhouse gas emissions.

Dividend Guidance

HICL continues to pay the highest dividend per share amongst

its core infrastructure peer group. In the year, the cash flow

generation from the portfolio was in line with expectations and the

full year dividend declared for the year to 31 March 2022 of 8.25p

per share was cash covered 1.05 times

The Board is pleased to re-confirm the dividend guidance of

8.25p per share for the year to 31 March 2023

. Cash cover for

the 2023 dividend is anticipated to show a steady level of

improvement against this year’s result.

“The Board is pleased to announce

dividend guidance of 8.25p per share

for the year to 31 March 2024

”

As previously highlighted, in determining the Company’s dividend

trajectory the Board is focused on rebuilding dividend cash cover

and is pleased with the steady progress made over the last two

reporting cycles. In addition, attention is given to the long-term

earnings profile of the Company. This latter consideration

recognises both the desired balance between HICL’s pay-out ratio

and the level of reinvestment into the Company’s long-term

growth; and market conditions, including the higher taxation

environment and the lower returns available in the market from

high quality core infrastructure assets.

Having taken these factors into consideration, the Board is

pleased to announce dividend guidance of 8.25p per share for

the year to 31 March 2024

Continued Sustainability Leadership

Given the Company’s position as trusted custodian of essential

public infrastructure, the Board believes that HICL is especially

well positioned to deliver the ‘social’ dimension of the ESG

framework. HICL is invested in, and manages, assets which 20+

million people globally interact with and rely on. This drives the

Company’s sustainability strategy, including to meet the increasing

standard for disclosure best practice.

Stated on an Investment Basis and including profits on disposals versus original acquisition cost of £4.8m. Excluding this, dividend cash cover is 1.02x

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

01 / OVERVIEW

8 HICL ANNUAL REPORT 2022

1.1

Chairman’s Statement (continued)

HICL has also published its 2022 Sustainability Report, the

second annual iteration in its enhanced format, which can be

found on the Company’s website. HICL continues to report in

compliance with the Task Force on Climate-related Financial

Disclosures (“TCFD”) (see Section 3.7 – Task Force on Climate-

related Financial Disclosures) and the EU’s Sustainable Finance

Disclosures Regulation (“SFDR”). The Sustainability Report details

the Company’s progress in the year, including with respect to

enhanced asset-level data collection, especially for emissions,

as well as the key milestones ahead in the Company’s

sustainability ambitions.

Looking forward, the Company is working to comply with the

step-up in disclosure required under SFDR from 1 January 2023

and the announcement of the UK’s Sustainable Disclosure

Requirements regime (“SDR”) which is expected to align

with SFDR.

Given the continued drive across HICL’s markets toward net zero,

the Board welcomes InfraRed’s decision in July 2021 to join the

Net Zero Asset Managers Initiative, reflecting InfraRed’s

commitment to achieve net zero emissions across the HICL

portfolio by 2050, as well as setting interim targets for 2030.

See Section 2.7 – Sustainability Highlights.

For an in-depth review of the Company and Investment

Manager’s sustainability performance and ambitions, please see

HICL’s Sustainability Report, available on the Company’s website,

under Reports & Publications.

Investment Manager

Over the last two years, and overseen by the Board, InfraRed has

implemented a succession plan for the team managing HICL.

This well-coordinated process has seen leadership of the team

transition to Edward Hunt (Head of Core Income Funds),

supported by Helen Price (CFO, Core Income Funds), with Harry

Seekings and Keith Pickard stepping away from their day-to-day

involvement with HICL. Earlier this month, InfraRed announced

that Harry would be relinquishing his executive role at InfraRed

and consequently leaving the HICL Investment Committee. Harry

will continue his contribution to InfraRed as a Senior Adviser and

remains available to both the InfraRed team and the Board for

support and advice as needed. On behalf of the Board and our

shareholders, I would like to thank Harry and Keith for the very

considerable contributions which they have made to the

development of the Company.

Board Succession

In line with the UK Corporate Governance Code, after nine years

on the Board, Susie Farnon and I will step down in July 2022.

Susie was appointed to the Board in 2013 and has served as

Chair of the Audit Committee for five years. I would like to thank

Susie for her excellent leadership of the Audit Committee and her

valued contribution to the Company.

As previously announced, Mike Bane will succeed me as

Company Chair, Rita Akushie will replace Susie as Chair of

the Audit Committee and Frances Davies will replace Mike as

Chair of the Remuneration Committee. All appointments are

effective from 20 July 2022, subject to the Directors’ re-election at

the 2022 AGM.

The Board acknowledges the importance of diversity of ideas and

experience to deliver enhanced decision-making. To support this,

HICL seeks to comply with external guidance and policy on board

diversity. HICL’s Board composition has been compliant with the

recommendations of the Hampton-Alexander and Parker Reviews

since 2020. The Board further notes the FCA’s April 2022 Policy

Statement on diversity and inclusion on company boards and the

Nomination Committee will address this in due course. HICL’s

succession plan generally seeks to ensure a continuity of

appropriate skills and experience amongst the Directors

as a whole.

Outlook

The outlook for infrastructure investment remains positive.

The key defensive attributes of core infrastructure, including the

strong yield, inflation-linked returns and low beta, underpin the

continuing attractiveness of the asset class, and of HICL itself, to

investors against the broader market backdrop. Demand for

infrastructure investment is expected to continue to support

valuations for high quality assets.

“The Company continues to position for

growth, to capture the significant

opportunity identified across HICL’s

core markets”

The Company continues to position itself for growth, to capture

the significant opportunity identified across HICL’s core markets in

both traditional and modern economy infrastructure sectors.

InfraRed’s differentiated capability to source new investments via

less competitive situations, as demonstrated in the year, remains

crucial in the current market conditions. Continuation of

partnerships with key industry relationships will support

this pursuit.

With a well-developed and visible pipeline of core infrastructure

opportunities and substantial headroom within the Company’s

credit facilities, the Board is confident that HICL is well placed to

continue to deliver on its strategy and grow into the future.

Ian Russell

Chairman

24 May 2022

01 / OVERVIEW

9HICL ANNUAL REPORT 2022

01 / OVERVIEW

Bradford Schools, UK

01 / OVERVIEW

10 HICL ANNUAL REPORT 2022

1.2

The Investment Portfolio – Top 10 Assets

Affinity Water

Affinity Water Limited is the largest

water-only supplier in the UK by

revenue and population served

covering an area of 4,515 sq. km.

Sector: Electricity, Gas & Water

Location: England, UK

% of portfolio: 9% (March 2021: 8%)

HICL holding: 33.2%

Concession length: N/A

Status: Operational

A63 Motorway

The A63 Motorway project in South

West France includes the upgrade

of an existing 105 km road linking

Bordeaux with the Spanish border.

Sector: Transport

Location: France

% of portfolio: 7% (March 2021: 7%)

HICL holding: 21.0%

Concession length: 40 years

Status: Operational

High Speed 1

HS1 is the rail link between London

St Pancras station and the Channel

Tunnel. It is currently the UK’s only

high-speed rail line in operation.

Sector: Transport

Location: UK

% of portfolio: 5% (March 2021: 4%)

HICL holding: 21.8%

Concession length: 30 years

Status: Operational

Northwest Parkway

The Northwest Parkway is a 14 km,

four-lane toll road that forms part

of the ring road around the city of

Denver, Colorado, USA.

Sector: Transport

Location: USA

% of portfolio: 7% (March 2021: 5%)

HICL holding: 33.3%

Concession length: 99 years

Status: Operational

Southmead Hospital

Southmead Hospital PFI project

is an 800-bed acute hospital

concession on a single site at

Southmead in North Bristol.

Sector: Health

Location: UK

% of portfolio: 5% (March 2021: 5%)

HICL holding: 62.5%

Concession length: 35 years

Status: Operational

This section excludes Queen Alexandra Hospital, the disposal of which was announced on 31 March 2022

01 / OVERVIEW

11HICL ANNUAL REPORT 2022

01 / OVERVIEW

Royal School of

Military Engineering

The PPP project covers 32 new and

21 existing buildings, and five training

areas on behalf of the UK Ministry

of Defence.

Sector: Accommodation

Location: UK

% of portfolio: 4% (March 2021: 4%)

HICL holding: 100%

Concession length: 30 years

Status: Operational

Blankenburg Tunnel

The availability PPP project involves

the construction of a 4.2 km tunnel

under the Nieuwe Maas river near

Rotterdam, linking the A15 and

A20 motorways.

Sector: Transport

Location: The Netherlands

% of portfolio: 2% (March 2021: 2%)

HICL holding: 70%

Concession length: 24 years

Status: In construction

Pinderfields and

Pontefract Hospitals

Pinderfields and Pontefract Hospitals

PFI project is a two hospital concession

for Mid Yorkshire Hospitals NHS Trust,

delivering a combined total of 774 beds.

Sector: Health

Location: UK

% of portfolio: 4% (March 2021: 4%)

HICL holding: 100%

Concession length: 35 years

Status: Operational

Dutch High Speed Rail

The PPP project provides a 96 km

high-speed rail connection from

Amsterdam (Schiphol Airport) to the

Belgian border.

Sector: Transport

Location: The Netherlands

% of portfolio: 2% (March 2021: 3%)

HICL holding: 43%

Concession length: 30 years

Status: Operational

Home Office

The PPP concession commissioned

by the UK Home Office to replace

its existing headquarters with

purpose-built serviced offices in

Westminster, London.

Sector: Accommodation

Location: UK

% of portfolio: 3% (March 2021: 3%)

HICL holding: 100%

Concession length: 29 years

Status: Operational

03 / PERFORMANCE & RISK

12 HICL ANNUAL REPORT 2022

1.3

The Investment Portfolio – At a Glance

as at 31 March 2022

Mar 22 Mar 21

Accommodation 10% 11%

Education 14% 16%

Electricity, Gas & Water 12% 10%

Health 27% 29%

Fire, Law & Order 5% 5%

Transport 32% 29%

SECTOR

March 2022

INVESTMENT STATUS

March 2022

March 2021

Mar 22 Mar 21

Fully operational 97% 97%

Construction 3% 3%

OWNERSHIP STAKE

March 2022

Mar 22 Mar 21

100% ownership 28% 31%

50% – 100% ownership 30% 29%

Less than 50% ownership 42% 40%

March 2021 March 2021

March 2022

March 2021

Mar 22 Mar 21

PPP projects

66% 71%

Demand-based assets

22% 19%

Regulated assets

12% 10%

MARKET SEGMENT

Mar 22 Mar 21

73% 74%

18% 18%

North America

9% 8%

GEOGRAPHIC LOCATION

March 2022

March 2021

Mar 22 Mar 21

Less than 10 years 12% 4%

10-20 years 46% 48%

20-30 years 26% 34%

Greater than 30 years 16% 14%

INVESTMENT LIFE

March 2022

March 2021

This section excludes Queen Alexandra Hospital, the disposal of which was announced on 31 March 2022

03 / PERFORMANCE & RISK

13HICL ANNUAL REPORT 2022

Darlington Schools, UK

02 / STRATEGIC REPORT

14 HICL ANNUAL REPORT 2022

M80 Motorway, UK

02 / STRATEGIC REPORT

15HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT 03 / PERFORMANCE & RISK 04 / DIRECTORS’ REPORT 05 / FINANCIAL STATEMENTS01 / OVERVIEW

Strategic Report

02 / STRATEGIC REPORT

16 HICL ANNUAL REPORT 2022

2.1

HICL’s Investment Proposition

HICL’s investment proposition is to deliver sustainable income from a diversified portfolio

of investments in core infrastructure. The Company offers investors stable, long-term real

returns from core infrastructure assets that are vital to communities, spanning sectors

such as roads, rail, utilities and social infrastructure.

The Investment Manager, InfraRed Capital Partners Limited (“InfraRed”) on behalf of HICL, seeks to actively develop a portfolio of core

infrastructure assets that delivers the investment attributes listed below to investors.

Based on NAV per share appreciation plus dividends paid

This is not a profit forecast. There can be no assurance that this expectation will be met

For a 1% increase in future inflation assumptions the portfolio return would increase by 0.8%

Diversification

V HICL provides shareholders with immediate and liquid access to a portfolio of over 100

core infrastructure investments

V HICL’s portfolio is purposefully diversified across market segments, sectors,

revenue types, geographies and currencies

V This active approach to diversification underpins HICL’s resilience and the predictability

of the Company’s cash flows

V HICL invests in assets that sit at the heart of communities, which:

– provide essential services with important social purpose (e.g. healthcare, education,

law and order)

– facilitate essential inter-regional connectivity (e.g. rail, road)

– facilitate the transition to a lower carbon future (e.g. offshore transmission)

Sustainability

V HICL has delivered a 9.0% Total Shareholder Return

since IPO to investors

V Current return expectations align with HICL’s weighted average discount rate of 6.6%

(gross of fees)

V This return is generated via the active and responsible stewardship of essential

core infrastructure assets, delivered through the Company’s business model

(see facing page)

Total return

V HICL delivers the highest cash dividend within the core infrastructure peer group

V The stability of the Company’s yield profile is supported by HICL’s diversification and

active management approach

Yield

V The Company delivers a return that is correlated to long-term inflation at 0.8x

V Inflation linkage is a key part of the investment proposition, protecting real returns and

mitigating against a higher interest rate environment

Inflation

correlation

V HICL provides shareholders with visibility over cash flows for several decades into the

future, derived from its portfolio of long-life infrastructure assets

V 29.8 years weighted average asset life

V The Company continually looks to improve this longevity through active management

of portfolio composition

Asset life

02 / STRATEGIC REPORT

17HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

2.2

HICL’s Business Model

HICL’s strategy to deliver the Investment Proposition is through the successful execution

of its Business Model.

The Board delegates the majority of the day-to-day activities required to deliver the Business Model to the Investment Manager.

More information on the InfraRed business can be found at Section 2.5 – Investment Manager’s Report.

ACCRETIVE

INVESTMENT

VALUE

PRESERVATION

VALUE

ENHANCEMENT

HICL has a clearly defined Investment Policy, which can be

found in Section 3.8 – Strategic Report Disclosures. This

sets the overarching framework within which HICL seeks to

construct a resilient core infrastructure portfolio that delivers

the Investment Proposition and is consistent with HICL’s overall

risk appetite.

This is achieved through:

– A structured evaluation framework focusing on cash flow

quality, market positioning and criticality

Accretive Investment

Geography

Located in mature

infrastructure markets

Asset quality

Defined by:

– Cash Flow Quality

– Market Positioning

– Criticality

Segmentation

Core infrastructure

market positioning

Value-add

Accretive to HICL’s

Investment Proposition

The following summarises HICL’s Acquisition Strategy

– Careful and deliberate portfolio construction to improve the

Investment Proposition

– A focus on sustainability that is built into the investment

process (see Sustainability Report 2022, available on the

HICL website)

– An objective that acquisitions are accretive to key

portfolio metrics

– Utilising a variety of channels, both proprietary and public,

across InfraRed’s international, multi-fund investment

management platform to source accretive transactions

InfraRed’s Asset Management and Portfolio Management

teams work in partnership with the management teams in

HICL’s portfolio companies to preserve the value of

investments for shareholders and stakeholders. The objective

is to ensure portfolio companies continue to operate with the

endorsement of their key stakeholders, including through the

delivery of contractual and regulatory requirements, in order

to deliver the base-case investment return.

This is achieved through:

– Providing effective governance of portfolio companies,

usually through board representation

– Building relationships with key portfolio company

counterparties, in particular public sector clients / regulators

– Facilitating and / or driving resolution of operational issues,

including disputes and critical issues

– Delivering HICL’s sustainability strategy

– Managing the valuation process and oversight of financial

performance of each investment against HICL forecasts

Value Preservation Value Enhancement

InfraRed’s Asset Management and Portfolio Management

teams pursue opportunities to deliver outperformance from

the existing portfolio through a systematic, strategic

programme of value enhancement. This upside is often

shared between HICL’s shareholders and public sector

clients for PPP projects, or with the customers of regulated

assets through periodic regulatory price reviews.

This is achieved through:

– Sponsoring the implementation of initiatives within portfolio

companies to optimise asset business plans or capital

structures (for example, refinancing existing senior debt facilities)

– Developing and implementing procurement efficiencies

across HICL’s large and diverse portfolio, in particular by

leveraging economies of scale

– Exploring opportunities to add to or upgrade asset-level

facilities to improve stakeholder outcomes whilst supporting

long-term shareholder returns

– Driving efficient financial and treasury management of HICL,

seeking to reduce ongoing charges

02 / STRATEGIC REPORT

18 HICL ANNUAL REPORT 2022

2.3

Core Infrastructure

The term ‘core infrastructure’ has become synonymous with

those assets that exhibit the most coveted infrastructure

characteristics, and by definition sit at the lower end of the

infrastructure equity risk spectrum. Since IPO, HICL’s investment

policy, which continues to guide HICL’s Acquisition Strategy, has

been aligned with the core infrastructure market. The Company’s

investment policy is set out in full in Section 3.8 – Strategic

Report Disclosures.

Core infrastructure is a distinct market segment, comprising assets with good cash flow

visibility and entrenched market positioning, that sit at the heart of communities and the

economy; that is, essential infrastructure that delivers resilient cash flows from a

protected market position.

The Company and its Investment Manager, InfraRed,

systematically evaluates the infrastructure market using the

following core infrastructure framework to focus on assessing

asset quality via the three key tenets of cash flow quality, market

positioning and criticality:

Individual assets must demonstrate the above key characteristics

to meet HICL’s mandate. These attributes will however exist to

varying degrees across different assets, sectors, revenue

types and geographies, guiding the specific risk profile of

individual assets. By bringing together assets with complimentary

risk profiles, an opportunity therefore exists to shape a

diversified portfolio with more attractive risk and reward

characteristics overall.

Cash Flow Quality

Stable revenues

V Low volatility in a range of macro environments

V Suitable / diverse counterparties

V Inflation protection

V High capital cost

V Low operational complexity

Lower operational

gearing / complexity

Market Positioning

Defensive positioning

V Monopolistic characteristics e.g. from exclusive

contract or lack of feasible competition

V Regulated in some circumstances

V Capital intensive business model

V Structural protections

High barriers to entry

Criticality

Essential assets

V Strong social licence and public benefit

V Real assets supporting essential services or

facilitating important social function

Importantly, Investors accept the vital role that core

infrastructure assets play in society and therefore the

importance of a stakeholder-led approach to maximising

long-term shareholder value.

02 / STRATEGIC REPORT

19HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

KPI Measure Objective Assessment 31 March

2022

31 March

2021

Dividends Aggregate interim dividends declared

per share for the year

An annual distribution of at least that achieved

in the prior year

Achieved 8.25p 8.25p

Total

Shareholder

Return

NAV growth and dividends paid per

share since IPO

A long-term IRR target of 7% to 8% as set out

at IPO

Achieved 9.0% p.a. 8.9% p.a.

Cash-covered

Dividends

Operational cash flow/dividends paid to

shareholders

Dividend payments are covered by cash

received from the portfolio

Achieved 1.05x

0.90x

Positive

Inflation

Correlation

Changes in the expected portfolio

return for 1% p.a. inflation change for

each and every future period

Maintain positive correlation with a correlation

of at least 0.5x

Achieved 0.8x 0.8x

Competitive

Cost

Proposition

Annualised ongoing charges/average

undiluted NAV

Efficient gross (portfolio level) to net (investor

level) returns, with the intention to reduce

ongoing charges where possible. Maintain

within the range for FTSE 250 listed

infrastructure peers

Achieved 1.06% 1.07%

Set by reference to the issue price of 100p/share, at the time of HICL’s IPO in February 2006

Including profits on disposals versus original acquisition cost of £4.8m. Excluding this, dividend cash cover would have been 1.02x

Including profits on disposals versus original acquisition cost of £11.9m. Excluding this, dividend cash cover would have been 0.83x

Calculated in accordance with Association of Investment Companies guidelines. Ongoing charges excluding non-recurring items such as acquisition costs

KQI Measure Objective Assessment 31 March

2022

31 March

2021

Investment

Concentration

Risk

Percentage of portfolio value represented

by the ten largest investments

Percentage of portfolio value represented

by the single largest investment

Maintain a diversified portfolio of investments

(thereby mitigating concentration risk) and, at all

times, remain compliant with HICL’s Investment

Policy

Single asset concentration < 15%

Achieved 48%

46%

Risk / Reward

Characteristics

Percentage of portfolio value

represented by the aggregate value of

projects with construction and/or

demand-based risk

Compliance with HICL’s Investment Policy, to

be lower than the aggregate limit of 35% for

such investment

Achieved 25% 22%

Unexpired

Concession

Length

Portfolio’s weighted-average unexpired

concession length

Seek where possible investments that maintain

or extend the portfolio concession life such that

it remains above 20 years

Achieved 29.8

years

28.6

years

Refinancing

Risk

Investments with refinancing

risk within 24 months as a

percentage of portfolio value

Manage exposure to refinancing risk to 20% of

portfolio value

Achieved 0.0% 0.2%

Sustainability

Stewardship

Percentage of the portfolio that

is rated ‘high’ for ESG

performance

>75% of the portfolio rated high in ESG

performance

Achieved 98% 99%

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

‘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 – namely pre-operational projects, demand-based assets and / or other vehicles making infrastructure investments. Further details are set out in the

Investment Policy, available from HICL’s website

Calculated as required asset refinancings within 24 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

‘High’ rating in ESG performance means scoring 4/5 stars in the HICL Sustainability Survey or subsequent metrics as ESG reporting evolves

The Board has identified metrics with which to clearly measure HICL’s performance against its strategic objectives. The results for the

year ended 31 March 2022 are set out below.

2.4

Key Performance & Quality Indicators

02 / STRATEGIC REPORT

20 HICL ANNUAL REPORT 2022

2.5

Investment Manager’s Report

The Investment Manager

InfraRed Capital Partners Limited (“InfraRed”) acts as the Investment Manager to

HICL and Operator of the Group’s investment portfolio.

InfraRed has day-to-day responsibility for the Company and manages key

stakeholders. Activities include:

V Development and execution of HICL’s strategy;

V Stewardship of portfolio assets through proactive asset and portfolio

management, and the resolution of critical issues;

V Stakeholder engagement across both public and private sectors;

V Investment origination, due diligence and execution; and

V Capital raising, investor relations and preparation of key external communications.

InfraRed is a specialist infrastructure investment manager:

Edward Hunt

Head of Core Income Funds, InfraRed

Edward leads the InfraRed team that

manages HICL

USD12bn

Equity under

management

25+

Years of investment

experience

15+

Years managing

HICL

220+

Infrastructure assets

under management

Infrastructure Funds

raised

Countries where InfraRed

manages assets

Nationalities

170+

Staff across

six countries

Partnership with

Sun Life / SLC

since 2020

AIF subject to the full

scope of the AIFMD

(UK Investment Trust Company)

International investment

manager focused on

infrastructure

Investment Manager’s relationship with the Company

Shared responsibility across the Board and InfraRed

To deliver a robust and proactive approach to governance to deliver sustainable income,

to mitigate risks and to create a positive impact within the Company’s portfolio

Investor Relations

Communications

Alternative Investment

Fund Manager (AIFM)

Fund Management Strategy Reporting

Acquisitions and Disposals

Asset Management

Risk and Portfolio Management

HICL’s Shareholders

Independent Non-Executive

Board and Committees

Governance Oversight Strategy

Portfolio Companies

Non-recourse holding structure

Helen Price

CFO, Core Income Funds, InfraRed

Helen is responsible for managing the

financial activities carried out by InfraRed

for HICL

HICL’s Investment Committee is

the principal executive decision

making body for HICL within InfraRed

and is comprised of:

V Werner von Guionneau (CEO)

V Chris Gill (Deputy CEO)

V Keith Pickard (COO)

V Stewart Orrell (Head of Asset Mgt)

V Harry Seekings

(Head of Investments)

V Edward Hunt

(Head of Core Income Funds)

Stepping down from HICL’s Investment Committee effective 1 July 2022

02 / STRATEGIC REPORT

21HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Operational Highlights

The performance of the portfolio was strong for the year ended

31 March 2022, returning 9.6% (7.7% at 31 March 2021)

significantly ahead of the Company’s expected return of 6.8% for

the period (the Company’s weighted average discount rate as at

31 March 2021).

This outperformance was driven by higher than expected inflation

feeding through asset-level valuations, continued market pressure

on infrastructure asset pricing (as reflected in HICL’s Interim Report

2021), the accretive disposal of Queen Alexandra Hospital, and

other value enhancement activities delivered by InfraRed’s specialist

asset and portfolio management teams. The demand-based and

regulated assets delivered an outsized contribution to portfolio

outperformance, principally due to the stronger inflation linkage in

these segments. The portfolio outperformance is reported net of

asset-specific costs, including in respect of the management of

defect remediation on selected healthcare projects.

Segment overview

HICL’s PPP portfolio (66% of the Directors’ Valuation at 31 March

2022; 71% at 31 March 2021) performed well, underpinned by its

availability-based contracted revenues. In the year, InfraRed’s

Asset Management team worked extensively with public sector

clients, particularly in healthcare, to successfully navigate the

challenges posed by Covid-19. Proactive engagement with the

public sector extended to successful collaboration across broader

industry issues such as the cessation of LIBOR, the approach to

handback of PFI assets at contract expiry and the transition to net

zero greenhouse gas emissions.

Typical of real assets, the active management by InfraRed of

physical asset condition across the PPP segment continued to be

a key priority. This included proactive leadership and control of the

delivery of remediation works by responsible parties where

necessary (including identified construction defects), with the

effect of de-risking the associated equity cash flow assumptions

where impacted. Further information is included in the Risk

Management section below.

Demand-based investments (22% of the Directors’ Valuation at

31 March 2022; 19% at 31 March 2021) continued to see a

robust recovery from the disruption associated with Covid-19,

broadly tracking in line with the Company’s valuation assumptions

taken at 31 March 2021. The range of outcomes for the traffic

forecasts across these assets continues to narrow and be

de-risked.

The performance of HICL’s regulated asset segment (12% of the

portfolio by value as at 31 March 2022; 10% at 31 March 2021) in

the year was pleasing. In addition to the 100% average annual

availability recorded across HICL’s four OFTO assets, Affinity

Water delivered solid operational progress, improving its relative

industry ranking in Ofwat’s annual assessment

For further explanation refer ‘Alternative Performance Measures’ in Section 3.1 – Financial Review

Ofwat, Service Delivery Report 2020-2021, November 2021

Calculated as an IRR, reflecting the initial purchase price, distributions received, and the final sale price

Enhanced disclosure on each of HICL’s Top 10 assets is provided

this year and is set out in Section 2.6.

HICL’s business model delivering value

The active management of the Company’s portfolio

composition by InfraRed is a significant driver of shareholder

value. Acquisitions totalled £110.4m in the year, with a further

investment announced post year end.

The Company completed acquisitions in incremental stakes in

Bradford Schools I & II PPP projects for 29% and 34% of equity

value for £16.1m combined); acquired a 58.3% interest in the Road

Management Group shadow toll roads (£56.1m in two tranches);

committed £10.4m to the B247 greenfield road PPP in Germany

(which completed post-year end) and committed to invest £27.8m

in an existing UK health holding in the first half. Post year end the

Company announced its first fibre investment, acquiring a 55%

interest in ADTIM SAS, a wholesale fibre network servicing rural

communities in France, representing c. 2% of portfolio value at

31 March 2022.

This investment activity was accretive to key portfolio metrics and,

importantly, illustrated InfraRed’s differentiated approach to sourcing

investments via less competitive situations, including: incremental

stakes in existing holdings (e.g. Bradford Schools); greenfield

investments (e.g. the B247); and relationship-driven pipeline (e.g.

RMG Roads). Most recently, HICL announced a forward-looking

partnership with VINCI Highways in Germany and is pleased to have

re-entered its partnership with the Mitsubishi subsidiary, Diamond

Transmission Corporation, to bid for the Hornsea II OFTO. Such

partnerships serve to support key relationships and secure

consistent and longer-term pipeline for the Company.

Periodic asset disposals remain an important lever to optimise

portfolio construction and deliver outperformance. In the year,

HICL agreed to dispose of its 100% interest in the Queen

Alexandra Hospital (“QAH”) PPP project (March 2022) and

completed the sale of its 50% interest in the Health & Safety

Executive Headquarters PPP project (October 2021). Both

disposals are accretive to key portfolio metrics and together

delivered a combined holding period return of c. 10% per

annum

. Finally, the return of a small PPP project was effected

under the voluntary termination regime, reflecting changes in the

client’s ongoing requirements for the facility. These divestments

enable the effective rotation of proceeds into the accretive

acquisition activity discussed above.

Financial Highlights

NAV per share increased by 10.8p over the year to 163.1p at

31 March 2022 (31 March 2021: 152.3p). The Company’s

annualised total shareholder return, based on growth in NAV per

share plus dividends paid, was 12.8% for the period (31 March

2021: 5.5%). On the same basis, in the 16 years since its IPO,

HICL has delivered a total shareholder return of 9.0% per annum.

02 / STRATEGIC REPORT

22 HICL ANNUAL REPORT 2022

2.5

Investment Manager’s Report (continued)

The recovery in cash cover to 1.05x

was as planned and driven

primarily by solid cash generation from the underlying portfolio.

Further information on the investment valuation and financial

performance can be found in Section 3.2 – Valuation of the

Portfolio and Section 3.1 – Financial Review, respectively.

On 1 April 2022, the Company announced a new £400m GBP

multi-currency facility. Headroom within the Revolving Credit

Facility was £264.6m at the year end. Together with the expected

proceeds from the agreed sale of QAH, the Company has a

robust balance sheet and is well placed to fund its attractive

investment pipeline.

Governance

The Board of HICL is undergoing a key transition within its

succession plan. Chairman, Ian Russell, and Audit Chair, Susie

Farnon, will both retire in July 2022. InfraRed reflects upon the

substantial contributions of Ian and Susie, and expresses its

sincere gratitude for their unwavering dedication throughout this

important period for HICL.

HICL will now open a new chapter. As previously announced, the

planned Board transitions will be effected with Mike Bane due to

be appointed to the Chairman role, Rita Akushie to the role of

Audit Chair, and Frances Davies to Remuneration Chair. The

Investment Manager has worked closely with Mike, Rita and

Frances around the boardroom table and looks forward to

continuing to do so in their new roles.

Sustainability

Sustainability is embedded in the Company’s business model.

HICL’s sustainability credentials can be viewed in two parts:

V the inherent social good derived from assets that provide

essential services to communities; and

V the benefit that is derived from an active sustainability strategy

that seeks to drive improvements in the ESG performance of

the underlying assets in the portfolio.

The Investment Manager recognises the importance of both of

these elements in the Company’s strategy to provide sector

leadership on sustainability. InfraRed’s enhanced investment

processes ensure a systematic evaluation of asset-level

sustainability credentials when making acquisitions. Equally

important, InfraRed’s active asset management enables robust

measurement of, and tangible improvements across, the

Company’s reported sustainability metrics (set out in detail in

HICL’s Sustainability Report 2022, available on the HICL website).

HICL and InfraRed’s commitment to sustainability best practice

was further demonstrated in the year. For the second successive

year, HICL has reported across all 11 recommended disclosures

from the Task Force on Climate-related Financial Disclosures

(“TCFD”). HICL has complied with the EU’s Sustainability Finance

Including profits on disposal versus original acquisition cost of £4.8m. Excluding this, dividend cash cover would have been 1.02x

Calculated as the daily HICL share price return vs FTSE All-Share daily return over 12 months to 31 March 2022

Disclosure Regulation (“SFDR”) since March 2021, noting the

step-up in disclosure obligations applicable from 1 January 2023.

From this date, InfraRed intends to report for HICL in accordance

with Article 8 of the regulations. Finally, InfraRed’s own ambition

for net zero was formalised in the period through its decision to

join the Net Zero Asset Managers initiative, committing InfraRed

to achieve net zero emissions across the HICL portfolio by 2050,

with interim targets by 2030.

Highlights are provided in Section 2.7 – Sustainability Highlights.

Further detail is set out in the Company’s Sustainability Report

2022, available on the HICL website.

Risk Management

HICL’s risk appetite statement, approach to risk management

and governance structure are set out in Section 3.4 – Risk and

Risk Management.

Commentary on the Company’s key risks is set out below.

Political and regulatory risk

Geopolitics

The Investment Manager notes the geopolitical consequences of

war in Eastern Europe. The Company is not directly exposed to

the region, via either its investment portfolio or its shareholder

energy costs and inflation are likely to provide an element of

challenge to all, including HICL’s portfolio companies.

Recognising this heightened uncertainty, HICL’s portfolio provides

defensive positioning against greater volatility in financial markets.

HICL’s beta over the year was 0.32

illustrating the diversification

that HICL can bring to shareholders’ portfolios.

LIBOR/SONIA transition

The risk associated with the transition of PFI contracts from

LIBOR to SONIA has continued to be actively managed down by

liaising directly with lenders and swap counterparties on a project

by project basis and is no longer considered to be a principal risk.

Following HICL’s announcement in July 2021 of the first

successful transition by InfraRed of a UK PFI project, 90% of the

portfolio by value has transition arrangements substantively

agreed. The remainder of the portfolio is expected to be resolved

over the course of 2022.

PFI handback

The process whereby PFI projects revert to public ownership is

still in its infancy, but gathering momentum over the next decade.

Ensuring the smooth transition of assets over time is therefore a

prominent issue for all PFI stakeholders, public and private

sectors alike. The Investment Manager believes strongly that

initiatives of such scale can only be resolved through genuine

collaboration across project stakeholders. In this vein, InfraRed

strongly supports the efforts of the Infrastructure and Projects

Authority (“IPA”) to establish numerous dedicated working groups

02 / STRATEGIC REPORT

23HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

to discuss and develop solutions to cross-industry challenges

such as ‘handback’ and the transition to net zero. InfraRed

representatives have joined a subset of these working groups,

as an active and collaborative partner. Further initiatives such as

the IPA’s contractual ‘health checks’, in which a HICL asset

participated, as well as InfraRed-sponsored handback preparation

initiatives on three other UK PFI assets, continue to guide

InfraRed’s planning and asset management design around this

risk. HICL has c. 2% of its portfolio scheduled to be handed back

before March 2030. To date, two HICL projects have reached

concession expiry: one received a contract extension, and the

other was handed back successfully.

Client relationships

The Investment Manager continues to highlight the risks inherent in

long-term partnership frameworks, particularly when operating and

financial pressures are more acute, such as those seen in the UK

healthcare sector over the last 24 months. For a small subset of

these assets, this has resulted in more adversarial forms of contract

management from healthcare clients, with negative consequences

for the PFI project and its stakeholders. To date, this remains

immaterial to the portfolio; however the potential for further

instances of this behaviour, including the non-payment of

contracted revenues, continues to pose a risk to the Company’s

cash flows. Following the disposal of QAH, the Company has 27%

of the portfolio in healthcare assets (29% as at 31 March 2021).

Counterparty risk

By design, HICL has a significant network of service delivery

partners, which operate across the assets in the portfolio. By

transferring long-term delivery obligations to these specialists, risk

is transferred to the party best able to manage it. The residual risk

to the Company is therefore where these counterparties

underperform or fail. The management of HICL’s exposure to the

performance of its network of delivery counterparties is a key

mitigation to this risk. The breakdown of service delivery

counterparty exposure is set out on page 51.

The proposed acquisition of Engie SA’s services unit, Equans, by

Bouygues S.A. has been noted by the Investment Manager. Once

completed, this transaction will increase HICL’s exposure to the

Bouygues Group to 25% by value

(31 March 2021: 15%).

Recognising Bouygues’ strong performance track record and credit

profile, InfraRed remains comfortable with this level of concentration.

Management of facility condition remains a key focus of InfraRed’s

Asset Management team. This includes the identification of

physical quality issues (including defects), the utilisation of lifecycle

budgets and the effective management of specialist

subcontractors. This latter activity includes taking necessary

action to ensure construction defect remediation, where

appropriate, and is a key mitigant to this risk.

Covid-19 and consumer behaviour

A subset of the Company’s demand-based assets continues to

be impacted by the effects of Covid-19. Within the Directors’

Valuation, assumptions have been adopted in respect of the

recovery profiles of the individual assets (e.g. traffic assumptions).

While visibility of the recovery trajectory is improving with time,

some risk remains around these future assumptions.

Across HICL’s geographies, significant progress has been made

in the management of Covid-19 in the period and the risk posed

to the portfolio has steadily decreased over the year. Longer-term,

the potential for more systemic shifts in consumer behaviour (e.g.

working practices or modal selection) remains uncertain and

could impact asset demand within the HICL portfolio, either

positively or negatively. An assessment of this uncertainty is

included within the Directors’ Valuation.

Macroeconomic risk

The prospect of persistent high inflation presents the risk of

declining real returns to investors. To the extent that policy makers

utilise monetary levers to manage higher inflation, interest rate

increases may result. Higher interest rates have the potential to

negatively impact asset pricing.

Importantly, the returns from HICL’s high quality core infrastructure

portfolio are highly correlated to inflation at 0.8x

over the long

term. Recognising the current high inflationary environment,

additional NAV and cash flow sensitivities have been included in

Section 3.2 – Valuation of the Portfolio on page 47. Where

inflation is higher than HICL’s valuation assumptions by 3% for the

next three years, NAV would increase by 10.2p per share.

In relation to interest rates, there is also a degree of protection

built in to discount rates. From its lowest point in 2007, the

implied equity risk premium (the difference between the discount

rate and risk-free rate) expanded from 2.5% to an all-time high of

6.5% in March 2020. The current equity risk premium of 4.8%

continues to provide an element of buffer to cushion the impact of

rising risk-free rates on asset pricing. Additionally, over this same

period we have seen a step change in the embrace of

infrastructure as an asset class by institutional investors

. This has

contributed significantly to the observed downward pressure on

required returns from the sector, in addition to the decline in

risk-free rates.

The Investment Manager also notes the prospect of stagflation in the

context of the supply side constraints driving current inflation and the

potential for economic contraction. Should policy makers allow

greater levels of inflation (i.e. with limited use of monetary controls),

HICL’s investment proposition would be expected to continue to

provide protection to shareholders, and the relative attractiveness of

the asset class would be expected to further increase.

The proportion of the portfolio, by value at 31 March 2022, to which Bouygues provides facilities management services

If outturn inflation was 1% p.a. higher than the valuation assumption in each and every future period, the expected return from the portfolio (before Corporate Group

expenses) would increase by 0.8%

1445% increase in unlisted infrastructure assets under management between December 2006 and March 2021, Preqin data

02 / STRATEGIC REPORT

24 HICL ANNUAL REPORT 2022

2.5

Investment Manager’s Report (continued)

Climate Change

Climate change risks to the Company are both the physical risks

that a changing environment poses to real assets, and the

transition risks arising as a consequence of authorities seeking

to limit the extent and impact of a changing climate through

policy initiatives.

Primary mitigations exist at project level including contractual

protections, insurances and the finite nature of the concessions.

At a corporate level, the Company has reported against all 11 of

the Task Force on Climate-related Financial Disclosures (“TCFD”).

The disclosure includes a comprehensive assessment of the risks

to the Company posed by climate change. This is set out on

pages 68-73.

Market and Outlook

The Company is well positioned to deliver its strategy,

notwithstanding heightened uncertainty in the broader market.

Indeed such instability continues to highlight the relative

attractiveness of core infrastructure versus other asset classes.

HICL’s strong inflation correlation (0.8x), low beta, and strong

predictable yield, ensure that HICL remains a compelling holding

for ‘all seasons’.

The appetite for the asset class has continued to support

infrastructure asset prices, despite the evolving macroeconomic

environment. Competition for high quality core infrastructure

assets remains high. This dynamic continues to support the

valuation of HICL’s existing portfolio and is also reflected in the

market for new investments.

The Investment Manager remains focused on the enhancement

of HICL’s Investment Proposition (refer to page 16) and continues

to position the Company for growth in pursuit of this. InfraRed

views positively the opportunity to continue to make high

quality additions to the existing portfolio and improve key

portfolio metrics.

The Company’s vision, to deliver strong social foundations, connect

communities and support sustainable modern economies guides

HICL’s investment ambition. This reflects the fundamental role that

traditional infrastructure sectors play in our society (e.g. social,

transportation) as well as the increasing role of those sectors driving

the modern economy, such as communications (e.g. fibre, towers)

and the energy transition (e.g. OFTOs, district utilities). HICL’s

thematic approach aligns with InfraRed’s broader strategic

investment outlook and activity across the range of funds managed

by InfraRed. This multi-fund, cross-strategy investment platform

enables the full weight of InfraRed’s expertise, international footprint

and track record to be brought to bear for HICL, across the core

infrastructure landscape.

InfraRed actively manages a strong pipeline of investment

opportunities for the Company, underpinned by its differentiated

capability to source attractive new investments via less

competitive situations. This encompasses a continued focus on:

V Relationship driven pipeline: building upon the announced

partnerships with key industry relationships;

V Incremental acquisitions in the existing portfolio: 72% of the

portfolio by value is less than 100% owned (31 March 2021:

69%). As highlighted in HICL’s Interim Report 2021, InfraRed

will continue to explore incremental opportunities across all

existing portfolio segments, including the demand-based

assets correlated to GDP on a case-by-case basis; and

V Greenfield opportunities: building on InfraRed’s 20 year-plus

track record in successfully delivering assets through

construction. Existing exposure to assets in construction

is 3% by portfolio value at 31 March 2022 (31 March

2021: 3%).

Achieving the appropriate risk and reward balance for HICL

continues to be of highest importance. InfraRed’s disciplined and

structured use of its core infrastructure framework (refer to page

18) to evaluate new opportunities ensures that HICL continues to

pursue high quality core infrastructure assets, aligned with HICL’s

clear risk and reward mandate, and in support of the delivery of

HICL’s investment proposition.

Further detail on the Company’s pipeline is set out in the

graphic opposite.

02 / STRATEGIC REPORT

25HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Availability

or toll roads Water

Rail and

rolling stock OFTOs

District energyTowers

Electricity

distribution

Health Education

Fire, Law

& order Accommodation

Fibre

networks

V Focus on incremental acquisitions

across the operational PPP

portfolio (UK, Europe)

V Visible greenfield PPP pipeline

across Europe, Canada, Australia

Strong Social

Foundations

Connecting

Communities

Sustainable Modern

Economies

Healthy pipeline covering the breadth of HICL’s acquisition focus:

V Attractive pipeline of core infrastructure assets spanning UK, Europe, North America and Australia & New Zealand

V c. £510m of equity at exclusivity, preferred bidder, or shortlisted stage

V Two origination partnerships now in effect with key industry relationships; a further one at advanced stage

V Communications infrastructure in

mature geographies: wholesale

FTTH assets in France, Nordics,

UK, Iberia; towers in UK, Europe,

Australia & New Zealand

V Incremental acquisitions on

demand-based transport assets

on a case-by-case basis

V New and incremental acquisitions

spanning HICL’s core markets

across regulated utilities,

including water, electricity

transmission / distribution

and OFTOs

V Select district heating/utilities

opportunities (North America and

Europe) which exhibit identifiable

core infrastructure characteristics

02 / STRATEGIC REPORT

26 HICL ANNUAL REPORT 2022

2.6

Top 10 Assets – Operational Highlights

https://www.affinitywater.co.uk/docs/Affinity_Water_Limited_2021.pdf

https://www.ofwat.gov.uk/wp-content/uploads/2021/11/Service-Delivery-Report-2020-2021.pdf

The Ofwat 2019 price review period that sets prices for the period from April 2020 to March 2025

Based on Affinity Water’s Regulated Capital Value of £1,478m as at March 2022 (Source: Ofwat)

https://www.affinitywater.co.uk/docs/corporate/plans/strategic/AW0031_Strategic-direction-statement.pdf

The Ofwat 2024 price review process that sets prices for the period from April 2025 to March 2030

Affinity Water – 9% of portfolio

Affinity Water provides an average of 950m litres of clean water each day to a population of more than 3.6 million people in Southern

and Eastern England. It is a water-only company and has no sewerage operations. As a regulated utility, the company has clear

visibility over its appointed revenue base until March 2025. The effects of the shift in water usage patterns, mainly as a result of the

Covid-19 pandemic, continue to be analysed ahead of further Ofwat engagement and are not expected to have a material financial

impact on the business.

Over the year, the management team has been focused on driving the operational performance of the business. InfraRed has

worked closely with the Affinity Water board to support this objective. The company plans to spend approximately £100m

, over the

course of the current Asset Management Period to achieve its ambitious leakage reduction targets. More generally, total expenditure

and performance commitments were in line with HICL’s expectations for the year. Management’s focus on operational performance

was recognised by Ofwat in its most recent Service Delivery Report

, with Affinity Water judged to have “stepped up to the challenge

set in the PR19 final determination”. Furthermore, Moody’s, S&P and Fitch all re-affirmed their ratings for the company’s listed debt

during the period.

As a result of the significant capital investment that Affinity Water committed to as part of PR19

, the company’s Regulatory Capital

Value (“RCV”) increased by 13% in the year to 31 March 2022 resulting in an implied RCV multiple of 1.29x

. This is the largest

increase of any water company in England in percentage terms and underlines the long-term strategic value of the asset. Importantly,

RCV growth is contractually linked to both RPI and CPI inflation, which is a key driver of Affinity Water’s high inflation correlation (see

Section 3.2 – Valuation of the Portfolio for further details).

Affinity published its Strategic Direction Statement

in June 2021, following consultation with key stakeholders including communities

and customers, and focusing on network resilience, environmental protection, and consumer affordability. This document also

provides a foundation for the company’s PR24

preparations, which have now started in earnest.

During the year, the company won two Ofwat Innovation Awards for its ‘Seagrass Seeds of Recovery’ and ‘Smarter Tanks’ projects.

Affinity Water’s responsible approach to business is reflected through a broad programme of sustainability initiatives, some of which

are detailed in HICL’s Sustainability Report 2022.

Northwest Parkway – 7% of portfolio

The Northwest Parkway is a free-flow toll road which provides access to key residential and employment districts in the Denver

Metropolitan area as well as Denver International Airport.

During the year, traffic levels rose steadily from 72% of pre-Covid levels in the quarter ending 30 June 2021 to 83% of pre-Covid

levels in the quarter ending 31 March 2022. This was broadly in line with the Investment Manager’s valuation assumption, although

usage of the road briefly reduced in January and February as a result of heavy snowfall. Encouragingly, traffic levels continued to

increase after the financial year end, reaching 91% of pre-Covid levels in the 4 week period ending 1 May 2022. This continued

recovery in demand, underpinned by economic growth and increased domestic air travel in the United States, supports the

Investment Manager’s assumption that traffic will return to pre-Covid levels by June 2023. The project company board agreed to

resume distributions during the year, further reducing uncertainty, and HICL recognised a modest uplift in the March 2022 valuation.

Tolls were increased by 20 cents during the year, which incorporated a ‘catch-up’ for the previous year where traffic was more

severely impacted by the pandemic and tolls were held flat. A further increase, which is expected to be at least in line with inflation, is

planned for the coming year. The management team has successfully focused on improving the rate of toll collection from non-

registered users and has also set aside $100,000 to help victims of a devastating local fire (the Marshall Fire) which occurred in late

December 2021.

02 / STRATEGIC REPORT

27HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

A63 Motorway – 7% of portfolio

HICL’s investment relates to a 105 km stretch of the A63

Autoroute in France, which connects Bordeaux to the

Spanish border. The road is an important trans-European

transport corridor for both freight and leisure travel, enabling

journeys from the Iberian Peninsula and South-Western

France to the whole of Northern Europe. Due to its strategic

positioning, the performance of the asset has been largely

unaffected by Covid-19, despite lockdowns in France during

April and May 2021. In the three-month period ending 31

March 2022, light and heavy vehicle traffic was 1% and 3%

above pre-Covid levels respectively, and revenues for the

financial year were broadly in line with of the Investment

Manager’s valuation assumption. The assumptions

underpinning the future traffic forecast are not materially

different from those used in September 2019, demonstrating

the asset’s full recovery from the impact of Covid-19.

During the period, major carriageway resurfacing works were undertaken in line with the long-term maintenance plan for the asset.

The works are phased to minimise disruption during peak periods and are due to complete on schedule in December 2022.

A contactless payment system was also installed to improve efficiency and user experience at the toll plazas.

Atlandes, the concessionaire for HICL’s investment, continues to lead the market with respect to sustainability. In February 2022, the

company became the first toll road operator in France to implement reduced tariffs for LNG-powered lorries; further initiatives are

detailed in HICL’s Sustainability Report 2022.

Southmead Hospital – 5% of portfolio

Southmead Hospital is a major 800-bed acute hospital in

Bristol. It provides accident and emergency and specialist

medical services to a population of almost one million people

in Bristol, South Gloucestershire, and North Somerset.

The hospital played a particularly vital role throughout the

Covid-19 pandemic, and during the year InfraRed worked

closely with the portfolio company and facilities management

provider to support the NHS trust in a return to more

normal operations.

Southmead Hospital was built by Carillion Plc (“Carillion”),

which entered liquidation in 2018. During the year, InfraRed

continued to work collaboratively with all key project

stakeholders to finalise the resolution of outstanding

contractual obligations with the client and the projects

lenders, further de-risking the cash flow assumptions.

Throughout this process, InfraRed has maintained excellent

working relationships with the NHS Trust and Bouygues

Energies & Services, who provide the facilities management

services, which has led to further collaboration on a number

of ESG initiatives including a carbon survey and wellbeing

events for staff members. HICL, continues to assume

responsibility for the construction defect risk associated with

the project in the absence of Carillion.

02 / STRATEGIC REPORT

28 HICL ANNUAL REPORT 2022

2.6

Top 10 Assets– Operational Highlights (continued)

High Speed 1 – 5% of portfolio

High Speed 1 (“HS1”) is the UK’s only high-speed rail line, linking London St Pancras with the Channel Tunnel. It is a vital component

of the UK’s rail link with Continental Europe, enabling fast and frequent domestic rail services between Kent and Greater London.

International train path bookings (which represented 32% of pre-Covid track access revenues) increased materially over the year as

restrictions on cross-border travel due to Covid-19 were gradually eased. Although border restrictions were briefly re-introduced due

to the Omicron variant, this did not have a material impact on HS1’s financial performance. In the four-week period to 30 April 2022,

international train path bookings reached 81% of pre-Covid levels, slightly ahead of HICL’s valuation assumption. Eurostar’s

advertised services indicate that bookings are expected to continue to increase over the coming months, and HICL’s forecast

assumes that international train path bookings will reach pre-Covid levels by March 2025.

Domestic services (68% of pre-Covid track access) continue to benefit from the contractual underpin from the Department for

Transport, which guarantees 96% of these pre-Covid domestic track access revenues. Although there is some uncertainty around

the return to a pre-Covid domestic timetable, neither the replacement of London & South Eastern Railway Limited as the operator of

domestic services nor the results of the Williams-Shapps Plan for Rail are expected to materially impact future train path bookings.

Retail revenue slightly exceeded InfraRed’s forecast in the year as a result of strong consumer demand; HS1’s management team

continues to work closely with tenants at St Pancras International as they experience increased footfall. The management team also

worked tirelessly to deliver several important liquidity enhancement initiatives in the period. These initiatives, along with InfraRed’s

active approach to asset and stakeholder management, ensured that HS1 required no external funding despite highly challenging

operating conditions.

The Investment Manager notes that there have been several reports in the period relating to competing international train services.

Although no adjustment has been made to the March 2022 valuation, the interest shown by potential new operators demonstrates

the inherent attractiveness of high-speed rail as an efficient and environmentally friendly mode of travel. Sustainability is at the heart of

HS1’s business, and a number of key highlights are set out in HICL’s Sustainability Report 2022.

Royal School of Military Engineering – 4% of portfolio

HICL’s investment covers over 50 buildings and five training facilities used by the Royal School of Military Engineering Group, which

provides a wide range of training to the British Army and Defence forces.

Training continued to be delivered throughout the year, although a small number of courses were deferred to the following year due

to Covid-19.

As part of the Ministry of Defence’s standard rotation programme, the Chief of Staff, Commandant and two-star General roles were

rotated during the year, and InfraRed looks forward to continuing the excellent working relationships developed on the project to date

with the new senior team.

The Investment Manager also agreed a new

management services contract with Vercity, with all

existing employees transferring on 1 April 2022.

During the year, new facilities were formally opened by

HRH Countess of Wessex. The project company also

initiated several ESG initiatives, including the installation

of electric vehicle chargers, the donation of iPads to

local schools and improvements in biodiversity through

on-site beehives and a wormery to reduce food waste.

Photo credit: Crown Copyright

02 / STRATEGIC REPORT

29HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Pinderfields and Pontefract Hospitals – 4% of portfolio

Pinderfields and Pontefract Hospitals provide acute hospital services to more than half a million people living in the Wakefield and

North Kirklees districts of West Yorkshire. Pinderfields Hospital is a designated major trauma centre and is home to two specialist

regional services in burns and spinal injuries for the North of England. Throughout the Covid-19 pandemic, the project company

has been working closely with the NHS Trust, which has been complimentary of the service provision in response to their

changing requirements.

During the year, InfraRed and other key stakeholders progressed the terms for a major programme of works which will be completed

over the next five years. These include ventilation upgrades as well as improvements to intensive care units and Haematology. In

March 2022, the project company’s construction partner commenced work on a temporary ward which will accommodate patients

whilst components of the main hospital are being upgraded. The project is expected to resume shareholder distributions during the

coming year, which have been paused while the scope and programme of works within the hospitals is agreed by all stakeholders.

Home Office – 3% of portfolio

HICL’s investment relates to the state-of-the-art headquarters of the Home Office and the Department for Environment, Food and

Rural Affairs (“DEFRA”) 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. As a result of changes in working patterns linked to the Covid-19 pandemic,

day-to-day occupancy of the building has been well below maximum levels. This has not impacted the financial performance of the

asset as revenues are linked to availability rather than usage. In collaboration with the client and its facilities management partner, the

portfolio company agreed to isolate some aspects of plant to better manage the building environment and will continue to be

accommodating whilst working patterns at the facility stabilise.

Dutch High Speed Rail Link – 2% of portfolio

The Dutch High Speed Rail Link provides a 96 km high-speed connection from Amsterdam (Schiphol Airport) to the Belgian border

and facilitates domestic and international rail services. Revenues for this PPP asset are dependent on availability, and therefore not

impacted by changing passenger or train volumes as a result of Covid-19. Availability for the entire financial year was 100%, and as a

result the performance of the asset was in line with InfraRed’s expectations.

InfraRed and Infraspeed, the operator of the concession, are now collaborating with the client to undertake a number of major

variations to further improve the lives of the communities surrounding the railway tracks. The project features extensive noise-

reduction screens, which minimise noise pollution without threatening biodiversity.

Blankenburg Tunnel – 2% of portfolio

The Blankenburg Tunnel involves the construction of a 4.2 km motorway, incorporating both below river and land-based tunnels near

the city of Rotterdam. Located on the strategic TEN-T road network

, the project will increase capacity and improve road safety.

Construction works began in September 2018 and are expected to complete in 2024. During the year, the project company agreed

a major variation with the client to build the most technically complex element of the design, the immersed tunnel section, in a local

dry dock. This significantly de-risked the construction programme and helped to counteract some of the challenges posed by

Covid-19.

As a result of this variation, InfraRed’s active approach to asset management, and positive working relationships with the construction

subcontractors, the project is expected to meet the planned availability date despite delays linked to construction staff shortages. The

construction contractor is currently in discussions with the client in relation to rising materials and labour costs; regardless of the outcome,

the risk to HICL is mitigated through the contractual pass-through.

Trans-European Transport Network (TEN-T) is a planned network of roads, airports, railways and water infrastructure in the EU. The initiative seeks to establish

intermodal, long-distance and high-speed corridors

30 HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

2.7

Sustainability Highlights

https://www.un.org/sustainabledevelopment/

HICL’s approach to sustainability

As a prominent long-term investor in core infrastructure, HICL has a role in society

that extends beyond its shareholders.

“Creating Better Futures has always been at the

very core of who we are. This is what drives our

people and defines InfraRed.”

Werner von Guionneau, CEO, InfraRed

InfraRed’s approach to sustainability

InfraRed aims to create better futures by developing and managing long-term,

sustainable infrastructure.

The Company is a trusted steward of essential assets and has

a responsibility towards the communities that the assets serve

and, in many cases, to which the assets will be returned at the

end of the defined contractual term.

The Board and Investment Manager recognise that operating

in a sustainable manner lies at the very heart of the Company’s

business model, and is fundamental for the successful delivery

of its investment proposition.

Our infrastructure supports the lives and

livelihoods of the communities in which we

operate. Around the world over 20 million people

have access to HICL’s infrastructure; in the UK

alone, HICL’s assets touch the lives of one in

four citizens. As a result, the Company has an

exceptional opportunity to make a positive social

contribution by enhancing the experience of its

clients, end users and wider stakeholders.

HICL actively contributes to the United Nations (“UN”) Sustainable

Development Goals (“SDGs”) through the delivery of reliable and

resilient infrastructure that supports economic development and

human wellbeing. The nature of HICL’s investment proposition

means the Company inherently contributes to developing industry,

innovation and infrastructure (SDG 9); and building sustainable

cities and communities (SDG 11).

“HICL’s ability to deliver sustainable income to

investors is intrinsically linked to delivering positive

outcomes for the communities it serves.”

Ian Russell CBE, Chairman

The Investment Manager believes that long-term success for all

stakeholders (including investors) can only be achieved by taking

responsibility for the wider impacts of its investment activities.

Sustainability has always been central to how InfraRed invests

and manages HICL’s portfolio, as well as the way in which it

conduct its own business operations.

InfraRed’s most recent sustainability report

sets out its strategy,

which is built around four key objectives as set out to the right.

These will allow the Investment Manager to best leverage its

position and resources to create a positive impact now, but

more importantly create better futures for the next generation.

Climate: Contribute to the energy transition to

achieve net zero and deliver climate resilient

infrastructure

Resources: Minimise environmental impacts,

resource consumption and biodiversity loss

Communities: Make a positive social contribution

by addressing the needs of sustainable

communities

People: Promote safe and fair work that respects

diversity and inclusion at InfraRed, our business

partners and supply chains

Available at: www.ircp.com/sustainability

02 / STRATEGIC REPORT

31HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

2.7

Sustainability Highlights

InfraRed maintains

an A+ PRI score

InfraRed commits to

Net Zero Asset

Managers initiative

Intention to report in

line with Article 8 of

SFDR

Enhanced

investment

process and

exclusions list

Updated

sustainability

metrics and

targets for HICL

EU Sustainable Finance Disclosures Regulation

Principles for Responsible Investment (“PRI”) ratings are based on following a set of Principles, including incorporating ESG criteria into investment analysis,

decision-making processes and ownership policies

More information is available at https://www.unpri.org/about-the-pri

Focus on driving

social impact

through HICL’s

assets

Further details can be found in HICL’s dedicated Sustainability Report 2022, which can be

found at hicl.com/sustainability/

02 / STRATEGIC REPORT

32 HICL ANNUAL REPORT 2022

Social impact in numbers

The graphic below demonstrates the reach of HICL’s portfolio. By facilitating access to essential

services in a socially responsible manner, our projects contribute to many of the UN SDGs and

deliver an inherent social good. However, both the Board and the Investment Manager

acknowledge that making a genuine social contribution involves going above and beyond the

reliable provision of infrastructure. Some examples of specific initiatives undertaken by InfraRed or

HICL’s portfolio companies are highlighted here and expanding the Company’s social impact will

be a key priority going forward.

11.9m

people with access

to HICL’s healthcare

facilities

140,000

places across schools,

colleges and university

facilities

2.3m

people served by HICL’s

courts, fire stations and

police stations

1.7m

homes connected to

renewable electricity

Social Initiative:

Community

Fridge

HICL Sustainability Report

2022, page 19

350,000

homes connected to high-speed

internet by ADTIM

At completion of fibre roll-out

02 / STRATEGIC REPORT

33HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

3.6m

people served with clean

water by Affinity Water

40,000

accommodation

places

4.5m

unique users of HICL’s

roads and railways

Over 20 million with access to HICL’s infrastructure

worldwide, including one in four UK citizens

Over 1,200 staff are directly

employed by HICL’s portfolio

companies, with thousands more

jobs created through the supply chain

Social Initiative:

Affinity Water

Vulnerable

Customer Support

HICL Sustainability Report

2022, page 16

Social Initiative:

Northwest

Parkway Fire

Relief

HICL Sustainability Report

2022, page 16

03 / PERFORMANCE & RISK

34 HICL ANNUAL REPORT 2022

Queen Alexandra Hospital, UK

03 / PERFORMANCE & RISK

35HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT 03 / PERFORMANCE & RISK 04 / DIRECTORS’ REPORT 05 / FINANCIAL STATEMENTS01 / OVERVIEW

Performance

& Risk

03 / PERFORMANCE & RISK

36 HICL ANNUAL REPORT 2022

3.1

Financial Review

HICL prepares its financial information in accordance with

UK-adopted International Financial Reporting Standards (“IFRS”).

In the Company’s Strategic report, the Directors report the

financial performance using the non-GAAP Investment Basis.

The Company does not consolidate its portfolio companies as it

meets the definition of an Investment Entity. IFRS 10 provides an

exception from consolidation but also requires the Company to

fair value other companies in the Group (primarily intermediate

holding companies and partnerships), which can result in a loss

of transparency. The Investment Basis is designed to be a “look

through” of IFRS 10 to present the underlying performance.

The Directors believe it is more transparent to aid understanding

for readers of HICL’s Annual Report. It allows readers to assess

the Company’s underlying operating performance and its gearing,

including its capacity for investment and ability to make

distributions. Total return, NAV, and EPS are the same under

IFRS and the Investment Basis. The Board and the Investment

Manager manage the Company on an Investment Basis, which is

an APM and is reconciled on page 41.

The following financial information is prepared under the

Investment Basis, which consolidates the results of the Company,

together with HICL Infrastructure 2 S.a.r.l. and Infrastructure

Investments Limited Partnership referred to as “Group”

throughout the Financial Review. Total return, which is defined as

total comprehensive income for the year, and net assets, are the

same under the Investment Basis and IFRS and reconciliation is

provided of the Investment Basis financial statements to the IFRS

statements from page 41.

Summary Income Statement

Investment Basis

£m

For the year ended

31 March 2022

For the year ended

31 March 2021

Dividend income 75.8 37.1

Interest income 117.2 116.5

Fair value movement 192.0 33.5

Realised gain on the sale of investments 4.8 –

Foreign exchange gain/(loss) on investments 7.4 (36.3)

(Loss)/gain on foreign exchange derivatives (1.9) 19.3

Other income 10.5 18.6

Total Income 405.8 188.7

Expenses and finance costs (37.4) (36.6)

Profit before tax 368.4 152.1

Tax 0.3 (0.2)

Total Return 368.7 151.9

Earnings per share 19.0p 7.9p

Total income increased by 115% to £405.8m (2021: £188.7m) in

2022. The increase is principally due to uplift in the fair value

movement from £33.5m to £192.0m which resulted from the 0.2%

decrease in the discount rate to 6.6% (2021: 6.8%) announced in

the Interim Report 2021, the impact of higher than forecast inflation

and an uplift in the valuation of the Queen Alexandra Hospital,

following its successful sale process. In addition, dividend income

increased to £75.8m (2021: £37.1m) driven by the operational PPP

portfolio and the demand assets. Further detail on the valuation

movements is given in Section 3.2 – Valuation of the Portfolio.

The hedging policy targets NAV per share volatility of no more

than 2% for a 10% movement in foreign exchange rates. During

the year, the net impact of foreign exchange movements was a

£5.5m gain (2021: £17.0m loss), which represents 0.2% of the

closing NAV (2021: 0.6%). This follows a 0.3% movement in

weighted average FX rates in the year.

Hedging in this report compared to non-Sterling portfolio

values were:

Foreign Exchange Hedging

£m

Rate at

31 March 2022

Non-UK

assets

Fair value of FX

Hedge

FX Hedge as % of

non-UK assets %

1% sensitivity to

movement in FX rates

Euro 1.19 469 284 61% 1.9

USA 1.31 219 77 35% 1.4

Canada 1.64 62 19 31% 0.4

Total 750 380 51% 3.7

Sensitivity impact is net of derivatives

03 / PERFORMANCE & RISK

37HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Expenses and Finance Costs

Investment Basis

£m

For the year ended

31 March 2022

For the year ended

31 March 2021

Investment Manager fees 29.3 28.7

Finance costs 4.1 3.5

Directors’ fees & expenses 0.6 0.5

Acquisition bid costs 0.4 1.3

Professional fees 3.0 2.6

Expenses and finance costs 37.4 36.6

Total fees accruing to the Investment Manager were £29.3m

(2021: £28.7m) for the year. The marginal increase in the year

related to the uplift in the portfolio valuation since March 2021,

calculated in line with the Investment Manager fee calculation as

defined on page 125.

During the year £0.4m of acquisition bid costs were incurred

(2021: £1.3m), comprising legal, technical and tax due diligence,

on unsuccessful bids.

Tax

Tax charged to the Income Statement under the Investment Basis

is incurred by HICL’s immediate subsidiary, HICL Infrastructure 2

S.a.r.l. As HICL Infrastructure PLC has Investment Trust Company

(“ITC”) status, it is exempt from tax on certain items on the basis

that it is already paid at the operating company level thus

preventing shareholders from suffering double taxation. The

Directors monitor compliance with the ITC rules by receiving an

annual taxation report from the Investment Manager and are of

the opinion that HICL has complied with its obligations as an ITC

in the year.

Ongoing Charges

Investment Basis

£m

For the year ended

31 March 2022

For the year ended

31 March 2021

Investment Manager 29.3 28.7

Auditor – KPMG – for the Corporate Group 0.4 0.3

Non-audit fee – KPMG – Interim review 0.1 0.1

Directors’ fees and expenses 0.6 0.5

Other ongoing expenses 2.0 1.6

Total expenses 32.4 31.2

Average NAV 3,039.7 2,923.4

Ongoing charges % 1.06% 1.07%

Ongoing charges, calculated in line with the Association of

Investment Companies’ (“AIC”) guidance, is defined as annualised

ongoing charges (which excludes acquisition costs and other

non-recurring items) divided by the average published undiluted

net asset value of £3,039.7m in the year (2021: £2,923.4m).

The ongoing charges percentage is 1.06% (2021: 1.07%).

The small reduction is primarily driven by HICL’s increased

investment value due to the portfolio gains mentioned above.

Overall, earnings per share increased to 19.0p (2021: 7.9p)

at 31 March 2022.

Summary Balance Sheet and NAV

Investment Basis

£m 31 March 2022 31 March 2021

Investments at fair value 3,216.6 2,938.1

Net other (liabilities) / assets (11.3) 7.4

Net (debt) / cash (46.2) 4.7

Net Assets 3,159.1 2,950.2

NAV per share (before dividend) 163.1p 152.3p

NAV per share (post dividend) 161.1p 150.3p

03 / PERFORMANCE & RISK

38 HICL ANNUAL REPORT 2022

3.1

Financial Review (continued)

Investments at fair value increased by 9.5% to £3,216.6m

(31 March 2021: £2,938.1m), principally due to the impact of

higher than forecast inflation and the weighted average discount

rate reduction from 6.8% to 6.6%. Further detail on the

movement in Investments at fair value, which are net of

commitments and therefore not in the Directors’ Valuation,

is given in Section 3.2 – Valuation of the Portfolio.

An analysis of the movements in Net (debt) / cash is shown

in the cash flow section below.

NAV per share was 163.1p (31 March 2021: 152.3p) before the

2.07p fourth quarterly distribution. NAV per share increased by

10.8p, reflecting earnings per share of 19.0p, net of 8.5p

distributions, for the year ended 31 March 2022.

NAV per share and Earnings per share are the same under the

Investment Basis and the IFRS Basis.

Key accounting judgements and estimates

A key judgement is the assessment required to determine the

degree of control or influence the Group exercises and the form of

any control to ensure that the financial treatment of investment

entities is accurate. The introduction of IFRS 10 resulted in the

Group’s intermediate holding companies being presented at fair

value, which reduced the transparency of the underlying

investment performance. As a result, the Group presents a

non-GAAP Investment Basis set of financial statements to ensure

that the commentary in the Strategic report remains fair, balanced

and understandable. The reconciliation of the Investment Basis to

IFRS is shown on page 41.

In preparing these accounts, the key accounting estimate is the

carrying value of the Group’s investments, which are stated at fair

value. Given the importance of the valuation of investments, the

Board’s Audit Committee has oversight of the Investment

Manager’s valuation process and challenges the valuation policy,

process and application to individual investments on a bi-annual

basis. A third party is also appointed to carry out an independent

review of the 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.

The Group’s investments are predominantly unquoted and are

therefore valued using a discounted cash flow analysis of the

forecast investment cash flows from each project. 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.

Summary Cash Flow

Investment Basis

£m 31 March 2022 31 March 2021

Cash from investments 200.5 178.0

Operating costs (34.3) (32.4)

Finance costs (3.2) (2.7)

Net cash inflow before capital movements 163.0 142.9

Cost of new investments (87.5) (162.5)

Investment disposal proceeds 18.5 27.5

Share capital raised, net of costs – 118.6

Net cash flow from derivatives 15.1 9.1

Debt arrangement fees (paid) / received (0.2) 0.8

Dividends paid (159.8) (158.3)

Movement in the year (50.9) (21.9)

Net cash at start of year 4.7 26.6

Net (debt) / cash at end of year (46.2) 4.7

The Group ended the year with net debt of £46.2m (31 March

2021: £4.7m net cash). This is a result of drawings on the RCF of

£75.6m (31 March 2021: £26.9m) at year end to support the new

portfolio investments ahead of any equity issue.

Higher distributions from the Group’s operational PPP portfolio

and the demand-based assets reflective of economies recovering

from the impact of Covid-19 led to cash from investments

improving from £178.0m to £200.5m in the year. Proceeds from

investments of £18.5m (2021: £27.5m) represent the disposal of

Health & Safety Headquarters and the cessation of an UK

educational PPP project. The purchase of investments of £87.5m

(2021: £162.5m) represents incremental funds invested into a UK

hospital project and Bradford Schools Phase 1 and 2, together

with a new investment, split into two tranches, into Road

Management Group.

Dividends paid in the year were £159.8m (2021: £158.3m) and

dividend cash cover, increased to 1.05

x (2021: 0.90

x) due to the

above noted improved cash receipts from the Group’s investments.

Including profits on disposals versus original acquisition cost of £4.8m. Excluding this, dividend cash cover would have been 1.02x

Including profits on disposals versus original acquisition cost of £11.9m. Excluding this, dividend cash cover would have been 0.83x

03 / PERFORMANCE & RISK

39HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Group Drawings and Gearing Levels

As at 31 March 2022, the Group had cash drawings on its Revolving

Credit Facility (“RCF”) of £75.6m (31 March 2021: £26.9m) and

drawings of £30.0m by way of letters of credit (31 March 2021:

£18.6m). The Group also had drawings by way of letter of credit on

its Letter of Credit Facility (“LCF”) facility of €67.3m (31 March 2021:

€67.3m). Consequently, the Group has the capacity to fund

additional investments as and when further attractive opportunities

arise as well as maintain sufficient working capital.

On 1 April 2022, the Group announced that it had renegotiated

a £400m RCF with Barclays, RBC, CIBC, ING, Lloyds, NAB,

RBSi and SMBC, with an expiry date of 30 June 2024.

A €67.5m LCF provided by ING and SMBC with an expiry date

of 31 December 2026 is also held to fund existing and future

longer-term funding obligations.

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 its Corporate

Subsidiaries at any time.

The ratio of debt to Adjusted Gross Asset Value at the end of the

year was as follows:

31 March 2022

£m

31 March 2021

£m

Outstanding drawings

Bank borrowings 75.6 26.9

Letter of credit facility 86.7 75.8

162.3 102.7

Adjusted Gross Asset Value

Directors’ Valuation 3,311.0 3,011.9

Cash and cash equivalents 29.4 31.4

3,340.4 3,043.3

Borrowing ratio 4.9% 3.4%

From time to time the Company issues its own shares to

the market; the timing of these issuances depends on market

prices and need for investor capital to further the Group’s

Acquisition Strategy.

Should a discount arise to the Net Asset Value at which the

Ordinary Shares may trade, from time to time the Company may,

at the sole discretion of the Directors:

V make market purchases of up to 14.99% per annum of its

issued Ordinary Shares; and

V make tender offers for the Ordinary Shares.

There were no changes in HICL’s approach to capital

management during the year.

03 / PERFORMANCE & RISK

40 HICL ANNUAL REPORT 2022

3.1

Financial Review (continued)

APM Purpose 2022

Investment

Basis

Calculation Reconciliation to IFRS

Annualised

Return from

the Portfolio

A measure of underlying portfolio

performance within a given year

9.6% £269.8m return divided by

£2,807.3m rebased

valuation compounded for a

year

The calculation uses figures which are

reconciled to the Investment Basis on

page 43 which, in turn, is reconciled to

IFRS in the Reconciliation of Investment

Basis to IFRS section below

Directors’

Valuation

A measure of the size of the

investment portfolio including the

value of further contracted future

investments committed by the

Company

£3,311.0m £3,216.6m investments at

fair value plus £94.4m

contracted commitments

The calculation uses portfolio assets

shown in the reconciliation in the table

entitled ‘Reconciliation of Investment

Basis to IFRS’ below

Dividend

cash cover

A measure of distributable cash

received from underlying projects

in the period enabling distributions

to shareholders

1.05x

£167.9m distributable cash

received including £4.8m of

profit on disposal versus

original cost divided by

£159.8m dividend for the

year

The calculation uses the dividend paid in

the Statement of Changes in Equity

divided by distributable cash

Distributable

cash

A measure of cash received from

underlying projects in the year

£167.9m Calculated as net cash inflow

before capital movements

shown in the Investment

Basis cash flow plus £4.8m

profit on disposal versus

original cost

The calculation uses distributions

received from investments plus £4.8m

profit on disposal versus original cost

Cash

investments

Identifying new opportunities in

which to invest capital is a driver

of the Company’s ability to deliver

attractive returns

£87.5m £87.5m Investment Basis

cash paid to acquire

investments in the year

The equivalent balance under IFRS and

the reconciliation to the Investment

Basis is shown in the Reconciliation of

cash flow statement

Cash

proceeds

Cash proceeds from our

investments support our returns

to shareholders, as well as our

ability to invest in new

opportunities

£18.5m £18.5m cash received from

the disposal of investments

in the year

The equivalent balance under IFRS and

the reconciliation to the Investment

Basis is shown in the Reconciliation of

cash flow statement

Net cash/

(debt)

A measure of the available liquid

cash to invest in the business

offset by the Group’s borrowings.

This is an indicator of the financial

risk in the Group’s statement of

financial position

£(46.2)m £29.4m cash and cash

equivalents, plus £nil

deposits, less £75.6m loans

and borrowings

The equivalent balance under IFRS and

the reconciliation to the Investment

Basis is shown in the Reconciliation of

statement of financial position

The calculation includes total profit on disposal of £4.8m versus the original acquisition cost. Excluding this, dividend cash cover is 1.02x

Alternative Performance Measures (“APMs”)

The Directors assess the Company’s performance using a variety of measures that are not specifically defined under IFRS and are

therefore termed APMs which are deemed useful to investors as these are how the Company is managed and assessed. The APMs

that are used 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 110 onwards. The Directors’ Investment Basis is itself an APM.

The explanation and rationale for the Investment Basis is shown on page 36 and its reconciliation to IFRS is shown from page 41.

The table below defines the Company’s additional APMs.

03 / PERFORMANCE & RISK

41HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Reconciliation of Investment Basis to IFRS

Reconciliation of Statement of Comprehensive Income

For the year ended 31 March 2022 For the year ended 31 March 2021

£m

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Dividends received

75.8 3.5 79.3 37.1 0.2 37.3

Interest received

117.2 (36.7) 80.5 116.5 4.5 121.0

Net gain/(loss) on revaluation of

investments

196.8 15.2 212.0 33.5 (37.0) (3.5)

Foreign exchange movement on

investments

7.4 (7.4) – (36.3) 36.3 –

Loss on foreign exchange

derivatives

(1.9) 1.9 – 19.3 (19.3) –

Other Income

10.5 (10.5) – 18.6 (18.6) –

Total Income

405.8 (34.0) 371.8 188.7 (33.9) 154.8

Management fee

(29.3) 29.3 – (28.7) 28.7 –

Finance costs

(4.1) 4.1 – (3.5) 3.5 –

Other fund expenses

(4.0) 0.9 (3.1) (4.4) 1.5 (2.9)

Total expenses (37.4) 34.3 (3.1) (36.6) 33.7 (2.9)

Profit/(loss) Before Tax 368.4 0.3 368.7 152.1 (0.2) 151.9

Tax 0.3 (0.3) – (0.2) 0.2 –

Earnings 368.7 – 368.7 151.9 – 151.9

Earnings per share 19.0p – 19.0p 7.9p – 7.9p

Notes:

Total income shown in the IFRS accounts only relates to HICL and not those portfolio companies held through investment entity subsidiaries. The consolidation

adjustments represent the results recorded in HICL Infrastructure 2 S.a.r.l. and Infrastructure Investments Limited Partnership (together the “Corporate Subsidiaries”)

Other fund expenses comprise audit, valuation and other professional fees

Reconciliation of Statement of Financial Position

For the year ended 31 March 2022 For the year ended 31 March 2021

£m

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Investments at Fair Value

3,216.6 (58.1) 3,158.5 2,938.1 12.2 2,950.3

Trade and other receivables

1.2 (1.0) 0.2 0.2 – 0.2

Other financial assets

5.4 (5.4) – 18.2 (18.2) –

Trade and other payables

(12.6) 11.8 (0.8) (10.3) 9.6 (0.7)

Other current financial liabilities

(5.3) 5.3 – (0.5) 0.5 –

Cash and cash equivalents

29.4 (28.2) 1.2 31.4 (31.0) 0.4

Loans and borrowings

(75.6) 75.6 – (26.9) 26.9 –

Net assets attributable to

Ordinary Shares

3,159.1 – 3,159.1 2,950.2 – 2,950.2

NAV per share (before dividend) 163.1p – 163.1p 152.3p – 152.3p

NAV per share (post dividend) 161.1p – 161.1p 150.3p – 150.3p

Note:

The Investment Basis financial statements are prepared for performance measurement and therefore reserves are not analysed separately

03 / PERFORMANCE & RISK

42 HICL ANNUAL REPORT 2022

3.1

Financial Review (continued)

Reconciliation of Statement of Cash Flows

For the year ended 31 March 2022 For the year ended 31 March 2021

£m

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Investment

Basis

Consolidation

adjustments

IFRS

Basis

Portfolio income from investments

200.5 (36.9) 163.6 178.0 (17.2) 160.8

Operating expenses paid

(34.3) 31.3 (3.0) (32.4) 29.5 (2.9)

Finance (costs)/income

(3.2) 3.2 – (2.7) 2.7 –

Net cash inflow before capital

movements

163.0 (2.4) 160.6 142.9 15.0 157.9

Purchase of investments

(87.5) 87.5 – (162.5) 44.1 (118.4)

Proceeds from investments

18.5 (18.5) – 27.5 (27.5) –

Share capital raised net of costs

– – – 118.6 – 118.6

Net cash flow from derivatives

15.1 (15.1) – 9.1 (9.1) –

Debt arrangement fees paid

(0.2) 0.2 – 0.8 (0.8) –

Dividends paid

(159.8) – (159.8) (158.3) – (158.3)

Movement in the year

(50.9) 51.7 0.8 (21.9) 21.7 (0.2)

Net cash/(debt) at start of year

4.7 (4.3) 0.4 26.6 (26.0) 0.6

Foreign exchange on cash

– – – – – –

Net (debt)/cash at end of year (46.2) 47.4 1.2 4.7 (4.3) 0.4

Note:

There is a difference between the change in cash and cash equivalents of the Investment Basis financial statements and the IFRS financial statements because there

are cash balances held in the Corporate Subsidiaries. Cash held within the Corporate Subsidiaries will not be shown in the IFRS statements but will be seen in the

Investment Basis statements

03 / PERFORMANCE & RISK

43HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

3.2

Valuation of the Portfolio

Valuation Methodology and Approach Overview

InfraRed, in its capacity as Investment Manager, is responsible for

preparing the fair market valuation of HICL’s investment portfolio for

the Directors’ approval each reporting period. This investment

valuation is called the Directors’ Valuation. The Directors’ Valuation,

which is an Alternative Performance Measure (“APM”), comprises the

valuation of the investment portfolio as well as the future investments

committed to by the Group at the reporting period end. The

Directors’ Valuation is the preferred valuation measure of the portfolio

because it includes future commitments and, therefore, represents

the Group’s total value at risk. Further detail on the Group’s APMs,

including a reconciliation to the IFRS financial statements, is shown

on page 41. The valuation methodology and policy are unchanged

from previous reporting periods.

The valuation is carried out on a six-monthly basis as at 31 March

and 30 September each year. The Group’s investments are

predominantly unquoted and are therefore valued using a discounted

cash flow analysis of the forecast investment cash flows from each

project. 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.

There is a secondary market for infrastructure investments and,

where appropriate and publicly available, data points are considered.

The Directors’ Valuation is a sum-of-the-parts valuation, and no

further adjustment is made to reflect the size, scarcity, and

diversification of the overall portfolio.

The key external (macroeconomic and fiscal) factors affecting the

forecast of each portfolio company’s cash flows in local currency are

inflation rates, interest rates, rates of GDP and applicable tax rates.

The Investment Manager makes forecast assumptions for each of

these external metrics, based on market data and economic forecasts.

The Investment Manager exercises its judgement in assessing the

expected future cash flows from each investment based on the

detailed financial models produced by each portfolio company and

adjusting where necessary to reflect the Group’s economic

assumptions as well as any specific operating assumptions.

The fair value for each investment is then derived from the application

of an appropriate market discount rate and year end currency

exchange rate. The discount rate takes into account risks associated

with the financing of an investment such as investment risks

(e.g. liquidity, currency risks, market appetite) and any risks to

the investment’s earnings (e.g. predictability and covenant of the

revenues and service delivery challenges), all of which may be

differentiated by the phase of the investment’s life (e.g. in

construction or in operation).

More information on the valuation policy can be found on page 140.

The Directors’ Valuation is the key component in determining HICL’s

Net Asset Value (“NAV”) and so the Directors receive and challenge

an independent report and opinion on the Investment Manager’s

valuation from a third-party valuation expert.

Directors’ Valuation at 31 March 2022

The Directors’ Valuation of the portfolio at 31 March 2022 was

£3,311.0m, an increase of 9.9% in the year (31 March 2021:

£3,011.9m). The Directors’ Valuation includes £94.4m of

outstanding equity commitments (31 March 2021: £73.8m) in

respect of four projects: the Blankenburg Connection

(Netherlands), a UK healthcare project, Paris-Sud University

(France), and the B247 Road (Germany).

A breakdown of the movement in the Directors’ Valuation is

shown in the chart and table below.

Movement in the Directors’ Valuation in the year ended 31 March 2022

3,400

3,200

3,000

2,800

2,600

2,400

2,200

2,000

(£’m)

3,011.9

2,903.0

3,311.0

2,938.1

2,807.3

3,216.6

110.4

(18.8)

269.8

Future Commitments

(200.5)

72.3

(1.3)

31 March

2021

valuation

Acquisitions Cash

distributions

Rebased

valuation

Return Change in

discount

rate

Change in

economic

assumptions

Change in

FX on net

valuation

31 March

2022

valuation

Disposals Change in

FX on equity

commitments

59.8

7.4

9.6% 2.1% 2.6% 0.3%

Income Statement Revenue

Directors'

Valuation

Movement

‘Return’ comprises the unwinding of the discount rate and project outperformance including actual inflation

FX movement net of hedging is a gain of £5.5m

£3,311.0m reconciles, on an Investment Basis, to £3,216.6m Investments at fair value through £94.4m of future commitments

03 / PERFORMANCE & RISK

44 HICL ANNUAL REPORT 2022

Acquisitions

The acquisitions in the year include RMG Roads (£56.1m),

Bradford Schools I & II (£16.1m), B247 Road (£10.4m) and

the commitment to invest into a UK healthcare asset (£27.8m)

to be injected over a three year timeframe.

Divestments

The divestments include the disposal of the Group’s investment in

the Health & Safety Headquarters (£11.3m) and the voluntary

termination of a small project (£7.5m). The upcoming disposal of

the QAH is not included within divestments on the basis that the

transaction had not completed at the balance sheet date.

Rebased Net Valuation

The three valuations shown in the chart have been split between

investments at fair value

and future commitments. The

percentage movements have been calculated on the rebased

valuation of £2,807.3m to reflect the returns generated on the

capital employed in the year.

The rebased portfolio delivered income statement revenue

totalling 14.6% in the year (2021: 6.2%).

Return from the Portfolio

The return from the underlying portfolio of £269.8m (2021:

£213.2m) represents a 9.6% (2021: 7.7%) increase in the rebased

value of the portfolio, versus the discount rate, or expected

annualised return, of 6.8% at the start of the year. The £83.6m /

2.5% of outperformance was principally generated from actual

inflation, over and above the base case assumption, of £59.1m in

the year (2021: £(12.3)m) and the expected profit on the

upcoming disposal of QAH. Following a very competitive sales

process, HICL generated a profit equivalent to 1.5p per share on

the transaction. Following the liquidation of Carillion in 2018,

HICL, via the Investment Manager, assumed responsibility for the

construction and facility management risk associated with the

project. In the years since, InfraRed successfully stabilised the

project. InfraRed’s active asset management strategy for QAH

over the last four years is a key contributor to the uplift in NAV per

share recognised. These two items were partially offset by costs

that were incurred on certain healthcare projects for the

renegotiation of management service agreements, the update of

lifecycle cost assumptions and the rectification of building defects.

Inflation

The HICL portfolio is highly correlated to inflation and, in isolation,

is well placed to benefit in a higher inflationary environment. In the

UK, RPI in the year ended 31 March 2022 was 9.0% (2021:

1.5%). Similar conditions were experienced in France, where CPI

was 4.5% (2021: 1.1%) and the USA, where CPI was 8.5%

(2021: 2.6%). This higher inflation has had a particularly positive

impact on the Company’s regulated and demand assets, such as

Affinity Water and Northwest Parkway, whose revenues are more

correlated to inflation than the Company’s PPP portfolio.

As the actual inflation rates were higher than the Company’s

forecast assumptions for the year, the outperformance of £59.1m

(2021: £(12.3)m) is recognised in the portfolio return. A case study

on the impact of inflation on the Company’s assets is shown on

page 46.

Inflation is forecast to remain high throughout 2022 and 2023.

Therefore, the Company has updated its forecast short-term

inflation assumptions in all jurisdictions. The impact of the change

in forecast short-term assumptions is included within the £72.3m

recognised in the change in economic assumptions.

Demand Assets

HICL has seven demand-based assets in the portfolio,

representing 22% of the portfolio value at 31 March 2022 (31

March 2021: 19%). Five of these demand-based assets, namely

High Speed 1, the A63 Motorway (France), Northwest Parkway

(USA), RMG Roads and M1-A1, are sensitive to GDP and, as a

result, their valuations were more significantly affected by the

Covid-19 pandemic. As these countries have seen an easing of

restrictions during the period, usage of these facilities has

stabilised with demand for these assets closely following the

forecasts set at the March 2021 valuation.

For further information on these assets, refer to the Top 10 assets

– operational highlights.

Discount rates

The discount rate is determined based on the Investment

Manager’s knowledge of the market, which includes intelligence

gained from bidding and disposal activities, discussions with

financial advisers knowledgeable of these markets and publicly

available information on relevant transactions.

When there are limited transactions or information available, and

as a second method and sense check, a ‘bottom-up’ approach is

taken based on the appropriate long-term government bond

yields and an appropriate risk premium. The risk premium takes

into account risks and opportunities associated with the project

earnings (e.g. predictability and covenant of the concession

income and service delivery challenges), all of which may be

differentiated by project phase, jurisdiction and market

participants’ appetite for these risks.

In the portfolio, there were three projects in construction at 31

March 2022, all of which are located in the Eurozone (31 March

2021: 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 in construction affect the investment value.

An analysis of the weighted average discount rates for the

investments in the portfolio analysed by territory, and showing

movement in the year, is shown on page 45.

3.2

Valuation of the Portfolio (continued)

On an Investment Basis

03 / PERFORMANCE & RISK

45HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Generally, sufficient market data on discount rates is available

and therefore the risk premium is derived from this market

discount rate for operational social and transportation

infrastructure investments less the appropriate long-term

government bond yield.

During the year long-term government bond yields in the UK,

North America and the Eurozone have risen while discount rates

have reduced, resulting in lower risk premiums. Competition for

infrastructure remains extremely strong and demand continues to

significantly outweigh supply. The Investment Manager’s view is

that discount rates used to value projects do not rigidly follow

bond yields, although naturally there is some correlation over the

longer term. In addition, there is some short-term volatility in

response to a high inflationary environment which has caused the

risk premium to reduce to 4.8% (March 2021: 5.5%). At present,

the strength of the competitive dynamic means that the

Investment Manager is not seeing any evidence that higher

inflation is resulting in increased discount rates in the market for

infrastructure investments that the Company operates in.

Change in Economic Assumptions

Changes in economic assumptions resulted in a positive impact

of £72.3m. The increase was principally due to changes in

forecast inflation assumptions in all jurisdictions (£70.6m), as well

as various changes in interest rate assumptions (£6.9m) and other

minor movements for tax rates of £(5.2)m) outlined in the

assumptions on page 48.

Forex

GBP weakened against the Euro but strengthened against the

USD in the period resulting in a positive impact of £7.4m

pre-hedging. Net of hedging, the positive impact was £5.5m.

31 March 2022

Country

Long-term

government bond yield Risk premium Discount rate

31 March 2021

Discount rate Movement

1.8% 4.7% 6.5% 6.7% (0.2%)

Eurozone

1.2% 5.3% 6.5% 6.8% (0.3%)

North America

2.5% 4.6% 7.1% 7.4% (0.3%)

Portfolio 1.8% 4.8% 6.6% 6.8% (0.2%)

03 / PERFORMANCE & RISK

46 HICL ANNUAL REPORT 2022

Case Study: Inflation

During the last 12 months, inflation has been materially above the forecast assumptions in the jurisdictions in which HICL operates.

This has contributed to a significant increase in asset valuations (2.0% of the 9.9% increase in the year) due to the strong correlation

the portfolio has to inflation. This case study sets out how inflation impacts each of the sectors that the Company invests in.

The level of correlation a project has to inflation is determined by the proportion of income and costs that are linked to inflation versus

its cost base. This varies from project to project. For example, if a project has 100% of its revenue indexed to inflation but has fixed rate

bank debt which is not inflation linked, it will have a higher correlation to inflation when compared to an asset whose revenue is

only partially indexed but has the same cost base.

There is often a delay between the period in which high inflation

occurs, and the portfolio company cash flows being rebased.

The impact of high inflation is typically reflected in the following

years’ cash flows for the project company and is accumulated

each month. There may be a further delay until the additional

cash generated by the project company is distributed to

Cash flow impact

shareholders which is typically semi-annual and stipulated

under the project’s financing agreements. For a small amount

of projects, the costs may reset for inflation ahead of revenues;

for example, if the project company has index linked debt.

In the case of Affinity Water, its

Regulated Capital Value (“RCV”) sets

the basis for allowed shareholder

returns. As the RCV increases due to

inflation, the allowance for increasing

the Company’s regulated income

should adjust upwards in nominal

terms. Revenues are regulated by

Ofwat in a five-yearly cycle with the

pricing of regulated income 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

a blend of RPI and CPIH in the next

regulatory period.

Regulated assets

For HICL’s demand-based assets,

the concession agreement usually

prescribes how user fees (e.g tolls

or rents) are determined. Most of the

Company’s demand-based assets,

including the A63 Motorway (France),

Northwest Parkway (USA)

and HS1, benefit from a contractual

ability to reset these fees annually

(or in some cases twice a year) for

inflation. In the UK, this is typically

using RPI whereas the non-UK

projects generally use CPI.

Demand-based assets

The Company’s PPP projects have

contractual income streams derived

from public sector clients that are

rebased every year for inflation,

typically from 1 April. These

revenues are either partially or totally

indexed (depending on the contract

and the nature of the project’s

financing). Facilities management

and operating subcontracts have

similar indexation arrangements.

In the UK, projects tend to use

either RPI or RPIx (RPI excluding

mortgage payments) and non-UK

projects use CPI (Consumer Price

Index). In most cases, these

contractual arrangements are

deliberately structured so that equity

cashflows are positively correlated

to inflation as the indexation of

revenues is greater than the

indexation of the cost base.

PPP assets

03 / PERFORMANCE & RISK

47HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

The below chart shows the cash impact on the portfolio of the sensitivities described above. This shows increases in cash

flows as project company revenues and costs are reset, which then compounds each year given the higher base position.

In the short term, the cash impact is minimal because of the delay between the period of high inflation and the revenues

being rebased. The delay is further compounded by the need to accumulate additional revenues each month before a

semi-annual distribution is made. In addition, as two of the Company’s higher correlated assets to inflation are

not currently distributing, namely Affinity Water and HS1, the impact of higher inflation in the early years is lower.

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

1 Year 3 Years

Impacts of short-term inflation sensitivities

on HICL's NAV as at 31 March 2022

+3%

Change in NAV in pence/share

5 Years

3.6

10.2

16.1

Distribution Forecast March 2022 +3% for 1 year +3% for 3 years +3% for 5 years

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051

2052

2053

2054

2055

2056

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

Annual project distributions (£ 000 s)

nnual cash flows and impact from 3% Inflation sensitivities

Sensitivity analysis

The portfolio’s high inflation correlation means if inflation

was 1% p.a. higher than currently assumed for all future

periods the expected return from the portfolio would

increase by 0.8% to 7.4% (currently 6.6%). This increased

return would result in a marginal cash flow benefit in each

future period. As previously reported, the impact of 0.5%

movement for all future periods is included on page 49.

However, due to the current high inflation environment,

additional sensitivities have been provided to enable

shareholders to understand the impact of a scenario where

inflation is 300bps above HICL’s forecast assumptions (set

out on the following page) for the next one, three and five

years. Given the current levels of inflation, a 300bps

increase, versus HICL’s forecast inflation assumptions in all

jurisdictions in one year, would result in a 3.6p increase in

NAV per share. These sensitivities of the Company’s NAV to

higher levels of short-term inflation are set out in the chart

to the right.

The impact of inflation over the longer term is not

proportionate to the impact shown in the chart as a result

of projects having a finite contractual length and the fact

that Affinity Water is not expected to distribute until

before financial year ending 2026.

03 / PERFORMANCE & RISK

48 HICL ANNUAL REPORT 2022

3.2

Valuation of the Portfolio (continued)

31 March 2022 31 March 2021

Inflation

Rates

UK (RPI and RPIx)

6% year ending March 2023,

3.50% year ending March 2024

2.75% p.a. to 2030,

2.0% thereafter

2.75% p.a. to 2030, 2.0% thereafter

UK (CPIH)

5.25% year ending March 2023,

2.75% year ending March 2024

2.0% thereafter

2.0% p.a.

Eurozone (CPI) 3.0% year ending March 2023

2.0% p.a. thereafter

2.0% p.a.

Canada (CPI) 3.0% year ending March 2023

2.0% p.a. thereafter

2.0% p.a.

USA (CPI) 4.0% year ending March 2023

2.0% p.a.

Interest

Rates

UK 0.75% p.a. to March 2025, 1.25% p.a. thereafter 0.25% p.a. to March 2025, 1.25% p.a. thereafter

Eurozone 0.0% p.a. to March 2025, 0.5% p.a. thereafter 0.0% p.a. to March 2025, 0.25% p.a. thereafter

Canada 0.75% p.a. to March 2024, 2.25% p.a. thereafter 0.5% p.a. to March 2024, 2.25% p.a. thereafter

USA 0.75% p.a. to March 2024, 2.00% p.a. thereafter 0.5% p.a. to March 2024, 2.25% p.a. thereafter

Foreign

Exchange

Rates

GBP / CAD 1.64 1.73

GBP / EUR 1.19 1.17

GBP / USD 1.31 1.38

Tax

Rates

UK 19% to 2023, 25% thereafter 19% to 2023, 25% thereafter

Eurozone Ireland 12.5%

France 25% – 27.5%

Netherlands 25.8%

Ireland 12.5%

France 25%

Netherlands 25%

USA 21% Federal & 4.6% Colorado State 21% Federal & 4.6% Colorado State

Canada 23% and 27% 23% and 27%

GDP

Growth

UK 4.0% in 2022,

2.0% p.a. thereafter

5.0% in 2021, 5.5% in 2022, 2.0% p.a. thereafter

Eurozone 3.0% in 2022,

1.8% p.a. thereafter

5.5% in 2021, 4.0% in 2022, 1.8% p.a. thereafter

USA 3.5% in 2022,

2.5% p.a. thereafter

5.5% in 2021, 4.0% in 2022, 2.5% p.a. thereafter

Retail Price Index and Retail Price Index excluding Mortgage Interest Payments

Consumer Prices Index including owner-occupiers’ housing costs; used in the valuation of Affinity Water

Valuation Assumptions

Apart from the discount rates, the other key economic assumptions used in determining the Directors’ Valuation of the portfolio are

as follows:

03 / PERFORMANCE & RISK

49HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

NAV per share based on 1,937 million Ordinary Shares as at 31 March 2022

Sensitivities for inflation, interest rates, tax rates and lifecycle are based on the 35 largest investments extrapolated for the whole portfolio

Foreign exchange rate sensitivity is net of Group hedging at 31 March 2022

Discount Rate +/- 0.5%

Inflation -/+ 0.5%

Tax Rate +/- 5%

GDP -/+ 0.5%

Lifecycle +/- 5%

Interest Rate -/+ 0.5%

Foreign Exchange Rates -/+ 5%

-10p

(8.1)

-8p -6p -4p -2p 0p 2p 4p 6p 8p 10p

(7.6)

(5.3)

(5.4)

(2.1)

(0.8)

(1.0)

9.0

8.5

5.4

5.3

2.1

1.0

Negative correlation

Change in NAV in pence per share

Positive correlation

Valuation Sensitivities

The portfolio’s valuation is sensitive to each of the macroeconomic assumptions listed above. An explanation of the reason for the sensitivity

and an analysis of how each variable in isolation (i.e. while keeping the other assumptions constant) impacts the valuation follows below

1,2,3

The sensitivities are also contained in Note 14 to the financial statements.

03 / PERFORMANCE & RISK

50 HICL ANNUAL REPORT 2022

3.2

Valuation of the Portfolio (continued)

Discount Rate Sensitivity

Whilst not a macroeconomic assumption, the weighted average

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.

Inflation Rate Sensitivity

As described on page 46, 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. On Affinity Water, one of

HICL’s regulated assets, revenues are regulated by Ofwat in a

five-yearly 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 2022 was 0.8x (2021: 0.8x) such that should

inflation be 1% p.a. higher than the valuation assumption for all future

periods the expected return from the portfolio would increase 0.8%

from 6.6% to 7.4%.

The portfolio valuation assumes UK inflation of 6% for the year

ending March 2023, 3.50% for the year ending March 2024, 2.75%

per annum for both RPI and RPIx to 2030 and 2.0% thereafter. The

March 2022 forecasts for RPI out to December 2022 range from

5.8% to 10.9% from 12 independent forecasters as compiled by HM

Treasury, with an average forecast of 9.0%.

More information can be found on the effect of inflation on page 46.

Gross Domestic Product (“GDP”) Sensitivity

At 31 March 2022, the portfolio had five investments which are

considered sensitive to GDP, comprising 21% of the portfolio value

(18% at 31 March 2021) namely the A63 Motorway (France), M1-A1

Road, RMG Roads, Northwest Parkway (USA) and High Speed 1.

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.

If outturn GDP growth was 0.5% p.a. lower for all future periods

than those in the valuation assumptions set out on page 48 for

all future periods, expected return from the portfolio (before

Group expenses) would decrease 0.2% from 6.6% to 6.4%

(6.6% at 31 March 2021).

Interest Rate Sensitivity

Each 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 two investments – Affinity Water and Northwest Parkway

(USA), which have refinancing requirements, exposing these

investments to interest rate risk. 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 2022, cash deposits for the portfolio were earning

interest at a rate of 0.2% per annum on average.

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

usually either taken by the project company (and hence the investor)

or is subcontracted and taken by the FM contractor. Of the 115

investments (excluding QAH), 51 have lifecycle as a project company

risk (i.e. not subcontracted to the supply chain).

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 19%

to 2023 and 25% thereafter.

Foreign Exchange Rate Sensitivity

27% of the portfolio by (Directors) value, has exposure to foreign

exchange rates. The sensitivity shows, post-hedging, the impact of

GBP appreciating or depreciating against these currencies by

+/- 5%.

03 / PERFORMANCE & RISK

51HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

TEN LARGEST FACILITIES MANAGEMENT

COUNTERPARTY EXPOSURES

In House 17%

Bouygues 15%

Equans 10%

EGIS 7%

Network Rail 5%

Mitie 4%

Babcock 4%

Sodexo 3%

Integral 3%

Siemens 2%

Other 30%

Affinity Water 9%

Northwest Parkway 7%

A63 Motorway 7%

Southmead Hospital 5%

High Speed 1 5%

Royal School of Military

Engineering 4%

Pinderfields &

Pontefract Hospitals 4%

Home Office 3%

Dutch High Speed

Rail Link 2%

Blankenburg Tunnel 2%

Remaining Investments 52%

LATENT DEFECTS WARRANTY PERIODS

COUNTERPARTY EXPOSURES

Within 1 year 4%

1–2 years 2%

2–5 years 10%

5–10 years 4%

10+ years 3%

Latent defects limitation /

warranty period expired 63%

Affinity Water and

High Speed 1 14%

TEN LARGEST INVESTMENTS

3.3

Portfolio Analysis

By value, at 31 March 2022, using Directors’ Valuation excluding A13 senior bonds and the expected disposal proceeds from Queen Alexandra Hospital.

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

Assets subject to regulatory regimes that help mitigate the potential impact of defects on equity

TEN LARGEST CONSTRUCTION

COUNTERPARTY EXPOSURES

Colas 7%

Balfour Beatty 4%

DEME 2%

Strabag 2%

Laing O’Rourke 2%

Bouygues 2%

Bilfinger 1%

Ferrovial 1%

Galliford Try 1%

Other contractors 1%

Latent defects limitation /

warranty period expired 63%

Affinity Water and

High Speed 1 14%

03 / PERFORMANCE & RISK

52 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management

Risk management framework

HICL’s risk management framework covers all aspects of HICL’s

business. The Board monitors, challenges and evaluates

InfraRed’s management of risk through the consideration of

scenarios that could materially impact the performance of HICL

were they to occur. Having considered and analysed key risks,

mitigating action may be undertaken to reduce the likelihood and

impact of each risk manifesting.

The schematic below sets out the Company’s risk management

framework:

The Board has ultimate responsibility for setting HICL’s Risk Policy

and Risk Appetite. It has convened a Risk Committee to assist the

Board by assessing HICL’s overall risk profile, recommending a risk

appetite, and ensuring its framework is appropriately designed and

effective. The terms of reference for the Risk Committee can be

found on HICL’s website.

Day-to-day monitoring, evaluation and management of risk is

undertaken by InfraRed as HICL’s Investment Manager. Working

closely with portfolio company management teams, InfraRed’s Asset

Management Team ensures the timely reporting of project-specific

risks to the HICL Fund Management Team as and when they arise;

the HICL Investment Committee also undertakes a formal review of

project-specific risks on a quarterly basis. The Investment Manager is

monitored and challenged by the Risk Committee, which reports to

the Board.

The Investment Manager uses its experience, insight from

investments within the Group’s portfolio and the wider infrastructure

market to consider future risks and develop appropriate mitigation

strategies. The Investment Manager oversees the deployment of

these strategies and directs portfolio company management teams

as required. Relevant systems, policies, oversight and third-party

assurance are utilised to ensure effective risk management.

The Board’s Management Engagement Committee reviews the

performance of the Investment Manager (as well as all key service

providers) at least annually and this review includes a consideration

of the Investment Manager’s internal controls and their effectiveness.

No issues were identified in the latest review. The Investment

Manager’s Risk and Compliance team has developed a detailed

self-assessment internal control report, and this is reviewed on a

quarterly basis by the Risk Committee.

Oversight and Feedback

Market Intelligence

Risk Assessment and Reporting

Third-Party Advisers

HICL Infrastructure PLC

Board

Risk Committee

Project / Business Management Teams

InfraRed Capital Partners Limited

Investment Committee

Asset

Management

Team

Portfolio

Management

Team

Origination &

Transaction

Team

Central

Support

Functions

Fund Management Team

Primary Risk Class

Residual

Risk

Rating

Change in

the year

NAV/share Impact

Residual vs Inherent

Cash Flow Impact five years

Residual vs Inherent

Portfolio performance risk High

Financial / market risk Medium

Political risk Medium

Operational risk – execution Low

Operational risk – portfolio administration,

asset management

Very Low

HICL central management risk Very Low

Operational risk – regulation and compliance Very Low

03 / PERFORMANCE & RISK

53HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Risk classes

Risk is evaluated across seven primary risk classes. These are set

out in the table below along with the Investment Manager’s

assessment of:

V The potential financial impact of plausible 12-month downside

scenarios, which are developed by the Investment Manager

and reviewed by the Risk Committee. They represent the

estimated impact of severe but plausible scenarios, meaning

they are not worst-case. Each scenario is presented before

(inherent) and after (residual) the effect of mitigation strategies

is considered; and

V A residual risk rating

based on the likelihood and mitigated

impact of the prudent downside scenario for each risk class.

If any one of the plausible 12-month downside scenarios were to

materialise, the NAV / share impact would occur immediately, but

the effect on cash flow may extend beyond the current year, with

a consequential impact on dividend cash cover. The Risk

Committee has therefore decided to focus on the five-year cash

flow impact of each scenario.

The Investment Manager regularly presents stress scenarios

and associated mitigation strategies to the Risk Committee to

assist its assessment of more severe but lower-probability

downside scenarios.

There has been no change to the residual risk ratings of the seven

primary risk classes over the year. Although the residual risk from

portfolio performance is still considered to be high, the Investment

Manager’s focus on driving the delivery of facility defect

remediation works has improved the Company’s position.

Significant progress has also been made in the management of

Covid-19 in the period and the risk posed to the portfolio (and

specifically to HICL’s demand-based asset segment) has steadily

decreased over the year. As is typical in the stewardship of real

assets, proactive and reactive management of facility condition

remains a key focus to minimise the risk posed by physical

quality issues.

The residual risk rating for both the financial / market risk and

political risk classes continues to be assessed as medium, which

reflects the geopolitical and market volatility observed during the

year. For financial / market risk, short-term inflation, interest rate

and GDP rates may be lower than HICL’s assumptions as at 31

March 2022; there is also a risk that increased interest rates could

lead to pressure on asset pricing. Political risk is an inherent

feature of the infrastructure asset class, and the Company

remains exposed to potential future increases in corporation tax

although there were no material changes across HICL’s core

geographies during the period.

The material components and mitigation strategies of each

primary risk class are described in the tables that follow.

There are five residual risk ratings: the lowest being ‘Very Low’, then ‘Low’, ‘Medium’, ‘High’ and ‘Very High’

Key

Inherent

Residual

03 / PERFORMANCE & RISK

54 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management (continued)

Principal Risk Risk Description Risk Mitigation

Portfolio performance risk

Revenue

adjustments

PPP projects may experience

reduced income through

availability deductions. These can

occur because of poor operational

performance or an adversarial

approach to contract management

from clients and advisers.

As a result, projects may be

prevented from making

distributions by lenders,

particularly when there are

disputes concerning the level or

attribution of deductions.

In addition to the financial impact

of these deductions, there is the

potential for an adverse

reputational impact from any

material operational issues.

For regulated assets, failure to

meet certain delivery outcomes

can result in penalties being

incurred and/or incentives not

being earned.

Operational issues can be caused by several factors. The

Investment Manager’s Asset Management team plays a pro-active

oversight role, to ensure trends are identified early and, if possible,

corrected before they escalate.

When problems do arise, work on the corrective actions is

performed with the client to minimise any potential reputational or

financial damage. In some cases, adversarial contract management

can result in negative consequences for the project and its

stakeholders, including service delivery to end users.

Payment deductions for unavailability or poor service delivery are

typically contractually passed to the subcontractor. In a severe

case, the subcontractor could be terminated.

Penalties levied against regulated assets for underperformance

could result in lower returns. Some mitigation is achieved through

the regulatory price control process through setting targets that are

both stretching and achievable. The compensation of the portfolio

company’s management team is linked to performance against

regulatory plan outcomes.

Demand Demand-based asset revenue is

dependent on the usage of the

associated infrastructure. For

some demand-based assets,

usage may also be linked to

economic growth.

Actual usage below valuation

assumptions could lead to

adverse financial performance,

with significant underperformance

potentially resulting in default of

the financing arrangements.

Demand risk is considered by the Investment Manager as part of the

due diligence process at the time of acquisition. This includes usage

history and, where appropriate, third-party experts are used to assess

demand projections.

Significant progress has been made in the management of Covid-19

in the period and the risk posed to the portfolio has steadily

decreased over the year.

The impact on usage from long-term behavioural changes, such as

increased home working, remains uncertain and could negatively or

positively impact demand. An assessment of this risk is incorporated

within the Directors’ Valuation, and risk is also mitigated by the

strategic, critical nature of the Group’s demand-based assets.

03 / PERFORMANCE & RISK

55HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Principal Risk Risk Description Risk Mitigation

Portfolio performance risk (continued)

Construction

defects

For PPP projects where the

construction subcontractor bears

the risk of defect remediation, the

subcontractor may dispute the

scope of remediation required.

This in turn could result in lenders

preventing the project from

distributing.

Depending on the extent of the

defects and the works required to

remediate them, there is a risk that

availability deductions may also

be levied.

There is also the potential for an

adverse reputational impact from

any material defect issue.

Typically, PPP project companies have a right to make claims against

construction subcontractors in relation to identified defects for a

period of time following the completion of construction (the ‘statutory

limitations period’).

Construction defects are primarily identified through a regular

programme of operations and maintenance activities or as a result of

surveys performed.

Defects detected within the statutory limitations period are lodged

with the construction subcontractor for remediation. The cost of

remediation is the responsibility of the construction subcontractor and

not borne by the PPP project company. An adjudication or court

process is used where disputes arise and cannot be commercially

resolved, although this may result in projects being prevented from

making distributions by lenders.

Following the expiry of the statutory limitations period, the risk of

remediation of construction defects typically falls to the project

company and is an equity risk (for which the lifecycle budget can in

some cases offset the cost). Equity risk also exists if a construction

counterparty were to become insolvent, as it may no longer be able

to fulfil its obligations.

Management of counterparty credit risk is discussed below.

Construction,

operations and

maintenance

counterparties

PPP projects and demand-based

assets typically subcontract the

provision of construction,

operations and maintenance

services to specialist providers.

The failure of a supply chain

provider could negatively impact

the project company’s ability to

fulfil its contractual obligations

with the client, potentially leading

to revenue adjustments (see

above).

One of HICL’s key objectives is to provide investors with access to a

balanced, well-diversified portfolio of core infrastructure investments,

thereby mitigating concentration risk and reduce the impact of the

default / non-performance by any single counterparty. Counterparty

credit risk is also assessed by the Investment Manager’s internal credit

risk team on a regular basis.

If a key subcontractor were to fail, HICL’s priority is the continuation

of services to public sector clients and the users of the affected

infrastructure.

Contingency plans are continuously reviewed for a scenario in which a

key subcontractor enters administration or liquidation, and the

Investment Manager’s wide network provides a number of potential

replacement service providers.

03 / PERFORMANCE & RISK

56 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management (continued)

Principal Risk Risk Description Risk Mitigation

Portfolio performance risk (continued)

Operational

costs

PPP project companies and

demand-based asset

concessionaires include a budget

for the management services

contract, the lifecycle costs and

the insurance premium. There is a

risk that this budget could prove

to be insufficient.

Risk for other operational costs,

such as facilities management and

operations & maintenance, is

generally passed down through

fixed price contracts to industry

specialists.

For regulated assets, the

regulatory price control process

sets a total expenditure (capital

and operational) allowance for the

associated portfolio company to

achieve its targets. Overspend

against this allowance does not

necessarily result in additional

revenue, which may reduce the

returns generated.

As part of the due diligence process at the time of acquisition,

operating budgets are reviewed to determine if they are adequate.

In the case of insurance, there is often some protection through

contractual premium risk-sharing agreements with the project

company’s client.

The adequacy of lifecycle budgets is regularly assessed, where the

risk sits with the project companies. HICL publishes an analysis of the

portfolio’s sensitivity to lifecycle costs, which is set out in Section 3.2

– Valuation of the Portfolio.

The management teams of regulated assets, with oversight from the

Investment Manager, prepare detailed business plans as part of each

price control process. These plans take inputs from in-house and

third-party experts and are scrutinised by the regulator. Mitigation is

achieved through setting reasonable expenditure allowances that are

both stretching and achievable. The compensation of the portfolio

company’s management team is linked to performance against the

total allowed expenditure.

Cyber security Failure to protect data could have

negative legal, operational and

reputational repercussions.

A breach of data security could

occur by accident or as a result of

a deliberate cyber-attack.

A cyber-attack could affect the IT

systems of the Group, the

Investment Manager or a portfolio

company, causing theft or loss of

data, or damage to the

infrastructure’s control systems

and equipment.

The Group has no IT systems as it relies on those of its service

providers. The Investment Manager has data management policies

and its staff receive regular training to reduce the risk of an accidental

data breach. The Investment Manager has IT systems designed to

withstand a cyber-attack and these systems have been subject to

successful annual tests by a specialist third party.

Most portfolio companies tend not to have their own IT systems and

rely on those of subcontractors. Data is backed up and the risk,

should data be corrupted or stolen, is considered low. The

subcontractors or portfolio companies also have disaster recovery

plans. This reduces the potential impact of business interruption.

Those portfolio companies with their own IT systems have data

management policies and their staff receive regular training to reduce

the risk of an accidental data breach. Typically, these companies also

undergo cyber penetration testing or use the separation of critical

operational systems from the internet through bespoke procedures

and firewalls to support the implementation of IT systems designed to

withstand a cyber-attack.

03 / PERFORMANCE & RISK

57HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

Principal Risk Risk Description Risk Mitigation

Portfolio performance risk (continued)

Climate change Climate change will impact most

companies. The impact will result

from the physical consequences

of climate change, and also from

government policy and consumer

behaviour changes to arrest the

pace of adverse climate change.

This has the potential to impact

the financial performance of the

Group’s portfolio.

For most concessions, performance risk, including events arising

from adverse climate change, is mitigated through risk pass-down

to subcontractors, insurance coverage and public-sector client

relief events.

The Investment Manager has undertaken a detailed climate change

impact assessment across the portfolio, enabling a better

understanding of the potential consequences of climate change.

The key risks arising can be broken down into two categories:

V Physical risks: “acute” physical damage to infrastructure

investments from variations in weather patterns and “chronic”

impacts such as sea level rises and drought; and

V Transition risks: policy, legal, technological, market and

reputational risks associated with the transition to a lower-

carbon economy.

Although a subset of HICL’s portfolio is exposed to physical risks,

mitigation measures can be identified and implemented. Furthermore,

the overall exposure at a portfolio level is relatively low, even under a

4°C scenario, and is limited to a small number of physical risks.

HICL’s portfolio benefits from inherent mitigation against transition

risks, due to the essential nature of the infrastructure within it and the

protections afforded by PPP and concession contracts.

For new investments, sustainability considerations (including climate

change) are integrated into each stage of the Investment Manager’s

investment process. This process was further enhanced during

the year and includes a requirement that all new acquisitions

require a climate change impact assessment to be undertaken

as a condition of approval. Further details are set out in HICL’s

Sustainability Report 2022.

03 / PERFORMANCE & RISK

58 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management (continued)

Principal Risk Risk Description Risk Mitigation

Financial and market risk

Investor

sentiment

Prolonged periods where the

prevailing share price trades below

HICL’s Net Asset Value inhibit

HICL’s ability to issue new equity

capital.

The need to issue new equity capital primarily relates to the

repayment of drawings under HICL’s Revolving Credit Facility (“RCF”).

HICL has a number of alternative options available. Inter alia,

these include:

V Refinancing the RCF to extend its maturity, currently June

2024, reduces the near-term urgency to repay drawings,

though it is not HICL’s policy to be drawn for substantial

periods of time.

Details on the recent renegotiation of the RCF can be found in

Section 3.1 – Financial Review.

V For construction assets, where equity commitments are

deferred for a number of years, HICL’s Letter of Credit Facility

(“LCF”) provides for longer-term drawings, as noted in Section

3.1 – Financial Review.

V Strategic management of the portfolio composition through

disposals to pay down drawings under the RCF and facilitate

opportunistic acquisitions without substantially increasing

HICL’s gearing. One accretive disposal was made in the year

and one, QAH, completed post year end.

Inflation Investment returns from portfolio

companies typically have positive

inflation correlation. Inflation levels

below HICL’s long-term

assumptions would result in the

valuation of the portfolio being

adversely impacted, and sustained

periods of deflation could result in

defaults under loan arrangements.

The prospect of persistent high inflation across HICL’s geographies

presents the risk of declining real returns to investors. To the extent

that policy makers utilise monetary levers to manage higher inflation,

interest rate rises to may follow. Changes to interest rates have the

potential to impact asset pricing.

The returns from HICL’s portfolio are highly correlated to inflation

at 0.8x over the long term. A case study on the impact of inflation

and in the short term in particular, is set out in Section 3.2 – Valuation

of the Portfolio.

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59HICL ANNUAL REPORT 2022

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Principal Risk Risk Description Risk Mitigation

Financial and market risk (continued)

Discount and

interest rates

A discounted cash flow

methodology is used to value the

majority of the Group’s

investments. Appropriate discount

rates are key to deriving a fair and

reasonable valuation for the

portfolio. The rate is established

by reference to comparable

market transactions, which is

corroborated by considering the

yield on long-dated government

bonds (as a reference for the

risk-free rate) plus an adequate

risk premium.

All other things being equal, higher

discount rates would result in a

reduction in the portfolio valuation.

Interest rates and inflation are positively correlated over the long term.

Therefore, an increase in discount rates due to increased interest

rates over the long term is likely to coincide with higher inflation –

factors which materially offset one another in the portfolio

valuation calculation.

An interest rate increase would have a positive impact on cash

deposit interest income for portfolio companies. This would

partly mitigate a portfolio value reduction arising from increased

discount rates.

The current equity risk premium provides an element of buffer to

cushion the potential impact of rising risk-free rates on asset pricing.

Additionally, the embrace of infrastructure as an asset class by

institutional investors has contributed significantly the observed

downward pressure on asset pricing, independent on the level of

risk-free rates.

HICL publishes an analysis of the portfolio’s sensitivity to discount

and interest rates in Section 3.2 – Valuation of the Portfolio.

Economic

growth

A subset of HICL’s demand-based

assets have an exposure to GDP.

There is a risk that the economic

recovery from Covid-19 is below

HICL’s short-term forecasts.

The Investment Manager regularly presents GDP sensitivities

to the Risk Committee, which remains comfortable with the

Company’s exposure.

The Company retains its self-imposed exposure limit of 20% of the

portfolio to new assets with returns correlated to GDP, although it

would consider exceeding this threshold in the case of accretive

incremental acquisitions on a case-by-case basis and as

opportunities arise.

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60 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management (continued)

Principal Risk Risk Description Risk Mitigation

Political risk

Policy changes Political risk is inherent in HICL’s

business model due to the number

of public sector counterparties.

There is a risk that clients of

HICL’s portfolio companies or

national governments choose to

terminate contracts.

In the UK, the Group is observing

heightened public sector activity

around the prospect of PPP

‘handback’ and the mobilisation of

public sector resources for the

transition of UK PPP facilities back

to the public sector at their expiry.

There remains a long-term risk

that a future UK Government may

consider taking utilities, including

water companies, back into public

ownership.

Typically, public sector counterparties are entitled to voluntarily

terminate a PPP contract and, if this occurs, project companies have

a corresponding right to receive compensation. For most PPP

projects, this compensation is contractually based on market value

which would be expected to be equal to the prevailing value of the

asset in the portfolio.

Whilst the near-term threat of nationalisation of utilities in the UK has

receded it remains incumbent on private asset owners to continually

demonstrate, through performance and service quality, the benefits of

private investment in infrastructure.

The Investment Manager is an active member of various industry

bodies, including the Global Infrastructure Investor Association and

The Infrastructure Forum, which, on behalf of the infrastructure sector,

engage with politicians, civil servants, other policy shapers, such as

the National UK Infrastructure Commission, and regulators.

The Investment Manager works with the Association of Investment

Companies on behalf of the Company.

The Investment Manager interacts directly with stakeholders of the

portfolio’s projects, and with policy shapers through dialogue and by

responding to relevant consultations and calls-for-evidence to extol

the value that the private sector brings to the delivery of public

infrastructure.

Legal or

regulatory

changes

Legal and regulatory changes may

adversely impact the Group. This

could take the form of legislation

impacting the contractual costs or

obligations to which portfolio

companies are exposed.

Certain investments are subject to

regulatory oversight. Regular price

control reviews by the regulator

determine levels of investment

and service that must be delivered

and revenue that may be

generated. Particularly severe

reviews may result in poor

financial performance of the

affected investment.

HICL, the Investment Manager, and their advisers continually monitor

any potential or actual changes to regulations to ensure both the

Group and its service providers remain compliant.

Most social and transport infrastructure concessions provide a

degree of protection, through their contractual structures, in relation

to changes in legislation which affect either the project asset or the

way the services are provided.

Regulators seek to balance protecting customer interests with

making sure that each company generates sufficient income to

operate effectively.

The Investment Manager participates in relevant consultation

processes, to ensure that the legislature and regulators hear the

concerns and views of HICL, in its capacity as a private sector

investor.

Affinity Water has clarity on the parameters for its business plan for

the next three years and has started to prepare for the next price

review process to ensure a smooth transition.

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61HICL ANNUAL REPORT 2022

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Principal Risk Risk Description Risk Mitigation

Political risk (continued)

Taxation

changes

Taxation legislation or treaty

changes may adversely impact the

Group and the portfolio’s value.

This may include changes to:

V Corporation tax rates;

V Cross-border tax rules; and

V Other taxation legislation.

Certain risks, such as changes to corporation tax rates, cannot be

prevented or mitigated. HICL values its portfolio based on enacted

tax rates. Investors are provided with an illustration of the portfolio’s

sensitivity to changes in tax rates in Section 3.2 – Valuation of

the Portfolio.

Relevant cross-border tax rules are closely monitored for any

potentially adverse changes to the Group.

The Board and the Investment Manager actively monitor broader

taxation legislation developments.

Operational risk – execution

Inadequate due

diligence

Poor or inadequate due diligence

can result in underperformance

against acquisition assumptions.

The Investment Manager’s Origination and Execution team has a

depth of experience in buying and selling infrastructure assets and

has a thorough approach to the due diligence phase. The Investment

Manager is supported by specialist advisers (e.g. lawyers, technical

consultants, sustainability advisers and tax advisers). Oversight is

provided by the Investment Manager’s HICL Investment Committee,

and by the Board in respect of matters falling outside the Investment

Manager’s ‘Approved Investment Parameters’.

Breach of

policies

New acquisitions may cause HICL

to breach its Investment Policy, its

banking covenants, or other

internal control policies.

The Investment Manager’s has detailed internal sign-off procedures

including a team independent of the acquisition to reviewing the

acquisition terms and impact against all policies and procedures.

Operational risk – asset and portfolio management

The Investment

Manager

HICL is heavily reliant upon the

Investment Manager to implement

the strategies and deliver its

objectives.

The Investment Manager’s team is

responsible for fund, portfolio and

asset management, as well as

investment selection and pricing

discipline. A performance

deterioration of any of these

functions could have a material

impact on HICL’s performance.

The Investment Manager has a long track record of investing and

managing infrastructure investments. It has depth of resource and

knowledge in the asset class, as well as appropriate and detailed

policies, procedures and compliance systems.

The Investment Manager’s team benefits from a group of individuals

possessing relevant qualifications, relationships and experience for

their roles. The Board is satisfied that there is sufficient depth of

expertise within the Investment Manager’s team for the Group not to

be reliant on any single ‘key person’.

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62 HICL ANNUAL REPORT 2022

3.4

Risk & Risk Management (continued)

Principal Risk Risk Description Risk Mitigation

Operational risk – asset and portfolio management (continued)

Valuations Financial models, either for the

Group or the underlying project

companies, may contain errors, or

incorrect inputs, resulting in

inaccurate outputs. These could

adversely impact the assessment

of HICL’s financial position.

Financial models are managed by an experienced team who are

adept at working with them in a manner that seeks to minimise the

introduction of errors. The valuation process also includes multiple

stages of review and challenge from senior individuals within the

Investment Manager’s team, and valuation assumptions (including

discount rates) are formed based on a wide range of market data.

In addition to the processes of the Investment Manager, the Group’s

portfolio valuation is assessed by HICL’s independent valuation expert

twice a year.

HICL central management risk

Loss of key

personnel

HICL relies on the Board of

Directors and key service

providers, including the

Investment Manager, to manage

the Group. Loss of a ‘key person’

could lead to gaps in ‘corporate

knowledge’.

The Board is comfortable that it is not overly reliant on any one

Director. Similarly, it is comfortable that the teams in all its key service

providers, including the Investment Manager, have a suitable breadth

and depth of resources such that if any one individual were to depart,

the services can continue to be provided to the required standards by

the remaining team members.

Service provider

failure

The Group has no employees and

relies on service providers to

provide management services, the

most important of which is the

Investment Manager. Failure of

any one service provider could

lead to potential operating issues

and a possible value impairment.

The Management Engagement Committee reviews the performance

of all key service providers annually. Poor performance issues are

communicated promptly back to the relevant service provider and to

date this has had the necessary effect. Changes are made when

necessary.

The Investment Manager and the Administrator have confirmed that

controls relevant to the Company’s business remain in place.

The Investment Manager has identified key roles and processes and

alternates planned to manage key person risk (see Loss of Key

Personnel above).

Operational risk – regulation and compliance

Breach of

regulations

The Group’s activities may breach

regulations in the jurisdictions in

which it operates.

When entering new jurisdictions, specialist technical and legal advice

is taken. Once investments are made, the Investment Manager seeks

to remain abreast of changes of regulations and laws to ensure

compliance.

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63HICL ANNUAL REPORT 2022

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3.5

Viability Statement

The AIC Code of Corporate Governance (the “AIC Code”) requires

the Directors to make a statement regarding the Company’s

viability in the Annual Report, explaining how they have assessed

the Company’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

2027 remains an appropriate period over which to assess HICL’s

viability as:

V this period accords with the Company’s business planning

exercises, including how the Directors assess the Company at

their annual strategy board meeting;

V it is the period over which the internal stress testing is

performed; and

V 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 Group, it is

challenging to assess the regulatory, tax and political

environment outside of the five-year period with any certainty.

Assessment of HICL’s Prospects

The Directors’ primary assessment of the Company’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 the 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 the investments.

The Company has a low level of expenses relative to forecast

receipts from its portfolio investments. The portfolio consists of

companies whose underlying assets are predominantly fully

constructed and operating PPPs or similar projects with public

sector counterparties in jurisdictions with established and proven

legal systems. As a result, the Company benefits from predictable

long-term contracted cash flows and a set of risks that can be

identified and assessed (see Risk & Risk Management on page

52). The projects are each financed on a non-recourse basis to

the Company and are supported by detailed financial models.

The Directors believe that the non-recourse financing and

diversification within the portfolio of investments helps to

withstand and mitigate the risks it is most likely to meet.

Assessment of Viability

In making this statement, the Directors have considered the

resilience of the Company, 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 market and political environment, as

well as the continued impact of the Covid-19 pandemic and

heightened geopolitical risk, and consequent volatility surrounding

the world economy.

The Investment Manager has prepared sensitivity analyses

including various stress scenarios which have been considered

previously by the Risk Committee. These include:

V Increasing tax rate assumptions by 5% for all non-UK assets;

V Increasing lifecycle costs by 10%;

V No step up in deposit interest rates from March 2025 (i.e.

remains at 0.75% forever);

V Inflation is 1% lower than the base case scenario;

V Assuming an increase in projects not distributing of 20%

of the portfolio (note this represents projects entering

distribution lock-up for a period of 12 months after which

they are released);

V Deferral of demand-asset lock-up release dates by 2 years

and no refinancing proceeds; and

V Combined scenario assuming:

i. Increase in PPP projects not distributing of 20%;

ii. A delay to distributions from demand assets for a further

24 months beyond the base case assumption;

iii. 25% increase to insurance and 10% increase in SPV

operating costs; and

iv. No refinancing proceeds from key assets.

Individually, these scenarios pose a minimal threat to the

Company’s 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 the Company

should remain viable over the five-year assessment period.

Viability Statement

The Directors have a reasonable expectation that the Company

will be able to continue in operation and meet its liabilities

as they fall due over the five-year period to March 2027, on the

assumption that there is sufficient liquidity in the debt market to

allow the Company, via its corporate subsidiary, Infrastructure

Investments Limited Partnership, to refinance or repay

obligations becoming due under the 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.

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64 HICL ANNUAL REPORT 2022

3.6

Risk Committee Report

The following pages set out the Risk

Committee’s report on its activities in

respect of the year ended 31 March 2022.

The Risk Committee operates within clearly

defined terms of reference, which are

available on the Company’s website. The

Risk Committee is comprised of all the

Directors and it meets four times a year,

coinciding with the quarterly Board

meetings, and is available to convene

ad-hoc should material matters arise.

In discharging its responsibilities, the duties of the Risk Committee

comprise defining risk appetite for the Group and a robust

assessment and monitoring of all matters relating to the risks to

which the Group is exposed, as well as their management and

oversight of mitigating actions. In particular, we consider risk

exposure and controls, stress and scenario planning, regulatory

compliance, portfolio company controls and the three lines

of defence.

Simon Holden

Risk Committee Chair

24 May 2022

Main Duties and General Approach

The Risk Committee’s main duties are, as set out in its Terms of

Reference, to consider, and where necessary make

recommendations to the Board, on the following:

V the Company’s implementation of an effective governance

structure and control framework which covers key risk areas

with appropriate reporting;

V the Group’s risk appetite statement (reviewed annually at a

minimum), taking account of the current economic, political,

and business environment, as well as any short-term shocks

or longer-term trends (such as climate change) which might

affect portfolio performance;

V risk limits and tolerances, and risk management;

V regulatory compliance;

V the Group’s risk profile, challenging the assessment and

measurement of key risks whilst monitoring the actions taken

to manage and mitigate them;

V scenario analysis to determine whether proposed mitigation is

sufficient to manage the business risk profile within the Board’s

appetite; and

V the Investment Manager’s advice on material changes to

investment strategy, the treasury policy, the hedging policy and

the risk policy.

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65HICL ANNUAL REPORT 2022

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Statement of the Chairman of the Risk Committee

The Company has a risk management framework covering all

aspects of the Group’s business. The Company is an Alternative

Investment Fund (“AIF”) and the Investment Manager (as

Alternative Investment Fund Manager) is responsible for risk

management and has thus implemented systems and controls to

manage and monitor risk. The Board places reliance on the

Investment Manager’s systems and controls and, through its Risk

Committee, monitors, reviews and challenges their effectiveness.

The risk management framework follows a cascade approach,

with three ‘lines of defence’, to identify both imminently emerging

risks as well as longer-term ‘horizon risks’, and effectively

safeguard and protect the interests of the Company and its

shareholders. The Investment Manager implements mitigation

strategies, which are regularly reported against and assessed by

the Risk Committee:

V The first line is the development of systems to implement

effective controls. These are set out in documents such as the

Company’s and the Investment Manager’s Policies and

Controls Manuals. 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 portfolio, is responsible for the

identification, classification, assessment and management of

risk both within the existing portfolio and in evaluating new

investment opportunities.

V The second line is that of oversight and engagement from the

Risk Committee, who look at emerging and previously

reported risks and challenge InfraRed’s approach to risk

management. At each quarterly meeting, the Risk Committee

conducts an in-depth review of the most material risks faced

by the Group, which are assessed quantitively (based on

potential valuation and cash flow impact) and qualitatively

(reputational impacts). The Committee also considers

longer-term factors to which the Company may need to adapt

in the future (‘horizon risks’) such as climate change, as well as

risks which may impact the future delivery of the Company’s

Investment Proposition. Mitigation strategies are proposed by

the Investment Manager, with progress being monitored by the

Risk Committee. The Risk Committee also ensures that all

relevant policies are up to date and that delegated authorities

are observed.

V The third line is third-party assurance which is used on an

as-needed basis to provide independent scrutiny of the

Company’s 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.

Routine Business

The Committee considered and noted compliance with HICL’s

Investment Policy and other policies relating to gearing, hedging

and risk reportable events, which are fundamental to the

Company’s risk appetite.

Within the Investment Policy, the Risk Committee has established

Approved Investment Parameters (“AIPs”). These are designated

thresholds that are approved by the Board in coordination with

the Investment Manager. These set the perimeter of HICL’s risk

appetite as it relates to portfolio construction and are adjusted

from time-to-time as this evolves, having consideration of both

the Company’s investment strategy and operating environment.

These have served as intended during year, with compliance

monitored by the Risk Committee and any proposed investment

which would exceed the limits set by the AIPs appropriately

considered in advance.

The Committee’s routine quarterly agenda covers, inter alia, a

summary of key risks faced by the Group (including changes to

the potential impact or timing of known risks as well as a

consideration of emerging and longer-term ‘horizon’ risks with the

environmental factors notable amongst these), a review of HICL’s

risk management policies and updates on relevant fund or

portfolio company matters as required.

The Committee considered, at each meeting, regulatory

compliance reports from both the Investment Manager and

Aztec, the Company’s Administrator. The Committee also

received compliance reports from the Depositary. No significant

action points or notable comments arose in respect of these

regular reviews.

The Committee concludes each meeting with an assessment of

whether HICL is compliant with its stated risk appetite and, at

each quarterly meeting, confirmed that this was the case.

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66 HICL ANNUAL REPORT 2022

Process and Reporting Updates

Over the course of the year, the Investment Manager continued to

refine its risk management process and its quarterly reporting to

the Risk Committee in a number of areas:

Stress testing and scenario analysis

A rolling programme of stress testing and scenario analysis for

HICL was presented to the Risk Committee at each of its

meetings throughout the year. In February 2022, the Investment

Manager undertook a full refresh of the presentation and format of

the scenario analyses, which now align more closely with the

regular quarterly reporting on all material risks. Several

improvements were also made to the scenarios included within

each Primary Risk Class.

Portfolio construction risk

This year, the Risk Committee has been especially interested in

better understanding and planning for longer-term risks that might

arise from changes to the weighted average asset life and capital

deployment profile of the Company under different market

conditions. To address this, the Investment Manager provided

additional strategic reporting and scenario analyses relating to

future portfolio composition, the range of potential impacts and

mitigating plans that would be required to sustain HICL’s

Investment Proposition. This has been an especially productive

exercise to assist the Board and Investment Manager focus and

prioritise asset allocation discussions.

Climate-related risks

During the year, the vast majority of HICL’s project companies

adopted the findings of InfraRed’s portfolio-wide climate change

impact assessment by incorporating climate-related risk in

asset-level risk registers. Furthermore, as part of the Investment

Manager’s updated investment process, all potential acquisitions

are required to have a climate change impact assessment

undertaken as a condition of approving the transaction. This

ensures that any material issues can be escalated to the Risk

Committee through InfraRed’s quarterly reporting.

Key risks

The key risks faced by the Group and associated mitigants are

set out in Section 3.4 – Risk & Risk Management. During the year,

the Risk Committee devoted time to consider several key risks,

providing timely updates to the Board and shareholders as

necessary, including:

V Health & Safety: The Risk Committee received quarterly

reporting from the Investment Manager in relation to health and

safety matters. The safe working practices of our contractors

and the avoidance of injuries are always of paramount concern

and are closely monitored across the portfolio at all times.

V Counterparty risk: The Investment Manager actively monitors

the financial health and performance of the portfolio’s

construction, operations and maintenance subcontractors.

The Risk Committee noted the proposed acquisition of Engie’s

services unit, Equans, by Bouygues S.A., but at this stage

remains comfortable with a potential increase in exposure

given the credit quality of Bouygues S.A. and its track record

of performance across the HICL portfolio.

V Covid-19: The Investment Manager continued to monitor the

impact of Covid-19 on HICL’s GDP-linked demand-based

assets; the wider portfolio and the Company’s service

providers have not been materially affected by the pandemic.

Over the year, the Risk Committee has noted a reduction in the

short-term risks associated with Covid-19 as government-

imposed restrictions on movement have eased and demand-

based asset usage has increased. As a result, the focus has

gradually shifted to the potential longer-term impacts of

behavioural change on the recovery of Northwest Parkway

and HS1.

V Facility condition: The Risk Committee received regular

updates from the Investment Manager on matters of building

defects, including fire safety. The Risk Committee is supportive

of the Investment Manager’s focus on safety through thorough

surveying and prioritising remediation works, which are

expected to be borne by their respective construction

contractors wherever possible. During the year, pursuing this

approach has successfully driven the delivery of remediation

works and as a result, the de-risking of certain projects which

had been impacted by these legacy construction issues.

Unresolved construction defects may impact on asset

availability and / or the ability for projects to make distributions

to investors. Furthermore, for certain projects there is a risk

that increased defect remediation costs could adversely affect

the valuation of the investment, either because the statutory

limitations period has expired, or the original construction

contractor is insolvent.

3.6

Risk Committee Report (continued)

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67HICL ANNUAL REPORT 2022

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V Financial / market risks: Over the past year, the Risk

Committee has perceived an increase in general market

volatility but sees the Company’s diversified portfolio and low

correlation as fundamental and effective risk mitigants.

There has also been volatility in key macroeconomic

indicators; particularly inflation which has increased during

the period across HICL’s core geographies. A case study on

the impact of inflation is provided in Section 3.2 – Valuation of

the Portfolio.

The Risk Committee received periodic updates from the

Investment Manager in relation to the transition from LIBOR to

SONIA. During the financial year, InfraRed announced the first

successful transition of a UK PFI, formed a dedicated project

to deliver the transition and worked closely with the IPA to

mitigate developing risks. The associated risks faced by HICL

have been actively managed and reduced, with only a small

number of projects remaining that require transition.

V Political and regulatory risk: Political and regulatory risk are

inherent within the infrastructure asset class and are closely

monitored by the Risk Committee and the Investment

Manager. As governments seek to reduce fiscal deficits

following the Covid-19 pandemic, there is a risk associated

with increases in corporation tax, although there were no

material changes across HICL’s core geographies during

the year.

Affinity Water has clarity on the parameters for its business

plan for the next three years. During the year, the Company

published its Strategic Direction Statement, which provides the

foundation for the company’s approach to the 2024 price

review (“PR24”). Both the company and the Investment

Manager have engaged with Ofwat’s initial consultations on

PR24 and the Risk Committee has been kept apprised of the

potential implications for HICL’s investment in Affinity Water.

V Public sector engagement: The Risk Committee notes that

the risk of contractual or operational disputes in the run-up to

‘handback’ is most effectively mitigated by ensuring

operational excellence and a constructive engagement with

public sector stakeholders. The Investment Manager launched

a programme of pilot projects during the year, which are

designed to foster collaboration by providing a template for

best practice which can be adopted by all stakeholders.

Furthermore, InfraRed was invited to join the IPA’s Project

Expiry Working Group alongside a select number of

industry participants.

The Investment Manager reported on the heightened risk

associated with certain UK health assets, where operational

and financial pressures have translated into adverse behaviour

by clients and their advisers. HICL and its Investment Manager

continue to take seriously their responsibilities as stewards of

essential community assets and to demonstrate the benefits to

society of private sector involvement in the responsible and

sustainability operation of critical public infrastructure.

68 HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Task Force on Climate-related Financial Disclosures

The tables below set out the Company’s disclosure against the 11 TCFD recommendations. The information

set out below provides key climate-related information and cross-references to where additional information can be found. We confirm

that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures, we acknowledge there

are certain areas where the Company is in the process of gathering and publishing more data. More information on these areas can be

found in the below disclosures.

Governance

Recommendation Disclosure

Describe the

Board’s oversight

of climate-related

risks and

opportunities

The Board has overall responsibility for the oversight of HICL’s sustainability risks and opportunities, of

which climate change is an important subset. The Board and the Investment Manager meet on a quarterly

basis, during which they review the risks facing the Company, including risks related to climate change.

Sustainability is also a key topic at the Board’s annual strategy meetings.

Some of the Board’s committees also have key roles:

V The Risk Committee oversees and challenges InfraRed’s risk management processes and analysis,

and has a specific remit to examine ‘horizon’ risks such as the long-term consequences of climate

change;

V The Management Engagement Committee considers how HICL service providers, including

InfraRed, adhere to HICL’s Sustainability Policy;

V The Audit Committee reviews the Company’s approach to disclosures, including those relating to

climate change.

In relation to climate-related opportunities, the Investment Manager presents a review of the market to the

Board on a quarterly basis. As part of this review, potential new acquisition opportunities are highlighted,

including those which directly support the transition to a low-carbon economy.

Although management of the portfolio, as well as investment decisions within agreed parameters, is

delegated to InfraRed as the Investment Manager, the Board has overall responsibility for the Company’s

Investment Policy.

3.7

Task Force on Climate-related

Financial Disclosures

02 / STRATEGIC REPORT

69HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

69HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Governance (continued)

Recommendation Disclosure

Describe

management’s

role in assessing

and managing

climate-related

risks and

opportunities

The application of HICL’s Sustainability Policy to making new investments and the management of HICL’s

portfolio is undertaken by InfraRed, as Investment Manager and Operator. This includes the day-to-day

monitoring, evaluation and management of risks, including those linked to climate change. The Investment

Manager’s risk framework explicitly considers climate-related risks across its Portfolio Performance, Political

and Operational – Execution risk classes.

In 2020, InfraRed commissioned a detailed climate change impact assessment to identify and assess

climate-related risks and opportunities in the portfolio. The Investment Manager used the results of this

exercise to transform the management and reporting of climate-related risks at portfolio company level.

The vast majority of HICL’s portfolio companies have adopted the findings of the assessment by discussing

climate-related risks and opportunities at board level and including these on their risk registers.

InfraRed’s Asset Management Team ensures the timely reporting of project-specific risks relating to climate

change to the HICL Fund Management Team as and when they arise; the HICL Investment Committee

also undertakes a formal review of all project-specific risks on a quarterly basis. This process ensures that

material climate-related risks feed into the Investment Manager’s quarterly reporting to the Risk Committee,

which in turn reports to the Board.

InfraRed is also responsible for incorporating climate-related risks and opportunities into the investment

process, which applies for all new acquisitions. During the year InfraRed’s Sustainability and Origination &

Execution teams worked together to review and enhance the sustainability requirements in the Investment

Manager’s pre-investment processes. One of the key changes included the requirement to complete a

climate change risk assessment, which is now a formal condition of transaction approval. The results of this

assessment are factored into the valuation and/or risk management processes (where relevant) and

presented to the Fund’s Investment Committee as part of the formal investment approval process.

70 HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Strategy

Recommendation Disclosure

Describe the

climate-related

risks and

opportunities the

organisation has

identified over the

short, medium

and long term

Through its detailed climate change impact assessment, the Investment Manager has identified that in the

short term, based on current climate conditions, a subset of assets in which HICL has invested are

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 Company may also be exposed to transition risks if

there are rapid, unexpected changes to government policy.

Beyond 2040, based on a 4°C scenario, there is slightly increased exposure to physical risks.

Under a 1.5°C scenarios the impact of transition risks could be greater, but many assets have inherent

protection as they provide vital services and have low direct emissions. Conversely, there is likely to be

greater scope to take advantage of opportunities arising from the energy transition, such as asset

repurposing and additional investment.

HICL’s main physical risk exposures based on both current and future conditions are to winter storms, river

flooding and coastal flooding, which is expected based on the weighting of the portfolio 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. The

potential annual loss across the portfolio from wind storms and flooding is not expected to be material, with

mitigation measures further reducing any impact in ‘severe’ years. HICL’s assets benefit from

comprehensive insurance policies, which include physical damage as a result of climate-related events.

Examples of potential transition risks under a 1.5°C scenario include increased public transport use, a

reduction in overall journeys, car sharing, which could impact some of HICL’s demand-based assets. Such

a scenario is also likely to present a number of opportunities for the Company at both the asset and market

level, some of which are set out in section five below.

Describe the

impact of

climate-related

risks and

opportunities on

the organisation’s

businesses,

strategy and

financial planning

The primary impact of climate change for HICL is likely to be borne by its portfolio companies: increased

operating costs or reduced revenues as a result of physical risks materialising. In many cases 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 scenario, whereas under

a 1.5°C scenario assets are more likely to be impacted by transition risks.

The results of the climate impact assessment feed into the Company’s strategy in a number of ways.

During the year, InfraRed rolled out its Climate Change Best Practices guidance to portfolio companies,

and provided support through regular ESG workshops. In conjunction with Mott MacDonald, InfraRed will

also produce guidance for portfolio companies to enable them to reduce their greenhouse gas emissions.

Finally, understanding the risks and opportunities from climate change (including under a 1.5°C scenario)

instructs future acquisition screening and strategic portfolio construction.

During the year, a review of insurance costs was undertaken across the portfolio. As is common with real

assets, insurance is one of the primary risk mitigants against the financial impact of physical damage. In the

future, and particularly under a 4°C scenario, it is possible that the cost of obtaining insurance increases as

a result of the increased likelihood of severe weather events, although this is likely to be limited to a small

number of assets.

In March 2022, HICL renegotiated a £400m Revolving Credit Facility (“RCF”) which continues to link the

margin on the facility to performance against five ESG targets. This demonstrates HICL’s commitment to its

wider sustainability strategy by embedding it within the financing structure of the Company.

3.7

Task Force on Climate-related

Financial Disclosures (continued)

71HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Strategy (continued)

Recommendation Disclosure

Describe the

resilience of the

organisation’s

strategy, taking

into consideration

different future

climate scenarios,

including a 2°C or

lower scenario

The portfolio-level findings of the climate change impact assessment demonstrate that the Company’s

strategy is highly resilient to both physical and transition risks associated with climate change.

Under a ‘current’ climate scenario, only eight assets have an unmitigated physical impact index above 3.0

(medium) This rises to 19 assets under a 4°C scenario, demonstrating the resilience of the portfolio even in

the event of extreme climate change. Under a 1.5°C scenario, the Group is more exposed to transition

risks, but these are mitigated through the essential nature HICL’s investments, and the contractual risk

allocation that exists through concession agreements.

A transition to a low carbon economy also presents a number of opportunities. The primary example is the

need for related investment such as rapid charging or retrofitting of energy efficiency solutions. A key tenet

of HICL’s vision is to support sustainable modern economies by investing in assets linked to the energy

transition, and a 1.5°C scenario is likely to increase the number of investable opportunities in this space.

Risk

Recommendation Disclosure

Describe the

organisation’s

processes for

identifying and

assessing

climate-related

risks

For new acquisitions, climate-related risks are considered throughout the investment process by the

Investment Manager. At the deal screening phase, the identification of climate-related risks (physical or

transition) and the potential impact (positive or negative) are mandatory requirements.

During the year InfraRed’s Sustainability and Origination & Execution teams worked together to review and

enhance the sustainability requirements in the Investment Manager’s pre-investment processes. One of the

key changes included the requirement to complete a climate change risk assessment, which is now a

formal condition of transaction approval.

Further details are provided in HICL’s Sustainability Report 2022.

For existing projects, risks have been identified and assessed through a detailed climate change impact

assessment, as set out in the HICL 2021 Sustainability Report

. The Company’s portfolio companies use

the results of this assessment to undertake proactive monitoring and assessment at the project level.

https://www.hicl.com/wp-content/uploads/2021/06/HICL-Sustainability-Report-2021.pdf – see page 10

72 HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Risk (continued)

Recommendation Disclosure

Describe the

organisation’s

processes for

managing

climate-related

risks

Over the year, InfraRed’s Asset Management team engaged with the management teams of HICL’s

portfolio companies. Using the climate change impact assessment, the vast majority of HICL’s portfolio

companies have adopted the findings by discussing climate-related risks and opportunities at board level,

updating risk matrices and developing and implementing mitigation and resilience strategies

as appropriate.

InfraRed’s Asset Management Team ensures the timely reporting of project-specific risks relating to climate

change to the HICL Fund Management Team as and when they arise; the HICL Investment Committee

also undertakes a formal review of all project-specific risks on a quarterly basis. This process ensures that

material climate-related risks feed into the Investment Manager’s quarterly reporting to the Risk Committee,

which in turn reports to the Board.

The Company’s positioning with respect to a transition to a low-carbon economy is primarily considered

through the Investment Manager’s active approach to asset management and portfolio construction.

HICL’s core infrastructure investments provide essential services to communities, and as a result are

inherently well positioned. For HICL’s PPP projects, energy use is driven by the client, with the portfolio

company generally responsible for maintaining the equipment which provides the building’s heating, cooling

and lighting. Any changes to these systems required under a 1.5°C scenario would usually be accounted

for under existing lifecycle budgets or alternatively treated as a contract variation. In relation to HICL’s

GDP-correlated demand-based assets such as toll roads, which may be exposed to transition risks and

opportunities under a 1.5°C scenario, these benefit from strong strategic positioning. The Company also

invests directly in assets which are likely to benefit from a low-carbon transition, such as OFTOs.

More broadly, InfraRed’s exclusion policy specifically covers carbon-intensive industries such as coal, oil

and gas (where not aligned to a low-carbon transition) and HICL does not invest in assets whose primary

purpose is electricity generation.

Describe how

processes for

identifying,

assessing and

managing

climate-related

risks are

integrated into

the organisation’s

overall risk

management

Sustainability considerations are incorporated into the Investment Manager’s risk management framework,

which is used as the basis of risk reporting to the HICL Risk Committee. In particular, sustainability features

as a material risk in the following risk classes:

V Political risk: in particular, policies associated with the transition to net zero carbon emissions;

V Operational risk – execution: through transaction due diligence and investment decisions;

V Portfolio performance risk: sustainability risks can affect operational performance, including

transitional and physical risks associated with adverse climate change.

Climate change risk is an explicit building block of portfolio performance risk. Individual project companies

submit regular progress reports to InfraRed on the mitigation measures they are taking in response to the

climate change impact assessment. In turn, this enables the HICL Risk Committee to consider the overall

impact and opportunities of climate change at fund level.

Further details are provided in Section 3.4 – Risk & Risk Management

3.7

Task Force on Climate-related

Financial Disclosures (continued)

73HICL ANNUAL REPORT 2022

02 / STRATEGIC REPORT

Metrics

Recommendation Disclosure

Disclose the

metrics used by

the organisation

to assess

climate-related

risks and

opportunities

As noted below, HICL has disclosed the combined Scope 1, 2 and 3 greenhouse gas emissions of its

entire portfolio for the 2019 baseline year. These can be found on page 25 of HICL’s Sustainability Report

2022. The accurate measurement and disclosure of emissions forms an important part of InfraRed’s wider

strategy relating to InfraRed’s net zero commitments, further details of which are provided in HICL’s

Sustainability Report 2022. Although only 39% of portfolio companies reported their Scope 1 and 2

emissions as part of InfraRed’s most recent ESG survey, the data collection exercise as part of InfraRed’s

net zero commitment will ensure that Scope 1, 2, and 3 emissions are routinely captured for all projects in

future years.

As set out in section 7, HICL’s portfolio is well positioned for a 1.5°C scenario, although the degree of

alignment varies by sector and also by remaining concession length. Currently, 14% of the portfolio by

value is fully aligned, representing Affinity Water and High Speed 1 which have already committed to

achieve net zero by 2030. InfraRed’s commitment to achieve net zero for HICL’s entire portfolio by 2050 will

ensure that this percentage rises to 100% over time. The chart below sets out the portfolio exposure (by

number of projects) to physical climate risks based on current climate conditions, without mitigation:

Flash flood

Wildfire

Tornado

Lightning

Hailstorm

Winter storm

Tropical storm

Drought stress

Heat stress

River flood

Coastal flood

0% 20% 40% 60% 80% 100%

Very high

High

Medium

Low

Very low

None

Disclose Scope

1, Scope 2, and if

appropriate,

Scope 3

greenhouse gas

emissions, and

the related risks

Due to the nature of its business, HICL has no Scope 1 or Scope 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 (which is offset using an accredited scheme).

In previous years, HICL voluntarily disclosed certain Scope 3 emissions based on an operational control

boundary approach. The 2021 data for the same four assets is available on page 24 of HICL’s Sustainability

Report 2022. This year, the significant data collection exercise undertaken as part of InfraRed’s net zero

commitment allows for significantly enhanced disclosure. The combined Scope 1, 2 and 3 greenhouse gas

emissions of HICL’s entire portfolio for the 2019 baseline year can be found on page 25 of HICL’s

Sustainability Report 2022.

Describe the

targets used by

the organisation

to manage

climate-related

risks and

opportunities and

performance

against targets

One of the key ways in which climate-related risks can be reduced in the long term is through a global

reduction in greenhouse gas emissions. By joining the Net Zero Asset Managers initiative, InfraRed has

committed to achieve net zero greenhouse gas emissions for HICL’s portfolio by 2050. It is also required to

set interim reduction targets, which will include for HICL’s portfolio. These will be published over the coming

year. The Company has considered the sensitivity of its business strategy to a 1.5°C scenario, and does

not assess this to be material due to the reasons described in sections seven and nine.

Given the importance of the climate change impact assessment as a risk management tool, HICL

has set clear targets relating to its implementation; these are set out on page 10 of HICL’s Sustainability

Report 2022.

03 / PERFORMANCE & RISK

74 HICL ANNUAL REPORT 2022

3.8

Strategic Report Disclosures

Investment Policy

HICL’s Investment Policy is to ensure a diversified portfolio which

has a number of similarly sized investments and is not dominated

by any single investment. HICL will seek to acquire Infrastructure

Equity with similar risk / reward characteristics to the current

portfolio, which may include (but is not limited to):

V Public sector, government-backed or regulated revenues;

V Concessions which are predominantly ‘‘availability’’ based (i.e.

the payments from the concession do not generally depend on

the level of use of the project asset); and / or

V Companies in the regulated utilities sector.

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 (at the time the relevant investment is made) in:

V Project Companies which have not yet completed the

construction phases of their concessions but where

prospective yield characteristics and associated risks are

deemed appropriate to the investment objectives of HICL. This

may include investment in companies which are in the process

of bidding for concessions, to the extent that such companies

form part of a more mature portfolio of investments which

HICL considers appropriate to acquire;

V Project Companies with ”demand-based” concessions where

the Investment Manager considers that demand and stability

of revenues are not yet established, and / or Project

Companies which do not have public sector sponsored /

awarded or government-backed concessions; and

V To a lesser extent (but counting towards the same aggregate

35% limit, and again at the time the relevant investment is

made) in limited partnerships, other funds that make

infrastructure investments and / or financial instruments and

securities issued by companies that make infrastructure

investments, or whose activities are similar or comparable.

Geographic focus

The Directors believe that attractive opportunities for HICL to

enhance returns for investors are likely to arise outside as well as

within the UK (where the majority of the projects in the current

portfolio are based). HICL may therefore make investments in the

European Union, Norway, Switzerland, the Americas and selected

territories in Asia and Australasia. HICL may also make

investments in other markets should suitable opportunities arise.

HICL will seek to mitigate country risk by concentrating on

investment opportunities in jurisdictions where it considers that

contract structures and enforceability are reliable and where (to

the extent applicable) public sector obligations carry what the

Investment Manager believes to be a satisfactory credit rating and

where financial markets are relatively mature.

Single investment limit and diversity of clients

and suppliers

For each new acquisition made, HICL will ensure that such

investment acquired does not have an acquisition value (or, if it is

a further stake in an existing investment, the combined value of

both the existing stake and the further stake acquired is not)

greater than 20% of the total gross assets of HICL immediately

post acquisition.

The total gross assets will be calculated based on the last

published gross investment valuation of the portfolio plus

acquisitions made since the date of such valuation at their

cost of acquisition.

The purpose of this limit is to ensure the portfolio has a number of

investments and is not dominated by any single investment.

In selecting new investments to acquire, the Investment Manager

will seek to ensure that the portfolio of investments has a range of

public sector clients and supply chain contractors, in order to

avoid over-reliance on either a single client or a single contractor.

Restrictions under the Listing Rules

In accordance with the requirements of the Financial Conduct

Authority, HICL has adopted the policies set out below:

a) 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;

b) 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

c) 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.

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 Section 3.4 – Risk & Risk Management.

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 2022, also available on the website.

03 / PERFORMANCE & RISK

75HICL ANNUAL REPORT 2022

03 / PERFORMANCE & RISK

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;

however the Directors assess the impact of HICL’s activities

on other stakeholders, in particular public sector clients and

the end users of the infrastructure investments, as well as the

community as a whole, recognising that the investments of

HICL are often key community assets. Details can be found

in the Strategic Report.

Gender Diversity

At the year end, the Board of Directors comprised eight

non-executives; five 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 2022.

Leverage Gross Method Commitment Method

Maximum limit 150% 150%

Actual level 114% 103%

Ian Russell

Chairman

24 May 2022

04 / DIRECTORS’ REPORT

76 HICL ANNUAL REPORT 2022

Road Management Group, UK

04 / DIRECTORS’ REPORT

77HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT02 / STRATEGIC REPORT 03 / PERFORMANCE & RISK 04 / DIRECTORS’ REPORT 05 / FINANCIAL STATEMENTS01 / OVERVIEW

Directors’

Report

04 / DIRECTORS’ REPORT

78 HICL ANNUAL REPORT 2022

Operational Structure

HICL Infrastructure PLC (“HICL”, or the “Company” and, together

with its subsidiaries, the “Group”) is a registered investment

company with an independent Board of Directors. 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.

HICL’s portfolio comprises over 100 infrastructure investments. Its

strategy to protect and enhance the value of the existing portfolio,

and to source appropriately-priced new investments, utilises the

expertise of its Investment Manager, InfraRed Capital Partners

Limited (“InfraRed”). HICL has a 31 March year end, announces

its full year results in May and interim results in November. It also

publishes two Interim Update Statements each year, normally in

February and July.

4.1

Board and Governance

Organisational Structure

HICL Infrastructure PLC

AIF

subject to the full scope

of the AIFMD

(UK Investment

Trust Company)

Portfolio of underlying investments

HICL’s Portfolio Companies

Infrastructure Investments LP

(English limited partnership)

HICL Infrastructure S.a.r.l. 2

EQUITY

• Legal

• Corporate Broking

• Public Relations

• Governance

• Oversight

• Strategy

Advisers and

Service Providers

Independent Directors

Investment Manager

• HICL’s AIFM

• Management

• Strategy

• Reporting

• Acquisition Pipeline

• Asset Management

• Risk and Portfolio

Management

Company Secretary

• Aztec Financial Services

(UK) Limited

Dividends

Independent of the Investment Manager

Alternative Investment Fund, as defined by the Alternative Investment Fund Managers Directive

Alternative Investment Fund Managers Directive

Interest + Principal

HICL’s Shareholders

04 / DIRECTORS’ REPORT

79HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Group Structure

Investments are made via the Corporate Subsidiaries, which

comprise a group structure involving a Luxembourg-domiciled

investment company and an English limited partnership (the

“Partnership”). HICL’s assets are therefore held indirectly through

the Corporate Subsidiaries and any subsidiaries are wholly owned

by the general partner of the Partnership on behalf of the

Partnership. InfraRed Capital Partners Limited (“InfraRed”) has

been appointed the Investment Manager of HICL and Operator of

the Partnership. InfraRed has been appointed AIFM in

accordance with the AIFM Directive, and also provides the

registered office of HICL.

The Company invests in infrastructure investments indirectly via

the Corporate Subsidiaries:

V HICL Infrastructure 2 S.a.r.l., a société à responsabilité limitée

established in Luxembourg, is the sole limited partner in the

Partnership, an English limited partnership which has a special

purpose vehicle, the General Partner, as its general partner.

The General Partner is a wholly owned indirect subsidiary of

InfraRed Partners LLP. The General Partner, on behalf of the

Partnership, has appointed InfraRed as operator of the

Partnership. HICL Infrastructure 2 S.a.r.l. invests the

contributions it receives in capital contributions and partner

loans to the Partnership, which acquires and holds the

infrastructure investments.

V HICL Infrastructure 2 S.a.r.l. has an independent board,

on which a HICL Board Director sits, and takes advice on

administration matters from RSM Tax & Accounting

Luxembourg.

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, the Partnership 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).

The Board and the Committees

As at 31 March 2022, the Board of HICL comprised eight

independent, non-executive Directors whose role is to manage

HICL in the interests of shareholders and other stakeholders. In

particular, the Board approves and monitors adherence to the

Investment Policy and Acquisition Strategy, determines risk

appetite, sets policies, agrees levels of delegation to key service

providers and monitors their activities and performance (including,

specifically, that of the Investment Manager) against agreed

objectives. The Board will take advice from the Investment

Manager, where appropriate – for example on matters concerning

the market, the portfolio and new acquisition opportunities.

The Board meets regularly – at least five times a year, each time

for two consecutive days – for formal Board and Committee

meetings. One of these Board meetings is devoted to considering

the strategy of HICL, both in terms of potential acquisitions and

the management of the current portfolio. There are also a number

of ad hoc meetings dependent upon business needs. In addition,

the Board has formed six committees (Audit, Management

Engagement, Market Disclosure, Nomination, Remuneration and

Risk) which manage risk and governance.

Management of the portfolio, as well as investment decisions

within agreed parameters, is delegated to InfraRed as the

Investment Manager, which reports regularly to the Board.

At the quarterly Board and Committee meetings, the operating

and financial performance of the portfolio, its valuation and the

appropriateness of the risk and controls are reviewed.

04 / DIRECTORS’ REPORT

80 HICL ANNUAL REPORT 2022

Mr Ian Russell

Chairman of the Board

Chair of Nomination Committee

Mr Frank Nelson

Senior Independent Director

Chair of Management

Engagement Committee

Background and experience

Ian Russell CBE (British), resident in the UK, is a qualified accountant.

He was appointed to the Board on 1 May 2013. Ian worked for

Scottish Power plc between 1994 and 2006, initially as Finance

Director and, from 2001, as its CEO. Prior to this he spent eight years

as Finance Director at HSBC Asset Management in Hong Kong and

London. Ian is chairman of Scottish Futures Trust and National

Museums Scotland.

Date of appointment*

Appointed to the Board on 1 May 2013

Other public company directorships

(listed in London unless noted otherwise)**:

None

Background and experience

Frank Nelson (British), resident in the UK, is a qualified accountant.

He has over 25 years of experience in the construction, contracting,

infrastructure and energy sectors. He was appointed to the Board on

1 June 2014. Frank was Finance Director of construction and

house-building group Galliford Try plc from 2000 until October 2012.

He was previously Finance Director of Try Group plc from 1987,

leading the company through its floatation on the London Stock

Exchange in 1989 and the subsequent merger with Galliford in 2001.

Following his retirement, Frank was appointed as the Senior

Independent Director of Eurocell and as the Chair of Van Elle

Holdings. He is also Chair of a privately owned contracting and

property development group.

Date of appointment*

Appointed to the Board 1 June 2014

Other public company directorships

(listed in London unless noted otherwise)**:

Eurocell PLC

Van Elle Holdings PLC

Mr Mike Bane

Chair of Remuneration

Committee

Background and experience

Mike Bane (British) is a chartered accountant and retired from public

practice in June 2018. Mike has been a Guernsey resident for over 20

years. He has more than 35 years of audit and advisory experience in

the asset management industry including in relation to infrastructure

investment companies. He led EY’s services to the asset

management industry in the Channel Islands and was a member of

EY’s EMEIA Wealth and Asset Management Board. Prior to EY, Mike

was at PwC, in both London and Guernsey. Mike was President of

the Guernsey Society of Chartered and Certified Accountants from

2015 to 2017. Mike graduated with a BA in Mathematics from the

University of Oxford and is a long-standing member of the Institute of

Chartered Accountants in England and Wales.

Date of appointment*

Appointed to the Board on 1 July 2018

Other public company directorships

(listed in London unless noted otherwise)**:

Apax Global Alpha Limited

Standard Life Investments Property Income Trust Limited

4.2

Board of Directors

* 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

Ms Rita Akushie

Background and experience

Rita Akushie (British) has more than 20 years’ experience acting in

leadership and finance roles for housing associations and charities,

including at Newlon Group, where she was Chief Financial Officer

and then Deputy Chief Executive; and subsequently as Group

Finance Director for Thames Valley Housing. Rita has recently served

as CFO for Cancer Research UK, and currently serves as CFO & Pro

Vice-Chancellor (Operations) for the University of London. Rita

graduated with a BA in Economics and French from the University of

Ghana. She is a Fellow of the Institute of Chartered Accountants of

England and Wales and a Fellow of the Association of Corporate

Treasurers.

Date of appointment

Appointed to the Board on 1 January 2020

Other public company directorships

(listed in London unless noted otherwise)**:

None

04 / DIRECTORS’ REPORT

81HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Mrs Sally-Ann (Susie) Farnon

Chair of the Audit Committee

Background and experience

Sally-Ann Farnon (known as Susie) (British), resident in Guernsey, is a

fellow of the Institute of Chartered Accountants in England and

Wales, having qualified as an accountant in 1983, and is a non-

executive director of a number of property and investment

companies. She was appointed to the Board on 1 May 2013.

Susie was a Banking and Finance Partner with KPMG Channel

Islands from 1990 until 2001 and Head of Audit KPMG Channel

Islands from 1999. She has served as President of the Guernsey

Society of Chartered and Certified Accountants and as a member of

The States of Guernsey Audit Commission and as Vice-Chairman of

The Guernsey Financial Services Commission, and is a director of

The Association of Investment Companies.

Date of appointment*

Appointed to the Board on 1 May 2013

Other public company directorships

(listed in London unless noted otherwise)**:

Apax Global Alpha Limited

Bailiwick Investments Limited (TISE)

Real Estate Credit Investments Limited

Mr Simon Holden

Chair of the Risk Committee

Background and experience

Simon Holden (British) is a Chartered Director (CDir) accredited by the

Institute of Directors. Previously an investment director at Terra Firma

Capital Partners, Candover Investments prior to that, Simon has been

an active independent director to listed investment company, private

equity fund and trading company boards since 2015. In addition,

Simon acts as the pro-bono Business Advisor to Guernsey Ports; a

States of Guernsey enterprise that operates all of the Bailiwick’s

critical airport and harbour infrastructure. Simon is a member of

several industry interest groups in both financial services and

intellectual property and graduated from the University of Cambridge

with an MEng and MA (Cantab) in Manufacturing Engineering.

Date of appointment*

Appointed to the Board 1 July 2016

Other public company directorships

(listed in London unless noted otherwise)**:

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)

Mr Kenneth D. Reid

Background and experience

Kenneth D. Reid (British), resident in Singapore, has more than

35 years of international experience in the sectors of construction,

development and infrastructure investment. Working initially with Kier

Group, and then from 1990 with Bilfinger Berger AG, he has been a

project leader and senior management executive responsible for

businesses and projects across all continents. From 2007 to 2010,

Ken served as a member of the Group Executive Board of Bilfinger

Berger AG. He graduated in Civil Engineering from Heriot-Watt

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 James

Walker Group Limited, and is a member of the Singapore Institute

of Directors.

Date of appointment*

Appointed to the Board 1 September 2016

Other public company directorships

(listed in London unless noted otherwise)**:

None

Ms Frances Davies

Background and experience

Frances Davies (British) has more than 30 years of experience across

various roles within the banking and asset management industries.

Since 2007, she has been a partner of Opus Corporate Finance, a

corporate finance advisory business. Frances is also on Aviva’s

With-Profits Committee and the committee of the Hermes Property

Unit Trust. Previously she served as Head of Global Institutional

Business at Gartmore Investment Management where she was

responsible for Gartmore’s relationships with pension funds and other

institutions within the UK, Europe and the US. Previously she held

roles at Morgan Grenfell Asset Management and SG Warburg. Ms

Davies graduated with a MA in Philosophy, Politics and Economics

and a M.Phil in Management Studies, both from Oxford University.

Date of appointment

Appointed to the Board on 1 April 2019

Other public company directorships

(listed in London unless noted otherwise)**:

JPMorgan Smaller Companies Investment Trust plc

04 / DIRECTORS’ REPORT

82 HICL ANNUAL REPORT 2022

InfraRed Capital Partners Limited (“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.

In July 2020, InfraRed was acquired by Sun Life Financial Inc.

(together with its subsidiaries and joint ventures, “Sun Life”), with

InfraRed continuing to operate as a distinct business under SLC

Management, Sun Life’s alternative asset management business.

The Sun Life acquisition has provided 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 2022, Sun Life had total assets

under management of C$1,352bn. 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

around 170 employees and partners, based mainly in offices in

London and with smaller offices in New York, Seoul and Sydney.

Its infrastructure team comprises over 100 professional staff who

have, on average, c. 11 years of relevant industry experience.

Within the infrastructure team, there are:

V a Management team with overall responsibility for the activities

provided to HICL;

V an Origination and Execution team responsible for business

development and sourcing new investments;

V an Asset Management team responsible for managing the

portfolio of investments; and

V a Portfolio Management team responsible for financial

reporting, cash flow management, debt, foreign exchange

hedging and tax.

Six senior members of the InfraRed team make up InfraRed’s

Investment Committee on behalf of HICL. The Investment

Committee has combined experience of over 150 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

(i) 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

(iii) above which, together with investments under (i), (ii) and

(iii) 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) and

(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 thirty six (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.

4.3

The Investment Manager

04 / DIRECTORS’ REPORT

83HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

4.4

Corporate Governance Statement

www.theaic.co.uk/system/files/policy-technical/AIC2019AICCodeofCorporateGovernanceFeb19.pdf

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 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.

). 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 2022, the Board comprised eight non-executive

Directors. In accordance with Provision 10 of the AIC Code all of the

non-executives are independent of the Investment Manager. The

Chairman, Ian Russell, 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, Frank Nelson. Frank 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 eight Directors intend to retire

and the six continuing Directors will offer themselves for re-

election at the forthcoming Annual General Meeting in July 2022.

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

commissioned in 2021.

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

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 2022

is set out below:

Formal

Board

Meetings

Audit

Committee

Management

Engagement

Committee

Market

Disclosure

Committee

Nomination

Committee

Remuneration

Committee

Risk

Committee

Mr I Russell 5(c) 8* 1 1 6(c)** 2 4

Mr F Nelson 5 9 1(c) 1 6 2 4

Mr M Bane 5 9 1 1 6 2(c) 4

Ms R Akushie 5 9 1 1 6 2 4

Ms F Davies 5 6 1 1 5 2 4

Mrs S Farnon 5 9(c) 1 1 6 2 4

Mr S Holden 5 9 1 1 6 2 4(c)

Mr K Reid 5 8 1 1 6 2 4

* Mr Russell is not a member of the Audit Committee, but is invited to attend

** Mr Russell did not attend Nomination Committee meetings focused on recruiting his successor, which were chaired by Mr Nelson

04 / DIRECTORS’ REPORT

84 HICL ANNUAL REPORT 2022

4.4

Corporate Governance Statement (continued)

During the period to 31 March 2022 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

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:

V a review of the infrastructure market detailing key

developments;

V investment activity in the period and the pipeline of potential

new investment opportunities;

V a review of portfolio performance in the period with material

issues identified and discussed;

V a review of any sustainability issues and Company

sustainability initiatives from the period;

V a review of any Health & Safety matters in the period;

V a detailed financial review, including detailed management

accounts, valuation and treasury matters; and

V reports from HICL’s brokers and from the financial PR

company.

Matters relating to the Company’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 Section 3.6 – Risk Committee Report.

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 more detailed analysis of HICL’s Budget and Business

Plan for the prospective year.

Performance Evaluation

In 2021 an external review was commissioned as part of the

triannual independent Board performance review.

In the year to 31 March 2022 the Board conducted its own

internal evaluation, considering the performance, tenure and

independence of each Director. This annual self-evaluation was

undertaken using a questionnaire, and also by way of one-to-one

interviews by the Chairman with each Director holding office in the

year. The Chairman presented a summary of the conclusions to

the Board. Feedback on the Chairman was collated by the Senior

Independent Director who then briefed the Chairman.

The independence of each Director has been considered and

each has been confirmed as being independent of the Company

and its Managers. 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 and since the

launch of the Company.

Delegation of Responsibilities

The Board has delegated the day-to-day administration of the

Company to Aztec Financial Services (UK) Limited in its capacity

as Company Secretary and Administrator.

HICL delegates the majority of the day-to-day activities required

to deliver the business model, including responsibility for the

majority of HICL’s risk and portfolio management, to the

Investment Manager, InfraRed, subject to the overall oversight

and supervision of the Directors. InfraRed also operates and

manages the Partnership and its assets in accordance with and

subject to the Investment Policy, investment guidelines and

approved investment parameters that are adopted by the

Directors from time to time in conjunction with (and with the

agreement of) InfraRed.

The strategies and policies which govern the delegated activities

have been set by the Board in accordance with section 172 of the

Companies Act 2016.

04 / DIRECTORS’ REPORT

85HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Conflict of interest

As at 31 March 2022, the Board comprised eight non-executive

Directors, all of whom are independent of the Investment

Manager. None of the Directors sit on boards of other entities

managed by the Investment Manager.

Each Director is required to inform the Board of any potential or

actual conflicts of interest prior to any Board discussion.

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

have been originated and developed by, and may be acquired

from InfraRed or from a fund managed by, InfraRed. In order to

deal with these potential conflicts of interest, detailed procedures

and arrangements have been established to manage transactions

between HICL, InfraRed or funds managed by InfraRed (the

‘‘Rules of Engagement’’). If HICL invests in funds managed or

operated by InfraRed, HICL shall bear any management or similar

fees charged in relation to such fund provided, however, that the

value of HICL’s investments in such funds shall not be counted

towards the valuation of HICL’s investments for the purposes of

calculating the management fees payable to InfraRed.

It is possible that in future HICL may seek to purchase certain

investments from funds managed or operated by InfraRed once

those 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 put in place to manage the conflict.

Key features of the Rules of Engagement are described in HICL’s

March 2019 Prospectus, available on the website at www.hicl.com.

Risk Management and Internal Controls

The Board is responsible for HICL’s system of internal control and

for reviewing its effectiveness. To help achieve this end, the Board

has a designated Risk Committee. It follows a process designed

to meet the particular needs of HICL in managing the risks to

which it is exposed.

At each Board meeting, the Board also monitors HICL’s

investment performance in comparison to its stated objectives

and it reviews HICL’s activities since the last Board meeting to

ensure adherence to approved investment guidelines. The

pipeline of new potential opportunities is considered and the

prices paid for new or incremental investments during the quarter

are also reviewed.

The Investment Manager prepares management accounts and

updates business forecasts on a quarterly basis, which allow the

Board to assess HICL’s activities and review its performance.

The Board has reviewed the need for an internal audit function

and it has decided that the systems and procedures employed by

the Investment Manager and the Secretary, including their own

internal review processes, and the work carried out by HICL’s

external auditors, provide sufficient assurance that a sound

system of internal control, which safeguards HICL’s assets, is

maintained. An internal audit function specific to HICL is therefore

considered unnecessary albeit, from time to time, independent

assurance assignments may be commissioned by the Board.

The Board recognises that these control systems can only be

designed to manage rather than eliminate the risk of failure to

achieve business objectives, and to provide reasonable, but not

absolute, assurance against material misstatement or loss, and

rely on the operating controls established by both the Company

Administrator and the Investment Manager.

The Audit Committee also plays a vital role in overseeing internal

controls. For more information please see Section 4.5 – Audit

Committee Report.

The Board and the Investment Manager have agreed clearly

defined investment criteria, return targets, risk appetite and

exposure limits. Reports on these performance measures,

coupled with cash projections and investment valuations, are

submitted to the Board and the relevant committees at each

quarterly meeting.

Relations with Shareholders

The Board welcomes the views of shareholders and places great

importance on communication with HICL’s shareholders.

HICL reports its full year results to shareholders in May and

interim results in November as well as publishing two Interim

Update Statements each year, normally in February and July.

HICL also holds an AGM in July.

Results of Extraordinary and Annual General Meetings are

announced by the Company promptly after the relevant meeting.

Additionally, other notices and information are provided to

shareholders on an ongoing basis through the Company’s

website in order to assist in keeping shareholders informed. The

Secretary and Registrar monitor the voting of the shareholders

and proxy voting is taken into consideration when votes are cast

at the AGM.

Senior members of the Investment Manager make themselves

available to meet with principal shareholders and key sector

analysts. Feedback from these meetings is provided to the Board

on a regular basis.

Shareholders may contact any of the Directors via the Company

Secretary – including any in his or her capacity as chairman of

one of HICL’s committees, as appropriate – whose contact details

are on HICL’s website.

During the year Mr I Russell (Chairman) and Mr Mike Bane 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.

04 / DIRECTORS’ REPORT

86 HICL ANNUAL REPORT 2022

4.4

Corporate Governance Statement (continued)

Committees of the Board

As well as regular Board meetings, the following committees met

during the course of the year (as set out in the table below): Audit,

Management Engagement, Market Disclosure, Nomination,

Remuneration and Risk. The formal terms of reference for each

Committee have been approved by the Board of HICL and are

available on the Investor Relations section of HICL’s website.

For efficiency and as all Directors are non-executive, all

Committees (apart from the Audit Committee) comprise all the

Directors of the Board.

Audit

Committee

Management

Engagement

Committee

Market

Disclosure

Committee

Nomination

Committee

Remuneration

Committee

Risk

Committee

Chairman Mrs S Farnon Mr F Nelson Mr I Russell Mr M Bane Mr S Holden

Members Ms R Akushie Ms R Akushie Ms R Akushie Ms R Akushie Ms R Akushie Ms R Akushie

Mr M Bane Mr M Bane Mr M Bane Mr M Bane Ms F Davies Mr M Bane

Ms F Davies Ms F Davies Ms F Davies Ms F Davies Mrs S Farnon Ms F Davies

Mr S Holden Mrs S Farnon Mrs S Farnon Mrs S Farnon Mr S Holden Mrs S Farnon

Mr F Nelson Mr S Holden Mr S Holden Mr S Holden Mr F Nelson Mr F Nelson

Mr K Reid Mr K Reid Mr F Nelson Mr F Nelson Mr K Reid Mr K Reid

Mr I Russell Mr K Reid Mr K Reid Mr I Russell Mr I Russell

Mr I Russell

By invitation Mr I Russell

The respective reports of the Remuneration Committee, the Risk

Committee and the Audit Committee are set out in Sections 4.6,

3.6 and 4.5, respectively, of this Annual Report.

The Chairman and members of each Committee as at 31 March

2022 were as follows:

Nomination Committee

The full terms of reference for the Nomination Committee are

available from HICL’s website.

The Board believes that its composition with respect to the

balance of skills, gender, experience and knowledge, coupled

with the mixed length of service, provides for a sound base

from which the interests of investors will be served to a high

standard. There is a good spread of skills on the Board and an

appropriate level of knowledge of regulatory requirements and

regulations, generally, as well as a number of Directors with

accounting qualifications and a good understanding of

investment companies.

Succession planning for key roles, including the Chair and the

Chair of the Audit Committee, as well as the mix of skills and

experience on the Board more generally with respect to Director

recruitment, are explicitly considered and discussed by the

Nomination Committee.

Other than in exceptional circumstances, it is the policy of the

Board that Directors, including the Chair, will not serve more than

nine years on the Board, including time spent on the Board of

HICL Infrastructure Company Limited. As a general rule, a

Director who has served more than nine years will not be

considered independent.

HICL has adopted a Diversity Policy (see Section 4.7 – Report of

the Directors), which the Nomination Committee takes regard of

in all decision making.

The Nomination Committee had six meetings in the year to

31 March 2022.

Management Engagement Committee (“MEC”)

The full terms of reference for the MEC are available from HICL’s

website.

The MEC of the Board is responsible for reviewing all major

service providers to HICL, which includes the Investment

Manager. The terms of reference of this Committee are approved

by the Board of HICL and are available on HICL’s website.

The MEC met once in the year to 31 March 2022 to review the

performance of the key service providers including the Investment

Manager. No material weaknesses were identified; 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 MEC meeting for the financial year occurred in February

2022, when a review of key service providers was undertaken.

Overall, 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 be recommended to the Board for approval, which was

duly granted.

Market Disclosure Committee

The full terms of reference for the Market Disclosure Committee

are available from HICL’s website.

The Committee has responsibility for overseeing the disclosure of

information by the Company to meet its obligations under the

Market Abuse Regulation and the Financial Conduct Authority’s

Listing Rules and Disclosure Guidance and Transparency Rules.

The Market Disclosure Committee met once in the year to

31 March 2022.

04 / DIRECTORS’ REPORT

87HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

I am pleased to present the Audit Committee report for the year

ended 31 March 2022. My report explains the Committee’s work

this year.

We held regular scheduled meetings this year, four of which were

aligned with the Company’s reporting cycle. Member attendance

can be found on page 83. Other regular attendees at these

meetings were: the Company Chair, members of the Investment

Manager’s finance team including the CFO, and the external

auditor, KPMG LLP. In accordance with the Committee’s role in

the investment valuations, separate meetings were held to review

and challenge the Investment Manager’s semi-annual valuation

assumptions, judgements and resulting valuations of the

Company’s underlying portfolio of infrastructure assets. The full list

of Committee roles and responsibilities can be found in the terms

of reference found here: https://www.hicl.com/wp-content/

uploads/2020/02/2.-HICL-Audit-Committee-Terms-of-Reference-

Feb-2022.pdf

The Audit Committee is the formal forum through which the

external auditor reports to the Board of Directors. After four years

of signing the HICL audit report, the incumbent partner is rotating

off after this cycle to give the new audit partner three years before

the audit has to rotate to another firm per the regulations. We

have reviewed the independence, objectivity and effectiveness of

KPMG and recommended to the Board that KPMG be appointed

as external auditor of the Company in respect of the coming

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

InfraRed senior management team who have responsibility

for HICL.

In the coming year, and in response to the Independent Review

on the Quality and Effectiveness of Audit, otherwise known as

the Bryden Review, we intend to publish our Audit and

Assurance Policy.

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.

And finally, as I am retiring from the Board, having reached my

nine-year tenure, I shall be handing over the Chairman role to Rita

Akushie at the AGM in June. I would like to take this opportunity

to wish Rita, the wider HICL team, and you, as shareholders, my

very best for the future.

Susie Farnon

Audit Committee Chair

24 May 2022

Governance and responsibilities

All members of the Committee are independent non-executive

Directors. The Board believes members have the necessary range

of financial, risk, control and commercial experience required to

provide effective challenge to the Investment Manager, external

auditor, and other advisers as appropriate. In particular, the

Board is satisfied that Susie Farnon, Rita Akushie, Mike Bane

and Frank Nelson have the recent and relevant financial

experience as outlined in the FRC’s Corporate Governance Code.

The attendance of members at meetings is shown in the table on

page 83.

The external auditor and the third-party valuation expert are

invited to attend the Audit Committee meetings at which the

Annual and Interim Reports are considered, and at which they

can meet with the Audit Committee without representatives of the

Investment Manager being present. The Audit Committee has

direct access to KPMG and to key senior staff of the Investment

Manager, and it reports its findings and recommendations to the

Board, which retains the ultimate responsibility for the Company’s

financial statements.

4.5

Audit Committee Report

04 / DIRECTORS’ REPORT

88 HICL ANNUAL REPORT 2022

4.5

Audit Committee Report (continued)

Financial reporting External audit

Annual and interim reports Confirmation of the external auditor’s independence

Quarterly interim update statements Policy and approval for non-audit fees

Key accounting judgements and estimates FY2022 audit plan, including significant audit risks (being the

valuation of investments in investment entity subsidiaries)

Update on the relevant thematic reviews from the FRC Audit results report, including the results from testing Key Audit

Matters

Application of APMs, including the Investment Basis External auditor performance and effectiveness

Reviewed the Annual report to ensure that it is fair, balanced and

understandable

Internal control, compliance and risk management Risk review

Review of HICL’s system of control and risk management Valuation reports and recommending the investment portfolio

valuation to the Board

Review of the Viability statement and the supporting stress test

scenarios

Review of investment themes from the portfolio company review

process and portfolio performance including ESG issues and risks

Update on compliance with HMRC’s Senior Accounting Officer

(“SAO”) Regime including wider tax controls

Regular reviews of compliance with regulatory rules and compliance

monitoring findings

Reports on approach to tax policy and strategy

Annual tax update

Going concern and liquidity

What the Committee reviewed in the year ended 31 March 2022

04 / DIRECTORS’ REPORT

89HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Financial reporting regulators

The Committee considered comment letters and papers from the

FRC, including their publication on “Key matters for 2021/22

reports and accounts” in October 2021 as well as their annual

review of corporate reporting and their published thematic

reviews. The Committee reviewed a paper prepared by InfraRed,

which detailed how it had taken due account of the matters

raised and the enhancements it proposed to relevant

disclosures in the September 2021 Interim accounts and

2022 Annual report and accounts.

The Company’s internal control and risk management

systems, including those in relation to the financial reporting

process include:

V Overview of the Investment Manager’s system of key control

and oversight processes, line manager reviews and systems’

access controls;

V updates for the Committee on accounting developments,

including draft and new accounting standards and legislation;

V a separate Investment Committee, at the Investment Manager

level, which considers the Company’s investment valuation

policies, application and outcome;

V approval of the Company’s budget 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 re-forecasting;

V reports from the Investment Manager on matters relevant to

the financial reporting process, including quarterly

assessments of internal controls, processes and fraud risk;

V independent updates and reports from the external auditor on

accounting developments, application of accounting

standards, key accounting judgements and observations on

systems and controls, where appropriate;

V overview of the Investment Manager’s appointment of

experienced and professional staff, both by recruitment and

promotion, of the necessary calibre to fulfil their allotted

responsibilities; and

V appropriate Board oversight of external reporting.

Going concern and viability

The Directors are required to make a statement in the Annual

report as to HICL’s long-term viability. The Committee provides

advice to the Board on the form and content of the statement,

including the underlying assumptions, shown on page 63. To

enable it to provide this advice, the Committee evaluated a report

from the Investment Manager setting out its view of HICL’s

long-term viability and content of the proposed Viability

statement. This report was based on the 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

performance against an assessment of the Group’s risk profile.

Areas of accounting judgement and control focus

The Committee pays particular attention to matters it considers to

be important by virtue of their complexity, level of judgement and

potential impact on the financial statements and wider business

model. Significant areas of focus considered by the Committee

are detailed in the table on the following page, alongside the

actions taken by the Committee (with appropriate challenge from

the external auditor) to address them.

04 / DIRECTORS’ REPORT

90 HICL ANNUAL REPORT 2022

4.5

Audit Committee Report (continued)

Significant Issue Audit Committee Actions

Valuation of investments

The total carrying value of the Investment in Investment Entity

Subsidiary at 31 March 2022 was £3,158.5m (2021: £2,950.3m).

See Note 12 to the financial statements.

The fair value of the Company’s investment is based on the

Net Asset Value of IILP and the sundry assets and liabilities of its

direct Corporate Subsidiary. 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 Section

3.2 – Valuation of the Portfolio on pages 43-50 of this report.

The Audit Committee discussed the valuation process and

methodology with the Investment Manager in August, October and

November 2021 as part of its review of the September 2021

Interim Report, and in February, March, April and May 2022 as part

of its review of the March 2022 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.

Due to the ongoing challenges with Covid-19, specific focus was

placed on the recovery of the Company’s demand-based assets.

The Audit Committee met with KPMG nine times during the year. In

July 2021, the Audit Committee reviewed and agreed KPMG’s

initial audit plan, while in February and April 2022 the Audit

Committee discussed the audit approach to the valuation as well

as in May 2022 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.

04 / DIRECTORS’ REPORT

91HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Significant Issue Audit Committee Actions

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 Section 3.2 –

Valuation of the Portfolio.

The Audit Committee considered in detail and provided robust

challenge to the economic assumptions that are subject to judgment

and that may have a material impact on the valuation. In addition, the

Audit Committee considered the impact (both actual and potential) of

the Covid-19 pandemic and 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.

Due to the current levels of inflation, 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.

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.

Valuation of investments – discount rates

The discount rates used to determine the valuation are selected

and recommended by the Investment Manager. The discount rate

is applied to the expected future cash flows from each

investment’s financial forecasts to arrive at a valuation (discounted

cash flow valuation). The resulting valuation is therefore sensitive

to the discount rate selected.

The Investment Manager is experienced in valuing these

investments and adopts discount rates reflecting their current and

extensive experience of the market. The Investment Manager sets

out the discount rate assumptions and the sensitivity of the

valuation of the investments to this discount rate in Section 3.2 –

Valuation of the Portfolio.

The Audit Committee challenged the Investment Manager on their

material judgements and compared this to feedback from the

third-party valuation expert.

The Investment Manager highlighted to the Audit Committee the

forecast impact on cash flows of several stress scenarios

alongside its assessment of the risk to these cash flows.

The Audit Committee was satisfied that the range of discount

rates was appropriate for the valuation carried out by the

Investment Manager.

04 / DIRECTORS’ REPORT

92 HICL ANNUAL REPORT 2022

Significant Issue Audit Committee Actions

Going concern and viability statement

The financial statements have been prepared on a going concern

basis, with the assessment period of five years unchanged in the

viability statement. See Note 2(a) for details.

The Investment Manager provided a paper explaining the

rationale for the going concern basis of preparation, which has

been considered by the Audit Committee and the external auditor.

The Audit Committee met with the Investment Manager to

discuss the rationale and challenge key assumptions applied, as

part of its review of the March 2022 Annual Report.

The Audit Committee also reviewed the Company’s viability

statement and accompanying commentary, as well as projections

and sensitivities, including the risks associated with the Covid-19

pandemic, 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”)

There are various APMs used throughout the Annual Report to

give investors more information. One of these is the Investment

Basis which is adopted to aid users of its report to assess the

Company’s underlying operating performance and its gearing as

well as providing greater transparency into HICL’s Statement of

Financial Position, including its capacity for investment and ability

to make distributions. Total return, NAV, and EPS are the same

under IFRS and the Investment Basis. The Board and the

Investment Manager manage the Company on an Investment

Basis.

In the year the Company’s reporting was amended to enhance its

disclosure of APMs, which are now disclosed in Section 3.1 –

Financial Review. The presentation was first updated in the

Company’s Interim Report and the disclosure, together with the

FRC’s thematic review on APMs was considered by the

Committee, together with input from the external auditor, in

November 2021.

The Audit Committee reviewed the Investment Manager’s

assessment of the Investment Basis including its presentation by

challenging the disclosures made in the Annual Report and

whether due attention was given to the distinction between the

Investment Basis and IFRS.

Other APMs and their relevance to investors was challenged by

the Audit Committee in order that the Annual Report provides

meaningful disclosure to investors. In this year’s Annual Report,

there is a subsection included in the Financial Review on page 40

that details out the assessment of APMs.

Fair, balanced and understandable

The 2019 AIC Code of Corporate Governance requires the Board

to present a fair, balanced and understandable assessment of the

Company’s position and prospects.

To report the relevant financial performance and position to

stakeholders, the Company prepares pro forma summary

financial information on the basis that HICL consolidates the

results of the Corporate Subsidiaries, known as the “Investment

Basis”, as well as reporting in accordance with IFRS.

The Audit Committee reviewed the March 2022 Annual Report to

ensure that, when taken as a whole, it presents a fair, balanced

and understandable assessment of the Company’s position and

prospects.

The Audit Committee received a draft version of the March 2022

Annual Report for their review and comment, as well as a specific

paper from the Investment Manager to aid their assessment of

the March 2022 Annual Report being fair, balanced and

understandable.

As such, the Audit Committee was able to provide positive

confirmation to the Board, for it to fulfil its obligations under the

2019 AIC Code of Corporate Governance.

4.5

Audit Committee Report (continued)

04 / DIRECTORS’ REPORT

93HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Accounting policies and practices

The Audit Committee reviewed the appropriateness of, and was

satisfied with, the Company’s accounting policies.

The Directors exercised judgement in determining whether the

Company and the Corporate Subsidiaries meet the IFRS 10

definition of an investment entity. By virtue of the Company and

Corporate Subsidiaries’ status as investment entities, all

investments (including the Corporate Subsidiaries) are accounted

for at fair value through profit or loss. Further detail is contained

within Note 2(a) of the financial statements.

Internal Controls

The Audit Committee reviewed the Company’s statement on

internal controls in relation to accounting records, the valuation

process and accounts preparation, prior to endorsement by

the Board.

The Management Engagement Committee reviews the adequacy

and effectiveness of the Investment Manager’s internal controls as

part of its annual review of the Investment Manager’s

performance. Further, each quarter, the Board reviews and

debates a self-assessment internal control report prepared

by the Investment Manager – see Section 3.4 – Risk & Risk

Management for further detail.

Internal Audit

In line with FRC guidance, the Audit Committee keeps under

review the need for an internal audit function. The Audit

Committee is satisfied that the systems of internal control of the

Company, the Investment Manager and the Administrator are

adequate to fulfil the Board ’s obligation in this regard and that

currently an internal audit function is not necessary. Additionally,

HICL’s Depositary provides daily cash flow monitoring, asset

ownership verification and oversight services to the Company.

External Auditor

The Audit Committee notes the requirements of the UK Corporate

Governance Code and in particular the requirement to put the

external audit out to tender at least every 10 years. The external

audit was most recently tendered for the years commencing after

31 March 2015. As reported in the Annual Report for the year

ended 31 March 2015, KPMG was re-appointed as auditor at the

completion of the tender process, and it is expected that the audit

will be tendered within the next two years.

The Audit Committee is monitoring the current consultation on

“Restoring trust in audit and corporate governance” by the

Department for Business, Energy and Industrial Strategy and are

supportive of the stated aims to strengthen the UK’s framework

for major companies and the way in which they are audited.

The Company is in compliance with the requirements of The

Statutory Audit Services for Large Companies Market

Investigation (Mandatory Use of Competitive Tender Processes

and Audit Committee Responsibilities) Order 2014, which relates

to the frequency and governance of tenders for the appointment

of the external auditor and the setting of a policy on the provision

of non-audit services.

Auditor independence

The Audit Committee is responsible for reviewing KPMG’s

independence and performance. It establishes policies for the

provision of non-audit services by the external auditor and reviews

the terms under which the external auditor may be appointed to

perform non-audit services, and the scope and results of the

audit, including KPMG’s effectiveness. To safeguard the

independence and objectivity of the external auditor, the Audit

Committee ensures that any advisory and/or consulting services

provided by the external auditor do not conflict with their statutory

audit responsibilities.

Permitted audit and audit-related services include the statutory

audit of HICL and of its subsidiaries, the Company’s interim review

and other permitted audit-related services. The Audit Committee

has pre-approved these services up to £20,000, which are

reported after the event to the Audit Committee. Non-Audit

services above this limit require prior approval from the

Committee.

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. In the year fees were:

March 2022

£m

March 2021

£m

Audit services

Audit of the Company and intermediate

holding entities

0.4 0.4

Audit of HICL’s project subsidiaries and

other audit-related services

0.1 0.6

0.5 1.0

Non-audit services

Interim review of the Company 0.1 0.1

Other non-audit services – –

0.1 0.1

Total 0.6 1.1

Non-audit services in the above table consisted of audit-related

assurance services for the Company’s Interim Report. In total, it

represented 20% (2021: 10%) 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.

In July 2021, Johnston Carmichael was appointed as the auditor

of 37 of the HICL controlled project subsidiaries following a

competitive tender process.

04 / DIRECTORS’ REPORT

94 HICL ANNUAL REPORT 2022

4.5

Audit Committee Report (continued)

Assessment of Independence and Effectiveness

To fulfil its responsibility regarding the independence of the

external auditor, the Audit Committee considered:

V changes in audit personnel in the audit plan for the

current year;

V a report from the external auditor describing their

arrangements to identify, report and manage any conflicts of

interest; and

V 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:

V the external auditor’s fulfilment of the agreed audit plan and

variations from it;

V the external auditor’s UK Transparency Report 2022;

V reports highlighting the major issues that arose during the

course of the audit;

V feedback from the Investment Manager evaluating the

performance of the audit team; and

V 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.

04 / DIRECTORS’ REPORT

95HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

The Remuneration Committee’s report is set out on pages 95 to

97. The report includes the Directors’ Remuneration Policy, an

explanation of the Committee’s structure and responsibilities, a

report on its activities in the year ended 31 March 2022 and

relevant required reporting on remuneration and shareholdings.

This report is prepared in accordance with the Listing Rules of the

FCA, the relevant sections of the Companies Act 2006 and the

Large and Medium-sized Companies and Groups (Accounts and

Reports) Regulations 2008, (as amended by the Large and

Medium-sized Companies and Groups (Accounts and Reports)

Amendment Regulations 2013, the Companies (Miscellaneous

Reporting) Regulations 2018 and the Companies (Directors’

Remuneration Policy and Directors’ Remuneration Report)

Regulations 2019). Those aspects of the report that are required

to be audited are labelled as such.

The Committee met twice during the year. There have been no

changes to the Directors’ Remuneration Policy or the Terms of

Reference of the Remuneration Committee. After careful

consideration, the Committee recommended to the Board that

the Chair and Directors’ fees are increased in line with inflation to

continue to attract and retain directors with an appropriate skillset

and experience for the Company.

This Directors’ Remuneration Report was adopted by the Board

and signed on its behalf by:

Mike Bane

Remuneration Committee Chair

24 May 2022

Directors’ Remuneration Policy

The Directors’ Remuneration Policy is determined by the

Remuneration Committee. In accordance with the provisions of

the AIC Code of Corporate Governance (the “AIC Code”),

Directors’ remuneration is designed to reflect their duties and time

commitments. Remuneration is set at a reasonable level to attract

and retain Directors of the necessary quality and experience to

execute effective governance and oversight of the Company, to

support strategy and to promote long-term sustainable success.

The specific additional responsibilities of the Chairman, Senior

Independent Director, and the chairs of the various committees of

the Board are taken into account. The policy aims to be fair and

reasonable compared to equivalent investment trusts, investment

companies and other similar-sized financial companies. The

effects of inflation are also considered. Reasonable travel and

associated expenses are reimbursed.

HICL’s articles of association limit the aggregate fees payable to

the Board to a total of £700,000 p.a. (or such amount as HICL’s

shareholders, in a general meeting, shall determine from time-to-

time) excluding reimbursable expenses. Within that limit it is the

responsibility of the Remuneration Committee, as a Committee of

the Board, to determine Directors’ remuneration in conjunction

with the Chairman of the Board, and in his case, by the

Remuneration Committee only. Relevant comparative information

is considered in forming these recommendations and the views

expressed by shareholders are taken into consideration.

The Remuneration Committee will seek the views of an

independent external remuneration consultant at least every three

years to assist its review of remuneration. This was last performed

in 2020, and implemented in 2021, and is scheduled to be

reviewed in 2023.

Directors’ fees are fixed and are payable in cash. As all Directors

are non-executive, they are not eligible for share options,

long-term incentive schemes or other benefits, performance-

related or otherwise. Directors do not have service contracts and

there is no provision for compensation for loss of office. Each new

Director is 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.

This policy and the level of Directors’ fees is reviewed annually by

the Remuneration Committee and applies with effect from 1 April

of each year, subject to shareholder approval at the AGM.

Committee structure and responsibilities

The Remuneration Committee comprises all the Directors

including the Chairman 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 the 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 (as set out on page 95 and with

Principles P, Q and R of the 2019 AIC Corporate Code.

4.6

Directors’ Remuneration Report

04 / DIRECTORS’ REPORT

96 HICL ANNUAL REPORT 2022

Relevant Performance Information

In setting the Directors’ remuneration, consideration is given

to the size 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

for the 16-year period from inception until

31 March 2022 compared with an investment in the FTSE 250

Index over the same period. During that period the TSR was

9.0% p.a. compared with the FTSE 250 Index which was

7.8% 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 2022.

Actual Expenditure

YE 2022 YE 2021

Aggregate Directors’ Remuneration £516,000 £445,500

Aggregate dividends paid

to shareholders

£159,787,113 £158,272,480

Aggregate cost of Ordinary

Shares repurchased

£0 £0

Review of Remuneration

The Remuneration Committee performed a review of Board

remuneration in the year ended 31 March 2022. The review

supported a 5% increase in fees for all Board roles as a result of

increased UK inflation. The inflationary increase is consistent with

the recommendations of the 2020 triennial independent review

performed by Trust Associates representing changes to cost of

living to maintain director fees at a competitive level, but has been

determined below the current level of inflation.

The proposed remuneration, analysed by role, for the year

ending 31 March 2023 is set out in the following table, together

with comparatives:

450

400

350

300

250

200

150

100

Total Shareholder Return

HICL TSR (LHS) FTSE 250 TSR (LHS)

2.5

1.5

0.5

FTSE All-Share TSR (LHS) HICL Beta vs FTSE 250 (RHS)

Beta

Mar 06 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18Mar 07 Mar 19 Mar 21Mar 20

Role (YE 2022)

Total Fees

Proposed

(YE 2023)

Fees

Approved

(YE 2022)

Chairman £105,000 £100,000

Senior Independent Director £70,500 £67,000

Audit Committee Chair £69,500 £66,000

Risk Committee Chair £67,000 £64,000

Director (inc. Luxembourg subsidiary companies) £63,000 £60,000

Director £55,500 £53,000

Total

£430,500 £516,000

Including its predecessor, HICL Guernsey Limited from inception in March 2006 until March 2019

The fees approved/proposed relate to the roles performed and not to individuals per se

Approved at the AGM on 20 July 2021

Ian Russell and Susie Farnon will step down from the HICL Board at the end of July 2022, following the AGM. Directors serving part of the year will receive pro-rata

remuneration for the period served within the financial year to 31 March 2023. The total proposed fee presented is based on the full year remuneration for six

Directors (2022: eight Directors) and does not include pro rata allocations which have not yet been confirmed

4.6

Directors’ Remuneration Report (continued)

04 / DIRECTORS’ REPORT

97HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Directors’ remuneration – audited

Total Remuneration paid / due in year Year ended 31 March 2022 Year ended 31 March 2021

Mr I Russell* £100,000 £78,000

Mr F Nelson £67,000 £60,000

Ms R Akushie £53,000 £47,000

Mr M Bane** £60,000 £53,000

Mrs F Davies £53,000 £47,000

Mrs S Farnon £66,000 £59,000

Mr S Holden £64,000 £54,500

Mr K Reid £53,000 £47,000

Total £516,000 £445,500

*The chairman was the highest paid Director

**Includes £7,000 in respect of Luxembourg subsidiary

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 20 July 2022.

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 20 July 2021.

In Favour Discretion Against Withheld

Resolution Votes % Votes % Votes % Votes %

10 – Remuneration Report 1,141,389,564 99.93 9,332 0.00 580,448 0.05 181,682 0.02

11 – Remuneration Policy 1,127,715,616 98.74 4,814 0.00 14,260,298 1.25 180,298 0.02

12 – Directors’ aggregate remuneration cap 1,129,778,426 98.92 2,575

0.00

12,213,946 1.07 166,079 0.01

Statement of shareholder voting

At the last AGM held on 20 July 2021, the resolutions relating to

the Directors’ remuneration report for the year ended 31 March

2021, the Directors’ Remuneration Policy and an increase to the

Directors’ aggregate remuneration cap were approved.

The percentage of votes cast was 58.97%. The results of the

votes on resolutions relating to remuneration are summarised in

the table below:

Number of Ordinary Shares 31 March 2022 31 March 2021

Mr I Russell 95,979 95,979

Mr F Nelson 51,568 51,568

Ms R Akushie 0 0

Mr M Bane 14,394 14,394

Mrs F Davies 0 0

Mrs S Farnon 59,931 59,931

Mr S Holden 27,694 27,694

Mr K Reid 11,098 10,975

Total 260,664 260,541

Statement of Directors shareholdings – audited

The Directors of the Company on 31 March 2022, and their

interests in the shares of the Company, are shown in the

table below:

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.

04 / DIRECTORS’ REPORT

98 HICL ANNUAL REPORT 2022

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 2022. 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.

Results

HICL’s results for the year are summarised in Section 3.1 –

Financial Review and are set out in detail in the financial

statements.

Distributions and Share Capital

HICL declared three quarterly interim distributions, totalling 6.18p

per share, for the year ended 31 March 2022 as follows:

4.7

Report of the Directors

Amount Declared Record date Paid / to be paid

2.06p 23/02/2022 04/03/2022 31/03/2022

2.06p 17/11/2021 26/11/2021 31/12/2021

2.06p 21/07/2021 27/08/2021 30/09/2021

The fourth quarterly interim distribution, of 2.07p per share, for the

year ended 31 March 2022 was declared by HICL on 19 May

2022, and is due to be paid on 30 June 2022.

HICL has one class of share capital, Ordinary Shares, of which

there were 1,936,813,501 in issue as at 1 April 2021.

This number did not change over the course of the year.

Shareholders may reinvest their dividends via a Dividend

Reinvestment Plan (“DRIP”), the details of which can obtained by

emailing shares@linkgroup.co.uk

Director Role(s) Years of Service*

Mr I Russell Chairman of the Board, Chair of Nomination Committee 8 years 11 months

Mr F Nelson Senior Independent Director, Chair of Management Engagement Committee 7 years 10 months

Ms R Akushie Director 2 years 3 months

Mr M Bane Chair of the Remuneration Committee 3 years 9 months

Ms F Davies Director 3 years 0 months

Mrs S Farnon Chair of the Audit Committee 8 years 11 months

Mr S Holden Chair of the Risk Committee 5 years 9 months

Mr K Reid Director 5 years 7 months

*Assuming a continuation of the years of service as a Director of HICL Infrastructure Company Limited

Directors

The Directors who held office during the year to 31 March 2022 were:

Interim dividend

Year ended

31 March 2022

Year ended

31 March 2021

Year ended

31 March 2020

Year ended

31 March 2019

Year ended

31 March 2018

3 month period ending 30 June 2.06 2.06 2.06 2.01 1.96

3 month period ending 30 September 2.06 2.06 2.06 2.01 1.96

3 month period ending 31 December 2.06 2.06 2.06 2.01 1.96

3 month period ending 31 March 2.07 2.07 2.07 2.02 1.97

Paid / declared 8.25p 8.25p 8.25p 8.05p 7.85p

Dividend History

04 / DIRECTORS’ REPORT

99HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

Directors’ Indemnities

HICL has made qualifying third-party indemnity provisions for the

benefit of its Directors which were made during the period and

remain in force at the date of this report.

Employees

HICL has no employees.

Diversity Policy

The Board believes that a diversity of viewpoints and personal

experiences, along with broad professional expertise, lead to better

decisions, are critical to innovation and provide a competitive

advantage in HICL’s marketplace. When recruiting new Directors,

the Board searches for candidates from a diverse range of

backgrounds and communities to attract the widest breadth of

talent, skills and outlook. The Board’s policy is to appoint individuals

on merit, based on their skills, experience and expertise.

HICL has achieved the key targets of the Hampton-Alexander

Review and the Parker Review, that 33% of the Board of Directors

should be women by the end of 2020 and at least one Director is

from an ethnic minority by 2024. As at 31 March 2022, 37%

(three) of the Board of Directors were women and 12% (one) was

from an ethnic minority.

The Board notes the FCA’s April 2022 Policy Statement on diversity

and inclusion on company boards which HICL plans to address.

HICL is an investment company and as such does not have a

senior management team. Day-to-day management of HICL is

delegated to InfraRed Capital Partners (“InfraRed”), HICL’s

Investment Manager. InfraRed’s diversity policy and statistics are

published at: https://www.ircp.com/corporate-life

Corporate Governance

Section 4.4 – Corporate Governance Statement 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 July 2022.

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 Section 4.3 –

The Investment Manager.

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 Section 4.4 – Corporate

Governance Statement.

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:

V information in relation to HICL’s leverage can be found in the

Strategic Report;

V remuneration of InfraRed as HICL’s AIFM can be found below

in AIFM Remuneration;

V a summary of the activities of HICL can be found in Section

2.5 – Investment Manager’s Report;

V 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 Section 3.6 – Risk Committee Report; and

V 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 Capital Partners (Management) LLP,

which are available from Companies House.

The aggregate total remuneration paid by the group which contains

InfraRed for the year ended 31 March 2022 was £36,134,693.

This was divided into fixed remuneration of £19,398,990 attributable

to 178 beneficiaries and variable remuneration of £16,735,703

attributable to 161 beneficiaries. The aggregate total remuneration

paid by the group which contains InfraRed to AIFMD Code Staff in

the year was £7,481,962 and the number of senior management

and risk takers was 16.

The Investment Manager fees charged to the Company were £0.1m

(disclosed as Investment Manager fees in Note 6), of which the full

balance remained payable at 31 March 2022. InfraRed is also the

Operator of IILP, the Corporate Subsidiary through which HICL holds

its investments. The total Operator fees were £29.3m of which

£7.4m remained payable at 31 March 2022.

Brokers, Administrator and Company Secretary

HICL’s joint corporate brokers at 31 March 2022 are Investec

Bank plc and RBC Capital Markets.

The Administrator and Company Secretary is Aztec Financial

Services (UK) Limited.

04 / DIRECTORS’ REPORT

100 HICL ANNUAL REPORT 2022

4.7

Report of the Directors (continued)

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 re-appointment of KPMG LLP as auditor of HICL

is to be proposed at the forthcoming Annual General Meeting.

Substantial Interests in Share Capital

As at 31 March 2022, HICL is aware of or has received

notification in accordance with the Financial Conduct Authority’s

Disclosure 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

Investec Wealth & Investment Limited 123,627,850 6.4%

Brewin Dolphin Limited 116,881,789 6.0%

Rathbones Investment Management 112,958,933 5.8%

Fidelity International Ltd 62,294,660 3.2%

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 PLC met the criteria for the first time in

September 2021 to qualify for Payment Practice Reporting. This

requires HICL PLC to report on their payment policies and

specific data on payments and suppliers that demonstrate

achieved performance every six months. For the purpose of this

reporting HICL PLC is required to state a standard payment term.

As HICL 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 Section 2.7 – Sustainability Highlights.

Political Contributions

HICL made no political donations during the year (2021: nil).

Going concern

The Company’s business activities, together with the factors likely

to affect its future development, performance and position are set

out in Section 2.2 – HICL’s Business Model. The financial position

of the Company, its cash flow and liquidity position are described in

Sections 2.5 – Investment Manager’s Report and 3.1 – Financial

Review. 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 Company’s access to credit facilities and by

reviewing cash flow forecasts with a number of stress scenarios.

They also considered the Company’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 Section 3.1 – Financial Review 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. As explained in

the Investment Manager’s Report, these infrastructure projects

include several demand-based assets that have been impacted

by Covid-19, and a large number of availability assets that have

no exposure to economic growth. 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 20 July 2021.

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

Section 2.7 – 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.

04 / DIRECTORS’ REPORT

101HICL ANNUAL REPORT 2022

04 / DIRECTORS’ REPORT

The Directors are responsible for preparing the Annual Report and

the financial statements in accordance with applicable law and

regulations.

Company law requires the directors to prepare financial

statements for each financial year. Under that law they have

elected to prepare the financial statements in accordance

with UK-adopted international accounting standards and

applicable law.

Under company law the Directors must not approve the financial

statements unless they are satisfied that they give a true and fair

view of the state of affairs of the Company and of its profit or loss

for that period. In preparing these financial statements, the

directors are required to:

V select suitable accounting policies and then apply them

consistently;

V make judgements and estimates that are reasonable, relevant

and reliable;

V state whether they have been prepared in accordance with

UK-adopted international accounting standards;

V assess the Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern;

and

V use 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.

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.

4.8

Statement of Directors’ Responsibilities

in respect of the Annual Report and the financial statements

Responsibility statement of the Directors in respect of the

annual financial report

We confirm that to the best of our knowledge:

V 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

V 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.

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.

In accordance with Disclosure Guidance and Transparency Rule

4.1.14R, the financial statements will form part of the annual

financial report prepared using the single electronic reporting

format under the TD ESEF Regulation. The auditor’s report on

these financial statements provides no assurance over the

ESEF format.

By order of the Board

Authorised signatory

Aztec Financial Services (UK) Limited

Company Secretary

24 May 2022

Registered Office:

Aztec Financial Services (UK) Limited:

Forum 4, Solent Business Park, Parkway South, Whiteley,

Fareham, PO15 7AD

05 / FINANCIAL STATEMENTS

102 HICL ANNUAL REPORT 2022

Newcastle Libraries, UK

05 / FINANCIAL STATEMENTS

103HICL ANNUAL REPORT 2022

ST NTS02 / STRATEGIC REPORT 03 / PERFORMANCE & RISK 04 / DIRECTORS’ REPORT 05 / FINANCIAL STATEMENTS01 / OVERVIEW

Financial

Statements

05 / FINANCIAL STATEMENTS

104 HICL ANNUAL REPORT 2022

5.1

Independent Auditor’s Report to the Members

of HICL Infrastructure PLC

1. Our opinion is unmodified

We have aud ted the financial statements of HICL

Infrastructure PLC (“the Company”) for the year

ended 31 March 2022 which comprise the Income

Statement, Statement of Financial Position,

Statement of Changes in Shareholders’ Equ ty,

Cash Flow Statement and the related notes,

including the accounting policies in note 1.

In our opinion the financial statements:

— give a true and fair view of the state of

Company’s affairs as at 31 March 2022 and of

its prof t for the year then ended;

— have been properly prepared in accordance w th

UK-adopted international accounting standards;

and

— have been prepared in accordance w th the

requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance w th

International Standards on Auditing (UK) (“ISAs

(UK)”) and applicable law. Our respons bilities are

described below. We believe that the audit

evidence we have obtained is a sufficient and

appropriate basis for our opinion. Our audit opinion

is consistent w th our report to the audit

comm ttee.

We were first appointed as auditor by the directors

on 26 February 2019. The period of total

uninterrupted engagement, including HICL

Infrastructure Company Lim ted the previous

Guernsey listed ent ty, is for sixteen years ended

31 March 2022. We have fulfilled our ethical

respons bil ties under, and we remain independent

of the Company in accordance w th, UK ethical

requirements including the FRC Ethical Standard as

applied to listed public interest ent ties. No non-

audit services proh bited by that standard were

provided.

Independent

auditor’s report

to the members of HICL Infrastructure PLC

Overview

Materiality:

financial

statements as a

whole

£30m (2021:£28m)

1% (2021:0 95%) of Company net

asset value

Key audit matters vs 2021

Recurring risks Valuation of

investment in

investment entity

subsidiary

◄►

05 / FINANCIAL STATEMENTS

105HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

2. Key audit matters: our assessment of risks of material misstatement

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 aud t; and directing the efforts of the engagement team. We

summarise below the key aud t matter (unchanged from 2021), in arriving at our audit opinion above, together with our key aud t procedures to

address this matter and, as required for public interest entities, our results from those procedures.

These matters were addressed, and our results

are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in

forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.

The risk Our response

Valuation of investment in

investment entity subsidiary

(£3,158.5m; 2021: £2,950.3m)

Refer to:

Audit Committee Report on page

Accounting policy on pages 115

Financial disclosures on pages 120

and 121

Forecast based valuation:

— The Company’s investments in ts

immediate subsidiary is carried at

fair value through profit or loss and

represents a significant proportion

of the Company’s net assets. The

fair value of the immediate

subsidiary reflects its net asset

value incorporating the fair value

of the underlying infrastructure

projects and holding companies.

— The fair value of infrastructure

investments is determined using

the income approach whereby the

long term forecasted cash flows of

each individual infrastructure asset

are discounted, with their

cashflows and/ or discount rate

adjusted to reflect risk profile

associated w th these

investments. In addition, inherent

in these long term forecasted cash

flows are key macro-economic

assumptions such as inflation,

foreign exchange rates, tax rates,

deposit rates and (for certain

demand-based investments) GDP.

— The valuation risk represents a risk

of error associated with estimating

the timing and amounts of long

term forecasted cash flows and a

risk of both fraud and error

associated w th the selection and

application of discount rates,

appropriate macro-economic

assumptions and specific project

adjustments to reflect risk.

Changes to long term forecasted

cash flows and/or the selection

and application of different

assumptions may result in a

materially d fferent valuation for

the infrastructure investments.

— In the current year the macro-

economic assumptions impacting

all investments and spec fically the

forecasted cash flows of demand

based investments continue to be

impacted by the economic

disruption caused by COVID-19

and broader geopol tical and

economic factors. This results in a

high degree of estimation

uncertainty, with a potential range

of reasonable outcomes greater

than our materiality for the

financial statements as a whole

and poss bly many times that

amount. The financial statements

(note 14) disclose the sensitivity

estimated by the Company.

Our procedures included:

— Assessing forecasted distributions: we have compared the

prior year forecasts to current year actual distributions to

consider historical accuracy of forecasting. We assessed the

valuation for each investment focusing on changes since the

prior reporting date. We risk-assessed the portfolio, selecting

specific investments to perform additional procedures on.

This sample included specific investments where there has

been a significant movement in valuation, investments w th

known operational issues and a haphazard selection of

investments from the residual population.

— considered whether the cash flows used for the

calculation are consistent with the forecasts prepared by

the underlying investments and assessed responses from

underlying project entities to identify significant matters

identified for the projects and whether these have a

material impact on the forecasted distributions;

— held discussions with the investment manager to ident fy

any specific operational issues relating to the

investments, and assessed and challenged the impact of

these issues on the forecasted distr butions and discount

rate;

— gained an understanding of and challenged any significant

adjustments, e ther to the cash flows and/ or discount

rates, that impact forecasted distributions, including

adjustments related to COVID-19; and

— tested evidence to support all significant acquisitions and

disposal during the year.

— Benchmarking valuation assumptions: w th support from

KPMG valuation specialists, we reviewed and challenged the

Company’s assumed discount rates and the macro-economic

assumptions applied in the valuation models by benchmarking

against independent market data, market transactions and

valuation specialists’ experience in valuing similar

investments.

— We considered the impact on discount rates and macro-

economic assumptions in light of COVID-19 and ts impact on

demand based assets. We reviewed the methodology used

and with input from the valuation specialists assessed the

reasonableness of this methodology and assumptions

applied;

— Evaluation of the third party expert: we assessed the

objectiv ty, capabilities and competence of the third party

valuation expert engaged by the Company to challenge the

reasonableness of the Company’s investment valuations. We

considered the methodology applied by the valuation expert

in performing their work. We obtained and assessed the

valuation expert’s findings, held discussions with them and

considered the impact, if any, on our aud t work; and

— Assessing disclosures: we considered the Company’s

disclosures in relation to the use of estimations and

judgements regarding the fair value of investments and the

Company’s investment valuation policies. Additionally we

assessed the transparency provided by the disclosures w th

regards to outlining sens tiv ties in investment values in

relation to economic assumptions applied.

Our results

— As a result of our work we found the valuation of the investment

in investment entity subsidiary and related sensitivity disclosures

to be acceptable. (2021: Acceptable)

05 / FINANCIAL STATEMENTS

106 HICL ANNUAL REPORT 2022

5.1

Independent Auditor’s Report to the Members

of HICL Infrastructure PLC (continued)

Net Assets

£3,158.5m

(2021: £2,950.3m)

Materiality

£30.0m (2021: £28.0m)

£30.0m

Whole financial

statements

materiality

(2021: £28.0m)

£22.5m

Whole financial

statements performance

materiality (2021: £21 0m)

£1.5m

Misstatements

reported to the

audit committee (2021: £1.4m)

Net Assets

Material ty

3. Our application of materiality and an overview

of the scope of our audit

Material ty for the financial statements as a whole was

set at £30.0m (2021: £28.0m), determined with

reference to a benchmark of Net Assets, of which it

represents 1% (2021: 0.95%).

We consider Net Assets to be the key financial

statement benchmark used by shareholders of the

Company is assessing financial performance.

In line w th our aud t methodology, 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.

Performance materiality was set at 75% (2021: 75%)

of materiality for the financial statements as a whole,

which equates to £22.5m (2021: £21.0m). We applied

this percentage in our determination of performance

materiality because we did not ident fy any factors

indicating an elevated level of risk.

We agreed to report to the Aud t Committee any

corrected or uncorrected ident fied misstatements

exceeding £1.5m (2021: £1.4m), in addition to other

identified misstatements that warranted reporting on

qualitative grounds.

The scope of the aud t work performed was fully

substantive as we did not rely upon the Company’s

internal control over financial reporting.

4. The impact of climate change on our audit

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 assets

the Company invests in along with the assets the Company

holds on its Statement of Financial Position.

As 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 have performed a risk assessment of how

the impact of climate change may affect the financial

statements and our aud t. Taking into account the nature of

the Company’s underlying investments, 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 aud t, including our key aud t matters. The

potential impacts of climate change on the Company’s

investments have been assessed as part of our procedures

performed over the adjustments to future cash flows and

discount rates.

We have also read the Board’s Task Force on Climate-

related Financial Disclosure (TCFD) in the front ha f of the

annual report and considered consistency with the financial

statements and our aud t knowledge.

5. Going concern

The directors have prepared the financial statements on the

going concern basis as they do not intend to liquidate the

Company or to cease ts operations, and as they have

concluded that the Company’s financial pos tion means that

this is realistic. They have also concluded that there are no

material uncertainties that could have cast significant doubt

over its 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”).

We used our knowledge of the Company, its industry, and

the general economic environment to ident fy the inherent

risks to its business model and analysed how those risks

might affect the Company’s financial resources or ability to

continue operations over the going concern period. The risk

that we considered most likely to adversely affect the

Company’s available financial resources was operational or

performance issues w thin the portfolio which increases the

number of projects not distributing and its impact on the

Company’s distribution income and cash flows.

We considered whether this risk could plausibly affect the

liquidity or covenant compliance in the going concern period

by assessing the degree of downside assumption that,

individually and collectively, could result in a liquid ty issue,

taking into account the Company’s current and projected

cash and facil ties (a reverse stress test).

Our conclusions based on this work:

— we consider that the directors’ use of the going concern

basis of accounting in the preparation of the financial

statements is appropriate;

— we have not ident fied, and concur with the directors’

assessment that there is not, a material uncertainty

related to events or conditions that, individually or

collectively, may cast significant doubt on the

Company's ability to continue as a going concern for the

going concern period;

05 / FINANCIAL STATEMENTS

107HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

— we have nothing material to add or draw attention to in

relation to the directors’ statement in note 2 to the

financial statements on the use of the going concern

basis of accounting with no material uncertainties that

may cast sign ficant doubt over the Company’s use of

that basis for the going concern period, and we found

the going concern disclosure in note 2 to be acceptable;

and

— the related statement under the Listing Rules set out on

page 74 is materially consistent with the financial

statements and our aud t knowledge.

However, as we cannot predict all future events or

conditions and as subsequent events may result in

outcomes that are inconsistent w th judgements that were

reasonable at the time they were made, the above

conclusions are not a guarantee that the Company will

continue in operation.

6. Fraud and breaches of laws and regulations – ability

to detect

Identifying and responding to risks of material

misstatement due to fraud

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

procedures included:

— enquiring of directors and the Audit Committee, as to

the Company’s high-level policies and procedures to

prevent and detect fraud, including the Company’s

policy and channel for “whistleblowing”, as well as

whether they have knowledge of any actual, suspected

or alleged fraud.

— reading Board and Aud t Committee minutes.

— considering the investment manager’s fee arrangement

and how closely t is linked to the valuation of the

Company’s assets.

We communicated identified fraud risks throughout the

audit team and remained alert to any indications of fraud

throughout the audit.

As required by auditing standards, and taking into account

poss ble pressures to meet prof t or investment valuation

targets and our overall knowledge of the control

environment, 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. We deemed that there is

lim ted opportunity or incentive to man pulate income

recognition.

We have identified a fraud risk associated w th the valuation

of investments, further detail in respect of this fraud risk is

set out in the key audit matter disclosures section 2 of this

report.

We also performed procedures including:

— identifying journal entries to test based on risk criteria

and comparing the ident fied entries to supporting

documentation. These included those posted by senior

finance management; those posted and approved by the

same user; and those posted to unusual accounts.

— assessing the accounting estimate related to fair value

of investments for bias.

Identifying and responding to risks of material

misstatement due to non-compliance with laws and

regulations

We ident fied 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 w th the directors

and other management (as required by auditing standards),

and discussed with the directors and other management

the policies and procedures regarding compliance with laws

and regulations.

We communicated ident fied laws and regulations

throughout our team and remained alert to any indications

of non-compliance throughout the audit.

The potential effect of these laws and regulations on the

financial statements varies considerably.

The company is subject to laws and regulations that directly

affect the financial statements including financial reporting

legislation (including related companies legislation),

distr butable prof ts legislation, and taxation legislation and

we assessed the extent of compliance w th these laws and

regulations as part of our procedures on the related financial

statement items.

Whilst the company is subject to many other laws and

regulations, we did not ident fy any others where the

consequences of non-compliance alone could have a

material effect on amounts or disclosures in the financial

statements.

Context of the ability of the audit to detect fraud or

breaches of law or regulation

Owing to the inherent lim tations of an aud t, 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 audit

in accordance w th aud ting standards. For example, the

further removed non-compliance with laws and regulations

is from the events and transactions reflected in the financial

statements, the less likely the inherently limited procedures

required by auditing standards would identify it.

In addition, as with any aud t, there remained a higher risk

of non-detection of fraud, as these may involve collusion,

forgery, intentional omissions, misrepresentations, or the

override of internal controls. Our aud t 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 w th all laws

and regulations.

05 / FINANCIAL STATEMENTS

108 HICL ANNUAL REPORT 2022

5.1

Independent Auditor’s Report to the Members

of HICL Infrastructure PLC (continued)

7. We have nothing to report on the 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.

Our respons bility is to read the other information and, in

doing so, consider whether, based on our financial

statements aud t work, the information therein is materially

misstated or inconsistent with the financial statements or

our aud t knowledge. Based solely on that work we have

not identified material misstatements in the other

information.

Strategic report and directors’ report

Based solely on our work on the other information:

— 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

In our opinion the part of the Directors’ Remuneration

Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-

term viability

We are required to perform procedures to ident fy whether

there is a material inconsistency between the directors’

disclosures in respect of emerging and principal risks and

the viabil ty statement, and the financial statements and

our aud t knowledge.

Based on those procedures, we have nothing material to

add or draw attention to in relation to:

— the directors’ confirmation w thin the viability statement

page 63 that they have carried out a robust assessment

of the emerging and principal risks facing the Company,

including those that would threaten ts business model,

future performance, solvency and liquid ty;

— the disclosures describing these risks and how

emerging risks are identified, and explaining how they

are being managed and m tigated; 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 ts liabil ties 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 63 under the Listing Rules. Based on the above

procedures, we have concluded that the above disclosures

are materially consistent w th the financial statements and

our aud t knowledge.

Our work is lim ted 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

cond tions 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 viabil ty.

Corporate governance disclosures

We are required to perform procedures to ident fy whether

there is a material inconsistency between the directors’

corporate governance disclosures and the financial

statements and our audit knowledge.

Based on those procedures, we have concluded that each

of the following is materially consistent with the financial

statements 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 pos tion and performance, business model

and strategy;

— the section of the annual report descr bing the work of

the Audit Comm ttee, including the sign ficant issues

that the aud t committee considered in relation to the

financial statements, and how these issues were

addressed; and

— the section of the annual report that descr bes the

review of the effectiveness of the Company’s risk

management and internal control systems.

We are required to review the part of the Corporate

Governance Statement relating to the Company’s

compliance with the provisions of the UK Corporate

Governance Code specified by the Listing Rules for our

review. We have nothing to report in this respect

05 / FINANCIAL STATEMENTS

109HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

8. We have nothing to report on the other matters on

which we are required to report by exception

Under the Companies Act 2006, we are required to report

to you if, 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 aud ted are not in

agreement with the accounting records and

returns; or

— certain disclosures of directors’ remuneration spec fied

by law are not made; or

— we have not received all the information and

explanations we require for our aud t.

We have nothing to report in these respects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page

101, 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

abil ty to continue as a going concern, disclosing, as

applicable, matters related to going concern; and using the

going concern basis of accounting unless they e ther 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 aud tor’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 t

exists. Misstatements can arise from fraud or error and are

considered material f, 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 responsibil ties is provided on the

FRC’s webs te at www.frc.org.uk/auditorsresponsibil ties

The Company is required to include these financial

statements in an annual financial report prepared using the

single electronic reporting format specified in the TD ESEF

Regulation. This aud tor's report provides no assurance over

whether the annual financial report has been prepared in

accordance with that format.

10. 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 and the terms of our engagement by

the Company. Our aud t 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

the further matters we are required to state to them in

accordance w th the terms agreed w th the Company, and

for no other purpose. To the fullest extent perm tted 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.

Ian Griffiths (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London E14 5GL

24 May 2022

05 / FINANCIAL STATEMENTS

110 HICL ANNUAL REPORT 2022

Note

Year ended

31 March 2022

Total

£m

Year ended

31 March 2021

Total

£m

Dividends received 79.3 37.3

Interest received 80.5 121.0

Net gain / (loss) on revaluation of investment in Investment Entity Subsidiary 212.0 (3.5)

Total income 5 371.8 154.8

Company expenses 6 (3.1) (2.9)

Profit before tax 368.7 151.9

Profit for the year 9 368.7 151.9

Earnings per share – basic and diluted (pence) 9 19.0 7.9

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.

5.2

Income Statement

For the year ended 31 March 2022

05 / FINANCIAL STATEMENTS

111HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

Note

31 March 2022

£m

31 March 2021

£m

Non-current assets

Investment in Investment Entity subsidiary 12, 14 3,158.5 2,950.3

Total non-current assets 3,158.5 2,950.3

Current assets

Trade and other receivables 0.2 0.2

Cash and cash equivalents 1.2 0.4

Total current assets 1.4 0.6

Total assets 3,159.9 2,950.9

Current liabilities

Trade and other payables (0.8) (0.7)

Total current liabilities (0.8) (0.7)

Total liabilities (0.8) (0.7)

Net assets 3,159.1 2,950.2

Equity

Share capital 16 0.2 0.2

Share premium 16 1,055.3 1,055.3

Revenue reserve 16 1,993.3 1,996.4

Capital reserve 16 110.3 (101.7)

Total equity 11 3,159.1 2,950.2

Net assets per Ordinary Share (pence) 11 163.1 152.3

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 24 May 2022, and signed on its behalf by:

I Russell M Bane

Director Director

Company registered number: 11738373

5.2

Statement of Financial Position

As at 31 March 2022

05 / FINANCIAL STATEMENTS

112 HICL ANNUAL REPORT 2022

5.2

Statement of Changes in Shareholders’ Equity

For the year ended 31 March 2022

Note

Share capital and

share premium

£m

Revenue

reserve

£m

Capital

reserve

£m

Total

shareholders’

equity

£m

Shareholders’ equity as at 31 March 2020 936.9 1,999.3 (98.2) 2,838.0

Profit for the year – 155.4 (3.5)1 151.9

Distributions paid to Company shareholders 10 – (158.3) – (158.3)

Issues of Ordinary Shares 16 120.0 – – 120.0

Costs of issue of Ordinary Shares 16 (1.4) – – (1.4)

Shareholders’ equity as at 31 March 2021 1,055.5 1,996.4 (101.7) 2,950.2

Revenue and Capital reserves are described in accounting policies Note 16 – Share Capital and Reserves

The accompanying Notes are an integral part of these financial statements.

For the year ended 31 March 2021

Note

Share capital and

share premium

£m

Revenue

reserve

£m

Capital

reserve

£m

Total

shareholders’

equity

£m

Shareholders’ equity as at 31 March 2021 1,055.5 1,996.4 (101.7) 2,950.2

Profit for the year – 156.7 212.0 368.7

Distributions paid to Company shareholders 10 – (159.8) – (159.8)

Shareholders’ equity as at 31 March 2022 1,055.5 1,993.3 110.3 3,159.1

Revenue and Capital reserves are described in accounting policies Note 16 – Share Capital and Reserves

05 / FINANCIAL STATEMENTS

113HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

5.2

Cash Flow Statement

For the year ended 31 March 2022

Note

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Cash flows from operating activities

Profit before tax 9 368.7 151.9

Adjustments for:

Investment income 5 (371.8) (154.8)

Operating cash flows before movements in working capital (3.1) (2.9)

Changes in working capital:

Increase in receivables – (0.1)

Increase in payables 0.1 0.1

Cash outflow from operations (3.0) (2.9)

Investment income received 163.6 160.8

Net cash from operating activities 160.6 157.9

Cash flows from investing activities

Investment in subsidiary – (118.4)

Net cash used in investing activities – (118.4)

Cash flows from financing activities

Net proceeds from issue of share capital 16 – 118.6

Distributions paid to Company shareholders 10 (159.8) (158.3)

Net cash used in financing activities (159.8) (39.7)

Net increase / (decrease) in cash and cash equivalents 0.8 (0.2)

Cash and cash equivalents at beginning of year 0.4 0.6

Cash and cash equivalents at end of year 1.2 0.4

The accompanying Notes are an integral part of these financial statements.

05 / FINANCIAL STATEMENTS

114 HICL ANNUAL REPORT 2022

5.3

Notes to the Financial Statements

For the year ended 31 March 2022

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 2022 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 invest in infrastructure projects in the United Kingdom, North America and Europe.

2. KEY ACCOUNTING POLICIES

(a) 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 to the preparation of the Company’s accounts are shown below. These policies have been consistently applied and apply to all

years presented.

Going concern

The Company’s business activities, together with the factors likely to affect its future development, performance and position are set out

in Section 2.2 – HICL’s Business Model. The financial position of the Company, its cash flows, and liquidity position are described in

Section 3.1 – Financial Review. In addition, Notes 2 to 17 and 19 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 Company’s access to a Revolving Credit Facility

and Letter of Credit Facility, both via a Corporate Subsidiary (details of which are set out in Section 3.1 – Financial Review) and by

reviewing cash flow forecasts with a number of stress scenarios, including actual and potential downside impacts, such as an increase

in projects not distributing and increasing operational costs, resulting in adverse asset cash flows. They also considered the Company’s

considerable financial resources, including investments in a significant and diversified number of project assets. The majority of these

project assets operate long-term contracts with various public sector customers and suppliers across a range of infrastructure projects.

As explained in Section 2.5 – Investment Manager’s Report, these infrastructure projects include several demand-based assets that

were impacted by Covid-19 but are now recovering, and a large number of availability assets that have no direct exposure to economic

growth. 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 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

The Company 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.

V Amendments to IFRS 10 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

V Amendments to IAS 1 Classification of Liabilities as Current or Non-current (effective for annual periods beginning on or after

1 January 2023)

V Amendments to IFRS 3 Reference to the Conceptual Framework (effective for business combinations for which date of acquisition

is on or after the beginning of the first annual period beginning on or after 1 January 2022)

V Annual improvements to IFRS standards 2018-2020 Cycle (effective for annual periods beginning on or after 1 January 2022)

V Amendments to IAS 8 Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023)

05 / FINANCIAL STATEMENTS

115HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

2. KEY ACCOUNTING POLICIES (CONTINUED)

(b) Financial instruments

Financial assets and liabilities are recognised on the Balance Sheet when the Company becomes a party to the contractual provisions of

the instrument. Financial assets and liabilities are de-recognised when the contractual rights to the cash flows from the instrument expire

or the asset or liability is transferred and the transfer qualifies for de-recognition in accordance with IFRS 9 ‘Financial Instruments:

Recognition and measurement’.

(i) Non-derivative financial instruments

Non-derivative financial instruments comprise the Company’s investment in the equity and debt of Luxco, trade and other receivables,

cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value including directly attributable transaction costs, except for

financial instruments measured at fair value through profit or loss. Subsequent to initial recognition, non-derivative financial instruments

are measured as described below.

Investments in equity and debt securities

Investments in the equity and loanstock of entities engaged in infrastructure activities, which are not classified as subsidiaries of the

Company or which are subsidiaries not consolidated in the Company’s results, are designated at fair value through profit or loss since

the Company manages these investments and makes purchase and sale decisions based on their fair value.

Other

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment

losses for financial assets. Interest income or expenses, foreign exchange gains and losses and impairment are recognised in the

Income Statement. Any gain or loss on derecognition is recognised in the Income Statement.

(ii) Fair values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has

access at that date.

The fair value of the Company’s investment in Luxco is 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 fair value of the underlying investments in its portfolio of infrastructure assets, since IILP

manages these investments and makes purchase and sale decisions based on their fair value.

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.

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 using the effective interest method. Dividend

income is recognised when the Company’s right to receive payment is established.

(d) Share capital and share premium

Ordinary Shares are classified as equity. Costs associated with the establishment of the Company or directly attributable to the issue of

new shares are recognised as a deduction from the share premium account.

(e) Equity and reserves

The Company is a UK approved investment trust company. Financial statements prepared under IFRS are not strictly required to 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 “AIC SORP”). However, where relevant and appropriate, the Directors have looked to

follow the recommendations of the AIC SORP. The Directors have chosen to rename distributable and other reserves into a Revenue

reserve and a Capital reserve respectively. The Directors have exercised their judgement in applying the AIC SORP and a summary of

these judgements are as follows:

V Net gains on investments are applied wholly to the Capital reserve as they relate to the revaluation or disposal of investments;

V Dividends are applied to the Revenue reserve except under specific circumstances where a dividend arises from a return of capital or

proceeds from a refinancing, when they are applied to the Capital reserve;

05 / FINANCIAL STATEMENTS

116 HICL ANNUAL REPORT 2022

2. KEY ACCOUNTING POLICIES (CONTINUED)

V Fees payable are applied to the Capital reserve where the service provided is, in substance, an intrinsic part of an intention to acquire

or dispose of an investment;

V Movement in the fair value of derivative financial instruments is applied to the Capital reserve as the derivative hedging programme is

specifically designed to reduce the volatility of Sterling valuations of the non-Sterling denominated investments;

V Management fees are applied to the Revenue reserve as they reflect ongoing asset management. Where a transaction fee element is

due on the acquisition of an investment it is applied to the Capital reserve;

V Operating costs are applied wholly to the Revenue reserve as there is no clear connection between the operating expenses of the

Company and the purchase and sale of an investment;

V Finance costs are applied wholly to the Revenue reserve as the existing borrowing is not directly linked to an investment; and

V Foreign exchange movements are applied to the Revenue reserve where they relate to movements on non-portfolio assets.

(f) Cash and cash equivalents

Cash and cash equivalents held by the Company comprise cash balances, deposits held on call with banks and other short-term, highly

liquid investments with original maturities of three months or less. Cash equivalents, including demand deposits, are held for the

purpose of meeting short-term cash commitments rather than for investment or other purposes.

(g) Income tax

Income tax represents the sum of the tax currently payable and deferred tax. Current tax is based on the taxable profit for the year.

Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are

taxable or deductible in other years and it further excludes items that are never taxable or deductible. Tax is calculated using tax rates

that have been enacted or substantively enacted by the balance sheet date.

(h) Foreign exchange gains and losses

Transactions entered into by the Company in a currency other than its functional currency are recorded at the rates ruling when the

transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange

differences arising on the re-translation of unsettled monetary assets and liabilities are recognised immediately in the Income Statement.

(i) Expenses

All expenses are accounted for on an accruals basis. The Company’s investment management fee, administration fees and all other

expenses are charged through the Income Statement.

(j) Dividends payable

Dividends payable to the Company’s shareholders are recognised when they become legally payable. In the case of interim dividends,

this is when they are paid. In the case of final dividends, this is when they are approved by the shareholders at the Annual General

Meeting.

(k) Segmental reporting

The Chief Operating Decision Maker (the “CODM”) has been determined to be the Board, who are of the opinion that the Company is

engaged in a single segment of business, being the investment in infrastructure, which is principally in private finance initiatives and

public private partnership companies. The Company has no single major customer.

The internal financial information used by the CODM on a quarterly basis to allocate resources, assess performance and manage the

Company presents the business as a single segment comprising the portfolio of investments in infrastructure assets.

3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in accordance with UK adopted IFRS requires management to make judgements, estimates and

assumptions in certain circumstances that affect reported amounts. The judgements, estimates and assumptions that have a significant

risk of causing a material adjustment to the disclosure or to the carrying amounts of assets and liabilities are outlined below.

Key judgements

(i) Investment entities

The Company has applied IFRS 10 ‘Consolidated Financial Statements’, IFRS 11 ‘Joint Arrangements’ and IFRS 12 ‘Disclosure of

Interests in Other entities’ in these financial statements, which require investment entities to measure certain subsidiaries, including

those that are themselves investment entities, at fair value through the Income Statement, rather than consolidating their results.

5.3

Notes to the Financial Statements (continued)

05 / FINANCIAL STATEMENTS

117HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)

To determine that the Company continues to meet the definition of an investment entity, the Company is required to satisfy the following

three criteria:

1. It obtains funds from one or more investors for the purpose of providing these investors with professional investment management

services;

2. It commits to its investors that its business purpose is to invest its funds solely for returns from capital appreciation, investment

income or both; and

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

The Corporate Subsidiaries carry out investment activities and incur overheads and borrowings on behalf of the Company. They are

considered investment entities themselves and are therefore measured at fair value in these financial statements.

Consistent with previous years, the Company meets the criteria due to the following reasons:

V It delivers stable returns to shareholders through a mix of income yield and capital appreciation;

V It provides investment management services and has several investors who pool their funds to gain access to infrastructure-related

investment opportunities that they might not have had access to individually; and

V It has elected to measure and evaluate the performance of all its investments on a fair value basis. The fair value method is used to

represent the Company’s performance in its communication to the market, including investor presentations. In addition, the

Company reports fair value information internally to Directors, who use fair value as the primary measurement attribute to evaluate

performance.

Key estimation uncertainties

The key area where estimates are significant to the financial statements and have a significant risk of causing a material adjustment to

the carrying amounts of assets and liabilities within the next financial year is the valuation of the Company’s investment entity subsidiary.

The Company’s corporate subsidiary, IILP, holds investments in infrastructure assets which are held at fair value. The portfolio is

well-diversified by sector, geography and underlying risk exposures. The key risks to the portfolio are discussed in further detail in the

Risk & Risk Management report on page 52, with the valuation assumptions discussed on page 48.

4. GEOGRAPHICAL ANALYSIS

The tables below provide an analysis based on the geographical location of the Company’s underlying investments.

Investment income UK Eurozone North America Total

31 March 2022 £283.0m £32.7m £56.1m £371.8m

% of Total investment income 76% 9% 15% 100%

31 March 2021 £85.6m £43.1m £26.1m £154.8m

% of Total investment income 55% 28% 17% 100%

Investment in investment entity subsidiaries UK Eurozone North America Total

31 March 2022 £2,305.7m £568.5m £284.3m £3,158.5m

% of Total Investments 73% 18% 9% 100%

31 March 2021 £2,184.7m £536.4m £229.2m £2,950.3m

% of Total investments 74% 18% 8% 100%

05 / FINANCIAL STATEMENTS

118 HICL ANNUAL REPORT 2022

5. TOTAL INCOME

Year ended

31 March 2022

Total

£m

Year ended

31 March 2021

Total

£m

Dividends received 79.3 37.3

Interest received 80.5 121.0

Net gain / (loss) on revaluation of investment in Investment Entity Subsidiary 212.0 (3.5)

Total 371.8 154.8

6. COMPANY EXPENSES

Year ended

31 March 2022

Total

£m

Year ended

31 March 2021

Total

£m

Fees to the auditor 0.4 0.4

Investment Manager fees (Note 18) 0.1 0.1

Directors’ fees (Note 18) 0.6 0.5

Professional fees 2.0 1.9

Total 3.1 2.9

Fees to the auditor comprise the Company’s £0.3m audit fees as well as £0.1m fees to KPMG LLP, in respect of their review of the

Company’s interim accounts (31 March 2021: £0.3m audit fees and £0.1m interim review fees).

7. EMPLOYEES

The Company had no employees during the year (31 March 2021: Nil).

8. INCOME TAX

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Current taxes

Current year

– –

The effective rate of corporation tax in the UK for a large company is 19% (2021: 19%). The tax charge in the year was lower than the

standard and effective tax rate due to differences explained below.

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Profit before tax

Profit before tax multiplied by the UK corporation tax rate of 19% 70.1 28.9

Effect of:

Non-deductible capital (gains)/losses (40.3) 0.7

Non-taxable dividend income (15.1) (7.1)

Dividends designated as interest distributions (17.5) (23.1)

Other 2.8 0.6

– –

5.3

Notes to the Financial Statements (continued)

05 / FINANCIAL STATEMENTS

119HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

8. INCOME TAX (CONTINUED)

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.

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.

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

31 March 2022

Year ended

31 March 2021

Profit attributable to equity holders of the Company £368.7m £151.9m

Weighted average number of Ordinary Shares in issue 1,936.8m 1,914.0m

Total basic and diluted earnings per Ordinary Share 19.0 pence 7.9 pence

10. DISTRIBUTIONS TO COMPANY SHAREHOLDERS

Year ended

31 March 2022

£m

Year ended

31 March 2021

£m

Amounts paid and recognised as distributions to equity holders during the year:

Fourth quarterly interim dividend for the year ended 31 March 2021 of 2.07p per share 40.1 38.6

First quarterly interim dividend for the year ended 31 March 2022 of 2.06p per share 39.9 39.9

Second quarterly interim dividend for the year ended 31 March 2022 of 2.06p per share 39.9 39.9

Third quarterly interim dividend for the year ended 31 March 2022 of 2.06p per share

39.9 39.9

159.8 158.3

Amounts not recognised as distributions to equity holders during the year:

Fourth quarterly interim dividend proposed for the year ended 31 March 2022 of 2.07p per share

40.1 40.1

The Company has elected to distribute a percentage of the dividends paid to shareholders as an interest distribution for tax purposes.

For the year ended 31 March 2022 the dividends distributed had an interest streaming percentage of 57% (2021: 76%), with the fourth

quarterly interim dividend payable on 30 June 2022.

Quarterly interest streaming fluctuates due to several factors, including the forecast annual effective interest received from

underlying projects.

05 / FINANCIAL STATEMENTS

120 HICL ANNUAL REPORT 2022

11. NET ASSETS PER ORDINARY SHARE

31 March 2022 31 March 2021

Shareholders’ equity at 31 March £3,159.1m £2,950.2m

Less: fourth interim dividend (£40.1m) (£40.1m)

£3,119.0m £2,910.1m

Number of Ordinary Shares at 31 March 1,936.8m 1,936.8m

Net assets per Ordinary Share after deducting fourth interim dividend

161.1p 150.3p

Add fourth interim dividend

2.07p 2.07p

Net assets per Ordinary Share at 31 March

163.1p 152.3p

12. INVESTMENT IN INVESTMENT ENTITY SUBSIDIARY

31 March 2022

£m

31 March 2021

£m

Opening balance 2,950.3 2,837.9

Additions to investment in investment entity subsidiary in the year – 118.4

Gain/(loss) on revaluation of investment (Note 5) 212.0 (3.5)

Other

(3.8) (2.5)

Carrying amount at year end

3,158.5 2,950.3

NAV per share (pence)

163.1p 152.3p

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 its direct Corporate Subsidiary. IILP’s Net Asset Value is based on the aggregate fair value of each of the

individual project companies and holding companies in which the Company holds an indirect investment, along with the working capital

of intermediate holding companies.

Refer to pages 48 and 140 for the valuation techniques and key model inputs used for determining investment fair values.

The Investment Manager has carried out fair market valuations of the portfolio companies as at 31 March 2022. 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 equity 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 1.29% to 7.75% (weighted average of 6.6%) (2021: weighted average of 6.8%).

Investments are generally restricted on their ability to transfer funds to HICL under the terms of their senior funding arrangements for

that investment. Significant restrictions include:

V Historic and projected debt service and loan life cover ratios exceed a given threshold;

V Required cash reserve account levels are met;

V Senior lenders have agreed the current financial model that forecasts the economic performance of the project company;

V Investment company is in compliance with the terms of its senior funding arrangements; and

V Senior lenders have approved the annual budget for the Company.

5.3

Notes to the Financial Statements (continued)

05 / FINANCIAL STATEMENTS

121HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

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 2022:

V An investment of £12.2m into a UK healthcare project;

V An incremental investment of £16.1m to acquire a further 18.5% in the Bradford 1 and 28.3% of the Bradford 2 Schools projects;

V The acquisition of a 58% stake, in two tranches, in the Road Management Group for £56.1m; and

V The completion of an incremental 5% stake in the A9 project for £0.8m.

Disposals

The Company, via its Corporate Subsidiaries, made the following disposal and divestment during the year ended 31 March 2022:

V The disposal of a 50% stake in Health & Safety Headquarters generating proceeds of £11.3m; and

V A public sector PPP project (0.3% of the portfolio by value at 31 March 2021) was voluntarily terminated by the client and generated

an initial termination payment of £7.2m.

Note 20 details the acquisitions 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 Report in Section 3.2 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 2022

£m

31 March 2021

£m

Financial assets

Investments in investment entity subsidiary 3,158.5 2,950.3

Financial assets at fair value through profit or loss 3,158.5 2,950.3

Trade and other receivables 0.2 0.2

Cash and cash equivalents 1.2 0.4

Financial assets – loans and receivables 1.4 0.6

Financial liabilities

Trade and other payables (0.8) (0.7)

Financial liabilities – payables (0.8) (0.7)

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:

V Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

V 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)

V Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

05 / FINANCIAL STATEMENTS

122 HICL ANNUAL REPORT 2022

14. FINANCIAL INSTRUMENTS (CONTINUED)

31 March 2022

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Investments in investment entity subsidiaries (Note 12) – – 3,158.5 3,158.5

31 March 2021

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Investments in investment entity subsidiaries (Note 12) – – 2,950.3 2,950.3

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

Methodology Description Inputs

Fair value at 31

March (£m)

Sensitivity on key

unobservable input

Fair value impact of

sensitivities (£m)

+5%/-5%

NAV The fair value of the investment in

HICL’s investment entity

subsidiary, Luxco, which is equal

to its carrying value

Inputs that are not based on observable

market data. The fair value of HICL’s

investment in Luxco is based on Luxco’s

holding in IILP that is held at fair value

£3,158.5 (2021:

£2,950.3)

A 5% sensitivity on

closing NAV

£157.9

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.

Sensitivities

-0.5% p.a.

change

Investment in

Investment Entity

Subsidiary

+0.5% p.a.

change

Discount rates

31 March 2022 +£173.5m £3,216.6m -£156.9m

31 March 2021 +£162.1m £2,938.1m -£147.1m

Inflation rates

31 March 2022 -£147.3m £3,216.6m +£163.9m

31 March 2021 -£140.8m £2, 938.1m +£155.1m

Cash deposit rates

31 March 2022 -£15.2m £3, 216.6m +£20.2m

31 March 2021 -£18.2m £2,938.1m +£21.4m

The 0.5% sensitivity is consistent with that shown in previous reports and assumes that the changes are for all future periods. It is also

consistent with that shown by the Company’s listed infrastructure peers and this allows for comparisons to be determined. The mix of

the portfolio means that the sensitivity is linear and it is possible to determine the impact if percentage changes are in multiples of this

sensitivity. The Directors recognise that HICL’s main geographies are currently experiencing higher inflation levels than have seen for a

number of years, and therefore the valuation of the portfolio is being influenced by changes to short-term inflation assumptions. As

explained in the Valuation report on page 47, if there is a 300bps increase in inflation over the next year (and all other factors remained

unchanged), the Company’s investment in its Investment Entity Subsidiary could increase by approximately £69m.

5.3

Notes to the Financial Statements (continued)

05 / FINANCIAL STATEMENTS

123HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

15. LOANS AND BORROWINGS

The Company had no loans or borrowings owing as at 31 March 2022 (2021: £nil).

16. SHARE CAPITAL AND RESERVES

Ordinary Shares

31 March 2022

31 March 2021

Authorised and issued at the beginning of the year 1,936.8 1,863.6

Issued for cash – 73.2

Authorised and issued at end of year – fully paid 1,936.8 1,936.8

The holders of the 1,963,813,501 Ordinary Shares (31 March 2021: 1,936,813,501) 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 2022

No new share issuances occurred during the year ended 31 March 2022.

For the year ended 31 March 2021

In July 2020, 73.2 million new Ordinary Shares of 0.01p each were issued to various institutional investors at an issue price per share

(before expenses) of 164.0p.

Share capital and share premium

31 March 2022

£m

31 March 2021

£m

Opening balance 1,055.5 936.9

Issue of Ordinary Shares – 120.0

Costs of issue of Ordinary Shares – (1.4)

Balance at end of year 1,055.5 1,055.5

The share capital is £0.2m at 31 March 2022 (31 March 2021: £0.2m).

Revenue and Capital reserves

Revenue and Capital reserves 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 subsidiary since acquisition on 1 April 2019. During the year the

Distributable Reserve has been renamed the Revenue Reserve and the Other Reserves has been renamed to the Capital Reserve to

align with the AIC SORP.

17. FINANCIAL RISK MANAGEMENT

A review of the Corporate Group’s objectives, policies and processes for managing and monitoring risk is set out in the Risk

management section on pages 52 to 62. This Note provides further detail on financial risk management, cross-referring to the Risk

management section where applicable, and includes quantitative data on specific financial risks. 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 a Corporate Subsidiary as disclosed below.

The Corporate Group, via IILP, owns a portfolio of investments predominantly in the subordinated loanstock and equity of project

finance companies. These companies are structured at the outset to minimise financial risks where possible, and the Investment

Manager and Operator primarily focus their risk management on the direct financial risks of acquiring and holding the portfolio but

continue to monitor the indirect financial risks of the underlying projects through representation, where appropriate, on the boards of the

project companies and the receipt of regular financial and operational performance reports.

Market risk

Returns from HICL’s investments are determined at acquisition but may be 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. HICL has

seven demand-based assets in the portfolio representing 22% of the portfolio value at 31 March 2022 (31 March 2021: 22%). Over the

course of the year, the negative impact of Covid-19 has reduced resulting in increased usage of these assets with some returning to

pre-lockdown levels of utilisation. This has positively impacted revenues and, hence, valuation.

Four of these demand-based assets are sensitive to GDP which means their valuations were more significantly affected by the Covid-19

pandemic. The rate of recovery has been assessed using a variety of information sources including actual traffic figures, management

assessments, consensus changes in GDP forecasts and sensitivity analysis.

05 / FINANCIAL STATEMENTS

124 HICL ANNUAL REPORT 2022

17. FINANCIAL RISK MANAGEMENT (CONTINUED)

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.

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 indexes. 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 CPI from 2030, RPI linked project companies have been aligned to

CPI from this date. The sensitivity of the Corporate Group to inflation is shown on pages 49 and 122.

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 and other currency

denominated borrowings. At 31 March 2022, the Corporate Group, via IILP, hedged its currency exposure through Euro, Canadian

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 on page 49.

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.

31 March 2022

Less than 1 year

£m

Between 1 and 2 years

£m

Between 2 and 5 years

£m

More than 5 years

£m

Trade and other payables 0.8 – – –

Total 0.8 – – –

31 March 2021

Less than 1 year

£m

Between 1 and 2 years

£m

Between 2 and 5 years

£m

More than 5 years

£m

Trade and other payables 0.7 – – –

Total 0.7 – – –

5.3

Notes to the Financial Statements (continued)

05 / FINANCIAL STATEMENTS

125HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

18. RELATED PARTY TRANSACTIONS

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. The additional 20% may be acquired by Sun Life under a

put and call framework agreed with the InfraRed owners, exercisable after four and five years respectively. InfraRed was appointed

under an Investment Management Agreement, dated 4 March 2019, as Investment Manager to, and 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 per annum, 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 (2021: £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 subsidiary of 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 2022, 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 £29.1m (2021: £28.6m) of which £7.4m remained payable at 31 March 2022 (2021: £7.1m).

The Directors of the Company, who are considered to be key management, received fees for their services. Their fees were £0.6m

(2021: £0.5m) for the year ended 31 March 2022 (see Note 6). One Director also receives fees for serving as Director of the

Luxembourg subsidiary – the annual fees are £7k (2021: £6k).

All of the above transactions were undertaken on an arm’s length basis.

19. GUARANTEES AND OTHER COMMITMENTS

As at 31 March 2022, the Company, via a Corporate Subsidiary, had £94.4m of commitments for future project investments (31 March

2021: £73.8m).

20. EVENTS AFTER THE BALANCE SHEET DATE

On 28 April, 2022 and subsequent to an Extraordinary General Meeting, the Board announced that, via a corporate subsidiary, that

HICL has disposed of its 100% interest in the Queen Alexandra Hospital PFI Project (“QAH”) to InfraRed European Infrastructure Income

Fund 4 (“EIIF 4”) for c. £108m.

On 17 May, 2022, the Board announced that, via a corporate subsidiary, HICL has acquired a 50% equity interest in the B247

Mühlhausen-Bad Langensalza Road PPP. The interest was acquired from Vinci Concessions Deutschland GmbH (“VINCI”), paving the

way for future partnership on the German road PPP pipeline. HICL’s total investment into the Project will amount to c. EUR 12.0m.

On 19th May, 2022, the Board announced that, via a corporate subsidiary, HICL has acquired its first fibre broadband investment

through the acquisition of a 55% shareholding in ADTIM SAS in France from DIF Capital Partners from its DIF CIF I fund. Following

completion, ADTIM will represent approximately 2% of HICL’s portfolio, by value.

05 / FINANCIAL STATEMENTS

126 HICL ANNUAL REPORT 2022

5.3

Notes to the Financial Statements (continued)

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).

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Academy Services Norwich Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Academy Services Norwich Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Academy Services Oldham Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Academy Services Oldham Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Academy Services Sheffield Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Academy Services Sheffield Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

ADAGIA B.V. BV Strawinskylaan 1021, 1077 XX, Amsterdam, Netherlands 100% 100% N/A

N/A

Addiewell Prison (Holdings) Limited C/O Sodexo Remote Sites Limited 5th Floor, Exchange

No.2, 62 Market Street, Aberdeen, Scotland, AB11 5PJ

67% 67% N/A

N/A

Addiewell Prison Limited C/O Sodexo Remote Sites Limited 5th Floor, Exchange

No.2, 62 Market Street, Aberdeen, Scotland, AB11 5PJ

67% 67% N/A

N/A

Affinity Water Acquisitions (HoldCo)

Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 0.7 375.9

Affinity Water Acquisitions

(Investments) Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire,United

Kingdom,, AL10 9EZ

33% 33% 31 Mar '21 0.7 390.6

Affinity Water Acquisitions (MidCo)

Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 0.7 530.6

Affinity Water Acquisitions Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 0.7 487.6

Affinity Water Capital Funds Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 (6.6) 181.9

Affinity Water East Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 2.4 65.2

Affinity Water Finance (2004) PLC The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% N/A

N/A

Affinity Water Finance PLC The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% N/A

N/A

Affinity Water Holdco Finance Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 0.4 288.0

Affinity Water Holdings Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 1.0 291.7

Affinity Water Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 (51.3) 112.6

Affinity Water Pension Trustees

Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% N/A

N/A

Affinity Water Programme Finance

Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% N/A

N/A

Affinity Water Shared Services

Limited

The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% N/A

N/A

Affinity Water Southeast Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

33% 33% 31 Mar '21 2.0 66.7

AGP (2) Limited 8 White Oak Square, London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

05 / FINANCIAL STATEMENTS

127HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

AGP Holdings (1) Limited 8 White Oak Square, London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

Albion Healthcare (Doncaster)

Holdings Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

50% 50% N/A

N/A

Albion Healthcare (Doncaster) Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

50% 50% N/A

N/A

Albion Healthcare (Oxford) Holdings

Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

25% 25% N/A

N/A

Albion Healthcare (Oxford) Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

25% 25% N/A

N/A

Amalie Infrastructure Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

N/A2

Amalie PFI (UK) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 3.6 36.1

Annes Gate Property Plc 8 White Oak Square, London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

Ashburton Services (Holdings)

Limited

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

Ashburton Services Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

Aspire Defence Finance plc Aspire Business Centre, Ordnance Road, Tidworth,

United Kingdom, SP9 7QD

13% 13% N/A

N/A

Aspire Defence Holdings Limited Aspire Business Centre, Ordnance Road, Tidworth,

United Kingdom, SP9 7QD

13% 13% N/A

N/A

Aspire Defence Limited Aspire Business Centre, Ordnance Road, Tidworth,

United Kingdom, SP9 7QD

13% 13% N/A

N/A

Atlandes 15, avenue Léonard de Vinci, CS60024, Cedex, Pessac,

33615, France

14% 14% 31 Dec '21 143.2 44.6

Axiom Education (Edinburgh)

Holdings Limited

Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

100% 100% N/A

N/A

Axiom Education (Edinburgh) Limited Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

100% 100% 31 Dec '20 0.0 (47.9)

Axiom Education (Perth & Kinross)

Holdings Limited

Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

100% 100% 31 Dec '20 0.5 (87.9)

Axiom Education (Perth & Kinross)

Limited

Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

100% 100% N/A

N/A

N/A2

BAAK Blankenburg B.V. (Project Co) Strawinskylaan 1021, 1077 XX, Amsterdam, Netherlands 70% 70% N/A

N/A

Bangor & Nendrum Schools Services

Holdings Limited

50 Bedford Street, Belfast, United Kingdom, BT2 7FW 26% 26% N/A

N/A

Bangor & Nendrum Schools Services

Limited

50 Bedford Street, Belfast, United Kingdom, BT2 7FW 26% 26% N/A

N/A

BaSS LIFT Holdings Limited 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

100% 100% N/A

N/A

Betjemen Holdings Jvco Limited 5th Floor Kings Place 90 York Way, London, United

Kingdom, N1 9AG

21% 21% 31 Mar '21 (155.8) 336.4

Betjemen Holdings Limited 5th Floor Kings Place 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (155.8) 111.1

Betjemen Holdings Midco Limited 5th Floor Kings Place 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (66.5) 269.9

Birmingham and Solihull (Fundco 1)

Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

21. RELATED UNDERTAKINGS (CONTINUED)

05 / FINANCIAL STATEMENTS

128 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Birmingham and Solihull (Fundco 2)

Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Birmingham and Solihull (Fundco 3)

Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Birmingham and Solihull (Fundco 4)

Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Birmingham and Solihull Local

Improvement Finance Trust Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

100% 100% N/A

N/A

Blue Light Holdings Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Blue3 (Gloucestershire Fire)

(Holdings) Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Blue3 (Gloucestershire Fire) Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

BNC IXAS SPC Holding B.V

(Incorporated in Holland)

Ringwade 71, 3439 LM Nieuwegein, Netherlands 100% 80% N/A

N/A

BNC Pi2 Holding B.V. (Incorporated

in Holland)

Ringwade 71, 3439 LM Nieuwegein, Netherlands 100% 100% N/A

N/A

Boldon School (Holdings) Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

Boldon School Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

Brentwood Healthcare Partnerships

Holdings Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Brentwood Healthcare Partnerships

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

By Education (Barking) Holdings

Limited

First Floor Templeback, 10 Temple Back, Bristol, United

Kingdom, BS1 6FL

100% 100% N/A

N/A

By Education (Barking) Limited First Floor Templeback, 10 Temple Back, Bristol, United

Kingdom, BS1 6FL

100% 100% N/A

N/A

ByCentral (Holdings) Limited 8 White Oak Square London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

ByCentral Limited 8 White Oak Square London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% 31 Dec '20 0.6 (50.6)

ByWest (Holdings) Limited 8 White Oak Square London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

N/A2

ByWest Limited 8 White Oak Square London Road, Swanley, United

Kingdom, BR8 7AG

100% 100% N/A

N/A

CAE Aircrew Training Services Plc Raf Benson, Wallingford, Oxfordshire, United Kingdom,

OX10 6AA

22% 22% N/A

N/A

Catalyst Healthcare (Romford)

Financing Plc

C/O Albany Spc Services Ltd 3rd Floor, 3-5 Charlotte

Street, Manchester, United Kingdom, M1 4HB

67% 67% N/A

N/A

Catalyst Healthcare (Romford)

Holdings Limited

C/O Albany Spc Services Ltd 3rd Floor, 3-5 Charlotte

Street, Manchester, United Kingdom, M1 4HB

67% 67% N/A

N/A

Catalyst Healthcare (Romford)

Limited

C/O Albany Spc Services Ltd 3rd Floor, 3-5 Charlotte

Street, Manchester, United Kingdom, M1 4HB

67% 67% N/A

N/A

Catalyst Higher Education (Sheffield)

Holdings Limited

C/O Albany Spc Services Ltd 3rd Floor, 3-5 Charlotte

Street, Manchester, United Kingdom, M1 4HB

50% 50% N/A

N/A

Catalyst Higher Education (Sheffield)

plc

C/O Albany Spc Services Ltd 3rd Floor, 3-5 Charlotte

Street, Manchester, United Kingdom, M1 4HB

50% 50% N/A

N/A

Central Blackpool PCC Holding

Company Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

05 / FINANCIAL STATEMENTS

129HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

21. RELATED UNDERTAKINGS (CONTINUED)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Central Blackpool PCC Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Children’s Ark Partnerships Holding

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Children’s Ark Partnerships Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Citylink Telecommunications Holdings

Limited

15 Canada Square, London, E14 5GL 34% 34% N/A

N/A

Citylink Telecommunications Limited 15 Canada Square, London, E14 5GL 34% 34% N/A

N/A

Claymore Road (Holdings) Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

50% 50% N/A

N/A

Claymore Road Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

50% 50% N/A

N/A

Connect M1-A1 Holdings Limited 6th Floor 350 Euston Road, Regents Place, London,

United Kingdom, NW1 3AX

30% 30% N/A

N/A

Connect M1-A1 Limited 6th Floor 350 Euston Road, Regents Place, London,

United Kingdom, NW1 3AX

30% 30% 31 Mar '21 (3.3) 42.6

Consort Healthcare (Birmingham)

Funding plc

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

30% 30% N/A

N/A

N/A2

Consort Healthcare (Birmingham)

Holdings Limited

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

30% 30% N/A

N/A

Consort Healthcare (Birmingham)

Intermediate Limited

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

30% 30% N/A

N/A

Consort Healthcare (Birmingham)

Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

30% 30% N/A

N/A

Consort Healthcare (Blackburn)

Funding Plc

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Blackburn)

Holdings Limited

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Blackburn)

Intermediate Limited

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Blackburn)

Limited

8 White Oak Square, Swanley, Kent, United Kingdom,

BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Mid Yorks)

Funding Plc

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Mid Yorks)

Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Mid Yorks)

Intermediate Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Mid Yorks)

Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Consort Healthcare (Salford) Holdings

Limited

Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

Consort Healthcare (Salford)

Intermediate Limited

Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

Consort Healthcare (Salford) Plc Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

Consort Healthcare (Tameside)

Holdings Limited

Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

Consort Healthcare (Tameside)

Intermediate Limited

Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

05 / FINANCIAL STATEMENTS

130 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Consort Healthcare (Tameside) Plc Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

50% 50% N/A

N/A

Criterion Healthcare Holdings Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

36% 36% N/A

N/A

Criterion Healthcare Plc Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

36% 36% N/A

N/A

CSES (Dorset) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

CSM PPP Services Holdings Limited

(Incorporated in Ireland)

Suite 54, Morrison Chambers, 32 Nassau Street, Dublin

2, Ireland

76% 76% N/A

N/A

CSM PPP Services Limited

(Incorporated in Ireland)

Suite 54, Morrison Chambers, 32 Nassau Street, Dublin

2, Ireland

76% 76% N/A

N/A

CVS Leasing Limited Raf Benson, Wallingford, Oxfordshire, United Kingdom,

OX10 6AA

87% 87% N/A

N/A

D3 - Société de la deviation de

Troissereux (Incorporated in France)

21 rue Hippolyte Bayard, PAE du Haut-Ville, 60000

Beauvais, France

90% 90% N/A

N/A

Daiwater Investment Limited The Hub, Tamblin Way, Hatfield, Hertfordshire, United

Kingdom, AL10 9EZ

37% 37% 31 Mar '21 1.6 747.9

Derby School Solutions (Holdings)

Limited

Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom, WD24 4WW

100% 100% N/A

N/A

N/A2

Derby School Solutions Limited Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom, WD24 4WW

100% 100% N/A

N/A

Diamond Transmission Partners BBE

Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

50% 50% N/A

N/A

Diamond Transmission Partners BBE

Holdings Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

50% 50% N/A

N/A

Diamond Transmission Partners

Galloper (Holdings) Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

49% 49% N/A

N/A

Diamond Transmission Partners

Galloper Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

49% 49% N/A

N/A

Diamond Transmission Partners RB

(Holdings) Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

49% 49% N/A

N/A

Diamond Transmission Partners RB

Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

49% 49% N/A

N/A

Diamond Transmission Partners

Walney Extension (Holdings) Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

29% 29% N/A

N/A

Diamond Transmission Partners

Walney Extension Limited

Mid City Place, 71 High Holborn, London, United

Kingdom, WC1V 6BA

29% 29% 31 Mar '21 (0.1) (455.9)

Directroute (Tuam) Holdings Limited M17/M18 Operations Centre, Furzy Park, Athenry, Co

Galway, Ireland

100% 100% 31 Dec '20 5.2 (42.8)

Directroute (Tuam) Limited M17/M18 Operations Centre, Furzy Park, Athenry, Co

Galway, Ireland

100% 100% 31 Dec '20 5.2 (42.8)

Dorset Emergency Services PPP

(Holdings) Limited

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

N/A2

Ealing Care Alliance (Holdings)

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

63% 63% N/A

N/A

Ealing Care Alliance Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

63% 63% N/A

N/A

Ealing Schools Partnerships Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Ealing Schools Partnerships Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

05 / FINANCIAL STATEMENTS

131HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

21. RELATED UNDERTAKINGS (CONTINUED)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Eastbury Park (Holdings) Limited 8 White Oak Square, London Road, Swanley, United

Kingdom, BR8 7AG

50% 50% N/A

N/A

Eastbury Park Limited 8 White Oak Square, London Road, Swanley, United

Kingdom, BR8 7AG

50% 50% N/A

N/A

Education 4 Ayrshire Holdings

Limited

2 Lochside View Edinburgh, United Kingdom, EH12 1LB 100% 100% N/A

N/A

Education 4 Ayrshire Limited 2 Lochside View Edinburgh, United Kingdom, EH12 1LB 100% 100% N/A

N/A

EIPF 15, avenue Léonard de Vinci, CS60024, Cedex, Pessac,

33615, France

70% 70% N/A

N/A

Emblem Schools (Holdings) Limited 2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

30% 30% N/A

N/A

Emblem Schools Limited 2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

30% 30% N/A

N/A

Enterprise Civic Buildings (Holdings)

Limited

Unit 18 Navigation Way, Ashton-On-Ribble,

Preston,United Kingdom, PR2 2YP

100% 100% N/A

N/A

Enterprise Civic Buildings Limited Unit 18 Navigation Way, Ashton-On-Ribble,

Preston,United Kingdom, PR2 2YP

100% 100% N/A

N/A

Enterprise Education Conwy Limited Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

90% 90% N/A

N/A

Enterprise Education Holdings

Conwy Limited

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

90% 90% N/A

N/A

Enterprise Healthcare Holdings

Limited

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, England, PR2 2YP

100% 100% N/A

N/A

Enterprise Healthcare Limited Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

Euro IV PPP Platform Limited

Partnership

1st Floor Connaught House, 1 Burlington Road, Dublin 4,

Ireland

100% 100% N/A

N/A

European Healthcare Projects

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Falkirk Schools Gateway (Holdings) Quartermile One, 15 Lauriston Place, Edinburgh, United

Kingdom, EH3 9EP

29% 29% N/A

N/A

Falkirk Schools Gateway Limited Quartermile One, 15 Lauriston Place, Edinburgh, United

Kingdom, EH3 9EP

29% 29% 31 Mar '21 0.3 (41.9)

FCC (East Ayrshire) Holdings Limited 2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

26% 26% N/A

N/A

FCC (East Ayrshire) Limited 2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

26% 26% N/A

N/A

GGB inBalans B.V Hagenweg 3 c, 4131 LX, Vianen, Netherlands 85% 85% N/A

N/A

GGB inBalans Investco B.V Hagenweg 3 c, 4131 LX, Vianen, Netherlands 100% 100% N/A

N/A

Glasgow Healthcare Facilities

(Holding) Limited

2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

25% 25% N/A

N/A

Glasgow Healthcare Facilities Limited 2nd Floor, 11 Thistle Street, Edinburgh, United Kingdom,

EH2 1DF

25% 25% 31 Dec '20 1.7 (41.5)

GO-PASS Mobility Services LLC 2711 Centerville Road, Suite 400, Wilmington, Delaware

19808, USA

33% 33% N/A

N/A

N/A2

Green Timbers GP Limited

(Incorporated in Canada)

1060 - 1500 West Georgia Street, Vancouver, BC, V6G

2Z6, Canada

100% 100% N/A

N/A

Green Timbers Holdings Limited

(Incorporated in Canada)

1060 - 1500 West Georgia Street, Vancouver, BC, V6G

2Z6, Canada

100% 100% N/A

N/A

N/A2

Green Timbers Limited Partnership

(Incorporated in Canada)

1060 - 1500 West Georgia Street, Vancouver, BC, V6G

2Z6, Canada

100% 100% 31 Mar '21 9.2 64.3

05 / FINANCIAL STATEMENTS

132 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

GT (NEPS) Limited Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

90% 90% N/A

N/A

N/A2

GT NEPS (Holdings) Limited Blake House 3 Frayswater Place, Cowley, Uxbridge,

Middlesex, United Kingdom, UB8 2AD

90% 90% N/A

N/A

H&D Support Services (Holdings)

Limited

Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom, WD24 4WW

100% 100% N/A

N/A

H&D Support Services Limited Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom,WD24 4WW

100% 100% N/A

N/A

Hadfield Healthcare Partnerships

Holdings Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Hadfield Healthcare Partnerships

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

HDM Schools Solution Limited C/O Dla Piper Scotland Llp Fao Stuart Mcmillan Collins

House, Rutland Square, Edinburgh, United Kingdom,

EH1 2AA

75% 75% N/A

N/A

HDM Schools Solutions (Holding)

Limited

C/O Dla Piper Scotland Llp Fao Stuart Mcmillan Collins

House, Rutland Square, Edinburgh, United Kingdom,

EH1 2AA

75% 75% N/A

N/A

Healthcare Centres PPP Holdings

Limited

Suite 54 Morrison Chambers, 32 Nassau Street, Dublin 2,

Republic of Ireland

60% 60% N/A

N/A

Healthcare Centres PPP Limited Suite 54 Morrison Chambers, 32 Nassau Street, Dublin 2,

Republic of Ireland

60% 60% N/A

N/A

Helix Acquisition Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (33.0) (33.0)

Helix Bufferco Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (33.0) (33.0)

Helix Holdings Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (62.3) (685.9)

Helix MidCo Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 (33.0) (33.0)

HICL Infrastructure (Green Timbers)

Inc (Incorporated in Canada)

1060 - 1500 West Georgia Street, Vancouver, BC, V6G

2Z6, Canada

100% 100% N/A

N/A

HICL Infrastructure 2 S.a.r.l. 6, rue Adolphe, L-1116, Luxembourg 100% 100% 31 Mar '21 37.0 191.0

HICL Infrastructure 3 S.a.r.l. 6, rue Adolphe, L-1116, Luxembourg 100% 100% N/A

N/A

HICL Infrastructure Canada Inc.

(Incorporated in Canada)

Suite 2600, Three Bentall Centre, PO BOX 49314, 595

Burrard Street, Vancouver BC V7X 1L3, Canada

100% 100% 31 Mar '21 7.0 112.4

High Speed One (HS1) Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% N/A

N/A

N/A2

High Speed Rail Finance (1) PLC 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% N/A

N/A

High Speed Rail Finance PLC 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% N/A

N/A

Highway Management M80

Investment Management Limited

Part First Floor, 1 Grenfell Road, Maidenhead, Berkshire,

United Kingdom, SL6 1HN

50% 50% 31 Dec '20 (0.5) (53.7)

Highway Management Scotland

(Holdings) Limited

Part First Floor, 1 Grenfell Road, Maidenhead, Berkshire,

United Kingdom, SL6 1HN

50% 50% 31 Dec '20 (0.5) (50.0)

Highway Management Scotland

Limited

Part First Floor, 1 Grenfell Road, Maidenhead, Berkshire,

United Kingdom, SL6 1HN

50% 50% 31 Dec '20 (0.5) (50.0)

Holdfast Training Services Limited Building 29, HQ RSME Brompton Barracks, Chatham,

Kent, England, ME4 4UG

100% 100% 31 Mar '21 (12.1) 33.4

HS1 Limited 5th Floor, Kings Place, 90 York Way, London, United

Kingdom, N1 9AG

22% 22% 31 Mar '21 51.7 497.5

05 / FINANCIAL STATEMENTS

133HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

21. RELATED UNDERTAKINGS (CONTINUED)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Information Resources (Oldham)

Holdings Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

N/A2

Information Resources (Oldham)

Investments

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Information Resources (Oldham)

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Infraspeed (Holdings) BV

(Incorporated in Holland)

2132 LS Hoofddorp, Taurusavenue 155, Netherlands 43% 43% 31 Mar '21 9.2 82.8

Infraspeed BV (Incorporated in

Holland)

2132 LS Hoofddorp, Taurusavenue 155, Netherlands 43% 43% 31 Dec '20 9.7 81.5

Infrastructure Central Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investment Limited

Partnership

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (A63)

Holdings Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 25.5 174.9

Infrastructure Investments (Affinity)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

90% 90% 31 Mar '21 50.8 256.7

Infrastructure Investments (Aria)

Holdco Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Aria)

TopCo Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Australia)

LLP

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Bond)

Holdings LLP

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 (0.7) 47.8

Infrastructure Investments (Bond)

LLP

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 (0.7) 47.8

Infrastructure Investments (Colorado)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 40.0 195.4

Infrastructure Investments (Defence)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 7.9 75.3

Infrastructure Investments (Germany)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Health)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (HSL

ZUID) Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 (2.3) 39.5

Infrastructure Investments (No 7)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (No 8)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (OFTO 1)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Portal) GP

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments (Portal)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A2 N/A

N/A

Infrastructure Investments (Portal)

Limited Partnership

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments

(Portsmouth) Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

05 / FINANCIAL STATEMENTS

134 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Infrastructure Investments (Roads)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments Betjeman

(Holdco) Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments Betjeman

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

62% 62% N/A

N/A

Infrastructure Investments Group

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 15.4 1,023.3

Infrastructure Investments Holdings

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 (56.3) 404.0

Infrastructure Investments Limited

Partnership

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 155.2 2,951.0

Infrastructure Investments NWP (US)

LLC

701 Northwest Parkway, Broomfield, CO 80023, USA 100% 100% 31 Dec '20 (3.2) 89.5

Infrastructure Investments PPP OFTO

holdings LLP

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments PPP

OFTO LLP

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Infrastructure Investments Roads

Management Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Integrated Bradford Hold Co Two

Limited

Chancery Exchange, 10 Furnival Street, London, United

Kingdom, EC4A 1AB

62% 34% N/A

N/A

Integrated Bradford Holdco One

Limited

Chancery Exchange, 10 Furnival Street, London, United

Kingdom, EC4A 1AB

48% 29% N/A

N/A

Integrated Bradford SPV One Limited Chancery Exchange, 10 Furnival Street, London, United

Kingdom, EC4A 1AB

48% 29% N/A

N/A

Integrated Bradford SPV Two Limited Chancery Exchange, 10 Furnival Street, London, United

Kingdom, EC4A 1AB

62% 34% N/A

N/A

Ivywood College Holdings Limited 7 Queens Road, Belfast, United Kingdom, BT3 9DT 75% 75% N/A

N/A

Ivywood College Limited 7 Queens Road, Belfast, United Kingdom, BT3 9DT 75% 75% N/A

N/A

Ivywood Colleges Parking Limited 7 Queens Road, Belfast, United Kingdom, BT3 9DT 75% 75% N/A

N/A

IXAS Zuid-Oost B.V (Incorporated in

Holland)

Langbroekdreef 18, 1108 EB, Amsterdam 25% 20% N/A

N/A

Kajima Darlington Schools Holding

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima Darlington Schools Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima Haverstock Holding Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima Haverstock Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima Newcastle Libraries Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima Newcastle Libraries Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima North Tyneside Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kajima North Tyneside Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Kent Education Partnership

(Holdings) Limited

Part First Floor, 1 Grenfell Road, Maidenhead, Berkshire,

United Kingdom, SL6 1HN

50% 50% N/A

N/A

05 / FINANCIAL STATEMENTS

135HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

21. RELATED UNDERTAKINGS (CONTINUED)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Kent Education Partnership Limited Part First Floor, 1 Grenfell Road, Maidenhead, Berkshire,

United Kingdom, SL6 1HN

50% 50% N/A

N/A

Kluster (Incorporated in France) 1 avenue Eugène Freyssinet, 78280 Guyancourt, France 85% 85% N/A

N/A

Liaison Infrastructure Routière

Investissement (Incorporated in

France)

91, Rue du Faubourg Saint-Honoré, 75008 Paris 100% 100% N/A

N/A

Manchester Housing (MP Equity)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Manchester Housing (MP Subdebt)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Manchester Housing (MP TopCo)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Manchester School Services

Holdings Limited

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

76% 76% N/A

N/A

Manchester School Services Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

76% 76% N/A

N/A

Medway Community Estates Limited

(Medway LiftCO)

55 Station Road, Beaconsfield, Buckinghamshire, United

Kingdom, HP9 1QL

60% 60% N/A

N/A

Medway Fundco Limited 55 Station Road, Beaconsfield, Buckinghamshire, United

Kingdom, HP9 1QL

60% 60% N/A

N/A

Medway Fundco Two Limited 55 Station Road, Beaconsfield, Buckinghamshire, United

Kingdom, HP9 1QL

60% 60% N/A

N/A

Metier Healthcare Limited 4 Estates Yard, Wellhouse Lane, Barnet, Hertfordshire,

United Kingdom, EN5 3DG

100% 100% N/A

N/A

Metier Holdings Limited 4 Estates Yard, Wellhouse Lane, Barnet, Hertfordshire,

United Kingdom, EN5 3DG

100% 100% N/A

N/A

New Intermediate Care Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

New Schools Investment Company

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Newham Learning Partnership (Hold

Co) Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

80% 80% N/A

N/A

Newham Learning Partnership

(Project Co) Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

80% 80% N/A

N/A

Newham Learning Partnership (PSP)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Newham Transformation Partnership

Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

80% 80% N/A

N/A

Newport School Solutions Limited Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom, WD24 4WW

100% 100% N/A

N/A

Newport Schools Solutions

(Holdings) Limited

Astral House, Imperial Way, Watford, Hertfordshire, United

Kingdom, WD24 4WW

100% 100% N/A

N/A

Newton Abbot Health Holdings

Limited

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

Newton Abbot Health Limited Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

Northwest Connect General

Partnership (Incorporated in Canada)

10060 Jasper Avenue, Suite 1201, Edmonton, AB T5J

4E5, Canada

50% 50% 31 Dec '20 (21.4) (55.9)

Northwest Connect Holdings Inc.

(Incorporated in Canada)

10060 Jasper Avenue, Suite 1201, Edmonton, AB T5J

4E5, Canada

50% 50% 31 Dec '20 (18.9) (65.5)

Northwest Connect Inc.

(Incorporated in Canada)

10060 Jasper Avenue, Suite 1201, Edmonton, AB T5J

4E5, Canada

50% 50% N/A

N/A

05 / FINANCIAL STATEMENTS

136 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Northwest Connect Investment Inc.

(Incorporated in Canada)

10060 Jasper Avenue, Suite 1201, Edmonton, AB T5J

4E5, Canada

50% 50% 31 Dec '20 3.5 48.5

Northwest Parkway LLC 701 Northwest Parkway, Broomfield, CO 80023, USA 33% 33% N/A

N/A

NWP Holdco LLC 701 Northwest Parkway, Broomfield, CO 80023, USA 33% 33% N/A

N/A

Ochre Solutions (Holdings) Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

40% 40% N/A

N/A

Ochre Solutions Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

40% 40% 31 Dec '20 (2.5) (78.5)

Paradigm (Sheffield BSF) Holdings

Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

59% 59% N/A

N/A

N/A2

Paradigm (Sheffield BSF) Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

59% 59% N/A

N/A

PFF (Dorset) Limited Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

Pi2 B.V (Incorporated in Holland) Ringwade 71, 3439 LM Nieuwegein, Netherlands 100% 100% N/A

N/A

Pi2 Holding B.V (Incorporated in

Holland)

Ringwade 71, 3439 LM Nieuwegein, Netherlands 100% 100% N/A

N/A

PIP Infrastructure Investments

(Southmead) Ltd

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

25% 25% N/A

N/A

Playton- Saclay 1 Avenue Eugène Freyssinet, 78280 Guyancourt, France 85% 85% 31 Dec '21 (0.0) 62.8

PPP Services (North Ayrshire)

Holdings Limited

Infrastructure Managers Limited, 2nd Floor, 11 Thistle

Street, Edinburgh, EH2 1DF

26% 26% N/A

N/A

PPP Services (North Ayrshire) Limited Infrastructure Managers Limited, 2nd Floor, 11 Thistle

Street, Edinburgh, EH2 1DF

26% 26% N/A

N/A

Prima 200 Fundco No 1 Limited 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Prima 200 Fundco No 2 Limited 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Prima 200 Fundco No 3 Limited 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Prima 200 Limited 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

60% 60% N/A

N/A

Prime Infrastructure Investments

Limited

5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

100% 100% N/A

N/A

Prime LIFT Investments 5 The Triangle, Wildwood Drive, Worcester,

Worcestershire, United Kingdom, WR5 2QX

100% 100% N/A

N/A

Prisma 21 (Incorporated in France) 1 avenue Eugène Freyssinet, 78280 Guyancourt, France 85% 85% N/A

N/A

Prospect Healthcare

(Hinchingbrooke) Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

75% 75% N/A

N/A

Prospect Healthcare

(Hinchingbrooke) Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

75% 75% N/A

N/A

N/A2

Ravensbourne Health Services

Holdings Limited

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

Ravensbourne Health Services

Limited

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

RBLH Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

RBLH Medway Investment Company

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

RBLH RWF Investment Company

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

05 / FINANCIAL STATEMENTS

137HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

21. RELATED UNDERTAKINGS (CONTINUED)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Redwood Partnership Ventures 2

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Redwood Partnership Ventures 3

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

100% 100% N/A

N/A

Redwood Partnership Ventures

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Renaissance Miles Platting Holding

Company Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

50% 50% N/A

N/A

Renaissance Miles Platting Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

50% 50% N/A

N/A

RL Investment Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Road Infrastructure (Ireland) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% 31 Mar '21 11.2 67.5

Road Management Consolidated

PLC

Cannon Place, 78 Cannon Street, London, EC4N 6AF 58% 58% N/A

N/A

Road Management Group Limited Cannon Place, 78 Cannon Street, London, EC4N 6AF 58% 58% N/A

N/A

Road Management Limited Cannon Place, 78 Cannon Street, London, EC4N 6AF 58% 58% N/A

N/A

Road Management Services

(Gloucester) Limited

Cannon Place, 78 Cannon Street, London, EC4N 6AF 58% 58% 31 Dec '20 (2.6) 70.9

Road Management Services (NB:

Bond)

Cannon Place, 78 Cannon Street, London, EC4N 6AF 42% 42% N/A

N/A

Road Management Services

(Peterborough) Limited

Cannon Place, 78 Cannon Street, London, EC4N 6AF 58% 58% 31 Dec '20 (5.8) 46.2

RSP (Holdings) Limited Precision House, Mcneil Drive, Motherwell, United

Kingdom, ML1 4UR

30% 30% N/A

N/A

RWF Health and Community

Developers (Tranche 1) Limited

55 Station Road, Beaconsfield, Buckinghamshire, United

Kingdom, HP9 1QL

60% 60% N/A

N/A

RWF Health and Community

Developers Limited

55 Station Road, Beaconsfield, Buckinghamshire, United

Kingdom, HP9 1QL

60% 60% N/A

N/A

S&W (Hold Co Two) Limited Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

80% 80% N/A

N/A

S&W (Hold Co) One Limited Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

80% 80% N/A

N/A

S&W TLP (Project Co One) Limited Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

80% 80% N/A

N/A

S&W TLP (Project Co Two) Limited Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

80% 80% N/A

N/A

S&W TLP (PSP One) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

S&W TLP (PSP Three) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

S&W TLP (PSP Two) Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

S&W TLP Education Partnership

Limited

Second Floor, 46 Charles Street, Cardiff, United Kingdom,

CF10 2GE

80% 80% N/A

N/A

Salford Schools Solutions Holdings

Limited

Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

26% 26% N/A

N/A

05 / FINANCIAL STATEMENTS

138 HICL ANNUAL REPORT 2022

21. RELATED UNDERTAKINGS (CONTINUED)

5.3

Notes to the Financial Statements (continued)

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Salford Schools Solutions Limited Third Floor Broad Quay House, Prince Street, Bristol,

United Kingdom, BS1 4DJ

26% 26% N/A

N/A

Schools Capital Ltd Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

51% 51% N/A

N/A

Schools Investment Company (Irl)

Limited

Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Schools Public / Private Partnership

(Ireland) Limited

Suite 54, Morrison Chambers, 32 Nassau Street, Dublin

2, Ireland

50% 50% N/A

N/A

N/A2

Services Support (Cleveland)

Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Services Support (Cleveland) Limited 8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

100% 100% N/A

N/A

Services Support (Gravesend)

Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

73% 73% N/A

N/A

Services Support (Gravesend)

Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

73% 73% N/A

N/A

Services Support (Manchester)

Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

73% 73% N/A

N/A

N/A2

Services Support (Manchester)

Limited

8 White Oak Square, London Road, Swanley, Kent, BR8

7AG

73% 73% N/A

N/A

Sheffield Limited Education

Partnership Limited (LEP)

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

50% 50% N/A

N/A

Sheffield Schools Topco Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

75% 75% N/A

N/A

Sheppey Route (Holdings) Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N

50% 50% N/A

N/A

Sheppey Route Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

50% 50% N/A

N/A

Sussex Custodial Services (Holdings)

Limited

Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

Sussex Custodial Services Limited Unit 18 Riversway Business Village Navigation Way,

Ashton-On-Ribble, Preston, United Kingdom, PR2 2YP

100% 100% N/A

N/A

The Hospital Company (Oxford John

Radcliffe) Holdings Limited

2 Hunting Gate, Hitchin, Hertfordshire, United Kingdom,

SG4 0TJ

100% 100% N/A

N/A

The Hospital Company (Oxford John

Radcliffe) Limited

2 Hunting Gate, Hitchin, Hertfordshire, United Kingdom,

SG4 0TJ

100% 100% 31 Dec '20 3.0 (75.1)

The Hospital Company (QAH

Portsmouth) Holdings Limited

2 Hunting Gate, Hitchin, Hertfordshire, United Kingdom,

SG4 0TJ

100% 100% N/A

N/A

The Hospital Company (QAH

Portsmouth) Limited

2 Hunting Gate, Hitchin, Hertfordshire, United Kingdom,

SG4 0TJ

100% 100% N/A

N/A

The Hospital Company (Southmead)

Limited

8 White Oak Square, London Road, Swanley, England,

BR8 7AG

63% 63% N/A

N/A

The Hospital Company (Southmead)

Holdings Limited

8 White Oak Square, London Road, Swanley, Kent,

United Kingdom, BR8 7AG

63% 63% N/A

N/A

The Renfrewshire Schools

Partnership Limited

Precision House, Mcneil Drive, Motherwell, United

Kingdom, ML1 4UR

30% 30% N/A

N/A

Transpark Highway Finance Inc.

(Incorporated in Canada)

2800 Park Place, 666 Burrard Street, Vancouver BC V6C

2Z7, Canada

50% 50% N/A

N/A

Transpark Highway General

Partnership (Incorporated in Canada)

2800 Park Place, 666 Burrard Street, Vancouver BC V6C

2Z7, Canada

50% 50% N/A

N/A

05 / FINANCIAL STATEMENTS

139HICL ANNUAL REPORT 2022

05 / FINANCIAL STATEMENTS

Entity Registered address

Shareholding

Year

end

Profit /

(Loss)

£m

Aggregate

Capital &

Reserves

£m

31-Mar

2022

31-Mar

2021

Transpark Highway Holdings Inc.

(Incorporated in Canada)

2800 Park Place, 666 Burrard Street, Vancouver BC V6C

2Z7, Canada

50% 50% N/A

N/A

Transpark Highway Inc. (Incorporated

in Canada)

2800 Park Place, 666 Burrard Street, Vancouver BC V6C

2Z7, Canada

50% 50% N/A

N/A

Transpark Highway Investment Inc.

(Incorporated in Canada)

2800 Park Place, 666 Burrard Street, Vancouver BC V6C

2Z7, Canada

50% 50% N/A

N/A

TW Accommodation Limited Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

TW Accommodation Services

(Holdings) Limited

Cannon Place, 78 Cannon Street, London, United

Kingdom, EC4N 6AF

100% 100% N/A

N/A

UK GDN Investments Holdco Ltd Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

UK GDN Investments Ltd Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

UK GDN Investments Topco Ltd Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Willcare (MIM) Limited 128 Buckingham Palace Road, London, United Kingdom,

SW1W 9SA

100% 100% N/A

N/A

Willcare Holdings Limited 128 Buckingham Palace Road, London, United Kingdom,

SW1W 9SA

100% 100% N/A

N/A

Wooldale Partnerships Holdings

Limited

10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Wooldale Partnerships Limited 10 St. Giles Square, London, United Kingdom, WC2H

8AP

50% 50% N/A

N/A

Yorker Holdings PKR Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Zealburg Holdings Limited Level 7 One Bartholomew Close, Barts Square, London,

United Kingdom, EC1A 7BL

100% 100% N/A

N/A

Denotes a direct shareholding

In line with Companies Act requirements, no disclosure has been made where capital and reserves and profit or loss amounts are not considered to be material

21. RELATED UNDERTAKINGS (CONTINUED)

140 HICL ANNUAL REPORT 2022

Appendix

Valuation Policy

As described in Section 3.2, the Group’s investments are

predominantly valued using a discounted cash flow (“DCF”)

analysis of the forecast investment cash flows from each

portfolio company.

The following is an overview of the key assumptions and

principles applied in the valuation and forecasting of future

cash flows:

V Discount rates and other key valuation assumptions (as

outlined above) continue to be applicable

V Contracts for PPP projects and demand-based assets are not

terminated before their contractual expiry date

V A reasonable assessment is made of operational performance,

including in relation to PPP projects, payment deductions and

the ability to pass these down to subcontractors

V Distributions from each portfolio company reflect reasonable

expectations, including consideration of financial covenant

restrictions from senior lenders

V 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

V For demand-based assets, a reasonable assessment is made

of future revenue growth, typically supported by forecasts

made by an independent third party

V 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

V Where a portfolio company expects to receive residual

value from an asset, that the projected amount for this value

is realised

V Non-UK investments are valued in local currency and

converted to Sterling at the period end exchange rates

V A reasonable assessment is made of regulatory changes in the

future which may impact cash flow forecasts

V Perpetual investments are assumed to have a finite life (e.g.

Affinity Water is valued using a terminal value assumption)

V 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.

Regulated Assets

The valuation drivers and metrics for certain regulated assets are

different in certain aspects from the Company’s other market

segments – in particular, it is necessary to forecast future

regulatory outcomes as well as operational performance against

targets and allowances agreed with the regulator.

The Regulated Capital Value (“RCV”) multiple, which measures a

company’s enterprise value as a multiple of RCV, is the most

widely used valuation metric for UK regulated assets and forms a

useful cross-check to the DCF-derived valuation. An RCV multiple

will vary depending on a company’s risk profile and operational

performance, influenced by factors such as whether the business

is listed, its level of gearing, whether it is responsible for funding a

pension deficit, and its business scope and complexity.

141HICL ANNUAL REPORT 2022

Glossary

Item Definition

Acquisition Strategy This identifies the scope for current acquisitions; further details can be found in Section 2.2 –

HICL’s Business Model

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 United Kingdom trade association for the

closed-ended investment company industry

AIC Code The 2019 AIC Code of Corporate Governance

AMP7 The UK water industry regulatory period from 2020 to 2025

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. See Section 2.3 – Core Infrastructure

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; further details can be found in Section 3.2 –

Valuation of the Portfolio

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

142 HICL ANNUAL REPORT 2022

Item Definition

Investment Policy HICL’s Investment Policy has not materially changed since IPO and can be found on the website

at https://www.hicl.com/about-us/strategy-investment-policy/

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, being 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

Ofwat The 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 Project Companies and Operating Companies to HICL 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

2024. See Section 3.1 – Financial Review

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 SDG United Nations’ Sustainable Development Goals

Glossary (continued)

143HICL ANNUAL REPORT 2022

Directors & Advisers

Directors

Ian Russell, CBE (Chairman)

Rita Akushie

Mike Bane

Frances Davies

Susie Farnon

Simon Holden

Frank Nelson

Kenneth D. Reid

Registered Office

One Bartholomew Close

Barts Square

London

EC1A 7BL

Registrar

Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Helpline: 0871 664 0300

Administrator to Company, Company Secretary

Aztec Financial Services (UK) Limited

Forum 4, Solent Business Park

Parkway South

Whiteley

Fareham PO15 7AD

Investment Manager and Operator

InfraRed Capital Partners Limited

One Bartholomew Close

Barts Square

London

EC1A 7BL

+44 (0)20 7484 1800

Auditor

KPMG LLP

15 Canada Square

London E14 5GL

Financial PR

Teneo Strategy Limited

5th Floor

6 More London Place

London SE1 2DA

Joint Corporate Brokers

Investec Bank plc

30 Gresham Street

London EC2V 7QP

RBC Capital Markets

2 Swan Lane

London

EC4R 3BF

144 HICL ANNUAL REPORT 2022

Adjusted Gross Asset Value means fair market value, without deductions for borrowed money or other liabilities or accruals, and including outstanding

subscription obligations

Company

HICL Infrastructure PLC is incorporated in England and Wales

under the Companies Act 2006 with registered no. 11738373

and registered as an investment company under Section 833

of the Companies Act 2006.

Investment Manager and Operator

InfraRed Capital Partners Limited is an English limited company

registered in England & Wales under number 03364976 and

authorised and regulated by the Financial Conduct Authority

(authorisation number 195766). InfraRed is a part of SLC

Management which is the institutional alternatives and traditional

asset management business of Sun Life.

Company Secretary and Administrator

Aztec Financial Services (UK) Limited

Shareholders’ Funds

£3.2bn as at 31 March 2022

Market Capitalisation

£3.4bn as at 31 March 2022

Investment Manager and Operator Fees

1.1% per annum of the Adjusted Gross Asset Value

of the

portfolio up to £750m

1.0% from £750m up to £1.5bn

0.9% from £1.5bn up to £2.25bn

0.8% from £2.25bn to £3.0bn

0.65% above £3.0bn

plus £0.1m per annum investment management fee

No fee on new acquisitions

No performance fee

Fees relating to shareholder matters from underlying

project companies are paid to the Group (and not to

the Investment Manager).

ISA, NISA, PEP and SIPP Status

The shares are eligible for inclusion in NISAs, ISAs and PEPs

(subject to applicable subscription limits) provided that they

have been acquired by purchase in the market, and they are

permissible assets for SIPPs.

NMPI Status

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.

AIFMD Status

HICL is a UK domiciled and tax-resident public limited company,

which will operate its affairs as a UK Investment Trust Company,

and an Alternative Investment Fund under the AIFM Directive.

HICL has appointed InfraRed Capital Partners Limited as its

investment manager and AIFM under the Investment

Management Agreement.

FATCA

HICL has registered for FATCA and has GIIN number

E6TB47.99999.SL.826

Investment Policy

HICL’s Investment Policy is set out in Section 3.8 – Strategic

Report Disclosures of the Company’s 2022 Annual Report and

can be found in full on the website at www.hicl.com

ISIN and SEDOL

ISIN: GB00BJLP1Y77

SEDOL: BJLP1Y7

Website

www.hicl.com

Directors & Advisers (continued)

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

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use of the world’s forest resources.

Delivering Real Value.

Registered Address

HICL Infrastructure PLC

(Registered number: 11738373)

One Bartholomew Close

Barts Square

London

EC1A 7BL

T +44 (0)203 818 0246

E info@hicl.com

W hicl.com