REG - HICL Infrastructure - Interim Results for the six months ended 30 Sep 25

HICL InfrastructureAnnouncement

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RNS Number : 0769I  HICL Infrastructure PLC  19 November 2025

19 November 2025

HICL Infrastructure PLC

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2025

 

This announcement contains Inside Information.

 

The Board of HICL Infrastructure PLC ("HICL", or the "Company") announces
Interim Results for the Company for the six months ended 30 September 2025.
The Interim Report is available at the following link:
https://www.hicl.com/investors/reports-publications/
(https://www.hicl.com/investors/reports-publications/)

Highlights

For the six months ended 30 September 2025

 Proposed combination of HICL and TRIG:
 ·             This week, HICL announced a proposed combination with The Renewables
               Infrastructure Group (TRIG) to create the UK's largest listed infrastructure
               investment company with net assets in excess of £5.3bn. Please see the RNS
               announcement published on 17 November 2025 for further information.
 Strategic progress on active portfolio management:
 ·             Portfolio sale of seven UK PPP assets in line with HICL's(1) 31 March 2025
               valuation.
 ·             Total announced disposals over the past 24 months are over £730m, reinforcing
               HICL's active approach to portfolio construction and the credibility of its
               valuation.
 ·             Proceeds from strategic disposals continue to be deployed to support buybacks
               and existing investment commitments, reinforcing HICL's capital allocation
               discipline and positioning for long-term value creation.
 Good cash generation & dividend cover:
 ·             Dividend cash cover increased to 1.10x as at 30 September 2025, up from 1.07x
               in March, excluding profits on disposals, supported by good inflation-linked
               cash generation across HICL's core PPP assets reinforcing confidence in HICL's
               FY26 target.
 ·             The Company remains on track to deliver its covered dividend target of 8.35p
               per share for the year to 31 March 2026 and reiterates its target of 8.50p per
               share for the year to 31 March 2027(2).
 Sustainable valuation growth:
 ·             HICL's NAV per share increased by 2.9p to 156.0p as at 30 September 2025
               (March 2025: 153.1p), with an annualised underlying return of 10.3% from the
               portfolio(3) (30 September 2024: 5.5%).
 ·             Performance from HICL's growth assets(4) was strong over the six-month period,
               contributing to NAV accretion and reinforcing the strategy to rotate into
               assets with a longer asset life and with capital growth potential.
 ·             HICL's yield assets, representing 50% of the portfolio following announced
               disposals, delivered robust operational performance, with higher historic
               inflation feeding through into cash receipts. This supported dividend cover
               and helped to mitigate asset-specific challenges in a small subset of this
               portfolio segment.
 ·             Over the period to 30 September 2025, 50.3m shares were repurchased under the
               expanded £150m buyback programme, generating 0.9p of NAV accretion.

 

1 HICL Infrastructure PLC and its subsidiaries is defined as either HICL or
the Group throughout the Report. HICL Infrastructure PLC, the Company only, is
defined as the Company throughout the Report

2 For discussion purposes only. The information above is based on hypothetical
assumptions that may not occur and represent the views solely of InfraRed.
Investors should not rely upon the targeted/hypothetical information in making
an investment decision. Targeted /Hypothetical returns are aspirational in
nature and should not be relied upon when making an investment decision. There
can be no assurance or guarantee that the targets or assumptions underlying
the hypothetical information or any of the economics presented can or will be
achieved. Upon request, InfraRed will provide the criteria and assumptions
upon which we based such targeted/hypothetical information

3 Defined as the return on the portfolio that includes the unwind of the
discount rate and portfolio performance (before adjusting macroeconomic
assumptions)

4 Refer to the Glossary provided in the Annual Report 2025 for definitions

Mike Bane, Chair of HICL, said:

"HICL's ability to deliver on its strategy amid a challenging macroeconomic
backdrop has been ably demonstrated in the period. With increasing dividend
cash cover, NAV accretion and strong operational performance, the Company is
well positioned to deliver a compelling value proposition for shareholders."

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

"Taking an active approach to portfolio rotation underlines the Company's
valuation and supports our ongoing objective to deliver sustainable NAV
growth. This has been proven in the first half of the year with the disposal
of seven UK PPP assets at NAV, enhancing key portfolio metrics and providing
capital for accretive reinvestment."

Summary Financial Results (On an investment basis)

 For the six months to                                         30 September 2025  30 September 2024
 Income                                                        £145.8m            £71.7m
 Total Return                                                  £119.5m            £45.0m
 Earnings / (loss) per share                                   6.1p               2.2p
 Target dividend per share for the financial year to 31 March  8.35p              8.25p

 

 Net Asset Value                                 30 September 2025  31 March 2025
 NAV per share                                   156.0p             153.1p
 Interim Dividend                                2.09p              2.07p
 NAV per share after deducting interim dividend  153.9p             151.0p

 

 

 

 

Chair's Statement

HICL has delivered a strong performance in the first half of the year,
building on its proven track record of strategic portfolio rotation, amid a
volatile market backdrop. The Group has achieved underlying NAV growth while
exceeding the targeted asset disposals for the financial year 2026, ahead of
schedule and at robust valuations, enabling continued returns to shareholders.

On 17 November 2025, the Board was pleased to announce the proposed
combination of HICL with TRIG Ltd to create the UK's largest listed
infrastructure investment company with net assets in excess of £5.3bn. The
combination represents a unique opportunity to capture the key megatrends
shaping the infrastructure market today, which increasingly straddle both core
infrastructure and the energy transition. The Combined Company will have the
scale, portfolio diversification and balance sheet strength to better access a
broader range of global opportunities and deliver sustainable long-term value
for shareholders. The Combination is to be implemented through the
reconstruction and voluntary winding up of TRIG, with TRIG assets transferred
to HICL in exchange for the issue of new HICL shares and cash. For further
details, please see the announcement published on 17 November 2025 by
Regulatory Information Service by the Company. The remainder of the Group's
interim report is prepared on an entirely standalone basis.

The Board and Investment Manager were pleased to announce the signing of
c.£225m of asset disposals in the first half of the financial year, ahead of
the stated target by 31 March 2026. This milestone, achieved for a total
consideration in line with HICL's 31 March 2025 valuation, brings total signed
disposals in the past 24 months to more than £730m, reinforcing the Company's
active approach to portfolio construction and the credibility of HICL's
valuation process and assumptions, across a range of asset types.

The disposal marks further progress in HICL's active portfolio rotation
strategy, reducing exposure to short‑duration PPP assets and lifecycle risk,
while lowering the Group's exposure to healthcare assets.

This supports HICL's ongoing objective to deliver sustainable NAV growth
through reinvestment into longer-duration, earnings-generating assets with the
potential to increase their valuation over time. Underlying earnings continue
to comfortably cover dividend expectations, and we seek to enhance this
further through ongoing asset out performance.

HICL's growth assets delivered operational performance in line with
expectations, driven by a strong aggregate EBITDA uplift versus the same
period in 2024, with notable contributions from Affinity Water, Fortysouth,
and Altitude Infra. Following completion of disposals signed in the period,
yield assets will represent 50% of the Directors' Valuation (31 March 2025:
55%) and continue to provide a stable complement to growth assets within the
portfolio.

Dividend cash cover ratio of 1.10x has been delivered for the six-month
period, enabling the Board to reaffirm its progressive dividend guidance of
8.35p per share for FY26 and 8.50p per share for FY27. In the first half of
the financial year, the Group repurchased £60m of shares, demonstrating the
commitment to supporting shareholder returns.

Financial performance

As at 30 September 2025, HICL's NAV was 156.0p (March 2025: 153.1p), with
earnings per share of 6.1p (March 2025: 2.3p) and an annualised portfolio
return of 10.3%(1) (30 September 2024: 5.5%) in excess of the 8.4% weighted
average discount rate.

Beyond the unwind of the discount rate, the 2.9p NAV increase was primarily
attributable to operational outperformance from growth assets, an uplift in
actual inflation and higher inflation expectations improving future cash
generation within the portfolio, and 0.9p of accretion from share buybacks
executed in the six-month period.

HICL's growth assets delivered a robust contribution to financial performance,
with an annualised underlying return of 13.2% over the period and aggregate
EBITDA across these portfolio companies 7% higher than the same period for
FY25, while advancing disciplined capital expenditure plans to support
long-term value creation. Furthermore, favourable regulatory outcomes received
for Affinity Water and Texas Nevada Transmission ("TNT") positively influenced
the valuations of these businesses.

1 Based on interim dividends paid plus change in NAV per share

HICL's yield assets generally continued to perform well, delivering an
underlying annualised return of 7.6%, with PPPs maintaining over 99% asset
availability. An upward adjustment to the asset-specific discount rate and a
cash flow provision was made at one UK healthcare project to reflect greater
risk of performance deductions and detracting from performance. The Group
remains focused on maintaining high standards of facility condition for HICL's
clients and end users across its asset base. Active portfolio management
approach continues to mitigate lifecycle risk, which has reduced from 48% to
37% of gross portfolio value over the past 24 months as a result of asset
disposals.

Further detail on the factors affecting the valuation is set out in the
Valuation of the Portfolio section from page 12 of the report.

From 1 July, in line with prior guidance, the Board and Investment Manager
implemented a revised management fee structure, now based 50% on market
capitalisation and 50% on NAV, replacing the previous adjusted Gross Asset
Value ("GAV") based calculation. This change, effective for half of the
six-month period, has resulted in a 12% reduction in the proforma (assuming
the revised fee was charged for the full year) annualised Operating Expense
Ratio ("OER") to 1.00% as at 30 September 2025 (30 September 2024: 1.10%).

Capital allocation

HICL's capital allocation strategy remains clear and is being executed
effectively; seeking to prioritise the most accretive use of capital, with a
benchmark set by the return achievable through share repurchases.

Accordingly, buybacks continued at a steady pace, with £60m deployed during
the period under the expanded £150m programme, and contributing 0.9p of NAV
accretion since 31 March 2025.

Looking ahead, the persistent pricing dislocation between public and private
markets is expected to present further opportunities to enhance portfolio
construction, longevity of shareholder returns and growth through selective
asset rotation. HICL remains well-positioned to capitalise on these
opportunities, supported by a strong balance sheet and disciplined investment
framework.

The Board and Investment Manager will continue to assess further disposals and
new selective investments on an opportunistic basis, with due consideration to
both the economic merit relative to further share buybacks, and the need to
continue to progress HICL's strategy.

Dividend guidance

The Board reaffirms its commitment to delivering the target dividend of 8.35p
per share for the financial year ending 31 March 2026 and reiterates guidance
of 8.50p per share for the year ending 31 March 2027.

Dividend cash cover increased to 1.10x for the six-month period (31 March
2025: 1.07x), which reflects the pleasing cash generation from HICL's yield
assets and the positive impact of a higher inflationary environment, in line
with guidance for the FY26.

Outlook

As at 30 September 2025, the Company's share price implies a long-term annual
expected portfolio return of 9.7%(1) net of costs, over a weighted average
asset life of 32 years. The Board believes this presents a compelling
opportunity for investors to access HICL's high-quality portfolio at premium
risk-adjusted returns.

Together with the Investment Manager, we remain focused on addressing the
share price discount. In addition to the strategic capital allocation
initiatives outlined above and diligent execution of active asset management
across the portfolio, we are proactively engaged in industry-wide efforts to
improve cost disclosure and to advocate for the inclusion of investment
companies within key infrastructure indices.

Valuations for high-quality core infrastructure assets in private markets
remain robust and transaction volumes are resilient. HICL continues to
actively assess new opportunities across sectors and geographies where these
advance the Company's strategy to deliver long‑term shareholder returns.
Primarily, this will focus on proprietary pipeline through existing
investments and relationships across the InfraRed(2) group, noting that more
broadly, the continuation, and indeed acceleration, of key infrastructure
megatrends is reshaping and expanding infrastructure demand and the investment
opportunity. With a strong balance sheet and ample liquidity, the Group is
well-positioned to capitalise on these opportunities.

In the face of a reshaped macroeconomic environment, HICL is not standing
still; we are evolving, adapting, and positioning the Group to thrive in a
changing infrastructure landscape, delivering sustainable value for our
shareholders today and into the future.

Mike Bane, Chair

18 November 2025

1 Based on discount rate, less ongoing charges ratio, adjusted to reflect the
share price discount to the NAV using published discount rate sensitivities

2 The Investment Manager of HICL Infrastructure Plc, InfraRed Capital Partners
Limited ("InfraRed")

 

Investment Manager's Report

The six months to 30 September 2025 marked a period of continued strategic
progress for HICL, characterised by disciplined portfolio rotation, strong
operational performance and pleasing cash generation.

InfraRed was pleased to build on its strong track record of asset disposals
with the announcement of a sale of a portfolio of seven UK PPP assets to APG
for a total consideration in line with HICL's 31 March 2025 valuation. The
transaction was executed ahead of schedule, enhancing key portfolio metrics,
while providing additional financial flexibility to support existing buyback
commitments and future investment activity in support of shareholder returns.

Operational performance was strong, with dividend cash cover increasing to
1.10x in the first half, providing additional confidence in achieving the
target for the 2026 financial year. NAV accretion in the period was
underpinned by HICL's portfolio construction, with portfolio returns in excess
of the dividend, supported by outperformance from HICL's growth assets.

Despite a challenging macroeconomic backdrop, HICL's differentiated investment
proposition remains compelling. The Investment Manager believes the current
share price materially undervalues the portfolio, with HICL's inflation-linked
cash flows continuing to offer investors an attractive combination of income
and growth. With a robust balance sheet, ample liquidity, and a proven ability
to execute value-accretive disposals, totalling in excess of £730m over the
past 24 months at robust valuations, HICL remains well positioned to navigate
ongoing macroeconomic uncertainty and to capitalise on emerging opportunities
across the infrastructure sector.

Operational highlights

Portfolio performance was solid over the first six months of the year,
characterised by an annualised portfolio return of 10.3%1 (30 September 2024:
5.5%). This was ahead of the expected return for the period (as indicated by
HICL's weighted average discount rate at 31 March 2025) before the impact of
changes to macroeconomic assumptions, driven principally by higher actual
inflation and outperformance from growth assets including Affinity Water and
Altitude Infra. InfraRed's active management of both portfolio composition and
individual asset performance remains central to delivering resilient earnings
and long-term value.

Further details can be found as follows and in the Valuation of the Portfolio
section of this report starting on page 12.

Operational performance review

HICL's portfolio delivered strong operational performance over the six months
to 30 September 2025, with overall outperformance from growth assets and
pleasing cash generation from yield assets continuing to underpin the investor
proposition.

Across HICL's largest regulated assets, Affinity Water and TNT, performance
over the six-month period was supported by important regulatory outcomes. At
Affinity Water, HICL's 30 September 2025 valuation incorporated a modest
upward adjustment to the revenue allowance for future weighted average cost of
capital ("WACC"), reflecting an increase in allowed cost of equity as base
rates have increased, combined with a staged increase in the cost of debt over
several AMPs. Signs that the regulatory environment continues to improve were
reinforced by the recently published Cunliffe Review, which included
recommendations for a new integrated regulator to replace Ofwat, an outcome
welcomed by HICL. The Company remains on track to deliver its £50m investment
commitment into Affinity Water by 31 March 2026 and continues to anticipate
the resumption of dividends from the business within this timeframe.

At TNT, the regulatory settlement with the Public Utility Commission of Texas
for Cross Texas Transmission was concluded in October 2025, with the final
allowed return on equity aligning with HICL's assumptions and adjustments in
the proforma capital structure supporting the asset valuation. TNT continues
to experience a significant increase in demand for transmission capacity as
renewable energy developers in the US accelerate project completions ahead of
the expiration of federal tax credits. In response to this favourable market
backdrop, TNT anticipates reinvesting a greater portion of its near-term free
cash flow into capacity expansion works. This is expected to support long-term
earnings growth by increasing the size of the company's regulated asset base,
which attracts the regulated return.

More broadly, capital expenditure programmes continue to be successfully
executed across the Group's full set of operating assets, with notable
progress in HICL's digital infrastructure assets. At Fortysouth, the tower
rollout remains on track and 26 new co-location agreements were signed during
the period, supporting long-term revenue growth. At Altitude Infra, the
management team continues to expand network coverage, with the number of homes
connected progressing broadly in line with HICL's valuation assumptions, and
construction now >97% complete.

1 Defined as the return on the portfolio that includes the unwind of the
discount rate and portfolio performance (before adjusting macroeconomic
assumptions)

London St. Pancras Highspeed ("LSPH") recorded increased international train
path bookings compared with the same period in 2024, with EBITDA in line with
HICL's previous valuation assumption. In October 2025, the Office of Rail and
Road issued its final decision regarding capacity at the Temple Mills depot,
approving Virgin Trains' application for access to this strategically
important maintenance facility, which supports cross-channel services. HICL
welcomes this outcome, as it marks a key milestone in the process to introduce
a second international operator to the line. The Group's valuation of LSPH
continues to take a probability-weighted view of a new international operator
commencing services.

HICL's portfolio of yield assets, comprising a diversified portfolio of PPP
investments, will constitute 50% of the Directors' Valuation following the
announced disposals. This portfolio segment continued to perform in line with
expectations; average asset availability of over 99% was maintained during the
period, and higher actual inflation feeding into these assets' index-linked
contracted revenues increased future expected cash flows to equity, supporting
asset valuations. Further details of the operational performance of HICL's
five largest assets and the PPP portfolio can be found on pages 9-11.

During the period, an upward adjustment to the asset‑specific discount rate
of Lewisham Hospital was made to reflect greater risk of performance
deductions, in addition to a cash flow provision. The portfolio sale announced
in August 2025 will reduce the Group's exposure to projects in the UK
healthcare sector and those with lifecycle delivery obligations in line with
HICL's strategy moving forward. Upon transaction completion, HICL's exposure
to UK healthcare is expected to decrease from 22% to 16% of gross portfolio
value and exposure to lifecycle risk from 41% to 37% of gross portfolio value.
HICL's remaining PPP assets continue to benefit from contracted,
inflation-linked revenues and fixed-rate debt structures.

Further details of the operational performance of HICL's five largest assets
and the PPP portfolio can be found on pages 9 to 11.

Portfolio construction and capital allocation

Optimising portfolio construction through active management and asset rotation
remains central to HICL's strategy and is a key driver of long-term
shareholder value. Over the six months to 30 September 2025, InfraRed
continued to execute this strategy with discipline, announcing disposals
targeted for the financial year ending 31 March 2026, seven months ahead of
schedule. Despite the challenging macroeconomic backdrop, the portfolio sale
was agreed for a total consideration in line with the valuation of the assets
as at 31 March 2025. This latest transaction builds on InfraRed's strong track
record and brings total announced disposals to more than £730m over the past
24 months, reinforcing the robustness of HICL's NAV and discount rate
assumptions.

The sale improves key portfolio metrics, including reducing HICL's exposure to
short-duration assets and lifecycle risk, while continuing to right-size the
Group's exposure to healthcare assets. These actions support HICL's ongoing
objective to rotate into longer-duration assets with the potential to deliver
capital growth as HICL's existing PPP assets are gradually handed back.

The sale improves key portfolio metrics, including reducing HICL's exposure to
short-duration assets and lifecycle risk, while continuing to right-size the
Group's exposure to healthcare assets. These actions support HICL's ongoing
objective to rotate into longer-duration assets with the potential to deliver
capital growth as HICL's existing PPP assets are gradually handed back.

Net proceeds from disposals, expected to be received by the end of the year,
will be used to fully repay the Group's RCF, providing additional financial
flexibility to fund the existing share buyback programme, outstanding equity
commitments and future investment activity. c. £122m of the £150m share
buyback programme has now been completed, with the risk and return proposition
available to the Company through buying back its shares remaining a key
benchmark for future capital allocation decisions. The Investment Manager will
continue to explore selective further investments, with due consideration of
the economic merit against buybacks and the necessary progression of HICL's
strategy.

InfraRed remains focused on enhancing portfolio quality and resilience, and
continues to assess opportunities that improve HICL's yield, total return, and
asset life metrics to ensure the Group is well-positioned to deliver
sustainable value for shareholders over the long term.

Financial highlights

The Company's NAV per share increased by 2.9p to 156.0p over the period (31
March 2025: 153.1p), driven by increased inflation assumptions, NAV accretion
from share buybacks and the overall outperformance of HICL's growth assets.
This performance reflects the progress made towards the Investment Manager's
strategy to rotate the portfolio into longer-duration assets with the
potential for valuation growth, while benefiting from the Group's
high-yielding PPP assets. As a result, underlying portfolio performance of
10.3%1 (30 September 2024: 5.5%), comfortably exceeds the level of the
dividend, reinforcing the sustainability of underlying portfolio NAV growth.

Dividend cash cover increased to 1.10x for the six-month period to 30
September 2025 (31 March 2025: 1.07x) providing confidence in achieving the
target of 1.10x by the end of the financial year. This improvement was
underpinned by higher historical inflation driving pleasing cash generation
within HICL's PPP assets and allows the Board to reaffirm dividend guidance of
8.35p per share for the financial year ending 31 March 2026 and 8.50p per
share for the year ending 31 March 2027. Should inflation remain above
historical averages and HICL's own valuation assumptions, the portfolio's
strong inflation correlation would provide a tailwind to future cash
generation and feed into asset valuations.

1 Defined as the return on the portfolio that includes the unwind of the
discount rate and portfolio performance (before adjusting macroeconomic
assumptions)

The weighted average discount rate for the portfolio was maintained at 8.4% as
at 30 September 2025. While the weighted average sovereign bond yield for the
portfolio increased by approximately 10bps over the period, this is
counterbalanced by evidence from the Group's own disposal activity and further
transaction data from the broader market. The equity risk premium embedded in
the discount rate has correspondingly reduced marginally to 3.4%, which
remains suitable given the low-risk nature of HICL's core infrastructure
portfolio and the inflation‑protected characteristics of its underlying cash
flows.

Further detail on the approach to the valuation can be found in the Valuation
of the Portfolio section of this report starting on page 12.

HICL ended the period in a net debt position of £142.2m (31 March 2025:
£102.2m). The net proceeds of £216.8m will also be used to fund share
buybacks and existing equity commitments of £115.5m by the end of March 2026.

Sustainability

In the period, the Investment Manager took proactive steps towards further
embedding sustainability across HICL's portfolio. These efforts included
around enhancing data collection processes, primarily to better understand the
social value generated by HICL's assets, which will support more targeted,
portfolio company-level initiatives.

InfraRed also continued its engagement with HICL's portfolio companies over
the period to advance decarbonisation initiatives, with the aim of improving
operational performance and contributing to the Company's climate ambition for
50% of its portfolio to either be aligning to, aligned to or at net zero by
2030. The Investment Manager will continue working closely with HICL's assets
to implement these plans, positioning the portfolio to perform strongly in a
lower-carbon, energy-resilient economy.

Key risks update

HICL's risk appetite statement, approach to risk management and governance
structure are set out in the Risk and Risk Management section of HICL's 2025
Annual Report, which can be accessed on the Company's website at www.hicl.com.

The principal risks for the Group for the remaining six months of its
financial year are unchanged from those reported on in the 2025 Annual Report.
Developments over in the period for the Group's key risks are summarised as
follows.

Macroeconomic risk

The macroeconomic backdrop remained challenging over the six months to 30
September 2025, with increased volatility in both equity and fixed income
markets caused by tariff uncertainty and renewed macroeconomic pressures.
Inflation remained stubborn in both the UK and the US, prompting further
uncertainty for the expected trajectory for interest rates. While this
environment supports HICL's cash generation, it has also moderated
expectations for Bank of England base rate cuts and increased pressure on UK
sovereign bond yields.

Sovereign bond yields across HICL's core geographies remained elevated and
volatile over the period, reflecting investor concerns around inflation,
slowing economic growth, and widening fiscal deficits. These dynamics
continued to weigh on the Company's share price, although there was a notable
narrowing of the share price discount over the period.

Despite a modest uptick in equity market activity, conditions in the UK remain
subdued, and the market continues to be challenging for UK-listed
infrastructure investment companies. In this context, the Investment Manager
continues to prioritise disciplined capital allocation and active portfolio
rotation, with the announced portfolio sale demonstrating the Group's ability
to rotate capital despite the complex market backdrop.

Political and regulatory risk

Geopolitics

Geopolitical risk remained elevated during the period, with ongoing conflicts
in Ukraine and the Middle East continuing to contribute to global market
volatility, in addition to uncertainty surrounding tariff policy from the US.
HICL's portfolio is expected to remain insulated from direct tariff impacts
but there remains the risk of second‑order effects, such as increased supply
chain costs, which InfraRed continues to monitor.

In the UK, political developments continue to dominate headlines. Recent
macroeconomic data releases and rising UK sovereign bond yields increased
focus on the UK's fiscal position, while the market is awaiting the
publication of the Autumn Budget.

HICL continues to closely monitor the political environment in France, which
remains unsettled following recent government changes and ongoing budget
negotiations; however, InfraRed views the risk to HICL's portfolio to be
limited. The Group's exposure to France is generally concentrated in sectors
that benefit from broad political support or operate within stable regulatory
frameworks, and no material changes to asset performance have been observed as
a result of these dynamics.

Regulatory risk

Regulatory risk reduced further in relation to HICL's largest asset, Affinity
Water, following the publication of the Cunliffe Review of the UK water sector
on 21 July 2025. The review calls for a number of recommendations regarding an
overhaul of the sector's regulation and main regulator, Ofwat. InfraRed
welcomes the conclusions of the review and will continue to monitor its
implications for Affinity Water over coming periods.

At TNT, the conclusion of the regulatory settlement with the Public Utility
Commission of Texas in October 2025 has reduced the asset's regulatory risk
exposure for this regulatory cycle. The Company now has greater certainty over
its medium-term cash flows and the final allowed return on equity was aligned
with HICL's assumptions. This outcome supported the Group's valuation of TNT
and reinforces confidence in the asset's regulatory framework.

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

Client relationships

Long-term partnership frameworks, such as those underpinning HICL's PPP
portfolio, inherently carry certain risks, particularly in sectors such as UK
healthcare, where broader operational and financial pressures on the public
sector can increase the likelihood of performance challenges. A valuation
downside was recognised at Lewisham Hospital. InfraRed is implementing a
targeted service improvement plan with the facilities management provider to
address these issues and support long-term asset performance.

While HICL generally maintains highly collaborative relationships with its
public sector clients, the Investment Manager continues to monitor the risk of
disputes that could result in reduced or withheld payments of contracted
revenues. As part of its proactive approach to mitigating such risks, InfraRed
contributes to the broader policy dialogue on private finance in UK
infrastructure via its involvement in key industry and trade organisations,
including as a founding member of the Association of Infrastructure Investors
in PPPs ("AIIP"). Through the AIIP, InfraRed engages directly with government
stakeholders, advocating for the long-term value that well-structured
public-private partnerships can deliver to communities.

Facility condition risk

Maintaining high facility condition standards remains a core asset management
priority for InfraRed. This is reflected in the ongoing remedial works at
Birmingham Hospitals, which remain on schedule, with the support of the NHS
Trust. This programme is one of several targeted initiatives across the
portfolio aimed at enhancing asset quality and ensuring long-term operational
resilience.

The existing provision in respect of facility condition risk within the PPP
portfolio remains appropriate. The Investment Manager remains committed to
proactive oversight and continuous improvement to ensure high standards of
facility condition for HICL's clients and end users. Active portfolio
management continues to serve as a key mitigant to facility condition risk, as
evidenced by the reduction in lifecycle risk following the recent UK PPP
disposals.

Market and outlook

The macroeconomic backdrop continues to be uncertain, with elevated interest
rates and geopolitical tensions weighing on public market sentiment.
Nevertheless, HICL's share price discount narrowed over the first half of the
financial year, and the listed infrastructure sector demonstrated resilience,
particularly during April's equity market correction. HICL's portfolio remains
positively correlated to inflation, providing a natural hedge in a higher-rate
environment.

Private market valuations for core infrastructure remain robust, supported by
strong investor demand and the enduring appeal of inflation-linked, long-term
assets. Capital raising for infrastructure in private markets has increased
compared to the first half of 2024 with significant dry powder to be invested.
Transaction volumes remain resilient, and political support across HICL's
markets for infrastructure investment and renewal remains entrenched. This is
underpinned by the accelerating global megatrends; digitisation,
decarbonisation, and energy transition, which continue to shape the
infrastructure landscape and align with HICL's strategic focus. The digital,
utilities, transport and social infrastructure sectors stand to benefit as
these trends drive sustained demand for connectivity, energy resilience, and
the modernisation of essential public services.

The Investment Manager will continue to assess new investments and disposals
selectively, where these improve long-term portfolio construction and value
creation for shareholders. Capital allocation will continue to be guided by
the hurdle presented by further share buybacks, balanced against the strategic
contribution of reinvestment opportunities. This disciplined approach to
capital allocation remains central to delivering long-term value for
shareholders. HICL's strong defensive position in this market environment,
characterised by long asset life, inflation‑linkage and limited cash flow
exposure to interest rate volatility, represents a significant advantage for
the Group. This inherent resilience, coupled with contracted earnings growth
and proven asset management discipline, positions HICL favourably to deliver
attractive risk-adjusted returns from the current share price position.

 

Directors' Statement of Responsibilities

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in
accordance with International Accounting Standard 34 Interim Financial
Reporting ("IAS 34") as adopted by the United Kingdom; and

·      the interim management report, comprising the Chair's Statement,
Investment Manager's Report and Financial Results, includes a fair review of
the information required by:

o  DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and

o  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.

On behalf of the Board

Mike Bane, Chair

18 November 2025

Publication of documentation

The above information is an extract of information from HICL's Interim Report.
The Interim Report has been submitted to the National Storage Mechanism and
will shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdata.fca.org.uk%2F%23%2Fnsm%2Fnationalstoragemechanism&data=02%7C01%7Cphilippe.vuillaume%40partnersgroup.com%7C9921b2a94ca84f80abd008d83e0034f3%7C0bcc0075229d4973b0c30ef63eb9c51f%7C0%7C0%7C637327517903944751&sdata=7xdHtTc7SAh63in9nIZT0csRmMwIWJIIjmp6yNOLWDo%3D&reserved=0)
. It can also be obtained from the Company Secretary or from the Investors
section of the Company's website, at www.HICL.com (http://www.hicl.com/) .

 

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