HICL Publish Annual Results for the Year Ended 31 March 2025

HICL Infrastructure PLC

ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2025

This announcement contains Inside Information.

The Board of HICL Infrastructure PLC (“HICL”, or the “Company”) announces Annual Results for the Company for the year ended 31 March 2025. The Annual Report and Accounts are available on the Company’s website: http://www.hicl.com.

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• The Company’s NAV per share decreased by 5.1p (-3.2%) in the year to 153.1p at 31 March 2025, principally driven by the increase in the portfolio’s weighted average discount rate to 8.4%.

• Solid operational performance in the year. The portfolio delivered an annualised underlying return of 7.7% (31 March 2024: 9.0%) before the impact of changes to macroeconomic assumptions. HICL’s growth assets (45% of portfolio by value) outperformed budget with actual EBITDA growth of 11% year-on-year.

• New dividend guidance of 8.50pps for FY 20271 and reaffirmed guidance of 8.35pps for the year to 31 March 20261. This further increase in dividend growth reflects continued improvement in cash generation from the portfolio in the year with cash cover of 1.56x or 1.07x, excluding profits on completed disposals (31 March 2024: 1.05x).

• Completed £244m of divestments (previously announced), taking total realised divestments to £509m over the last 20 months, achieved at or above carrying value and underscoring the robustness of HICL’s valuation.

• Continued focus on effective capital allocation in the year, with the initial £50m buyback completed and expanded by a further £100m. In excess of £200m of targeted divestments in the coming year, in line with the Company’s active approach to portfolio rotation.

• At the HICL level, net debt stands at £102.2m with significant liquidity of £441.8m available on the Revolving Credit Facility (RCF), providing the company with capital resilience and flexibility.

• To further improve manager alignment with shareholder, the Board and Investment Manager have agreed a revision to the management fee arrangements, transitioning to a fee basis of 50% NAV (previously GAV) and 50% market capitalisation effective from 1 July 20253.

• Positive outlook for the Company, with the Group’s high-quality assets well-positioned to deliver HICL’s total return strategy, notwithstanding macro uncertainty. The Manager’s active approach to portfolio rotation has enabled proactive capital allocation to address share price weakness and enhance the balance sheet, positioning HICL to capitalise on the substantial market opportunity for specialist infrastructure investors.

• Published HICL’s 2025 Sustainability Report, which can be found on the Company’s website at: https://www.hicl.com

Summary Financial Results

(On an Investment Basis¹)

Net Asset Values	31 March 2025	31 March 2024
Net Asset Value (“NAV”) per share	153.1p	158.2p
Q4 Dividend	2.07p	2.07p
NAV per share after deducting Q4 dividend	151.0p	156.1p

Mike Bane, Chair of HICL, said:

“The Company’s share price performance continues to be disappointing. This is despite another year of solid operating results and actions taken to address the discount. I am confident that through disciplined execution of our strategy the Company will continue to demonstrate financial robustness and operational excellence thus proving its inherent value”

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

“HICL’s high-quality portfolio continues to support the Company’s total return proposition, with progression in portfolio cash generation, delivery of portfolio company capex plans and increased earnings from the portfolio’s growth assets in the year. Looking forward, the active approach to asset rotation remains a key lever to enhance value and address share price weakness, while further refining the portfolio for long-term success.”

Chair’s Statement

I am pleased to present another solid set of operating results despite the Company’s unsatisfactory share price performance. In the year, your Board and Investment Manager prioritised the completion of significant asset sales and the implementation of the Company’s share buyback programme. Further asset sales and an expanded share buyback programme have also been announced. These actions enhance shareholder returns and demonstrate the inherent value of HICL’s¹ investment portfolio.

Your Board recognises and shares dissatisfaction with the Company’s share price which continues to suffer from macroeconomic, political and financial market volatility. The share price does not reflect HICL’s solid underlying performance; nor does it capture the true value of the Company’s portfolio. Alongside the Investment Manager, InfraRed², we are acutely focused on addressing this value dislocation through further strategic disposals, share buybacks, and enhanced dividend guidance.

The Board has also agreed a reduced management fee incorporating market capitalisation and based on NAV from the previous Gross Asset Value (“GAV”) based calculation. The revised fee will be calculated on the average of the Company’s most recently published NAV and its daily average closing market capitalisation³. This 50:50 fee basis strengthens alignment between the Investment Manager and shareholders. Based on the current share price, the management fee will reduce by 17% and the pro forma Ongoing Charges Ratio will fall to 0.95% (1.10% for 31 March 2025). Subject to finalisation of contractual arrangements, the new fee will apply from 1 July 2025.

Proactive Capital Allocation

Effective capital allocation and accretive portfolio rotation remained important areas of focus for the Board during the year. HICL successfully completed the previously announced amounting to £244m, paid down the Revolving Credit Facility (“RCF”) and completed the Company’s initial £50m share buyback programme, which provided 0.7p of NAV accretion.

In March 2025, the Board took the decision to increase the pace of share buyback activity and expanded the programme by a further £100m running to the end of the calendar year 2025. The return currently implied on buybacks is 11.1%⁴, which is compelling compared to alternative uses of capital.

Building on its successful track record of over £1bn in asset sales for HICL since its IPO, the Investment Manager is now targeting at least £200m of further strategic disposals during the coming financial year, enhancing portfolio construction and funding the expanded buyback programme and upcoming investment commitments.

A key enabler of effective capital allocation is the underlying performance of the portfolio. The portfolio delivered a solid operational performance in the year, demonstrating the resilient nature of the underlying assets and the increasing contribution of the Company’s growth investments. Higher cash flow generation from the portfolio underpins the Board’s decision to reiterate dividend guidance of 8.35pps for the year to 31 March 2026 and issue new dividend guidance of 8.50pps for the year to 31 March 2027. For more information on operational performance please refer to the Investment Manager’s Report on pages 16-21.

HICL benefits from a strong balance sheet and solid operational performance; fundamentals that we expect to be recognised in the share price as the Company executes its strategy.

Financial Performance

The Company’s NAV per share at 31 March 2025 was 153.1p (March 2024: 158.2p). This result reflects solid operational performance offset by an increase in the weighted average discount rate of the portfolio driven by macroeconomic conditions.

The portfolio delivered an underlying return of 7.7% (March 2024: 9.0%), close to the expected performance of 8.0% (the weighted average discount rate at 31 March 2024). Affinity Water and the growth assets outperformed expectations, substantially offsetting the negative impacts of lower real inflation in the UK and Europe and the recognition of increased forecast cost risk across a subset of UK PPP assets, as disclosed in HICL’s 30 September 2024 Interim Report.

The weighted average discount rate used to value the portfolio increased to 8.4% (March 2024: 8.0%), a 40bps average increase in the year. This largely reflects significant increases in government bond yields across HICL’s geographies, balanced against relevant transaction data, including the announced acquisition of BBGI Global Infrastructure S.A. and HICL’s own current disposal activity. These all provide evidence of consistent and robust valuations for core infrastructure assets.

The total movement in NAV for the year to 31 March 2025 was (5.1)p, with (6.9)p relating to the change in discount rates. Total Shareholder Return for the year was 2.0% (March 2024: 1.0%)⁵ and earnings per share was 2.3p (March 2024: 1.5p). More detailed explanations of the portfolio’s valuation and the discount rate can be found in the Valuation of the Portfolio section, starting on page 42.

The Board and Investment Manager appreciate the importance of enhanced disclosure of operational metrics such as cash generation and earnings, both for current and future shareholders. Further details can be found in the accompanying Investor Presentation for the Annual Results.

Governance

In line with the UK Corporate Governance code, the Board maintains the policy that Directors serve for no more than nine years, other than in exceptional circumstances. The Board and I extend our thanks to Simon Holden and Kenneth Reid who will complete their full nine-year terms on the Board in the coming year. They have both made exceptional contributions to the HICL Board. After a period of transition, Liz Barber assumed Simon’s responsibilities as Chair of the Risk Committee in February 2025 and Frances Davies will take over Ken’s role as Senior Independent Director and Chair of the Management Engagement Committee as he approaches retirement. I wish Liz and Frances all the best in their new responsibilities.

The Board continues to be proactive in succession planning to ensure it has a mix of appropriate skills and experience. Towards the end of last year, an independent external recruitment process was started with the aim of finding a new Director with a profile and skillset that would best complement that of the remaining Directors. This process concluded recently with the appointment of Graham Sutherland as a non-executive Director, Graham is currently the Chief Executive Officer of First Group plc and will bring considerable infrastructure and listed market experience to the Board. I am delighted to welcome him to the Board and to HICL.

The Board and Audit Committee have conducted a review of external audit provision. To manage the risk around the longevity of auditor engagement with the current auditors KPMG LLP, the Board intends to appoint Deloitte LLP as HICL’s auditor for the financial year starting 1 April 2025, subject to shareholder approval at the 2025 Annual General Meeting (“AGM”).

Outlook

The Board has continued to prioritise proactive capital allocation for the benefit of shareholders and to address the current share price. The Investment Manager has repeatedly demonstrated the intrinsic value and solid performance of HICL’s investments by completing over £500m of accretive disposals over the last two years. We expect this to continue with £200m of further sales targeted and with proceeds recycled into accretive opportunities – including share buybacks and selective investments offering compelling risk-adjusted returns.

Looking ahead, we expect distributions from the Group’s investments to increase as HICL’s growth assets mature and PPP assets begin to return capital. Reinvestment of these cash flows is critical to the ability of the Company to maintain and grow its portfolio valuation and long-term earnings base. Appropriately balancing the portfolio between growth assets and higher yielding investments is a key strategic priority for the Board and InfraRed.

In this context, the outlook for infrastructure investment is arguably more compelling than for any other asset class. The increasing importance of private investment in infrastructure globally is in sharp focus as nations, including the UK, look increasingly inwards, renewing legacy infrastructure, responding to global infrastructure megatrends, and aspiring to fulfil ambitious growth agendas. The Investment Manager continues to selectively review investment opportunities for HICL that improve its portfolio composition, including, captive opportunities from existing investments.  

HICL remains a highly diversified, long-term investor in critical infrastructure projects, positioned at the forefront of structural market tailwinds. Global demand for infrastructure investment is estimated to reach $68tn by 2040⁶. As a global investor with a recognised track record and a resilient balance sheet, your Company is well positioned to benefit from these opportunities over the coming years.