Interim Results 6 Months Ended 30th September 2021

RNS Number : 3403T

HICL Infrastructure PLC

24 November 2021

 

24 November 2021

HICL Infrastructure PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

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 2021. The Interim Report is available at the following link: http://www.hicl.com/InterimReport2021

Highlights

For the six months ended 30 September 2021

· A strong result in the period, with growth in the Net Asset Value ("NAV") per share of 3.1p, to 155.4p (March 2021: 152.3p).

· Annualised total shareholder return¹ of 9.8%, reflecting: value enhancement initiatives across the portfolio; continued evidence of recovery from the Covid-19 pandemic; strong asset pricing in the Company's core geographies; and higher than assumed inflation.

· The outlook for inflation is expected to remain elevated in HICL's core markets, making the inherent inflation correlation of HICL's return, at 0.8x, a key attraction for investors.

· Directors' Valuation² of the portfolio at 30 September 2021 is £3,121.7m (March 2021: £3,011.9m) on an Investment Basis.

· Pleasing performance from the portfolio in the year to date, delivering an underlying annualised portfolio return of 7.3%, ahead of the weighted average discount rate of 6.8% at March 2021.

· The path to recovery has varied across the three largest demand-based assets. However, all three assets performed in line with the forecasts assumed at 31 March 2021.

· Dividends paid in the period were 4.13p per share (September 2020: 4.12p) and dividend cash cover increased to 1.04³ times (September 2020: 0.83 times).

· The Company is on track to deliver a fully cash covered dividend of 8.25p per share for the year to March 2022, in line with its stated target⁴.

· HICL continues to pay the highest cash dividend in the listed core infrastructure peer group.

· The Board has re-affirmed its dividend guidance of 8.25p per share for the year to 31 March 2023⁴.

· HICL continues to advance its ambitious sustainability strategy, with progress made against the key sustainability metrics set out in the Annual Report 2021.

· HICL's strategy of optimising portfolio composition was demonstrated by the recycling of capital from an opportunistic disposal into accretive incremental acquisitions post period end.

· HICL's vision of delivering social foundations, connecting communities and supporting sustainable modern economies guides the Company's acquisition focus, and InfraRed is progressing a strong, advanced pipeline across both traditional and emerging core infrastructure sectors.

· The Board continues to be encouraged by the signs of continued economic recovery from the Covid-19 pandemic, the resilience of the portfolio and the strength of HICL's visible pipeline.

1.  NAV per share change plus dividends paid

2.  The Directors valuation is an Alternative Performance Measure. It comprises the investment portfolio valuation under the Investment Basis of £2,991.9m and commitments of £129.8m at 30 September 2021 (31 March 2021: investment portfolio valuation of £2,938.1m and commitments of £73.8m)

3.  On an Investment Basis, includes profit on disposal of £1.7m versus the original acquisition cost. Excluding this, dividend cash cover is 1.02x

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

Summary Financial Results

(on an Investment Basis)

for the six months to	30 September 2021	30 September 2020
Income1	£157.2m	£121.9m
Profit before tax ("PBT")2	£139.2m	£104.1m
Earnings per share ("EPS")	7.2p	5.5p
Target dividend per share for the year	8.25p	8.25p
1.  Income was £141.2m on an IFRS Basis (2020: £105.5m) 2.  PBT was £139.5m on an IFRS Basis (2020: £104.0m)
Net Asset Value	30 September 2021	31 March 2021
Net Asset Value ("NAV") per share	155.4p	152.3p
Q2 Dividend	2.06p	2.07p
NAV per share after deducting Q2 dividend	153.3p	150.3p

Ian Russell, Chairman of the Board, said:

"I am pleased to report a strong result for the period, with a return to NAV growth and a cash covered dividend. We continue to see encouraging signs of recovery from the Covid-19 pandemic, which in combination with value enhancement initiatives across the portfolio has supported an annualised total return for shareholders of 9.8% in the period.

"Through our portfolio of over 100 essential public infrastructure investments, HICL serves a global population of over 20 million people and is uniquely positioned to deliver the 'social' dimension of the ESG framework. HICL's continued ability to deliver sustainable income from this diversified core infrastructure portfolio is intrinsically linked to the delivery of positive outcomes for the communities it serves.

"With inflation expected to remain elevated in the Company's core markets, the Board believes the inherent inflation correlation of HICL's return, at 0.8x, to be highly attractive for investors seeking sustainable, long-term income.

"The HICL portfolio's long-dated, inflation linked and predictable cashflows give the Board the confidence to re-affirm the 8.25p target dividend for the year to 31 March 2023. We expect the target dividend of 8.25p for the current year to 31 March 2022 to be fully cash covered and are delighted to be able to continue to offer shareholders the highest cash dividend amongst our listed core infrastructure peer group."

Edward Hunt, Director, Infrastructure at InfraRed Capital Partners, HICL's Investment Manager added:

"Portfolio performance in the period has been pleasing, with consistent operational performance from the availability-based and regulated assets, and encouraging evidence of further recovery in the portfolio's demand-based assets.

"HICL's vision of delivering social foundations, connecting communities and supporting sustainable modern economies guides InfraRed's acquisition focus and ensures the appropriate emphasis is placed on both traditional infrastructure sectors as well as those sectors being driven by the modern economy.

"We are currently progressing a strong pipeline of attractive core infrastructure opportunities for HICL. Whilst a disciplined approach to risk and reward remains crucial in the current competitive market, HICL continues to access attractive pipeline through InfraRed's differentiated origination capability across its international investment platform."

Chairman's Statement

HICL's vision is to enrich lives through infrastructure: delivering strong social foundations; connecting communities; and supporting sustainable modern economies.

Through this vision, the Company endeavours to deliver sustainable income from a diversified core infrastructure portfolio. As a responsible owner of key public assets, HICL's ability to deliver this investment proposition over the long term is interwoven with the delivery of positive stakeholder outcomes for the broader community.

In this capacity as a custodian of essential public infrastructure, HICL is well positioned to deliver the 'social' dimension of the ESG¹ framework. Through its portfolio of more than 100 individual investments, HICL serves a population of over 20 million people in six countries, including nearly 15 million via the provision of access to healthcare facilities, courts, fire and police stations.

The Company continues to progress its ambitious sustainability strategy across each of the pillars of Environmental, Social and Governance, as set out in its 2021 Sustainability Report, for the benefit of both shareholders and other stakeholders. Sustainability highlights in the period are outlined in Section 2.2 - Sustainability Update in the full Interim Report linked above.

Financial performance

I am pleased to announce a strong result for the Company for the six months to 30 September 2021, with an increase in Net Asset Value ("NAV") of 3.1p per Share to 155.4p (March 2021: 152.3p per Share). Total Shareholder Return² ("TSR"), which is calculated as NAV growth plus dividends, on an annualised basis was 9.8% (September 2020: 7.8%) and the underlying Annualised Return³ from the portfolio, which is calculated as portfolio return divided by the rebased valuation, was 7.3% (7.5% in September 2020), in excess of the Company's weighted average discount rate in the period (6.8% at March 2021). This TSR outperformance was driven by value enhancement initiatives across the portfolio; continued evidence of recovery from Covid-19; strong asset pricing in the Company's core geographies; and higher than assumed inflation.

(See Section 2.3 - Valuation of the Portfolio in the full Interim Report linked above for additional detail on the factors influencing the Directors' Valuation and the discount rate.)

Dividend guidance

The long-term and predictable nature of the Company's cash flows provides good visibility for future dividends, and transparency on these targets is important to HICL's shareholders. The Board is pleased to re-affirm that HICL remains on track to deliver its target dividend of 8.25p per share⁴ for the financial year ending 31 March 2022, which is expected to be fully cash covered.

The Board also reiterates the dividend guidance of 8.25p per share⁴ for the year ending 31 March 2023. This dividend remains the highest cash dividend available from HICL's listed core infrastructure peer group. The dividend trajectory will continue to be calibrated against the Company's express intention to rebuild dividend cash cover and enhance the long-term earnings profile of the Company.

Corporate governance

Having served on the Board for eight years, it is appropriate that I step down next year in line with the guidance on director independence in the UK Corporate Governance Code.

Following a comprehensive search process, led by Frank Nelson, HICL's Senior Independent Director, in conjunction with a leading independent search consultancy, the Board has confirmed that current non-executive Director Mike Bane has been selected to be my successor as Chair, effective from 31 July 2022. Further detail on the process will be included in the 2022 Annual Report.

On behalf of the Board, I congratulate Mike on his forthcoming appointment and wish him every success in the role.

Business model in action

The pillars of HICL's business model (see page 3 in the full Interim Report linked above) are interconnected and operate in concert to support value creation for the Company's shareholders, underpinning this period's strong financial performance.

As HICL's portfolio now emerges from the Covid-19 pandemic, the Investment Manager's value preservation activities have focused on supporting two key areas: our public sector clients, particularly in the healthcare sector, as they transition to more normal and resilient operating environments, including the implementation of related variations; and the subset of the Company's demand-based assets with longer forecast paths to recovery.

The active management of High Speed 1 ("HS1", 4% of portfolio value at 30 September 2021) through a challenging six months has been a key focus. In the period, the easing of restrictions for cross-border travel and the steady increase in international services provides confidence in the recovery assumed in the valuation and the underlying strategic value of the asset (see Section 2.1 - Investment Manager's Report in the full Interim Report linked above for additional commentary on HS1).

Preparing for the transition from LIBOR to SONIA on 31 December 2021 has also been an important value preservation initiative, driven by InfraRed's portfolio management team. In a successful pilot scheme sponsored by InfraRed, one of HICL's investments, the Sheffield Building Schools for the Future (BSF) project, became the first PPP project in the UK to transition its financing agreements proactively, subject to client consent. The Investment Manager continues to work closely with the Infrastructure and Projects Authority in its role to support the public sector on the transition and limit disruption. HICL's leadership in this industry-wide challenge protects the Company's interests and those of its stakeholders, including public sector and financing partners.

Value enhancement in the period has been delivered through portfolio and asset management initiatives including project variations, lifecycle works reprofiling and refinancing. The Company also made a disposal in the period, and after the period-end announced the completion of two acquisitions. These transactions are all expected to be accretive to portfolio metrics.

InfraRed continues to progress the Company's acquisition strategy, with primary focus on the enhancement of HICL's investment proposition for shareholders. Key to this is systematic adherence to the Company's core infrastructure framework, across the themes and sectors in which the Company seeks acquisitions. Within this, a pipeline of attractive investment opportunities consistent with the tenets of HICL's vision continues to be developed: social foundations (e.g. health, education), connecting communities (e.g. transportation and communications) and sustainable modern economies (e.g. energy transition, water).

With increasing competition for the attractive investment characteristics of infrastructure assets, investment discipline remains imperative, as does the full utilisation of InfraRed's multi-national, multi-fund origination platform, which continues to be leveraged to identify and execute attractive opportunities for HICL across its core markets.

HICL's value enhancement and accretive investment activity are key drivers of NAV growth. Since IPO in 2006, the Company has delivered over 40p of NAV outperformance⁵. This is delivered through the efforts of InfraRed's dedicated asset management, portfolio management and origination teams, in line with the pillars of HICL's business model.

Outlook

The strategic backdrop for infrastructure investment remains positive. Powerful megatrends continue to drive infrastructure delivery, in particular in support of the transition to a lower carbon economy and the pursuit of greater and faster connectivity. Governments across HICL's core markets also continue to progress ambitious infrastructure delivery programmes to both stimulate economies post-pandemic and address the systemic ageing of existing infrastructure. Inevitably, the transition from headlines to delivery will take time and require significant private sector input; the Company continues to champion the role of private sector investment in enabling this process towards asset delivery for the benefit of local communities.

The outlook for inflation is expected to remain elevated in HICL's core markets, and in this context, the inherent inflation correlation built into HICL's cash flows at 0.8x is a key attraction for investors.

Overall, looking ahead, the Board continues to be encouraged by the signs of continued economic recovery from the Covid-19 pandemic, the resilience of the portfolio and the strength of HICL's visible pipeline.

Ian Russell, Chairman

23 November 2021

1.  Environmental, social and governance

2.  On a Net Asset Value ("NAV") plus dividends paid basis

3.  "Return" comprises the unwinding of the discount rate and portfolio outperformance, excluding the impact of changes in economic assumptions and discount rates, other than project specific changes

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

5.  Compared to expected Earnings per share from IPO to date

Investment Manager's Report

Operational Highlights

The underlying performance of the portfolio has been pleasing in the year to date, delivering an annualised portfolio return of 7.3% (7.5% at 30 September 2020), ahead of the expected return of 6.8% for the period (as at 31 March 2021).

PPP projects

The Company's PPP portfolio comprised 69% of the Directors' Valuation at 30 September 2021 (31 March 2021: 71%) and continues to perform robustly owing to its long-term, availability-based contracted revenues.

InfraRed's active asset and portfolio management activities remained focused on effective partnership with the public sector through the unique challenges resulting from the Covid-19 pandemic. Across the healthcare portfolio in particular this involved the transition to more normal and resilient operating environments, including the implementation of related contract variations. This cooperation with the public sector extended to other important matters during the period, including the effective navigation of the transition from LIBOR to SONIA across the portfolio as well as handback strategy and planning (see 'Key Risks Update' below). This progress underscores InfraRed's stance that the achievement of successful outcomes for both public and private sector is tied to the principles and spirit of collaboration inherent in the PPP model.

Proactive monitoring of asset condition across the portfolio remains a key activity of InfraRed's specialist asset management team. In addition to the effective management of lifecycle spending over the concession life, an important element of this is the identification and remediation of construction-related defects across a subset of assets, which can arise many years after construction completion. This includes taking appropriate action, including through legal channels if necessary, to ensure that subcontractors stand behind their obligations and remedy defects promptly and responsibly. Pursuing this approach as required during the period has successfully driven the delivery of remediation works and the further de-risking of equity cash flow assumptions, where impacted by these historic construction quality issues. As disclosed and valued in the Annual Report 2021, the Company committed to invest £28m in a UK healthcare project to deliver the remediation of certain fire safety construction defects in the absence of the construction contractor, Carillion. The first tranche of investment was made in September 2021 and the remediation works are expected to complete in the first quarter of 2023.

A key component of the Company's strategy to deliver value to shareholders is optimising portfolio composition. In September 2021, the Company disposed of its 50% interest in the Health & Safety Executive Headquarters PPP for £11m. These proceeds were recycled post period end into incremental investments in the Bradford Schools Phase I and Phase II PPP projects. This portfolio rotation was accretive to return and yield whilst delivering an improved risk profile and a longer asset life for the portfolio.

In August 2021, the PPP contract for the Defence Sixth Form College project (0.3% of the portfolio by value at 31 March 2021) was voluntarily terminated by the public sector client due to planned changes to the UK's defence training programme. The Company expects to receive compensation in line with the equity valuation of the investment at 31 March 2021.

Demand-based assets

Investments where asset revenues are linked to end-user demand accounted for 20% of the portfolio by value as at 30 September 2021 (31 March 2021: 19%) and have experienced the greatest impact from the Covid-19 pandemic. The recovery to date has varied across the three largest demand-based assets (discussed below), however, all three assets performed in line with the forecasts assumed at 31 March 2021.

Underlying demand on the A63 Motorway in France (7% of portfolio value) remained resilient due to its position as a key transit corridor. Performance during the period was in line with the 31 March 2021 valuation forecast despite being partially impacted by lockdowns and travel restrictions in France throughout early 2021. In September and October 2021, traffic exceeded pre-Covid levels, underscoring the road's strategic positioning as part of the TEN-T trans-European network.

The Northwest Parkway in Colorado, USA (6% of portfolio value) also performed in line with InfraRed's previous forecast. The asset has continued to recover, linked to the ongoing vaccination roll-out and increasing consumer confidence in the US, and resumed shareholder distributions during the period. InfraRed's forecast assumes recovery of revenue to 100% of pre-Covid levels by June 2023, unchanged from the 31 March 2021 valuation.

HS1 (4% of portfolio value) provides the UK's strategic rail link into Europe and is therefore impacted by cross-border travel and quarantine restrictions. The gradual easing of these conditions in the period enabled passenger demand for international rail travel (32% of pre-Covid track access revenue) to start to recover. In the four-week period to 10 October 2021, international train services were operating at 35% of pre-Covid levels, and Eurostar's advertised services  indicate that bookings are expected to continue to increase above this level over the coming months. InfraRed's forecast assumes recovery of international services to 100% of pre-Covid levels by March 2025, consistent with the 31 March 2021 valuation.

Domestic services (68% of pre-Covid track access revenue) continue to be supported by the contractual underpin provided by the Department for Transport, which guarantees 96% of pre-Covid revenues. The Investment Manager notes the replacement of London & South Eastern Railway Limited as the operator of domestic services on HS1 by the UK Government, which is not expected to have an impact on current or forecast future train path bookings.

The Investment Manager remains focused on supporting HS1's continuing recovery, in coordination with the HS1 management team which delivered important liquidity enhancement initiatives in the period. Relationships with the project's lenders remain positive and collaborative.

Based on the performance of the three largest demand-based assets during the period and the current economic outlook, the valuation approach used at 31 March 2021 has been retained with minor adjustments linked to the latest available performance data and macroeconomic assumptions. The Investment Manager is comfortable that the forecasts for these assets appropriately balance downside risks (see 'Key Risks Update' below) with the potential for future outperformance.

Shortly after the period end, the Company completed its acquisition of a 33% interest in Road Management Group ("RMG Roads"), which comprises two UK shadow toll roads: A417/A419 Swindon-Gloucester and the A1(M) Alconbury-Peterborough.  Both roads performed resiliently through the Covid-19 pandemic owing to their strategic positioning. Following the acquisition, the proportion of the portfolio with demand correlated to GDP is 19%.

Regulated assets

Regulated assets, comprising HICL's investment in Affinity Water and four Offshore Transmission assets ("OFTOs") accounted for 11% of the portfolio by value, as at 30 September 2021 (31 March 2021: [10]%).

Operational performance at Affinity Water (8% of portfolio value), a regulated water-only company serving a population of over three million in the south of England, was in line with expectations during the period. The business continues to focus on meeting the challenging performance commitments established by Ofwat as part of the PR19 Final Determination. Although the company did not meet its leakage target for the financial year to 31 March 2021, it is committed to reducing leakage by 20% by March 2025. Addressing the primary operational impacts of Covid-19 (increased water consumption and reduced pressure) is another key priority, which continues to be managed in coordination with Ofwat. Affinity's ambition here is supported by the company's forward-looking approach to sustainability, which also focuses on reducing resource abstraction, climate change, innovation, and social initiatives.

Working closely with the Affinity Water board, InfraRed will continue to support the management team in driving the performance of the company through this Asset Management Period. The strategic long-term value of the company continues to be underpinned by the significant investment required in the network, which is expected to result in a 38% increase in Regulatory Capital Value over the course of the current Asset Management Plan period. Furthermore, the highly sought-after characteristics of this investment, notably a perpetual asset life and high inflation correlation, support HICL's portfolio composition and the long-term delivery of real returns.

HICL's four OFTO investments continue to perform strongly , recording combined availability over the six months to 30 September 2021 of 100%. These assets will be an important contributor to the UK's transition to Net Zero and the Investment Manager continues to look favourably on the sector for further investment opportunities.

Financial Highlights

NAV per share increased by 3.1p to 155.4p at 30 September 2021 (31 March 2021: 152.3p). The Company's annualised total shareholder return, based on growth in NAV per share plus dividends paid, was 9.8% for the period (30 September 2020: 7.8%). Over the 15 years since its IPO, HICL has delivered a return of 8.9% per annum on the same basis.

Cash generation in the period was in line with forecast. The Investment Manager remains confident that the cash generation from the portfolio will remain in line with its full year forecast and expects the target dividend of 8.25p per share for the financial year to 31 March 2022¹ to be fully cash covered.

Further information on the investment valuation and financial performance can be found in Section 2.3 - Valuation of the Portfolio and Section 2.6 - Financial Review, respectively in the full Interim Report linked above.

Sustainability

The Investment Manager believes that long-term success for all HICL's stakeholders, including investors, can only be achieved by taking responsibility for the environmental, social and governance impacts of its investment activities. This is essential to InfraRed's corporate vision and the Investment Manager is committed to embracing sustainability best practice. This means recognising and delivering on its stewardship responsibilities, on behalf of HICL, across the Company's portfolio of essential infrastructure.

In July 2021, InfraRed took an important step in acting on climate change by joining the Net Zero Asset Manager initiative. By becoming a signatory, InfraRed has committed to achieve net zero emissions for its entire investment portfolio (including HICL) by 2050, or sooner. A case study on this initiative can be found in the Sustainability Update on page 19 in the full Interim Report linked above, alongside HICL's key sustainability highlights for the half year.

Key Risks Update

HICL's risk appetite statement, approach to risk management and governance structure are set out in Section 3.5 - Risk and Risk Management of the Annual Report 2021, which can be accessed on the Company's website at www.hicl.com .

The principal risks for the Company for the remaining six months of its financial year are unchanged from those reported on in the Annual Report 2021. There have been no material changes to the impact and likelihood of the Company's principal risks in the period, for which updates on in-period developments are provided below:

Covid-19

Across HICL's core geographies there has been substantive progress in the management of Covid-19, principally through widespread and effective vaccination programmes. The immediate risk posed by the pandemic has decreased in the period, however the Company remains vigilant to the prospect of further disruption. The Directors' Valuation includes an assessment on the recovery profiles of specific assets (such as the traffic forecasts for demand-based assets) and risk remains around the assumptions adopted.

Counterparty risk

Global supply chain pressures have received widespread media coverage. To date, these challenges have been successfully managed by HICL's network of service delivery partners and asset performance has not been materially impacted across the portfolio. The Investment Manager continues to engage closely with its public and private sector partners on this issue as it develops.

Political and regulatory risk

In the UK, the public sector has continued its assessment of readiness for the return of PPP assets at their concession expiry ("handback"). In support of this, the Infrastructure and Projects Authority ("IPA") has conducted a number of project-specific 'health checks'. One HICL asset was included in this exercise with no material issues arising. More broadly InfraRed is committed to proactive and constructive engagement with the IPA and key government departments in the development of transparent and equitable handback protocols. HICL has c.3% of its portfolio scheduled to be handed back by March 2030.

Successful operation of the PPP model is built on effective partnership and collaboration. We note the UK public healthcare system continues to endure both operational and financial pressure, exacerbated over the course of the past two years in the context of the pandemic. This pressure can translate into behaviour by specific healthcare clients, and their advisers, that could prove adverse to the interests of the PFI, including with respect to service delivery. There continues to be risk that such behaviour erodes shareholder value on specific UK health assets.

In July 2021, HICL announced the first successful transition of a UK PFI ahead of the planned cessation of LIBOR on 31 December 2021, delivered in partnership with the IPA. InfraRed is focused on the delivery of a smooth transition from LIBOR to SONIA over the coming months, in coordination with key public and private sector stakeholders.

Macro-economic risk

The Investment Manager notes the inflationary pressures across HICL's core geographies. Importantly, HICL's equity cash flows are positively correlated to inflation at 0.8x. This means that if long-term inflation were to be 1% higher than the Company's assumptions for all future periods, the Company's returns would increase by 0.8%. This inflation protection is a key attraction of the Company's investment proposition and the result of careful portfolio composition.

This Interim Report provides an update which should be viewed in the context of the Company's risk management framework and principal risks as disclosed in the Annual Report 2021.

Outlook

Market conditions remain supportive for infrastructure investment. Competition for assets continues to be elevated with demand significantly outweighing the supply of high-quality core infrastructure investment opportunities. Notwithstanding this competitive market dynamic, the Investment Manager views favourably the opportunity for accretive investment across the breadth of the core infrastructure landscape.

Continued adherence to the Company's structured core infrastructure risk and reward framework ensures pricing discipline is prioritised and maintained. This approach is complemented by InfraRed's differentiated origination capability, derived from its cross-fund, international investment platform and provides HICL access to less competitive situations, including partnership-driven opportunities and incremental investments. The Investment Manager is working to finalise up to three strategic partnerships to secure preferential access to deal flow, particularly greenfield PPP opportunities. Additionally HICL's existing portfolio continues to provide significant opportunity for accretive incremental investments across each of HICL's asset segments. In respect of demand-based assets with a correlation to GDP, the Investment Manager and the Board may consider exceeding the 20% threshold for appropriate incremental investment opportunities on a case-by-case basis. Incremental acquisitions provide off-market access to high quality assets that InfraRed knows well and therefore represent an attractive risk reward proposition for the Company.

HICL's vision to deliver social foundations, connect communities and support sustainable modern economies guides the Company's acquisition focus. This ensures the appropriate emphasis on both traditional infrastructure sectors and those being driven by the modern economy. The thematic approach also strongly aligns with InfraRed's core competencies; InfraRed's broader investment activity extends beyond HICL's current focus and provides the footprint, expertise and track record to access and successfully execute across the breadth of the core infrastructure market for the benefit of HICL.

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

Directors' Responsibility Statement

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 Chairman's Statement, Investment Manager's Report and Financial Results, includes a fair review of the information required by:

a)  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

b)  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

Ian Russell

Chairman
23 November 2021

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 . It can also be obtained from the Company Secretary or from the Investors section of the Company's website, at www.HICL.com . A direct link to the PDF of the Interim Report is also included here : http://www.hicl.com/InterimReport2021

 

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