HICL Infrastructure Stock

Good morning, everyone, and thank you for joining HICL's Annual results presentation for the financial year 2026. I'm Mohammed Zaheer, I lead the InfraRed listed Investor Relations team here, and I'll start with a few brief housekeeping points before we begin.

Joining me today are Ed Hunt, Mark Tiner and Ross Gurney-Read, the usual team, you'll be familiar with who will take you through the group's results for the year, covering financial performance, portfolio development and the broader market context. We will run through the formal presentation, first, after which we'll take questions from those in the room and those online. If you are joining via the webcast, you can submit questions through the platform.

Please note that today's presentation is being recorded, and the presentation slides and recording will be on the company's website. There is no fire drill planned. So in the event that the alarm does sound, please do follow the marshals out of the building.

With that, thank you again for joining us, and I'll now hand over to Ed.

Thanks very much, Mo. Good morning and a very warm welcome to this set of annual results for HICL Infrastructure PLC. Starting on Slide 4, as we do with an important restatement of HICL's proposition.

HICL sources high-quality infrastructure assets in private markets and offers them to listed investors in a diversified and liquid vehicle. We focus on core infrastructure, essential assets differentiated by their long-term cash flows, inflation protection, barriers to entry and growth potential.

The portfolio is actively managed, ensuring each and every asset plays its role and that value is crystallized at the right times through selective asset rotation, and all delivered by InfraRed's 25-plus year track record as a specialist infrastructure investor, leveraging its international capability across the infrastructure risk spectrum.

With that as the anchor, Slide 5 puts that into context with HICL now having delivered for over 20 years since IPO. HICL was originally listed in 2006 as the first infrastructure investment company on the main market of the London Stock Exchange. And since then, it's a story of resilience, of consistency and of evolution.

From its pure PPP portfolio in 2006, the decision to extend into broader core infrastructure in 2016, and it's roughly 50% allocation to these growth assets now in 2026. Over that 20 years, the company has delivered a NAV return of 8.5% per annum, encompassing almost 150p in dividends and 60p in NAV growth. That's through all market cycles and the full spectrum of macroeconomic and geopolitical shocks. These are strong numbers, and they differentiate HICL from its peer group.

As well as marking the occasion, the slide reinforces what HICL has been designed to do, to provide exposure to resilient long-term infrastructure assets at attractive total returns through the cycle, enhanced by active management and importantly, involving with the underlying infrastructure market. And these attributes are at the heart of this year's annual results as set out on the next slide, Slide 6. This is a strong annual result, underpinned by a pleasing operational performance, effective portfolio rotation and enhanced cash generation.

Moving left to right on this slide. First, on the left, the slide shows a total NAV return of 10.3% with NAV growth of 7.1p in the year. The return from the underlying portfolio was 12.2%, materially ahead of expectations, driven by the excellent performance from the company's growth portfolio with EBITDA improving 9% year-on-year as well as outperformance from accretive asset rotation.

That takes us to the middle column with GBP 536 million of accretive asset sales achieved in the year, well in excess of the GBP 200 million target and taking the total divestments over 3 years to over GBP 1 billion at a weighted average premium to NAV of 11%. This is almost half HICL's market capitalization, evidencing the quality of the NAV, the importance of asset rotation in the business model and the manager's execution capability.

In the year, this activity added 2.2p to our performance before taking into consideration the use of that capital, including the GBP 103 million of share buybacks completed in the year, taking the overall spend on share buybacks to date to a sector-leading GBP 189 million.

Finally, on cash generation, the dividend cash cover target was met with cash cover of 2.38x, including disposals or 1.10x excluding disposals. That was alongside a 1.59x funds from operations or FFO dividend cover, supporting today's new dividend guidance of 8.65p for FY '28 and highlighting the healthy level of reinvestment in the underlying portfolio.

One point to reemphasize on this slide is that the company's payout and reinvestment settings now consistently support NAV growth. All things being equal, steady-state portfolio earnings are now comfortably in excess of the level of the dividend even before our performance. This underpins steady period-on-period NAV progression, and we'll unpack this as we go through the slides as well as other elements of the result. But the year in summary, selective rotation, strong operational performance and cash flow that supports continued dividend progression and NAV growth.

On Slide 7, we set out further key metrics to illustrate this annual performance. Going clockwise from the top left, we've seen that NAV growth of 4.6% in the year to 160.2p. Top right, total shareholder return of 13.1% as a result of share price appreciation and HICL's strong dividend offering since period end, we've seen a further 8% share price increase up to Friday, a little bit more this week.

Bottom right, we examine expected future returns. The discount rate of 8.5% is the best guide to the expected gross return at NAV, which at Friday's discount to NAV, this translates to an expected net return after costs of 10% with a 6% plus down payment on that total return through the dividend alone.

And finally, bottom left, this net return will only be improved by the continued downward trend on the expenses ratio. This declined to 1.03% in the year due to fee reductions taken last year. And on the basis of the further fee revision announced today to 100% market cap, this represents a peer-leading pro forma OER of 90 basis points.

Moving on now to strategic portfolio construction on the next slide, Slide 8. This slide revisits HICL's portfolio construction and the balance between the company's cash generative and growth-oriented assets, adjusting for the recent portfolio rotation. At a high level, the story is consistent. HICL seeks to complement its yielders those cash generative, shorter-duration assets with its growers, those earnings generative longer-duration assets to provide an attractive total return proposition with a meaningful and progressive income component.

This slide sets out the key characteristics of each segment. The yielders are delivering a cash yield of around 11% long-term, while the growers delivered EBITDA growth of around 9% year-on-year and an assumed longer-term growth profile of around 6% per annum. The design here is straightforward. The yielders will continue to throw off significant cash as they approach maturity while the growers will continue to compound through growth CapEx and operational delivery, and as they mature, will increasingly contribute to the portfolio's cash generation.

As active managers, our job is to continue to balance both sides of this equation through timely acquisitions and disposals to solve for that compelling total return for shareholders long-term. Importantly, this chart assumes that all cash is paid out. The reality is that the dividend cash cover will be reinvested, providing valuable future funding for organic growth and an even stronger long-term portfolio valuation versus the line that you can see set out on this page.

That's a good point to pause. I'll now hand over to Mark for the financial results.

Thank you, Ed. Good morning, everyone. I'm pleased to present to you the review of HICL's financial performance for the year today.

On Slide 10, we present a NAV per share bridge for the year to 31st of March 2026. And this year, we have split the movement into 3 sections to show the different types of return. The gray blocks totaling 1p represents steady state NAV growth generated by HICL's portfolio. This comprises the unwind of the discount rates used to value the portfolio assets, less company expenses and the dividends paid in the course of the year.

Absent any outperformance or change in macroeconomic assumptions, investors can expect that the NAV should increase year-on-year as the discount rate unwind covers expenses and the payment of the dividend.

Next, we have the results of active management by InfraRed and the Board, adding 5.3p of NAV per share in the year. Share buybacks of GBP 103 million at an average discount to NAV of about 24% added 1.6p to the NAV per share. Value enhancement of 3.7p was driven by InfraRed's portfolio management and asset rotation activities and 2.2p of this gain was the gain realized on the sale of the A63 Motorway for a 21% premium to carrying value.

Finally, the effective changes to macroeconomic assumptions totaled 0.8p. There was no increase in reference discount rates used to value assets in the year. Risk-free rates did begin to increase towards the end of March, which placed upward pressure on discount rates. Offsetting this was the powerful evidence of asset transactions taking place in our market sector, especially the GBP 536 million of assets sold by HICL in the year at an average 11% premium to NAV. Modest net foreign exchange gain after hedging was 0.8p, leading us to the year-end NAV per share of 160.2p.

On the right-hand side, some headline metrics. As Ed mentioned, the pro forma OER has reduced to 90 bps on a go-forward basis, assuming the new fee regime. Fund level gearing was 7.1% at year-end and net debt was GBP 62.3 million, reflecting the GBP 150 million private placement notes less the cash balance of GBP 87.7 million.

Liquidity available to HICL at the year-end was GBP 304 million, being the Topco cash of GBP 87.7 million and net disposal proceeds held down in the group of GBP 333 million less investment commitments of GBP 117 million. The RCF remains undrawn, with GBP 395 million of further liquidity available.

Moving the lens to the company's portfolio during the year and picking out some key movements on Slide 11. Acquisitions of GBP 51.8 million represent the commitment to acquire a further stake in Cross London Trains, which closed last week. Divestments of GBP 527.8 million, comprised the sale of 7 PPP assets to APG and the sale of the A63 French Motorway.

Strong cash distributions from the portfolio of GBP 223 million led to the year's increase in dividend cash cover to 1.1x. Gross portfolio return of GBP 323.5 million was 12.2%, the weighted opening portfolio valuation, showing outperformance over the unwind of the weighted average discount rate. And finally, we add to the net disposal proceeds that are retained down in the portfolio to get to a total portfolio of fair value of GBP 3.1 billion or GBP 3.2 billion, including future commitments.

I move now to analyze the underlying cash generation of the portfolio and how it supports the company's strategic objectives. As last year, we show here the cash generation of each part of the portfolio. The yielders, which represent 53% of portfolio value and the growers, which represent 47%.

On the left, yielders which largely comprised the PPP portfolio, generated GBP 164 million of cash after debt service, tax and life cycle costs paid. On the right, we show the growth portfolio cash flows. EBITDA of GBP 272 million was a 9% increase on the prior year. Deducting debt service, tax and maintenance CapEx, the growth assets generated GBP 139 million of cash before growth CapEx. So together, yielders and growers generated GBP 303 million of operational cash flow for the company.

On Slide 13, we then present 3 perspectives on cash cover. Going left to right. Firstly, we introduced a funds from operations or FFO metric. This captures cash generated by the portfolio after payment of all obligations but before capital allocation decisions. To calculate funds from operations, we deduct company expenses to get GBP 256 million available for capital allocation decisions. Portfolio FFO amply covers the dividend 1.59x.

Next, we look at traditional dividend cash cover. To calculate this, we take FFO and deduct the growth CapEx deployed in the year predominantly at Affinity Water, Fortysouth, Altitude and TNT. This CapEx adds to the portfolio asset base, increasing the revenue that can be earned from it and hence increasing EBITDA and ultimately, yields. Deducting the year's growth CapEx of GBP 79 million gives distributable cash from the portfolio of GBP 177 million, which covers the annual dividend 1.1x.

And finally, we look at the company's earnings cover. The increase in portfolio value, partly driven by the deployment of growth CapEx in recent years, less company expenses results in earnings covering the dividend 1.66x. Taking just the discount rate unwind minus expenses, shows that earnings cover of dividend is positive at around 1.2x, indicating that we should expect the NAV to grow each year on a steady state basis.

Turning to the divestments in the year, Page 14. HICL's returns have been underpinned by the active rotation policy operated by the manager. Highly selective divestments based on rigorous disposal criteria have been made at an average premium to NAV of 11%, validating the company's portfolio valuation approach, earning 2.2p of NAV outperformance and creating GBP 536 million of proceeds for redeployment or capital returns.

From a portfolio composition and risk perspective, the divestments have achieved a couple of targets, reducing the company's exposure to healthcare assets and to life cycle risk, reducing political risk by selling an asset in France, and improving the portfolio's inflation correlation to 0.8x. Ross will speak in more detail about the disposal of the A63 Motorway shortly.

Let me move to Slide 15. Here, we take a closer look at the portfolio debt profile and a selection of portfolio sensitivities. On the left, all portfolio debt is non-recourse to the company. And as you can see from the donut, only 0.6% of the overall balance is due for refinancing in the next 2 years. Indeed, only 17% of the debt is due to be refinanced that's all, as the remainder is fixed-term concession debt on the PPP portfolio.

As a result of planned debt amortization in the PPP portfolio, gross portfolio gearing reduces from 65% today to under 50% in 2040. And this effectively matches the average gearing of those assets, which do have refinancing requirements, 46% at 31st of March. The year has also seen debt refinancings successfully completed on Affinity Water, TNT, Altitude and Fortysouth on accretive terms.

And on the right, we present here key portfolio valuation sensitivities. Due to the nature of the long-term contracts in our portfolio, higher inflation has a positive correlation to NAV increased since the divestments, reflecting the portfolio's 0.8x inflation correlation and acting as an offset to any increases in the discount rate.

The other sensitivity I would like to comment on here is a slight positive correlation of interest rates, considering interest income on cash and interest payable on debt. This reflects the large interest-earning cash balances in the PPP portfolio, especially and the fact that practically all interest on the portfolio debt is fixed in nature.

With that, I'll now hand over to Ross to take you through the portfolio performance section.

Thanks very much, Mark. Good morning, everyone. So as usual, I'll start with a reminder of HICL's core infrastructure framework on Slide 17. And this sets out the attributes that we're looking for when we make new investments, so namely high-quality cash flows, defensive market positioning and a strong social license to operate. Ed will come on and talk about the pipeline. When we're renewing new opportunities and reviewing opportunities, we guided by this framework, which applies across different sectors and return profiles.

Turning to Page 18. You can see the familiar snapshot of HICL's diversified portfolio. The charts have moved around a little bit compared with last year as a result of the transaction activity, but the geographic split hasn't changed too much with the disposals in the U.K. and France broadly offsetting. The 10 largest assets are around 55% of the portfolio by value, and the weighted average asset life is now up at over 34 years.

So let's dive into portfolio performance. I'll run through the 6 largest assets, cover the PPPs as a whole, and then talk about the A63 at the end.

So starting with Affinity Water on the left-hand side of Page 19. This is HICL's largest investment at 13.6% of the portfolio value. Affinity continues to perform well financially, finishing its first year of the regulatory period with EBITDA slightly ahead of our forecast. This solid in-year performance is underpinned by a stable and resilient capital structure as well as continued growth in the regulatory capital value of the business, which is indexed to CPI inflation.

To support the ambitious AMP8 investment plan, HICL executed its GBP 50 million incremental equity investment during the year. And this also set the foundation for the resumption of dividends with HICL receiving its first distribution from Affinity in over 5 years, in line with our forecast. This was another key milestone for the business, which following PR24 is now on a stable footing and delivering a mix of income and capital growth. To reflect the improved cash flow certainty, we reduced the discount rate by 10 basis points and contributed to another increase in valuation.

Operational performance is still a key focus area for the company and will continue to be under the leadership of incoming CEO, Mark Garth, who joins from United Utilities. Was pleasing to see Ofwat recognizing the company as a top performer in several areas, albeit customer experience remains an area for improvement. Affinity will draw on Mark's proven track record here at UU. More broadly and notwithstanding the potential for political change in the U.K., we expect the Cunliffe Review and subsequent white paper to be broadly supportive.

Recent transactions in the sector have also demonstrated there is appetite from investors for water companies in public and private markets, and particularly those that are well-performing water-only companies with resilient capital structures.

Moving on to Texas Nevada Transmission. So as a reminder, this asset actually comprises 2 electricity transmission networks, which are co-owned and operated by LS Power. Cross Texas Transmission is a regulated utility, 1 Nevada transmission has a long-term availability contract with NV Energy, an A-rated Berkshire Hathway subsidiary. As you can see, both continue to perform very well operationally.

In October 25, CTT concluded its regulatory settlement with the Public Utility Commission of Texas. This settlement process is slightly more straightforward than next size that we have in the U.K. The regulation operates under a cost of service delivery model, and therefore, the key output is the allowed return on equity. This was confirmed at 9.6%, which was in line with our valuation forecast and demonstrates the need for the regulator to appropriately incentivize investment in the network.

And this need for investment is only going to get larger. This was the conclusion of a third-party study, which was incorporated into the valuation but more broadly, the regulator has only just started to come to terms with the massive need for power to fuel AI.

In Texas, massive data centers now dominate the interconnection queue, making up over 70% of requests. It's estimated that the state could have over 40 gigawatts of data centers by 2028, and this could reach 150 gigawatts within the next 5 years. And just to put that into context, that's double the U.K.'s total energy generation capacity.

For our investment in TNT, this means that the focus is likely to be on growth CapEx for the foreseeable future to support more interconnections and a more resilient network.

Turning on to Page 20, we provide some detail on HICL's 2 large transport assets. So starting with LSPH. International train path bookings grew by 4% year-on-year. Retail income outperformed our forecast by 9%. On the domestic side, revenues were still at the contractual underpin level, albeit the level of top-up from the DfT is now minimal. Southeastern trains continue to add additional services during the year.

In fact, from the May '26 timetable, which kicked in a couple of weeks ago, Southeastern are now back at the underpin. While this doesn't have a direct valuation impact, it is encouraging to see sustained and growing demand across the user base. And this dynamic is really important in the context of a second international operator, which is the #1 priority to unlocking the full growth potential of our investment.

Once again, there's been a lot of good progress in the year. Most notably the ORR awarding depot capacity to Virgin Trains in October '25, which was not challenged by Eurostar, was supported by a detailed and credible operating strategy. The ruling doesn't preclude other operators from launching services. In fact, Trenitalia continues to progress its own plans using existing rolling stock and depots in France.

Shortly after the period end, Virgin and LSPH jointly applied to the regulator for approval of a framework track access agreement, which would provide Virgin with access rights to the line. This is conditional on ordering rolling stock within the coming months. And as I've always said, this will be the trigger for us to have another look at the valuation. However, we have slightly reduced the discount rate, and we've also incorporated the latest estimates for the significant station expansion works required at St. Pancras to support a step-up in international services.

Moving on to Cross London Trains, which is now HICL's fifth largest asset, if you include the 6.5% stake we acquired in March. Because this transaction completed on the 20th of May, which is after the year-end, the valuation of the new stake is currently based on the commitment of the original acquisition cost of just over GBP 50 million.

At the next reporting period, we intend to revalue the incremental investment in line with the approach taken for the current stake and this is expected to result in a substantial uplift in valuation adding over GBP 0.01 to NAV per share, reflecting the off-market price achieved for a minority stake and HICL's favorable rights as an existing shareholder. This is an asset we know well and has pulled consistently since our first acquisition around 4 years ago.

Cash flow visibility is particularly strong for the next decade, given the availability-based contract provided by the Secretary of State for Transport and the fact that maintenance obligations are retained by Siemens and directly contracted with the operator. From 2036, the fleet will be relet on commercial terms. Our assumptions are based on partial inflation catch-up and a useful asset life of 45 years, which we think is reasonable based on historical data and the unique nature of this fleet.

Turning to Slide 21. We cover HICL's 2 digital assets. So starting with Fortysouth, where EBITDA grew by over 10% for the second consecutive year and slightly outperformed our valuation assumption. Although most of this was driven by CapEx, the long-term anchor tenancy contract did also capture the benefit of higher-than-expected inflation.

At the year-end, Fortysouth had delivered over 230 new towers since the business was carved out of One NZ. This demonstrates the successful execution of the build-to-suit program, under which new towers are first developed to meet One NZ's specific 5G coverage requirements and then capacity to accommodate additional tenants is increased over time.

Building on this expanded capacity, Fortysouth side, 60 new co-location contracts during the year, around 3/4 of which were with the Emergency Services Network. In March, the management team also reached agreement with Spark on a structured 75-site co-location program to be rolled out over 5 years. Crucially, this deal significantly extends the contract duration and inflation protection of the co-location contract which improves revenue quality and supports the long-term financeability of the company.

Moving on to Altitude Infra, where our valuation remained broadly stable over the year despite EBITDA being behind our forecast assumption. This primarily reflected short-term softness in the Business Services segment, counterbalanced by supportive regulatory guidance, which will enable an increase in excess tariffs payable by ISPs. This really highlights the importance of investment discipline in a sector as diverse as fiber to the home.

Altitude Infra benefits from France's attractive rural market framework, which is underpinned by national deployment targets. The company earns inflation-linked wholesale revenues from all the major ISPs under a regulated tariff structure. During the year, the company achieved a substantial completion of the rollout of the network.

And as to result, the most important long-term valuation driver is the take-up or penetration of fiber regardless of the Internet service provider. Penetration increased to 63% from 56% in the prior year. This was in line with our forecast, and we expect this to continue to increase as the copper network is decommissioned over time.

Turning to Slide 22. We cover the PPPs, which represent 57% of the portfolio by value. These assets benefit from availability base, contracted revenues, which tend to be linked to inflation and fixed rate long-term debt structures. From an operational perspective, the vast majority of HICL's PPPs performed well during the year, with aggregate availability above 99%. In the portfolio of this size, flare-ups do happen from time-to-time. We recognized a provision against Lewisham hospital during the period to reflect an ongoing contractual dispute with the trust.

More broadly, this demonstrates the importance of maintaining collaborative working relationships, particularly as assets approach the end of their concession life. During this year, 3 assets were successfully returned to the public sector ownership, 2 roads and a police training center. And this provides an excellent model as handback starts to ramp up over the coming years. The clients receive their assets in good condition and HICL slightly outperformed its financial projections.

As well as managing the assets themselves, InfraRed continues to manage the composition of the PPP portfolio through active rotation. During the year, HICL sold 7 U.K. PPP assets for a combined GBP 225 million. And that's with previous disposals, these assets were targeted. The sale was accretive to key metrics such as inflation correlation and asset life and it reduced our exposure to U.K. healthcare. It also further reduced the PPP portfolio sensitivities, most notably to life cycle costs, as you can see on the right-hand side of the slide.

It would be remiss of me not to mention the other significant disposal in the year. We have a case study on A63 on Page 23. This is an asset which HICL owned for 9 years, but InfraRed has been involved with for 15. Between 2011 and 2016, InfraRed developed, built, stabilized, refinanced and successfully exited the project, which gave us a unique vantage point to acquire a state HICL in 2017 as one of the first non-PPP assets in the portfolio.

We subsequently took the opportunity to make further incremental investments, leveraging our shareholding position to achieve favorable terms, much like the acquisition of XLT this year. Traffic has proven to be extremely resilient even in the face of COVID-19. As you can see on the page, a steady 1.2% growth per year on average when you layer on inflation-linked toll increases and value enhancement activities, this resulted in revenue growing by over 40% during HICL's ownership period.

Much like Northwest Parkway, this put us in a great position to exit to a strategic buyer, realizing a 14% IRR and 2.2p of NAV outperformance for shareholders. And these numbers are pretty compelling. But just to finish off, I'll try and demonstrate the potential value which can be created by managing these assets across their full life span.

If HICL had brought its 24% stake back in 2011, on the same terms as InfraRed's unlisted fund, it would have paid GBP 49 million. Now just looking at the disposal price alone, that equates to a multiple of over 7x. When you include all the distributions received over the 9 years that increases to over 10x.

So on that note, I'll hand back over to Ed, who will take you through the outlook.

Thanks, Ross. Back to me to round off today's presentation. And I want to do that by providing a little bit of commentary on how we're seeing the infrastructure market today and how we see it developing going forward. As we've highlighted in many of these presentations, we're in the midst of an infrastructure super cycle and the numbers on the page speak for themselves.

Over $100 trillion of global infrastructure investment is needed by 2040, spanning transport, energy, communications and social infrastructure. All sectors in which HICL has already made investments and we're seeing this growth come through in the results already. We've talked a lot about the key megatrends driving infrastructure development, energy resilience, digitalization, demographic shifts.

These drivers are only becoming more acute as energy security takes center stage, AI transforms the way we live and work and in aging and increasingly urban populous strains have infrastructure systems. This is not a one cycle story. It's a structural multi-decade tailwind, and HICL is positioned to benefit substantially from it.

So let's unpack this a little bit more on Slide 26. On Slide 26, we're stepping back to frame what we see as the evolving infrastructure landscape, a market that's evolving in scale, in shape and in return characteristics. There are 4 structural elements to highlight. First, the role of the private sector is increasing materially. This is beyond simply funding and extends to the increasing role of the private sector in sponsoring and procuring new infrastructure. We see this already in HICL through assets such as Fortysouth and Texas Nevada Transmission.

This dynamic materially broadens the infrastructure sponsor landscape versus dealing with governments alone. Successful investors will be those that can match this across sectors and across geographies with an international multi-strategy platform with the network with the relationships and expertise to originate across that broader universe.

Second, infrastructure systems are becoming more interconnected as energy and digitalization are increasingly interdependent and permeate transport utilities and social infrastructure more broadly. The energy intensity of digitalization, the decarbonization of heat and transport and the drive for efficiency across our utilities all play to this. And as these sectors become more intertwined, it reinforces the need for a diversified approach across sectors and across systems to fully capture those megatrends.

Third, the number of investable assets is increasing markedly with megatrends driving new sectors and asset types. As these sectors mature and derisk, they cascade down into HICL's investable universe. Managers with expertise across the full asset life cycle will be better positioned to have sharpened expertise in these new sectors and to position earlier for assets as they derisk. Both play directly to HICL's construction experience and InfraRed's long-term track record across both core and higher risk, higher returning infrastructure strategies.

And fourth, dynamics within core infrastructure itself are evolving. As mature assets are impacted by these megatrends, they're becoming more CapEx intensive, reducing near-term yields, but supporting stronger growth and more attractive long-term returns. This increasing complexity demands a more active management capability, playing to HICL's active business model and InfraRed's high-touch approach, supported by over 160 professionals and large dedicated asset management team.

So stepping back, these elements point to a broader, more interconnected, more dynamic and more attractive infrastructure market for those that have the attributes to capture it. These dynamics play firmly to HICL's and to InfraRed's strengths, creating the conditions to continue to improve HICL's growth profile and total return over time while preserving the portfolio's core attributes.

On Slide 27, we show the practical expression of this positioning. We're seeing a large volume of opportunities in the market, but the key point is really around the discipline and selectivity within that. The funnel on the left-hand side of the slide sets that out. A broad universe of over 80 opportunities screened recently narrowed through disciplined filtering to a small number that we're actively progressing and ultimately just the one executed across London Trains.

Looking at what we're progressing, the composition reflects the themes we've discussed. So it's across sectors with strength in utilities, transport and digital infrastructure, across geographies with a continued focus on markets that we know and understand well and at returns that are accretive to HICL's portfolio on a risk-adjusted basis. And that's an important consideration.

We're not simply chasing return up the risk spectrum, but selecting particular situations in high-quality assets where these offer attractive risk-adjusted returns and compare favorably to the ongoing buyback program. In the current environment where some dislocation remains in private markets, we're seeing opportunities that meet these criteria more readily, spanning both new investments and more proprietary opportunities such as the recent Cross London Trains investment.

And just to reiterate, this is about deploying capital highly selectively where it enhances the portfolio while maintaining strong investment discipline set against alternative uses of that capital.

Now finally, on Slide 28, we bring that positioning together. HICL is designed to capture what we see as a long-term structural opportunity in infrastructure investment, not tactically, but through a consistent and strategic approach. This approach is underpinned by HICL's portfolio construction, yielders and growers as well as its approach to diversifications across regions, sectors and megatrends.

The portfolio is positioned to grow with these megatrends as the GBP 600 million of growth CapEx over the next 5 years illustrates as well as the attractive pipeline of opportunities linked to these trends that we see in the market. Of course, disciplined capital allocation remains at the forefront through the continuation of selective asset recycling, a discerning approach to new investments and the continuation of HICL's sector-leading buyback program where it represents the best use of capital.

And finally, supported by the platform itself, which provides the capability and track record to execute and to actively manage in a more complex and more exciting market. And on that note, and also to plug that we are lining up a Capital Markets Day in early June, I think the 2nd of June -- sorry, July, where we can spend more time on the market and HICL's strategy within it. So with that, that concludes the presentation and very happy now to go to Q&A. June would have been a bit of a push.

Joe Pepper, RBC. I think just 3 from me, already linked to Slide 27, actually. Just when you mentioned the 4 live opportunities, in terms of how we think about that in terms of where you are currently in the sale process and when we could perhaps expect updates on any of those, that would be of interest.

And also secondly, in terms of that pipeline opportunity, how do you think about that in terms of the balance of growers versus yielders in the portfolio and how that could potentially impact key metrics such as dividend cover going forward and the longer-term outlook for dividend growth there if you were to focus perhaps more on the yielders.

And then finally, on the balance sheet, it's clearly in a very good place now with the RCF fully repaid. I would be curious to know just in terms of what kind of willingness you have to draw on that, both in terms of quantum and then also for how long as well? Or should we start to think of these as a kind of one-in, one-out policy with disposals supporting reinvestment?

Thanks, Joe. So I'll take the first 2 and then ask Mark to talk to balance sheet utilization. I think the first thing to say on '27 is that this is a snapshot in time in terms of how we're seeing the pipeline right now. So as the days and weeks go on, we'll be adding and subtracting opportunities from this mix.

In terms of the live opportunities, what I will say is that there's a focus on more bilateral situations, so ones that we can unearth through relationships or through existing positions in the portfolio. So that's a key focus rather than gravitating towards processes, which are going to be more competitive. So a real focus on less competitive situations.

And in terms of that sort of split of balance between growers and yielders, I would say that within that, there's a particular focus on opportunities that deliver both, have a minimum yield contribution, but also a total return that sits as a favorable use of capital versus, say, buybacks. So beating that buyback threshold.

That's only really -- generally, there is a trade-off between yield and growth, as you've highlighted right here. But where we can unearth these situations that are less competitive, we find that we're able actually to deliver on both fronts. But certainly, right now, we continue to focus on both elements of the equation.

In real assets, it's difficult to fine tune that exactly over time. So it's likely that we'll pull a lever in one direction, and we'll need to compensate in the other direction. But right now, in terms of those 4 live opportunities, I'd say they're quite balanced in that respect. And Mark, on RCF utilization.

Yes. Thanks, Joe. So your question is, we will [ to draw ] the RCF to do investments. I believe.

Yes actually and also its how long?

Yes. And we see it primarily as a bridge to disposal. The days of having it as a bridge to equity haven't returned yet. Bridge to disposal, we've proved that we can sell assets. We've proved that we can sell assets for good premium, GBP 1.5 billion since HICL was founded. So we have confidence in our ability to sell assets if we see opportunities that come before or sale closes, then we would certainly use the RCF just as we have done in the past year.

So the average drawing on the RCF during the course of the last year was between GBP 30 million and GBP 40 million, while we were undertaking last year's buyback program, and we bridge to the disposal proceeds for APG and also A63.

Just taking a step back a little bit, looking at the overall fund gearing level, it's 7.1% at the moment. Fairly low, I think. Obviously, that's slightly exaggerated by the large amount of cash, and we've got that at a portfolio level. But if you think of a steady-state level of maybe 7% to 8%, does that leave scope for a little bit more fund leverage in order to increase investment cadence? Possibly. It's not something we've ruled out, but it's probably not our first port of call. We've been successful selling assets, we would look to improve NAVs and improve active management through doing that and use the RCF to bridge if necessary, and the pipeline.

It's [ Ian Schuler ] from Canaccord. I've got 3 as well, if I may. Just starting on the NAV bridge on Page 10. The gains from the disposals, is that figure included within the 3.7p via enhancement? And if so, how much of it is from disposals?

The second one is just can you tell us what the current up-to-date cash debt position is taking into account all the disposals? I think there's a figure there of GBP 87 million of cash, but obviously, you've got loan notes on the other side in terms of net debt. And then I think there are GBP 333 million of disposal proceeds held outside the group. Can you just explain why it's structured in that way?

And then the final question is on the dividend cover. We're up from 1.07x to 1.1x. Obviously, that's reflecting Affinity, but Affinity is 13% of the portfolio. So it just seems a bit surprising that the increase in the dividend cover isn't a bit higher given that, that's now come on stream. Does that mean that there's a revenue gone down from some of the other investments in the portfolio?

Thanks, Ian. So on your first question, yes, if you look on Page 10 and the value enhancement block of 3.7p and 2.2p generated by the sale of the A63, the gain on disposal is in there. So you've got 1.5p of other value enhancement.

On your second question, yes, net debt at the year-end was GBP 62 million. If you add in the GBP 333 million, which is kept down in the corporate group at year-end, you get to a net cash position of more like GBP 270 million. And the reason for that cash being down there, that's obviously primarily the A63 proceeds. They arrived in euros, and they arrived into the holding vehicle, and the cash is on deposit, it's earning a yield, some of it's being turned into sterling.

We need to keep euros because we have euro commitments later on in the year. But there was no operational benefit moving it up to the topco just for the sake of moving it. So the cash is ready and available to be deployed. It sits in a holding company just below the limited partnership.

And your final question about dividend cover. Yes, we're very pleased that Affinity paid a dividend this year, slightly ahead of budget, a very strong contributor to the overall cover. And yes, we hit our target of 1.1x. 1.1x target was assuming that Affinity would distribute. The PPP portfolio generated a lot of cash, 11% yield this year. And we do have, for some of the assets that are focusing more on CapEx like TNT, Altitude and Fortysouth, lower distributions.

And so while those assets work through their CapEx programs to build out their asset bases, there is less cash coming from them, made up for by the likes of Affinity being a core infrastructure business, we have very good visibility over future cash flows, and we're building a level of safety accordingly.

It's Ben Newell from Investec. A couple for me. One on the GBP 600 million of growth CapEx over the next 5 years. How is that split between the growth assets and sort of how you're planning to fund that? Is that internal or will you expect to put more equity in? And then on the handback, how many are upcoming in the next couple of years? And just how that process has gone over the last year with the 3 that you've done?

So I'll start with the CapEx. Thanks, Ben. So the growth CapEx of GBP 79 million. As we have said in the prior year, the majority of that maybe 70%, 75% is at Affinity Water, and we're perfectly comfortable with that situation that the regulatory framework there allows you to earn a return on money that you put into the ground.

And so there's a direct link between the CapEx that's deployed there, the revenue that's generated and the EBITDA and the yield that it throws off. And the remaining balance is split between Fortysouth, which is building out its tower network, as Ed mentioned -- as Ross mentioned, TNT, which is improving and increasing its connections both to data users like data centers in Texas and energy sources.

And then Altitude as well in the last year. Altitude, more or less finished building out its network, it's backbone fiber network. And so a lot of CapEx receives there and also to complete that work. In terms of funding, all of that is internally funded. So we put GBP 50 million into Affinity earlier this year. That was part of the regulatory settlement in order to bring the gearing down to 70% at the start of the AMP. And all the CapEx that we've discussed is internally paid for by the companies by cash generated.

Yes, happy to take the handback question, Ben. So I guess, yes, you're right to highlight the 3 that went back this year. And I guess the way we're looking at that is it's really the firing starting now on the handback program ramping up. HICL has handed back a couple of assets to date, but this is really the start of every subsequent year going forward, there will be assets returning. So if we look at the kind of short-term, generally, it is a handful of assets per year, and they're generally small. They're generally in the education sector or kind of small roads PPPs.

The first major handback, I'd say, is the home office, which handback in 2031. So that's an asset that we're clearly monitoring and is already in its kind of 5-year review process with NISTA and with the client. Interestingly, that's an asset where obligations for life cycle delivery are passed down to the FM contractor. So again, there's some protection inherent there in terms of that process, but all going well.

And then I think the stat that we've got in the slide is 18.2% of the portfolio is going back over the next 10 years. So you can start to see the real ramp-up over the kind of medium-term. And I think what we've seen in the 3 that have gone back this year is it's been a very smooth process, frankly. The clients have been happy with the assets that they've got back. The contractual frameworks were relatively clear and were followed. And I think some of the work we've done over the last 3 or 4 years in trying to get ready for handback a little bit earlier has really helped because it's meant that -- there hasn't been any kind of unwelcome surprises cropping up at the end of the contract.

They've gone back. We're effectively just waiting for the handback certificate to be signed off. But effectively, the distributions associated with the return of the asset are effectively in our bank account now. So yes, things have gone pretty well for those first 3.

Any further questions from the room? If not, we'll move to those online.

Okay. Thank you. So starting with one for you, Mark. Is the Cross London Trains accretion in the March NAV?

It is not, no. So 31st of March, Cross London Trains. The transaction was signed in March and completed on the 20th of May. So the valuation event that Ross spoke about will take place in September, and we will own about 13% of that.

Perfect. And Mark, maybe sticking with you for a question on dividend cover. Are you comfortable with the headroom in the dividend cash cover? Should it be closer to 1.2, 1.3x as a target?

So the dividend cash cover that we disclosed at 1.1x, we've targeted that number because we think that gives sufficient comfort to investors that the dividend is well covered. We've also disclosed this year fund some operations metric which looks at your dividend cover before deployment of growth CapEx and which takes place -- capital allocation decision that takes place down in the portfolio of companies. And that's 1.59x, and we think that quite comfortably covers the dividend given that some of that growth CapEx is by its nature, discretionary.

So no, I think 1.1x, we think, is appropriate. You can see from the increasing cash graph on Page 8 that goes out 25 years or so, that forecast cash balances generated by the portfolio are increasing over time. And that gives us comfort that the dividend we expect should grow over time, and it should be amply covered at 1.1x minimum.

And Mark, just on a similar theme, but from the opposite angle. Can you explain why the dividend has only increased from 8.5p per share to 8.65p share given the strong coverage?

Okay. So in looking at the dividend guidance that we're giving, we're weighing a couple of things. So the portfolio behaves with complementarity between it. We've got our yielders, which generates a very strong yield, 11% and the cash that comes off those yields funds the dividend as you can see from the disclosure that we've produced. We've got half of the portfolio, which does generate a yield but has a stronger capital growth element there as well.

And so when we're looking to give dividend guidance, we're looking at the portfolio we have, and we're looking at HICL's strategic objectives. And we are mindful of a dividend that is increasing, increasing over time, but not a dividend that uses all available cash, which doesn't leave enough cash to be able to stoke the other side of the equation, which is capital growth in the growth assets, most of which is internally generated. But if it wasn't internally generated, we will be able to take the cash out.

In order to have a portfolio that pays a good dividend, a growing dividend that's well covered, but also is generating capital growth. This is the balance that we've alighted on.

Perfect. Thanks, Mark, and we'll give you a bit of a break there. And Ross, a number of questions on Affinity. So I'll do this one at a time. But Affinity Water, we've seen UU utilize Ofwat's reopener mechanism and also Severn Trent indicating opportunities, is Affinity pursuing any reopeners? And what would the potential impact be on RCV growth?

Yes. So it's a good question. Nothing immediately targeted by Affinity Water in terms of these kind of large reopening opportunities. Clearly, UU and Severn Trent much bigger companies. Affinity does have a significant capital expenditure program, but I guess, multiple smaller than the very large water and sewerage companies. But clearly, what Affinity is looking at, as Mark has suggested, is continuing to explore areas where it can improve the resilience of its network. RCV is projected to grow by 30% this AMP. So that is clearly a decent level of investment in the network, and that is all able to be funded by capital sources from within the business.

Obviously, there was a GBP 50 million equity investment that HICL made. And we've now got that balance between distributions to shareholders and continuing to invest in the network. So we think Affinity is in a relatively comfortable and stable position now on that front.

And sticking with the Affinity. Can you share what your RCV premium is? And are you comfortable with this relative to listed peers?

Yes. So the RCV premiums 1.26x, and that's pretty consistent with the RCV premium last year. Yes, we are comfortable with that. If you look at the peer group, that sits broadly within the range. Some of them are slightly lower than that, but we think for a company like Affinity that's a water-only company with a relatively healthy non-appointed business, which sits outside the regulatory framework and also a very clean capital structure, no significant holdco gearing. Yes, we're very comfortable, that is an appropriate premium at this time.

And there's another question which you've dealt with elements of on the CapEx front. But the extension is, given Affinity's strong performance and the CapEx outlook, does this affect your expectations for the holding period for the Affinity Water stake?

I mean that's a very good question because as we've said in the past, there's no asset within the HICL portfolio that is sacred to us that we would always have to hold the entire stake in our asset for the duration. HICL is set up as a long-term investor and our forecast to assume that we hold Affinity for the long-term. But like any asset in the portfolio, we remain open and alive to potential situations for divestment.

Clearly, we're at the point in the regulatory cycle now where we've received PR24. We've actually received the CMA findings for those companies that did appeal to the CMA, and we've also had the Cunliffe Review, and we've had the subsequent white paper that followed that. So what we've seen in the past is that if there are transactions in the water sector, they do tend to occur in the second, third, potentially fourth years of the regulatory cycle. So nothing off the table. We'll keep paying attention to what happens in the market, and we'll assess the opportunity like we would any other that crops up in the portfolio.

Thanks, Ross. Ed, a few questions on the pipeline of opportunities. So would your utilities bucket potentially include existing assets? Or is it predominantly new?

So on the utilities, it's predominantly new. So we're not looking at new incremental investments within existing holdings. It would be new third-party assets.

On a similar kind of theme, after the market's response to the last attempt of consolidation, are you content with the critical mass of your trust? Or do you feel the need to seek further options?

Yes, it's an interesting question. I think we are very focused on HICL as a stand-alone proposition, I think the results speak for themselves in terms of the quality of the portfolio we have, the growth drivers within the positioning of the vehicle to continue to benefit from its broader market. We continue to keep an eye out for opportunities for new investments, be that in private markets or public markets.

Right now, the pipeline that we've laid out is very much focused on private assets and more broadly, we're comfortable with the scale of the business where we're continuing to grow assets organically as well as actually having a market-leading buyback program. So yes, very, very comfortable with the current stance of the company.

And then how do you see your FFO cash cover evolving over the next few years if you were to secure your preferred assets in the pipeline?

Yes, it's a good question. It comes back to the question that Joe raised around the balance between yields and growers. So to the extent that we're acquiring assets that have a yield component, but also a growth component, I think you can expect to see the recycling of capital in those assets into CapEx and into maximizing their market position within their chosen field.

So I think I wouldn't expect that the FFO would deteriorate with those investments, but I think there's potential for it to continue to grow with the earnings of the potential opportunities.

Perfect. And then another question on portfolio construction. So whilst the yield model is clear, however, the growth allocation, one might argue that fiber and towers are no longer considered as such as demonstrated in low exit values and challenges, particularly in fiber. Could you please comment?

Yes. I mean fiber is an interesting one. There's fiber assets and there's fiber assets. And I think we've been really discerning around where HICL plays in the relative market constructs around those assets. So we saw a lot of enthusiasm around fiber, in particular, in the U.K. and in, say, Germany, which I pull out as examples of markets that are highly competitive that don't have a lot of structure to the market, certainly not a lot of regulation and a retail-oriented businesses.

So we've seen a lot of overbuild. We've seen a lot of people rushing to get customers. And when HICL made its investment in fiber, it deliberately stayed away from those types of market structures, and we looked purely at the French rural market because of the market structure that sits around it. So it's a regulated market. It's concession-based. The regional monopolies. There's no overbuild risk. The tariffs are regulated, and there's a lot more structure to it. And we decided that was a better home for HICL.

We looked at a number of businesses in that space before we alighted on Altitude infrastructure. And hence, we're very comfortable with the growth prospects for that business as we've, a, rolled out the physical infrastructure to actually deliver the network, and now that's substantially completed, as Ross highlighted, but also as that penetration rate continues to go up. And that's backstopped by the fact that there's a national target on the decommissioning of the existing copper network. So France has quite high natural broadband penetration on the copper network. As that's phased out, that will transition over to fiber.

So in our portfolio, these assets are continuing to grow. In the towers business, I won't go on quite as much, but New Zealand is a market that's still very much developing around the 5G opportunity. Data usage is continuing to grow. You're seeing in the raw stats, the level of both organic new tower build as well as the opportunity in increased co-location on our towers that there's actually a lot of growth there. So it's not right to take sort of international comparators in Europe or the U.S. and say, well, that applies to our portfolio. You really need to look at the market specifics around the assets that we've acquired.

Thanks, Ed. And final question we have here. There are a number of questions that -- or a number of comments that congratulate on the strong results. One has a question in it as well, though, and it reads, however, the question is, how do you plan to get on to a justified premium to issue new shares and grow? Is it just time and hard work? CMD in July should help.

Yes. No, I agree. Looking forward to the CMD. I think what are we looking to do? It's really -- we can't control the broader macro market, and that's obviously shown to be quite volatile, either geopolitically or from a macroeconomic perspective, and we can only control the controllables in terms of HICL's performance. And I think we've done a pretty good job of that. So the base level is putting the company in a position where it can deliver stable period-on-period NAV progression.

And I think we've got the settings right in terms of the payout ratio, the level of reinvestment and the earnings cover that we're getting from the portfolio in steady state, added to which we're applying a lot of active management, either in pushing some of the assets, Ross was talking about to new opportunities like a second operator on London's [indiscernible] speed or through rotating assets and crystallizing value selectively.

And ultimately setting out our store for investors in terms of capital allocation that combines the various levers available to us, an increase in the dividend, strong buyback program and selective investment like XLT so that we can continue to drive the strategy forward and really bring investors in behind us. And hopefully, that will translate into a share price rating.

Great. Thanks, Ed. We've gone slightly over. So thank you for everyone for bearing with us. That's all of the questions in the room and all of the questions online. So that concludes our formal presentation. Please do contact the Investor Relations team if you have any further questions. And thank you again for joining us.

Good morning, everyone, and welcome to HICL's Interim results presentation for the period ended 30th of September 2025. Usual housekeeping applies. We're not expecting a fire alarm. So if it does go off, please do follow the fire marshal out of the building and into the blizzard outside. We expect the presentation to last about 30 minutes, following which we'll take questions from the room and then from those online.

I'll now hand over to Ed Hunt and Mark Tiner to take us through the formal presentation.

Thanks, Mo. Good morning, and welcome to this set of interim results for HICL Infrastructure PLC. A busy week for the company, recognizing Monday's announcement regarding the proposed combination of HICL and TRIG. That announcement and the investor presentation is on the website. And clearly, we're getting around to speak to investors in the market.

Notwithstanding that exciting development and that it remains subject to a shareholder vote, the focus today will be on HICL's results as a stand-alone, reflecting the performance for the 6 months to 30 September. So starting on Slide 4 with HICL's core proposition. This is a reminder of HICL's differentiated and straightforward purpose, one that has underpinned the company's investment proposition for almost 20 years.

HICL sources and executes high-quality infrastructure investments in private markets, constructs a well-balanced and diversified portfolio and offers that to investors in a liquid vehicle. Each and every asset is actively managed to realize its inherent value and to perform its specific role in the overall portfolio, utilizing InfraRed's 25-year plus track record as a specialist infrastructure investor. All up, a defensive platform positioned for growth, and this is evident throughout this set of results.

Starting on Slide 5. This is a robust interim result underpinned by a strong operating performance. HICL remains on the front foot, meeting the key milestones that we set out to the market at the beginning of the financial year. This starts on the left of the slide, the company's approach to portfolio rotation.

In August, HICL announced the sale of 7 U.K. PPP assets for around GBP 225 million, in line with our March 31 valuation. This exceeded the GBP 200 million disposal target for the year, and HICL has now delivered on over GBP 730 million of divestments over the last 24 months at strong valuations. This divestment activity is supportive to long-term portfolio construction, enables capital recycling for accretive investment and importantly, provides an engine for growth. And this growth is clear, turning to the middle column.

The company's NAV per share increased by 2.9p over the period to 156p, primarily driven by a strong operational performance from HICL's growth assets, which saw a combined 7% EBITDA uplift period-on-period. HICL's yield assets complemented this outperformance with pleasing cash generation, bringing the underlying portfolio return to 10.3% on an annualized basis.

As you can see on the right of the slide, the strong operational performance puts HICL on track to meet its cash generation targets. So cash cover for the 6 months reached that important 1.1x threshold, an uplift from the 1.07x at the full year. HICL remains on track to deliver its 1.1x for the full year, excluding profits on disposal. This growing cover ratio speaks to the quality of the underlying cash generation, notwithstanding the significant reinvestment of cash at asset level into growth CapEx.

If we were to gross up the dividend cash cover for that CapEx, the dividend cover would increase to in excess of 1.5x or a payout ratio of around 65%, ensuring significant compounding of free cash. This cash generation also supports HICL's progressive dividend with the Board reaffirming the existing guidance of 8.35p to March '26 and the 8.5p for the year March '27 on a stand-alone basis.

Together with the 3 columns on this page showcase HICL's compelling total return proposition. Organic growth at asset level, fueled by disciplined CapEx at portfolio level through accretive asset rotation and that strong and growing income that we associate with high-quality infrastructure, a defensive platform positioned for growth. Further metrics for the 6-month period are set out on Slide 6.

Top left, we highlight the NAV growth of 1.9% over the period to 1.56.0p, contributing to a strong 9.5% annualized NAV return for the period set out on the top right. That's a result of a strong performance from HICL's growth assets with EBITDA growth of 7% period-on-period, bottom left. And bottom right then looks at the discount rate or the expected returns from the portfolio. So 8.4% is the weighted average discount rate and the expected gross return if you buy the portfolio at NAV. That translates to 10% net return if you buy at Friday's share price. As active managers, we seek to deliver over and above those expected returns as we have done in this period.

On Slide 7, the now very familiar yielders and growers slide, a useful tool to articulate strategic portfolio construction. The yielders in the light purple, HICL's PPP investments with an average life of 13 years, yielding strongly at around 11% cash yield, balanced with HICL's growers, longer life assets, extending cash flows beyond the maturing yielders, compounding free cash back into growth CapEx and providing that long-term earnings base that underpins long-term dividend and NAV growth.

The design here is straightforward. The yielders will continue to mature and eventually be handed back. The growers will continue their growth CapEx and then start their yielding phase. And as active managers, our job is to continue to stoke and balance both sides of this equation to solve for a compelling total return for shareholders. Note that this chart assumes all cash is paid out. The reality is the dividend cash cover, that element above 1x cover will be reinvested, providing a valuable source of funding for organic growth.

Passing over now to Mark for the financial results.

Thank you, Ed, and good morning, everyone. I'm pleased to present to you today the review of HICL's financial performance for the first 6 months of the year. Taking Slide 9.

We touched on HICL's strong disposal track record at the beginning. So before we review the NAV bridge for the period, I would like to take a closer look at August's portfolio sale to APG, the manager of Europe's largest pension fund. Beyond meeting the FY '26 disposal target well ahead of the end of the financial year, the transaction has several strategic benefits for the company.

From a portfolio construction perspective, this sale continues our portfolio rotation efforts and improves key portfolio construction metrics, including reducing HICL's exposure to short-duration assets and life cycle risk while continuing to rightsize exposure to health care assets. On valuation, the disposals are in line with our 31 March 2025 valuation, providing an important transactional data point along with net proceeds that support the growth of the company.

The sale also establishes a new partnership framework with APG, which creates opportunities for future divestments and potential co-investments as attractive opportunities arise. And finally, to reiterate that disposal proceeds now total in excess of GBP 730 million over the past 24 months, the highest in the sector at an average premium to NAV of 7%. We expect this transaction to close in the next few weeks.

On Slide 10, we show the NAV per share bridge for the period to 30 September 2025. Starting with opening NAV per share of 153.1p, the portfolio generated 7.2p of value accretion in the year. 6.2p of this arose from the unwind of the weighted average discount rate, which was unchanged in the 6 months at 8.4%. While government bond yields rose slightly in the period, the transactional evidence we saw, including our own disposal of assets at March NAV did not point to an increase in discount rates from the March level. And as a result, we have maintained a weighted average discount rate at 8.4%.

We are pleased by an extra $0.01 of NAV accretion coming from outperformance of the portfolio. This was driven by higher-than-expected inflation in our countries of operation, particularly the U.K. and the effect in the period of the investment managers value enhancement initiatives, particularly at the growth assets.

Changes in forecast economic assumptions used in the portfolio valuation models contributed a further 0.1p. And the company's share buyback program, which was renewed in March, targeting a further GBP 100 million of buybacks over the course of the year, contributed NAV accretion in the period of 0.9p or 1.8p since the beginning of the program in May 2024. A total of 116 million shares have been bought back at an average price of 118.8p.

Fund expenses of 1.5p per share include the management fee, which was calculated on the new reduced basis for 3 months of the period. A small foreign exchange gain of 0.4p after hedging and the 4.2p of dividends paid in the year, reflecting the full year target of 8.35p completes the bridge to our 30 September NAV per share of 156p.

Turning to the right side of the slide. The operating expense ratio was 1.04% by annualizing the 6-month costs. On a pro forma basis, assuming that management fee reduction is in place for the whole year, the OCR is 1.0%, a 10 bps decrease from the prior year. Net debt at the end of the period was GBP 142.2 million, a GBP 40 million increase over the 6 months, arising from liquidity deployed into the buyback program over the period.

HICL's net debt principally comprises GBP 30 million of drawn RCF and GBP 150 million of private placement notes, offset by GBP 38 million of cash and led to a fund gearing percentage of 8%, marginally up over the period from 7.4%. And finally, available liquidity available to the company at the end of the period, including undrawn RCF amounts, was GBP 402 million.

Turning to Slide 11. Here, we take a look at the portfolio level debt profile and key portfolio valuation sensitivities. On the left, you can see from the doughnuts that 84% of the debt is concession project finance, amortizing debt with no refinancing requirements. Only 16% of portfolio level debt has any refinancing requirements. And of that amount, only 1% falls due in the next 2 years. HICL's portfolio gearing is 65% overall on a nonrecourse basis, and the average gearing of those assets that do have refinancing risk is lower, as you would expect, at 50%. On the right, we present key portfolio sensitivities. While the weighted average discount rate has not changed in the period, if it were to increase by 0.5%, for example, there will be a 7.3p negative effect on NAV per share.

Due to the nature of the long-term contracts in our portfolio, higher inflation has a positive correlation to NAV, reflecting the portfolio's 0.7x inflation correlation. We also note the slight positive overall correlation of the NAV to interest rates. This reflects the large interest-earning cash balances in the PPP portfolio, especially and the fact that practically all interest payable on the portfolio debt is fixed in nature.

Turning to Slide 12. Here, we refresh the cash generation analysis presented at full year. The cash flows after the 6-month period and show the relative contribution of the yielders and growers, each now 50% of the portfolio to cash generation. In the period, yielders contributed GBP 86 million after debt amortization and life cycle costs. And the growers generated EBITDA of GBP 131 million in the period, a strong 7% increase on the prior comparable period. And after payment of interest, tax and CapEx contributed GBP 28 million to dividend cover.

At fund level in the central box, total distributions of GBP 114 million cover finance costs of GBP 6 million and operating costs of GBP 19 million, resulting in GBP 89 million to cover the 2 quarters' dividends 1.1x. Dividend is also covered 1.42x by earnings, demonstrating the ability of the NAV to grow over time.

Turning to Slide 13. We would expect this sustainable NAV growth to be supported by a dividend cash cover target of 1.1x or more in future years. We are keen to maintain a balance between a progressive dividend well covered and the ability to redeploy surplus cash into the portfolio to generate future returns through growth CapEx, reinvestment or bolt-on acquisitions where appropriate. This is why we are targeting a minimum of 1.1x dividend cover to give shareholders comfort that the dividend is suitably covered and within the portfolio to make the most efficient use of remaining capital. Finally, on a stand-alone basis, we reaffirm the dividend guidance of 8.5p for FY '27.

We turn to Slide 15. Before moving into portfolio performance, it's worth revisiting here the company's market positioning, which you can see here on Page 15. HICL is a core infrastructure investor. All of our assets are positioned towards the lower end of the infrastructure risk spectrum and benefit from 3 key characteristics: high cash flow quality through contracts, entrenched demand or regulated revenues, defensive market positioning where there are high barriers to entry and low competition and criticality, essential assets that form the foundation of modern society. This framework guides our approach to new acquisitions and also describes the existing portfolio, which is summarized on the next page.

So you'll be familiar with the charts on this slide, which really underscore the diversification of HICL's portfolio across sectors, geographies and revenue types. Our active approach to portfolio construction remains central to the company's business model with the agreed sale of 7 U.K. PPP assets in the period expected to further enhance key metrics and diversify risk.

For example, the company's exposure to health assets reduces from 22% to 16% with PMP and Southmead Hospitals now falling outside the top 10. And the top 10 percentage increases due to the sale, partly because of the denominator effect, but also through outperformance. For example, Affinity steps up to 12%. The following pages provide the usual performance updates for HICL's largest holdings.

So I'll hand you back to Ed, who will take you through these.

Thanks, Mark. And turning now to Slide 17. Affinity Water remains HICL's largest investment at over 12% of the portfolio by value. The business delivered solid operational performance, achieving material EBITDA growth in line with forecasts. Ofwat's recent performance report highlighted Affinity as a strong performer in several areas and a top performer in supply interruptions for a second year.

Affinity was ranked within the average band with only 1 company above and 5 in the category below. Day-to-day operations are supported by a robust capital structure. Credit ratings are 2 notches above Ofwat's requirements. There's very little holdco debt and no refinancing is needed until 2033. A valuation uplift was recorded to reflect a small increase to future WACC. Other regulatory developments included the Cunliffe review, which included a proposal to streamline the regulatory regime, developments welcomed by HICL.

HICL is on track to deliver its GBP 50 million investment into Affinity Water by 31 March '26, supporting substantial RCV growth and expects dividends from the business to resume this financial year. And finally, to note, CEO, Keith Haslett, will be moving across to Pennon and remains in post supporting the appointment of a new CEO.

Moving across to T&T. Operational performance of this asset remains strong with both networks, Cross Texas Transmission and One Nevada Transmission achieving 100% availability over the period. Shortly after period end, Cross Texas Transmission concluded its latest regulatory settlement and was granted an allowed return on equity in line with HICL's valuation, providing greater clarity on future returns. In the near term, Cross Texas is experiencing strong demand for transmission capacity driven by renewables developers accelerating projects ahead of federal tax credit expirations.

Additionally, a refreshed study of CTT's long-term growth outlook confirmed that total future energy demand is expected to be higher than previously assumed. Both factors contribute to increased reinvestment of free cash into CapEx earlier than assumed, expanding the company's asset base and future earnings potential.

Over on Slide 18, we offer an overview of HICL's largest demand-based assets, starting with the A63. Traffic for both light and heavy vehicles continues to grow, though numbers were marginally below HICL's forecast due to fewer summer holiday journeys. We're closely monitoring France's political environment, which remains unsettled after recent government changes. There has been no material impact on A63's performance, highlighting its strategic role as a trans-European transport corridor.

Moving to London St. Pancras HighSpeed, again, formerly known as High Speed 1. Internationally, the chart shows Eurostar bookings for the period surpassed our valuation assumptions, buoyed by higher-than-expected spot bids from Eurostar. These bookings averaged 99% of pre-COVID levels, supporting EBITDA in line with HICL's assumptions. Domestic bookings remained below the contractual revenue underpinned from the DfT, but it's positive that future December '25 to May '26 timetables included over 400 more parts than previously assumed. Although pre-COVID levels are not anticipated until 2028, this suggests that the government-run Southeastern operator is responding to underlying demand for extra parts.

A key announcement was made after the period. The U.K. rail regulator approved Virgin Trains' application for access to the Temple Mills depot. This is a major milestone for introducing a second operator for the cross-channel services and a major growth driver for London St. Pancras HighSpeed.

On Slide 19, we cover HICL's 2 large digital infrastructure assets, starting with Fortysouth. Fortysouth's revenues are secured by an availability-based anchor tenancy agreement with One New Zealand, supporting financial performance and providing the foundation for the 11% EBITDA growth period-on-period, which exceeded HICL's valuation assumption. The management team has focused on enhancing earnings growth by securing additional colocations, mainly from public sector clients, and that's largely offset softer demand from the mobile network operators.

Since HICL's 2022 acquisition, 104 new agreements have been signed with efforts underway to reduce the commissioning lead time and accelerate revenues from those new colocations. The core tower deployment program remains on track to reach nearly 300 new towers by 2027, supporting New Zealand's 5G expansion. Tower upgrades were marginally behind schedule year-to-date, but are expected to accelerate over New Zealand's summer months to meet the March 2026 target. Finally, last week, Infratil announced a conditional agreement to sell its 20% stake in Fortysouth to an investor managed by InfraRed, giving Infrared managed investors a combined 60% stake in the asset and improving asset level governance. And finally, Altitude Infra, which is now HICL's sixth largest asset at approximately 3.5% of total portfolio by value.

As a reminder, this asset benefits from France's favorable rural market framework, concession-based regional monopolies and supported by a national deployment target. The company earns inflation-linked wholesale revenues from all the major Internet service providers under a regulated tariff. Since acquisition, management has prioritized the rollout of the network across the 27 concessions. By September, this was over 97% complete with the focus now on migrating customers onto Altitude's network.

Fiber take-up currently stands at 59% on a blended basis, matching our valuation assumption. Our forecast assumes a long-term fiber penetration of 89%, in line with current broadband penetration with the existing copper network set for decommissioning by 2030. More broadly, the management team continues to explore new growth opportunities through the outright acquisition of networks, acquiring neighboring networks or indeed by developing new networks in new markets, capitalizing on Altitude's in-house construction and operations expertise.

On Slide 20, we cover the PPPs, which now make up 52% of the portfolio by value. These assets benefit from availability-based revenues, inflation linked and long-term fixed rate debt. Operationally, the vast majority of the PPP portfolio performed well in the year, aggregate availability exceeding 99%. Notwithstanding the contracted revenues, Infra takes a very active approach to managing the PPP portfolio, both at asset level and through its leadership role within the public sector and the association of investors in PPPs.

The portfolio sale in the period further reduced HICL's exposure to U.K. health care and life cycle delivery. This transaction is another example of HICL's ongoing portfolio rotation strategy, strengthening portfolio construction and better positioning the company to protect and create value going forward.

Turning now to market and outlook on Slide 22. Here, we consider market activity across HICL's key sectors and geographies. Deal flow remains below historic averages, mostly due to ongoing macroeconomic and political volatility. However, it also remains clear that there is a healthy liquid market for high-quality infrastructure assets, demonstrating the through-cycle appeal to a range of investor types. And clearly, HICL's own disposal activity speaks to that.

Our own observations are that following a period of transition in the rate environment, we're now seeing valuations stabilize as with HICL in this period, along with increased institutional interest in core infrastructure, given its attractive risk/reward profile, for example, the transaction with APG. On this basis, we expect further uplift in market activity going forward. The fundamental drivers of infrastructure development, decarbonization, digitalization, demographic change continue to offer strong long-term growth prospects for the asset class. HICL is well positioned to benefit from these trends, and we discuss that on the next slide.

On Slide 23, we set out HICL's long-term self-sustaining model. Key to HICL's investment proposition is that its portfolio is self-sustaining and self-funded, and we see that here on the slide. There are 3 key enablers. Firstly, surplus cash flow, driving free cash over and above the dividend through active management of the assets. This is evident through the increase in cash generation and the dividend cover to 1.1x in the period. This is over and above the substantial asset level growth CapEx itself and investment in future cash generation. Secondly, asset rotation, strategically divesting assets to improve portfolio construction and generate additional cash flows through profits on disposal.

Over GBP 200 million of disposals have been made in the financial year, over GBP 730 million of disposals delivered over the last 24 months at strong valuations and with profits reinvested into assets and buybacks. And then thirdly, accretive reinvestment. This includes share repurchases and additional investments where these advance HICL's strategy at attractive risk-adjusted returns.

To date, the buyback program continues, and we continue to evaluate investment opportunities on a highly selective basis. The market for investment remains attractive with variable conditions presenting opportunities for outsized returns. Finally, as we think about the outlook for the company, I would like to talk about Monday's announcement and how this fits with and enhances HICL's strategy.

Slide 24 sets out the key highlights from the proposed transaction, but I want to specifically address why this transaction is the right thing for HICL's strategy and the right thing for HICL shareholders. There are 3 key reasons. Firstly, it expedites growth. TRIG's portfolio is the most diversified of its peer group. It is the most contracted of its peer group.

Over 70% of its revenues over the next 10 years are contracted. These assets generate huge levels of cash, and it's that cash that provides the foundation from which HICL can transition to a higher total return strategy. one that pays a higher dividend from day 1, delivers more cash cover and reinvestment in support of long-term growth. Secondly, it precipitates a re-rating. To re-rate the shares, HICL needs to attract new buyers and appeal to a global investor base. The prerequisites to achieve that are a compelling total return strategy and scale. This combination is more likely to lead to a re-rating of HICL shares, all things considered than HICL stand-alone.

Finally, it follows the assets. It updates the investment focus to reflect the evolution of the infrastructure market where traditional core infrastructure and the energy transition are converging. This is where the growth is, and successful investors will be those that position their mandates to fully benefit from these powerful tailwinds. Our job as manager is to look around the corner. HICL has evolved before and the time is right that it evolves again.

I greatly appreciate your time this morning and now very happy to open up to questions, starting with those in the room. Alex?

Alex Wheeler, RBC. Two for me, please. Just firstly, on the growers, the over 13% annualized return that you mentioned this morning in the RNS, I'd just be interested in how much of that has come from valuation uplifts in the period and how much of it is from the strong organic growth that you're seeing in those assets and the EBITDA growth that's coming through. I think you mentioned that Affinity had a valuation uplift.

So any color there and elsewhere would be great. And then just secondly, on the PP -- you've obviously been through a number of disposals. You've lowered your health care exposure. Just interested to get your thoughts on whether you're happy with the balance of that now or whether you'd be looking to do any more selective disposals in the future?

Yes. Thanks, Alex. I'll take the PPP and the divestment one first, and then Mark will come in on the EBITDA. So yes, I mean, to reiterate, we continue to have an active approach to portfolio rotation. And as I mentioned in the presentation, it's really finding that balance between the yielders and growers. There's a few ingredients that go into that.

One, the desire for dividend growth; and b, the right level of reinvestment. So we need to balance the cash. It's also dependent on the evolution of the growers and how much cash they start generating or indeed reinvesting. So on the one hand, you have an asset like Affinity that's gone from a non-yielding phase into a yielding phase. You also have assets like Texas Nevada Transmission that are actually seeing more growth on their networks and actually reinvesting more cash than previously assumed.

So we take a view on that balance period-to-period, but we absolutely expect to continue to rotate assets, and we'll do that where it makes sense for long-term portfolio construction and getting the balance right in terms of sector exposures and indeed that balance between yields and growth.

Taking your first question, the 13% composition, so that's the gross return for the growers. Inflation obviously plays a key part. The portfolio is quite strongly correlated. And of the penny of outperformance, about half of that comes from actual inflation. So that's us forecasting inflation forward. The actual outturn is higher than we expect, particularly in the U.K.

So we update our models and that increases DtF valuation. Secondly, in terms of performance, the EBITDA performance of the growers on average 7% 6 months on 6 months. We're very pleased with that. We think that's very good for assets of these kinds. Where that's higher than the assumptions that we've included in our valuation models, we obviously update and that assumption flows through forward because you're starting from a higher base of earnings as you go forward. So that feeds through to valuations. And some assets like primarily Affinity, also Fortysouth and Altitude have seen really strong EBITDA performances.

And then you have valuation movements that you referred to. Affinity, for example, after the final determination was passed by the regulator, we very slightly increased the WACC there in line with that determination. With TNT, they have brought forward CapEx on building out their network, as Ed described. And so that has a valuation impact as well. It's pretty strongly accretive. And so there are movements of those kinds as well that are feeding through, again, as you would expect for assets of this kind.

And then finally, we had a bit of a tailwind in these 6 months, not very large, but modest from FX, particularly strengthening of the euro against sterling.

Just a few for me. Could you remind me the RCV multiple you've got in for Affinity as it stands today? And I was quite interested if you can talk a little bit about the APG relationship or any similar relationships of that in the context of your disposal programs, et cetera?

And thirdly, just on CapEx, you on the growers have spent GBP 50 million in the period. Can you give a sense for what you expect that to be over the full year? And in that same context, the current facilities at the company level that will support that, just again, taking that in context of your disposal targets and meeting that balance, what's funded and what might you need to fund?

Yes, sure. So in relation to the RCV multiple, we don't disclose it publicly. You can work it out though in the public information, it's between 1.2 and 1.25. In relation to relationships for divestments. So you mentioned the APG relationship. So I mean this is an important feature. We know that the market is not as competitive as it was 3 years ago and bringing relationships to bear to acquire assets is a key strength of InfraReds in order to rotate assets. In this case, APG is an example of that.

There's an ongoing relationship between HICL, InfraRed and APG in respect of future potential divestments for the and indeed future partnerships for acquisitions. So we see relationships like that as a very key strength in being able to continue to execute the type of portfolio rotation that we'd like. APG is one example. There will be others in due course, I'm sure. In relation to CapEx, Mark might have the figures to hand, but it's fairly linear.

If you think about the biggest CapEx developers, it's Affinity towards the others and also things like Fortysouth, where it's a pretty linear deployment over the next 6 months to year. But Mark, I don't know whether you want to comment on that.

Yes, sure. That's correct. And as you can expect with businesses that are CapEx heavy CapEx plans, there's sometimes a bit of a lag and then it falls into the previous year. So that sort of happens year after year. So the linear approach is it would be a good assumption. In terms of the funding and the facilities available, taking Affinity Water, first of all, we said back in May that, that took its regulatory determination and went out and got fully refinanced.

So that has no refinancing obligation until 2033. It raised a large bond at tighter spreads than the rest of its debt. So that business is fully funded. All the CapEx is fully funded either through free cash flow or the financing. So that's a comment on the financing of the CapEx there.

Fortysouth, we mentioned that that's exploring an early refinancing. That's been an independent business for nearly 3 years since its carve-out. It's got a bit of a track record to show some lending banks. And so we would expect a refinancing there to in anticipation of the continuing CapEx plans that are driving really great EBITDA growth there. And obviously, that company generates an awful lot of free cash flow, which at the moment is being prioritized towards tower build-outs and connections.

And then finally, Altitude as well. Altitude has just refinanced its mezz debt. It's a very large business of which HICL owns 6% and Infrared funds own about 20%, and that is fully funded for the remainder of its build-out program, which is now drawing to a close. So there isn't a very large CapEx requirement on existing plans there.

It's Ashley Thomas from Winterflood. Just on the PPP portfolio, could you perhaps give us a bit of additional color on the situation at the Lewisham Hospital and the higher risk of performance deductions and potentially sort of a rough quantum of the increase in the discount rate and the cash provision?

Yes, happy to do that. So we highlight in the annual -- actually referring to comments that we made in the report itself regarding Lewisham. I think the first point to make out that in any PPP relationship, it's a long marriage, often 25, 30 years and you have ups and downs.

On that particular asset, we have identified some need for service improvements in respect of the FM and the SPV management. We are working through that with the client, but we do foresee a slightly higher risk of deductions in the short term. So we've made some adjustments to cash flow to potentially reflect that. And we've also increased the discount rate in respect of that asset.

Overall, Lewisham is not a large asset in the portfolio, less than 1%. So very quarantined and not a key feature of the valuation story today. So significant portfolio level.

It's Iain Scouller from Stifel. Just in terms of the cash coming back from the PPPs, can you just sort of talk a bit about the pipeline, any sort of sectors you're particularly focused on? And also, I mean, on pricing of transactions, I think you're sort of indicating that they're actually holding up relatively well despite the bond yield being relatively high. So I was wondering if you just talk a bit about that in a bit more detail.

Iain, do you mind just clarifying the first -- cash from PPPs, do you mean in terms of divestments? Or do you mean...

I mean, you've got this cash coming back in. I mean, the over GBP 200 million. So I mean, how quickly are you intending to invest that in the pipeline? And if you just talk a bit about the pipeline?

Yes, absolutely. So yes, I mean, in terms of the sort of weighted average asset life of the PPP portfolio more generally, it's still about 13 years. So there are certainly examples of PPPs that are rolling off sooner than that, and there are examples of PPPs that roll off much further than that.

In respect of cash that comes off the portfolio in the next 5 years, then that provides an opportunity for us to deploy using capital allocation discipline that we've showed thus far. That's been a balance of investments back into assets, be it incremental investment in A63 or an incremental investment in Affinity Water, so opportunities through the existing portfolio or to pick up additional stakes, but also in respect of buybacks and debt reduction on the balance sheet. So it's a quantum that drips in over the coming years rather than a big lump, but we'll continue to use the same capital allocation discipline to direct that cash.

In respect of transaction data, I mean, I made the point in the presentation, but I'll let Mark speak to this as well. So we recognize that conditions are still somewhat variable, but they are starting to settle. So what we've noticed as a house is this increase in institutional interest in at the core end of the infrastructure risk spectrum, recognizing that valuations have taken their mark-to-market. Discount rates across the sector have increased between 140, 180 basis points. HICL's own has done the same. and at those new discount rates and valuations, that's quite a compelling risk-adjusted return.

So we're working carefully and constructively with institutional partners to develop and harvest those relationships where appropriate on behalf of HICL, and we see more activity there. But in carefully structured processes, it's clear that you can attract NAV for a group of assets. These 7 assets are pretty bog standard PPP assets. The U.K., they're health. They've got life cycle, but they are very much representative of the broader PPP portfolio in many respects, and we've attracted a strong valuation for them. So we think that valuations can hold up.

The caveat to that is what we're seeing elsewhere in the market is where someone says, we have to sell all our assets tomorrow, puts up the for sale sign runs a process and the valuations are soft, and that's absolutely what you would expect in this type of market, running a process of that type. So it's about InfraRed's ability to leverage relationships, find the right buyers for the right assets and do it in a sensible way.

Discount rates. Obviously, bond yields did rise slightly between March and September. And of those fairly modest rises cut at 30 September, the most marked was in the U.K. really. And that was the jurisdiction, of course, where we sold nearly 15% of the portfolio, the PPP portfolio at NAV. And so it didn't seem in the context of that, that there was a compelling argument to put the discount rates up at half year. And bond yields since then have remained a little bit volatile, but they haven't particularly shot up.

So I think for those online, we've got one more in the room, and then we'll start taking questions from the...

Sorry. Just a quick follow-on on discount rates. Colette from Deutsche Numis. Obviously, there's none in your portfolio as we stand today. Your historic approach to valuation has been fairly stable over time. How do you expect that to evolve with the introduction potentially of some of the sort of renewable assets within the TRIG portfolio. How do you see those discount rates compare across sectors?

I know you talk about them converging as trends, but there is obvious difference in volatility of valuation that listed investors have seen in those assets. How do you think about that in the context of your historic approach to valuation?

Yes. Thanks, Colette. So in -- I think the first thing to say is that TRIG's assets, renewable assets are of a quality that conforms with HICL's core infrastructure framework. So it's a well-diversified portfolio, low operational complexity and high levels of contracting. So the revenue visibility over the next 10 years is actually very good, and we have in-house capability to continue to fix power prices and contract power prices out as TRIG announced it only a couple of weeks ago.

So that remains a key feature of that particular business model. In terms of valuation approach, it's infrared as a house. So the robust approach that you see on the HICL side is absolutely there on the TRIG side, there's a lot of similarity in approach, in particular, InfraRed has a valuation committee, which sits across the valuation activity of all the funds, and that's independent of the investment teams.

Additionally, obviously, in respect of the transaction, there's been quite a lot of third-party due diligence around the price. So independent experts, big 4 firms reviewing the valuation of those assets and also reviewing TRIG's own independent valuation. So an independent view of an independent view of underlying valuation. The discount rate approach remains consistent with that risk profile. It's slightly higher on the team versus HICL's discount rate. They adopt a bifurcated approach around the contracted and noncontracted revenues. But that's absolutely consistent with the valuation principles that we would apply to the HICL portfolio and fits within that strategy.

Take some from online?

Yes, let's do that. So moving on to the questions submitted online. We'll start with those that relate to the results for the period, and then we'll move on to those that are a bit more in relation to the transaction, the proposed transaction. So firstly, is there any risk of performance deduction at the performance reduction at Lewisham also occurring at other health care assets?

Yes. So the feature of PPP portfolios is that they're availability based and you need to perform to a performance regime. And to the extent that you don't or subcontractors don't, then there's risk of performance deductions. So that is a risk inherent in the ownership of PPP assets and one that we've been for close to 20 years.

We highlight Lewisham because it's slightly more likely than others, and we would highlight others if it was a material risk. We don't think it's a material risk. The availability of the portfolio is very strong, and we continue to enjoy excellent relationships with our public sector counterparts.

You touched on this, Mark, in your discussion on CapEx, but just to clarify. So for Texas Nevada Transmission, will the extra CapEx be funded from the company's own cash flows? Or does it require extra investment from HICL?

TNT has brought forward its CapEx program, and that is entirely internally funded. It's an asset that we own a minority part of along LS Power, a well-known U.S. practitioner, and that's entirely self-funded.

Then we've had a couple of questions on Fortysouth around the valuation. And so a question, have you marked Fortysouth down to the transaction value by your other fund?

No, we haven't. The transaction value is not public. Infratil put out a fairly vague announcement about it. We do recognize that historically, Infratil has had a different valuation to HICL for Fortysouth. It's been lower. They value the asset on a different basis to HICL. So they value it on an amortized cost basis. We value it on a forward-looking DCF basis. And over the long term, that doesn't matter. But over the short term, you do get gaps in the approach until it catches up with an independent valuation.

In respect of the sale, I think it's important to realize that it was a minority stake, limited governance rights and Infratil in this case didn't run a process. It was a bilateral transaction. So the pricing doesn't reflect what HICL would achieve with a much larger stake in any event. But I do recognize there's been a valuation delta on that asset, but we're very comfortable that all shareholders are looking at the same forward-looking cash flows, the same projected models, and we're all agreed on the strategy. So it's not a difference in view on the company's aspect.

So moving on to some questions on the proposed transaction. Why wasn't the deal with TRIG done on a share price discount basis instead of a fair asset value? TRIG shareholders are being favored by the proposed combination ratio as evidenced by the 11% difference in share price to NAV between the 2 companies before the announcement.

Yes. I mean clearly, a good question to the Board, but these types of combinations are done on [indiscernible] ratios. And that's typically how these get done. I'm not sure that the merger would take place on a share price for share price. In respect of valuations, I think it's important to realize that both companies trade on material discounts.

I can assure you that even doing GBP 730 million of transactions above NAV doesn't close your discount and the discount is not reflective of underlying asset values. The delta between the discount rate -- the delta between the share price discounts in this case is effectively the premium from one side to the other.

Reading your results, you point out that you can sell assets fast, rotate into faster-growing areas, grow NAV, increase dividend cover and are well positioned to deliver compelling value proposition. Yet these are the reasons you gave for joining with TRIG. What does TRIG bring to the table besides NAV, which is more volatile, at risk from government action and of an asset type where multiple trusts are trying to sell them and a rising debt pile on day 1.

So there's a few points in that. I'll come on to the benefits of scale in a minute. But in respect to portfolio construction, I think that's a really, really important point, and I tried to get to that in my first comment. When I was discussing the yielders and growers chart for HICL, the point that I was making was that we need to continue to stoke and balance both sides of the equation.

We can't continue to just add growth assets to HICL stand-alone and expect HICL to be able to continue to deliver its current dividend and dividend profile. So HICL is constrained in that way as to how much growth and return it can offer investors without making a change to the income characteristics of the fund. I think that's widely acknowledged. So in order to be able to add high growth returning -- higher growth and higher returning assets to the portfolio, you need to stoke the yield side of the equation. And that's what this transaction primarily delivers on the day 1 portfolio. It introduces a large portfolio of highly yielding assets that generate a huge amount of cash.

TRIG currently pays a higher dividend than HICL on a smaller asset base. We're going to moderate the dividend so that we get the balance right. But at the same time, we can offer HICL shareholders a day 1 dividend increase. And from that cash-generative platform, we can then add higher returning higher-growth assets more sensibly more reasonably while maintaining the income characteristics of the total return strategy. So that's the key portfolio construction rationale here.

Scale is also important for the rerating for our ability to access different transactions, larger transactions, and that will become a key feature of the business model. In respect of TRIG's debt, TRIG has looked through gearing at a lower rate than HICL. It's probably an important point to clarify. TRIG has slightly more debt at the topco level, less debt in the portfolio. So we don't see it as an increase in the debt position. I think I captured most of the points, but I'm sure there'll be others.

No, I think you did that, Ed. Is the TRIG merger just a poison pill action to avoid being taken over by JLIF and BBGI like JLIF and BBGI. And is TRIG trying to avoid its continuation vote next year? I mean this is more of a question for the Board, but to the extent that you can answer.

Yes. Is TRIG trying to avoid take that. Look, that's a question for TRIG. I think these companies have been in the market at extended discounts for a long period of time. I think the hope that it was a transitory blip in 2023 have not borne out, and it's been more sustained.

That has encouraged Boards to look at more fundamental and more ambitious proposals in order to address the share price re-rate. This is such a proposal in respect of TRIG's continuation vote. Effectively, the Board is providing a strategic option to its shareholders at quite a high threshold for approval. If shareholders vote against it, then they'll get a continuation. So...

Yes. Absolutely. Can you please explain why the proposed transaction does not simply mean an increase in financial and investment risk? Or this not inevitably lead to greater income and NAV volatility?

Well, I've made the -- from a HICL perspective, the attraction of the TRIG portfolio is that it's unlike other portfolios within the renewable space. It's highly diversified. It is highly contracted, and it fits very squarely within HICL's core infrastructure framework when we're evaluating high-quality assets. So for these reasons, it sits within our current risk profile. It introduces a different set of risks, but not a heightened set of risks for HICL shareholders.

Brilliant. And actually concludes all the questions that we've got online. So thank you to everyone for joining us in the room, and thank you for joining us online. That will conclude our presentation today.