The Directors, in preparing this strategic report, have complied with Section 414C of the Companies Act 2006.

The results are for the year to 31 December 2024.

The principal objective of the Company is to hold investments in infrastructure projects.

The Company holds an investment in unsecured loan notes issued by Hounslow Highways Services Limited, a fellow subsidiary.

The Company has issued loan notes to Vinci Highways S.A.S and BIIF Holdco III Limited, the joint controllers of the parent Company, Hounslow Highways Investment Limited.

The Company’s sole transactions relate to the income received from the loan investment and interest expense on the loan notes issued.

In its role as a holding company there are no key performance indicators for the directors to monitor. However, from a group point of view the performance of the investment is assessed every six months by testing the cash resources against the bank lending covenants. The key indicator being the debt service cover ratio. The investment has been compliant with the covenants laid out in the Group loan agreement.

The principal financial risks and uncertainties of the Company arise from the performance of its fellow subsidiary,

Hounslow Highways Services Limited. The Company can only service its loan obligations to its parent undertakings if Hounslow Highways Services Limited continues to service its loan obligations to the Company.

The Directors intend the business to continue to operate in line with the contractual terms and do not expect any strategic changes.

On behalf of the board

In accordance with the requirements of the Companies Act 2006 the following sections describe the matters that are required for inclusion in the Directors’ Report and were approved by the Board. Further details of matters required to be included in the Directors’ Report are incorporated by reference into this report, as detailed below.

A full description of the Company's principal activities, business and principal risks, and uncertainties and future developments is contained within the Strategic Report on page 1, which are incorporated by reference into this report.

The results for the year are set out on page 9.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

No charitable or political donations were made during the year (2023: £nil) and expenditure on research and development activities was £nil (2023: £nil).

Climate change

The directors recognise that it is important to disclose their view of the impact of climate change on the company. As a holding company, the company itself does not trade. The company's subsidiary holds key operational contracts which are long-term and with a small number of known counterparties. In most cases, the cash flows from these contracts can be predicted with reasonable certainty for at least the medium-term. Having considered the company's operations, including the operations of its subsidiary, its contracted rights and obligations and forecast cash flows, there is not expected to be a significant impact upon the company's operational or financial performance arising from climate change.

The independent auditors, PricewaterhouseCoopers LLP, are deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.

The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Company's Strategic Report information required by (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal activities, business, and principal risks, financial instruments and uncertainties and future developments.

Each director in office at the date of approval of this annual report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and

• the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

The financial statements are prepared on a going concern basis for the reasons set out in the Accounting Policies.

No cash flow statement is presented for the year end 31 December 2024 (2023: none), as no cash flows have been paid or received by the Company.

The directors are responsible for preparing the Hounslow Highways Investment 2 Limited annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with UK-adopted international accounting standards.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006.

Directors' confirmations

In the case of each director in office at the date the directors' report is approved:

• so far as the director is aware, there is no relevant audit information of which the group's and company's auditors are unaware; and

• they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group's and company's auditors are aware of that information.

In our opinion, Hounslow Highways Investment 2 Limited's financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its result for the year then ended;

• have been properly prepared in accordance with UK-adopted international accounting standards; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Financial Statements (the "Annual Report"), which comprise: the Statement of financial position as at 31 December 2024; the Statement of comprehensive income and the Statement of changes in equity for the year then ended; and the notes to the financial statements, comprising material accounting policy information and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

Strategic report and Directors' report

In our opinion, based on the work undertaken in the course of the audit; the information given in the Strategic report and Directors' report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors' report.

As explained more fully in the Directors' responsibilities statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006 and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and the risk of management bias in accounting estimates. Audit procedures performed by the engagement team included:

• Enquiries of management around known or suspected instances of non-compliance with laws and regulations, claims and litigation, and instances of fraud;

• Understanding of management's controls designed to prevent and detect irregularities;

• Review of board minutes;

• Challenging management on assumptions and judgements made in their significant accounting estimates; and

• Identifying and testing journal entries to assess whether any of the journals appeared unusual, for example impacting distributable reserves.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

The notes on pages 12 to 20 form part of these financial statements.

The notes on pages 12 to 20 form part of these financial statements.

The notes on pages 12 to 20 form part of these financial statements.

Hounslow Highways Investment 2 Limited is a private company limited by shares incorporated in England and Wales. The registered office is 8th Floor, 6 Kean Street, London, WC2B 4AS. The Company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with UK-adopted international accounting standards as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under International Financial Reporting Standards (IFRS), except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Judgements made by the directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 2.

Cash flow forecasts are prepared for the underlying investment looking over the expected life of the asset and so including the 12 month period from the date the financial statements are signed. In drawing up these forecasts, the directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

The Company's cash flows are dependent on the performance of its investment. After reviewing the performance of the investment, which is done on a regular basis, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

In light of this, the directors continue to adopt the going concern basis of accounting in preparing the Company’s annual financial statements.

Classification of financial instruments issued by the Company

The financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:

• they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company; and

• where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

The financial assets are classified as a financial instrument and are carried at amortised cost using the effective interest rate method reflecting adjustments to its carrying value. Finance income relating to the financial assets is recognised in the Income statements and statement of other comprehensive income.

Non-derivative financial instruments comprise contract asset, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Investment in debt securities

Investments in debt securities are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method, less any impairment losses.

Trade and other receivables

Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.

Trade and other payables

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

Interest bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

The Company recognises impairment by calculating the expected credit losses (where applicable) using one of the following two approaches:

• For assets where the credit risk has not significantly changed since initial recognition, a credit loss allowance is calculated by assessing the credit risk for the next twelve months.

• For assets where the credit risk has significantly changed since initial recognition, a credit loss allowance is calculated by assessing the lifetime credit risk.

Credit risk allowances are recognised directly in the income statement.

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Income taxation comprises current taxation. Income taxation is recognised where a taxation asset or liability arises that is permitted to be recognised under generally accepted accounting principles. All identifiable taxation assets or liabilities are recognised in the income statement except to the extent that the taxation arising relates to other items recognised directly in equity, in which case such taxation assets or liabilities are recognised in equity.

Current taxation assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount of taxation are those that are enacted, or substantively enacted, by the statement of financial position date. Management periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Investments in subsidiary undertaking

The investments in the fellow subsidiary undertaking comprise the Company’s investments in the loan receivables due from its fellow subsidiary undertaking. These investments are financial instruments and are classified as ‘Investments in fellow subsidiary’.

The loan receivable is recognised at amortised cost, using the effective interest rate method, less any appropriate allowances for expected credit losses (see 1.5 above).

Financing income and expense

Interest income and interest payable is recognised in the profit or loss as it accrues, using the effective interest method.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

The carrying value of those assets recorded in the Company’s statement of financial position at amortised cost could be materially reduced if the value of those assets were assessed to have been impaired. Impairment reviews are performed using the expected credit losses model which involve the significant use of assumptions. Consideration has to be given as to the probability of default and the losses to be incurred in such event.

Auditors' remuneration of £3k (2023: £3k) is borne by the fellow subsidiary Hounslow Highways Services Limited.

The average number of persons employed by the Company during the financial year amounted to nil (2023: nil). The directors are not employed by the Company and receive remuneration from another company for their services as directors of this entity and a number of fellow subsidiaries. It is not possible to make an accurate apportionment of their remuneration in respect of each of the subsidiaries.

During 2017, the Company acquired 100% of the Loan Notes 2038 issued by Hounslow Highways Services Limited. The principal activity of Hounslow Highways Services Limited is the design, installation, operation and maintenance of highway infrastructure and facilities within the London Borough of Hounslow (LBH).

The investment bears a Coupon of 9.25% per annum and payment of capital falls due in the year 2038. The Coupon on the principal amount accrues daily and is payable in cash on 30 September and 31 March each year. The company has calculated the expected credit losses, but no credit losses have been recognised on the grounds of materiality.

The investment sum was advanced under a subordinated loan agreement and is therefore unsecured, and would rank alongside ordinary creditors in the event of a winding up.

Details of the company's fellow subsidiaries at 31 December 2024 are as follows:

The directors have assessed the recoverability of the carrying investment using the financial model of the underlying investment and no impairment is considered necessary.

Amounts owed by fellow group undertakings is a trading unsecured balance, bears no interest and is repayable in cash based on the terms explained in note 7.

The company has calculated the expected credit losses, but no credit losses have been recognised on the grounds of materiality.

Amounts owed to fellow group undertakings is a trading unsecured balance, bears no interest and is repayable in cash based on the terms explained in note 7.

Included within borrowings: amounts falling due after more than one year is an amount of £20,626k (2023: £20,626k) in respect of liabilities payable or repayable by instalments which fall due for payment after more than 5 years from the reporting date.

During 2017, the Company issued Loan Notes 2038 with nominal value of £20,291k

The debt bears a Coupon of 9.25% per annum and payment of capital falls due in the year 2038. The Coupon on the principal amount accrues daily and is payable in cash on 30 September and 31 March each year. Interest not settled by cash on these dates is added to the principal and the Coupon accrues on this uplifted amount in the next interest period. Interest settled using this mechanism in the year was £nil (2023: £nil)

The loan was advanced under a subordinated loan agreement and is therefore unsecured and would rank alongside ordinary creditors in the event of a winding up.

During 2017, the Company advanced £20,291k and acquired 100% of Loan Notes 2038 issued by Hounslow Highways Services Limited, a fellow subsidiary. During 2022, a further £335k of unpaid interest was capitalised within the Loan Notes. During the year, the Company earned interest of £1,952k (2023: £1,905k) from these loan notes. The interest outstanding at 31 December 2024 is £520k (2023: £486k).

During 2017, the Company received £10,146k from BIIF Holdco III Limited for the Loan Notes 2038 that were issued. During 2022, a further £167k of unpaid interest was capitalised within the Loan Notes. During the year, the Company incurred interest of £976k (2023: £953k) for these loan notes. The interest outstanding at 31 December 2024 is £260k (2023: £243k).

During 2017, the Company received £10,146k from Vinci Highways S.A.S for the Loan Notes 2038 that were issued. During 2022, a further £167k of unpaid interest was capitalised within the Loan Notes. During the year, the Company incurred interest of £976k (2023: £953k) for these loan notes. The interest outstanding at 31 December 2024 is £260k (2023: £243k).

Hounslow Highways Investment 2 Limited’s immediate parent Company is Hounslow Highways Investment Limited (incorporated in the United Kingdom and registered in England and Wales). Hounslow Highways Investment Limited consolidates the financial statements of Hounslow Highways Investment 2 Limited. The Company is jointly controlled by BIIF Holdco III Limited and Vinci Highways S.A.S.

The directors have agreed with the company's auditors that the auditors' liability to damages for breach of duty in relation to the audit of the company's financial statements for the year to 31 December 2024 should be limited to the greater of £5,000,000, and that in any event the auditors' liability for damages should be limited to that part of any loss suffered by the company as is just and equitable having regard to the extent to which the auditors, the company and any third parties are responsible for the loss in question. The shareholders approved this limited liability agreement, as required by the Companies Act 2006, by a resolution dated 6 February 2025.

a) Fair value disclosures

The following is an analysis of the Company’s financial instruments at the statement of financial position date comparing the carrying value included in the statement of financial position with the fair value of those instruments at that date. None of the Company’s financial instruments have quoted prices. Consequently, the following techniques have been used to determine fair values as follows:

• Non-current borrowings – based on the carrying amount in respect of fixed rate loans

• Other receivables and payables – approximates to the carrying value because of the short maturity of these instruments;

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the financial statement is determined on such a basis, except for measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either director or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

The best evidence of fair value is a quoted price in an actively traded market; where this data is available then the instrument is classified as having been determined using a Level 1 valuation. In the event that the market for a financial instrument is not active, alternative valuation techniques are used. The Company does not have any financial instruments where it is eligible to apply a Level 1 valuation technique.

There have been no reclassifications or transfers between the various valuation categories during the year.

b) Management of risk

The Board has overall responsibility for the Company’s risk management framework.

The Company’s activities expose it to a variety of financial risks, which arise in the normal course of business: market risk, credit risk, and liquidity risk. The overall risk management programme seeks to minimise the net impact of these risks on the operations of the Company by using similar and offsetting financial instruments that are appropriate to the circumstances and economic environment within which the Company operates. The objectives and policies for holding, or issuing, financial instruments and similar contracts, and the strategies for achieving those objectives that have been followed during the year are explained below

i) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Changes in market price are derived from: currency movements interest rate changes; and changes in prices caused by factors other than those derived from currency or interest rate changes.

The Company operates in the UK and has no significant exposure to foreign currency, and therefore this has an immaterial impact on market risk. Short-term financial assets and liabilities, such as other receivables and payables, are not subject to market risk. Interest rate risk arises from the use of borrowings. However, all of the Company’s borrowings have been issued at fixed rates and as a result the Company is not exposed to interest rate risk.

ii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations.

Credit risk primarily arises from the Company’s loan investments which is indirectly dependant from the normal commercial operations of Hounslow Highways Services Limited (HHS) or potentially, arises from HHS exposure to: a) LBH in respect of invoices submitted by the Company for infrastructure services; b) HHS counterparties to the interest rate swaps and c) HHS short term deposits. There are no other significant credit exposures to which the Company is exposed. LBH is the underlying loan investment’s principal customer and income derived from LBH represents the vast majority of the HHS income. LBH operates a low risk business and is a UK government body. Having considered the credit risks arising in respect of the exposures to LBH, the Directors consider that those risks are immaterial.

iii) Liquidity risk and Going Concern

Liquidity risk is the risk that the Company will have insufficient funds to meet its liabilities. The Board of Directors manages this risk.

As a result of the environment under which the Company and its’ investment operates; the credit worthiness of the HHS principal customer (LBH), the cash inflows generated by HHS are highly predictable and stable. In addition, net of the impact of the interest swap arrangements all of the HHS senior debt carry a fixed coupon, and based on the forecasts prepared, all of these debt service costs are expected to be met from the cash inflows the underlying investment and the Company is expected to generate over the whole period of the project.

b) Management of risk (continued)

iii) Liquidity risk and Going Concern (continued)

The contractual cash flows shown in the table below are the contractual undiscounted cash flows relating to the relevant financial instruments. In determining the interest element of contractual cash flows in cases where the Company has a choice as to the length of interest calculation periods and the interest rate that applies varies with the period selected, the contractual cash flows have been calculated assuming the Company selects the shortest available interest calculation periods. Where the holder of an instrument has a choice of when to redeem, the following tables are prepared on the assumption the holder redeems at the earliest opportunity.

The numbers in the following tables have been included in the Company’s cash flow forecasts for the purposes of considering Liquidity Risk as noted above.

*Including interest payments