The directors present the strategic report for the year ended 31 March 2026.

The principal activities of the company are the design, construction, financing, commissioning and maintenance of a new hospital for children and a department of clinical neurosciences, in accordance with the terms of an agreement with NHS Lothian ("NHSL").

The project reached financial close during February 2015, with construction also commencing in February 2015. Construction was completed on 22 February 2019 at which point the hospital was commissioned and was transferred to NHSL. Post-completion works were completed in July 2019. Further enhancement works were requested by NHSL during 2019 and the final element of these works completed in April 2021. The hospital has been fully occupied since March 2021.

A public inquiry into ventilation issues at the hospital, as well as issues at Queen Elizabeth University Hospital, Glasgow, commenced in August 2020. The review of the ventilation issues was published in March 2025 and proposed a list of changes and amendments to processes around design specifications. There have been no adverse impacts to the company arising from the findings of the inquiry.

The contract between the company and NHSL follows the Non-Profit Distributing (“NPD”) PPP approach. This means the surplus made by the company over the concession is distributed back to NHS Lothian. At 31 March 2026 a liability was recognised for £3,025,000 (2025: £3,309,000) being the surplus in the period from incorporation to 31 March 2026. Net assets at 31 March 2026 were £nil (2025: £nil). The construction costs are capitalised forming the contract asset on the statement of financial position. The directors consider the financial asset to be recoverable over the concession period.

The company has financial and non-financial key performance indicators, each of which impacts its results for the period and will impact its future performance. The key performance indicators of the Company are:

• Progress against the financial model. The company created a model before the commencement of the project which forecasts all income and expenditure. The company tracks its progress against the financial model. The activities of the company continue to progress in line with financial model.

• The level of service provided. This is measured through the availability of the asset and therefore the deductions to unitary payments levied by NHS Lothian when the asset is partially or completely unavailable for use. Total deductions levied in the year to 31 March 2026 were £51,648 which is below threshold levels included the company’s agreement with NHSL and its service provider.

• Financial covenants. The directors consider anticipated future performance and position of the company and it is expected that the ADSCR (Annual Debt Service Cover Ratio) and LLC (Loan Life Cover) financial covenants, as required by the finance agreements, will be met. ADSCR is required to exceed 1.05 and LLC is required to exceed 1.10.

NHS Lothian is the company's sole client. However, the directors consider that no significant risk arises from such a small client base as the Scottish Government has underwritten NHSL's obligations. The company has an obligation to maintain the fabric of the hospital over the life of its concession to a specified standard. This obligation has been passed down to the company's service provider.

The financial risk management policy of the company is designed to identify and manage risk at the earliest possible point. These risks are reviewed by the Board of Directors on a quarterly basis.

The company does not undertake financial instrument transactions that do not align with the company’s trading activities. Board approval would be required for the use of any new financial instrument and the company’s ability to enter into any transaction is constrained by the financial covenants within the finance agreements.

The company’s management of price risk, credit risk, liquidity risk and interest rate cash flow risk is detailed below:

Price risk

The company’s price risk is managed by the 25-year service delivery element of the project agreement with NHS Lothian which provides for payments that are fixed subject to performance and inflation. The terms are mirrored with the key supplier, being the facilities management provider, through the services contract.

Credit risk

Cash flows are generated from the availability of the hospital and from the maintenance provided to NHS Lothian. Cash flows are secured under a long-term contract with NHS Lothian, whose liabilities are effectively underwritten by the Scottish Government. Further detail on credit risk is included within Note 13.

Liquidity risk

The company’s liquidity risk is principally managed through financing the company by means of long-term borrowings which are tailored to match the expected costs and revenues arising from the contract under the Non-Profit Distributing programme. Further detail on liquidity risk is included within Note 17.

Interest rate cash flow risk

The company has interest bearing assets and interest-bearing liabilities. Interest bearing assets include only cash balances which earn interest at variable rates. Interest bearing liabilities include senior debt, senior subordinated debt and loan notes, all of which bear interest at a fixed rate. Further detail on cash flow risk is included within Note 17.

On behalf of the board

The directors present their annual report and audited financial statements for the year ended 31 March 2026.

The results for the year are set out on page 8. Payment of dividends is not permitted under the company's Articles of Association.

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

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

From the start of the operational phase on 22 February 2019 the company is responsible for providing planned and reactive maintenance until the end of the concession in July 2042.

Azets Audit Services were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006 during the year.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulation.

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, 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.

The company has chosen in accordance with Companies Act 2006 to set out the principal activities of the company within the strategic report.

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 auditor is 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 auditor is 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.

We have audited the financial statements of IHS Lothian Limited (the 'company') for the year ended 31 March 2026 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 March 2026 and of its profit 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.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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.

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.

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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 in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the directors' report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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

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

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

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors 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 auditor's 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.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-​compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-​compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;

• Reviewing minutes of meetings of those charged with governance; 

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-​compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-​compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The notes on pages 12 to 22 form part of these financial statements.

The notes on pages 12 to 22 form part of these financial statements.

The notes on pages 12 to 22 form part of these financial statements.

The notes on pages 12 to 22 form part of these financial statements.

IHS Lothian Limited is a private company limited by shares incorporated in Scotland. The registered office is 13 Queen's Road, Aberdeen, AB15 4YL.

The financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, 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.

The directors have prepared detailed model forecasts incorporating the relevant terms of the NPD PPP contract, subcontracts, and credit agreements, and have adopted prudent assumptions in relation to economic and operational factors. In preparing these forecasts, the truedirectors have considered external economic factors.

The forecasts (which are updated regularly) predict that the company will have sufficient cash resources to meet its liabilities as they fall due for a period of 12 months from the date of signing the financial statements. Having considered the financial position of the company, its expected future cash flows and the facilities in place with the company’s lenders, the directors have a reasonable expectation that the company will have adequate resources to continue to generate positive operating cashflows. Accordingly, the directors consider that it is appropriate for the financial statements of the company to be prepared on a going concern basis.

Revenue is recognised in accordance with the contract asset and service income accounting policy shown under ‘Accounting for Non-Profit Distributing (NPD) contracts’ policy and excludes VAT.

Cash and cash equivalents comprise cash at bank and short-term with original maturities of three months or less.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

Contract asset, trade and other receivables are measured at amortised cost using the effective interest method, less any impairment.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Financial assets, other than those at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

Other financial liabilities, including borrowings, are initially recognised at proceeds, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.

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.

Accounting for Non-Profit Distributing (NPD) Contracts

The company has been established to undertake the design, build, operation and maintenance of a new hospital and department for clinical neuroscience. The company has subsequently entered into agreements with finance providers and sub-contractors. Based on the contractual arrangements, the company has classified the project as a service concession arrangement and has accounted for the principal assets and income streams from the project in accordance with IFRS 15.

During construction, revenue was recognised at cost, plus a deemed profit margin. Upon becoming operational, the costs were transferred to the contract asset. The contract asset represents a long-term receivable due from NHS Lothian. It represents the cumulative asset spend attributable to the availability-based revenues with imputed interest on the balance.

During the operational phase the unitary charge received will be applied to revenue, capital repayment of the contract asset and interest income, applying the effective interest rate method. Revenue will be calculated based on cost plus an appropriate profit margin. The contract asset will be reduced to nil over the life of the concession.

As the contract is NPD, a contract liability equalling the net profit is created, recognising the amount that is due to be paid to NHS Lothian, rather than being available for distribution to the shareholders. The liability will then be cleared by cash payments to NHS Lothian.

(a) New standards, amendments and interpretations: No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 January 2025 have had a material impact on the company.

(b) New standards, amendments and interpretations not yet adopted: There are no new standards or amendments to standards and interpretations expected to have an impact on the financial statements.

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.

As disclosed in Note 1, the company accounts for the project as a service concession arrangement. The directors use their judgement in selecting the appropriate financial asset rate to be applied in order to allocate the income received between revenue, and capital repayment of and interest income on the financial asset and also the service margin that is used to recognise service revenue.

All turnover arose within the United Kingdom.

The average monthly number of persons (excluding directors) employed by the company during the year was: nil (2025: nil).

No tax has been charged or credited in the current or prior year.

The amounts set out as contract costs recoverable relate to the Contract Asset as set out in Note 12.

The amounts set out as contract liabilities relate to the surplus generated from the start of concession to date and will be distributed to NHS Lothian under the Non-Profit Distributing model. The aging of the liability is set out in Note 15. In the prior year this was included within provisions see Note 25.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

The company’s long-term exposure to credit risk is principally dependent on the creditworthiness of NHS Lothian as the company’s sole client. The risk associated with this is mitigated as the cash flows are secured under the Project Agreement, which is a long-term agreement with NHS Lothian, whose obligations and liabilities are effectively underwritten by the Scottish Government.

All debtors past due on the reporting date have been settled post year end. The maximum credit risk exposure relating to financial assets is represented by the carrying value at the balance sheet date.

Cash at bank includes £7,304,000 (2025: £6,887,000) restricted from use in the business, being held in the Company's reserve accounts under the terms of the Common Terms Agreement.

The senior secured loan comprises £46,977,435 (2025: £49,983,700) borrowed under an Institutional Investor Senior Facility Agreement which attracts a fixed interest rate of 3.288% and £45,883,622 (2025: £48,840,203) borrowed under a Senior Finance Contract which attracts a fixed interest of 2.881%.

Other loans include amounts received from IHS Lothian Holdings Limited, a fellow group undertaking. This comprises £7,178,877 (2025: £7,605,792) borrowed under an Institutional Investor Senior Subordinated On-Loan Agreement which attracts a fixed interest rate of 4.538% and £6,956,613 (2025: £7,370,760) borrowed under a Senior Subordinated On-Loan Agreement which attracts a fixed interest of 4.560% and two Shareholder Loans: £14,166,034 (£14,579,267 original loan plus £nil capitalised interest less issue costs of £413,232) (2025: £15,053,438 being £14,579,267 original loan plus £918,568 capitalised interest less issue costs of £444,397) has interest payable at 9.47% per annum and £5,071,495 (£5,400,000 original loan less repayments to date) (2025: £5,400,000 (original loan)) has interest payable at 8% per annum. Overdue interest on the Shareholder Loans attracts additional default interest of 2%.

Amounts are stated net of unamortised issue cost.

Senior secured and senior subordinated loans are repayable in six monthly instalments between September 2017 and July 2040 and are secured by a fixed charge over all property, bank accounts, receivables, investments, intellectual property, plant and machines, insurances and all rights, title and interest.

Shareholder loans are paid in full by the end of the concession.

i. Valuation of financial assets and liabilities

Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments, other than those whose carrying amounts are a reasonable approximation of fair value:

Financial instruments not measured at fair value includes cash and cash equivalents, contract asset, trade and other receivables, trade and other payables, and loans and borrowings. There are no financial instruments measured at fair value.

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables,

bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term

maturities of these instruments.

The fair value of contract asset and loan balances have been assessed by applying the movement in risk free borrowing from Financial Close to the Balance Sheet date to the existing interest rates and discounting future cashflows using this rate.

ii. Financial Risk Management

Interest rate risk

The directors consider the interest rate risk to the company to be minimal. All of the company’s debt is fixed rate and this therefore means the borrowings are not impacted by any interest rate fluctuations. During the year the company made short term cash deposits of less than three months. Any changes to interest rate may impact the interest income received on future deposits.

Liquidity risk

The table below summarises the maturity profile of the company’s financial liabilities at 31 March 2026 and 31 March 2025 based on contractual undiscounted payments.

The company’s capital and debt structure is set out in the concession term financial model at the commencement of the project. The equity and debt has been subscribed for in accordance with this model to date.

The company’s operations expose it to a variety of financial risks that include credit risk, interest rate risk and liquidity risk which are discussed in separate notes to the financial statements. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.

Given the size of the company, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. Resolis Limited, as a provider of financial services to the company under a management services agreement, implements the policies set by the Board of Directors.

The company has raised finance through loans from The Prudential Assurance Company Limited, Prudential Retirement Income Limited and the European Investment Bank. In addition, the company also raised finance through loans from a fellow subsidiary undertaking, IHS Lothian Holdings Limited, which had received loans from a fellow group undertaking, IHS Lothian Investments Limited, which secured loans from The Prudential Assurance Company Limited, Prudential Retirement Income Limited and the European Investment Bank. The company operates a long-term business, and its policy is to finance it with long term borrowings.

IHS Lothian Limited will service these loans with cash-flows generated from its NPD concession asset. Based upon the projected future cash-flows the directors consider that they will be able to meet their obligations as they fall due for the foreseeable future.

Details of the amounts managed as capital by the company can be found in Note 16.

On 18 December 2014, the company issued 1 ordinary share of £1 each to IHS Lothian Holdings Limited for a cash consideration of £1. This share was converted into an ordinary A share on the 12 February 2015.

In February 2015, the company issued 1 ordinary B share of £1 each to Lothian Health Board for a cash consideration of £1. In February 2015, the company issued 99 ordinary A shares of £1 each to IHS Lothian Holdings Limited for a cash consideration of £99.

At 31 March 2026, the company was a subsidiary of IHS Lothian Holdings Limited. The smallest and largest group to consolidate these financial statements was IHS Lothian Corporate Holdings Limited. The consolidated financial statements can be obtained from the Company Secretary at 1 Park Row, Leeds, England, LS1 5AB.

In the directors' opinion the ultimate controlling party is PPP Equity PIP LP.

During the year, the company made the following transactions with related parties.

During the year the company received £22,677,000 (2025: £21,525,000) from NHS Lothian. This figure is inclusive of the Unitary Charge and all pass through costs under the Project Agreement. As at 31 March 2026 NHS Lothian owed the company £425,000 (2025: £178,000).

The company paid fees for directors services of £23,000 (2025: £22,000).

The company paid interest, including rolled up interest, on subordinated loans of £3,560,000 (2025: £3,356,000) to IHS Lothian Holdings Limited.

At 31 March 2026 the company owed fellow group undertaking IHS Lothian Holdings Limited £34,910,000 (2025: £37,043,000).

The profit distribution surplus was previously recognised as a provision. It is now considered more appropriate to recognise this within creditors. This prior year adjustment does not impact the previously stated result or net asset position. £3,309,000 was previously recognised as a provision which has now been included within non-current creditors,

Note 1 - The surplus or loss generated had previously been included within administrative expenses. It has been deemed more appropriate to adjust revenue.