Infratil : Notice of annual meeting 2023

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2023 Notice of Meeting

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The shareholders of Infratil Limited

19 July 2023

Shareholders have already received Infratil's 2023 Annual Report in which I, and the Chief Executive, Jason Boyes, on behalf of the manager, Morrison & Co, commented on the activities of Infratil over the past year and on the future prospects for Infratil.

Even though the Annual Report was published in May, there have been significant and positive developments since then, most notably the acquisition of the other 49.9% of One NZ and the $935 million equity raise.

The Annual Meeting this year will be in Wellington but shareholders will also have the option to join the meeting online. We had intended to hold the meeting in Auckland, but accessible venues were unavailable. A number of matters are to come before shareholders for voting at the Annual Meeting. These include:

• The re-election of Peter Springford, and the election of Anne Urlwin, as Directors.
• Authorisation to give the Board the option to exercise Infratil's rights under the Management Agreement to issue shares to Morrison & Co to pay:
• • the third instalment of the FY2022 international portfolio annual incentive fee in 2024; and
  • the second instalment of the FY2023 international portfolio annual incentive fee in 2024.
• Setting the aggregate fees payable to Directors by Infratil.
• Authorisation for the Directors to fix the auditor's remuneration.

International portfolio annual incentive fees

As noted in Infratil's 2023 Annual Report, Morrison & Co earned a FY2023 international portfolio annual incentive fee of $232.9 million. As a protection against the possibility of the relevant portfolio of investments subsequently falling in value, the FY2023 international portfolio annual incentive fee is payable over three years (in three instalments of ~$54.6 million each) and, if the value of the relevant portfolio of investments at either of the subsequent two balance dates is lower than the 31 March 2023 valuation, that year's instalment will be reduced proportionately to reflect the lower valuation.

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The FY2023 international portfolio annual incentive fee follows the FY2022 international portfolio annual incentive fee of $99.7 million (payable in three instalments of ~$33.2 million each) noted in Infratil's 2022 Annual Report.

The Management Agreement gives the Board the option to pay any instalment of an international portfolio incentive fee in cash or by issuing Infratil ordinary shares to Morrison & Co (the "scrip option"), or a mixture of both. However, under the NZX Listing Rules, the Board needs shareholder approval if it wishes to use the scrip option.

The Board has not made a decision whether to use the scrip option for any portion of the third instalment of the FY2022 incentive fee (to the extent payable) or the second instalment of the FY2023 international portfolio annual incentive fee (to the extent payable), but the Board would like to have both options available if the Board considers that issuing shares (rather than paying cash) would be in the best interests of Infratil.

At the 2022 Annual Meeting, shareholders approved the use of the scrip option in connection with the third instalment of the FY2021 incentive fee and the second instalment of the FY2022 international portfolio annual incentive fee. In May 2023 for the first time, the Board exercised the scrip option to satisfy $60 million of the third tranche of the FY2021 incentive fee by issuing Infratil shares to Morrison & Co rather paying that amount in cash.

If shareholders do not approve the scrip option, the third instalment of the 2022 international portfolio annual incentive fee and the second instalment of the 2023 international portfolio annual incentive fee will be paid in cash to the extent that they become payable.

If the Board also wishes to have this option available for the third instalment of the FY2023 international portfolio annual incentive fee (payable in 2025), the Board will seek shareholder approval for this at the 2024 Annual Meeting.

Director Fees

The Board reviews directors' fees annually to ensure that fees do not fall out of step with the market, reflect the commitment required as an Infratil director and ensure that Infratil continues to attract high quality director candidates. This year the Board engaged EY to undertake a benchmarking exercise in order to assess the appropriateness of fees paid to Directors.

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The last time shareholders approved an increase to the directors' fee pool was at the 2019 Annual Meeting with the increases to directors' fees implemented over a three-year period. For the directors' fees in FY2022, the Board approved a ~4.5% increase from within that pool.

Infratil operates in several significant sectors and has investments globally. The pace and complexity of Infratil's investment activity require a Board with the capability and commitment that is different from most of its peers on the NZX and ASX.

Amendments to the Management Agreement

As announced alongside the Annual Report, amendments to the Management Agreement were agreed and have now been documented with the Manager, Morrison & Co. The changes to the Management Agreement are not considered material by the Board (and have been assessed as likely to be beneficial to Infratil). Accordingly, they did not require shareholder approval under the NZX Listing Rules or Infratil's constitution.

Share Buyback Programme

The Notice of Meeting also includes a Disclosure Document (Annexure A) describing the Share Buyback Programme which Infratil has decided to continue. The Board considers that, from time to time, buying back shares may be the best use of Infratil's funds. Accordingly, Infratil wishes to keep open that opportunity to protect or maximise shareholder value for the next 12 months, as it has done for a number of years.

I look forward to seeing you at the Annual Meeting, presenting our results and answering any questions you may have.

Chair

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