RCS - Cordiant Digital Inf - Results analysis from Kepler Trust Intelligence

Cordiant Digital InfrastructureAnnouncement

27/06/2024 15:00

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RNS Number : 2093U  Cordiant Digital Infrastructure Ltd  27 June 2024

Cordiant Digital Infrastructure (CORD)

27/06/2024

Results analysis from Kepler Trust Intelligence

Cordiant Digital Infrastructure (CORD) has released its financial results for
the year ending 31/03/2024. Over the year, CORD saw its NAV per share increase
by 7.8%, and a total return of 9.3% based on the ex-dividend opening NAV. CORD
has no formal benchmark.

Over the course of the year, the trust completed purchases of Speed Fibre and
Norkring Belgie taking the total number of portfolio companies from three to
five, split across a mix of asset classes.

The biggest contributor to performance was Emitel. This was primarily a result
of new contract wins and growth in cash flow though Emitel also benefitted
from currency translation, a change in net debt and a change in the discount
rate.  Speed Fibre also contributed positively to performance.

CRA was a slight detractor as, while revenues grew this was offset by an
increase in the discount rate and forex headwinds. Hudson Interxchange
narrowed losses, though still detracted.

CORD announced an increase in the dividend of 5% to 4.2p per share. Dividend
cover, as measured by the managers' adjusted funds from operations figure
(AFFO), increased to 1.6x.

The discount widened to 48% at year end, despite strong operational
performance The board has allocated £20m to a share buyback programme. In the
year to 31/03/2024, £5.4m had been spent.

Gearing is c. 39% of gross assets (64% of NAV) on a look through (i.e.
consolidated) basis.

Chairman Shonaid Jemmett-Page stated "The underlying strengths of  CORD  and
our portfolio, the growth in the sector and the attractiveness of our core
markets together lead the Board to look forward to the year ahead with
confidence".

Kepler View

We believe these results demonstrate another encouraging year for Cordiant
Digital Infrastructure (CORD). The managers have delivered strong performance,
aided by good operational revenue and contract wins from the portfolio's two
largest holdings. This was somewhat offset by unfavourable foreign exchange
movements, though this is arguably temporary.

The portfolio has grown to five companies. This, in our opinion, has helped to
diversify some of the concentration risk of the portfolio and supports income
generation. One new holding also supported performance after an increase in
its value due to a rise in revenues and profits.

The increase in operational revenue has contributed to an improved dividend
outlook. Underlying revenues grew over 50% from the previous year, and whilst
there were increased costs for capex and financing, AFFO still increased by
13%. This has allowed the managers to announce a 5% increase in the dividend.
This is the second time the dividend has been increased in the trust's short
history.

The trust had liquidity of c. £167.7m at the year end. Total net debt
increased from £552.9m the interim statement on 30/09/2023 therefore gearing
has increased slightly to 38.9% on a GAV basis though this remains below the
maximum level of 50% of GAV. The managers argue their gearing positioning and
interest cover is substantially stronger than their competitors.

Despite the encouraging performance, the discount on the shares widened to 48%
We believe this could represent an attractive entry point for long-term
investors with rate cuts a potential catalyst. The board began share buybacks
in the year which have been accretive to NAV.

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