REG - Cordiant Digital Inf - Interim Results to 30 September 2023
29/11/2023 07:00
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RNS Number : 9775U Cordiant Digital Infrastructure Ltd 29 November 2023
29 November 2023
Cordiant Digital Infrastructure Limited
Interim report for the six months ended 30 September 2023
Solid performance, reflecting strength of underlying portfolio
Cordiant Digital Infrastructure Limited (the Company), an operationally
focused specialist digital infrastructure investor, is pleased to announce its
unaudited interim results for the six months to 30 September 2023.
Financial highlights:
· Total return for the period of £9.4 million, being 1.2p per share or 1.1% of
opening ex-dividend NAV.
o Total return reflects positive operating performance, offset by an
increase in the weighted average discount rate to 9.8% and adverse foreign
exchange movements in the period of £22.3 million.
· Interim dividend of 2.0p per share, in line with 4.0p per share target for the
year.
· Full year target dividend of 4.0p per share is 3.6x covered by EBITDA, 1.2x
covered by AFFO (adjusted funds from operations). Addition of Speed Fibre
strengthens EBITDA cover further to 4.3x and AFFO to 1.5x on a pro forma
basis.
· NAV per share decreased from 113.4p at 31 March 2023 to 112.7p at 30 September
2023 due to payment of the 2.0p per share second interim dividend in July
2023, partly offset by the total return of 1.2p per share.
· Portfolio EBITDA for the six-month period increased 5.5% to £55.5 million,
over the prior comparable period, on a like-for-like pro forma, constant
currency basis.
· Acquisition of Speed Fibre increases portfolio diversification with
investments now made in the Czech Republic, United States, Poland and Ireland.
· Total liquidity post-Speed Fibre acquisition is £207 million, including £72
million held directly by the Company and £135 million at portfolio company
level.
Commenting, Shonaid Jemmett-Page,Chairman of Cordiant Digital Infrastructure
Limited, said:
"I am pleased to report a solid performance by the Company for the first six
months of the year, despite the challenging economic conditions during the
period. The Company's performance reflects the strength of its portfolio
companies, which offer strong cashflows and growth opportunities in line with
our Buy, Build & Grow model. The strength of the portfolio has been
achieved with a conservative level of debt and through a disciplined
acquisition strategy. The recently announced acquisition of Speed Fibre is
additive to the portfolio as it offers additional cashflows, growth potential
and further diversity in geography and asset class. With continued liquidity
of £207 million, the Company remains well positioned, and as such the Board
looks forward to the second half of the year with confidence".
-ENDS-
For further information, please visit www.cordiantdigitaltrust.com or contact:
Cordiant Capital, Inc. +44 (0) 20 7201 7546
Investment Manager
Stephen Foss, Managing Director
Aztec Financial Services (Guernsey) Limited +44 (0) 1481 749700
Company Secretary and Administrator
Chris Copperwaite / Laura Dunning
Investec Bank plc +44 (0) 20 7597 4000
Joint Corporate Broker
Tom Skinner (Corporate Broking)
Lucy Lewis / Denis Flanagan (Corporate Finance)
Jefferies International Limited +44 (0) 20 7029 8000
Joint Corporate Broker
Stuart Klein / Gaudi Le Roux
Celicourt +44 (0) 20 7770 6424
Financial Communications Advisor
Philip Dennis / Felicity Winkles / Ali AlQahtani
Interim Report and results webcast for analysts
The 2023 Interim Report will be available to download at
cordiantdigitaltrust.com/investors/results-centre/ from 29 November 2023.
The Company will be hosting an analyst meeting at 10.00am BST at the offices
of Investec, 30 Gresham Street, London, EC2V 7QN. For those wishing to attend,
please contact Ali AlQahtani at Celicourt via CDI@celicourt.uk.
Notes to editors:
Cordiant Digital Infrastructure Limited primarily invests in the core
infrastructure of the digital economy - data centres, fibre-optic networks and
telecommunication and broadcast towers in Europe and North America. Further
details about the Company can be found on its website at
www.cordiantdigitaltrust.com (http://www.cordiantdigitaltrust.com/) .
The Company is a sector-focused specialist owner and operator of Digital
Infrastructure, listed on the London Stock Exchange under the ticker CORD. In
total, the Company has successfully raised £795 million in equity, along with
a further €200 million through a Eurobond with four European institutions;
deploying the proceeds into four core acquisitions: CRA, Hudson Interxchange,
Emitel and Speed Fibre, which together offer stable, often index-linked
income, and opportunities for growth, in line with the Company's Buy, Build
& Grow model.
Cordiant Capital Inc (the Investment Manager or Cordiant), the Company's
investment manager, is a specialist global infrastructure and real assets
manager with a sector-led approach to providing growth capital solutions to
promising mid-sized companies in Europe, North America and selected global
markets. Since the firm's relaunch in 2016, Cordiant, a partner-owned and
partner-run firm, has developed a track record of exceeding mandated
investment targets for its clients.
Chairman's statement
I am pleased to present the Interim Report for Cordiant Digital Infrastructure
Limited (the Company) for the six months to 30 September 2023.
Introduction
The Company has achieved a solid financial performance despite the headwinds
created by the current high interest rate environment which have continued
throughout the period. The Company's NAV has decreased from £875.7 million
at 31 March 2023 to £868.6 million, due to the payment of the second interim
dividend in July 2023. The decrease in NAV was partially offset by the £9.4
million profit for the period. Profit for the period would have been higher
but for the adverse movements in the weighted average discount rate used to
value the portfolio and foreign exchange.
At the portfolio company level, we have seen a good financial performance. The
aggregate pro forma¹ normalised EBITDA of the portfolio companies for the six
months to 30 September 2023 was £55.5 million(1), up 5.5% from the prior
comparable period. This financial performance was accompanied by strong
operating performance, reflecting the overall quality of our portfolio
companies. Among the highlights during the period were the successful
refinancing of Emitel's senior loan facilities, with a consortium of leading
international and national lenders that secured PLN 1.57 billion (£293.5
million) of financing maturing in 2030 and the new 15-year contract CRA signed
with T-Mobile, which substantially expanded the scope of its existing
contract.
A further strategic step in the construction of the portfolio has also been
achieved with the acquisition of Speed Fibre - Ireland's leading open access
fibre infrastructure provider. This was the Company's fourth significant
investment since its IPO, announced during the summer and completed in October
2023. In November 2023, we also announced a smaller transaction - the
agreement to acquire Norkring, the Belgian broadcast and colocation business,
which we expect to complete later in the financial year.
We recognise that macroeconomic factors have continued to create challenges
for many companies and their shareholders across the listed investment trust
sector and throughout the period we have continued to consider capital
allocation as part our decision-making process. In this, we have taken into
account our strategy for the portfolio and our aim of further diversification
by geography and asset class, as well as opportunities to drive further growth
through disciplined capital expenditure, while also acknowledging that some
shareholders wish to see capital deployed through the purchase of the
Company's own shares. We have made further buy backs during the period under
the programme announced in February 2023 and expect to retain this option as
part of our response to current financial market conditions.
Portfolio strategy
The Investment Manager has a Core Plus strategy that aims to generate a stable
annual dividend while also continuing to invest in the asset base of the
Company's portfolio companies to drive higher revenues and increase net asset
values. The Company is implementing this approach through its Buy, Build &
Grow model.
Following its IPO, the Company began deploying the capital raised during a
period of intense corporate activity where Digital Infrastructure transaction
prices reached a peak. Consequently, we prudently sought out high-quality,
cash-generating mid-market assets that we viewed as attractive investment
opportunities. We have continued to focus on targeted investment in our
existing portfolio companies and the acquisition of new businesses that
reflect the current pricing environment and further diversifies the portfolio,
both geographically across Europe and North America and by asset class. This
highly focused strategy is exemplified by the acquisition of Speed Fibre in
Ireland, as well as the smaller acquisition of Norkring in Belgium.
Our disciplined approach to deploying capital since IPO has resulted in a
portfolio acquired for an EBITDA/EV multiple of approximately 10.2x and which
delivers approximately £132 million of annual EBITDA based on most recent
last twelve months (LTM) EBITDA, pro forma including Speed Fibre.
Overall, the portfolio we have constructed is high quality with a broad
diversification by asset type. It is supported predominantly by blue-chip
customers and is capable of generating strong cash flows through long-term
contracts.
We are also a long-term investor with a clear focus on sustainability. We
consider the ESG approach and metrics of potential targets in our pipeline as
part of our pre-investment analysis and post-acquisition we work with our
portfolio companies to improve their ESG performance.
Operational performance
The strength of the overall performance of our portfolio companies underpinned
the Company's results for the period. This performance was achieved against
the backdrop of rates of inflation and central bank interest rate levels not
seen in many years. The Company's portfolio companies were able to benefit
from significant levels of inflation protection through a combination of
contractual revenue escalators, pass-through costs and hedging policies.
Excluding Speed Fibre, approximately three-quarters of the portfolio's
contracts are multi-year in nature and offer full or partial inflation
protection, with the remainder being annual in nature, often renewed
automatically, and therefore capable of being repriced to reflect the renewal
year's inflation. Active management of long-term contracts also provided
opportunities to re-negotiate contractual terms with a number of customers.
Emitel performed well during the period, with revenues increasing 10.1% and
EBITDA increasing 3.6% over the prior comparable period. Performance was
driven by the launch of a new sixth digital TV multiplex and the effect of
inflation-linked price increases. In addition, Emitel completed a successful
refinance of its loan facilities during the period, with a range of global,
pan-European and local banks. The facilities were 1.6x oversubscribed and
achieved an improved credit margin over the previous facilities. Recently,
Emitel has also won several important broadcast contracts in TV and radio,
which are expected to drive further future revenue and EBITDA.
CRA also performed well during the period, with revenue and EBITDA growth of
10.5% and 8.1% respectively, driven by growth in all business areas. CRA
continued to see strong growth in demand for data centre capacity, +15.1% as
measured in racks occupied and +22.0% as measured in power deployed. A new
15-year contract with T-Mobile, which significantly expanded the scope of
services provided by CRA completed a successful half year.
Hudson remains a growth opportunity, with the Investment Manager providing
substantial hands-on support in order to develop the business. During the
period, the Investment Manager began to refresh Hudson's leadership team and
has refocused the sales effort. While Hudson has added customers to its
business during the period, its overall financial progress has been slower
than hoped.
Speed Fibre was acquired after 30 September 2023 and we will report on its
performance in the Company's Annual Report 2023 for the year ended 31 March
2024.
Returns and dividend
On 28 November 2023, the Board approved an interim dividend of 2.0p per share
for the six months ended 30 September 2023 and confirms that it expects to pay
a total dividend of 4.0p per share for the year ended 31 March 2024. The
record date for distribution is 8 December 2023 and the payment date is 22
December 2023. The dividend continues to be well covered by earnings and by
adjusted funds from operations (net cash flows from the portfolio businesses)
and represents a significant increase over the indicative level set out at the
time of the IPO in 2021.
The NAV per share as at 30 September 2023 was 112.7p (as at 31 March 2023:
113.4p or 111.4p ex-dividend), reflecting the payment of the dividend in July
2023 and a return of 1.1% over the period from the ex-dividend opening NAV, or
1.2p per share.
The profit for the six-month period reflected the strong overall performance
of the underlying portfolio companies, offset by adverse foreign exchange
movements (totalling £22.3 million) and an increase in the weighted average
discount rate used to value our investments of 18 basis points to 9.8%
(causing a £32.6 million decrease in value). Excluding foreign exchange
movements in the period would result in a total return of 3.7%. The Company
continues to target an annual NAV total return of at least 9%.
The Company's shares traded at a discount to NAV during the period. A similar
situation exists for many of the companies in the UK investment trust sector,
largely as a result of macroeconomic factors and dislocations in the market.
Both the Board and Investment Manager remain confident in the Company's
strategy and the reported NAV. While the primary focus has been, and remains,
deploying available capital in support of the Company's Buy, Build & Grow
model, further purchases of the Company's shares have been made under the
discretionary programme of share buybacks of up to £20 million announced in
the February 2023 trading update. Buybacks totalling £2.0 million had been
executed by 30 September 2023. The buyback programme is not subject to a set
cut-off date.
Gearing and interest
In June 2022, the Company raised a €200 million Eurobond facility from a
group of blue-chip financial institutions, further bolstering its liquidity
position and giving it additional flexibility to invest in the existing
portfolio and make further acquisitions. The Eurobond was issued at subsidiary
company level and fully drawn down by June 2023.
As at 30 September 2023, the Company and its subsidiaries had total debt on a
look-through basis equivalent to £552.9 million. The Company takes a
conservative approach to gearing, and on a pro forma basis, including Speed
Fibre, net gearing was 38% of gross assets (substantially below the level of
50% permitted under the gearing policy set out in the Company's Prospectus). A
majority of the debt is held at the portfolio platform level on a non-recourse
basis, with the remainder being the full drawdown of the Eurobond facility
during the period.
Of the debt at 30 September 2023, 51% of the Company and its subsidiaries'
total debt is on a fixed-interest basis, with the rest at floating rates, none
of which is inflation linked. The Company is reviewing the appropriate level
of hedging for the interest rate of the new Emitel facilities, which are
currently all at floating rates.
Principal risks and uncertainties
In the six months to 30 September 2023, we updated the principal risks
identified by the Company. The changes largely continue to be driven by
macroeconomic factors and the resulting impacts on the financial markets which
we have seen persist across the period. As a result of the high inflation
environment, further increases to interest rates and market volatility, the
Company's share price, as with many other investment trusts listed on the
London Stock Exchange, has been adversely impacted and this in turn has
restricted the ability to raise additional equity capital and to take
advantage of some of the opportunities to develop in portfolio. These factors
are expected to continue for some time yet.
Sustainability
Both the Board and the Investment Manager continue to focus on sustainability
and reducing the impact of the Company and its portfolio companies on our
environment. It is pleasing to highlight achievements and progress on
initiatives across the portfolio. Emitel has been the recipient of a number of
prestigious awards, including ranking second in the 'telecommunications,
technology, media and entertainment' group in the XVII edition of the
Responsible Companies Ranking 2023. In the general classification, the company
was ranked twelfth, out of a total of 250, of the largest companies operating
in the Polish market. CRA published its first 'ESG Sustainability &
Responsibility' report in October 2023, issuing a public commitment to meet
100% of its electricity consumption through the use of renewables by 1 January
2025, having made progress to reach 46% by December 2022. Hudson has become a
participant in a new initiative being undertaken by major US utility, Con
Edison - the Conservation Voltage Reduction (CVR) Plan. The CVR plan enables
an electric utility to reduce energy and peak demand by lowering voltage at
the distribution system. Hudson is making the necessary adjustments in its
transformers to enable energy savings. Speed Fibre's ESG performance was
considered as part of the acquisition process. Earlier this year it was
awarded a 5-star rating by GRESB, the widely recognised provider of ESG data
to financial markets.
Board and governance
The Board receives regular updates on the Company's performance and that of
the individual portfolio companies from the Investment Manager and provides
objective oversight of the Investment Manager's activities. During the period,
the Senior Independent Director and I met with a number of shareholders to
listen to their views on the Company and the Investment Manager and to feed
these back for discussion at our Board meetings. The Board, Investment Manager
and the Company's brokers remain available to engage with shareholders as
appropriate. The Board continues to note the Investment Manager's strong
hands-on operational experience and depth of capability being deployed on a
day-to-day basis in support of portfolio's operations whether through its
active engagement with portfolio company management of commercial initiatives
and technological insights to increase revenue growth, its leadership on
strategic financings and bolt on acquisitions and its support in taking
forward ESG initiatives.
Outlook
There are early indications that financial market conditions could be entering
a new phase, as interest rates begin to plateau or fall across the Company's
markets. This brings uncertainty as well as opportunity for the Company and
its portfolio companies. However, the overall performance of our portfolio
companies continues to be a positive one, with Speed Fibre well placed to
contribute positively to the results for the full year. The Investment Manager
is actively managing the portfolio to drive that performance. In addition,
Digital Infrastructure's importance to the functioning of the global economy
and our society continues to increase, with the growth of AI representing a
further major evolution of the sector.
As a result, and notwithstanding the current conditions affecting financial
markets generally, the underlying strength of the Company and the
attractiveness of its core markets lead the Board to look forward to the year
ahead with confidence.
Shonaid Jemmett-Page
Chairman
28 November 2023
(1)Portfolio comprising CRA, Emitel and Hudson; comparison on a constant
currency basis.
Investment Manager's report
About the Investment Manager
Cordiant Capital, the Investment Manager appointed by the Company, is a
sector-specialist investor focused on middle-market 'Infrastructure 2.0'
platforms in Digital Infrastructure, energy transition infrastructure and the
agriculture value chain. It manages approximately $4 billion of funds through
offices in London, Montreal, Luxembourg and Sao Paulo, and offers Core Plus,
Value Add and Opportunistic strategies.
The Investment Manager's Digital Infrastructure group, consisting of 17 front
office professionals, brings considerable hands-on investing and operating
expertise to its investment approach. This investing strategy can be
summarised as acquiring and expanding cash-flowing Digital Infrastructure
platforms in the UK, EEA and North America.
Introduction
The Company delivered a solid performance in the six months to 30 September
2023 based on a positive operating performance by the portfolio. NAV per share
of 112.7p was slightly down at 30 September 2023, reflecting a positive total
return per share of 1.2p earned in the six months, less the payment of the
2.0p second interim dividend to shareholders in July 2023. The target dividend
remains at 4.0p per share for the year, ahead of the schedule outlined in the
Company's Prospectus. The Company's dividend is well covered, both by
portfolio company earnings and on a cash basis. Aggregate debt levels in the
Company's financing subsidiary and at the portfolio level are prudent and
remain below industry averages for the Digital Infrastructure sector.
Capital allocation
With the deployment of funds into the acquisition of Speed Fibre, the Company
has remaining pro forma liquidity, including undrawn debt facilities, of £207
million, of which £72 million is held at the Company level, and £135 million
at portfolio platform level. The Board and Investment Manager closely monitor
the options for optimal use of these funds and which activities will be in the
best long-term interests of shareholders. Options for capital deployment
include the following:
- The Company announced earlier in the year a programme of share buybacks up to
a total of £20 million. To date, the Company has bought back 2.6 million
shares at a total cost of £2.0 million. The Company did not set an end date
to the buyback programme.
- The Investment Manager believes that further diversification of the portfolio
is an important strategic aim. The acquisition of Speed Fibre closed in
October and added to the portfolio's diversification by increasing exposure to
Western Europe, a euro-denominated jurisdiction and fibre-optic networks.
- Capital could also be allocated to substantial capital expenditure projects at
the portfolio company level if that expenditure was expected to generate
significant future growth in earnings and value. During the six-month period,
£9.0 million of capital expenditure was deployed, all funded from internal
portfolio company cash flows.
Activity in the period
In May 2023, the Company announced that CRA had signed contracts with
broadcasters for three new TV broadcast channels, A11 TV, A11 Sport and a
teleshopping channel from Swedish-based Topmerch group.
These contracts, together with the previously announced five-year agreement
between CRA and the US blue chip pay TV broadcaster, AMC Networks
International (AMC), demonstrate the appeal of the digital terrestrial
broadcast platform to regional and international broadcasters as the most
sustainable and efficient way to transmit content to viewers. Terrestrial
television broadcasting is the most widely used method of television
distribution in the Czech Republic, covering 99% of the population and used by
nearly 60% of households. Digital terrestrial broadcasting brings households a
wide range of the most watched TV channels in the Czech Republic.
In June 2023, the Company announced that Emitel had acquired American Tower
Corporation's subsidiary in Poland, whose portfolio comprises 65 modern
lattice telecoms towers. The portfolio has a low tenancy ratio providing
available load capacity for additional lease customers, which will be
accretive to Emitel's revenue and is distributed across attractive locations
that complement Emitel's existing telecoms network.
In July 2023, Emitel successfully refinanced its senior debt package. Emitel
secured a debt package of PLN 1.57 billion, which comprises a senior loan of
PLN 1.27 billion, a capex facility of PLN 250 million and an RCF of PLN 50
million. As at 30 September 2023, PLN 240 million of the capex facility and
the whole RCF remain substantially undrawn.
The new facilities were 1.6x oversubscribed and have a blended credit margin
lower than the 2.9% of the previous senior facilities. The banking group
included international banks Citi, BNP, Credit Agricole and DNB Bank ASA, as
well as leading Polish banks and financial institutions. The capex facility
and RCF will be applied to support Emitel's growth trajectory by financing its
operational activities, new investments and acquisition plans.
In August 2023, the Company announced that it had agreed to acquire Speed
Fibre, Ireland's leading open access fibre infrastructure provider. Speed
Fibre was acquired from the Irish Infrastructure Fund for a total enterprise
value of €190.5 million. The equity consideration of €97.2 million was
funded by €67.6 million in cash and €29.6 million through a vendor loan
note, with an initial interest rate of 6% and a maturity of four years.
Speed Fibre operates 5,400 kilometres of owned and leased fibre and wireless
backhaul across Ireland, on which it provides dark fibre, wavelength and
ethernet services to a mix of carriers, internet service providers, corporate
customers, and the government. The business is also well-positioned to serve
Ireland's growing data centre sector, which is expected to be the fastest
growing hyperscale data centre market in Western Europe over the next six
years. While primarily a backbone provider, Speed Fibre's subsidiary, Magnet
Plus, provides connection and service to approximately 10,000 business and
retail customers in Ireland.
With a stable business model, sales growth and high revenue and cash flow
visibility, Speed Fibre generated revenues of ca.€80 million and EBITDA of
ca.€23 million in 2022. Outstanding gross debt of ca.€111 million as at
December 2022, which matures in 2029, is provided by three bank lenders, all
of whom have committed to continue to support Speed Fibre under the Company's
ownership. Gross debt was balanced by ca.€19 million of cash on hand at
December 2022. This acquisition completed on 18 October 2023.
Since 31 March 2023, the Company's Directors, the Investment Manager and its
staff made further investments in the Company's shares, acquiring in total 3.1
million more shares to bring the combined total to 9.2 million shares. This
included Steven Marshall, Chairman of Cordiant Digital Infrastructure
Management, who acquired a further 2.6 million shares, bringing his total
personal holding to 6.9 million shares.
At the date of this report, the Directors, Investment Manager and its staff
owned 1.2% of the ordinary issued share capital of the Company.
In February 2023 the Company announced that, in light of the discount at which
the Company's shares were then trading, and in consultation with the Company's
brokers, the Board had approved a discretionary share buyback programme of up
to £20 million. Shares acquired under the programme will either be held in
treasury by the Company or cancelled. The buyback programme is not subject to
a set cut-off date.
To the date of this report, 2.6 million shares had been acquired by the
Company at an average price of 79.5p and held in treasury.
Financial highlights
During the six months to 30 September 2023, the Company achieved a NAV total
return of 1.1% or 1.2p per share. The NAV per share decreased from 113.4p
(111.4p ex-dividend) over the period to 112.7p. This movement comprises a
positive total return for the six-month period of 1.2p, offset by the payment
of the second interim dividend of 2.0p in July 2023.
The total return reflects a positive underlying operating performance across
the portfolio, offset by a slight increase in the weighted average discount
rate and adverse foreign exchange movements in the period.
With the agreement of the Board, the Investment Manager has increased the
weighted average discount rate (WACC, for further analysis and explanation see
section 'Valuations' below) for the whole portfolio by 18 basis points to 9.8%
at 30 September 2023. The total return, excluding the adverse underlying
foreign exchange movement in the period, would be 3.7%. The Company remains a
net beneficiary of foreign exchange movements when measured from inception in
February 2021 to 30 September 2023.
The Company's total return of 1.1% or 1.2p per share is equal to a profit for
the period of £9.4 million (30 September 2022: £21.0 million). Net assets
were £868.6 million (31 March 2023: £875.7 million, £860.3 million
ex-dividend), representing a NAV per share of 112.7p (31 March 2023: 113.4p,
111.4p ex-dividend).
Application of IFRS
As disclosed in the Company's Annual Report 2023, the Company holds Hudson
directly whereas Emitel and CRA are both held through its wholly-owned
subsidiary, Cordiant Digital Holdings UK Limited. The Eurobond was issued by
Cordiant Digital Holdings Two Limited, which is a wholly-owned subsidiary of
Cordiant Digital Holdings UK Limited.
Consequently, under the application of IFRS 10 and the classification of the
Company as an investment entity, the Company's investment in Cordiant Digital
Holdings UK Limited is recorded as a single investment that encompasses
underlying exposure to Emitel, CRA and the Eurobond. In order to facilitate
shareholders' understanding of the breakdown and performance of the Company's
portfolio, the elements of the overall value movement attributable to foreign
exchange movements and value movement and income from each portfolio company
are identified in Chart 1. The Company's profit and NAV under this approach
are exactly the same as in the audited IFRS Statement of Comprehensive Income
and the Statement of Financial Position.
Table 1 shows the reconciliation of Table 3 to the IFRS Statement of
Comprehensive Income.
Table 1: Reconciliation of Statement of Comprehensive Income to Table 3
Accrued income Net unrealised value movement Net foreign exchange movement Fund expenses IFRS P&L
Movement in fair value of investments 1.3 42.4 (22.6) - 21.1
Investment acquisition costs - - - (1.2) (1.2)
Other expenses - - - (6.9) (6.9)
Foreign exchange movements on working capital - - 0.3 - 0.3
Finance income 1.0 - - - 1.0
Finance expense - - - (4.9) (4.9)
2.3 42.4 (22.3) (13.0) 9.4
Table 2 shows the reconciliation of the closing NAV in Table 3 to the IFRS
Statement of Financial Position.
Table 2: Underlying components of Statement of Financial Position
Emitel CRA Hudson Cash Inter-company balances Other assets and liabilities Eurobond IFRS Total
Investments at fair value through profit and loss 461.2 388.6 48.9 - 170.2 (0.4) (172.4) 896.1
Receivables and prepayments - - - - - 15.5 - 15.5
Cash and cash equivalents - - - 130.9 - - - 130.9
Payables - - - - (1.3) (3.7) - (5.0)
Loans and borrowings - - - - (168.9) - - (168.9)
461.2 388.6 48.9 130.9 - 11.4 (172.4) 868.6
Financial performance in the period
Table 3 shows the Company's NAV progression for the six months to 30 September
2023, with underlying value growth, foreign exchange movements and costs split
out from the IFRS classification of returns presented in the Statement of
Comprehensive Income and Statement of Financial Position.
Table 3: NAV progression for the six-month period to 30 September 2023
September
£m
Opening NAV as at 1 April 2023 875.7
Dividend paid July 2023 (15.4)
Opening ex-dividend NAV 860.3
Accrued income 2.3
Value movement 42.4
Foreign exchange movement (22.3)
Fund expenses (13.0)
Share buy back (1.1)
Closing NAV as at 30 September 2023 868.6
Underlying value growth was £42.4 million in the period (30 September 2022:
decrease of £4.0 million), comprised of £35.4 million gain in respect of
Emitel, £18.3 million gain in respect of CRA (30 September 2022: gain of
£0.8 million) and an £11.3 million decrease in respect of Hudson (30
September 2022: decrease of £4.8 million).
Underlying foreign exchange loss for the Company was £22.3 million for the
period (30 September 2022: gain of £25.8 million), comprising a
£3.2 million unrealised loss in respect of Emitel and Polish zloty (30
September 2022: gain of £2.9 million), £20.1 million unrealised loss in
respect of CRA and Czech crowns (30 September 2022: gain of £11.4 million),
£0.3 million gain in respect of Hudson and the US dollar (30 September 2022:
gain of £11.5 million) and a £0.7 million gain relating to other balance
sheet assets and liabilities.
For the period since the Company's inception, unrealised foreign exchange
gains of £42 million have been recognised in the NAV, equal to approximately
5.4p per share. This comprises £18 million in respect of Emitel and Polish
zloty, £18 million in respect of CRA and Czech crowns and £6 million in
respect of Hudson and US dollars.
The Investment Manager and Board have kept the Company's hedging strategy
under regular review in light of the volatility in foreign exchange rates
since the Company began operations. The Company is a long-term investor in the
portfolio and is mindful of the costs and liquidity demands of hedging; it
does not seek to manage balance sheet foreign exchange exposure from reporting
period to reporting period. To date the Company has not undertaken any hedging
of balance sheet foreign exchange exposure, though it has hedged discrete
foreign exchange cash flows where this has been deemed desirable.
Total Company costs of £13.0 million for the period reflected: management
fees paid to the Investment Manager; costs attributable to the Eurobond
facility raised by Cordiant Digital Holdings Two Limited; operating costs and
discontinued deal costs of the Company; and certain acquisition costs relating
to the acquisition of Speed Fibre accrued during the period. The ongoing
charges ratio for the six months to 30 September 2023, calculated as
annualised management fee and operating expenses (excluding acquisition costs
and non-recurring items) divided by the average NAV during the period, was
0.9%. This has been calculated in line with the guidelines published by the
AIC.
Valuations
The Investment Manager conducts a rigorous valuation process in respect of
every interim and year end reporting date. The valuations of the portfolio
companies are prepared by the Investment Manager according to the IPEV
Valuation Guidelines and IFRS 13.
The Investment Manager and Board are keenly aware of the apparent disconnect
between asset valuations and the discounts to NAV at which many investment
companies trade, including for the present time, the Company. Since the
Company's IPO, the Board has appointed an independent valuation team from a
Big 4 accounting firm. This independent valuer performs a full valuation of
each asset at each interim and financial year end and reports independently to
the Board.
The Investment Manager has increased the weighted average discount rate
applied to the portfolio since the Company's first valuation in March 2022 by
173bps to 9.8%, to reflect increases in risk-free rates and risk premia over
that time. When assessing future forecast cash flows to include in the
discounted cash flow, the Investment Manager makes careful judgements about
the probability of cash flows materialising in the future. Prudent valuations
are the result of this approach, with Emitel being valued at an enterprise
value of 9.7x last twelve months (LTM) EBITDA, and CRA being valued at an
enterprise value of 11.1x LTM EBITDA at 30 September 2023. Hudson currently
has negative EBITDA and has been reduced in value by a further £11.3 million.
At Emitel, the value increase during the six months to 30 September 2023 was
primarily driven by new business won and the impact of 2023 inflation on
future revenues. The discount rate selected by the Investment Manager has
remained unchanged since 31 March 2023.
At CRA, the value movement in the period is driven by cash flow generation
reducing net debt and strong earnings performance in the period from long-term
contracts, increasing future expected earnings. This is slightly offset by an
increase in the discount rate at 30 September 2023.
Hudson continues to seek new customers and build out revenues. During the
period, the Company invested a further £2.9 million to support cash flow. At
30 September 2023, the Investment Manager valued the business at
£48.9 million, a reduction of £8.1 million from 31 March 2023. This was
driven by the slower than expected ramp-up in revenues and EBITDA. The
discount rate was slightly increased compared to 31 March 2023.
The primary valuation methodology of the Company's three portfolio platforms
is a discounted cash flow approach. The Investment Manager has discounted the
near-term forecast cash flows of each platform and a terminal value using a
weighted average cost of capital (WACC) as the discount rate. This process
yields an enterprise value from which the net debt of the platform is deducted
to arrive at the equity value attributable to the Company. At 30
September 2023, the Company owned 100% of each platform either directly or
indirectly through intermediate holding companies.
Table 4: Weighted average cost of capital at 30 September 2023
Range low point Range high point Weighted average mid-point
Cost of equity 10.1% 13.5% 11.4%
Cost of debt 5.5% 7.5% 6.8%
WACC 8.6% 11.0% 9.8%
Weighted average cost of capital at 31 March 2023
Range low point Range high point Weighted average mid-point
Cost of equity 9.6% 12.9% 11.0%
Cost of debt 5.0% 7.0% 6.5%
WACC 8.2% 11.0% 9.6%
The WACC for each valuation comprises a weighted average of the cost of equity
attributable to the platform and the cost of debt attributed.
The cost of equity comprises an appropriate risk-free rate plus a premium for
specific risk relating to the platform, its size and its geographical
location. Table 4 shows the range of cost of equity and cost of debt used at
30 September 2023 in the valuations of the three platforms. The weighted
average mid-point cost of equity was 11.4% and the weighted average cost of
debt mid-point was 6.8%.
The weighted average discount rate (WACC) used across the portfolio at 30
September 2023 was 9.8%. From 31 March 2023 to 30 September 2023, the
weighted average discount rate for the portfolio increased by 18 basis points.
Increases in discount rates since 31 March 2022 have caused an aggregate
£110 million reduction in value in the portfolio.
Dividend coverage
The Company's prudent approach to portfolio construction, as further evidenced
by the acquisition of Speed Fibre which completed after the period end, has
created a cash generative, conservatively geared and strongly diversified pool
of assets with scale and the potential for future growth.
In December 2023, Company will pay a first interim dividend of 2.0p per share
for the year to 31 March 2024, as part of the target for the year of 4.0p per
share. This represents a significant increase over the dividend for the year
planned at the time of the IPO in February 2021. The 4.0p per share dividend
is approximately 3.6x covered by EBITDA and 1.2x covered by AFFO, defined as
free cash flow after Company level costs, net finance costs, taxation and
maintenance capital expenditure.
AFFO dividend cover has reduced slightly from the 1.5x disclosed at 31 March
2023 due to higher net finance costs following the full Eurobond drawdown in
June 2023, and from higher interest costs on the 33% of Emitel debt that was
floating rate, as interest rates in Poland peaked during the last twelve
months. LTM EBITDA increased 5.8% from March to September 2023. Table 5 shows
the calculation of AFFO for the twelve months to 30 September 2023.
Table 5: Calculation of adjusted funds from operations (AFFO)
Twelve months to 30 September 2023(1) (unaudited)
£m
Portfolio company revenues 214.1
Portfolio company normalised EBITDA 111.1
Dividend coverage, EBITDA basis 3.6x
Net Company-specific costs (14.0)
Net finance costs (32.0)
Net taxation, other (14.5)
Free cash flow before all capital expenditure 50.6
Maintenance capital expenditure(2) (13.4)
Adjusted funds from operations 37.2
Dividend at 4.0p per share (30.8)
Dividend cover 1.2x
(1)At average foreign exchange rates for the period.
(2)Aggregate growth capital expenditure of £12.4 million was invested in the
12 months to 30 September 2023 across the portfolio (not included in AFFO
calculation).
The addition of Speed Fibre to the portfolio after September 2023, with its
strong EBITDA generation, supports the Company's dividend coverage, increasing
EBITDA coverage to 4.3x and AFFO coverage to 1.5x on a pro forma basis with
reference to Speed Fibre's LTM EBITDA and cash flows to 30 September 2023.
Investee company performance
For the six months to 30 September 2023, the portfolio companies generated
combined revenue of £108.3 million, representing a 10.7% increase over the
prior comparable period, on a like-for-like pro forma, constant currency
basis. Portfolio EBITDA increased 5.5% over the prior comparable period, on a
like-for-like pro forma, constant currency basis, to £55.5 million.
These increases in revenue and EBITDA reflect the impact of new contracts
being entered into, including in the broadcasting and telecoms business units
at Emitel and CRA, together with the effect of inflation-linked revenues
feeding through 2022 inflation rates into 2023 revenues. Notable new contracts
included the new contract between CRA and T-Mobile that expanded the existing
scope of services and the number of towers made available to T-Mobile,
broadcast contracts at CRA and Emitel with new broadcasters and the successful
tender win by Emitel extending the coverage of the Polish DAB+ radio
multiplex with 17 regional radio stations.
During the six months to 30 September 2023, across the portfolio companies
£5.9 million was invested in maintenance capital expenditure and
£7.6 million in growth capital expenditure. Maintenance capital expenditure
included investment in IT systems and security at CRA and infrastructure
modernisation at Emitel. Growth capital expenditure included investment
related to the DAB+ contract win (announced by the Company on 8 November 2023)
and construction of new telecoms towers at Emitel; and data centre investment
at CRA.
Total gross debt at the Company, subsidiary and platform level was equivalent
to £552.9 million, an increase of £87 million since 31 March 2023 and
reflected the full drawdown of the Eurobond in June 2023 offset by a
de-levering of Emitel's drawn debt by PLN 200 million as part of the refinance
during the period. Aggregate cash balances at the Company, subsidiary and
platform level were equivalent to £202 million. Including undrawn debt
facilities at portfolio company level, total liquidity was equivalent to £259
million, or £207 million on a pro forma basis, after the acquisition of Speed
Fibre.
51% of all debt is on a fixed-interest basis, with the remainder floating,
none of which is inflation linked. The Company is assessing options for fixing
the interest rate of the new Emitel facilities, currently all floating rate.
Aggregate net gearing was 38% on a pro forma look-through basis including
Speed Fibre, well below the 50% maximum permitted under the Company's
investment policy.
The Investment Manager's team
Building on the significant strength of the existing digital team reflects the
Investment Manager's continued commitment to supporting platform companies in
achieving their growth ambitions, along with being able to source and deliver
investment opportunities that are in line with target returns.
Unlike its peers in this market, the digital team at the Investment Manager
possesses deep, senior experience of managing and operating world-class
Digital Infrastructure businesses. This is combined with private equity
executives having decades of experience advising and investing in the sector,
making for a unique marriage of capabilities.
Environmental, social and governance highlights
For the second year in a row, the Investment Manager has achieved Carbon
Neutral+ accreditation, after verifying and offsetting emissions associated
with operations. The Investment Manager disclosed in the Company's Annual
Report 2023 its intention to offset emissions associated with operations
(covering Scope 1, 2 and select Scope 3 categories associated with its London,
Montreal and Luxembourg offices and employees, for the period 1 January 2022
to 31 December 2022). Since publication of the Company's Annual Report 2023,
the Investment Manager has offset these verified emissions, as well as an
additional 25%, achieving both CO(2)e Assessed and Carbon Neutral+
organisation accreditation.
Outlook
The Investment Manager is pleased with the overall quality of assets and
underlying cash flows in the portfolio. These have been assembled at what the
Investment Manager believes to be a highly attractive price without
sacrificing growth potential.
Internally generated cash flows and the remaining proceeds of the Eurobond
facility will allow the Company to cover the dividend, engage in appropriate
maintenance capital expenditures, expand existing platforms and invest in new
assets to further diversify the portfolio, both geographically and by asset
type.
The Investment Manager remains closely focused on the Company's target of 9%
return to shareholders, comprising dividend and capital growth. The Investment
Manager is seeing some improvement in the pricing environment for digital
assets in the middle market and the purchase terms available. The Investment
Manager has recruited a large and capable team of digital specialists with the
skills and experience required to manage the Company's assets and to succeed
in maximising total return from Core Plus assets.
Based on the solid performance since inception, which has continued up to 30
September 2023, the Investment Manager believes the Company remains well
placed to deliver as planned in the year ending 31 March 2024.
The Investment Manager looks forward to the second half of the year ahead with
confidence.
Emitel
Emitel £m
Original cost 353.0
Value at 1 April 2023 429.0
Further investment in the period -
Unrealised value movement in the period 35.4
Unrealised foreign exchange movement in the period (3.2)
Value at 30 September 2023 461.2
May not add due to rounding
Financial performance in the period
For the first six months of Emitel's financial year to 30 June 2023, revenue
increased 10.1% to PLN 293 million (£55.5 million at average exchange
rates for the period) and EBITDA increased by 3.6% to PLN 189 million
(£35.8 million at average exchange rates for the period). This performance
reflected strong revenue growth in telecoms infrastructure and TV broadcast,
offset by an increase in employee costs driven by salary increases to combat
the impact of high inflation in Poland.
The increase in TV broadcast revenues was primarily driven by the launch of a
new sixth digital television multiplex (MUX 6), which launched with an anchor
agreement with Telewizja Polska S.A. (TVP) in February 2023. MUX 6 is the
second DTT multiplex operated by Emitel exclusively for TVP, the other being
MUX 3. The extra broadcast capacity provided by MUX 6 enables TVP to increase
the number of channels it offers and allows the media market to use existing
MUX 1 and MUX 8 capacity for additional new channels in Poland.
Telecoms infrastructure revenue growth in the period was driven by Emitel's
acquisition of 65 telecoms towers in Poland from American Tower Corporation.
The towers are less than three years old and have robust long-term contracts
(14 years average) with inflation-linked escalators.
In addition to volume growth and M&A, revenue growth was also driven by
inflation-linked price increases (approximately 79% of Emitel's revenues have
full or partial CPI-linked contracts). Inflation in Poland for 2022 was 14.4%,
and the latest European Commission inflation forecast for Poland in 2023 is
11.4%.
In the period, Emitel signed a new loan facilities agreement with a consortium
of leading Polish and international banks. The new facilities include senior
secured term loans of PLN 1,270 million (of which PLN 370 million - €83
million - is denominated in euros), a capex facility of PLN 250 million and a
revolving credit facility (RCF) of PLN 50 million. The new facilities were
1.6x oversubscribed and have a blended credit margin lower than the 2.9% of
the current senior facilities. The capex facility and RCF will support
Emitel's growth trajectory by financing its operational activities, new
investments, and acquisition plans.
Cash balances decreased to PLN 83 million (£15.5 million) due to a partial
de-levering of the senior debt facilities by PLN 200 million (£37 million)
upon refinancing, completed in September 2023. The outstanding principal
amount of third-party bank debt was PLN 1,294 million (£241.9 million) at
30 September 2023. Of the interest payable on the third-party bank debt, 100%
was floating, pending negotiation of interest rate swaps with lending banks to
effect some rate fixing; none was inflation linked.
Outlook
Emitel has recently won the tender for extending the coverage of Polskie
Radio's DAB+ multiplex with 17 regional radio stations. Upon completion of the
implementation, the reach of Polskie Radio's digitally broadcast stations will
include 75% of Poland and nearly 88% of the population. This is initially a
four-year contract with revenue inflation linkage commencing in October 2023.
After the period end, Emitel signed a new contract for the provision of TV
broadcasting services via a new channel with Telewizja Polsat and via the
extension of an existing contract with TV Spektrum. Both agreements cover 62
existing locations and have the same terms regarding duration, fees,
indexation, and SLA as the other contracts on MUX 1. Following this agreement,
MUX 1 is now at full capacity. Emitel is currently marketing available
capacity on MUX 8 to broadcasters.
CRA
CRA £m
Original cost 305.9
Value at 1 April 2023 389.1
Further investment in the period* 1.3
Unrealised value movement in the period 18.3
Unrealised foreign exchange movement in the period (20.1)
Value at 30 September 2023 388.6
*Interest on shareholder loan capitalised during the period
May not add due to rounding
Financial performance
Revenues for the six months to 30 September 2023 increased by 10.5% to CZK
1.2 billion (£44.0 million at average exchange rates for the period) and
adjusted EBITDA increased 8.1% to CZK 0.6 billion (£21.9 million at
average exchange rates for the period).
The revenue performance was driven by year-on-year growth in all business
areas. The broadcast division produced solid mid-single digit growth, driven
mainly by the TV segment. In addition, CRA experienced strong double-digit
growth in the data centre and cloud, towers and IoT business lines coupled
with single-digit growth in the telecoms business. Inflation escalations have
mostly benefited the TV and tower businesses. As mentioned in the Company's
Annual Report 2023, TV broadcasting won several new contracts including
signing a five-year agreement in March 2023 with blue-chip pay TV
broadcaster, AMC Networks International (AMC), a global provider of well-known
content such as AMC, Film+ and Sport1. In addition, in July 2023 CRA signed a
new 15-year contract with T-Mobile related to leasing space on CRA towers.
EBITDA performance was driven by an increase in revenues which was slightly
offset by a decrease in gross margin mainly due to higher power cost.
Operating expenditure as a percentage of revenue has fallen slightly due to
operating leverage effect.
CRA continues to enjoy strong demand for its data centre capacity, as measured
in racks occupied +15.1% and power +22.0%. This reflects robust demand
dynamics from new and existing customers. CRA tower portfolio benefited from
an increase in both the number of points of presence (PoPs) up 1.2% and the
price per PoP up 7.3%.
Cash balances increased to CZK 1.5 billion (£54.5 million) at 30 September
2023. Third-party bank debt remained unchanged at CZK 3.9 billion
(£138.5 million). Interest on the bank debt is 100% hedged. The loan falls
due in the second half of 2025. The Investment Manager intends to begin the
refinance project before the end of 2023.
Operations
CRA continued to benefit from its market leading position in all its areas of
operations as evidenced by the increase in utilisation rates in most of its
business lines. This was achieved while preserving a high-quality blue-chip
customer base and pricing power. In addition, the company is constantly
looking for efficiency improvements in its business lines, further augmenting
the benefits of its operating leverage. In line with power planning for the
new data centre, CRA has committed to 100% of its power requirement coming
from renewable sources within the next two years. 46% is the most recent
measurement at 31 March 2023.
Outlook
Inflation escalations, increased capacity utilisation and new contracts wins
are expected to help drive CRA growth in the second half of this financial
year and in future years. The Czech economy is expected to grow by 0.1% in
2023 while the inflation rate is expected to be 11% according to the Czech
central bank's August 2023 forecast. CRA's business lines benefit from either
full inflation protection or fixed escalators which help protect the company's
margins. Inflation linked contracts will typically incorporate 2023 inflation
from January 2024 onwards.
Continued demand for data centre capacity is a key driver for CRA's plans to
invest in a new 26MW data centre on a former AM radio transmission site
outside Prague. The new centre is expected to be a state-of-the-art facility,
with market-leading power utilisation efficiency and on-site solar power. The
execution for the fibre ring of this data centre has now started. With current
plans for the new data centre to be completed in 2025, CRA is also actively
looking at bolt-on acquisition opportunities to further boost its data centre
and cloud operations.
Hudson
Hudson £m
Original cost 55.8
Value at 1 April 2023 57.0
Further investment in the period 2.9
Unrealised value movement in the period (11.3)
Unrealised foreign exchange movement in the period 0.3
Value at 30 September 2023 48.9
May not add due to rounding
Financial performance
During the six months to 30 September 2023, Hudson saw revenue increase by
15.8% to $11.2 million (£8.9 million at average exchange rates for the
period) and EBITDA loss decrease by 0.9% to $2.7 million (loss of
£2.1 million at average exchange rates for the period). The increase in
revenue is due to inflation escalation, the increase in pass-through power
costs and new contracts signed for the sixth floor of 60 Hudson Street. The
slight improvement in EBITDA loss was a result of higher revenue which was
mostly offset by an increase in rent and power costs and the additional sales
personnel and the impact of sales commission.
Hudson saw sub-optimal operational and financial progress through the first
six months. The pace of new sales has been slower than the Investment Manager
had hoped, with Hudson's management also dealing with global supply chain
issues affecting the availability and lead times of data hall construction
materials. Capacity utilisation of the sixth floor has increased to 356kW
resulting from a number of contract wins.
Operations
During the period, the Investment Manager took the decision to refresh the
Hudson leadership team. Atul Roy, former Head of Strategy at BT Group and Head
of Telecoms at the Investment Manager, has been appointed Interim CEO while
the Manager seeks a leader for the business. In the first six months of the
year, Hudson benefited, to a certain extent, from the investment made in its
sales and marketing teams in the previous period. However, the Investment
Manager is not satisfied with the pace of the sales ramp up and the team is
actively looking with the management team at all options to improve sales
initiatives and operations in order to bring Hudson to profitability. This
will primarily be achieved by increasing the conversion of the current
pipeline to sales, coupled with attracting anchor connectivity customers who
bring other customers to their ecosystem. In addition, the team is looking at
other services that can be sold on top of rent and power, such as remote hands
and cross connect services.
Outlook
The Investment Manager believes Hudson will struggle to show positive EBITDA
in the next twelve months. Hudson continues to offer a significant opportunity
for growth, with its unique location, current utilisation below 30%, overall
demand for data centre space in the region and no requirement for additional
upfront investment, essentially de-risking capital expenditure by linking it
directly to new revenue contracts.
Speed Fibre Group DAC (acquired October 2023)
Speed Fibre acquisition details £m
Enterprise value 164.6(1)
Net senior debt 80.7
Equity value 83.9
Of which funded by cash 58.4
Of which funded by vendor loan note 25.5
( )
(1)Foreign exchange rate on the date of completion applied.
Speed Fibre is Ireland's leading open access fibre infrastructure provider.
The acquisition of Speed Fibre from the Irish Infrastructure Fund was agreed
in August 2023 for a total enterprise value of €190.5 million (£164.6
million). The equity consideration of €97.2 million (£83.9 million) was
funded by €67.6 million (£58.4 million) in cash and €29.6 million
(£25.5 million) through a vendor loan note with an initial interest rate of
6% and a maturity of four years. The acquisition completed in October 2023.
Speed Fibre is the fourth Digital Infrastructure platform acquired by the
Company since its launch in 2021 and is consistent with its investment
strategy of buying cash flow generating platforms capable of growth under its
Buy, Build & Grow model. The acquisition further diversifies the Company's
portfolio on a sub-sector and geographic basis.
Speed Fibre operates 5,400 kilometres of owned and leased fibre and wireless
backhaul across Ireland, on which it provides dark fibre, wavelength and
ethernet services to a mix of carriers, internet service providers, corporate
customers, and the government. The business is also well-positioned to serve
Ireland's growing data centre sector, which is expected to be the fastest
growing hyperscale data centre market in Western Europe over the next six
years. While primarily a backbone provider, Speed Fibre's subsidiary, Magnet
Plus, provides connection and service to approximately 10,000 business and
retail customers in Ireland.
With a stable business model, sales growth and high revenue and cash flow
visibility, Speed Fibre generated revenues of approximately €80 million and
EBITDA of approximately €23 million in 2022. Outstanding gross debt of
ca.€111 million as at December 2022 and which matures in 2029 is provided
by three bank lenders, all of whom have committed to continue to support Speed
Fibre under the Company's ownership. Speed Fibre's debt interest is set as a
margin over Euribor, and 70% of the interest is fixed through an interest rate
swap. Gross debt was balanced by ca.€19 million of cash on hand at December
2022.
Speed Fibre has a strong ESG and sustainability focus, earning a 5-star rating
from GRESB, an independent organisation providing validated ESG performance
data, and is targeting net zero carbon emissions by 2040.
Key highlights
- A national digital network in a strategically located market acquired at an
attractive price.
- Two complementary operating companies, combined to create a #1 carrier-neutral
wholesale fibre business and vertically integrated ISP able to deliver 100GB
across Ireland.
- Strong management team with track record of operational success, and a strong
focus on ESG (5-star rating from GRESB).
- Positive Digital Infrastructure market dynamics with high (and growing) rates
of data consumption.
- High barriers to entry protecting SFG's business and market position, coupled
with long-term relationships with main carriers and retail service providers
in Ireland.
- Blue chip clients include Vodafone, AT&T, Three and Verizon.
Investment case
- Speed Fibre provides a strong platform from which to invest in accretive
strategic organic and inorganic opportunities.
- The valuation multiple reflects the transaction dynamics, change in
macro-economic conditions and our institutional approach to disciplined
M&A.
- This is an attractive entry multiple for the Company's shareholders for a
stable business model with high revenue and cash flow visibility.
- Seasoned and accomplished management team with a proven track-record and over
125 years of combined experience in the industry.
- Ireland still lags Europe in high-speed internet coverage; the need for which
was further accelerated by remote working trends accelerated by COVID-19
- Data consumption growth in Ireland expected to be amongst the highest in
Europe.
- Supportive regulatory backdrop; the Irish Government remains committed to
delivering quality, affordable, high-speed broadband to all parts of Ireland.
Norkring AS (announced November 2023)
In November 2023, the Company announced that it had agreed to acquire Norkring
België NV (Norkring), which operates 25 communication and broadcast towers in
Belgium, from its current shareholders Telenor Communication II AS and
Participatiemaatschappij Vlaanderen NV.
Norkring is being acquired for a total enterprise value of €5.25 million,
subject to customary adjustments. The transaction is being funded from the
Company's cash on its balance sheet and is conditional upon foreign direct
investment approval in Belgium. The acquisition is expected to complete during
the course of the Company's current financial year.
In addition to its towers, Norkring is the holder of two DAB licences and one
DTT multiplex licence. It provides (i) radio and TV broadcasting services to
commercial stations and distributors and (ii) colocation and site-hosting to
broadcasters, niche communications operators and mobile network operators. As
part of a consortium, Norkring is conducting trials using 5G broadcast
technology, which is expected to provide it with the ability to offer
additional services to broadcast and mobile operator customers.
Risk management
Principal risks and uncertainties
1. The capital markets may remain effectively closed to the Company for a
significant period. As a consequence, the Company may be unable to raise new
capital and it may therefore be unable to progress investment opportunities.
How we mitigate risk
The Company has acquired a portfolio of cash-generating assets with
significant organic growth prospects, which together are capable of providing
returns meeting the investment objective without further acquisitions. The
Investment Manager also continues to consider potential alternative sources of
capital.
How the risk is changing
Significant discounts to NAV continue to be evident in the current share
prices of many investment trust companies listed on the London Stock Exchange,
including the Company, and this situation has worsened somewhat over the last
six months.
Movement since 31 March 2023
Higher
2. There is a risk that, even when the capital markets are open, insufficient
numbers of investors are prepared to invest new capital, or that investors are
unwilling to invest sufficient new capital, to enable the Company to achieve
its investment objectives.
How we mitigate risk
The Company has established a track record of successful investments, which
together are capable of providing returns meeting the investment objective
without further acquisitions. The Investment Manager has deep sector knowledge
and investment expertise and is well-known and respected in the market.
How the risk is changing
The continuing poor conditions in the investment trust sector give rise to
uncertainty. It is not possible to predict when market conditions might
improve.
Movement in the year
New risk
3.The Company may lose investment opportunities if it does not match
investment prices, structures and terms offered by competing bidders.
Conversely, the Company may experience decreased rates of return and increased
risk of loss if it matches investment prices, structures and terms offered by
competitors.
How we mitigate risk
The Investment Manager operates a prudent and disciplined investment strategy,
participating in transaction processes only where it can be competitive
without compromising its investment objectives.
How the risk is changing
The Investment Manager has been able to identify and pursue bilateral
opportunities rather than auction processes, where competition for those
assets has been a less significant factor. However, there can be no guarantee
that suitable further bilateral opportunities will arise. In addition, current
market conditions and the consequent limitations on the Company's ability to
access capital markets may mean that it is not able to pursue certain
investment opportunities.
Movement in the year
Unchanged
4. There can be no guarantee or assurance the Company will achieve its
investment objectives, which are indicative targets only. Investments may fail
to deliver the projected earnings, cash flows and/or capital growth expected
at the time of acquisition. The actual rate of return may be materially lower
than the targeted rate of return.
How we mitigate risk
The Investment Manager performs a rigorous due diligence process with internal
specialists and expert professional advisers in fields relevant to the
proposed investment before any investment is made. The Investment Manager also
carries out a regular review of the investment environment and benchmarks
target and actual returns against the industry and competitors.
How the risk is changing
The operational performance of our investments to date is in line with our
expectations, demonstrating that the due diligence process undertaken at the
time of acquisition was appropriately rigorous to mitigate this risk. The same
level of rigour must be maintained for future investments. Foreign exchange
movements have had a negative effect on the Company's returns.
Movement in the year
Higher
5. Actual results of portfolio investments may vary from the projections,
which may have a material adverse effect on NAV.
How we mitigate risk
The Investment Manager provides the Board with at least quarterly updates of
portfolio investment performance and detail around material variation from
budget and forecast returns.
How the risk is changing
The results of our investments to date are materially in line with our
projections at the time of their acquisition and their aggregate fair value
has increased. This demonstrates the quality of the Investment Manager's
projections and its ability to manage the investments for growth.
Movement in the year
Unchanged
6. The Company invests in unlisted Digital Infrastructure assets, and such
investments are illiquid. There is a risk that it may be difficult for the
Company to sell the Digital Infrastructure assets and the price achieved on
any realisation may be at a discount to the prevailing valuation of the
relevant Digital Infrastructure asset.
How we mitigate risk
The Investment Manager has considerable experience across relevant digital
infrastructure sectors, and members of them team have been involved in over
$80 billion of relevant transactions. The Company seeks a diversified range of
investments so that exposure to temporary poor conditions in any one market is
limited.
How the risk is changing
The Company is still in its relative infancy and, as a vehicle with permanent
capital, is not likely to be seeking a full divestment of any asset for some
time. Its exposure to divestment risk is limited in the short to medium term.
Movement in the year
No movement
7.The Company may invest in Digital Infrastructure assets which are in
construction or construction-ready or otherwise require significant future
capital expenditure. Digital Infrastructure assets which have significant
capital expenditure requirements may be exposed to cost overruns, construction
delay, failure to meet technical requirements or construction defects.
How we mitigate risk
The Investment Manager has significant experience of managing construction
risks arising from Digital Infrastructure assets and will also engage third
parties where appropriate to oversee such construction.
How the risk is changing
The Company's investments to date have not undertaken significant capital
construction projects. This risk has therefore been relatively low to date but
may increase as capital investment increases under our Buy, Build & Grow
model.
Movement in the year
Unchanged
Statement of Directors' responsibilities
The Directors are responsible for preparing this Interim Report in accordance
with the Disclosure Guidance and Transparency Rules of the UK's Financial
Conduct Authority.
In preparing the unaudited condensed set of interim financial statements
included within the Interim Report, the Directors are required to:
- prepare and present the condensed set of interim financial statements in
accordance with IAS 34 Interim Financial Reporting issued by the International
Accounting Standards Board (IASB) and the DTRs;
- ensure the condensed set of interim financial statements has adequate
disclosures;
- select and apply appropriate accounting policies; and
- make accounting estimates that are reasonable in the circumstances.
The Directors are responsible for designing, implementing and maintaining such
internal controls as they determine are necessary to enable the preparation of
the condensed set of interim financial statements that is free from material
misstatement whether due to fraud or error.
On behalf of the Board
Shonaid Jemmett-Page
Chairman
28 November 2023
Condensed Statement of Financial Position
As at 30 September 2023 (unaudited)
Note As at As at
30 September 2023
31 March 2023
£'000
£'000
Non-current assets
Investments at fair value through profit or loss 8 896,126 872,315
896,126 872,315
Current assets
Receivables 10 15,499 14,680
Cash and cash equivalents 130,868 10,498
146,367 25,178
Total assets 1,042,493 897,493
Current liabilities
Payables (4,980) (1,495)
(4,980) (1,495)
Net current assets 141,387 23,683
Non-current liabilities
Loans and borrowings 13 (168,936) (20,287)
(168,936) (20,287)
Total liabilities (173,916) (21,782)
Net assets 868,577 875,711
Equity
Equity share capital 11 778,071 779,157
Retained earnings - Revenue (9,663) (196)
Retained earnings - Capital 100,169 96,750
Total equity 868,577 875,711
Number of shares in issue
Ordinary shares 11 771,009,707 772,509,707
771,009,707 772,509,707
Net asset value per ordinary share (pence) 112.65 113.36
The unaudited condensed interim financial statements were approved and
authorised for issue by the Board on 28 November 2023 and signed on their
behalf by:
Shonaid Jemmett-Page Sian Hill
Chairman Director
The accompanying notes form an integral part of these unaudited condensed
interim financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2023 (unaudited)
For the six months ended For the six months ended
30 September 2023 30 September 2022
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net gain on investments 8 1,316 19,734 21,050 1,397 18,017 19,414
at fair value through profit or loss
1,316 19,734 21,050 1,397 18,017 19,414
Operating expenses
Other expenses 4 (6,869) - (6,869) (5,441) (1,405) (6,846)
Investment acquisition costs - (1,198) (1,198) - (717) (717)
Operating (loss)/profit (5,553) 18,536 12,983 (4,044) 15,895 11,851
Foreign exchange movements on working capital - 332 332 1,276 1,611 2,887
Finance income 988 - 988 6,275 - 6,275
Finance expense (4,902) - (4,902) - - -
(Loss)/profit for the period before tax (9,467) 18,868 9,401 3,507 17,506 21,013
Tax charge 5 - - - - - -
(Loss)/Profit for the period after tax (9,467) 18,868 9,401 3,507 17,506 21,013
(Loss)/Profit and total comprehensive (loss)/income (9,467) 18,868 9,401 3,507 17,506 21,013
for the period
Weighted average number of shares
Basic
Ordinary shares 7 772,435,390 772,435,390 772,435,390 773,427,686 773,427,686 773,427,686
Diluted
Ordinary shares 7 772,435,390 772,435,390 772,435,390 773,427,692 773,427,692 773,427,692
Earnings per share
Basic earnings from continuing operations in the period (pence)
Ordinary shares 7 (1.22) 2.44 1.22 0.45 2.27 2.72
Diluted earnings from continuing operations in the period (pence)
Ordinary shares 7 (1.22) 2.44 1.22 0.45 2.27 2.72
The accompanying notes form an integral part of these unaudited condensed
interim financial statements.
Condensed Statement of Changes in Equity
For the six months ended 30 September 2023 (unaudited)
For the period from
1 April 2022 to 30 September 2022
Note Share capital Retained earnings-Revenue Retained earnings-Capital Total equity
£'000
£'000
£'000
£'000
Opening net assets as at 1 April 2022 11 779,896 (2,724) 45,174 822,346
Issue of share capital 11 295 - - 295
Share issue costs (92) - - (92)
Dividends paid during the period - - (11,599) (11,599)
Profit and total comprehensive income for the period - 3,507 17,506 21,013
Closing net assets attributable to shareholders as at 30 September 2022 780,099 783 51,081 831,963
For the period from
1 October 2022 to 31 March 2023
Note Share capital Retained earnings-Revenue Retained earnings-Capital Total equity
£'000
£'000
£'000
£'000
Opening net assets as at 30 September 2022 11 780,099 783 51,081 831,963
Dividends paid during the period 12 - - (15,473) (15,473)
Shares repurchased in the period (943) - - (943)
Share issue costs 1 - - 1
(Loss)/Profit and total comprehensive (loss)/income for the period - (979) 61,142 60,163
Closing net assets attributable to shareholders as at 31 March 2023 779,157 (196) 96,750 875,711
For the period from
1 April 2023 to 30 September 2023
Note Share capital Retained earnings-Revenue Retained earnings-Capital Total equity
£'000
£'000
£'000
£'000
Opening net assets as at 1 April 2023 11 779,157 (196) 96,750 875,711
Shares repurchased during the period 11 (1,086) - - (1,086)
Dividends paid during the period 12 - - (15,449) (15,449)
(Loss)/Profit and total comprehensive (loss)/income for the period - (9,467) 18,868 9,401
Closing net assets attributable to shareholders as at 30 September 2023 778,071 (9,663) 100,169 868,577
The accompanying notes form an integral part of these unaudited condensed
interim financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 September 2023 (unaudited)
Note For the six For the six
months ended
months ended
30 September 2023 30 September 2022
£'000 £'000
Operating activities
Operating profit for the period 12,983 11,851
Adjustments for non-cash movements
Net gain on investments at fair value through profit or loss 8 (21,050) (19,414)
(Increase)/Decrease in receivables (801) 39,356
Increase in payables 3,485 1,815
Decrease in foreign exchange derivative - 8,072
Net cash flows (used in)/generated from operating activities (5,383) 41,680
Cash flows (used in)/generated from investing activities
Investment additions 8 (2,761) (3,050)
Finance income received 175 6,275
Net cash flows (used in)/generated from investing activities (2,586) 3,225
Cash flows generated from/(used in) financing activities
Issue of share capital 11 - 295
Payment of issue costs 11 - (92)
Shares repurchased (870) -
Loan drawn down 148,992 -
Finance costs paid (4,042) -
Dividends paid 12 (15,450) (11,599)
Bank interest received 385 -
Net cash flows generated from/(used in) financing activities 129,015 (11,396)
Net increase in cash and cash equivalents during the period 121,046 33,509
Cash and cash equivalents at the beginning of the period 10,498 353,734
Exchange translation movement (676) 2,887
Cash and cash equivalents at the end of the period 130,868 390,130
The accompanying notes form an integral part of these unaudited condensed
interim financial statements.
Notes to the interim financial statements
1. General information
Cordiant Digital Infrastructure Limited (the Company; LSE ticker: CORD) was
incorporated and registered in Guernsey on 4 January 2021 with registered
number 68630 as a non-cellular company limited by shares and is governed in
accordance with the provisions of the Companies (Guernsey) Law 2008 (as
amended). The registered office address is East Wing, Trafalgar Court, Les
Banques, St Peter Port, Guernsey GY1 3PP. The Company's ordinary shares were
admitted to trading on the Specialist Fund Segment of the London Stock
Exchange on 16 February 2021 and its C Shares on 10 June 2021. On 20 January
2022, all C Shares were converted to ordinary shares. A second issuance of
ordinary shares took place on 25 January 2022. Note 11 gives more
information on share capital.
2. Accounting policies
The principal accounting policies applied in the preparation of these
unaudited condensed interim financial statements are set out below. These
policies have been consistently applied, unless otherwise stated.
Basis of preparation
The unaudited condensed interim financial statements have been prepared on a
historical cost basis as modified for the measurement of certain financial
instruments at fair value through profit or loss and in accordance with IFRS,
AIC SORP and applicable company law. They are presented in pounds sterling,
which is the currency of the primary economic environment in which the Company
operates and are rounded to the nearest thousand, unless otherwise stated. The
principal accounting policies are set out below.
The unaudited condensed interim financial statements have been prepared under
IAS 34 'Interim Financial Reporting'. The presentation and accounting policies
used in the preparation of the unaudited condensed interim financial
statements are consistent with those that are adopted in the annual financial
statements, except for the adoption of new standards effective as at 1 April
2023. The Company has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective. These amendments are
not expected to have an impact on the unaudited condensed interim financial
statements of the Company.
The financial information contained in this Interim Report does not constitute
statutory accounts as defined in Section 243 of the Companies (Guernsey) Law
2008 as amended. The unaudited condensed interim financial statements do not
include all the information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's annual
financial statements for the year ended 31 March 2023.
Going concern
The financial statements have been prepared on a going concern basis as the
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
While the conflict in Ukraine and market volatility during the period have
affected the way in which the business activities of the Company's investee
companies are conducted, this did not have a material direct effect on the
results of the business. The Directors are satisfied that the resulting
macroeconomic environment is not likely to significantly restrict business
activity.
The Directors and Investment Manager are actively monitoring these risks and
their potential effect on the Company and its underlying investments. In
particular, they have considered the following specific key potential impacts:
- increased volatility in the fair value of investments
- disruptions to business activities of the underlying investments; and
- recoverability of income and principal and allowance for expected credit
losses.
In considering the above key potential impacts of the conflict in Ukraine and
market volatility on the Company and its underlying investments, the
Investment Manager has assessed these with reference to the mitigation
measures in place. Based on this assessment, the Directors do not consider
that the effects of the conflict in Ukraine and market volatility have created
a material uncertainty over the assessment of the Company as a going concern.
As further detailed in note 8 to the financial statements, the Company uses a
third-party valuation provider to perform a reasonableness assessment of the
Investment Manager's valuation of the underlying investments. Additionally,
the Investment Manager and Directors have considered the cash flow forecast to
determine the term over which the Company can remain viable given its current
resources.
On the basis of this review, and after making due enquiries, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for at least the period from 28 November
2023 to 30 November 2024, being the period of assessment considered by the
Directors. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Accounting for subsidiaries
The Directors have concluded that the Company has all the elements of control
as prescribed by IFRS 10 'Consolidated Financial Statements' in relation to
all its subsidiaries and that the Company satisfies the three essential
criteria to be regarded as an Investment Entity as defined in IFRS 10. The
three essential criteria are that the entity must:
- obtain funds from one or more investors for the purpose of providing these
investors with professional investment management services;
- commit to its investors that its business purpose is to invest its funds
solely for returns from capital appreciation, investment income or both; and
- measure and evaluate the performance of substantially all of its investments
on a fair value basis.
In satisfying the second essential criterion, the notion of an investment time
frame is critical, and an Investment Entity should have an exit strategy for
the realisation of its investments. The Board has approved a divestment
strategy under which the Investment Manager will, within two years from
acquisition of an investment and at least annually thereafter, undertake a
review of the current condition and future prospects of the investment. If the
Investment Manager concludes that:
- the future prospects for an investment are insufficiently strong to meet the
Company's rate of return targets; or
- the value that could be realised by an immediate disposal would outweigh the
value of retaining the investment; or
- it would be more advantageous to realise capital for investment elsewhere than
to continue to hold the investment;
- the Investment Manager will take appropriate steps to dispose of the
investment.
Also as set out in IFRS 10, further consideration should be given to the
typical characteristics of an Investment Entity, which are that:
- it should have more than one investment, to diversify the risk portfolio and
maximise returns;
- it should have multiple investors, who pool their funds to maximise investment
opportunities;
- it should have investors that are not related parties of the entity; and
- it should have ownership interests in the form of equity or similar interests.
The Directors are of the opinion that the Company meets the essential criteria
and typical characteristics of an Investment Entity. Therefore, subsidiaries
are measured at fair value through profit or loss, in accordance with IFRS 9
'Financial Instruments'. Fair value is measured in accordance with IFRS 13
'Fair Value Measurement'.
Financial instruments
In accordance with IFRS 9, financial assets and financial liabilities are
recognised in the Statement of Financial Position when the Company becomes a
party to the contractual provisions of the instrument. Financial assets and
financial liabilities are only offset and the net amount reported in the
Statement of Financial Position and Statement of Comprehensive Income when
there is a currently enforceable legal right to offset the recognised amounts
and the Company intends to settle on a net basis or realise the asset and
liability simultaneously.
Financial assets
The classification of financial assets at initial recognition depends on the
purpose for which the financial asset was acquired and its characteristics.
All purchases of financial assets are recorded at the date on which the
Company became party to the contractual requirements of the financial asset.
The Company's financial assets principally comprise investments held at fair
value through profit or loss, cash and cash equivalents and trade receivables.
Financial assets are recognised at the date of the purchase or the date on
which the Company became party to the contractual requirements of the asset.
Investments are initially recognised at cost, being the fair value of
consideration given. Transaction costs are recognised in the Statement of
Comprehensive Income as incurred.
A financial asset is derecognised (in whole or in part) either:
- when the Company has transferred substantially all the risks and rewards of
ownership; or
- when it has neither transferred nor retained substantially all the risks and
rewards and when it no longer has control over the assets or a portion of the
asset; or
- when the contractual right to receive cash flow has expired.
Investments held at fair value through profit or loss
Investments are classified upon initial recognition as held at fair value
through profit or loss. Gains or losses resulting from the movement in fair
value are recognised in the Statement of Comprehensive Income at each
valuation point.
The loans provided to subsidiaries are held at fair value through profit or
loss as they form part of a managed portfolio of assets whose performance is
evaluated on a fair value basis. These loans are recognised at the loan
principal value, which is considered to be equal to its fair value, plus
outstanding interest. Any gains or losses on the loan investment are
recognised in profit or loss.
Fair value is defined as 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. Fair value is calculated on an
unlevered, discounted cash flow basis in accordance with IFRS 13.
When available, the Company measures fair value using the quoted price in an
active market. A market is regarded as 'active' if transactions for the asset
or liability take place with sufficient frequency and volume to provide
pricing information on an ongoing basis. If there is no quoted price in an
active market, then the Company uses valuation techniques that maximise the
use of relevant observable inputs and minimise the use of unobservable inputs.
The chosen valuation technique incorporates all of the factors that market
participants would take into account when pricing a transaction.
Valuation process
The Investment Manager is responsible for proposing the valuation of the
assets held by the Company, and the Directors are responsible for reviewing
the Company's valuation policy and approving the valuations.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other
short-term highly liquid investments with an original maturity of three months
or less that are readily convertible to a known amount of cash and are subject
to an insignificant risk of changes in value.
Trade receivables
Trade receivables are classified as financial assets at amortised cost. They
are measured at amortised cost less impairment assessed using the simplified
approach of the expected credit loss (ECL) model based on experience of
previous losses and expectations of future losses. Trade and other receivables
are recorded based on agreements entered into with entities with no notable
history of default causing the ECL of these receivables to be immaterial and
therefore no ECL has been recorded.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual agreements entered into and are recorded on the date on which the
Company becomes party to the contractual requirements of the financial
liability.
The Company's financial liabilities measured at amortised cost include trade
and other payables, intercompany loans and other short-term monetary
liabilities which are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest rate method. A
financial liability (in whole or in part) is derecognised when the Company has
extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the Statement of Comprehensive Income.
Equity
Financial instruments issued by the Company are treated as equity if the
holder has only a residual interest in the assets of the Company after the
deduction of all liabilities. The Company's ordinary shares and Subscription
Shares are classified as equity.
Share issue costs directly attributable to the issue of ordinary shares are
shown in equity as a deduction from share capital. When shares recognised as
equity are repurchased, the amount of the consideration paid, which includes
directly attributable costs, is recognised as a deduction from equity.
Dividends
Dividends payable are recognised as distributions in the financial statements
when the Company's obligation to make payment has been established.
Revenue recognition
Dividend income is recognised when the Company's entitlement to receive
payment is established. Other income is accounted for on an accruals basis
using the effective interest rate method.
Expenses
Expenses include legal, accounting, auditing and other operating expenses.
They are recognised on an accruals basis in the Statement of Comprehensive
Income in the period in which they are incurred.
Taxation
Current tax is the expected tax payable on the taxable income for the period,
using tax rates that have been enacted or substantively enacted at the date of
the Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Deferred tax assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition of other
assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. Deferred tax liabilities are recognised for
taxable temporary differences arising on investments, except where the Company
is able to control the timing of the reversal of the difference and it is
probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax is calculated at the tax rates that are expected to apply
in the period when the liability is settled or the asset is realised. Deferred
tax is charged or credited to the Statement of Comprehensive Income except
when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with directly in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off tax assets against tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities on a net basis.
Deferred tax assets and liabilities are not discounted.
Foreign currencies
The functional currency of the Company is sterling, reflecting the primary
economic environment in which it operates. The Company has chosen pounds
sterling as its presentation currency for financial reporting purposes.
Transactions during the period, including purchases and sales of investments,
income and expenses are translated into pound sterling at the rate of exchange
prevailing on the date of the transaction.
Monetary assets and liabilities denominated in currencies other than pound
sterling are retranslated at the rate of exchange ruling at the reporting
date. Non-monetary items that are measured in terms of historical cost in a
currency other than pound sterling are translated using the exchange rates at
the dates of the initial transactions and are not subsequently retranslated.
Non-monetary items measured at fair value in a currency other than pounds
sterling are translated using the exchange rates at the date when the fair
value was determined. Foreign currency transaction gains and losses on
financial instruments classified as at fair value through profit or loss are
included in profit or loss in the Statement of Comprehensive Income as part of
the change in fair value of investments.
Foreign currency transaction gains and losses on financial instruments are
included in profit or loss in the Statement of Comprehensive Income as 'Net
gains on investments'.
Segmental reporting
The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board of Directors as a whole. The key measure of
performance used by the Board to assess the Company's performance and to
allocate resources is the Company's NAV, as calculated under IFRS as issued by
the IASB, and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in the Interim Report.
For management purposes, the Company is organised into one main operating
segment, which invests in Digital Infrastructure assets.
Due to the Company's nature, it has no customers.
New standards, amendments and interpretations issued and effective for the
financial period beginning 1 April 2023
The Board of Directors has considered new standards and amendments that are
mandatorily effective from 1 April 2023 and determined that these do not have
material impact on the Company and are not expected to significantly affect
the current or future periods.
New standards, amendments and interpretations issued but not yet effective
There are a number of new standards, amendments to standards and
interpretations which are not yet mandatory for the 30 September 2023
reporting period and have not been adopted early by the Company. These
standards are not expected to have a material impact on the financial
statements of the Company in the current or future reporting periods or on
foreseeable future transactions.
3. Significant accounting judgements, estimates and assumptions
The preparation of the unaudited condensed interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses.
Assessment as an Investment Entity
In the judgement of the Directors, the Company qualifies as an investment
entity under IFRS 10 and therefore its subsidiary entities have not been
consolidated in the preparation of the financial statements. Further details
of the impact of this accounting policy are included in note 9.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a
significant risk of resulting in a material adjustment to the carrying amounts
of assets and liabilities within the six-month period ended 30 September 2023
is included in note 8 and relates to the determination of fair value of
investments with significant unobservable inputs.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The resulting accounting estimates will, by definition, seldom equal the
related actual results. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future periods
affected.
4. Other expenses
Other expenses in the Condensed Statement of Comprehensive Income comprise:
For the six For the six
months ended
months ended
30 September 2023
30 September 2022
£'000
£'000
Management fees 3,100 3,932
Legal and professional fees 259 1,546
Discontinued deal fees 2,873 1,110
Directors' fees 93 93
Audit fees 85 83
Other expenses 459 82
6,869 6,846
5. Taxation
As an investment trust, the Company is exempt from UK tax on capital gains on
any disposal of shares. To the extent it has qualifying interest income, it
may make a streaming election to treat part or all of its distributions as
interest distributions, and will be entitled to deduct any interest
distributions paid out of profits arising from its loan relationships in
computing its UK corporation tax liability.
It is anticipated that the Company will meet the conditions for the UK
dividend exemption and will be exempt from UK tax on any dividend income
received.
No tax expense or liability has been recognised in these unaudited condensed
interim financial statements because the Company's tax-deductible expenses
exceed taxable income.
The Company does not recognise deferred tax assets in respect of taxable
losses because it does not expect to have profits against which those losses
can be utilised.
6. Management and performance fees
Under the investment management agreement dated 29 January 2021 between the
Company, the Investment Manager and Cordiant Digital Infrastructure Management
LLP, the Investment Manager is entitled to receive an annual management fee
and a performance fee, plus any applicable VAT, in addition to the
reimbursement of reasonable expenses incurred by it in the performance of its
duties.
Management fee
The Investment Manager receives from the Company an annual management fee,
based on the average market capitalisation of the Company, calculated and paid
monthly in arrears using the average market capitalisation for each LSE
trading day for the relevant month. The management fee has been payable since
30 April 2021, being the date on which more than 75% of the IPO proceeds were
deployed in investment activities.
The annual management fee is calculated on the following basis:
― 1.00% of the average market capitalisation up to £500 million;
― 0.90% of the average market capitalisation between £500 million and £1
billion; and
― 0.80% of the average market capitalisation in excess of £1 billion.
Following the publication of each Interim Report and Annual Report and
financial statements, the Investment Manager is required to apply an amount,
in aggregate, equal to 10% of the annual management fee for the preceding
six-month period in the following manner:
a) if the average trading price, calculated over the 20 trading days
immediately preceding the announcement date, is equal to, or higher than, the
last reported NAV per ordinary share (as adjusted to reflect any dividends
reflected in the average trading price) the Investment Manager shall use the
relevant amount to subscribe for new ordinary shares (rounded down to the
nearest whole number of ordinary shares), issued at the average trading price;
or
b) if the average trading price is lower than the last reported NAV per
ordinary share (as adjusted to reflect any dividends reflected in the average
trading price) the Investment Manager shall, as soon as reasonably
practicable, use the relevant amount to make market purchases of ordinary
shares (rounded down to the nearest whole number of ordinary shares) within
two months of the relevant NAV announcement date.
Even though the annual management fee is payable on a monthly basis, ordinary
shares are only acquired by the Investment Manager on a half-yearly basis.
Any ordinary shares subscribed or purchased by the Investment Manager pursuant
to the above arrangements are, subject to usual exceptions, subject to a
lock-up of 12 months from the date of subscription or purchase.
For the six months ended 30 September 2023, the Investment Manager has charged
management fees of £3.1 million (30 September 2022: £3.9 million) to the
Company, with £0.6 million (30 September 2022: £1.6 million) owed at period
end. During the six months ended 30 September 2023, the Investment Manager did
not subscribe for any new ordinary shares (30 September 2022: £0.3 million)
but made open market purchases of 444,772 shares at an average price of 73.8p
per share (30 September 2022: no open market purchases).
Performance fee
The Investment Manager may in addition receive a performance fee on each
performance fee calculation date, dependent on the performance of the
Company's NAV and share price. The first performance fee calculation date is
31 March 2024, and subsequent calculation dates are on 31 March each year
thereafter. The fee will be equal to 12.5% of the excess return over the
target of 9% for the NAV return or share price return, whichever is the lower,
multiplied by the time weighted average number of ordinary shares in issue
(excluding any ordinary shares held in treasury) during the relevant period.
Any performance fee is to be satisfied as follows:
- as to 50% in cash; and
- as to the remaining 50% of the performance fee, subject to certain exceptions
and the relevant regulatory and tax requirements:
a) if the average trading price, calculated over the 20 trading days immediately
preceding the performance fee calculation date, is equal to or higher than the
last reported NAV per ordinary share (as adjusted to reflect any dividends
reflected in the average trading price) the Company will issue to the
Investment Manager such number of new ordinary shares (credited as fully paid)
as is equal to the performance fee investment amount divided by the average
trading price (rounded down to the nearest whole number of ordinary shares);
or
b) if the average trading price is lower than the last reported NAV per ordinary
share (as adjusted to reflect any dividends reflected in the average trading
price) then the Company shall (on behalf of, and as agent for, the Investment
Manager) apply the performance fee investment amount in making market
purchases of ordinary shares, provided any such ordinary shares are purchased
at prices below the last reported NAV per ordinary share.
Any ordinary shares subscribed or purchased by the Investment Manager pursuant
to the above arrangements will, subject to usual exceptions, be subject to a
lock-up of 36 months from the date of subscription or purchase.
For the period ended 30 September 2023, no performance fee is due to the
Investment Manager (30 September 2022: £nil) and no amount has been accrued
as the share price performance hurdle has not been met.
7. Earnings per share and net asset value per share
Earnings per share
Ordinary shares
For the six months ended 30 September 2023 Basic Diluted
Allocated profit attributable to this share class - £'000 9,401 9,401
Weighted average number of shares in issue 773,392,830 773,392,830
Earnings per share from continuing operations in the period (pence) 1.22 1.22
For the six months ended 30 September 2022 Basic Diluted
Allocated profit attributable to this share class - £'000 21,013 21,013
Weighted average number of shares in issue 773,427,686 773,427,692
Earnings per share from continuing operations in the period (pence) 2.72 2.72
As at 31 March 2023 there were 6,434,884 potentially dilutive Subscription
Shares in issue. During the six months ended 30 September 2023 no additional
Subscription Shares had been issued.
Net asset value per share
As at As at
30 September 2023
31 March 2023
Net asset value - £'000 868,577 875,711
Number of shares 771,009,707 772,509,707
Net asset value per share (pence) 112.65 113.36
8. Investments at fair value through profit or loss
As at 30 September 2023 Loans Equity Total
£'000
£'000
£'000
Opening balance 37,350 834,965 872,315
Additions 2,761 - 2,761
Net gains on investments 1,316 19,734 21,050
41,427 854,699 896,126
As at 31 March 2023 Loans Equity Total
£'000
£'000
£'000
Opening balance 27,671 382,185 409,856
Additions 4,691 379,724 384,415
Net gains on investments 4,988 73,056 78,044
37,350 834,965 872,315
The terms of the Company's direct investment in CDIL Data Centre USA LLC, the
legal entity operating as Hudson Interxchange (Hudson) remains unchanged from
those disclosed in the Company's Annual Report 2023. The Company made an
additional loan investment in Hudson of £2.8 million during the period ended
30 September 2023. As at 30 September 2023, the equity investment in Hudson
was valued at £41.3 million and the loan investment in Hudson at
£7.6 million. The total investment in Hudson was valued at £48.9 million.
The value of the Company's indirect investment in České Radiokomunikace a.s.
(CRA), as at 30 September 2023 was £388.6 million (31 March 2023: £389.1
million), comprising an equity investment valued at £362.5 million (31 March
2023: £362.9 million) and a loan investment of £26.1 million (31 March
2023: £26.2 million).
During the period, Cordiant Digital Holdings One Limited (CDH1), a subsidiary
of the Company, restructured part of its equity investment in Emitel amounting
to PLN192.5 million to a loan investment. Interest accrued on the loan
investment during the period ended 30 September 2023 amounted to £0.9
million. As at 30 September 2023, the Emitel loan investment is valued at
£36.9 million and the remaining equity investment is valued at £424.3
million (31 March 2023: £429.0 million). The Company's total indirect
investment in Emitel is £461.2 million.
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following three levels:
- Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities;
- Level 2 - inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
- Level 3 - inputs for assets or liabilities that are not based on observable
market data (unobservable inputs).
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Directors consider observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
The Company's investments have been classified within Level 3 as the
investments are not traded and contain unobservable inputs. The valuations
have been carried out by the Investment Manager. In order to obtain assurance
in respect of the valuations calculated by the Investment Manager, the Company
has engaged a third-party valuations expert to carry out an independent
assessment of the unobservable inputs and of the forecast cash flows of the
Company's investments.
The Company's investments in CRA, Hudson and Emitel have been valued using a
DCF methodology. This involves forecasting the entity's future cash flows,
taking into account the terms of existing contracts, expected rates of
contract renewal and targeted new contracts, and the economic and geopolitical
environment. These cash flows are discounted at the entity's estimated
weighted average cost of capital (WACC). This method also requires estimating
a terminal value, being the value of the investment at the end of the period
for which cash flows can be forecast with reasonable accuracy, which is March
2030 for CRA, December 2030 for Emitel and March 2037 for Hudson. The terminal
value is calculated using an assumed terminal growth rate (TGR) into
perpetuity based on anticipated industry trends and long-term inflation rates.
Both the Investment Manager and the third-party valuation expert use a
combination of other valuation techniques to verify the reasonableness of the
DCF valuations, as recommended in the International Private Equity and Venture
Capital (IPEV) Valuation Guidelines:
- earnings multiple: applying a multiple, derived largely from comparable listed
entities in the market, to the forecast EBITDA of the entity to calculate an
enterprise value, and then deducting the fair value of any debt in the entity;
- DCF with multiple: calculating a DCF valuation of the cash flows of the entity
to the end of the period for which cash flows can be forecast with reasonable
accuracy, and then applying a multiple to EBITDA at the end of that period to
estimate a terminal value; and
- dividend yield: forecasting the entity's capacity to pay dividends in the
future and applying an equity yield to that forecast dividend, based on
comparable listed entities in the market.
The DCF valuations derived by the Investment Manager and those derived by the
third-party valuation expert were not materially different from each other,
and the other valuation techniques used provided assurance that the DCF
valuations are reasonable.
9. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the Company
qualifies as an Investment Entity under IFRS 10, these subsidiaries have not
been consolidated in the preparation of these financial statements:
Investment Place of business Ownership interest Ownership interest
at 30 September 2023
at 31 March 2023
Held directly
Cordiant Digital Holdings UK Limited United Kingdom 100% 100%
CDIL Data Centre USA LLC USA 100% 100%
Held indirectly
Cordiant Digital Holdings One Limited United Kingdom 100% 100%
Cordiant Digital Holdings Two Limited United Kingdom 100% 100%
Communications Investments Holdings s.r.o. Czech Republic 100% 100%
České Radiokomunikace a.s. (Czechia) Czech Republic 100% 100%
Czech Digital Group, a.s Czech Republic 100% 100%
Emitel S.A. Poland 100% 100%
Allford Investments S.A. Poland 100% 100%
EM Properties sp. z o. o. Poland 100% 100%
EM Projects sp. z o. o. Poland 100% 100%
EM Tower sp.z.o.o Poland 100% -
Hub Investments sp. z o. o. Poland 100% 100%
The registered office of the subsidiaries located in the Czech Republic is
Skokanska 2117/1, 169 00, Prague 6. The registered office of the subsidiaries
located in the UK is 63 St James's Street, London, SW1A 1LY. The registered
office of the subsidiary located in the US is 60 Hudson Street suite 116B, New
York, NY 10013.
The amounts invested in the Company's unconsolidated subsidiaries during the
six months ended 30 September 2023 and their carrying value at 30 September
2023 are as outlined in note 8.
There are certain restrictions on the ability of the Company's unconsolidated
subsidiaries in the Czech Republic to transfer funds to the Company in the
form of cash dividends or repayment of loans. In accordance with the
documentation relating to loans made by various banks to CRA, such cash
movements are subject to limitations on amounts and timing, and satisfaction
of certain conditions relating to leverage and interest cover ratio. The
Directors do not consider that these restrictions are likely to have a
significant effect on the ability of the Company's subsidiaries to transfer
funds to the Company.
Subsidiaries held in the Czech Republic and Poland are profitable and cash
generative, and do not need the financial support of the Company. The
subsidiary based in the US will receive the financial support of the Company
for a period of at least 12 months from the publication of this report.
10. Receivables
30 September 2023 31 March 2023
£'000
£'000
Cash collateral* 9,182 9,130
Other debtors 3,380 2,573
Expenses paid on behalf of related parties 2,878 2,866
Prepayments 59 77
Interest receivable - 34
15,499 14,680
* Cash collateral relates to one security deposit held in money market
accounts (31 March 2023: one security deposit held in money market accounts).
An amount of USD11.3 million (£9.2 million) relates to collateral for a
letter of credit relating to the lease of the building occupied by Hudson, and
generated interest of 0.73% per annum during the period ended 30 September
2023.
11. Share capital
Subject to any special rights, restrictions, or prohibitions regarding voting
for the time being attached to any shares, holders of ordinary shares have the
right to receive notice of and to attend, speak and vote at general meetings
of the Company and each holder being present in person or by proxy shall upon
a show of hands have one vote and upon a poll shall have one vote in respect
of each ordinary share that they hold.
Holders of ordinary shares are entitled to receive and participate in any
dividends or distributions of the Company in relation to assets of the Company
that are available for dividend or distribution. On a winding-up of the
Company, the surplus assets of the Company available for distribution to the
holders of ordinary shares (after payment of all other debts and liabilities
of the Company attributable to the ordinary shares) shall be divided amongst
the holders of ordinary shares pro rata according to their respective holdings
of ordinary shares.
Ordinary shares
30 September 2023 Share capital 31 March 2023 Share capital
Number of shares £'000 Number of shares £'000
Issued and fully paid 773,559,707 780,100 773,559,707 780,100
Cancellation of treasury shares - - - -
Issued and fully paid at period/year end 773,559,707 780,100 773,559,707 780,100
Shares held in treasury (2,550,000) (2,029) (1,050,000) (943)
Outstanding shares at period/year end 771,009,707 778,071 772,509,707 779,157
Holders of ordinary shares are entitled to all dividends paid by the Company
on the ordinary shares and, on a winding up, provided the Company has
satisfied all of its liabilities, ordinary shareholders are entitled to all of
the surplus assets of the Company attributable to the ordinary shares.
Subscription shareholders carry no right to any dividends paid by the Company
and have no voting rights.
No Subscription Shares have been exercised between 30 September 2023 and the
date of this report.
Treasury shares
30 September 2023 31 March 2023
Number of shares Number of shares
Opening balance 1,050,000 -
Shares repurchased during the period/year 1,500,000 1,050,000
Closing balance at period/year end 2,550,000 1,050,000
During the year ended 31 March 2023, the Company initiated a share buyback
programme. Investec, as the Company's joint broker, has been given limited
authority to undertake market buybacks. 1,500,000 ordinary shares (31 March
2023: 1,050,000 ordinary shares) have been repurchased and held in treasury by
the Company during the period ended 30 September 2023.
Subscription shareholders have no right to any dividends paid by the Company
and have no voting rights.
12. Dividends declared with respect to the period
Dividends declared Dividend Total dividend
per ordinary share
£'000
pence
First interim dividend in respect of the period ended 30 September 2023 2.00 15,420
Second interim dividend in respect of the year ended 31 March 2023 2.00 15,449
2.00 15,449
Dividends declared Dividend Total dividend
per ordinary share
£'000
pence
Second interim dividend in respect of the year ended 31 March 2023 1.50 8,920
1.50 8,920
On 28 November 2023, the Board approved a distribution of 2.00 pence per share
with respect to the six months ended 30 September 2023. The record date for
the distribution is 8 December 2023 and the payment date is 22 December 2023.
13. Related party transactions
Directors
The Company has four non-executive Directors, each of whom is considered to be
independent. Directors' fees for the six months ended 30 September 2023
amounted to £92,500 (30 September 2022: £92,500), of which £nil (31 March
2023: £nil) was outstanding at the period end.
Investments
As part of the initial acquisition of Communications Investments Holdings
s.r.o. (CIH) in April 2021, the Company acquired a loan due from CIH which
accrues interest at 9.9% per annum. The loan investment was transferred to the
Company's subsidiary Cordiant Digital Holdings Two Ltd (CDH2) on 31 May 2022,
in exchange for a promissory note. The balance on the promissory note
investment at 30 September 2023, including accrued interest, was £32.2
million (31 March 2023: £32.6 million).
In January 2022, the assets of Hudson were acquired by the Company's
subsidiary CDIL Data Centre USA LLC. The Company provided funding for this
transaction in the form of equity contributions. The balance of the equity
investment at 30 September 2023, was £52.5 million (31 March 2023: £52.2
million). The Company has also provided additional funding during the period
ended 30 September 2023 in the form of loans totalling £2.8 million.
Company subsidiaries
During the period ended 30 September 2023, the Company borrowed an additional
£149.0 million (EUR 172.9 million) from its indirect subsidiary, Cordiant
Digital Holdings Two Limited (CDH2) to bring its total borrowings owing to
CDH2 to £168.9 million (EUR 196.0 million) as at 30 September 2023. The loan
is subject to interest charged at a variable rate. Interest charged during the
period amounted to £4.0 million (30 September 2022: nil) of which £1.3
million remains outstanding at period end and is included in current
liabilities on the Statement of Financial Position.
The expenses paid by the Company on behalf of its subsidiary companies during
the period amounted to £2.9 million (30 September 2022: £0.2 million).
14. Ultimate controlling party
In the opinion of the Board, on the basis of the shareholdings advised to
them, the Company has no ultimate controlling party.
15. Subsequent events
On 18 October 2023, the Company acquired Speed Fibre DAC, Ireland's leading
open access fibre infrastructure provider which operates via its subsidiaries
Enet and Magnet Plus. The Company has funded this acquisition through a
combination of equity and debt.
On 30 June 2023, the Company's subsidiary Cordiant Digital Holdings UK Ltd
(CDHUK) entered into an agreement to acquire 74.99% of the shares of Norkring
België N.V. (Norkring), a Belgian broadcasting company. On 1 November 2023,
CDHUK entered into an agreement to acquire the remaining 25.01% of Norkring.
Both agreements are conditional upon receiving clearance under Belgium's
foreign direct investment rules. CDHUK is acquiring Norkring for a total
enterprise value of €5.25 million, subject to customary adjustments.
Other than the events above and dividends declared as disclosed in note 12,
there are no other material subsequent events.
Glossary of capitalised defined terms
Administrator means Aztec Financial Services (Guernsey) Limited
AFFO means adjusted funds from operations
AIC means the Association of Investment Companies
AIC Code means the AIC Code of Corporate Governance
AIC SORP means the AIC Statement of Recommended Practice
Board means the board of Directors of the Company
CIH means Communications Investments Holdings s.r.o.
Company means Cordiant Digital Infrastructure Limited
Company's Annual Report 2023 means the Company's annual report for the year
ended 31 March 2023
Company Law means the Companies (Guernsey) Law 2008
Company's Prospectus means the prospectus issued by the Company on 29 January
2021 in relation to its IPO
CRA means České Radiokomunikace s.a.
C Shares means C shares of no par value each in the capital of the Company
issued pursuant to the Company's placing programme as an alternative to the
issue of ordinary shares
DCF means discounted cash flow
Digital Infrastructure means the physical infrastructure resources that are
necessary to enable the storage and transmission of data by telecommunications
operators, corporations, governments and individuals. These predominantly
consist of mobile telecommunications/broadcast towers, data centres, fibre
optic networks, in-building systems and, as appropriate, the land under such
infrastructure. Digital Infrastructure assets do not include switching and
routing equipment, servers and other storage devices or radio transmission
equipment or software
Directors means the directors of the Company
DTR means the Disclosure Guidance and Transparency Rules issued by the FCA
EBITDA means earnings before interest, taxation, depreciation and amortisation
EEA means the European Economic Area
Emitel means Emitel S.A.
ESG means environmental, social and governance
EV means enterprise value
FCA means the UK Financial Conduct Authority
Hudson means Hudson Interxchange (previously operating under the name DataGryd
Datacenters a trading name of CDIL Data Centre USA LLC)
IAS means international accounting standards as issued by the Board of the
International Accounting Standards Committee
IASB means International Accounting Standards Board
IFRS means the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board
Interim Report means the Company's half yearly report and unaudited condensed
interim financial statements for the six-month period ended 30 September 2023
Investment Entity means an entity whose business purpose is to make
investments for capital appreciation, investment income, or both.
Investment Manager means Cordiant Capital Inc.
IoT means the Internet of Things
IPEV Valuation Guidelines means the International Private Equity and Venture
Capital Valuation Guidelines
IPO means the initial public offering of shares by a company to the public
LSE means the London Stock Exchange
NAV or net asset value means the value of the assets of the Company less its
liabilities as calculated in accordance with the Company's valuation policy
and expressed in pounds sterling
Norkring means Norkring België NV
RCF means revolving credit facility
Speed Fibre means Speed Fibre Designated Activity Company
Subscription Shares means redeemable subscription shares of no par value each
in the Company, issued on the basis of one Subscription Share for every eight
ordinary shares subscribed for in the IPO
TCFD means Task Force on Climate-related Financial Disclosures
UK or United Kingdom means the United Kingdom of Great Britain and Northern
Ireland
US or United States means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia
USD means United States dollars.
WACC means weighted average cost of capital.
Directors and general information
Directors (all appointed 26 January 2021)
Shonaid Jemmett-Page Chairman
Sian Hill Audit Committee Chairman and Senior Independent Director
Marten Pieters
Simon Pitcher
All independent and of the registered office below.
Website www.cordiantdigitaltrust.com
ISIN (ordinary shares) GG00BMC7TM77
Ticker (ordinary shares) CORD
SEDOL (ordinary shares) BMC7TM7
Registered Company Number 68630
Registered office Legal advisors to the Company
East Wing Gowling WLG (UK) LLP
Trafalgar Court 4 More London Riverside
Les Banques London
St Peter Port SE1 2AU
Guernsey
GY1 3PP
Investment manager Carey Olsen (Guernsey) LLP
Cordiant Capital Inc. Carey House
28th Floor Les Banques
Bank of Nova Scotia Tower St Peter Port
1002 Sherbrooke Street West Guernsey
Montreal GY1 4BZ
QC H3A 3L6
Company secretary and administrator Registrar
Aztec Financial Services (Guernsey) Limited Computershare Investor Services
East Wing (Guernsey) Limited
Trafalgar Court 1st Floor Tudor House
Les Banques Le Bordage
Guernsey St Peter Port
GY1 3PP Guernsey
GY1 4BZ
Auditor Brokers
BDO Limited Investec Bank plc
PO Box 180 30 Gresham Street
Place du Pre London
Rue du Pre EC2V 7QP
St Peter Port
Guernsey
GY1 3LL
Principal banker and custodian Jefferies International Limited
The Royal Bank of Scotland International Limited 100 Bishopsgate
Royal Bank Place London
1 Glategny Esplanade EC2N 4JL
St Peter Port
Guernsey
GY1 4BQ
Receiving agent
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6AH
Cautionary Statement
The Chairman's statement and Investment Manager's review have been prepared
solely to provide additional information for shareholders to assess the
Company's strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other purpose.
The Chairman's statement and Investment Manager's review may include
statements that are, or may be deemed to be, 'forward-looking statements'.
These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms 'believes', 'estimates',
'anticipates', 'expects', 'intends', 'may', 'will' or 'should' or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this document and include
statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager, concerning, amongst other things, the
investment objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects,
and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of operations, financial
condition, liquidity, distribution policy and the development of its financing
strategies may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
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