Cordiant Digital Infrastructure Limited announces strong full year results for 2023 with double digit NAV growth and robust dividend cover

22 June 2023

LEI: 213800T8RBBWZQ7FTF84

Cordiant Digital InfrastructureLimited

Full year results for the year ended 31 March 2023

A strong overall performance underpinned by double digit NAV growth and robust dividend cover

Cordiant Digital Infrastructure Limited (the Company), the sector-focused specialist owner and operator of Digital Infrastructure that enables modern communications and the internet, is pleased to announce its full year results for the year to 31 March 2023.

Financial highlights:

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NAV per share increased by 10.0%¹ or 10.5p on a total return basis to 113.4p

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Net assets increased to £875.7 million

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NAV total return since inception of 21.1% (2022: 10.0%), exceeding IPO expectations

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Gross return from investments in the year2 of 12.3% achieved notwithstanding increase in average discount rate by 81bps during the year

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Total dividend for the period increased to 4.0p, in line with guidance; 3.4x covered by earnings and 1.5x covered by adjusted funds from operations (AFFO)

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Acquisition of Emitel completed at effective EV purchase multiple of 8.8x FY22 EBITDA

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Equity raised at IPO and in subsequent capital raises now fully invested at an average EV/EBITDA multiple of 10.6x

Operational highlights:

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Continued strong overall performance by portfolio companies which generated aggregate EBITDA growth of 10.0% year on year3 to £104 million

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Emitel delivered strong performance with revenue up 13% and EBITDA up 8% year on year.

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CRA is meeting performance expectations and winning new broadcast and telecoms customer contracts.

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Hudson has won several new contracts and now seeks to convert its substantial pipeline of opportunities.

Commenting, Shonaid Jemmett-Page, Chairman of Cordiant Digital Infrastructure Limited, said:

"I am pleased to report a strong overall performance by the Company, despite a challenging year for the listed investment trust sector and global markets generally. The Company made a total NAV return for the year of 10.0% and the aggregate pro forma¹ normalised EBITDA of the portfolio companies for the year to 31 March 2023 increased from £94 million to £104 million. Significant milestones were achieved included the completion of the acquisition of Emitel, the Company's largest acquisition to date, as well as substantial strategic progress at CRA and the raising of a €200 million Eurobond facility.

"The portfolio we have constructed is high quality with strong potential for growth, with predominantly blue-chip clients, and it is generating strong cash flows through long-term, largely inflation-linked contracts. This, combined with a strong deal pipeline, access to funds and more realistic pricing for mid-market Digital Infrastructure assets, gives us confidence for the coming year and beyond."

1.     Based on opening ex-dividend NAV at 1 April 2022 of 104.8p.

2.     Based on investment cost, time-weighted for any follow-on investments made.

3.     On a pro forma, normalised, constant currency basis.

For further information, please visit www.cordiantdigitaltrust.com or contact:

Annual report and results webcast for analysts

The 2023 Annual Report will be available to download at cordiantdigitaltrust.com/investors/results-centre/ from 26 June 2023 and will be posted to shareholders on 28 June 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 [email protected].

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.

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, deploying the proceeds into three acquisitions: Emitel; CRA; and Hudson, which offer stable, often index-linked income, and the opportunity for growth, in line with the Company's Buy, Build & Grow model. In June 2022, the Company signed a €200 million Eurobond facility with four European financial institutions, providing fresh committed capital to invest in the existing portfolio and finance new acquisitions.

Cordiant Capital Inc. (the Investment Manager), the Company's investment manager, is a sector-specialist investor with particular expertise and experience in Digital Infrastructure. It invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Its current client base consists of global insurance companies, pension plans and family offices.

Basis of preparation:

The information below is an extract from the Company's 2023 Annual Report. The 2023 Annual Report will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. It can also be obtained from the Administrator or from the Results Centre section of the Company's website, at https://www.cordiantdigitaltrust.com/.

Chairman's statement

I am pleased to present the Annual Report for Cordiant Digital Infrastructure Limited (the Company) for the year ended 31 March 2023.

Introduction

The Company has achieved a strong overall performance despite a challenging year for the listed investment trust sector and global markets generally. The Company's NAV has increased from £822.3 million to £875.7 million and aggregate pro forma¹ normalised EBITDA of the portfolio companies for the year to 31 March 2023 has increased from £94 million to £104 million. Among the year's significant milestones were: the completion of the acquisition of Emitel, the Company's largest acquisition to date; substantial strategic progress at CRA; and the raising of a €200 million Eurobond facility.

Portfolio strategy

The Investment Manager has a Core Plus strategy that aims to generate an annual dividend while also continuing to invest in the asset base of the portfolio companies to drive higher revenues and increase net asset values. The Company is implementing this approach through its Buy, Build & Grow model.

We are also a long-term investor with a focus on sustainability. We work with our portfolio companies to improve their ESG performance.

The Company began investing during a period of intense corporate activity which saw transaction prices reaching a peak in the Digital Infrastructure market, and consequently sought out high-quality, cash-generating assets that were, in the view of both the Board and the Investment Manager, attractive investment opportunities in that market. As a result of this disciplined approach a portfolio delivering £104 million of EBITDA has been acquired at an EV/EBITDA multiple of approximately 10.6x, based on the most recent reported EBITDA - substantially below comparable acquisitions in the market.

The portfolio we have constructed is high quality, with predominantly blue-chip clients and generating strong cash flows through long-term contracts. Hudson is a growth opportunity where the management team is gaining traction, albeit with further work still to do.

Our three acquisitions to date give us a broad portfolio diversification by asset type with:

- 1,260 mobile and broadcast towers;

- Seven data centres;

- 4,368km of fibre-optic network;

- Two national broadcast networks; and

- Nationwide networks of active IoT sensors.

The Company continues to target investment in our existing portfolio companies and the acquisition of new businesses that reflect the new and more favourable pricing environment, while continuing to seek further diversification both geographically and by asset class across Europe and North America.

Funds not earmarked for dividends or future acquisitions are being used to maintain existing assets and to expand revenue potential by building additional capacity in the form of new communications towers, enhanced broadcast capacity and new data centre space.

Our strategy remains focused on buying, building and growing our portfolio.

Operational performance

The strength of the overall performance of our portfolio companies underpinned the Company's results for the year.

The acquisition of Emitel, which we announced in January 2022, closed on 15 November 2022. Emitel exceeded our expectations during the year, with contractual escalators offsetting an increase in energy prices. This better-than-expected performance lowered our effective purchase multiple to 8.8x LTM (last twelve months) EBITDA at close. Alongside this strong financial performance, Emitel completed its upgrade to its broadcast infrastructure for digital terrestrial TV and continues to roll out new products to leave it well positioned for future growth.

CRA also performed well during the year. It posted an increase in revenues and EBITDA during the period, partly reflecting continued strong demand for data centre capacity. CRA benefited from upgrading its broadcast network, resulting in a 30% increase in capacity. In addition, it increased by 7% the capacity of its tower and rooftop portfolio, which now consists of 658 towers. Commercial initiatives during the year resulted in entering into contracts for four new broadcast channels during the year or shortly afterwards.

Hudson added some marquee customers to its business, including two major US telecommunications carriers. Hudson is a strategically located interconnect data centre which offers a significant opportunity for growth at minimal risk, with further capital expenditure linked to customer acquisition. Our investment in the business during the year has bolstered the sales and marketing teams, which have, in turn, generated an increase in pipeline opportunities.

Inflation

The year to 31 March 2023 saw rates of inflation increase across many economies to levels not seen for some years. Overall, the revenue of the Company's portfolio platforms benefited from a high level of inflation protection. This was through a combination of contractual revenue escalators, pass-through costs and active hedging policies, in particular in relation to energy prices. The Investment Manager works closely with the management teams of its portfolio companies to support them in managing their input costs.

Approximately three-quarters of portfolio company 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.

1.     Assuming the three portfolio companies were owned for the whole prior-year comparative period, comparison on a constant currency basis and including Emitel's audited 31 December 2022 results.

Gearing

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 at 31 March 2023, €50 million was drawn down. The balance of €150 million was drawn down during June 2023.

As at 31 March 2023, the Company and its subsidiaries had total debt on a look-through basis equivalent to £466 million, representing a conservative net gearing of 30% of gross assets, substantially below the level of 50% permitted under the gearing policy disclosed 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 partial drawdown of the Eurobond facility during the year.

Of this gearing, 78% 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 Investment Manager is actively engaged in a planned refinancing of Emitel's existing debt facilities alongside the company's management team, which is expected to be finalised in Q3 2023.

Returns and dividend

In November 2022, the Board declared an interim dividend of 2.0p per share and confirmed the Company's dividend target of 4.0p per share for the year ended 31 March 2023. In line with this guidance, the Company will pay a further interim dividend of 2.0p per share on 21 July 2023. The dividend is 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.

This bringing forward of the planned dividend increases reflects the strong cash flows generated by the portfolio.

The NAV per share as at 31 March 2023 was 113.4p (as at 31 March 2022: 106.3p), an increase of 6.6% over the year.

The increase in NAV reflects the strong overall performance of the underlying portfolio companies and favourable foreign exchange movements, offset by an increase in the discount rates used to value our investments to reflect higher market interest rates.

Combined, the NAV total return to investors during the year was 10.0%. The Company continues to target an annual NAV total return of at least 9%.

Along with many other companies in the investment trust sector, the Company's shares traded at a discount to NAV during much of the period, 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. As a consequence, the primary focus has been, and remains, deploying available capital in support of the Company's Buy, Build & Grow model.

However, in addition, in February 2023 the Board approved a discretionary programme of share buybacks of up to £20 million, of which £0.9 million had been executed by 31 March 2023. The buyback programme is not subject to a set cut-off date.

Principal risks and uncertainties

During the year we updated the principal risks previously identified by the Company. These changes have largely been driven by widely publicised emerging macroeconomic factors such as energy price rises, the impacts of inflation, increases in interest rates and market volatility. For example, while Digital Infrastructure industry revenues tend to benefit from inflation, this is often offset by a delay as contracts are repriced reflecting the prior year's inflationary environment. A number of these factors have adversely impacted the Company's share price as well as those of many other investment trusts listed on the London Stock Exchange, which has in turn restricted the ability of such companies to raise additional equity capital.

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. In this regard it is pleasing to highlight progress on a number of initiatives across the portfolio: Emitel's procurement of 85% of its electricity from renewable sources; CRA's progress towards its own target of 100% of its electricity being from renewable sources with an increase to 46%; and Hudson's use of technology to deliver its operations at a better power utilisation efficiency level than others operating in the same location. As part of this focus, this year the Company decided to commence reporting in line with the TCFD recommendations.

Board and governance

The Company benefits from a skilled and committed Board combining telecommunications sector, private equity and investment trust experience. That experience allows the Board to provide insight and guidance to the Investment Manager's team in its delivery of value to the Company and its shareholders.

The Board views a strong working relationship with the Investment Manager as fundamental to the success of the Company. The Management Engagement Committee considers the performance of the Investment Manager annually, along with that of the Company's other key advisors, and reports to the Board on that performance. The Board has noted that the Investment Manager's strong hands-on operational capabilities are clearly being deployed in support of both pipeline generation and portfolio company operations and that it has further strengthened its experienced team as the portfolio has grown.

Outlook

The Company is well placed to see continued progress in the next financial year. The performance of the underlying portfolio companies remains strong overall, and the Company is well placed to benefit further from returns on investments already made and to make new investments in the next financial year. The Investment Manager is actively engaged in applying its operational expertise in each of the portfolio platforms, which the Board sees as a key driver for their future performance. We are also seeing engagement between portfolio companies on best practice and innovation which the Board expects will also contribute to that future performance.

In addition to the strong pipeline of organic and acquisition-led investment opportunities, the Company benefits from a relatively strong liquidity position. This leaves it well placed to act on opportunities without the need to raise additional equity.

The importance of Digital Infrastructure to the functioning of our economy and our society continues to grow year on year. In turn, this translates to ongoing growth in demand for the sector in which the Company operates. While evolving financial conditions and a complex economic environment will inevitably create challenges, 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

Investment Manager's report

Introduction

The Company delivered a strong performance in the year to 31 March 2023 despite continued headwinds throughout the year from rising energy costs and interest rates. NAV per share increased to 113.4p over the course of the year, reflecting positive performance from the Company's portfolio, and the dividend progressed to 4.0p per share for the year, three years ahead of the schedule outlined in the Company's prospectus. The Company's dividend is well covered, both by earnings and on a cash basis. Aggregate debt levels in the Company's financing subsidiary and at the portfolio level are prudent and below industry averages for the Digital Infrastructure sector.

Portfolio construction and portfolio strategy

In constructing the portfolio, the Investment Manager has focused on providing investors with exposure to platforms offering scale, growth, cashflows and diversification, through different asset types and geographies, with the aim of protecting and enhancing income streams.

At year end, these assets included:

- 1,260 mobile and broadcast towers;

- Seven data centres, including one of the largest interconnect facilities in New York;

- 4,368km of fibre-optic network;

- Two national broadcast networks; and

- Two national networks of active IoT sensors.

The Company began investing during a period of very high relative multiples for Digital Infrastructure assets. At the time, the best relative value for a Core Plus strategy lay in seeking high-quality assets that had, in the view of the Investment Manager, been underpriced by the market. CRA and Emitel are both multi-asset platforms that were attracting lower pricing than single asset class enterprises might have attracted. They both operate in attractive markets with strong economic growth and comparatively strong public finances. The Czech Republic and Poland are countries in the core of the European Union, as well as being members of NATO and the OECD. They have many broadly comparable economic statistics to other EU members such as Spain or Portugal.

Hudson in New York represented a different opportunity: a strategic asset that was operating at low capacity utilisation, purchased below construction cost.

The Company's portfolio has been acquired at prices substantially below those prevailing in both public and private Digital Infrastructure markets. The acquisition multiple of EV/EBITDA for the whole portfolio was 10.6x based on the most recent reported EBITDA for each portfolio company.

The Company's Buy, Build & Grow model is designed to be implemented across North America and Europe. Over time, additional capital will be invested in expanding the existing cash flow generating base.

Activity in the year

In June 2022, through its financing subsidiary, Cordiant Digital Holdings Two Limited, the Company successfully raised a €200 million Eurobond facility to provide extra capital to deploy in building the Company's portfolio. The Eurobond was oversubscribed and was supported by a group of blue-chip lending institutions. The Company secured attractive pricing, with 82.5% of the interest at fixed rate, and a margin of 4.5% to 4.75%, the rate calibrated to the overall level of gearing.

The Eurobond facility has no annual clean-down requirement and is repayable in a single payment in September 2026. In accordance with its terms, €50 million was drawn during the financial year and the remaining unutilised balance of €150 million of the Eurobond facility was drawn by the Company in early June 2023, just before the final date for drawdown.

In November 2022, the Company completed the acquisition of Emitel, the Polish Digital Infrastructure platform, its largest investment to date. Completion followed the granting of regulatory approvals by the responsible Polish government bodies. The acquisition was agreed in January 2022 and between the signing of the acquisition and its closing in November 2022, the Company undertook a forward purchasing programme to acquire Polish zloty (PLN), converting £353 million to PLN. This realised a foreign exchange gain of £18 million (reported in Net gain on investments at fair value through profit or loss in the Statement of Comprehensive Income) and bank interest of £9 million (reported as Finance income in the Statement of Comprehensive Income), largely mitigating the cash drag effect on returns of the unanticipated delay in receiving the final regulatory approval. At closing, the purchase price represented an EV/EBITDA multiple of 8.8x FY22 EBITDA.

With the acquisition of Emitel, the equity raised at IPO and in subsequent capital raises is now fully invested at an average EV/EBITDA multiple of 10.6x. This contrasts favourably with other transaction multiples in the sector, which frequently reached much higher levels during this period.

At Hudson, the investment in sales and marketing made by the Company during the year resulted in the signing of two well-known US telecommunications firms as customers, and an increased level of interest from potential customers.

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 will not be subject to a set cut-off date.

To the date of this report, 1.05 million shares had been acquired by the Company at an average price of 90p and held in treasury. The Board and Investment Manager are carefully monitoring market conditions in relation to the buyback programme.

During 2023, Board members, partners and employees of the Investment Manager and senior management of the Company's portfolio companies, increased their respective shareholdings in the Company, resulting in an aggregate holding of approximately six million shares. This included Steven Marshall, Chairman of Cordiant Digital, who acquired a further 900,000 shares, bringing his total personal holding to 4.3 million shares.

Financial highlights

During the year to 31 March 2023, the Company achieved a NAV total return of 10.0% or 10.5p per share. The NAV per share increased from 106.3p over the year to 113.4p. This is a strong result in a year of high energy prices and market volatility. It reflects a positive operating performance across the portfolio and favourable foreign exchange movements, offset by a meaningful increase in discount rates to reflect increases in market interest rates and higher risk premia.

The Company recorded a 58.3% increase in profit in the year to £81.2 million (period to 31 March 2022: £51.3 million). This increase reflects, following the IFRS classification: movement in the fair value of investments of £73.1 million (period to 31 March 2022: £40.3 million); unrealised foreign exchange gains of £6.1 million (period to 31 March 2022: £13.9 million); a realised loss on restructure of £3.9 million (period to 31 March 2022: nil); interest income of £2.7 million (period to 31 March 2022: £2.9 million); net finance income of £9.3 million (period to 31 March 2022: £0.2 million); and net foreign exchange gains of £11.7 million (period to 31 March 2022: £6.2 million) offset by: transaction costs of £6.6 million (period to 31 March 2022: £4.6 million); and other operating costs of £11.3 million (period to 31 March 2022: £7.4 million). The profit of £81.2 million represents earnings per share of 10.5p.

The portfolio, whether held directly or through Cordiant Digital Holdings UK Limited, and at 31 March 2023 consisting of Emitel, CRA and Hudson, together with the Eurobond facility, was valued at the reporting date at £872.3 million (31 March 2022: £409.9 million). The Company had cash balances of £10.5 million (31 March 2022: £353.7 million) and net other financial liabilities of £7.1 million (31 March 2022: other net assets of £58.8 million). Net assets were £875.7 million (31 March 2022: £822.3 million), representing a NAV per share of 113.4p (31 March 2022: 106.34p, 104.84p ex-dividend).

Application of IFRS

As disclosed in the Company's Interim Report published on 29 November 2022, 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 Table 3. 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.

*subject to rounding

Table 2 shows the reconciliation of the closing NAV in Table 3 to the IFRS Statement of Financial Position.

Financial performance in the year

Table 3 shows the Company's NAV progression for the year to 31 March 2023, with underlying value growth, foreign exchange movements and costs split out from the audited IFRS classification presented in the Statement of Comprehensive Income and Statement of Financial Position.

Table 3: NAV progression for the year to 31 March 2023

Underlying value growth was £46.0 million in the year (period to 31 March 2022: £40.3 million), comprised of £47.9 million gain in respect of Emitel, £8.2 million gain in respect of CRA (period to 31 March 2022: gain of £40.3 million) and a £10.1 million decrease in respect of Hudson (period to 31 March 2022: £nil gain or loss).

Underlying foreign exchange gain for the Company was £44.0 million for the year (period to 31 March 2022: £13.9 million), comprising a £13.2 million gain in respect of Emitel and Polish zloty, £26.6 million gain in respect of CRA and Czech koruna (period to 31 March 2022: gain of £11.5 million), £4.2 million gain in respect of Hudson and the US dollar (period to 31 March 2022: gain of £2.4 million).

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, and given the substantial unrealised foreign exchange gain which the Company recognised at 31 March 2023. To date, the Company has not undertaken any hedging of balance sheet foreign exchange exposure.

Total Company costs of £21.3 million for the year reflected: management fees paid to the Investment Manager; costs attributable to the Eurobond facility raised by Cordiant Digital Holdings Two Limited in the year; operating costs and discontinued deal costs of the Company; and acquisition costs relating to the acquisition of Emitel. The ongoing charges ratio for the year to 31 March 2023, calculated as annualised management fee and operating expenses (excluding acquisition costs and non-recurring items) divided by the average NAV during the year, was 1.1%. This has been calculated in line with the guidelines published by the AIC.

Table 4 shows the Company's NAV progression from the reported ex-dividend NAV at 30 September 2022 to the audited NAV at 31 March 2023. The increase in NAV in the second half of the year has been driven by a reduction in net debt in the portfolio companies and strong operating performance, somewhat offset by increased discount rates, Eurobond finance costs and other expenses.

Table 4: NAV bridge for the six months from 1 October 2022 to 31 March 2023

The gain on foreign exchange translation in the second half of the year relates to the investments in Emitel (£10.0 million), CRA (£15.2 million) and Hudson (loss of £7.0 million).

The underlying valuation gain of £50.0 million in the second half of the year is split between Emitel (£47.9 million) and CRA (£7.3 million), with an offsetting value decrease at Hudson (£(5.2) million).

Valuations

At Emitel, the value increase during the year to 31 March 2023 was primarily driven by cash flow generation since the acquisition was agreed and the fact that the Company acquired Emitel at a comparatively low multiple to reported EBITDA, with the equity consideration fixed in January 2022.

At CRA, the value movement in the year is driven by cash flow generation reducing net debt. This is offset by an increase in the discount rate applied since March 2022 and September 2022.

Hudson is in a growth phase as it seeks to take on new customers and build out revenues. During the year, the Company invested a further £4.7 million to support cash flow. At 31 March 2023, the Investment Manager valued the business at £57.0 million, a reduction of £3.5 million from aggregate cost. This was driven by an increase in the discount rate, later than planned ramp-up in revenues and EBITDA, and delays in fitting out the data halls for new customers due to global supply chain issues.

The valuations of the portfolio companies were prepared by the Investment Manager according to the IPEV Valuation Guidelines and IFRS 13. The Company has also appointed an independent valuation expert, who performed a full independent valuation prior to the audit.

The Company responded to market volatility during the year by increasing the discount rates applicable to its valuations of its portfolio platforms. The increase in overall value reported by the Company therefore reflects generally strong operating performance and robust cash flow generation, partially offset by the mathematical effect of volatile markets, as captured through increases in discount rates. On this basis, the Investment Manager is highly confident that the reported portfolio value is a fair reflection of value that has accrued to shareholders at 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 31 March 2023, the Company owned 100% of each platform either directly or indirectly through intermediate holding companies.

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 5 shows the range of cost of equity and cost of debt used at 31 March 2023 in the audited valuations of the three platforms. The weighted average mid-point cost of equity was 11.0% and the weighted average cost of debt mid-point was 6.5%.

Table 5: Weighted average cost of capital

The weighted average discount rate (WACC) used across the portfolio at 31 March 2023 was 9.6%. From 30 September 2022 to 31 March 2023, the weighted average discount rate for the portfolio (CRA and Hudson which were each held by the Company at 30 September 2022) increased by 36 basis points. The weighted average discount rate increase across the whole year for these two investments was 81 basis points. This increase was applied by the Company in response to global market volatility which saw increasing risk free rates and risk premia during the year and which has had the mathematical effect of exerting downward pressure on valuations during the year. Increases in discount rates during the year for CRA and Hudson caused a £78 million reduction in value.

Dividend coverage

The Company's prudent approach to portfolio construction has created a cash generative, conservatively geared and strongly diversified pool of assets with scale and the potential for future growth.

The Company will pay a further interim dividend of 2.0p per share, bringing the total for the year to 31 March 2023 to 4.0p. This represents a significant increase over the dividend for the year planned at the time of the IPO in February 2021. The 4.0p dividend is approximately 3.4x covered by EBITDA and 1.5x covered by adjusted funds from operations (AFFO) defined as free cash flow after Company level costs, net finance costs, taxation and maintenance capital expenditure. Table 6 shows the calculation of AFFO for the year to 31 March 2023.

Table 6: Calculation of adjusted funds from operations (AFFO)

1.     At average foreign exchange rates for the period. Includes Emitel's LTM revenue and EBITDA to 31 March 2023 and FY23 unaudited results for CRA and Hudson, both of which have a 31 March year end.

2.     Fund expenses of £21.3 million net of cash interest received of £9.7 million as shown in Table 1.

3.     Aggregate growth capital expenditure of £14.9 million was invested in the 12 months to 31 March 2023 across the portfolio.

Investee company performance

For the year to 31 March 2023, the portfolio companies generated combined revenue of £197.1 million, representing a 7.8% increase over the prior year, on a like-for-like proforma, constant currency basis. Portfolio EBITDA increased 10.0% over the year, on a like-for-like proforma, constant currency basis, to £103.8 million¹.

These increases in revenue and EBITDA reflect a number of factors such as new contracts being entered into, including in the broadcasting and telecoms business units, and the selling of additional space at data centres at CRA and Hudson. Higher revenues were earned from existing customers, by the application of inflation indexation and the cross-selling of complementary services. The Investment Manager worked with each of the platform companies to bring its experience in industry best practice to these mid-sized platforms in the areas of broadcast, telecoms infrastructure and data centres. Finally, the platforms made investments in new capacity, technologies and services, such as the DVB-T2 broadcast upgrade and new multiplexers (MUXes), which led to increased revenues and EBITDA.

During the year to 31 March 2023, across the portfolio companies £12.9 million was invested in maintenance capital expenditure and £14.9 million in growth capital expenditure. Maintenance capital expenditure included investment in IT systems and security, the backbone network at CRA and infrastructure modernisation at Emitel.

Growth capital expenditure included upgrades to the latest generation of digital broadcast technology (DVB-T2) at Emitel, expansion of the number of tower sites, expansion of data centre capacity at CRA and Hudson and continued investment in utility sensor networks. This growth capex was funded by surplus adjusted funds from operations after the payment of the dividend.

Total gross debt at the Company, subsidiary and platform level was equivalent to £466 million, and aggregate cash balances at the Company, subsidiary and platform level were equivalent to £122 million. Aggregate net gearing was 30% on a look-through basis, well below the 50% maximum permitted under the Company's investment policy. 78% of all debt is on a fixed-interest basis, with the remainder floating, none of which is inflation linked.

At 31 March 2023, the Company had a total potential liquidity position of £254 million, consisting of aggregate cash at the Company and platform level of £122 million and undrawn balances of £132 million within the Eurobond facility, all of which has been drawn subsequent to the year end. As and when appropriate, the Company will continue to deploy cash in internal growth projects at platform companies and in new investments.

Digital Infrastructure market outlook

Growth in data traffic continues to accelerate globally due to growing adoption and demand from multiple sectors. This trend is agnostic to any one sector's behaviour because it is fuelled by growing demand from many industry segments.

Interconnect data centres act as crossroads for digital data traffic movement and edge data centres bring the digital traffic closer to the end customer. Improved end-user experience and a growing need for data traffic optimisation are resulting in growth in both these markets.

Generative AI has the potential to drive a surge in demand for higher capacity data centre space and traffic on fibre networks. In addition, for data centres, increasing use of AI is expected to translate to higher kilowatt requirements from customers and increases in revenues.

The Investment Manager also believes that AI is likely to be a positive influence for the broadcast market. Broadcasters can use AI analytics to gain granular insight into their audience faster and more effectively than was the case historically. Better understanding of viewer demographics will come from probabilistic data modelling which will be used for targeting advertising, leading to an improved return on investment for rand owners and higher revenues for the broadcasters. In turn this strengthens the market for TV channels on digital terrestrial TV, which benefits the Company's platforms.

It seems likely that AI serves ultimately to enhance the end viewer connections and stickiness for media content companies, either in broadcast or broadband media. The Company, as an owner of Digital Infrastructure, is well positioned to benefit from this evolution.

The Investment Manager's team

During the year, the digital team at the Investment Manager was further strengthened with the appointment of Mark Tiner as Chief Financial Officer. Mark brings extensive knowledge and experience, having previously held senior positions within two investment trust managers and as CFO of a €1 billion private equity firm.

The Investment Manager also appointed Meekal Hashmi as Chief Operating Officer. His focus on back and mid office and information technology will be of significant value to the digital team. The Investment Manager also expanded its environmental, social and governance team, joining the Partnership for Carbon Accounting Financials and developing Task Force on Climate-related Financial Disclosures (TCFD) capabilities. Additional appointments were made to provide further capability to the transactions, finance and legal teams as the portfolio has grown.

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.

1.     Including Emitel's revenues and EBITDA from audited financial statements to 31 December 2022.

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.

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 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 pricing environment for digital assets in the middle market has somewhat improved and 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 in 2022, which has continued into 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 year ahead with confidence.

Emitel

1.     On a cash basis. The Company converted £353 million into PLN between March and June 2022. By the time of the acquisition closing in November 2022, the value of the PLN acquired had increased to over £380 million, reflecting the bank interest earned, and the appreciation of PLN against pounds sterling over the period. £3.0 million of PLN was not utilised for the transaction and was converted back into pounds sterling.

2.     Includes foreign exchange movement recorded in the year on PLN cash.

3.     Bank interest earned on PLN balances held during 2022 between signing of the deal in January 2022 and closing of the deal in November 2022.

Financial performance in the year

For Emitel's audited financial year ending 31 December 2022, revenue increased 13% to PLN 548 million (£99.8 million at average exchange rates for the year) and EBITDA increased by 7.7% to PLN 368 million (£67.0 million at average exchange rates for the year). This performance reflected strong growth in TV broadcast revenues, offset by an increase in energy costs and a contractual lag in inflation-adjusted revenues.

The increase in broadcast revenues was primarily driven by additional capacity available from investment in the latest DVB-T2 technology - notably, the annualised impact of a new MUX 4 contract signed in 2021, and higher testing revenues prior to commercial launch of MUX 6 (which took place in February 2023). In addition, DVB-T2 technology investment freed up bandwidth for sale, enabling Emitel to offer additional digital services to its broadcast customers and viewers, which further improved the Company's competitive position.

Revenue growth was driven by inflation-linked price increases (approximately 75% of Emitel's revenues have full or partial CPI-linked contracts) and incremental telecom infrastructure revenues. 2022 inflation will principally be reflected in indexed revenue contracts from January 2023 onwards. Inflation in Poland for 2022 was 16.6%. Increased telecom infrastructure revenues arose from an additional 40 build-to-suit (BTS) sites and an increase in the tower tenancy ratio to 1.4x, which demonstrated Emitel's success in driving additional revenue from existing infrastructure.

Cash balances increased to PLN 224 million (£42 million). The principal amount of third-party bank debt was PLN 1,470 million (£276 million) at year end. Of the interest payable on the third-party bank debt at 31 March 2023, 67% was fixed and 33% floating; none was inflation linked.

At acquisition in November 2022, the Company also recognised a foreign exchange gain of £18 million and accumulated cash interest of £9 million, having acquired the Polish zloty required to meet the purchase consideration through a series of forward contracts.

Operations

Emitel's contracted orderbook saw further growth in the last financial year and now stands at more than PLN 3 billion (more than £566 million), with contracts extending out as far as 2035. The weighted average contract length in TV broadcasting is seven years, three years in radio broadcasting and 13 years⁴ in telecom infrastructure services.

Emitel's incumbent customer base presents an opportunity to evolve its technical capabilities and service offering, including an 'over the top' implementation for a major mobile operator for ca.140 channels, more than 100 of which are HD. Further contract wins are expected during 2023.

During 2022, Emitel completed the last stage of digital terrestrial TV frequency switching (refarming), thus completely freeing up the 700MHz band, which is to be allocated to 5G. This was a four-year programme undertaken by the company which moved terrestrial multiplexers from 694-790MHz to 470-694MHz, and in doing so, increased available TV broadcasting capacity.

Emitel won the prestigious Top Employer in Poland award again in Q1 2023, reflecting the underlying strength of the business and the high standards to which it is managed and operated on a day-to-day basis. This is the fourth consecutive win for the company.

Outlook

Emitel continues to invest in the development of new products such as IPTV, hybrid TV (HbbTV), and DAI platforms which allow among other things, the placement of specific advertisement spots in advertising blocks based on a predefined criterion. The Company recently partnered with the Warsaw Stock Exchange to conduct a pilot for DAI. The pilot will aim to test the functionality and effectiveness of DAI in all types of digital TV platforms in Poland. As part of the project, Emitel is responsible for the installation and configuration of the system, which will be connected to the infrastructure provided by the Warsaw Stock Exchange.

Starting in 2020, Emitel began to develop Poland's sixth digital television multiplexer (MUX 6) around the DVB-T2 technology standard to expand capacity and augment its service and distribution offerings for broadcasters. Following the completion and testing of MUX 6 in 2022, in Q1 2023 Emitel was able to secure a new contract win with Polish public broadcaster TVP, for an expansion of its channels' transmissions. TVP is a state media corporation in Poland and is the oldest and largest Polish television network. MUX 6 will be the second digital TV multiplex operated by Emitel exclusively for TVP, the other being MUX 3.

4.     13 years for the anchor tenant.

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 Emitel's existing MUX 1 and MUX 8 capacity for additional new channels in Poland. Both of these developments increase Emitel's revenue potential. The agreement, which came into effect on 1 February 2023, will allow for 96% population coverage in Poland for the MUX 6 channels.

After the year end, Emitel acquired 65 telecommunication towers in Poland from American Tower. The towers are less than three years old and come with robust contracts with long tenures (14 years average) with inflation-linked escalators for tenants. These are high-quality lattice towers and have high-quality contracts with blue-chip customers, Orange and Play, who are already clients of Emitel. The acquisition was funded from Emitel's own cash resources.

Emitel is working to refinance its third-party bank debt in advance of the June 2024 maturity date. The Company expect this process to be finalised in Q3 2023.

Demand for data and Digital Infrastructure in Poland remains strong and was supported by continued growth in GDP during the year. Emitel remains well positioned to benefit from these trends in Poland.

CRA

* Interest on shareholder loan capitalised during the year

Financial performance

Revenues for the 12 months to 31 March 2023 increased by 2.0% to CZK 2.264 billion (£80.3 million at average exchange rates for the year) and adjusted EBITDA increased 16.9% to CZK 1.2 billion (£41.2 million at average exchange rates for the year).

The revenue performance was driven by double-digit growth in the data centre (DC), cloud and IoT business lines coupled with single-digit growth in the telecoms business line. This was somewhat offset by a decline in radio broadcasting revenue due to the shutdown of AM broadcasting, as was scheduled for this year. Revenue growth from TV broadcasting was flat year on year. TV broadcasting recently 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. These new contracts, together with inflation linkage in revenues from the broadcast business, position CRA well for broadcast growth in the coming year.

EBITDA performance was driven by an increase in revenues, slight improvement in gross margin and a reduction in operating expenditure as a percentage of revenue compared with the year to 31 March 2022.

The renewal of existing contracts and the winning of new ones were supported by investments made in the expansion and upgrading of CRA's assets. During the year CRA invested CZK 51 million to build more public protection and disaster relief (PPDR) sites for the Czech government and develop IoT networks in partnership with a number of customers. It also made further investments into the existing tower portfolio to support growing the number of antennas on those towers. These investments directly led to CRA earning extra revenues and EBITDA as a result of the capital deployed. In addition, CRA is benefiting from previous investments made to complete the roll-out of the latest broadcast technology, DVB-T2, resulting in a 30% increase in broadcast capacity that it can offer to customers and potential customers. In the last quarter of the financial year, CRA made good progress in selling broadcast capacity to a number of new entrants into the Czech market, as mentioned above.

CRA also saw continued demand for data centre capacity, as measured in racks occupied (+12.2%) and power (+21.4%). This reflects robust demand dynamics from new and existing customers.

Cash balances increased to CZK 1.3 billion (£48.1 million) at 31 March 2023. Third-party bank debt remained unchanged at CZK 3.9 billion (£146.0 million). Interest on the bank debt is 100% hedged until the second half of 2025 when the loan falls due.

Operations

CRA benefited from stability in its energy costs during the year and incurred lower energy costs compared to many of its competitors due to its hedging policy. This in turn benefited CRA's existing data centre customers who are charged for energy based on a pass-through mechanism. In addition, it helped CRA win some new customers who were facing far higher energy charges by their previous data centre service providers.

During the year, CRA also benefited from new senior management appointments. The refreshed management team, working with the Investment Manager's team, has sought to implement innovative commercial arrangements with customers to support and improve the balance of near- and longer-term revenue and earnings visibility. These arrangements include a new revenue-sharing model, to drive take-up of broadcast capacity, and balancing pass-through costs with longer-term contractual agreements.

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 five years; as at 31 March 2023 46% of the company's electricity use came from renewable sources.

Outlook

After the year end, CRA signed a 15-year lease agreement with a leading European mobile network operator. This also resulted in extra space being freed up on CRA's towers despite an increase in revenue per tower.

The Czech economy benefited from strong investment activity during the year, and real GDP increased by 2.5% in 2022, according to official data. 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 2022 inflation, which in the Czech Republic was 15.1%, from January 2023 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 looking at bolt-on acquisition opportunities to boost data centre capacity in the interim.

Hudson

Financial performance

During the period, Hudson saw revenue increase by 9.2% to $20.5 million (£17.0 million at average exchange rates for the year) and EBITDA loss increase by 43% to $(5.3) million (loss of £4.4 million at average exchange rates for the year). The increase in EBITDA loss was a result of the recruitment of sales and marketing personnel and the impact of sales commission, which is paid up front when a new contract is starting to generate revenue.

Hudson saw solid operational progress through the year, although 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 321KW resulting from a number of contract wins. These included blue-chip customers such as a major US mobile operator and a leading provider of advance network communications. We expect the pace of pipeline conversion to sales to increase in the coming financial year.

The overall sales pipeline has continued to grow and now stands at 7.2MW; the value of sales opportunities which management judge a 50% probability or more increased by 250% between March 2022 and March 2023.

Operations

During the year, Hudson benefited from the investment made in its sales and marketing teams, including the appointment of new heads of sales and marketing with extensive recent experience in selling and marketing data centre space and services. The team is now increasingly active in the market, with a campaign to target customers in the financial sector where low-latency interconnection and colocation are required.

These initiatives are also being actively supported by the Investment Manager's operational team, with individuals on the ground in New York assisting the management team in converting the substantial pipeline into sales.

Outlook

Hudson continues to offer a significant opportunity for growth, with current utilisation below 30%, and no requirement for additional upfront investment, essentially de-risking capital expenditure by linking it directly to revenue contracts.

Principal risks and uncertainties

Under the FCA's Disclosure Guidance and Transparency Rules, the Directors are required to identify those material risks to which the Company is exposed and take appropriate steps to mitigate those risks.

The Company's assets consist primarily of investments in Digital Infrastructure assets, with a predominant focus on data centres, mobile telecommunications/broadcast towers and fibre-optic network assets. Its principal risks are therefore related to market conditions in the Digital Infrastructure sector in general, but also the particular circumstances of the businesses in which it is invested. The Investment Manager seeks to mitigate these risks through active asset management initiatives and carrying out due diligence work on potential targets before entering into any investments.

The Board thoroughly considers the process for identifying, evaluating and managing any significant risks faced by the Company, including emerging risks, on an ongoing basis and these are reported and discussed at Board meetings. The Board ensures that effective controls are in place to mitigate these risks and that a satisfactory compliance regime exists to ensure all applicable local and international laws and regulations are upheld.

Every risk that is identified is considered by the Investment Manager and by the Directors, with specialist third party advice where necessary. That assessment is both qualitative and quantitative, considering the nature of the risk and the likelihood of it crystallising, together with the financial, legal and/or operational consequences if it does. For each risk, a two-part score is assigned: low, medium or high likelihood; and low, medium or high impact.

The key areas of risk faced by the Company are summarised below:

1

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. To mitigate this 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. The Investment Manager has been able to identify and pursue bilateral opportunities rather than auction processes, where competition for these assets has been a less significant factor. However, there can be no guarantee that suitable further bilateral opportunities will arise. In addition, current market volatility 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. Risk: Increased

2

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. To mitigate this risk, the Investment Manager performs a rigorous due diligence process with internal specialists and expert professional advisers in fields relevant to the proposed investment, prior to that investment being executed.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. Risk: Unchanged

3

The actual rate of return may be materially lower than the targeted rate of return. To mitigate this risk, the Investment Manager performs a rigorous due diligence process before any investment is made. Post-acquisition, investment valuations are performed by the Investment Manager in line with IPEV guidelines and the Company's valuation policy. The Company has also appointed an independent valuation expert, who provides a reasonableness check of the Investment Manager's valuations at each interim financial reporting date, and performs a full independent valuation at each year end. The Investment Manager also carries out a regular review of the investment environment and benchmarks target and actual returns against the industry and competitors. The NAV total return since inception of 21.1% has grown period on period, supported by investment performance in line with expectations and a dividend programme ahead of IPO target. Volatility in key market indicators over the period has had a negative impact on valuations for investments across the market, and the Company is no exception. Risk: Unchanged

4

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. 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. 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. Risk: Increased

5

The operation, maintenance and performance of Digital Infrastructure assets in which the Company may invest, or acquire in the future, may be affected by the impacts of material geo-political events such as the war in Ukraine, the continuing impact of COVID-19 or another pandemic or epidemic, climate change, or other wide-scale disruption to the global economy and business. Such disruption may materially adversely affect the Company's suppliers, tenants and customers. To mitigate this risk, the Company seeks to acquire a diversified range of investments over the medium term, so that the exposure to conditions in any one market and to individual suppliers, customers and tenants, is limited. The war in Ukraine has had a material impact on the availability and cost of energy and has contributed to a significant increase in inflation in markets around the world. The war itself is not expected to affect the Company's investments directly, but it will have an impact on supply chains in the short to medium term, in respect of both pricing and delivery times. COVID-19 has had limited impact on the Company and indications are that risks from the pandemic are fading. Risk: Decreased

6

Actual results of portfolio investments may vary from the projections, which may have a material adverse effect on NAV. To mitigate this 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. 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, contributing to NAV total return of 21.1% since IPO. This demonstrates the quality of the Investment Manager's projections and its ability to manage the investments for growth. Risk: Unchanged

7

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. To mitigate this 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 and, as appropriate, investigate potential alternative sources of capital, including further debt issuance and co-investment. We have an ongoing investor relations programme with shareholders, new investors and research analysts, combined with an active PR process to increase the Company's profile. Significant discounts to NAV are evident in the current share prices of many investment trust companies listed on the London Stock Exchange, including the Company, and have been for a substantial part of the financial year ending 31 March 2023. Investment trusts do not usually seek to raise equity capital at a discount to their NAV and may not do so without shareholder approval. It is not possible to predict when market conditions might improve. Risk: NEW

8

Inflation may cause costs to rise faster than revenues, causing a reduction in margins and profits. The earnings of the Company's portfolio companies have a substantial level of resilience to the effects of inflation. Revenue contracts include full or partial protection from inflation, or cost pass-throughs, and generally comprise long-term contracts with strong counterparties. Energy cost hedging strategies have greatly mitigated the effects on earnings of energy costs that are not pass-through. The Company will seek to put similar protections in place in future contracts and in future investments wherever possible. The Investment Manager will continue to take board positions on investee companies and use its influence to maintain rigorous cost controls. Globally, levels of inflation have risen substantially, largely as a result of the war in Ukraine. While the effect of inflation is net positive in the case of the Company's portfolio, there can be no guarantee that future investments will be able to obtain or maintain similar contractual protections. Risk: Decreased

9

Increasing interest rates cause the cost of existing debt service to rise and increases the cost of new debt. A higher interest rate environment may also reduce the aggregate level of demand in the global economy, and so reduce economic growth. To mitigate this risk, the Company and its investee companies seek to fix or hedge the majority of interest costs of existing debt to mitigate the effect of increases in interest rates. The Investment Manager operates competitive processes with trusted parties to seek best value from lenders to the Company and its investee companies. The Company maintains what it considers to be a prudent level of overall gearing. In response to increasing inflation and volatility in global exchange rates, monetary authorities around the world are increasing the cost of borrowing. This will make new debt more expensive to the Company and its competitors and increase risk around refinancing of existing debt. Risk: Unchanged

These principal risks and uncertainties remain the most likely to affect the Company in 2023/24.

Statement of Financial Position

                 As at 31 March 2023

The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2023 and signed on their behalf by:

Shonaid Jemmett-Page                                         Sian Hill

Chairman                                                                Director

The accompanying notes form an integral part of these financial statements.

  Statement of Comprehensive Income

             Year ended 31 March 2023

The accompanying notes form an integral part of these financial statements.

       Statement of Changes in Equity

             Year ended 31 March 2023

The accompanying notes form an integral part of these financial statements.

        Statement of Cash Flows

              Year ended 31 March 2023

The accompanying notes form an integral part of these financial statements.

Notes to the 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 10 gives more information on share capital.

2.     Significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied, unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with IFRS as issued by the IASB, the Statement of Recommended Practice issued by the Association of Investment Companies (the AIC SORP) and the Companies (Guernsey) Law 2008 (as amended).

The financial statements have been prepared on an historical cost basis as modified for the measurement of certain financial instruments at fair value through profit or loss. 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 AIC SORP has been applied retrospectively and has resulted in presentational changes to the Statement of Financial Position, Statement of Comprehensive Income and Statement of Changes in Equity in order to present revenue and capital items separately.

The principal accounting policies are set out below.

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 year have affected the way in which 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 6 to the financial statements, the Investment Manager 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 21 June 2023 to 30 June 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

― then 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, 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, derivative financial instruments, cash and cash equivalents, and trade receivables.

Financial assets are recognised at the date of purchase or the date on which the Company became party to the contractual requirements of the asset. Financial assets are initially recognised at cost, being the fair value of consideration given. Transaction costs of financial assets at fair value through profit or loss 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 measured 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 plus outstanding interest. Any gain or loss on the loan investment is 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.

Derivatives held for trading

When considered appropriate the Company will enter into derivative contracts to manage its foreign-exchange risk and provide protection against the volatility of the market. Unquoted foreign exchange derivatives are valued at the price that would be paid or received by closing out the contract on the reporting date by entering into an equal and opposite contract at that date. Gains and losses arising from changes in fair value are presented in the Statement of Comprehensive Income in the period in which they arise.

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

It is the intention of the Directors to conduct the affairs of the Company so that it satisfies the conditions in section 1158 Corporation Tax Act 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011 for it to continue to be approved by HMRC as an investment trust.

In respect of each accounting period for which the Company is approved by HMRC as an investment trust, the Company will be exempt from UK corporation tax on its chargeable gains and its capital profits from creditor loan relationships. The Company will, however, be subject to UK corporation tax on its income (currently at a rate of 19%, rising to 25% from 1 April 2023).

In principle, the Company will be liable to UK corporation tax on its dividend income. However, there are broad-ranging exemptions from this charge which would be expected to be applicable in respect of most of the dividends the Company may receive.

A company that is an approved investment trust in respect of an accounting period is able to take advantage of modified UK tax treatment in respect of its 'qualifying interest income' for an accounting period. It is expected that the Company will have material amounts of qualifying interest income and that it may, therefore, decide to designate some or all of the dividends paid in respect of a given accounting period as interest distributions.

To the extent that the Company receives income from, or realises amounts on the disposal of, investments in foreign countries it may be subject to foreign withholding or other taxation in those jurisdictions. To the extent it relates to income, this foreign tax may, to the extent not relievable under a double tax treaty, be able to be treated as an expense for UK corporation tax purposes, or it may be treated as a credit against UK corporation tax up to certain limits and subject to certain conditions.

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 reporting date.

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 that is not a business combination and that affects neither the taxable profit nor the accounting profit. Deferred tax assets and 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 the pound 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 year, including purchases and sales of investments, income and expenses are translated into pounds sterling at the rate of exchange prevailing on the date of the transaction.

Monetary assets and liabilities denominated in currencies other than pounds 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 pounds sterling are translated using the exchange rates at the dates of the initial transactions.

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 a finance income or expense.

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 Directors 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 Annual 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 2022

The Board of Directors has considered new standards and amendments that are mandatorily effective from 1 April 2022 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 31 March 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 and on foreseeable future transactions.

3.     Significant accounting judgements, estimates and assumptions

The preparation of the 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.

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.

Judgements

In the process of applying the Company's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

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 7.

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 year ended 31 March 2023 is included in note 6 and relates to the determination of fair value of investments with significant unobservable inputs.

Climate change

In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the climate change risks identified in the ESG report section of the Strategic Report.

In preparing the financial statements, the Directors have considered the medium- and longer-term cash flow impacts of climate change on a number of key estimates within the financial statements, including:

― the estimates of future cash flows used in assessments of the fair value of investments; and

― the estimates of future profitability used in the assessment of distributable income.

These considerations did not have a material impact on the financial reporting judgements and estimates in the current year. This reflects the conclusion that climate change is not expected to have a significant impact on the Company's short- or medium-term cash flows including those considered in the going concern and viability assessments.

4.     Other expenses

Other expenses in the Statement of Comprehensive Income comprises:

*Legal and professional fees have been reclassified from the other expenses line in the prior year to make the presentation consistent with the current year.

5.     Finance income

Finance income in the Statement of Comprehensive Income comprises:

6.     Investments at fair value through profit or loss

During the year ended 31 March 2023, the Company restructured its loan and equity investments in Communication Investments Holdings s.r.o. (CIH), an entity incorporated in the Czech Republic and the parent company of České Radiokomunikace a.s. (CRA), to hold them indirectly through Cordiant Digital Holdings UK Limited (CDHUK) and Cordiant Digital Holdings Two Limited (CDH2), two wholly-owned subsidiaries of the Company. CDH2 issued shares and promissory notes to the Company in consideration for the transfer of the loan and equity investments in CIH. CDHUK then issued shares and promissory notes to the Company in consideration for the transfer of the shares and promissory notes of CDH2. The exchange loss realised on the restructure of investment by the Company is £3.9 million. The fair value of the shares and promissory notes issued by CDHUK are included in the table above and represent the fair values of the underlying investments together with other assets and liabilities of its subsidiaries. The fair value of the Company's equity investment in CDHUK amounted to £782.8 million at 31 March 2023 (31 March 2022: nil) and the loan investment amounted to £32.5 million (31 March 2022: nil).

The value of the Company's indirect investment in CRA as at 31 March 2023 was £389.1 million, comprising an equity investment valued at £362.9 million and a loan investment of £26.2 million.

The Company made loan investments of £4.7 million in CDIL Data Centre USA LLC, the legal entity operating as Hudson Interxchange (previously operating under the name DataGryd) during the year ended 31 March 2023. As at 31 March 2023, the equity investment was valued at £52.3 million (31 March 2022: £58.2 million) and the loan investment at £4.7 million (31 March 2022: nil). The unrealised foreign exchange gain on the loan investment is £0.1 million and £3.6 million on the equity investment. The investments are held at fair value. The unrealised fair value loss on the equity investment at 31 March 2023 is £9.6 million.

The Company, through its indirect subsidiary Cordiant Digital Holdings One Limited (CDH1), acquired Emitel S.A. during the year ended 31 March 2023. The Company subscribed for additional shares in CDHUK for cash consideration of £379.7 million in order to provide the funds for CDH1 to complete the acquisition of Emitel. The value of the Company's indirect investment in Emitel at 31 March 2023 was £429.0 million.

The table below details all gains on investments through profit or loss.

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.

During the year ended 31 March 2023, there were no transfers of investments at fair value through profit or loss from or to Level 3.

The Company's investments in CRA, Hudson Interxchange 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 Interxchange. The terminal value is calculated using an assumed terminal growth rate (TGR) into perpetuity based on anticipated industry trends and long-term inflation rates.

The DCF valuation methodology requires estimation of unobservable inputs. The following table summarises the effect on the valuation of the Company's portfolio of reasonably possible alternative investment assumptions with regards to those estimates; these are calculated using the DCF valuation models referred to above.

31 March 2023

31 March 2022

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.

7.     Unconsolidated subsidiaries

The following table shows subsidiaries of the Company. As the Company qualifies as an Investment Entity as referred to in note 6, these subsidiaries have not been consolidated in the preparation of the financial statements:

¹These subsidiaries were held directly by the Company at 31 March 2022. Following an intragroup reorganisation described below, they are now held indirectly.

The following additional information is provided in relation to unquoted investments as recommended by the AIC SORP.

²Figures from Emitel's audited IFRS accounts for the year ended 31 December 2022

³Figures from CRA's audited IFRS accounts for the year ended 31 March 2022

⁴Figures from Hudson's audited US GAAP accounts for the period from 13 January 2022 to 31 March 2022

During the year ended 31 March 2023, a reorganisation of the group was undertaken. At 31 March 2023, the Company holds its 100% investment in Cordiant Digital Holdings UK Limited (CDHUK) directly. CDHUK holds a 100% shareholding in Cordiant Digital Holdings Two Limited (CDH2), and CDH2 in turn holds a 100% shareholding in Cordiant Digital Holdings Limited One Limited (CDH1). Previously, each of CDHUK, CDH2 and CDH1 was held directly by the Company. At 31 March 2023, Communications Investments Holdings s.r.o. (CIH) was held as an investment by CDH2; at 31 March 2022, CIH was held directly by the Company. CDIL Data Centre USA LLC is held directly by the Company and this was not affected by the reorganisation. CDH1 holds the Company's investment in Emitel.

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 registered office of the subsidiaries located in Poland is ul.Franciszka Klimczakal, 02-297 Warsaw.

The amounts invested in the Company's unconsolidated subsidiaries during the year and their carrying value at 31 March 2023 are as outlined in note 6.

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 in 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.

8.     Receivables

Cash collateral relates to one security deposit held in money market accounts (31 March 2022: two security deposits held in money market accounts). An amount of USD11.3 million (£9.1 million) relates to collateral for a letter of credit relating to the lease of the building occupied by Hudson, and generated interest of 0.59% per annum during the year ended 31 March 2023.

9.     Derivatives

During the year ended 31 March 2023, the Company entered into six foreign exchange forward contracts totalling £203.0 million in Polish zloty. The maturity date of three of these foreign exchange forwards was 9 June 2022 and of the remaining three was 11 July 2022.

10.   Share capital

Ordinary shares

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.

The Company holds the power to issue an unlimited number of shares and the shares have no par value.

C shares

The C Shares were all converted to ordinary shares in January 2022.

C Shares of each class carry the right to receive all income of the Company attributable to the C Shares, and to participate in any distribution of such income by the Company pro rata to the relevant NAV attributable to each of the classes of C Share and within each such class income shall be divided pari passu amongst the holders of C Shares of that class in proportion to the number of C Shares of such class held by them.

Treasury shares

During the year ended 31 March 2023, the Company initiated a share buyback programme. Investec, as Cordiant Digital Infrastructure Limited's joint broker, has been given limited authority to undertake market buybacks. 1,050,000 ordinary shares (31 March 2022: nil) have been repurchased and held in treasury by the Company during the year ended 31 March 2023.

Subscription shareholders have no right to any dividends paid by the Company and have no voting rights.

11.   Audit fees

Other operating expenses include fees payable to the Company's auditor, which can be analysed as follows:

Non-audit services paid to the Company's auditor during the period ended 31 March 2022 related to a review of the Interim Report and services around the C Share conversion to ordinary shares. There were no non-audit services provided during the year ended 31 March 2023. The statutory audit fees for the year ended 31 March 2023 is £170,000 which excludes an amount of £25,000 relating to the prior year.

12.   Taxation

a)    Analysis of the tax charge for the year/period

b)    Factors affecting the tax charge for the year/period

The tax assessed for the year ended 31 March 2023 is lower than the Company's applicable rate of corporation tax for that year of 19%. The factors affecting the tax charge for the year/period are as follows:

c)    Deferred taxation

The Company has an unrecognised deferred tax asset of £77,000 (Prior year: £712,000) based on a main rate of corporation tax of 25%.

A change to the UK tax rate from 19% to 25% was enacted on 24 May 2021 and the deferred tax asset not recognised has been calculated at the expected applicable future rate.

It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset has been recognised.

Due to the Company's status as an investment trust and the intention to continue to meet the conditions required to retain that status, the Company has not provided for tax on any capital gains or losses arising on the revaluation of investments.

13.   Management and performance fees

Under the Investment Management Agreement, 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 using the closing market capitalisation for each LSE trading day for the relevant month, and paid monthly in arrears. 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, 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 will only be 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 year ended 31 March 2023, the Investment Manager has charged management fees of £7.3 million (31 March 2022: £4.7 million) to the Company, with £0.6 million (31 March 2022: £0.7 million) owed at year end.

During the year ended, 31 March 2023, the Investment Manager was required to subscribe for new ordinary shares for aggregate consideration of £0.29 million (31 March 2022: £0.18 million) and to conduct market purchases for aggregate consideration of £0.39 million (31 March 2022: nil).

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 year ended 31 March 2023, no performance fee is due to the Investment Manager (31 March 2022: £nil) and no amount has been accrued as the share price performance hurdle has not been met.

14.   Earnings per share and net asset value per share

As at 31 March 2023, there were 6,434,884 (31 March 2022: 6,435,071) potentially dilutive Subscription Shares in issue. During the year ended 31 March 2023, 187 (31 March 2022: 39,814,911) Subscription Shares were exercised and 1,050,000 ordinary shares (31 March 2022: nil) were bought back.

The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:

15.   Dividends declared and paid with respect to the year/period

Dividends paid during the year ended 31 March 2023

Dividend per ordinary share pence

Total dividend
£'000

Second interim dividend in respect of the period ended 31 March 2022

Interim dividend in respect of the year ended 31 March 2023

1.50

2.00

11,599

15,473

27,072

On 21 June 2023, the Board approved a second interim dividend of 2.0 pence per share in respect of the period from 1 April 2022 to 31 March 2023, bringing the total dividend for the year to 4.0 pence per share. The record date for this dividend is 30 June 2023 and the payment date is 21 July 2023.

16.   Financial risk management

Financial risk management objectives

The Company's investing activities intentionally expose it to various types of risks that are associated with the underlying investments. The Company makes the investment in order to generate returns in accordance with its investment policy and objectives.

The most important types of financial risks to which the Company is exposed are market risk (including price, interest rate and foreign currency risk), liquidity risk and credit risk. The Board of Directors has overall responsibility for the determination of the Company's risk management and sets policy to manage that risk at an acceptable level to achieve those objectives. The policy and process for measuring and mitigating each of the main risks are described below.

The Investment Manager and the Administrator provide advice to the Company which allows it to monitor and manage financial risks relating to its operations through internal risk reports which analyse exposures by degree and magnitude of risks. The Investment Manager and the Administrator report to the Board on a quarterly basis.

Categories of financial instruments

For those financial assets and liabilities carried at amortised cost, the Directors are of the opinion that their carrying value approximates to their fair value.

Fair value hierarchy

The table below analyses financial instruments measure at fair value at the reporting date by the level in fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the Statement of Financial Position. All fair value measurements below are recurring.

Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the capital return to shareholders. The capital structure of the Company consists of issued share capital and retained earnings, as stated in the Statement of Financial Position.

In order to maintain or adjust the capital structure, the Company may issue new shares. There are no external capital requirements imposed on the Company.

The Company's investment policy is set out in the Additional information section of the 2023 Annual Report.

Market risk

Market risk includes price risk, foreign currency risk and interest rate risk.

Price risk

The underlying investments held present a potential risk of loss of capital to the Company. As outlined in note 6, investments are in the form of shareholder loans and equity with protective provisions in place. Price risk arises from uncertainty about future prices of underlying financial investments held by the Company. As at 31 March 2023, the fair value of investments, excluding cash and cash equivalents, was £872.3 million (31 March 2022: £409.9 million) and a 5% increase/(decrease) in the price of investments with all other variables held constant would result in a change to the fair value of investments of +/- £43.6 million (31 March 2022: £20.5 million).

Please refer to note 6 for quantitative information about the fair value measurements of the Company's Level 3 investments.

The Company is exposed to a variety of risks which may have an impact on the carrying value of its investments. The risk factors are set out below.

Not actively traded

The Company's investments are not generally traded in an active market but are indirectly exposed to market price risk arising from uncertainties about future values of the investments held. The investments of the Company vary as to geographic distribution of operations and size, all of which may impact the susceptibility of their valuation to uncertainty.

Concentration

The Company invests in the Digital Infrastructure sector. While the Company is subject to the investment and diversification restrictions in its investment policy, within those limits material concentrations of investments may arise.

Although the investments are in the same industry, each individual underlying data centre, mobile telecommunications tower or segment of a fibre-optic network held within the portfolio constitutes a separate Digital Infrastructure Asset. This risk is managed through careful selection of investments within the specified limits of the investment policy.

Each of these investment restrictions is calculated and applied as at the time of investment and non-compliance resulting from changes in the price or value of assets following investment is not considered a breach of the investment restrictions.

Foreign currency risk

The Company invests in financial instruments and enters into transactions that are denominated in currencies other than its functional currency, primarily in US dollars, Polish zloty and Czech koruna.

The Company's currency risk is managed by the Investment Manager in accordance with the policies and procedures in place.

The Company also has exposure to foreign currency risk due to the payment of some expenses in US dollars, Czech koruna, Polish zloty, Canadian dollars and euros. Consequently, the Company is exposed to risks that the exchange rate of its currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company's assets or liabilities denominated in currencies other than pounds sterling. Any exposure to foreign currency risk at the underlying investment level is captured within price risk.

The following table sets out, in pounds sterling, the Company's total exposure to direct and indirect foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities:

The table below sets out the effect on the net assets against a reasonably possible weakening of the pound against the US dollar, Czech koruna, Polish zloty and euros by 5%, at 31 March 2023. The analysis assumes that all other variables remain constant.

A strengthening of the pound against the above currencies would have resulted in an equal but opposite effect to the amounts shown above.

Interest rate risk

The Company's exposure to interest rate risk relates to the Company's cash and cash equivalents. The Company is subject to risk due to fluctuations in the prevailing levels of market interest rates.

The Company has no other interest-bearing assets or liabilities as at the reporting date. As a consequence, the Company is only exposed to variable market interest rate risk. As at 31 March 2023, the cash balance held by the Company was £10.5 million (31 March 2022: £353.7 million). A 1% increase/(decrease) in interest rates with all other variables held constant would result in a change to interest received of +/- £0.1 million (31 March 2022: +/- £3.5 million) per annum.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors.

Liquidity risk is defined as the risk that the Company may not be able to settle or meet its obligations on time or at a reasonable price. The Company's policy and the Investment Manager's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company's liabilities are made up of estimated accruals and trade creditors which are due to be settled within three months of the year end.

The Company's liquidity risk arises principally from the fact that there is no liquid market for its investments and it may not be able to realise their full value on a timely basis, The Company will maintain flexibility in funding by keeping sufficient liquidity in cash and cash equivalents, which may be invested on a temporary basis in line with the cash management policy as agreed by the Directors from time to time. Cash and cash equivalents as at the year-end are insufficient to cover the forecast expenses for the following twelve months, but the Company has access to further liquidity through the debt facility raised by its subsidiary Cordiant Digital Holdings Two Ltd, of which €150.0 million (£131.9 million) was undrawn at the balance sheet date.

The Company adopts a prudent approach to liquidity management and through the preparation of budgets and cash flow forecasts maintains sufficient cash reserves to meet its obligations.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Financial assets mainly consist of cash and cash equivalents and investments at fair value through profit or loss. The Company's risk on liquid funds is reduced because it can only deposit monies with institutions with a minimum credit rating of A-. The Company mitigates its credit risk exposure on its investments at fair value through profit or loss by the exercise of due diligence on the counterparties and the Investment Manager.

The table below shows the material cash balances and the credit rating for the counterparties used by the Company at the year/period-end date:

The Company's maximum exposure to loss of capital at the year/period end is shown below:

Carrying value and maximum exposure

Gearing

As at the date of these financial statements the Company has no gearing.

17.   Related party transactions

Directors

The Company has four non-executive Directors, each of whom is considered to be independent. Directors' fees for the year ended 31 March 2023 amounted to £185,000 (31 March 2022: £218,000), of which £nil (31 March 2022: £nil) was outstanding at the year end.

As part of the IPO Shonaid Jemmett-Page and Sian Hill purchased 20,000 shares each, and Marten Pieters and Simon Pitcher purchased 25,000 shares each. Each of the directors was also granted Subscription Shares at time of the IPO at a rate of one Subscription Share for every eight ordinary shares purchased, and each of them has subsequently exercised their rights to convert their Subscription Shares into additional ordinary shares. In addition, all directors made extra purchases of shares during the year. Shonaid Jemmett-Page bought 5,539 shares, Sian Hill bought 15,000 shares, Marten Pieters bought 20,000 shares and Simon Pitcher bought 10,000 shares. The Directors' shares at 31 March 2023 are as shown in the table below:

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. Total interest receivable by the Company in relation to the year was £0.5 million (31 March 2022: £2.9 million), of which £nil (31 March 2022: £nil) remained outstanding at the year/period end. 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 31 March 2023, including accrued interest, was £32.6 million (31 March 2022: nil). In January 2022, the assets of Hudson Interxchange 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 31 March 2023, was £52.2 million (31 March 2022: £58.2 million). The Company has also provided additional funding during the year ended 31 March 2023 in the form of loans totalling £4.7 million.

Company subsidiaries

On 16 December 2022, the Company borrowed £20.3 million from CDH2, representing proceeds from a Eurobond issued by CDH2. The loan is subject to interest charged at variable rate. Interest charged during the year amounted to £0.4 million (31 March 2022: £nil) which all remained outstanding as at 31 March 2023. The expenses paid by the Company on behalf of subsidiary companies during the year amounted to £2.9 million (31 March 2022: £nil).

18.   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.

19.   Subsequent events

With the exception of dividends declared and disclosed in note 15, there are no material subsequent events.

Glossary of capitalised defined terms

Administrator means Aztec Financial Services (Guernsey) Limited

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

AIF/AIFM/AIFMD means Alternative Investment Fund, AIF manager and AIF Managers Directive respectively

AFFO means adjusted funds from operations

Board means the Directors of the Company as a group

CIH means Communications Investments Holdings s.r.o.

Company Law means the Companies (Guernsey) Law 2008

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

Company means Cordiant Digital Infrastructure Limited

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 sourcebook issued by the Financial Conduct Authority

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 (or its successor bodies)

FRC means the Financial Reporting Council

GFSC means the Guernsey Financial Services Commission

Hudson means Hudson Interxchange (previously operating under the name DataGryd Datacenters 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 2022

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 the Company to the public, completed on 16 February 2021

Listing Rules means the listing rules made by the UK Listing Authority under Section 73A of the Financial Services and Markets Act 2000

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 pound sterling

SASB means Sustainability Accounting Standards Board, an independent non-profit, whose mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decision-useful information to investors

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

UK (or FRC) Code means the UK Corporate Governance Code issued by the Financial Reporting Council

UNSDGs means United Nations Sustainable Development Goals

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

East Wing

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3PP

Legal advisors to the Company

Gowling WLG (UK) LLP

4 More London Riverside

London

SE1 2AU

Investment manager

Cordiant Capital Inc.

28th Floor

Bank of Nova Scotia Tower

1002 Sherbrooke Street West

Montreal

QC H3A 3L6

Carey Olsen (Guernsey) LLP

Carey House

Les Banques

St Peter Port

Guernsey

GY1 4BZ

Company secretary and administrator

Aztec Financial Services (Guernsey) Limited

(appointed 8 November 2022)

PO Box 656

Trafalgar Court

Les Banques

Guernsey

GY1 3PP

Registrar

Computershare Investor Services

(Guernsey) Limited

1st Floor Tudor House

Le Bordage

St Peter Port

Guernsey

GY1 4BZ

Ocorian Administration (Guernsey) Limited

(resigned 7 November 2022)

2nd Floor

Trafalgar court

Les Banques

Guernsey

GY1 4LY

Brokers

Investec Bank plc

30 Gresham Street

London

EC2V 7QP

Auditor

BDO Limited

PO Box 180

Place du Pre

Rue du Pre

St Peter Port

Guernsey

GY1 3LL

Jefferies International Limited

100 Bishopsgate

London

EC2N 4JL

Principal banker and custodian

The Royal Bank of Scotland International Limited

Royal Bank Place

1 Glategny Esplanade

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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