Cordiant Digital Infrastructure Ltd (LSE:CORD, FRA:86L) has reported solid portfolio growth and set out the next phase of its development as it prepares to migrate its listing to the UK Official List.
In an interview with Proactive, chairman Steven Marshall and chief financial officer Andrew Ewe discuss the strategic rationale behind the move, which could pave the way for potential inclusion in the FTSE 250 and broaden the shareholder base through increased index investor participation.
In the following Q&A video, also transcribed below, the pair outline the company’s recent operational performance, expansion across telecoms, fibre and data centres, and the structural demand drivers – including cloud computing and artificial intelligence – supporting long-term growth in digital infrastructure.
Proactive: Joining me in the studio today are Cordiant Digital Infrastructure Management chairman Steven Marshall and Cordiant Digital Infrastructure CFO Andrew Ewe. Steve, Andrew, thank you very much for coming in. So Steve, one of the big announcements was the plan to migrate the listing to the official list. Why is that strategically important?
Steven Marshall: This has been something a long time coming. We're just hitting our five-year anniversary now and we've been building diversification of investments. Now we're at a stage where we have a strong track record and have delivered very good growth over the last five years. Regulatory bodies are somewhat predisposed to moving companies onto the official list. When we get onto the official list and potentially into the FTSE 250, it makes our stock much more accessible, particularly to retail investors. On the specialist funds segment investors have to go through a sophisticated investor test, which can put some people off. Being in the FTSE 250 should also bring additional demand from index trackers.
Proactive: That obviously increases visibility as well. Andrew, can you take us through some of the highlights of your trading update?
Andrew Ewe: We’re very pleased with performance so far this year. In the nine months to December, portfolio revenue was up 8.9% and portfolio EBITDA was up 7.1%. The business has benefited from new contracts, inflation and good cost control as well as recent acquisitions. Dividend coverage remains healthy at 1.8 times adjusted funds from operations. CRA has also had a particularly busy year. In December it completed the acquisition of Nangu.TV, a company in the IPTV and OTT streaming space. That strengthens CRA’s position in that growing market. CRA’s flagship 26-megawatt data centre development recently completed groundworks and we are in advanced negotiations with contractors for the main construction phase. We also expect CRA to generate around £12 million in cash this financial year and reinvest that into growth projects such as Prague Gateway. Across the group we have about £241 million in liquidity including cash and undrawn debt, which supports continued growth investments and acquisitions.
Proactive: What about the implications of the conflicts in the Middle East and how that might affect the portfolio?
Andrew Ewe: We are seeing heightened volatility in financial and commodity markets. The positive point is that about two-thirds of our revenue is linked to inflation, either fully indexed or capped. With healthy EBITDA margins we expect inflation to be a net benefit. Energy is a major cost but Emitel and CRA have hedged almost all energy requirements for this year and about 50% for next year. Electricity is typically a pass-through cost for data centres, meaning customers ultimately pay for it. More broadly, digital infrastructure remains a defensive asset class because demand for data continues to grow through AI, cloud computing and online video. We also see opportunities as governments increasingly look to strengthen communications resilience, emergency systems and cybersecurity infrastructure.
Proactive: Steve, what growth catalysts should investors watch over the next couple of years?
Steven Marshall: We operate in a sector that is naturally high growth. There is increasing demand for mobile telecommunications capacity and more people working from home connecting via fibre. There is also growing demand for data centres to house servers and data. On top of that there is the additional demand coming from AI technologies. As people begin using AI systems to compute and complete tasks, that drives further demand across digital infrastructure. We are essentially investing in the plumbing of the internet. The company owns telecom towers that support mobile networks, fibre networks in Ireland through Speed Fibre Group, and broadcast and telecom towers in Poland and the Czech Republic. Another important catalyst is the development of a 26-megawatt data centre facility in Prague. We are also expecting synergies from the acquisition of BT Ireland, which has been merged with Speed Fibre Group to create a much larger and stronger number two player in the market.
Proactive: Thank you both for coming in.