Northern Data : Annual Report 2023

ANNUAL REPORT 2023

At a glance

Key data of Northern Data Group

Revenue

Total income

EBITDA

Adjusted EBITDA

EBIT

Adjusted EBIT

Net result

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Shares outstanding, weighted average (undiluted) Shares outstanding, weighted average (diluted) Earnings per share (undiluted)

Earnings per share (diluted)

Employees (annual average)

Cash and cash equivalents

EUR million

EUR million

EUR million

EUR million

EUR million

EUR million

EUR million

EUR million

EUR million

EUR million

Thousand units Thousand units

EUR

EUR

FTE

EUR million

2023

77.5

111.0

-28.2

-5.5

-153.2

-130.4

-151.1

-17.6

-84.7

305.1

28,941

28,941

-5.22

-5.22

144

Dec. 31, 2023

243.0

2022

193.3

249.5

-58.1

42.4

-265.4

-59.1

-265.8

1.0

-95.2

-82.9

23,816

23,816

-11.16

-11.16

209

Dec. 31, 2022

39.9

TO THE	ESG REPORT		GROUP MANAGEMENT		GROUP FINANCIAL		NOTES TO THE GROUP
A SHAREHOLDERS		B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Content

A

To the Shareholders	2
Letter to the shareholders	4
Report of the Supervisory Board	10
Northern Data on the Capital Market	13

B

ESG Report (unaudited)	17
ESG - Acting responsibly with an eye to the future	18
ESG Data Overview	19
ESG Reporting at Northern Data	20
Material Topics	21
Environmental	24
Social	27
Governance	30
ESG in the future	31

C

Group Management Report	32
Basis of the Group	33
Economic Report	36
Opportunity, Risk and Forecast Report	43

D

Group Financial Statements	58
Consolidated Statement of Comprehensive
Income for the year ended December 31	59
Consolidated Statement of Financial Position
as of December 31	60
Consolidated Statement of Changes in Equity
for the year ended December 31	62
Consolidated Statement of Cash Flows for the
year ended December 31	63

E

Notes to the Group
Financial Statements	64
1  Information about the Group and
basics of the preparation of the
Group Financial Statements	65
2 Changes to the scope of consolidation	85
3  Notes to the Statement of
Comprehensive Income	86
4 Notes to the Statement of Financial Position	93
5 Other explanatory notes	101
Auditor's Report	117
Imprint	120

ANNUAL REPORT 2023 NORTHERN DATA AG

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A

TO THE SHAREHOLDERS

TO THE	ESG REPORT	GROUP MANAGEMENT	GROUP FINANCIAL	NOTES TO THE GROUP
A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

• In a very short period of time, AI has developed such enor- mous transformative power in a wide range of economic and social areas that it is tantamount to a technical revolution. «

Aroosh Thillainathan

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TO THE	ESG REPORT	GROUP MANAGEMENT	GROUP FINANCIAL	NOTES TO THE GROUP
A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

Letter to the shareholders

Dear shareholders, employees and friends of Northern Data AG,

We are pleased to inform you that Northern Data Group successfully took a big step forward in fiscal year 2023 by scaling its business and thus further driving its growth course as a technology company. Above all, the year was characterized by designing the infrastructure and solutions needed to unleash the potential of high-performance computing (HPC) applications. This was made possible by extensive investments in "Taiga Cloud," "Peak Mining" and "Ardent Data Centers."

While Peak Mining, with its business activities in Bitcoin mining, was again responsible for the majority of revenue in the fiscal year, we were able to report significant revenue in the cloud segment (Taiga Cloud) for the first time. We fully achieved our forecast with revenue at Group level of EUR 77.5 million and adjusted EBITDA of EUR -5.5 million.

At the pulse of time

The global boom in generative Artificial Intelligence (AI) continued unabated in 2023. In a very short period of time, AI has developed such enormous transformative power in a wide range of economic and social areas that it is tantamount to a technical revolution. At the same time, Bitcoin consolidated its position as the leading global digital asset, grew and established itself further. The price of Bitcoin began an unprecedented rally over the course of the year and more than doubled.

These megatrends go hand in hand with the enormous demand for HPC. Cloud computing - based on special graphic processing units (GPUs) - is the foundation for realizing generative AI. Moreover, Bitcoin mining - based on specialized Application Specific Integrated Circuits (ASIC chips) - would also be unimaginable without HPC.

These developments have once again confirmed that Northern Data AG, with its deep expertise in the field of HPC, is serving exactly the needs and requirements of today. With an installed hash rate of 3.34 exahash per second (EH/s) as of the end of 2023, we are not only one of the largest Bitcoin mining companies in the world, but seize a leading position as a cloud solutions provider, running Europe's largest cluster of NVIDIA A100 and H100 Tensor Core GPUs. With this HPC infrastructure, we are at the pulse of time.

Three business divisions

It is Northern Data Group's vision to power the next generation of innovation bravery through sustainable, state of the art, HPC solutions. In 2023, we further aligned our Group structure with the launch of three divisional brands dedicated to our three core business areas. The new brands clearly define the Group's focus, with each division positioned to capitalize on the demand for HPC power in its respective market.

Our three business divisions provide state-of-the-art data center and cloud environments that optimize perfor- mance, maximize revenue and support advanced compu- ting: Taiga Cloud offers sovereign, clean-energy-powered,ultra-fast GPU compute power across Europe. Ardent Data Centers reinvents data center infrastructure to deliver higher performance, density, and availability, whereas Peak Mining secures the Bitcoin network with efficiency gains through state-of-the-art hardware, high-quality infrastructure and leading software technology.

Extensive investments

In order to give our growth plans the necessary boost by scaling our business, we made considerable investments in fiscal year 2023. To realize these investments, we carried out capital increases and raised debt capital. In total, Northern Data AG received around EUR 1 billion (more than USD 1 billion).

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TO THE	ESG REPORT	GROUP MANAGEMENT	GROUP FINANCIAL	NOTES TO THE GROUP
A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

We carried out the acquisition of Damoon Limited in stages. Under IFRS, all stages became effective as of the end of December 2023, giving us access to more than 10,000 highly efficient NVIDIA H100 Tensor Core GPUs.

In addition, Northern Data AG has secured a debt financing facility totaling EUR 575 million to be split between our three business divisions. Specifically, the investment was used to support the continued growth of Taiga Cloud by investing in additional NVIDIA hardware through partnerships with GIGABYTE and HPE, expand and enhance Ardent Data Centers' data center portfolio and further scale Peak Mining's business with state-of-the-art liquid- cooled mining technology from our partner MicroBT.

Operational development at the business division level

Following the investments totaling EUR 730 million, Taiga Cloud owns the largest cluster of NVIDIA A100 and H100 Tensor Core GPUs in Europe. This puts us at the forefront to meet the growing demand for generative AI GPUs across Europe and drive AI innovation globally. Initial deployments started in December 2023. With the rollout continuing in 2024, we are scaling our generative AI cloud. Taiga Cloud's entire cloud is 100 percent carbon-neutral and powered and cooled with Power Usage Effectiveness ratios (PUEs) of less than 1.2. Housing these islands of GPUs across European, clean-energy-powered data cen- ters, Taiga Cloud offers high-speed, low latency and data- sovereign compute power along to help its customers to meet their ESG objectives.

Ardent Data Centers currently operates as a colocation service provider with data centers in the United States and Europe. The division brings together the expertise for the planning, construction, and management of data centers within Northern Data Group. In 2023, Ardent Data Centers purchased an existing data center facility in Pittsburgh, PA, and began due diligence on purchasing two other locations (one in the United States, one in Europe) as part of a EUR 110 million investment strategy. This strategy

is aimed at expanding Ardent Data Centers' ability to provide colocation services for computing power across Europe and the United States. With the business division Ardent Data Centers, we are focused on building the most efficient, future-ready network of HPC colocation capacity in the market.

Finally, in 2023, Peak Mining focused on building the foundations for the growth of its Bitcoin mining portfolio, which included securing the latest hardware available on the market and developing locations with attractive energy prices for mining. Specifically, in September 2023, the division secured access to liquid-cooled mining hardware, purchasing more than 7 EH/s of the latest generation of WhatsMiners from MicroBT. The first batch of the EUR 140 million (USD 150 million) investment is deployed at our next-generation 30 MW mining site in Grand Forks, North Dakota. Construction of this location has been underway since May 2024. In addition to the hardware investment, Peak Mining purchased a 300 MW, 33-acre location in Corpus Christi, Texas, that has approved power by the Electric Reliability Council of Texas (ERCOT). This represents another significant step in Northern Data Group's investment strategy and will significantly increase Peak Mining's hash rate and Bitcoin production. The first phase of the expansion is underway and will deliver 100 MW of mining capacity by the end of the first half year of 2024. We aim to expand our hash rate to around 7.9 EH/s before the end of 2024.

Positive outlook for 2024 and beyond

In fiscal year 2024, we confirm our expectations for Group revenue in the range of EUR 200 million to EUR 240 million - around three times the revenue of fiscal year 2023. Adjusted EBITDA for 2024 is expected to be in the range of EUR 50 million to EUR 80 million.

For the first time, Taiga Cloud will be the main contributor to revenue and EBITDA. With the significant enhancement of Taiga Cloud's cutting-edge GPU resources, we anticipate revenue for the segment of between EUR 120 million and EUR 150 million and adjusted EBITDA of between EUR 50 million and EUR 65 million. Peak Mining's revenue is expected to be between EUR 80 million and EUR 90 million with adjusted EBITDA of between EUR 7 million and EUR 15 million. For Ardent Data Centers, we expect revenue between EUR 12 million and EUR 15 million and adjusted EBITDA of between EUR -3 million and EUR -1 million.

Thanks to consistent scaling, clear structuring into three synergistically interlinked business divisions and the tailwind from major economic trends, we are ideally posi- tioned. Focusing our vision on the entire Group will drive value creation and lead us to profitable and sustainable growth in the future.

ANNUAL REPORT 2023 NORTHERN DATA AG

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TO THE	ESG REPORT	GROUP MANAGEMENT	GROUP FINANCIAL	NOTES TO THE GROUP
A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

On behalf of the entire management team of Northern Data Group, I would like to thank you - our share- holders, partners and friends - for your trust in Northern Data Group and for accompanying us on our journey. I would also like to thank our employees around the world who, through their commitment and enthu- siasm, drive Northern Data Group forward every day in shaping the future of the HPC market.

Together, we enter 2024 well-prepared and confident to capitalize on the exciting opportunities that lie ahead. We look forward to reporting on future developments. Stay tuned for more milestones.

Sincerely yours,

Aroosh Thillainathan

Chairman of the Management Board

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A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

Group Leadership

Aroosh Thillainathan

Group Founder, CEO and Chairman of the Management Board

As Chief Executive Officer and Chairman of the Management Board since 2020, Aroosh has been pivotal in shaping the company's strategic direction and success. His entrepreneurial background includes founding several successful ventures and making signifiicant advances in High Performance Computing. Recognized for his market foresight and customer-centric innovations, Aroosh continues to lead Northern Data Group towards new frontiers in the industry.

Rosanne Kincaid-Smith

Group Chief Operating Officer

As Group Chief Operating Officer, Rosanne Kincaid-Smith, is a key player in the company's rise as a leading provider of High Performance Computing solutions. With experience in technology, data analytics, and commercial business strategy, she leads global teams and manages signifiicant operational transformations, driving the business stra- tegy. Rosanne's expertise spans executing restructuring initiatives, spearheading market expansion efforts, navigating intricate mergers and acquisitions and championing innovation.

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TO THE	ESG REPORT	GROUP MANAGEMENT	GROUP FINANCIAL	NOTES TO THE GROUP
A SHAREHOLDERS	B (UNAUDITED)	C REPORT	D STATEMENTS	E FINANCIAL STATEMENTS

Letter to the shareholders

Group Leadership

Rudolf Haas

Group Chief Legal Officer

As Group Chief Legal Officer, Rudolf Haas is an esteemed legal professional with over 20 years of experience in international law firms, including being a Partner at Latham & Watkins and Managing Director at King & Wood Mallesons in Frankfurt. Ru- dolf's expertise in finance and capital markets law supports the Group's strategic growth, with a proven track record in navigating the complex intersection of law and business.

Elliot Jordan

Group Chief Financial Officer

As Group Chief Financial Offi- cer, Elliot brings over 20 years of fiinance experience, including key roles during rapid expansion phases at renowned companies. Serving as CFO at Farfetch, Elliot led the company's successful IPO on the NYSE. Furthermore, he held Finance Director positions at ASOS and J Sainsbury's and is a non-executive Board Member and Chair of the Audit and Risk Committee at HM Land Registry. Elliot now drives Northern Data Group's fiinancial strategy in the High-Performance Computing market.

Mick McNeil

Group Chief Revenue Officer

As Group Chief Revenue Officer, Mick leverages his extensive business development background in technology to drive new product

introductions­and revenue growth and build effective go-to-market­ teams. His experience includes ­pivotal roles at Microsoft and Logicalis, where he led signifiicant transformations. Mick's multi-market expertise enhances Northern Data Group's product, marketing, and commercial strategies, fostering customer-centric innovations and capitalizing on strategic market opportunities.

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