Digital 9 Infrastructure (DGI9) H2 2023 earnings summary

Executive summary

• 2023 was marked by balance-sheet pressure, a 23.1% total return decline and a 64.1% shareholder return decline; shareholders approved a managed wind-down on 25 March 2024.

• Portfolio businesses broadly met expectations, with combined revenue up 10% YoY, while higher financing costs and portfolio valuation losses drove a £237.3m pre-tax loss.

• Verne Global was sold after year-end, enabling substantial RCF repayments; orderly asset disposals and shareholder capital returns now guide strategy.

Financial highlights

• FY2023 pre-tax loss was £237.3m versus £92.1m profit in 2022; basic and diluted EPS was a 27.43p loss versus 11.09p earnings.

• NAV fell to £686.3m and 79.33p per share at 31 December 2023, from £949.6m and 109.76p a year earlier.

• Investment income was £27.97m; fair-value losses were £252.0m, versus £97.2m of fair-value gains in 2022.

• Portfolio revenue rose 10% to £446.6m, while EBITDA fell 2% to £197.7m and margin was 44%, versus 50% in 2022.

• FY2023 dividends totalled 3.0p per share; the 6.0p annual target was withdrawn and no further 2023 dividends were declared.

Outlook and guidance

• The managed wind-down is expected to take 24–36 months from approval of the audited statements, but could take longer if assets cannot be realised at maximum value.

• Sale preparations for wholly owned assets are underway; investor outreach for Aqua Comms, EMIC-1 and Elio Networks began in April 2024. Arqiva’s sale process is deferred.

• No new investments are planned, except where legally or contractually required or where spending could protect value or facilitate a better disposal.

• No medium-term dividends are planned; proceeds are intended first to repay and cancel the RCF, with capital returns to shareholders thereafter.

• Verne’s potential earn-out is up to $135m, contingent on 2026 run-rate EBITDA targets; payment could be zero if performance is below 80% of target.