REG - Digital 9 Infrastr. - Results for the full year ended 31 December 2024

Digital 9 InfrastructureAnnouncement

Yesterday 17:45

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250430:nRSd9203Ga&default-theme=true

RNS Number : 9203G  Digital 9 Infrastructure PLC  30 April 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER
THE UK'S MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT,
SUCH INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

30 April 2025

 

DIGITAL 9 INFRASTRUCTURE PLC

("D9" or the "Company" and, together with its subsidiaries, the "Group")

 

 

 Results for the full year ended 31 December 2024

 

The Board of Digital 9 Infrastructure plc (the "Board") announces the
Company's audited results for the year ended 31 December 2024 and a
post-period end update on the Company's managed wind-down. The Company's
Annual Report is available at the following link: Digital 9 Infrastructure -
Annual Report 2024 | Digital 9 Infrastructure Plc
(https://url.jer.m.mimecastprotect.com/s/tzdQCL8z9DI52nQPhBfVcyTwY1?domain=d9infrastructure.com/)
.

 

Eric Sanderson, Chair of D9, said: "2024 was a year of significant change for
the Company, with the appointment of a new board and investment manager,
InfraRed Capital Partners Limited ("InfraRed") to effect the managed wind-down
of the Company. We believe the Company is in a more stable position, and we
have materially progressed the managed wind-down mandated by shareholders last
year, with the signed divestments of EMIC-1 and Aqua Comms."

 

"Post-period end, we have successfully refinanced the RCF with the Company's
existing lenders and now have a pathway to a full repayment of the drawn
balance. We are prioritising the return of capital to shareholders from
portfolio company divestments, as well as maximising the value of the
portfolio where appropriate ahead of an optimal exit point."

 

"We continue to believe the intrinsic value of D9's remaining portfolio is not
accurately reflected in the Company's market capitalisation, notwithstanding
the disappointing NAV decline during the year. This was a result of revisions
to key valuation and methodology assumptions in the portfolio, following an
extensive valuation process undertaken by InfraRed alongside the Board's
independent valuer. We also acknowledge that there remains a wide range of
outcomes for the valuation of the Company's largest asset, Arqiva, dependent
upon key broadcasting contract renewals expected to be agreed during 2027.
This will limit the ability of the Company to realise the best value outcome
for shareholders with respect to Arqiva prior to the outcome of these
renewals."

 

2024 Summary Highlights

 

 ·             Divestment processes for remaining wholly-owned assets have accelerated
               significantly since the appointment of InfraRed in October 2024. Further to
               the announced divestments of Aqua Comms and EMIC-1, there is an ongoing
               priority process for SeaEdge UK1.
 ·             Divestment proceeds received for Verne Global ("Verne") during 2024
               represented a net consideration of £347 million, and were used to pay down
               £321 million of the Revolving Credit Facility ("RCF"). Post-period end, the
               remaining balance of £53 million was successfully refinanced and the Company
               expects to repay this balance using the EMIC-1 proceeds (c.£33 million(1)),
               as well as further divestment proceeds and working capital surpluses expected
               before expiry of the RCF on 16 June 2025.
 ·             The sale of Elio Networks has been paused as the Company undertakes various
               value-add initiatives to maximise shareholder value from the asset prior to
               its eventual sale. InfraRed has been working with the management and
               co-shareholders of Arqiva Group ("Arqiva") to best position the business ahead
               of key events in 2027 and 2028, including the renewal of broadcasting
               contracts and the refinancing of debt facilities. Arqiva showed good
               operational resilience in 2024, despite margin pressure.

2024 Portfolio Performance

 

 ·             The Company's NAV as at 31 December 2024 was £297.3 million (or 34.4p per
               share), representing a decline in both fair value and total return of -£389.0
               million (-45.0p per share, or -56.7%) compared to 31 December 2023 (£686.3
               million, or 79.3p per share). The December 2024 NAV was based on a
               comprehensive bottom-up valuation of underlying assets completed by InfraRed
               and supported by an independent review from a newly appointed valuation
               expert.
 ·             Of the £389.0 million fair value reduction, £344.2 million (-39.8p per
               share) was attributable to adjustments for agreed divestment considerations,
               related mostly to Aqua Comms, and to a lesser extent EMIC-1. Changes in key
               assumptions relating to Arqiva contributed a decline in fair value of -£83.0
               million, or 9.6p per share.
 ·             The remaining change in fair value reflected finance expenses, as well as
               changes in fair value attributable to Elio Networks, SeaEdge UK1 and the
               potential Verne Earn-Out. Further detail on the underlying assumptions and
               methodology of the valuation process is provided in the Company's Annual
               Report.
 ·             The Verne transaction closed on 15 March 2024 and generated total gross cash
               proceeds of $440 million (£347 million at the time of the transaction), of
               which £321 million was used to pay down the RCF. The Verne transaction also
               triggered the recognition of a potential earn-out payment based on the
               underlying performance of Verne in 2026. The Verne Earn-Out valuation as of
               December 2024 is based on the contractual mechanism of the Earn-Out, adjusted
               for current market and business specific dynamics.
 ·             Given the significant reductions in Company valuation since December 2023, the
               Directors and Investment Manager have undertaken a detailed investigation
               which has identified potential issues with the prior year valuations ("PYA
               Review"). Given that neither the current Board nor InfraRed were part of the
               December 2023 valuation process, the Directors have elected to appoint an
               independent expert to review the valuations for this period. The quantum of
               any potential valuation adjustment is to be determined by this independent
               expert working with the Board and Investment Manager, and as such no prior
               year adjustment has been made in the accounts issued today. Further detail on
               this PYA Review is set out in the Annual Report.
 ·             The Board has determined that it is in shareholders' best interests not to
               publish a full breakdown of the NAV by each portfolio company to protect the
               Company's commercial position during live divestment processes. The valuation
               of Arqiva has been provided. At the point when the Company's commercial
               position changes, the Board will provide the customary transparency on asset
               valuations.

 

Post Period-End Updates

 

RCF refinancing and further repayments

 

 ·             As announced on 14 March 2025, the Company refinanced the £53 million
               principal outstanding on its RCF facility with its existing lender group. The
               renewed RCF has been made available to the Company for a committed three-month
               term expiring 16 June 2025, and two further three-month extension period
               options, subject to lender agreement at the time.
 ·             The Company expects to repay the balance of the new facility through receipt
               of the EMIC-1 proceeds, as well as further divestment proceeds and working
               capital surpluses expected before expiry of the RCF.

 

Divestment processes

 

 ·             Aqua Comms: on 17 January 2025, the Company announced a binding agreement for
               the divestment of Aqua Comms for $48 million (c. £40 million(1)), net of
               transaction costs. Completion is subject to multi-jurisdictional regulatory
               approvals including competition clearances, which are expected to take
               approximately 12 months from signing of the agreement.
 ·             EMIC-1: binding agreement for the divestment of EMIC-1 was signed on 31
               December 2024 for a consideration of $42 million (c. £33 million(1)), net of
               transaction costs. As at the approval of the accounts proceeds have yet to be
               received due to the procedural and administrative closing process for the
               transaction but are expected ahead of RCF expiry.
 ·             SeaEdge UK1: the divestment process is progressing well with value realisation
               expected in the near term.
 ·             Elio Networks: the divestment process has been paused until a later date,
               whilst the Company undertakes value-add initiatives ahead of a later exit.
               Work on these initiatives has commenced, and it is expected that value can be
               optimised within a similar timeframe to the Arqiva exit.
 ·             Arqiva Group: the Board believes that pursuing a sale of the Company's stake
               in Arqiva at this time would not yield an acceptable outcome for shareholders
               as clarity is needed on key broadcasting contract renewals in order for value
               to be optimised. The realisation process is not expected to occur before 2027,
               upon agreement of terms of key broadcasting contract renewals.
 ·             Verne Earn-Out: the Company, in conjunction with its advisers, is assessing
               the terms of the mechanism and relevant facts to determine the optimum route
               to realising value from the Verne Earn-Out. This includes continuing to hold,
               or the potential for an early settlement. Adjustments have been made to the
               valuation to reflect this.

(1) FX rates quoted are as at time of respective announcements, transactions
are exposed to FX rates up to closing

 

Termination arrangements with Triple Point

 

 ·             As discussed previously, the Board is continuing to negotiate termination
               arrangements with D9's previous investment manager, Triple Point Investment
               Management LLP ("Triple Point").  The Board has provided in full for the
               amount considered to be due under the contract with Triple Point but expects
               to negotiate a much lower amount than this.
 ·             Additionally, the Board had also made it clear to Triple Point that a loss of
               US$ 2.8 million incurred by a wholly owned subsidiary in the D9 Group in the
               financial year ended 31 December 2023, as a result of an external fraud,
               should be borne by Triple Point. The Company is in discussion with Triple
               Point in relation to reimbursement including under insurance arrangements, but
               as at the date of signing of the Company's accounts, the amount had not been
               paid by Triple Point to the Company and the amount has not been recorded as
               part of the net assets of subsidiaries.

 

Financial Highlights

 

 As at                          31 Dec 2024  30 Jun 2024  31 Dec 2023
 IFRS Net Asset Value ("NAV")   £297m        £403m        £686m
 IFRS NAV per share             34.36p       46.59p       79.33p
 IFRS Investment Valuation      £286m        £384m        £676m
 Total Portfolio Value(2)       £331m        £424m        £1,029m
 Aggregate Group debt (2)       £238m        £233m        £545m
 Group Cash (unrestricted) (2)  £17.7m       £23.9m       £17.6m

 

 For the period                                 12M to        6M to         12M to

                                                31 Dec 2024   30 Jun 2024   31 Dec 2023
 Earnings per share (for the 12M or 6M ended)   (45.00p)      (32.73p)      (27.43p)
 Ongoing charges ratio (annualised) (2)         1.82%         1.63%         1.33%
 Dividends paid per share                       -             -             3p
 Total return (based on NAV) (2)                (56.7%)       (71.7%)       (23.1%)
 Annualised Consolidated portfolio revenue (2)  £381m         £195m         £396m
 Annualised Consolidated portfolio EBITDA (2)   £179m         £190m         £181m

 

(2) Alternative Performance Measure ("APM"). Further information on APMs can
be found in the Annual Report.

 

Portfolio Highlights (excluding Verne Global and EMIC-1)

                                 12M to        12M to        Y/Y

                                 31 Dec 2024   31 Dec 2023   Change %
 Consolidated Portfolio Revenue  £381m         £396m         (4%)
 Aqua Comms(3)                   £34m          £28m          19%
 Arqiva (100%)                   £338m         £359m         (6%)
 Sea Edge UK1                    £1m           £1m           2%
 Elio Networks                   £8m           £8m           -
 Consolidated Portfolio EBITDA   £179m         £181m         (1%)
 Aqua Comms(3)                   £9m           £9m           5%
 Arqiva (100%)                   £165m         £167          (1%)
 Sea Edge UK1                    £1m           £1m           2%
 Elio Networks                   £4m           £4m           -

 

(3) Excluding EMIC-1

 

ENDS.

 

 

Contacts

 

 Digital 9 Infrastructure plc                                                                                                via FTI Consulting

 Eric
 Sanderson
 InfraRed Capital Partners Limited                                                                                           +44 (0) 207 484 1751

 James O'Halloran

 Mohammed Zaheer
 Panmure Liberum Limited (Financial Adviser to the Company)                                                                  +44 (0) 203 100 2222

 Chris Clarke

 Darren Vickers
 J.P. Morgan Cazenove (Corporate Broker)                                                                                     +44 (0) 20 7742 4000

 William Simmonds

 Jérémie Birnbaum
 FTI Consulting (Communications Adviser)                                                                                     dgi9@fticonsulting.com (mailto:dgi9@fticonsulting.com)

 Mitch Barltrop                                                                                                              +44 (0) 7807 296 032

 Maxime Lopes                                                                                                                +44 (0) 7890 896 777

 

LEI Code: 213800OQLX64UNS38U92

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Helen Richardson, Company Secretary.

 

About Digital 9 Infrastructure plc

 

Digital 9 Infrastructure plc (DGI9) is an investment trust listed on the
London Stock Exchange and a constituent of the FTSE All-Share, with the ticker
DGI9. The Company's investment objective is to undertake a Managed Wind-Down
of the Company and realise all existing assets in the Company's portfolio in
an orderly manner. For more information, please visit www.d9infrastructure.com
(http://www.d9infrastructure.com) .

 

About InfraRed Capital Partners (Investment Manager to D9 appointed to effect
the wind-down)

 

InfraRed was appointed in an advisory position on 11 October 2024 and AIFM on
11 December 2024 to effect the managed wind-down of D9.

 

InfraRed manages US$13bn of equity capital(4) for investors around the globe,
in listed and private funds across both core and value-add strategies.
InfraRed combines a global reach, operating worldwide from offices in London,
Madrid, New York, Sydney and Seoul, with deep sector expertise from a team of
more than 160 people. InfraRed is part of SLC Management, the institutional
alternatives and traditional asset management business of Sun Life, and
benefits from its scale and global platform.

 

For more information, please visit www.ircp.com (http://www.ircp.com) .

 

(4) Uses 5-year average FX as at 30th September 2024 of GBP/USD of 1.2827;
EUR/USD 1.1123. EUM is USD 12.803m

 

Publication of documentation

 

This release is based on D9's 2024 Annual Report. The Annual Report has been
submitted to the National Storage Mechanism and will shortly be available for
inspection at:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

It can also be obtained from the Reports section of the Company's website:

Digital 9 Infrastructure - Annual Report 2024 | Digital 9 Infrastructure Plc
(https://url.jer.m.mimecastprotect.com/s/tzdQCL8z9DI52nQPhBfVcyTwY1?domain=d9infrastructure.com/)
.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  FR DZGFDVGGGKZM