Digital 9 Infrastructure (DGI9) has released a trading update that covers its performance to the 30 September 2022. The key highlights are as follows:
- The Group’s diversified portfolio of eight high-quality data centre, subsea fibre, and wireless network assets (together, the “Investee Companies”) has performed strongly during the period to 30 September 2022.
- The Company had a Pro-forma Adjusted Gross Asset Value of £1.3bn at 30 September 2022. For the 12-months to 30 September 2022, consolidated Investee Company Revenue of c.£418m achieved Company and management expectations and consolidated Investee Company EBITDA of c.£221m exceeded expectations by c.10%.
- The Investee Companies recently updated their 5-year business plans to 2027 as part of a customary annual re-forecasting exercise. The Company and the Investment Manager note the significant increase in customer demand for the Investee Companies’ services – particularly for the Group’s data centre platform and following the commercial integration of Ficolo Oy and Volta Data Centres with Verne Global.
- The Company and the Investment Manager believe the portfolio provides a compelling opportunity for capital growth via reinvestment of Investee Companies’ respective operating cash flow and the funding of incremental growth capital expenditure to increase data capacity and fibre connectivity, strengthen portfolio returns and continue to enhance shareholder value.
- Given the significant growth opportunities, the Company continues to focus on the operational performance and optimisation of each of the assets acquired to date.
- To help pursue Investee Companies’ growth ambitions, which are driven by accelerated customer demand, the Company has identified a significantly increased growth capital expenditure pipeline of c.£264m for the year ending 31 December 2023 and c.£639m in respect of the subsequent four years ending 31 December 2027. At 31 December 2022, the Group had committed to fund c.£46m of this pipeline in Aqua Comms, EMIC-1 and Volta.
- The Company and the Investment Manager are evaluating complementary sources of growth capital to support the significantly increased growth capital expenditure pipeline. The Company will consider the most suitable use of any additional capital at the time, taking account of efficient management of its costs (including reducing RCF interest payments through the repayment of the RCF) as well as the financing of accretive portfolio growth opportunities.
- The Company is targeting an aggregate dividend of 6.0 pence per ordinary share in the capital of the Company (“Ordinary Share”) for the year ended 31 December 2022.
- At 1 January 2023, the Group had c.£74m of cash available and £43.8m remaining undrawn of the £375m RCF, excluding the accordion tranche of up to £125m. RCF’s annual interest rate margin reduced from 3.75% to 3.5% from 9 December 2022 to reflect the diversified nature of the Group’s portfolio.
- On 19 December 2022, the Company successfully became a constituent of the FTSE 250 Index, potentially unlocking further diversification of the share register with access to blue chip UK and international investors and enhanced liquidity in its shares.
- DGI9 intends to issue its audited annual results for the year ended 31 December 2022 in March 2023. The Company’s Net Asset Value at 31 December 2022 will be published with the 2022 Annual Report in March 2023. The Company intends to host a Capital Markets Day for shareholders and analysts shortly following the release of the Company’s annual results.
Comments from Phil Jordan, chair of Digital 9 Infrastructure
“Since IPO, the Company has selectively acquired high-quality businesses with an established market presence in data centres, subsea fibre, and wireless networks. These form a diversified and integrated portfolio now well-placed to grow organically.
“The business performance and our latest forecasts demonstrate the strength of our portfolio’s revenues and profitability. The majority of D9’s portfolio comprises capital intensive businesses, underpinned by an exponential demand for data, and the growth opportunities for each can be supported by a visible pipeline of investment which is already part-funded by the Group. Through our active asset management approach, we expect these investments to deliver both income and capital growth which will underpin our 10% total return target and 6 pence per share dividend per annum target.
“We will continue to engage openly with our shareholders and look forward to presenting our results for the year ended 31 December 2022 in due course.”
Comments from Arnaud Jaguin, Investment Director at Triple Point
“In pursuing future growth, we expect the portfolio will achieve higher returns due to the arbitrage between making investment in our existing asset base compared to making new acquisitions.
“Our Investee Companies have identified significant growth opportunities, reflected in their recent forecasting and growth capital planning. As we aim to strike the right balance between growth, financial leverage and total return, we will remain disciplined in our capital management approach. As such we are evaluating complementary sources of growth capital and considering the most suitable use of any additional capital.
“Our best-in-class growth platforms align to the UN SDG9 and allow us to drive breadth and depth of customer relationships, lead the way in promoting carrier-neutral connectivity globally, and democratise access to critical digital infrastructure, with an emphasis on de-carbonisation.”