Digital9 Infrastructure has published results for 2023. It published an NAV as at 31 December 2023 on 28 March of £728m or 84p per share. At that time, the board had obtained an independent valuation of Aqua Comms, Elio Networks, Arqiva Group and the potential earn-out payment of up to US $135m from the sale of Verne Global that had completed on 15 March 2024. Nothing material has changed since then except that the Verne Global proceeds have been received as anticipated. However, the end December NAV is now said to be £686.3m or 79.33p per share.
The main differences are that the amount included in the NAV for the potential $135m earn out is now $34m rather than the $67m that was used in March, and the value of Aqua Comms has been written down again. This is what the announcement has to say about this:
“The decrease was driven largely by the recognition of $34m (25%) of the potential $135m Verne Global earn-out. This is lower than the unaudited valuation of $67m which was disclosed in March 2024, as a result of a more conservative treatment of the risk parameters which had been utilised in the initial independent valuation. This prudent approach recognises the inherent uncertainty and perceived risk around Verne Global’s ability to meet future run-rate EBITDA targets, which in turn will determine the amount of the earn-out to be received by the company in early 2027. Alongside the change to the Verne Global earn-out, it was also agreed as part of the final review to increase the discount rate for Aqua Comms to reflect the nascent nature of the business’ expansion into the Asia region alongside its well-established transatlantic business, which resulted in an £15.5m decrease from the unaudited valuations published in March.”
There is no real news about progress with the managed wind down. The board does try to make encoraging noises about the earn out though. It notes that “at completion, Ardian disclosed its intention to support the expansion of Verne Global with up to $1.2bn of committed investment through equity and debt, multiplying the business’ existing sold capacity of 29 MW for 2023 by close to four times in the medium term.”
[QD comment: After yesterday’s good news about the contingent proceeds from the Verne sale, this is a new blow. However, until we hear otherwise, this represents an accounting issue rather than a permanent loss of value.]
DGI9 : Digital 9 results see NAV slashed again