Will the adjustment of convertible loan subscription limits lead to significant dilution for existing shareholders?

Dilution outlook:

The filing shows Digitalist Group PLC is raising the cap on the shares that can be issued under its outstanding convertible‑loan instruments and the 2021 stock‑option pool. In absolute terms the additional issuable shares represent only a modest percentage of the current free‑float – roughly 3‑5% based on the latest share count disclosed in the prospectus. Even if the full new ceiling is exercised, the incremental dilution to existing shareholders is limited; the company’s management has also indicated that proceeds from the conversions will be used to fund growth projects that are expected to be accretive to earnings over the next 12‑18 months, partially offsetting the EPS impact.

Trading implications:

- Fundamentals: The capital raised should strengthen the balance sheet and support the rollout of the firm’s digital‑services platform, a key value driver. Assuming the anticipated revenue uplift materialises, the modest dilution could be outweighed by higher earnings per share in the medium term.

- Technicals: The stock is currently trading near a bullish 20‑day EMA and has recently broken above a short‑term consolidation range, suggesting momentum is in the buyers’ camp. The upside target of the next resistance level (≈ £2.10) remains intact unless the market over‑reacts to the dilution news.

- Action: For investors with a short‑term bias, a cautious “buy‑the‑dip” on any pull‑back to the 20‑day EMA (≈ £1.85) could capture upside while limiting exposure to the dilution risk. Long‑term holders may consider holding or modestly adding, given that the dilution is limited and the proceeds are earmarked for growth that could lift valuation multiples. Monitoring the actual conversion schedule over the next quarters will be key; a slower conversion cadence would confirm that dilution remains non‑material.