Duke Capital Share Discussion Threads

[btgman] 23/12/2021 11:25

Before folk comment around Duke and their Royalty payment and what the finance represents I do wish they would do some proper research.

As a starting point I would recommend you watch this



Try and gat hold of Cenkos latest broker note

Then come back with comments.

As for todays news for those who understand Duke I would suggest the further investment in Miriad is quite simply stunning. We continue to receive our Royalty payments in line with our strategy but everyone needs to start and give some consideration as to how much a 30% equity stake in Miriad might be worth. I have my view on this but would be intrigued to see their next accounts.

AIMHO
GLA
BTG

[carcosa] 23/12/2021 10:32

"How desperate as a business would you have to be to take financing at this cost?"

Their headline expected returns are in the 13-15% interest per annum and payments persist for 30 years.

Upon cursory examination, given those headlines, many investors will turn away; why would a company even entertain that finance idea.. I mean, 15% per annum for 30 years… that’s only going to attract lousy, desperate companies who can’t get finance even from a loan shark, and must be so desperate they must be a heart beat away from being bankrupt, right?

Well, it’s not as simple as that…

Us investors are usually aware that there are traditionally two types of financing available to a company. Debt financing and Equity financing.

Debt financing means getting a traditional loan in which the company does not give up any of the ownership of the business. It does require fixed payments irrespective of how well, or badly, the company is performing at any one moment in time; can be especially difficult for seasonal businesses. It also typically requires financial covenants to be kept in place all the time.

Equity financing requires the company to issue shares (thus diluting existing shareholders). One risk is that the company loses some (or all) control over the business.

Royalty financing is a sort of compromise between the two. Investors see greater returns than they would with a traditional loan, and companies don't have to trade equity for financing.

In essence Royalty Finance can be summed up as being a real option for business owners who need capital but want to retain control.

Oh, and that 13-15% rate includes capital repayment… something that usually requires refinancing with debt in traditional markets.

Depending on jurisdiction there can also be worthwhile tax breaks for the investee companies. And, repayments are influenced by the 'collar' related to the turnover of the investee company. Also the investees can get out of the deal via PE takeover and/or a buyout clause.

For the right growth companies Royalty Financing is an ideal solution; better than debt or equity finance. Should also be remembered royalty financing has been around for decades outside of the UK.

Whilst currently valued around NAV (something which I estimate is now 42p/share) as time goes by I would hope it be valued along annuity valuation.

[dicktrade] 23/12/2021 08:54

Stemis,

If you are thinking of investing in DUKE can i suggest that you look at how these numbers actually work. You have jumped to conclusions and they are the wrong ones. Duke financing is more involved .
DYOR

[bwm2] 23/12/2021 08:20

SteMis
This Royalty payment includes amortisation of Capital so there is no capital to repay at the end. Frequently the funding is used for acquisitions where bank funding is not available and hence makes sense to these clients

[stemis] 22/12/2021 23:57

Another Royalty agreement £10.5m @ 13.5% plus 17.5% equity stake.

How desperate as a business would you have to be to take financing at this cost? I notice that they've also recently provided financing to a sign company. I once worked for a group that owned a sign company. Not for me thanks...

[kadvfn1] 16/12/2021 13:08

Me too. I double down when we tanked during covid and its one of my better ones for sure

[igbertsponk] 16/12/2021 11:36

In person the CEO is very credible, and has backed the company with a lot of the money he's earnt doing the same thing elsewhere. Gets my vote.

[btgman] 16/12/2021 11:09

Another Royalty agreement £10.5m @ 13.5% plus 17.5% equity stake. Broker upgraded figures going forward market very slow to react.

AIMHO
GLA
BTG

[kadvfn1] 15/12/2021 08:48

That's just Neil. He's been like that for all his interviews... I believe we're heading in the right direction and if everything align and we get some luck we could see our share price heading a lot higher wt higher payout. What's not to like

[joe say] 15/12/2021 07:54

FWIW my take was that the CEO didn't half talk a lot of waffle - sounded like a salesman peddling his wares with random flitting all over the place

Clearly I was none too impressed - sorry

[carcosa] 15/12/2021 06:46

Jock:



Free to register

[jockthescot75] 15/12/2021 06:33

Thanks btgman.

Have you got a link to it? I'm struggling to find it on the www.

Thanks!

Jock

[btgman] 14/12/2021 19:53

For anyone who hasn't watched the meetthecompany presentation for Duke from yesterday I would recommend for old and new shareholders alike.

What I would say there were a few key points for me:-

They are clearly excited by their increasing revenue stream, the additional performance royalties which we may get could add quite significantly to income.

The portfolio consists of 8 investments from memory where Duke has a 25-30% equity stake from memory. If ever any of these are sold is likely to add an exciting bonus.

The confidence was born out by the increased quarterly dividend announced today. Another key point was they were most keen to point out they are steadily increasing dividends to avoid reducing them in the future which is very encouraging.

Some may have Duke as steady rather than exciting. I would have it as solid with some likely positive surprises in the future.

AIMHO
GLA
BTG

[kadvfn1] 14/12/2021 09:29

Nice divi increase. Hopeing we can get back to 0.7p/quarter before end 2022

[carcosa] 13/12/2021 16:33

They have recently stated the 80% FCF is a medium term target. Currently at 70%

[kadvfn1] 13/12/2021 09:22

Just found Duke's dividend policy...

Following Shareholders' approval of the new Investing Policy in June 2015, Duke's focus has been on bringing royalty investing to the European market with the objective of generating predictable and stable cash flows from royalty agreements with a view of paying an attractive, growing and sustainable cash dividend yield for Shareholders.

Although the Company has never paid a dividend, it is the Directors' intention to start paying dividends in the financial year ending 31 March 2018 and that the Company will, in normal circumstances, pay out approximately 80 - 100 per cent. of its free cash flow to its shareholder in the form of dividends. With the proceeds of the Fundraising, the Company is targeting an annualised dividend yield of between 7 and 8 per cent. once fully invested with a minimum targeted dividend yield of at least 5 per cent in the financial year to 31 March 2018*. It is intended that, any dividend paid by the Company will be paid on a quarterly basis on or around, the end of each calendar quarter.

* This is a target only and not a profit forecast. There can be no assurance that the target can or will be met in this timescale or at all and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all and should decide for themselves whether or not the target dividend yield is reasonable or achievable

[kadvfn1] 13/12/2021 08:09

I also think that Duke will be increasing their dividend payment soon to attract new investor. I would havevtjoguth they will do so to at least maintain 4-6% return for newcomer. At least that's what I'm hoping for...

[joe say] 13/12/2021 08:03

To be fair, shares that have paid dividends in the past tend to pay them going forwards and vice versa

[podgyted] 12/12/2021 11:55

I agree with the fool that this is an interesting share, but seriously:-

"It also helps that the company pays a dividend. Its dividend yield is somewhat low at 2.3%, but I am not complaining. "

The market looks forward not back, the fool is not what it once was.

[igbertsponk] 07/12/2021 15:42

Doing a Hanson!
Very brave to go and steal US corn. Shows the way this company is going gangbusters.

[swiss paul] 07/12/2021 09:55

Duke Royalty Ltd (LSE:DUKE) - Enters into Largest Royalty Agreement To Date

Duke Royalty (AIM:DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce that it has entered into a US$21.0 million (approximately £15.9 million) royalty financing agreement (the "Financing") with Atlas Signs Holdings, Inc. ("Atlas"). This partnership represents Duke's largest investment to date and expands upon the Company's North American presence.

Atlas is a US-based, turnkey national brand implementation company that delivers signage, sign maintenance, lighting, installation, and project management services to the world's leading companies.

[bwm2] 03/12/2021 08:54

BT The resilience in 2020 and the openness of their quarterly reporting at that time is important to me. I am also pleased to see their exit from leisure.

[kadvfn1] 03/12/2021 08:38

So how much do we think the next divi will increase by? 0.1p or more?