Duke Capital Share Discussion Threads

[masurenguy] 14/5/2019 07:58

14 May 2019
Duke Royalty Limited

Modification of Terms with Recently Acquired Royalty Partners

Duke Royalty Limited (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 modifications to the terms of the following agreements which will increase near term revenues for the Company.

The Company has reached agreements with royalty partners Welltel (Ireland) Limited ("Welltel"), a telecommunications services company, media company Pearl & Dean Cinemas Limited ("the Pearl & Dean Group"), and Xtremepush Limited ("Xtremepush"), a technology solutions company, all of which were acquired via the recent Capital Step acquisition, to modify the terms of existing agreements. This is expected to increase gross revenues to Duke by at least £3.7m in aggregate over the next 5 years.

Capital Step was acquired by Duke Royalty in February 2019, prior to which it offered a 'unitranche' solution, which is a perpetual royalty paired with a senior secured loan, which amortises over a three to five year term. Pursuant to the existing arrangements with these three royalty partners, a total of £5.5m of capital deployed amongst them was due to begin repayments in various instalments starting from December 2018, with the entire £5.5m of capital expected to be repaid by 31 March 2022.

Modifications of terms have now been agreed; for Welltel and Xtremepush, the maturity dates of the senior loan facilities have been extended until 30 April 2024, when the full repayment of principal will be due. For the Pearl and Dean Group, the original agreement saw half of the royalty amortising over three years, and the other half as a perpetual term. The parties have agreed to make the entire amount a perpetual royalty, with the return calculated as a fixed percentage of gross revenues, subject to a floor and a cap. All other terms of the agreements remain the same.

As a result of removing the capital repayments, Duke has increased the gross revenues that it expects to receive, assuming the agreements are in place until 30 April 2024, by at least £3.7m. By extending the royalty agreement in perpetuity, the actual revenue could exceed this figure depending on future revenue growth of the Pearl & Dean Group, as £3.7m only includes the minimum contractual royalties (ie. the 'floor') due in the next 5 years. These modifications represent an increase of more than 25% to the Capital Step portfolio's expected revenues per year for the next five years and need no additional overhead costs. Importantly, these contract modifications are excluded from the 'performance related milestones for the period ended 31 March 2021' which the Capital Step portfolio needs to deliver in order to receive a deferred payment from Duke Royalty, as announced by the Company on 4(th) February.

Neil Johnson, CEO of Duke Royalty, said:"We are pleased to agree these modifications, which means that our royalty partners can increase short term cash flow and Duke can maximise near term revenues. We recognised the strength and credit quality of the acquired royalty partners and the Board identified this as a way of unlocking value of the Capital Step royalty agreements for Duke Royalty shareholders. We are also looking at the opportunity to deploy further capital at accretive returns via follow-on investments into the acquired royalty partners and look forward to updating the market in due course."

[masurenguy] 13/5/2019 08:21

Citywire states both Cenkos & Berenberg rate DUKE a ‘buy’, with the latter issuing a 56p price target.

[leading] 07/5/2019 10:09

I like the business model here.

SME finance is poorly served by the banks, who can't be bothered to do the necessary due diligence. Duke offer an attractive alternative to Private Equity. PE either take a controlling stake or threaten to do so if business turns down, so pretty unattractive. I would definitely consider this as a financing method if I was looking to do a buyout.

Considerable operational gearing available too. Origination and deal flow may be the limiting factor here for a while, but they have achieved a critical mass to make the model work already.

So I have bought some.

[carcosa] 10/4/2019 13:22

EDIT: Duplicate

[davidosh] 08/4/2019 20:08

Just a reminder that Duke Royalty will be exhibiting and presenting at the Mello2019 event on Thursday 16th May



They will almost certainly be doing two presentations so one in the morning and one afternoon.

More info and tickets here...

If you want a 30% discount you can use this code in the box ADVFN30

[jonwig] 08/4/2019 13:41

He also says current year dividend could be 4 x 0.9p. Intriguing company. "To buy or not to buy?"

[petewy] 08/4/2019 13:37

IC's simon Thompson:
"The bottom line is that as more investors become aware of the solid progress Duke Royalty is making, the shares are likely to rerate towards the 55p target price I outlined in my February Alpha Report when I suggested buying at 41.6p, since when the board has paid out a quarterly dividend of 0.7p a share ('Duke Royalty: A royal high yielding investment', 18 February 2019). Buy

[bakedbean1] 21/3/2019 09:40

I did my DD before buying in and was aware it was a quarterly dividend ... anyone not researching before investing does not deserve to be here

In the larger scheme of things 0.7p paid quarterly or 1.4p paid bi-annually makes hardly a jot of difference to my portfolio performance and is something I would never factor into a purchase decision.

[ntv] 21/3/2019 09:18

I know that, you know that, but readers of a RNS in the morning (potential new shareholder) doesn't know that if it doesn't jump out in his/her face
it has to be in black and white

[carcosa] 21/3/2019 05:07

Dividend policy was also in the Admissions Document.

[melody9999] 20/3/2019 23:33

NTV - its been quarterly nearly from the start:

[ntv] 20/3/2019 16:11

why didn't they tell the market they are paying quarterly dividends , it might have brought it to the attention of a few new potential shareholders?

[kiwi28] 19/3/2019 16:55

Dividend schedule.

[ntv] 19/3/2019 09:46

Poor PR for some reason

[ntv] 19/3/2019 09:45

not clear from the RNS though

[carcosa] 19/3/2019 09:30

It is quarterly as per their dividend policy per RNS dated 17 March 2017

[ntv] 19/3/2019 09:23

presuming this is a quarterly dividend payment though it doesn't state it is the case

[cheshire man] 19/3/2019 07:31

" approved an interim dividend of 0.7 pence (sterling) per share with the ex-dividend date being 4 April 2019, the record date being 5 April 2019 and a payment date of 17 April 2019."

[molrey] 01/3/2019 22:27

Yes some serious offloading going on below the bid around 40p when it's been trading 41-42p most of the day. Will be interested to see who is on both sides of the transactions as the volumes should warrant a notification of holdings RNS (including some sizable trades over the past few week) Hopefully that has cleared out the seller now.

[shauney2] 01/3/2019 16:36

Huge volume today.

[stevie blunder] 01/3/2019 09:12

Thanks yupawise, I've added it to the header.

[yupawiese2010] 28/2/2019 23:05

Graham Neary talking to Neil Johnson Executive director & CEO of Duke via his cube podcast.

[davidosh] 28/2/2019 18:20

Just to let you all know that Duke Royalty will be exhibiting and presenting at the Mello2019 event on Thursday 16th/Friday 17th May



They will almost certainly be doing two presentations so one in the morning and one afternoon.

More info and tickets here...

[stevie blunder] 28/2/2019 08:53

Thanks bageo, I had missed that.

Link to the presentation added in the header