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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Duke Capital Limited | LSE:DUKE | London | Ordinary Share | GG00BYZSSY63 | ORDS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.25 | -0.78% | 31.75 | 31.50 | 32.00 | 32.00 | 31.75 | 32.00 | 363,095 | 08:05:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 31.06M | 19.59M | 0.0472 | 6.73 | 131.9M |
From Apr 2022 to Apr 2024
TIDMDUKE
RNS Number : 1645I
Duke Royalty Limited
01 December 2022
1 December 2022
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Interim Results for the six months ended 30 September 2022
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 its interim results for the six-months ended 30 September 2022 ("Interim 2023").
Financial Highlights
-- Total cash revenue* of GBP10.4 million, up 34% from the prior period (Interim 2022: GBP7.8 million)
-- Recurring cash revenue**, also GBP10.4 million, increased 67% (Interim 2022: GBP6.3 million)
-- Free cash flow of GBP6.6 million, up 44% (Interim 2022: GBP4.6 million) -- Net profit generated of GBP10.3 million, a 66% increase (Interim 2022: GBP6.2 million)
-- Adjusted earnings of 1.58 pence per share, a 14% increase (Interim 2022: 1.39 pence per share)
-- Cash dividends of 1.40 pence per share paid to shareholders, a 27% increase (Interim 2022: 1.10 pence per share)
Operational Highlights
-- Raised GBP20 million of new equity capital in May 2022 -- Deployed over GBP6 million of capital into existing Royalty Partners
-- The portfolio as a whole has proven resilient as trading continues to be in line with expectations during the current macroeconomic headwinds
-- During this period of inflation, the portfolio has produced five out of five maximum positive adjustments
-- Post period end, invested GBP5.5 million into new royalty partner New Path Fire & Security
-- Currently over GBP15 million of available liquidity for future deployments
* Total cash revenue is monthly cash distributions from Duke's royalty partners plus cash gains received from the sales of equity assets and buyout premiums
** Recurring cash revenue excludes buyout premium receipts and cash gains from equity sales (formerly termed 'normalised' revenue)
Nigel Birrell, Chairman of Duke Royalty, said:
"I am pleased to report that Duke Royalty's results for the six-month period show a continuation of increasing recurring cash revenue and higher cash flow per share metrics, which are both core KPIs for the Company. This strong underlying operating performance allowed Duke to pay two quarterly dividends of 0.70 pence each during Interim 2023, equating to an annualised dividend of 2.80 pence which represents a material increase from the 2.25 pence per share of dividends paid out in FY22. These are pleasing results given the challenging economic and political backdrop globally and the portfolio debt coverage ratio remains comfortable. With this in mind, I would like to thank the Duke team for their ongoing efforts in creating a diversified portfolio of royalty investments that have proven resilient during the current macroeconomic headwinds.
"Looking ahead, Duke is well-positioned for growth with additional liquidity ready for deployment. While we have taken a cautious approach to additional deployments in Interim 2023, we feel the current macroeconomic environment will translate to increased demand for our royalty finance solution from profitable, long-standing businesses as we compare favourably to other short term capital solutions. We look forward to expanding our portfolio over the months ahead as we execute on an exciting pipeline of new opportunities which will drive further growth in our business."
Investor Webinars
Investor Meet Company
Neil Johnson, CEO, and Hugo Evans, Finance Director, will deliver a live presentation relating to the Interim Results via the Investor Meet Company platform on Thursday 8 December 2022 at 4pm GMT.
The online presentation is open to all existing and potential shareholders.
Investors can sign up to Investor Meet Company for free and add to meet Duke Royalty via:
https://www.investormeetcompany.com/duke-royalty-limited/register-investor
Mello Monday
The Company will be presenting at MelloMonday on Monday 12 December 2022, taking place from 5pm to 9.30pm. Both Neil Johnson and Hugo Evans will be presenting and taking questions from participants.
If you would like to attend, you can register here for the event.
For further information, please visit www.dukeroyalty.com or contact:
Hot Features
Premium
Neil Johnson / Charlie
Cannon Brookes / Hugo
Duke Royalty Limited Evans +44 (0) 1481 730 613
Cenkos Securities
plc Stephen Keys / Callum
(Nominated Adviser Davidson / Julian Morse
and Joint Broker) / Michael Johnson +44 (0) 207 397 8900
Canaccord Genuity
(Joint Broker) Adam James / Harry Rees +44 (0) 207 523 8000
SEC Newgate (Financial Elisabeth Cowell / + +44 (0) 20 3757 6880
Communications) Axaule Shukanayeva dukeroyalty@secnewgate.co.uk
CHAIRMAN'S REPORT
Dear Shareholder,
I am pleased to report that Duke Royalty's results for Interim 2023 show a continuation of increasing recurring cash revenue and higher cash flow per share metrics, which are both core KPIs for the Company. These are pleasing results given the challenging economic and political backdrop globally. With this in mind, I would like to thank the Duke team for their ongoing efforts in creating a diversified portfolio of royalty investments that have proven resilient during the current macroeconomic headwinds.
I note that there has only been a short period since the Company released its full year results for the 12 months ended 31 March 2022 ("FY 2022"). However, in this short period we have witnessed two different UK Prime Ministers, an escalation in the Russia/Ukraine conflict, significantly higher interest rates and more mainstream commentary about the possible onset of a global recession. Against this undeniably bearish market backdrop, Duke has continued to selectively deploy its capital and will continue to be opportunistic at a time when other lenders are pulling back from the market, thereby providing an opportunity for Duke to expand and increase its market share.
Duke's simple investment philosophy of providing long dated, senior secured royalty investments to established and profitable SME owner-operated business will see it through these challenging times, and I am pleased to report a strong set of financial results for Interim 2023 alongside an optimistic outlook for the rest of the financial year.
Operational Review
In May 2022, Duke announced a GBP20 million equity placing from both institutional and retail investors. Net proceeds from this fundraising were used to repay the existing debt and provide additional liquidity headroom, allowing the Company both to invest further capital into its existing Royalty Partners as well into new opportunities. In that regard, Duke invested GBP6.6m into Intec and Tristone during Interim 2023, both of which are undertaking buy and build strategies in their respective sectors of I.T. managed services and specialist residential and domiciliary care. However, given the volatile macroeconomic back drop, the general feeling in the period was one of caution whilst positioning the Company to take advantage of an ever-expanding deal pipeline and market opportunity.
Based on our current deal pipeline, we expect to deliver an acceleration in deployments over the next six months, and I am pleased to note that Duke had GBP21m of liquidity available for deployment into this pipeline of new deal opportunities at 30 September 2022. In that regard, post period end the Company announced a GBP5.5 million new deployment into New Path Fire & Security, a specialist Fire and Security business, that is undertaking a buy and build strategy in the highly fragmented Fire and Security sector. I look forward to announcing further follow-on investments into New Path Fire in due course as they execute on their business plan.
In terms of the existing portfolio, a further five positive adjustment resets have been recorded in the first six months of the financial year, driven by the current high levels of inflation which have increased the average yield on the Duke portfolio to record levels. These positive resets, when taken alongside a period of high deployment in FY 2022, has allowed Duke to continue to announce record consecutive quarters of recurring cash revenue during Interim 2023, a trend we again expect to continue in the coming quarters. Clearly the current falling levels of discretionary consumer spending remain a key area of focus for the Company but in general, Duke's stated focus on investing in B2B businesses has meant that this has had less of a direct impact. To date, the Company's portfolio as a whole continues to trade robustly. In that regard, it is pleasing to note that the portfolio debt service coverage ratio remains at a level above 2x, thereby providing a good degree of insulation during these volatile times. As previously discussed in prior Chairman's Statements, as Duke deploys more capital the ongoing advantages of operational leverage will increasingly benefit shareholders and this is a trend that I look forward to reporting on in future periods.
Financial Review
The financial results for Interim 2023 reflect the resilience of Duke's business model and its ability to withstand stresses in the global financial system. I am delighted to report that the Company's cash revenue, being cash distributions from Royalty Partners and cash gains from the sale of equity investments, grew to GBP10.4 million during the Period under review, a 34% increase over the GBP7.8 million generated in Interim 2022. However, it should be noted that Interim 2022 benefited from the BHP buyout, which delivered over GBP1.5 million of premiums and realised equity gains. On a like-for-like basis, Interim 2023 produced GBP10.4 million of recurring cash revenue against GBP6.2 million in FY 2022, a 67% increase.
Free cash flow, which represents the Company's ability to pay out quarterly cash dividends to its shareholders and is defined as net operating cash inflow plus cash gains from the sale of equity investments less its interest on debt financing, grew by 27% to GBP6.6 million. This equates to 1.71 pence per share, up from GBP4.6 million and 1.36 pence per share in Interim 2022.
Total income, which includes non-cash fair value movements on the Company's investment portfolio, grew to GBP15.8 million, a 62% increase over Interim 2022. This generated total earnings after tax of GBP10.3 million and earnings per share of 2.65 pence against GBP6.2 million in Interim 2022 and earnings per share of 1.84 pence. Adjusted earnings, which strips out the fair value movements and represents a truer reflection of Duke's operating performance, rose to GBP6.2 million from GBP4.7 million, a 32% increase.
Dividend
This strong underlying operating performance allowed Duke to pay two quarterly dividends of 0.70 pence each during Interim 2023, equating to an annualised dividend of 2.80 pence which represents a material increase from the 2.25 pence per share of dividends paid out in FY22. It is pleasing to note that at the current 2.80 pence annualised rate, the dividend is well covered by free cash flow, and it is the intention of Duke to increase its dividend at a measured pace over time while at the same time reducing the Company's payout ratio, thereby allowing more cash to be reinvested into new deal opportunities.
Outlook
Duke is well-positioned for growth having created a large and diversified portfolio of royalty investments, an exciting pipeline of new opportunities and a strong liquidity position ready for deployment. Additionally, the current macroeconomic climate means that demand for our solution from profitable, long-standing businesses, is as high as ever.
As always, I am appreciative of the ongoing support of our shareholders and am pleased to report the Chairman's Statement for Interim 2023. Our existing partners have traded resiliently during the period and the Group's business model is well insulated to withstand the current economic headwinds and to grow its market share.
I look forward to reporting on the Group's ongoing progress and development in future periods.
Nigel Birrell
Chairman
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Cash flows from operating activities
Receipts from royalty investments 10,234 14,701 6,419
Receipts of interest from loan
investments 173 580 450
Other operating income 30 543 266
Operating expenses paid (1,061) (2,487) (946)
Payments for royalty participation
fees (57) (115) (57)
Tax paid (813) (2,055) (1,569)
------------- ----------- -------------
Net cash inflow from operating
activities 8,506 11,167 4,563
Cash flows from investing activities
Royalty investments advanced (6,550) (74,586) (23,209)
Royalty investments received - 2,938 2,938
Loan investments advanced (700) (3,192) -
Loan investments received - 3,949 3,370
Equity investments advanced - (530) (530)
Receipts from equity instruments - 300 652
Realised gain from sale of equity 2,583 -
investments -
Receipt of deferred consideration - 7,679 -
Investment costs paid (173) (972) (496)
Net cash outflow from investing
activities (7,423) (61,831) (17,275)
Cash flows from financing activities
Proceeds from share issue 20,000 35,000 35,000
Share issue costs (1,115) (1,936) (1,936)
Dividends paid (5,282) (7,270) (3,270)
Proceeds from loans 5,050 38,200 -
Loan repaid (18,500) (7,500) (7,500)
Interest paid (1,872) (1,649) (612)
Other finance costs paid (30) (181) -
Net cash (outflow) / inflow financing
activities (1,749) 54,664 21,682
Net change in cash and cash equivalents (666) 4,000 8,970
------------- ----------- -------------
Cash and cash equivalents at
beginning of period/year 5,707 1,766 1,766
Effect of foreign exchange on
cash 31 (59) 9
Cash and cash equivalents at
the end of period/year 5,072 5,707 10,745
============= =========== =============
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
Note (unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Income
Royalty investment net income 6 15,079 18,037 7,584
Loan investment net income 7 173 533 410
Equity investment net income 8 485 9,678 1,497
Other operating income 30 543 266
Total income 15,767 28,791 9,757
Investment Costs
Transaction costs (28) (631) (525)
Due diligence costs (455) (1,113) 11
Total Investment Costs (483) (1,744) (514)
Operating Costs
Administration and personnel (1,811) (2,060) (1,191)
Legal and professional (232) (405) (183)
Other operating expenses (100) (151) (65)
Expected credit losses - (72) -
Share-based payments (458) (930) (472)
------------- ----------- -------------
Total operating costs (2,601) (3,618) (1,911)
Operating profit 12,683 23,429 7,332
------------- ----------- -------------
Net foreign currency gains 177 (60) 108
Finance costs 3 (1,951) (1,996) (693)
Profit for the period before
tax 10,909 21,373 6,747
------------- ----------- -------------
Taxation expense 4 (614) (982) (540)
Total comprehensive income
for the period 10,295 20,391 6,207
============= =========== =============
Basic earnings per share (pence) 5 2.65 5.95 1.84
============= =========== =============
Diluted earnings per share
(pence) 5 2.65 5.95 1.84
============= =========== =============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note 30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Non-current assets
Goodwill 13 203 203 203
Royalty finance investments 6 149,853 139,648 93,232
Loan investments 7 3,872 3,172 1,000
Equity investments 8 11,305 10,820 4,810
Trade and other receivables 10 - 2,141 2,236
Deferred tax asset 18 155 156 157
------------- ----------- -------------
165,388 156,140 101,638
Current assets
Royalty finance investments 6 22,091 20,831 13,607
Loan investments 7 1,000 1,000 580
Equity investments 8 - - 60
Trade and other receivables 10 2,294 53 7,780
Cash and cash equivalents 5,072 5,707 10,745
Current tax asset 111 - -
------------- ----------- -------------
30,568 27,591 32,772
Total Assets 195,956 183,731 134,410
------------- ----------- -------------
Current liabilities
Royalty debt liabilities 9 165 160 144
Trade and other payables 11 1,423 423 868
Borrowings 12 337 362 172
Current tax liability - 87 132
1,925 1,032 1,316
Non-current liabilities
Royalty debt liabilities 9 960 951 932
Trade and other payables 11 1,331 1,067 204
Borrowings 12 34,363 47,740 9,659
36,654 49,758 10,795
Net Assets 157,377 132,941 122,299
============= =========== =============
Equity
Shares issued 14 172,939 153,974 153,974
Share based payment reserve 15 2,936 2,478 2,020
Warrant reserve 15 265 265 265
Retained losses 16 (18,763) (23,776) (33,960)
Total Equity 157,377 132,941 122,299
============= =========== =============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based
Shares payment Warrant Retained Total
Note issued reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2021 120,870 1,548 265 (36,897) 85,786
---------- ------------- --------- ---------- ----------
Total comprehensive income for
the period - - - 6,207 6,207
Transactions with owners
Shares issued for cash 35,000 - - - 35,000
Share issuance costs (1,936) - - - (1,936)
Share based payments 40 472 - - 512
Dividends - - - (3,270) (3,270)
---------- ------------- --------- ---------- ----------
Total transactions with owners 33,104 472 - (3,270) 30,306
At 30 September 2022 153,974 2,020 265 (33,960) 122,299
---------- ------------- --------- ---------- ----------
Total comprehensive income for
the period - - - 14,184 14,184
Transactions with owners
Share based payments - 458 - - 458
Dividends - - - (4,000) (4,000)
---------- ------------- --------- ---------- ----------
Total transactions with owners - 458 - (4,000) (3,542)
At 31 March 2022 153,974 2,478 265 (23,776) 132,941
---------- ------------- --------- ---------- ----------
Share-based
Shares payment Warrant Retained Total
Note issued reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2022 153,974 2,478 265 (23,776) 132,941
---------- ------------- --------- ---------- ---------
Total comprehensive income for
the period - - - 10,295 10,295
Transactions with owners
Shares issued for cash 20,000 - - - 20,000
Share issuance costs (1,115) - - - (1,115)
Share based payments 80 458 - - 538
Dividends - - - (5,282) (5,282)
---------- ------------- --------- ---------- ---------
Total transactions with owners 18,965 458 - (5,282) 14,141
At 30 September 2022 172,939 2,936 265 (18,763) 157,377
========== ============= ========= ========== =========
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Duke Royalty Limited ("Duke Royalty" or the "Company") is a company limited by shares, incorporated in Guernsey under the Companies (Guernsey) Law, 2008. Its shares are traded on the AIM market of the London Stock Exchange.
Throughout the period, the "Group" comprised Duke Royalty Limited and its wholly owned subsidiaries; Duke Royalty UK Limited, Capital Step Holdings Limited, Capital Step Investments Limited, Capital Step Funding Limited, Capital Step Funding 2 Limited and Duke Royalty Employee Benefit Trust.
The Group's investing policy is to invest in a diversified portfolio of royalty finance and related opportunities.
2. Significant accounting policies 2.1 Basis of preparation
The interim Condensed Consolidated Financial Statements of the Group have been prepared in accordance with UK adopted international accounting standards, and applicable Guernsey law, and reflect the following policies, which have been adopted and applied consistently.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The group transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 April 2021. There was no impact or changes in accounting from the transition.
The accounting policies adopted in the preparation of the interim Condensed Consolidated Financial Statements are consistent with those followed in the preparation of the Consolidated Financial Statements of the Group for the year ended 31 March 2022.
The Financial Statements have been prepared on a historical cost basis, except for the following:
-- Royalty investments - measured at fair value through profit or loss -- Equity investments - measured at fair value through profit or loss -- Royalty participation liabilities - measured at fair value through profit or loss
The Directors consider that the Group has adequate financial resources to enable it to continue operations for a period of no less than 12 months from the date of approval of the financial statements. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements.
2.2 New and amended standards adopted by the Group
There were no new standards adopted by the Group during the reporting period.
2.3 New standards and interpretations not yet adopted
At the date of authorisation of these interim Condensed Consolidated Financial Statements, certain standards and interpretations were in issue but not yet effective and have not been applied in these interim Condensed Consolidated Financial Statements. The Directors do not expect that the adoption of these standards and interpretations will have a material impact on the interim Condensed Consolidated Financial Statements of the Group in future periods.
2.4 Going concern
In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future.
The cash flow needs of the Group have been assessed taking account the need for further funding for any of the existing royalty partners and the ongoing working capital needs of the business against the current cash and liquidity of the Group.
Furthermore, there is adequate headroom in terms of the uncalled loan facility in place should it be required.
3. Finance Costs
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Interest payable on borrowings 1,750 1,499 409
Non-utilisation fees 112 350 213
Deferred finance costs released
to P&L 89 147 71
1,951 1,996 693
============= =========== =============
4. Income tax
The Company has been granted exemption from Guernsey taxation. The Company's subsidiary in the UK is subject to taxation in accordance with relevant tax legislation.
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Current tax
Income tax expense 613 980 539
Deferred tax
Decrease in deferred tax assets 1 3 2
Decrease in deferred tax liabilities - (1) (1)
1 2 1
Income tax expense 614 982 540
============= =========== =============
Factors affecting income tax expense for the period
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Profit on ordinary activities
before tax 10,910 21,373 6,747
Tax using the Groups effective
tax rate of 5.63% (2022: 4.60%,
period to 30 September 2022:
8.00%) 614 982 540
Income tax expense 614 982 540
============= =========== =============
5. Earnings per share
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Total comprehensive income
(GBP000) 10,295 20,391 6,207
Weighted average number of
Ordinary Shares in issue, excluding
treasury shares (000s) 388,412 342,822 337,310
Basic earnings per share (pence) 2.65 5.95 1.84
============= =========== =============
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Total comprehensive income
(GBP000) 10,295 20,391 6,207
Weighted average number of
Ordinary Shares, diluted for
warrants in issue (000s) 388,412 342,822 337,310
Diluted earnings per share
(pence) 2.65 5.95 1.84
============= =========== =============
Basic earnings per share is calculated by dividing total comprehensive income for the period by the weighted average number of shares in issue throughout the period, excluding treasury shares (see Note 14). Diluted earnings per share represents the basic earnings per share adjusted for the effect of dilutive potential shares issuable on exercise of share options under the Company's share-based payment schemes, weighted for the relevant period.
All share options, warrants and Long-Term Incentive Plan awards in issue are not dilutive at the year-end as the exercise prices were above the average share price for the period. However, these could become dilutive in future periods.
Adjusted earnings per share
Adjusted earnings represent the Group's underlying performance from core activities. Adjusted earnings is the total comprehensive income adjusted for unrealised and non-core fair value movements, non-cash items and transaction-related costs, including due diligence fees, together with the tax effects thereon. Given the sensitivity of the inputs used to determine the fair value of its investments, the Group believes that adjusted earnings is a better reflection of its ongoing financial performance.
Valuation and other non-cash movements such as those outlined are not considered by management in assessing the level of profit and cash generation of the Group. Additionally, IFRS 9 requires transaction-related costs to be expensed immediately whilst the income benefit is over the life of the asset. As such, an adjusted earnings measure is used which reflects the underlying contribution from the Group's core activities during the year.
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Total comprehensive income
for the period 10,295 20,391 6,207
Unrealised fair value movements (5,330) (10,431) (2,663)
Expected credit losses - 72 -
Share-based payments 458 930 472
Investment costs 483 1,746 525
Tax effect of the adjustments
above at Group effective rate 247 350 134
-------------
Adjusted earnings 6,153 13,058 4,675
============= =========== =============
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Adjusted earnings for the year
(GBP000) 6,153 13,058 4,675
Weighted average number of
Ordinary Shares in issue, excluding
treasury shares (000s) 388,412 342,822 337,310
Adjusted earnings per share
(pence) 1.58 3.81 1.39
============= =========== =============
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Diluted adjusted earnings for
the year (GBP000) 6,153 13,058 4,675
Diluted weighted average number
of Ordinary Shares in issue,
excluding treasury shares (000s) 388,412 342,822 337,310
Diluted adjusted earnings per
share (pence) 1.58 3.81 1.39
============= =========== =============
6. Royalty investments
Royalty investments are financial assets held at FVTPL that relate to the provision of royalty capital to a diversified portfolio of companies.
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Brought forward 160,479 85,301 85,301
Additions 6,550 74,586 23,209
Refinanced assets - (2,939) (2,938)
Gain on financial assets at
FVTPL 4,915 3,531 1,267
-------------
171,944 160,479 106,839
============= =========== =============
Royalty finance investments are comprised of:
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Non-Current 149,853 139,648 93,232
Current 22,091 20,831 13,607
171,944 160,479 106,839
============= =========== =============
Royalty investment net income on the face of the consolidated statement of comprehensive income comprises:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Royalty interest 10,234 13,987 5,705
Royalty premiums - 714 714
Gain on royalty assets at FVTPL 4,916 3,531 1,267
Loss on royalty liabilities
at FVTPL (71) (195) (102)
15,079 18,037 7,584
============= =========== =============
All financial assets held at FVTPL are mandatorily measured as such.
The Group's royalty investment assets comprise royalty financing agreements with 13 (30 September 2021: 11, 31 March 2022: 13) investees. Under the terms of these agreements the Group advances funds in exchange for annualised royalty distributions. The distributions are adjusted based on the change in the investees' revenues, subject to a floor and a cap. The financing is secured by way of fixed and floating charges over certain of the investees' assets. The investees are provided with buyback options, exercisable at certain stages of the agreements.
7. Loan investments
Loan investments are financial assets held at amortised cost which the exception of the GBP2.2 million loan issued at 0% interest. The impact of discounting is immaterial to the financial statements. The below table shows both the loans at amortised cost and fair value.
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Brought forward 4,172 4,950 4,950
Additions 700 3,192 -
Buybacks - (3,950) (3,370)
Expected credit losses - (20)
4,872 4,172 1,580
============= =========== =============
The Group's loan investments comprise secured loans advanced to two entities (30 September 2021: two, 31 March 2022: two) in connection with the Group's royalty investments.
The loans comprise fixed rate loans of GBP4,872,000 (30 September 2021: GBP1,580,000, March 2022: GBP4,172,000) which bear interest at rates of between 0% and 15%.
The loans mature as follows:
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
In less than one year 1,000 1,000 580
In one to two years - - -
In two to five years 3,872 3,172 1,000
4,872 4,172 1,580
============= =========== =============
Loan investment net income on the face of the consolidated statement of comprehensive income comprises:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Loan interest 173 533 410
============= =========== =============
ECL Analysis
The measurement of ECLs is primarily based on the product of the instrument's probability of default ("PD"), loss given default ("LGD"), and exposure at default ("EAD"). The Group analyses a range of factors to determine the credit risk of each investment. These include, but are not limited to:
-- liquidity and cash flows of the underlying businesses -- security strength -- covenant cover -- balance sheet strength
If there is a material change in these factors, the weighting of either the PD, LGD or EAD increases, thereby increasing the ECL impairment.
The disclosure below presents the gross and net carrying value of the Group' loan investments by stage:
Gross Net
carrying Allowance Carrying
amount for ECLs amount
As at 30 September 2022 GBP000 GBP000 GBP000
Stage 1 4,872 - 4,872
Stage 2 - - -
Stage 3 - - -
4,872 - 4,872
=========== =========== ===========
Net
Gross carrying Allowance Carrying
amount for ECLs amount
As at 31 March 2022 GBP000 GBP000 GBP000
Stage 1 4,192 (20) 4,172
Stage 2 - - -
Stage 3 - - -
4,192 (20) 4,172
================ =========== ===========
Net
Gross carrying Allowance Carrying
amount for ECLs amount
As at 30 September 2022 GBP000 GBP000 GBP000
Stage 1 1,580 - 1,580
Stage 2 - - -
Stage 3 - - -
1,580 - 1,580
================ =========== ===========
Under the ECL model introduced by IFRS 9, impairment provisions are driven by changes in credit risk of instruments, with a provision for lifetime expected credit losses recognised where the risk of default of an instrument has increased significantly since initial recognition.
The credit risk profile of the investments has not increased materially and they remain Stage 1 assets. No ECLs have been charged in the period on these assets as they are not deemed material.
The following table analyses Group's provision for ECL's by stage for the period ended 30 September 2022:
Stage Stage Stage Total
1 2 3
GBP000 GBP000 GBP000 GBP000
At 1 April 2021 and 30 - - - -
September 2021
Expected credit losses
on loan investments in
year 20 - - 20
Expected credit losses
on other receivables
in year 52 - - 52
Carrying value at 31
March 2022 and 30 September
2022 72 - - 72
======== ======== ======== ========
8. Equity investments
Equity investments are financial assets held at FVTPL.
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Brought forward 10,820 3,495 3,495
Additions - 530 530
Disposals - (2,883) (652)
Gain / (loss) on equity assets
held at FVTPL 485 9,678 1,497
11,305 10,820 4,870
============= =========== =============
The Group's equity investments comprise unlisted shares and warrants in 10 of its royalty investment companies (30 September 2021: eight, 31 March 2022: nine).
The Group also still holds two (30 September 2021: two, 31 March 2022: two) unlisted investments in mining entities from its previous investment objectives. The Board does not consider there to be any future cash flows from the remaining investments and they are fully written down to nil value.
Equity investment net income on the face of the consolidated statement of comprehensive income comprises:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Gain / (loss) on equity investments
at FVTPL 485 7,095 1,497
Realised gain on sale of equity - 2,583 -
investments
485 9,678 1,497
============= =========== =============
9. Royalty debt liabilities
Royalty debt liabilities are financial liabilities held at FVTPL.
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Brought forward 1,111 1,031 1,031
Payments made (57) (115) (57)
Loss on financial assets held
at FVTPL 71 195 102
-------------
1,125 1,111 1,076
============= =========== =============
Royalty debt liabilities are comprised of:
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Current 165 160 144
Non-current 960 951 932
1,125 1,111 1,076
============= =========== =============
10. Trade and other receivables
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Current
Prepayments and accrued income 8 53 43
Other receivables 2,286 - 7,737
------------- ----------- -------------
2,294 53 7,780
Non-current
Other receivables - 2,141 2,236
2,294 2,194 10,016
============= =========== =============
The other receivable balance consists of funds due on the sale of Duke Royalty Switzerland Gmbh, incorporated to hold the riverboat assets. On 31 March 2021, Duke sold its Swiss subsidiary to Starling Fleet AG for EUR11,600,000. The deal was structured so that EUR5,000,000 was payable on or before 30 September 2021, EUR4,000,000 was due on or before 30 September 2022, with the remaining EUR2,600,000 due on or before 30 June 2023. The second instalment of EUR4,000,000 was repaid early in March 2022. The last instalment is classified as current.
Using the same methodology as laid out in note 7 for the loan investments, the deferred consideration has been subject to ECL impairment. The financial strength of the counterparty has been reviewed in conjunction with current and future outlook for river cruising, while also taking into account the charges that the Group owns over the riverboats. An ECL impairment of GBP52,000 was recognised against this asset in the year to 31 March 20022 (refer to Note 10 for classification). No further impairment was recognised in the period to 30 September 2022.
11. Trade and other payables
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Current
Trade payables 8 11 10
Transaction costs 279 233 125
Accruals and deferred income 1,136 179 733
1,423 423 868
------------- ----------- -------------
Non-current
Transaction costs 1,331 1,067 204
2,754 1,490 1,072
------------- ----------- -------------
12. Borrowings
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Secured loan
Current - accrued interest 337 362 172
Non-current 34,363 47,740 9,659
34,700 48,102 9,831
============= =========== =============
The secured loan facility has an interest rate of 7.25% over one-month UK LIBOR per annum. In January 2022, the facility term was extended and the facility size increased from GBP35,000,000 to GBP55,000,000. Of this, GBP35,000,000 comprised a revolving facility and GBP20,000,000 a term facility. The principal amount is repayable on 18 January 2027. Furthermore, the interest rate was amended to 7.25% over SONIA. The loan is secured by means of a fixed and floating charge over the assets of the Group.
The Group has adopted Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and 16). Applying the practical expedient introduced by the amendments, when the benchmarks affecting the Group's loans are replaced, the adjustments to the contractual cash flows will be reflected as an adjustment to the effective interest rate. Therefore, the replacement of the loans' benchmark interest rate will not result in an immediate gain or loss recorded in profit or loss, which may have been required if the practical expedient was not available or adopted.
As at 30 September 2022, GBP20,250,000 was undrawn on the facility (30 September 2021: GBP25,000,000, 31 March 2022: GBP6,800,000).
At 30 September 2022, GBP387,000 (30 September 2021: GBP355,000, 31 March 2022: GBP460,000) of unamortised fees remained outstanding.
The table below set out an analysis of net debt and the movements in net debt for the period ended 30 September 2022, the prior period and the year ended 31 March 2022.
Interest
Payable Borrowings
GBP000 GBP000
At 1 April 2022 362 47,740
Cash movements
Loan advanced - 5,050
Loan repaid - (18,500)
Deferred finance costs paid - -
Interest paid (1,872) -
Other finance costs paid (30)
Non-cash movements
Deferred finance costs released to P&L - 73
Interest charged 1,862 -
Other finance costs charged 15 -
As at 30 September 2022 337 34,363
========== ============
Interest
Payable Borrowings
GBP000 GBP000
At 1 April 2021 161 17,103
Cash movements
Loan repaid - (7,500)
Interest paid (611) -
Non-cash movements
Deferred finance costs released to P&L - 56
Interest charged 622 -
As at 30 September 2021 172 9,659
========== ============
Cash movements
Loan advanced - 38,200
Deferred finance costs paid - (181)
Interest paid (1,038) -
Non-cash movements
Deferred finance costs released to P&L - 62
Interest charged 1,228 -
As at 31 March 2022 362 47,740
========== ============
13. Goodwill
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Goodwill arising on business
combination 203 203 203
============= =========== =============
14. Share capital
External Treasury Total
Shares Shares shares
No. No. No. GBP000
Allotted, called up
and fully paid
At 31 March 2021 247,052 10,855 257,907 120,870
---------- ---------- --------- ---------
Shares issued for cash
during the period 100,000 - 100,000 35,000
Share issuance costs - - - (1,936)
Shares issued to directors
and key advisers as remuneration 105 - 105 40
At 30 September 2021 347,157 10,855 358,012 153,974
---------- ---------- --------- ---------
Shares issued to Employee
Benefit Trust during
the period - 792 792 -
PSA shares vested during
the year 1,457 (1,457) - -
At 31 March 2022 348,614 10,190 358,804 153,974
---------- ---------- --------- ---------
Shares issued for cash
during the period 57,143 - 57,143 20,000
Share issuance costs - - - (1,115)
Shares issued to directors
and key advisers as remuneration 205 - 205 80
---------- ---------- --------- ---------
At 31 September 2021 405,962 10,190 416,152 172,939
========== ========== ========= =========
There is a single class of shares. There are no restrictions on the distribution of dividends and the repayment of capital with respect to externally held shares. The shares held by the Duke Royalty Employee Benefit Trust are treated as treasury shares. The rights to dividends and voting rights have been waived in respect of these shares.
15. Equity-settled share-based payments
Warrant reserve
There were no movements in the warrant reserve during the period:
Warrants
No. (000) GBP000
At 1 April 2021, 30 September 2021,
31 March 2022, and 30 September 2022 4,375 265
=========== ========
At 30 September 2022, 4,375,000 (30 September 2021: 4,375,000, 31 March 20212 4,375,000) warrants were outstanding and exercisable at a weighted average exercise price of 46 pence (30 September 2021: 46 pence, 31 March 2022: 46 pence). The weighted average remaining contractual life of the warrants outstanding was 0.50 years (30 September 2021: 1.50 years, 31 March 2022: 1.00 years).
Share-based payment reserve
The following table shows the movements in the share-based payment reserve during the period:
Share options LTIP Total
GBP000 GBP000 GBP000
At 1 April 2021 and 30 September
2021 136 1,412 1,548
LTIP awards - 472 472
--------------- -------- --------
At 30 September 2021 136 1,884 2,020
LTIP awards - 458 458
--------------- -------- --------
At 31 March 2022 136 2,342 2,478
LTIP awards - 458 458
--------------- -------- --------
At 30 September 2022 136 2,800 2,936
=============== ======== ========
Share option scheme
No share options were granted during the period to 30 September 2022.
At 30 September 2022, 200,000 options (30 September 2021: 960,000, 31 March 2022: 200,000) were outstanding and exercisable at a weighted average exercise price of 50 pence (30 September 2021: 31 March 2022: 50 pence). The weighted average remaining contractual life of the options outstanding at the period end was 1.00 years (30 September 2021: 2.00 years, 31 March 2022: 1.50 years).
Long Term Incentive Plan
No performance share awards (PSAs) were granted during the period to 30 September 2022.
At 30 September 2022, 12,298,000 (30 September 2021: 11,855,000, 31 March 2022: 12,298,000) PSAs were outstanding. The weighted average remaining vesting period of these awards outstanding was 1.00 year (30 September 2021: 1.44 years, 31 March 2022: 1.50 years).
16. Distributable reserves
Under Guernsey law, the Company can pay dividends provided it satisfies the solvency test prescribed by the Companies (Guernsey) Law, 2008. The solvency test considers whether the Company is able to pay its debts when they fall due, and whether the value of the Company's assets is greater than its liabilities. The Company satisfied the solvency test in respect of the dividends declared in the period.
17. Dividends
The following interim dividends have been recorded in the period to 30 September 2022, 31 March 2022 and 30 September 2021:
Dividend Dividends
per
share payable
Record date Payment date pence/share GBP000
26 March 2021 12 April 2021 0.55 1,359
25 June 2021 12 July 2021 0.55 1,909
Dividends paid for the period ended 30 September
2021 3,268
===========
Dividend Dividends
per
share payable
Record date Payment date pence/share GBP000
24 September 2021 12 October 2021 0.55 1,909
24 December 2021 12 January 2022 0.60 2,093
Dividends paid for the period ended 31 March
2022 4,702
===========
25 March 2022 12 April 2022 0.70 2,440
1 July 2022 12 July 2022 0.70 2,842
Dividends paid for the period ended 30 September
2022 5,282
===========
On 30 September 2022 the Company approved a further quarterly cash dividend of 0.70 pence per share, totalling GBP2,8420,000, which was paid on 12 October 2021.
18. Deferred tax
Total
GBP000s
1 April 2021 158
Credited / (charged) to profit & loss (1)
---------
At 30 September 2021 157
Credited / (charged) to profit & loss (1)
---------
At 31 March 2022 156
Charged to profit & loss (1)
At 30 September 2022 155
=========
The deferred tax asset arises due to a temporary timing differences on the treatment of transaction costs in the UK subsidiary. This deferred tax asset is expected to reverse over a 30 year period. The utilisation of this asset is dependent on sufficient future taxable profits being generated by the UK subsidiary.
19. Related parties
Directors' fees
The following fees were payable to the Directors during the period:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Short term remuneration 734 730 463
Share-based payments 211 485 273
945 1,215 736
============= =========== =============
Other related party transactions
The following amounts were paid to related parties during the period in respect of support services fees:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Abingdon Capital Corporation 205 363 175
Arlington Group Asset Management
Limited 43 85 43
248 448 218
============= =========== =============
Support Service Agreements with Abingdon Capital Corporation ("Abingdon"), a company of which Neil Johnson is a Director, and Arlington Group Asset Management Limited ("Arlington"), a company of which Charles Cannon Brookes is a Director, were signed on 16 June 2015. The services to be provided by both Abingdon and Arlington include global deal origination, vertical partner relationships, office rental and assisting the Board with the selection, execution and monitoring of royalty partners and royalty performance. Abingdon fees also includes fees relating to remuneration of staff residing in North America.
Dividends
The following dividends were paid to related parties:
Period Year to Period
to to
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Directors (1) 186 262 124
Other related parties 27 37 17
213 299 141
============= =========== =============
(1) Includes dividends paid to Abinvest Corporation, a wholly owned subsidiary of Abingdon Capital Corporation, and to Arlington Group Asset Management
20. Fair value measurements
Fair value hierarchy
IFRS 13 requires disclosure of fair value measurements by level of the following fair value hierarchy:
Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the entity can readily observe.
Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
Level 3: Inputs that are not based on observable market date (unobservable inputs).
The Group has classified its financial instruments into the three levels prescribed as follows:
30-Sep-22 31-Mar-22 30-Sep-21
(unaudited) (audited) (unaudited)
GBP000 GBP000 GBP000
Financial assets
Financial assets at FVTPL
- Royalty finance investments 171,944 160,479 106,839
- Equity investments 11,305 10,820 4,870
183,249 171,299 111,709
============= =========== =============
Financial liabilities
Financial liabilities at FVTPL
- Royalty debt liabilities 1,125 1,111 1,076
============= =========== =============
The following table presents the changes in level 3 items for the periods ended 30 September 2022, 31 March 2022 and 30 September 2021:
Financial Financial
Assets Liabilities Total
GBP000 GBP000 GBP000
At 31 March 2020 88,796 (1,031) 87,765
Additions 23,739 - 23,739
Repayments (3,590) - (3,590)
Royalty income received 5,705 - 5,705
RP liability paid - 57 57
Net change in FV (2,941) (102) (3,043)
----------- ------------- ----------
At 30 September 2021 111,709 (1,076) 110,633
Additions 51,377 - 51,377
Repayments (2,232) - (2,232)
Royalty income received (10,453) - (10,453)
RP liability paid - 58 58
Net change in FV 21,000 (93) 20,907
----------- ------------- ----------
At 31 March 2022 171,299 (1,111) 170,188
Additions 6,550 - 6,550
Repayments - - -
Royalty income received (15,079) - (15,079)
RP liability paid - 57 57
Net change in FV 20,479 (71) 20,408
At 30 September 2022 183,249 (1,125) 182,124
=========== ============= ==========
Valuation techniques used to determine fair values
The fair value of the Group's financial instruments is determined using discounted cash flow analysis and all the resulting fair value estimates are included in level 3.
Valuation processes
The main level 3 inputs used by the Group are derived and evaluated as follows:
Annual adjustment factors for royalty investments and royalty participation liabilities
These factors are estimated based upon the underlying past and projected performance of the royalty investee companies together with general market conditions.
Discount rates for financial assets and liabilities
These are initially estimated based upon the projected internal rate of return of the royalty investment and subsequently adjusted to reflect changes in credit risk determined by the Group's Investment Committee.
Changes in level 3 fair values are analysed at the end of each reporting period and reasons for the fair value movements are documented.
Valuation inputs and relationships to fair value
The following summary outlines the quantitative information about the significant unobservable inputs used in level 3 fair value measurements:
Royalty investments
The unobservable inputs are the annual adjustment factor and the discount rate. The range of annual adjustment factors used is -6.0% to 6.0% and the range of risk-adjusted discount rates is 14.7% to 17.4%.
Equity investments
Sensitivity analysis has not been performed on the Group's equity investments on the basis that they are not material to the Condensed Consolidated Financial Statements
Royalty participation instruments
The unobservable inputs are the annual adjustment factor and the discount rate. The range of annual adjustment factors used is -6.0% to 6.0% and the range of risk-adjusted discount rates is 16.3% to 17.4%.
21. Events after the financial reporting date
Dividends
On 12 October 2022, the Company paid a quarterly dividend of 0.70 pence per share.
On 26 November, Duke announced a GBP5.5 million investment into New Path Fire & Security.
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END
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