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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 | 0.77% | 32.75 | 32.50 | 33.00 | 32.75 | 32.50 | 32.50 | 792,263 | 12:12:30 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 31.06M | 19.59M | 0.0472 | 6.94 | 136.05M |
From Apr 2019 to Apr 2024
TIDMDUKE
RNS Number : 3023J
Duke Royalty Limited
04 December 2018
4 December 2018
Duke Royalty Limited ("Duke", "Duke Royalty" or "the Company")
Interim Results and Dividend Declaration
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 report its interim results for the six months ended 30 September 2018.
Highlights:
-- Revenue of GBP2.7 million (H1 2017*: GBP0.6 million), an increase of 350% -- Inaugural net profit before tax GBP1.1 million (H1 2017: loss before tax of GBP0.4 million)
-- Positive cash flow from operations of GBP1.3 million (H1 2017: cash outflow of GBP0.1 million)
-- Two new royalty investments made, GBP6.5 million investment into Brownhills Investments Limited (BIL) and GBP10 million into InterHealth Canada Holding Corp (ICHC)
-- Completed follow-up investments of GBP3.0 million into Lynx Equity (U.K.) Limited
-- Successfully raised GBP44 million of new equity in an oversubscribed placing at 44 pence per share to expand and diversify royalty investment portfolio
-- Placing was well supported by existing shareholders and also brought new institutional investors onto Duke's share register
-- Two quarterly dividends paid, 0.6p on 12 April 2018 and 0.7p on 12 July 2018. Based on the previous quarter payment, Duke continues to be ranked amongst the top AIM companies based on dividend yield.
-- Positive adjustment factors achieved from Duke's first two investments, Temarca B.V. and Lynx Equity (U.K.) Limited and encouraging sales growth also being shown by Trimite Global Coatings Limited and Brownhills Investments Limited
-- Strong liquidity available for future capital deployments with cash at period end sitting at GBP30.1 million
*H1 2017 means the six-month period to 30 September 2017
Dividend Declaration
The Company is pleased to report it has approved a quarterly dividend of 0.7 pence (sterling) per share with the ex-dividend date being 27 December 2018, the record date 28 December 2018 and the payment date 12 January 2019.
Neil Johnson, CEO of Duke Royalty, said: "I am delighted to report that, in the period under review, Duke has been able to post significant revenue growth as well as its inaugural net profit. As the Company continues to deploy capital and benefit from the participation in the growth of its partner companies, I expect both revenues and profits to increase in subsequent reporting periods.
"The Company is focused on deploying its capital raised in the summer into new royalty partners who are under exclusivity to Duke whilst we conduct due diligence. I remain confident Duke will be in a position to close more than one transaction should they pass our due diligence process by the end of the financial year. With this in mind, I look forward to the remainder of the financial year with optimism."
For further information, please contact www.dukeroyalty.com, or contact:
Hot Features
Premium
Neil Johnson/ Charlie +44 (0) 1481 741
Duke Royalty Limited Cannon-Brookes 240
Grant Thornton
UK LLP Colin Aaronson/ Samantha +44 (0) 20 7383
(Nominated Adviser) Harrison/ Seamus Fricker 5100
Cenkos Securities
plc Julian Morse/ Michael +44 (0) 207 397
(Joint Broker) Johnson 8900
Mirabaud Securities
Limited Peter Krens/ Edward +44 (0) 20 3167
(Joint Broker) Haig-Thomas 7222
Newgate Communications Elisabeth Cowell/ +44 (0) 20 3757
(PR) Ian Silvera / Tom 6880
Carnegie dukeroyalty@newgatecomms.com
CHAIRMAN'S REPORT
FOR THE PERIODED 30 SEPTEMBER 2018
Dear Shareholder,
Duke Royalty's strategy is to provide investors with exposure to capital growth and income by becoming the preferred and leading provider of royalty finance for corporations in Europe and abroad.
I am delighted to present our financial results for the six months ended 30 September 2018, with the Company achieving its inaugural net profit before tax of GBP1.1 million and revenues of GBP2.7 million. Duke is now in a strong position to execute its strategy thanks to the achievements delivered during the period.
These include diversification of Duke's portfolio of royalty partners and underlying companies from five to eight investments across a range of sectors, completion of an oversubscribed placing to raise GBP44 million delivered at a premium to the previous fundraise, and the receipt of increased royalty payments from two of our partners due to the revenue growth they achieved on the back of our investment. As a result of these achievements, Duke continues to be ranked amongst the top AIM companies based on dividend yield.
We are currently the only UK-quoted diversified Royalty company. This means that we have a first-mover advantage to secure some of the most compelling investment opportunities in these jurisdictions.
Our sector focus currently covers:
-- Hospitality and Leisure; -- Industrials; -- Technology and media; -- Healthcare; and -- Power and utilities.
Our operating cost base is carefully managed to ensure that each deal entered into by Duke is immediately accretive. Accordingly, cash operating expenses were kept under tight control during the period, increasing from GBP0.26 million to GBP0.56 million period-on-period to reflect the decision by Duke to scale-up its operating team to effectively manage its deal origination, execution and monitoring requirements.
Whilst we expect further modest increases in cash operating expenses as the Company continues to expand, they should significantly lag revenue growth and this positive operational leverage is expected to be seen in the coming periods.
During this interim period, two new royalty investments and one follow-on investment were concluded. GBP6.5 million was invested into Brownhills Investments Limited (BIL) and GBP10 million into InterHealth Canada Holding Corp (ICHC), while a follow-up investment totalling GBP3 million was also made into Lynx Equity (U.K.) Limited. Both Brownhills and InterHealth match Duke's core investment criteria in that they are both well-established and profitable private businesses, with Duke looking forward to being aligned with them in their future growth and success.
Royalty finance, which provides capital and receives returns based on revenue performance of its investee companies over a long term, represents a GBP50 billion sector in North America. The funding gap in Europe and abroad, due to the banks' unwillingness to lend to SMEs, means that we represent an attractive proposition for private growth businesses that wish to retain control of their businesses without any refinancing risk. In turn, our business model provides investors with exposure to ambitious private companies with excellent track records of delivering growth.
One of the key selling points and differentiating factors about the Duke business model is that Duke is aligned with its investee companies (royalty partners), with its return being directly linked to the underlying performance of its royalty partners. Each of Duke's royalty partners is subject to an annual adjustment, which triggers a reset of the monthly payment amount due to Duke, subject to a collar (a maximum adjustment up or down). The reset is calculated once a year, each year for the life of the royalty agreement, based on the gross revenue growth (or decline) of the royalty partner over the preceding twelve months.
In this regard, I am pleased that Duke recently confirmed positive annual adjustments for its first two Royalty Partners, Lynx UK and Temarca. As announced on 8 May 2018, Temarca and Lynx UK were tracking above the top end of the annual adjustment range, and the Company is pleased to report that both partners are continuing to track above expectations and we are confident of further positive resets in both cases.
With regard to Duke's other partners, the first adjustment date for both Trimite and Brownhills is on 31 March 2019. Based on management accounts received by Duke for the period to the end of September 2018, the year-on-year revenue performance for Trimite and Brownhills is meeting expectations. As such, Duke remains confident of a positive reset event as and when these two partners complete their first adjustment periods.
Financial Review
Investors will note the restatement of the September 2017 interim numbers. This has been necessary as part of the move by Duke to adopt IFRS 9 reporting standards and the requirement to compare this Interim FY19 statement to the previous interim period on a like for like basis. All future reporting periods will be reported according to IFRS 9 and, due to the fact that the March 31 2018 financials were also prepared under IFRS 9, no further restatements will be required in the future.
To fund these investments and also provide the necessary liquidity to fund future royalty investments, Duke was able to successfully raise GBP44 million in an equity issuance in July 2018 priced at 44p per share. It was very pleasing that the equity issue was well oversubscribed and that it also brought a number of new institutional shareholders onto the Company's share register.
During the interim period, Duke paid out two quarterly dividends with 0.6p per share paid to shareholders on 12 April 2018 and 0.7p per share paid on 12 July 2018. The July payment reflected the second dividend increase in the Company's short operating history. The Company remains committed to maintaining a high and stable dividend and the Company's current focus is now on deploying all of its remaining cash into a series of new royalty investments in the coming months.
Outlook
Heading into 2019, I am confident that the Company's momentum will continue as it seeks to further expand its portfolio. We have a very strong cash position with over GBP30 million as at 30 September, a pipeline of new investments expected to deliver news flow in 2019, and an excellent management team which boasts more than 75 years' combined royalty finance experience. Currently, the Company is focused on delivering additional deployments into new royalty partners and I am confident the results of our efforts will be seen before the end of the financial year.
We expect knowledge of royalty finance, a multi-billion industry in North America, to grow across Europe and abroad, particularly among private small and medium-sized enterprises, attracting more potential opportunities for Duke among well-established businesses. The management team will continue to educate the corporate community, the advisors to these companies and the investor community in 2019, to further drive new opportunities and potential investors to the Company.
We are mindful of the geo-political headwinds, including Brexit, facing the UK and European business community. But Duke's business model, which includes consistently low operating costs and tight controls over operating expenses, means that the Company is very well-positioned to cope with unfavourable macroeconomic events.
Overall, this has been another period of strong progress by the Company and, as always, I am very grateful for the support of our shareholders. The board looks forward to reporting on the Company's continued progress in future periods.
Nigel Birrell Chairman 3 December 2018
DIRECTORS
FOR THE PERIODED 30 SEPTEMBER 2018
Mr Nigel Birrell (Chairman)
Nigel Birrell is a Non-Executive Director and Chairman of the Board. He works with the Executive Directors on deal origination and structuring. He has extensive public company experience and expertise in the gaming, media and financial services sectors. Mr Birrell is the CEO of the Lottoland Group, a Gibraltar regulated gaming group.
Mr Birrell was previously Group Director on the Executive Board at bwin.party digital entertainment plc, the world's leading listed on-line gaming business, where he was responsible for all its mergers and acquisitions, business development and managing its investment portfolio. While at bwin.party Mr Birrell led the acquisitions of Gamebookers, Empire On-line and IOG's casino operations, Cashcade, the World Poker Tour and Orneon. He was instrumental in devising, negotiating and transacting the merger between PartyGaming and Bwin.party, the largest online gaming deal in history. He has also led all its disposals including Ongame's sale to Amaya. Prior to bwin.party, Mr Birrell was a director of the FTSE 250 media group HIT Entertainment. He also worked as an investment banker with Donaldson, Lufkin & Jenrette and Dresdner Kleinwort Benson. Since leaving bwin.party Mr Birrell has served on the Board of LottoLand Limited, a Gibraltar regulated fast growing gaming group as its CEO. He is also a Non-Executive Chairman of Southern Rock Insurance Company Limited, a regulated insurance underwriter.
Mr Birrell holds a LLB from the University of London (Queen Mary College) and qualified as a solicitor of the Senior Courts of England and Wales.
Mr Neil Johnson
Neil Johnson is an Executive Director and Duke Royalty's Chief Executive Officer with responsibility for the overall strategic direction and performance of the Group. Working closely with the other members of the Management team, Board members and the Investment Committee, he leads all deal origination, due diligence and structuring.
Mr Johnson has over 25 years of experience in investment banking, merchant banking, and research analysis in both the Canadian and UK capital markets. In 2012 he co-founded and became Chief Executive Officer of Difference Capital Financial, a Canadian publicly listed merchant bank. For the previous 19 years he worked for Canaccord Genuity, first in Canada and later at Canaccord London rising to the positions of Head of Corporate Finance (Europe), Global Head of Technology, and a member of the Global Executive Committee. Mr Johnson was instrumental in the firm becoming authorised as a nominated adviser for AIM and regulated in the UK and London Stock Exchange Main Market listings; he spearheaded the firm's diversification into the technology industry, and led Canaccord's initiative to attract North American firms to list in London.
During his tenure the Canaccord European operation grew revenues from less than GBP5 million to over GBP50 million, completed over 100 transactions and raised in excess of GBP3 billion for North American companies listed in London.
Mr Johnson is a graduate of the Richard Ivey School of Business at the University of Western Ontario and holds the designation of Chartered Financial Analysis Charterholder.
Mr Charles Cannon Brookes
Charlie Cannon Brookes is an Executive Director of the Company and works alongside the CEO on deal origination, due diligence and structuring. In addition Mr Cannon Brookes is Duke Royalty's liaison with UK institutions / advisors and has oversight of Duke Royalty's corporate governance and UK plc responsibilities.
Mr Cannon Brookes has over 20 years investment experience. He is a Director of FCA authorised and regulated Arlington Group Asset Management Limited (AGAM). Through AGAM, Mr Cannon Brookes has been active in a variety of different investment management mandates and corporate finance transactions. In addition, he has successfully led a number of IPO and RTO transactions on the London markets. Prior to AGAM he worked for Arlington Group plc, an AIM quoted investment company and managed all of its public equity portfolio, as well as Jupiter Asset Management, ABN Amro and Barclays de Zoete Wedd. He has extensive fund management experience and has advised and sat on the board of a number of different funds, trusts and other operating public companies.
Mr Cannon Brookes holds a BA Honours degree in Economics & Politics from the University of Exeter.
Mr Justin Cochrane
Justin Cochrane is currently a Non-Executive Director of the Company. He works with the Executive Directors on deal origination and structuring and is a member of the Investment Committee.
Mr Cochrane is the President and COO of Cobalt 27 Capital Corp. Mr Cochrane was the Executive Vice President of Duke Royalty from 2015 to the period under review as he transitioned into the executive role at Cobalt 27. Mr Cochrane was previously the Executive Vice President of Corporate Development for Sandstorm Gold Ltd. At Sandstorm, Mr Cochrane was responsible for sourcing, negotiating and executing royalty and stream financing transactions across the globe. Mr Cochrane was a key part of Sandstorm's team as it grew into one of the largest royalty and stream financing companies in Canada. Prior to Sandstorm Mr Cochrane was a Vice President at National Bank Financial where he spent some nine years working in the investment banking group. As Vice President, Mr Cochrane managed primary coverage of British Columbia based clients in the diversified, paper & forest products, power & utilities, resources, cleantech and other sectors. Mr Cochrane specialised in providing advice to client on merger and acquisition transactions and equity and debt financing opportunities.
Mr Cochrane holds the designation of Chartered Financial Analyst Charterholder and received a Bachelor of Commerce degree, with honours, from the University of British Columbia, Vancouver, Canada. Mr Cochrane is a government ambassador at the Multiple Sclerosis Society of Canada and also a Director of Cobalt 27 Capital Corp. and Nevada Copper Corp.
Mr Mark Le Tissier
Mark Le Tissier is a Non-Executive Director of the Company. He is responsible for the oversight of the Company's corporate obligations in Guernsey.
Mr Le Tissier is the European Regional Director of Trident Trust with oversight over five offices, as well as the Managing Director of Trident Trust Company (Guernsey) Limited and has worked for Trident for over twenty years. He has extensive board-level experience and has an in-depth knowledge of Guernsey and other jurisdictions' corporate and investment regulations. Mr Le Tissier is a Trust & Estate Practitioner who has also completed the IOD Programme in company direction and is resident in Guernsey.
Mr Matthew Wrigley
Matthew Wrigley is a Non-Executive Director of the Company and works with the Executive Directors on structuring and all legal matters relating to the Company.
Mr Wrigley is a partner at asset management advisory firm, MJ Hudson. In his fifteen years in alternative assets, he has gained experience through a mix of legal and commercial roles, including serving as General Counsel for a fund management company listed on the Australian Securities Exchange with AUD 1.3 billion assets under management, Chief Operating Officer of investment trust listed on the Singapore Securities Exchange with a market capitalisation of SGD 600 million, and with leading global law firm, Baker McKenzie. He also sits on several fund and general partner boards, with strategies spanning private equity, infrastructure and real estate.
Mr Wrigley is a Solicitor of the Supreme Court of Queensland Australia, holds a Bachelor of Laws (LL.B) from the University of Queensland and is resident of Guernsey.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 30 SEPTEMBER 2018
Note Period Year to Period
to to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Income
Net change in fair value on financial
assets financial
and financial liabilities at
fair value
through profit or loss 6,13,15 2,481,210 1,554,518 467,887
Transaction costs reimbursed 107,500 145,000 -
Net foreign currency gains - 97,238 100,700
Gain on exercise of warrants 87,989 - -
Interest receivable 22,345 - -
Total income 2,699,044 1,796,756 568,587
Expenses
Support services administration
fees 14 (110,000) (806,537) (451,439)
Directors' fees 14 (144,315) (132,065) (54,500)
Investment Committee fees 14 (25,000) (37,500) (12,500)
Legal and professional fees (234,510) (229,723) (50,918)
Transaction costs (436,102) (488,308) (141,103)
Royalty participation fees 15 (431,750) (848,534) (249,769)
Other operating costs (91,377) (112,289) (34,496)
Net foreign currency losses (1,820) - -
Interest payable (78,880) (2) (1,700)
Other finance costs (93,180) - -
Total expenses (1,646,934) (2,654,958) (996,425)
Gain/(loss) for the financial
period 1,052,110 (858,202) (427,838)
Taxation expense 3 (102,000) - -
Total comprehensive income/(loss)
for the period 950,110 (858,202) (427,838)
Basic earnings/(deficit) per
share (pence) 4 0.73 (1.38) (0.94)
Diluted earnings/(deficit) per
share (pence) 4 0.73 (1.38) (0.94)
All income is attributable to the holders of the Ordinary Shares of the Company.
The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2018
Note 30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Non-current assets
Financial assets at fair value
through profit or loss 6 39,174,461 20,782,297 6,339,755
Deferred tax 7 107,000 - -
39,281,461 20,782,297 6,339,755
Current assets
Financial assets at fair value
through profit or loss 6 5,609,414 2,786,501 844,198
Trade and other receivables 8 711,163 6,687,020 15,253
Cash and cash equivalents 30,066,361 3,165,221 7,323,409
36,386,938 12,638,742 8,182,860
Total assets 75,668,399 33,421,039 14,522,615
Equity
Shares issued 9 101,918,170 60,303,293 40,905,094
Shares to be issued - - 341,439
Share based payment reserve 10 169,042 129,977 124,412
Warrant reserve 125,000 125,000 -
Retained losses 11 (28,623,621) (28,314,324) (27,178,219)
73,588,591 32,243,946 14,192,726
Current liabilities
Trade and other payables 12 678,541 259,693 51,336
Financial liabilities at fair value
through profit or loss 13 187,362 140,886 42,968
865,903 400,579 94,304
Non-current liabilities
Financial liabilities at fair value
through profit or loss 13 1,213,905 776,514 235,585
Total liabilities 2,079,808 1,177,093 329,889
Total equity and liabilities 75,668,399 33,421,039 14,522,615
The Condensed Consolidated Financial Statements on pages 10 to 31 were approved and authorised for issue by the Board of Directors on 3 December 2018 and were signed on its behalf by:
Mark Le Tissier Matthew Wrigley Director Director
The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 SEPTEMBER 2018
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
Cash flows from operating activities GBP GBP GBP
Receipts from royalty investments 1,791,642 987,192 245,074
Receipts from transaction costs
reimbursed 167,500 45,000 -
Payments for royalty participation (81,252) - -
fees
Operating expenses paid (566,563) (785,714) (343,474)
Net cash inflow/(outflow) from operating
activities 1,311,327 246,478 (98,400)
Cash flows from investing activities
Royalty investments advanced (13,924,640) (22,932,356) (6,932,356)
Transaction costs paid (222,047) (277,737) (141,103)
Pre-royalty investment advanced (605,419) - -
Amounts advanced to agents pending
royalty investment
completion - (6,467,500) -
Gain on exercise of warrants 87,989 - -
Payment to acquire equity investment - (250) -
Interest income received 13,914 - -
Net cash outflow from investing
activities (14,650,203) (29,677,843) (7,073,459)
Cash flows from financing activities
Proceeds from share issue 44,010,000 19,840,275 343,000
Share issue costs (2,345,123) (765,613) (70,000)
Dividends paid (1,250,630) (925,468) (226,887)
Interest paid (78,880) - (1,699)
Other finance costs paid (85,500) - -
Net cash inflow from financing
activities 40,249,867 18,149,194 44,414
Net change in cash and cash equivalents 26,910,991 (11,282,171) (7,127,445)
Cash and cash equivalents at beginning
of year 3,165,221 14,350,154 14,350,154
Effect of foreign exchange on
cash (9,851) 97,238 100,700
Cash and cash equivalents at the
end of year 30,066,361 3,165,221 7,323,409
The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODSED 30 SEPTEMBER 2017 AND 31 MARCH 2018
Share-based
Shares Shares to payment Warrant Retained Total
be
Note issued issued reserve reserve losses equity
GBP GBP GBP GBP GBP GBP
At 1 April
2017 40,905,094 - 124,412 - (26,523,494) 14,506,012
Total
comprehensive
loss for
the period
(restated) - - - - (427,838) (427,838)
Transactions
with
owners
Share based
payments 10 - 341,439 - - - 341,439
Dividends 5 - - - - (226,887) (226,887)
Total
transactions
with owners - 341,439 - - (226,887) 114,552
At 1 October
2017
(restated) 40,905,094 341,439 124,412 - (27,178,219) 14,192,726
Total
comprehensive
loss for
the period - - - - (430,364) (430,364)
Transactions
with
owners
Shares issued
for
cash 9 19,507,275 - - - - 19,507,275
Share
issuance
costs
- 9 (1,188,338) - - - - (1,188,338)
Share based
payments 9,10 1,079,262 (341,439) 5,565 - - 743,388
Warrants
issued - - - 125,000 - 125,000
Dividends 5 - - - - (705,741) (705,741)
Total
transactions
with owners 19,398,199 (341,439) 5,565 125,000 (705,741) 18,481,584
At 31 March
2018 60,303,293 - 129,977 125,000 (28,314,324) 32,243,946
The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 SEPTEMBER 2018
Share-based
Shares payment Warrant Retained Total
Note issued reserve reserve losses equity
GBP GBP GBP GBP GBP
At 1 April 2018 60,303,293 129,977 125,000 (28,314,324) 32,243,946
Total comprehensive income
for
the year - - - 950,110 950,110
Transactions with owners
Shares issued for cash 9 44,000,000 - - - 44,000,000
Share issuance costs
- 9 (2,385,123) - - - (2,385,123)
Share based payments 10 - 39,065 - - 39,065
Dividends 5 - - - (1,259,407) (1,259,407)
Total transactions with
owners 41,614,877 39,065 - (1,259,407) 40,394,535
At 30 September 2018 101,918,170 169,042 125,000 (28,623,621) 73,588,591
The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODED 30 SEPTEMBER 2018
1. General Information
Duke Royalty Limited ("Duke Royalty" or the "Company") is a closed-ended
investment company with limited liability formed under the Companies
(Guernsey) Law, 2008. Its shares are traded on the AIM market
of the London Stock Exchange. The Company's registered office
is shown on page 32.
The Group comprised Duke Royalty Limited and its wholly owned
subsidiary Duke Royalty UK Limited, a company registered in England
and Wales.
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 International
Accounting Standard 34 "Interim Financial Reporting", as adopted
by the European Union, and using the going concern basis of
preparation. These interim financial statements do not contain
all the information and disclosures as presented in the annual
financial statements, and should be read in conjunction with
the Consolidated Financial Statements of the Group for the
year ended 31 March 2018, which have been prepared in accordance
with International Financial Reporting Standards ("IFRS"),
to the extent that they have been adopted by the European Union,
and applicable Guernsey law.
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
2018, except for the adoption of new standards effective from
1 January 2018, and are expected to be applied in the preparation
of the financial statements for the year ended 31 March 2018.
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
2.2 New and amended standards adopted by the Group
The Group has adopted IFRS 15 "Revenue from Contracts with
Customers" for the first time in these interim financial statements.
There are no areas within this standard which have a material
impact on the Group.
2.3 Restatement of interim comparatives
In preparing the interim Consolidated Financial Statements
of the Group for the period ended 30 September 2017, the Group
elected to early adopt IFRS 9 'Financial instruments'. Following
a full review of the implementation of IFRS 9 as part of the
preparation of the Consolidated Financial Statements for the
year ended 31 March 2018, the Group made certain amendments
which have resulted in the restatement of the comparative figures
for the period ended 30 September 2017 in these Condensed Consolidated
Financial Statements. As part of this restatement, transaction
costs and royalty participation fees previously included in
the carrying value of the investments were expensed in the
Condensed Consolidated Statement of Comprehensive Income. This
has resulted in the previously reported loss before tax of
GBP78,139 increasing to GBP427,838.
3. 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.
Factors affecting income tax expense for the year
Period Year to Period
to to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Profit/(loss) on ordinary activities
before tax 950,110 (858,202) (427,838)
Corporation tax at country rates 331,458 (61,409) (61,049)
Tax losses not recognised - 61,409 61,049
Utilisation of tax losses brought (122,458) - -
forward
Deferred tax asset recognised (107,000)
102,000 - -
4. Earnings/(deficit) per share
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
Basic earnings/(deficit) per Ordinary (unaudited) (audited) (unaudited)
Share
(restated)
GBP GBP GBP
Profit/(loss) for the period 950,110 (858,202) (427,838)
Weighted average number of Ordinary
Shares
in issue 130,210,792 62,234,062 45,377,459
Basic earnings/(deficit) per share
(pence) 0.73 (1.38) (0.94)
Period to Year to Period to
September March September
2018 2018 2017
Diluted earnings/(deficit) per (unaudited) (audited) (unaudited)
Ordinary Share
(restated)
GBP GBP GBP
Profit/(loss) for the period 950,110 (858,202) (427,838)
Weighted average number of Ordinary
Shares,
diluted for warrants in issue 130,309,049 62,234,062 45,377,459
Diluted earnings/(deficit) per
share (pence) 0.73 (1.38) (0.94)
The basic earnings per share is based on the Group profit for
the period and on the weighted average number of Ordinary Shares
in issue for the period. The share options, Long Term Incentive
Plan awards and warrants in issue were not dilutive in the year
ended 31 March 2018 and the period ended 30 September 2017, but
the warrants in issue have become dilutive in the current period.
For more details on the share options see note 10.
5. Dividends
The Company implemented a quarterly dividend policy during the
year ended 31 March 2018. The following interim dividends have
been recorded and paid since the inception of this policy:
Dividend Dividends
per
share payable
pence/share GBP
Record date Payment date
30 June 2017 27 July 2017 0.5 226,887
Dividends payable for the period ended
30 September 2017 226,887
Record date Payment date
29 September 2017 19 October 2017 0.5 226,887
29 December 2017 12 January 2018 0.5 478,854
Dividends payable for the period ended
31 March 2018 705,741
Record date Payment date
3 April 2018 12 April 2018 0.6 581,265
29 June 2018 12 July 2018 0.7 678,142
Dividends payable for the period ended
30 September 2018 1,259,407
On 20 September 2018 the Company approved a further quarterly
dividend of 0.7 pence per share, totalling GBP1,385,317, which
was paid on 12 October 2018.
6. Financial assets at fair value through profit or loss
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Non-current -
Royalty investments 39,174,211 20,782,047 6,339,755
Equity investments 250 250 -
39,174,461 20,782,297 6,339,755
Current
Royalty investments 5,609,414 2,786,501 844,198
44,783,875 23,568,798 7,183,953
Net changes in fair value on financial assets at fair value through
profit or loss:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
On royalty investments 2,614,579 1,623,384 496,671
On equity investments - - -
Total net gains 2,614,579 1,623,384 496,671
Net changes in fair value on financial assets at fair value through
profit or loss:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Realised 1,791,642 987,192 245,074
Change in unrealised 822,937 636,192 251,597
Total net gains 2,614,579 1,623,384 496,671
Realised changes in fair value relate to cash amounts received
under the Group's royalty financing agreements.
Royalty investments
Temarca B.V.
In April 2017 the Group completed its first royalty financing
agreement with Temarca B.V. ("Temarca"). Under the terms of the
agreement the Group advanced EUR8 million (GBP6.9 million) to
Temarca for a term of 25 years in exchange for annualised royalty
distributions of approximately EUR1 million (GBP0.9 million).
The distributions are adjusted annually based on the percentage
change in Temarca's gross revenues compared to the prior year,
subject to a floor and cap. The financing is secured by way of
fixed and floating charges over certain assets and the Group
has provided Temarca with a buyback option. This buyback option
can be exercised at Temarca's discretion at any time during the
term of the agreement.
In August 2018 the Group contributed a further EUR1 million (GBP0.9
million) of financing to Temarca. This increased the annualised
royalty distributions receivable from Temarca to approximately
EUR1.1 million (GBP1.0 million) per annum.
Lynx Equity (U.K.) Limited
In October 2017 the Group entered into a royalty financing agreement
with Lynx Equity (U.K.) Limited ("Lynx"). Under the terms of
the agreement the Group advanced GBP7 million to Lynx in perpetuity
in exchange for annualised royalty distributions of approximately
GBP0.8 million. The distributions are adjusted annually based
on the percentage change in the aggregated gross revenues of
Lynx's investee companies compared to the prior year, subject
to a floor and cap. The financing is secured over all present
and after-acquired property and assets of Lynx and shares of
the subsidiaries of Lynx. Lynx's parent company has also provided
a corporate guarantee to pledge all cash flows from Lynx to the
Group. The Group has provided Lynx with a buyback option after
the expiry of a period of five years from the date of the original
investment. This buyback option is exercisable at Lynx's discretion.
In April and September 2018 the Group contributed a further GBP2
million and GBP1 million respectively of royalty financing to
Lynx. This increased the annualised royalty distributions receivable
from Lynx to approximately GBP1.2 million per annum.
Trimite Global Coatings Limited
In March 2018 the Group entered into a royalty financing agreement
with Trimite Global Coatings Limited ("Trimite"). Under the terms
of the agreement the Group advanced GBP9 million to Trimite for
a term of 30 years in exchange for annualised distributions of
approximately GBP1.1 million. The distributions are adjusted
annually based on the percentage change in Trimite's gross revenues
compared to the prior year, subject to a floor and cap. The financing
is secured by way of fixed and floating charges over certain
assets and the Group has provided Trimite with a buyback option.
This buyback option can be exercised at Trimite's discretion
at any time during the term of the agreement.
Brownhills Investments Limited
In April 2018 the Group entered into a royalty financing agreement
with Brownhills Investments Limited ("Brownhills"). Under the
terms of the agreement the Group advanced GBP6.5 million to Brownhills
for a term of 30 years in exchange for annualised distributions
of approximately GBP0.9 million. The distributions are adjusted
annually based on the percentage change in Brownhill's gross
revenues compared to the prior year, subject to a floor and cap.
The investment is secured via fixed and floating charges. The
Group has provided Brownhills with a buyback option.
InterHealth Canada Holding Corp
In August 2018 the Group entered into a royalty financing agreement
with InterHealth Canada Holding Corp ("ICHC"). Under the terms
of the agreement the Group advanced GBP10 million to ICHC for
a term of 30 years in exchange for annualised distributions of
approximately GBP1.35 million. The distributions are adjusted
annually based on the percentage change in ICHC's gross revenues
compared to the prior year, subject to a floor and cap. The investment
is secured via fixed and floating charges. The Group has provided
ICHC with a buyback option.
Equity investments
At completion of the Group's royalty financing agreement with
Trimite (see above) the Group acquired a 2.5% interest in the
Trimite group for GBP250.
The Group still holds two unlisted investments in mining entities
from its previous investment objectives. The Board do not consider
there to be any future cash flows from these investments and
they are fully written down to nil value.
7. Deferred tax
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Deferred tax asset 107,000 - -
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.
8. Trade and other receivables
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Transaction costs reimbursed receivable 40,000 100,000 -
Prepayments and accrued income 57,713 109,520 15,253
Unpaid share capital - 10,000 -
Pre-royalty investment advances 613,450 - -
Amounts advanced to agents pending
royalty
investment completion - 6,467,500 -
711,163 6,687,020 15,253
9. Share capital
No. shares GBP
Authorised
Unlimited number of shares of no par value - -
Allotted, called up and fully paid
At 1 April 2017 and at 30 September 2017 45,377,459 40,905,094
Shares issued for cash during the period 48,768,187 19,507,275
Shares issued in settlement of share issuance
costs 1,231,813 492,725
Share issuance costs - (1,188,338)
Shares issued in connection with support services
agreement 1,500,000 586,537
At 31 March 2018 96,877,459 60,303,293
Shares issued for cash during the period 100,000,000 44,000,000
Share issuance costs - (2,385,123)
Shares issued to Employee Benefit Trust during 1,025,000 -
the period
At 30 September 2018 197,902,459 101,918,170
In August 2018 the Company issued 100 million new Ordinary Shares
at 44p per share, of which all were fully paid up at 30 September
2018.
During the period, the Company issued 1,025,000 shares for consideration
of GBPnil into an Employee Benefit Trust, under the terms of
its Long Term Incentive Plan (LTIP). See note 10 for further
details.
10. Share-based payments
The following table shows the movements in the share-based payment
reserve during the period:
Share LTIP
options awards Total
GBP GBP GBP
At 1 April 2017 124,412 - 124,412
LTIP awards granted in the year - - -
At 30 September 2017 124,412 - 124,412
LTIP awards granted - 5,565 5,565
At 31 March 2018 124,412 5,565 129,977
LTIP awards granted - 39,065 39,065
At 30 September 2018 124,412 44,630 169,042
Share option scheme
The Group operates a share option scheme ("the Scheme").
The Scheme was established to incentivise Directors, staff and
certain key advisers and consultants to deliver long-term value
creation for shareholders.
Under the Scheme, the Board of the Company will award, at its
sole discretion, options to subscribe for Ordinary Shares of
the Company on terms and at exercise prices and with vesting
and exercise periods to be determined at the time. However, the
Board of the Company has agreed not to grant options such that
the total number of unexercised options represents more than
4 per cent of the Company's Ordinary Shares in issue from time
to time. Options vest immediately and lapse 5 years from the
date of grant.
At the period end 760,000 (March 2018 and September 2017 - 760,000)
options were outstanding and exercisable at a weighted average
exercise price of 75 pence (March 2018 and September 2017 - 75
pence). The weighted average remaining contractual life of the
options outstanding at the period end was 1.93 years (March 2018
- 2.43 years; September 2017 - 2.93 years).
Long Term Incentive Plan
On 7 November 2017 the Remuneration Committee adopted the Duke
Royalty Limited Long Term Incentive Plan ("LTIP") which the Board
approved the framework of and described in the Admission Document
of the Company dated 20 March 2017.
Under the rules of the LTIP the Remuneration Committee may grant
Performance Share Awards ("PSAs") which vest after a period of
three years and are subject to various performance conditions.
The LTIP awards will be subject to a performance condition based
50 per cent on total shareholder return ("TSR") and 50 per cent
on total cash available for distribution ("TCAD per share").
TSR can be defined as the returns generated by shareholders based
on the combined value of the dividends paid out by the Company
and the share price performance over the period in question.
Upon vesting the awards are issued fully paid.
On 6 March 2018 1,025,000 PSAs were issued to Directors with
a fair value of GBP234,390. An expense of GBP39,065 for the period
(March 2018 - GBP5,565; September 2017 - GBPnil) has been recognised
in these Condensed Consolidated Financial Statements in 'Directors'
fees'. Disclosure of the valuation assumptions used to value
the PSAs has not been made on the basis that the related IFRS
2 charge in the year under review is immaterial.
At the period end 1,025,000 (March 2018 - 1,025,000; September
2017 - nil) LTIP awards were outstanding. The weighted average
remaining vesting period of the LTIP awards outstanding at the
period end was 2.43 years (March 2018 - 2.93; September 2017
- nil).
11. 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.
12. Trade and other payables
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Trade payables 76,424 178,761 -
Corporation tax 209,000 - -
Accruals and deferred income 393,117 80,932 51,336
678,541 259,693 51,336
13. Financial liabilities at fair value through profit or loss
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Royalty participation liability
Current 187,362 140,886 42,968
Non-current 1,213,905 776,514 235,585
1,401,267 917,400 278,553
Net changes in fair value on financial liabilities at fair value
through profit or loss:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Realised - - -
Change in unrealised 133,369 68,866 28,784
133,369 68,866 28,784
14. Related parties
Directors' fees
The following fees were payable to the Directors during the period:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Neil Johnson 56,555 52,715 25,000
Charles Cannon Brookes 39,590 36,900 17,500
Nigel Birrell 12,000 12,000 6,000
James Ryan - 6,000 6,000
Justin Cochrane 24,170 18,450 -
Matthew Wrigley 12,000 6,000 -
Mark Le Tissier - - -
144,315 132,065 54,500
During the year to 31 March 2018, the Directors voluntarily reduced
their fees in order for the Company to implement and sustain
its quarterly dividend policy. During the 6 months ended 30 September
2018 this reduction ceased.
The above noted fees include the following expenses relating
to awards granted under the Group's Long Term Incentive Plan
(see note 10):
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Neil Johnson 19,055 2,715 -
Charles Cannon Brookes 13,340 1,900 -
Justin Cochrane 6,670 950 -
39,065 5,565 -
Mark Le Tissier, a Director of Trident Trust Company (Guernsey)
Limited has waived his entitlement to a fee in relation to being
a Director of the Company.
Fees relating to Matthew Wrigley are paid to MJ Hudson, a law
firm in which he is a partner.
At the period end GBP6,000 remained outstanding to Nigel Birrell
and GBP6,000 remained outstanding to Matthew Wrigley (March 2018
and September 2017 - no fees remained outstanding). These were
paid subsequent to the period end.
Investment Committee fees
The Group's Investment Committee assist in analysing and recommending
potential royalty transactions and its members are considered
to be key management along with the Directors. The following
fees were payable to the members of the Investment Committee
during the period:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Andrew Carragher - - 20,000
Jim Webster 25,000 37,500 40,000
25,000 37,500 60,000
Jim Webster is also the Group's Chief Investment Officer and
has an operational role in the Group beyond the Investment Committee,
which is reflected in the level of his fee.
Andrew Carragher has waived his entitlement to a fee during the
period in relation to being a member of the Group's Investment
Committee, and Jim Webster agreed to voluntarily reduce his fee,
in conjunction with the voluntary reductions of the Directors,
in order for the Company to implement and sustain its quarterly
dividend policy. During the 6 months ended 30 September 2018,
the reduction of Jim Webster's fee ceased.
During the fiscal year, the representatives of Oliver Wyman were
not paid by the Group for their service as per the terms of the
collaboration agreement.
GBP12,500 remained outstanding to Jim Webster at the period end
(March 2018 and September 2017 - GBPnil). This was paid subsequent
to the period end.
Other related party transactions
The following amounts were paid to related parties during the
period in respect of support services fees:
Period to Year to Period to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Payable to Abingdon Capital Corporation
Annual service fee 98,000 196,000 280,000
Share award - 415,818 -
98,000 611,818 280,000
Payable to Arlington Group Asset
Management
Limited
Annual service fee 12,000 24,000 95,000
Share award - 170,719 -
12,000 194,719 95,000
110,000 806,537 375,000
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 and on-going investment management, including preparation
of investment reports, performance data and compliance with the
Company's investing policy.
The Support Services Agreements also entitled Abingdon and Arlington
to be allotted up to 1,500,000 Ordinary shares in the Company,
in recognition of the execution of the royalty strategy, principally
the completion of royalty investments by the Group. These conditions
were met during the year ended 31 March 2018 and the shares were
issued on 22 December 2017. This entitlement has now been satisfied
in full and no further shares will be issued pursuant to the
Support Services Agreements. The shares were valued at GBP586,537
based on the 20-day volume weighted average share prices preceding
the dates on which Abingdon and Arlington became entitled to
them in accordance with the terms of the agreement.
During the year to 31 March 2018, both Abingdon and Arlington
agreed to voluntary reductions in their annual service fees in
order for the Company to implement and sustain its quarterly
dividend policy. These reductions were still in place throughout
the current period.
Share options and LTIP awards
The Group's related parties have the following interests, either
directly or beneficially, in share options issued under the Group's
share option scheme and Long Term Incentive Plan:
Share options Period Year to Period
to to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
No. No. No.
Neil Johnson 85,000 85,000 -
Charles Cannon
Brookes(1) 85,000 85,000 -
Nigel Birrell 85,000 85,000 -
James Ryan 85,000 85,000 -
Justin Cochrane 70,000 70,000 -
LTIP awards Period Year to Period
to to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
(restated)
No. No. No.
Neil Johnson 500,000 500,000 -
Charles Cannon
Brookes(1) 350,000 350,000 -
Justin Cochrane 175,000 175,000 -
(1) Includes share options issued to Arlington
The following dividends were paid to related parties:
Period Year to Period
to to
30 31 30
September March September
2018 2018 2017
(unaudited) (audited) (unaudited)
GBP GBP GBP
Neil Johnson(1) 41,693 33,636 -
Charles Cannon
Brookes(2) 65,000 58,000 -
Nigel Birrell 8,450 8,500 -
Justin Cochrane 9,620 10,600 -
(1) Includes dividends paid to Abinvest Corporation, a wholly
owned subsidiary of Abingdon
(2) Includes dividends paid to Arlington
15. 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 31 30
September March September
2018 2018 2017
Level 3 Level 3 Level 3
(unaudited) (audited) (unaudited)
(restated)
GBP GBP GBP
Financial assets
Financial assets at fair value
through profit or loss
- Royalty investments 44,783,625 23,568,548 7,183,953
- Equity investments 250 250 -
44,783,875 23,568,798 7,183,953
Financial liabilities
Financial liabilities at fair
value through profit or loss
- Royalty participation instruments 1,401,267 917,400 278,553
Total financial liabilities 1,401,267 917,400 278,553
The following table presents the changes in level 3 items for
the 6 month periods ended 30 September 2018, 31 March 2018 and
30 September 2017:
Financial Financial
assets liabilities Total
GBP GBP GBP
At 1 April 2017 - - -
Additions (restated) 6,932,356 (249,769) 6,682,587
Royalty income received (245,074) - (245,074)
Net change in fair value (restated) 496,671 (28,784) 467,887
At 30 September 2017 (restated) 7,183,953 (278,553) 6,905,400
Additions 16,000,250 (598,765) 15,401,485
Royalty income received (742,118) - (742,118)
Net change in fair value 1,126,713 (40,082) 1,086,631
At 31 March 2018 23,568,798 (917,400) 22,651,398
Additions 20,392,140 (431,750) 19,960,390
Royalty income received (1,791,642) - (1,791,642)
Net change in fair value 2,614,579 (52,117) 2,562,462
At 30 September 2018 44,783,875 (1,401,267) 43,382,608
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 of 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 -1.0% to 6.0% and the range of risk-adjusted discount rates
is 13.6% to 20.0%.
An increase in the annual adjustment factor (subject to the collars
set under the terms of the royalty financing agreements) of 25
basis points would increase the fair value by GBP711,068.
A reduction in the discount rate of 25 basis points would increase
the fair value by GBP714,542.
A decrease in the annual adjustment factor (subject to the collars
set under the terms of the royalty financing agreements) of 25
basis points would decrease the fair value by GBP640,943.
An increase in the discount rate of 25 basis points would decrease
the fair value by GBP643,524.
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 used in the fair value calculation of the royalty
investments. The range of annual adjustment factors used is -1.0%
to 6.0% and the range of risk-adjusted discount rates is 13.6%
to 20.0%.
An increase in the annual adjustment factor (subject to the collars
set under the terms of the royalty financing agreements) of 25
basis points would increase the fair value of the liability by
GBP31,639.
A reduction in the discount rate of 25 basis points would increase
the fair value of the liability by GBP31,496.
A decrease in the annual adjustment factor (subject to the collars
set under the terms of the royalty financing agreements) of 25
basis points would decrease the fair value of the liability by
GBP12,257.
An increase in the discount rate of 25 basis points would decrease
the fair value of the liability by GBP12,089.
16. Events after the financial reporting date
Dividends
On 12 October 2018 the Company paid a quarterly dividend of 0.7
pence per share.
Performance Share Awards ("PSA") under the Company's Long Term
Incentive Plan ("LTIP") Awards
On 31 October 2018 the Group's Remuneration Committee approved
the issuance of 1,665,000 PSA's. The PSA's vest after a period
of three years and are subject to various performance conditions
outlined in the Company's admission document and set by the Remuneration
Committee, all
in accordance with the LTIP rules.
Grant of options
On 31 October 2018 the Group's Remuneration Committee approved
the grant of 200,000 options over Ordinary Shares (the "Options")
under the Company's option plan. The Options expire five years
from the date of issuance and have an exercise price of GBP 0.50.
Issuance of ordinary shares
On 31 October 2018 the Company's Remuneration Committee approved
the issuance of 305,000 new ordinary shares of no par value.
Issuance of warrants
The Board also approved the grant of 2,375,000 Warrants to Partners
Value Investments LP ("PVI") in consideration for the provision
of services provided by PVI to the Company under the terms of
the Strategic Advisory Agreement (as announced on 8 November
2017).
COMPANY INFORMATION
Directors Nigel Birrell (Chairman) Justin Cochrane
Neil Johnson Mark Le Tissier
Charles Cannon Brookes Matthew Wrigley
Secretary and administrator Trident Trust Company
(Guernsey) Limited
Trafalgar Court
4(th) Floor, West Wing,
St Peter Port
Guernsey, GY1 3RL
Registered in Guernsey,
number 54697
Website address www.dukeroyalty.com
Registered office Trafalgar Court
4(th) Floor, West Wing,
St Peter Port
Guernsey, GY1 2JA
Independent auditor BDO Limited
Place du Pre
Rue de Pre
St Peter Port
Guernsey, GY1 3LL
Nominated advisor Grant Thornton UK LLP
30 Finsbury Square
London, EC2A 1AG
Brokers Mirabaud Securities Limited Cenkos Securities plc
5(th) Floor, 10 Bressenden
Place 6-8 Tokenhouse Yard
London, SW1E 5DH London, EC2R 7AS
Support service providers Abingdon Capital Corporation
Arlington Group Asset 4 King Street W., Suite
Management Limited 401
47/48 Piccadilly Toronto, Ontario
London, W1J 0DT Canada, M5H 1B6
Registrar and CREST agent Computershare Investor
Services (Guernsey) Limited
c/o Queensway House
Hilgrove Street
St Helier
Jersey, JE1 1ES
Advocates to the Company
as to MJ Hudson
Guernsey law Hadsley House
Lefebvre Street
St Peter Port
Guernsey, GY1 2JP
Investment Committee Neil Johnson John Romeo
Justin Cochrane Andrew Carragher
Jim Webster
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR TJBLTMBAMBMP
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December 04, 2018 02:01 ET (07:01 GMT)
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