⌘K
t
| Date | 1 Dec 2022 |
| Time | 07:00:04 |
| Category | Results |
| ID | 1645I |
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 £10.4 million, up 34% from the prior period (Interim 2022: £7.8 million)
· Recurring cash revenue**, also £10.4 million, increased 67% (Interim 2022: £6.3 million)
· Free cash flow of £6.6 million, up 44% (Interim 2022: £4.6 million)
· Net profit generated of £10.3 million, a 66% increase (Interim 2022: £6.2 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 £20 million of new equity capital in May 2022
· Deployed over £6 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 £5.5 million into new royalty partner New Path Fire & Security
· Currently over £15 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:
|
Duke Royalty Limited |
Neil Johnson / Charlie Cannon Brookes / Hugo Evans
|
+44 (0) 1481 730 613 |
|
Cenkos Securities plc (Nominated Adviser and Joint Broker) |
Stephen Keys / Callum Davidson / Julian Morse / Michael Johnson |
+44 (0) 207 397 8900 |
|
|
|
|
|
Canaccord Genuity (Joint Broker)
|
Adam James / Harry Rees |
+44 (0) 207 523 8000 |
|
SEC Newgate (Financial Communications) |
Elisabeth Cowell / Axaule Shukanayeva |
+ +44 (0) 20 3757 6880 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 £20 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 £6.6m 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 £21m 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 £5.5 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 £10.4 million during the Period under review, a 34% increase over the £7.8 million generated in Interim 2022. However, it should be noted that Interim 2022 benefited from the BHP buyout, which delivered over £1.5 million of premiums and realised equity gains. On a like-for-like basis, Interim 2023 produced £10.4 million of recurring cash revenue against £6.2 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 £6.6 million. This equates to 1.71 pence per share, up from £4.6 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 £15.8 million, a 62% increase over Interim 2022. This generated total earnings after tax of £10.3 million and earnings per share of 2.65 pence against £6.2 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 £6.2 million from £4.7 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 to |
|
Year to |
|
Period to |
|
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
|
£000 |
|
£000 |
|
£000 |
|
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 investments |
|
- |
|
2,583 |
|
- |
|
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 to |
|
Year to |
|
Period to |
|
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
Note |
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
|
£000 |
|
£000 |
|
£000 |
|
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) |
|
|
|
£000 |
|
£000 |
|
£000 |
|
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 |
|
|
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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.
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.
There were no new standards adopted by the Group during the reporting period.
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.
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.
|
|
Period to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 |
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 |
|
|
Period to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Total comprehensive income (£000) |
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Total comprehensive income (£000) |
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Adjusted earnings for the year (£000) |
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Diluted adjusted earnings for the year (£000) |
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 |
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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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.
Loan investments are financial assets held at amortised cost which the exception of the £2.2 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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 £4,872,000 (30 September 2021: £1,580,000, March 2022: £4,172,000) 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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 carrying amount |
|
Allowance for ECLs |
|
Net Carrying amount |
|
As at 30 September 2022 |
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Stage 1 |
4,872 |
|
- |
|
4,872 |
|
Stage 2 |
- |
|
- |
|
- |
|
Stage 3 |
- |
|
- |
|
- |
|
|
4,872 |
|
- |
|
4,872 |
|
|
Gross carrying amount |
|
Allowance for ECLs |
|
Net Carrying amount |
|
As at 31 March 2022 |
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Stage 1 |
4,192 |
|
(20) |
|
4,172 |
|
Stage 2 |
- |
|
- |
|
- |
|
Stage 3 |
- |
|
- |
|
- |
|
|
4,192 |
|
(20) |
|
4,172 |
|
|
Gross carrying amount |
|
Allowance for ECLs |
|
Net Carrying amount |
|
As at 30 September 2022 |
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 1 |
|
Stage 2 |
|
Stage 3 |
|
Total |
|
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
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 |
Equity investments are financial assets held at FVTPL.
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Gain / (loss) on equity investments at FVTPL |
485 |
|
7,095 |
|
1,497 |
|
Realised gain on sale of equity investments |
- |
|
2,583 |
|
- |
|
|
485 |
|
9,678 |
|
1,497 |
Royalty debt liabilities are financial liabilities held at FVTPL.
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Current |
165 |
|
160 |
|
144 |
|
Non-current |
960 |
|
951 |
|
932 |
|
|
1,125 |
|
1,111 |
|
1,076 |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
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 €11,600,000. The deal was structured so that €5,000,000 was payable on or before 30 September 2021, €4,000,000 was due on or before 30 September 2022, with the remaining €2,600,000 due on or before 30 June 2023. The second instalment of €4,000,000 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 £52,000 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.
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
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 |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
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 £35,000,000 to £55,000,000. Of this, £35,000,000 comprised a revolving facility and £20,000,000 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, £20,250,000 was undrawn on the facility (30 September 2021: £25,000,000, 31 March 2022: £6,800,000).
At 30 September 2022, £387,000 (30 September 2021: £355,000, 31 March 2022: £460,000) 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 |
|
|
£000 |
|
£000 |
|
|
|
|
|
|
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 |
|
|
£000 |
|
£000 |
|
|
|
|
|
|
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 |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
Goodwill arising on business combination |
203 |
|
203 |
|
203 |
|
|
External Shares No. |
|
Treasury Shares No. |
|
Total shares No. |
|
£000 |
|
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.
Warrant reserve
There were no movements in the warrant reserve during the period:
|
|
Warrants |
||
|
|
No. (000) |
|
£000 |
|
|
|
|
|
|
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 |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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).
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.
The following interim dividends have been recorded in the period to 30 September 2022, 31 March 2022 and 30 September 2021:
|
|
|
Dividend per |
|
Dividends |
|
|
|
share |
|
payable |
|
Record date |
Payment date |
pence/share |
|
£000 |
|
|
|
|
|
|
|
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 per |
|
Dividends |
|
|
|
share |
|
payable |
|
Record date |
Payment date |
pence/share |
|
£000 |
|
|
|
|
|
|
|
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 £2,8420,000, which was paid on 12 October 2021.
|
|
Total |
|
|
£000s |
|
|
|
|
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.
Directors' fees
The following fees were payable to the Directors during the period:
|
|
Period to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 to |
|
Year to |
|
Period to |
|
|
30-Sep-22 |
|
31-Mar-22 |
|
30-Sep-21 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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
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) |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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 |
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
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%.
Dividends
On 12 October 2022, the Company paid a quarterly dividend of 0.70 pence per share.
On 26 November, Duke announced a £5.5 million investment into New Path Fire & Security.