14 August 2019
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Operational Update and Notice of Results
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 the following operational update and notice of results.
Full-year results for the financial year ended 31 March 2019 (FY 2019) are expected to be published on 9 September 2019.
· Results will show a significant uplift in the financial results over the prior year, with revenue and cashflow from operations in line with market expectations
· Momentum has continued into Q1 FY 2020, with record quarterly cash revenue achieved and June 2019 representing the single highest month of cash revenues to date
· All annual adjustment factors for Royalty Partners were revised upwards during FY 2019 and Q1 FY 2020, increasing revenue to Duke and testament to the strong portfolio performance
· The improved terms of the debt refinancing to increase both its size and to reduce the cost have now been formally agreed with Duke's existing debt provider, with completion of the refinancing expected by the end of August
· The Company's near-term pipeline of both follow-on and new investment opportunities remains strong
Neil Johnson, CEO of Duke Royalty, commented:
"Fiscal 2019 was a busy year for the Company, with the raising of £44 million new equity capital and the tripling of the number of Royalty Partners from four to 12. This was in part through the acquisition of Capital Step and the completion of several follow-on transactions into existing Royalty Partners.
"We have made meaningful deployments of our capital during FY 2019 and are pleased to see solid revenue growth from our Royalty Partners. This delivered revenue and operating cashflow is in line with expectations, with cashflow remaining a key performance metric of the Company. Additionally, the positive annual adjustments of Duke's royalty distributions have resulted in increased revenue for the Company. At the same time, the Board believes the existing investment and operating infrastructure is now able to support the continued growth of the Company for the foreseeable future, which will stabilise group operating costs in FY 2020 and beyond.
"With Duke's high operating leverage, we feel confident that assuming continued positive annual adjustments, combined with future additional capital deployment, the Company will be able to produce a higher dividend pay-out to shareholders."
Duke Royalty has made significant progress in delivering on its strategy to become the premier royalty finance company for the UK and Europe during the period. It has acquired its only known competitor in the region and diversified its portfolio through a range of investments.
Duke continues to focus on diversifying its revenue base by adding new Royalty Partners. The Company has identified several new potential Royalty Partners, many of which are in late stage investigation. This underpins the Board's continued confidence that Duke's financing product is attractive to owners of SME businesses, that it is competitively priced and differentiated against other products in the UK and Europe.
In addition, the Company continues with on-going negotiations regarding several follow-on investments into existing Royalty Partners, with a view to provide both acquisition capital and expansion capital. This is in line with Duke's stated goal to both increase exposure to its existing 12 core Royalty Partners and to better balance the portfolio weighting following the acquisition of Capital Step in February 2019.
A key focus remains on ensuring the Company's flexibility of financing alternatives, particularly around improving the terms of its current debt facility. Recently, improved terms have been agreed between Duke and its existing lender, with a restructuring expected to complete in the coming weeks. Benefits of the anticipated refinancing include significantly reduced debt servicing costs for Duke, alongside a material expansion of the overall size of the credit line.
Capital Step has been successfully integrated into the group during the period under review and, as well as increasing the size of Duke Royalty's portfolio, has strengthened the Company's origination and monitoring capabilities. The Company has expanded its office and personnel to reflect the dramatic growth of its portfolio. The infrastructure that is now in place is envisaged to be capable of supporting sustained growth in the business in the mid-term.
With sustainable group operational expenses for continued growth achieved, and the debt service costs anticipated to be reduced in the short term, the Company believes that the planned royalties will be accretive to existing shareholders, where they will benefit from the operational leverage and higher profits.
Finally, the Board would also like to congratulate three royalty partners for material recent achievements; Xtremepush, which was named in the global 2019 Gartner Magic Quadrant for Mobile Marketing Platforms in July, Pearl and Dean Cinemas for impressive attendance levels in May, which peaked at 16.6 million and represent the highest individual May performance for the last 50 years, and Lynx UK, which has acquired a fifth company, Denmark-based Sundry Trapper.
For further information, please contact www.dukeroyalty.com, or contact:
Duke Royalty Limited
Neil Johnson / Charlie Cannon-Brookes
+44 (0) 1481 741 240
Cenkos Securities plc
(Nominated Adviser and Broker)
Julian Morse / Michael Johnson / Stephen Keys / Callum Davidson
+44 (0) 207 397 8900
Elisabeth Cowell / Ian Silvera / Megan Kovach
+44 (0) 20 3757 6880
About Duke Royalty
Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.
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