Fourth quarter cash revenue in line for Duke Royalty

Alternative capital provider Duke Royalty updated the market on trading in its fourth quarter on Monday, reporting cash revenue from partner distributions and gains from equity asset sales in line with expectations, totalling £2.5m.

The AIM-traded company said that represented a “small” like-for-like increase from the prior quarter, once the positive effects of redemption premiums were removed.

In January, Duke completed a follow-on investment of £2.2m into its existing royalty partner Step Investments.

Duke said its funds were used by Step to acquire a majority equity stake in the Dublin-based private education subsidiary City Education Group, and to facilitate the acquisition of a majority interest in Adtower Digital Media - a profitable Irish business within the digital out of home advertising sector.

In February, Duke announced the successful investment of £6.2m into a new royalty partner, Fabrikat, a profitable fabricator of steel products supplying the UK street lighting and guardrail markets.

Following that, in March Duke announced a follow-on investment of £4.5m into its existing royalty partner United Glass Group (UGG), to allow UGG to complete the acquisition of London Architectural Glass, a UK supplier of bespoke architectural glass to premium residential, educational and heritage projects throughout the UK.

Also in March, Duke announced the exit of its investment in three river cruising vessels through the sale of its wholly-owned subsidiary Duke Royalty Switzerland to Starling Fleet Holding, with headline consideration coming in at €11.6m (£10.02m) plus interest.

Based on current trading, Duke said it expected cash revenue for the first quarter of the 2022 financial year to increase to £2.8m.

“I am pleased to report that the fourth quarter of the 2021 financial year was a positive and busy quarter for Duke with several new investments completed and one royalty partner exited,” said chief executive officer Neil Johnson.

“During the quarter we also successfully transitioned chief investment officers with Peter Madouros taking over from Jim Webster, who remains an important part of Duke as the new chairman of the investment committee.”

Johnson noted that after the quarter ended, Duke raised £35m in an oversubscribed equity placing.

“This fundraise gives Duke over £70m of available liquidity to deploy into its expanding pipeline and to take advantage of the increasing opportunities available in the alternative financing market.

“We look forward to providing updates on this in due course.”

At 0909 BST, shares in Duke Royalty were up 0.27% at 36.6p.