Duke Royalty reports strong pickup
Duke Royalty shares jumped by a fifth after the financing company reported a strong pickup in trading for the companies it backs.
The company said cash revenue in the three months to the end of June was more than £2m - down 20% from a year earlier. Operating cash costs fell 15%.
Duke said the figures meant first-quarter cash revenue would exceed annual cash costs and that the upturn in trading had continued into the second quarter with royalty revenue exceeding that for the first quarter.
Shares of Duke rose 21% to 24.75p at 10:50 BST. The shares have halved in value in 2020.
The AIM-listed company provides capital to companies in exchange for a small percentage of revenue over about 30 years. The business is unusual in the UK but there are many similar operators in North America.
Duke said it deferred payments for some of its partner companies to give them flexibility during the Covid-19 crisis. The company said it did not expect to extend these agreements beyond September. Cash revenues are likely to increase over the coming quarters as a result, it said.
Chief Executive Neil Johnson said: "The feedback from our royalty partners is one of a relatively improving operating environment and we are beginning to see some positive momentum re-emerging from the portfolio as a whole, notwithstanding the fact that we continue to face an unprecedented operating environment.
"Duke has taken a series of proactive measures to help its few hardest hit, consumer-facing royalty partners. All of the businesses within our portfolio have withstood prior market turbulence and have a long-term track record of profitability and growth, so we support them as they navigate their way through this difficult trading period."