REG - Duke Capital - Interim Results for the six months ended 30 Sep 24
16/12/2024 07:00
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RNS Number : 1270Q Duke Capital Limited 16 December 2024
16 December 2024
Duke Capital Limited
("Duke Capital", "Duke" or the "Company")
Interim Results for the six months ended 30 September 2024
Duke Capital Limited (AIM: DUKE), a leading provider of hybrid capital
solutions for SME business owners in Europe and North America, is pleased to
announce its interim results for the six-months ended 30 September 2024
("Interim 2025").
Financial Highlights
· Recurring cash revenue* totalled £12.7 million, an increase
of 4% on Interim 2024 (£12.2 million)
· Total cash revenue of £13.5 million, down 4% from the prior
period (Interim 2024: £14.1 million)
· Free cash flow** of £5.9 million, down 26% from Interim 2024
(£7.9 million) - fewer investment exits delivered in the current period
compared to Interim 2024
· Cash dividends of 1.40 pence per share paid to shareholders
(Interim 2024: 1.40 pence per share)
Operational Highlights
· Deployed over £15 million of capital into existing Capital
Partners
· Completed a £23.5 million fundraise post period end to
support portfolio M&A and progress Duke's third party, non-dilutive
funding strategy to accelerate scale
· Positive outlook with a number of buy and build opportunities
in the portfolio's pipeline and a diversified portfolio positioned for
continued resilience
*Recurring cash revenue excludes exit premiums and cash gains from the sale of
equity investments
** Free cashflow is defined as net cash inflows from operations plus cash
gains from the sale of equity investments less investment costs less interest
paid on borrowings
Nigel Birrell, Chairman of Duke Capital, said:
"During the first six months of FY 2025, we have continued to prove our
ability to deliver. We continue to increase recurring cash revenue, driven by
the team's successful execution on several growth opportunities. This is
testament to the quality of the portfolio we have established and the
significant potential it holds for continued capital appreciation. With a
strong, well-funded balance sheet and numerous growth opportunities under
review, we have a positive outlook for the months ahead. The private credit
and direct lending markets continue to go from strength to strength and we
have confidence that our diversified portfolio is well positioned for
continued resilience. We look forward to updating the markets on our
progress."
For further information, please visit www.dukecapital.com
(http://www.dukecapital.com) or contact:
Duke Capital Limited Neil Johnson / Charles Cannon Brookes / Hugo Evans +44 (0) 1481 231 816
Cavendish Capital Markets Limited (Nominated Adviser and Joint Broker) Stephen Keys / Callum Davidson / Michael Johnson +44 (0) 207 220 0500
Canaccord Genuity Limited Adam James / Harry Rees +44 (0) 207 523 8000
(Joint Broker)
SEC Newgate (Financial Communications) Elisabeth Cowell / Alice Cho / Olivia Hart +44 (0) 20 3757 6882 dukecapital@secnewgate.co.uk
About Duke Capital
Duke is a leading provider of hybrid capital solutions for SME business owners
in Europe and North America, combining the best features of both equity and
debt.
Since 2017, Duke has provided unique long-term financing which eliminates
re-financing risk and necessity for a short-term exit by providing a unique
'corporate mortgage' while also aligning its returns to grow with the success
of the business.
Duke is focused on generating attractive risk-adjusted returns for
shareholders and has a track record of achieving this across market cycles.
Its three investment pillars are capital preservation, attractive dividend
yield, and to provide upside upon exits. Duke is listed on the AIM market
under the ticker DUKE and is headquartered in Guernsey.
CHAIRMAN'S REPORT
Dear Shareholder,
During the six-month period, I am pleased to report that Duke Capital has
continued to build on its consistent track record of delivery, particularly in
terms of increasing its quarterly recurring cash revenue. Notably, the Company
completed seven follow-on investments during the period to enable our capital
partners to deliver on their buy and build strategies, deploying over £15
million of capital and resulting in an increase in the maturity and
profitability of the underlying portfolio. It is our belief that this maturing
of the portfolio, with Duke "staying in for longer", will benefit shareholders
by positioning us to attract higher EBITDA multiples upon exit. As has been
the case for the past two and a half years, the growth we delivered during the
period was funded by non-dilutive means, drawing down on the Company's debt
line with Fairfax alongside the reinvestment of proceeds from the high IRR
exits we have achieved.
Building on the strategic review we undertook in the last financial year, we
have been developing a long-term funding strategy which is not reliant on
raising equity via the UK public equity markets. Alongside a unique and
compelling product, we now have an almost eight-year track record of
resilience which clearly showcases the highly attractive fundamentals of our
business model in terms of the exposure it offers to a unique segment of the
private markets and the strong recurring cash revenue and free cash flow it
supports.
This underpins the Board's belief that the time is right to move towards a
third-party capital model and as such, we intend to raise future additional
capital via new Managed Account / Joint Venture structures. The clear benefits
of this strategy will be to eliminate cash drag, deliver accretive fee-based
revenue and reduce Duke's dependence on the UK public equity markets, thereby
minimising dilution and enabling us to execute on strategic growth
opportunities more rapidly and at scale. With this in mind, during the period,
Duke engaged a placement agent to approach potential capital providers and, as
previously announced, has received indicative term sheets from Tier-1 capital
providers on potential new funding, with further term sheets expected.
In the meanwhile, as we progress towards this goal, we took the strategic
decision to undertake a targeted fundraise via the public markets post period
end. This decision was not taken lightly and reflected the near-term
investment opportunities and requirements from inside the Company's existing
portfolio specifically in relation to Duke's buy and build platforms. The
fundraising included an offer to our retail shareholder base and delivered
£23.5 million of new funding by way of a Placing, Subscription, Retail Offer
and Broker Option. The proceeds will be used to provide additional capital to
our current partners, enabling them to deliver bolt-on M&A to build their
EBITDA and increasing our equity participation where possible.
Outlook
With a strong, well-funded balance sheet and numerous growth opportunities we
maintain a positive outlook for the months ahead, albeit we recognise the need
for caution in relation to the UK economy. Positively, we have witnessed good
growth in our Irish and North American partners and have confidence that our
diversified portfolio is well positioned to continue its resilience. The
private credit and direct lending markets continue to go from strength to
strength, and we have a clear strategy to meaningfully drive future scale. I
would like to take this opportunity to thank our shareholders, team and
advisers for their continued support.
Nigel Birrell
Chairman
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
Note Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Cash flows from operating activities
Receipts from hybrid credit investments 6 12,775 27,267 13,720
Receipts of interest from term credit investments 7 117 453 259
Other operating receipts 652 195 45
Operating expenses paid (2,614) (4,015) (2,383)
Payments for hybrid credit participation fees 9 (46) (130) (68)
Tax paid (607) (673) (498)
Net cash inflow from operating activities 10,277 23,097 11,075
Cash flows from investing activities
Hybrid credit investments advanced 6 (15,322) (42,012) (17,102)
Hybrid credit investments repaid 6 3,987 17,636 7,041
Term credit investments advanced 7 - (750) -
Equity investments purchased 8 - (3,799) (926)
Equity investments sold 8 - 2,326
Equity dividends received 8 21 48 48
Receipt of deferred consideration 10 742 1,512 750
Investments costs paid (273) (1,344) (358)
Net cash outflow from investing activities (10,845) (26,383) (10,547)
Cash flows from financing activities
Dividends paid 17 (5,817) (11,524) (5,709)
Proceeds from loans 12 17,000 15,000 5,000
Interest paid 12 (4,162) (6,222) (2,819)
Other finance costs paid (4) - -
Net cash inflow / (outflow) financing activities 7,017 (2,746) (3,528)
Net change in cash and cash equivalents 6,449 (6,032) (3,000)
Cash and cash equivalents at beginning of period / year 2,896 8,939 8,939
Effect of foreign exchange on cash (164) (11) 32
Cash and cash equivalents at the end of period / year 9,181 2,896 5,971
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
Note (unaudited) (audited) (unaudited)
£000 £000 £000
Income
Hybrid credit investment income 6 8,512 23,014 13,514
Term credit investment income 7 117 453 259
Equity investment income 8 990 1,925 (3,442)
Other operating income 652 195 45
Total Income 10,271 25,587 10,376
Investment costs
Transaction costs (115) (475) (21)
Due diligence costs 36 (645) (309)
Total investment costs (79) (1,120) (330)
Operating costs
Administration and personnel (2,286) (3,072) (2,033)
Legal and professional (258) (533) (274)
Other operating costs (216) (370) (131)
Expected credit losses 7 - 14 -
Share-based payments 15 (427) (938) (537)
Total operating costs (3,187) (4,899) (2,975)
Operating profit 7,005 19,568 7,071
Net foreign currency movement (163) (22) 55
Finance costs 3 (4,689) (7,255) (3,326)
Profit for the period before tax 2,153 12,291 3,800
Taxation expense 4 (181) (683) (408)
Total comprehensive income for the period 1,972 11,608 3,392
Basic earnings per share (pence) 5 0.47 2.81 0.83
Diluted earnings per share (pence) 5 0.47 2.81 0.83
All income is attributable to the holders of the Ordinary Shares of the
Company.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30-Sep-24 31-Mar-24 30-Sep-23
Note (unaudited) (audited) (unaudited)
£000 £000 £000
Non-current assets
Goodwill 13 203 203 203
Hybrid credit finance investments 6 185,871 177,589 174,149
Term credit investments 7 5,382 5,382 4,652
Equity investments 8 16,873 15,904 11,564
Trade and other receivables 1,574 1,574 -
Deferred tax 18 804 408 200
211,378 201,060 190,768
Current assets
Hybrid credit finance investments 6 32,195 33,359 26,521
Trade and other receivables 10 31 843 1,529
Cash and cash equivalents 9,181 2,896 5,971
Current tax asset 186 155 463
41,593 37,253 34,484
Total Assets 252,300 238,313 225,252
Current liabilities
Hybrid credit debt liabilities 9 160 170 167
Trade and other payables 11 416 461 454
Borrowings 12 736 632 527
1,312 1,263 1,148
Non-current liabilities
Hybrid credit debt liabilities 9 944 934 988
Trade and other payables 11 992 1,063 1,286
Borrowings 12 87,189 69,772 59,351
89,125 71,769 61,625
Net Assets 161,863 165,281 162,479
Equity
Shares issued 14 172,939 172,939 172,939
Share based payment reserve 15 4,812 4,385 3,984
Warrant reserve 15 3,036 3,036 3,036
Retained losses 16 (18,924) (15,079) (17,480)
Total Equity 161,863 165,281 162,479
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 2023 172,939 3,447 3,036 (15,163) 164,259
Total comprehensive income for the period - - - 3,392 3,392
Transactions with owners
Share based payments 15 - 537 - - 537
Dividends 17 - - - (5,709) (5,709)
Total transactions with owners - 537 - (5,709) (5,172)
At 30 September 2023 172,939 3,984 3,036 (17,480) 162,479
Total comprehensive income for the period - - - 8,216 8,216
Transactions with owners
Share based payments 15 - 401 - - 401
Dividends 17 - - - (5,815) (5,815)
Total transactions with owners - 401 - (5,815) (5,414)
At 31 March 2024 172,939 4,385 3,036 (15,079) 165,281
Share-based
Shares payment Warrant Retained Total
Note issued reserve reserve losses equity
£000 £000 £000 £000 £000
At 1 April 2024 172,939 4,385 3,036 (15,079) 165,281
Total comprehensive income for the period - - - 1,972 1,972
Transactions with owners
Share based payments 15 - 427 - - 427
Dividends 17 - - - (5,817) (5,817)
Total transactions with owners - 427 - (5,817) (5,390)
At 30 September 2024 172,939 4,812 3,036 (18,924) 161,863
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Duke Capital Limited ("Duke Capital" 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 Capital Limited and its
wholly owned subsidiaries; Duke Royalty UK Limited, Duke Capital US Holdings,
Inc and Duke Capital Employee Benefit Trust.
The Group's investing policy is to invest in a diversified portfolio of hybrid
credit 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 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.
These condensed consolidated interim financial statements have been prepared
in accordance with International Accounting Standard ("IAS") 34 Interim
Financial Reporting, as adopted for use in the UK.
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 2024.
No new or revised standards or interpretations that have become effective
during the period ended 30 September 2024 have had a material effect on the
financial statements of the Group.
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.
2.2 Going concern
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 near future.
The cash flow needs of the Group have been assessed taking account the need
for further funding for any of the existing hybrid credit partners and the
ongoing working capital needs of the business against the current cash and
liquidity of the Group.
2.3 Material accounting policies
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are relevant. Actual results may differ from
these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or
in the period of the revision and future periods, if the revision affects both
current and future periods.
The principal accounting policies applied in the presentation of the condensed
consolidated interim financial statements of Duke Capital, including the
critical accounting judgements made by the Directors and the key sources of
estimation, are consistent with those followed in the preparation of the
Group's Annual Report and consolidated financial statements for the year ended
31 March 2024 and have been consistently applied throughout the period ended
30 September 2024.
3. Finance Costs
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Interest payable on borrowings 4,268 6,413 2,905
Deferred finance costs released to P&L 421 842 421
4,689 7,255 3,326
4. 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.
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Current tax
Income tax expense 577 891 408
Deferred tax
Decrease in deferred tax assets (396) (208) -
(396) (208) -
Income tax expense 181 683 408
Factors affecting income tax expense for the period
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Profit on ordinary activities before tax 1,972 12,291 3,800
Guernsey taxation at 0% (30 September 2023: 0%, 31 March 2024: 0%) - - -
Overseas tax charges at effective rate of 8.40% (30 September 2023: 10.73%, 31 181 683 408
March 2024: 5.55%)
Income tax expense 181 683 408
5. Earnings per share
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Total comprehensive income (£000) 1,972 11,608 3,392
Weighted average number of Ordinary Shares in issue, excluding treasury shares 415,865 412,955 410,484
(000s)
Basic earnings per share (pence) 0.47 2.81 0.83
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Total comprehensive income (£000) 1,972 11,608 3,392
Diluted weighted average number of Ordinary Shares in issue, excluding 415,865 412,955 410,484
treasury shares (000s)
Diluted earnings per share (pence) 0.47 2.81 0.83
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 are 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-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Total comprehensive income for the period 1,972 11,608 3,392
Unrealised fair value movements 3,293 6,854 4,295
Expected credit losses - (14) -
Share-based payments 427 938 537
Net transaction costs 79 1,120 330
Tax effect of the adjustments above at Group effective rate (319) (494) (553)
Adjusted earnings 5,452 20,012 8,001
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Adjusted earnings for the year (£000) 5,452 20,012 8,001
Weighted average number of Ordinary Shares in issue, excluding treasury shares 415,865 412,955 410,484
(000s)
Adjusted earnings per share (pence) 1.31 4.85 1.95
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Diluted adjusted earnings for the year (£000) 5,452 20,012 8,001
Diluted weighted average number of Ordinary Shares in issue, excluding 415,865 412,955 410,484
treasury shares (000s)
Diluted adjusted earnings per share (pence) 1.31 4.85 1.95
6. Hybrid credit investments
Hybrid credit investments are financial assets held at FVTPL that relate to
the provision of hybrid credit capital to a diversified portfolio of
companies.
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Brought forward 210,948 191,333 191,333
Additions 15,322 42,012 17,102
Buybacks (3,987) (17,636) (7,041)
Loss on hybrid credit assets at FVTPL (4,217) (4,761) (724)
218,066 210,948 200,670
Hybrid credit investments are comprised of:
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Non-current 185,871 177,589 174,149
Current 32,195 33,359 26,521
218,066 210,948 200,670
Hybrid credit investment income on the face of the consolidated statement of
comprehensive income comprises:
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Hybrid credit interest 11,959 23,689 12,559
Hybrid credit premiums 816 3,578 1,760
Total hybrid credit cash revenue 12,775 27,267 14,319
Hybrid credit equitised revenue - 600 -
Loss on hybrid credit assets at FVTPL (4,217) (4,761) (724)
Loss on hybrid credit liabilities at FVTPL (46) (92) (81)
Hybrid credit investment income 8,512 23,014 13,514
All financial assets held at FVTPL are mandatorily measured as such.
The Group's hybrid credit investment assets comprise hybrid credit financing
agreements with 14 (30 September 2023: 15, 31 March 2024: 14) capital
partners. Under the terms of these agreements the Group advances funds in
exchange for annualised hybrid credit 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.
7. Term credit investments
Term credit investments are financial assets held at amortised cost except for
the £2.2 million loan issued at 0% interest. The impact of discounting is
immaterial to the Consolidated Financial Statements. The below table shows
both the loans at amortised cost and fair value.
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Brought forward 5,382 4,652 4,652
Additions - 750 -
Buybacks - - -
Expected credit losses - (20) -
5,382 5,382 4,652
The Group's loan investments comprise secured loans advanced to two entities
(30 September 2023: two, 31 March 2024: two) in connection with the Group's
hybrid credit investments.
The loans comprise fixed rate loans of £5,382,000 (30 September 2023:
£4,872,000, 31 March 2024: £5,382,000) which bear interest at rates of
between 0% and 5% (30 September 2023: 0% and 15%, 31 March 2024: 0% and 5%).
The loans mature as follows:
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
In less than one year - - -
In one to two years - - -
In two to five years 5,382 5,382 4,652
5,382 5,382 4,652
Loan investment net income on the face of the consolidated statement of
comprehensive income comprises:
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Loan interest 117 453 259
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 2024 £000 £000 £000
Stage 1 5,402 (20) 5,382
Stage 2 - - -
Stage 3 - - -
5,402 (20) 5,382
Gross carrying amount Allowance for ECLs Net
Carrying amount
As at 31 March 2024 £000 £000 £000
Stage 1 5,402 (20) 5,382
Stage 2 - - -
Stage 3 - - -
5,402 (20) 5,382
Gross carrying amount Allowance for ECLs Net
Carrying amount
As at 30 September 2023 £000 £000 £000
Stage 1 4,692 (40) 4,652
Stage 2 - - -
Stage 3 - - -
4,692 (40) 4,652
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 2024:
Stage 1 Stage 2 Stage 3 Total
£000 £000 £000 £000
At 1 April 2023 and 30 September 2023 92 - - 92
Expected credit losses on loan investments in period 20 - - 20
Expected credit losses on other receivables in year (34) (34)
Carrying value at 31 March 2024 and 30 September 2024 78 - - 78
8. Equity investments
Equity investments are financial assets held at FVTPL.
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Brought forward 15,904 13,529 13,529
Additions - cash - 3,799 1,525
Additions - equitised revenue - 600 -
Disposals - (3) -
Proceeds on sale - (2,323) -
Proceeds on sale - deferred - (1,575) -
Gain / (loss) on equity assets at FVTPL 969 1,877 (3,490)
16,873 15,904 11,564
The Group's equity investments comprise unlisted shares and warrants in 12 of
its capital partners (30 September 2023: 12, 31 March 2024: 13).
The Group also still holds one (30 September 2023: two, 31 March 2024: two)
unlisted investment 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-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Unrealised gain / (loss) on equity assets at FVTPL 969 325 (3,490)
Realised gain on equity assets at FVTPL 21 1,552 -
Dividend income - 48 48
990 1,925 (3,442)
9. Hybrid credit debt liabilities
Hybrid credit debt liabilities are financial liabilities held at FVTPL.
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Brought forward 1,104 1,142 1,142
Payments made (46) (130) (68)
Loss on financial assets held at FVTPL 46 92 81
1,104 1,104 1,155
Hybrid credit debt liabilities are comprised of:
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Current 160 170 167
Non-current 944 934 988
1,104 1,104 1,155
10. Trade and other receivables
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Current
Prepayments and accrued income 31 101 25
Other receivables - 742 1,504
31 843 1,529
Non-current
Other receivables 1,574 1,574 -
1,605 2,417 1,529
11. Trade and other payables
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Current
Trade payables 67 13 20
Transaction costs 238 342 316
Accruals and deferred income 111 106 118
416 461 454
Non-current
Transaction costs 992 1,063 1,286
1,408 1,524 1,740
12. Borrowings
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Secured loan
Current - accrued interest 527 441 337
Non-current 59,351 53,930 34,363
59,878 54,371 34,700
At 30 September 2024, £10,000,000 was undrawn on the facility (30 September
2023: £37,000,000, 31 March 2024: £27,000,000).
At 30 September 2024, £964,000 of unamortised fees were outstanding (30
September 2023: £1,247,000, 31 March 2024: £1,103,000).
The table below sets out an analysis of net debt and the movements in net debt
for the period ended 30 September 2024, the prior period and the year ended 31
March 2024.
Interest Payable Borrowings
£000 £000
At 1 April 2024 632 69,772
Cash movements
Loan advanced - 17,000
Deferred finance costs paid - (4)
Interest paid (4,162) -
Non-cash movements
Deferred finance costs released to P&L - 421
Interest charged 4,268 -
As at 30 September 2024 736 87,189
Interest Payable Borrowings
£000 £000
At 1 April 2023 441 53,930
Cash movements
Loan advanced - 5,000
Interest paid (2,819) -
Non-cash movements
Deferred finance costs released to P&L - 421
Interest charged 2,905 -
As at 30 September 2023 527 59,351
Cash movements
Loan advanced - 10,000
Interest paid (3,403) -
Non-cash movements
Deferred finance costs released to P&L - 421
Interest charged 3,508 -
At 31 March 2024 632 69,772
13. Goodwill
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Goodwill arising on business combination 203 203 203
14. Share capital
External Shares Treasury Shares Total shares £000
No. No. No.
Allotted, called up and fully paid
At 1 April 2023 407,762 9,773 417,535 172,939
Shares issued to Employee Benefit Trust during the period - 3,955 3,955 -
PSA shares vested during the period 7,665 (7,665) - -
At 30 September 2023 and 31 March 2024 415,427 6,063 421,490 172,939
Shares issued to Employee Benefit Trust during the period - 2,871 2,871 -
PSA shares vested during the period 1,316 (1,316) - -
At 31 September 2024 416,743 7,618 424,361 172,939
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 Capital Employee Benefit
Trust are treated as treasury shares. The rights to dividends and voting
rights have been waived in respect of these shares.
15. Equity-settled share-based payments
Warrant reserve
There were no movements in the warrant reserve during the period:
Warrants
No. (000) £000
At 1 April 2023 43,990 3,036
Lapsed during the period (2,375) -
At 30 September 2023, 31 March 2024 and 30 September 2024 41,615 3,036
The warrants expire in January 2028 and have an exercise price of 45 pence. As
per IFRS 2, the warrants have been valued using the Black Scholes model. A
total expense of £2,771,000 has been capitalised and will be amortised over
the life of the warrants. In the period to 30 September 2024, an expense of
£277,000 (30 September 2023: £277,000, 31 March 2024: £554,000) was
recognised through finance costs in relation to the warrants.
At 30 September 2024, 41,615,000 (30 September 2023: 41,615,000, 31 March
2024: 41,615,000) warrants were outstanding and exercisable at a weighted
average exercise price of 45 pence (30 September 2023: 46 pence, 31 March
2024: 45 pence). The weighted average remaining contractual life of the
warrants outstanding was 3.26 years (30 September 2023: 4.26 years, 31 March
2024: 3.45 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 2023 136 3,311 3,447
LTIP awards - 537 537
At 30 September 2023 136 3,848 3,984
LTIP awards - 401 401
At 31 March 2024 136 4,249 4,385
LTIP awards - 427 427
At 30 September 2024 136 4,676 4,812
Share option scheme
The Group operates a share option scheme ("the Scheme"). The Scheme was
established to incentivise Directors, staff and 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 four per
cent of the Company's Ordinary Shares in issue from time to time. Options vest
immediately and lapse five years from the date of grant.
No share options were granted during the period to 30 September 2024 and there
were nil options outstanding and exercisable at 30 September 2024 (30
September 2023: 200,000, 31 March 2024: nil).
Long Term Incentive Plan
Under the rules of the Long-Term Incentive Plan ("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.
The fair value of the LTIP awards consists of (a) the fair value of the TSR
portion; and (b) the fair value of the TCAD per share portion. Since no
consideration is paid for the awards, the fair value of the awards is based on
the share price at the date of grant, as adjusted for the probability of the
likely vesting of the performance conditions. Since the performance condition
in respect of the TSR portion is a market condition, the probability of
vesting is not revisited following the date of grant. The probability of
vesting of the TCAD per share portion, containing a non-market condition, is
reassessed at each reporting date. The resulting fair values are recorded on a
straight-line basis over the vesting period of the awards.
6,226,000 performance share awards (PSAs) were granted during the period to 30
September 2024 (30 September 2023: 3,663,000, 31 March 2024: 3,663,000).
At 30 September 2024, 13,684,000 (30 September 2023: 9,726,000, 31 March 2024:
9,726,000) PSAs were outstanding. The weighted average remaining vesting
period of these awards outstanding was 2.38 years (30 September 2023: 1.49
years, 31 March 2024: 1.30 years).
16. 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.
17. Dividends
The following interim dividends have been recorded in the period to 30
September 2024, 31 March 2024 and 30 September 2023:
Dividend per Dividends
share payable
Record date Payment date pence/share £000
31-Mar-23 12-Apr-23 0.70 2,854
23-Jun-23 12-Jul-23 0.70 2,855
Dividends payable for the period ended 30 September 2023 5,709
Dividend per Dividends
share Payable
Record date Payment date pence/share £000
29-Sep-23 12-Oct-23 0.70 2,908
29-Dec-23 12-Jan-24 0.70 2,908
Dividends payable for the period ended 31 March 2024 5,816
2-Apr-24 12-Apr-24 0.70 2,908
28-Jun-24 12-Jul-24 0.70 2,909
Dividends payable for the period ended 30 September 2024 5,817
On 27 September 2024, the Company approved a further quarterly cash dividend
of 0.70 pence per share, totalling £2,923,000, which was paid on 12 October
2023.
18. Deferred tax
Total
£000s
1 April 2023 and 30 September 2023 200
Credited to profit & loss 208
At 31 March 2024 408
Credited to profit & loss 396
At 30 September 2024 804
A deferred tax asset has been recognised as it is expected that future
available taxable profits will be available against which the Group can use
against the tax losses.
19. Related parties
Directors' fees
The following fees were payable to the Directors during the period:
Period to Year to Period to
30-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Short term remuneration 871 1,206 831
Share-based payments 215 464 256
1,086 1,670 1,087
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-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Abingdon Capital Corporation 322 533 263
Arlington Group Asset Management Limited 50 100 50
313 633 313
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 capital partners and investment performance.
Abingdon fees also include 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-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Directors (1) 259 354 196
Other related parties 36 92 50
295 446 246
(1) Includes dividends paid to Abinvest Corporation, a wholly owned subsidiary
of Abingdon Capital Corporation, and to Arlington Group Asset Management
20. 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-Sep-24 31-Mar-24 30-Sep-23
(unaudited) (audited) (unaudited)
£000 £000 £000
Financial assets
Financial assets at FVTPL
- Hybrid credit investments 218,066 210,948 200,670
- Equity investments 16,873 15,904 11,564
234,939 226,852 212,234
Financial liabilities
Financial liabilities at FVTPL
- Hybrid credit debt liabilities 1,104 1,104 1,155
The following table presents the changes in level 3 items for the periods
ended 30 September 2024, 31 March 2024 and 30 September 2023:
Financial Financial
Assets Liabilities Total
£000 £000 £000
At 1 April 2023 204,862 (1,142) 203,720
Additions 18,628 - 18,628
Repayments (7,041) - (7,041)
Hybrid credit income received 11,959 - 11,959
Hybrid credit participation liabilities paid - 68 68
Net change in FV (16,174) (80) (16,254)
At 30 September 2023 212,234 (1,154) 211,080
Additions 27,782 - 27,782
Repayments (14,491) - (14,491)
Hybrid credit income received (34,974) - (34,974)
Hybrid credit participation liabilities paid - 61 61
Net change in FV 36,301 (11) 36,290
At 31 March 2024 226,852 (1,104) 225,748
Additions 15,322 - 15,322
Repayments (3,987) - (3,987)
Hybrid credit income received 11,959 - 11,959
Hybrid credit participation liabilities paid - 46 46
Net change in FV (15,206) (46) (15,252)
At 30 September 2024 234,940 (1,104) 233,836
Valuation techniques used to determine fair values
The fair value of the Group's hybrid credit financial instruments is
determined using discounted cash flow analysis and all the resulting fair
value estimates are included in level 3. The fair value of the equity
instruments is determined applying an EBITDA multiple to the underlying
businesses forward looking EBITDA. All 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 hybrid credit investments and hybrid credit
participation liabilities
These factors are estimated based upon the underlying past and projected
performance of the hybrid credit investee companies together with general
market conditions.
Discount rates for financial assets and financial liabilities
These are initially estimated based upon the projected internal rate of return
of the hybrid credit investment and subsequently adjusted to reflect changes
in credit risk determined by the Group's Investment Committee.
EBITDA multiples
These multiples are based on comparable market transactions.
Forward looking EBITDA
These are estimated based on the projected underlying performance of the
hybrid credit investee companies together.
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:
Hybrid credit 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% (30
September 2023: -6.0% to 6.0%, 31 March 2024: -6.0% to 6.0%) and the range of
risk-adjusted discount rates is 14.7% to 17.7% (30 September 2023: 14.7% to
17.4%, 31 March 2024: 14.7% to 17.7%)
Equity investments
The unobservable inputs are the EBITDA multiples and forward-looking EBITDA.
The range of EBITDA multiples used is 4.2x to 8.0x (30 September 2023: 5.3x to
10.0x, 31 March 2024: 4.2x to 8.0x).
Hybrid credit 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% (30
September 2023: -6.0% to 6.0%, 31 March 2024: -6.0% to 6.0%) and the range of
risk-adjusted discount rates is 16.3% to 17.3% (30 September 2023: 16.3% to
17.4%, 31 March 2024: 16.3% to 17.7%).
21. Events after the financial reporting date
Dividends
On 12 October 2024, the Company paid a quarterly dividend of 0.70 pence per
share.
On 22 November 2024, the Group announced the successful placement of
85,454,636 new shares at a price of 27.5p per share, raising new capital of
£23.5 million.
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