TIDMDUKE
RNS Number : 8331M
Duke Royalty Limited
14 May 2020
14 May 2020
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Trading and Dividend Update
Duke Royalty, a provider of alternative capital solutions to a
diversified range of profitable and long-established businesses in
Europe and abroad, provides the following trading update.
Current Trading
Further to our trading update on 2 April 2020, Duke has been
working closely with its royalty partners to understand the impact
of the Covid-19 pandemic on their businesses and to ensure that
they are provided with the necessary support to trade through this
challenging period. By design, Duke's long-term capital is
structured to be aligned with its royalty partners, their owners
and managers through the ups and downs of economic cycles.
Whilst impacts to Duke's portfolio are inevitable during the
pandemic, management are pleased with the ongoing resilience
demonstrated by the Group's portfolio as a whole. Through its
diversified portfolio, Duke naturally has exposure to a range of
sectors, some of which are impacted to a greater extent by Covid
than others, such as hospitality & leisure. In certain
situations where Covid-19 has had the greatest impact, Duke has
elected to either accrue, capitalise or equitise its monthly cash
payments in the short term with the intention of alleviating the
negative cashflow impacts for its royalty partners during this time
of unprecedented financial stress.
Nevertheless, cash revenue received in April totalled over
GBP600,000 and this level of monthly cash revenue is expected to be
maintained through the quarter ended 30 June 2020 ("Q1 2020").
While this is below the GBP1 million cash receipts of March, it
should be noted that the reduction has not been waived or lost by
Duke, rather it has resulted from the restructuring detailed above
with the anticipation that the shortfall will be made up in
subsequent periods as the pandemic stabilises and trading
improves.
Based on the proactive cost cutting measures that were put in
place by Duke in March, the Company estimates that its annual
operating cost base is currently running at approximately GBP1.8
million. Therefore, it is pleasing to note that the Company's Q1
2020 cash receipts will likely exceed its entire FY 2021 annual
operating cost budget, thereby highlighting the high margin and
cash generative nature of Duke's business model.
The Company's liquidity position also remains strong, with cash
on hand of over GBP3 million and additional liquidity of
approximately GBP18 million via its revolving line of credit with
Honeycomb Investment Trust. Duke anticipates making additional
investments into its existing royalty partners over the coming
months, both to provide financial support and to provide
acquisition capital in certain circumstances. While it is too early
to make any definite forecasts, Duke remains cautiously optimistic
that its royalty partners will be able to successfully navigate
through this unique period of uncertainty and Duke looks forward to
be able to report on a more normalised trading environment in due
course.
Dividend
In light of the lower cash receipts expected in the short term,
and the likely follow-on investments that Duke intends to make into
its existing royalty partners in the coming months, the Company
feels it would be prudent to retain cash as much as possible to
support its portfolio. To that effect, for the upcoming June
quarter, Duke will elect to pay shareholders a scrip dividend
instead of its normal cash dividend, with the exact quantum to be
announced in the normal timing cycle of mid-June. Since 2017, Duke
has paid out more than GBP12.7 million in cash dividends and
intends to revert to the payment of cash dividends when a more
normalised trading environment returns. Further timings and details
relating to the scrip dividend will be provided in the June
announcement.
Neil Johnson, CEO of Duke Royalty, said:
"While we face an unexpected business environment, royalty
companies are designed to withstand downside economic shocks. Duke
Royalty benefits from both low operating costs and senior security
in our investments, while limiting the downside adjustment in any
given year.
"Our short-term priority is to support our royalty partners in
order to protect our portfolio, while helping the long-term future
of each company. Like most lenders in the market, we have made our
contribution towards the fight against this virus by way of
restructuring some of the repayment terms where necessary. I would
like to take this opportunity to thank our royalty partners, some
of which have also altered their business to contribute in the
quest to overcome Covid-19, for the resilience they have shown in
recent weeks.
"Our commitment to our shareholders is also steadfast.
Currently, the Board believes cash conservation is prudent, which
has been the response of most businesses during this pandemic.
However, rewarding shareholders through dividends is a priority, so
we will continue the dividend through a scrip arrangement.
"Given the strong financial performance we delivered ahead of
the outbreak, I believe we will move out of this extraordinary time
having demonstrated the resilience of our model, the benefits of
our capital over short dated bank debt, and the strength of our
support for our partners in overcoming this unique trading
period."
***ENDS***
For further information, please contact www.dukeroyalty.com , or
contact:
Neil Johnson / Charlie
Cannon Brookes / Hugo +44 (0) 1481 741
Duke Royalty Limited Evans 240
Cenkos Securities
plc Stephen Keys / Callum
(Nominated Adviser Davidson / Julian Morse +44 (0) 207 397
and Broker) / Michael Johnson 8900
Newgate Communications Elisabeth Cowell/ Ian + +44 (0) 20 3757
(PR) Silvera/ Megan Kovach 6880 dukeroyalty@newgatecomms.com
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.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
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