TIDMDUKE
RNS Number : 8506V
Duke Royalty Limited
08 November 2017
8 November 2017
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Interims Results for the period ended 30 September 2017
Duke Royalty (AIM: DUKE) is pleased to report the interim
results for the period ending 30 September 2017 ("Interim 2018")
which has been a time of significant positive change for the
Company.
Chairman's Report
Interim 2018 is the Company's first period of revenue since the
change in investing policy, having generated GBP 0.31 million of
receipts due under contract and a loss for the period GBP 0.08
million. Furthermore, due to the events post the period under
review as described below, I am pleased to inform shareholders that
Duke Royalty is now operating at a cashflow positive run rate. The
Company has also maintained its significantly reduced operational
expenditure, with Board fees and other service provider costs
having been voluntarily reduced in order for the Company to
implement and sustain its dividend policy for Fiscal 2018. This
reduced level of operational expenditure will remain in place until
the Company has successfully deployed additional capital into new
royalty opportunities and until the Board and respective Board
Committees decide that the level of operational expenditure should
be increased.
During Interim 2018, the Company announced its inaugural royalty
financing agreement for Euro 8.0 million with Temarca, an
established European river cruise provider. The financing,
announced on 6 April 2017, has allowed Temarca to purchase one boat
that was previously being leased, repay all outstanding senior
debt, refurbish their fleet and boost working capital. Under the
terms of the financing, Duke provided Euro 8.0 million to Temarca
with an option at Duke's sole discretion to provide an additional
Euro 2.0 million for a period of 12 months. The Financing, now
fully deployed entitles Duke to receive distributions of over Euro
1.0 million per annum, equating to a cash-on-cash yield of
approximately 13 per cent. It should be noted that the Euro 8.0
million was drawn down in several tranches during Interim 2018 with
the facility only fully deployed just before the period end. As a
result, the full revenue impact will not be felt until the second
half of the 2018 fiscal year. The distribution will be adjusted
annually with the first adjustment occurring in August 2018 based
on the percentage change in Temarca's gross revenues for the fiscal
year ending 31 July 2018 compared to the prior year. The annual
adjustment in the distribution will be subject to a collar. The
term of the financing is for a period of 25 years, will be senior
secured and Duke has provided Temarca with a buyback option.
The Company announced three board changes during Interim 2018,
the appointment of Justin Cochrane as an executive director, the
appointment of Matthew Wrigley as a non-executive director and the
resignation of Jim Ryan as a non-executive director.
I am also pleased to report that during Interim 2018 Duke
Royalty approved its first two quarterly dividends both of 0.5
pence (sterling) per share. I would like to remind shareholders
that the Company is targeting a minimum initial annual dividend
yield of two pence per share for Fiscal 2018 and intends to
continue paying quarterly dividends going forward.
Immediately following the period under review, on 6 October
2017, the Company announced that it had closed its second royalty
financing with Lynx Equity (U.K.) Limited ("Lynx UK"), the UK-based
subsidiary of Lynx Equity Limited ("Lynx"). Duke has committed GBP
7.0 million, with an initial tranche of GBP 4.5 million (which has
already been drawn down) and an additional GBP 2.5 million to be
drawn down at the completion by Lynx UK of an imminent acquisition.
The financing represents the beginning of the relationship with
Lynx as a Royalty Partner, as Duke has become Lynx's preferred
European capital provider, with the potential to provide a further
GBP 8.0 million of funding equating to a total of GBP 15.0 million
over time. The financing will entitle Duke to monthly distributions
beginning in November 2017 which total GBP 0.54 million per annum,
based on the initial drawdown of GBP 4.5 million. The distributions
will be adjusted annually with the first adjustment occurring in
August 2018, based on the percentage change in Lynx UK's gross
revenues for the fiscal year ending July 2018 compared to the prior
year. The annual adjustment in the distributions will be subject to
a collar. The term of the Company's agreement with Lynx is
perpetual, and Lynx has a no-buyout clause for the first 5
years.
The Remuneration Committee approved the Company's long-term
incentive plan (LTIP) as described in Part 5 of the Admission
Document. Shareholders should also note the following in regard to
the issuance of 1,500,000 bonus Ordinary Shares in the Company
which are a component of the Support Services agreement with
Abingdon Capital Corporation ("Abingdon") as described in Part 1 of
the Admission Document. Whilst none of the 1,500,000 shares have
been issued to date, 859,614 have been accounted for during Interim
2018 in relation to the full drawdown of the Temarca financing. The
non-cash cost of issuing these 859,614 shares equates to GBP 0.34m
has been booked to the Consolidated Statement of Comprehensive
Income as a Support service fee expense.
On 8 November 2017, the Company announced that it had also
entered into an Advisory Agreement with Partners Value Investments
LP ("PVI"), the Company's second largest shareholder, and approved
the grant of 2,000,000 5-year warrants to PVI, exercisable at
GBP0.42, in consideration for the provision of certain services
provided by PVI to the Company under the terms of the Agreement.
Under the Advisory Agreement, PVI will provide input on transaction
sourcing and capital raising activities.
We look forward to reporting further progress during Fiscal 2018
in growing Europe's first listed diversified royalty company.
Nigel Birrell
Chairman
About Duke Royalty
Headquartered in Guernsey, Duke Royalty Limited has been
established to provide alternative financing solutions to a
diversified range of businesses in Europe and abroad. Duke
Royalty's experienced team and exclusive partnership 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.
For more information, visit dukeroyalty.com.
For further information:
Duke Royalty Limited Neil Johnson / Charlie Cannon-Brookes
+44 (0) 1481 741 240
Grant Thornton UK LLP Colin Aaronson / Samantha
(Nominated Adviser) Harrison / Carolyn Sansom
+44 (0) 20 7383 5100
Mirabaud Securities Peter Krens / Edward Haig-Thomas
LLP (Joint Broker)
+44 (0) 20 3167 7222
Cenkos Securities plc Julian Morse/ Michael Johnson
(Joint Broker)
+44 (0) 207 397 8900
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.
Interim Consolidated Statement of Comprehensive Income
For the period ended 30 September 2017
Period ended
Period ended 30 September
30 September 2017 2016
Unaudited Unaudited
Notes GBP GBP
Income
Cash received and receivable on royalty debt instruments 3 312,200 -
Effective interest adjustment on royalty debt instrument 3 88,128 -
------------------- --------------
Interest income from royalty debt instruments 400,328 -
------------------- --------------
Fair value movement on royalty debt instruments 3 53,645 -
Foreign currency gain 100,700 2
Net investment gain 554,673 2
------------------- --------------
Expenses
Support services fees 10 (451,439) (188,103)
Directors' fees 10 (54,500) (109,000)
Legal and professional fees (51,167) (124,628)
Consultancy fees 38,537 (38,125)
Restructuring costs - (15,071)
Other expenses (12,832) (23,222)
Administration fees (18,000) (28,500)
Audit fees (10,000) (15,500)
Travel & entertainment 10 (21,664) (73,700)
Registrar fees (6,718) (5,941)
Broker fees (18,329) -
Nomad fees (12,500) (15,083)
Foreign currency loss - -
Investment advisory fees 10 (12,500) (38,406)
Total expenses (631,112) (675,279)
------------------- --------------
Operating loss (76,439) (675,277)
Finance income - 72,496
Finance costs (1,700) (1,002)
Loss for the financial year end (78,139) (603,473)
Other comprehensive income - -
=================== ==============
Total comprehensive loss for the period (78,139) (603,783)
=================== ==============
Basic and diluted deficit per share (pence) (0.01) (7.66)
=================== ==============
All activities derive from continuing operations.
All income is attributable to the holders of the Ordinary Shares
of the Company.
The notes form an integral part of these Interim Financial
Statements.
Consolidated Statement of Changes in Equity
For the period ended 30 September 2017
Shares Shares to be Warrants Share Option
Issued issued Issued Reserve Retained Losses Total Equity
Notes GBP GBP GBP GBP GBP
At 1 April 2017 40,905,094 - - 124,412 (26,523,494) 14,506,012
Total
comprehensive
loss for the
period - - - - (78,139) (78,139)
Transactions
with owners
Shares to be
issued 7 - 341,439 - - - 341,439
Dividends 6 - - - - (226,887) (226,887)
Total
transactions
with owners - 341,439 - - (226,887) 114,552
----------- ---------------- --------- ---------------- ---------------- -------------
At 30 September
2017 40,905,094 341,439 - 124,412 (26,828,520) 14,542,425
=========== ================ ========= ================ ================ =============
At 1 April 2016 27,064,815 - 72,454 124,412 (25,191,366) 2,070,315
Total
comprehensive
expense for the
year - - - - (603,783) (603,783)
Transactions
with owners
Warrants
cancelled - - (72,454) - - (72,454)
Total
transactions
with owners - - (72,454) - - (72,454)
----------- ---------------- --------- ---------------- ---------------- -------------
At 30 September
2016 27,064,815 - - 124,412 (25,795,149) 1,394,078
=========== ================ ========= ================ ================ =============
The notes form an integral part of these Interim Financial
Statements
Consolidated Statement of Financial Position
As at 30 September 2017
31 March
30 September 2017 2017
Unaudited Audited
Notes GBP GBP
ASSETS
Royalty debt instruments 3 7,255,099 -
Equity investments at fair value through profit and loss 4 - -
Total non-current assets 7,255,099 -
Trade and other receivables 8 15,253 381,467
Cash and cash equivalents 7,323,409 14,350,154
Total current assets 7,338,662 14,731,621
14,593,761 14,731,621
================== ===========
EQUITY AND LIABILITIES
Equity
Shares issued 7 40,905,094 40,905,094
Shares to be issued 7 341,439 -
Share option reserve 124,412 124,412
Retained losses (26,828,520) (26,523,494)
Total Equity 14,542,425 14,506,012
Current Liabilities
Trade and other payables 9 51,336 225,609
Total current liabilities 51,336 225,609
Total equity and liabilities 14,593,761 14,731,621
============= =============
Net asset value per Ordinary Share (excluding
shares held in Treasury) 0.32 0.32
----- -----
The notes form an integral part of these Interim Financial
Statements
Consolidated Statement of Cash Flows
For the period ended 30 September 2017
Period ended Period ended
30 September 2017 30 September 2016
Notes GBP GBP
Cash flows from operating activities
Royalty instrument advanced (7,046,200)
Receipts on royalty debt instrument 3 245,074 -
Finance costs paid (1,699)
Other interest - 42
Proceeds from the sale of equity investments - 516,535
Operating expenses paid (370,733) (760,115)
Net cash outflow from operating activities (7,173,558) (243,538)
Cash flows from financing activities
Net proceeds from share issue 273,000 -
Dividends paid 6 (226,887) -
Net cash inflow from financing activities 46,113 -
Net change in cash and cash equivalents (7,127,445) (243,538)
Cash and cash equivalents at beginning of period 14,350,154 1,625,749
Effect of foreign exchange on cash 100,700 -
Cash and cash equivalents at end of period 7,323,409 1,382,211
=================== ===================
The notes form an integral part of these Interim Financial
Statements
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
Duke Royalty Limited ("Duke Royalty" or the "Company") is a
closed-ended investment company with limited liability formed under
the Companies (Guernsey) Law, 2008. The Company was incorporated in
Guernsey on 22 February 2012 and its shares were admitted to
trading on the London Stock Exchange's AIM on 9 July 2012. The
Company's registered office is shown on page 23.
The Company's investing policy is to invest in a diversified
portfolio of royalty finance and related opportunities.
The Company's shares are traded on AIM, a market operated by the
London Stock Exchange.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The Unaudited Condensed Financial Statements ("Interim
Statements") have been prepared in accordance with International
Financial Reporting Standards ("IFRS"). The Interim Statements do
not include all the information and disclosures required in annual
financial statements, and should be read in conjunction with the
Company's Annual Report and Consolidated Financial Statements for
the year ended 31 March 2017 (2017 "Annual Report"), which were
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union and applicable
Guernsey law.
In addition to the same accounting policies, presentation and
methods of computation followed in these Interim Statements as were
followed in the preparation of the 2017 Annual Report; the
directors have made an early adoption of IFRS 9 in these Interim
Statements. Trade and other receivables comprise prepaid expenses
and are assessed using the simplified approach in respect of
expected credit losses any such impact would be immaterial to the
financial statements given the carrying value of trade and other
receivables.
The early adoption of IFRS 9 was performed after a high-level
assessment of the three aspects of IFRS 9 following its first
investment in Royalty Debt Instrument. The preliminary assessment
is based on currently available information and may be subject to
changes arising from additional reasonable and supportable
information being made available to the Company in the future.
Early adoption of IFRS 9 does not have any impact on the
comparatives in these Interim Statements.
b) New and amended standards and interpretations
At the date of authorisation of these Interim Statements, the
following standards and interpretations, which will become relevant
to the Company but have not been applied in these Interim
Statements, were in issue but not yet effective:
IFRS 7, Financial Instruments Disclosures - Amendments regarding
initial application of IFRS 9* - effective for when IFRS 9 is
applied.
IFRS 15, Revenue from contracts with customers - effective for
periods commencing after 1 January 2018.
These standards will be adopted by the Company and its
subsidiary when they become effective. The Directors anticipate
that the adoption of these standards and interpretations in future
periods will require additional disclosures but are not expected to
have a material impact on the Financial Statements of the Company
and its subsidiary.
The Company has early adopted only IFRS 9 and no other standard,
interpretation or amendment that has been issued but is not yet
effective.
c) Foreign currency
Items included in the Interim Statements are measured using the
currency of the primary economic environment in which the entity
operated ("the functional currency"). The Company's capital is
disclosed using the currency of its primary economic environment as
is for all fund-raising activities. The Interim Statements are
presented in Pounds Sterling (GBP).
Transactions in currencies other than Sterling are translated at
the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the date of the Interim Statement of Financial Position are
retranslated into Sterling at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the Interim Statement of Comprehensive Income.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
rate of exchange at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated into Sterling at foreign
exchange rates ruling at the dates the fair value was
determined.
d) Financial instruments
Financial assets and financial liabilities are recognised in the
Interim Statement of Financial Position when the Company becomes a
party to the contractual provisions of the instrument. Financial
assets and financial liabilities are only offset and the net amount
reported in the Interim Statement of Financial Position and Interim
Statement of Comprehensive Income when there is a currently
enforceable legal right to offset the recognised amounts and the
Company intends to settle on a net basis or realise the asset and
liability simultaneously.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics. All financial assets are initially
recognised at fair value. All purchases of financial assets are
recorded at trade date, being the date on which the Company became
party to the contractual requirements of the financial assets.
Receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market.
These comprise assets that meet the business model test of holding
to collect contractual cashflows and the contractual
characteristics are solely repayments of principal and interest
test. They are initially recognised at fair value on acquisition,
and subsequently carried at amortised cost using the effective
interest rate method less provisions for impairment. The simplified
approach is adopted in respect of measurement of expected credit
losses with life long expected credit losses recognised on
inception where appropriate. Such losses are recognised in the
statement of comprehensive income. The effect of discounting on
these financial instruments is not considered to be material.
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).
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised either
(i) when the Company has transferred substantially all the risks
and rewards of ownership; or (ii) when it has neither transferred
nor retained substantially all the risks and rewards and when it no
longer has control over the assets or a portion of the asset; or
(iii) when the contractual right to receive cash flow has expired.
Any gain or loss on derecognition is taken to the Interim Statement
of Comprehensive Income as appropriate.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments with an
original maturity of three months or less that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Investments at fair value through profit or loss
Royalty instruments
Royalty debt instruments are recognised or derecognised on
completion where a purchase or sale of the royalty is under a
contract. Depending on the characteristics of the contract of the
royalty debt instrument, the contract will be classified as a
royalty debt instrument or a royalty equity instrument.
Royalty debt instrument
Due to the nature of the royalty debt instrument, in accordance
to IFRS 9, they are classified as debt instruments carried at fair
value. Whilst the business model of the Company is to collect the
contractual cashflows, the product fails the solely repayment of
principal and interest test. This is on the basis that the return
is linked to a fluctuation revenue stream of the Investee and so
such instruments are recognised at fair value through profit or
loss. Upon initial recognition an effective interest rate is
computed based on the estimated future cashflows under the
contract. Fixed effective interest income determined based in the
original effective rate is recognised in the income statement with
royalty interest receipts reducing the carrying value of the
instrument. At each reporting date the instrument is fair valued
with movements in the fair value recognised as movement in fair
value through profit or loss.
Royalty equity instruments
Similar to debt instruments, equity instruments are carried at
fair value at each reporting date, based on the estimated future
cash flows from the underlying investee. All valuation movements
are recognised at fair value through profit or loss. Royalty
dividends receipts are recognised in the income statement as they
are due.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All financial liabilities are initially recognised at fair
value. All purchases of financial liabilities are recorded on trade
date, being the date on which the Company becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Company's financial
liabilities approximate to their fair values.
The Company's financial liabilities consist of any financial
liability measured at amortised cost.
Financial liabilities measured at amortised cost
These include loans and borrowings, payables and other
short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost using the
effective interest rate method.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Company has extinguished its contractual obligations, it
expires or is cancelled. Any gain or loss on derecognition is taken
to the Interim Statement of Comprehensive Income.
Capital
Financial instruments issued by the Company are treated as
equity if the holder has only a residual interest in the assets of
the Company after the deduction of all liabilities. The Company's
Ordinary Shares and Warrants are classified as equity
instruments.
The Company considers its capital to comprise its Ordinary Share
Capital, Warrants and retained losses.
Equity instruments
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction from proceeds.
Share based payments
The Company operates an equity settled Share Option Plan for its
directors and key advisers. As the shares issued vest immediately
the Company recognises the full expense within the Statement of
Comprehensive Income with the corresponding amount recognised in a
share option reserve. There were no additional share options
awarded during the period.
The Company also settles a portion of expenses by way of share
based payments. These expenses are settled based on the fair value
of the service received as an expense with the corresponding amount
increasing equity. During the period there were no expenses paid by
way of share based payments.
e) Expenses
Expenses are accounted for on an accrual basis.
f) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Company's performance and to allocate resources is the total
return on the Company's net asset value, as calculated under IFRS,
and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in these
Interim Financial Statements.
For management purposes, the Company's new investment objective
now is to focus on one main operating segment, which is to invest
in a diversified portfolio of royalty finance and related
opportunities. At the end of the period the Company has one
investment into this segment and has derived income from it. Due to
the Company's nature it has no customers.
3. ROYALTY DEBT INSTRUMENTS
Period ended Period ended
30 September 2017 30 September 2016
Unaudited Unaudited
GBP GBP
Brought forward
Debt instrument amounts advanced 7,046,200 -
Net effective interest 400,328 -
Royalty debt payment received and receivable (312,200) -
------------------- -------------------
Sub total 7,134,328 -
Royalty debt payment receivable 67,126 -
------------------- -------------------
Carried forward 7,201,454 -
------------------- -------------------
Unrealised gain 53,645 -
Brought forward - -
Movement - -
Carried forward - -
Fair value
Brought forward - -
------------------- -------------------
Carried forward 7,255,099 -
=================== ===================
A 1% increase or decrease in the growth rate would
increase/(decrease) net assets attributable to shareholders by
GBP31,385.
A reduction/increase to the discount rate by 25 basis points
would increase/(decrease) net assets attributable by GBP1,746,413
and (GBP1,230,151) respectively.
During the period the Company identified an investment
opportunity and entered into a Loan Agreement with Temarca B.V. The
Company has advanced an amount totalling EUR8 million for a
duration of 25 years which generates monthly income of EUR85,333
less any Adjustment Factor. The Adjustment Factor is based mainly
on Temarca B.V.'s gross revenue. Income recognised for the period
in the Statement of Comprehensive Income is computed on a Cash on
Cash Yield of 12.80% applied for the duration of the loan.
Given the characteristics of the instrument it is classified as
a royalty debt instrument and fair valued at Level 3 as it is based
on unobservable inputs.
The royalty debt instrument is modelled based on the expected
cashflows receivable under the contract using an effective interest
rate that exactly discounts the estimated cashflows over the future
life of the contract. Given the final draw down on Temarca B.V.
closed in September 2017 there have been no movements in the fair
value since initial recognition.
4. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
The Company still holds three unlisted investments in mining
entities from its previous investment objectives. The Board do not
consider there to be any future cash flows from these investments
and were fully written down to nil value.
The fair value of investments in the three unlisted entities is
derived by applying a discount rate, as deemed appropriate by the
Board. All of the Company's investments held at fair value through
profit or loss are valued at Level 3 as are based on unobservable
inputs.
The three investments were regarded as immaterial for the
purpose of these interim financial statements therefore no
sensitivity analysis has been performed.
5. TAXATION
The Company is resident for tax purposes in Guernsey where it is
subject to taxation. The current taxation rate applicable to the
Company is 0%.
6. DIVIDS
The Board has declared interim dividends of GBP226,887 on 22
June 2017 and GBP226,887 on 21 September 2017 for the period ended
30 September 2017 (period ended 30 September 2016: GBPnil). As at
30 September 2017, the dividends totalling GBP226,887 declared on
22 June 2017 were paid to the shareholders and recognised in the
Interim Statements. The dividends declared on 21 September 2017
were paid in October 2017 and will be recognised in the next
accounting period.
7. SHARES ISSUED
Number of ordinary Shares in issue
Number of ordinary Shares in issue GBP
Authorised
Unlimited number of shares of no
par value - -
----------------------------------- ------------------------------------
Allotted, called up and fully
paid:
As at 1 April 2017 45,377,459 40,905,094
Share issued - -
As at 30 September 2017 45,377,459 40,905,094
=================================== ====================================
859,614 shares are due to be issued for the period ended 30
September 2017. The 859,614 shares relate to shares payable under
the support services agreement on completion of sourcing a royalty
instrument as disclosed in note 10 and will be allocated to
Arlington and Abingdon equally at a total cost of GBP341,439.
This amount has been recognised within the statement of
comprehensive income.
8. TRADE AND OTHER RECEIVABLES
31 March
30 September 2017 2017
GBP GBP
Prepayments and accrued income 15,253 6,967
Investments costs incurred - 31,500
Proceeds due from share issuance - 343,000
15,253 381,467
================== =========
9. TRADE AND OTHER PAYABLES
31 March
30 September 2017 2017
GBP GBP
Broker fees 10,830 -
Audit fees 12,500 25,000
Directors fees and expenses 3,235 35,616
Investment costs incurred - 31,500
Consultancy fees - 133,493
Legal fees 23,750 -
Other creditors 1,021 -
51,336 225,609
================== =========
10. RELATED PARTIES
Directors were entitled to the following remuneration during the
period;
Charge for period Outstanding at Outstanding at
Charge for period to period end period end
to 30/09/2017 30/09/2016 30/09/2017 30/09/2016
GBP GBP GBP GBP
Neil Johnson 25,000 50,000 - -
Charles
Cannon-Brookes 17,500 35,000 - -
Nigel Birrell 6,000 12,000 - -
James Ryan 6,000 12,000 - -
Mark Le Tissier - - - -
54,500 109,000 - -
------------------- ------------------- ------------------- --------------------
Directors were also reimbursed for GBP8,040 (30 September 2016:
GBP61,347) for expenses incurred on business on behalf of the
Company.
Mark Le Tissier, a Director of Trident Trust (Guernsey) Limited
waived his entitlement to a fee for his directorship.
The Investment Committee assists the Company in analysing and
recommending potential royalty transactions. Along with Neil
Johnson, the Investment Committee is made up of David Campbell,
Andrew Carragher, John Romeo, Andrew Chadwick-Jones, Justin
Cochrane, and Jim Webster. During the period GBP12,500 (30
September 2016: GBP20,000) was paid. There was no outstanding
balance payable to the committee members at the end of the period
(30 September 2016: GBP5,000). Only Jim Webster earns a fee for his
role as chief investment officer of the Company. Those fees paid
were as follows:
Charge for Charge for Outstanding at Outstanding at
Entitlement per period to period to period end period end
annum 30/09/2017 30/09/2016 30/09/2017 30/09/2016
GBP GBP GBP GBP GBP
A Carragher - - 10,000 - 5,000
J Webster 25,000 12,500 10,000 - -
12,500 20,000 - 5,000
----------------- ----------------- ---------------- ----------------
The related parties' interests in the share capital of the
Company are as follows:
Holding Holding
at Additional at Percentage
31 March shareholdings 30 September of share
Name 2017 in period 2017 capital
Charles Cannon-Brookes 1,408,517 - 1,408,517 3.10%
Arlington Group
Asset Management
Limited 1,357,365 - 1,357,365 2.99%
N Johnson 1,160,000 - 1,160,000 2.56%
J Cochrane 690,000 - 690,000 1.52%
J Ryan 650,000 - 650,000 1.43%
N Birrell 525,000 - 525,000 1.16%
Abinvest Corporation 500,000 - 500,000 1.10%
Charles Cannon-Brookes is a Director and shareholder of
Arlington Group Asset Management Limited ("Arlington") which owns
1,357,365 Ordinary Shares and is therefore interested in 2,765,882
Ordinary Shares representing 6.10 per cent of the total voting
rights.
Neil Johnson is a Director of Abinvest Corporation and Abingdon
Capital Corporation. Abinvest Corporation is a wholly owned
subsidiary of Abingdon Capital Corporation. He owns 500,000
Ordinary Shares through Abinvest Corporation and 10,000 Ordinary
Shares through RBK&C Trust and therefore has an overall
interest in the Ordinary Shares of the Company of 1,660,000
Ordinary Shares representing 3.66 per cent of the total voting
rights.
Justin Cochrane, a current member of the Company's Investment
Committee is also a full time Executive Vice President at Abingdon
Capital Corporation ("Abingdon"). Mr Cochrane overall interest in
the Ordinary Shares of the Company is 690,000 Ordinary Shares
representing 1.52 per cent of the total voting rights.
The Company has a share option scheme ("the Scheme") to
incentivise Directors, staff and certain key advisers and
consultants to deliver long-term value creation for shareholders.
The Company operates an equity based scheme for directors and
specified consultants.
The related parties' interest in the share options of the
Company are as follows:
5 year
option,
vesting
immediately
granted Exercise
Name on Total options price GBP
Nigel Birrell 4 Sep 2015 85,000 0.75
Arlington Group
Asset Management 4 Sep
Limited 2015 85,000 0.75
Neil Johnson 4 Sep 2015 85,000 0.75
James Ryan 4 Sep 2015 85,000 0.75
J Cochrane 4 Sep 2015 70,000 0.75
Abingdon is entitled to an annual service fee of GBP196,000 and
Arlington is entitled to an annual service fee of GBP24,000 per
annum. An amount totalling GBP110,000 was paid to Abingdon and
Arlington during the period (30 September 2016: GBP188,103).
In addition to the service fee, Abingdon shall have the right
from time to time to be issued and allotted up to 1,500,000
ordinary shares of no par value in the Company following the
conditions noted below.
-- each time an investment originating from Abingdon is
completed, Abingdon shall be entitled to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 5% x A/B
-- to the extent that an investment does not originate from
Abingdon but Abingdon assists the Company in the negotiation and
completion of such investment, Abingdon shall be entitled, upon
completion of such investment, to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 2.5% x A/B.
For the purposes of the calculation "A" is the gross value of
the investment and "B" is either: (i) if the investment is financed
(in whole or in part) through an offering of ordinary shares of no
par value in the capital of the Company, the price per share at
which such ordinary shares are offered, or (ii) if the Investment
is financed by any other means, the weighted average closing price
on AIM of the ordinary shares for the 20 Business Days immediately
preceding the completion of the Investment.
859,614 shares for a total cost of GBP341,439 are due to be
issued as at the end of the period following the successful
completion of the first royalty debt instrument of the Company.
The 859,614 shares relate to shares payable under the support
services agreement on completion of sourcing a royalty instrument
as disclosed in note 10 and will be allocated at the discretion of
Abingdon, who have indicated that they will request the allocation
to be made to Arlington and Abingdon equally to reflect the
collective efforts of both companies to date.
The total charge to the Interim Consolidated Statement of
Comprehensive Income for Abingdon was GBP276,413 of which GBP7,693
comprises disbursed costs which are included in travel and
entertainment expenses (2016: GBP181,198) and GBP170,719 in
relation to shares to be issued upon successful completion of the
first royalty debt instrument (2016: GBPnil) There were no
outstanding amounts at the end of the period (2016: GBPnil).
The Company has a Support Service Agreement with Arlington
whereby the services to be provided by Arlington include global
deal origination and on-going investment management, including
preparation of investment reports, performance data and compliance
with the Company's investing policy.
The total charge to the Interim Consolidated Statement of
Comprehensive Income for Arlington was GBP191,230 of which GBP8,511
comprises of disbursed costs which are included in travel and
entertainment costs (2016: GBP53,163) and GBP170,719 in relation to
shares to be issued upon successful completion of the first royalty
debt instrument (2016: GBPnil). An amount of GBP3,235 was
outstanding for travel and entertainment expenses at the end of the
period (2016: GBPnil).
The Directors are not aware of any ultimate controlling
party.
11. CONTINGENT LIABILITIES
At 30 September 2017 there were no contingent liabilities (2016:
GBPnil).
12. POST BALANCE SHEET EVENTS
On 6 October 2017 the Company announced that it had entered into
its second royalty financing agreement with Lynx Equity (U.K.)
Limited ("Lynx UK"), the UK-based subsidiary of Lynx Equity Limited
("Lynx"). The Company has committed GBP 7.0 million, with an
initial tranche of GBP 4.5 million to be drawn down immediately,
with the additional GBP 2.5 million being drawn down at the
completion by Lynx UK of an imminent acquisition.
The Financing represents the beginning of the relationship with
Lynx as a Royalty Partner, as Duke has become Lynx's preferred
European capital provider, with the potential to provide a further
GBP 8 million of funding equating to GBP 15 million over time.
The Remuneration Committee approved the Company's long-term
incentive plan (LTIP) as described in Part 5 of the Admission
Document.
The Company also entered into an Advisory Agreement with
Partners Value Investments LP ("PVI"), and approved the grant of
2,000,000 5-year warrants to PVI, exercisable at GBP0.42, in
consideration for the provision of certain services provided by PVI
to the Company under the terms of the Agreement.
Dividends amounting to GBP 226,887 declared in September 2017
were paid in October 2017.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KDLFBDFFZFBE
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November 08, 2017 02:05 ET (07:05 GMT)
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