Interim results and dividend declaration

RNS Number : 3023J

Duke Royalty Limited

04 December 2018

 

4 December 2018

Duke Royalty Limited ("Duke", "Duke Royalty" or "the Company")

Interim Results and Dividend Declaration

Duke Royalty Limited (AIM: DUKE), a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to report its interim results for the six months ended 30 September 2018.

Highlights:

·      Revenue of £2.7 million (H1 2017*: £0.6 million), an increase of 350%

·      Inaugural net profit before tax £1.1 million (H1 2017: loss before tax of £0.4 million)

·      Positive cash flow from operations of £1.3 million (H1 2017: cash outflow of £0.1 million)

·      Two new royalty investments made, £6.5 million investment into Brownhills Investments Limited (BIL) and £10 million into InterHealth Canada Holding Corp (ICHC)

·      Completed follow-up investments of £3.0 million into Lynx Equity (U.K.) Limited

·      Successfully raised £44 million of new equity in an oversubscribed placing at 44 pence per share to expand and diversify royalty investment portfolio

·      Placing was well supported by existing shareholders and also brought new institutional investors onto Duke's share register

·      Two quarterly dividends paid, 0.6p on 12 April 2018 and 0.7p on 12 July 2018. Based on the previous quarter payment, Duke continues to be ranked amongst the top AIM companies based on dividend yield.

·      Positive adjustment factors achieved from Duke's first two investments, Temarca B.V. and Lynx Equity (U.K.) Limited and encouraging sales growth also being shown by Trimite Global Coatings Limited and Brownhills Investments Limited

·      Strong liquidity available for future capital deployments with cash at period end sitting at £30.1 million

*H1 2017 means the six-month period to 30 September 2017

Dividend Declaration

The Company is pleased to report it has approved a quarterly dividend of 0.7 pence (sterling) per share with the ex-dividend date being 27 December 2018, the record date 28 December 2018 and the payment date 12 January 2019.

Neil Johnson, CEO of Duke Royalty, said: "I am delighted to report that, in the period under review, Duke has been able to post significant revenue growth as well as its inaugural net profit. As the Company continues to deploy capital and benefit from the participation in the growth of its partner companies, I expect both revenues and profits to increase in subsequent reporting periods.

"The Company is focused on deploying its capital raised in the summer into new royalty partners who are under exclusivity to Duke whilst we conduct due diligence.  I remain confident Duke will be in a position to close more than one transaction should they pass our due diligence process by the end of the financial year.  With this in mind, I look forward to the remainder of the financial year with optimism."

 For further information, please contact www.dukeroyalty.com, or contact:

Duke Royalty Limited	Neil Johnson/ Charlie Cannon-Brookes	[phone]
Grant Thornton UK LLP  (Nominated Adviser)	Colin Aaronson/ Samantha Harrison/ Seamus Fricker	[phone]
Cenkos Securities plc  (Joint Broker)	Julian Morse/ Michael Johnson	[phone]
Mirabaud Securities Limited (Joint Broker)	Peter Krens/ Edward Haig-Thomas	[phone]
Newgate Communications (PR)	Elisabeth Cowell/ Ian Silvera / Tom Carnegie	[phone] [e-mail]

CHAIRMAN'S REPORT

FOR THE PERIOD ENDED 30 SEPTEMBER 2018

Dear Shareholder,

Duke Royalty's strategy is to provide investors with exposure to capital growth and income by becoming the preferred and leading provider of royalty finance for corporations in Europe and abroad.

I am delighted to present our financial results for the six months ended 30 September 2018, with the Company achieving its inaugural net profit before tax of £1.1 million and revenues of £2.7 million. Duke is now in a strong position to execute its strategy thanks to the achievements delivered during the period.

These include diversification of Duke's portfolio of royalty partners and underlying companies from five to eight investments across a range of sectors, completion of an oversubscribed placing to raise £44 million delivered at a premium to the previous fundraise, and the receipt of increased royalty payments from two of our partners due to the revenue growth they achieved on the back of our investment. As a result of these achievements, Duke continues to be ranked amongst the top AIM companies based on dividend yield.

We are currently the only UK-quoted diversified Royalty company. This means that we have a first-mover advantage to secure some of the most compelling investment opportunities in these jurisdictions.

Our sector focus currently covers:

·      Hospitality and Leisure;

·      Industrials;

·      Technology and media;

·      Healthcare; and

·      Power and utilities.

Our operating cost base is carefully managed to ensure that each deal entered into by Duke is immediately accretive. Accordingly, cash operating expenses were kept under tight control during the period, increasing from £0.26 million to £0.56 million period-on-period to reflect the decision by Duke to scale-up its operating team to effectively manage its deal origination, execution and monitoring requirements.

Whilst we expect further modest increases in cash operating expenses as the Company continues to expand, they should significantly lag revenue growth and this positive operational leverage is expected to be seen in the coming periods.

During this interim period, two new royalty investments and one follow-on investment were concluded. £6.5 million was invested into Brownhills Investments Limited (BIL) and £10 million into InterHealth Canada Holding Corp (ICHC), while a follow-up investment totalling £3 million was also made into Lynx Equity (U.K.) Limited.  Both Brownhills and InterHealth match Duke's core investment criteria in that they are both well-established and profitable private businesses, with Duke looking forward to being aligned with them in their future growth and success.

Royalty finance, which provides capital and receives returns based on revenue performance of its investee companies over a long term, represents a £50 billion sector in North America. The funding gap in Europe and abroad, due to the banks' unwillingness to lend to SMEs, means that we represent an attractive proposition for private growth businesses that wish to retain control of their businesses without any refinancing risk. In turn, our business model provides investors with exposure to ambitious private companies with excellent track records of delivering growth. 

One of the key selling points and differentiating factors about the Duke business model is that Duke is aligned with its investee companies (royalty partners), with its return being directly linked to the underlying performance of its royalty partners. Each of Duke's royalty partners is subject to an annual adjustment, which triggers a reset of the monthly payment amount due to Duke, subject to a collar (a maximum adjustment up or down). The reset is calculated once a year, each year for the life of the royalty agreement, based on the gross revenue growth (or decline) of the royalty partner over the preceding twelve months.

In this regard, I am pleased that Duke recently confirmed positive annual adjustments for its first two Royalty Partners, Lynx UK and Temarca. As announced on 8 May 2018, Temarca and Lynx UK were tracking above the top end of the annual adjustment range, and the Company is pleased to report that both partners are continuing to track above expectations and we are confident of further positive resets in both cases.  

With regard to Duke's other partners, the first adjustment date for both Trimite and Brownhills is on 31 March 2019. Based on management accounts received by Duke for the period to the end of September 2018, the year-on-year revenue performance for Trimite and Brownhills is meeting expectations. As such, Duke remains confident of a positive reset event as and when these two partners complete their first adjustment periods.

Financial Review

Investors will note the restatement of the September 2017 interim numbers. This has been necessary as part of the move by Duke to adopt IFRS 9 reporting standards and the requirement to compare this Interim FY19 statement to the previous interim period on a like for like basis. All future reporting periods will be reported according to IFRS 9 and, due to the fact that the March 31 2018 financials were also prepared under IFRS 9, no further restatements will be required in the future.

To fund these investments and also provide the necessary liquidity to fund future royalty investments, Duke was able to successfully raise £44 million in an equity issuance in July 2018 priced at 44p per share. It was very pleasing that the equity issue was well oversubscribed and that it also brought a number of new institutional shareholders onto the Company's share register.

During the interim period, Duke paid out two quarterly dividends with 0.6p per share paid to shareholders on 12 April 2018 and 0.7p per share paid on 12 July 2018. The July payment reflected the second dividend increase in the Company's short operating history. The Company remains committed to maintaining a high and stable dividend and the Company's current focus is now on deploying all of its remaining cash into a series of new royalty investments in the coming months.

Outlook

Heading into 2019, I am confident that the Company's momentum will continue as it seeks to further expand its portfolio. We have a very strong cash position with over £30 million as at 30 September, a pipeline of new investments expected to deliver news flow in 2019, and an excellent management team which boasts more than 75 years' combined royalty finance experience. Currently, the Company is focused on delivering additional deployments into new royalty partners and I am confident the results of our efforts will be seen before the end of the financial year.

We expect knowledge of royalty finance, a multi-billion industry in North America, to grow across Europe and abroad, particularly among private small and medium-sized enterprises, attracting more potential opportunities for Duke among well-established businesses. The management team will continue to educate the corporate community, the advisors to these companies and the investor community in 2019, to further drive new opportunities and potential investors to the Company.

We are mindful of the geo-political headwinds, including Brexit, facing the UK and European business community. But Duke's business model, which includes consistently low operating costs and tight controls over operating expenses, means that the Company is very well-positioned to cope with unfavourable macroeconomic events.

Overall, this has been another period of strong progress by the Company and, as always, I am very grateful for the support of our shareholders. The board looks forward to reporting on the Company's continued progress in future periods.

Nigel Birrell
Chairman
3 December 2018

DIRECTORS

FOR THE PERIOD ENDED 30 SEPTEMBER 2018

Mr Nigel Birrell (Chairman)

Nigel Birrell is a Non-Executive Director and Chairman of the Board. He works with the Executive Directors on deal origination and structuring. He has extensive public company experience and expertise in the gaming, media and financial services sectors. Mr Birrell is the CEO of the Lottoland Group, a Gibraltar regulated gaming group.

Mr Birrell was previously Group Director on the Executive Board at bwin.party digital entertainment plc, the world's leading listed on-line gaming business, where he was responsible for all its mergers and acquisitions, business development and managing its investment portfolio. While at bwin.party Mr Birrell led the acquisitions of Gamebookers, Empire On-line and IOG's casino operations, Cashcade, the World Poker Tour and Orneon. He was instrumental in devising, negotiating and transacting the merger between PartyGaming and Bwin.party, the largest online gaming deal in history. He has also led all its disposals including Ongame's sale to Amaya. Prior to bwin.party, Mr Birrell was a director of the FTSE 250 media group HIT Entertainment. He also worked as an investment banker with Donaldson, Lufkin & Jenrette and Dresdner Kleinwort Benson. Since leaving bwin.party Mr Birrell has served on the Board of LottoLand Limited, a Gibraltar regulated fast growing gaming group as its CEO. He is also a Non-Executive Chairman of Southern Rock Insurance Company Limited, a regulated insurance underwriter.

Mr Birrell holds a LLB from the University of London (Queen Mary College) and qualified as a solicitor of the Senior Courts of England and Wales.

Mr Neil Johnson

Neil Johnson is an Executive Director and Duke Royalty's Chief Executive Officer with responsibility for the overall strategic direction and performance of the Group. Working closely with the other members of the Management team, Board members and the Investment Committee, he leads all deal origination, due diligence and structuring.

Mr Johnson has over 25 years of experience in investment banking, merchant banking, and research analysis in both the Canadian and UK capital markets. In 2012 he co-founded and became Chief Executive Officer of Difference Capital Financial, a Canadian publicly listed merchant bank. For the previous 19 years he worked for Canaccord Genuity, first in Canada and later at Canaccord London rising to the positions of Head of Corporate Finance (Europe), Global Head of Technology, and a member of the Global Executive Committee. Mr Johnson was instrumental in the firm becoming authorised as a nominated adviser for AIM and regulated in the UK and London Stock Exchange Main Market listings; he spearheaded the firm's diversification into the technology industry, and led Canaccord's initiative to attract North American firms to list in London.

During his tenure the Canaccord European operation grew revenues from less than £5 million to over £50 million, completed over 100 transactions and raised in excess of £3 billion for North American companies listed in London. 

Mr Johnson is a graduate of the Richard Ivey School of Business at the University of Western Ontario and holds the designation of Chartered Financial Analysis Charterholder.

Mr Charles Cannon Brookes

Charlie Cannon Brookes is an Executive Director of the Company and works alongside the CEO on deal origination, due diligence and structuring. In addition Mr Cannon Brookes is Duke Royalty's liaison with UK institutions / advisors and has oversight of Duke Royalty's corporate governance and UK plc responsibilities. 

Mr Cannon Brookes has over 20 years investment experience. He is a Director of FCA authorised and regulated Arlington Group Asset Management Limited (AGAM). Through AGAM, Mr Cannon Brookes has been active in a variety of different investment management mandates and corporate finance transactions. In addition, he has successfully led a number of IPO and RTO transactions on the London markets. Prior to AGAM he worked for Arlington Group plc, an AIM quoted investment company and managed all of its public equity portfolio, as well as Jupiter Asset Management, ABN Amro and Barclays de Zoete Wedd. He has extensive fund management experience and has advised and sat on the board of a number of different funds, trusts and other operating public companies.

Mr Cannon Brookes holds a BA Honours degree in Economics & Politics from the University of Exeter.

Mr Justin Cochrane

Justin Cochrane is currently a Non-Executive Director of the Company. He works with the Executive Directors on deal origination and structuring and is a member of the Investment Committee. 

Mr Cochrane is the President and COO of Cobalt 27 Capital Corp. Mr Cochrane was the Executive Vice President of Duke Royalty from 2015 to the period under review as he transitioned into the executive role at Cobalt 27. Mr Cochrane was previously the Executive Vice President of Corporate Development for Sandstorm Gold Ltd. At Sandstorm, Mr Cochrane was responsible for sourcing, negotiating and executing royalty and stream financing transactions across the globe. Mr Cochrane was a key part of Sandstorm's team as it grew into one of the largest royalty and stream financing companies in Canada. Prior to Sandstorm Mr Cochrane was a Vice President at National Bank Financial where he spent some nine years working in the investment banking group. As Vice President, Mr Cochrane managed primary coverage of British Columbia based clients in the diversified, paper & forest products, power & utilities, resources, cleantech and other sectors. Mr Cochrane specialised in providing advice to client on merger and acquisition transactions and equity and debt financing opportunities.

Mr Cochrane holds the designation of Chartered Financial Analyst Charterholder and received a Bachelor of Commerce degree, with honours, from the University of British Columbia, Vancouver, Canada. Mr Cochrane is a government ambassador at the Multiple Sclerosis Society of Canada and also a Director of Cobalt 27 Capital Corp. and Nevada Copper Corp.

Mr Mark Le Tissier

Mark Le Tissier is a Non-Executive Director of the Company. He is responsible for the oversight of the Company's corporate obligations in Guernsey.

Mr Le Tissier is the European Regional Director of Trident Trust with oversight over five offices, as well as the Managing Director of Trident Trust Company (Guernsey) Limited and has worked for Trident for over twenty years.  He has extensive board-level experience and has an in-depth knowledge of Guernsey and other jurisdictions' corporate and investment regulations. Mr Le Tissier is a Trust & Estate Practitioner who has also completed the IOD Programme in company direction and is resident in Guernsey.

Mr Matthew Wrigley

Matthew Wrigley is a Non-Executive Director of the Company and works with the Executive Directors on structuring and all legal matters relating to the Company.

Mr Wrigley is a partner at asset management advisory firm, MJ Hudson. In his fifteen years in alternative assets, he has gained experience through a mix of legal and commercial roles, including serving as General Counsel for a fund management company listed on the Australian Securities Exchange with AUD 1.3 billion assets under management, Chief Operating Officer of investment trust listed on the Singapore Securities Exchange with a market capitalisation of SGD 600 million, and with leading global law firm, Baker McKenzie. He also sits on several fund and general partner boards, with strategies spanning private equity, infrastructure and real estate.

Mr Wrigley is a Solicitor of the Supreme Court of Queensland Australia, holds a Bachelor of Laws (LL.B) from the University of Queensland and is resident of Guernsey.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 SEPTEMBER 2018

	Note	Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
Income
Net change in fair value on financial assets financial
and financial liabilities at fair value
through profit or loss	6,13,15	2,481,210		1,554,518		467,887
Transaction costs reimbursed		107,500		145,000		-
Net foreign currency gains		-		97,238		100,700
Gain on exercise of warrants		87,989		-		-
Interest receivable		22,345		-		-
Total income		2,699,044		1,796,756		568,587
Expenses
Support services administration fees	14	(110,000)		(806,537)		(451,439)
Directors' fees	14	(144,315)		(132,065)		(54,500)
Investment Committee fees	14	(25,000)		(37,500)		(12,500)
Legal and professional fees		(234,510)		(229,723)		(50,918)
Transaction costs		(436,102)		(488,308)		(141,103)
Royalty participation fees	15	(431,750)		(848,534)		(249,769)
Other operating costs		(91,377)		(112,289)		(34,496)
Net foreign currency losses		(1,820)		-		-
Interest payable		(78,880)		(2)		(1,700)
Other finance costs		(93,180)		-		-
Total expenses		(1,646,934)		(2,654,958)		(996,425)
Gain/(loss) for the financial period		1,052,110		(858,202)		(427,838)
Taxation expense	3	(102,000)		-		-
Total comprehensive income/(loss) for the period		950,110		(858,202)		(427,838)

Basic earnings/(deficit) per share (pence)	4	0.73		(1.38)		(0.94)

Diluted earnings/(deficit) per share (pence)	4	0.73		(1.38)		(0.94)

All income is attributable to the holders of the Ordinary Shares of the Company.

The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2018

Note		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
Non-current assets
Financial assets at fair value through profit or loss	6	39,174,461		20,782,297		6,339,755
Deferred tax	7	107,000		-		-
		39,281,461		20,782,297		6,339,755
Current assets
Financial assets at fair value through profit or loss	6	5,609,414		2,786,501		844,198
Trade and other receivables	8	711,163		6,687,020		15,253
Cash and cash equivalents		30,066,361		3,165,221		7,323,409
		36,386,938		12,638,742		8,182,860
Total assets		75,668,399		33,421,039		14,522,615
Equity
Shares issued	9	101,918,170		60,303,293		40,905,094
Shares to be issued		-		-		341,439
Share based payment reserve	10	169,042		129,977		124,412
Warrant reserve		125,000		125,000		-
Retained losses	11	(28,623,621)		(28,314,324)		(27,178,219)
		73,588,591		32,243,946		14,192,726
Current liabilities
Trade and other payables	12	678,541		259,693		51,336
Financial liabilities at fair value through profit or loss	13	187,362		140,886		42,968
		865,903		400,579		94,304
Non-current liabilities
Financial liabilities at fair value through profit or loss	13	1,213,905		776,514		235,585
Total liabilities		2,079,808		1,177,093		329,889
Total equity and liabilities		75,668,399		33,421,039		14,522,615

The Condensed Consolidated Financial Statements on pages 10 to 31 were approved and authorised for issue by the Board of Directors on 3 December 2018 and were signed on its behalf by:       

Mark Le Tissier	Matthew Wrigley
Director	Director

The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2018

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
Cash flows from operating activities		£		£		£
Receipts from royalty investments		1,791,642		987,192		245,074
Receipts from transaction costs reimbursed		167,500		45,000		-
Payments for royalty participation fees		(81,252)		-		-
Operating expenses paid		(566,563)		(785,714)		(343,474)
Net cash inflow/(outflow) from operating activities		1,311,327		246,478		(98,400)
Cash flows from investing activities
Royalty investments advanced		(13,924,640)		(22,932,356)		(6,932,356)
Transaction costs paid		(222,047)		(277,737)		(141,103)
Pre-royalty investment advanced		(605,419)		-		-
Amounts advanced to agents pending royalty investment
completion		-		(6,467,500)		-
Gain on exercise of warrants		87,989		-		-
Payment to acquire equity investment		-		(250)		-
Interest income received		13,914		-		-
Net cash outflow from investing activities		(14,650,203)		(29,677,843)		(7,073,459)
Cash flows from financing activities
Proceeds from share issue		44,010,000		19,840,275		343,000
Share issue costs		(2,345,123)		(765,613)		(70,000)
Dividends paid		(1,250,630)		(925,468)		(226,887)
Interest paid		(78,880)		-		(1,699)
Other finance costs paid		(85,500)		-		-
Net cash inflow from financing activities		40,249,867		18,149,194		44,414
Net change in cash and cash equivalents		26,910,991		(11,282,171)		(7,127,445)
Cash and cash equivalents at beginning of year		3,165,221		14,350,154		14,350,154
Effect of foreign exchange on cash		(9,851)		97,238		100,700
Cash and cash equivalents at the end of year		30,066,361		3,165,221		7,323,409

The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODS ENDED 30 SEPTEMBER 2017 AND 31 MARCH 2018

						Share-based
		Shares		Shares to be		payment		Warrant		Retained		Total
Note		issued		issued		reserve		reserve		losses		equity
		£		£		£		£		£		£
At 1 April 2017		40,905,094		-		124,412		-		(26,523,494)		14,506,012
Total comprehensive loss for
the period (restated)		-		-		-		-		(427,838)		(427,838)
Transactions with owners
Share based payments	10	-		341,439		-		-		-		341,439
Dividends	5	-		-		-		-		(226,887)		(226,887)
Total transactions with owners		-		341,439		-		-		(226,887)		114,552
At 1 October 2017 (restated)		40,905,094		341,439		124,412		-		(27,178,219)		14,192,726
Total comprehensive loss for
the period		-		-		-		-		(430,364)		(430,364)
Transactions with owners
Shares issued for cash	9	19,507,275		-		-		-		-		19,507,275
Share issuance costs -	9	(1,188,338)		-		-		-		-		(1,188,338)
Share based payments	9,10	1,079,262		(341,439)		5,565		-		-		743,388
Warrants issued		-		-		-		125,000		-		125,000
Dividends	5	-		-		-		-		(705,741)		(705,741)
Total transactions with owners		19,398,199		(341,439)		5,565		125,000		(705,741)		18,481,584
At 31 March 2018		60,303,293		-		129,977		125,000		(28,314,324)		32,243,946

The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2018

				Share-based
		Shares		payment		Warrant		Retained		Total
	Note	issued		reserve		reserve		losses		equity
		£		£		£		£		£
At 1 April 2018		60,303,293		129,977		125,000		(28,314,324)		32,243,946
Total comprehensive income for the year		-		-		-		950,110		950,110
Transactions with owners
Shares issued for cash	9	44,000,000		-		-		-		44,000,000
Share issuance costs -	9	(2,385,123)		-		-		-		(2,385,123)
Share based payments	10	-		39,065		-		-		39,065
Dividends	5	-		-		-		(1,259,407)		(1,259,407)
Total transactions with owners		41,614,877		39,065		-		(1,259,407)		40,394,535
At 30 September 2018		101,918,170		169,042		125,000		(28,623,621)		73,588,591

The notes on pages 15 to 31 form an integral part of these Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 SEPTEMBER 2018

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. Its shares are traded on the AIM market of the London Stock Exchange.  The Company's registered office is shown on page 32. The Group comprised Duke Royalty Limited and its wholly owned subsidiary Duke Royalty UK Limited, a company registered in England and Wales. The Group's investing policy is to invest in a diversified portfolio of royalty 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 International Accounting Standard 34 "Interim Financial Reporting", as adopted by the European Union, and using the going concern basis of preparation.  These interim financial statements do not contain all the information and disclosures as presented in the annual financial statements, and should be read in conjunction with the Consolidated Financial Statements of the Group for the year ended 31 March 2018, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), to the extent that they have been adopted by the European Union, and applicable Guernsey law. 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 2018, except for the adoption of new standards effective from 1 January 2018, and are expected to be applied in the preparation of the financial statements for the year ended 31 March 2018. The Financial Statements have been prepared on a historical cost basis, except for the following: §  Royalty investments - measured at fair value through profit or loss §  Equity investments - measured at fair value through profit or loss §  Royalty participation liabilities - measured at fair value through profit or loss

2.2

New and amended standards adopted by the Group

The Group has adopted IFRS 15 "Revenue from Contracts with Customers" for the first time in these interim financial statements.  There are no areas within this standard which have a material impact on the Group.

2.3

Restatement of interim comparatives

In preparing the interim Consolidated Financial Statements of the Group for the period ended 30 September 2017, the Group elected to early adopt IFRS 9 'Financial instruments'.  Following a full review of the implementation of IFRS 9 as part of the preparation of the Consolidated Financial Statements for the year ended 31 March 2018, the Group made certain amendments which have resulted in the restatement of the comparative figures for the period ended 30 September 2017 in these Condensed Consolidated Financial Statements.  As part of this restatement, transaction costs and royalty participation fees previously included in the carrying value of the investments were expensed in the Condensed Consolidated Statement of Comprehensive Income.  This has resulted in the previously reported loss before tax of £78,139 increasing to £427,838.

3.	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.

Factors affecting income tax expense for the year

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Profit/(loss) on ordinary activities before tax	950,110		(858,202)		(427,838)
	Corporation tax at country rates	331,458		(61,409)		(61,049)
	Tax losses not recognised	-		61,409		61,049
	Utilisation of tax losses brought forward	(122,458)		-		-
	Deferred tax asset recognised	(107,000)
		102,000		-		-

4.	Earnings/(deficit) per share

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
	Basic earnings/(deficit) per Ordinary Share	(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Profit/(loss) for the period	950,110		(858,202)		(427,838)
	Weighted average number of Ordinary Shares
	in issue	130,210,792		62,234,062		45,377,459
	Basic earnings/(deficit) per share (pence)	0.73		(1.38)		(0.94)

		Period to		Year to		Period to
		September		March		September
		2018		2018		2017
	Diluted earnings/(deficit) per Ordinary Share	(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Profit/(loss) for the period	950,110		(858,202)		(427,838)
	Weighted average number of Ordinary Shares,
	diluted for warrants in issue	130,309,049		62,234,062		45,377,459
	Diluted earnings/(deficit) per share (pence)	0.73		(1.38)		(0.94)

The basic earnings per share is based on the Group profit for the period and on the weighted average number of Ordinary Shares in issue for the period. The share options, Long Term Incentive Plan awards and warrants in issue were not dilutive in the year ended 31 March 2018 and the period ended 30 September 2017, but the warrants in issue have become dilutive in the current period. For more details on the share options see note 10.

5.

Dividends

The Company implemented a quarterly dividend policy during the year ended 31 March 2018. The following interim dividends have been recorded and paid since the inception of this policy:

				Dividend per		Dividends
				share		payable
				pence/share		£
	Record date	Payment date
	30 June 2017	27 July 2017		0.5		226,887
	Dividends payable for the period ended 30 September 2017					226,887
	Record date	Payment date
	29 September 2017	19 October 2017		0.5		226,887
	29 December 2017	12 January 2018		0.5		478,854
	Dividends payable for the period ended 31 March 2018					705,741
	Record date	Payment date
	3 April 2018	12 April 2018		0.6		581,265
	29 June 2018	12 July 2018		0.7		678,142
	Dividends payable for the period ended 30 September 2018					1,259,407

On 20 September 2018 the Company approved a further quarterly dividend of 0.7 pence per share, totalling £1,385,317, which was paid on 12 October 2018.

6.	Financial assets at fair value through profit or loss

		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Non-current					-
	Royalty investments	39,174,211		20,782,047		6,339,755
	Equity investments	250		250		-
		39,174,461		20,782,297		6,339,755
	Current
	Royalty investments	5,609,414		2,786,501		844,198
		44,783,875		23,568,798		7,183,953

Net changes in fair value on financial assets at fair value through profit or loss:

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	On royalty investments	2,614,579		1,623,384		496,671
	On equity investments	-		-		-
	Total net gains	2,614,579		1,623,384		496,671

Net changes in fair value on financial assets at fair value through profit or loss:

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Realised	1,791,642		987,192		245,074
	Change in unrealised	822,937		636,192		251,597
	Total net gains	2,614,579		1,623,384		496,671

Realised changes in fair value relate to cash amounts received under the Group's royalty financing agreements.

Royalty investments Temarca B.V. In April 2017 the Group completed its first royalty financing agreement with Temarca B.V. ("Temarca").  Under the terms of the agreement the Group advanced €8 million (£6.9 million) to Temarca for a term of 25 years in exchange for annualised royalty distributions of approximately €1 million (£0.9 million).  The distributions are adjusted annually based on the percentage change in Temarca's gross revenues compared to the prior year, subject to a floor and cap.  The financing is secured by way of fixed and floating charges over certain assets and the Group has provided Temarca with a buyback option.  This buyback option can be exercised at Temarca's discretion at any time during the term of the agreement. In August 2018 the Group contributed a further €1 million (£0.9 million) of financing to Temarca.  This increased the annualised royalty distributions receivable from Temarca to approximately €1.1 million (£1.0 million) per annum.

Lynx Equity (U.K.) Limited In October 2017 the Group entered into a royalty financing agreement with Lynx Equity (U.K.) Limited ("Lynx").  Under the terms of the agreement the Group advanced £7 million to Lynx in perpetuity in exchange for annualised royalty distributions of approximately £0.8 million.  The distributions are adjusted annually based on the percentage change in the aggregated gross revenues of Lynx's investee companies compared to the prior year, subject to a floor and cap.  The financing is secured over all present and after-acquired property and assets of Lynx and shares of the subsidiaries of Lynx.  Lynx's parent company has also provided a corporate guarantee to pledge all cash flows from Lynx to the Group.  The Group has provided Lynx with a buyback option after the expiry of a period of five years from the date of the original investment.  This buyback option is exercisable at Lynx's discretion. In April and September 2018 the Group contributed a further £2 million and £1 million respectively of royalty financing to Lynx.  This increased the annualised royalty distributions receivable from Lynx to approximately £1.2 million per annum. Trimite Global Coatings Limited In March 2018 the Group entered into a royalty financing agreement with Trimite Global Coatings Limited ("Trimite").  Under the terms of the agreement the Group advanced £9 million to Trimite for a term of 30 years in exchange for annualised distributions of approximately £1.1 million.  The distributions are adjusted annually based on the percentage change in Trimite's gross revenues compared to the prior year, subject to a floor and cap.  The financing is secured by way of fixed and floating charges over certain assets and the Group has provided Trimite with a buyback option. This buyback option can be exercised at Trimite's discretion at any time during the term of the agreement. Brownhills Investments Limited In April 2018 the Group entered into a royalty financing agreement with Brownhills Investments Limited ("Brownhills").  Under the terms of the agreement the Group advanced £6.5 million to Brownhills for a term of 30 years in exchange for annualised distributions of approximately £0.9 million.  The distributions are adjusted annually based on the percentage change in Brownhill's gross revenues compared to the prior year, subject to a floor and cap.  The investment is secured via fixed and floating charges. The Group has provided Brownhills with a buyback option.

InterHealth Canada Holding Corp In August 2018 the Group entered into a royalty financing agreement with InterHealth Canada Holding Corp ("ICHC").  Under the terms of the agreement the Group advanced £10 million to ICHC for a term of 30 years in exchange for annualised distributions of approximately £1.35 million.  The distributions are adjusted annually based on the percentage change in ICHC's gross revenues compared to the prior year, subject to a floor and cap.  The investment is secured via fixed and floating charges.  The Group has provided ICHC with a buyback option.

Equity investments At completion of the Group's royalty financing agreement with Trimite (see above) the Group acquired a 2.5% interest in the Trimite group for £250. The Group still holds two 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 they are fully written down to nil value.

7.	Deferred tax

		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Deferred tax asset	107,000		-		-

The deferred tax asset arises due to a temporary timing differences on the treatment of transaction costs in the UK subsidiary.  This deferred tax asset is expected to reverse over a 30 year period.  The utilisation of this asset is dependent on sufficient future taxable profits being generated by the UK subsidiary.

8.	Trade and other receivables

		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Transaction costs reimbursed receivable	40,000		100,000		-
	Prepayments and accrued income	57,713		109,520		15,253
	Unpaid share capital	-		10,000		-
	Pre-royalty investment advances	613,450		-		-
	Amounts advanced to agents pending royalty
	investment completion	-		6,467,500		-
		711,163		6,687,020		15,253

9.	Share capital

		No. shares		£
	Authorised
	Unlimited number of shares of no par value	-		-
	Allotted, called up and fully paid
	At 1 April 2017 and at 30 September 2017	45,377,459		40,905,094
	Shares issued for cash during the period	48,768,187		19,507,275
	Shares issued in settlement of share issuance costs	1,231,813		492,725
	Share issuance costs	-		(1,188,338)
	Shares issued in connection with support services agreement	1,500,000		586,537
	At 31 March 2018	96,877,459		60,303,293
	Shares issued for cash during the period	100,000,000		44,000,000
	Share issuance costs	-		(2,385,123)
	Shares issued to Employee Benefit Trust during the period	1,025,000		-
	At 30 September 2018	197,902,459		101,918,170

In August 2018 the Company issued 100 million new Ordinary Shares at 44p per share, of which all were fully paid up at 30 September 2018.

During the period, the Company issued 1,025,000 shares for consideration of £nil into an Employee Benefit Trust, under the terms of its Long Term Incentive Plan (LTIP). See note 10 for further details.

10.	Share-based payments

The following table shows the movements in the share-based payment reserve during the period:

		Share		LTIP
		options		awards		Total
		£		£		£
	At 1 April 2017	124,412		-		124,412
	LTIP awards granted in the year	-		-		-
	At 30 September 2017	124,412		-		124,412
	LTIP awards granted	-		5,565		5,565
	At 31 March 2018	124,412		5,565		129,977
	LTIP awards granted	-		39,065		39,065
	At 30 September 2018	124,412		44,630		169,042

Share option scheme

The Group operates a share option scheme ("the Scheme"). The Scheme was established to incentivise Directors, staff and certain 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 4 per cent of the Company's Ordinary Shares in issue from time to time. Options vest immediately and lapse 5 years from the date of grant. At the period end 760,000 (March 2018 and September 2017 - 760,000) options were outstanding and exercisable at a weighted average exercise price of 75 pence (March 2018 and September 2017 - 75 pence).  The weighted average remaining contractual life of the options outstanding at the period end was 1.93 years (March 2018 - 2.43 years; September 2017 - 2.93 years).

Long Term Incentive Plan

On 7 November 2017 the Remuneration Committee adopted the Duke Royalty Limited Long Term Incentive Plan ("LTIP") which the Board approved the framework of and described in the Admission Document of the Company dated 20 March 2017. Under the rules of the 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. On 6 March 2018 1,025,000 PSAs were issued to Directors with a fair value of £234,390.  An expense of £39,065 for the period (March 2018 - £5,565; September 2017 - £nil) has been recognised in these Condensed Consolidated Financial Statements in 'Directors' fees'.  Disclosure of the valuation assumptions used to value the PSAs has not been made on the basis that the related IFRS 2 charge in the year under review is immaterial. At the period end 1,025,000 (March 2018 - 1,025,000; September 2017 - nil) LTIP awards were outstanding.  The weighted average remaining vesting period of the LTIP awards outstanding at the period end was 2.43 years (March 2018 - 2.93; September 2017 - nil).

11.	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.

12.	Trade and other payables

		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Trade payables	76,424		178,761		-
	Corporation tax	209,000		-		-
	Accruals and deferred income	393,117		80,932		51,336
		678,541		259,693		51,336

13.	Financial liabilities at fair value through profit or loss

		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Royalty participation liability
	Current	187,362		140,886		42,968
	Non-current	1,213,905		776,514		235,585
		1,401,267		917,400		278,553

Net changes in fair value on financial liabilities at fair value through profit or loss:

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Realised	-		-		-
	Change in unrealised	133,369		68,866		28,784
		133,369		68,866		28,784

14.	Related parties

Directors' fees

The following fees were payable to the Directors during the period:

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Neil Johnson	56,555		52,715		25,000
	Charles Cannon Brookes	39,590		36,900		17,500
	Nigel Birrell	12,000		12,000		6,000
	James Ryan	-		6,000		6,000
	Justin Cochrane	24,170		18,450		-
	Matthew Wrigley	12,000		6,000		-
	Mark Le Tissier	-		-		-
		144,315		132,065		54,500

During the year to 31 March 2018, the Directors voluntarily reduced their fees in order for the Company to implement and sustain its quarterly dividend policy.  During the 6 months ended 30 September 2018 this reduction ceased. The above noted fees include the following expenses relating to awards granted under the Group's Long Term Incentive Plan (see note 10):

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Neil Johnson	19,055		2,715		-
	Charles Cannon Brookes	13,340		1,900		-
	Justin Cochrane	6,670		950		-
		39,065		5,565		-

Mark Le Tissier, a Director of Trident Trust Company (Guernsey) Limited has waived his entitlement to a fee in relation to being a Director of the Company. Fees relating to Matthew Wrigley are paid to MJ Hudson, a law firm in which he is a partner. At the period end £6,000 remained outstanding to Nigel Birrell and £6,000 remained outstanding to Matthew Wrigley (March 2018 and September 2017 - no fees remained outstanding).  These were paid subsequent to the period end.

Investment Committee fees

The Group's Investment Committee assist in analysing and recommending potential royalty transactions and its members are considered to be key management along with the Directors.  The following fees were payable to the members of the Investment Committee during the period:

		Period to		Year to		Period to
		30		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Andrew Carragher	-		-		20,000
	Jim Webster	25,000		37,500		40,000
		25,000		37,500		60,000

Jim Webster is also the Group's Chief Investment Officer and has an operational role in the Group beyond the Investment Committee, which is reflected in the level of his fee. Andrew Carragher has waived his entitlement to a fee during the period in relation to being a member of the Group's Investment Committee, and Jim Webster agreed to voluntarily reduce his fee, in conjunction with the voluntary reductions of the Directors, in order for the Company to implement and sustain its quarterly dividend policy.  During the 6 months ended 30 September 2018, the reduction of Jim Webster's fee ceased. During the fiscal year, the representatives of Oliver Wyman were not paid by the Group for their service as per the terms of the collaboration agreement. £12,500 remained outstanding to Jim Webster at the period end (March 2018 and September 2017 - £nil).  This was paid subsequent to the period end.

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		31		30
		September		March		September
		2018		2018		2017
		(unaudited)		(audited)		(unaudited)
		£		£		£
	Payable to Abingdon Capital Corporation
	Annual service fee	98,000		196,000		280,000
	Share award	-		415,818		-
		98,000		611,818		280,000
	Payable to Arlington Group Asset Management
	Limited
	Annual service fee	12,000		24,000		95,000
	Share award	-		170,719		-
		12,000		194,719		95,000
		110,000		806,537		375,000

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 and on-going investment management, including preparation of investment reports, performance data and compliance with the Company's investing policy.

The Support Services Agreements also entitled Abingdon and Arlington to be allotted up to 1,500,000 Ordinary shares in the Company, in recognition of the execution of the royalty strategy, principally the completion of royalty investments by the Group.  These conditions were met during the year ended 31 March 2018 and the shares were issued on 22 December 2017. This entitlement has now been satisfied in full and no further shares will be issued pursuant to the Support Services Agreements. The shares were valued at £586,537 based on the 20-day volume weighted average share prices preceding the dates on which Abingdon and Arlington became entitled to them in accordance with the terms of the agreement. During the year to 31 March 2018, both Abingdon and Arlington agreed to voluntary reductions in their annual service fees in order for the Company to implement and sustain its quarterly dividend policy.  These reductions were still in place throughout the current period.

Share options and LTIP awards

The Group's related parties have the following interests, either directly or beneficially, in share options issued under the Group's share option scheme and Long Term Incentive Plan:

	Share options			Period to		Year to		Period to
				30		31		30
				September		March		September
				2018		2018		2017
				(unaudited)		(audited)		(unaudited)
				No.		No.		No.
	Neil Johnson			85,000		85,000		-
	Charles Cannon Brookes1			85,000		85,000		-
	Nigel Birrell			85,000		85,000		-
	James Ryan			85,000		85,000		-
	Justin Cochrane			70,000		70,000		-

	LTIP awards			Period to		Year to		Period to
				30		31		30
				September		March		September
				2018		2018		2017
				(unaudited)		(audited)		(unaudited)
								(restated)
				No.		No.		No.
	Neil Johnson			500,000		500,000		-
	Charles Cannon Brookes1			350,000		350,000		-
	Justin Cochrane			175,000		175,000		-

1 Includes share options issued to Arlington

The following dividends were paid to related parties:

				Period to		Year to		Period to
				30		31		30
				September		March		September
				2018		2018		2017
				(unaudited)		(audited)		(unaudited)
				£		£		£
	Neil Johnson1			41,693		33,636		-
	Charles Cannon Brookes2			65,000		58,000		-
	Nigel Birrell			8,450		8,500		-
	Justin Cochrane			9,620		10,600		-

1 Includes dividends paid to Abinvest Corporation, a wholly owned subsidiary of Abingdon 2 Includes dividends paid to Arlington

15.	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		31		30
		September		March		September
		2018		2018		2017
		Level 3		Level 3		Level 3
		(unaudited)		(audited)		(unaudited)
						(restated)
		£		£		£
	Financial assets
	Financial assets at fair value through profit or loss
	- Royalty investments	44,783,625		23,568,548		7,183,953
	- Equity investments	250		250		-
		44,783,875		23,568,798		7,183,953
	Financial liabilities
	Financial liabilities at fair value through profit or loss
	- Royalty participation instruments	1,401,267		917,400		278,553
	Total financial liabilities	1,401,267		917,400		278,553

The following table presents the changes in level 3 items for the 6 month periods ended 30 September 2018, 31 March 2018 and 30 September 2017:

		Financial		Financial
		assets		liabilities		Total
		£		£		£
	At 1 April 2017	-		-		-
	Additions (restated)	6,932,356		(249,769)		6,682,587
	Royalty income received	(245,074)		-		(245,074)
	Net change in fair value (restated)	496,671		(28,784)		467,887
	At 30 September 2017 (restated)	7,183,953		(278,553)		6,905,400
	Additions	16,000,250		(598,765)		15,401,485
	Royalty income received	(742,118)		-		(742,118)
	Net change in fair value	1,126,713		(40,082)		1,086,631
	At 31 March 2018	23,568,798		(917,400)		22,651,398
	Additions	20,392,140		(431,750)		19,960,390
	Royalty income received	(1,791,642)		-		(1,791,642)
	Net change in fair value	2,614,579		(52,117)		2,562,462
	At 30 September 2018	44,783,875		(1,401,267)		43,382,608

Valuation techniques used to determine fair values The fair value of the Group's financial instruments is determined using discounted cash flow analysis and all of the 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 royalty investments and royalty participation liabilities These factors are estimated based upon the underlying past and projected performance of the royalty investee companies together with general market conditions. Discount rates for financial assets and liabilities These are initially estimated based upon the projected internal rate of return of the royalty investment and subsequently adjusted to reflect changes in credit risk determined by the Group's Investment Committee.

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: Royalty investments The unobservable inputs are the annual adjustment factor and the discount rate.  The range of annual adjustment factors used is -1.0% to 6.0% and the range of risk-adjusted discount rates is 13.6% to 20.0%. An increase in the annual adjustment factor (subject to the collars set under the terms of the royalty financing agreements) of 25 basis points would increase the fair value by £711,068. A reduction in the discount rate of 25 basis points would increase the fair value by £714,542. A decrease in the annual adjustment factor (subject to the collars set under the terms of the royalty financing agreements) of 25 basis points would decrease the fair value by £640,943. An increase in the discount rate of 25 basis points would decrease the fair value by £643,524. Equity investments Sensitivity analysis has not been performed on the Group's equity investments on the basis that they are not material to the Condensed Consolidated Financial Statements.

Royalty participation instruments The unobservable inputs are the annual adjustment factor and the discount rate used in the fair value calculation of the royalty investments.  The range of annual adjustment factors used is -1.0% to 6.0% and the range of risk-adjusted discount rates is 13.6% to 20.0%. An increase in the annual adjustment factor (subject to the collars set under the terms of the royalty financing agreements) of 25 basis points would increase the fair value of the liability by £31,639. A reduction in the discount rate of 25 basis points would increase the fair value of the liability by £31,496. A decrease in the annual adjustment factor (subject to the collars set under the terms of the royalty financing agreements) of 25 basis points would decrease the fair value of the liability by £12,257. An increase in the discount rate of 25 basis points would decrease the fair value of the liability by £12,089.

16.	Events after the financial reporting date

Dividends On 12 October 2018 the Company paid a quarterly dividend of 0.7 pence per share. Performance Share Awards ("PSA") under the Company's Long Term Incentive Plan ("LTIP") Awards On 31 October 2018 the Group's Remuneration Committee approved the issuance of 1,665,000 PSA's. The PSA's vest after a period of three years and are subject to various performance conditions outlined in the Company's admission document and set by the Remuneration Committee, all in accordance with the LTIP rules. Grant of options On 31 October 2018 the Group's Remuneration Committee approved the grant of 200,000 options over Ordinary Shares (the "Options") under the Company's option plan. The Options expire five years from the date of issuance and have an exercise price of GBP 0.50. Issuance of ordinary shares On 31 October 2018 the Company's Remuneration Committee approved the issuance of 305,000 new ordinary shares of no par value. Issuance of warrants The Board also approved the grant of 2,375,000 Warrants to Partners Value Investments LP ("PVI") in consideration for the provision of services provided by PVI to the Company under the terms of the Strategic Advisory Agreement (as announced on 8 November 2017).

COMPANY INFORMATION

Directors	Nigel Birrell (Chairman)	Justin Cochrane
	Neil Johnson	Mark Le Tissier
	Charles Cannon Brookes	Matthew Wrigley
Secretary and administrator	Trident Trust Company (Guernsey) Limited
	Trafalgar Court
	4th Floor, West Wing, St Peter Port
	Guernsey, GY1 3RL
Registered in Guernsey, number	54697
Website address	www.dukeroyalty.com
Registered office	Trafalgar Court
	4th Floor, West Wing, St Peter Port
	Guernsey, GY1 2JA
Independent auditor	BDO Limited
	Place du Pre
	Rue de Pre
	St Peter Port
	Guernsey, GY1 3LL
Nominated advisor	Grant Thornton UK LLP
	30 Finsbury Square
	London, EC2A 1AG
Brokers	Mirabaud Securities Limited	Cenkos Securities plc
	5th Floor, 10 Bressenden Place	6-8 Tokenhouse Yard
	London, SW1E 5DH	London, EC2R 7AS
Support service providers	Arlington Group Asset Management Limited	Abingdon Capital Corporation 4 King Street W., Suite 401
	47/48 Piccadilly	Toronto, Ontario
	London, W1J 0DT	Canada, M5H 1B6
Registrar and CREST agent	Computershare Investor Services (Guernsey) Limited
	c/o Queensway House
	Hilgrove Street
	St Helier
	Jersey, JE1 1ES
Advocates to the Company as to	MJ Hudson
Guernsey law	Hadsley House
	Lefebvre Street
	St Peter Port
	Guernsey, GY1 2JP
Investment Committee	Neil Johnson	John Romeo
	Justin Cochrane	Andrew Carragher
	Jim Webster

 

END

 

 

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