3 December 2021
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Interim Results for the six months ended 30 September 2021
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 announce its interim results for the six-month ended 30 September 2021.
Financial Highlights
· Cash revenue of £7.8 million, up 78% from the prior period (Interim 2021: £4.4 million)
· Net cash inflow from operations of £5.2 million, a 46% increase (Interim 2021: £3.6 million)
· Net profit generated of £6.2 million, a 50% increase (Interim 2021: £4.1 million)
· Free cash flow of £4.6 million, up 58% from Interim 2021 (£2.9 million)
· Adjusted earnings of 1.39 pence per share, a 60% increase (Interim 2021: 0.87 pence per share)
· Cash dividends of 1.10 pence per share paid to shareholders
Operational Highlights
· Raised £35 million of new equity capital in April 2021
· Deployed over £23 million of capital into three new royalty partners
· Realised exits from two investments
· Over £55 million of available liquidity for future deployments
· Current deal pipeline is at historic levels in deal value and number
Neil Johnson, CEO of Duke Royalty, said:
"This has been a very successful half year, characterised by substantial cashflow growth and accelerating investment deployment. Cash revenue is up 78% from the prior period to £7.8 million, and we have delivered a 58% increase in free cashflow to £4.6 million. This positive performance has been driven mainly by our team's rapid execution of new royalty agreements which has seen us invest over £23 million into three new royalty partners during the period.
"This strong trading performance makes me confident that Duke will exceed the market's expectations for the 12 months ended 31 March 2022. Since the resumption of its cash dividend, Duke has increased its dividend payment from 0.50 pence per share to 0.55 pence per share, with the prospect of higher dividend payments for shareholders in the future. This growth will be supported by entering into new royalty agreements and I am pleased to report that our pipeline is the strongest in our history. We expect to announce a range of new deployments in the coming weeks and months."
Investor Webinar
Neil Johnson, CEO, and Hugo Evans, Finance Director, will deliver a live presentation via the Investor Meet Company platform on 13 December 2021 at 15:30 GMT.
The online presentation is open to all existing and potential shareholders.
Questions can be submitted pre-event via your IMC dashboard or at any time during the live presentation via the "Ask a Question" function. Although the Company may not be in a position to answer every question it receives, it will address the most prominent within the confines of information already disclosed to the market. Responses to the Q&A from the live presentation will be published at the earliest opportunity on the Investor Meet Company platform.
Investor feedback can also be submitted directly to management post-event to ensure the Company can understand the views of all elements of its shareholder base.
Investors can sign up to Investor Meet Company for free and add to meet Duke Royalty via:
https://www.investormeetcompany.com/duke-royalty-limited/register-investor
Investors who have already registered and added to meet the Company will be automatically invited.
This announcement contains inside information.
For further information, please contact www.dukeroyalty.com , or contact:
Duke Royalty Limited |
Neil Johnson / Charlie Cannon Brookes / Hugo Evans
|
+44 (0) 1481 741 240 |
Cenkos Securities plc (Nominated Adviser and Joint Broker)
|
Stephen Keys / Callum Davidson / Julian Morse / Michael Johnson
|
+44 (0) 207 397 8900 |
Canaccord Genuity (Joint Broker)
|
Adam James / Georgina McCooke |
+44 (0) 207 523 8000 |
SEC Newgate Communications (PR) |
Elisabeth Cowell / Richard Bicknell / Megan Kovach |
+44 (0) 203 757 6880 |
CHAIRMAN'S REPORT
Dear Shareholder,
I am pleased to report the results for the Group for the six-month period ended 30 September 2021 ("Interim 2022"), which were characterised by substantial cashflow growth and accelerating investment deployment.
Interim 2022 was a period of positive development for Duke during which the executive team's focus reverted to business development, growth and deal execution following the initial shock of the pandemic felt during the prior half year period. After a sustained period where the Company was required to focus much of its attention on internal monitoring and working closely with its Royalty Partners to ensure that they traded safely through the many challenges of Covid-19, it has been encouraging to witness a significant bounce back in the operating performance of many of those Partners.
Furthermore, after such a period of global financial stress, the Company's unique, long dated and aligned product offering has meant that Duke is increasingly being seen as a preferred capital partner for many profitable, well managed private businesses who do not wish to become encumbered by the high refinancing risk associated with short-dated debt. To highlight this point, I am pleased to be able to report that Duke's current deal pipeline is as robust as it has ever been in the Company's history and I am confident that the Company will being able to announce a number of new deployments in due course.
Operational Review
Interim 2022 started with an over-subscribed £35 million equity placing which closed in late April, providing Duke with the necessary liquidity to allow it to accelerate its speed of deployment. It was very pleasing to note that several large, new institutions were added to the Duke share register as part of the fundraising. As with previous equity fundraisings, Duke ensured there was a retail element to the capital raising process with £32 million being raised from institutional investors and £3 million coming from existing and new retail shareholders through the PrimaryBid platform. Wherever possible, Duke seeks to provide existing and new individual shareholders the chance to participate on the same terms as the institutions and we very much appreciate the strong support we continue to receive from our large retail investor base.
Duke made three material new investments during the period under review, the first of which was a €10 million investment into Fairmed Healthcare AG ("Fairmed"), closed at the end of June. Formed in 2012 and based in Zug, Switzerland, Fairmed provides high quality generic prescription medicines, over-the-counter pharmaceuticals, dermocosmetics and dietary supplements in various EU countries. The second investment, made in July, was a £7.7 million investment into InTec Business Solutions Limited ("InTec"). InTec is a UK company specialising in the design, implementation, and support of a wide range of cloud services and business applications and is undertaking a buy and build strategy of synergistic companies within the I.T. Managed Services sector in the UK and Ireland. In September, Duke subsequently upsized its investment in Intec by £2.2 million, which allowed InTec to complete its eighth acquisition, providing additional product, profitability and diversification to the business. Also in July, Duke agreed to a total funding commitment of up to CA$20 million (approximately £11.6 million) with Creō-Tech Industrial Group Inc. ("Creō-Tech"). Creō-Tech is a Canadian holding company that has been set up to acquire businesses that provide engineering, procurement and construction ("EPC") services in commercial and industrial settings. Of the CA$20 million total commitment, Duke invested CA$8.3 million as part of the initial drawdown to facilitate the acquisitions of Silhouette and Axial, two longstanding and profitable businesses with predictable revenue streams.
Two successful divestments were also made during the period. The first was Duke's exit of its investment in royalty partner Almondclose Limited, trading as Berkley Recruitment (Group) Limited ("Berkley"), a Cork-based resourcing and recruitment business. Duke received net cash of €1.3 million at closing, delivering an IRR on the Berkley investment of 16.0%. Due to its sub £5 million investment size, Berkley represented a subscale investment for Duke which was inherited via its acquisition of Capital Step back in February 2019. Duke has retained exposure to the Irish resourcing and recruitment sector via its other larger royalty partner, BIL, which is conducting a buy and build strategy within the sector. The second exit came from royalty partner BHPC Limited ("BHP"), an Irish insurance brokerage specialising in the not-for-profit insurance space, and at closing Duke received back net cash of £6.9 million, delivering an IRR of 29.4%, Duke's highest realised IRR to date. BHP represented Duke's fifth exit to date further validating our funding model.
Financial Review
The financial results for Interim 2022 reflect the resilience of Duke's business model and its ability to withstand the global economic disruption caused by the Covid-19 pandemic. I am delighted to report that the Company's cash revenue, being cash distributions from royalty partners and cash gains from the sale of equity investments, grew to £7.8 million during the period under review, a 78% increase over the £4.4 million generated in Interim 2021. Net cash inflow from operations, the key indicator of the Group's underlying operating performance, totalled £5.2 million, a 46% increase over the £3.6 million generated in Interim 2021. Total cash available for distribution (free cashflow), which represents the Group's operating cashflows less its interest on debt financing and is a measure of Duke's ability to cover its dividend, grew by 58% to £4.6 million, generating 1.36 pence per share, up from £2.9 million and 1.22 pence per share in Interim 2021.
Total income, which includes non-cash fair value movements on the Company's investment portfolio, grew to £9.8 million, a 38% increase over Interim 2021. This produced total earnings after tax of £6.2 million and earnings per share of 1.84 pence against £4.1 million in Interim 2021 and earnings per share of 1.73 pence. Adjusted earnings, which strips out the fair value movements and represents a truer reflection of Duke's operating performance, rose to £4.7 million from £2.1 million, a 125% increase.
The Company strengthened its balance sheet during the period under review, raising £35 million of new equity capital at the end of April. Of this, over £23 million was deployed into three new royalty partners, only marginally less than the aggregate deployments for the entire financial year 2021. The full cashflow benefits of these deployments will be seen over the second half of the financial year.
Dividend
In April 2021, the Company increased its dividend from 0.50 pence per share to 0.55 pence per share, the first increase since the resumption of the cash dividend in Q3 of financial year 2021. This was followed with a further dividend of 0.55 pence per share paid in July 2021. Post-period end, a dividend of 0.55 pence per share was paid to shareholders in October 2021.
Outlook
One of the few benefits of the Covid-19 experience was the strong working relationship that has been created between Duke and its Royalty Partners. Together, we faced problems and implemented solutions and this has created a strong platform from which Duke can now embark on the next chapter of its growth, one in which I expect to see the Company grow its asset base and diversify its portfolio further.
Current trading for the three months ended 31 December 2021 is strong and I am pleased to share the Board's confidence of exceeding the market's expectations for 12 months ended 31 March 2022.
Notably, we have a robust pipeline of new investment opportunities, all of which have demonstrated resilience in the height of the pandemic. Given the nature of the Company's low and largely fixed cost base, additional deployments are expected to lead to increases in the Company's operating cash flow per share which in turn should lead to the prospect of higher dividend payments for Duke's shareholders in the future. It remains the Company's key objective to create a large, diversified portfolio of compounding long term income streams with the majority of this income being paid to shareholders in the form of quarterly dividends.
As always, I am appreciative of the ongoing support of our shareholders and am pleased to report the Chairman's statement for Interim 2022. Our existing partners have traded resiliently and we have minimised our exposure to the travel and leisure sectors. Therefore, the Group is well placed to continue to grow and I look forward to being able to report on the Group's ongoing progress and development in future periods.
Nigel Birrell
Chairman
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2021
|
|
Period to |
|
Year to |
|
Period to |
|
|
30-Sep-21 |
|
31-Mar-21 |
|
30-Sep-20 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
Cash flows from operating activities |
|
|
|
|
|
|
Receipts from royalty investments |
|
6,419 |
|
9,931 |
|
3,654 |
Receipts of interest from loan investments |
|
450 |
|
667 |
|
381 |
Receipts from equity instruments |
|
652 |
|
345 |
|
345 |
Other operating income |
|
266 |
|
93 |
|
6 |
Operating expenses paid |
|
(946) |
|
(2,154) |
|
(893) |
Payments for royalty participation fees |
|
(57) |
|
(81) |
|
(52) |
Tax (paid) / received |
|
(1,569) |
|
135 |
|
135 |
Net cash inflow from operating activities |
|
5,215 |
|
8,936 |
|
3,576 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Royalty investments advanced |
|
(23,209) |
|
(22,708) |
|
(5,326) |
Royalty investments received |
|
2,938 |
|
14,354 |
|
900 |
Loan investments advanced |
|
- |
|
(1,145) |
|
(132) |
Loan investments received |
|
3,370 |
|
2,370 |
|
1,100 |
Equity investments advanced |
|
(530) |
|
(653) |
|
(350) |
Investment costs paid |
|
(496) |
|
(634) |
|
(61) |
Net cash outflow from investing activities |
|
(17,927) |
|
(8,416) |
|
(3,869) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from share issue |
|
35,000 |
|
- |
|
- |
Share issue costs |
|
(1,938) |
|
(1) |
|
- |
Dividends paid |
|
(3,269) |
|
(3,013) |
|
(1,778) |
Proceeds from loans |
|
- |
|
15,200 |
|
4,000 |
Loans repaid |
|
(7,500) |
|
(13,926) |
|
- |
Interest paid |
|
(611) |
|
(1,409) |
|
(663) |
Other finance costs paid |
|
- |
|
(95) |
|
(157) |
Net cash inflow / (outflow) from financing activities |
|
21,682 |
|
(3,244) |
|
1,402 |
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
8,970 |
|
(2,724) |
|
1,109 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period/year |
|
1,766 |
|
4,481 |
|
4,481 |
Effect of foreign exchange on cash |
|
9 |
|
9 |
|
14 |
|
|
|
|
|
|
|
Cash and cash equivalents at the end of period/year |
|
10,745 |
|
1,766 |
|
5,604 |
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIOD ENDED 30 SEPTEMBER 2021
|
|
Period to |
|
Year to |
|
Period to |
|
|
30-Sep-21 |
|
31-Mar-21 |
|
30-Sep-20 |
|
Note |
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
Income |
|
|
|
|
|
|
Royalty investment net income |
6 |
7,584 |
|
19,344 |
|
7,509 |
Loan investment net income |
7 |
410 |
|
636 |
|
339 |
Equity investment net income |
8 |
1,497 |
|
1,569 |
|
(769) |
Other operating income |
|
266 |
|
93 |
|
6 |
Total income |
|
9,757 |
|
21,642 |
|
7,085 |
|
|
|
|
|
|
|
Investment Expenses |
|
|
|
|
|
|
Transaction costs |
|
(525) |
|
(447) |
|
11 |
Due diligence costs |
|
11 |
|
(103) |
|
40 |
|
|
(514) |
|
(550) |
|
51 |
Operating Expenses |
|
|
|
|
|
|
Administration and personnel |
|
(1,191) |
|
(1,675) |
|
(953) |
Legal and professional |
|
(183) |
|
(367) |
|
(178) |
Other operating expenses |
|
(65) |
|
(99) |
|
(41) |
Share-based payments |
|
(472) |
|
(806) |
|
(303) |
|
|
(1,911) |
|
(2,947) |
|
(1,475) |
|
|
|
|
|
|
|
Operating profit |
|
7,332 |
|
18,145 |
|
5,661 |
|
|
|
|
|
|
|
Net foreign currency gains |
|
108 |
|
(542) |
|
15 |
Finance costs |
|
(693) |
|
(1,539) |
|
(815) |
|
|
|
|
|
|
|
Profit for the period before tax |
|
6,747 |
|
16,064 |
|
4,861 |
|
|
|
|
|
|
|
Taxation expense |
4 |
(540) |
|
(2,111) |
|
(734) |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
6,207 |
|
13,953 |
|
4,127 |
|
|
|
|
|
|
|
Basic earnings per share (pence) |
|
1.84 |
|
5.75 |
|
1.73 |
Diluted earnings per share (pence) |
|
1.84 |
|
5.75 |
|
1.73 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
|
Note |
30-Sep-21 |
|
31-Mar-21 |
|
30-Sep-20 |
|
|
(unaudited) |
|
(audited) |
|
(unaudited) |
|
|
£000 |
|
£000 |
|
£000 |
Non-current assets |
|
|
|
|
|
|
Goodwill |
13 |
203 |
|
203 |
|
203 |
Royalty finance investments |
6 |
93,232 |
|
71,107 |
|
53,299 |
Loan investments |
7 |
1,000 |
|
4,370 |
|
3,357 |
Equity investments |
8 |
4,810 |
|
3,495 |
|
172 |
Trade and other receivables |
10 |
2,236 |
|
5,618 |
|
- |
Deferred tax asset |
18 |
157 |
|
158 |
|
204 |
|
|
101,638 |
|
84,951 |
|
57,235 |
Current assets |
|
|
|
|
|
|
Royalty finance investments |
6 |
13,607 |
|
14,194 |
|
30,186 |
Loan investments |
7 |
580 |
|
580 |
|
5,192 |
Equity investments |
8 |
60 |
|
- |
|
- |
Trade and other receivables |
10 |
7,780 |
|
4,422 |
|
67 |
Cash and cash equivalents |
|
10,745 |
|
1,766 |
|
5,604 |
Current tax asset |
|
- |
|
- |
|
169 |
|
|
32,772 |
|
20,962 |
|
41,218 |
|
|
|
|
|
|
|
Total Assets |
|
134,410 |
|
105,913 |
|
98,453 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Royalty debt liabilities |
9 |
144 |
|
114 |
|
131 |
Trade and other payables |
11 |
868 |
|
267 |
|
484 |
Borrowings |
12 |
172 |
|
161 |
|
117 |
Current tax liability |
|
132 |
|
1,163 |
|
- |
|
|
1,316 |
|
1,705 |
|
732 |
Non-current liabilities |
|
|
|
|
|
|
Royalty debt liabilities |
9 |
932 |
|
917 |
|
1,063 |
Trade and other payables |
11 |
204 |
|
402 |
|
400 |
Borrowings |
12 |
9,659 |
|
17,103 |
|
19,566 |
|
|
10,795 |
|
18,422 |
|
21,029 |
|
|
|
|
|
|
|
Net Assets |
|
122,299 |
|
85,786 |
|
76,692 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Shares issued |
14 |
153,973 |
|
120,870 |
|
119,663 |
Share based payment reserve |
15 |
2,020 |
|
1,548 |
|
1,045 |
Warrant reserve |
15 |
265 |
|
265 |
|
265 |
Retained losses |
16 |
(33,959) |
|
(36,897) |
|
(44,281) |
|
|
|
|
|
|
|
Total Equity |
|
122,299 |
|
85,786 |
|
76,692 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2021
|
|
|
|
Share-based |
|
|
|
|
|
|
|
|
Shares |
|
payment |
|
Warrant |
|
Retained |
|
Total |
|
Note |
issued |
|
reserve |
|
reserve |
|
losses |
|
equity |
|
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2020 |
|
118,479 |
|
742 |
|
265 |
|
(45,446) |
|
74,040 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
4,127 |
|
4,127 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
Shares issued as dividends |
|
1,184 |
|
- |
|
- |
|
- |
|
1,184 |
Share based payments |
|
- |
|
303 |
|
- |
|
- |
|
303 |
Dividends |
|
- |
|
- |
|
- |
|
(2,962) |
|
(2,962) |
Total transactions with owners |
|
1,184 |
|
303 |
|
- |
|
(2,962) |
|
(1,475) |
|
|
|
|
|
|
|
|
|
|
|
At 30 September 2020 |
|
119,663 |
|
1,045 |
|
265 |
|
(44,281) |
|
76,692 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
- |
|
- |
|
- |
|
9,826 |
|
9,826 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
Shares issued as dividends |
|
1,207 |
|
- |
|
- |
|
- |
|
1,207 |
Share based payments |
|
- |
|
503 |
|
- |
|
- |
|
503 |
Dividends |
|
- |
|
- |
|
- |
|
(2,442) |
|
(2,442) |
Total transactions with owners |
|
1,207 |
|
503 |
|
- |
|
(2,442) |
|
(732) |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2021 |
|
120,870 |
|
1,548 |
|
265 |
|
(36,897) |
|
85,786 |
|
|
|
| Share-based |
|
|
|
|
|
|
|
| Shares |
| payment |
| Warrant |
| Retained |
| Total |
| Note | issued |
| reserve |
| reserve |
| losses |
| equity |
|
| £000 |
| £000 |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2021 |
| 120,870 |
| 1,548 |
| 265 |
| (36,897) |
| 85,786 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
| - |
| - |
| - |
| 6,207 |
| 6,207 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
|
|
Shares issued for cash |
| 35,000 |
| - |
| - |
| - |
| 35,000 |
Share issuance costs |
| (1,937) |
| - |
| - |
| - |
| (1,937) |
Share based payments |
| 40 |
| 472 |
| - |
| - |
| 512 |
Dividends |
| - |
| - |
| - |
| (3,269) |
| (3,269) |
Total transactions with owners |
| 33,103 |
| 472 |
| - |
| (3,269) |
| 30,306 |
|
|
|
|
|
|
|
|
|
|
|
At 30 September 2021 |
| 153,973 |
| 2,020 |
| 265 |
| (33,959) |
| 122,299 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2021
1. General Information
Duke Royalty Limited ("Duke Royalty" or the "Company") is a company limited by shares, incorporated in Guernsey under the Companies (Guernsey) Law, 2008. Its shares are traded on the AIM market of the London Stock Exchange. The Company's registered office is shown on page 28.
Throughout the period, the "Group" comprised Duke Royalty Limited and its wholly owned subsidiaries; Duke Royalty UK Limited, Capital Step Holdings Limited, Capital Step Investments Limited, Capital Step Funding Limited, Capital Step Funding 2 Limited and Duke Royalty Employee Benefit Trust.
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 2021, 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 2021.
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
There were no new standards adopted by the Group during the reporting period.
2.3 Going concern
In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. After making enquiries and bearing in mind the nature of the Company's business and assets, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future.
The cash flow needs of the Group have been assessed taking account the need for further funding for any of the existing royalty partners and the ongoing working capital needs of the business against the current cash and liquidity of the Group.
Furthermore, there is adequate headroom in terms of the uncalled loan facility in place should it be required.
3. Finance Costs
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Interest payable on borrowings | (409) |
| (1,293) |
| (689) |
Non-utilisation fees | (213) |
| (106) |
| (56) |
Deferred finance costs released to P&L | (71) |
| (140) |
| (70) |
| (693) |
| (1,539) |
| (815) |
4. Income tax
The Company has been granted exemption from Guernsey taxation. The Company's subsidiary in the UK is subject to taxation in accordance with relevant tax legislation.
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
Current tax |
|
|
|
|
|
Income tax expense | 539 |
| 1,594 |
| 263 |
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
Decrease in deferred tax assets | 2 |
| 674 |
| 483 |
Decrease in deferred tax liabilities | (1) |
| (157) |
| (12) |
| 1 |
| 517 |
| 471 |
|
|
|
|
|
|
Income tax expense | 540 |
| 2,111 |
| 734 |
Factors affecting income tax expense for the period
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Profit on ordinary activities before tax | 6,747 |
| 16,064 |
| 4,861 |
|
|
|
|
|
|
Tax using the Groups effective tax rate of 8.00% (2021: 13.14%, period to 30 September 2020: 15.10%) | 540 |
| 2,111 |
| 734 |
Income tax expense | 540 |
| 2,111 |
| 734 |
5. Earnings per share
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Total comprehensive income (£000) | 6,207 |
| 13,953 |
| 4,127 |
Weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) | 337,310 |
| 242,836 |
| 238,797 |
Basic earnings per share (pence) | 1.84 |
| 5.75 |
| 1.73 |
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Total comprehensive income (£000) | 6,207 |
| 13,953 |
| 4,127 |
Weighted average number of Ordinary Shares, diluted for warrants in issue (000s) | 337,310 |
| 242,836 |
| 238,797 |
Diluted earnings per share (pence) | 1.84 |
| 5.75 |
| 1.73 |
Basic earnings per share is calculated by dividing total comprehensive income for the period by the weighted average number of shares in issue throughout the period. Diluted earnings per share represents the basic earnings per share adjusted for the effect of dilutive potential shares issuable on exercise of share options under the Company's share-based payment schemes, weighted for the relevant period.
Adjusted earnings per share
Adjusted earnings represents the Group's underlying performance from core activities. Adjusted earnings is the total comprehensive income adjusted for unrealised and non-core fair value movements, non-cash items and transaction-related costs, including royalty participation fees, together with the tax effects thereon.
Valuation and other non-cash movements such as those outlined are not considered by management in assessing the level of profit and cash generation of the Group. Additionally, IFRS 9 requires transaction-related costs to be expensed immediately whilst the income benefit is over the life of the asset. As such, an adjusted earnings measure is used which reflects the underlying contribution from the Group's core activities during the year.
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Total comprehensive income for the period | 6,207 |
| 13,953 |
| 4,127 |
|
|
|
|
|
|
Unrealised fair value movements | (2,663) |
| (9,871) |
| (2,658) |
Share-based payments | 472 |
| 806 |
| 303 |
Transactions costs / (receipts) net of costs reimbursed | 525 |
| 550 |
| (51) |
Tax effect of the adjustments above at Group effective rate | 134 |
| 1,119 |
| 353 |
Adjusted earnings | 4,675 |
| 6,557 |
| 2,074 |
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Adjusted earnings (£000) | 4,675 |
| 6,557 |
| 2,074 |
Weighted average number of Ordinary Shares, excluding treasury shares (000s) | 337,310 |
| 242,836 |
| 238,797 |
Adjusted earnings per share (pence) | 1.39 |
| 2.70 |
| 0.87 |
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Diluted adjusted earnings (£000) | 4,675 |
| 6,557 |
| 2,074 |
Weighted average number of Ordinary Shares, diluted for warrants in issue (000s) | 337,310 |
| 242,836 |
| 238,797 |
Diluted adjusted earnings per share (pence) | 1.39 |
| 2.70 |
| 0.87 |
6. Royalty investments
Royalty finance investments are financial assets held at fair value through profit and loss ("FVTPL") that relate to the provision of royalty capital to a diversified portfolio of companies.
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Brought forward | 85,301 |
| 75,559 |
| 75,559 |
Additions | 23,209 |
| 22,708 |
| 5,326 |
Refinanced assets | (2,938) |
| (21,434) |
| (900) |
Gain on financial assets at FVTPL | 1,267 |
| 8,468 |
| 3,500 |
| 106,839 |
| 85,301 |
| 83,485 |
Royalty finance investments are comprised of:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Non-Current | 93,232 |
| 71,107 |
| 53,299 |
Current | 13,607 |
| 14,194 |
| 30,186 |
| 106,839 |
| 85,301 |
| 83,485 |
Royalty investment net income on the face of the consolidated statement of comprehensive income comprises:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Royalty interest | 5,705 |
| 9,179 |
| 4,082 |
Royalty premiums | 714 |
| 1,862 |
| - |
Gain on royalty assets at FVTPL | 1,267 |
| 8,468 |
| 3,500 |
Loss on royalty liabilities at FVTPL | (102) |
| (165) |
| (73) |
| 7,584 |
| 19,344 |
| 7,509 |
All financial assets held at FVTPL are mandatorily measured as such.
The Group's royalty investment assets comprise royalty financing agreements with 11 (30 September 2020: 11, 31 March 2021: 10) investees. Under the terms of these agreements the Group advances funds in exchange for annualised royalty distributions. The distributions are adjusted based on the change in the investees' revenues, subject to a floor and a cap. The financing is secured by way of fixed and floating charges over certain investees' assets. The investees are provided with buyback options, exercisable at certain stages of the agreements.
7. Loan investments
Loan investments are financial assets held at amortised cost.
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Brought forward | 4,950 |
| 9,517 |
| 9,517 |
Additions | - |
| 1,145 |
| 132 |
Refinanced loans | (3,370) |
| (5,649) |
| (1,100) |
Net foreign currency movement | - |
| (63) |
| - |
| 1,580 |
| 4,950 |
| 8,549 |
The Group's loan investments comprise secured loans advanced to two entities (30 September 2020: six, 31 March 2021: three) in connection with the Group's royalty investments.
The loans comprise fixed rate loans of £1,580,000 (30 September 2020: £6,192,000, 31 March 2021: £1,580,000) which bear interest at rates of between 5% and 15% and nil variable rate loans (30 September 2020: £2,357,000, 31 March 2021: £3,370,000).
The loans mature as follows:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
In less than one year | 580 |
| 580 |
| 5,192 |
In one to two years | - |
| - |
| - |
In two to five years | 1,000 |
| 4,370 |
| 3,357 |
| 1,580 |
| 4,950 |
| 8,549 |
The total loan investment net income during the period was £410,000 (30 September 2020: £339,000, 31 March 2021: £636,000). Loan investment net income on the face of the consolidated statement of comprehensive income comprises:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Loan interest | 242 |
| 603 |
| 306 |
Loan premiums | 168 |
| 33 |
| 33 |
| 410 |
| 636 |
| 339 |
ECL Analysis
The measurement of ECLs is primarily based on the product of the instrument's probability of default ("PD"), loss given default ("LGD"), and exposure at default ("EAD"). The Group analyses a range of factors to determine the credit risk of each investment. These include, but are not limited to:
· liquidity and cash flows of the underlying businesses
· security strength
· covenant cover
· balance sheet strength
If there is a material change in these factors, the weighting of either the PD, LGD or EAD increases, thereby increasing the ECL impairment.
The disclosure below presents the gross and net carrying value of the Group' loan investments by stage:
| Gross carrying amount |
| Allowance for ECLs |
| Net Carrying amount |
As at 30 September 2021 | £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Stage 1 | 1,580 |
| - |
| 1,580 |
Stage 2 | - |
| - |
| - |
Stage 3 | - |
| - |
| - |
| 1,580 |
| - |
| 1,580 |
| Gross carrying amount |
| Allowance for ECLs |
| Net Carrying amount |
As at 31 March 2021 | £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Stage 1 | 4,950 |
| - |
| 4,950 |
Stage 2 | - |
| - |
| - |
Stage 3 | - |
| - |
| - |
| 4,950 |
| - |
| 4,950 |
| Gross carrying amount |
| Allowance for ECLs |
| Net Carrying amount |
As at 30 September 2020 | £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Stage 1 | 5,269 |
| - |
| 5,269 |
Stage 2 | - |
| - |
| - |
Stage 3 | 3,280 |
| - |
| 3,280 |
| 8,549 |
| - |
| 8,549 |
Under the ECL model introduced by IFRS 9, impairment provisions are driven by changes in credit risk of instruments, with a provision for lifetime expected credit losses recognised where the risk of default of an instrument has increased significantly since initial recognition.
At 30 September 2020, the Group determined the risk profile of one loan investment was deemed to be impaired and was classified as Stage 3. This investment was subsequently sold prior to the year ended 31 March 2021.
The credit risk profile of the remaining investments has not increased materially and they remain Stage 1 assets. No ECLs have been charged on these assets as they are not deemed material.
The following table analyses Group's provision for ECL's by stage for the period ended 30 September 2021:
| Stage 1 |
| Stage 2 |
| Stage 3 |
| Total |
| £000 |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
|
|
At 1 April 2020 and 30 September 2020 | - |
| - |
| 2,947 |
| 2,947 |
Impairment charged in period | - |
| - |
| - |
| - |
Refinanced Loans | - |
| - |
| (2,947) |
| (2,947) |
Carrying value at 31 March 2021 and 30 September 2021 | - |
| - |
| - |
| - |
8. Equity investments
Equity investments are financial assets held at FVTPL.
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Brought forward | 3,495 |
| 507 |
| 507 |
Additions | 530 |
| 1,764 |
| 779 |
Disposals | (652) |
| (345) |
| (345) |
Gain / (loss) on equity assets at FVTPL | 1,497 |
| 1,569 |
| (769) |
| 4,870 |
| 3,495 |
| 172 |
The Group's equity investments comprise unlisted shares and warrants in eight of its royalty investment companies (30 September 2020: six, 31 March 2021: eight).
The Group also still holds two (30 September 2020: two, 31 March 2021: two) unlisted investments in mining entities from its previous investment objectives. The Board does not consider there to be any future cash flows from the remaining investments and they are fully written down to nil value.
Equity investment net income on the face of the consolidated statement of comprehensive income comprises:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Gain / (loss) on equity investments at FVTPL | 1,497 |
| 1,569 |
| (778) |
Realised gain on sale of equity investments | - |
| - |
| 9 |
| 1,497 |
| 1,569 |
| (769) |
9. Royalty debt liabilities
Royalty debt liabilities are financial liabilities held at FVTPL.
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Brought forward | 1,031 |
| 1,173 |
| 1,173 |
Repayments | - |
| (226) |
| - |
Payments made | (57) |
| (81) |
| (52) |
Loss on financial assets at FVTPL | 102 |
| 165 |
| 73 |
| 1,076 |
| 1,031 |
| 1,194 |
Royalty debt liabilities are comprised of:
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Current | 144 |
| 114 |
| 131 |
Non-current | 932 |
| 917 |
| 1,063 |
| 1,076 |
| 1,031 |
| 1,194 |
10. Trade and other receivables
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
Current |
|
|
|
|
|
Prepayments and accrued income | 43 |
| 167 |
| 64 |
Other receivables | 7,737 |
| 4,255 |
| 3 |
| 7,780 |
| 4,422 |
| 67 |
Non-current |
|
|
|
|
|
Other receivables | 2,236 |
| 5,618 |
| - |
| 10,016 |
| 10,040 |
| 67 |
11. Trade and other payables
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
Current |
|
|
|
|
|
Trade payables | 10 |
| 2 |
| 2 |
Transaction costs | 125 |
| 82 |
| 94 |
Accruals and deferred income | 733 |
| 183 |
| 388 |
| 868 |
| 267 |
| 484 |
Non-current |
|
|
|
|
|
Transaction costs | 204 |
| 402 |
| 480 |
|
|
|
|
|
|
| 1,072 |
| 669 |
| 884 |
12. Borrowings
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
Secured loan |
|
|
|
|
|
Current - accrued interest | 172 |
| 161 |
| 117 |
Non-current | 9,659 |
| 17,103 |
| 19,566 |
| 9,831 |
| 17,264 |
| 19,683 |
The secured revolving loan facility has an interest rate of 7.25% over UK LIBOR per annum. The principal amount is repayable on 11 March 2026. The loan is secured by means of a fixed and floating charge over the assets of the Group.
As at 30 September 2021, £25,000,000 was undrawn on the facility (30 September 2020: £10,000,000, 31 March 2020: £17,500,000).
At 30 September 2021, £355,000 (30 September 2020: £434,000, 31 March 2021: £396,000) of unamortised fees remained outstanding.
The table below set out an analysis of net debt and the movements in net debt for the period ended 30 September 2021, the prior period and the year ended 31 March 2021.
| Interest Payable |
| Borrowings |
| £000 |
| £000 |
|
|
|
|
At 1 April 2021 | 161 |
| 17,103 |
Cash movements |
|
|
|
Loan advanced | - |
| - |
Loan repaid | - |
| (7,500) |
Deferred finance costs paid | - |
| - |
Interest paid | (611) |
| - |
Non-cash movements |
|
|
|
Deferred finance costs released to P&L | - |
| 56 |
Interest charged | 622 |
| - |
As at 30 September 2021 | 172 |
| 9,659 |
| Interest Payable |
| Borrowings |
| £000 |
| £000 |
|
|
|
|
At 1 April 2020 | 172 |
| 15,517 |
Cash movements |
|
|
|
Loan advanced | - |
| 4,000 |
Loan repaid | - |
| - |
Deferred finance costs paid | - |
| - |
Interest paid | (799) |
| - |
Non-cash movements |
|
|
|
Deferred finance costs released to P&L | - |
| 49 |
Interest charged | 744 |
| - |
As at 30 September 2020 | 117 |
| 19,566 |
|
|
|
|
Cash movements |
|
|
|
Loan advanced | - |
| 11,200 |
Loan repaid | - |
| (13,926) |
Deferred finance costs paid | - |
| (23) |
Interest paid | (611) |
| - |
Non-cash movements |
|
|
|
Deferred finance costs released to P&L | - |
| 60 |
Transfer to royalty debt liability | - |
| 226 |
Interest charged | 655 |
| - |
At 31 March 2021 | 161 |
| 17,103 |
13. Goodwill
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Goodwill arising on business combination | 203 |
| 203 |
| 203 |
14. Share capital
| External Shares No. |
| Treasury Shares No. |
| Total shares No. |
| £000 |
Allotted, called up and fully paid |
|
|
|
|
|
|
|
At 31 March 2020 | 236,937 |
| 2,690 |
| 239,627 |
| 118,479 |
Shares issued for cash during the period | - |
| - |
| - |
| - |
Share issuance costs | - |
| - |
| - |
| - |
Scrip dividend paid | 4,479 |
| - |
| 4,479 |
| 1,184 |
Shares issued to Employee Benefit Trust during the period
| - |
| 2,525 |
| 2,525 |
| - |
At 30 September 2020 | 241,416 |
| 5,215 |
| 246,631 |
| 119,663 |
Shares issued to Employee Benefit Trust during the period | - |
| 6,153 |
| 6,153 |
| - |
Scrip dividend paid | 5,123 |
| - |
| 5,123 |
| 1,207 |
PSA shares vested during the year | 513 |
| (513) |
| - |
| - |
At 31 March 2021 | 247,052 |
| 10,855 |
| 257,907 |
| 120,870 |
|
|
|
|
|
|
|
|
Shares issued for cash during the period | 100,000 |
| - |
| 100,000 |
| 35,000 |
Share issuance costs | - |
| - |
| - |
| (1,937) |
Shares issued to directors and key advisers as remuneration | 105 |
| - |
| 105 |
| 40 |
At 31 September 2021 | 347,157 |
| 10,855 |
| 358,012 |
| 153,973 |
There is a single class of shares. There are no restrictions on the distribution of dividends and the repayment of capital with respect to externally held shares. The shares held by the Duke Royalty Employee Benefit Trust are treated as treasury shares. The rights to dividends and voting rights have been waived in respect of these shares.
15. Equity-settled share-based payments
Warrant reserve
There were no movements in the warrant reserve during the period:
| Warrants | ||
| No. (000) |
| £000 |
|
|
|
|
At 1 April 2020, 30 September 2020, 31 March 2021, and 30 September 2021 | 4,375 |
| 265 |
At 30 September 2021, 4,375,000 (30 September 2020: 4,375,000, 31 March 2020: 4,375,000) warrants were outstanding and exercisable at a weighted average exercise price of 46 pence (30 September 2020: 46 pence, 31 March 2020: 46 pence). The weighted average remaining contractual life of the warrants outstanding was 1.50 years (30 September 2020: 2.50 years, 31 March 2021: 2.00 years).
Share-based payment reserve
The following table shows the movements in the share-based payment reserve during the period:
| Share options |
| LTIP |
| Total |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
At 1 April 2020 | 136 |
| 606 |
| 742 |
LTIP awards | - |
| 303 |
| 303 |
At 30 September 2020 | 136 |
| 909 |
| 1,045 |
|
|
|
|
|
|
LTIP awards | - |
| 503 |
| 503 |
At 31 March 2021 | 136 |
| 1,412 |
| 1,548 |
|
|
|
|
|
|
LTIP awards | - |
| 472 |
| 472 |
At 30 September 2021 | 136 |
| 1,884 |
| 2,020 |
Share option scheme
No share options were granted during the period to 30 September 2021.
At 30 September 2021, 200,000 options (30 September 2020: 960,000, 31 March 2021: 200,000) were outstanding and exercisable at a weighted average exercise price of 50 pence (30 September 2020: 31 March 2021: 50 pence). The weighted average remaining contractual life of the options outstanding at the period end was 2.00 years (30 September 2020: 1.44 years, 31 March 2021: 2.50 years).
Long Term Incentive Plan
No performance share awards (PSAs) were granted during the period to 30 September 2021.
At 30 September 2021, 11,855,000 (30 September 2020: 2,690,000, 31 March 2021: 11,855,000) PSAs were outstanding. The weighted average remaining vesting period of these awards outstanding was 1.50 years (30 September 2020: 1.44 years, 31 March 2021: 2.04 years).
16. Distributable reserves
Under Guernsey law, the Company can pay dividends provided it satisfies the solvency test prescribed by the Companies (Guernsey) Law, 2008. The solvency test considers whether the Company is able to pay its debts when they fall due, and whether the value of the Company's assets is greater than its liabilities. The Company satisfied the solvency test in respect of the dividends declared in the period.
17. Dividends
The following interim dividends have been recorded in the period:
|
| Dividend per |
| Dividends |
|
| share |
| payable |
Record date | Payment date | pence/share |
| £000 |
|
|
|
|
|
27 March 2020 | 14 April 2020 | 0.75 |
| 1,777 |
26 June 2020 | 10 July 2020 | 0.50 |
| 1,185 |
Dividends payable for the period ended 30 September 2020 |
| 2,962 | ||
|
|
|
|
|
|
| Dividend per |
| Dividends |
|
| share |
| payable |
Record date | Payment date | pence/share |
| £000 |
|
|
|
|
|
25 September 2020 | 12 October 2020 | 0.50 |
| 1,206 |
29 December 2020 | 12 January 2021 | 0.50 |
| 1,236 |
Dividends paid for the period ended 31 March 2021 |
| 2,442 | ||
|
|
|
|
|
26 March 2021 | 12 April 2021 | 0.55 |
| 1,359 |
25 June 2021 | 12 July 2021 | 0.55 |
| 1,909 |
Dividends paid for the period ended 30 September 2021 |
| 3,268 |
On 24 September 2021 the Company approved a further quarterly cash dividend of 0.55 pence per share, totalling £1,909,000, which was paid on 12 October 2021.
18. Deferred tax
| Royalty investment |
| Tax losses |
| Total |
| £000s |
| £000s |
| £000s |
|
|
|
|
|
|
1 April 2020 | (12) |
| 687 |
| 675 |
Credited / (charged) to profit & loss | 9 |
| (480) |
| (471) |
At 30 September 2020 | (3) |
| 207 |
| 204 |
|
|
|
|
|
|
Credited / (charged) to profit & loss | 161 |
| (207) |
| (46) |
At 31 March 2021 | 158 |
| - |
| 158 |
|
|
|
|
|
|
Charged to profit & loss | (1) |
| - |
| (1) |
At 30 September 2021 | 157 |
| - |
| 157 |
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.
19. Related parties
Directors' fees
The following fees were payable to the Directors during the period:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Short term remuneration | 463 |
| 582 |
| 366 |
Share-based payments | 273 |
| 528 |
| 326 |
| 736 |
| 1,110 |
| 692 |
Other related party transactions
The following amounts were paid to related parties during the period in respect of support services fees:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Abingdon Capital Corporation | 175 |
| 350 |
| 175 |
Arlington Group Asset Management Limited | 43 |
| 85 |
| 43 |
| 218 |
| 435 |
| 218 |
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 assisting the Board with the selection, execution and monitoring of royalty partners and royalty performance. Abingdon fees also includes fees relating to remuneration of staff residing in North America.
Dividends
The following dividends were paid to related parties:
| Period to |
| Year to |
| Period to |
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Directors 1 | 124 |
| 232 |
| 126 |
Other related parties | 17 |
| 31 |
| 10 |
| 141 |
| 263 |
| 136 |
1 Includes dividends paid to Abinvest Corporation, a wholly owned subsidiary of Abingdon Capital Corporation, and to Arlington Group Asset Management
20. Fair value measurements
Fair value hierarchy
IFRS 13 requires disclosure of fair value measurements by level of the following fair value hierarchy:
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the entity can readily observe.
Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
Level 3: Inputs that are not based on observable market date (unobservable inputs).
The Group has classified its financial instruments into the three levels prescribed as follows:
| 30-Sep-21 |
| 31-Mar-21 |
| 30-Sep-20 |
| (unaudited) |
| (audited) |
| (unaudited) |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
Financial assets at FVTPL |
|
|
|
|
|
- Royalty finance investments | 106,839 |
| 85,301 |
| 83,485 |
- Equity investments | 4,870 |
| 3,495 |
| 172 |
| 111,709 |
| 88,796 |
| 83,657 |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
Financial liabilities at FVTPL |
|
|
|
|
|
- Royalty debt liabilities | 1,076 |
| 1,031 |
| 1,194 |
The following table presents the changes in level 3 items for the periods ended 30 September 2021, 31 March 2021 and 30 September 2020:
| Financial |
| Financial |
|
|
| Assets |
| Liabilities |
| Total |
| £000 |
| £000 |
| £000 |
|
|
|
|
|
|
At 31 March 2020 | 76,067 |
| (1,173) |
| 74,894 |
Additions | 6,104 |
| - |
| 6,104 |
Repayments | (1,245) |
| - |
| (1,245) |
Royalty income received | 3,654 |
| - |
| 3,654 |
RP liability paid | - |
| 52 |
| 52 |
Net change in FV | (923) |
| (73) |
| (996) |
At 30 September 2020 | 83,657 |
| (1,194) |
| 82,463 |
Additions | 18,368 |
| - |
| 18,368 |
Repayments | (20,533) |
| 226 |
| (20,307) |
Royalty income received | (22,999) |
| - |
| (22,999) |
RP liability paid | - |
| 29 |
| 29 |
Net change in FV | 30,303 |
| (92) |
| 30,211 |
At 31 March 2021 | 88,796 |
| (1,031) |
| 87,765 |
Additions | 23,739 |
| - |
| 23,739 |
Repayments | (3,590) |
| - |
| (3,590) |
Royalty income received | 5,705 |
| - |
| 5,705 |
RP liability paid | - |
| 57 |
| 57 |
Net change in FV | (2,941) |
| (102) |
| (3,043) |
At 30 September 2021 | 111,709 |
| (1,076) |
| 110,633 |
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 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 -6.0% to 6.0% and the range of risk-adjusted discount rates is 14.7% to 17.4%.
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. The range of annual adjustment factors used is -6.0% to 6.0% and the range of risk-adjusted discount rates is 16.3% to 17.4%.
21. Events after the financial reporting date
Dividends
On 12 October 2021, the Company paid a quarterly dividend of 0.55 pence per share.