- Record Q4 royalty revenue anticipated, up 21%
- Debt facilities refinanced and increased on better terms
- New investment in acquisitive fire and safety business
Alternative capital solutions provider Duke Royalty (DUKE:AIM) said it expected to make £5.7 million in recurring revenue in its fourth quarter to 31 March, representing 21% growth on the prior year.
If achieved, it will eclipse the record £5.6 million booked in the third quarter to 31 December. The shares ticked up 1.25% to 33.7p in early trading on Friday.
For the uninitiated, Duke provides financing to profitable and long-established private companies who need capital but whose owners wish to maintain equity control by receiving royalty payments based on revenues.
DEBT FACILITIES REFINANCED
During the quarter the company refinanced and increased its credit facility on improved terms, saving 2.25% in interest costs. The new facility provides the group with up to £100 million and replaces £55 million of term and revolving credit facilities.
The company completed a new £5 million royalty investment into New Path Fire & Security which predominantly helps businesses protect their assets and people.
The acquisitive business is buying independent regional fire and safety companies in the south of England. Duke also invested £0.5 in the company's equity giving it a 15% stake.
Duke increased its funding to specialist residential care provider Tristone Healthcare, committing a further £3.2 million and taking the total financing to £16.6 million.
The cash will be used to acquire a ‘well respected’ residential and nursing care provider in greater Manchester.
Chief executive Neil Johnson commented: ‘With Fairfax Financial as our new senior lender, we have a world class partner to continue our growth.
‘As we look ahead to Duke's 2024 financial year, we believe we have a solid foundation to continue to grow the business and add royalty partners to continue revenue growth and portfolio diversification.’
EXPERT VIEW
Analyst Gary Greenwood at Shore Capital said the latest update implies full year recurring revenue of £21.7 million, slightly below his £22.2 million forecast, although he anticipates making ‘modest adjustments rather than major surgery’.
‘Duke has continued to make good progress during the period and we believe that the recent signing of a new enlarged credit facility with Fairfax positions it well to continue growing and diversifying its portfolio of investments’ added Greenwood.
