Business
Interim Results for the six months ended 30 Sep 24
Interim Results for the six months ended 30 Sep 24.
About this update from Duke Capital Limited
16 December 2024 Duke Capital Limited ("Duke Capital", "Duke" or the "Company") Interim Results for the six months ended 30 September 2024 Duke Capital Limited (AIM: DUKE), a leading provider of hybrid capital solutions for SME business owners in Europe and North America, is pleased to announce its interim results for the six-months ended 30 September 2024 ("Interim 2025"). Financial Highlights · Recurring cash revenue* totalled £12.7 million, an increase of 4% on Interim 2024 (£12.2 million) · Total cash revenue of £13.5 million, down 4% from the prior period (Interim 2024: £14.1 million) · Free cash flow** of £5.9 million, down 26% from Interim 2024 (£7.9 million) - fewer investment exits delivered in the current period compared to Interim 2024 · Cash dividends of 1.40 pence per share paid to shareholders (Interim 2024: 1.40 pence per share) Operational Highlights · Deployed over £15 million of capital into existing Capital Partners · Completed a £23.5 million fundraise post period end to support portfolio M&A and progress Duke's third party, non-dilutive funding strategy to accelerate scale · Positive outlook with a number of buy and build opportunities in the portfolio's pipeline and a diversified portfolio positioned for continued resilience *Recurring cash revenue excludes exit premiums and cash gains from the sale of equity investments ** Free cashflow is defined as net cash inflows from operations plus cash gains from the sale of equity investments less investment costs less interest paid on borrowings Nigel Birrell, Chairman of Duke Capital, said: "During the first six months of FY 2025, we have continued to prove our ability to deliver. We continue to increase recurring cash revenue, driven by the team's successful execution on several growth opportunities. This is testament to the quality of the portfolio we have established and the significant potential it holds for continued capital appreciation. With a strong, well-funded balance sheet and numerous growth opportunities under review, we have a positive outlook for the months ahead. The private credit and direct lending markets continue to go from strength to strength and we have confidence that our diversified portfolio is well positioned for continued resilience. We look forward to updating the markets on our progress." For further information, please visit www.dukecapital.com or contact: Duke Capital Limited Neil Johnson / Charles Cannon Brookes / Hugo Evans +44 (0) 1481 231 816 Cavendish Capital Markets Limited (Nominated Adviser and Joint Broker) Stephen Keys / Callum Davidson / Michael Johnson +44 (0) 207 220 0500 Canaccord Genuity Limited (Joint Broker) Adam James / Harry Rees +44 (0) 207 523 8000 SEC Newgate (Financial Communications) Elisabeth Cowell / Alice Cho / Olivia Hart +44 (0) 20 3757 6882 [email protected] About Duke Capital Duke is a leading provider of hybrid capital solutions for SME business owners in Europe and North America, combining the best features of both equity and debt. Since 2017, Duke has provided unique long-term financing which eliminates re-financing risk and necessity for a short-term exit by providing a unique 'corporate mortgage' while also aligning its returns to grow with the success of the business. Duke is focused on generating attractive risk-adjusted returns for shareholders and has a track record of achieving this across market cycles. Its three investment pillars are capital preservation, attractive dividend yield, and to provide upside upon exits. Duke is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey. CHAIRMAN'S REPORT Dear Shareholder, During the six-month period, I am pleased to report that Duke Capital has continued to build on its consistent track record of delivery, particularly in terms of increasing its quarterly recurring cash revenue. Notably, the Company completed seven follow-on investments during the period to enable our capital partners to deliver on their buy and build strategies, deploying over £15 million of capital and resulting in an increase in the maturity and profitability of the underlying portfolio. It is our belief that this maturing of the portfolio, with Duke "staying in for longer", will benefit shareholders by positioning us to attract higher EBITDA multiples upon exit. As has been the case for the past two and a half years, the growth we delivered during the period was funded by non-dilutive means, drawing down on the Company's debt line with Fairfax alongside the reinvestment of proceeds from the high IRR exits we have achieved. Building on the strategic review we undertook in the last financial year, we have been developing a long-term funding strategy which is not reliant on raising equity via the UK public equity markets. Alongside a unique and compelling product, we now have an almost eight-year track record of resilience which clearly showcases the highly attractive fundamentals of our business model in terms of the exposure it offers to a unique segment of the private markets and the strong recurring cash revenue and free cash flow it supports. This underpins the Board's belief that the time is right to move towards a third-party capital model and as such, we intend to raise future additional capital via new Managed Account / Joint Venture structures. The clear benefits of this strategy will be to eliminate cash drag, deliver accretive fee-based revenue and reduce Duke's dependence on the UK public equity markets, thereby minimising dilution and enabling us to execute on strategic growth opportunities more rapidly and at scale. With this in mind, during the period, Duke engaged a placement agent to approach potential capital providers and, as previously announced, has received indicative term sheets from Tier-1 capital providers on potential new funding, with further term sheets expected. In the meanwhile, as we progress towards this goal, we took the strategic decision to undertake a targeted fundraise via the public markets post period end. This decision was not taken lightly and reflected the near-term investment opportunities and requirements from inside the Company's existing portfolio specifically in relation to Duke's buy and build platforms. The fundraising included an offer to our retail shareholder base and delivered £23.5 million of new funding by way of a Placing, Subscription, Retail Offer and Broker Option. The proceeds will be used to provide additional capital to our current partners, enabling them to deliver bolt-on M&A to build their EBITDA and increasing our equity participation where possible. Outlook With a strong, well-funded balance sheet and numerous growth opportunities we maintain a positive outlook for the months ahead, albeit we recognise the need for caution in relation to the UK economy. Positively, we have witnessed good growth in our Irish and North American partners and have confidence that our diversified portfolio is well positioned to continue its resilience. The private credit and direct lending markets continue to go from strength to strength, and we have a clear strategy to meaningfully drive future scale. I would like to take this opportunity to thank our shareholders, team and advisers for their continued support. Nigel Birrell Chairman CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS Note Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Cash flows from operating activities Receipts from hybrid credit investments 6 12,775 27,267 13,720 Receipts of interest from term credit investments 7 117 453 259 Other operating receipts 652 195 45 Operating expenses paid (2,614) (4,015) (2,383) Payments for hybrid credit participation fees 9 (46) (130) (68) Tax paid (607) (673) (498) Net cash inflow from operating activities 10,277 23,097 11,075 Cash flows from investing activities Hybrid credit investments advanced 6 (15,322) (42,012) (17,102) Hybrid credit investments repaid 6 3,987 17,636 7,041 Term credit investments advanced 7 - (750) - Equity investments purchased 8 - (3,799) (926) Equity investments sold 8 - 2,326 Equity dividends received 8 21 48 48 Receipt of deferred consideration 10 742 1,512 750 Investments costs paid (273) (1,344) (358) Net cash outflow from investing activities (10,845) (26,383) (10,547) Cash flows from financing activities Dividends paid 17 (5,817) (11,524) (5,709) Proceeds from loans 12 17,000 15,000 5,000 Interest paid 12 (4,162) (6,222) (2,819) Other finance costs paid (4) - - Net cash inflow / (outflow) financing activities 7,017 (2,746) (3,528) Net change in cash and cash equivalents 6,449 (6,032) (3,000) Cash and cash equivalents at beginning of period / year 2,896 8,939 8,939 Effect of foreign exchange on cash (164) (11) 32 Cash and cash equivalents at the end of period / year 9,181 2,896 5,971 CONDENSED CONSOLIDATED STATEMENT OF INCOME Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 Note (unaudited) (audited) (unaudited) £000 £000 £000 Income Hybrid credit investment income 6 8,512 23,014 13,514 Term credit investment income 7 117 453 259 Equity investment income 8 990 1,925 (3,442) Other operating income 652 195 45 Total Income 10,271 25,587 10,376 Investment costs Transaction costs (115) (475) (21) Due diligence costs 36 (645) (309) Total investment costs (79) (1,120) (330) Operating costs Administration and personnel (2,286) (3,072) (2,033) Legal and professional (258) (533) (274) Other operating costs (216) (370) (131) Expected credit losses 7 - 14 - Share-based payments 15 (427) (938) (537) Total operating costs (3,187) (4,899) (2,975) Operating profit 7,005 19,568 7,071 Net foreign currency movement (163) (22) 55 Finance costs 3 (4,689) (7,255) (3,326) Profit for the period before tax 2,153 12,291 3,800 Taxation expense 4 (181) (683) (408) Total comprehensive income for the period 1,972 11,608 3,392 Basic earnings per share (pence) 5 0.47 2.81 0.83 Diluted earnings per share (pence) 5 0.47 2.81 0.83 All income is attributable to the holders of the Ordinary Shares of the Company. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30-Sep-24 31-Mar-24 30-Sep-23 Note (unaudited) (audited) (unaudited) £000 £000 £000 Non-current assets Goodwill 13 203 203 203 Hybrid credit finance investments 6 185,871 177,589 174,149 Term credit investments 7 5,382 5,382 4,652 Equity investments 8 16,873 15,904 11,564 Trade and other receivables 1,574 1,574 - Deferred tax 18 804 408 200 211,378 201,060 190,768 Current assets Hybrid credit finance investments 6 32,195 33,359 26,521 Trade and other receivables 10 31 843 1,529 Cash and cash equivalents 9,181 2,896 5,971 Current tax asset 186 155 463 41,593 37,253 34,484 Total Assets 252,300 238,313 225,252 Current liabilities Hybrid credit debt liabilities 9 160 170 167 Trade and other payables 11 416 461 454 Borrowings 12 736 632 527 1,312 1,263 1,148 Non-current liabilities Hybrid credit debt liabilities 9 944 934 988 Trade and other payables 11 992 1,063 1,286 Borrowings 12 87,189 69,772 59,351 89,125 71,769 61,625 Net Assets 161,863 165,281 162,479 Equity Shares issued 14 172,939 172,939 172,939 Share based payment reserve 15 4,812 4,385 3,984 Warrant reserve 15 3,036 3,036 3,036 Retained losses 16 (18,924) (15,079) (17,480) Total Equity 161,863 165,281 162,479 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share-based Shares payment Warrant Retained Total Note issued reserve reserve losses equity £000 £000 £000 £000 £000 At 1 April 2023 172,939 3,447 3,036 (15,163) 164,259 Total comprehensive income for the period - - - 3,392 3,392 Transactions with owners Share based payments 15 - 537 - - 537 Dividends 17 - - - (5,709) (5,709) Total transactions with owners - 537 - (5,709) (5,172) At 30 September 2023 172,939 3,984 3,036 (17,480) 162,479 Total comprehensive income for the period - - - 8,216 8,216 Transactions with owners Share based payments 15 - 401 - - 401 Dividends 17 - - - (5,815) (5,815) Total transactions with owners - 401 - (5,815) (5,414) At 31 March 2024 172,939 4,385 3,036 (15,079) 165,281 Share-based Shares payment Warrant Retained Total Note issued reserve reserve losses equity £000 £000 £000 £000 £000 At 1 April 2024 172,939 4,385 3,036 (15,079) 165,281 Total comprehensive income for the period - - - 1,972 1,972 Transactions with owners Share based payments 15 - 427 - - 427 Dividends 17 - - - (5,817) (5,817) Total transactions with owners - 427 - (5,817) (5,390) At 30 September 2024 172,939 4,812 3,036 (18,924) 161,863 NOTES TO THE FINANCIAL STATEMENTS 1. General Information Duke Capital Limited ("Duke Capital" 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. Throughout the period, the "Group" comprised Duke Capital Limited and its wholly owned subsidiaries; Duke Royalty UK Limited, Duke Capital US Holdings, Inc and Duke Capital Employee Benefit Trust. The Group's investing policy is to invest in a diversified portfolio of hybrid credit 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 UK adopted international accounting standards, and applicable Guernsey law, and reflect the following policies, which have been adopted and applied consistently. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 April 2021. There was no impact or changes in accounting from the transition. These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting, as adopted for use in the UK. 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 2024. No new or revised standards or interpretations that have become effective during the period ended 30 September 2024 have had a material effect on the financial statements of the Group. The Directors consider that the Group has adequate financial resources to enable it to continue operations for a period of no less than 12 months from the date of approval of the financial statements. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. 2.2 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 near future. The cash flow needs of the Group have been assessed taking account the need for further funding for any of the existing hybrid credit partners and the ongoing working capital needs of the business against the current cash and liquidity of the Group. 2.3 Material accounting policies In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. The principal accounting policies applied in the presentation of the condensed consolidated interim financial statements of Duke Capital, including the critical accounting judgements made by the Directors and the key sources of estimation, are consistent with those followed in the preparation of the Group's Annual Report and consolidated financial statements for the year ended 31 March 2024 and have been consistently applied throughout the period ended 30 September 2024. 3. Finance Costs Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Interest payable on borrowings 4,268 6,413 2,905 Deferred finance costs released to P&L 421 842 421 4,689 7,255 3,326 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Current tax Income tax expense 577 891 408 Deferred tax Decrease in deferred tax assets (396) (208) - (396) (208) - Income tax expense 181 683 408 Factors affecting income tax expense for the period Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Profit on ordinary activities before tax 1,972 12,291 3,800 Guernsey taxation at 0% (30 September 2023: 0%, 31 March 2024: 0%) - - - Overseas tax charges at effective rate of 8.40% (30 September 2023: 10.73%, 31 March 2024: 5.55%) 181 683 408 Income tax expense 181 683 408 5. Earnings per share Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Total comprehensive income (£000) 1,972 11,608 3,392 Weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) 415,865 412,955 410,484 Basic earnings per share (pence) 0.47 2.81 0.83 Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Total comprehensive income (£000) 1,972 11,608 3,392 Diluted weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) 415,865 412,955 410,484 Diluted earnings per share (pence) 0.47 2.81 0.83 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, excluding treasury shares (see Note 14). 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. All share options, warrants and Long-Term Incentive Plan awards in issue are not dilutive at the year-end as the exercise prices were above the average share price for the period. However, these could become dilutive in future periods. Adjusted earnings per share Adjusted earnings represent 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 due diligence fees, together with the tax effects thereon. Given the sensitivity of the inputs used to determine the fair value of its investments, the Group believes that adjusted earnings are a better reflection of its ongoing financial performance. 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Total comprehensive income for the period 1,972 11,608 3,392 Unrealised fair value movements 3,293 6,854 4,295 Expected credit losses - (14) - Share-based payments 427 938 537 Net transaction costs 79 1,120 330 Tax effect of the adjustments above at Group effective rate (319) (494) (553) Adjusted earnings 5,452 20,012 8,001 Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Adjusted earnings for the year (£000) 5,452 20,012 8,001 Weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) 415,865 412,955 410,484 Adjusted earnings per share (pence) 1.31 4.85 1.95 Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Diluted adjusted earnings for the year (£000) 5,452 20,012 8,001 Diluted weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) 415,865 412,955 410,484 Diluted adjusted earnings per share (pence) 1.31 4.85 1.95 6. Hybrid credit investments Hybrid credit investments are financial assets held at FVTPL that relate to the provision of hybrid credit capital to a diversified portfolio of companies. 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Brought forward 210,948 191,333 191,333 Additions 15,322 42,012 17,102 Buybacks (3,987) (17,636) (7,041) Loss on hybrid credit assets at FVTPL (4,217) (4,761) (724) 218,066 210,948 200,670 Hybrid credit investments are comprised of: 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Non-current 185,871 177,589 174,149 Current 32,195 33,359 26,521 218,066 210,948 200,670 Hybrid credit investment income on the face of the consolidated statement of comprehensive income comprises: Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Hybrid credit interest 11,959 23,689 12,559 Hybrid credit premiums 816 3,578 1,760 Total hybrid credit cash revenue 12,775 27,267 14,319 Hybrid credit equitised revenue - 600 - Loss on hybrid credit assets at FVTPL (4,217) (4,761) (724) Loss on hybrid credit liabilities at FVTPL (46) (92) (81) Hybrid credit investment income 8,512 23,014 13,514 All financial assets held at FVTPL are mandatorily measured as such. The Group's hybrid credit investment assets comprise hybrid credit financing agreements with 14 (30 September 2023: 15, 31 March 2024: 14) capital partners. Under the terms of these agreements the Group advances funds in exchange for annualised hybrid credit 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 of the investees' assets. The investees are provided with buyback options, exercisable at certain stages of the agreements. 7. Term credit investments Term credit investments are financial assets held at amortised cost except for the £2.2 million loan issued at 0% interest. The impact of discounting is immaterial to the Consolidated Financial Statements. The below table shows both the loans at amortised cost and fair value. 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Brought forward 5,382 4,652 4,652 Additions - 750 - Buybacks - - - Expected credit losses - (20) - 5,382 5,382 4,652 The Group's loan investments comprise secured loans advanced to two entities (30 September 2023: two, 31 March 2024: two) in connection with the Group's hybrid credit investments. The loans comprise fixed rate loans of £5,382,000 (30 September 2023: £4,872,000, 31 March 2024: £5,382,000) which bear interest at rates of between 0% and 5% (30 September 2023: 0% and 15%, 31 March 2024: 0% and 5%). The loans mature as follows: 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 In less than one year - - - In one to two years - - - In two to five years 5,382 5,382 4,652 5,382 5,382 4,652 Loan investment net income on the face of the consolidated statement of comprehensive income comprises: Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Loan interest 117 453 259 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 2024 £000 £000 £000 Stage 1 5,402 (20) 5,382 Stage 2 - - - Stage 3 - - - 5,402 (20) 5,382 Gross carrying amount Allowance for ECLs Net Carrying amount As at 31 March 2024 £000 £000 £000 Stage 1 5,402 (20) 5,382 Stage 2 - - - Stage 3 - - - 5,402 (20) 5,382 Gross carrying amount Allowance for ECLs Net Carrying amount As at 30 September 2023 £000 £000 £000 Stage 1 4,692 (40) 4,652 Stage 2 - - - Stage 3 - - - 4,692 (40) 4,652 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. The credit risk profile of the investments has not increased materially and they remain Stage 1 assets. No ECLs have been charged in the period 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 2024: Stage 1 Stage 2 Stage 3 Total £000 £000 £000 £000 At 1 April 2023 and 30 September 2023 92 - - 92 Expected credit losses on loan investments in period 20 - - 20 Expected credit losses on other receivables in year (34) (34) Carrying value at 31 March 2024 and 30 September 2024 78 - - 78 8. Equity investments Equity investments are financial assets held at FVTPL. 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Brought forward 15,904 13,529 13,529 Additions - cash - 3,799 1,525 Additions - equitised revenue - 600 - Disposals - (3) - Proceeds on sale - (2,323) - Proceeds on sale - deferred - (1,575) - Gain / (loss) on equity assets at FVTPL 969 1,877 (3,490) 16,873 15,904 11,564 The Group's equity investments comprise unlisted shares and warrants in 12 of its capital partners (30 September 2023: 12, 31 March 2024: 13). The Group also still holds one (30 September 2023: two, 31 March 2024: two) unlisted investment 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Unrealised gain / (loss) on equity assets at FVTPL 969 325 (3,490) Realised gain on equity assets at FVTPL 21 1,552 - Dividend income - 48 48 990 1,925 (3,442) 9. Hybrid credit debt liabilities Hybrid credit debt liabilities are financial liabilities held at FVTPL. 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Brought forward 1,104 1,142 1,142 Payments made (46) (130) (68) Loss on financial assets held at FVTPL 46 92 81 1,104 1,104 1,155 Hybrid credit debt liabilities are comprised of: 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Current 160 170 167 Non-current 944 934 988 1,104 1,104 1,155 10. Trade and other receivables 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Current Prepayments and accrued income 31 101 25 Other receivables - 742 1,504 31 843 1,529 Non-current Other receivables 1,574 1,574 - 1,605 2,417 1,529 11. Trade and other payables 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Current Trade payables 67 13 20 Transaction costs 238 342 316 Accruals and deferred income 111 106 118 416 461 454 Non-current Transaction costs 992 1,063 1,286 1,408 1,524 1,740 12. Borrowings 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Secured loan Current - accrued interest 527 441 337 Non-current 59,351 53,930 34,363 59,878 54,371 34,700 At 30 September 2024 , £10,000,000 was undrawn on the facility ( 30 September 2023: £37,000,000, 31 March 2024: £27,000,000 ). At 30 September 2024, £964,000 of unamortised fees were outstanding (30 September 2023: £1,247,000, 31 March 2024: £1,103,000). The table below sets out an analysis of net debt and the movements in net debt for the period ended 30 September 2024, the prior period and the year ended 31 March 2024. Interest Payable Borrowings £000 £000 At 1 April 2024 632 69,772 Cash movements Loan advanced - 17,000 Deferred finance costs paid - (4) Interest paid (4,162) - Non-cash movements Deferred finance costs released to P&L - 421 Interest charged 4,268 - As at 30 September 2024 736 87,189 Interest Payable Borrowings £000 £000 At 1 April 2023 441 53,930 Cash movements Loan advanced - 5,000 Interest paid (2,819) - Non-cash movements Deferred finance costs released to P&L - 421 Interest charged 2,905 - As at 30 September 2023 527 59,351 Cash movements Loan advanced - 10,000 Interest paid (3,403) - Non-cash movements Deferred finance costs released to P&L - 421 Interest charged 3,508 - At 31 March 2024 632 69,772 13. Goodwill 30-Sep-24 31-Mar-24 30-Sep-23 (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 1 April 2023 407,762 9,773 417,535 172,939 Shares issued to Employee Benefit Trust during the period - 3,955 3,955 - PSA shares vested during the period 7,665 (7,665) - - At 30 September 2023 and 31 March 2024 415,427 6,063 421,490 172,939 Shares issued to Employee Benefit Trust during the period - 2,871 2,871 - PSA shares vested during the period 1,316 (1,316) - - At 31 September 2024 416,743 7,618 424,361 172,939 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 Capital 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 2023 43,990 3,036 Lapsed during the period (2,375) - At 30 September 2023, 31 March 2024 and 30 September 2024 41,615 3,036 The warrants expire in January 2028 and have an exercise price of 45 pence. As per IFRS 2, the warrants have been valued using the Black Scholes model. A total expense of £2,771,000 has been capitalised and will be amortised over the life of the warrants. In the period to 30 September 2024, an expense of £277,000 (30 September 2023: £277,000, 31 March 2024: £554,000) was recognised through finance costs in relation to the warrants. At 30 September 2024, 41,615,000 (30 September 2023: 41,615,000, 31 March 2024: 41,615,000) warrants were outstanding and exercisable at a weighted average exercise price of 45 pence (30 September 2023: 46 pence, 31 March 2024: 45 pence). The weighted average remaining contractual life of the warrants outstanding was 3.26 years (30 September 2023: 4.26 years, 31 March 2024: 3.45 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 2023 136 3,311 3,447 LTIP awards - 537 537 At 30 September 2023 136 3,848 3,984 LTIP awards - 401 401 At 31 March 2024 136 4,249 4,385 LTIP awards - 427 427 At 30 September 2024 136 4,676 4,812 Share option scheme The Group operates a share option scheme ("the Scheme"). The Scheme was established to incentivise Directors, staff and 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 four per cent of the Company's Ordinary Shares in issue from time to time. Options vest immediately and lapse five years from the date of grant. No share options were granted during the period to 30 September 2024 and there were nil options outstanding and exercisable at 30 September 2024 (30 September 2023: 200,000, 31 March 2024: nil). Long Term Incentive Plan Under the rules of the Long-Term Incentive Plan ("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. The fair value of the LTIP awards consists of (a) the fair value of the TSR portion; and (b) the fair value of the TCAD per share portion. Since no consideration is paid for the awards, the fair value of the awards is based on the share price at the date of grant, as adjusted for the probability of the likely vesting of the performance conditions. Since the performance condition in respect of the TSR portion is a market condition, the probability of vesting is not revisited following the date of grant. The probability of vesting of the TCAD per share portion, containing a non-market condition, is reassessed at each reporting date. The resulting fair values are recorded on a straight-line basis over the vesting period of the awards. 6,226,000 performance share awards (PSAs) were granted during the period to 30 September 2024 (30 September 2023: 3,663,000, 31 March 2024: 3,663,000). At 30 September 2024, 13,684,000 (30 September 2023: 9,726,000, 31 March 2024: 9,726,000) PSAs were outstanding. The weighted average remaining vesting period of these awards outstanding was 2.38 years (30 September 2023: 1.49 years, 31 March 2024: 1.30 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 to 30 September 2024, 31 March 2024 and 30 September 2023: Dividend per Dividends share payable Record date Payment date pence/share £000 31-Mar-23 12-Apr-23 0.70 2,854 23-Jun-23 12-Jul-23 0.70 2,855 Dividends payable for the period ended 30 September 2023 5,709 Dividend per Dividends share Payable Record date Payment date pence/share £000 29-Sep-23 12-Oct-23 0.70 2,908 29-Dec-23 12-Jan-24 0.70 2,908 Dividends payable for the period ended 31 March 2024 5,816 2-Apr-24 12-Apr-24 0.70 2,908 28-Jun-24 12-Jul-24 0.70 2,909 Dividends payable for the period ended 30 September 2024 5,817 On 27 September 2024, the Company approved a further quarterly cash dividend of 0.70 pence per share, totalling £2,923,000, which was paid on 12 October 2023. 18. Deferred tax Total £000s 1 April 2023 and 30 September 2023 200 Credited to profit & loss 208 At 31 March 2024 408 Credited to profit & loss 396 At 30 September 2024 804 A deferred tax asset has been recognised as it is expected that future available taxable profits will be available against which the Group can use against the tax losses. 19. Related parties Directors' fees The following fees were payable to the Directors during the period: Period to Year to Period to 30-Sep-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Short term remuneration 871 1,206 831 Share-based payments 215 464 256 1,086 1,670 1,087 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Abingdon Capital Corporation 322 533 263 Arlington Group Asset Management Limited 50 100 50 313 633 313 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, office rental and assisting the Board with the selection, execution and monitoring of capital partners and investment performance. Abingdon fees also include 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Directors 1 259 354 196 Other related parties 36 92 50 295 446 246 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-24 31-Mar-24 30-Sep-23 (unaudited) (audited) (unaudited) £000 £000 £000 Financial assets Financial assets at FVTPL - Hybrid credit investments 218,066 210,948 200,670 - Equity investments 16,873 15,904 11,564 234,939 226,852 212,234 Financial liabilities Financial liabilities at FVTPL - Hybrid credit debt liabilities 1,104 1,104 1,155 The following table presents the changes in level 3 items for the periods ended 30 September 2024, 31 March 2024 and 30 September 2023: Financial Financial Assets Liabilities Total £000 £000 £000 At 1 April 2023 204,862 (1,142) 203,720 Additions 18,628 - 18,628 Repayments (7,041) - (7,041) Hybrid credit income received 11,959 - 11,959 Hybrid credit participation liabilities paid - 68 68 Net change in FV (16,174) (80) (16,254) At 30 September 2023 212,234 (1,154) 211,080 Additions 27,782 - 27,782 Repayments (14,491) - (14,491) Hybrid credit income received (34,974) - (34,974) Hybrid credit participation liabilities paid - 61 61 Net change in FV 36,301 (11) 36,290 At 31 March 2024 226,852 (1,104) 225,748 Additions 15,322 - 15,322 Repayments (3,987) - (3,987) Hybrid credit income received 11,959 - 11,959 Hybrid credit participation liabilities paid - 46 46 Net change in FV (15,206) (46) (15,252) At 30 September 2024 234,940 (1,104) 233,836 Valuation techniques used to determine fair values The fair value of the Group's hybrid credit financial instruments is determined using discounted cash flow analysis and all the resulting fair value estimates are included in level 3. The fair value of the equity instruments is determined applying an EBITDA multiple to the underlying businesses forward looking EBITDA. All 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 hybrid credit investments and hybrid credit participation liabilities These factors are estimated based upon the underlying past and projected performance of the hybrid credit investee companies together with general market conditions. Discount rates for financial assets and financial liabilities These are initially estimated based upon the projected internal rate of return of the hybrid credit investment and subsequently adjusted to reflect changes in credit risk determined by the Group's Investment Committee. EBITDA multiples These multiples are based on comparable market transactions. Forward looking EBITDA These are estimated based on the projected underlying performance of the hybrid credit investee companies together. 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: Hybrid credit 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% (30 September 2023: -6.0% to 6.0%, 31 March 2024: -6.0% to 6.0%) and the range of risk-adjusted discount rates is 14.7% to 17.7% (30 September 2023: 14.7% to 17.4%, 31 March 2024: 14.7% to 17.7%) Equity investments The unobservable inputs are the EBITDA multiples and forward-looking EBITDA. The range of EBITDA multiples used is 4.2x to 8.0x (30 September 2023: 5.3x to 10.0x, 31 March 2024: 4.2x to 8.0x). Hybrid credit 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% (30 September 2023: -6.0% to 6.0%, 31 March 2024: -6.0% to 6.0%) and the range of risk-adjusted discount rates is 16.3% to 17.3% (30 September 2023: 16.3% to 17.4%, 31 March 2024: 16.3% to 17.7%). 21. Events after the financial reporting date Dividends On 12 October 2024, the Company paid a quarterly dividend of 0.70 pence per share. On 22 November 2024, the Group announced the successful placement of 85,454,636 new shares at a price of 27.5p per share, raising new capital of £23.5 million.
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