(Alliance News) - Duke Royalty Ltd on Monday said it hiked its dividend and swung to annual profit for the first time following a sharp increase in total income.
In the year ended March 31, the royalty financing firm achieved a maiden pretax profit of GBP1.9 million, improved from an GBP858,202 loss in financial 2018.
Total income rose sharply year-on-year to GBP6.1 million from GBP1.8 million, helped by strong total net gains in the value of its financial assets. During the recently ended financial year, Duke's assets achieved total net gains of GBP5.9 million, compared with GBP1.6 million the year before.
Duke increased its dividend by 33% to 2.8 pence per share from 2.1p and said "a stable and increasing dividend yield is a fundamental principle that the company will continue to focus on in future years".
Total operating expenses rose by 44% to GBP3.8 million from GBP2.7 million, largely driven by a rise in transaction costs.
In August 2018, Duke raised GBP44.0 million through an oversubscribed placing and subscription, its largest equity raise to date.
In February 2019, Duke acquired Capital Step Holdings Ltd and Capital Step Investments Ltd, at the time the company's "only known UK royalty competitors" for an enterprise value of GBP21.7 million. It was Duke's largest transaction to date and boosted its royalty partners from five to 11.
Later that month, Duke Royalty concluded its 12th royalty financing with a GBP10.0 million investment into vehicle parts wholesalers MRDB Holdings Ltd Group.
Looking ahead, the company said it has a "strong pipeline of new opportunities and follow-on investments" though it did say that UK political uncertainty could create headwinds.
Chief Executive Neil Johnson said: "The operating cash flow, which is a key metric for our business, has grown substantially together with revenue. As a result of Duke's high operating leverage, combined with the fact that we have quadrupled our royalty portfolio in the past year, we are pleased to see the financial benefits that have been generated, particularly in relation to our increased dividend.
"The political headwinds being felt in the UK mean uncertain times, however near-term uncertainty makes the long-term nature of our capital more attractive to business owners who require capital. Also, the predictability of our cash flow increases the confidence for shareholders in times of volatility. We are confident that the year ahead will be characterised by continued growth."
Shares in Duke Royalty were flat at 47.60p each in London on Monday morning.
Duke Capital (DUKE)