Duke Capital Regulatory News (DUKE)

22 July 2021

Duke Royalty Limited

("Duke Royalty" or "Duke")

New Royalty Agreement with IT Service Business

Duke Royalty, a provider of alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad, is pleased to announce that it has further diversified its revenue base by entering into a £7.7 million royalty financing agreement (the "Financing") with 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 including I.T. managed services, I.T. infrastructure support, hosted collaboration, and communication solutions.

Highlights:

· Initial cash yield of 13.5% per annum via monthly payments, which commence immediately.

· 30-year secured financing, with distributions to be adjusted annually to reflect InTec's consolidated revenue growth, on typical Duke terms.

· InTec's underlying businesses have a history of predictable revenue from longstanding operations, while InTec has consistently grown revenue and profitability over the last five years

· Since being founded in 2016, the InTec team have already completed seven acquisitions and with a pipeline of further acquisitions, Duke expects to provide further financing over the next 18 months

· Duke's investment will facilitate a refinancing of the capital structure in InTec, consolidating equity shareholding among the founding management team and introducing Duke as the senior lender to support the business's ongoing M&A strategy.

Neil Johnson, CEO of Duke Royalty, said:

"Duke Royalty is building and diversifying its cash revenue by entering into new partnerships, and we are delighted to add InTec along with Fairmed very recently. InTec has all the qualities of an attractive royalty partner for Duke - a buy & build platform with a track record of growth and profitability with management aligned through significant equity holdings to continue growing the business.

"The underlying businesses' predictable revenue profiles underpin our confidence in the business model. Furthermore, we believe that the market dynamics support InTec's long term prospects, in particular the urgent need for businesses to implement effective IT solutions which support complex hybrid working models and the increased uptake of new technologies among SME clients. Our support of this investment reflects our strong belief in the management team's ability to continue the success achieved to date and the attractiveness of an M&A strategy in this sector."

Simon Howitt, Chairman of InTec, said:

"Duke's investment solution and the team's appetite for supporting transformational strategies is key to our vision for what we want InTec to become. By taking on Duke's capital, we have simplified our balance sheet and set a firm foundation for future growth, both via M&A and organically. We are excited to continue to execute on our clearly defined plan."

Further information regarding InTec

Formed in 2016, InTec is highly acquisitive and has acquired seven businesses to date. InTec's underlying businesses have long standing operations, high customer retention and positive EBITDA. Future growth plans include M&A of businesses with similar financial characteristics but diversification of specialties and local geographies which are accretive to current operations.

InTec comprises a UK-wide group of ICT specialists enabling businesses to work smarter through technology. It specialises in the design, implementation, and support of a wide range of cloud services and business applications including I.T. managed services, I.T. infrastructure support, hosted collaboration, and communication solutions. InTec is an end-to-end independent technology consultancy helping businesses understand and see real value from their technology systems and investments.

About the Financing

Duke has committed £7.7 million of capital to enable InTec's current management team to refinance certain balance sheet items and continue their acquisition strategy of IT managed service businesses. Future tranches of capital are planned at Duke's sole discretion, as InTec believes it can replicate the strategy of acquiring businesses accretive to current financial results, which would also be enhancing Duke's position as senior secured lender.

The terms of the Financing are in line with Duke's typical investment criteria. The Financing is provided through a combination of a secured loan and preference shares and Duke will be entitled to monthly distributions (the "Distribution") beginning in July 2021.

In line with Duke's other investments, and reflective of the participating nature of Duke's business model, the Distribution will be adjusted annually based on the percentage change in total combined gross revenues of the Group for the 12 months to 31 December 2021, compared to the prior financial (calendar) year. The first adjustment will occur from July 2022. The annual adjustment in the Distribution will be subject to an agreed collar.

The Financing is for a period of 30 years, with the Distribution payable to Duke throughout the duration of this term, unless InTec utilises an early buyback option which will trigger an early redemption payment to Duke.

Duke Royalty Portfolio

A full list of Duke's current Royalty Partners are now included for reference on our Partners page of our website: www.dukeroyalty.com/partners

This announcement contains inside information.

***ENDS***

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

About Duke Royalty

Duke Royalty Limited provides alternative capital solutions to a diversified range of profitable and long-established businesses in Europe and abroad. Duke Royalty's experienced team provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders. Duke Royalty is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.