Duke Capital Regulatory News (DUKE)

16 February 2021

Duke Royalty Limited

("Duke Royalty", "Duke" or the "Company")

New Royalty Agreement with a Leading UK Steel Fabrication 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 £6.2 million royalty financing agreement (the "Financing") with Meteor HoldCo Limited, which undertakes business as Fabrikat (Nottingham) Limited ("Fabrikat"). Formed in 1985 and based in Sutton-in-Ashfield, UK, Fabrikat is a fabricator of steel products supplying the UK street lighting and guardrail markets.

Highlights:

· Initial cash yield of approximately 14% per annum via monthly payments, which commence immediately

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

· Fabrikat has a long history of steady turnover and profitability, providing street lighting columns, guardrails and more bespoke products to local councils around the UK via contractors and Original Equipment Manufacturers ("OEMs")

· Duke's investment will facilitate a management buyout ("MBO") of two shareholders who, in recent years, have handed over the day to day running of the business to the current management team which has a combined tenure in the business of more than 60 years and lead all aspects of Fabrikat's operations

· As part of the recapitalisation, Duke will receive a 30% equity stake in the business

Neil Johnson, CEO of Duke Royalty, said:

"Fabrikat is a well-managed business with a longstanding track record of profitability, making it an ideal royalty partner for Duke. The business' long history of growing market share and its ability to withstand and successfully navigate challenging environments, including the recent turbulence created by the pandemic, makes us confident of the Company's short and long-term future prospects. Our support of this MBO reflects our confidence in the management team's ability to continue the success achieved to date and illustrates how effective our capital is in MBO situations.

"Additionally, with Duke's existing credit facility with Pollen Street Capital, we are well positioned to make more investments in the coming months as we focus on capitalising on the increasing demand for long term, flexible sources of finance."

Paul Allen, CFO of Fabrikat, said:

"Duke's investment solution has been a great fit for this transaction. By taking on Duke's capital, the other members of the MBO team and I can assume operational control and a majority equity shareholding in a company where we have worked for most of our careers. We are excited to take Fabrikat forward and build on the excellent reputation of the firm."

Further information regarding Fabrikat

Fabrikat was founded in 1985 and is now the largest independently owned manufacturer of lighting columns and guardrails in the UK. Fabrikat designs, manufactures and supplies street lighting columns, traffic management and telecommunication structures, pedestrian guardrail, parapet, fencing and street furniture products. Leveraging its decades of experience and expertise in manufacturing and engineering, it has broadened its offering to include column testing, evaluation and asset management services.

Fabrikat has a diverse and expanding customer base, supplying local authorities, contractors, developers, specifiers, wholesalers, and lighting OEMs. Increasingly it is pivoting into higher margin, bespoke sub-sectors.

Two members of the MBO Team have been at the company for more than 30 years and across the management team there is deep technical expertise in the steel fabrication market. The company is based in Sutton-in-Ashfield, UK and employs c.80 staff across its production and administrative functions.

About the Financing

Duke has committed £6.2 million of capital to enable the current management team to shape the future growth and build on the stable foundations of a long-standing, profitable business. Importantly, there will be no change to the day-to-day management of Fabrikat.

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 March 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 March 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 Fabrikat utilises an early buyback option which will trigger an early redemption payment to Duke. In addition, Duke has received 30% of the fully diluted ordinary equity of the Group as part of its investment.

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

***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.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon publication of this announcement, this inside information is now considered to be in the public domain.