Join our community of smart investors

Bargain shares: A royal high yielding investment

A royalty finance company is exiting mature investments at healthy profits and is making good progress recycling proceeds from a placing into new investee companies.
Bargain shares: A royal high yielding investment
  • Pre-tax profit of £16.1m includes £9.9m gains on portfolio.
  • April’s placing raises £35m, at 35p a share, and loan facilities extended from £30m to £35m plus £20m accordion facility.
  • Duke still debt free after £23.3m of new investments made post March year-end.

Annual results from Duke Royalty (DUKE:48p), an Aim-traded company that makes its money by providing capital to companies in exchange for rights to a small percentage of their future revenues, highlight exactly why I included the shares, at 29p, in my market beating 2021 Bargain Shares Portfolio.

Having successfully navigated the Covid-19 pandemic, and provided the requisite support to its royalty partners last year, the group is now seeing the upside. In the 12 months to 31 March 2021, Duke’s cash revenue increased 7 per cent to a record £11m which in turn produced 16 per cent higher operating cash flow of 3.68p a share and free cash flow of 3.1p a share.  The 2.25p a share dividend was covered 1.2 times by adjusted earnings per share of 2.7p, up from 2.44p in 2019/20, but free cash flow cover is the better metric.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in