TIDMDUKE
RNS Number : 8138I
Duke Royalty Limited
22 June 2017
22 June 2017
Duke Royalty Limited
("Duke Royalty", "Duke" or the "Company")
Final Results for the year ended 31 March 2017 and declaration
of Maiden Dividend
Duke Royalty (AIM: DUKE) announces its final results for the
year ended 31 March 2017 ("Fiscal 2017").
Fiscal 2017 has been transformational for the Company which has
commenced operations as the first UK quoted diversified royalty
company. During the year, the Board and Investment Committee
focused on evaluating a number of opportunities, in order to create
a near-term pipeline of royalty financing transactions. To finance
the near-term pipeline, the Company commenced a fundraising early
in 2017. The financial year culminated with the Company's
successful raise of GBP15 million on 17 March 2017, bringing a
number of new institutional shareholders onto the Company's
register.
Post financial year end, on 6 April 2017 the Company announced
its inaugural royalty financing agreement for EUR8.0 million with
Temarca B.V. ("Temarca"), an established European river cruise
provider. With a cash-on-cash yield of approximately 13 per cent,
this inaugural royalty financing agreement will result in Duke
operating at a cashflow positive run rate following the
commencement of monthly distributions in May 2017.
Over Fiscal 2017, Duke Royalty generated a loss of GBP1.4
million. It should be noted however that Fiscal 2017 involved the
re-Admission of the Company and the equity placing to AIM, with
numerous other one-off costs. However, the Company has committed to
significantly reducing operational expenses for the financial year
ending 31 March 2018 ("Fiscal 2018"). As outlined in the Company's
Admission Document published on 20 March 2017, Board fees and other
service fees have been voluntarily reduced in order for the Company
to implement and sustain a quarterly dividend policy for Fiscal
2018.
The Company looks forward to reporting further progress during
Fiscal 2018, and looks with enthusiasm to furthering our investment
policy of building a diversified royalty portfolio.
Maiden Dividend
The Company is pleased to report that the Board has approved its
maiden dividend of P 0.5 pence (sterling) per share with the
ex-dividend date being 29 June 2017 and the record date 30 June
2017. Furthermore the Company is targeting a minimum initial annual
dividend yield of five per cent. for Fiscal 2018 and intends to pay
quarterly dividends going forward.
Notice of Annual General Meeting
The Company announces that its Annual General Meeting ("AGM")
will be held at Trafalgar Court, 4th Floor, West Wing, Admiral
Park, St Peter Port, Guernsey GY1 2JA on 27 September 2017 at 11:00
BST.
The full annual report and accounts, including the audit report
and the notice of the Company's AGM, and the proposed articles of
association will be posted to applicable shareholders by 7 July
2017 and will be available on the Company's website at that time:
www.dukeroyalty.com
About Duke Royalty
Headquartered in Guernsey, Duke Royalty Limited has been
established to provide alternative financing solutions to a
diversified range of businesses in Europe and abroad. Duke
Royalty's experienced team and exclusive partnership 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.
For more information, visit dukeroyalty.com.
For further information:
Duke Royalty Limited Neil Johnson / Charlie Cannon-Brookes
+44 (0) 1481 741 240
Grant Thornton UK LLP Colin Aaronson / Samantha
(Nominated Adviser) Harrison / Jamie Barklem/
Carolyn Sansom
+44 (0) 20 7383 5100
Mirabaud Securities Peter Krens / Edward Haig-Thomas
LLP (Joint Broker)
+44 (0) 20 3167 7222
Cantor Fitzgerald Europe Marc Milmo / Catherine Leftley
(Joint Broker) / Callum Butterfield
+44 (0) 207 894 7000
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
The Directors present their Annual Report and the Audited
Consolidated Financial Statements of the Group for the year ended
31 March 2017.
Status and activity
The Company is an investment holding company incorporated on 22
February 2012 with limited liability in Guernsey under the
Companies (Guernsey) Law, 2008.
The Company's shares were admitted to trading on the London
Stock Exchange's AIM Market ("AIM") on 9 July 2012. On 17 March
2017 the Company announced that 37,500,000 new Ordinary Shares had
been successfully placed or subscribed for at a price of 40 pence
per share ("Fundraising"), with new and existing institutional
investors, as well as certain Directors. Pursuant to the
Fundraising, the Company raised gross proceeds of GBP15 million
(net proceeds GBP13.8 million after fund raising commission and
Initial Public Offering expenses).
The Company's initial investment objective was to build a
focused natural resource investment vehicle in order to generate
positive returns to shareholders. As detailed in the Investing
Policy section on page 2 following the result of the EGM on 16 June
2015 the Company's Articles of Incorporation and Investing Policy
were changed to that of investment in a diversified portfolio of
royalty finance and related opportunities.
Post year end on 6 April 2017 the Company entered into its
inaugural royalty financing agreement for EUR8.0 million (the
"Financing") with Temarca B.V. ("Temarca"), an established European
river cruise provider. The Financing will allow Temarca to purchase
two boats that are currently being leased, refurbish a portion of
their fleet and repay existing creditors.
Results and dividends
The Company's performance during the year is discussed in the
Chairman's Report on page 3. The results for the year are set out
in the Consolidated Statement of Comprehensive Income on page
15.
At the year end the net assets attributable to the ordinary
shareholders were GBP14,506,012 (2016: GBP2,070,315).
No dividend was declared during the financial year to 31 March
2017.
Post the financial year end the Board approved the Company's
maiden dividend of 0.5 pence (sterling) per shares.
Taxation
The Company has been granted exemption from Guernsey taxation
and is charged an annual exemption fee of GBP1,200. The Directors
intend to conduct the Company's affairs such that it continues to
remain eligible for exemption from Guernsey tax.
Shareholder information
Up to date information regarding the Company can be found on the
Company's website, which is www.dukeroyalty.com.
Annual General Meeting
The notice for the Annual General Meeting of the Company, which
is to be held on 27 September 2017 at 11:00 BST a.m., is on page 40
of this document. The form of Proxy for the Annual General Meeting
will accompany the notice of Annual General Meeting.
Directors' responsibilities statement
The Directors are responsible for preparing the Annual Report
and the Consolidated Financial Statements in accordance with
applicable law and regulations.
Company law allows the Directors to prepare Consolidated
Financial Statements for each financial year. Under that law the
Directors have elected to prepare the Consolidated Financial
Statements in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
The Directors are permitted by the Companies (Guernsey) Law,
2008 to prepare Consolidated Financial Statements for each
financial period which gives a true and fair view of the state of
affairs of the Group and of the surplus or deficit of the Group for
that period.
In preparing those Consolidated Financial Statements the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Consolidated Financial Statements; and
-- prepare the Consolidated Financial Statements on a going
concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors confirm that they have complied with the above
requirements in preparing the Consolidated Financial
Statements.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the Financial Statements comply with the Companies (Guernsey) Law,
2008. The Directors are also responsible for safeguarding the
assets of the Company and Group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors who held office at the date of approval of this
report confirm that, so far as each of the Directors is aware,
there is no relevant audit information of which the Company's
auditor is unaware, having taken all the steps the Directors ought
to have taken to make themselves aware of any relevant audit
information and to establish that the Company's auditor is aware of
that information.
Directors
The Directors of the Company, who served during the year, and
subsequently, are shown below:
Director
-----------------------
Nigel Birrell
Charles Cannon-Brookes
Neil Johnson
James Ryan
Mark Le Tissier
-----------------------
The Directors held the following interest in the share capital
of the Company either directly or beneficially.
Ordinary Share Ordinary Share
Shares Options Shares Options
Director 2017 2017 2016 2016
------------------ ---------- --------- --------- ---------
N Johnson 1,660,000 85,000 900,000 85,000
C Cannon-Brookes 2,765,882 85,000 453,517 85,000
N Birrell 525,000 85,000 400,000 85,000
J Ryan 650,000 85,000 400,000 85,000
M Le Tissier - - - -
------------------ ---------- --------- --------- ---------
The Directors who served in the year received the following
remuneration during the year:
Director Entitlement 2017 2016**
per annum GBP GBP
-------------------- ------------ -------- --------
N Johnson 100,000 100,000 95,082
C Cannon-Brookes 70,000 70,000 69,292
N Birrell* 24,000 24,000 32,836
J Ryan 24,000 24,000 32,836
M Le Tissier - - -
R King 27,500 - 25,208
-------------------- ------------ -------- --------
Total remuneration 218,000 255,252
-------------------- ------------ -------- --------
* Chairman.
** includes GBP13,915 each for Mr Johnson, Mr Cannon-Brookes, Mr
Birrell and Mr Ryan which equates to the value of the options
issued to each Director under the share option plan.
Post the financial year end Board fees have been voluntarily
reduced in order for the Company to implement and sustain a
quarterly dividend policy for Fiscal 2018.
Directors' authority to buy back shares
A shareholder resolution, which took effect upon Admission to
AIM, has been passed granting the Board authority to make market
purchases of up to 14.99 per cent of the Ordinary Shares in issue
during any twelve month period. Any repurchase of Ordinary Shares
will be made in accordance with the Articles of Association of the
Company and the Companies (Guernsey) Law, 2008, as amended, and
within guidelines established from time to time by the Board and
will be at the absolute discretion of the Board, and not at the
option of the Shareholders.
This authority will lapse on the date of the Company's next
annual general meeting. Subject to Shareholder authority for
proposed repurchases, general purchases of up to 14.99 per cent of
the Ordinary Shares in issue will only be made through the
market.
The minimum price (exclusive of expenses) which may be paid for
an Ordinary Share is GBP0.01 per share and the maximum price
(exclusive of expenses) which may be paid for an Ordinary Share
shall be not more than five per cent above the average of the
middle market quotation for the Ordinary Shares for the five
business days before the purchase is made.
Any repurchase by the Company of 15 per cent or more of any
class of its shares (excluding shares of that class held in
treasury) will be effected by way of a tender offer to all
Shareholders of that class.
When Ordinary Shares trade at a substantial discount to the NAV
per Ordinary Share and do not coincide with trading volumes in the
market, the Directors may feel that it is appropriate to make such
purchases.
Shareholders' significant interests
The following shareholders had a substantial interest either
directly or beneficially of 3% or more of the Company's issued
share capital as at 31 March 2017.
Ordinary % of the
shares Ordinary
Shareholder/ Nominee Account held Share capital
Hargreave Hale Limited 7,500,000 16.53%
Partners Value Investment Inc. 4,375,000 9.64%
AXA Investment Managers 3,750,000 8.26%
Charles Cannon-Brookes* 2,765,882 6.10%
Walker Crips 2,000,000 4.41%
Artemis Investment Management
Plc 1,705,543 3.76%
Neil Johnson** 1,660,000 3.66%
Henderson Global Investors
Ltd 1,500,000 3.31%
*Of these, 1,357,365 shares are legally owned by Arlington Group
Asset Management Limited
** Of these, 500,000 shares are legally owned by Abingdon
Capital Corporation
Relations with Shareholders
The Directors place a great deal of importance on communication
with shareholders. The Annual Report and Consolidated Financial
Statements are widely distributed to other parties who have an
interest in the Company's performance. Shareholders and investors
may obtain up to date information on the Company through the
Company's website.
The Notice of the Annual General Meeting included within the
Annual Report and Consolidated Financial Statements is sent out 20
working days in advance of the meeting. All shareholders have the
opportunity to put questions to the Board formally at the Company's
Annual General Meeting. The Company Secretary and representatives
from Arlington Group Asset Management Limited and Abingdon Capital
Corporation are available to answer general queries.
Corporate governance
The Board of Directors is responsible for the corporate
governance of the Company. As a Guernsey incorporated company and
under the AIM Rules for Companies, the Company is not required to
comply with The UK Corporate Governance Code published by the
Financial Reporting Council ("UK Code"). However, the Directors
place a high degree of importance on ensuring that high standards
of Corporate Governance are maintained and as such the Company is
committed to complying with the corporate governance obligations
appropriate to the Company's size and nature of business. The
Company does not, nor does it intend to, adopt the UK Code.
As a Guernsey incorporated company, the Company is required to
comply with the Finance Sector Code of Corporate Governance issued
by the Guernsey Financial Services Commission ("GFSC Code")
introduced on 1 January 2012.
The Board
The Board, whose membership, and where relevant independence, is
disclosed above, meets at least four times a year. Between the
formal meetings there was regular contact with the Support Services
Providers, the Company Secretary and the Investment Committee. The
Directors are kept fully informed of investment and financial
controls, and other matters that are relevant to the business of
the Company and should be brought to the attention of the
Directors. The Directors also have access to the Administrator and,
where necessary in the furtherance of their duties, to independent
professional advice at the expense of the Company. The Board is
responsible for the appointment and monitoring of all service
providers to the Company.
The Board has engaged specific individuals and external
companies to undertake the investment management, administrative
and custodial activities of the Company. Clear documented
contractual arrangements are in place with these individuals and
firms, which define the areas where the Board has delegated
responsibility to them.
It remains the responsibility of the Board to assess whether the
outsourced activities are being performed adequately, to ensure
that the Company has adequate resources and to establish
procedures, including compliance plans, to be able to monitor the
performance of third parties performing the outsourced activities.
The Directors believe that the Board has a balance of skills and
experience which enables it to perform these assessments, to
provide effective strategic leadership and proper governance of the
Company. The Board has considered non-financial areas of risk such
as disaster recovery and staffing levels within service providers
and considers adequate arrangements to be in place.
At the quarterly Board Meetings going forward the Board will
meet regularly with the Investment Committee to review strategy and
deal flows.
The Company maintains insurance in respect of directors' and
officers' liability in relation to their acts on behalf of the
Company. Suitable insurance is in place and has been renewed for
the period until 30 November 2017.
Annual Report and Financial Statements
The Board of Directors are responsible for preparing the Annual
Report and Financial Statements. The Audit Committee advises the
Board on the form and content of the Annual Report and Financial
Statements, any issues which may arise and any specific areas which
require judgement.
Internal control and financial reporting
The Board is responsible for establishing and maintaining the
Group's system of internal controls. Internal control systems are
designed to meet the specific needs of the Group and the risks to
which it is exposed, and, by their very nature, provide reasonable,
but not absolute, assurance against material misstatement or
loss.
The key components designed to provide effective internal
control are outlined below:
-- Trident Trust Company (Guernsey) Limited ("TT") was
responsible for the provision of administration and company
secretarial duties for the period under review;
-- The duties of managing the Company's royalty investments,
administration / company secretarial and accounting are segregated.
The procedures are designed to complement one another; and
-- The Board reviews financial information and compliance
reports produced by the Administrator on a regular basis.
The Board reviews the Group's risk management and internal
control systems quarterly and are satisfied that the controls are
satisfactory, given the size and nature of the Group.
Audit Committee
The Company's audit committee comprises Jim Ryan (Chairman),
Nigel Birrell and Mark Le Tissier. The Audit Committee's main
functions include, inter alia, reviewing the effectiveness of
internal control systems and risk assessment, considering the need
for an internal audit, making recommendations to the Board in
relation to the appointment and remuneration of the Company's
auditors and monitoring and reviewing annually their independence,
objectivity, effectiveness and qualifications. The Audit Committee
will also monitor the integrity of the financial statements of the
Company including its annual and interim reports, announcements and
any other formal announcement relating to financial performance.
The Audit Committee will be responsible for overseeing the
Company's relationship with the external auditors, including making
recommendations to the Board on the appointment of the external
auditors and their remuneration. The Audit Committee will consider
the nature, scope and results of the auditors' work and reviews,
and develop and implement policy on the supply of non-audit
services that are to be provided by the external auditors. The
Audit Committee will focus particularly on compliance with legal
requirements, accounting standards and the relevant AIM Rules for
Companies and ensuring that an effective system of internal
financial and non-financial controls is maintained. The ultimate
responsibility for reviewing and approving the annual report and
accounts will remain with the Board. The identity of the Chairman
of the Audit Committee will be reviewed on an annual basis and the
membership of the Audit Committee and its terms of reference will
be kept under review. The Audit Committee will have no links with
the Company's external auditors.
Investment committee
The Investment Committee which is made up of members nominated
by the Company and by Oliver Wyman and currently includes one
independent member (Mr. Andrew Carragher). The current members of
the Investment Committee are Neil Johnson, Executive Director and
Chief Executive Officer of Duke Royalty; Jim Webster, Chief
Investment Officer of Duke Royalty, Justin Cochrane, Executive Vice
President of Corporate Development of Abingdon Capital Corporation;
David Campbell, Partner in the Health & Life Sciences practice
of Oliver Wyman; John Romeo, Managing Partner for North America and
Global Head of Corporate Finance and Restructuring at Oliver Wyman;
Andrew Chadwick-Jones, Partner at Oliver Wyman's London office,
specialising in health delivery systems and Andrew Carragher, a
founder and Managing Partner of DW Healthcare Partners, a private
equity firm founded in 2002 with over $750 million under
management.
The Investment Committee is responsible for reviewing the
pipeline of all proposed opportunities; assisting and advising on
royalty terms; identifying and managing potential conflicts of
interests; assessing the individual capital requirements for each
potential opportunity; making recommendations to the Board and
reviewing the performance and outlook of the portfolio.
The Investment Committee has no power to bind the Company to any
potential transaction, and the Company is not bound to follow any
advice or recommendation of the Investment Committee. Every
proposed Royalty Financing will be decided by the Board.
Anti-bribery and corruption
The Board acknowledges that the Group's international operations
may give rise to possible claims of bribery and corruption. In
consideration of the UK Bribery Act the Board reviews the perceived
risks to the Group arising from bribery and corruption to identify
aspects of the business which may be improved to mitigate such
risk. The Board has adopted a zero tolerance policy toward bribery
and has reiterated its commitment to carry out business fairly,
honestly and openly.
Financial risk profile
The Group's main financial instruments comprise royalty
investments and cash. The main purpose of these instruments is the
investment of Shareholders' funds. The most significant risks that
these instruments are subject to are discussed in note 16 to the
Consolidated Financial Statements.
Environment
The Group seeks to conduct its affairs responsibly and
environmental factors are, where appropriate, taken into
consideration with regard to investment decisions taken on behalf
of the Company.
Going Concern
After making all reasonable enquires the Directors believe that
it is appropriate to continue to adopt the going concern basis in
preparing the Consolidated Financial Statements as the Company has
adequate financial resources to continue in operational existence
for the foreseeable future.
Independent Auditor
The auditor, BDO Limited, has indicated its willingness to
continue in office. Accordingly, a resolution for its reappointment
will be proposed at the forthcoming Annual General Meeting. The
external auditors are required to rotate the audit engagement
partner responsible for the company audits every five years and the
completion of this audit is the fifth for the current engagement
partner. In certain circumstances where there has recently been, or
will soon be, a substantial change to the entity's business it is
permitted under the FRC's Ethical Standard to extend that tenure by
up to two years in order to safeguard audit quality. In light of
this the Board has determined, with the agreement of BDO Limited,
that it is necessary for the current audit engagement partner to
continue with his role for a sixth year, given his detailed
understanding of the operations and systems at Duke Royalty which
we believe are important at a time of significant change for the
company given the recent changes to the Company's Investment
Strategy to a Royalty Financing Business along with the recent
change in the Company's administrator.
Approved by the Board of Directors on 21 June 2017 and signed on
behalf of the Board by:
Nigel Birrell Charles Cannon-Brookes
Director Director
Independent Auditor's Report to the Members of Duke Royalty
Limited
We have audited the consolidated financial statements of Duke
Royalty Limited for the year ended 31 March 2017 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of
Financial Position, the Consolidated Statement of Cash Flows and
the related notes 1 to 17. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards as endorsed by the
European Union (IFRS).
This report is made solely to the company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work is undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of the directors and auditor
As explained more fully in the Directors' Responsibilities
Statement within the Directors' Report, the directors are
responsible for the preparation of the consolidated financial
statements and for being satisfied that they give a true and fair
view.
Our responsibility is to audit and express an opinion on the
consolidated financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all
the financial and non--financial information in the annual report
to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If
we become aware of any apparent misstatements or inconsistencies we
consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2017 and of the group's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the parent company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and
explanations, which, to the best of our knowledge and belief, are
necessary for the purposes of our audit.
CHARTERED ACCOUNTANTS
Place du Pré
Rue du Pré
St Peter Port
Guernsey
21 June 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2017
Year ended Year ended
31 March 2017 31 March 2016
Notes GBP GBP
Income
Net capital loss on financial assets at fair value through profit or loss 4 - (2,402,040)
Investment income 4 - -
Net investment losses - (2,402,040)
--------------- ---------------
Expenses
Support services administration fees 5a (487,945) (692,333)
Directors' fees 15 (218,000) (255,252)
Restructuring costs (15,072) (137,569)
Consultancy fees (127,396) (101,139)
Directors' expenses 15 (82,174) (63,439)
Investment advisory committee fees 15 (60,000) (44,425)
Administration fees 5b (46,500) (36,000)
Marketing costs (11,758) (33,029)
Audit fees (28,000) (32,250)
Other expenses 6 (38,501) (30,876)
Broker fees 5c - (26,055)
Nomad fees 5d (29,421) (17,773)
Registrar fees 5e (9,350) (17,604)
Custodian fees - (4,121)
Foreign currency loss - (291)
Aborted deal fees (95,025) -
Reverse takeover fees (68,468) -
Other legal and professional fees (85,060) -
Total expenses (1,402,670) (1,492,156)
--------------- ---------------
Operating loss (1,402,670) (3,894,196)
Finance income 44 646
Finance costs (1,956) (153,066)
Loss for the financial year (1,404,582) (4,046,616)
Total comprehensive expense for the year (1,404,582) (4,046,616)
=============== ===============
Basic and diluted deficit per share (pence) 8 (0.16) (0.65)
=============== ===============
All activities derive from continuing operations. All income is
attributable to the holders of the Ordinary Shares of the
Company.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2017
Shares Warrants
Notes Issued Issued Retained Losses Share Option Reserve Total Equity
GBP GBP GBP GBP GBP
At 1 April 2016 27,064,815 72,454 (25,191,366) 124,412 2,070,315
Total comprehensive expense
for the year - - (1,404,582) - (1,404,582)
Transactions with owners
Shares issued
- Share based payments 11b 447,575 447,575
* Warrants lapsed (72,454) 72,454, - -
- Transaction costs (1,159,721) - - - (1,159,721)
- Issued for cash 10 14,552,425 - - - 14,552,425
Total transactions with
owners 13,840,279 (72,454) 72,454 - 13,840,279
------------ --------- ---------------- --------------------- -------------
At 31 March 2017 40,905,094 - (26,523,494) 124,412 14,506,012
============ ========= ================ ===================== =============
At 1 April 2015 24,208,640 72,454 (21,144,750) - 3,136,344
Total comprehensive expense
for the year - - (4,046,616) - (4,046,616)
Transactions with owners
Shares issued
- Share based payments 400,000 - - - 400,000
Shares bought back and
cancelled 2,456,175 - - - 2,456,175
Share options - - - 124,412 124,412
Total transactions with
owners 2,856,175 - - 124,412 2,980,587
------------ --------- ---------------- --------------------- -------------
At 31 March 2016 27,064,815 72,454 (25,191,366) 124,412 2,070,315
============ ========= ================ ===================== =============
Consolidated Statement of Financial Position
As at 31 March 2017
31 March 2017 31 March 2016
Notes GBP GBP
ASSETS
Non-Current Assets
Investments at fair value through profit or loss 4 - -
Total non-current assets - -
Current Assets
Trade and other receivables 13 381,467 519,737
Cash and cash equivalents 14,350,154 1,625,749
Total current assets 14,731,621 2,145,486
Total Assets 14,731,621 2,145,486
============== ==============
EQUITY AND LIABILITIES
Equity
Shares issued 10 40,905,094 27,064,815
Warrants issued 10 - 72,454
Share options 11a 124,412 124,412
Retained losses (26,523,494) (25,191,366)
Total Equity 14,506,012 2,070,315
Liabilities
Current Liabilities
Trade and other payables 14 225,609 75,171
Total current liabilities 225,609 75,171
Total Equity and Liabilities 14,731,621 2,145,486
============= =============
Consolidated Statement of Cash Flows
For the year ended 31 March 2017
Year ended Year ended
31 March 2017 31 March 2016
Notes GBP GBP
Cash flows from operating activities
Proceeds from sale of investments 12 516,535 1,165,158
Interest and investment income 44 646
Operating expenses paid (1,255,997) (929,708)
Investment costs incurred (31,500) -
Net cash (outflow) / inflow from operating activities (770,918) 236,096
Cash flows from financing activities
Proceeds from issue of shares 10 14,209,425 2,456,175
Share issues costs (712,146) -
Repayment of loan - (1,688,133)
Finance costs paid (1,956) (153,066)
Escrow payments under loan agreement - 257,080
Net cash inflow from financing activities 13,495,323 872,056
Net change in cash and cash equivalents 12,724,405 1,108,152
Cash and cash equivalents at beginning of year 1,625,749 517,597
Cash and cash equivalents at end of year 14,350,154 1,625,749
=============== ===============
The notes below form an integral part of these Consolidated
Financial Statements.
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
Duke Royalty Limited (the "Company") is a closed-ended
investment company with limited liability formed under the
Companies (Guernsey) Law, 2008. The Company was incorporated in
Guernsey on 22 February 2012 and its shares were admitted to
trading on the London Stock Exchange's AIM on 9 July 2012. The
Company's registered office is shown on page 38.
The Company's investing policy is to invest in a diversified
portfolio of royalty finance and related opportunities.
The Company's shares are traded on AIM, a market operated by the
London Stock Exchange.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The Consolidated Financial Statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") to the extent that they have been adopted by the
European Union, and reflect the following policies, which have been
adopted and applied consistently.
b) Basis of consolidation
Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
The "Group" is defined as the Company and its subsidiary Duke
Royalty UK Limited. Duke Royalty UK Limited has been dormant since
incorporation. In the prior year the Group included Praetorian ZDP
Limited and Praetorian Resources (GP) Limited which were dissolved
on 16 May 2016
As at 31 March 2017, the Company has prepared consolidated
financial statements for the Group for the year.
c) New and amended standards and interpretations
The accounting policies adopted in the year are consistent with
those of the previous financial period, with the exception of new
standards that have become effective during the year. Although
there were a number of new standards and interpretations that apply
for the first time for this year end, none of these had any
significant impact on the Consolidated Financial Statements.
At the date of authorisation of these Consolidated Financial
Statements, the following standards and interpretations, which will
become relevant to the Group but have not been applied in these
Consolidated Financial Statements, were in issue but not yet
effective:
IFRS 9, "Financial Instruments - Classification and Measurement"
(effective 1 January 2018 as set by IASB).
IFRS 7, Financial Instruments Disclosures - Amendments regarding
initial application of IFRS 9 - effective for when IFRS 9 is
applied for periods commencing after 1 January 2018.
IFRS 15, Revenue from contracts with customers - effective for
periods commencing after 1 January 2018.
These standards will be adopted by the Group when they become
effective. The Directors anticipate that the adoption of these
standards and interpretations in future periods will require
additional disclosures but are not expected to have a material
impact on the Consolidated Financial Statements of the Group.
The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet
effective.
d) Foreign currency
Items included in the Consolidated Financial Statements of the
Group are measured using the currency of the primary economic
environment in which the entity operated ("the functional
currency"). The Consolidated Financial Statements are presented in
Pounds Sterling (GBP), which is the Group's functional and
presentation currency.
Transactions in currencies other than Sterling are translated at
the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the date of the Consolidated Statement of Financial Position are
retranslated into Sterling at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the Consolidated Statement of Comprehensive
Income.
Non-monetary assets and liabilities that are measured in terms
of historical cost in a foreign currency are translated using the
rate of exchange at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated into Sterling at foreign
exchange rates ruling at the dates the fair value was
determined.
e) Financial instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument. Financial
assets and financial liabilities are only offset and the net amount
reported in the Consolidated Statement of Financial Position and
Consolidated Statement of Comprehensive Income when there is a
currently enforceable legal right to offset the recognised amounts
and the Group intends to settle on a net basis or realise the asset
and liability simultaneously.
Financial assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics. All financial assets are initially
recognised at fair value. All purchases of financial assets are
recorded at trade date, being the date on which the Group became
party to the contractual requirements of the financial assets. The
Group has not classified any of its financial assets as Held to
Maturity or as Available for Sale. The Group's financial assets
comprise loans and receivables and investments held at fair value
through profit or loss.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
principally comprise other receivables and cash and cash
equivalents. They are initially recognised at fair value on
acquisition, and subsequently carried at amortised cost using the
effective interest rate method, less any provision for
impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments with an
original maturity of three months or less that are readily
convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Financial assets at fair value
Classification
The Group classifies its investments as "financial assets at
fair value". These financial assets are designated by the Group at
fair value through profit or loss at inception.
Recognition
Purchases and sales of investments are recognised on the trade
date, the date on which the Group commits to purchase or sell the
investment.
Measurement
Financial assets at fair value are initially recognised at cost,
being the fair value of consideration given. Subsequent to initial
recognition, all financial assets at fair value through profit or
loss are measured at fair value. Gains and losses arising from
changes in the fair value of the 'financial assets at fair value'
category are presented in the Statement of Comprehensive Income in
the period in which they arise.
Fair value estimation
Marketable (Listed) Securities - where an active market exists
for the securities, the value is stated at the bid price on the
last trading day in the period. Marketability discounts are not
applied unless there is some contractual, governmental or other
legally enforceable restriction preventing realisation at the
reporting date.
Unlisted Investments - are carried at such fair value as the
Directors consider appropriate given the performance of each
investee company and after considering the financial position of
the entity, latest news and developments.
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).
All investments at fair value through profit and loss are
measured as level three investments except one unlisted warrant
which has no movements or value is measured at level two (note
4).
Derecognition of financial assets
A financial asset (in whole or in part) is derecognised either
(i) when the Group has transferred substantially all the risks and
rewards of ownership; or (ii) when it has neither transferred nor
retained substantially all the risks and rewards and when it no
longer has control over the assets or a portion of the asset; or
(iii) when the contractual right to receive cash flow has expired.
Any gain or loss on derecognition is taken to the Consolidated
Statement of Comprehensive Income as appropriate.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All financial liabilities are initially recognised at fair
value. All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of financial
liabilities measured at amortised cost.
Financial liabilities measured at amortised cost
These include loans and borrowings, payables and other
short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost using the
effective interest rate method.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
Consolidated Statement of Comprehensive Income.
Capital
Financial instruments issued by the Group are treated as equity
if the holder has only a residual interest in the assets of the
Group after the deduction of all liabilities. The Company's
Ordinary Shares are classified as equity instruments.
The Group considers its capital to comprise its Ordinary Share
Capital and retained earnings.
Equity instruments
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction from proceeds.
Share based payments
The Group operates an equity settled Share Option Plan for its
directors and key advisers. As the shares issued vest immediately
the Group recognised the full expense within the Statement of
Comprehensive Income with the corresponding amount recognised in a
share option reserve in the year ended 31 March 2016. There were no
additional share options awarded during the year. The key inputs
into the model are disclosed in note 11.
The Group also settles a portion of expenses by way of share
based payments, these expenses are settled based on the fair value
of the service received as an expense with the corresponding amount
increasing equity. During the year all share based payments were as
a result of the fundraise and therefore the net impact on share
capital was nil.
e) Income
Interest income is recognised on a time apportioned basis using
the effective interest method.
f) Expenses
Expenses are accounted for on an accrual basis.
g) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Group's performance and to allocate resources is the total
return on the Group's net asset value, as calculated under IFRS,
and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in these
Financial Statements.
For management purposes, due to the Company's restructure and
change in investing policy, the Company is now focused on one main
operating segment, which is to invest in a diversified portfolio of
royalty finance and related opportunities. At the year end the
Company has no investments into this segment and has derived no
income from it. All of the Group's income was derived from its
previous investing policy and main operating segment which was to
invest in natural resources stocks, which are located in various
jurisdictions. Due to the Group's nature it has no customers.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Consolidated Financial Statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies
and the reported amounts of assets and liabilities, income and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about the carrying values of
assets and liabilities that are not readily apparent from other
sources. 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 revision and future
periods, if the revision affects both current and future
periods.
Fair value of unlisted investments
In the process of applying the Group's accounting policies,
management has followed the same judgements as prior year, which
had the most significant effects on the amounts recognised in the
prior year's Consolidated Financial Statements:
The Group uses valuation techniques that include inputs that are
not based on the observable market data to estimate the fair value
of its unlisted investments. Significant judgement has been applied
by the directors when valuing these investments.
In the year ended 31 March 2016, for one investment the
directors applied a full discount to unaudited NAV of USD 484,455.
In forming this conclusion, the Directors took into account all
available information including; the NAV which included significant
projects that were not valued since 2011, the decline in the market
since the latest audited NAV values of 2012, projects not being
able to be realised despite efforts to secure sales, the
illiquidity of the investment and restriction over sale from the
debenture holder. In addition the projects were not income
generating and there was a significant interest payable on the
loan. There have been no changes in circumstances during the year
ended 31 March 2017.
Two of the Company's other unlisted investments were listed on
the Toronto Stock exchange until 17 September 2014 and 25 September
2015 respectively after which the investments were suspended. The
final investment was an unlisted warrant that after using the Black
Scholes valuation method was carried at nil value. The directors
applied a 100% discount to the latest traded prices of both
investments. The last traded prices of the holdings were GBP176,652
and GBP50,970 respectively.
The Directors believe that the applied valuation techniques and
assumptions used are appropriate in determining the fair value of
unlisted investments. Further details are provided in Note 4.
4. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
For the year ended 31 March 2017 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Opening Cost - - 4,564,793 4,564,793
Cost change - - - -
Disposals proceeds - - - -
Net realised loss on disposal of investments - - - -
------------- --------- ------------ -------------
Closing portfolio cost - - 4,564,793 4,564,793
Net accumulated unrealised loss on investments - - (4,564,793) (4,564,793)
Closing valuation - - - -
============= ========= ============ =============
Movement in net unrealised gain on investments - - - -
Net realised loss on disposal of investments - - - -
------------- --------- ------------ -------------
Net capital gain on fair value of financial assets
designated at fair value through profit
or loss - - - -
Investment income - - - -
------------- --------- ------------ -------------
Total gains on financial assets at fair value through
profit or loss - - - -
============= ========= ============ =============
For the year ended 31 March 2016 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Opening Cost 17,631,398 82,119 3,094,348 20,807,865
Transfer to level 3 161,355 - - 161,355
Additions at cost (1,470,445) - 1,470,445 -
Disposals proceeds (1,599,574) (82,119) - (1,681,693)
Net realised loss on disposal of investments (14,722,734) - - (14,722,734)
------------- --------- ------------ -------------
Closing portfolio cost - - 4,564,793 4,564,793
Net accumulated unrealised loss on investments - - (4,564,793) (4,564,793)
Closing valuation - - - -
============= ========= ============ =============
Movement in net unrealised loss on investments 13,877,198 2,267 (1,558,771) 12,320,694
Net realised loss on disposal of investments (14,722,734) - - (14,722,734)
------------- --------- ------------ -------------
Net capital loss on fair value of financial assets
designated at fair value through profit
or loss (845,536) 2,267 (1,558,771) (2,402,040)
Investment income - - - -
------------- --------- ------------ -------------
Total losses on financial assets at fair value through
profit or loss (845,536) 2,267 (1,558,771) (2,402,040)
============= ========= ============ =============
Financial assets designated at fair value through profit or loss
("financial assets"), are analysed by using a fair value hierarchy
that reflects the significance of inputs. Valuation techniques used
in the determination of fair values, including the key inputs used,
are as follows:
Fair value hierarchy level Valuation techniques
Level 3 The fair value of investments in the three unlisted
entities is derived by applying a discount rate, as deemed
appropriate by the Board. All of the Company's investments held at
fair value through profit or loss are valued at Level 3 except one
unlisted warrant which has no movements or value is measured at
level two.
The board do not consider there to be any future cash flows from
the investments and as such no sensitivity analysis has been
performed.
For financial instruments that are recognised at fair value on a
recurring basis, the Board determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period.
During the year to 31 March 2017 there were no transfers between
Level 1 to Level 3.
5. MATERIAL AGREEMENTS
(a) Support services
The Group has a Support Service Agreement with Abingdon Capital
Corporation ("Abingdon") whereby services to be provided by
Abingdon include global deal origination, vertical partner
relationships and on-going investment management, including
preparation of investment reports, performance data and compliance
with the Company's investing policy. During the year, Abingdon was
entitled to an annual service fee of GBP280,000. This annual fee
will be voluntarily reduced to GBP196,000 per annum with effect
from 1 April 2017. In addition to the Service Fee, Abingdon shall
have the right from time to time to be issued and allotted up to
1,500,000 ordinary shares of no par value in the Company following
the conditions noted below.
-- each time an investment originating from Abingdon is
completed, Abingdon shall be entitled to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 5% x A/B
-- to the extent that an investment does not originate from
Abingdon but Abingdon assists the Company in the negotiation and
completion of such investment, Abingdon shall be entitled, upon
completion of such Investment, to be issued such number of
Incentive Shares (rounded down to the nearest whole number) as is
equal to 2.5% x A/B.
For the purposes of the calculation "A" is the gross value of
the investment and "B" is either: (i) if the Investment is financed
(in whole or in part) through an offering of ordinary shares of no
par value in the capital of the Company, the price per share at
which such ordinary shares are offered, or (ii) if the Investment
is financed by any other means, the weighted average closing price
on AIM of the ordinary shares for the 20 Business Days immediately
preceding the completion of the Investment. As there have been no
investments during the year the clause has had no impact on this
year's financial statements.
In the prior year for their significant contributions of efforts
in and incurred costs and expenses towards the elaboration,
development and implementation of the Company's new investing
policy and underlying business model, Abinvest Corporation, a
wholly owned subsidiary of Abingdon, received an allotment of
500,000 Ordinary Shares of no par value in the Company as bonus
shares, equating to a value of GBP250,000. This was accounted for
in the Consolidated Statement of Comprehensive Income under
expenses / support services fees (GBP250,000 of the total support
service fee of GBP692,333).
The total charge to the Consolidated Statement of Comprehensive
Income for Abingdon was GBP382,702 which includes GBP102,702 of
disbursed costs (2016: GBP168,853). There were no outstanding
amounts at the end of the year (2016: GBPnil).
The Group has a Support Service Agreement with Arlington Group
Asset Management Limited ("Arlington") whereby the services to be
provided by Arlington include global deal origination, vertical
partner relationships and on-going investment management, including
preparation of investment reports, performance data and compliance
with the Company's investing policy. Arlington was entitled to an
annual service fee of GBP95,000 per annum. The annual fee will be
voluntarily reduced to GBP24,000 per annum from 1 April 2017.
The total charge to the Consolidated Statement of Comprehensive
Income for Arlington was GBP105,243 of which includes GBP10,243 of
disbursed costs (2016: GBP112,021). There were no outstanding
amounts at the end of the year (2016: GBPnil).
(b) Administration fees
Trident Trust Company (Guernsey) Limited were appointed as
Administrator on 1 April 2016. They were entitled to receive a
fixed fee of GBP36,000 per annum, quarterly in arrears, for
administration of the Company, as set out in the Administration
Agreement. The total charge to the Consolidated Statement of
Comprehensive Income was GBP36,000 with no outstanding balance at
the end of the year (2016: GBPnil).
In the prior year R&H Fund Services (Guernsey) Limited was
the Administrator up to 31 March 2016. They were entitled to
receive a fixed fee of GBP36,000 per annum, quarterly in arrears,
for administration of the Group, as set out in the Administration
Agreement. The total charge to the Consolidated Statement of
Comprehensive Income was GBP10,500 (2016: GBP36,000) for handover
costs of which GBPnil was outstanding at the end of the year (2016:
GBP9,000).
(c) Corporate broker fees
On 18 January 2016 Peel Hunt LLP ("Peel") was appointed to act
as the Company's Broker and Nominated Advisor. Peel resigned on 9
January 2017 and no fee was paid or due to them during the year
(2016: GBP6,608). Cantor Fitzgerald Europe and Mirabaud Securities
LLP were appointed as the Company's new Brokers. Cantor Fitzgerald
Europe received GBP154,010 and Mirabaud Securities LLP received
shares to the value of GBP226,397 for fees in relation to the
shares issued in March 2017. There were no outstanding fees at the
end of the year (2016: GBPnil).
(b) Nominated adviser fees
On 18 January 2016 Peel Hunt LLP ("Peel") was appointed by the
Company to act as Nominated Adviser and Broker to the Company for
the purpose of the AIM Rules for Companies. Peel was entitled to an
annual fee of GBP30,000, payable quarterly in advance. Peel
resigned on 9 January 2017 and Grant Thornton UK LLP ("Grant
Thornton") were reappointed as Nominated Advisor effective from 10
January 2017. Grant Thornton is entitled to GBP30,000 per annum.
The total charge for Peel Hunt LLP was GBP22,755 (2016: GBPnil),
the total charge for Grant Thornton to the Consolidated Statement
of Comprehensive Income was GBP6,666 (2016: GBP17,773). There were
no amounts outstanding at the end of the year (2016: GBPnil).
(c) Registrar fees
The Company is party to an Offshore Registrar Agreement with
Computershare Investor Services (Guernsey) Limited (the
"Registrar") dated 30 March 2012, pursuant to which the Registrar
will provide registration services to the Company which will
entail, among other things, the Registrar having responsibility for
the transfer of shares, maintenance of the share register and
acting as transfer and paying agent. For the provision of such
services, the Registrar is entitled to receive a minimum annual fee
of GBP5,500. The total charge to the Consolidated Statement of
Comprehensive Income was GBP9,350 (2016: GBP17,604), there were no
amount outstanding at the end of the year (2016: GBPnil).
6. OTHER EXPENSES
Year ended Year ended
31 March 2017 31 March 2016
GBP GBP
Sundry expenses 1,900 10,677
Insurance premiums 11,640 10,718
Listing fees 24,961 9,481
38,501 30,876
=============== ===============
7. TAXATION
The Company has been granted exemption from Guernsey taxation
and is charged an annual exemption fee of GBP1,200.
8. DEFICIT PER SHARE
Year ended Year ended
Basic and diluted deficit per ordinary share 31 March 2017 31 March 2016
GBP GBP
Loss for the year (1,404,582) (4,046,616)
Weighted average number of Ordinary Shares in issue 8,874,766 6,188,379
--------------- ---------------
Deficit Per Share (pence) (0.16) (0.65)
=============== ===============
The deficit per share is based on the Group loss for the year
and on the weighted average number of Ordinary Shares in issue for
the year. The share options in issue are not dilutive at the year
end but could become dilutive in future periods. For more details
on the share options see note 11.
9. DIVIDS
No dividend was declared or paid in respect of the year ended 31
March 2017 (2016: GBPnil).
10. SHARES ISSUED
Number of Warrants Number of ordinary Shares in issue GBP
Authorised
Unlimited number of shares of no par
value - - -
------------------- ----------------------------------- ------------
Allotted, called up and fully paid:
As at 1 April 2016 363,196 7,877,459 27,137,269
Shares issued for cash during the year - 36,381,062 14,552,425
Share based payments - 1,118,938 447,575
Warrants lapsed (396,196) - (72,454)
Transaction costs - - (1,159,721)
As at 31 March 2017 - 45,377,459 40,905,094
=================== =================================== ============
On 23 March 2017 the Company issued 37,500,000 new ordinary
shares at 40 pence per ordinary share enlarging the issued share
capital of the Company to 45,377,459 Ordinary Shares. The proceeds
of GBP14,552,425 from the issuance of these new ordinary shares
provided additional working capital for the Company. Out of these
45,377,459 issued shares, 565,993 were awarded to Mirabaud
Securities LLP for services performed as Broker and 552,945 were
awarded to CED Capital for compensation for funds raised. At the
end of the year GBP343,000 of share issued remained outstanding and
are included in debtors.
Warrants
363,196 warrants with an exercise price of GBP4.13 expired 29
October 2016. GBP72,454 representing the value of the warrants was
reclassified to reserves.
11. SHARE BASED PAYMENTS
a) Share Options
The Company operates a share option scheme ("the Scheme").
The Scheme was established to incentivise directors, staff and
certain 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 10 per cent of
the Company's Ordinary Shares in issue from time to time.
The Company also operates an equity settled share based scheme
for directors and specified consultants. Options vest immediately
and will lapse 5 years from the date of grant.
Weighted
average exercise
price in
pence Number
Outstanding 1 April 2016 75 760,000
Granted during the year - -
Forfeited during the year - -
Exercised during the year - -
Lapsed during the year - -
Outstanding at 31 March 2017 75 760,000
Weighted
average exercise
price in
pence Number
Outstanding 1 April 2015 - -
Granted during the year 75 760,000
Forfeited during the year - -
Exercised during the year - -
Lapsed during the year - -
Outstanding at 31 March 2016 75 760,000
The exercise price of options outstanding at 31 March 2017 was
75 pence and their weighted average contractual life was 5 years
(2016: 75 pence).
Of the total number of options outstanding at 31 March 2017,
760,000 (2016: 760,000) had vested and were exercisable.
The following information is relevant in the determination of
the fair value of options granted during the prior year under the
equity-settled share based remuneration schemes operated by the
Company.
Equity settled share based payment
Option pricing model used Black Scholes
Weighted average share price at grant 58.50 Pence
Weighted average contractual life in
days 1,619
Expected volatility 40%
Dividends growth rate 0%
Risk free rate 1.27%
The volatility assumption, measured at the standard deviation of
expected share price returns, is based on a statistical analysis of
daily share prices for comparable companies over the last three
years.
The total share based remuneration expenses charged to the
Consolidated Statement of Comprehensive Income statement is as
follows:
31 March 2017 31 March 2016
GBP GBP
Directors' fees - 55,658
Consultancy fees - 34,377
Investment advisory committee fees - 22,918
Support services administration fees - 11,459
Total - 124,412
================ ==============
b) Other Share Based Payments
31 March 2017 31 March 2016
GBP GBP
CED Capital 221,178 -
Abington Capital Corporation - 250,000
Justin Cochrane - 150,000
Mirabaud Securities LLP 226,397 -
447,575 400,000
============== ==============
During the current year 565,993 shares were awarded to Mirabaud
Securities LLP for services performed as Broker in relation to the
shares issued in March 2017 and 552,945 shares were awarded to CED
Capital. These are included within the share issue costs (note 10).
The share based payments to Abingdon Capital Corporation and Justin
Cochrane were charged to the Consolidated Statement of
Comprehensive Income in support services administration fees (see
note 5a).
The total share based payments expenses charged to the
Consolidated Statement of Comprehensive Income comprise of broker
fees for Mirabaud Securities LLP and CED Capital incurred during
the year, which was an equity settled payment totalled GBP447,575
have been capitalised during the year against shares issued. Refer
to note 10.
31 March 2017 31 March 2016
GBP
Directors' fees - 55,658
Consultancy fees - 34,377
Investment advisory committee fees - 22,918
Support services administration fees - 411,459
Total - 524,412
================ ==============
12. RETAINED EARNINGS
Pursuant to the Companies (Guernsey) Law, 2008 (as amended), all
reserves (including share capital) can be designated as
distributable. However, in accordance with the Admission Document,
the Company shall not make any distribution of capital profits or
capital reserves except by means of capitalisation issues in the
form of fully paid Ordinary Shares or issue securities by way of
capitalisation of profits or reserves except fully paid Ordinary
Shares issued to the holders of its Ordinary Shares.
13. TRADE AND OTHER RECEIVABLES
31 March 2017 31 March 2016
GBP GBP
Prepayments and accrued income 6,967 3,202
Unsettled trades - 516,535
Investments costs incurred 31,500 -
Proceeds due from share issuance (Note 10) 343,000 -
381,467 519,737
============== ==============
14. TRADE AND OTHER PAYABLES
31 March 2017 31 March 2016
GBP GBP
Investments costs incurred 31,500 -
Audit fees 25,000 25,000
Administration fees (note 5b) - 9,000
Directors fees and expenses (note 15) 35,616 31,171
Investment committee fees (note 15) - 10,000
Consultancy fees 133,493 -
225,609 75,171
============== ==============
15. RELATED PARTIES
Mr Mark Le Tissier, a Director of Trident Trust Company
(Guernsey) Limited has waived his entitlement to a fee in relation
to being director of the Company.
Directors were entitled to the following remuneration during the
year;
Charge for Charge for Outstanding at Outstanding
Entitlement year to year to year end at year end
per annum 31/03/2017 31/03/2016 31/03/2017 31/03/2016
GBP GBP GBP GBP GBP
Robert King * 27,500 - 25,208 - 4,583
Neil Johnson 100,000 100,000 95,082 - 8,755
Charles
Cannon-Brookes 70,000 70,000 69,292 - 5,833
Nigel Birrell 24,000 24,000 32,836 - 6,000
James Ryan 24,000 24,000 32,836 6,000 6,000
Mark Le Tissier - - - - -
218,000 252,254 6,000 10,000
-------------- --------------- -------------- ---------------
*resigned 7 March 2016
**** includes GBP13,915 each for Mr Johnson, Mr Cannon-Brookes,
Mr Birrell and Mr Ryan which equates to the
value of the options issued to each Director under the share
option plan.
Post the financial year end Board fees have been voluntarily
reduced.
During the year no shares or options were issued under the Share
Option Scheme to the directors (See note 11).
Directors were also reimbursed for GBP82,174 (2016: GBP63,439)
of expenses incurred on business on behalf of the Company GBP29,616
is payable at the end of the year (2016: GBPnil).
During the prior year the Company announced the formation of its
Investment Committee who assist the Company in analysing and
recommending potential royalty transactions. Along with Neil
Johnson the Investment Committee is made up of members of Oliver
Wyman and independent representatives. During the year the Company
paid GBP93,280 to the committee members. Neil Johnson does not earn
a fee for his role on the Investment Committee.
Charge for year to Charge for year to Outstanding at year Outstanding at year
31/03/2017 31/03/2016 end 31/03/2017 end 31/03/2016
GBP GBP GBP GBP
A Carragher 20,000 22,213 - 5,000
J Webster 40,000 22,212 - 5,000
60,000 44,425 - 10,000
-------------------- --------------------- -------------------- --------------------
No share options were issued during the year. In the prior year
options to the value of GBP 22,918 were issued to A Carragher and J
Webster.
The related parties' interests in the share capital of the
Company are as follows:
Holding Percentage
Holding Additional at of enlarged
at 31March shareholdings 31 March share
Name 2016 in year 2017 capital
Charles Cannon-Brookes 158,517 1,250,000 1,408,517 3.10%
N Johnson 400,000 760,000 1,160,000 2.56%
N Birrell 400,000 125,000 525,000 1.16%
J Ryan 400,000 250,000 650,000 1.43%
J Cochrane 315,000 375,000 690,000 1.52%
Arlington Group
Asset Management
Limited 295,000 1,062,365 1,357,365 2.99%
Abinvest Corporation 500,000 - 500,000 1.10%
Charles Cannon-Brookes is a Director and shareholder of
Arlington Group Asset Management Limited which owns 1,357,365
Ordinary Shares and is therefore interested in 2,765,882 Ordinary
Shares representing 6.10 per cent of the total voting rights.
Neil Johnson is a Director of Abinvest Corporation and Abingdon
Capital Corporation. Abinvest Corporation is a wholly owned
subsidiary of Abingdon Capital Corporation. He owns 500,000
Ordinary Shares through Abinvest Corporation and 10,000 Ordinary
Shares through RBK&C Trust and therefore has an overall
interest in the 1,660,000 Ordinary Shares of the Company
representing 3.66 per cent of the total voting rights.
Justin Cochrane, a current member of the Company's Investment
Committee is also a full time Executive Vice President at Abingdon
Capital Corporation ("Abingdon"). Mr Cochrane overall interest in
the Ordinary Shares of the Company is 690,000 Ordinary Shares
representing 1.52 per cent of the total voting rights.
As detailed in note 11 the Company has adopted a share option
scheme ("the Scheme") to incentivise Directors, staff and certain
key advisers and consultants to deliver long-term value creation
for shareholders.
The Company also operates an equity settled share based scheme
for directors and specified consultants.
Support Service Agreements with Abingdon Capital Corporation
("Abingdon") and Arlington Group Asset Management Limited
("Arlington") were signed on 16 June 2015. The services to be
provided by both Abingdon and Arlington include global deal
origination, vertical partner relationships and on-going investment
management, including preparation of investment reports,
performance data and compliance with the Company's investing
policy. See note 5a for additional information.
The Directors are not aware of any ultimate controlling
party.
Share options issued under the share option plan
The related parties' interest in the share options of the
Company are as follows:
5 yr option,
vesting
immediately
granted Total Exercise price
Name on options GBP
N Johnson 04/09/2015 85,000 0.75
Arlington Group
Asset Management
Limited 04/09/2015 85,000 0.75
J Ryan 04/09/2015 85,000 0.75
N Birrell 04/09/2015 85,000 0.75
J Cochrane 04/09/2015 70,000 0.75
16. FINANCIAL RISK MANAGEMENT
The Group's investing activities expose it to various types of
risk that are associated with the investee companies in which it
invests. The most important types of financial risk to which the
Group is exposed are market risk, liquidity risk and credit risk.
Market risk includes price risk, foreign currency risk and interest
rate risk. The Board of Directors has overall responsibility for
risk management and the policies adopted to minimise potential
adverse effects on the Group's financial performance.
The policies and processes for measuring and mitigating each of
the main risks are described below.
Market Risk
Market risk is the risk that the value of investment holdings
will fluctuate as a result of changes in market prices caused by
factors other than interest rate or currency rate movements. As the
Group's investments are carried at fair value with changes
recognised in the Consolidated Statement of Comprehensive Income,
all changes in market conditions ultimately affect net assets.
The Company's financial assets comprise of four illiquid
investments at GBPnil value. A sensitivity analysis in respect of
these assets is presented in note 4.
Currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign currency exchange rates. The presentation currency of
the Company is Sterling.
The Group does not have any financial assets or other financial
instruments in foreign currencies other than those illiquid
investments noted in note 4 for the year ended 31 March 2016 or 31
March 2017. Accordingly no sensitivity has been prepared.
Interest rate risk
The interest rate profile of the Group's financial assets and
liabilities as at the Consolidated Statement of Financial Position
date comprise only cash and cash equivalents.
At 31 March 2017 cash and cash equivalents of GBP14,350,154
(2016: GBP1,625,749) were potentially exposed to movements in
interest rates. At the current time any movement in interest rates
would not have a material
financial impact on the Group. Therefore, the Group does not
hedge against the interest rate risk to which it is exposed.
During the year the Group received only minimal interest on its
cash and cash equivalents, GBP45 (2016: GBP646).
Liquidity risk
Liquidity risk is the risk that the Group will encounter in
realising assets or otherwise raising funds to meet financial
commitments.
The Group maintains sufficient cash to pay accounts payable and
accrued expenses as they fall due. The Group's overall liquidity
risks are monitored on a quarterly basis by the Board.
Currently the value of the residual portfolio of unlisted
investments totals GBPnil. The Board considers the portfolio of
unlisted investments to be illiquid due to the investments being
delisted, suspended or being in liquidation. The Company may not be
able to liquidate these positions in the near term or at all and as
such has marked the valuation to zero on each. The write down of
these assets to GBPnil includes other factors as discussed in note
4.
The contractual, undiscounted cash flows of the Group's current
liabilities, which are equal to the fair value of the Group's
current liabilities, consisting of trade and other payables and
loans payable, are all payable within three months and total
GBP225,609 (2016: GBP75,171).
The following illustrates the maturity analysis of the Group's
undiscounted contractual cash flows for liabilities.
Due < 3 months Due 3 - 12 months Due > 12 months Due within 1 - 5 years Total
As at 31 March 2017 GBP GBP GBP GBP GBP
Trade and other
payables 225,609 - - - 225,609
Total 225,609 - - - 225,609
--------------- ------------------ ---------------- ----------------------- --------
Due < 3 months Due 3 - 12 months Due > 12 months Due within 1 - 5 years Total
As at 31 March 2016 GBP GBP GBP GBP GBP
Trade and other
payables 75,171 - - - 75,171
Total 75,171 - - - 75,171
--------------- ------------------ ---------------- ----------------------- --------
Given that the operating costs of the Group are generally known,
contractually fixed costs, the Board is of the opinion that the
Group is not exposed to any undue liquidity risk.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group. It is the opinion of the Board
of Directors that the carrying amounts of financial assets best
represent the maximum credit risk exposure at the financial
reporting date.
At the financial reporting date the only financial assets which
are subject to credit risk are cash and cash equivalents totalling
GBP14,350,154 (2016: GBP1,625,749).
All of the cash and cash equivalents held by the Group are with
Barclays Bank Plc ("Barclays"). Accordingly the Group is only
exposed to credit risk at Barclays. Insolvency of Barclays may
cause the Group's rights with respect of the cash and cash
equivalents held by it to be delayed or limited. The Group monitors
this risk by reviewing the credit rating of Barclays at the time of
setting up accounts and on an ad hoc basis. Moody's bank financial
strength rating for Barclays is baa2 (2016: A2) as at the date of
signing these Consolidated Financial Statements. The Board
considers that the risk of holding cash and cash equivalents with
Barclays is acceptable.
As at 31 March 2017 there were no financial assets which were
past due or impaired (2016: GBPnil).
Capital management
The Board manages the Company's capital with the objective of
being able to continue as a going concern while maximising the
return to shareholders through the capital appreciation of its
investments. The capital structure of the Company consists of
equity as disclosed in the Consolidated Statement of Financial
Position.
17. EVENTS AFTER THE FINANCIAL REPORTING DATE
The Company entered into a Loan Agreement under its new
investment objective on 5 April 2017 with Temarca B.V. and agreed
to advance EUR8,000,0000 out of which EUR5,444,030 was paid
subsequent to year end. The remaining EUR2,555,970 will be drawn
down as per the terms of the Loan Agreement.
Included within trade and other receivables is GBP31,500 of
capitalised costs associated with the purchase of the investment in
Temarca B.V.
Post the financial year end the Board approved the Company's
maiden dividend of 0.5 pence (sterling) per share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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