Duke Capital (DUKE) H2 2024 earnings summary

Executive summary

• Achieved record FY 2024 results with significant growth in cash revenue, recurring revenue, and free cash flow, supported by a robust portfolio of 15 capital partners and GBP 214 million invested capital.

• Focused on a hybrid capital model combining long-term debt and equity, providing capital preservation, attractive yield, and upside through exits.

• Completed rebranding and messaging refresh, positioning for greater flexibility in equity ownership and direct lending.

• Portfolio diversification increased, with investments spanning the UK, US, Canada, Ireland, and Denmark, reducing reliance on the UK market.

• Eight exits to date, with notable IRRs, including a 36% IRR on a recent 30% equity stake exit and three FY24 exits with IRRs of 20%, 34%, and over 200%.

Financial highlights

• Total cash revenue reached a record GBP 30.3 million, up 38% year-over-year.

• Free cash flow increased to GBP 17.9 million, up 40% year-over-year, with free cash flow per share at GBP 0.0434.

• Dividend per share was GBP 0.028, well covered by free cash flow per share, with a yield of 9%.

• Adjusted earnings per share rose to 4.85 pence from 3.13 pence in the prior year.

• Net income fell to GBP 11.5 million from GBP 20 million, mainly due to a GBP 4.7 million fair value decrease in the hybrid credit portfolio.

Outlook and guidance

• No immediate plans to increase the dividend due to the high interest rate environment; focus remains on reinvesting for capital growth.

• Dividend policy will be revisited as interest rates decline and macroeconomic conditions improve.

• Refreshed strategy and product positioning to capitalize on growth in the private credit sector.

• Increased flexibility to take equity ownership and expand direct lending to the lower mid-market.

• Liquidity of GBP 30 million available for new investments, with future equity raises dependent on the timing and size of portfolio exits.