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, and a well-covered 9% dividend yield.

• Continued focus on hybrid capital solutions, combining long-term debt and equity stakes, with a philosophy centered on capital preservation, attractive yield, and upside from exits.

• Portfolio consists of 15 capital partners with investments spanning the UK, US, Canada, Ireland, and Denmark, totaling £214 million invested and eight exits to date, averaging a 21% IRR (excluding one outsized exit).

• Enhanced ability to take larger equity stakes following a change in accounting policy and strategic repositioning, positioning for greater upside on future exits.

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

Financial highlights

• Total cash revenue reached £30.3 million, up 38% year-over-year.

• Free cash flow increased to £17.9 million, up 40% year-over-year.

• Free cash flow per share was 4.34 pence, with dividends paid at 2.80 pence per share, well covered by cash flow.

• Adjusted earnings per share rose to 4.85 pence from 3.13 pence in the prior year, better reflecting core performance.

• NAV per share was 39.8 pence as of March 2024, stable year-over-year.

Outlook and guidance

• Dividend increases are unlikely in the short term due to high interest rates; focus remains on reinvesting for capital growth.

• Refreshed strategy and product positioning to capitalize on growth in the private credit sector, with increased flexibility to take equity ownership and expand direct lending.

• Anticipates macro headwinds (interest rates, UK economic growth, small-cap fund outflows) to abate, which could positively impact share price and NAV.