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DUKE CAPITAL LIMITED
Annual Report • Jun 25, 2025
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Annual Report
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National Storage Mechanism | Additional information 
RNS Number : 2595O
Duke Capital Limited
25 June 2025
25 June 2025
Duke Capital Limited
("Duke Capital", "Duke" or the "Company")
Final Results for the year ended 31 March 2025
Results reflect disciplined execution while building future value
Duke Capital Limited (AIM: DUKE), a leading provider of hybrid capital solutions for SME business owners in Europe and North America, is pleased to announce its audited results for the 12 months ended 31 March 2025 ("FY25").
Financial Highlights:
· Recurring cash revenue* of £25.8 million (2024: £24.3 million), an increase of 6%
· Total cash revenue of £26.6 million (2024: £30.3 million), a decrease of 12% and reflective of the lack of investment exits in FY25 (2024: three exits)
· Free cash flow** of £12.6 million (2024: £17.9 million), a decrease of 30%, reflecting lack of exits
· Free cash flow per share of 2.83 pence per share (2024: 4.34 pence)
· Net income of £2.0 million (FY24: £11.6 million), down 83% reflecting the non-cash reduction in fair value of the portfolio
· Adjusted earnings of £15.4 million, (FY24: £20.0 million), a decrease of 23%
· Dividend of 2.80 pence per share (2024: 2.80 pence)
· The cash position ended FY25 at £19.8m. With £10m still available on the credit line with Fairfax, Duke's liquidity position at 31 March 2025 was a robust £29.8m
Operational Highlights:
· Over £24 million deployed into existing capital partners
· Increased equity stakes in six current partners
· Completed an oversubscribed £23.5 million equity raise in November 2024 to provide additional capital to current partners to support M&A activity and allow flexibility on the timing of Duke's third-party, non-dilutive funding strategy
Post-Period End Highlights:
· £6.6 million of recurring cash revenue expected in Q1 FY26, representing a 4% year-on-year increase (Q1 FY25: £6.3 million)
· In April 2025, invested £3.3 million into New Path Fire and Security Limited to further its acquisitive growth strategy. Duke purchased additional equity in New Path, increasing our ownership from 15.0% to 20.9%
· In June 2025, invested £2.0m into Tristone Healthcare Limited to complete the acquisition of Serenity Care Homes Limited. As part of the deal, Duke invested £500k of additional equity in Tristone, increasing our ownership stake from 21.3% to 28.4%.
* Recurring cash revenue excludes exit premiums and cash gains from the sale of equity investments
** Free cash flow is defined as net cash inflows from operations plus cash gains from the sale of equity investments less net transaction costs less interest paid on borrowings
Nigel Birrell, Chairman of Duke Capital, said: "Despite a persistently challenging global and UK macroeconomic environment, Duke Capital delivered solid results in FY25. Duke Capital has once again maintained a stable and reliable dividend, underlining the resilience of our income-generating model and our disciplined approach to capital allocation.
"Duke's investment philosophy for some time has been to "stay in for longer" with its investments and to attract higher EBITDA multiples upon exit as the portfolio matures. We announced five follow-on investments into our existing capital partners during 2025, all of whom are operating buy and build models. The proceeds were used by these partners to acquire long standing, profitable businesses. The operating performance from all these new portfolio investments has been positive which underlines the strict criteria and extensive due diligence that is undertaken prior to any transaction closing.
"Looking ahead, there are some positive signs emerging with inflationary pressures beginning to ease and interest rates expected to decline further. Our business model and attractiveness to investors improves in times of lower interest rates. Duke Capital will continue to work with its longstanding, private, profitable partners to ensure that we are able to deliver our operational and financial objectives to the benefit of our shareholders."
Investor Presentation
CEO Neil Johnson and CFO Hugo Evans will provide a live investor presentation relating to the FY25 results via the Investor Meet Company platform on Monday 30 June 2025 at 12:45 p.m. BST.
The presentation is open to all existing and potential shareholders. Questions can be submitted via the Investor Meet Company dashboard up until 9 a.m. the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Duke Capital via:
https://www.investormeetcompany.com/duke-capital-limited/register-investor
Investors who already follow Duke Capital on the Investor Meet Company platform will automatically be invited.
This announcement contains inside information.
For further information, please visit https://dukecapital.com/ or contact:
| Duke Capital Limited | Neil Johnson / Charles Cannon Brookes / Hugo Evans | +44 (0) 1481 231 816 |
| Cavendish Capital Markets Limited (Nominated Adviser and Joint Broker) | Stephen Keys / Callum Davidson / Michael Johnson | +44 (0) 207 220 0500 |
| Canaccord Genuity Limited (Joint Broker) |
Adam James / Harry Rees | +44 (0) 207 523 8000 |
| SEC Newgate (Financial Communications) | Robin Tozer / Alice Cho / Gwen Samuel | +44 (0) 20 3757 6882 [email protected] |
Duke Capital Portfolio
A full list of Duke's current partners is included for reference on the Partners page of the Company's website: www.dukecapital.com/partners .
About Duke Capital
Duke is a leading provider of hybrid capital solutions for SME business owners in Europe and North America, combining the best features of both equity and debt.
Since 2017, Duke has provided unique long-term financing which eliminates re-financing risk and necessity for a short-term exit by providing a unique 'corporate mortgage' while also aligning its returns to grow with the success of the business.
Duke is focused on generating attractive risk-adjusted returns for shareholders and has a track record of achieving this across market cycles. It's three investment pillars are capital preservation, attractive dividend yield, and to provide upside upon exits.
Duke is listed on the AIM market under the ticker DUKE and is headquartered in Guernsey.
Chairman's Statement
I am pleased to present Duke Capital's annual statements for the financial year ending 31 March 2025, a year in which we demonstrated strategic resilience, operational discipline, and consistent value delivery to our shareholders amidst a challenging global and UK macroeconomic backdrop.
The UK economy continues to suffer from slow growth with the IMF recently forecasting the UK's expected GDP growth rate in 2025 to be 1.2% which, while an improvement on the 1.1% reported in 2024 and the 0.3% in 2023, reflects an extended period of below average growth. In addition to slow growth and low levels of consumer demand, businesses are now facing other new challenges, particularly from increased employment costs while increased uncertainty surrounding global trade and geopolitical tensions continue to impact general risk appetite.
I am pleased to be able to report that in the face of this challenging economic backdrop, Duke Capital has once again been able to deliver solid results in FY25. There are some positive signs emerging with inflationary pressures beginning to ease and interest rates, which were trimmed further to 4.25% in May, expected to decline further in the second half of the year as inflation cools and the UK government attempts to stimulate domestic growth. Duke Capital's business model and attractiveness to investors improves in times of lower interest rates so we look forward to an easing of the interest rate cycle.
At the heart of our investment philosophy is the goal of delivering consistent, long-term value. I am pleased to report that Duke Capital has once again maintained a stable and reliable dividend, underlining the resilience of our income-generating model and our disciplined approach to capital allocation. In an environment where income certainty is increasingly valued by investors, our ability to support a steady and covered dividend payout reaffirms the strength of our portfolio and the robustness of our recurring revenue streams. This policy remains a cornerstone of our commitment to shareholder returns.
As reported in my Interim FY25 chairman's statement, Duke's investment philosophy for some time has been to "stay in for longer" with its investments and to attract higher EBITDA multiples upon exit as the portfolio matures. With this in mind, Duke announced five follow-on investments into our existing capital partners during 2025, all of whom are operating buy and build models. The proceeds were used by these partners to acquire long standing, profitable businesses. I am pleased to report that the operating performance from all these new portfolio investments has been positive which underlines the strict criteria and extensive due diligence that is undertaken prior to any transaction closing.
As previously reported, during H2 FY25 Duke closed a £23.5m equity fundraise by way of a Placing, Subscription, Retail Offer and Broker Option. While it is always difficult to raise new equity capital at a discount to the Company's underlying NAV, the decision reflected the near-term investment opportunities and requirements from inside the Company's existing portfolio specifically in relation to Duke's buy and build platforms. The proceeds enabled us to provide additional capital to our current partners, delivering bolt-on M&A and increasing their EBITDA while increasing our equity participation where possible. I believe shareholders will see the benefits of this decision in the coming periods and I am pleased to report that Duke Capital's cash position ended FY25 at £19.8m. With £10m still available on the credit line with Fairfax, Duke's liquidity position at 31 March 2025 was a robust £29.8m.
Outlook
During FY25, Duke Capital stayed true to its core purpose in difficult market conditions: delivering reliable returns and distributing a large percentage of its free cashflow to its shareholders in the form of covered dividends. As we enter FY26, the global economy has been shaken by tariffs, wars and divisive political rhetoric which has led to extreme movements in global public equity markets. Despite this volatile backdrop, Duke Capital will continue to work with its longstanding, private, profitable partners to ensure that we are able to deliver our operational and financial objectives to the benefit of our shareholders.
I would like to thank our management team, our investee partners, and you, our shareholders, for your continued trust and support. Together, we look to the future with confidence.
Yours faithfully,
Nigel Birrell
Chairman
CEO's Statement
FY25 marked our first full year operating as Duke Capital. I'm pleased to report results that reflect disciplined execution while building future value. Recurring cash revenue rose to £6.5 million in Q4 FY25, up 13% year-on-year. For the full year, recurring revenue reached £25.8 million, demonstrating consistent growth and the resilience of our hybrid capital model.
A Clear Investment Philosophy
While our name changed, our core investment philosophy remains the same. We back profitable, long-established, non-PE-backed businesses - a model well suited to MBOs and buy-and-build strategies. Our rebranding to hybrid capital better captures our blend of private credit and equity, but our philosophy remains to align our returns with the long-term success of our partners.
This repositioning alongside our move to IFRS 10, give us flexibility to increase equity stakes beyond 30%, allowing us to stay invested longer. Despite this, we maintain senior capital rights and remain aligned with management teams.
Notably, our core product, investment criteria, and investing policy have not changed, which allows us to report a solid set of results across our core cash flow KPIs. A key focus in FY25 was increasing our equity stakes across the portfolio, to maximize expected shareholder returns upon exit. We achieved this in six companies, with management support, through a mix of minority and majority holdings, aligning value creation with exit potential.
Portfolio Deployment and Support
The repositioning also enabled deeper support for existing partners. In FY25, we deployed over £24 million of capital across the portfolio. Highlights include:
· Total follow-on financing during the year into BPVA (Ireland) Limited ("BPVA") of £6.8 million. This facilitated BPVA's acquisition of three separate businesses as supporting the reconfiguration of the shareholding structure of the BPVA entity. This investment took Duke's overall investment in BPVA to over £20 million.
· A £3.0 million follow-on investment in United Glass Group in September 2024 to support its latest acquisition.
· A £2.9 million into Step Investments Limited ("Step"). Duke's funds were used by Step to increase its shareholding from 34% to a 75% controlling stake in the Dublin-based Group, Bay Broadcasting, which operates three longstanding and profitable radio stations. This was followed by the successful divestment by Step of its subsidiary, City Education & Learning Group, for initial proceeds of €5.2 million. The sale has provided Step with the liquidity to pursue further growth M&A in the media sector.
After the period-end, we made further investments:
· £3.3 million in April 2025 into New Path Fire and Security Limited to further its acquisitive growth strategy. Duke purchased additional equity in New Path, increasing our ownership from 15.0% to 20.9%.
· In June 2025, we invested £2.0 million into Tristone Healthcare Limited to complete the acquisition of Serenity Care Homes Limited. As part of the deal, Duke invested £500k of additional equity in Tristone, increasing our ownership stake from 21.3% to 28.4%.
These actions reflect our conviction in the buy-and-build model and our ability to compound value over time. Duke's most recent investment exemplifies this. Announced at the end of the last financial year, Duke invested £14.5 million into Integrum Care Group which operates six elderly care homes across the Kent and East Sussex. Integrum's performance since investment has been encouraging and it is our intention to support Integrum's buy-and-build strategy, recognising its strength as a platform and its impressive management team which has a strong track record in the elderly care sector.
Strengthened Capital Position
In December, we completed an oversubscribed £23.5 million equity raise at 27.5p per share. We were supported by major investors and welcomed new institutional and retail holders. Our message was clear: the hybrid capital model is both differentiated and proven to reward shareholders and business owners.
The capital from the fundraise is supporting further M&A activity within our portfolio and allows flexibility on the timing of our third-party, non-dilutive funding strategy. While deeper investment into existing partner companies may extend exit timelines, we're confident that value accretion for expected exits at higher EBITDA multiples will benefit shareholders over time. We recognise the vote of confidence by shareholders in their support for the fundraising.
We also remain committed to exploring third-party capital partnerships which are accretive to shareholders. While current geopolitical and market conditions have made it challenging to secure such partnerships on acceptable terms, we continue to search for potential partners aligned with our long-term vision. While sustainable growth is our goal to take advantage of economies of scale, growth must serve long-term shareholder value - not growth for its own sake.
Investment Strategy Guides Decision Making
Our investment pillars - capital preservation, yield through robust dividends, and upside through exits - continues to guide our decision making amid global geo-political uncertainty. With government transitions in our two core countries, the UK and the United States, we remained cautious on adding new partners. Indeed, at the time of our fundraising in financial year Q3, our stated use of proceeds was to deploy the funds within our current portfolio.
Although no additional exits occurred in FY25, we received final full payments from the exit of Fairmed and anticipate the final deferred consideration from Fabrikat in FY26. Despite there being no new exits in FY25, we look at our lifecycle of investments over multiple periods, and by design the exit timing is not in our control. Regardless, we feel strongly that our strategy will be validated in the fullness of time.
Finance Review
The financial results for FY25 demonstrate Duke's resilience in the face of global macro uncertainty. I am pleased to report that the Group's recurring cash revenue, which excludes the effects of any investment exits, reached £25.8 million, a 6% increase over FY24.
The Group's total cash revenue decreased by 12% to £26.6 million. However, this was the direct result of the lack of investment exits. In FY24, we experienced two full exits and the partial exit of Fairmed Healthcare, which delivered £6.0 million of non-recurring revenue. In FY25, Duke only received the remaining £800k of premiums from the Fairmed exit.
Free cash flow, defined as net cash inflows from operations plus cash gains from the sale of equity investments less net transaction costs less interest paid on borrowings, decreased from £17.9 million to £12.6 million in the year, again the result of the lack of investment exits.
Investment exits are part of Duke's investment model, but as discussed, we are generally not in control of the exits. As a result, the timings of portfolio exits are unpredictable and will lead to variability in our total cash inflows. As demonstrated in the table below, our total cash revenue shows year-on-year volatility, while our recurring remains on a steadier growth trajectory.
| 2022 | 2023 | 2024 | 2025 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Recurring cash revenue | 14,941 | 21,767 | 24,321 | 25,761 | |||
| Growth | 70% | 46% | 12% | 6% | |||
| Non-recurring cash revenue | 3,466 | 114 | 5,965 | 837 | |||
| Growth | 55% | (97%) | 5128% | (86%) | |||
| Total cash revenue | 18,407 | 21,881 | 30,286 | 26,598 | |||
| Growth | 67% | 19% | 38% | (12%) |
Total income, which includes non-cash fair value movements on the Company's investment portfolio, fell to £15.2 million in FY25, an 41% decrease over FY24. This generated total earnings after tax of £2.0 million and earnings per share of 0.45 pence against £11.6 million in FY24 and earnings per share of 2.81 pence; the decrease was driven a material reduction in the non-cash fair value movements of £14.1 million. Adjusted earnings, which strips out the fair value movements decreased 23% from £20.0 million in FY24 to £15.4 million in FY25, again due to no new investment exits in FY25.
A metric which was kept under tight control was our fixed operating expenses, which rose just 5% over FY24. This was achieved by holding headcount steady while reducing expenses where feasible. For personnel costs, such as discretionary compensation, there is a timing mismatch. Annual awards get crystallised during the subsequent financial year. Consequently, we expect our total operating expenses in FY26 to remain flat when compared to FY25.
Following the equity raise in December, Duke's liquidity remains strong, with cash on the balance sheet standing at £19.8 million at 31 March 2025 and a further £10 million remaining undrawn on Duke's facility with Fairfax. This gives the Company close to £30 million of available liquidity at the financial year end, allowing the Group to maintain its strategy of supporting the current investment portfolio as we look to build value from within.
The investment portfolio continued to grow in FY25, with the fair value of the investment portfolio reaching £244 million, split across hybrid credit, term credit and equity investments.
| 2022 | 2023 | 2024 | 2025 | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Hybrid credit investments | 160,479 | 191,334 | 210,948 | 225,684 | |||
| Term credit investments | 4,172 | 4,652 | 5,382 | 2,322 | |||
| Equity investment | 10,820 | 13,529 | 15,904 | 15,812 | |||
| Total investment portfolio | 175,471 | 209,515 | 232,234 | 243,818 |
Dividend
I am pleased to report Duke maintained a 0.70 pence quarterly dividend throughout FY25, equating to an annualised dividend of 2.80 pence, in line with FY24. We are confident that we will cover our dividend through FY26 and beyond.
Outlook - Confident in our ability to deliver long-term shareholder value
As we closed FY25, we assessed the impact of global tariffs and supply chain pressures. While our portfolio companies are largely regional or national in scope, indirect effects, such as delayed purchasing decisions and input cost volatility, have introduced some uncertainty. Nonetheless, we believe these challenges remain manageable.
With our investment pillars in mind, Duke maintained a covered dividend throughout the year by ensuring our portfolio delivers current yield for shareholders. Our focus on capital preservation has resulted in a broadly stable total asset value, while individual portfolio positions change with altering growth rates and their knock-on effects on equity valuations. Following through on our repositioning to Duke Capital, we directed our energy to seeking increased equity stakes, to maximize our ability to generate upsides from exits which we expect our shareholders to benefit from in the future.
We have a positive outlook as growth returns at a macro level while central banks start easing interest rates, which we believe benefits our partners and shareholders. With a diversified and resilient portfolio, a strong balance sheet, and a clear strategic direction, we are confident in our ability to deliver long-term value to shareholders.
Neil Johnson
Chief Executive Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
| Year to | Year to | |||
| 31-Mar-25 | 31-Mar-24 | |||
| Note | £'000 | £'000 | ||
| Cash flows from operating activities | ||||
| Receipts from hybrid credit investments | 9 | 25,000 | 27,267 | |
| Receipts of interest from term credit investments | 10 | 158 | 453 | |
| Other operating receipts | 1,419 | 195 | ||
| Operating expenses paid | (4,186) | (4,015) | ||
| Payments for hybrid credit participation fees | 12 | (87) | (130) | |
| Tax paid | (781) | (673) | ||
| Net cash inflow from operating activities | 21,523 | 23,097 | ||
| Cash flows from investing activities | ||||
| Hybrid credit investments advanced | 9 | (24,500) | (42,012) | |
| Hybrid credit investments repaid | 9 | 3,987 | 17,636 | |
| Term credit investments advanced | 10 | (2,286) | (750) | |
| Equity investments purchased | 11 | (370) | (3,799) | |
| Equity investments sold | 11 | - | 2,326 | |
| Equity dividends received | 11 | 21 | 48 | |
| Receipt of deferred consideration | 742 | 1,512 | ||
| Investment costs paid | (462) | (1,344) | ||
| Net cash outflow from investing activities | (22,868) | (26,383) | ||
| Cash flows from financing activities | ||||
| Proceeds from share issue | 17 | 23,500 | - | |
| Share issue costs | 17 | (1,394) | - | |
| Dividends paid | 20 | (12,249) | (11,524) | |
| Proceeds from loans | 15 | 17,000 | 15,000 | |
| Interest paid | 15 | (8,520) | (6,222) | |
| Other finance costs | (4) | - | ||
| Net cash inflow / (outflow) from financing activities | 18,333 | (2,746) | ||
| Net change in cash and cash equivalents | 16,988 | (6,032) | ||
| Cash and cash equivalents at beginning of year | 2,896 | 8,939 | ||
| Effect of foreign exchange on cash and cash equivalents | (117) | (11) | ||
| Cash and cash equivalents at the end of year | 19,767 | 2,896 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
| Note | Year to | Year to | |||
| 31-Mar- 25 | 31-Mar-24 | ||||
| £'000 | £'000 | ||||
| Income | |||||
| Net hybrid credit investment income | 9 | 19,168 | 23,014 | ||
| Term credit investment income | 10 | 158 | 453 | ||
| Net equity investment income | 11 | (5,849) | 1,925 | ||
| Other operating income | 1,742 | 195 | |||
| Total income | 15,219 | 25,587 | |||
| Investment costs | |||||
| Transaction costs | (171) | (475) | |||
| Due diligence costs | (87) | (645) | |||
| Total investment costs | (258) | (1,120) | |||
| Operating costs | |||||
| Administration and personnel | 5 | (3,509) | (3,072) | ||
| Legal and professional | (449) | (533) | |||
| Other operating costs | (381) | (370) | |||
| Expected credit losses | 10 | 78 | 14 | ||
| Share-based payments | 18 | (409) | (938) | ||
| Total operating costs | (4,670) | (4,899) | |||
| Operating profit | 10.291 | 19,568 | |||
| Net foreign currency movement | (99) | (22) | |||
| Finance costs | 6 | (9,454) | (7,255) | ||
| Profit before tax | 738 | 12,291 | |||
| Taxation credit / (expense) | 7 | 1,267 | (683) | ||
| Profit after tax | 2,005 | 11,608 | |||
| Basic earnings per share (pence) | 8 | 0.45 | 2.81 | ||
| Diluted earnings per share (pence) | 8 | 0.45 | 2.81 |
All income is attributable to the holders of the Ordinary Shares of the Company. There is no other comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
| Note | 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | |||
| Non-current assets | ||||
| Goodwill | 16 | 203 | 203 | |
| Hybrid credit finance investments | 9 | 190,100 | 177,589 | |
| Term credit investments | 10 | 2,322 | 5,382 | |
| Equity investments | 11 | 15,812 | 15,904 | |
| Trade and other receivables | 13 | - | 1,574 | |
| Deferred tax | 21 | 2,877 | 408 | |
| 211,314 | 201,060 | |||
| Current assets | ||||
| Hybrid credit finance investments | 9 | 35,584 | 33,359 | |
| Trade and other receivables | 13 | 1,936 | 843 | |
| Cash and cash equivalents | 19,767 | 2,896 | ||
| Current tax asset | - | 155 | ||
| 57,287 | 37,253 | |||
| Total assets | 268,601 | 238,313 | ||
| Current liabilities | ||||
| Hybrid credit debt liabilities | 12 | 140 | 170 | |
| Trade and other payables | 14 | 444 | 461 | |
| Borrowings | 15 | 723 | 632 | |
| Current tax liability | 266 | - | ||
| 1,573 | 1,263 | |||
| Non-current liabilities | ||||
| Hybrid credit debt liabilities | 12 | 898 | 934 | |
| Trade and other payables | 14 | 967 | 1,063 | |
| Borrowings | 15 | 87,611 | 69,772 | |
| 89,476 | 71,769 | |||
| Net assets | 177,552 | 165,281 | ||
| Equity | ||||
| Share capital | 17 | 195,045 | 172,939 | |
| Share-based payment reserve | 18 | 4,794 | 4,385 | |
| Warrant reserve | 18 | 3,036 | 3,036 | |
| Retained losses | 19 | (25,323) | (15,079) | |
| Total equity | 177,552 | 165,281 |
The Consolidated Financial Statements were approved and authorised for issue by the Board of Directors on 24 June 2025 and were signed on its behalf by Directors Maree Wilms and Matthew Wrigley.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
| Share-based | ||||||||||
| Shares | payment | Warrant | Retained | Total | ||||||
| Note | issued | reserve | reserve | losses | equity | |||||
| £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
| At 1 April 2023 | 172,939 | 3,447 | 3,036 | (15,163) | 164,259 | |||||
| Total comprehensive income for the year | - | - | - | 11,608 | 11,608 | |||||
| Transactions with owners | ||||||||||
| Share-based payments | 18 | - | 938 | - | - | 938 | ||||
| Dividends | 20 | - | - | - | (11,524) | (11,524) | ||||
| Total transactions with owners | - | 938 | - | (11,524) | (10,586) | |||||
| At 31 March 2024 | 172,939 | 4,385 | 3,036 | (15,079) | 165,281 | |||||
| Total comprehensive loss for the year | - | - | - | 2,005 | 2,005 | |||||
| Transactions with owners | ||||||||||
| Shares issued for cash | 17 | 23,500 | - | - | - | 23,500 | ||||
| Share issuance costs | 17 | (1,394) | - | - | - | (1,394) | ||||
| Share-based payments | 18 | - | 409 | - | - | 409 | ||||
| Dividends | 20 | - | - | - | (12,249) | (12,249) | ||||
| Total transactions with owners | 22,106 | 409 | - | (12,249) | 10,266 | |||||
| At 31 March 2025 | 195,045 | 4,794 | 3,036 | (25,323) | 177,552 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
1. General Information
Duke Capital Limited ("Duke Capital" or the "Company") is a company limited by shares, incorporated in Guernsey under the Companies (Guernsey) Law, 2008. Its shares are traded on the AIM market of the London Stock Exchange. The Company's registered office is shown on page 70.
Throughout the year, the "Group" comprised Duke Capital Limited and its wholly owned subsidiaries; Duke Capital UK Credit Limited (formerly Duke Royalty UK Limited) , Duke Capital Employee Benefit Trust and Duke Capital US GH Holdings, Inc.
The Group's investing policy is to invest in a diversified portfolio of hybrid credit finance and related opportunities.
2. Material accounting policy information
2.1 Basis of preparation
The Consolidated Financial Statements of the Group have been prepared in accordance with UK adopted international accounting standards, and applicable Guernsey law, and reflect the following policies, which have been adopted and applied consistently.
The Group has adopted IFRS 10 Consolidated Financial Statements. IFRS 10 requires entities that meet the definition of an investment entity within the standard to account for those controlled entities within the Group's direct investment portfolio as held at fair value through profit or loss ("FVTPL") and to not be consolidated into the financial statements.
Subsidiaries that provide investment-related services or engage in permitted investment-related activities with investees, continue to be consolidated unless they are also investment entities.
An investment entity is one which:
- obtains funds from investors for the purpose of providing them with investment management services;
- invests funds solely for returns from capital appreciation/investment income; and
- measures and evaluates the performance of substantially all of its investment on a fair value basis.
In accordance with IFRS 10 the Consolidated Financial Statements include the financial statements of the Company and service entities controlled by the Company made up to the reporting date. Control is achieved where the Company has the power over the potential investee as a result of voting or other rights, has rights to positive or negative variable returns from its involvement with the investee and has the ability to use its power over the investee to affect significantly the amount of its returns.
The following subsidiaries are deemed service entities and are consolidated in the group financial statements:
- Duke Capital UK Credit Limited (formerly Duke Royalty UK Limited)
- Duke Capital Employee Benefit Trust
Under IFRS 12 paragraph 19A, the following subsidiaries have classified as investment entities under IFRS 10 and therefore not consolidated:
| Subsidiary Name | Place of business | % ownership |
| Duke Capital US GH Holdings, Inc. | USA | 100% |
| United Glass Group | UK | 73.8% |
| Integrum Care Group | UK | 50.0% |
| Creo-tech Industrial Group | Canada | 99.9% |
| Intec Business Solutions | UK | 100% |
| MQL (formerly Miriad Products) | UK | 49.9% |
| Trimite Global Coatings | UK | 100% |
The Consolidated Financial Statements have been prepared on a going concern basis and under the historical cost basis, except for the following:
· Hybrid credit investments - measured at FVTPL;
· Equity investments - measured at FVTPL;
· Hybrid credit participation liabilities - measured at FVTPL.
Presentation of statement of cash flows
The Board considers cash flow to be the most important measure of the Group's performance and subsequently has presented its Consolidated Statement of Cash Flows before the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position.
There have been no changes to the classification of any of the cash flows or to the overall cash movements.
Presentation of statement of comprehensive income
In order to better reflect the activities of a hybrid credit financing company, the Consolidated Statement of Comprehensive Income includes additional analysis, splitting the Group's income by investment type.
2.2 New accounting standards, interpretations and amendments from 1 January 2024 adopted by the Group
In the current period, the Company has considered and adopted all relevant new standards, interpretations and amendments to existing standards that are effective as at year-end.
Their adoption has not had any impact on the amounts reported or disclosed in the financial statements
Standard:
Amendments to IAS 1: Classification of Liabilities as Current or Non-current -1 Jan 2024
Amendments to IAS 1: Classification of debt with covenants- 1 Jan 2024
Amendments to IFRS 16: Leases -1 Jan 2024
Amendments to IAS 7: Statement of Cash Flows- 1 Jan 2024
The Company has not early adopted nor plans to early adopt any of the above.
2.3 New Accounting Standards, interpretations and amendments issued but not yet effective
At the date of authorisation of these Consolidated Financial Statements, certain standards and interpretations were in issue but not yet effective and have not been applied in these Consolidated Financial Statements. These include:
Amendments to IFRS 9 and IFRS 7: Classification and Measurement of Financial Statements -1 Jan 2026.
Amends to IAS 21 Lack of Exchangeability-1 Jan 2025
Amendments to IFRS 18: Presentation and Disclosure in Financial Statements - not yet adopted by UK endorsement board
Amendments to IFRS 19: Subsidiaries without Public Accountability: Disclosures - not yet adopted by UK endorsement board
With the exception of IFRS 18, these will not have a material impact on operations or financial statements of the company. IFRS 18 - Presentation and Disclosures in Financial Statements which will be applied from its mandatory effective date and since retrospective application is required, the comparative information for the financial year ending 31 December 2026 will be restated accordingly.
2.4 Going concern
The financial statements have been prepared on a going concern basis, which assumes that the Company will be able to continue its operations for the foreseeable future and realise its assets and discharge its liabilities in the normal course of business.
In assessing the appropriateness of the going concern basis, the Board and management have considered the Company's financial position, liquidity, and cash flow forecasts, as well as the current and expected impacts of macroeconomic conditions, including continuing inflationary pressures, global tariffs and global economic uncertainty.
Stress testing and scenario analyses have been performed, which indicate that the Company is able to withstand potential downside scenarios without compromising operational capability.
Based on this assessment and bearing in mind the nature of the Group's recurring revenue streams and after assessing the 12-month forecasts from date of authorisation of the financial statements, combined with the available headroom in terms of the refinanced debt facility in place should it be required, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Consolidated Financial Statements.
In making the assessment, the Directors did not consider there to be any material uncertainty relating to events or conditions that individually or collectively may cast significant doubt on the Group's ability to continue as a going concern.
2.5 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. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted across the Group. The EBT has been consolidated on the basis that Duke Capital Limited exercises control over the Trust.
2.6 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 operating cashflow, as calculated under IFRS, and therefore no reconciliation is required between the measure of performance used by the Board and that contained in these Consolidated Financial Statements.
For management purposes, the Group's investment objective is to focus on one main operating segment and to invest in a diversified portfolio of hybrid credit finance and related opportunities. At the end of the period the Group has 14 (2024: 15) investments into this segment and has derived income from them. Due to the Group's nature, it has no customers.
2.7 Foreign currency
Functional and presentation currency
Items included in the Consolidated Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The Consolidated Financial Statements are presented in Pounds Sterling, which is also the functional currency of the Company and its subsidiaries.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the reporting date.
Foreign exchange gains and losses relating to the financial assets and financial liabilities carried at fair value through profit or loss are presented in the Consolidated Statement of Comprehensive Income within 'hybrid credit investment', 'term credit investment income' and 'equity investment income'.
Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'net foreign currency movement'. This has been presented below operating costs as this best reflects the true nature of the balance.
2.8 Transaction costs
Transaction costs are costs incurred to acquire financial assets at fair value through profit or loss. They include finders' fees, legal and due diligence fees and other fees paid to agents and advisers. Transaction costs, when incurred, are recognised immediately in profit or loss as an expense. Where transaction costs are in respect of term credit investments (carried at amortised cost), these are offset using the effective interest method.
Transaction costs are also incurred to acquire financial liabilities carried at amortised cost; these are offset using the effective interest method.
2.9 Income tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.10 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.
a. Financial assets at FVTPL
Hybrid credit investments are debt instruments classified at FVTPL under IFRS 9. The return on these investments is linked to a fluctuating revenue stream and thus, whilst the business model is to collect contractual cash flows, such cash flows are not solely payments of principal and interest. Such assets are recognised initially at fair value and remeasured at each reporting date. The change in fair value is recognised in profit or loss and is presented within 'hybrid credit investment income' in the Consolidated Statement of Comprehensive Income. The fair value of these financial instruments is determined using discounted cash flow analysis. Further details of the methods and assumptions used in determining the fair value can be found in note 23.
Investments in equity instruments are classified at FVTPL. The Group subsequently measures all equity investments at fair value and the change in fair value is recognised in profit or loss and is presented within the 'equity investment income' in the Consolidated Statement of Comprehensive Income. Dividends from such investments are recognised in profit or loss when the Group's right to receive payments is established.
b. Financial liabilities at FVTPL
Financial liabilities at FVTPL comprise hybrid credit participation liabilities. These liabilities arise under a contractual agreement between the Group and a strategic partner for the provision of services in connection with the Group's hybrid credit financing arrangements. Under this agreement services are provided in exchange for a percentage of gross royalties' receivable. These instruments are classified at FVTPL on the basis that the liability is linked to the Group's hybrid credit investments. Such liabilities are recognised initially at fair value with the costs being recorded immediately in profit or loss as 'hybrid credit participation fees' and remeasured at each reporting date in order to avoid an accounting mismatch. The change in fair value is recognised in profit or loss and presented within 'hybrid credit investment income'. The fair value of these financial instruments is determined using discounted cash flow analysis. Further details of the methods and assumptions used in determining the fair value can be found in note 23.
2.11 Share-based payments
The Group operates an equity-settled Share Option Plan and a Long-Term Incentive Plan for its Directors and key staff members.
The fair value of awards granted under the above plans is recognised in profit or loss with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the awards granted:
· including any market performance conditions (e.g., the entity's share price);
· excluding the impact of any service and non-market performance vesting conditions (e.g. increase in cash available for distribution, remaining a director for a specified time period); and
· including the impact of any non-vesting conditions.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
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. All expenses recognised in the year in relation to the Group's Share Option and Long-Term Incentive Plan schemes are recognised through the share-based payment reserve.
3. Critical accounting estimates
The preparation of the Consolidated Financial Statements in conformity with IFRS requires management to make 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 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. The following estimates and assumptions that may cause a material adjustment to the carrying amount of assets and liabilities are:
Fair value of hybrid credit investments
Hybrid credit investments are valued using a discounted cash flow analysis. The discount rate used in these valuations has been estimated to take account of market interest rates and the credit worthiness of the investee. Revenue growth has been estimated by the Directors and is based on unobservable market inputs.
Where the hybrid credit investment contains a buy-back clause, the Directors have assessed the likelihood of this occurring. Where occurrence of the buyback is deemed likely, the exit date is built into the discounted cash flow at the appropriate point. At each reporting date, this exit date is reviewed and amended if the buyback assumption has changed.
These assumptions are reviewed semi-annually. The Directors believe that the applied valuation techniques and assumptions used are appropriate in determining the fair value of the hybrid credit investments and have made adjustments to the discount rates and estimated revenue growth where necessary. Further details of the carrying values, methods, assumptions and sensitivities used in determining the fair value can be found in note 23.
Fair value of hybrid credit participation liabilities
The payments falling due under the Group's contract for hybrid credit participation fees are directly linked to the Group's hybrid credit investments and thus the same assumptions have been applied in arriving at the fair value of these liabilities. The Directors have considered whether any increase in discount rate is required to represent the Group's credit risk as the payments are made by the Group rather than the investee and have concluded that none is required since payment under the contract is only due once the Group has received the gross amounts from the investee. Further details of the methods, assumptions and sensitivities used in determining the fair value can be found in note 23.
Fair value of equity investments
The Group's equity investments are not traded in an active market and thus the fair value of the instruments is determined using valuation techniques. The Group makes assumptions based on market conditions at the end of each reporting period. The key estimates that the Directors have made in arriving at the fair values are the price/earnings multiples to be applied to the investee entities' profits. These multiples have been estimated based on market information for similar types of companies. The carrying value of equity investments is disclosed in note 11. Further details of the methods, assumptions and sensitivities used in determining the fair value can be found in note 23.
4. Auditor's remuneration
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Audit of the Consolidated Financial Statements | 107 | 106 |
5. Administration and personnel
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Support services administration fees | 735 | 633 | |
| Directors' fees | 1,291 | 1,206 | |
| Investment Committee fees | 108 | 108 | |
| Personnel costs | 1,375 | 1,125 | |
| 3,509 | 3,072 |
6. Finance costs
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Interest payable on borrowings | 8,611 | 6,413 | |
| Deferred finance costs released to P&L | 843 | 842 | |
| 9,454 | 7,255 |
7. Income tax
The Company has been granted exemption from Guernsey taxation. The Company's subsidiaries in the UK are subject to taxation in accordance with relevant tax legislation.
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Current tax | |||
| Income tax expense | 1,362 | 891 | |
| Deferred tax | |||
| Increase in deferred tax assets | (2,629) | (208) | |
| Total deferred tax benefit | (2,629) | (208) | |
| Income tax (credit) / expense | (1,267) | 683 |
Factors affecting income tax expense for the year
| Profit on ordinary activities before tax | 738 | 12,291 | |
| Guernsey taxation at 0% (2024: 0%) | - | - | |
| UK withholding tax at 20% | 1,042 | 794 | |
| Overseas tax charges at rate higher than 0% | 320 | 97 | |
| Deferred tax benefit | (2,629) | (208) | |
| Income tax expense | (1,267) | 683 |
8. Earnings per share
| 2025 | 2024 | ||
| Total comprehensive income (£'000) | 2,005 | 11,608 | |
| Weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) | 443,930 | 412,955 | |
| Basic earnings per share (pence) | 0.45 | 2.81 | |
| 2025 | 2024 | ||
| Total comprehensive income (£'000) | 2,005 | 11,608 | |
| Diluted weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) | 443,930 | 412,955 | |
| Diluted earnings per share (pence) | 0.45 | 2.81 |
Basic earnings per share is calculated by dividing total comprehensive income for the period by the weighted average number of shares in issue throughout the period, excluding treasury shares (see note 17).
Diluted earnings per share represents the basic earnings per share adjusted for the effect of dilutive potential shares issuable on exercise of share options under the Company's share-based payment schemes, weighted for the relevant period.
All share options, warrants and Long-Term Incentive Plan awards in issue are not dilutive at the year-end as the exercise prices were above the average share price for the period. However, these could become dilutive in future periods.
Adjusted earnings per share
In addition to the GAAP Measures, we present adjusted EPS, a non-GAAP measure, to provide investors with additional insight into our financial performance. Adjusted earnings represent the Group's underlying performance from core activities. Adjusted earnings is the total comprehensive income adjusted for unrealised and non-core fair value movements, non-cash items and transaction-related costs, including hybrid credit participation fees, together with the tax effects thereon. Given the sensitivity of the inputs used to determine the fair value of its investments, the Group believes that adjusted earnings is a better reflection of its ongoing financial performance.
Valuation and other non-cash movements such as those outlined are not considered by management in assessing the level of profit and cash generation of the Group. Additionally, IFRS 9 requires transaction-related costs to be expensed immediately whilst the income benefit is over the life of the asset. As such, an adjusted earnings measure is used which reflects the underlying contribution from the Group's core activities during the year.
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Total comprehensive income for the year | 2,005 | 11,608 | |
| Unrealised fair value movements | 14,070 | 6,854 | |
| Expected credit loss | (78) | (14) | |
| Share-based payments | 409 | 938 | |
| Transactions costs net of costs reimbursed | 257 | 1,120 | |
| Tax effect of the adjustments above at Group effective rate | (1,223) | (494) | |
| Adjusted earnings | 15,440 | 20,012 |
| 2025 | 2024 | ||
| Adjusted earnings for the year (£'000) | 15,440 | 20,012 | |
| Weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) | 443,930 | 412,955 | |
| Adjusted earnings per share (pence) | 3.48 | 4.85 | |
| 2025 | 2024 | ||
| Diluted adjusted earnings for the year (£'000) | 15,440 | 20,012 | |
| Diluted weighted average number of Ordinary Shares in issue, excluding treasury shares (000s) | 443,930 | 412,955 | |
| Diluted adjusted earnings per share (pence) | 3.48 | 4.85 |
9. Hybrid credit investments
Hybrid credit investments are financial assets held at FVTPL that relate to the provision of hybrid credit capital to a diversified portfolio of companies.
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| At 1 April | 210,948 | 191,333 | |
| Additions - cash | 24,500 | 42,012 | |
| Additions - refinancing of term credit investment (note 10) | 3,250 | - | |
| Exits - cash | (3,987) | (17,636) | |
| Settled via issue of equity investment (note 11) | (848) | - | |
| Loss on financial assets at FVTPL | (8,179) | (4,761) | |
| As at 31 March | 225,684 | 210,948 |
Hybrid credit investments are comprised of:
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Non-current | 190,100 | 177,589 | |
| Current | 35,584 | 33,359 | |
| 225,684 | 210,948 |
Hybrid credit investment income on the face of the Consolidated Statement of Comprehensive Income comprises:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Hybrid credit interest | 24,184 | 23,689 | |
| Hybrid credit premiums | 816 | 3,578 | |
| Total hybrid credit cash revenue | 25,000 | 27,267 | |
| Hybrid credit equitised revenue | 2,368 | 600 | |
| Loss on hybrid credit assets at FVTPL | (8,179) | (4,761) | |
| Loss on hybrid credit liabilities at FVTPL | (21) | (92) | |
| 19,168 | 23,014 |
All financial assets held at FVTPL are mandatorily measured as such.
The Group's hybrid credit investment assets comprise hybrid credit financing agreements with 14 (31 March 2024: 15) investees. Under the terms of these agreements the Group advances funds in exchange for annualised hybrid credit distributions. The distributions are adjusted based on the change in the investees' revenues, subject to a floor and a cap. The financing is secured by way of fixed and floating charges over certain of the investees' assets. The investees are provided with buyback options, exercisable at certain stages of the agreements.
During the year, £2,368,000 (2024: £600,000) of hybrid credit interest in two investment partners was converted into ordinary share capital of the respective partners.
10. Term credit investments
Term credit investments are financial assets held at amortised cost. The impact of discounting is immaterial to the Consolidated Financial Statements. The below table shows both the loans at amortised cost and fair value.
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| At 1 April | 5,382 | 4,652 | |
| Additions | 2,286 | 750 | |
| Refinanced via hybrid credit investment (note 9) | (3,250) | - | |
| Settled via issue of equity investment (note 11) | (2,192) | - | |
| ECL allowance | 60 | (20) | |
| Foreign exchange movement | 36 | ||
| As at 31 March | 2,322 | 5,382 |
The Group holds one term credit investment (31 March 2024: two) in connection with the Group's hybrid credit investments. The terms include a floating rate of interest payable on repayment of the investment and a maturity date on or before 4 April 2026.
During the year, £2,193,000 (2024: £nil) of term credit investments were converted into ordinary share capital in one investment partner.
The term credit investments mature as follows:
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| In less than one year | - | - | |
| In one to two years | 2,322 | 5.382 | |
| 2,322 | 5.382 |
Term credit investment income on the face of the Consolidated Statement of Comprehensive Income comprises:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Term credit interest charged | 158 | 453 | |
| 158 | 453 |
ECL analysis
The measurement of ECLs is primarily based on the product of the instrument's probability of default ("PD"), loss given default ("LGD"), and exposure at default ("EAD"). The Group analyses a range of factors to determine the credit risk of each investment. These include, but are not limited to:
· liquidity and cash flows of the underlying businesses;
· security strength;
· covenant cover; and
· balance sheet strength.
If there is a material change in these factors, the weighting of either the PD, LGD or EAD increases, thereby increasing the ECL impairment.
The disclosure below presents the gross and net carrying value of the Group's credit investments by stage:
| Gross carrying amount | Allowance for ECLs | Net Carrying amount |
|||
| As at 31 March 2025 | £'000 | £'000 | £'000 | ||
| Stage 1 | 2,322 | - | 2,322 | ||
| Stage 2 | - | - | - | ||
| Stage 3 | - | - | - | ||
| 2,322 | - | 2,322 | |||
| Gross carrying amount | Allowance for ECLs | Net Carrying amount |
|||
| As at 31 March 2024 | £'000 | £'000 | £'000 | ||
| Stage 1 | 5,402 | (20) | 5,382 | ||
| Stage 2 | - | - | - | ||
| Stage 3 | - | - | - | ||
| 5,402 | (20) | 5,382 |
Under the ECL model introduced by IFRS 9, impairment provisions are driven by changes in credit risk of instruments, with a provision for lifetime expected credit losses recognised where the risk of default of an instrument has increased significantly since initial recognition.
The credit risk profile of the investments has not increased materially and they remain Stage 1 assets. Minor expected credit losses have been charged for the Stage 1 assets.
The following table analyses the Group's provision for ECLs by stage:
| Stage 1 | Stage 2 | Stage 3 | Total | ||||
| £'000 | £'000 | £'000 | £'000 | ||||
| Carrying value at 1 April 2023 | 93 | - | - | 93 | |||
| Expected credit losses on credit investments in year | 20 | - | - | 20 | |||
| Expected credit losses on other receivables in year | (35) | - | - | (35) | |||
| Carrying value at 31 March 2024 | 78 | - | - | 78 | |||
| Expected credit losses on credit investments in year | (60) | - | - | (60) | |||
| Expected credit losses on other receivables in year | (18) | - | - | (18) | |||
| Carrying value at 31 March 2025 | - | - | - | - |
11. Equity investments
Equity investments are financial assets held at FVTPL.
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| At 1 April | 15,904 | 13,529 | |
| Additions - cash | 370 | 3,799 | |
| Additions - equitised revenue | 2,368 | 600 | |
| Additions - receipt of equity as part settlement of hybrid credit investment (note 9) | 848 | ||
| Additions - receipt of equity as part settlement of term credit investment (note 10) | 2,192 | - | |
| Disposals | - | (3) | |
| Proceeds on sale | - | (2,323) | |
| Proceeds on sale - deferred | - | (1,575) | |
| (Loss) / gain on equity assets at FVTPL | (5,870) | 1,877 | |
| As at 31 March | 15,812 | 15,904 |
The Group's net equity investments comprise unlisted shares in 12 capital partners (31 March 2024: 13). During the year, the Company disposed of its equity investment in Step Investments at nil cost.
During the year, £2,368,000 (2024: £600,000) of hybrid credit interest in two investment partners was converted into ordinary share capital of the respective partners.
During the year, £2,193,000 (2024: £nil) of term credit investments were converted into ordinary share capital in one investment partner.
The Group has one ( 31 March 2024: two) unlisted investment in mining entities from its previous investment objectives.
Equity investment income on the face of the Consolidated Statement of Comprehensive Income comprises:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Unrealised gain on equity assets at FVTPL | (5,870) | 325 | |
| Realised gain on equity assets at FVTPL | - | 1,552 | |
| Dividend income | 21 | 48 | |
| (5,849) | 1,925 |
12. Hybrid credit debt liabilities
Hybrid credit debt liabilities are financial liabilities held at FVTPL.
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| At 1 April | 1,104 | 1,142 | |
| Payments made | (87) | (130) | |
| Gain on hybrid credit debt liabilities at FVTPL | 21 | 92 | |
| As at 31 March | 1,038 | 1,104 |
Hybrid credit debt liabilities are comprised of:
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Non-current | 898 | 934 | |
| Current | 140 | 170 | |
| 1,038 | 1,104 |
13. Trade and other receivables
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Current | |||
| Prepayments and accrued income | 362 | 101 | |
| Other receivables | 1,574 | 742 | |
| 1,936 | 843 | ||
| Non-current | |||
| Other receivables | - | 1,574 | |
| 1,936 | 2,417 | ||
14. Trade and other payables
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Current | |||
| Trade payables | 13 | 13 | |
| Transaction costs | 241 | 342 | |
| Accruals and deferred income | 190 | 106 | |
| 444 | 461 | ||
| Non-current | |||
| Transaction costs | 967 | 1,063 | |
| 1,411 | 1,524 |
15. Borrowings
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Current - accrued interest | 723 | 632 | |
| Non-current | 87,611 | 69,772 | |
| 88,334 | 70,404 |
In January 2023, the Group entered into a new credit facility agreement with Fairfax Financial Holdings Limited and certain of its subsidiaries ("Fairfax") and issued Fairfax 41,615,134 warrants. Refer to note 18 for details. The facility amount is up to £100 million and has a five-year term, expiring in January 2028, with a bullet repayment on expiry and no amortisation payments during the five-year term. Furthermore, the interest rate is equal to SONIA plus 5.00% per annum.
At 31 March 2025, £10,000,000 (31 March 2024: £27,000,000) was undrawn on the facility.
At 31 March 2025, £2,336,000 (31 March 2024: £3,228,000) of unamortised warrant costs and fees remained outstanding.
The table below sets out an analysis of net debt and the movements in net debt for the year ended 31 March 2025 and prior year.
| Interest Payable | Borrowings | ||
| £'000 | £'000 | ||
| At 1 April 2024 | 632 | 69,772 | |
| Cash movements | |||
| Loan advanced | - | 17,000 | |
| Deferred finance costs paid | - | (4) | |
| Interest paid | (8,520) | - | |
| Non-cash movements | |||
| Deferred finance costs released to P&L | - | 843 | |
| Interest charged | 8,611 | - | |
| At 31 March 2025 | 723 | 87,611 |
| Interest Payable | Borrowings | ||
| £'000 | £'000 | ||
| At 1 April 2023 | 441 | 53,930 | |
| Cash movements | |||
| Loan advanced | - | 15,000 | |
| Interest paid | (6,222) | - | |
| Non-cash movements | |||
| Deferred finance costs released to P&L | - | 842 | |
| Interest charged | 6,413 | - | |
| At 31 March 2024 | 632 | 69,772 |
16. Goodwill
| Goodwill | |
| £'000 | |
| Opening and closing net book value at 1 April 2023, 31 March 2024 and 31 March 2025. | 203 |
The goodwill has not been assessed for impairment on the basis of materiality.
17. Share capital
| External Shares No. |
Treasury Shares No. |
Total shares No. |
£'000 | ||||
| Allotted, called up and fully paid | |||||||
| At 1 April 2024 | 415,427 | 6,063 | 421,490 | 172,939 | |||
| Shares issued for cash during the year | 85,455 | - | 85,455 | 23,500 | |||
| Share issuance costs | - | - | - | (1,394) | |||
| PSA shares vested during year | 1,316 | (1,316) | - | - | |||
| Shares issued to Employee Benefit Trust during the year | - | 2,871 | 2,871 | - | |||
| At 31 March 2025 | 502,198 | 7,618 | 509,816 | 195,045 | |||
| External Shares No. |
Treasury Shares No. |
Total shares No. |
£'000 | ||||
| Allotted, called up and fully paid | |||||||
| At 1 April 2023 | 407,762 | 9,773 | 417,535 | 172,939 | |||
| PSA shares vested during year | 7,665 | (7,665) | - | - | |||
| Shares issued to Employee Benefit Trust during the period | - | 3,955 | 3,955 | - | |||
| At 31 March 2024 | 415,427 | 6,063 | 421,490 | 172,939 |
There is a single class of shares. There are no restrictions on the distribution of dividends and the repayment of capital with respect to externally held shares. The shares held by the Duke Capital Employee Benefit Trust are treated as treasury shares. The rights to dividends and voting rights have been waived in respect of these shares.
18. Equity-settled share-based payments
Warrant reserve
The following table shows the movements in the warrant reserve during the year:
| Warrants | |||
| No. (000) | £'000 | ||
| At 1 April 2023, 31 March 2024 and 31 March 2025 | 43,990 | 3,036 |
The warrants expire in January 2028 and have an exercise price of 45 pence. A total expense of £2,771,000 has been capitalised and will be amortised over the life of the warrants. In the year to 31 March 2025, an expense of £554,000 (2024: £554,000) was recognised through finance costs in relation to the warrants.
18. Equity-settled share-based payments (continued)
At 31 March 2025, 43,990,000 (31 March 2024: 43,990,000) warrants were outstanding and exercisable at a weighted average exercise price of 45 pence (31 March 2024: 45 pence). The weighted average remaining contractual life of the warrants outstanding was 2.8 years (31 March 2024: 3.5 years).
Share-based payment reserve
The following table shows the movements in the share-based payment reserve during the year:
| LTIP | |
| £'000 | |
| At 1 April 2023 | 3,311 |
| LTIP awards | 938 |
| At 31 March 2024 | 4,249 |
| LTIP awards | 409 |
| At 31 March 2025 | 4,658 |
Share option scheme
The Group operates a share option scheme ("the Scheme"). The Scheme was established to incentivise Directors, staff and 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 4% of the Company's Ordinary Shares in issue from time to time. Options vest immediately and lapse five years from the date of grant.
There were nil options outstanding and exercisable at 31 March 2025 (31 March 2024: nil).
Long-Term Incentive Plan
Under the rules of the Long-Term Incentive Plan ("LTIP") the Remuneration Committee may grant Performance Share Awards ("PSAs") which vest after a period of three years and are subject to various performance conditions. The LTIP awards will be subject to a performance condition based 50 per cent on total shareholder return ("TSR") and 50% on total cash available for distribution ("TCAD per share"). TSR can be defined as the returns generated by shareholders based on the combined value of the dividends paid out by the Company and the share price performance over the period in question. Upon vesting the awards are issued fully paid.
The fair value of the LTIP awards consists of (a) the fair value of the TSR portion; and (b) the fair value of the TCAD per share portion. Since no consideration is paid for the awards, the fair value of the awards is based on the share price at the date of grant, as adjusted for the probability of the likely vesting of the performance conditions.
Since the performance condition in respect of the TSR portion is a market condition, the probability of vesting is not revisited following the date of grant. The probability of vesting of the TCAD per share portion, containing a non-market condition, is reassessed at each reporting date. The resulting fair values are recorded on a straight-line basis over the vesting period of the awards.
The following table shows the movements in the PSAs in issue during the year.
| 2025 | 2024 | ||
| 000s | 000s | ||
| At 1 April | 9,726 | 13,728 | |
| PSAs issued during the year | 6,226 | 3,663 | |
| PSAs vested during the year | (1,318) | (7,665) | |
| PSAs lapsed during the year | (790) | - | |
| At 31 March | 13,844 | 9,726 |
At 31 March 2025, 13,844,000 (31 March 2024: 9,726,000) PSAs were outstanding. The weighted average remaining vesting period of these awards outstanding was 1.5 years (31 March 2024: 1.3 years).
19. Distributable reserves
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.
20. Dividends
The following interim dividends have been recorded in the years to 31 March 2024 and 31 March 2025:
| Dividend per | Dividends | ||||
| share | payable | ||||
| pence/share | £'000 | ||||
| Record date | Payment date | ||||
| 31 March 2023 | 12 April 2023 | 0. 70 | 2,854 | ||
| 23 June 2023 | 12 July 2023 | 0. 70 | 2,854 | ||
| 29 September 2023 | 12 October 2023 | 0. 70 | 2,908 | ||
| 29 December 2023 | 12 January 2024 | 0. 70 | 2,908 | ||
| Dividends paid for the period ended 31 March 2024 | 11,524 |
| Payment date | |||||
| 2 April 2024 | 12 April 2024 | 0. 70 | 2,908 | ||
| 28 June 2024 | 12 July 2024 | 0. 70 | 2,908 | ||
| 27 September 2024 | 14 October 2024 | 0. 70 | 2,918 | ||
| 27 December 2024 | 14 January 2025 | 0. 70 | 3,515 | ||
| Dividends paid for the period ended 31 March 2025 | 12,249 |
A further quarterly dividend was paid post year end and a second announced; refer to note 25 for details.
Rights to dividends have been waived in respect of shares held by the Group's Employee Benefit Trust (see note 17).
21. Deferred tax
The temporary differences for deferred tax are attributable to:
| Hybrid credit investment | Tax losses |
Total | |||
| £'000 | £'000 | £'000 | |||
| 1 April 2023 | 199 | - | 199 | ||
| (Charged) / credited to profit & loss | (4) | 211 | 207 | ||
| At 31 March 2024 | 195 | 211 | 406 | ||
| (Charged) / credited to profit & loss | (5) | 2,634 | 2,629 | ||
| Utilised in year | - | (158) | (158) | ||
| At 31 March 2025 | 190 | 2,687 | 2,877 |
A deferred tax asset has been recognised as it is expected that future taxable profits will be available which the Group can use against the current year tax losses.
22. Related parties
Directors' fees
The following fees were payable to the Directors during the year:
| Basic fees | Annual bonus | Share-based payment | Total | Basic fees | Annual bonus | Share-based payment | Total | ||
| 2025 | 2025 | 2025 | 2025 | 2024 | 2024 | 2024 | 2024 | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Non-Executive | |||||||||
| N Birrell | 70 | - | - | 70 | 60 | - | - | 60 | |
| M Wilms | 50 | - | - | 50 | 45 | - | - | 45 | |
| M Wrigley | 50 | - | - | 50 | 45 | - | - | 45 | |
| Executive | |||||||||
| N Johnson | 330 | 216 | 122 | 668 | 300 | 240 | 243 | 783 | |
| C Cannon Brookes | 330 | 216 | 116 | 662 | 300 | 216 | 221 | 737 | |
| 830 | 432 | 238 | 1,500 | 750 | 456 | 464 | 1,670 |
The annual bonus paid in the current financial year to 31 March 2025 related to Group's performance for the year to 31 March 2024.
Fees relating to Charles Cannon Brookes are paid to Arlington Group Asset Management Limited.
Directors' fees include the following expenses relating to awards granted under the Group's Long-Term Incentive Plan (see note 18):
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| N Johnson | 122 | 243 | |
| C Cannon Brookes | 116 | 221 | |
| 238 | 464 |
At 31 March 2025, no Directors' fees were outstanding (2024: no fees outstanding).
Investment Committee fees
The Group's Investment Committee assists in analysing and recommending potential hybrid credit transactions and its members are considered to be key management along with the Directors.
The following fees were payable to the members of the Investment Committee during the year:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| A Carragher | 20 | 20 | |
| J Romeo | 20 | 20 | |
| J Cochrane | 20 | 20 | |
| J Webster | 48 | 59 | |
| 108 | 119 |
Investment Committee fees include the following expenses relating to awards granted under the Group's Long-Term Incentive Plan (see note 18):
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| J Webster | - | 11 |
Support services administration fees
The following amounts were payable to related parties during the year in respect of support services fees:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| Abingdon Capital Corporation | 635 | 533 | |
| Arlington Group Asset Management Limited | 100 | 100 | |
| 735 | 633 |
Support Service Agreements with Abingdon Capital Corporation ("Abingdon"), a company of which Neil Johnson is a director, and Arlington Group Asset Management Limited ("Arlington"), a company of which Charles Cannon Brookes is a director, were signed on 16 June 2015. The services to be provided by both Abingdon and Arlington include global deal origination, vertical partner relationships, office rental and assisting the Board with the selection, execution and monitoring of capital partners and investment performance. Abingdon fees also include fees relating to remuneration of staff residing in North America.
Share options and LTIP awards
The Group's related parties, either directly or beneficially, held share options issued under the Group's Long-Term Incentive Plan as follows:
| LTIP awards | |||
| 2025 | 2024 | ||
| No. | No. | ||
| N Johnson | 4,049 | 2,729 | |
| C Cannon Brookes | 3,823 | 2,457 | |
| 7,872 | 5,186 |
Dividends
The following dividends were paid to related parties:
| 2025 | 2024 | ||
| £'000 | £'000 | ||
| N Johnson1 | 206 | 179 | |
| C Cannon Brookes2 | 296 | 257 | |
| N Birrell | 40 | 37 | |
| M Wrigley | 1 | 1 | |
| M Wilms | 3 | - | |
| J Webster | - | 18 | |
| J Cochrane | 28 | 28 | |
| A Carragher | 15 | 15 | |
| J Romeo | 5 | 5 | |
| 594 | 540 |
1 Includes dividends paid to Abinvest Corporation, a wholly owned subsidiary of Abingdon
2 Includes dividends paid to Arlington
23. Fair value measurements
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 data (unobservable inputs).
The Group has classified its financial instruments into the three levels prescribed as follows:
| 31-Mar-25 | 31-Mar-24 | ||
| Level 3 | Level 3 | ||
| £'000 | £'000 | ||
| Financial assets | |||
| Financial assets at FVTPL | |||
| - Hybrid credit investments | 225,684 | 210,948 | |
| - Equity investments | 15,812 | 15,904 | |
| 241,496 | 226,852 | ||
| Financial assets at amortised cost | |||
| - Term credit investments | 2,322 | 5,382 | |
| 243,818 | 232,234 | ||
| Financial liabilities | |||
| Financial liabilities at FVTPL | |||
| - Hybrid credit debt liabilities | 1,038 | 1,104 | |
| Financial liabilities at amortised cost | |||
| - Borrowings | 88,334 | 70,404 | |
| 89,372 | 71,508 |
The fair value of the financial assets at amortised cost at 31 March 2025 is £2,322,000 (2024: £5,382,00). The fair value of the financial liabilities at amortised cost at 31 March 2025 is £89,861,000 (2024: £73,448,000)
The following table presents the changes in level 3 items for the years ended 31 March 2025 and 31 March 2024:
| Financial | Financial | ||||
| assets | liabilities | Total | |||
| £'000 | £'000 | £'000 | |||
| At 1 April 2024 | 232,234 | (71,508) | 160,726 | ||
| Additions - hybrid credit | 27,750 | - | 27,750 | ||
| Additions - term credit | 2,286 | - | 2,286 | ||
| Additions - equity | 5,778 | - | 5,778 | ||
| Additions - borrowings | - | (17,000) | (17,000) | ||
| Repayments - hybrid credit | (4,835) | - | (4,835) | ||
| Repayments - term credit | (5,442) | - | (5,443) | ||
| Hybrid credit participation liabilities paid | - | 87 | 87 | ||
| Net change in FV - hybrid credit investment | (8,179) | - | (8,179) | ||
| Net change in FV - equity | (5,870) | - | (5,870) | ||
| Net change in interest | - | (91) | (91) | ||
| ECL provision | 60 | - | 61 | ||
| Deferred finance costs | - | (839) | (839) | ||
| Foreign currency movement | 36 | (21) | 15 | ||
| At 31 March 2025 | 243,818 | (89,372) | 154,446 | ||
23. Fair value measurements (continued)
| Financial | Financial | ||||
| assets | liabilities | Total | |||
| £'000 | £'000 | £'000 | |||
| At 1 April 2023 | 209,514 | (55,513) | 154,001 | ||
| Additions - hybrid credit | 42,012 | - | 42,012 | ||
| Additions - term credit | 750 | - | 750 | ||
| Additions - equity | 4,399 | - | 4,399 | ||
| Additions - borrowings | - | (15,000) | (15,000) | ||
| Repayments - hybrid credit | (17,636) | - | (17,636) | ||
| Repayments - term credit | - | - | - | ||
| Repayments - equity | (3,901) | - | (3,901) | ||
| Hybrid credit participation liabilities paid | - | 130 | 130 | ||
| Net change in FV - hybrid credit investment | (4,761) | (92) | (4,853) | ||
| Net change in FV - equity | 1,877 | - | 1,877 | ||
| Net change in interest | - | (191 | (191) | ||
| ECL provision | (20) | - | (20) | ||
| Deferred finance costs | - | (842) | (842) | ||
| At 31 March 2024 | 232,234 | (71,508) | 160,726 |
Valuation techniques used to determine fair values
The fair value of the Group's hybrid credit financial instruments is determined using discounted cash flow analysis and all the resulting fair value estimates are included in level 3. The fair value of the equity instruments is determined applying an EBITDA multiple to the underlying businesses' forward-looking EBITDA. All resulting fair value estimates are included in level 3.
Valuation processes
The main level 3 inputs used by the Group are derived and evaluated as follows:
Annual adjustment factors for hybrid credit investments and hybrid credit participation liabilities
These factors are estimated based upon the underlying past and projected performance of the hybrid credit investee companies together with general market conditions.
Discount rates for financial assets and financial liabilities
These are initially estimated based upon the projected internal rate of return of the hybrid credit investment and subsequently adjusted to reflect changes in credit risk determined by the Group's Investment Committee.
EBITDA multiples
These multiples are based on comparable market transactions.
Forward-looking EBITDA
These are estimated based on the projected underlying performance of the hybrid credit investee companies together.
Changes in level 3 fair values are analysed at the end of each reporting period and reasons for the fair value movements are documented.
Valuation inputs and relationships to fair value
The following summary outlines the quantitative information about the significant unobservable inputs used in level 3 fair value measurements:
Hybrid credit investments
The unobservable inputs are the annual adjustment factor and the discount rate. The range of annual adjustment factors used is -6.0% to 6.0% (2024: -6.0%% to 6.0%) and the range of risk-adjusted discount rates is 7.2% to 17.7% (2024: 14.7% to 17.7%).
An increase in the annual revenue growth rates (subject to the collars set under the terms of the hybrid credit financing agreements) of 5% would increase the fair val ue by £997,000 (2024 : £1,160,000).
A decrease in the annual revenue growth rates (subject to the collars set under the terms of the hybrid credit financing agreements) of 5% would decrease the fair value by £995,000 (2024: £1,362,000).
An increase in the discount rate of 25 basis points would decrease the fair v alue by £2,262,000 (2024: £2,616,000).
A reduction in the discount rate of 25 basis points would increase the fair value by £2,312,000 (2024: £2,369,000).
Equity investments
The unobservable inputs are the EBITDA multiples and forward-looking EBITDA. The range of EBITDA multiples used is 4.3x to 7.9x (2024: 4.2x to 8.0x).
An increase in the EBITDA multiple of 25 basis points would increase fair value by £1,769,000 (2024: £1,687,000).
A decrease in the EBITDA multiple of 25 basis points would decrease fair value by £1,769,000 (2024: £1,971,000).
An increase in the forward-looking EBITDA of 5% would increase the fair value by £2,077,000 (2024: £2,086,000).
A decrease in the forward-looking EBITDA of 5% would decrease fair value by £2,077,000 (2024: £2,406,000).
Hybrid credit participation instruments
The unobservable inputs are the annual adjustment factor and the discount rate used in the fair value calculation of the hybrid credit investments. The range of annual adjustment factors used is -6%% to +6%% (2024: -6.0% to 6.0%) and the range of risk-adjusted discount rates is 16.3% to 17.7% (2024: 16.3% to 17.7%).
An increase in the annual adjustment factor (subject to the collars set under the terms of the hybrid credit financing agreements) of 5% would increase the fair value of the liability by £3,000 (2024: £5,000).
A decrease in the annual adjustment factor (subject to the collars set under the terms of the hybrid credit financing agreements) of 5% would decrease the fair value of the liability by £2,000 (2024: £9,000).
An increase in the discount rate of 25 basis points would decrease the fair value of the liability by £10,000 (2024: £12,000).
A reduction in the discount rate of 25 basis points would increase the fair value of the liability by £10,000 (2024: £12,000).
24. Financial risk management
The Group's hybrid credit financing activities expose it to various types of risk that are associated with the investee companies to which it provides hybrid credit finance. The most important types of financial risk to which the Group is exposed are market risk, liquidity risk and credit risk. Market risk includes other 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.
Principal financial instruments
The principal financial instruments used by the Group from which financial instrument risk arises, are as follows:
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Financial assets held at FVTPL | |||
| Hybrid credit investments | 225,684 | 210,948 | |
| Equity investments | 15,812 | 15,904 | |
| Total financial assets held at FVTPL | 241,496 | 226,852 | |
| Financial assets held at amortised cost | |||
| Term credit investments | 2,322 | 5,382 | |
| Cash and cash equivalents | 19,767 | 2,896 | |
| Trade and other receivables | 1,936 | 2,316 | |
| Total financial assets held at amortised cost | 24,025 | 10,594 | |
| Total financial assets | 265,521 | 237,446 | |
| Financial liabilities held at amortised cost | |||
| Bank borrowings | (88,334) | (70,404) | |
| Trade and other payables | (1,411) | (1,524) | |
| Total financial liabilities held at amortised cost | (89,745) | (71,928) | |
| Financial liabilities held at FVTPL | (1,038) | (1,104) | |
| Total financial liabilities | (90,783) | (73,032) |
The policies and processes for measuring and mitigating each of the main risks are described below.
Market risk
Market risk comprises foreign exchange risk, interest rate risk and other price risk.
Foreign exchange 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 Group is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the Euro. Foreign exchange risk arises from future commercial transactions in recognised assets and liabilities denominated in a currency that is not the functional currency of the Company and its subsidiary.
The Board monitors foreign exchange risk on a regular basis. The Group's exposure to this risk is outlined below.
The Group's exposure to foreign currency risk at the end of the reporting period was as follows:
| 31-Mar-25 | 31-Mar-25 | 31-Mar-25 | 31-Mar-24 | 31-Mar-24 | 31-Mar-24 | ||||||
| Euro | US Dollar | CAD Dollar | Euro | US Dollar | CAD Dollar | ||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
| Hybrid credit investment | - | 28,759 | 14,657 | 4,625 | 26,901 | 15,380 | |||||
| Equity investments | 8,648 | 1,356 | - | 8,278 | 650 | - | |||||
| Cash and cash equivalents | - | 9 | 241 | 81 | 34 | 273 | |||||
| Trade and other receivables | - | - | - | 741 | - | - | |||||
| Transaction costs payable | - | (1,209) | - | - | (1,405) | - | |||||
| 8,648 | 28,915 | 14,898 | 13,725 | 26,180 | 15,653 |
Sensitivity analysis has been performed by assessing the effect of a 5% (2024: 5%). movement in the exchange rate on the Group's assets and liabilities. 5% appears reasonable given the low volatility in the exchange rate over the last 12 months. If Sterling strengthens by 5% against the Euro, the net Euro-denominated assets would reduce by £412,000 (2024: £654,000). Conversely, if Sterling weakens by 5% the assets would increase by £455,000 (2024: £722,000).
If Sterling strengthens by 5% against the US Dollar, the net US Dollar-denominated assets would reduce by £1,377,000 (2024: £1,247,000). Conversely, if Sterling weakens by 5% the assets would increase by £1,522,000 (2024: £1,378,000).
If Sterling strengthens by 5% against the Canadian Dollar, the net Canadian Dollar-denominated assets would reduce by £709,000 (2024: £745,000). Conversely, if Sterling weakens by 5% the assets would increase by £784,000 (2024: £824,000).
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial asset will fluctuate because of changes in market interest rates.
The Group's main interest rate risks arise in relation to its hybrid credit investments, which are carried at fair value through profit or loss, and its borrowings, which are subject to an interest charge of one-month UK SONIA +5.00%. The Group's hybrid credit investments have a fair value at the reporting date of £224,850,000 (31 March 2024: £210,948,000). A sensitivity analysis in respect of these assets is presented in note 23.
The Group only holds on term credit investment (2024:2), which is subject to a floating interest rate. A movement of 100bps in the base rate impacts term credit interest by £23,000 (2024: £33,000).
The Group's borrowings at the reporting date are £88,334,000 (31 March 2024: £70,404,000); see note 15. A movement in the rate of SONIA of 100bps impacts loan interest payable by £900,000 (31 March 2024: £697,000).
Other price risk
Other price risk is the risk that the fair value of future cash flows of a financial asset will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign exchange risk).
The fair value of the Group's hybrid credit investments fluctuates due to changes in the expected annual adjustment factors applied to the hybrid credit payments that are payable by each of the investee companies, which are based upon the revenue growth of the investee company.
A sensitivity analysis in respect of the annual adjustment factors applied to the hybrid credit investments is presented in note 23.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
The Group's maximum exposure to credit risk is as follows:
| 31-Mar-25 | 31-Mar-24 | ||
| £'000 | £'000 | ||
| Hybrid credit investments | 225,684 | 210,948 | |
| Term credit investments | 2,322 | 5,382 | |
| Cash and cash equivalents | 19,767 | 2,896 | |
| Trade and other receivables | 1,936 | 2,316 | |
| 249,709 | 221,542 |
Hybrid credit investments
The hybrid credit investments relate to the Group's 14 hybrid credit financing agreements. At the reporting date, there was £4,628,000 of hybrid credit cash payments outstanding (31 March 2024: £7,492,000) from three capital partners (31 March 2024: five). Of this, £491,000 (31 March 2024: £58,000) was received in the month post year-end. Payment plans are being agreed to recover the £4,136,000 from all three capital partners over the next five years.
The Group monitors the credit worthiness of the investee companies on an ongoing basis and receives regular financial reports from each investee company. These reports are reviewed by the Board on a semi-annual basis. The credit risk relating to these investments is taken into account in calculating the fair value of the instruments.
The Group also has security in respect of the hybrid credit investments which can be called upon if the counterparty is in default under the terms of the agreement.
Term credit investments
The Group's term credit investments are held at amortised cost. All loans have been reviewed by the directors. The Board considered the credit risk, both at issue and at the year-end, and has determined that there have been no significant movements. Consequently, any loss allowance is limited to 12 months' expected losses and such allowances are considered to be immaterial.
Cash and cash equivalents
The credit quality of the Group's cash and cash equivalents can be assessed by reference to Moody's external credit ratings. All the Group's cash and cash equivalents were assessed as A1 (31 March 2024: all A1).
The Group considers that the credit risk relating to cash and cash equivalents is acceptable.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty 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.
At the year end the Group had access to an undrawn borrowing facility of £10,000,000 (2024: £27,000,000); see note 15.
The table below analyses the Group's hybrid credit investments and financial liabilities into relevant maturity groupings based on their undiscounted contractual maturities.
| Less than one year | One to five years |
Over five years | Total | ||||
| As at 31 March 2025 | £'000 | £'000 | £'000 | £'000 | |||
| Hybrid credit investments | 39,307 | 210,654 | 464,348 | 714,309 | |||
| Hybrid credit liabilities | (114) | (606) | (2,374) | (3,094) | |||
| Trade and other payables | (484) | (790) | (333) | (1,607) | |||
| Borrowings | (8,524) | (105,903) | - | (114,427) | |||
| 30,185 | 103,355 | 461,641 | 595,181 |
| Less than one year | One to five years |
Over five years | Total | ||||
| As at 31 March 2024 | £'000 | £'000 | £'000 | £'000 | |||
| Hybrid credit investments | 33,898 | 136,474 | 769,167 | 939,539 | |||
| Hybrid credit liabilities | (153) | (925) | (2,535) | (3,613) | |||
| Trade and other payables | (402) | (790) | (333) | (1,525) | |||
| Borrowings | (632) | (69,772) | - | (70,404) | |||
| 32,711 | 64,987 | 766,299 | 863,997 |
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.
25. Events after the financial reporting date
Dividends
On 14 April 2025 the Company paid a quarterly dividend of 0.70 pence per share. On 19 June 2025, the Company announced a quarterly dividend of 0.70 pence per share, due to be paid on 14 July 2025.
New investments
On 2 April 2025, the Group announced a follow-on investment of £3.3m into its existing capital partner, New Path Fire and Security Limited.
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