Good morning!
I’ll start today’s report with Duke Royalty (LON:DUKE) and Haynes Publishing (LON:HYNS). and then will see where to go from there.
Duke Royalty (LON:DUKE)
Share price: 48p (+0.7%)No. of shares: 240 millionMarket cap: £115 millionInterim Results
Many of you will be familiar with this one: it provides investments to private companies in the form of royalties.
We can think of it as a type of corporate mortgage: the investee pays flat payments to Duke over a very long period of time (e.g. 30 years). There is no final maturity date on which the principal is paid back – the principal is considered to be paid back over the course of the agreement.
Except there is one major difference, namely, that the payments aren’t flat. They increase or decrease (subject to a floor and a cap) in line with revenue changes at the investee.
It’s a bit like if the bank increased your mortgage payments by 5%, whenever your income increased by 5% (or reduced them if your income declined).
It’s an innovative structure, and I was a shareholder…
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