Duke Capital Reports Resilient Final Results for FY26 Amid Macroeconomic Uncertainty

Duke Capital’s FY26 results are a solid reminder of what this business is supposed to be – a cash-generative income vehicle first, and a growth story second. The headline numbers look good: cash revenue rose, free cash flow rose, profit after tax jumped, and the dividend was held. But underneath that, there are a few pressure points investors should not ignore.

If you own Duke for dependable income, this update is broadly reassuring. If you own it for clean, low-risk compounding, the fully drawn debt facility, weaker adjusted earnings and stress in two partner companies mean this was not a spotless year.

Duke Capital FY26 results: the key numbers retail investors need to know

Metric	FY26	FY25	Change
Total cash revenue	£28.6 million	£26.6 million	+7%
Recurring cash revenue	£27.1 million	£25.8 million	+5%
Free cash flow	£14.2 million	£12.6 million	+13%
Free cash flow per share	2.82p	2.83p	Flat
Profit after tax	£11.0 million	£2.0 million	+448%
Adjusted earnings	£13.9 million	£15.4 million	-10%
Dividend per share	2.80p	2.80p	Flat
Year-end cash	£8.3 million	£19.8 million	-58%
Total investment portfolio	£263.9 million	£243.8 million	+8%

Duke Capital recurring cash revenue and free cash flow show the model still works

The best part of this RNS is that Duke’s core engine kept moving forward. Recurring cash revenue – the regular income Duke receives from its capital partners, excluding one-off exit gains – rose to £27.1 million. Free cash flow, which is the cash left after operating inflows, transaction costs and borrowing interest, increased to £14.2 million.

That matters because Duke is built to pay shareholders an income stream from real cash, not just accounting profits. On that measure, FY26 was decent. The company also says it expects £7.0 million of recurring cash revenue in Q1 FY27, which suggests the new year has started on a stable footing.

I think this is the main positive takeaway. In a difficult environment, Duke still produced more cash from the portfolio. That is exactly what investors in this kind of alternative lender want to see.

Duke Capital dividend in FY26: covered, but only just

The annual dividend stayed at 2.80p per share, marking 36 consecutive quarters of dividends since formation. Total dividend payments came to £14.1 million, almost exactly in line with free cash flow of £14.2 million.

That is both encouraging and worth watching. Encouraging, because the dividend was effectively covered by cash flow. Worth watching, because there was very little headroom.

There is another wrinkle here. Free cash flow per share was 2.82p, only a shade above the 2.80p dividend, while adjusted earnings per share were 2.77p, slightly below the dividend. That does not scream immediate danger, but it does tell you Duke is running with fairly tight dividend cover rather than loads of spare capacity.

Duke Capital profit surge looks strong, but the accounting detail matters

Profit after tax jumped to £11.0 million from £2.0 million. On the face of it, that looks spectacular. In reality, a big chunk of that improvement came from a much smaller drag from non-cash fair value movements across the investment portfolio.

In plain English, fair value movements are paper revaluations rather than cash landing in the bank. Duke had a £14.1 million fair value loss in FY25, which improved to a £2.9 million loss in FY26. So yes, profit improved sharply, but investors should not read that as a sudden explosion in trading momentum.

Adjusted earnings actually fell 10% to £13.9 million, mainly because there was no full investment exit in FY26 like in previous years. That makes this result more about resilience than acceleration.

Duke Capital portfolio strategy: follow-on investments into known partners look sensible

Duke deployed more than £21 million, but almost entirely into existing capital partners rather than brand new deals. That included £6.0 million into Integrum Care Group, £3.7 million into Step Investments and £2.7 million into New Path Fire & Security.

I like that approach in this market. When conditions are uncertain, backing management teams you already know can be more sensible than chasing fresh deal flow just to look busy. Duke is effectively saying it would rather deepen proven relationships than stretch for growth.

The total investment portfolio rose to £263.9 million, with hybrid credit investments up to £248.9 million. Hybrid credit is Duke’s blend of debt-like income and equity-like upside. It is the heart of the model, and it is clearly still where management wants to put capital.

There was also a positive reminder that exits can create extra upside. Duke received the final deferred consideration from Fabrikat, with the overall realisation delivering a 35% internal rate of return over five years.

Duke Capital risks in FY26: fully drawn debt, overdue partner payments and two restructurings

Now for the less comfortable bits. Year-end cash fell to £8.3 million from £19.8 million, and Duke’s £100 million borrowing facility with Fairfax was fully drawn at the year end. The interest rate is SONIA plus 5.00% per annum, so this is not cheap money.

That matters because higher borrowing costs eat into shareholder returns. Duke paid £8.5 million of interest on borrowings in FY26, broadly unchanged year on year, but the facility is now fully utilised. There is less financial flexibility than there was a year ago.

Another point investors should take seriously is portfolio stress. Duke said it has started reorganising two partner companies post period end, involving the sale or closure of parts of their groups. Management says the focus is on capital preservation, which is the right priority, but restructurings are never a sign that everything is humming along nicely.

There is also a rise in overdue receipts. At the reporting date, £9.154 million of hybrid credit cash payments were outstanding from five capital partners, up from £4.628 million across three partners a year earlier. Duke did receive £1.141 million of this in the month after year end, which helps, but the direction of travel is clearly not ideal.

Duke Capital FY27 outlook: stable income story, but investors should expect a tougher path

Management sounds cautious, and I think that is sensible. The company sees weaker growth prospects across the portfolio, higher-for-longer rates, and a tougher backdrop for private credit.

There are some possible upside triggers. Two capital partners are currently in formal M&A sale processes with Tier 1 investment banks, and both could exit in the current financial year. If either completes on good terms, that could support both cash generation and sentiment.

Still, this is not a slam-dunk growth story right now. It is a yield-focused business trying to protect capital, maintain the dividend and work through stress in parts of the portfolio. On balance, the FY26 results are positive because the cash engine held up, but they also show why Duke needs disciplined execution from here.

What Duke Capital shareholders should watch after these final results

• Whether recurring cash revenue keeps growing from the £27.1 million base.
• Whether the 2.80p dividend remains covered with more breathing room.
• Progress on the two partner restructurings.
• Whether overdue partner payments reduce from the £9.154 million reported at year end.
• Any exits from the two partners currently in M&A processes.
• Whether Duke can improve liquidity given the Fairfax facility was fully drawn.

My overall read: this was a credible set of results with a healthy dose of realism. Duke Capital is still doing the most important thing – turning its portfolio into cash – but the margin for error looks tighter than it did before. For income investors, that keeps the story alive. For anyone expecting an easy ride, this RNS says otherwise.