Slide 1: FY2022 Financial Results
FY2022 Financial Results September 2022 AIM: DUKE
Slide 2: Disclaimer
Disclaimer These presentation slides and the accompanying verbal presentation (the “Presentation or in part, for any purposes whatsoever. In particular, they should not be distributed to or Materials”), are confidential and have been prepared by Duke Royalty Limited (the “Company”). otherwise made a
Slide 3: Corporate Overview
Corporate Overview Corporate Royalties are a hybrid between private credit and private equity, for owner-operators who want to maintain control of their business Capital Preservation Attractive Dividend Upside from Buyouts Yield Long term investment horizon Quarterly dividend payment and Buyouts typ
Slide 4: Duke Royalty's Formula for Success
Duke Royalty’s Formula for Success Five years of building the European leader in corporate royalties • Build the equity base Focus on cash `` FY18-FY20 • Build the portfolio flow & Establish • Build the cash flow dividends presence • Demonstrate downside protection during crisis Define market Prove
Slide 5: Financial Highlights
Financial High > ee en , DUKE alll AWARDS 2021 ROYALTY __ WINNER
Slide 6: Financial Highlights
Financial Highlights Financial metrics strengthen as deployments scale Total cash revenue (£m) Free cash flow (£m) Net income (£m) 20.0 18.4 15.0 30.0 12.1 20.4 15.0 20.0 14.0 10.3 11.0 10.0 7.5 10.0 1.8 10.0 5.4 5.8 4.0 0.0 5.0 5.0 -10.0 -0.9 1.0 0.3 -8.9 0.0 0.0 -20.0 FY18 FY19 FY20 FY21 FY22 FY18
Slide 7: Cashflow Highlights
Cashflow Highlights Significant increased cash flow generation creating operating leverage Opex % 76% 24% 27% 20% 14% 20,000,000 18.4 18,000,000 16,000,000 14,000,000 12,000,000 11.0 10.3 10,000,000 8,000,000 5.8 6,000,000 4,000,000 2.8 2.2 2.5 2,000,000 1.0 1.4 0.8 0 FY18 FY19 FY20 FY21 FY22 Total
Slide 8: Investment Growth
Investment Growth Acceleration of deployments leads to increased free cash flow and reduced payout ratio 2.80p per share of current annualised dividend1 13.00p of dividends / share paid since inception Portfolio cost (£m) Free cash flow / share (p) Payout ratio (%) 180 4.00 400% 160 3.50 350% 140 3.
Slide 9: Balance sheet
Balance sheet Balance sheet strengthening as portfolio matures 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 £000 £000 £000 £000 £000 Royalty investments 23,569 71,232 75,559 85,301 160,479 Loan investments - 9,626 9,517 4,949 4,172 Equity investments - - 507 3,495 10,820 Investment portfolio fa
Slide 10: Portfolio Highlights
Portfolio High py dure SSE awarvs 2021 i ROYALTY ____WINNER
Slide 11: Portfolio Summary
Portfolio Summary Credit metrics strengthen as portfolio grows Portfolio book cost (£m) Annual deployments (£m) Max single name exposure 200 80 75 15.0% 13.1% 13.1% 156 10.6% 150 60 10.0% 95 88 100 40 20 23 5.0% 50 20 0 0 0.0% FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 Current Contractual payments made
Slide 12: Portfolio Diversification
Portfolio Diversification Risk mitigation and increased diversification as deployments accelerate Portfolio by region Portfolio by sector Use of capital % of total cost % of total cost % of total cost 9% 7% 19% 10% 19% 37% 12% 51% 58% 23% 20% 35% UK - 7 Industrials - 5 Acquisition Capital - 6 North
Slide 13: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types December 2021 December 2021 July 2021 July 2021 June 2021 SPECIALIST CARE INDUSTRIALS INDUSTRIALS I.T. SERVICES HEALTHCARE Equity Stake: Equity Stake: Equity Stake: Equity Stake: Equi
Slide 14: Our Royalty Partners and their Operating Subsidiaries
Our Royalty Partners and their Operating Subsidiaries Duke’s exposure is diversified across 48 underlying operating companies Step Investments Bay Broadcasting Limited BIL 14
Slide 15: Duke's Investors: Top Global Funds
Duke’s Investors: Top Global Funds Strong base of blue-chip institutional investors1 with significant management ownership 9.95% 9.07% 6.99% 6.44% 6.37% 5.61% ownership ownership ownership ownership ownership ownership Directors, Management, Insiders 5.56% 4.76% 4.27% 3.93% 3.61% 3.02% ownership own
Slide 16: Post-Period End Highlights
Post-Period End Highlights Continued progress announced post-period end Finance Portfolio Pipeline • Record £5.1 million of • £5.4 million of follow-on • Strong pipeline of new cash revenue in Q1 FY23 investments into inTec opportunities under and Tristone review • £5.2 million of cash revenue forec
Slide 17: Summary
Summary As the only London listed corporate royalty company, Duke Royalty has pioneered corporate royalty financing in the UK and Europe. Capital preservation High operational leverage Downside protection evident from previous Cash operating costs down to 14% of total market downturns cash revenue i
Slide 18: Appendix
Appendix py dure SSS AWARDS 2021 ROYALTY ____WINNER
Slide 19: Consolidated Statement of Cashflows
Consolidated Statement of Cashflows FY2022 FY2021 FY2020 £000 £000 £000 Receipts from royalty investments 14,701 9,931 8,977 Receipts of interest from loan investments 580 667 1,268 Other operating receipts 543 438 90 Operating expenses paid (2,487) (2,154) (2,811) Payments for royalty participation
Slide 20: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income FY2022 FY2021 FY2020 £000 £000 £000 Income Royalty investment income 18,037 19,344 (2,994) Loan investment income 533 636 1,235 Equity investment income 9,678 1,569 (670) Other operating income 543 93 90 Impairment loss on loan investments - - (2,947) T
Slide 21: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 31-Mar-22 31-Mar-21 31-Mar-20 £000 £000 £000 Goodwill 203 203 203 Royalty finance investments 139,648 71,107 59,435 Loan investments 3,172 4,370 4,418 Equity investments 10,820 3,495 507 Trade and other receivables - 5,618 - Deferred tax asset 156 158 675
Slide 22: An Experienced Team, Including Royalty Pioneers
An Experienced Team, Including Royalty Pioneers Management and investment committee have royalty experience of 70+ years Neil Johnson – Executive Director and CEO Charlie Cannon-Brookes – Executive Jim Webster – Chairman of Investment • Pioneered UK listings for Canadian and UK Director Committee du
Slide 23: What is Royalty Financing?
What is Royalty Financing? A long-term participating loan with similar characteristics to traditional royalties • Alternative financing with features of debt and equity, which allows company owners to keep control of their business without refinancing risk • Duke provides a lump sum of capital to a
Slide 24: An Established Alternative Financing Solution
An Established Alternative Financing Solution Corporate royalties appeal to owners who need capital but want to retain control Debt Royalty Private Equity Term 3-7 years 25-40 years Permanent dilution Refinancing risk Significant None Pressure to exit Control Passive Passive Loss of control Covenant
Slide 25: Duke Royalty's Terms and Criteria
Duke Royalty’s Terms and Criteria Minimally-dilutive capital with no re-financing risk for long-standing, profitable, owner-managed companies • 30-year participating loan, no bullet repayment Corporate royalty terms • Annual adjustments of +/-6% based on revenue change • Senior security sought on av
Slide 26: How our Model Benefits Investors
How our Model Benefits Investors Royalty company shareholders benefit from attractive returns and increasing valuation as they diversify their investment portfolios Compounding Annuity-like opportunity High level of through participation revenue streams in growth by annual operational gearing adjust
Slide 27: Funding Solutions
Funding Solutions Key examples of how Duke’s funding solution has been used by owner-operators to drive growth and increase shareholder value Debt or Acquisition equity MBOs capital restructuring Allows experienced Debt refinancing or management teams to Flexible financing model shareholders exiting
Slide 28: ESG Considerations
ESG Considerations Duke Royalty’s ESG Assessment Framework Category Duke’s Policy Duke’s Evaluation of Company’s ESG Policies Risks: 1) What environmental risks has Duke identified that are associated with [Company’s] business model & industry? ▪ We encourage companies to 2) What challenges does [Co
Slide 29: Strong Origination and Due Diligence
Strong Origination and Due Diligence Origination process Origination through relationships Relationship driven, Healthy pipeline of investment opportunities management and financial strength more important than industry sector Indication of interest submitted Initial analysis of investment opportuni
Slide 30: Withstanding Challenges
Withstanding Challenges Duke’s proven resilience in turbulent market conditions Brexit and Supply Chain Ukraine / Inflation COVID-19 Issues Russia War • Portfolio has withstood • Portfolio has been working to • No direct impact to any of • The annual yield adjustment shocks of Brexit and Covid-19 mi
Slide 31: DUKE
MM DUKE ROYALTY AWARDS 2021 WINNER WY )