Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — H1 FY2021 Earnings Presentation
23 slides from Duke Capital's earnings presentation, December 2020
Slide 1: Interim 2021 Financial Results Presentation
Interim 2021 Financial Results Presentation December 2020 AIM: DUKE
Slide 2: Disclaimer
Disclaimer These presentation slides and the accompanying verbal presentation (the “Presentation Materials”), are confidential and have been prepared by Duke Royalty Limited (the “Company”). They do not constitute or form part of any offer for sale or subscription or any solicitation for any offer t
Slide 3: Interim 2021 Highlights
Interim 2021 Highlights Net cash inflow Cash from operating Dividend Revenue1 activities per share £4.4m £3.6m 1.00p FY20: £10.2m FY20: £6.8m FY20: 2.95p INT20: £5.0m INT20: £3.9m INT20: 1.45p IRR 22% 7 ~£20m Of first exit in royalty Royalty Partners partner XtremePush monthly payments of spare liqu
Slide 4: Investor Highlights
Investor Highlights We provide minimally-dilutive capital with no re-financing risk for private, owner-managed companies with strong cashflows Established Established Covid-19 Portfolio Market Resilience 11 Royalty Partners and demonstrated by NAV and £100 million deployed Presence cash flow preserv
Slide 5: Interim 2021 – Cashflow Highlights
Interim 2021 – Cashflow Highlights INT21 FY2020 INT20 • Trading in line with market Cashflow Highlights £000 £000 £000 expectations Cash revenue 1 4,380 10,245 5,022 • Cash revenue of £4.4m v £5.0m Core Operating expenses 2 (893) (2,273) (1,084) in Interim 2020, despite Other cash (expenses) / recei
Slide 6: Interim 2021 – Income Statement Highlights
Interim 2021 – Income Statement Highlights INT21 FY2020 INT20 • Royalty and loan income of £4.4m Income Statement Highlights £000 £000 £000 v £5.3m in Interim 2020 Investment income 4,421 10,212 5,068 • Fair value increase of £2.7m, Fair value movements and impairments 2,658 (12,641) 693 reflecting
Slide 7: Portfolio Cost
Portfolio Cost Total invested at 1 Apr 2019 - £74m Total invested at 30 Sep 2020 - £98m Welltel refinanced in Dec-19 £5.3m of follow-ons in FY21 £16m BIL refinanced in Jan-20 £7.7m of new capital invested £14m XtremePush repaid in Sep-20 £12m Duke’s 1st successful exit £10m £8m £6m £4m £2m £m At 1 A
Slide 8: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types June 2017 October 2017 April 2017 August 2018 February 2019 March 2018 Temarca B.V. Telecoms Business Services Leisure Healthcare Leisure Industrials Fair value: £15,136.000 Fair valu
Slide 9: Portfolio Fair Values as a % of Cost
Portfolio Fair Values as a % of Cost • Post FY21 follow-ons, Welltel the largest investment by fair value and cost • Fair value of total investment portfolio now just 6% less than cost Total cost at 30 Sep 2020 - £98m Total fair value at 30 Sep 2020 - £92m 16,000 13% 14,000 (11%) (23%) 12,000 (13%)
Slide 10: Financials - Portfolio Robustness
Financials - Portfolio Robustness Balance Sheet Upside Total NAV £77m (INT21) 7 equity stakes valued <£200k NAV / share of 31.1p (INT21) Redemption premiums Over £20m of liquidity for >£15m new deployments Gradual re-rating of FV portfolio Portfolio Portfolio cost - £98m Portfolio fair value - £92m
Slide 11: Opportunities for the future
Opportunities for the future The role of alternative financing has been on a dramatic rise since 2010 And Covid-19 will increase the size of the alternative financing industry Aggregate Private Debt, Worldwide All Sectors, in US$bn • Asset impairments driven by Covid-19 will $900 reduce risk-bearing
Slide 12: Summary
Summary • Duke has established the corporate royalty product in the European market • Resumption of cash dividends has been announced with room to grow • Embedded fair value upside from equity stakes acquired and from annual adjustments as the growth returns in future years • Embedded cash flow upsi
Slide 13: Appendix
Ea Wygider [A D U K E AWARDS 2019 E SMALL BUSINESS Ss SHORTLISTED ‘AWARDS 2018 O Vi A ~~ Alternative Finance R LTY Funderof they ear Provider ofthe Year
Slide 14: Consolidated Statement of Cashflows
Consolidated Statement of Cashflows Interim 2021 FY20 Interim 2020 £000 £000 £000 Receipts from royalty investments 3,654 8,977 4,397 Receipts of interest from loan investments 381 1,268 625 Net gains from disposal of equity instruments 345 - - Receipts from transaction costs reimbursed 6 90 6 Opera
Slide 15: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income Interim 2021 FY20 Interim 2020 £000 £000 £000 Income Royalty investment income 7,509 (2,994) 5,056 Loan investment income 339 1,235 672 Impairment loss on loan investments - (2,947) - Equity investment income (769) (670) 34 Other operating income 21 356
Slide 16: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 30-Sep-20 31-Mar-20 30-Sep-19 £000 £000 £000 Goodwill 203 203 203 Royalty finance investments 53,299 59,435 61,952 Loan investments 3,357 4,418 ,9,053 Equity investments 172 507 1,211 Deferred tax asset 204 675 - Total Non-Current assets 57,235 65,238 72,
Slide 17: What is Royalty Financing?
What is Royalty Financing? Royalties are deployed in multiple sectors, growing in popularity for financing, most business models put royalties on long term depreciating assets Year Market Name Sector Founded Cap. 1 1983 Mining £19.5b 1996 Pharmaceutical £18.5b 2004 & New LSE listings in £18.0b 2010
Slide 18: How are Corporate Royalties Different?
How are Corporate Royalties Different? A long-term participating loan with similar characteristics as traditional royalties • Duke provides a lump sum of capital to a company with a term of 25-40 years • Initial yield is 12.0 – 13.5% of capital, adjusted once per year with a collar of +/-6% in curre
Slide 19: Duke’s Typical Investment Criteria
Duke’s Typical Investment Criteria Criteria Description • c.£5m - £20m Investment Fit Within Duke Portfolio • Western Europe and North America • 10+ years of operating history Alignment of Management Goals • Back management with a track record of delivery and not looking with Duke’s Objectives to se
Slide 20: Strong Origination and Due Diligence
Strong Origination and Due Diligence Origination through Relationships 625+ Investment Opportunities since 2016 Origination Process Relationship driven, Indication of Interest Submitted management and financial 65+ Investment Opportunities strength more important than industry sector Preliminary Eva
Slide 21: Duke’s Investors – Top Global Funds
Duke’s Investors – Top Global Funds Shareholders % Ownership 16.05% Shareholder base 9.87% • Strong base of blue-chip institutional investors 8.18% • Significant management and 5.86% insider ownership 4.51% 3.76% Liquidity 3.59% • Focus on marketing and communication to retail market 3.28% • Duke in
Slide 22: An Experienced Team, Including Royalty Pioneers
An Experienced Team, Including Royalty Pioneers Management and investment committee have direct royalty experience of 60+ years Neil Johnson – Executive Director and CEO ➢ Pioneered UK listings for Canadian and UK dual-listed companies between 2000 and 2010 Steven Russo – VP, Investments ➢ £3 billio
Slide 23: Duke Royalty
DUKE ROYALTY