Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — Investor Presentation (August 2019)
22 slides from Duke Capital's investor presentation, August 2019
Slide 1: Investor Presentation
DUKE:AIM Investor Presentation August 2019 Alternative Finance Funder of the Year Provider of the Year
Slide 2: Disclaimer
Disclaimer The sole purpose of the information contained herein (the “Relevant Information”) is to provide background information to assist you in obtaining a general understanding of the business of Duke Royalty Limited (“Duke”). The Relevant Information does constitute an offer to sell, or a solic
Slide 3: Presentation Team
Presentation Team The management and investment committee have 60+ years of combined direct royalty experience Neil Johnson Jim Webster Charlie Cannon-Brookes Executive Director and Chief Investment Officer Executive Director CEO • Early player of UK listings for • Pioneered world’s first drug • Lon
Slide 4: Investor Highlights
Investor Highlights Duke, the first mover in UK and European royalty financing, provides capital with no re-financing risk for owner-managed private companies Portfolio of 12 Royalty £10 million available for Significant operational Partners additional investments leverage --- --- --- Strong royalty
Slide 5: What Is Royalty Financing?
What Is Royalty Financing? • Began in the 1980s - commodities • A long-term contractual interest which generates a consistent monthly cash flow and pharmaceuticals stream • Sector is worth £50bn in North America • Can be viewed as a corporate mortgage • In 2000s - expanded to diverse corporate royal
Slide 6: Why Duke Royalty?
Why Duke Royalty? Royalty financing allows private business owners to receive capital while retaining control of their businesses Debt Royalty Private Equity Permanent Term 3 – 7 Years 25 – 40 Years dilution Refinancing Significant None Pressure to exit Risk Control Passive Passive Loss of control C
Slide 7: How Do Investors Make Money?
How Do Investors Make Money? Royalty companies benefit from attractive returns and increasing valuation as they diversify their investment portfolios Cumulative cash flow: £100m investment • Annuity like revenue streams Annual Revenue Growth (3.0%) 0.0% 3.0% 6.0% • Compounding opportunity – through
Slide 8: Duke’s Typical Investment Criteria
Duke’s Typical Investment Criteria Primary Criteria Secondary Criteria Description Preferred sectors Investment Deal Size £5m - £20m Fit Within Hospitality & Leisure Duke Geographical Western Europe and North America Portfolio Focus Industrials Track Record 10+ years of operating history Alignment o
Slide 9: Strong Origination and Due Diligence
Strong Origination and Due Diligence • Multiple networks and deal finders sourcing new opportunities • Preliminary Evaluation – scored against our investment criteria and reviewed by independent investment committee • Term sheets prior to in-depth due diligence • Internal processes supplemented by i
Slide 10: Why Duke appeals to Certain Owner-Managers
Why Duke appeals to Certain Owner-Managers Select examples of how Duke’s funding solution can be used along with providing Growth Capital Shareholder Restructuring Acquisition Capital Where one or more shareholders wish to Acquisition capital is a common use exit (retirement, cash-out, etc.) case, p
Slide 11: Royalty Partners
Royalty Partners Duke has deep and proven experience investing across range of sectors, geographies and transaction types April 2017 June 2017 June 2017 October 2017 March 2018 March 2018 Temarca B.V. Leisure Business Services Telecoms Business Services Industrials Technology £9,000,000 £1,100,000 £
Slide 12: Partner Case Study: United Glass (Debt Refi. / Acquisition)
Partner Case Study: United Glass (Debt Refi. / Acquisition) Investment: £7.5m Use of Proceeds: Debt refinancing & acquisition Initial Obligation (Incl. Principal): 13.5% Security: Secured interest on all assets other Term: 30 years Annual Adjustment (based on Revenue): +/-6% than Mortgage on buildin
Slide 13: Partner Case Study: Miriad (Shareholder Restructuring)
Partner Case Study: Miriad (Shareholder Restructuring) Investment: £10.0m Use of Proceeds: Shareholder Partial Sale Initial Obligation (Incl. Principal): 13.2% Security: Secured interest on all assets other Term: 30 years Annual Adjustment (based on Revenue): +/-6% than CID Company Overview Owner Ex
Slide 14: Portfolio Diversification achieved in Fiscal 2019
Portfolio Diversification achieved in Fiscal 2019 Pre-July 2018 Placing Current Portfolio ~£32m capital deployed ~£79m capital deployed 1% 2% Trimite 1% 3% 2% InterHealth 3% Miriad 3% 14% 7% Temarca Trimite 3% 7% Brownhills 29% Temarca Welltel 6% 14% Partner Service 14% Brownhills BHP Partner Servic
Slide 15: Current Portfolio Diversification
Current Portfolio Diversification Investment by Geography Investment by Industry Segment Business UK 38% Services 19% Industrials 55% Ireland Healthcare 24% 14% 14% Offshore Hospitality & Leisure EU 11% 15% Technology & 10% Media Our Portfolio is Evenly Weighted & Diversified Amongst Regions and Sec
Slide 16: Achievements since Admission to AIM in March 2017
Achievements since Admission to AIM in March 2017 Duke Royalty Percentile Statistics vs AIM All Share April 2019 April 2017 Market Cap Top 25% Trading Value Top 10% Top 5% Dividend Yield 0 10 20 30 40 50 60 70 80 90 100 Raised ~£100m in debt and equity in 2 Europe’s only royalty provider since acqui
Slide 17: Duke’s Investors – Top Global Funds
Duke’s Investors – Top Global Funds Shareholder % Ownership Directors / Management / Insiders ~10.00% 15.30% 10.04% 9.13% 6.37% 5.11% 4.50% 4.38% 4.27% 3.34% Top Ten Total 72.44% Duke has a suite of blue-chip institutional investors including 3 of the top 10 largest fund managers in the world As at
Slide 18: Summary
Summary • Royalty Companies produce long term predictable revenue streams, paid monthly with embedded growth from an increasingly diversified portfolio • Duke Royalty is following North American model which has resulted in dozens of public companies producing capital growth as well as income • Parti
Slide 19: Appendix
Appendix py dune ROYALTY
Slide 20: A Highly Talented & Experienced Team
A Highly Talented & Experienced Team Management and investment committee have direct royalty experience of 60+ years Neil Johnson – Executive Director and CEO Steven Russo – VP, Investments ➢Pioneered UK listings for Canadian and UK dual-listed companies ➢6 years of experience in mezzanine debt and
Slide 21: Acquisition of Capital Step Accelerates Growth
Acquisition of Capital Step Accelerates Growth Duke acquired Capital Step, the only established competitor to Duke in the UK and Irish royalty financing markets Transaction Rationale Key Acquisition Terms • Accretive diversification of Duke portfolio; +6 • £21.65m investment: £10.0m cash for 100% ne
Slide 22: Replicating the Proven North American Model
Replicating the Proven North American Model AD : TSX DIV : TSX DUKE : AIM Years of Operation 15 5 2 Geographic Focus Canada & US Canada UK & Europe Number of Holdings 15 3 12 Capital Deployed* Over £700 million £175 million £67 million LTM Capital £100 million Nil £53 million Deployed* Return for in