Duke Capital Limited · LSE:DUKE
Duke Capital — Investor Presentation (June 2023)
28 slides from Duke Capital's investor presentation, June 2023
Slide 1: Investor Presentation
Investor Presentation June 2023 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: 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 5: 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 6: 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 7: How our Solution benefits Business Owners
How our Solution benefits Business Owners Key examples of how Duke’s funding solution has been used by owner-operators to drive growth and increase shareholder value while keeping control Debt or Acquisition equity MBOs capital restructuring Allows experienced Debt refinancing or management teams to
Slide 8: Financial Highlights
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Slide 9: Financial Highlights
Financial Highlights Cashflow metrics strengthen as deployments scale 15.10p of dividends / share paid since inception Total cash revenue2 (£m) Recurring cash revenue (£m) Free cash flow3 (£m) 25.0 21.9 25.0 21.8 15.0 13.3 12.1 20.0 18.4 20.0 14.9 10.0 15.0 11.0 15.0 7.5 10.3 10.3 8.8 5.4 10.0 10.0
Slide 10: Recurring Cash Flow
Recurring Cash Flow Significant increased cash flow generation creating operating leverage Quarterly operating leverage – FY21-current 7,000,000 35% 6,000,000 30% 5,000,000 25% 4,000,000 20% 3,000,000 15% 2,000,000 10% 1,000,000 5% 0 0% Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY 22 Q4 FY2
Slide 11: Balance sheet
Balance sheet Balance sheet strengthening as portfolio matures Mar-20 Mar-21 Mar-22 Mar-23e £000 £000 £000 £000 Royalty investments 75,559 85,301 160,479 190,000 Loan investments 9,517 4,949 4,172 4,500 Equity investments 507 3,495 10,820 12,500 Investment portfolio fair value 85,583 93,745 175,471
Slide 12: Portfolio Highlights
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Slide 13: Portfolio Summary
Portfolio Summary Credit metrics strengthen as portfolio grows Portfolio book cost (£m) Max single name exposure Contractual payments made 200 185 14.0% 13.1% 13.1% 12.1% 91% 96% 94% 156 12.0% 10.9% 100% 150 10.0% 80% 71% 95 88 8.0% 60% 100 6.0% 40% 50 4.0% 20% 2.0% 0 0.0% 0% FY20 FY21 FY22 FY23 FY2
Slide 14: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types November 2022 December 2021 December 2021 July 2021 July 2021 FIRE & SECURITY SPECIALIST CARE INDUSTRIALS INDUSTRIALS I.T. SERVICES Equity Stake: Equity Stake: Equity Stake: Equity St
Slide 15: Our Royalty Partners and their Operating Subsidiaries
Our Royalty Partners and their Operating Subsidiaries Duke’s exposure is diversified across 57 underlying operating companies Step Investments Bay Broadcasting Limited BIL 15
Slide 16: 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 11% 18% 16% 34% 20% 15% 53% 22% 60% 16% 36% UK - 8 Industrials - 5 Acquisition Capital - 7 North Am
Slide 17: Due Diligence Process
Due Diligence Process Origination Statistics • ~600 business plans per year are evaluated Origination through relationships Healthy pipeline of investment opportunities • ~100 Non Disclosure Agreements signed per year • ~40 Indications of Interest letter issued Indication of interest submitted Initi
Slide 18: Duke's Investors: Top Global Funds
Duke’s Investors: Top Global Funds Strong base of blue-chip institutional investors1 with significant management ownership 11.00% 9.03% 7.67% 6.45% 6.35% 5.62% ownership ownership ownership ownership ownership ownership Directors, Management, Insiders 5.59% 4.25% 3.63% 3.32% 3.15% 3.15% ownership ow
Slide 19: 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 10% of total market downturns cash revenue i
Slide 20: Appendix
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Slide 21: Recent Highlights
Recent Highlights Continued progress announced post-period end Finance Portfolio Pipeline • Global insurance • £5.5 million investment • Strong pipeline of new company Fairfax into new royalty partner opportunities under becomes senior lender New Path Fire and review Security • Record £5.3 million o
Slide 22: An Experienced Team, Including Royalty Pioneers
An Experienced Team, Including Royalty Pioneers Management and investment committee have royalty experience of 100+ years Neil Johnson – Executive Director and CEO Charlie Cannon-Brookes – Executive Nigel Birrell – Non-Exec Chairman • Pioneered UK listings for Canadian and UK Director and CIO • Grou
Slide 23: New royalty partner: New Path Fire and Security
New royalty partner: New Path Fire and Security Initial Royalty Initial obligation Annual adjustment Term Transaction type Investment (incl. principal) (based on revenue) 30 years Buy & Build £5.0m 13.5% +/-6% Company overview • New Path Fire and Security is a growing and acquisitive platform, buyin
Slide 24: 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 25: How our Solution Benefits Investors
How our Solution Benefits Investors Our shareholders benefit from attractive dividends and long-term, embedded growth within our increasingly diversified royalty portfolio Compounding Annuity-like opportunity High level of through participation revenue streams in growth by annual operational gearing
Slide 26: Duke Royalty's Formula for Success
Duke Royalty’s Formula for Success Six 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 F
Slide 27: 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 28: DUKE
M. DUKE ROYALTY AWARDS 2021 |er 4 WINNER )