Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — H1 FY2024 Earnings Presentation
29 slides from Duke Capital's earnings presentation, November 2023
Slide 1: FY2024 Interim Results
FY2024 Interim Results November 2023 AIM: DUKE Duke Royalty Limited Flexible Funding For Business Owners Of The Year 2022
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: Financial Highlights
Financial Highlight: > ae D DUKE ROYALTY ee Lp insider tlt AWARDS 2021 WINNER
Slide 5: Cashflow Highlights
Cashflow Highlights Steady growth during economic headwinds Total cash revenue (£m) Free cash flow (£m) Free cash flow per share (pence) 14.1 15.0 10.0 7.9 3.00 10.4 6.5 1.9 10.0 7.8 2.00 1.7 4.1 1.2 1.4 4.4 5.0 2.7 5.0 1.00 0.0 0.0 0.00 INT21 INT22 INT23 INT24 INT21 INT22 INT23 INT24 INT21 INT22 IN
Slide 6: Cashflow Movement
Cashflow Movement Cashflows driven by net deployments 25,000 Operating activities 14,072 Investing activities Financing activities 20,000 (2,383) (498) 15,000 5,000 10,000 8,939 7,041 750 (2,819) (426) 31 5,971 5,000 (5,709) (18,028) -- 6
Slide 7: Balance Sheet
Balance Sheet Balance sheet remains healthy and well insulated 30-Sep-20 30-Sep-21 30-Sep-22 30-Sep-23 £000 £000 £000 £000 Royalty investments 83,485 106,839 171,944 200,670 Loan investments 8,549 1,580 4,892 4,651 Equity investments 172 4,870 11,305 11,564 Investment portfolio fair value 92,206 113
Slide 8: Portfolio Returns
Portfolio Returns Credit like returns with further potential equity upside Capital Cash returned Cash return as % Unrealised Total return on Investment invested to date of capital fair value1 capital invested2 date Portfolio company invested Oct-17 Lynx 15,000 9,181 61% 15,367 1.6x Mar-18 Trimite 12
Slide 9: Portfolio Highlights
Portfolio Highlights > ae D DUKE ROYALTY ee Lp insider tlt AWARDS 2021 WINNER
Slide 10: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types July 2023 November 2022 December 2021 December 2021 July 2021 INDUSTRIALS FIRE & SECURITY SPECIALIST CARE INDUSTRIALS INDUSTRIALS Equity Stake: Equity Stake: Equity Stake: Equity Stak
Slide 11: Our Royalty Partners and their Operating Subsidiaries
Our Royalty Partners and their Operating Subsidiaries Duke’s exposure is diversified across 62 underlying operating companies Step Investments Bay Broadcasting Limited BPVA 11
Slide 12: New royalty partner: Glasshouse
New royalty partner: Glasshouse Initial Royalty Initial obligation Annual adjustment Term Transaction type Investment (incl. principal) (based on revenue) 30 years Buy & Build US$11.5m 13.5% +/-6% Products and End Application Company overview Shower Doors Vanity Mirrors • Glasshouse is a Dallas-base
Slide 13: Portfolio Performance – Investment Exits
Portfolio Performance – Investment Exits Track record with six exits to date Capital Date of Months Returned Investment Partner investment held (£000) IRR Apr-17 46 12,404 -1.4% Mar-18 36 1,677 16% Feb-18 30 4,798 22% Jun-17 41 18,575 27% Aug-18 47 9,040 29% Mar-23 3 9,160 +200% Royalty • Indicative
Slide 14: Duke's Investors: Top Global Funds
Duke’s Investors: Top Global Funds Strong base of blue-chip institutional investors1 with significant management ownership 11.53% 9.02% 8.44% 6.35% 6.21% 5.74% ownership ownership ownership ownership ownership ownership Directors, Management, Insiders 5.62% 4.43% 3.89% 3.36% 2.98% 2.57% ownership ow
Slide 15: Origination Metrics for Interim Period FY2024
Origination Metrics for Interim Period FY2024 Origination Statistics since 31 March 2023 • Focus on building North America channel, now represents Origination through relationships 50% of our inbound CIMs and growing Healthy pipeline of investment opportunities • 111 CIM’s reviewed under NDA: split
Slide 16: Summary
Summary As the only London listed corporate royalty company, Duke Royalty has pioneered corporate royalty financing in the UK and Europe. Capital preservation Navigating Current Markets Downside protection evident from previous Recurring cash revenue has increased for last market downturns 12 quarte
Slide 17: Appendix
Appendix > ae py dure SSE awarvs 2021 ROYALTY ____WINNER
Slide 18: Consolidated Statement of Cashflows
Consolidated Statement of Cashflows INTERIM 2024 FY 2023 INTERIM 2023 £000 £000 £000 Receipts from royalty investments 13,720 21,634 10,234 Receipts of interest from loan investments 259 339 173 Other operating receipts 45 176 30 Operating expenses paid (2,383) (3,306) (1,061) Payments for royalty p
Slide 19: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income INTERIM 2024 FY 2022 INTERIM 2023 £000 £000 £000 Income Royalty investment income 13,512 28,266 15,079 Loan investment income 259 339 173 Equity investment income (3,442) 2,212 485 Other operating income 45 176 30 Total income 10,376 30,993 15,767 Inves
Slide 20: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 30-SEP-23 31-MAR-22 30-SEP-22 £000 £000 £000 Goodwill 203 203 203 Royalty finance investments 174,149 158,540 149,853 Loan investments 4,652 4,652 3,872 Equity investments 11,564 13,529 11,305 Deferred tax asset 200 200 155 Total Non-Current assets 190,76
Slide 21: An Experienced Team with a collective track record
An Experienced Team with a collective track record Management and investment team have 5 years together at Duke Neil Johnson – Executive Director and CEO Charlie Cannon-Brookes – Executive Hugo Evans – CFO • 30 years of experience in financial Director and CIO • Extensive experience in senior financ
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: — i ler
M. — i ler y DUKE = AWARDS 2021 |“) ROYALTY WINNER