Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — Investor Presentation (February 2020)
17 slides from Duke Capital's investor presentation, February 2020
Slide 1: Investor Presentation
Investor Presentation February 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: Investor Highlights
Investor Highlights Duke, the first mover in UK and European owner-managed royalty financing, provides capital with no re-financing risk for private companies Portfolio of 12 Royalty ~ £90 million deployed 62.4% institutional Partners capital shareholder interest --- --- --- Top 3 shareholders: Only
Slide 4: What Is Royalty Financing?
What Is Royalty Financing? ▪ A long-term contractual interest which Royalty Industry Overview generates a consistent monthly cash flow stream ▪ Began in the 1980s - commodities and pharmaceuticals ▪ Sector is worth £50bn in North ▪ Can be viewed as a corporate mortgage America ▪ In 2000s - expanded
Slide 5: Replicating the Proven North American Model
Replicating the Proven North American Model AD : TSX DIV : TSX DUKE : AIM Years of Operation 15 5 3 Geographic Focus Canada & US Canada UK & Europe Number of Holdings 17 3 12 Capital Deployed1 ~£800 million ~£200 million ~ £90 million LTM Capital ~£105 million ~£25 million ~£50 million Deployed1 Ret
Slide 6: 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 ▪ Annuity like revenue streams Cumulative cash flow: £45m investment ▪ Compounding opportunity – Annual Revenue Growth through royalty partners’ reven
Slide 7: 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 8: Duke's Typical Investment Criteria
Duke’s Typical Investment Criteria Primary Criteria Secondary Criteria Description Preferred sectors Hospitality & Leisure Deal Size £5m - £20m Investment InvestmentFitFitWithin WithinDuke Duke Portfolio Portfolio Geographical Focus Western Europe and North America Industrials Track Record 10+ years
Slide 9: 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 10: 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 11: Portfolio Diversification Achieved in 18 Months
Portfolio Diversification Achieved in 18 Months April 2018 Current ~£32m capital deployed ~£90m capital deployed1,2 Temarca B.V. Trimite 7.8% 6.3% 2.2% 1.2% Lynx UK 3.3% 4.6% 13.3% Trimite Temarca B.V. 28.2% 8.3% InterHealth Miriad Unicted Glass 14.1% Group Bakhchysarai (Ireland) 13.3% 9.0% Limited
Slide 12: Current Portfolio Diversification
Current Portfolio Diversification Investment by Geography Investment by Industry Segment European Union Healthcare 13% 11% Offshore TMT Business 11% 15% Services 30% United Kingdom 48% Industrials Ireland 20% 28% Leisure 24% Our Portfolio is Well Diversified Amongst Regions and Sectors 2020-02-02 Pr
Slide 13: Our Royalty Partners
Our Royalty Partners Duke has 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 €14,100,000 €1,300,000 €8,10
Slide 14: Dividend History and Sustainability
Dividend History and Sustainability Duke has increased its dividend three Historical and Budgeted Dividend per Fiscal Quarter consecutive times 0.85p 0.75p 0.75p 0.70p 0.60p • Current dividend per share of 0.75p per quarter 0.65p (3.00p annualized) 0.55p 0.50p • Duke has paid a cumulative total of £
Slide 15: Research Coverage and Pipeline
Research Coverage and Pipeline Consensus Target Price = 59.3p Total prospects reviewed ~30% premium to current price Brokerage house Target Price Cenkos 65.0p Edison 58.0p Mirabaud Securities 58.0p Berenberg 56.0p Current Price1 46.2p Current Market Cap1 £110 million • Since 2018, Over 300 prospects
Slide 16: Duke's Investors – Top Global Funds
Duke’s Investors – Top Global Funds Shareholders % Ownership Directors / Management / Insiders ~6.00% 14.83% 8.45% 8.33% 7.04% 5.92% 5.71% Top Seven Total 56.28% Duke has a suite of blue-chip institutional investors and significant management and insider ownership As at January 31, 2020 2020-02-02 P
Slide 17: Summary
Summary ▪ Royalty Companies produce long term predictable revenue streams, paid monthly with embedded growth from an increasingly diversified portfolio ▪ Duke Royalty is following the North American model which has resulted in dozens of public companies producing capital growth as well as income ▪ E