Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — Investor Presentation (November 2021)
27 slides from Duke Capital's investor presentation, November 2021
Slide 1: Duke Royalty Investor Presentation
Duke Royalty Investor Presentation November 2021 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: Investor Highlights
Investor Highlights We provide minimally-dilutive capital with no re-financing risk for private, owner-managed companies with strong cashflows Established portfolio Strong dividend yield 11 Royalty Partners and £140+ million annualised dividend yield ranging from 5%- deployed since inception 8% sinc
Slide 4: What is Royalty financing?
What is Royalty financing? Royalties are deployed in multiple sectors and are part of the growing alternative financing market Year listed Year listed Year listed Year listed Year listed 1983 2005 & 2020 2018 2020 2020 Exchange Exchange Exchange Exchange Exchange TSX & NYSE TSX & LSE LSE NYSE LSE Se
Slide 5: Features of a Corporate Royalty
Features of a Corporate Royalty 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
Slide 6: 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 7: Funding Solutions
Funding Solutions Key examples of how Duke’s funding solution has been used 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 become majority ow
Slide 8: 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 Security for downside protection Compounding opportunity High level of Senior secured Annuity-like operational revenue streams through
Slide 9: Duke's Typical Investment Criteria
Duke’s Typical Investment Criteria Well-defined investment criteria that fit our risk-reward appetite • Cheque size of c.£5m - £20m Preferred sectors Investment fit within • Western Europe and North America Duke Portfolio • Appropriate Environmental, Social and Governance (ESG) standards Industrials
Slide 10: Strong Origination and Due Diligence
Strong Origination and Due Diligence Origination process Origination through relationships Relationship driven, Healthy pipeline of investment opportunities management and financial strength more important than industry sector Indication of interest submitted Initial analysis of investment opportuni
Slide 11: Duke's Investors: Top Global Funds
Duke’s Investors: Top Global Funds Strong base of blue-chip institutional investors with significant management ownership 9.75% 7.45% 6.61% 6.54% ownership ownership ownership ownership Directors, Management, Insiders 6.51% 6.24% 5.73% ~5.00% ownership ownership ownership ownership High level of liq
Slide 12: An Experienced Team, Including Royalty Pioneers
An Experienced Team, Including Royalty Pioneers Management and investment committee have royalty experience of 70+ years Neil Johnson – Executive Director and CEO Steven Russo – VP, Investments Jim Webster – Chairman of Investment • Pioneered UK listings for Canadian and UK • 6 years of experience i
Slide 13: Meet Our Royalty Partners
Meet Our Roy Partners > ee en , DUKE alll AWARDS 2021 ROYALTY __ WINNER
Slide 14: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types Current Portfolio July 2021 July 2021 June 2021 February 2021 INDUSTRIALS I.T. SERVICES HEALTHCARE INDUSTRIALS Equity Stake: Equity Stake: Equity Stake: Equity Stake: 19% 0% 0% 30% Ac
Slide 15: Example of Management Buyout: Fabrikat
Example of Management Buyout: Fabrikat Initial obligation Annual adjustment Invested to date Term Transaction type (incl. principal) (based on revenue) £6.2m 30 years MBO 14.0% +/-6% Company overview • 35 year history - largest independently owned manufacturer of lighting columns and guardrails in t
Slide 16: Example of Debt Refinancing: United Glass Group
Example of Debt Refinancing: United Glass Group Transaction type Initial obligation Annual adjustment Invested to date Term (incl. principal) (based on revenue) Debt Refinancing & £12.0m 30 years Acquisition 13.5% +/-6% Company overview • Privately-owned company in the UK • Founded in 1979, the Comp
Slide 17: Example of Acquisition Capital: Intec
Example of Acquisition Capital: Intec Transaction type Initial obligation Annual adjustment Invested to date Term (incl. principal) (based on revenue) Buy and Build £9.9m 30 years Acquisitions 13.5% +/-6% Company overview • UK buy & build platform for IT managed service businesses with six operating
Slide 18: Successful Exit Strategy Proven
Successful Exit Strategy Proven Partner exits form part of Duke’s funding model & validates the flexible form of capital December 2020 • Capital funded ambitious M&A strategy September 2020 • Capital supported organic growth and acquisition strategy in technology sector • Work from Home trend benefi
Slide 19: A Strengthened Market Opportunity for Long-term SME Finance
A Strengthened Market Opportunity for Long-term SME Finance Uniquely positioned to provide capital and stability to SMEs facing funding uncertainty • Duke’s solution fills an ever-increasing need from SMEs for long term, flexible capital • The attractiveness of alternative finance is expected to ris
Slide 20: Key post pandemic facts
Key post pandemic facts Duke has been gaining traction in the market through raising and deploying capital across industries Established portfolio Raised £35m of new equity with four new royalty partners secured to in April 2021 to execute pipeline, and date in 2021 enhanced investment team Liquidit
Slide 21: Appendix
Appendix py dure SSS AWARDS 2021 ROYALTY ____WINNER
Slide 22: Duke Royalty's Covid-19 Response
Duke Royalty’s Covid-19 Response Preservation of value Long term approach FY21 cash revenue - Q1: £2.0m Q2: £2.4m Q3: £4.2m Forbearance agreements with hardest-hit royalty partners Cash revenue forgone has been captured as equity or deferred But deployed further capital into strong partners enabling
Slide 23: FY2021 Financial Highlights
FY2021 Financial Highlights Increased cash generation despite turbulence Cash revenue (i) Operating cashflow per share Adjusted earnings per share (ii) £000 pence per share pence per share 11,035 3.68 2.70 10,335 3.17 2.44 2.52 1.83 5,751 FY2019 FY2020 FY2021 FY2019 FY2020 FY2021 FY2019 FY2020 FY202
Slide 24: Consolidated Statement of Cashflows
Consolidated Statement of Cashflows FY2021 FY2020 FY2019 £000 £000 £000 Receipts from royalty investments 9,931 8,977 5,097 Receipts of interest from loan investments 667 1,268 257 Receipts of interest from equity investments 345 - - Other operating receipts 93 90 308 Operating expenses paid (2,154)
Slide 25: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income FY2021 FY2020 FY2019 £000 £000 £000 Income Royalty investment income 19,344 (2,994) 5,611 Loan investment income 636 1,235 256 Impairment loss on loan investments - (2,947) - Equity investment income 1,569 (670) 65 Other operating income 93 90 167 Total
Slide 26: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 31-Mar-21 31-Mar-20 31-Mar-19 £000 £000 £000 Goodwill 203 203 203 Royalty finance investments 71,107 59,435 61,989 Loan investments 4,370 4,418 8,993 Equity investments 3,495 507 1,178 Trade and other receivables 5,618 - - Deferred tax asset 158 675 - Tot
Slide 27: Duke Royalty
) DUKE ROYALTY a N h N N N ‘y : a ee 2021 WINNER