Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — H1 FY2022 Earnings Presentation
27 slides from Duke Capital's earnings presentation, Dec 7, 2021
Slide 1: FY2022 Interim Results Presentation
FY2022 Interim Results Presentation 7 December 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: Snapshot: high-yielding & resilient with a compelling market opportunity
Snapshot: high-yielding & resilient with a compelling market opportunity We provide minimally-dilutive capital with no re-financing risk for private, owner-managed companies with strong cashflows Current portfolio of Strong dividend yield 12 Royalty Partners and £155+ million annualised dividend yie
Slide 4: Corporate royalties revisited
Corporate royalties revisited A long-term participating loan with similar characteristics to traditional royalties • Duke provides a lump sum of capital to a company with a term of 25-40 years • Initial yield is 12.0-14.0% of capital, adjusted once per year with a collar of +/-6% in currency terms (
Slide 5: Financial Highlights
Financial Highlights
Slide 6: Financial and operating highlights
Financial and operating highlights Strong trading performance, cashflow growth and increased deployments Cash Operating cash Adjusted earnings Revenue 1 inflow per share £7.8m £5.2m 1.39p FY21: £11.0m FY21: £8.9m FY21: 2.70p INT21: £4.4m INT21: £3.6m INT21: 0.87p Cash dividend per share 3 £24 millio
Slide 7: Cashflow highlights
Cashflow highlights Significant cash flow growth Cash Revenue 1 £000 +/- Free Cashflow 2 £000 +/- Interim 2022 7,786 78% Interim 2022 4,603 58% Interim 2021 4,380 Interim 2021 2,913 Operating Cashflow £000 +/- Core Operating Costs 3 £000 +/- Interim 2022 5,214 46% Interim 2022 946 6% Interim 2021 3,
Slide 8: Increasing revenue diversification
Increasing revenue diversification1 Interim 2021 Interim 2022 4.2% 2.2% 0.8% 1.8% 0.7% 0.3% 3.8% 15.0% 4.3% 4.5% 21.9% 5.9% 5.4% 6.0% 8.0% 13.8% 6.4% 18.7% 7.3% 15.7% 13.7% 9.9% 18.3% 11.3% Revenue Concentration Top Top 3 Top 5 Interim 2021 21.9% 58.9% 82.6% Interim 2022 15.0% 42.5% 63.8% 1 Excludes
Slide 9: Balance sheet highlights
Balance sheet highlights Rapidly growing royalty investment portfolio Royalty portfolio Loan portfolio Equity portfolio £000 £000 £000 106,839 8,549 4,870 83,485 85,301 3,495 4,950 1,580 172 30-Sep-20 31-Mar-21 30-Sep-21 30-Sep-20 31-Mar-21 30-Sep-21 30-Sep-20 31-Mar-21 30-Sep-21 Other Balance Sheet
Slide 10: Acceleration of deployments post-Covid
Acceleration of deployments post-Covid 140,000,000 Pre-Covid period New deployments Rapid deployment characterised by steady postponed during Covid schedule following 120,000,000 growth post Covid rebound 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 - 31-Mar-19 30-Sep-19 31-Mar-20 30-Sep-
Slide 11: Our Royalty Partners
Our Royalty Partners D DUKE ROYALTY
Slide 12: Our royalty partners
Our royalty partners Duke has proven experience investing across a diversified range of sectors, geographies and transaction types October 2017 March 2018 April 2018 June 2018 August 2018 September 2018 Step Investments BIL Fair value: £13.4m Fair value: £11.5m Fair value: £12.6m Fair value: £6.7m F
Slide 13: Royalty partner: Fabrikat
Royalty partner: Fabrikat Initial obligation Annual adjustment Initial Investment 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 the UK • Man
Slide 14: New Royalty Partner: Atlas Signs
New Royalty Partner: Atlas Signs Initial obligation Annual adjustment Initial Investment Term Transaction type (incl. principal) (based on revenue) US$21m 30 years Debt Refinancing 12.5% +/-6% Company overview • Founded by the Adinolfe family in 1992, Atlas is a leading national sign branding compan
Slide 15: Royalty partner exits
Royalty partner exits Exits form part of Duke’s funding model & validates the flexible form of capital June 2017 – • The lending relationship began in 2017 through Duke’s subsidiary, Capital Step for €500k to fund the Company’s December 2020 acquisition of ATS • Duke financed six different transacti
Slide 16: Restructuring case and exit: Temarca
Restructuring case and exit: Temarca Duke has successfully restructured and exited an underperforming asset Company Overview Temarca’s Difficulties March 2021 • Temarca has been operating riverboat • Shutdown of the European river cruise industry in 2020 prompted cruises along the Rhine and Danube r
Slide 17: Future Growth
Future Growth D DUKE ROYALTY
Slide 18: 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 19: Duke's Typical Investment Criteria
Duke’s Typical Investment Criteria Evaluation Execution – FY22 YTD • Cheque size of c.£5m - £20m Preferred sectors Investment fit within • Western Europe and North America • 300+ opportunities screened Duke Portfolio • Appropriate Environmental, Social and Governance (ESG) standards Industrials • Co
Slide 20: Key FY2022 facts
Key FY2022 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 in April 2021 to execute pipeline, and FY2022 to date enhanced investment team Current liquidit
Slide 21: Appendix
Appendix
Slide 22: Consolidated Statement of Cashflows
Consolidated Statement of Cashflows Interim 2022 Interim 2021 Financial Year 2021 £000 £000 £000 Receipts from royalty investments 6,419 3,654 9,931 Receipts from loan investments 450 381 667 Receipts from equity investments 652 345 345 Other operating receipts 266 6 93 Operating expenses paid (946)
Slide 23: Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income Interim 2022 Interim 2021 Financial Year 2021 £000 £000 £000 Income Royalty investment income 7,584 7,509 19,344 Loan investment income 410 339 636 Equity investment income 1,497 (769) 1,569 Other operating income 266 6 93 Total income 9,757 7,085 21,64
Slide 24: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position 30-Sep-21 30-Sep-20 31-Mar-21 £000 £000 £000 Goodwill 203 203 203 Royalty finance investments 93,232 53,299 71,107 Loan investments 1,000 3,357 4,370 Equity investments 4,810 172 3,495 Trade and other receivables 2,236 - 5,618 Deferred tax asset 157 204 1
Slide 25: 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 26: An experienced team, including Royalty pioneers
An experienced team, including Royalty pioneers Management and investment committee have direct 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 exper
Slide 27: Duke Royalty
D DUKE ROYALTY