Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — Investor Presentation (November 2019)
22 slides from Duke Capital's investor presentation, Nov 22, 2019
Slide 1: Investor Presentation
Investor Presentation November 2019 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 ~ £82 million deployed Operational leverage Partners capital --- --- --- Inaugural profit in FY 2019 Increased core p
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 2 Geographic Focus Canada & US Canada UK & Europe Number of Holdings 17 3 12 Capital Deployed1 ~£800 million ~£200 million ~ £80 million LTM Capital ~£105 million ~£25 million ~£50 million Deployed1 Ret
Slide 6: 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 7: 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 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: 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 10: Why Duke Appeals to Certain Owner-Managers
Why Duke Appeals to Certain Owner-Managers Select examples of how Duke’s funding solution can be used along with providing Growth Capital Shareholder Restructuring Acquisition Capital ▪ Where one or more shareholders wish to exit ▪ Acquisition capital is a common use case, particularly in (retiremen
Slide 11: 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 €10,700,000 €1,300,000 €6,90
Slide 12: Partner Case Study: United Glass (Debt Refi. / Acquisition)
Partner Case Study: United Glass (Debt Refi. / Acquisition) Investment: £7.5m Use of Proceeds: Debt refinancing & acquisition Initial Obligation (Incl. Principal): 13.5% Security: Secured interest on all assets other Term: 30 years Annual Adjustment (based on Revenue): +/-6% than Mortgage on buildin
Slide 13: Partner Case Study: Miriad (Shareholder Restructuring)
Partner Case Study: Miriad (Shareholder Restructuring) Investment: £10.0m Use of Proceeds: Shareholder Partial Sale Initial Obligation (Incl. Principal): 13.2% Security: Secured interest on all assets other Term: 30 years Annual Adjustment (based on Revenue): +/-6% than CID Company Overview Owner Ex
Slide 14: Portfolio Diversification Achieved in Fiscal 2019
Portfolio Diversification Achieved in Fiscal 2019 April 2018 Current ~£32m capital deployed ~£82m capital deployed1,2 Lynx UK Trimite 7.8% 6.3% 2.9% 1.6% 3.0% InterHealth 5.6% 14.8% Miriad Temarca B.V. 6.1% 28.2% Trimite Temarca B.V. Unicted Glass 8.6% 14.1% Group United Glass 12.3% Group Welltel Pa
Slide 15: Current Portfolio Diversification
Current Portfolio Diversification Investment by Geography Investment by Industry Segment European Union Healthcare 12% 12% Business Offshore Services 12% 25% TMT 17% United Kingdom 54% Ireland 22% Industrials Leisure 22% 24% Our Portfolio is Well Diversified Amongst Regions and Sectors 2019-11-25 Pr
Slide 16: Duke's Investors – Top Global Funds
Duke’s Investors – Top Global Funds Shareholders % Ownership Directors / Management / Insiders ~10.00% 15.30% 10.04% 9.13% 6.37% 5.11% 4.50% 4.38% 4.27% 3.34% Top Ten Total 72.44% Duke has a suite of blue-chip institutional investors and significant management and insider ownership As at September 4
Slide 17: Summary
Summary ▪ Fiscal 2019 saw growth in our core value proposition: to produce long term predictable revenue streams, paid monthly with embedded growth from an increasingly diversified portfolio ▪ Revenue grew 240% to £6.1 million while Operating Cash flow grew 1,500+% to £4.1 million ▪ Increased core p
Slide 18: Appendix
Appendix September 2019 D DUKE ROYALTY
Slide 19: 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 20: F2019 - Consolidated Profit & Loss Statement
F2019 - Consolidated Profit & Loss Statement Revenue (£'000s) FY 2019A FY 2018A ▪ Duke’s Revenue increased from £1.8 million to £6.1 million, achieving a 239% y-o-y increase Total Revenue 6,140 1,797 ▪ Revenue growth has been driven by a combination of Total Operating Expenses (incl non-cash items)
Slide 21: F2019 - Consolidated Cash Flow Statement
F2019 - Consolidated Cash Flow Statement (£'000s) FY 2019A FY 2018A Cashflow Cash flows from operating activities Receipts from royalty investments 5,097 987 ▪ Duke’s net cash inflow increased from £246K (0.4p Receipts of interest from loan investments 257 – per share) to £4.1m (2.5p per share), dem
Slide 22: Historical Royalty Performance
Historical Royalty Performance Relative Performance of Gold, Gold Operators (NYSE:HUI) and 600% Franco-Nevada (NYSE:FNV) from December 12, 2007 to September 6, 2019 500% 400% 300% 200% 100% 0% (100%) Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 (200%) Gold Pric