Flow Capital Corp. · CSE:FW
Flow Capital — Q3 2018 Earnings Presentation
25 slides from Flow Capital's earnings presentation, November 2018
Slide 1: Flow Capital Investor Presentation Q3 2018
F L O W C A P I TA L I N V E S T O R P R E S E N TAT I O N Q3 2018
Slide 2: Forward Looking Information
F O RWA R D L O O K I N G I N F O R M AT I O N This corporate presentation contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe h
Slide 3: Table of Contents
TA B L E O F C O N T E N T S INTRODUCTION TO FLOW CAPITAL GROWTH CAPITAL LOGIQ GLOBAL PARTNERS FINANCIALS VALUATION CONSIDERATIONS CORPORATE INFORMATION TSXV: FW 3
Slide 4: Flow Capital is a diversified alternative asset investor and advisor
INTRODUCTION Flow Capital is a diversified alternative asset investor and advisor. Flow Capital offers investors cash flow oriented exposure to high growth, North American small and medium sized businesses in high growth, tech-enabled industries – an asset class that is difficult to access unless yo
Slide 5: Two Operating Divisions
T W O O P E R AT I N G D I V I S I O N S GROWTH CAPITAL LOGIQ GLOBAL PARTNERS Flow Capital provides growth capital for LOGiQ Global Partners offers institutional emerging companies in high growth, tech- investors, such as Canadian pensions and enabled industries, with returns that are endowments, ac
Slide 6: Growth Capital
G R O W T H C A P I TA L INTRODUCTION TO FLOW CAPITAL GROWTH CAPITAL LOGIQ GLOBAL PARTNERS FINANCIALS VALUATION CONSIDERATIONS CORPORATE INFORMATION TSXV: FW 6
Slide 7: Value Proposition to the Entrepreneur
VA L U E P R O P O S I T I O N TO T H E E N T R E P R E N U E R “When you’re rapidly accreting the value of your equity and need capital to fuel expansion, and have cash flows to pay the monthly royalty, Flow’s revenue-linked growth capital is superior to conventional debt and equity.” vs debt vs eq
Slide 8: Value Proposition to the Investor
VA L U E P R O P O S I T I O N TO T H E I N V E S TO R “Cash flow oriented exposure to high growth, North American small and medium sized businesses in high growth, tech-enabled industries – an asset class that is difficult to access unless you’re an institutional investor – through a diversified, g
Slide 9: Deployment and Returns
DEPLOYMENT AND RETURNS Three months ended Three months ended September 30, 2018 September 30, 2017 Number of company investments since inception 43 39 Number of company investments in period - 1 Number of royalty buyouts since inception 8 6 Total capital deployed in period 2,722,706 425,000 Total ca
Slide 10: Portfolio Cash Returns
PORTFOLIO CASH RETURNS Aquam 376% Wmode 314% Fixt 221% Pliteq 200% Above Security 189% 4Tell 170% DS Handling 165% Boardwalktech 160% INOVx 127% Blue Drop 121% Mera 106% Interior Mark 91% TruGolf 86% Expert Homes 66% Medical Imaging 66% Manifest 66% Westlake 57% One Up 57% Agnity 53% Humble Abode 49
Slide 11: Growth Drivers: Recurring Revenues
GROWTH DRIVERS The Growth Capital division’s recurring revenues will continue to grow: 1. making investments in new portfolio companies 2. increasing the average initial investment size 3. making follow-on investments in existing portfolio companies 4. sharing in the revenue growth of portfolio comp
Slide 12: Growth Drivers: Non-Recurring Cash Inflows
GROWTH DRIVERS The Growth Capital division’s non-recurring cash inflows will continue with periodic and potentially material royalty buyouts and equity realizations: § 8 exited companies, $25M returned to capital base from $11M invested § Substantially all royalty investments contract for a 2X buyou
Slide 13: LOGiQ Global Partners
L O G I Q G L O B A L PA R T N E R S INTRODUCTION TO FLOW CAPITAL GROWTH CAPITAL LOGIQ GLOBAL PARTNERS FINANCIALS VALUATION CONSIDERATIONS CORPORATE INFORMATION TSXV: FW 13
Slide 14: LOGiQ Global Partners
L O G I Q G L O B A L PA R T N E R S Global Partners offers institutional investors, such as Canadian pensions and endowments, access to global alternative asset classes managed by leading money managers. Global Partners is compensated with a royalty on asset management fees. Three months ended Thre
Slide 15: Growth Drivers: Global Partners Recurring Revenues
GROWTH DRIVERS The Global Partners division’s recurring revenues will continue to grow: 1. winning new mandates with asset managers seeking access to Canadian institutions 2. growing the distribution of all represented managers to Canadian institutions 3. increasing royalties on fees as represented
Slide 16: Financials
FINANCIALS INTRODUCTION TO FLOW CAPITAL GROWTH CAPITAL LOGIQ GLOBAL PARTNERS FINANCIALS VALUATION CONSIDERATIONS CORPORATE INFORMATION TSXV: FW 16
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS Three months Three months Nine months ended Nine months ended ended September ended September September 30, September 30, 30, 2018 30, 2017 2018 2017 Revenues $1,170,140 $(1,222,621) $5,585,526 $(6,732,289) Recurring revenues from royalties, 2,019,703 1,193,359 4,415,735 3,573,5
Slide 18: Financial Highlights (chart)
FINANCIAL HIGHLIGHTS 4.0 3.5 3.5 3.4 3.0 0.2 2.5 CAD $ (Millions) 2.0 1.8 0.8 1.5 - 1.3 - - - - 1.2 0.1 1.2 1.0 1.1 1.1 0.8 1.0 0.7 1.0 0.6 0.5 0.5 0.2 0.2 0.1 0.1 0.1 0.0 - (0.2) (0.1) (0.2) (0.5) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Growth Capital Recurring Revenues Growth Capit
Slide 19: Shareholder Value Creation
S H A R E H O L D E R VA L U E C R E AT I O N Flow Capital creates shareholder value in four distinct ways: 1. Stable, recurring revenues from a diverse portfolio of royalties in North American emerging growth companies 2. Non-recurring royalty buyouts or buydowns 3. Non-recurring returns from reali
Slide 20: Shareholder Value Creation
S H A R E H O L D E R VA L U E C R E AT I O N Flow Capital’s strategy for scaling the business is to increase its book value by reinvesting cash yielded from recurring royalties and other non-recurring cash inflows — from both the Growth Capital division and the Global Partners division — into new r
Slide 21: Valuation Considerations
VA L U AT I O N C O N S I D E R AT I O N S INTRODUCTION TO FLOW CAPITAL GROWTH CAPITAL LOGIQ GLOBAL PARTNERS FINANCIALS VALUATION CONSIDERATIONS CORPORATE INFORMATION TSXV: FW 21
Slide 22: Valuation Considerations
VA L U AT I O N C O N S I D E R AT I O N S As of September 30, 2018: Shareholders equity Outstanding shares Book value per share $34M 87M $0.39 } $0.14 share price represents a 64% discount to book value In calculating book value, Flow Capital ascribes an expected value to future royalties, royalty
Slide 23: Corporate Information
C O R P O R AT E I N F O R M AT I O N Board of Directors Independent Registered Vernon Lobo Public Accounting Firm Catherine McLeod-Seltzer GOODMANS & ASSOCIATES Paul De Luca LLP Gordon McMillan Toronto, ON Alan Torrie Management Corporate Headquarters Robb McLarty 1 Adelaide St. East, Suite 3002 Ch
Slide 24: US Investors
U S I N V E S TO R S Some Canadian investments are classified as Passive Foreign Investment Companies, or “PFICs” under IRS regulations. Such investments require filing of certain forms with annual taxes for some investors for optimum tax treatment. While Flow Capital has made no determination if it
Slide 25: Flow Capital: Alternative Asset Investor and Advisor
F L O W C A P I TA L A LT E R N AT I V E A S S E T I N V E S T O R A N D A D V I S O R