Duke Capital Limited · LSE:DUKE
Duke Capital — Duke Royalty — Investor Presentation (January 2022)
26 slides from Duke Capital's investor presentation, January 2022
Slide 1: Duke Royalty Investor Presentation
Duke Royalty Investor Presentation January 2022 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 13 Royalty Partners and £180 million annualised dividend yield ranging from 5%- deployed since inception 8% since
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 equity MBOs Acquisition 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 Annuity-like opportunity High level of Senior secured through participation operational re
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 10.43% 1 7.43% 1 6.93% 1 6.53% 1 ownership ownership ownership ownership Directors, Management, Insiders 6.44% 1 5.95% 1 5.23% 1 ~3.50% 1 ownership ownership ownership ownership
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
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Slide 14: Our Royalty Partners
Our Royalty Partners Duke has proven experience investing across range of sectors, geographies and transaction types December 2021 December 2021 July 2021 July 2021 June 2021 SPECIALIST CARE INDUSTRIALS INDUSTRIALS I.T. SERVICES HEALTHCARE Equity Stake: Equity Stake: Equity Stake: Equity Stake: Equi
Slide 15: Example of Acquisition Capital: Tristone Healthcare
Example of Acquisition Capital: Tristone Healthcare Transaction type Initial obligation Annual adjustment Initial Investment Term (incl. principal) (based on revenue) Debt Refinancing & £10.5m 30 years Acquisition 13.5% +/-6% Company overview • Tristone provides specialist residential and domiciliar
Slide 16: Example of Debt Refinancing: Atlas Signs
Example of Debt Refinancing: Atlas Signs Initial obligation Annual adjustment Initial Investment Term Transaction type (incl. principal) (based on revenue) $21.0m 30 years Debt Refinancing 12.5% +/-6% Company overview • Founded by the Adinolfe family in 1992, Atlas is a leading national sign brandin
Slide 17: 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 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: Appendix
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Slide 21: 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 22: 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 five new royalty partners secured to in April 2021 to execute pipeline, and date in FY2022 enhanced investment team Liquidity of
Slide 23: 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 24: 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 25: 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 26: Awards 2021
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