REG - Caledonia Investmnts - Half-year Report
21/11/2023 07:00
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RNS Number : 0471U Caledonia Investments PLC 21 November 2023
Caledonia Investments plc
Half-year results for the six months ended 30 September 2023
Financial highlights
6 months Year
30 Sep 2023 31 Mar 2023 Change
Net asset value per share total return* 3.7% 5.5%
Net asset value per share* 5203p 5068p +2.7%
Net assets £2,876m £2,798m +2.8%
Interim dividend per share 18.9p 18.2p +4.0%
*Alternative Performance Measure (please refer to Glossary of terms and
alternative performance measures at end). Net asset value per share referred
to throughout is calculated on a diluted basis.
Highlights
- +3.7% NAV total return ("NAVTR") for the six months, with all parts of the
portfolio contributing to growth.
- Caledonia Public Companies returned 2.8%, following mixed performance of
global public equity markets.
- Caledonia Private Capital returned 5.9%, predominantly driven by the agreed
sale of Seven Investment Management ("7IM"). AIR-serv Europe was acquired in
April 2023 for £142.5m.
- Caledonia Private Equity Funds returned 4.6% with modest valuation growth
across both North American and Asian private equity funds.
- Final dividend of £27m (49.2p per share) paid to shareholders in August 2023,
in respect of the year ended 31 March 2023.
- Progressive dividend maintained, with the interim increased by 4.0% to 18.93p
per share.
- Strong balance sheet. Total liquidity position remains healthy, with undrawn
facilities of £215m at 30 September 2023 and anticipated cash proceeds of
c.£255m from the upcoming disposal of 7IM (net of transaction expenses).
Mat Masters, Chief Executive Officer, commented:
"We delivered a good return in the first half of the year against a backdrop
of continued market volatility, demonstrating the benefits of our diversified
portfolio. We have remained active in our approach to enhancing shareholder
value, demonstrated by the successful acquisition of AIR-serv Europe, together
with the agreed disposal of 7IM with anticipated returns at the top end of our
target range.
The global economic outlook remains challenging, with ongoing volatility
influencing short-term performance. However, we believe our long-term
outlook and focus on investing in high-quality, well-financed and managed
companies, underpinned by our strong balance sheet, leaves us well-placed to
continue delivering strong long-term returns in line with our aims."
21 November 2023
A presentation for analysts will take place at 11 am, with live webcast
available via this link.
(https://www.lsegissuerservices.com/spark/CaledoniaInvestments/events/20727530-78c1-4b07-bc7e-000603cfd4f9/caledonia-investments-plc-half-year-results-presentation)
Enquiries
Company contacts
Caledonia Investments plc
Mat Masters +44 20 7802 8080
Chief Executive Officer
Rob Memmott
Chief Financial Officer
Media contacts
Teneo
Tom Murray +44 20 7353 4200
Robert Yates
caledonia@teneo.com
Management report
Results
Caledonia's NAVTR for the six months to 30 September 2023 was 3.7% with net
assets at the period end totalling £2,876m. The NAVTR for the 12 months to 30
September 2023 was 4.6%. Revenue income for the half year increased 33% to
£33.8m largely due to an £8.6m dividend received from retained private
equity fund income distributions. Net debt at the period end (comprising
external borrowings of £35m and cash of £15m) was £20m (31 March 2023: net
cash of £222m) principally due to investments, including the £143m
acquisition of a majority stake in AIR-serv Europe, a leading supplier of
forecourt vending equipment. Total liquidity remains healthy with undrawn bank
facilities of £215m (31 March 2023: £250m).
During the period the Company repaid £211.2m on a loan facility with a wholly
owned subsidiary. The wholly owned subsidiary subsequently distributed
£212.1m, with minimal impact on group cash.
The directors have declared an interim dividend of 18.93p per share, an
increase of 4.0% compared with the previous year.
The tables below show Caledonia's performance track record and asset
allocation to 30 September 2023:
Performance record
6 months 1 year 3 years 5 years 10 years
% % % % %
NAVTR 3.7 4.6 59.4 63.2 183.8
Annualised
NAVTR 4.6 16.8 10.3 11.0
CPI-H 6.4 6.0 4.1 2.8
NAVTR vs CPI-H -1.8 10.8 6.2 8.2
FTSE All-Share Total Return 3.7 5.6
NAVTR vs FTSE All-Share Total Return 6.6 5.4
All three pools generated good, positive returns in the first half of the
year. The impact of foreign exchange rate movements was limited, with Sterling
weakening by 1.3% against the US dollar and strengthening by 1.3% against the
Euro in the period.
The Public Companies pool produced a return of 2.8%, reflecting the mixed
performance of global public equity markets. The Private Capital portfolio
produced a return of 5.9% following the biannual revaluation of our holdings,
reflecting the contractually agreed disposal of 7IM and that most of the
investee businesses are performing well. The Private Equity Funds portfolio
returned 4.6% based on modest valuation growth across both our North American
and Asian private equity funds, although there has been a notable slowdown in
the level of fund distributions in the period reflecting reduced market
transaction activity.
Asset allocation
Net assets allocation Return
Strategic Sep 2023 Mar 2023 target
% % % %
Public Companies 30-40 30 30 9.0
Private Capital 25-35 36 29 14.0
Private Equity Funds 25-35 33 31 12.5
The movement in asset allocation recorded in the first half of the year is a
combination of the relative performance of each pool, as explained below,
together with the net impact of investment and disposal activity.
Caledonia has continued to invest in and dispose of assets, in line with our
active approach to portfolio management. The movement in net debt in the first
half of the year was £242m, largely reflecting net investments made by all
three investment pools, and, most significantly, the acquisition of a majority
stake in the European division of AIR-serv Europe in April 2023 by Private
Capital. The Public Companies pool made significant additions to its holdings
in three companies, refined positions in a number of others and reduced
positions in two high performing stocks, resulting in a net investment outflow
of £17m. The Private Equity Funds pool has seen an increased level of
drawdowns, including the purchase of secondary positions in two Decheng
Private Equity Funds at attractive levels of discount, and only modest fund
distributions, resulting in a net cash outflow of £50m in the period.
Performance for the first half of the year is summarised in the table below.
Pool performance
31 Mar Invest- Realis- Gains/ Accrued 30 Sep
2023 ments ations losses income 2023 Income Return(3)
£m £m £m £m £m £m £m %
Public Companies 836.9 41.2 (24.7) 11.5 - 864.9 12.0 2.8
Private Capital(1) 824.0 157.1 (0.3) 44.2 2.1 1,027.1 11.6 5.9
Private Equity Funds 873.8 64.5 (14.8) 39.6 - 963.1 1.5 4.6
Portfolio investments 2,534.7 262.8 (39.8) 95.3 2.1 2,855.1 25.1
Other investments(2) 260.2 4.9 (208.1) (7.1) - 49.9 8.7
Total investments 2,794.9 267.7 (247.9) 88.2 2.1 2,905.0 33.8
Cash and other 3.1 (28.9)
Net assets 2,798.0 2,876.1 NAVTR 3.7
1. The Private Capital valuation at September 2023 includes £3.3m of accrued
income (March 2023: £1.2m), and £248.5m classified as an Asset Held for Sale
in the Consolidated Statement of Financial Position as at 30 September 2023,
relating to the agreed sale of 7IM.
2. Other investments comprised legacy investments and cash and receivables in
subsidiary investment entities. The £208.1m realisation principally reflects
a capital re-organisation, followed by a return of capital by an investment
subsidiary.
3. Returns for investments are calculated using the Modified Dietz methodology
and the return is Caledonia's NAVTR.
Caledonia Public Companies - Capital and Income portfolios (30% of NAV)
The total return on the Public Companies pool was 2.8% over the first half of
the year. This outcome reflected the mixed performance of major markets during
the period with technology stocks being in favour and US indices moving more
positively than the UK, together with muted performance in Asia.
The Capital portfolio delivered a return of 4.6%. Key stocks Hill & Smith,
Charter Communications, Microsoft, Oracle and Watsco delivered very strong
returns ranging from 10% to 30%, in contrast to the first half of the previous
financial year. However, these gains were partially offset by notable price
reductions for Croda International, Spirax Sarco, Texas Instruments and Thermo
Fisher Scientific.
The Income portfolio delivered a return of -2.2% with the majority of holdings
recording adverse share price movements. These adverse returns were partially
offset by stronger performance from RELX, Watsco and Sabre. The performance of
Sabre reflects premium growth following a difficult trading period last year.
Holdings were increased in Symrise, Croda International and RELX. We sold down
a portion of our holdings in Oracle and Watsco, following a period of strong
share price appreciation. Other activity was restricted to refining positions
in existing investments resulting in our Income portfolio moving closer to its
target of £250m of invested cost.
Caledonia Private Capital (36% of NAV)
The Private Capital portfolio generated a total return of 5.9% in the first
half of the year.
Caledonia's Private Capital strategy is focused on high-quality, UK mid-market
companies. We take a long-term approach that aims to deliver enduring value
throughout the business cycle, enabling us to give these businesses time to
fulfil their potential and only sell when the time is right to maximise value.
Caledonia's Private Capital portfolio is dominated by significant positions in
five UK-centric businesses and one private European investment company. These
six investments represent over 90% of the pool's value. Investee companies are
revalued in March and September each year. The portfolio generated a total
return of 5.9% in the first half of the year. The five UK centric businesses
are well-established and have strong market positions. With the exception of
Cooke Optics, which has been impacted by temporary industry issues as outlined
below, all are growing, profitable and cash generative.
Investee companies are revalued in March and September each year. Excluding
7IM, the remaining four businesses are valued on an earnings multiple basis,
with multiples in the range 9 to 14 times current year earnings. AIR-serv
Europe was acquired in April 2023 and is valued on a transaction basis using
cost of recent investment. Gearing levels are modest, with net debt of
approximately two times earnings before interest, tax, depreciation and
amortisation ("EBITDA").
In early September 2023, Caledonia announced that we had agreed terms for the
sale of our majority stake in 7IM, a vertically integrated retail wealth
management business, to Ontario Teachers' Pension Plan Board. The transaction
is subject to change in control approval by the Financial Conduct Authority
and is expected to complete by early 2024. Subject to the exact timing of
completion, we expect to receive cash proceeds of c.£255m, net of transaction
expenses, for the sale of our ordinary and preference shares in 7IM. The
valuation at the end of September of £248m, reflects expected cash proceeds
less a 3% discount to equity value in recognition of the very limited degree
of transaction execution risk. To reflect this transaction, this asset was
disclosed as held for sale on the condensed group statement of financial
position as at 30 September 2023. 7IM generated a return of 28.0% in the first
half of the year.
Cobepa, the Belgian based investment company, owns a diverse portfolio of
private global investments. The majority of the businesses within the Cobepa
portfolio continue to develop well, with many delivering strong performance
and valuation progression. Two significant disposals, one of which completed
in the period, have been agreed which, together with progress from portfolio
companies, supported the overall modest uplift in valuation. The valuation of
Caledonia's holding of Cobehold, the holding company of Cobepa, was £179m at
the end September, a return of 3.1% for the first half of the year.
Stonehage Fleming, the international multi-family office, continues to deliver
good earnings growth across both the Family Office and Investment Management
businesses. The former has seen a positive combination of new client wins and
increased activity levels with existing clients; the latter has felt the
benefit of recovering equity markets. The valuation at the end of September
was £157m, a return of 11.7% for the first half of the year.
AIR-serv Europe, a leading designer and manufacturer of air, vacuum and jet
wash machines, which it provides to fuel station forecourt operators across
the UK and Western Europe, was acquired in April 2023. The business is trading
well with earnings slightly ahead of expectations and demonstrating good year
on year growth. The valuation has been maintained at the equity purchase cost
of £143m, generating no return for the period. The position will be reviewed
in March 2024.
Liberation Group, an inns and drinks business with a pub estate stretching
from Southwest London to Bristol and the Channel Islands, has traded slightly
below expectations through the spring and summer. It has been adversely
impacted by the cost-of-living crisis reducing consumer discretionary incomes,
sustained cost inflation (particularly UK energy costs) and poor UK weather
affecting peak early-summer trading months. However, the integration of the
Cirrus Inns business, whilst not complete, has progressed well. The valuation
at the end of September was £135m, a return of 2.3% for the first half of the
year.
Cooke Optics, a leading manufacturer of cinematography lenses, has been
heavily impacted by the Hollywood writers' strike which started in early May
2023 and the subsequent actors' strike. With film and TV production severely
affected, Cooke has seen a subsequent fall in sales and a resulting reduction
in earnings. We anticipate that these industrial disputes will be resolved,
with the writers' strike appearing to have concluded recently, and product
demand will return. However, the timing and nature of a recovery in
financial performance is uncertain. This is reflected in our valuation at the
end of September of £102m, which includes a 15% equity discount to reflect
this matter. The equity return is -22.7% for the first half of the year.
Caledonia Private Equity Funds (33% of NAV)
The total return on the Private Equity Funds pool was 4.6% for the first half
of the year, including a 1% favourable impact from exchange rate movements.
Underlying performance reflects modest valuation growth from holdings across
the pool in both North America and Asia, with local currency returns of around
4% and 1% respectively.
Caledonia's fund investments are principally in third party managed private
equity funds operating in North America and in Asia. The North American based
private equity funds invest into the lower-mid market, with a focus on small
to medium sized, often owner-managed, established businesses. These funds
normally provide the first institutional investment into these businesses, and
support their professionalisation and growth, both organically and through
M&A activity. The entry pricing levels are relatively modest and there is
a deep, robust market for future divestment, either via trade sales or to
other, larger private equity private equity funds. The portfolio is a
combination of directly owned funds (45% of Private Equity Funds NAV), with a
broad range of managers generally managing funds in the range of US$250m to
US$500m. The balance is in fund of private equity funds investments (13% of
Private Equity Funds NAV) with HighVista Strategies (formerly Aberdeen), our
largest single manager exposure, over five separate funds.
In contrast, our Asian based funds invest across a wide range of sectors with
a focus on businesses in the early years of significant growth, having
successfully developed their business model. Whilst focused on local markets,
a number, particularly those with a healthcare focus, also invest into the US.
The market is less developed than in North America with divestments, in the
absence of a mature buyout market, mainly through an IPO or trade sale. The
portfolio is a combination of directly owned funds (24% of Private Equity
Funds NAV), with a broad range of managers, some sourced through our fund of
private equity funds relationships but mostly through our own knowledge and
contacts in the region. The balance (18% of Private Equity Funds NAV) is
invested with Asia Alternatives, Axiom and Unicorn, all fund of private equity
funds providers.
During the first half of the year, £52m was invested via drawdowns, £13m was
invested in the secondary purchase of two Decheng funds positions and
distributions of £15m, evenly balanced between North America and Asia, were
received. The level of distributions has declined compared to the last two
years, reflecting more challenging market conditions. We anticipate, based on
feedback from our managers, something of a recovery in distributions over the
next six to eighteen months.
Management and Board
Rob Memmott joined the board as Chief Financial Officer on 1 September 2023,
succeeding Tim Livett.
Dividend
The board has declared an interim dividend of 18.93p per share, an increase of
4.0% on last year's interim. This will be paid to shareholders on 4 January
2024.
Outlook
The global economic outlook continues to be challenging with the impact of
high rates of inflation, elevated interest rates and central bank debt
reduction leading to mixed performance across global markets. These factors
may influence the short-term performance of our portfolio but Caledonia's
long-term outlook and ethos of investment in high quality, well-financed and
managed companies, leaves us well-placed to withstand these pressures and
deliver long-term returns in line with our aims.
Change in pool investments value Net assets distribution
Sep Mar
£m 2023 2023
Opening portfolio balance 2,534.7 Public Companies 30% 30%
Investments 262.8 Private Capital 36% 29%
Realisations (39.8) Private Equity Funds 33% 32%
Gains/losses 95.3 Cash and other 1% 9%
Accrued income 2.1
Closing portfolio balance 2,855.1
Cash and other 21.0
Closing net assets 2,876.1
Net assets geographic distribution Net assets currency distribution
Sep Mar Sep Mar
2023 2023 2023 2023
United Kingdom 38% 31% Pound sterling 39% 41%
Europe 7% 8% US dollar 51% 50%
North America 39% 39% Euro 7% 7%
Asia 15% 13% Other currencies 3% 2%
Cash and other 1% 9%
1. The geographic distribution is based on the country of listing, country of
domicile for unlisted investments and underlying regional analysis for funds.
2. Currency distribution is based on the denomination of the securities held.
This does not look through to the underlying exposures, which may be
different.
Portfolio summary
Holdings of 1% or more of net assets at 30 September 2023 were as follows:
Net
Value assets
Name Pool Geography(1) Business £m %
Seven Investment Management Private Capital Jersey Investment management 248.5 8.6
Cobehold Private Capital Belgium Investment company 178.8 6.2
Stonehage Fleming Private Capital Guernsey Family office services 157.0 5.5
AIR-serv Europe Private Capital UK Forecourt vending 142.5 5.0
Liberation Group Private Capital Jersey Pubs, bars & inns 135.0 4.7
HighVista Strategies(2) Private Equity Funds US Funds of funds 123.5 4.3
Cooke Optics Private Capital UK Cine lens manufacturer 102.3 3.6
Axiom Asia funds Private Equity Funds Asia Funds of funds 88.1 3.1
Watsco Public Companies US Ventilation products 73.9 2.6
Microsoft Public Companies US Software 72.3 2.5
Oracle Public Companies US Software 69.8 2.4
Decheng funds Private Equity Funds Asia/ US Private equity funds 57.4 2.0
Texas Instruments Public Companies US Semiconductors 54.2 1.9
Philip Morris Public Companies US Tobacco & smoke-free products 49.3 1.7
Asia Alternatives funds Private Equity Funds Asia Funds of funds 47.3 1.6
Charter Communications Public Companies US Cable communications 46.4 1.6
Thermo Fisher Scientific Public Companies US Pharma & life sciences services 41.6 1.4
Fastenal Public Companies US Industrial supplies 40.3 1.4
Hill & Smith Public Companies UK Infrastructure 40.2 1.4
Unicorn funds Private Equity Funds Asia Funds of funds 39.6 1.4
CenterOak funds Private Equity Funds US Private equity funds 38.9 1.4
Stonepeak funds Private Equity Funds US Private equity funds 36.2 1.3
SIS Private Capital UK Content services 35.3 1.2
British American Tobacco Public Companies UK Tobacco & vaping 33.6 1.2
Ironbridge funds Private Equity Funds Canada Private equity funds 34.0 1.2
Becton Dickinson Public Companies US Medical technology 30.9 1.1
AE Industrial funds Private Equity Funds US Private equity funds 27.7 1.0
PAG Asia funds Private Equity Funds Asia Private equity funds 27.6 1.0
Spirax Sarco Public Companies UK Steam engineering 27.6 1.0
Moody's Corporation Public Companies US Financial services 27.5 1.0
Other investments 727.8 25.3
Investment portfolio 2,855.1 99.6
Cash and other 21.0 0.4
Net assets 2,876.1 100.0
1. Geography is based on the country of listing, country of domicile for unlisted
investments and underlying regional analysis for funds.
2. Previously Aberdeen.
Risks and uncertainties
Caledonia has a risk management framework that provides a structured process
for identifying, assessing, and managing risks associated with the company's
business objectives and strategy.
The principal risks and uncertainties faced by the company are set out in the
strategic report section of Caledonia's annual report 2023 pages 44-45.
External risks arise from political, legal, regulatory and economic changes.
Strategic risks arise from the conception, design and implementation of the
company's business model. Investment risks arise from specific investment and
realisation decisions. Market risks arise from equity price volatility,
foreign exchange rate movements and interest rate volatility. Liquidity risks
arise from counterparties, uncertainty in market prices and rates and
liquidity availability. Operational risks arise from potentially inadequate or
failed controls, processes, people or systems. Regulatory risks arise from
exposure to litigation or fraud or failure to adhere to the taxation and
regulatory environment. Environmental, social and governance ("ESG") and
climate change risks relate to the successful incorporation of ESG matters and
climate change impacts into investment strategy.
The principal risks and uncertainties identified in the annual report 2023
remain unchanged, other than the following developments: the global economic
outlook is increasingly uncertain, with the ongoing conflict in Ukraine and
the Middle East coupled with elevated inflation and interest rates, leading to
greater volatility across global markets. Caledonia actively monitors key risk
factors, including portfolio concentration, liquidity and volatility, and aims
to manage risk by:
- diversifying the portfolio by sector and geography.
- ensuring access to relevant information from investee companies, particularly
in the case of unquoted investments through board representation.
Consideration of changes to the economic environment forms an important part
of the valuation process for the assets within the Private Capital pool.
- managing cash and borrowings to ensure liquidity is available to meet
investment and operating needs.
- reducing counterparty risk by limiting maximum aggregate exposures.
Going concern
The factors likely to affect the company's ability to continue as a going
concern were set out in the annual report 2023. As at 30 September 2023, there
have been no significant changes to these factors other than our cash position
which has reduced in the period.
The group has conducted an interim going concern assessment which considered
future cash flows including drawdown of all outstanding private equity fund
commitments, the availability of liquid assets and debt facilities, and
banking covenant requirements over at least 12 months from the date of
approval of these financial statements. In making this assessment, several
stress scenarios were considered to reflect the increasingly uncertain
economic outlook, addressing the risks of foreign exchange appreciation,
investment income decline, a decline in distributions from private equity
funds, a delay in known Private Capital pool disposal and market price
reduction. A final scenario considered the cumulative impact of all variables.
Under these scenarios the group would have a range of mitigating actions
available to it, including the sale of liquid assets and usage of banking
facilities. In all scenarios the group would have sufficient cash reserves to
enable it to meet all of its liabilities as they fall due and still hold
significant liquid assets over the assessment period. As a result of this
assessment the directors are confident that the company will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the interim financial statements and
therefore have been prepared on a going concern basis.
Directors' responsibility statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the United Kingdom;
- the interim management report includes a fair review of the information
required by:
- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year;
- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related
parties transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period and any changes in
the related party transactions described in the last annual report that could
do so.
Signed on behalf of the board
Mat Masters, Chief Executive Officer
20 November 2023
Independent review report
to Caledonia Investments plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises condensed group statement of comprehensive
income, the condensed group statement of financial position, the condensed
group statement of changes in equity and the condensed group statement of cash
flows and the related explanatory notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority. In preparing the half-yearly
financial report, the directors are responsible for assessing the company's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
UK
20 November 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
Condensed group statement of comprehensive income
for the six months ended 30 September 2023
Unaudited Unaudited Audited
Six months 30 Sep 2023 Six months 30 Sep 2022 Year 31 Mar 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£m £m £m £m £m £m £m £m £m
Revenue
Investment income 33.8 - 33.8 25.4 - 25.4 43.2 - 43.2
Other income 0.4 - 0.4 0.4 0.3 0.7 0.8 1.3 2.1
Net gains and losses on fair value investments - 88.2 88.2 - 105.2 105.2 - 133.0 133.0
Net gains and losses on fair value property - 0.3 0.3 - 0.3 0.3 - (1.4) (1.4)
Total revenue 34.2 88.5 122.7 25.8 105.8 131.6 44.0 132.9 176.9
Management expenses (12.1) (4.4) (16.5) (10.6) (2.9) (13.5) (21.3) (8.6) (29.9)
Profit before finance costs 22.1 84.1 106.2 15.2 102.9 118.1 22.7 124.3 147.0
Treasury interest receivable 1.8 - 1.8 1.5 - 1.5 4.6 - 4.6
Finance costs (7.2) - (7.2) (1.2) - (1.2) (2.4) - (2.4)
Exchange movements 4.8 - 4.8 1.2 - 1.2 - - -
Profit before tax 21.5 84.1 105.6 16.7 102.9 119.6 24.9 124.3 149.2
Taxation (0.2) (1.1) (1.3) 1.4 (0.4) 1.0 (4.3) (2.0) (6.3)
Profit for the period 21.3 83.0 104.3 18.1 102.5 120.6 20.6 122.3 142.9
Other comprehensive income items never
to be reclassified to
profit or loss
Re-measurement of defined benefit pension schemes - (0.4) (0.4) - (0.1) (0.1) - 1.4 1.4
Tax on other comprehensive income - 0.4 0.4 - (0.5) (0.5) - (0.3) (0.3)
Total comprehensive income 21.3 83.0 104.3 18.1 101.9 120.0 20.6 123.4 144.0
Basic earnings per share 39.2p 152.7p 191.9p 33.4p 188.9p 222.3p 37.9p 225.3p 263.2p
Diluted earnings per share 38.6p 150.3p 188.9p 32.9p 185.9p 218.8p 37.3p 221.7p 259.0p
The total column of the above statement represents the condensed group
statement of comprehensive income, prepared in accordance with IFRSs as
adopted by the United Kingdom.
The revenue and capital columns are supplementary to the condensed group
statement of comprehensive income and are prepared under guidance published by
the Association of Investment Companies.
The profit for the period and total comprehensive income for the period is
attributable to equity holders of the parent.
Condensed group statement of financial position
at 30 September 2023
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2023 2022 2023
£m £m £m
Non-current assets
Investments held at fair value through profit or loss 2,656.5 2,479.3 2,794.9
Investment property 15.1 16.0 15.1
Property, plant and equipment 28.0 29.0 27.9
Deferred tax assets 4.8 21.1 5.7
Employee benefits 4.1 2.4 4.0
Non-current assets 2,708.5 2,547.8 2,847.6
Current assets
Asset held- for sale 248.5 - -
Trade and other receivables 14.9 8.3 6.9
Current tax assets 20.1 12.0 19.3
Cash and cash equivalents 14.9 242.7 221.6
Current assets 298.4 263.0 247.8
Total assets 3,006.9 2,810.8 3,095.4
Current liabilities
Interest bearing loans and borrowings (49.2) - (266.0)
Trade and other payables (39.0) (23.6) (22.1)
Employee benefits (1.5) (1.2) (2.4)
Current liabilities (89.7) (24.8) (290.5)
Non-current liabilities
Interest bearing loans and borrowings (35.0) - -
Employee benefits (4.2) (3.2) (5.1)
Deferred tax liabilities (1.9) (1.3) (1.8)
Non-current liabilities (41.1) (4.5) (6.9)
Total liabilities (130.8) (29.3) (297.4)
Net assets 2,876.1 2,781.5 2,798.0
Equity
Share capital 3.1 3.1 3.1
Share premium 1.3 1.3 1.3
Capital redemption reserve 1.4 1.4 1.4
Capital reserve 2,638.4 2,533.9 2,555.4
Retained earnings 239.9 252.4 247.4
Own shares (8.0) (10.6) (10.6)
Total equity 2,876.1 2,781.5 2,798.0
Undiluted net asset value per share 5286p 5120p 5150p
Diluted net asset value per share 5203p 5039p 5068p
Condensed group statement of changes in equity
for the six months ended 30 September 2023
Capital
redemp-
Share Share tion Capital Retained Own Total
capital premium reserve reserve earnings shares equity
£m £m £m £m £m £m £m
Six months ended 30 September 2023 (Unaudited)
Balance at 1 April 2023 3.1 3.1 1.4 2,555.4 247.4 (10.6) 2,798.0
Total comprehensive income
Profit for the period - - - 83.0 21.3 - 104.3
Other comprehensive income - - - - - - -
Total comprehensive income - - - 83.0 21.3 - 104.3
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 3.6 - 3.6
Transfer of shares to employees - - - - (5.7) 5.7 -
Own shares purchased - - - - - (3.1) (3.1)
Dividends paid - - - - (26.7) - (26.7)
Total transactions with owners - - - - (28.8) 2.6 (26.2)
Balance at 30 September 2023 3.1 3.1 1.4 2,638.4 239.9 (8.0) 2,876.1
Six months ended 30 September 2022 (Unaudited)
Balance at 1 April 2022 3.1 3.1 1.4 2,527.0 263.2 (13.3) 2,782.7
Total comprehensive income
Profit for the period - - - 102.5 18.1 - 120.6
Other comprehensive income - - - (0.6) - - (0.6)
Total comprehensive income - - - 101.9 18.1 - 120.0
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 2.9 - 2.9
Transfer of shares to employees - - - - (6.2) 6.2 -
Own shares purchased - - - - - (3.5) (3.5)
Dividends paid - - - (95.0) (25.6) - (120.6)
Total transactions with owners - - - (95.0) (28.9) 2.7 (121.2)
Balance at 30 September 2022 3.1 3.1 1.4 2,533.9 252.4 (10.6) 2,781.5
Six months ended 30 September 2022 (Unaudited)
Year ended 31 March 2023 (Audited)
Balance at 1 April 2022 3.1 3.1 1.4 2,527.0 263.2 (13.3) 2,782.7
Total comprehensive income
Profit for the year - - - 122.3 20.6 - 142.9
Other comprehensive income - - - 1.1 - - 1.1
Total comprehensive income - - - 123.4 20.6 - 144.0
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 5.8 - 5.8
Transfer of shares to employees - - - - (6.7) 6.7 -
Own shares purchased - - - - - (4.0) (4.0)
Dividends paid - - - (95.0) (35.5) - (130.5)
Total transactions with owners - - - (95.0) (36.4) 2.7 (128.7)
Balance at 31 March 2023 3.1 3.1 1.4 2,555.4 247.4 (10.6) 2,798.0
Condensed group statement of cash flows
for the six months ended 30 September 2023
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2023 2022 2023
£m £m £m
Operating activities
Dividends received 30.8 24.6 41.6
Interest received 2.4 2.3 6.5
Cash received from customers 0.4 0.4 2.6
Cash paid to suppliers and employees (14.2) (14.3) (25.3)
Taxes received - - 0.1
Group tax relief received - 0.5 2.0
Group tax relief paid (0.8) - -
Net cash flow from operating activities 18.6 13.5 27.5
Investing activities
Purchases of investments (253.1) (98.1) (468.1)
Proceeds from disposal of investments 241.1 111.5 192.1
Purchases of property, plant and equipment (0.3) (0.1) (0.3)
Net cash flow (used in)/from investing activities (12.3) 13.3 (276.3)
Financing activities
Interest paid (7.0) (1.1) (2.2)
Dividends paid to owners of the company (26.7) (120.6) (130.5)
Proceeds from bank borrowings 35.0 - -
Proceeds from group borrowings - - 266.0
Repayment of group borrowings (211.2) - -
Purchases of own shares (3.1) (3.5) (4.0)
Net cash flow (used in)/from financing activities (213.0) (125.2) 129.3
Net decrease in cash and cash equivalents (206.7) (98.4) (119.5)
Cash and cash equivalents at period start 221.6 341.1 341.1
Cash and cash equivalents at period end 14.9 242.7 221.6
Notes to the condensed financial statements
1. General information
Caledonia Investments plc is an investment trust company registered in England
and Wales with company number 00235481. The address of its registered office
is Cayzer House, 30 Buckingham Gate, London SW1E 6NN. The ordinary shares of
the company are premium listed on the London Stock Exchange.
This condensed set of financial statements was approved for issue on 20
November 2023 and is unaudited.
The information for the period ended 30 September 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for the year ended 31 March 2023 has been delivered
to the Registrar of Companies. The auditor's report on those accounts was not
qualified, did not draw attention to any matters by way of emphasis of matter
and did not contain a statement under section 498(2) and (3) of the Companies
Act 2006.
2. Accounting policies
Basis of accounting
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting and should be read in conjunction with
the annual financial statements for the year ended 31 March 2023, which were
prepared in accordance with IFRSs adopted by the United Kingdom.
This condensed set of financial statements has been prepared in accordance
with the recommendations of the Statement of Recommended Practice issued by
the Association of Investment Companies.
Adopted IFRSs
The accounting policies adopted in the preparation of the condensed
consolidated financial statements are consistent with those followed in the
preparation of the group's annual report for the year ended 31 March 2023,
except for the mandatory amendments that had an effective date prior to the
start of the six-month period. None of the mandatory amendments had an impact
on the reported financial position or performance of the group. The changes in
accounting policies will also be reflected in the group's consolidated
financial statements for the year ending 31 March 2024.
The group classifies assets as held-for-sale under IFRS 5 (Non-current assets
held for sale and discontinued operations) where it judges they meet the
relevant criteria. This policy has been applied in the current accounting
period (see note 11).
A number of new amendments to standards and interpretations will be effective
for periods beginning on or after 1 April 2024. The group plans to apply these
amendments in the reporting period in which they become effective.
Basis of consolidation
In accordance with the IFRS 10/IAS 28 investment entity amendments to apply
the investment entities exemption, the consolidated financial statements
include the financial statements of the company and service entities
controlled by the company made up to the reporting date. All other investments
in controlled entities are accounted as held at fair value through profit or
loss.
Going concern
Under the UK Corporate Governance Code and applicable regulations, the
directors are required to satisfy themselves that it is reasonable to presume
that the company is a going concern. As at 30 September 2023 the group holds
£880m of liquid investment assets, £15m of cash and has access to £215m of
undrawn committed banking facilities, of which £92.5m expires in July 2025
and £122.5m expires in November 2027.
The group has conducted an interim going concern assessment which considered
future cash flows, including drawdown of all outstanding private equity fund
commitments, availability of liquid assets and debt facilities, and banking
covenant requirements over at least 12 months from the date of approval of
these financial statements. In making this assessment, several stress
scenarios were considered to reflect the increasingly uncertain economic
outlook, addressing the risks of foreign exchange appreciation, investment
income decline, a decline in distributions from private equity funds, a delay
in known Private Capital pool disposal and market price reduction. A final
scenario considered the cumulative impact of all variables.
Under these scenarios the group would have a range of mitigating actions
available to it, including sale of liquid assets and usage of banking
facilities. In all scenarios the group would have sufficient cash reserves to
enable it to meet all of its liabilities as they fall due and still hold
significant liquid assets over the assessment period. As a result of this
assessment the directors are confident that the company will have sufficient
Private Equity Funds to continue to meet its liabilities as they fall due for
at least 12 months from the date of approval of the interim financial
statements and therefore have been prepared on a going concern basis.
Changes in accounting policies
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority and IAS 34, this condensed set of financial statements has
been prepared applying the accounting policies and presentation that were
applied in the preparation of the company's published consolidated financial
statements for the year ended 31 March 2023.
Judgements and estimates
In preparing these interim financial statements, management has made
judgements, estimates and assumptions that affected the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense.
The significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for the year
ended 31 March 2023.
3. Dividends
Amounts recognised as distributions to owners of the company in the period
were as follows:
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2023 2022 2023
£m £m £m
Final dividend for the year ended 31 March 2023 of 49.2p per share (2022 - 26.7 25.6 25.6
47.3p)
Special dividend for the year ended 31 March 2022 of 175.0p per share - 95.0 95.0
Interim dividend for the year ended 31 March 2023 of 18.2p per share - - 9.9
26.7 120.6 130.5
The directors have declared an interim dividend for the year ending 31 March
2024 of 18.93p per share, totalling £10.3m, which has not been included as a
liability in this condensed set of financial statements. This dividend will be
payable on 4 January 2024 to holders of shares on the register on 1 December
2023. The ex-dividend date will be 30 November 2023. The deadline for
elections under the dividend reinvestment plan offered by Link Group will be
the close of business on 12 December 2023.
4. Share capital
During the period, the company's Employee Share Trust sold 178,801 shares for
£nil and purchased 90,158 shares for £3.1m relating to the exercise of
performance share and deferred bonus awards.
In the six months ended 30 September 2022, the company's Employee Share Trust
sold 201,529 shares for £nil and purchased 93,198 shares for £3.5m relating
to the exercise of performance share and deferred bonus awards.
In the year ended 31 March 2023, the Employee Share Trust sold 221,581 shares
for £nil and purchased 106,898 shares for £4.0m relating to the exercise of
performance share and deferred bonus awards.
5. Net asset value per share
The group's undiluted net asset value per share is based on the net assets of
the group at the period end and on the number of shares in issue at the period
end less shares held by The Caledonia Investments plc Employee Share Trust.
The group's diluted net asset value per share assumes the calling of
performance share and deferred bonus awards for nil consideration.
6. Operating segments
The chief operating decision maker has been identified as the Chief Executive
Officer, supported by the Investment Committee, who reviews the company's
internal reporting to assess performance and allocate resources. Management
has determined the operating segments based on these reports.
The performance of operating segments is assessed on a measure of group total
revenue, principally comprising gains and losses on investments and investment
income. Reportable profit or loss is after treasury income and 'Other items',
which comprise management and other expenses. Reportable assets equate to the
group's total assets. 'Cash' and 'Other items' are not identifiable operating
segments.
'Other'-portfolio investments' comprise subsidiaries and other investments not
managed as part of the investment portfolio.
Profit before tax Total assets
6 months 6 months Year
30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar
2023 2022 2023 2023 2022 2023
£m £m £m £m £m £m
Quoted Equity 24 (79) 1 865 744 837
Private Capital* 56 49 65 1,027 819 824
Funds 41 176 104 963 953 874
Portfolio investments 121 146 170 2,855 2,516 2,535
Other investments 2 (14) 7 50 (37) 260
Total revenue/investments 123 132 177 2,905 2,479 2,795
Cash and cash equivalents - 2 4 15 243 221
Other items (17) (14) (32) 87 89 79
Reportable total 106 120 149 3,007 2,811 3,095
*Private Capital investment in 7IM was classified as an asset held for sale at
30 September 2023.
7. Related parties
Caledonia Investments plc repaid £211.2m to Caledonia US Investments Ltd, a
wholly-owned subsidiary of Caledonia, and received a distribution of £212.1m
from Caledonia US Investments Ltd in the period.
Caledonia Group Services Ltd, a wholly-owned subsidiary of Caledonia
Investments plc, provides management services to the company. During the six
months ended 30 September 2023, £16.4m was charged to the company for these
services (30 September 2022: £13.5m and 31 March 2023: £29.9m).
There were no other changes in the transactions or arrangements with related
parties as described in the company's annual report for the year ended 31
March 2023 that have had a material effect on the results or the financial
position of the company or of the group in the six months ended 30 September
2023.
8. Capital commitments
At 30 September 2023, the group had undrawn fund and other commitments
totalling £427.4m (30 September 2022: £339.0m and 31 March 2023: £422.6m).
These commitments could, in theory, be called upon simultaneously at any time.
Although this is unlikely, the going concern assessment has modelled this
scenario and in such circumstances the group would be able to meet all of
these liabilities.
9. Fair value hierarchy
The company measures fair values using the following fair value hierarchy,
reflecting the significance of the inputs used in making the measurements:
Level 1 Quoted prices (unadjusted) in active markets for identical assets.
Level 2 Inputs other than quoted prices included within Level 1 that are directly or
indirectly observable.
Level 3 Inputs for the asset that are not based on observable market data.
The table below analyses financial instruments held at fair value according to
level in the fair value hierarchy into which the fair value measurement is
categorised:
30 Sep 30 Sep 31 Mar
2023 2022 2023
£m £m £m
Investments held at fair value
Level 1 865.0 744.1 836.9
Level 2 5.1 5.3 4.8
Level 3 2,034.9 1,729.9 1,953.2
2,905.0 2,479.3 2,794.9
The following table shows a reconciliation from the opening balances to the
closing balances for fair value measurements in Level 3 of the fair value
hierarchy:
6 mths 6 mths Year
30 Sep 30 Sep 31 Mar
2023 2022 2023
£m £m £m
Balance at the period start 1,953.2 1,549.1 1,549.1
Purchases 226.5 69.7 413.5
Realisation proceeds (223.3) (81.3) (162.8)
Gains and losses on investments sold in the period 5.0 15.2 126.7
Gains and losses on investments held at the period end 71.4 175.3 27.3
Accrued income 2.1 1.9 (0.6)
Balance at the period end 2,034.9 1,729.9 1,953.2
Private asset valuation
Caledonia makes private equity investments in two forms: direct private equity
investments (the Private Capital pool) and investments into externally managed
unlisted private equity funds and funds of funds (the Funds pool). The
directors have made two estimates which they deem to have a significant risk
of resulting in a material adjustment to the amounts recognised in the
financial statements within the next financial year, which relate to the
valuation of assets within these two pools.
For directly owned private investments (Private Capital pool), totalling
£1,027.1m (31 March 2023: £824.0m), valuation techniques using a range of
internally and externally developed unobservable inputs are used to estimate
fair value. Valuation techniques make maximum use of market inputs, including
reference to the current fair values of comparator businesses that are
substantially the same (subject to appropriate adjustments). For each asset, a
range of valuation methods are considered and methods judged most appropriate
are used, taking into consideration the quantity and quality of data points
available. Methods include inter alia: consideration of indicative offers from
third parties, applying an earnings multiple to the maintainable earnings of a
business, and net assets, sometimes employing third-party net asset
valuations.
For private equity fund investments (unlisted Private Equity Funds pool),
totalling £958.0m (31 March 2023: £869.0m) held through externally managed
fund vehicles, the estimated fair value is based on the most recent valuation
provided by the external manager, usually received within 3-6 months of the
relevant valuation date. As at 30 September 2023, the majority of the
valuations included in these financial statements were based principally on
the 30 June 2023 managers' NAVs. Where required, valuations are adjusted for
investments and distributions between valuation date and reporting date. These
valuations depend upon the reasonableness of the fair value estimation made by
third-party managers, whose approach is assessed by Caledonia through a
combination of initial due diligence, on-going analytical monitoring and
review of financial reporting.
At 30 September 2023
Description/Category Valuation method Fair value Unobservable input Weighted average input Input sensitivity Change in valuation
£m +/- +/- £m
Internally developed
Private companies
Large Earnings 302.0 EBITDA multiple 13.9x 10.0% +35.0/-33.0
Medium Earnings 137.6 EBITDA multiple 10.0x 10.0% +10.5/-11.7
Small Earnings 17.7 EBITDA multiple 4.6x 15.0% +1.4/-1.4
Transaction price 391.0 Multiple 1 3-5% +14.8/-14.8
Manager valuation Net assets 178.8 Multiple 1 0.1x +17.9/-17.9
1,027.1 +79.6/-78.8
Non-pool companies 49.8
Total internal 1,076.9
Externally developed
Private equity funds
Net asset value Adjusted Manager NAV 958.0 Multiple 1 5.0% 47.9 / (47.9)
2,034.9 +127.5/-126.7
The principal changes during the half-year were the change in valuation method
used to value 7IM and BioAgilytix. 7IM, an investment manager, is valued at an
agreed transaction price and was previously valued on an EBITDA multiple.
BioAgilytix, which operates bioanalytical testing, is valued on an EBITDA
multiple (included in the 'Large, earnings' category above) and was previously
valued on a net assets basis.
The following table provides information on significant unobservable inputs
used at 31 March 2023 in measuring financial instruments categorised as Level
3 in the fair value hierarchy.
At 31 March 2023
Description/Category Valuation method Fair value Unobservable input Weighted average input Input sensitivity Change in valuation
£m +/- +/- £m
Internally developed
Private companies
Large Earnings 460.6 EBITDA multiple 13.9x 10.0% +39.6/-55.5
Medium Earnings 160.6 EBITDA multiple 11.1x 10.0% +/-13.1
Small Earnings 10.3 EBITDA multiple 4.6x 15.0% +/-1.2
Net assets / manager valuation 192.5 Multiple 1 0.1x +/-21.8
824.0 +75.7/-91.6
Non-pool companies 260.2
Total internal 1,084.2
Externally developed
Private equity funds
Net asset value Adjusted Manager NAV 869.0 Multiple 1x 5.0% +/-43.5
1,953.2 +119.2/-135.1
Private company (Private Capital) assets have been disaggregated into
categories as follows:
● Assets in the large, earnings based category have an Enterprise Value of
>£150m, and benefit from a reasonable number of comparative data points,
as well as having sufficient size to make their earnings reliable and
predictable.
● Assets in the medium, earnings based category have an Enterprise Value of
£50-£150m, with a more limited universe of comparable businesses available.
● Assets in the smaller, earnings based category have an Enterprise value of
<£50m. Their smaller size results in fewer data points due to a lack of
available listed comparators, and makes them generally more vulnerable than
larger assets to changes in economic conditions.
● Manager valuations are used for assets where the net asset method is employed.
For private company assets we have chosen to sensitise and disclose EBITDA
multiple or tangible asset multiple inputs because their derivation involves
the most significant judgements when estimating valuation, including which
data sets to consider and prioritise. Valuations also include other
unobservable inputs, including earnings and tangible assets, which are based
on historic and forecast data and are less judgmental. For each asset
category, inputs were sensitised by a percentage deemed to reflect the
relative degree of estimation uncertainty, and valuation calculations
re-performed to identify the impact. Private equity fund assets (unlisted
Funds Pool investments) are each held in and managed by the same type of fund
vehicle, valued using the same method of adjusted manager valuations, and
subject to broadly the same economic risks. They also comprise a diversity of
sector and geographical exposure, reducing concentration risk. They have been
sensitised at an aggregated level by 5% to reflect a degree of uncertainty
over managers' valuations which form the basis of their fair value.
10. Share-based payments
The group operates performance share schemes and a deferred bonus plan.
Details of these schemes were disclosed in the annual report 2023 and the
basis of measuring fair value was consistent with those disclosures.
During the six months ended 30 September 2023, awards over 192,384 shares were
issued under the performance share scheme (30 September 2022: 167,633 shares
and 31 March 2023: 172,802 shares). Compulsory deferred bonus awards over
1,976 shares were also granted (30 September 2022 and 31 March 2023: 39,500
shares).
Expenses in respect of share-based payments in the period were £3.9m (30
September 2022: £3.1m and 31 March 2023: £7.4m).
11. Asset held for sale
In September 2023, Caledonia agreed terms for the sale of a majority stake in
7IM, a vertically integrated retail wealth management business, to Ontario
Teachers' Pension Plan Board. The transaction is subject to change in control
approval by the Financial Conduct Authority and is expected to complete by
early 2024. Cash proceeds of c.£255m, are expected net of transaction
expenses. The valuation at the end of September of £248m reflects expected
cash proceeds less a 3% discount to equity value in recognition of the very
limited degree of transaction execution risk. To reflect this transaction,
this asset was disclosed as held for sale on the condensed group statement of
financial position as at 30 September 2023.
Glossary of terms and alternative performance measures
Alternative performance measure ("APM'")
APMs are not prescribed by accounting standards but are industry specific
performance measures which help users of the annual accounts and financial
statements to better interpret and understand performance.
NAV Total Return ("NAVTR")
NAVTR is a measure of how the NAV per share has performed over a period,
considering both capital returns and dividends paid to shareholders. NAVTR is
calculated as the increase in NAV per share between the beginning and end of
the period, plus accretion from the assumed dividend reinvestment in the
period. We use this measure as it enables comparisons to be drawn against an
investment index in order to benchmark performance and the calculation follows
the method prescribed by the Association of Investment Companies ('AIC').
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END
Copies of this statement are available at the company's registered office,
Cayzer House, 30 Buckingham Gate, London SW1E 6NN, United Kingdom, or from
its website at www.caledonia.com.
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