REG - Caledonia Investmnts - Half-year Report
26/11/2024 07:00
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RNS Number : 5908N Caledonia Investments PLC 26 November 2024
Caledonia Investments plc
Half-year results for the six months ended 30 September 2024
Financial highlights
Six months Year
30 Sept 2024 31 March 2024
Net asset value per share total return(1) 0.5% 7.4%
Net asset value per share 5346p 5369p
Net assets £2,918m £2,965m
Interim dividend per share 19.69p 18.93p
1. NAV total return, and investment and pool returns are Alternative performance
measures - see note 10
A presentation for analysts will take place at 09:30, with a live webcast
available via this link
(https://sparklive.lseg.com/CaledoniaInvestments/events/5cbb8d1a-6cc6-4b1e-8389-0cc6ea7f57a7/caledonia-investments-plc-half-year-results-presentation)
.
Highlights
NAV total return of 0.5%
• NAV of £2,918m (5,346p per share) +0.5% NAV Total Return ('NAVTR')
• Overall performance impacted by foreign exchange headwinds of £104m, reducing
NAVTR by 3.6% in the period
- +7.0% return from Public Companies reflecting overall positive movement in
global equity markets and careful stock selection
- -2.8% return from Private Capital with good performance and positive returns
from the majority of investee businesses offset by a reduction in the
valuation of Cooke Optics, with the valuation reflecting continued uncertainty
over the recovery of demand following the 2023 Hollywood actors and writers'
strikes
- -2.4% return from Funds with continued positive performance from our North
American holdings (+5.3% in local currency) and a small positive contribution
from our Asia holdings (+0.8% in local currency)
Progressive dividend growth
• Final dividend of 51.47p per share paid to shareholders in August, marking the
57th consecutive year of progressive dividend payments
• Interim dividend increased by 4.0% to 19.69p per share
Robust balance sheet with increased liquidity, well positioned to take
advantage of investment opportunities
• Net cash of £134.6m
• New revolving credit facility of £325m, increased from £250m, providing
total liquidity of £459.6m
• £211.6m invested into new and existing investments, including the £55.0m
Private Capital investment into Direct Tyre Management ('DTM') in August 2024.
Proceeds of £162.1m were received from the portfolio including £19.0m from
the sale of an Asian fund to the secondary market
Share buybacks
• £26.3m allocated to share buybacks, with 746,963 of shares repurchased at an
average discount of 34.8%, resulting in a 25.6p accretion to NAV per share.
Cayzer family concert party hold 49.5% of shares versus a 49.9% cap
• Circular released on 26 November 2024 seeking approval of an uncapped Rule 9
Waiver, allowing Caledonia to continue to buy back shares
• Requires the majority of independent shareholders to approve at a General
Meeting on 18 December 2024; Cayzer family concert party not permitted to vote
on the resolution
Performance track record to 30 September 2024
6 months 1 year 3 years 5 years 10 years
% % % % %
NAV total return 0.5 4.1 25.5 60.5 150.4
Annualised
NAV total return 4.1 7.9 9.9 9.6
Total shareholder return(1) 4.5 3.7 5.9 7.8
CPIH(2) 2.6 5.9 4.3 2.9
FTSE All Share total return 13.4 7.4 5.7 6.3
1. Alternative Performance Measure - see note 10
2. Consumer Prices Index including owner occupiers' housing costs ('CPIH')
Mat Masters, Chief Executive Officer, commented:
"This period has shown the value of our diversified, global and long-term
portfolio. While there was an impact from foreign exchange headwinds, overall
our underlying investment portfolio performed well in the first six months of
the year. This includes particularly strong returns from Public Companies,
driven by excellent operational performance of businesses in the portfolio.
"I am encouraged by our strategic progress in the first half of the year,
which included a £55m investment into DTM, an acquisition which typifies our
strategy to invest in high-quality companies with strong cash generation and
proven management teams. With a high quality portfolio underpinned by a strong
balance sheet, we are well placed to continue to generate long term
compounding real returns.
We continue to believe that the share price undervalues the high quality and
diverse portfolio, our long-term track record and future prospects. The
proposals announced today provide optionality for Caledonia to continue to buy
back shares, further enhancing value for our shareholders."
26 November 2024
Enquiries
Caledonia Investments plc Teneo
Mat Masters (CEO), Rob Memmott (CFO) Tom Murray, Robert Yates
+44 20 7802 8080 +44 20 7260 2700
Business review
Caledonia is a long-term equity investor, investing in high-quality,
well-managed companies with long-term growth characteristics with, in many
cases, an ability to deliver increasing levels of income. Our global,
diversified portfolio continues to deliver positive returns with NAVTR
increasing by 0.5%, despite foreign exchange headwinds, which reduced NAVTR by
3.6% in the period. The essence of long-term investing is the ability to
endure shorter-term fluctuations and maintain a focus on achieving sustainable
returns over the longer term. Whilst we remain cognisant of short term
performance, we invest and assess investment success over the longer term. Our
approach has delivered long-term real returns with annualised NAVTR of 9.6%
outperforming inflation by 6.7% and the FTSE-All Share index by 3.3% over the
last 10 years.
Asset allocation
Caledonia holds investments in both listed and private markets via three
pools: Public Companies, Private Capital and Funds, each managed by a
specialist investment team. The diversity and long-term outlook of our
investment approach mean we can effectively manage risk, both through
diversification and disciplined capital allocation across our three pools,
providing shareholders with a well-balanced global portfolio.
To ensure that we maintain a balanced portfolio, each of our investment pools
has a strategic allocation range. At 30 September 2024, all of our investment
pools were within their strategic allocation ranges.
Strategic allocation Allocation NAV at 30 Sept 2024
Public Companies 30%-40% 35%
Private Capital 25%-35% 29%
Funds 25%-35% 30%
Investment performance
At 30 September 2024, the investment portfolio was valued at £2.7bn,
delivering a return of 0.7% during the six months (4.6% in local currencies).
Investment pool returns
6 months 1 year 3 years 5 years 10 years
% % % % %
Public Companies 7.0 16.6 6.5 10.5 9.4
Private Capital -2.8 3.1 15.1 12.8 13.1
Funds -2.4 -4.6 8.0 13.1 14.1
Public Companies
The Public Companies pool provides Caledonia with exposure to a concentrated
portfolio of high-quality well-managed businesses. We take a long-term
ownership approach because we believe that it is better to allow the companies
to drive returns, rather than simply trading them. The qualities we focus on
include a strong market position, good and sustainable returns on capital, and
experienced management teams, which are closely aligned with long-term
investors. We expect that a combination of these factors will reward long-term
ownership.
The global portfolio comprises two strategies, the Capital and the Income
portfolios, each generally holding between 15 and 20 companies. The Income
portfolio aims to deliver an initial yield on invested cost of 3.5% with the
dividend per share from these holdings growing ahead of inflation over the
longer term. The Capital portfolio has no dividend target, is unconstrained
and, consequently, should produce higher returns over time. The portfolios are
managed by a single team, with the same research methodology and operational
discipline used across both.
Performance
In the first half of the year, the Public Companies pool generated a total
return of +7.0% (+11.6% in local currencies), reflecting positive performance
of a number of our holdings. Over the last 10 years the Public Companies pool
has delivered returns of 9.4% p.a..
Investment activity
We invested a total of £80.7m during the period and realised £68.0m
resulting in net investments across both portfolios of £12.7m.
Capital portfolio
At 30 September 2024 the Capital portfolio was valued at £747.1m and
delivered a return of +6.7% over the six months. The portfolio is
concentrated, with 18 holdings and is not managed against a benchmark. Over
the last 10 years the Capital portfolio has delivered returns of 11.2% p.a..
The strongest performers in terms of returns were Alibaba Group (+40.8%),
Oracle (+28.3%) and Phillip Morris (+27.8%), primarily driven by a combination
of underlying company operating results and improved expectations for future
growth prospects. Alibaba Group's performance followed strategic changes
implemented by a new CEO including a renewed focus on the core businesses;
coupled with economic stimulus measures in China supporting a rerating of most
Chinese stocks. Oracle continues to benefit from accelerating growth and
Phillip Morris' return was driven by continued strong performance of its
reduced risk products including Zyn, the company's smoke free nicotine
pouches. Gains across the Capital portfolio were partially offset by
negative contributions from a small number of companies, primarily Spirax
Sarco (-24.4%), Fastenal (-12.1%) and Croda International (-11.9%) due to
headwinds in their end markets. However, we remain confident in the
longer-term growth trajectories.
During the period, we initiated a new position in Pool Corp, a leading US
distributor of swimming pools and related outdoor living products and sold
our holding in British American Tobacco. Other than this trading activity
remained targeted with refined positions in a number of existing investments.
Income portfolio
At 30 September 2024 the Income portfolio was valued at £268.5m and generated
a return of +7.8% over the six months. Like the Capital portfolio, it is
concentrated, comprising 17 holdings and is not managed against a benchmark.
Over the last 10 years the Income portfolio has delivered returns of 5.4%
p.a..
The strongest performers were Phillip Morris (+27.8%) and Unilever (+23.8%).
The latter reflected early traction in their Growth Action Plan, with
increased investment in their top 30 power brands, continued portfolio
optimisation and the benefits of a new organisational structure and reward
framework. Gains were partially offset by weaker share price performances from
Sabre Insurance (-15.8%) and Fastenal (-12.1%). While both companies
experienced more challenging end markets, they continue to perform well at the
operating level and we remain confident in the long term potential of both
companies.
During the period, we initiated two new positions in the portfolio: Sage, a
leading accounting, HR and payroll software provider to SMEs and Croda
International, a speciality chemicals company with a focus on consumer,
pharmaceuticals and crop care. We exited our positions in DS Smith, following
the announcement of the agreed offer from International Paper, together with
Pennon Group during the period.
Private Capital
The Private Capital pool comprises a small number of direct investment
holdings in private companies, predominantly in the UK mid-market. We focus on
cash generative businesses with strong growth potential. We typically invest
£50m to £150m in private companies using low levels of leverage, providing
long-term capital along with operational and strategic support to portfolio
company management teams. Unlike many private equity firms, as a balance sheet
investor, we are not constrained by the finite life of a private equity fund,
which allows us to take a truly long-term approach to managing and realising
value from our investments.
Performance
At 30 September 2024, the Private Capital portfolio consisted of nine
companies, with five investments representing circa 90% of pool NAV.
The portfolio was valued at £848.1m and generated a return of -2.8% over the
six months, driven by good operational performance across the majority of the
portfolio companies, offset by a reduction in value of our investment in Cooke
Optics. Over the last 10 years the Private Capital pool has delivered a return
of 13.1% p.a..
The majority of the portfolio is valued on an earnings multiple basis, with
these multiples in the range 9 to 14.5 times last 12 months' earnings before
interest, tax, depreciation and amortisation ('LTM EBITDA'). Gearing levels
are low, with net debt typically in the range of 2 to 2.5 times LTM EBITDA.
Investment activity
We invested a total of £64.2m during the period, primarily driven by our
£55.0m acquisition of DTM in August 2024.
Portfolio summary
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 make progress. The valuation at 30 September 2024 was
£181.6m, a return of 1.6% (4.4% in local currency) for the six month period.
Stonehage Fleming, the international multi-family office, continues to deliver
a good performance across each of the Family Office, Investment Management and
Financial Services businesses. The valuation at 30 September 2024 was
£180.2m, a return of 7.6% for the six month period.
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 by Caledonia in April 2023. The
business has continued to perform well since acquisition, reporting good year
on year growth and, trading ahead of expectations. The valuation at 30
September 2024 was £174.2m, a return of 6.1% for the six month period.
Liberation Group, an inns and drinks business with an estate stretching from
Southwest London to Bristol and the Channel Islands. With the continuing
program of improvements to the Cirrus estate delivering good results and
improved trading across the rest of the business, revenue growth is improving,
The valuation at 30 September 2024 was £147.7m, a return of 9.1% for the six
month period.
DTM, the UK's leading independent provider of outsourced tyre management
services to fleet operators, was acquired in August 2024. Headquartered in
Blackpool, DTM has over 100 employees and serves c.250 fleet customers with
c.285,000 vehicles and c.1.3 million tyres under management. Enabled by a
proprietary technology platform, which allows customers to maximise their
fleet efficiency, compliance and output, DTM connects the vehicles it manages
to a national network of over 3,500 service provider locations. DTM has
consistently delivered year-on-year growth with a revenue CAGR of c.16% over
the last 15 years. The valuation has been maintained at the equity purchase
cost of £55m.
Cooke Optics, a leading manufacturer of cinematography lenses, continues to be
heavily impacted by the Hollywood writers' strike which started in early May
2023 and the subsequent actors' strike which started in July 2023. Both
disputes were resolved by November 2023, however despite good demand for
Cooke's new prosumer range, recovery in the Cinematography market has been
slow and it is clear that it will take longer than previously anticipated for
the industry to recover to pre-strike levels. We have therefore taken a more
conservative view of the timing and level of this recovery, which has been
reflected in the valuation at 30 September 2024 of £50.4m, a return of -56.4%
for the period. Cooke has no third-party debt. We continue to work closely
with the management team as they navigate through this challenging period.
Funds
We invest in funds operating in North America and Asia with a bias to buyouts.
The pool provides attractive diversification, investing in 76 funds managed by
42 managers with an underlying portfolio of over 600 companies, across a wide
range of sectors and company sizes.
The North American based funds, which represent 63% of the Funds pool (19% of
Caledonia's NAV), invest into the lower mid-market, with a focus on small to
medium sized, often owner-managed, established businesses. The pool is a
combination of directly owned funds (48% of Funds pool), with a broad range of
managers generally managing funds under US$750m, and the balance is in funds
of funds investments (15% of Funds pool) with HighVista Strategies US private
equity funds, our largest single manager over five separate funds with highly
diversified portfolios.
Our Asia funds represent 37% of the Funds pool (11% of Caledonia's NAV), and
invest across a wide range of sectors, which are set to benefit from wider
demographic trends, such as healthcare and technology. The funds typically
invest in 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 pool is a combination of directly owned funds (20% of Funds pool), with a
broad range of managers, and the balance (17% of Funds pool) is invested with
Asia Alternatives, Axiom and Unicorn, all funds of funds providers, investing
in buyout, growth and venture capital.
Performance
At 30 September 2024, the pool was valued at £874.6m, comprising £549.0m of
North American funds and £325.6m of Asian funds. The pool generated a total
return of -2.4% (+3.6% in local currencies) driven by the adverse impact of
foreign exchange, continued positive performance from our North American
holdings (+5.3% in local currency) and a small positive contribution from our
Asia holdings (+0.8% in local currency). Over the last 10 years, the Funds
pool has delivered returns of 14.1% p.a..
Looking at the performance drivers in our North American primary fund
programme, alongside realisation activity, robust operating performance
continues to be a key driver of returns. We believe our Asia portfolio remains
well positioned despite challenges posed by geopolitics and the wider
operating environment.
Investment activity
Overall, the Funds pool generated net cash of £27.4m in the first half of the
year. Investments totalled £66.7m with 77% deployed into North American funds
and the balance into Asia funds. Distributions of £75.1m were broadly split
60%/40% between North America and Asia. In addition, £19.0m was realised in a
secondary sale of an Asian fund. We continue to see improvement in realisation
activity in North America and our underlying managers remain cautiously
optimistic that exit markets will continue to improve. In our Asian portfolio,
we have seen an increase in distributions in the first half of the year,
albeit the pace of distributions has slowed since the peak of 2021. Given the
continued uncertainty in the macro environment, alongside the earlier stage
focus of our Asian fund holdings, in contrast to North America we expect the
pace of distributions to take longer to return to normal levels.
Portfolio maturity
Our primary funds portfolio has a weighted average age of approximately 4.3
years. The weighted average age of our North American holdings is 4.1 years,
within the window of a four to six year holding period typically targeted by
our managers. Reflecting the earlier stage focus of our Asia portfolio, the
weighted average age of these holdings is 4.8 years.
Uncalled commitments
During the first half, US$130m was committed: US$110m to North American lower
mid-market buyout funds and a US$20m new commitment to an existing Asian fund
manager. We have a good investment pipeline of potential new fund commitments
and in particular, we expect a number of our US managers to be fundraising
over the next 12-18 months, as broader market conditions for exits in this
market improve.
At 30 September 2024, uncalled commitments were £398.6m, circa 70% to North
America and 30% to Asia.
Investment movements in the year
31 Investments Realisations Accrued income Gains / (losses) 30 Income Return(3)
March Sept
2024
2024
£m £m £m £m £m £m £m %
Public Companies 949.8 80.7 (68.0) - 53.1 1,015.6 13.1 7.0
Private Capital(1) 820.3 79.2 (15.0) 1.3 (37.7) 848.1 14.1 (2.8)
Funds 926.3 66.7 (94.1) - (24.3) 874.6 2.2 (2.4)
Total pools 2,696.4 226.6 (177.1) 1.3 (8.9) 2,738.3 29.4 0.7
Other investments(2) 18.0 - - - (1.6) 16.4 -
Total investments 2,714.4 226.6 (177.1) 1.3 (10.5) 2,754.7 29.4
Net cash 227.4 - - - - 134.6
Other net (liabilities) / assets 23.5 - - - - 28.4
Net assets 2,965.3 2,917.7
1. Private Capital realisation of £15.0m relates to the repayment of a bridge
loan relating to the acquisition of DTM
2. Other investments comprise legacy investments and cash and net other assets
in subsidiary investment entities
3. Returns for investments are calculated using the Modified Dietz Methodology
Cash flows, liquidity and facilities
In September 2024, the company entered into a new revolving credit facility of
£325m with three banks on improved terms. The facility comprises £150m over
a five-year term expiring in August 2029 and £175m over a three year term
expiring in August 2027. The facility increases the available resources by
£75m and provides the company with enhanced liquidity and flexibility to
support long term investment. At 30 September 2024, total liquidity of cash
and undrawn facilities was £459.6m.
Our net investment cashflows were an outflow of £47.7m. Investment into our
portfolio totalled £224.8m Realisations from our portfolio totalled £177.1m.
After investment income, management expenses, dividend payments to our
shareholders and share buybacks, net cash outflow was £92.8m. At 30 September
our net cash was £134.6m (31 March 2024: £227.4m).
Foreign exchange
61.8% of our net asset value is non-Sterling denominated. We do not hedge our
foreign currency exposure. However, this risk is fully recognised by the
business and considered carefully within our risk management approach.
Dividend
The board has declared an interim dividend of 19.69p per share, an increase of
4.0% on last year's interim dividend, further extending our long term track
record of progressive dividend payments This will be paid to shareholders on 9
January 2025.
Share buybacks
Sentiment towards investment companies, and in particular those investing in
private assets, continues to weigh on discounts across the sector. We believe
it is important for shareholders to capture more fully the benefit from the
long-term increase in NAV per share. In recent years, the widening of the
discount has resulted in total shareholder return substantially
underperforming growth in the NAV per share, which we believe undervalues the
Company's high quality and diverse portfolio, its long-term track record and
its future prospects.
Alongside continuing to deliver long-term real returns, addressing the
discount is a priority for the Board and the management team. To help ensure
our investment proposition is recognised by the market, over the past year we
have improved disclosure, expanded press engagement, revitalised our approach
to investor relations and focused on increasing engagement with retail
investors. These efforts will continue to be enhanced and, among other things,
will include a series of events spotlighting each of the Company's investment
pools, commencing with Private Capital in early 2025.
In addition to this, we have been allocating capital to share buybacks. In the
six-month period to 30 September 2024, we allocated £26.3m to share buybacks,
purchasing and cancelling 746,963 shares at an average discount of 34.8%,
resulting in a 25.6p accretion to NAV per share.
The Cayzer family concert party holding is currently 49.5% versus a cap of
49.9%, which therefore limits the number of shares we can buy back. The Board
continues to believe that share buybacks at the current discount to Net Asset
Value per share are accretive to shareholders and that it is in the best
interests of the Company and shareholders to continue to do so.
The Company has carried out a consultation exercise with a significant
proportion of Independent Shareholders, who have historically voted at
previous general meetings. During this process the possibility of seeking
approval of a new Waiver Resolution that does not include a 49.9 per cent. cap
on the Concert Party's maximum interest in Ordinary Shares has been discussed.
Accordingly, on 26 November 2024 a Circular has been released to outline a
proposal to refresh our existing authority to undertake share buybacks and at
the same time seek approval from independent shareholders of a waiver from the
mandatory offer requirement in the Takeover Code that may otherwise apply to
the Concert Party as a result of share buybacks by the Company.
While this proposal is similar to the annual authority and waiver sought in
recent years, the approval of this waiver does not include a cap on the
percentage of the Ordinary Shares that the Concert Party can hold.
The waiver resolution requires the approval of a majority of independent
shareholders at a General Meeting to be held on 18 December 2024. The Cayzer
family concert party is not permitted to vote on the resolution. Further
information on the proposals can be found in the Circular released on 26
November 2024 and on the Company website (www.caledonia.com).
Looking forward
While the external environment remains uncertain, our long-term approach
enables us to remain focused on delivering attractive returns. This, together
with our diversified global portfolio, increased liquidity and strong balance
sheet, positions us well to take advantage of investment opportunities.
Supplementary information
Change in pool investments value
£m
Opening portfolio balance 2,696.4
Investments 226.6
Realisations (177.1)
Gains/losses (8.9)
Accrued income 1.3
Closing portfolio balance 2,738.3
Cash and other 179.4
Closing net assets 2917.7
Net asset distribution
30 Sept 31 Mar
2024 2024
Public Companies 34.8% 32.0%
Private Capital 29.1% 27.7%
Funds 30.0% 31.2%
Cash and other 6.1% 9.1%
100.0% 100.0%
Geography by region (headquartered)
30 Sept 31 Mar
2024 2024
North America 46.7% 45.1%
UK & Channel Islands 34.1% 33.9%
Asia 10.9% 12.7%
Europe 8.3% 8.3%
100.0% 100.0%
Net assets currency distribution
30 Sept 31 Mar
2024 2024
Pound sterling 38.2% 39.4%
US dollar 52.3% 51.4%
Euro 7.1% 6.9%
Other currencies 2.4% 2.3%
100.0% 100.0%
Investments summary
Holdings over 1% of net assets at 30 September 2024 were as follows:
Net
Value assets
Name Pool Geography Business £m %
Cobepa Private Capital Europe Investment company 181.6 6.2
Stonehage Fleming Private Capital Chan Is. Family office services 180.2 6.2
AIR-serv Europe Private Capital UK Forecourt vending 174.2 6.0
Liberation Group Private Capital UK Pubs, bars & inns 147.7 5.1
HighVista Strategies Funds US Funds of funds 129.1 4.4
Oracle Public Companies US Software 96.4 3.3
Microsoft Public Companies US Software 81.2 2.8
Watsco Public Companies US Ventilation products 73.1 2.5
Axiom Asia funds Funds Asia Funds of funds 72.7 2.5
Texas Instruments Public Companies US Semiconductors 71.0 2.4
Philip Morris Public Companies US Tobacco & smoke-free products 66.3 2.3
Decheng funds Funds Asia Private equity funds 57.3 2.0
Direct Tyre Management Private Capital UK Tyre management services 55.0 1.9
Cooke Optics Private Capital UK Cine lens manufacturer 50.4 1.7
Fastenal Public Companies US Industrial supplies 46.3 1.6
Thermo Fisher Scientific Public Companies US Pharma & life sciences services 46.2 1.6
Hill & Smith Public Companies UK Infrastructure 41.7 1.4
Croda International Public Companies UK Chemicals 40.3 1.4
Asia Alternatives funds Funds Asia Funds of funds 38.5 1.3
Unicorn funds Funds Asia Funds of funds 37.6 1.3
Moody's Corporation Public Companies US Financial services 37.5 1.3
Spirax Sarco Public Companies UK Steam engineering 34.9 1.2
PoolCorp Public Companies US Wholesale distributor 34.2 1.2
Charter Communications Public Companies US Cable communications 34.2 1.2
Ironbridge Funds Funds Canada Private equity funds 34.0 1.2
SIS Private Capital UK Content services 32.1 1.1
Boyne funds Funds US Private equity funds 31.6 1.1
CenterOak funds Funds US Private equity funds 29.7 1.0
Stonepeak funds Funds US Private equity funds 29.4 1.0
Other investments 753.9 25.7
Investment portfolio 2,738.3 93.9
Cash and other net assets 179.4 6.1
Net assets 2,917.7 100.0
Risks and uncertainties
Caledonia has a risk management framework in place that provides a structured
process for identifying, assessing, and managing risks that the company faces
in executing its 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 2024 pages 57-61, and
remain materially unchanged, summarised below:
• Strategic risks arise from the appropriateness of the business model to
deliver long-term capital and income growth
• Investment risks arise in respect of specific investment and realisation
decisions
• Market risks arise from losses in value of investments arising from sudden and
significant movements in public market prices, particularly in highly volatile
markets. Private asset valuations have an element of judgement and could also
be impacted by market fluctuations. Caledonia's principal market risks are
therefore equity price volatility, foreign exchange rate movements and
interest rate volatility
• Liquidity risks arise if liabilities, including private equity fund drawdowns,
cannot be met or new investments cannot be made due to a lack of liquidity.
Such risk can arise from being unable to sell an investment due to lack of a
market, or from not holding cash or being able to raise debt
• Operational risks arising from inadequate or failed processes, people and
systems or from external factors
Regulatory and legal 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 approach
Caledonia continues to closely monitor and manage these principal risks with
only minor updates to the commentary in the annual report, as follows:
geopolitical conflict risk remains heightened, sustaining market volatility,
and whilst UK inflation is now within target, interest rates remain slow to
reduce.
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 2024. As at 30 September 2024, there
have been no significant changes to these factors.
The group has made an assessment of going concern for a period of at least 12
months from the date of approval of this half-year report. In making this
assessment the directors considered an analysis of future cash flows,
liquidity, available credit facilities and banking covenant requirements, in
addition to a stress scenario reflecting an uncertain economic outlook.
Having performed 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
25 November 2024
INDEPENDENT REVIEW REPORT TO CALEDONIA INVESTMENT 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 2024 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 2024 which comprises the 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 Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). 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 (Revised), 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
London, UK
25 November 2024
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 2024
Unaudited Unaudited Audited
Six months 30 Sep 2024 Six months 30 Sep 2023 Year 31 Mar 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£m £m £m £m £m £m £m £m £m
Revenue
Investment income 29.4 - 29.4 33.8 - 33.8 61.8 - 61.8
Other income 0.4 - 0.4 0.4 - 0.4 0.9 0.6 1.5
Net (losses)/gains on fair value investments - (10.5) (10.5) - 88.2 88.2 - 174.4 174.4
Net gains/(losses) on fair value property - 0.3 0.3 - 0.3 0.3 - (3.9) (3.9)
Total revenue 29.8 (10.2) 19.6 34.2 88.5 122.7 62.7 171.1 233.8
Management expenses (13.6) (3.5) (17.1) (12.1) (4.4) (16.5) (22.9) (8.4) (31.3)
Profit before finance costs 16.2 (13.7) 2.5 22.1 84.1 106.2 39.8 162.7 202.5
Treasury interest receivable 5.7 - 5.7 1.8 - 1.8 3.2 - 3.2
Finance costs (1.6) - (1.6) (7.2) - (7.2) (10.6) - (10.6)
Exchange movements (0.4) - (0.4) 4.8 - 4.8 6.3 - 6.3
Profit before tax 19.9 (13.7) 6.2 21.5 84.1 105.6 38.7 162.7 201.4
Taxation 2.0 (0.4) 1.6 (0.2) (1.1) (1.3) 1.8 0.6 2.4
Profit for the period 21.9 (14.1) 7.8 21.3 83.0 104.3 40.5 163.3 203.8
Other comprehensive income items never to be reclassified to profit or loss
Re-measurements of defined benefit pension schemes - (0.5) (0.5) - (0.4) (0.4) - (0.8) (0.8)
Tax on other comprehensive income - 0.6 0.6 - 0.4 0.4 - 0.4 0.4
Total comprehensive income 21.9 (14.0) 7.9 21.3 83.0 104.3 40.5 162.9 203.4
Basic earnings per share 40.5p -26.1p 14.4p 39.2p 152.7p 191.9p 74.5p 300.2p 374.7p
Diluted earnings per share 39.9p -26.1p 14.2p 38.6p 150.3p 188.9p 73.3p 295.7p 369.0p
The total column of the above statement represents the group's statement of
comprehensive income, prepared in accordance with IFRSs as adopted in the
United Kingdom.
The revenue and capital columns are supplementary to the group's 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 2024
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Non-current assets
Investments held at fair value through profit or loss 2,754.7 2,656.5 2,695.4
Investment property 13.3 15.1 13.3
Property, plant and equipment 26.5 28.0 25.2
Deferred tax assets 4.2 4.8 5.3
Employee benefits 4.3 4.1 4.3
Non-current assets 2,803.0 2,708.5 2,743.5
Current assets
Asset held for sale - 248.5 19.0
Trade and other receivables 8.1 14.9 7.3
Current tax assets 4.5 20.1 1.7
Cash and cash equivalents 134.6 14.9 227.4
Current assets 147.2 298.4 255.4
Total assets 2,950.2 3,006.9 2,998.9
Current liabilities
Interest bearing loans and borrowings - (49.2) -
Trade and other payables (25.8) (39.0) (24.4)
Employee benefits (1.6) (1.5) (3.1)
Current liabilities (27.4) (89.7) (27.5)
Non-current liabilities
Interest bearing loans and borrowings - (35.0) -
Employee benefits (4.0) (4.2) (5.0)
Deferred tax liabilities (1.1) (1.9) (1.1)
Non-current liabilities (5.1) (41.1) (6.1)
Total liabilities (32.5) (130.8) (33.6)
Net assets 2,917.7 2,876.1 2,965.3
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 2,676.3 2,638.4 2,716.6
Retained earnings 240.1 239.9 250.2
Own shares (4.5) (8.0) (7.3)
Total equity 2,917.7 2,876.1 2,965.3
Undiluted net asset value 5430p 5286p 5452p
Diluted net asset value 5346p 5203p 5369p
Condensed group statement of changes in equity
for the six months ended 30 September 2024
Capital
Share Share redemption Capital Retained Own Total
capital premium reserve reserve earnings shares equity
£m £m £m £m £m £m £m
Six months ended 30 September 2024 (Unaudited)
Balance at 1 April 2024 3.1 1.3 1.4 2,716.6 250.2 (7.3) 2,965.3
Total comprehensive income
Profit for the period - - - (14.1) 21.9 - 7.8
Other comprehensive income - - - 0.1 - - 0.1
Total comprehensive income - - - (14.0) 21.9 - 7.9
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 2.6 - 2.6
Transfer of shares to employees - - - - (6.7) 6.7 -
Own shares purchased and cancelled - - - (26.3) - - (26.3)
Own shares purchased - - - - - (3.9) (3.9)
Dividends paid - - - - (27.9) - (27.9)
Total transactions with owners - - - (26.3) (32.0) 2.8 (55.5)
Balance at 30 September 2024 3.1 1.3 1.4 2,676.3 240.1 (4.5) 2,917.7
Six months ended 30 September 2023 (Unaudited)
Balance at 1 April 2023 3.1 1.3 1.4 2,555.4 247.4 (10.6) 2,798.0
Total comprehensive income
Profit for the period and 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 1.3 1.4 2,638.4 239.9 (8.0) 2,876.1
Year ended 31 March 2024 (Audited)
Balance at 1 April 2023 3.1 1.3 1.4 2,555.4 247.4 (10.6) 2,798.0
Total comprehensive income
Profit for the year - - - 163.3 40.5 - 203.8
Other comprehensive income - - - (0.4) - - (0.4)
Total comprehensive income - - - 162.9 40.5 - 203.4
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 6.2 - 6.2
Transfer of shares to employees - - - - (6.9) 6.9 -
Own shares purchased and cancelled - - - (1.7) - - (1.7)
Own shares purchased - - - - - (3.6) (3.6)
Dividends paid - - - - (37.0) - (37.0)
Total transactions with owners - - - (1.7) (37.7) 3.3 (36.1)
Balance at 31 March 2024 3.1 1.3 1.4 2,716.6 250.2 (7.3) 2,965.3
Condensed group statement of cash flows
for the six months ended 30 September 2024
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Operating activities
Dividends received 26.5 30.8 57.9
Interest received 5.7 2.4 3.8
Cash received from customers 0.4 0.4 1.5
Cash paid to suppliers and employees (17.7) (14.2) (24.5)
Taxes received - - 0.1
Group tax relief received 0.5 - 20.9
Group tax relief paid - (0.8) (0.8)
Net cash flow from operating activities 15.4 18.6 58.9
Investing activities
Purchases of investments (224.8) (253.1) (340.8)
Proceeds from disposal of investments 177.1 241.1 599.7
Purchases of property, plant and equipment (1.5) (0.3) (0.5)
Net cash flow (used in) / from investing activities (49.2) (12.3) 258.4
Financing activities
Interest paid (2.2) (7.0) (10.4)
Dividends paid to owners of the company (27.9) (26.7) (37.0)
Proceeds from bank borrowings - 35.0 70.0
Repayment of bank borrowings - - (70.0)
Loan payments to subsidiaries - (211.2) (258.8)
Purchases of own shares (28.9) (3.1) (5.3)
Net cash flow used in financing activities (59.0) (213.0) (311.5)
Net (decrease)/increase in cash and cash equivalents (92.8) (206.7) 5.8
Cash and cash equivalents at period start 227.4 221.6 221.6
Cash and cash equivalents at period end 134.6 14.9 227.4
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 September 2024
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Net (decrease)/increase in cash and cash equivalents in the period (92.8) (206.7) 5.8
Cash inflow from increase in borrowings - (35.0) (70.0)
Cash outflow from decrease in borrowings - 211.2 328.8
Change in net debt resulting from cash flows (92.8) (30.5) 264.6
Change in net debt resulting from foreign exchange movements - 5.6 7.2
Net cash/(debt) at the start of the period 227.4 (44.4) (44.4)
Net cash/(debt) at the end of the period 134.6 (69.3) 227.4
Notes to the final results announcement
1. General information
Caledonia Investments plc is an investment trust company domiciled in the
United Kingdom and incorporated in England in 1928, under number 235481. The
address of its registered office is Cayzer House, 30 Buckingham Gate, London
SW1E 6NN. The ordinary shares of the company are listed on the London Stock
Exchange.
This condensed set of financial statements was approved for issue on 25
November 2024 and is unaudited.
The information for the period ended 30 September 2024 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 2024 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 2024, 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 2024,
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 2025.
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.
A number of new amendments to standards and interpretations will be effective
for periods beginning on or after 1 April 2025. 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
As at 30 September 2024, the board has undertaken an assessment of the
appropriateness of preparing its financial statements on a going concern
basis, taking into consideration future cash flows, current cash holdings of
£135m, undrawn banking facilities of £325m and readily realisable assets of
£1.0bn as part of a wider process in connection with its viability
assessment. It has concluded that the group has sufficient cash, other liquid
resources and committed bank facilities to meet existing and new investment
commitments.
The directors have concluded that the group has adequate resources to continue
in operational existence for a period of at least 12 months from the date of
approval of the financial statements. Accordingly, they continue to consider
it appropriate to adopt the going concern basis in preparing the financial
statements.
The group has conducted a going concern assessment which considered future
cash flows, the availability of liquid assets and debt facilities, banking
covenant requirements and consideration of the economic environment over at
least 12 months from the date of approval of these financial statements. In
making this assessment a number of stress scenarios were developed, factoring
in (a) adverse foreign exchange movements, (b) a delay in disposals of
directly owned private equity investments, (c) drawdown of all existing
private equity fund commitments, (d) a significant market decline for two
years and (e) the cumulative impact of (c) and (d) above.
Under these scenarios the group would have a range of mitigating actions
available to it, including sales of liquid assets, and usage of banking
facilities, which would provide sufficient funds 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 financial statements and therefore have prepared the financial
statements on a going concern basis.
3. Dividends
Amounts recognised as distributions to owners of the company in the year were
as follows:
Six months 30 Sep 2024 Six months 30 Sep 2023 Year 31 Mar 2024
p/share £m p/share £m p/share £m
Final dividend for the year ended 31 March 2024 (2023) 51.47 27.9 49.20 26.7 49.20 26.7
Interim dividend for the year ended 31 March 2024 - - - - 18.93 10.3
51.47 27.9 49.20 26.7 68.13 37.0
The directors have declared an interim dividend for the year ending 31 March
2025 of 19.69p per share, totalling £10.6m, which has not been included as a
liability in this condensed set of financial statements. This dividend will be
payable on 9 January 2025 to holders of shares on the register on 6 December
2024. The ex-dividend date will be 5 December 2024. The deadline for elections
under the dividend reinvestment plan offered by Link Group will be the close
of business on 16 December 2024.
4. Earnings per share
Basic and diluted earnings per share
The calculation of basic earnings per share of the group was based on the
profit attributable to shareholders and the weighted average number of shares
outstanding during the year. The calculation of diluted earnings per share
included an adjustment for the effects of dilutive potential shares.
The profit attributable to shareholders (basic and diluted) was as follows:
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Revenue 21.9 21.3 40.5
Capital (14.1) 83.0 163.3
Total 7.8 104.3 203.8
The weighted average number of shares was as follows:
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
000's 000's 000's
Issued shares at the year start 54,612 54,664 54,664
Effect of shares cancelled (362) - (1)
Effect of shares held by the employee share trust (168) (306) (270)
Basic weighted average number of shares in the year 54,082 54,358 54,393
Effect of performance shares, share options and deferred bonus awards 849 860 844
Diluted weighted average number of shares in the year 54,931 55,218 55,237
During the period 746,963 of shares were repurchased at an average discount of
34.8%, resulting in a 25.6p accretion to NAV per share.
5. Operating segments
The following is an analysis of the profit/(loss) before tax for the period
and assets analysed by primary operating segments:
Profit/(loss) before tax Total assets
6 months 6 months Year
30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar
2024 2023 2024 2024 2023 2024
£m £m £m £m £m £m
Public Companies 66.2 23.5 101.8 1,015.6 865.0 949.8
Private Capital (23.7) 55.8 111.2 848.1 1,027.1 820.3
Funds (22.1) 41.2 19.4 874.6 963.1 926.3
Investment portfolio 20.4 120.5 232.4 2,738.3 2,855.2 2,696.4
Other investments(1) (0.8) 2.2 1.4 16.4 49.8 18.0
Total revenue/investments 19.6 122.7 233.8 2,754.7 2,905.0 2,714.4
Cash and cash equivalents 5.7 1.8 3.2 134.6 14.9 227.4
Other items (19.1) (18.9) (35.6) 60.9 87.0 57.1
Reportable total 6.2 105.6 201.4 2,950.2 3,006.9 2,998.9
1. Other investments included £16.4m of non-pool investments (30 September 2023:
£49.8m and 31 March: £18.0m of non-pool investments).
6. Share-based payments
In the period to 30 September 2024, participating employees in the performance
share scheme were awarded options over 233,802 shares at nil-cost (30
September 2023: 192,384 shares and 31 March 2024: 212,049 shares). Also, in
the period to 30 September 2024, participating employees received deferred
awards over 29,224 shares (30 September 2023 and 31 March 2024: 1,976 shares).
The IFRS 2 expense included in profit or loss for the period was £2.9m (30
September 2023: £3.9m and 31 March 2024: £7.1m).
7. Net asset value
The group's undiluted net asset value is based on the net assets of the group
at the year end and on the number of ordinary shares in issue at the year-end
less ordinary shares held by The Caledonia Investments plc Employee Share
Trust. The group's diluted net asset value assumes the calling of performance
share and deferred bonus awards.
Six months 30 Sep 2024 Six months 30 Sep 2023 Year 31 Mar 2024
Net Number Net Number Net Number
assets of shares(1) NAV assets of shares(1) NAV assets of shares(1) NAV
£m 000's p/share £m 000's p/share £m 000's p/share
Undiluted 2,917.7 53,732 5430 2,876.1 54,414 5286 2,965.3 54,388 5452
Share awards - 849 (84) - 861 (83) - 844 (83)
Diluted 2,917.7 54,581 5346 2,876.1 55,275 5203 2,965.3 55,232 5369
1. Number of shares in issue at the period-end is stated after the deduction
of 133,514 (30 September 2023: 249,319, 31 March 2024: 223,666) ordinary
shares held by the Caledonia Investments plc Employee Share Trust.
Net asset value total return is calculated in accordance with guidance from
the Association of Investment Companies ('AIC'), as the change in NAV from
the start of the period, assuming that dividends paid to shareholders are
reinvested at NAV at the time the shares are quoted ex-dividend.
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
p p p
Diluted NAV at period start 5369 5068 5068
Diluted NAV at period end 5346 5203 5369
Dividends payable in the period 51 49 68
Reinvestment adjustment(2) (2) 4 6
5395 5256 5443
NAVTR over the period 0.5% 3.7% 7.4%
2. The reinvestment adjustment is the gain or loss resulting from reinvesting the
dividends in NAV at the ex-dividend date.
8. Interest Bearing Loans and Borrowings
During the period, the company arranged a new secured bank revolving credit
facility, totalling £325m.
The facility consists of two tranches: £175m with a three year term from BNP
Paribas and Industrial and Commercial Bank of China that will expire in August
2027; and £150m with a five year term from The Royal Bank of Scotland
International RBSI that will expire in August 2029. The bank facility is
secured by way of floating charge over the public companies shares held by BNP
Paribas, as global custodian to the company. The previous £250m bilateral
facilities were cancelled at the same time.
9. Capital commitments
At 30 September 2024, the group had undrawn fund commitments totalling
£398.6m (30 September 2023: £427.4m and 31 March 2024: £377.3m).
Amounts are callable within the next 12 months. The group has conducted a
going concern assessment which considered future cash flows, the availability
of liquid assets and debt facilities, over the 12-month period required. In
making this assessment a number of stress scenarios were developed. All
scenarios include all outstanding private equity fund commitments being drawn.
Under these scenarios the group would have a range of mitigating actions
available to it, including sales of liquid assets and usage of banking
facilities, which would provide sufficient funds to meet all of its
liabilities as they fall due and still hold significant liquid assets over the
assessment period.
10. Performance measures
Caledonia uses a number of performance measures to aid the understanding of
its results. The performance measures are standard within the investment trust
industry and Caledonia's use of such measures enhances comparability.
Principal performance measures are as follows:
Net assets
Net assets provides a measure of the value of the company to shareholders and
is taken from the IFRS group net assets.
Net asset value ('NAV')
NAV is a measure of the value of the company, being its assets - principally
investments made in other companies and cash held - minus any liabilities. NAV
per share is calculated by dividing net assets by the number of shares in
issue, adjusted for shares held by the Employee Share Trust and for dilution
by the exercise of outstanding share awards. NAV takes account of dividends
payable on the ex-dividend date.
NAV total return ('NAVTR')
NAVTR is a measure of how the net asset value per share has performed over a
period, considering both capital returns and dividends paid to shareholders.
NAVTR is calculated as the increase in NAV between the beginning and end of
the period, plus the accretion from assumed dividend reinvestment during the
period. We use this measure as it enables comparisons to be drawn against an
investment index in order to compare performance. The calculation follows the
method prescribed by the AIC.
Total shareholder return ('TSR')
TSR measures the return to shareholders through the movement in the share
price and dividends paid during the measurement period.
11. 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:
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Investments held at fair value
Level 1 1,015.6 865.0 949.9
Level 2 9.0 5.1 8.4
Level 3 1,730.1 2034.9 1,737.1
2,754.7 2,905.0 2,695.4
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:
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2024 2023 2024
£m £m £m
Balance at the period start 1,737.1 1,953.2 1,953.2
Transferred to Held for Sale - - (19.0)
Purchases 146.0 226.5 269.8
Realisation proceeds (90.1) (223.3) (327.8)
Gains and losses on investments sold in the period 10.3 5.0 122.7
Gains and losses on investments held at the period end (74.5) 71.4 (263.2)
Accrued income 1.3 2.1 1.4
Balance at the period end 1,730.1 2,034.9 1,737.1
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 fund 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 investments),
totalling £848.1m (March 2024: £820.3m) 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 instruments that are
substantially the same (subject to appropriate adjustments).
For private equity fund investments (unlisted Funds Pool investments),
totalling £865.6m (March 2024: £898.8m) 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.
The following tables provide information on significant unobservable inputs
used at 30 September and 31 March 2024 in measuring financial instruments
categorised as Level 3 in the fair value hierarchy.
For private company assets we have chosen to sensitise and disclose EBITDA
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 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 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 are therefore subject to a
similar degree of estimation uncertainty. 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.
At 30 September 2024
Description / valuation method Fair value Unobservable input Weighted average input Input sensitivity Change in valuation
£m +/- +/- £m
Internally developed
Private companies
Large, earnings 502.1 EBITDA multiple 12.3x 10.0% +53.9/-54.4
Small and medium, earnings 109.4 EBITDA multiple 10.3x 10.0% +12.7/-13.5
Recent transaction 55.0 Multiple 1 5.0% +2.8/-2.8
Net assets / manager valuation 181.6 Multiple 1 0.1x +18.2/-18.2
848.1 +87.6/-88.9
Non-pool companies 16.4
Total internal 864.5
Externally developed
Private equity fund
Net asset value 865.6 Manager NAV 1 5% +43.3/-43.3
1,730.1 +130.9/-132.2
At 31 March 2024
Description / valuation method Fair value Unobservable input Weighted average input Input sensitivity Change in valuation
£m +/- +/- £m
Internally developed
Private companies
Large, earnings 473.9 EBITDA multiple 12.1x 10.0% +51.1/-52.7
Small and medium, earnings 164.0 EBITDA multiple 9.1x 10.0%-15% +15.3/-14.4
Net assets / manager valuation 182.4 Multiple 1 0.1x +18.6/-18.8
820.3 +85.0/-85.9
Non-pool companies 18.0
Total internal 838.3
Externally developed
Private equity fund
Net asset value 898.8 Manager NAV 1 5% +44.9/-44.9
1,737.1 +129.9/-130.8
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.
Investment and pool returns
The company uses the modified Dietz method as a measure of the performance of
an investment or investment pool over a period. This method divides the gain
or loss in value plus any income, less any capital cash flows, by the average
capital invested over the period of measurement. Average capital takes into
account the timing of individual cash flows.
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').
Total shareholder return ('TSR')
TSR measures the return to shareholders through the movement in the share
price and dividends paid during the measurement period.
Forward looking statements: This announcement may contain statements about the
future including certain statements about the future outlook for Caledonia
Investments plc and its subsidiaries ('Caledonia'). These are not guarantees
of future performance and will not be updated. Although we believe our
expectations are based on reasonable assumptions, any statements about the
future outlook may be influenced by factors that could cause actual outcomes
and results to be materially different.
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END
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website at www.caledonia.com.
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