REG - Caledonia Investmnts - Unaudited net asset value and portfolio update
08/04/2024 07:00
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RNS Number : 5825J Caledonia Investments PLC 08 April 2024
Unaudited net asset value at 31 March 2024 and portfolio update
Caledonia Investments plc ("Caledonia"), the self-managed FTSE 250 investment
trust targeting long term compounding real returns through investing in a
diverse portfolio of high quality companies, today announces its unaudited
diluted net asset value ("NAV") per share and portfolio update for the year
ended 31 March 2024, ahead of the announcement of its full year results in May
2024.
This announcement provides a further update on Caledonia's portfolio and
should be read in conjunction with the factsheet dated 31 March 2024 and
released on 8 April 2024, a copy of which is available at www.caledonia.com
(http://www.caledonia.com/) .
Unaudited NAV total return of 7.4%
· Unaudited NAV of £3.0 billion (5,369p per share) +7.4% NAV Total Return
("NAVTR") (31 March 2023: £2.8bn, 5,068p per share)
· All three investment pools contributed to growth, delivering a return of 8.7%
in the year, despite foreign exchange headwinds of c.£39 million
57 years of progressive dividend growth
· Final dividend for the year ended 31 March 2023 of £27 million (49.2 p per
share) was paid in August 2023
· Interim dividend for year ended 31 March 2024 of £10 million paid in January
2024, increased by 4.0% to 18.93p per share
Robust balance sheet with significant liquidity and well positioned to take
advantage of investment opportunities
· At 31 March 2024, Caledonia had net cash of £227 million (31 March 2023:
£222 million) and an undrawn revolving credit facility of £250m, providing
total liquidity of £477 million
· £344 million deployed into new and existing investments with proceeds of
£416 million received from the portfolio in the year
Performance to 31 March 2024
1 year 3 years 5 years 10 years
NAV total return(1) 7.4% 44.8% 67.5% 160.5%
NAV total return 7.4% 13.1% 10.9% 10.0%
Annualised
CPIH 3.8%(2) 6.0% 4.1% 2.8%
FTSE All-Share Total Return 8.4% 8.0% 5.4% 5.8%
1. NAV is calculated on a diluted, cum-income basis
2. Latest reported change over 12 months released on 20 March 2024
Portfolio update
· Public Companies - valued at £949.9 million (32.0% of NAV) +12.0% total
return (+13.7% in local currencies)
- Invested in high quality, well managed businesses with strong market positions
and pricing power. The global portfolio is split between capital and income
investments across 30 companies. Over the last 10 years the Public Companies
pool has delivered returns of 8.6% p.a.
- Capital portfolio (£698.2 million of value) delivered a return of 14.0%
(+16.0% in local currencies), with performance driven by Fastenal, Hill &
Smith, Microsoft, Oracle and Watsco. Gains partially offset by negative
contribution from companies including Alibaba, Charter Communications and
Croda International
- Income portfolio (£251.7 million of value) generated a return of 6.8% (+7.7%
in local currencies), with performance driven by DS Smith, Fastenal, RELX and
Sabre. Gains were offset by weaker share price performances from Diageo and
Reckitt Benckiser
- In line with our long-term investment approach, trading activity remained
targeted and opportunistic, primarily with increased holdings in Croda
International, Diageo, Philip Morris, Spirax Sarco and Symrise alongside a new
position in RELX. Following a period of strong share price appreciation, we
crystallised gains on a portion of our holdings in DS Smith, Microsoft, Oracle
and Watsco
· Private Capital - valued at £820.3 million (27.7% of NAV) +12.3% total return
(+12.9% in local currencies)
- The Caledonia Private Capital team typically invests £50m to £150m in
private companies, providing long-term capital along with operational and
strategic support to investee company management teams. Over the last 10 years
the Private Capital pool has delivered returns of 13.9% p.a.
- UK centric portfolio of eight companies, with five investments representing
over 90% of value
- £90 million of net valuation gains driven by realisations and good operating
performance across the majority of the investee companies
- Sale of Seven Investment Management ("7IM") delivered net proceeds of £256
million, generating a £59 million or 32% uplift to the 31 March 2023 carrying
value, a lifetime return of 2.3x and an IRR of 15%
- Acquisition of AIR-Serv Europe for £142.5 million in April 2023. The business
has since reported good year on year growth, trading ahead of expectations.
Having been held at equity purchase cost since acquisition, the business is
now valued on an earnings basis leading to an increase in value of £28
million
- EV/EBITDA valuation multiples applied range between 9x to 14x and low leverage
typically in the 2x to 2.5x range of net debt/EBITDA
· Funds - valued at £926.3 million (31.2% of NAV) +2.2% total return (+4.3% in
local currencies)
- Portfolio provides attractive diversification, investing in 75 funds managed
by 44 managers with an underlying portfolio of over 600 companies, across a
wide range of sectors and company sizes. Over the last 10 years, the Funds
pool has delivered returns of 17.3% p.a.
- 59% (£546.2 million) of the portfolio is invested in North American lower
mid-market funds and 41% (£377.1 million) in Asian fund of funds, venture
funds and growth funds
- Performance in the year driven by continued positive performance from North
American holdings (+9.8% in local currencies) which was partially offset by a
decline in the value of Asian holdings (-3.1% in local currencies), reflecting
the more challenging market conditions in the region
- £108.7 million deployed in the year, with 63% invested into North American
funds and the balance into Asian funds
- Distributions of £72.0 million were broadly split 75/25% between North
America and Asia. We have seen an increase in activity in the North American
portfolio in the last quarter of the financial year, with our underlying
managers cautiously optimistic that exit markets will continue to improve. In
our Asian portfolio, given the market volatility and macro uncertainty in the
region, alongside its earlier stage focus, we expect the pace of distributions
to take longer to regain momentum
- One new commitment made in the year to a leading US mid-market industrials
fund, with a good investment pipeline of potential new fund commitments. 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 31 March 2024, uncalled commitments were £377 million, 66% to North
America and 34% to Asia
Mat Masters, Caledonia's Chief Executive Officer commented:
"Our diversified portfolio continues to deliver positive returns, with all
pools contributing to growth, despite foreign exchange headwinds. We remain
focused on using long-term thinking to invest in high-quality companies with
strong market positions, and funds with track records of success. This has
resulted in long-term outperformance and enabled us to deliver 57 years of
increasing dividends.
We have an excellent platform from which to grow net assets and dividends. We
also have significant liquidity, allowing us to take advantage of investment
opportunities as they arise."
Caledonia will announce its audited full year results to 31 March 2024 on 21
May 2024. There will be a live webcast presentation for investors at 09:30
which can be accessed by visiting www.caledonia.com (http://www.caledonia.com)
or using the following link: here
(https://www.lsegissuerservices.com/spark/CaledoniaInvestments/events/7f1146b5-cbb3-4174-a80e-ac1f7998f978)
For further information:
Company contacts Media contacts
Mat Teneo
Masters
Tom Murray
Chief Executive
Officer Robert Yates
Rob +44 20 7353 4200
Memmott
caledonia@teneo.com (mailto:caledonia@teneo.com)
Chief Financial Officer
+44 20 7802
8080
investorrelations@caledonia.com (mailto:investorrelations@caledonia.com)
8 April 2024
Portfolio returns
Over the year to 31 March 2024, the investment portfolio generated a return of
8.7%, with all pools contributing to growth, despite the adverse impact of
Sterling strengthening against the US dollar.
£m NAV Net Capital Other NAV Income Total
31/03/23 investment gains / 31/03/24 Return
/(disposal) (losses)
Public Companies 836.9 33.0 80.0 - 949.9 21.9 12.0%
Private Capital 824.0 (94.6) 89.5 1.4 820.3 21.7 12.3%
Funds 873.8 36.3 16.2 - 926.3 3.6 2.2%
Portfolio 2,534.7 (25.3) 185.7 1.4 2,696.5 47.2 8.7%
Net Cash/(Debt) 221.6 25.3 - (19.5) 227.4
Other assets 41.7 - - (0.3) 41.4
Net assets 2,798.0 - 185.7 (18.4) 2,965.3 NAVTR 7.4%
Foreign exchange
55% of the portfolio is invested in US dollars. Foreign exchange movements
over the financial year resulted in reduction in net assets of approximately
£39m, predominantly related to the 2% strengthening of Sterling against the
US dollar.
Share buybacks
The ongoing support of the Cayzer family underpins Caledonia's long-term
culture and investment approach. Their holding of 48.8% cannot exceed 49.9%,
limiting the Company's ability to carry out share buybacks. With shares
trading at a significant discount to NAV, the Company issued an irrevocable
instruction on 28 March 2024 to Winterflood Securities Limited to purchase
within certain pre-set parameters until 20 May 2024. Any shares purchased will
be cancelled.
51,903 shares were repurchased in the year ended 31 March 2024 at an average
discount of 37.3%, resulting in a 1.8p NAV accretion.
Private Capital 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 trade well, with many delivering strong performance and
valuation progression. The valuation at 31 March 2024 was £181.0 million, a
return of 4.3% for 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 by Caledonia in April 2023. The
business has since reported good year on year growth, trading ahead of
expectations. Having been held at equity purchase cost since acquisition in
April 2023, the business is now valued on an earnings basis, leading to an
increase in value of £28m. The valuation at 31 March 2024 was £170.1
million, a return of 19.4% for the year
· Stonehage Fleming, the international multi-family office, continues to deliver
good revenue and margin growth across each of the Family Office, Investment
Management and Financial Services businesses, driven by client wins and
increased activity levels. The valuation at 31 March 2024 was £168.5
million, a return of 18.8% for the year
· Liberation Group, an inns and drinks business with a pub estate stretching
from Southwest London to Bristol and the Channel Islands. The business
has been adversely impacted by the cost of living crisis reducing consumer
discretionary incomes and sustained cost inflation (particularly UK energy
costs). Profitability and revenue growth continues to improve and the
optimisation of the Cirrus Inns business, acquired in December 2022, is
ongoing. The valuation at 31 March 2024 was £135.2 million, a return of 2.6%
for the year
· Cooke Optics, a leading manufacturer of cinematography lenses, as previously
reported, has been heavily impacted by the Hollywood writers' strike which
started in early May 2023 and the subsequent actors' strike. Both disputes
were resolved in November 2023. We are pleased to see improvement in demand
for the Company's core products and the success of the new SP3 "prosumer"
range. The valuation at 31 March 2024 includes a 10% equity discount to
reflect continued uncertainty around the timing and nature of the post-strike
recovery. The valuation at 31 March 2024 was £105.4 million, a return of
-14.9% for the year
Valuation approach
Public Companies
All listed companies are valued based on the closing bid price on the relevant
exchange as at 31 March 2024.
Private Capital
The holdings are valued biannually, principally on a normalised EBITDA x
market multiple basis (in line with the latest IPEV guidelines). This approach
was applied to the majority of significant assets in the portfolio on 31 March
2024. The exception was our holding in Cobepa where fair value was derived
from the external valuation prepared by Cobepa. In the case of Liberation
Group, the earnings derived valuation was supported by the underlying value of
the principally freehold pub estate plus the value of the drink production and
distribution business.
Funds
The fund valuations are based on the most recent valuations provided by the
fund managers, subject to cash movements from the valuation date. Valuations
are received 60 to 180 days from the valuation date.
Fund valuation dates included in NAV at 31 March 2024
£m % of Portfolio
Manager NAV date
29 February 2024 8.4 0.9
31 December 2023 691.1 74.6
30 September 2023 226.3 24.4
30 June 2023 0.5 0.1
Total 926.3 100.0
Caledonia Investments plc
Caledonia is a FTSE 250 self-managed investment trust company with a long
track record of delivering consistent returns and progressive annual dividend
payments to shareholders.
Our aim is to generate long-term compounding real returns that outperform
inflation by 3%-6% over the medium to long term, and the FTSE All-Share index
over 10 years.
We are a long-term investor and hold investments in both listed and private
markets across three pools: Public Companies, Private Capital and Funds. Each
has a strategic allocation of capital, investment strategy and target return.
The result is a well-balanced diversified portfolio of investments with a
global reach.
For additional information on Caledonia, please visit www.caledonia.com
(https://caledoniagroupservices.sharepoint.com/sites/InvestorRelations/Shared%20Documents/Trading%20statements/www.caledonia.com)
.
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