TIDMCLDN
RNS Number : 8435M
Caledonia Investments PLC
26 May 2022
Caledonia Investments plc
Final results for the year ended 31 March 2022
Financial highlights (1)
31 Mar 2022 31 Mar 2021 Change
Net asset value total return 27.9% 25.9%
Net asset value 5041p 4000p +26.0%
Net assets GBP2,783m GBP2,225m +25.1%
Annual dividend per share 64.8p 62.9p +3.0%
1. NAV total return, and investment and pool returns are Alternative
performance measures. Definitions of these measures may be found
at https://www.caledonia.com/invest-with-us/investment-trusts/
Hi ghlights
27.9% NAV total return for the year. Net assets of GBP2.78bn,
-- an all-time high.
3.0% increase in the dividend to 64.8p per share, 55th consecutive
-- year of increase.
Special dividend of 175p per share recommended by the board.
--
Positive investment returns across whole portfolio, with private
-- asset returns particularly strong.
Strong balance sheet with GBP591m of total liquidity (GBP341m
-- cash and GBP250m undrawn facilities).
Quoted Equity Good performance from the two Quoted Equity portfolios, with
-- total return of 14.1% in the year.
Capital portfolio total return of 14.6%.
--
Income portfolio total return of 13.7%.
--
Private Capital Strong total return of 54.7% driven by two exits.
--
Deep Sea Electronics sold to Generac Holdings Inc. in June
-- 2021; net proceeds of GBP242m.
BioAgilytix sold to Cinven; net proceeds of US$183m, before
-- US$42m reinvestment.
Remaining portfolio companies continued to make good progress
-- in terms of growth and profitability.
Funds Funds portfolio generated total return of 38.3% for the year.
--
Strong underlying funds performance from across our maturing
-- portfolio in both the US and Asia generated a material annual
net cash inflow for the first time since investment in funds
commenced.
Will Wyatt, Chief Executive , commented:
"Our strategy of investing in a diversified portfolio of
high-quality holdings in listed equities, directly owned private
companies and funds has generated significant value over the last
year and makes us well-placed to respond to the challenges posed by
inflation, supply constraints and potentially lower GDP growth.
We remain confident that our approach and high-quality portfolio
will continue to deliver our aims of growing net assets and
dividends over the long term."
25 May 2022
Enquiries
Caledonia Investments plc Tulchan Communications
Will Wyatt, Chief Executive Tom Murray
Mathew Masters, Chief Executive Officer Lisa Jarrett-Kerr
Designate
Tim Livett, Chief Financial Officer +44 20 7353 4200
+44 20 7802 8080
This announcement contains inside information relating to
Caledonia.
Chairman's statement
Results
The NAV total return for the year ended 31 March 2022 was 27.9%.
The performance included positive returns from all parts of our
portfolio. Returns from our private assets were particularly
strong; Private Capital delivered two successful portfolio company
exits, plus healthy returns from the remaining investee companies;
and the Funds portfolio benefitted from strong valuation growth in
private equity markets and favourable exits in its portfolio. Our
balance sheet remains strong with total liquidity of GBP591m
available at 31 March 2022, reflecting our banking facilities and
GBP341m of cash.
Income and dividends
Investment income (revenue account) grew 14% to GBP51.0m and net
income was GBP39.3m. It is worth noting that we expect investment
income to reduce gradually in the coming years. While it remains a
relatively low-income environment, our focus will be on total
returns rather than pure income from our portfolio. The board is
recommending a final dividend of 47.3p per share, which represents
a full year dividend of 64.8p, an increase of 3.0% when compare to
the previous year. This would represent the 55th consecutive year
of increases in our annual dividend.
Special dividend
The company has recommended special dividends in the past where
either cash levels are high or there has been a significant
disposal. Following the disposals of Deep Sea Electronics and
BioAgilytix during the year, the board is recommending a special
dividend of 175p per share at a cost of GBP95m. This provides a
considerable enhancement to the long-term yield that Caledonia has
delivered to shareholders which, on a ten year basis, is over
3%.
Board and staff
As previously announced, Will Wyatt retires as Chief Executive
at the company's annual general meeting in July 2022. On behalf of
the board, I would like to thank Will for his outstanding service
to Caledonia over the past twelve years. Under his leadership,
Caledonia's strategy has successfully evolved whilst the ethos,
culture and values of the business have been carefully nurtured. In
financial terms, NAV has grown strongly with an annualised NAV
total return of 12.2%, significantly outperforming the annualised
FTSE All-Share total return of 7.2% over this period. Subject to
shareholder approval, I am delighted that he will continue to serve
on the board as a non-executive director enabling us to benefit
from his experience.
Will is to be succeeded by Mathew Masters, currently Head of
Caledonia Quoted Equity, who was appointed to the board as Chief
Executive Officer Designate on 1 April 2022. Mathew joined
Caledonia from Grant Thornton in 2005, initially as an investment
executive. He became Head of the Capital portfolio in 2010, before
taking on broader responsibility for the Income strategy in 2019
when he was promoted to Head of Quoted Equity. I would also like to
welcome Mathew to the board in his role as CEO. The board and I
look forward to working with him in the years ahead as he builds on
his impressive track record from leading the Quoted Equity
portfolio and develops Caledonia's investment strategy.
During the year, Caledonia welcomed Lynn Fordham and Anne Farlow
as independent non-executive directors. Anne will succeed Shonaid
Jemmett-Page as Chairman of the Remuneration Committee on 1 June
2022 and Lynn will succeed Stuart Bridges as Chairman of the Audit
Committee on 27 July 2022. Shonaid Jemmett-Page has decided to step
down from the board as an independent non-executive director before
the expiry of her third term in office in 2024. We are most
grateful for her input and wish her well for the future. As part of
our succession planning activities, a search for Shonaid's
successor was scheduled to commence next year once Lynn, Anne and
Mathew have each had the opportunity to settle into their new roles
in the board. This activity will instead commence shortly. The
board has therefore asked Stuart to delay his planned retirement
from the board for up to one year whilst we recruit a replacement
for Shonaid.
On behalf of the board, I would like to thank all Caledonia
staff for their significant contribution during the year in
successfully delivering such strong financial performance.
AGM
The AGM is an important part of our shareholder communications
programme and we look forward to holding a physical meeting later
in the year.
Outlook
Caledonia's medium and long-term NAV total return performance
remains ahead of target and of relevant markets. However, following
an improved short-term outlook as economies emerged from the worst
effects of the pandemic, new challenges have appeared. Russia's
invasion of Ukraine has significantly increased geopolitical risks
and has exacerbated inflationary pressures. Interest rates are
moving to levels not seen for many years and there are justifiable
concerns that central banks remain somewhat behind the curve.
We anticipate significantly higher levels of volatility as
markets adapt to interest rate increases and support from central
banks is reduced as quantitative easing policies are unwound.
However, the portfolio is well diversified and we remain confident
that the long-term prospects for the underlying investments remain
strong.
David Stewart
Chairman
Chief Executive's report
Purpose
Caledonia's purpose is to grow net assets and dividends paid to
shareholders over the long term, whilst managing risk to avoid
permanent loss of capital.
Results for the year
The NAV total return for the year of 27.9% built on the previous
year's outturn of 25.9%, once again with all three parts of the
portfolio producing strong positive returns. Strength in western
stock markets was a helpful backdrop to the year. Caledonia's large
allocation to private equity assets, which have witnessed high
levels of liquidity and pricing uplifts, particularly in growth
companies, has also been beneficial, though asset and manager
selection remains critical to success. Shareholders should be
reassured by the current high levels of cash. While bond and equity
markets look vulnerable to falls, cash provides an appropriate
cushion to market reversals and optionality when opportunities
arise, despite the high level of inflation.
Caledonia has particularly low stock turnover relative to other
investment companies, though we do operate an active approach to
portfolio management. New or follow-on investments of GBP216.8m
were made during the year, GBP110.5m of which was invested in the
Funds pool. Divestments totalled GBP588.7m, dominated by the
disposals of Deep Sea Electronics ('DSE') and BioAgilytix by the
Private Capital pool. It was particularly pleasing to witness the
increasing maturity of the Funds pool which benefitted from
elevated levels of fund distributions receiving GBP178.0m during
the year.
Investment income for the year was GBP51.0m, an increase of
14.3% over the previous year. Net income was GBP39.3m, up 31.8%
which was flattered by the one-off recognition of GBP8.5m of
historic tax losses. Total comprehensive income, which includes
changes in the valuation of investments during the year, totalled
GBP611.3m (2021: GBP467.6m). The group balance sheet NAV of
GBP2.78bn is at an all time high. Maintenance of a strong balance
sheet is central to our strategy, particularly with Caledonia's
sizeable exposure to illiquid assets. Currency also moved
favourably during the year, positively impacting capital gains on
investments and thus the annual return by GBP59m, or around 3
percentage points.
Total liquidity remains healthy with cash of GBP341m plus
undrawn bank facilities of GBP250m at the year end. Caledonia's
GBP250m banking facilities include GBP137.5m expiring in May 2025,
with the balance of GBP112.5m expiring in July 2022. Discussions
are well advanced with ING to renew the latter facility for a
further three years.
The company made a series of share buy-backs during the year,
with over 710,000 shares being purchased and cancelled for GBP24m
at attractive levels of discount to NAV.
Investment performance
We aim to grow NAVTR by 3-6% ahead of inflation over the
short-term, leading to results over the long-term that exceed the
FTSE All-Share index. However, management and the investment teams
are incentivised in line with these objectives on an absolute,
rather than a relative, return basis. The table below shows our
investment performance over one, three, five and ten years. Results
continue to be ahead of both short-term and long-term targets. The
decision to increase exposure to non-UK assets over the past decade
has resulted in Caledonia significantly outperforming the FTSE
All-Share index which, whilst not used as a benchmark, provides a
useful reference point for UK-based investors.
Years to 31 March 1 year 3 years 5 years 10 years
% % % %
--------------------------- ------- -------- -------- ---------
NAVTR 27.9 47.8 66.2 215.1
FTSE All-Share 13.0 16.8 25.8 99.5
NAVTR v FTSE All-Share TR +14.9 +31.0 +40.4 +115.6
Annualised performance
NAVTR 27.9 13.9 10.7 12.2
RPI 9.0 4.3 3.7 3.0
NAVTR v RPI +18.9 +9.6 +7.0 +9.2
FTSE All-Share TR 13.0 5.3 4.7 7.2
NAVTR v FTSE All-Share TR +14.9 +8.6 +6.0 +5.0
--------------------------- ------- -------- -------- ---------
Strategy and allocation
The investment portfolio consists of the following three pools
of capital:
Pool name 2022 2021 Strategic allocation
% % %
----------------- ------ ------ ---------------------
Quoted Equity 29.8 32.2 35-50
Private Capital 28.1 37.2 35-45
Funds 28.6 28.6 20-30
Cash and other 13.5 2.0 +/-10
Net assets 100.0 100.0
----------------- ------ ------ ---------------------
The strategic allocation ranges shown in the table above are a
guide to ensure that the portfolio remains proportionately
balanced. The two large exits from the Private Capital pool have
resulted in its allocation being below its target range. Quoted
Equity is also below target due to the rapid valuation growth of
other asset pools in the year. New investments are individually
made on merit, not simply to address short-term allocation
imbalances.
The table below summarises the pool targets and strategic
allocation:
Pool name Description Return requirements Strategic allocation
--------------------------- -------------------------------- -------------------------------- ---------------------
10% total return, no yield
Capital strategy target
7% total return, 3.5% yield
Caledonia Quoted Equity Income strategy (on cost) 35-50%
Majority and minority
investments predominantly in
UK mid-market companies with
equity values
of between
Caledonia Private Capital GBP50m and GBP125m 14% total return, 5% yield 35-45%
US and Asian private equity
Caledonia Funds funds and funds of funds 12.5% total return 20-30%
--------------------------- -------------------------------- -------------------------------- ---------------------
Pool performance
Year to 31 March 1 year 3 years 5 years 10 years
% % % %
Pool name
Quoted Equity 14.1 48.2 68.6 189.3
- Capital portfolio 14.6 57.8 97.9 244.9
- Income portfolio 13.7 28.5 19.5 92.1
Private Capital 54.7 56.3 82.7 319.8
Funds 38.3 81.2 125.0 412.8
Portfolio 29.9 55.5 82.7 271.0
Caledonia Quoted Equity
The total return for the Quoted Equity pool was 14.1% over the
year. This strong performance reflected the positive movement in
global public equity markets and our stock selection within both
the Capital and Income portfolios, delivering total returns of
14.6% and 13.7% respectively. Performance was driven by good
returns from a broad range of sectors and across markets in the UK,
Continental Europe and North America. Six holdings - Microsoft,
Thermo Fisher, National Grid, Diageo, London Metric and Big Yellow
- delivered returns of over 30% during the period.
Trading activity was relatively limited in the first half of the
year, in line with our long-term investment approach. However, the
more volatile market backdrop arising during the second half of the
year created some buying opportunities, though portfolio
performance was pared back. Positions in Alibaba, the prominent
Chinese e-commerce and cloud-computing company, and in Moody's, a
leading global provider of credit ratings, financial data and
analytics, have been added to the Capital portfolio. Over the year
there has been an increase in our holding in Philip Morris
International and a reduction in our holdings in AG Barr and Polar
Capital. Other activity was restricted to refining positions in
existing investments.
Caledonia Private Capital
Caledonia's Private Capital portfolio is dominated by
significant positions in four UK-centric businesses, one US
co-investment and one private European investment company. These
six investments represent over 95% of the portfolio value. Investee
companies are revalued in March and September each year. The
portfolio generated a total return of 54.7% for the year.
On 1 June 2021, Caledonia announced that portfolio company DSE,
a leading provider of backup power control systems, had been
acquired by Generac Holdings Inc. ('Generac'). Generac is a leading
global designer and manufacturer of energy technology solutions and
other power products. DSE had grown strongly since its acquisition
by Caledonia in October 2018. Caledonia received net proceeds of
GBP242m in cash, net of fees, for the sale of its 84.2% fully
diluted stake. This included a pre-disposal dividend of GBP12.6m.
DSE was valued at GBP193m in Caledonia's accounts at 31 March
2021.
On 17 November 2021, Caledonia announced that the shareholders
of portfolio company BioAgilytix, a leading provider of
bioanalytical testing for large molecule research and development,
had agreed terms of a majority investment in the company by
international private equity firm Cinven. Caledonia co-invested in
BioAgilytix in February 2019 alongside Cobepa. Since then, the
business had grown strongly via a mix of impressive organic growth
and acquisitions in the US and Australia, expanding its geographic
reach and capabilities. The transaction completed on 22 December
2021 delivering gross proceeds of US$183m, net of fees. The
BioAgilytix co-investment was valued at US$36m in Caledonia's
accounts at 31 March 2021. The sizeable valuation uplift reflected
the strong growth in the business, good levels of profitability and
the attractiveness of the sector. Caledonia agreed to re-invest
US$42m alongside Cinven and a consortium of investors including
Cobepa, for a minority investment in BioAgilytix. This holding in
BioAgilytix was valued at cost of US$42m (GBP32m) at 31 March 2022,
reflecting the recent closing of the transaction.
Seven Investment Management ('7IM'), a vertically integrated
multi-asset class investment manager, continues to perform well.
The successful integration of the Partners Wealth Management
business has been a major contributor to performance, alongside
growth in 7IM's platform business. Assets under management continue
to grow strongly through a mix of positive investment performance
and net new fund inflows of c.GBP1.6bn during the year. The
valuation at 31 March 2022 was GBP174m, a return of 41% for the
year.
Cobepa, the Belgian-based investment company, owns a diverse
portfolio of private global investments. The businesses within its
portfolio have delivered healthy performances which, coupled with
two notable exits, has resulted in a significant valuation increase
for the year. As noted above, Cobepa was the majority owner of
BioAgilytix, which was sold to Cinven, and it has also recently
completed the disposal of its largest asset, Hillebrand, to
Deutsche Post DHL Group at an equity value of EUR1.5bn. The impact
of these transactions is largely included in the valuation of
Caledonia's holding in Cobehold (the holding company of Cobepa)
which was GBP159m at 31 March 2022, a return of 44% for the
year.
Stonehage Fleming, the international multi-family office,
continues to deliver good growth, both organically and through
successful acquisitions. In summer 2020, the business acquired
Cavendish Asset Management which has now been fully integrated, and
in January 2022 completed the acquisition of the private client
business of the Maitland Group, a global advisory, administration
and family office firm. The Maitland private client business is
highly complementary to Stonehage Fleming's existing operations.
The acquisition was funded from existing cash resources and
additional term debt. The valuation at 31 March 2022 was GBP140m, a
return of 25% for the year.
Liberation Group, a pub, restaurant and drinks business with
operations in the Channel Islands and the South West of the UK, has
traded well through the year, despite the adverse impact of the
Omicron variant of Covid-19 during the busy December to early
January trading period. The business has proved to be financially
robust with an estate focused on destination pubs, a strong food
offering, large outdoor spaces and, in several sites, good quality
accommodation. Summer trading saw better than expected levels of
demand return as consumers responded to a relaxation of Coronavirus
restrictions, supported by the popularity of UK-based holidays. The
pubs recently acquired from Wadworth & Co. are performing well
following a programme of investment. The valuation at 31 March 2022
was GBP136m, a return of 6% for the year.
Cooke Optics, a leading manufacturer of cinematography lenses,
has also traded well over the last twelve months. The business has
faced a number of challenges over the past two years but is now
delivering improved financial performance. The recently launched
range of full frame cine lenses has been positively received by the
market with a healthy initial order book. The market is strong as
global demand for both streaming and cinema content remains
elevated. The valuation at 31 March 2022 was GBP118m including
GBP30m of term debt, an equity return of 34% for the year.
Caledonia Funds
The total return for the Funds portfolio was 38.3% for the year.
This reflects strong underlying fund performance, including an
increased level of distributions, from across our maturing
portfolio. Caledonia's valuation policy is to utilise the latest
valuations reported by the managers of the funds in which we
invest, adjusted for any cash movements to our reporting date. 20%
of NAV is based on valuations dated 31 March 2022 and 71% dated 31
December 2021, primarily the directly owned funds. The remainder,
mostly fund of funds holdings, are dated 30 September 2021.
Caledonia Funds' investments are principally in third party
managed private equity funds operating in North America and Asia.
The level of return during the year has been very strong,
reflecting the outcome of a consistent, planned approach to
selecting and committing to funds over the last ten years, which
mature to deliver valuation growth and generate cash distributions
as underlying holdings are realised. Almost all of our managers
have recorded good growth this year, across both geographies. Our
investments with fund of funds managers - Aberdeen US Private
Equity funds, Axiom Asia funds and Asia Alternatives funds - have
shown particularly healthy returns.
The strategy for the Funds portfolio involves committing between
US$100m and US$150m per annum to new fund opportunities. During the
year, GBP111m was drawn down and GBP169m was distributed by the
funds; we also received GBP9m from the sale of a fund position in
the secondary market. The level of distributions remains positive,
with a notable bias towards our North American funds, reflecting
merger, acquisition and IPO activity in broader private equity
markets.
Responsible investment
We have a particularly engaged style of interaction and
stewardship of our investee companies. Our staff sit on the boards
of all of our Private Capital companies and often serve on the
advisory boards of the private equity funds in which we invest.
Despite usually being only a small shareholder in listed companies,
we are often given privileged access to their management teams. We
are therefore well positioned to both monitor and effect change to
the approach investee companies take to ESG matters. We are midway
through a project to ensure that such factors are fully
incorporated into our investment decision making process.
Outlook
The Western world appears to have come through the worst of the
Covid-19 pandemic, absent further mutations. This is not the case
in Asia where China's zero-Covid policy remains firmly in place.
Further geopolitical events have unsettled markets, particularly in
commodities and have exacerbated supply side constraints. The
prospect of increasing interest rates to combat unhealthily strong
inflation makes the old market adage of 'don't fight the Fed' look
ominously prescient this year. Bond yields have already risen
strongly and, with equities at lofty valuations, investors are
thinking carefully about allocation to alternative assets.
Caledonia's portfolio is comprised of high-quality businesses
and funds, many of which have the ability to respond to the
challenges posed by inflation, supply constraints and recent
forecasts of lower growth in GDP. The strong balance sheet, with
ample liquidity leaves us in a good position to resist these
headwinds, although Caledonia's portfolio will not be immune to
falls in valuations. However, our long-term mindset, outstanding
management team and current allocation gives us a good platform
from which to continue to achieve the aims of growth in net assets
and dividends paid to shareholders over the long-term.
Will Wyatt
Chief Executive
Investments summary
H oldings over 1% of net assets at 31 March 2022 were as
follows:
Net
Value assets
Name Pool Geography Business GBPm %
------------------------- ---------------- ---------- ----------------------- -------- ------
Seven Investment
Management Private Capital Jersey Investment management 173.7 6.2
Cobehold Private Capital Belgium Investment company 159.2 5.7
Stonehage Fleming Private Capital Guernsey Family office services 140.1 5.0
Liberation Group Private Capital Jersey Pubs & restaurants 135.7 4.9
Cooke Optics Private Capital UK Cine lens manufacturer 117.8 4.2
Aberdeen US PE funds Funds US Funds of funds 117.3 4.2
Axiom Asia funds Funds Asia Funds of funds 87.6 3.1
Microsoft Quoted Equity US Software 62.4 2.2
Watsco Quoted Equity US Ventilation products 62.2 2.2
Oracle Quoted Equity US Software 58.6 2.1
Texas Instruments Quoted Equity US Semiconductors 54.8 2.0
Asia Alternatives
funds Funds Asia Funds of funds 49.8 1.8
Pharma & life science
Thermo Fisher Scientific Quoted Equity US services 45.0 1.6
Philip Morris Quoted Equity US Tobacco & vaping 41.9 1.5
British American
Tobacco Quoted Equity UK Tobacco & vaping 41.6 1.5
Stonepeak funds Funds US Private equity funds 41.5 1.5
Fastenal Quoted Equity US Industrial supplies 40.6 1.5
Charter Communications Quoted Equity US Cable communications 37.7 1.4
Decheng funds Funds Asia/US Private equity funds 35.9 1.3
Unicorn funds Funds Asia Funds of funds 34.3 1.2
Spirax-Sarco Quoted Equity UK Steam engineering 33.6 1.2
BioAgilytix Private Capital US Bioanalytical testing 31.9 1.1
Hill & Smith Quoted Equity UK Infrastructure 31.6 1.1
LYFE fund Funds Asia Private equity funds 30.0 1.1
Becton Dickinson Quoted Equity US Medical technology 29.5 1.1
PAG Asia fund Funds Asia Private equity funds 29.1 1.0
AE Industrial Funds US Private equity funds 27.8 1.0
Croda International Quoted Equity UK Chemicals 26.6 1.0
Other investments 628.4 22.7
Investment portfolio 2,406.2 86.4
Non pool investments
(1) (20.7) (0.7)
Cash and other 397.2 14.3
-------------------------------------------------------------------------------- -------- ------
Net assets 2,782.7 100.0
-------------------------------------------------------------------------------- -------- ------
(1) Non pool investments comprise legacy investments, cash and
receivables and deferred tax liabilities in subsidiary investment
entities.
Geography is based on the country of listing, country of
domicile for unlisted investments and underlying regional analysis
for funds.
Risk management
Effective risk management is a key component of the company's
business model and assists in ensuring that the different parts of
the group operate within strategic risk parameters. The board has
overall responsibility for setting and monitoring the company's
risk appetite.
Principal risks Mitigation and management Key developments
-------------------------------------- -------------------------------------- --------------------------------------
Strategic
Risks in relation to the The company's business model and Overall strategic asset allocation
appropriateness of the business model strategy are reviewed periodically, review underway led by Chief Executive
to deliver long-term growth against market conditions and target Officer Designate,
in capital and income. returns. supported with input from the board.
Strategic risks include the allocation The performance of the company and its Review of strategy for each investment
of capital between public and private key risks are monitored regularly pool in progress - addressing
equity, by management and the board. approach, yield and return
and in relation to geography, sector, targets, forecast cash impact and
currency, yield, liquidity resourcing.
Private Capital approach amended to
focus on sourcing new investments,
building in revised
yield objectives, following two
successful disposals in the year.
-------------------------------------- -------------------------------------- --------------------------------------
Investment
Risks in respect of specific Investment opportunities are subject Recruitment to increase investment
investment and realisation decisions. to rigorous appraisal and a multi- team resources across all three pools.
Investment risks include the stage approval process. Investment Increased focus on quality due
appropriate research and due diligence managers have well-developed diligence pre investment, particularly
of new investments and networks through which they attract given high market prices,
the timely execution of both proprietary deal flow. as we seek to increase the rate of new
investments and realisations for Target entry and exit events and investment across our private assets -
optimising value. prices are monitored and updated both companies
regularly, in relation to market and funds.
conditions and strategic aims. ESG factors to be integrated into key
investment processes (see ESG &
climate change section).
-------------------------------------- -------------------------------------- --------------------------------------
Market
Risk of losses in value of investments Market risks and sensitivities are Market volatility has increased in
arising from sudden and significant reviewed weekly with actions taken, recent months, reflecting increased
movements in market prices, where appropriate, to balance risk and inflationary pressures
particularly in highly volatile return. and the uncertainty arising from the
markets. Adds to the risk A regular review of market and conflict in Ukraine.
associated with private asset portfolio volatility is conducted by The Quoted Equity team remain alert to
valuations. the board. Reviews also consider market movements, taking advantage of
Caledonia's principal market risks are investment concentration, currency recent market
therefore equity price volatility, exposure and portfolio falls to add target stocks to the
foreign exchange liquidity. Portfolio construction, portfolio, whilst remaining
rate movements and interest rate including use of private assets, determinedly long-term focused.
volatility. provides some mitigation. FX exposure remains a live issue for
periodic review.
-------------------------------------- -------------------------------------- --------------------------------------
Liquidity
Risk that liabilities cannot be met or Detailed cash forecasting for the year Discussions are well advanced with ING
new investments made due to a lack of ahead is updated and reviewed to extend existing GBP112.5m facility
liquidity. Such quarterly, including the expected for a further
risk can arise from not being able to drawdown of capital commitments. A three years.
sell an investment due to lack of a weekly cash update is produced focused New counterparties for money market
market or from not on the short-term cash forecast. funds, all AAA rated, added to limit
holding cash or being able to raise Loan facilities are maintained to maximum exposure
debt. provide appropriate liquidity to GBP50m with each counterparty and
headroom. limit
The liquidity of the portfolio is associated risk.
reviewed regularly.
-------------------------------------- -------------------------------------- --------------------------------------
ESG & Climate change
Risks in relation to the successful Caledonia is building ESG knowledge, Approach and commitment to ESG and
incorporation of ESG and climate particularly on climate change, and climate change being developed with a
change impacts developing policy plan to fully integrate
into our investment approach. and processes to integrate ESG matters into corporate strategy and investment
Identifying opportunities to drive our into our investment approach. We activity.
policy objectives, deliver strong anticipate that the Responsible Investment policy drafted
returns and assessment of new and existing with external support. Review activity
manage the risks to meet evolving investments will fully incorporate ESG underway internally
stakeholder expectations. / climate change risks and with the board.
and opportunities. Climate change reporting prepared,
Reporting will be introduced to with third party consultancy support,
demonstrate the impact our approach to to set out our climate
ESG matters has on our investment change commitments and disclose our
portfolio. approach to managing this risk.
-------------------------------------- -------------------------------------- --------------------------------------
Regulatory & legal
RIsks arising from exposure to Caledonia has internal resources to Continued health and safety protocols
litigation or fraud or failure to consider regulatory and tax matters maintained to ensure safe working in
adhere to the tax and as they arise. Professional advisers response to the
regulatory environment. are engaged, where necessary, to Covid-19 pandemic. New process
Caledonia operates across a number of supplement internal introduced for new suppliers to
jurisdictions and in an industry that knowledge in specialised areas or when mitigate fraud risk.
is new regulations are introduced. US private equity fund investments
subject to significant regulatory Activities supported structuring refined to ensure ongoing
oversight. by regular staff training. investment trust
Caledonia is a member of the compliance.
Association of Investment Companies
and operates in line with
industry standards.
-------------------------------------- -------------------------------------- --------------------------------------
Operational
Risks arising from inadequate or Systems and control procedures are Business continuity plan being
failed processes, people and systems developed and reviewed regularly. refreshed. New approach to information
or from external factors. They are tested to ensure effective technology disaster
Operational risks arise from the operation. recovery implemented in April 2022.
recruitment, development and retention Appropriate remuneration and other IT department structure and staffing
of staff, systems policies are in place to facilitate refreshed, providing broader range of
and procedures and business the skills and increased
disruption. retention of key staff. cover.
Business continuity plans are Cyber security focus maintained, with
maintained and updated as the business training refresh to address human
evolves and in response factor risk from phishing,
to emerging threats. This includes a enhanced password policy implemented
specific focus on cyber security. and new technology deployed to improve
e-mail security
(inbound and outbound) and prevent
potential data loss.
New Enfusion system, covering public
equity trading activity and investment
accounting activity
for the business, successfully
implemented on 1 April 2022 providing
a robust, well-supported
platform for key business processes.
-------------------------------------- -------------------------------------- --------------------------------------
Group statement of comprehensive income
for the year ended 31 March 2022
2022 2021
Revenue Capital Total Revenue Capital Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------- ------- ------- ------- ------- ------
Revenue
Investment income 51.0 4.8 55.8 44.6 - 44.6
Other income 0.6 - 0.6 0.1 0.8 0.9
Net gains on fair value investments - 567.1 567.1 - 437.0 437.0
Net gains on fair value property - 3.6 3.6 - 3.2 3.2
Total revenue 51.6 575.5 627.1 44.7 441.0 485.7
Management expenses (21.0) (11.8) (32.8) (18.9) (7.6) (26.5)
Profit before finance costs 30.6 563.7 594.3 25.8 433.4 459.2
Treasury interest receivable 0.1 - 0.1 0.1 - 0.1
Finance costs (2.3) - (2.3) (2.7) - (2.7)
Exchange movements (0.1) - (0.1) (0.8) - (0.8)
------------------------------------- ------- ------- ------- ------- ------- ------
Profit before tax 28.3 563.7 592.0 22.4 433.4 455.8
Taxation 11.0 8.2 19.2 7.4 2.8 10.2
------------------------------------- ------- ------- ------- ------- ------- ------
Profit for the year 39.3 571.9 611.2 29.8 436.2 466.0
Other comprehensive income
items never to be reclassified
to profit or loss
Re-measurements of defined
benefit pension schemes - (1.4) (1.4) - 2.3 2.3
Tax on other comprehensive
income - 1.5 1.5 - (0.7) (0.7)
Total comprehensive income 39.3 572.0 611.3 29.8 437.8 467.6
Basic earnings per share 72.1p 1049.3p 1121.4p 54.3p 795.0p 849.3p
Diluted earnings per share 70.8p 1030.7p 1101.5p 53.6p 784.2p 837.8p
------------------------------------- ------- ------- ------- ------- ------- ------
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 year and total comprehensive income for the
year is attributable to equity holders of the parent.
Statement of financial position
at 31 March 2022
Group Company
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
------------------------------------------------------ ------- ------- ------- -------
Non-current assets
Investments held at fair value through profit or loss 2,385.4 2,194.0 2,394.6 2,198.9
Investments in subsidiaries held at cost - - 0.9 0.9
Investment property 16.0 13.3 - -
Property, plant and equipment 29.2 29.0 - -
Deferred tax assets 24.2 8.4 18.1 6.1
Other receivables - - 37.3 35.7
Employee benefits 2.3 4.0 - -
Non-current assets 2,457.1 2,248.7 2,450.9 2,241.6
------------------------------------------------------- ------- ------- ------- -------
Current assets
Trade and other receivables 7.5 3.4 3.8 2.0
Current tax assets 8.9 7.3 9.8 7.3
Cash and cash equivalents 341.1 14.2 341.0 14.5
------------------------------------------------------- ------- ------- ------- -------
Current assets 357.5 24.9 354.6 23.8
------------------------------------------------------- ------- ------- ------- -------
Total assets 2,814.6 2,273.6 2,805.5 2,265.4
------------------------------------------------------- ------- ------- ------- -------
Current liabilities
Trade and other payables (22.4) (26.4) (35.6) (34.9)
Employee benefits (3.6) (2.6) - -
Current tax liabilities (0.1) - (0.1) -
Current liabilities (26.1) (29.0) (35.7) (34.9)
------------------------------------------------------- ------- ------- ------- -------
Non-current liabilities
Interest bearing loans and borrowings - (15.0) - (15.0)
Employee benefits (4.7) (2.9) - -
Deferred tax liabilities (1.1) (1.4) - -
Non-current liabilities (5.8) (19.3) - (15.0)
------------------------------------------------------- ------- ------- ------- -------
Total liabilities (31.9) (48.3) (35.7) (49.9)
------------------------------------------------------- ------- ------- ------- -------
Net assets 2,782.7 2,225.3 2,769.8 2,215.5
------------------------------------------------------- ------- ------- ------- -------
Equity
Share capital 3.1 3.2 3.1 3.2
Share premium 1.3 1.3 1.3 1.3
Capital redemption reserve 1.4 1.3 1.4 1.3
Capital reserve 2,527.0 1,979.1 2,526.0 1,979.8
Retained earnings 263.2 254.3 251.3 243.8
Own shares (13.3) (13.9) (13.3) (13.9)
------------------------------------------------------- ------- ------- ------- -------
Total equity 2,782.7 2,225.3 2,769.8 2,215.5
------------------------------------------------------- ------- ------- ------- -------
Undiluted net asset value 5133p 4055p
Diluted net asset value 5041p 4000p
------------------------------------------------------- ------- ------- ------- -------
The Company profit for the year ended 31 March 2022 was
GBP608.2m (2021: GBP464.5m)
The financial statements were approved by the board and
authorised for issue on 25 May 2022 and were signed on its behalf
by:
Will Wyatt Tim Livett
Chief Executive Chief Financial Officer
Statement of changes in equity
for the year ended 31 March 2022
Capital
Share Share redemption Capital Retained Own Total
capital premium reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Group
Balance at 31 March 2020 3.2 1.3 1.3 1,541.3 255.5 (15.3) 1,787.3
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income
Profit for the year - - - 436.2 29.8 - 466.0
Other comprehensive income - - - 1.6 - - 1.6
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income - - - 437.8 29.8 - 467.6
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 5.5 - 5.5
Transfer of shares to employees - - - - (2.8) 2.8 -
Own shares purchased - - - - - (1.4) (1.4)
Dividends paid - - - - (33.7) - (33.7)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (31.0) 1.4 (29.6)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2021 3.2 1.3 1.3 1,979.1 254.3 (13.9) 2,225.3
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income
Profit for the year - - - 571.9 39.3 - 611.2
Other comprehensive income - - - 0.1 - - 0.1
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income - - - 572.0 39.3 - 611.3
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 8.2 - 8.2
Transfer of shares to employees - - - - (4.0) 4.0 -
Own shares purchased and cancelled (0.1) - 0.1 (24.1) - - (24.1)
Own shares purchased - - - - - (3.4) (3.4)
Dividends paid - - - - (34.6) - (34.6)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners (0.1) - 0.1 (24.1) (30.4) 0.6 (53.9)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2022 3.1 1.3 1.4 2,527.0 263.2 (13.3) 2,782.7
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Company
Balance at 31 March 2020 3.2 1.3 1.3 1,543.2 246.9 (15.3) 1,780.6
Profit and total comprehensive income - - - 436.6 27.9 - 464.5
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 5.5 - 5.5
Transfer of shares to employees - - - - (2.8) 2.8 -
Own shares purchased - - - - - (1.4) (1.4)
Dividends paid - - - - (33.7) - (33.7)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (31.0) 1.4 (29.6)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2021 3.2 1.3 1.3 1,979.8 243.8 (13.9) 2,215.5
Profit and total comprehensive income - - - 570.3 37.9 - 608.2
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments - - - - 8.2 - 8.2
Transfer of shares to employees - - - - (4.0) 4.0 -
Own shares purchased and cancelled (0.1) - 0.1 (24.1) - - (24.1)
Own shares purchased - - - - - (3.4) (3.4)
Dividends paid - - - - (34.6) - (34.6)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners (0.1) - 0.1 (24.1) (30.4) 0.6 (53.9)
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2022 3.1 1.3 1.4 2,526.0 251.3 (13.3) 2,769.8
--------------------------------------------- ------- ------- ---------- ------- -------- ------ -------
Statement of cash flows
for the year ended 31 March 2022
Group Company
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- ------- -------
Operating activities
Dividends received 52.9 42.3 52.9 42.3
Interest received 1.7 2.3 1.7 2.3
Cash received from customers 0.5 0.1 - -
Cash paid to suppliers and employees (20.4) (17.8) (21.0) (14.4)
Taxes received 0.1 0.1 0.1 0.1
Taxes paid (0.1) (0.1) (0.1) (0.1)
Group tax relief received 1.4 0.9 1.4 0.7
Group tax relief paid - - - (0.2)
Net cash flow from operating activities 36.1 27.8 35.0 30.7
-------------------------------------------- ------- ------- ------- -------
Investing activities
Purchases of investments (226.9) (240.2) (226.9) (240.2)
Proceeds from disposal of investments 602.2 142.7 602.2 142.2
Purchases of property, plant and equipment (0.4) (3.5) - -
Net cash flow from/(used in) investing
activities 374.9 (101.0) 375.3 (98.0)
-------------------------------------------- ------- ------- ------- -------
Financing activities
Interest paid (2.6) (3.1) (2.3) (2.9)
Dividends paid to owners of the company (34.6) (33.7) (34.6) (33.7)
Proceeds from bank borrowings - 65.0 - 65.0
Repayment of bank borrowings (15.0) (50.0) (15.0) (50.0)
Loan payments to subsidiaries (4.4) (4.1) (4.4) (7.8)
Purchases of own shares (27.5) (1.4) (27.5) (1.4)
-------------------------------------------- ------- ------- ------- -------
Net cash flow used in financing activities (84.1) (27.3) (83.8) (30.8)
-------------------------------------------- ------- ------- ------- -------
Net increase/(decrease) in cash and
cash equivalents 326.9 (100.5) 326.5 (98.1)
Cash and cash equivalents at year start 14.2 114.7 14.5 112.6
Cash and cash equivalents at year end 341.1 14.2 341.0 14.5
-------------------------------------------- ------- ------- ------- -------
Notes to the final results announcement
1. General information and basis of preparation
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 premium listed on the London Stock
Exchange.
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 31 March 2022 the group holds GBP1,171m of liquid assets
and has access to GBP250m of undrawn committed banking facilities,
GBP112.5m of which expires in July 2022 and GBP137.5m of which
expires in May 2025. The Directors therefore believe the group will
be able to meet its liabilities as they fall due for at least 12
months from the date of approval of 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 risks arising from the Covid-19 pandemic, war in Ukraine and
the inflationary 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) reduction in
investment income, (c) reduction in distributions received from
private equity funds and drawdown of all existing private equity
fund commitments, (d) a delay and reduction in disposals of
directly owned private equity investments, and (e) the cumulative
impact of the 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.
2. Dividends
Amounts recognised as distributions to owners of the company in
the year were as follows:
2022 2021
p/share GBPm p/share GBPm
--------------------------------------------------------- ------- ---- ------- ----
Final dividend for the year ended 31 March 2021 (2020) 45.9 25.1 44.5 24.4
Interim dividend for the year ended 31 March 2022 (2021) 17.5 9.5 17.0 9.3
63.4 34.6 61.5 33.7
--------------------------------------------------------- ------- ---- ------- ----
Amounts proposed after the year end and not recognised in the
financial statements were as follows:
Proposed final dividend for the year ended 31 March 2022 47.3 25.6
Proposed Special dividend for the year ended 31 March 2022 175.0 94.9
----------------------------------------------------------- ----- -----
222.3 120.5
----------------------------------------------------------- ----- -----
The proposed final and special dividends for the year ended 31
March 2022 were not included as liabilities in these financial
statements. These dividends, if approved by shareholders at the
annual general meeting to be held on 27 July 2022, will be payable
on 4 August 2022 to holders of shares on the register on 1 July
2022. The ex-dividend date will be 30 June 2022. The deadline for
elections under the dividend reinvestment plan offered by Link
Group will be the close of business on 14 July 2022.
For the purposes of section 1158 of the Corporation Tax Act 2010
and associated regulations, the dividends payable for the year
ended 31 March 2022 are the interim, final and special dividends
for that year, amounting to GBP130.0m (2021: GBP34.4m).
3. 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:
2022 2021
GBPm GBPm
-------- ----- -----
Revenue 39.3 29.8
Capital 571.9 436.2
-------- ----- -----
Total 611.2 466.0
-------- ----- -----
The weighted average number of shares was as follows:
2022 2021
000's 000's
---------------------------------------------------------------------- ------ ------
Issued shares at the year start 55,374 55,374
Effect of shares cancelled (404) -
Effect of shares held by the employee share trust (468) (507)
---------------------------------------------------------------------- ------ ------
Basic weighted average number of shares in the year 54,502 54,867
Effect of performance shares, share options and deferred bonus awards 987 754
---------------------------------------------------------------------- ------ ------
Diluted weighted average number of shares in the year 55,489 55,621
---------------------------------------------------------------------- ------ ------
4. Operating segments
The following is an analysis of the profit/(loss) before tax for
the year and assets analysed by primary operating segments:
Profit/(loss) before tax Total assets
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
----------------------------------------------- ------------ ------------ ---------- ----------
Quoted Equity 100.7 174.0 830.1 716.1
Private Capital 322.0 150.0 781.7 826.8
Funds 230.4 165.9 794.4 637.1
Investment portfolio 653.1 489.9 2,406.2 2,180.0
Other investments (26.0) (4.2) (20.7) 14.0
----------------------------------------------- ------------ ------------ ---------- ----------
Total revenue/investments 627.1 485.7 2,385.5 2,194.0
Cash and cash equivalents 0.1 0.1 341.1 14.2
Other items (1) (35.2) (30.0) 88.0 65.4
----------------------------------------------- ------------ ------------ ---------- ----------
Reportable total 592.0 455.8 2,814.6 2,273.6
----------------------------------------------- ------------ ------------ ---------- ----------
1. Other items included -GBP20.7m (2021: GBP14.0m investments) of non-pool provisions.
5. Share-based payments
In the year to 31 March 2022, participating employees in the
performance share scheme were awarded options over 237,861 shares
at nil-cost (2021: 273,597 shares).
Also in the year to 31 March 2022, participating employees
received deferred awards over 49,267 shares (2021: 5,229
shares).
The IFRS 2 expense included in profit or loss for the year was
GBP9.0m (2021: GBP6.3m).
6. 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.
2022 2021
Net Number Net Number
assets of shares (1) NAV assets of shares (1) NAV
GBPm 000's p/share GBPm 000's p/share
---------------------- ---------- ------------------ ---------- --------- ----------------- ---------
Undiluted 2,782.7 54,211 5133 2,225.3 54,882 4055
Share awards - 987 (92) - 754 (55)
---------------------- ---------- ------------------ ---------- --------- ----------------- ---------
Diluted 2,782.7 55,198 5041 2,225.3 55,636 4000
---------------------- ---------- ------------------ ---------- --------- ----------------- ---------
1. Number of shares in issue at the year end is stated after the deduction of 452,645 (2021:
491,716) ordinary shares held by the Caledonia Investments plc Employee Share Trust
Net asset value total return is calculated in accordance with
AIC guidance, 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.
2022 2021
p p
------------------------------------------------------------------ ---------------- ---------------
Diluted NAV at year start 4000 3236
------------------------------------------------------------------ ---------------- ---------------
Diluted NAV at year end 5041 4000
Dividends payable in the year 63 62
Reinvestment adjustment (2) 12 11
5116 4073
------------------------------------------------------------------ ---------------- ---------------
NAVTR over the year 27.9% 25.9%
------------------------------------------------------------------ ---------------- ---------------
2. The reinvestment adjustment is the gain or loss resulting from reinvesting the dividends in
NAV at the ex-dividend date.
7. Capital commitments
At the reporting date, the group and company had entered into
unconditional commitments to limited partnerships, committed loan
facility agreements and a conditional loan and purchase agreement,
as follows:
Group Company
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
-------------------------- ----- ----- ----- -----
Investments
Contracted but not called 331.1 285.9 331.1 290.4
Conditionally contracted - 75.6 4.5 75.6
331.1 361.5 335.6 366.0
-------------------------- ----- ----- ----- -----
Amounts are callable within the next twelve months. The group
has conducted a going concern assessment which considered future
cash flows, the availability of liquid assets and debt facilities,
and consideration of the risks arising from the Covid-19 pandemic
over the 12 month period required. In making this assessment a
number of stress scenarios were developed. The most severe scenario
included all outstanding private equity fund commitments being
drawn. Under this severe scenario the group would have a range of
mitigating actions available to it, including usage of banking
facilities, disposal of some liquid assets and reduction in
discretionary spend which would enable it to meet all of its
liabilities and still hold significant liquid assets
8. 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 benchmark performance. 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.
9. Financial instruments - 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 GBP781.7m (2021: GBP826.8m) 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 GBP784.7m (2021: GBP627.5 m) 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.
Where required, valuations are adjusted for investments and
distributions between the valuation date and the reporting
date.
The following table provides information on significant
unobservable inputs used at 31 March 2022 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 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 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 31 March 2022
Description/ Fair value Unobservable input Weighted average Input sensitivity Change in valuation
valuation method input
GBPm +/- +/- GBPm
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
Internally developed
Private companies
Large, earnings 313.8 EBITDA multiple 13.5x 10.0% 28.2
Medium, earnings 117.8 EBITDA multiple 8.5x 10.0-15.0% 10.4
Small, earnings 23.3 EBITDA multiple 4.6x 15.0% 1.6
Large, Leisure, Tangible assets
tangible assets 135.7 multiple 1.14x 10.0% 15.4
Net assets / manager
valuation 191.1 Multiple 1 0.1x 19.1
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
781.7 74.7
Non-pool companies (20.7)
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
Total internal 761.0
Externally developed
Private equity fund
Net asset value 788.1 Manager NAV 1 5% 39.4
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
1,549.1 114.1
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
10. Financial information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31
March 2022 or 2021 but is derived from those accounts. Statutory
accounts for 31 March 2021 have been delivered to the Registrar of
Companies, and those for 31 March 2022 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The statutory accounts for the year ended 31 March 2022 will be
delivered to shareholders on 24 June 2022 and made
available for download from the company's website on that date.
Also, a copy will be delivered to the Registrar of
Companies in accordance with section 441 of the Companies Act
2006, following approval by shareholders.
The statutory accounts for the year ended 31 March 2022 include
a 'Directors' statement of responsibility' as follows:
We confirm that, to the best of our knowledge:
The group and parent company financial statements, which have
-- been prepared in accordance with applicable
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation
taken as a whole
The strategic report includes a fair review of the development
-- and performance of the business and the position of the company
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks
and uncertainties that it faces.
Signed on behalf of the board by:
Will Wyatt Tim Livett
Chief Executive Chief Financial Officer
25 May 2022 25 May 2022
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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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