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.
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 return1
|
7.4%
|
44.8%
|
67.5%
|
160.5%
|
|
NAV
total return
Annualised
|
7.4%
|
13.1%
|
10.9%
|
10.0%
|
|
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
or using the
following link:
here
For
further information:
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
31/03/23
|
|
Net
investment
/(disposal)
|
Capital
gains
/
(losses)
|
Other
|
|
NAV
31/03/24
|
|
Income
|
|
Total
Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Manager NAV date
|
|
£m
|
% of
Portfolio
|
|
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.
END