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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Caledonia Investments Plc | LSE:CLDN | London | Ordinary Share | GB0001639920 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 15.00 | 0.42% | 3,550.00 | 3,545.00 | 3,550.00 | 3,560.00 | 3,540.00 | 3,560.00 | 16,154 | 14:48:12 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 183M | 142.9M | 2.6117 | 13.55 | 1.94B |
From Apr 2022 to Apr 2024
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)
Hot Features
Premium
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
FTSE International Limited ('FTSE') (c) FTSE 2022. 'FTSE(R)' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE's express written consent.
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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END
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