TIDMCLDN
RNS Number : 1273H
Caledonia Investments PLC
22 November 2022
Caledonia Investments plc
Half-year results for the six months ended 30 September 2022
Financial highlights
6 months Year
30 Sep 2022 31 Mar 2022 Change
Net asset value per share total return* 4.5% 27.9%
Net asset value per share 5039p 5041p -
Net assets GBP2,782m GBP2,783m -
Interim dividend per share 18.2p 17.5p 4.0%
*Alternative Performance Measure.
Highlights
- +4.5% NAV total return for the six months.
- Caledonia Quoted Equity returned -9.5%, reflecting the broader
trend in global equity markets, mitigated to some degree by favourable
exchange rate movements.
- Caledonia Private Capital returned 6.3%, with the majority of
investee companies performing well.
- Caledonia Funds returned 22.3%, with performance based on the
favourable exchange rate position plus valuation growth for our
US funds.
- Progressive dividend maintained, with the interim increased by
4.0% to 18.2p per share.
- Final and special dividends of GBP121m paid to shareholders in
August 2022, in respect of the year ended 31 March 2022.
- Portfolio transactions realised net proceeds totalling GBP13m,
which included GBP16m from the Funds pool as the level of distributions
was sustained.
- Total liquidity position remains healthy, with GBP243m of cash
plus undrawn facilities of GBP250m at 30 September 2022.
Mat Masters, Chief Executive Officer, commented :
"The portfolio delivered a good return in the first half of the
year, particularly compared to the broader market, demonstrating
the benefits of our diversified investment approach. Our
significant exposure to private assets and a weighting towards US
dollar denominated assets were the key drivers of performance and
more than offset the adverse impact of falling global public equity
markets.
The global economic outlook has become more challenging during
the period, leading to increased volatility across markets. This
will influence the short-term performance of our portfolio but we
believe our long-term outlook and ethos of investment in high
quality, well-financed and managed companies, leaves us well-placed
to withstand pressures and deliver long-term returns in line with
our aims."
22 November 2022
Enquiries
Caledonia Investments plc Tulchan Communications
Mat Masters (Chief Executive Officer), Tom Murray, Lisa Jarrett
Tim Livett (Chief Financial Officer) Kerr
+44 20 7802 8080 +44 20 7353 4200
Management report
Results
Caledonia's NAV total return ("NAVTR") for the six months to 30
September 2022 was 4.5% with net assets at the period end totalling
GBP2,781.5m. The NAVTR for the 12 months to 30 September 2022 was
15.1%. Revenue income for the half year decreased 26% to GBP25.4m
largely due to a one-off pre-disposal dividend in the comparative
period. Total liquidity remains healthy with cash at the period end
of GBP243m (31 March 2022: GBP341m) plus undrawn bank facilities of
GBP250m (31 March 2022: GBP250m). The net decrease in cash was
driven by payment of final and special dividends in August
totalling GBP121m in respect of the year ended 31 March 2022.
The directors have declared an interim dividend of 18.2p per
share, an increase of 4.0% compared with the previous year.
The tables below show Caledonia's performance track record and
asset allocation to 30 September 2022:
Performance record
6 months 1 year 3 years 5 years 10 years
% % % % %
------------------------------------- -------- ------ ------- ------- --------
NAVTR 4.5 15.1 47.3 71.4 217.2
Annualised
NAVTR 15.1 13.8 11.4 12.2
Retail Prices Index 11.2 5.6 4.5 3.5
NAVTR vs RPI 3.9 8.2 6.9 8.7
FTSE All-Share Total Return 2.2 6.0
NAVTR vs FTSE All-Share Total Return 9.2 6.2
------------------------------------- -------- ------ ------- ------- --------
The underlying performance of our private assets during the
first half of the year, in both Private Capital and Funds, coupled
with the significant positive impact of the 15% fall in the value
of Sterling against the US dollar, has more than offset the
volatility and weakness in global equity markets. We do not
currently hedge our currency exposure, however we review our
approach on a regular basis.
The Quoted Equity portfolio produced a return of -9.5%,
reflecting the broader trend in public equity markets, mitigated to
some degree by favourable exchange rate movements. The Private
Capital portfolio produced a return of 6.3% following the biannual
revaluation of our holdings, with the majority of our investee
companies performing well. The Funds portfolio, which continues to
generate cash, returned 22.3% based on the favourable exchange rate
position plus valuation growth for our US funds. 100% of funds, by
value, are valued as at 30 June 2022.
Asset allocation
Net assets allocation Return
Strategic Sep 2022 Mar 2022 target
% % % %
----------------- --------- -------- -------- ------
Quoted Equity 30-40 27 30 9.0
Private Capital* 25-35 29 28 14.0
Funds 25-35 34 28 12.5
----------------- --------- -------- -------- ------
*Includes Cobepa.
The asset allocation model has been subject to refinement. The
new bandings, shown in the above table, reflect a consideration of
the risk return profile for each asset group. The most significant
change is a reduction in the range for Private Capital; the revised
banding will support a portfolio with 6 to 8 holdings at an average
equity value of GBP100m, together with our holding in Cobepa. The
increased funds allocation follows a move to increase our current
exposure to US lower mid-market private equity funds, which have
shown strong, reliable performance over recent years.
The movement in asset allocation recorded in the first half of
the year reflects a combination of the relative performance of each
pool, as explained below, together with the net impact of their
investment and disposal activity.
Caledonia has continued to invest and dispose of assets, in line
with our active approach to portfolio management. There was a net
cash outflow of GBP98m in the first half of the year, principally
due to the payment of final and special dividends of GBP121m paid
out to shareholders in August. The Quoted Equity pool increased its
holdings in three companies, refined positions in a number of
others and completed the sale of our holdings in AG Barr and
Imperial Brands, creating a net investment outflow of GBP4m. There
was no material transaction activity in the Private Capital
portfolio in the period. The Funds portfolio benefitted from a
sustained level of fund distributions, resulting in a net cash
inflow of GBP16m in the period.
Performance for the first half of the year is summarised in the
table below.
Pool performance
31 Mar Invest- Realis- Gains/ Accrued 30 Sep
2022 ments ations losses income 2022 Income Return
GBPm GBPm GBPm GBPm GBPm GBPm GBPm %
---------------------- ------- ------- ------- ------ ------- ------- ------ ------
Quoted Equity 830.1 29.8 (25.8) (90.1) - 744.0 11.4 -9.5
Private Capital 781.7 - (1.3) 36.6 1.9 818.9 12.2 6.3
Funds 794.4 69.7 (85.7) 174.5 - 952.9 1.8 22.3
---------------------- ------- ------- ------- ------ ------- ------- ------ ------
Portfolio investments 2,406.2 99.5 (112.8) 121.0 1.9 2,515.8 25.4
Other investments (20.8) 0.1 - (15.8) - (36.5) -
---------------------- ------- ------- ------- ------ ------- ------- ------ ------
Total investments 2,385.4 99.6 (112.8) 105.2 1.9 2,479.3 25.4
Cash and other 397.3 302.2
---------------------- ------- ------- ------- ------ ------- ------- ------ ------
Net assets 2,782.7 2,781.5 NAVTR 4.5
---------------------- ------- ------- ------- ------ ------- ------- ------ ------
1. Other investments comprised legacy investments and cash and receivables
in subsidiary investment entities.
2. Returns for investments are calculated using the Modified Dietz
methodology and the return is Caledonia's NAVTR.
3. The Private Capital valuation at September 2022 includes GBP3.6m
of accrued income (March 2022: GBP1.7m).
Caledonia Quoted Equity - Capital and Income portfolios (27% of NAV)
The total return on the Quoted Equity pool was -9.5% over the
first half of the year. This performance reflected volatile and
challenging global public equity markets over the last six months.
The impact of the notable rise in inflation and resulting interest
rate increases, together with the uncertainty created by the
ongoing conflict in Ukraine, has contributed to weakening market
pricing across many sectors. Our portfolios have been directly
impacted with most stocks registering price reductions over the
period.
The Capital portfolio delivered a return of -9.9%. Microsoft,
Oracle, Charter Communications and Hill & Smith have seen
material price declines, although general underlying trading for
these businesses remains strong. With 75% of the portfolio invested
in US stocks, the decline in overall return for the period was
significantly mitigated by the strength of the US dollar compared
to Sterling.
The Income portfolio delivered a return of -8.5% with notable
valuation falls for our property and insurance stocks, Big Yellow
Group and London Metric, and for Sabre Insurance. These adverse
returns were partially offset by stronger performance by tobacco
and consumer products holdings. Our US stocks, representing around
25% of the portfolio, delivered a neutral return with any price
declines offset by the movement in exchange rates.
Trading activity has been relatively limited, in line with our
long-term investment approach. The main activity was to increase
our holdings in Moody's, Charter Communications and London Metric.
We disposed of our remaining holdings in AG Barr and Imperial
Brands. The AG Barr position was held for 45 years, generating a
lifetime IRR of 17.4%. Other activity was restricted to refining
positions in existing investments.
Caledonia Private Capital (29% of NAV)
Caledonia's Private Capital portfolio is dominated by
significant positions in four UK centric businesses and one private
European investment company. These five investments represent over
90% of the portfolio value. Investee companies are revalued in
March and September each year. The portfolio generated a total
return of 6.3% in the first half of the year.
Seven Investment Management ("7IM"), a vertically integrated
multi-asset class investment manager, continues to perform well.
Whilst the volatility in public markets has impacted overall assets
under management ("AUM"), the business has continued to see
positive net investment flows and to grow earnings through the
period aided by direct cost savings, higher interest income and a
strong performance from recently acquired Partners Wealth
Management. AUM was over GBP20bn at the end of August 2022, down
from GBP21bn at the start of the calendar year, reflecting a mix of
negative market movement and positive net fund inflows. The closing
September valuation was GBP184.5m, a return of 8.0% for the first
half of the year.
Cobepa, the Belgian based investment company, owns a diverse
portfolio of private global investments. The businesses within the
Cobepa portfolio continue to develop well, with many delivering
strong performance and valuation progression. Recent disposals of
significant individual assets, most notably Hillebrand and
BioAgilytix, have boosted returns and provided liquidity to support
new investment opportunities. These factors are reflected in the
valuation of Cobehold (the holding company of Cobepa); the closing
valuation of Caledonia's holding in September was GBP174.2m, a
return of 11.1% for the first half of its year.
Stonehage Fleming, the international multi-family office,
continues to deliver good earnings growth. The integration of the
Maitland private client business, acquired on 31 January 2022, is
progressing well. The Family Office division has been delivering
good results on the back of new client wins. In contrast, the
Investment Management division has been somewhat adversely impacted
by the volatility in global public equity markets. The closing
September valuation was GBP141.2m, a total return including
distributions of 3.7% for the first half of the year.
Cooke Optics, a leading manufacturer of cinematography lenses,
has traded well in recent months following the successful launch of
a series of new lenses and delivered strong earnings growth in its
most recent financial year to 30 June 2022. The market is strong as
global demand for both streaming and cinema content remains
elevated. The business has invested in capacity to fulfil this
demand and is developing plans to bring several innovative new
products to the market. The closing September valuation was
GBP137.1m, an equity return of 22.0% for the first half of the
year.
Liberation Group, a pub, restaurant and drinks business with
operations in the South West of the UK and Channel Islands, has
traded well through the spring and summer. Its portfolio is well
positioned with a focus on destination pubs, a strong food
offering, large outdoor spaces and, in some cases, quality
accommodation. The business has been delivering strong earnings
growth as it emerged from the Covid-19 period but is now facing the
headwinds of weaker consumer confidence, as cost of living issues
dominate the news, and cost pressures, particularly from energy
contracts. In mitigation, the cost base is well managed and there
remains further upside from the Wadworth estate pubs acquired in
December 2020 and other site acquisitions. The closing September
valuation was GBP124.4m, a return of -8.3% for the first half of
the year.
Caledonia Funds (34% of NAV)
Caledonia's Funds investments are principally in third party
managed private equity funds operating in North America and in
Asia. The total return on the Funds portfolio was 22.3% for the
first half of the year. This reflects ongoing valuation growth
across the maturing portfolio of US and Asia based funds, plus a
significant positive exchange impact given that the majority of
these holdings are US dollar denominated. A number of our general
partners, particularly Boyne, KLH, CenterOak and New Heritage,
produced very strong gains in the period alongside our US fund of
funds manager, Aberdeen US private equity funds. 100% of funds, by
value, are valued as at 30 June 2022. Price movements in
public-equity markets in the quarter ended 30 September 2022 were
reviewed and determined to be in line with historic precedent.
This, combined with our knowledge of the underlying valuation
methodologies adopted by our fund managers, satisfies us of the
appropriateness of June valuations.
During the first half of the year, GBP70m was invested and
distributions of GBP86m were received. The level of distributions
remains positive in both the US and Asia, reflecting merger,
acquisition and IPO activity in the broader private equity
markets.
Fund investments
Geography Category
North America 55% Private equity 63%
Funds of private equity
Asia 44% funds 36%
United Kingdom 1% Quoted market 1%
---------------- --- ----------------------- ---
Management and Board
Tim Livett, Chief Financial Officer, has advised the board of
his intention to retire and leave the Company to develop a
portfolio of non-executive roles once his successor joins. The
search process for a new Chief Financial Officer has commenced and
the market will be updated on progress as appropriate.
Dividend
The board has declared an interim dividend of 18.2p per share,
an increase of 4.0% on last year's interim, at a total value of
GBP9.9m. This will be paid to shareholders on 5 January 2023.
The board has historically aimed for the annual dividend to be
fully covered by net revenue for the relevant financial year in a
period of normal trading. However, in light of the growing scale of
the private equity funds portfolio and lower yields for Private
Capital businesses, the board has determined that the approach
should be modified to reduce the strategic level of net revenue
cover to around 0.5x and factor in net cash inflow from the
maturing funds portfolio. The expectation is that this will provide
an aggregate cashflow cover for the dividend of at least 1x.
Outlook
The global economic outlook has become more challenging with the
impact of high rates of inflation, rising interest rates, central
bank debt reduction and the conflict in Ukraine leading to
increased volatility across global markets. These factors will
influence the short-term performance of our portfolio but
Caledonia's long-term outlook and ethos of investment in high
quality, well-financed and managed companies, leaves it well-placed
to withstand these pressures and deliver long-term returns in line
with our aims.
Change in pool investments value Net assets pool distribution
Sep Mar
GBPm 2022 2022
-------------------------- ---------------- ------------------------------------------- ------ ------
Opening balance 2,406.2 Quoted Equity 27% 30%
Investments 99.5 Private Capital 29% 28%
Realisations (112.8) Funds 34% 28%
Gains/losses 121.0 Cash and other 10% 14%
------------------------------------------- ------ ------
Accrued income 1.9
-------------------------- ----------------
Closing balance 2,515.8
-------------------------- ----------------
Net assets geographic Net assets currency
distribution distribution
Sep Mar Sep Mar
2022 2022 2022 2022
-------------------------- ------- ------- ------------------------------------------- ------ ------
United Kingdom 30% 32% Pound sterling 39% 47%
Europe 7% 7% US dollar 49% 45%
North America 37% 35% Euro 7% 6%
Asia 16% 12% Other currencies 5% 2%
------------------------------------------- ------ ------
Cash and other 10% 14%
-------------------------- ------- -------
1. The geographic distribution is based on the country of listing,
country of domicile for unlisted investments and underlying regional
analysis for funds.
2. Currency distribution is based on the denomination of the securities
held. This does not look through to the underlying exposures,
which may be different.
Portfolio summary
Holdings of 1% or more of net assets at 30 September 2022 were
as follows:
Net
Value assets
Name Pool Geography(1) Business GBPm %
------------------------- ---------------- ------------- ----------------------- ------- ------
Seven Investment
Management Private Capital Jersey Investment management 184.5 6.6%
Cobehold Private Capital Belgium Investment company 174.2 6.3%
Aberdeen US PE Funds Funds US Funds of funds 145.5 5.2%
Stonehage Fleming Private Capital Guernsey Family office services 141.2 5.1%
Cooke Optics Private Capital UK Cine lens manufacturer 137.1 4.9%
Liberation Group Private Capital Jersey Pubs & restaurants 124.4 4.5%
Axiom Asia funds Funds Asia Funds of funds 98.7 3.5%
Watsco Quoted Equity US Ventilation products 62.0 2.2%
Asia Alternatives
funds Funds Asia Funds of funds 56.5 2.0%
Microsoft Quoted Equity US Software 55.6 2.0%
Texas Instruments Quoted Equity US Semiconductors 55.6 2.0%
Oracle Quoted Equity US Software 51.1 1.8%
Pharma & life sciences
Thermo Fisher Scientific Quoted Equity US services 45.6 1.6%
Philip Morris Quoted Equity US Tobacco 43.7 1.6%
British American
Tobacco Quoted Equity UK Tobacco & vaping 42.1 1.5%
Unicorn funds Funds Asia Funds of funds 42.4 1.5%
Stonepeak funds Funds US Private equity funds 40.2 1.4%
Decheng funds Funds Asia/US Private equity funds 38.3 1.4%
Fastenal Quoted Equity US Industrial supplies 37.1 1.3%
CenterOak funds Funds US Private equity funds 35.3 1.3%
AE Industrial funds Funds US Private equity funds 33.8 1.2%
PAG Asia funds Funds Asia Private equity funds 32.4 1.2%
Charter Communications Quoted Equity US Cable communications 31.1 1.1%
LYFE funds Funds Asia Private equity funds 29.8 1.1%
Becton Dickinson Quoted Equity US Medical technology 29.2 1.0%
Ironbridge funds Funds Canada Private equity funds 28.9 1.0%
Spirax Sarco Quoted Equity UK Steam engineering 27.9 1.0%
TZP funds Funds US Private equity funds 26.5 1.0%
Other investments 665.1 23.9%
----------------------------------------------------------------------------------- ------- ------
Investment portfolio 2,515.8 90.2%
Cash and other 265.7 9.8%
----------------------------------------------------------------------------------- ------- ------
Net assets 2,781.5 100.0%
----------------------------------------------------------------------------------- ------- ------
1. Geography is based on the country of listing, country of domicile
for unlisted investments and underlying regional analysis for
funds.
Risks and uncertainties
Caledonia has a risk management framework that provides a
structured process for identifying, assessing, and managing risks
associated with the company's business objectives and strategy.
The principal risks and uncertainties faced by the company are
set out in the strategic report section of Caledonia's annual
report 2022. External risks arise from political, legal, regulatory
and economic changes. Strategic risks arise from the conception,
design and implementation of the company's business model.
Investment risks arise from specific investment and realisation
decisions. Market risks arise from equity price volatility, foreign
exchange rate movements and interest rate volatility. Liquidity
risks arise from counterparties, uncertainty in market prices and
rates and liquidity availability. Operational risks arise from
potentially inadequate or failed controls, processes, people or
systems. Regulatory risks arise from exposure to litigation or
fraud or failure to adhere to the taxation and regulatory
environment. Environmental, Social and Governance ("ESG") and
climate change risks relate to the successful incorporation of ESG
matters and climate change impacts into investment strategy.
The principal risks and uncertainties identified in the annual
report 2022 remain unchanged, other than the following
developments:
The global economic outlook is increasingly uncertain, with the
ongoing conflict in Ukraine coupled with rising inflation and
interest rates, leading to greater volatility across global
markets. Caledonia actively monitors key risk factors, including
portfolio concentration, liquidity and volatility, and aims to
manage risk by:
- diversifying the portfolio by sector and geography
- ensuring access to relevant information from investee companies, particularly in the case
of unquoted investments through board representation. Consideration of changes to the economic
environment forms an important part of the valuation process for the assets within the Private
Capital portfolio.
- managing cash and borrowings to ensure liquidity is available to meet investment and operating
needs
- reducing counterparty risk by limiting maximum aggregate exposures.
Going concern
The factors likely to affect the company's ability to continue
as a going concern were set out in the annual report 2022. As at 30
September 2022, there have been no significant changes to these
factors.
The group has conducted an interim going concern assessment
which considered future cash flows, including drawdown of all
outstanding private equity fund commitments, the availability of
liquid assets and debt facilities, and banking covenant
requirements over at least 12 months from the date of approval of
these financial statements. In making this assessment, stress
scenarios were considered to reflect the increasingly uncertain
economic outlook, addressing the risks of foreign exchange
appreciation, investment income decline, private equity funds
distribution decline and market price reduction. A final scenario
considered the cumulative impact of all variables.
Under these scenarios the group would have a range of mitigating
actions available to it, including sale of liquid assets and usage
of banking facilities. In all scenarios the group would have
sufficient cash reserves to enable it 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 interim financial
statements and therefore have been prepared on a going concern
basis.
Directors' responsibility statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
by the United Kingdom;
- the interim management report includes a fair review of the
information required by:
- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred
during the first six months of the financial year and their
impact on the condensed set of financial statements and a
description of the principal risks and uncertainties for the
remaining six months of the financial year;
- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related parties transactions that have taken place in
the first six months of the current financial year and that
have materially affected the financial position or performance
of the entity during that period and any changes in the related
party transactions described in the last annual report that
could do so.
Signed on behalf of the board
Mat Masters, Chief Executive Officer
21 November 2022
Independent review report
to Caledonia Investments plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises of the condensed
group statement of comprehensive income, the condensed group
statement of financial position, the condensed group statement of
changes in equity and the condensed group statement of cash flows
and the related explanatory notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of and
has been approved by the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this interim financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
UK
21 November 2022
Condensed group statement of comprehensive income
for the six months ended 30 September 2022
Unaudited Unaudited Audited
Six months 30 Sep Six months 30 Sep Year 31 Mar 2022
2022 2021
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Revenue
Investment income 25.4 - 25.4 34.4 4.8 39.2 51.0 4.8 55.8
Other income 0.4 0.3 0.7 0.1 - 0.1 0.6 - 0.6
Net gains and losses
on fair value investments - 105.2 105.2 - 323.0 323.0 - 567.1 567.1
Net gains and losses
on fair value property - 0.3 0.3 - 0.3 0.3 - 3.6 3.6
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Total revenue 25.8 105.8 131.6 34.5 328.1 362.6 51.6 575.5 627.1
Management expenses (10.6) (2.9) (13.5) (10.4) (4.8) (15.2) (21.0) (11.8) (32.8)
Profit before
finance costs 15.2 102.9 118.1 24.1 323.3 347.4 30.6 563.7 594.3
Treasury interest
receivable 1.5 - 1.5 - - - 0.1 - 0.1
Finance costs (1.2) - (1.2) (1.0) - (1.0) (2.3) - (2.3)
Exchange movements 1.2 - 1.2 - - - (0.1) - (0.1)
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Profit before
tax 16.7 102.9 119.6 23.1 323.3 346.4 28.3 563.7 592.0
Taxation 1.4 (0.4) 1.0 5.2 3.7 8.9 11.0 8.2 19.2
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Profit for the
period 18.1 102.5 120.6 28.3 327.0 355.3 39.3 571.9 611.2
Other comprehensive
income items never
to be reclassified
to
profit or loss
Re-measurement
of defined benefit
pension schemes - (0.1) (0.1) - - - - (1.4) (1.4)
Tax on other comprehensive
income - (0.5) (0.5) - 0.6 0.6 - 1.5 1.5
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Total comprehensive
income 18.1 101.9 120.0 28.3 327.6 355.9 39.3 572.0 611.3
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
Basic earnings
per share 33.4p 188.9p 222.3p 51.7p 597.5p 649.2p 72.1p 1049.3p 1121.4p
Diluted earnings
per share 32.9p 185.9p 218.8p 50.9p 587.7p 638.6p 70.8p 1030.7p 1101.5p
--------------------------- ------- ------- ------ ------- ------- ------ ------- ------- -------
The total column of the above statement represents the condensed
group statement of comprehensive income, prepared in accordance
with IFRSs as adopted by the United Kingdom.
The revenue and capital columns are supplementary to the
condensed group statement of comprehensive income and are prepared
under guidance published by the Association of Investment
Companies.
The profit for the period and total comprehensive income for the
period is attributable to equity holders of the parent.
Condensed group statement of financial position
at 30 September 2022
Unaudited Unaudited Audited
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------------------ --------- --------- -------
Non-current assets
Investments held at fair value through profit or loss 2,479.3 2,232.5 2,385.4
Investment property 16.0 13.6 16.0
Property, plant and equipment 29.0 28.7 29.2
Deferred tax assets 21.1 19.3 24.2
Employee benefits 2.4 4.1 2.3
------------------------------------------------------ --------- --------- -------
Non-current assets 2,547.8 2,298.2 2,457.1
------------------------------------------------------ --------- --------- -------
Current assets
Trade and other receivables 8.3 5.6 7.5
Current tax assets 12.0 2.7 8.9
Cash and cash equivalents 242.7 268.0 341.1
------------------------------------------------------ --------- --------- -------
Current assets 263.0 276.3 357.5
------------------------------------------------------ --------- --------- -------
Total assets 2,810.8 2,574.5 2,814.6
------------------------------------------------------ --------- --------- -------
Current liabilities
Trade and other payables (23.6) (28.5) (22.4)
Employee benefits (1.2) (1.5) (3.6)
Current tax liabilities - - (0.1)
------------------------------------------------------ --------- --------- -------
Current liabilities (24.8) (30.0) (26.1)
------------------------------------------------------ --------- --------- -------
Non-current liabilities
Employee benefits (3.2) (3.4) (4.7)
Deferred tax liabilities (1.3) (1.3) (1.1)
Non-current liabilities (4.5) (4.7) (5.8)
------------------------------------------------------ --------- --------- -------
Total liabilities (29.3) (34.7) (31.9)
------------------------------------------------------ --------- --------- -------
Net assets 2,781.5 2,539.8 2,782.7
------------------------------------------------------ --------- --------- -------
Equity
Share capital 3.1 3.2 3.1
Share premium 1.3 1.3 1.3
Capital redemption reserve 1.4 1.3 1.4
Capital reserve 2,533.9 2,289.8 2,527.0
Retained earnings 252.4 257.6 263.2
Own shares (10.6) (13.4) (13.3)
------------------------------------------------------ --------- --------- -------
Total equity 2,781.5 2,539.8 2,782.7
------------------------------------------------------ --------- --------- -------
Undiluted net asset value per share 5120p 4670p 5133p
Diluted net asset value per share 5039p 4592p 5041p
------------------------------------------------------ --------- --------- -------
Condensed group statement of changes in equity
for the six months ended 30 September 2022
Capital
redemp-
Share Share tion Capital Retained Own Total
capital premium reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Six months ended 30 September
2022 (Unaudited)
Balance at 1 April 2022 3.1 1.3 1.4 2,527.0 263.2 (13.3) 2,782.7
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total comprehensive income
Profit for the period - - - 102.5 18.1 - 120.6
Other comprehensive income - - - (0.6) - - (0.6)
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total comprehensive income - - - 101.9 18.1 - 120.0
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Transactions with owners of
the company
Contributions by and distributions
to owners
Share-based payments - - - - 2.9 - 2.9
Transfer of shares to option
holders - - - - (6.2) 6.2 -
Own shares purchased - - - - - (3.5) (3.5)
Dividends paid - - - (95.0) (25.6) - (120.6)
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total transactions with owners - - - (95.0) (28.9) 2.7 (121.2)
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Balance at 30 September 2022 3.1 1.3 1.4 2,533.9 252.4 (10.6) 2,781.5
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Six months ended 30 September
2021 (Unaudited)
Balance at 1 April 2021 3.2 1.3 1.3 1,979.1 254.3 (13.9) 2,225.3
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total comprehensive income
Profit for the period - - - 327.0 28.3 - 355.3
Other comprehensive income - - - 0.6 - - 0.6
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total comprehensive income - - - 327.6 28.3 - 355.9
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Transactions with owners of
the company
Contributions by and distributions
to owners
Share-based payments - - - - 3.4 - 3.4
Transfer of shares to option
holders - - - - (3.3) 3.3 -
Own shares purchased and cancelled - - - (16.9) - - (16.9)
Own shares purchased - - - - - (2.8) (2.8)
Dividends paid - - - - (25.1) - (25.1)
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Total transactions with owners - - - (16.9) (25.0) 0.5 (41.4)
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Balance at 30 September 2021 3.2 1.3 1.3 2,289.8 257.6 (13.4) 2,539.8
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Year ended 31 March 2022
(Audited)
Balance at 1 April 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 option
holders - - - - (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
----------------------------------- ------- ------- ------- ------- -------- ------ -------
Condensed group statement of cash flows
for the six months ended 30 September 2022
Unaudited Unaudited Audited
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------- --------- --------- -------
Operating activities
Dividends received 24.6 34.2 52.9
Interest received 2.3 - 1.7
Cash received from customers 0.4 0.1 0.5
Cash paid to suppliers and employees (14.3) (11.3) (20.4)
Taxes received - 0.1 0.1
Taxes paid - (0.1) (0.1)
Group tax relief received 0.5 1.4 1.4
Net cash flow from operating activities 13.5 24.4 36.1
------------------------------------------- --------- --------- -------
Investing activities
Purchases of investments (98.1) (63.5) (226.9)
Proceeds from disposal of investments 111.5 352.8 602.2
Purchases of property, plant and equipment (0.1) (0.3) (0.4)
------------------------------------------- --------- --------- -------
Net cash flow from investing activities 13.3 289.0 374.9
------------------------------------------- --------- --------- -------
Financing activities
Interest paid (1.1) (1.1) (2.6)
Dividends paid to owners of the company (120.6) (25.1) (34.6)
Repayments of bank borrowing - (15.0) (15.0)
Loan payments to subsidiaries - - (4.4)
Purchases of own shares (3.5) (18.4) (27.5)
------------------------------------------- --------- --------- -------
Net cash flow used in financing activities (125.2) (59.6) (84.1)
------------------------------------------- --------- --------- -------
Net (decrease)/increase in cash and cash
equivalents (98.4) 253.8 326.9
Cash and cash equivalents at period start 341.1 14.2 14.2
------------------------------------------- --------- --------- -------
Cash and cash equivalents at period end 242.7 268.0 341.1
------------------------------------------- --------- --------- -------
Notes to the condensed financial statements
1. General information
Caledonia Investments plc is an investment trust company
registered in England and Wales with company number 00235481. 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.
This condensed set of financial statements was approved for
issue on 21 November 2022 and is unaudited.
The information for the period ended 30 September 2022 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for the year
ended 31 March 2022 has been delivered to the Registrar of
Companies. The auditor's report on those accounts was not
qualified, did not draw attention to any matters by way of emphasis
of matter and did not contain a statement under section 498(2) and
(3) of the Companies Act 2006.
2. Accounting policies
Basis of accounting
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting and should be
read in conjunction with the annual financial statements for the
year ended 31 March 2022, which were prepared in accordance with
IFRSs adopted by the United Kingdom.
This condensed set of financial statements has been prepared in
accordance with the recommendations of the Statement of Recommended
Practice issued by the Association of Investment Companies.
Adopted IFRSs
The accounting policies adopted in the preparation of the
condensed consolidated financial statements are consistent with
those followed in the preparation of the group's annual report for
the year ended 31 March 2022, except for the mandatory amendments
that had an effective date prior to the start of the six-month
period. None of the mandatory amendments had an impact on the
reported financial position or performance of the group. The
changes in accounting policies will also be reflected in the
group's consolidated financial statements for the year ending 31
March 2023.
A number of new amendments to standards and interpretations will
be effective for periods beginning on or after 1 April 2023. The
group plans to apply these amendments in the reporting period in
which they become effective.
Basis of consolidation
In accordance with the IFRS 10/IAS 28 amendments to apply the
investment entities exemption, the consolidated financial
statements include the financial statements of the company and
service entities controlled by the company made up to the reporting
date. All other investments in controlled entities are accounted as
held at fair value through profit or loss.
Going concern
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 30 September 2022 the group holds GBP744m of liquid investment
assets, GBP243m of cash and has access to GBP250m of undrawn
committed banking facilities, of which GBP137.5m expires in May
2025 and GBP112.5m expires in July 2025.
The group has conducted an interim going concern assessment
which considered future cash flows, including drawdown of all
outstanding private equity fund commitments, availability of liquid
assets and debt facilities, and banking covenant requirements over
at least 12 months from the date of approval of these financial
statements. In making this assessment, stress scenarios were
considered to reflect the increasingly uncertain economic outlook,
addressing the risks of foreign exchange appreciation, investment
income decline, private equity funds distribution decline and
market price reduction. A final scenario considered the cumulative
impact of all variables.
Under these scenarios the group would have a range of mitigating
actions available to it, including sale of liquid assets and usage
of banking facilities. In all scenarios the group would have
sufficient cash reserves to enable it 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 interim financial
statements and therefore have been prepared on a going concern
basis.
Changes in accounting policies
As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and IAS 34, this condensed set of
financial statements has been prepared applying the accounting
policies and presentation that were applied in the preparation of
the company's published consolidated financial statements for the
year ended 31 March 2022.
Judgements and estimates
In preparing these interim financial statements, management has
made judgements, estimates and assumptions that affected the
application of accounting policies and the reported amounts of
assets and liabilities, income and expense.
The significant judgements made by management in applying the
group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the consolidated
financial statements for the year ended 31 March 2022.
3. Dividends
Amounts recognised as distributions to owners of the company in
the period were as follows:
6 months 6 months Year
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBPm GBPm GBPm
--------------------------------------------------------------------------------- -------- -------- ------
Final dividend for the year ended 31 March 2022 of 47.3p per share (2021: 45.9p) 25.6 25.1 25.1
Special dividend for the year ended 31 March 2022 of 175.0p per share 95.0 - -
Interim dividend for the year ended 31 March 2022 of 17.5p per share - - 9.5
--------------------------------------------------------------------------------- -------- -------- ------
120.6 25.1 34.6
--------------------------------------------------------------------------------- -------- -------- ------
The directors have declared an interim dividend for the year
ending 31 March 2023 of 18.2p per share, totalling GBP9.9m, which
has not been included as a liability in this condensed set of
financial statements. This dividend will be payable on 5 January
2023 to holders of shares on the register on 2 December 2022. The
ex-dividend date will be 1 December 2022. The deadline for
elections under the dividend reinvestment plan offered by Link
Group will be the close of business on 13 December 2022.
4. Share capital
During the period, the company's Employee Share Trust sold
201,529 shares for GBPnil and purchased 93,198 shares for GBP3.5m
relating to the exercise of performance share and deferred bonus
awards.
In the six months ended 30 September 2021, the company purchased
for cancellation 512,603 shares at a cost of GBP16.9m. In addition,
the Employee Share Trust sold 116,510 shares for GBPnil and
purchased 85,388 shares for GBP2.8m relating to the exercise of
performance share and deferred bonus awards.
In the year ended 31 March 2022, the company purchased for
cancellation 710,072 shares at a cost of GBP24.1m. In addition, the
Employee Share Trust sold 137,899 shares for GBPnil and purchased
98,828 shares for GBP3.4m relating to the exercise of performance
share and deferred bonus awards.
5. Net asset value per share
The group's undiluted net asset value per share is based on the
net assets of the group at the period end and on the number of
shares in issue at the period end less shares held by The Caledonia
Investments plc Employee Share Trust. The group's diluted net asset
value per share assumes the calling of performance share and
deferred bonus awards for nil consideration.
6. Operating segments
The chief operating decision maker has been identified as the
Chief Executive Officer, supported by the Investment Committee, who
reviews the company's internal reporting to assess performance and
allocate resources. Management has determined the operating
segments based on these reports.
The performance of operating segments is assessed on a measure
of group total revenue, principally comprising gains and losses on
investments and investment income. Reportable profit or loss is
after treasury income and 'Other items', which comprise management
and other expenses. Reportable assets equate to the group's total
assets. 'Cash' and 'Other items' are not identifiable operating
segments.
'Non-portfolio investments' comprise subsidiaries and other
investments not managed as part of the investment portfolio.
Profit before tax Total assets
6 months 6 months Year
30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar
2022 2021 2022 2022 2021 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- -------- -------- ------ ------ ------ ------
Quoted Equity (79) 97 101 744 778 830
Private Capital 49 134 322 819 708 782
Funds 176 150 230 953 751 794
-------------------------- -------- -------- ------ ------ ------ ------
Portfolio investments 146 381 653 2,516 2,237 2,406
Other investments (14) (18) (26) (37) (5) (20)
-------------------------- -------- -------- ------ ------ ------ ------
Total revenue/investments 132 363 627 2,479 2,232 2,386
Cash and cash equivalents 2 - - 243 268 341
Other items (14) (16) (35) 89 75 88
-------------------------- -------- -------- ------ ------ ------ ------
Reportable total 120 347 592 2,811 2,575 2,815
-------------------------- -------- -------- ------ ------ ------ ------
7. Employee benefits
An entity is not always required to remeasure a net defined
benefit pension scheme asset or liability for interim reporting
purposes under IAS 19 and IAS 34. Both accounting standards
indicate that the entity needs to exercise judgement in determining
whether it needs to remeasure the net defined benefit pension
scheme asset or liability at the end of the reporting period.
Accordingly, pension assets have not been remeasured to market
values at the reporting date, or liabilities remeasured to latest
actuarial assumptions, although based on an extrapolation of March
values, total pension liabilities have fallen by 31% (GBP21m) over
the period, and the fair value of assets has fallen by 10%
(GBP7.5m). Had we remeasured the net pension assets, the net
pension surplus would have increased by GBP13.5m ignoring surplus
recognition restrictions. Once surplus restrictions are applied,
the increase in net surplus would have been GBP2.3m.
8. Related parties
Caledonia Group Services Ltd, a wholly owned subsidiary of
Caledonia Investments plc, provides management services to the
company. During the six months ended 30 September 2022, GBP13.5m
was charged to the company for these services (30 September 2021:
GBP15.2m and 31 March 2022: GBP33.0m).
There were no other changes in the transactions or arrangements
with related parties as described in the company's annual report
for the year ended 31 March 2022 that have had a material effect on
the results or the financial position of the company or of the
group in the six months ended 30 September 2022.
9. Capital commitments
At 30 September 2022, the group had undrawn fund and other
commitments totalling GBP339.0m (30 September 2021: GBP368.4m and
31 March 2022: GBP331.1m). These commitments could, in theory, be
called upon simultaneously at any time. Although this is unlikely,
the going concern assessment has modelled this scenario and in such
circumstances the group would be able to meet all of these
liabilities.
10. Fair value hierarchy
The company measures fair values using the following fair value
hierarchy, reflecting the significance of the inputs used in making
the measurements:
Level Quoted prices (unadjusted) in active markets for identical
1 assets.
Level Inputs other than quoted prices included within Level 1 that
2 are directly or indirectly observable.
Level Inputs for the asset that are not based on observable market
3 data.
The table below analyses financial instruments held at fair
value according to level in the fair value hierarchy into which the
fair value measurement is categorised:
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBPm GBPm GBPm
-------------------------------- ------- ------- -------
Investments held at fair value
Level 1 744.1 779.1 830.1
Level 2 5.4 7.0 6.2
Level 3 1,729.9 1,446.4 1,549.1
-------------------------------- ------- ------- -------
2,479.3 2,232.5 2,385.4
------------------------------- ------- ------- -------
The following table shows a reconciliation from the opening
balances to the closing balances for fair value measurements in
Level 3 of the fair value hierarchy:
6 mths 6 mths Year
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBPm GBPm GBPm
-------------------------------------------- ------- ------- -------
Balance at the period start 1,549.1 1,468.3 1,468.3
Purchases 69.7 55.9 154.4
Realisation proceeds (81.3) (319.1) (561.2)
Gains and losses on investments sold in the
period 15.2 122.1 247.6
Gains and losses on investments held at the
period end 175.3 117.3 239.2
Accrued income 1.9 1.9 0.8
-------------------------------------------- ------- ------- -------
Balance at the period end 1,729.9 1,446.4 1,549.1
-------------------------------------------- ------- ------- -------
Private asset valuation
Caledonia makes private equity investments in two forms: direct
private equity investments (the Private Capital pool) and
investments into externally managed unlisted private equity funds
and funds 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 pool),
totalling GBP782.4m (31 March 2022: GBP761.0m), 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 comparator businesses that are
substantially the same (subject to appropriate adjustments). For
each asset, a range of valuation methods are considered and methods
judged most appropriate are used, taking into consideration the
quantity and quality of data points available. Methods include
inter alia: consideration of indicative offers from third parties,
applying an earnings multiple to the maintainable earnings of a
business, and net assets, sometimes employing third-party net asset
valuations.
For private equity fund investments (unlisted Funds Pool),
totalling GBP947.5m (31 March 2021: GBP788.1m) 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 valuation date and reporting date. These
valuations depend upon the reasonableness of the fair value
estimation made by third-party managers, whose approach is assessed
by Caledonia through a combination of initial due diligence,
on-going monitoring and review of financial reporting.
This delay in the receipt of manager valuations creates a risk
of changes or events occurring between the valuation dates and the
company's reporting dates which could impact valuations. The
increased level of volatility in public equity markets during the
first six-months, principally reflecting concerns about increasing
rates of inflation, rising interest rates and the conflict in
Ukraine, led to a review of this pricing risk. This review
determined that public market movements between 30 June 2022 and 30
September 2022 for relevant indices were in line with historic
precedents, the impact of inflation was not deemed material for
underlying holdings within the funds pool and there was no material
exposure to the conflict in Ukraine. The underlying valuation
methodologies adopted by our fund managers were also reviewed and
satisfied the board that the techniques utilised were
appropriate.
At 30 September 2022
Description/Category Valuation Fair value Unobservable Weighted Input Change in
method input average input sensitivity valuation
GBPm +/- +/- GBPm
--------------------- --------------- ---------- --------------- -------------- --------------- --------------
Internally developed
Private companies
Large Earnings 450.2 EBITDA multiple 13.4x 10.0% 46.1 / (47.0)
Medium Earnings 161.3 EBITDA multiple 9.0x 10.0-15.0% 12.8 / (12.8)
Small Earnings 9.0 EBITDA multiple 4.6x 15.0% 2.0 / (2.0)
Manager valuation Net assets 198.4 Multiple 1 0.1x 22.9 / (22.9)
--------------------- --------------- ---------- --------------- -------------- --------------- --------------
818.9 83.9 / (84.7)
Non-pool companies (36.5)
-------------------------------------- ---------- --------------- -------------- --------------- --------------
Total internal 782.4
Externally developed
Private equity funds
Adjusted
Net asset value Manager NAV 947.5 Multiple 1 5.0% 47.4 / (47.4)
--------------------- --------------- ---------- --------------- -------------- --------------- --------------
1,729.9 131.3 /
(132.1)
------------------------------------- ---------- --------------- -------------- --------------- --------------
The principal change during the half-year, was change in
valuation method used to value Liberation Group, (included in the
'Large, earnings' category above), which operates pubs and
restaurants, from a tangible assets multiple to an EBITDA
multiple.
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.
At 31 March 2022
Description/Category Valuation Fair value Unobservable Weighted Input Change in
method input average input sensitivity valuation
GBPm +/- +/- GBPm
--------------------- --------------- ---------- -------------- -------------- --------------- ---------------
Internally developed
Private companies
EBITDA
Large Earnings 313.8 multiple 13.5x 10.0% 28.2 / (28.2)
EBITDA
Medium Earnings 117.8 multiple 8.5x 10.0-15.0% 10.4 / (10.4)
EBITDA
Small Earnings 23.3 multiple 4.6x 15.0% 1.6 / (1.6)
Tangible
Tangible fixed assets
Large, Leisure assets 135.7 multiple 1.14x 10.0% 15.4 / (15.4)
Manager valuation Net assets 191.1 Multiple 1 0.1x 19.1 / (19.1)
--------------------- --------------- ---------- -------------- -------------- --------------- ---------------
781.7 74.7 / (74.7)
Non-pool companies (20.7)
-------------------------------------- ---------- -------------- -------------- --------------- ---------------
Total internal 761.0
Externally developed
Private equity funds
Adjusted
Net asset value Manager NAV 788.1 Multiple 1x 5.0% 39.4 / (39.4)
--------------------- --------------- ---------- -------------- -------------- --------------- ---------------
1,549.1 39.4 / (39.4)
------------------------------------- ---------- -------------- -------------- --------------- ---------------
Private company (Private Capital) assets have been disaggregated
into categories as follows:
-- Assets in the large, earnings based category have an Enterprise
Value of >GBP150m, and benefit from a reasonable number of
comparative data points, as well as having sufficient size
to make their earnings reliable and predictable.
-- Assets in the medium, earnings based category have an Enterprise
Value of GBP50-GBP100m, with a more limited universe of comparable
businesses available.
-- Assets in the smaller, earnings based category have an Enterprise
value of <GBP50m. Their smaller size results in fewer data
points due to a lack of available listed comparators, and
makes them generally more vulnerable than larger assets to
changes in economic conditions.
-- Manager valuations are used for assets where the net asset
method is employed.
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 (unlisted Funds Pool investments) 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 also comprise a diversity of sector and
geographical exposure, reducing concentration risk. 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.
11. Share-based payments
The group operates performance share schemes and deferred bonus
plans. Details of these schemes were disclosed in the annual report
2022 and the basis of measuring fair value was consistent with
those disclosures.
During the six months ended 30 September 2022, awards over
167,633 shares were issued under the performance share scheme (30
September 2021 and 31 March 2022: 237,861 shares). Compulsory
deferred bonus awards over 39,500 shares were also granted (30
September 2021 and 31 March 2022: 49,267 shares).
Expenses in respect of share-based payments in the period were
GBP3.1m (30 September 2021: GBP3.6m and 31 March 2022:
GBP9.0m).
FTSE International Limited ('FTSE') (c) FTSE 2022. 'FTSE(R)' is
a trademark 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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