Caledonia Investments Plc · LSE:CLDN
Caledonia Investments — Q4 2024 Earnings Presentation
41 slides from Caledonia Investments's earnings presentation, May 21, 2024
Slide 1: Full-year results
Full-year results Year ended 31 March 2024 www.caledonia.com
Slide 2: Cautionary statement
Cautionary statement This presentation contains certain statements that are, or may be deemed to be, forward-looking. Phrases such as "aim", "plan", "intend", “should”, "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended t
Slide 3: Caledonia Overview
Caledonia Overview NAV Growth NAV total return growth since 2004 Self-managed investment company Caledonia NAV TR CPIH+4.5% 700 Net assets of £3.0 billion 600 500 Targeting long-term compounding real returns 400 CPIH +3% to +6% 300 200 Progressive dividend policy 100 2004 2009 2014 2019 2024 Success
Slide 4: Time Well Invested
Time Well Invested Our history, structure and culture underpins our long-term approach to investment We invest in high We buy to hold, investing in companies with strong market positions and fundamentals, alongside investments in private equity funds with track quality companies that records of succ
Slide 5: A well-balanced portfolio
A well-balanced portfolio Provides shareholders with access to both private and public companies globally Public Companies Private Capital Funds Strategic Allocation: 30%-40% Strategic Allocation: 25%-35% Strategic Allocation: 25%-35% • Global portfolio • Direct investments focused on high • Proven
Slide 6: A well-balanced portfolio (cont'd)
A well-balanced portfolio (cont’d) Diversified by sector and geography Provides shareholders with access to companies operating across diverse sectors with global exposure Geography (Headquartered) Sector Industrials Industrials 27% Consumer discretionary 12% Includes Private Capital investments Inf
Slide 7: Long-term outperformance
Long-term outperformance Targeting real returns and outperformance of FTSE All-Share TR • Aim to grow capital value and income over the long term (10 years) measured in real terms • Target return of CPIH +3% to +6% over medium / long term • Aim to outperform FTSE All-Share Total Return over 10 years
Slide 8: Full-year results
Full-year results Year ended 31 March 2024 Full-year results 2024 7
Slide 9: Highlights
Highlights Year ended 31 March 2024 All investment pools contributed to growth, despite foreign exchange headwinds • Private Capital +12.3% Net assets ‒ Performance driven by sale of 7IM and good operating performance £3.0bn +7.4% ‒ Acquisition of AIR-serv Europe (5,369p per share) Total return • Pu
Slide 10: Private Capital
Private Capital Year ended 31 March 2024 Full-year results 2024 9
Slide 11: Private Capital
Private Capital Direct investments in established high quality businesses £820m invested in eight predominantly UK focused companies, with % Annualised Performance – Total return five investments representing over 90% of value 30% Performance 25% 23.5% 20% • 12.3% total return (12.9% in local curren
Slide 12: AIR-serv Europe – leading designer and manufacturer of air machines
Private Capital AIR-serv Europe – leading designer and manufacturer of air, vacuum and jet wash machines Investment: Opportunity for growth in existing and new geographies • Date: April 2023 • £143m invested HQ Wigan, Lancashire Investment thesis: • Expand the installed machine estate, focusing c. 2
Slide 13: AIR-serv Europe – early stages in the value creation plan
Private Capital AIR-serv Europe – early stages in the value creation plan, business is performing well Key actions since acquisition: High performance products, built using the best quality Structure and governance parts and designed for durability: Standard Air Air & Screenwash Air, Vacuum & Standa
Slide 14: Four further investments represent over 70% of pool value
Private Capital Four further investments represent over 70% of the Private Capital pool’s value Valuation £181m Valuation £169m Valuation £135m Valuation £105m Return 4.3% Return 18.8% Return 2.6% Return -14.9% Year of Year of Year of Year of 2004 2019 2016 2018 Investment Investment Investment Inve
Slide 15: Public Companies
Public Companies Year ended 31 March 2024 Full-year results 2024 14
Slide 16: Public Companies
Public Companies High quality companies where long-term ownership will be rewarded Annualised Performance – total return £950m invested in 30 companies, with a bias towards resilient 15% Internal companies with high returns on capital and pricing power +12.7% targets 10.7% +10.2% Performance 10% 8.6
Slide 17: Watsco: Distributor of air conditioning and heating equipment
Public Companies Watsco: Distributor of air conditioning, heating and refrigeration equipment (largest in North America) Long-term investment returns Overview2 22% annualised total return1 • Market leader in highly fragmented Timing of initial investments $60bn+ distribution industry • 2017 Capital
Slide 18: Watsco: 22% annualised total return since inception
Public Companies Watsco: 22% annualised total return since inception Share price $2 Investment thesis: Top slicing of 18% at an avg price of $379 • Increasing investments in technology supports: Initial investment at an avg price of o Market share growth and margin $146 improvements Top up adding To
Slide 19: Funds
Funds Year ended 31 March 2024 Full-year results 2024 18
Slide 20: Funds
Funds Providing exposure to over 600 companies operating in North America and Asia £926m invested in 74 funds managed by 42 managers Annualised Performance – total return 59% focused on the North American lower mid market 25% buyouts and 41% on Asian buyout, growth & VC funds 20% +17.0% +17.3% +16.0
Slide 21: Realisations gaining momentum in North America
Funds Realisations gaining momentum in North America Portfolio maturity (excl. funds of funds) FY 2024 North America realisations Realisations < 1 year 5% North America 25 1 - 3 years 30% • Level of realisations in North America continuing to improve GBP £m 3 - 5 years 29% particularly in Q4 - under
Slide 22: New Heritage Capital
New Heritage Capital Boston-based, lower mid-market control buyout manager Background to relationship Target company criteria • The US lower mid-market has been a core part of our • Enterprise Value: $50m to $200m investment strategy for the last 15 years and we have built a • Revenue: $30m to $150m
Slide 23: New Heritage Capital portfolio snapshots
New Heritage Capital Boston-based, lower mid-market control buyout manager Portfolio company snapshots Healthcare Business Business Sub-sector Categories Specialty Manufacturing Services Services Services Sold Sold Portfolio Company Leading developer and Leading provider of mental Provider of SaaS-b
Slide 24: Financial review
Financial review Full-year results 2024 23
Slide 25: Financial overview
Financial overview £3.0bn NAV – strong balance sheet with zero structural leverage £2.7bn Portfolio value – high quality, diversified portfolio 8.7% Portfolio return – good returns across all investment pools £477m Liquidity – significant liquidity to support investments 4.5% Increase in total divid
Slide 26: Investment portfolio and returns
Investment portfolio and returns Total portfolio return of 8.7% Investment movement (£m) Investments by Pool (£m) Net realisations £25m Funds Private Capital £926m £820m £2,696m Public Companies £950m Return Return Yield* % (excl. % FX) % Public Companies 12.0 13.7 3.7 Private Capital 12.3 12.9 3.9
Slide 27: Change in net asset value
Change in net asset value NAV return of 7.4% NAV movement (£m) Foreign Currency 7.4% Exposure (NAV) Total return £232m US dollar 52% Pound sterling 39% Euro 7% Other currencies 2% Full-year results 2024 26
Slide 28: Net cash & facilities
Net cash & facilities Significant liquidity available Movement in net cash (£m) • £250m RCF facility Net realisations £27m - £112.5m to July 2025 - £137.5m to November 2027 • £256m of 7IM sale proceeds received in January 2024 Caledonia Net Cash 31 March 2024 £227m Caledonia Liquidity £477m Full-yea
Slide 29: Share buybacks and communications
Share buybacks and communications Share price undervalues the quality of investment portfolio and its long-term performance Share buybacks • Discount widened from 33.1% to 38.9% over the year Annualised NAVTR and TSR • 290,219 shares repurchased in March and April 2024 at an average discount of 36%
Slide 30: Summary
Summary Full-year results 2024 29
Slide 31: Summary
Summary 1 The diverse portfolio remains well placed to deliver target returns over the long term both in terms of dividend and net asset growth for shareholders 2 Resilient portfolio capable of responding to the challenges posed by inflation, increased interest rates and potentially lower future gro
Slide 32: Manifesto
Manifesto We believe in the power of time. While others fight against it, Trying to conquer every passing minute, We work with it. We invest it patiently and judiciously, Harnessing its power year after year. Never afraid to wait, but always ready to act. Time is key to our knowledge, the trust we'r
Slide 33: Appendix
Appendix Full-year results 2024 32
Slide 34: Private Capital portfolio as at March 2024
Private Capital Portfolio as at 31 March 2024 3 years 5 years 10 years Value Annualised Returns 23.5% 13.7% 13.9% First 31 Mar Portfolio (£m) Invested 2024 Sector Cobehold 2004 181.0 Distribution Industrials 44% 1 Consumer discretionary 24% AIR-serv Europe 2023 170.1 Financials 21% Stonehage Fleming
Slide 35: Public Companies – Capital portfolio
Public Companies – Capital portfolio Top holdings as at 31 March 2024 Value 3 years 5 years 10 years First 31 Mar Top Holdings (£m) Invested 2024 Annualised Returns 9.7% 12.7% 10.2% Microsoft 2014 84.3 Sector Oracle 2014 83.5 Distribution Information technology 31% Watsco* 2017 57.7 Industrials 19%
Slide 36: Public Companies – Income portfolio
Public Companies – Income portfolio Top holdings as at 31 March 2024 3 years 5 years 10 years Value Annualised Returns 5.8% 6.0% 4.9% First 31 Mar Yield** Top Holdings (£m) Invested 2024 % Annualised Yield 4.5% 4.7% 4.3% Diageo 2020 19.5 2.4 Sector Watsco* 2020 19.3 5.7 Distribution Consumer staples
Slide 37: Funds top holdings
Funds Top holdings as at 31 March 2024 3 years 5 years 10 years Value First 31 Mar Annualised Returns 17.0% 16.0% 17.3% Top Holdings (£m) Invested 2024 HighVista Strategies* 2013 139.7 Strategy Axiom Asia funds 2012 83.2 N America buyout 45% Decheng funds 2015 59.0 N America funds of funds 13% Asia
Slide 38: Statement of Financial Position
Statement of Financial Position Year ended 31 March 2024 Investment £m 31-Mar-23 Investments Realisations income 1 Total return 31-Mar-24 Pool Public Companies 836.9 76.5 (43.5) (21.8) 101.7 949.8 Private Capital 824.0 161.2 (255.8) (20.3) 111.2 820.3 Funds 873.8 108.6 (72.0) (3.6) 19.5 926.3 Total
Slide 39: Summary of Comprehensive Income
Summary of Comprehensive Income 31-Mar-24 31-Mar-23 £m £m Revenue Capital Total Revenue Capital Total 1 Investment income – portfolio 47.1 - 47.1 43.2 - 43.2 Net gains on fair value investments – portfolio2 - 185.3 185.3 - 126.4 126.4 Total return 47.1 185.3 232.4 43.2 126.4 169.6 Investment income
Slide 40: Further information
Further information If you have any questions, or to request a meeting, please contact us in the following ways: • Send an email to: investorrelations@caledonia.com • Call us on tel: 020 7802 8080 • Website: www.caledonia.com • The Company’s ordinary shares are premium listed on the LSE under SEDOL:
Slide 41: Caledonia Investments plc
Caledonia Investments plc Cayzer House 30 Buckingham Gate London SW1E 6NN Tel: +44 20 7802 8080 Web: www.caledonia.com © Caledonia Investments plc 2024. Caledonia Investments, Time Well Invested and the sealion guardant are registered trademarks.
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