Caledonia Investments PLC · LSE:CLDN
Caledonia Investments — FY2011 Earnings Presentation
38 slides from Caledonia Investments's earnings presentation, July 2011
Slide 1: Presentation of final results for the year ending 31 March 2011
Presentation of final results for the year ending 31 March 2011 www.caledonia.com
Slide 2: Introduction and Highlights for the year
Introduction and Highlights for the year Will Wyatt Chief Executive 1
Slide 3: Highlights year to 31 March 2011
Highlights year to 31 March 2011 • 6.4% increase in diluted NAV per share since 31 March 2010 • 1.0% outperformance of FTSE All-Share Index (up 5.4%) Summary of the year 31 Mar 2011 31 Mar 2010 Change Diluted NAV per share 2165p 2034p +6.4% FTSE All-Share Index 3068 2910 +5.4% Share price 1725p 1625
Slide 4: Highlights year to 31 March 2011
Highlights year to 31 March 2011 • NAV per share performance +5.9% over 5 years (5.3% outperformance) +136.1% over 8 years* (59.3% outperformance) • TSR performance -4.4% over 5 years (24.4% underperformance) +171.5% over 10 years (113.5% outperformance) • 44 years of rising dividends – 10 year CAGR
Slide 5: Diluted NAV per Share Performance since 31 March 2006
Diluted NAV per Share Performance since 31 March 2006 2,400 2,200 2,000 1,800 (p) 1,600 Diluted NAV/share 1,400 FTSE All Share rebased 1,200 CAGR: Caledonia = +1.2% FTSE All-Share = +0.1% Final results 2011 4
Slide 6: Share Price – discount/(premium) to NAV per share
Share Price – discount/(premium) to NAV per share 30% 25% Share price discount/(premium) to NAV 20% 15% 10% 5% 0% -5% Caledonia AIC Global Growth Sector Final results 2011 5
Slide 7: Dividend Growth
Dividend Growth – 10 year CAGR 4.5% 40 44 years of increasing dividends 35 30 pence per share 25 20 15 10 5 0 Final results 2011 6
Slide 8: Performance Attribution
Performance Attribution 5 year Change since change (%) conversion (%) Net asset value per share performance +5.9% +136.1% FTSE All-Share Index +0.6% +76.8% Outperformance +5.3% +59.3% Relative performance due to sector exposure -3.1% +9.4% Relative performance due to stock selection +13.7% +56.6% Ma
Slide 9: Significant Contributors to Performance during the year
Significant Contributors to Performance during the year Value Value Income Total return Investment Pool 31 Mar 2010 31 Mar 2011 in year in year £m £m £m £m Close Brothers Quoted 152.1 165.9 7.7 21.5 British Empire Securities Funds 121.9 103.3 2.0 15.8 Amber Group Unquoted 15.4 11.5 8.3 14.1 Cobepa U
Slide 10: Investment Activity during the year
Investment Activity during the year • Total investments of £107m Holding £m % DP Home Finance 13.9 20.6 Income and Growth pool n.a. 12.1 Gateway to India fund 93.8 9.8 Avanti Communications 14.6 8.7 Perlus Microcap 33.0 8.5 • Total realisations of £180m Proceeds Realised gain £m £m British Empire Se
Slide 11: Financial Review
Financial Review Stephen King Finance Director 10
Slide 12: Summary of Comprehensive Income
Summary of Comprehensive Income 2011 2010 Change £m £m £m Investment and other income 33.2 33.0 0.2 Gains on investments 71.7 295.3 (223.6) Total revenue 104.9 328.3 (223.4) Management expenses (10.2) (13.1) 2.9 Other (including investment provisions) (10.6) (3.5) (7.1) Total comprehensive income 84
Slide 13: Summary Balance Sheet
Summary Balance Sheet 2011 2010 Change £m £m £m Investments and other non-current assets 1,184.0 1,184.6 (0.6) Trade and other receivables 3.6 5.9 (2.3) Cash and cash equivalents 101.2 8.3 92.9 Current assets 104.8 14.2 90.6 Total assets 1,288.8 1,198.8 90.0 Total liabilities (30.1) (17.2) (12.9) Ne
Slide 14: Caledonia NAV annual relative performance since conversion
Caledonia NAV annual relative performance since conversion 3500 15% 3300 10% 3100 2900 5% FTSE All-Share index 2700 0% 2500 -5% 2300 2100 -10% 1900 -15% 1700 1500 -20% Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Annual relative performance (RHS) FTSE All-Share (L
Slide 15: NAV Summary by Pool year to 31 March 2011
NAV Summary by Pool year to 31 March 2011 Value Net gains Value 31 Mar 10 Investments Disposals and other 31 Mar 11 Total £m £m £m £m £m return Quoted 444.2 19.6 (55.3) 18.5 427.0 7.1% Unquoted 264.1 2.6 (26.6) 41.1 281.2 19.6% Asia 125.0 40.5 (8.3) 1.8 159.0 2.4% Property 106.7 8.3 (1.3) (8.4) 105.
Slide 16: Movements in Net Asset Value
Movements in Net Asset Value 1,280 £61m -£6m -£1m £1,259m 1,260 1,240 1,220 £23m 1,200 £m £1,182m 1,180 1,160 1,140 1,120 1,100 Opening NAV Revenue return Capital return Dividends Other Closing NAV Category Final results 2011 15
Slide 17: Change in Net Asset Value between 31 March 2010 and 31 March 2011
Change in Net Asset Value between 31 March 2010 and 31 March 2011 1,280 £48m £4m £1,259m 1,260 1,240 1,220 £25m 1,200 £m £1,182m 1,180 1,160 1,140 1,120 1,100 NAV at 31 March 2010 Listed investments Unlisted investments Other movements* NAV at 31 March 2011 Category *Includes: income, dividends paid
Slide 18: Top Ten Investments: contribution to change in portfolio value
Top Ten Investments: contribution to change in portfolio value between 31 March 2010 and 31 March 2011 1,280 27.0% 1,260 26.1% Figures in percent show total return 32.9% -2.4% 7.9% 5.9% 1,240 18.4% 18.6% £m 1,220 15.1% 14.5% 1,200 £1,184.6m £1,183.2m 1,180 1,160 Investment Final results 2011 17
Slide 19: Cash / Facilities
Cash / Facilities • £101.2m liquidity at 31 March 2011 (£8.3m at 31 March 2010) • £100m five year committed facilities: expiry July 2013 Revolver £100m Margin: 80-85bp over LIBOR Available but undrawn • Overdraft facility £10m Final results 2011 18
Slide 20: Strategy
Strategy Will Wyatt Chief Executive 19
Slide 21: Aims
Aims • To provide an increasing store of wealth for shareholders • To provide an increasing annual income for shareholders Final results 2011 20
Slide 22: Strategy – investment philosophy
Strategy – investment philosophy • Core investment philosophy Invest in quoted and unquoted companies and funds Global reach Significant minority stakes with board representation Long term approach Value orientated style Emphasis on high quality management Concentrated portfolio Introduce a new inco
Slide 23: Strategy – conclusions of review
Strategy – conclusions of review • Long term returns excellent, deterioration in medium term TR performance • Use of management resource inefficient • Too many investments (68) • Many were subscale (<£10m) • Investment process required refreshing • Portfolio yield too low at 1.9% • Caledonia dividen
Slide 24: Strategy – actions
Strategy – actions • Reorientation of portfolio into pools of capital • Investment and divestment process and criteria sharpened up • Low portfolio yield to be addressed by: - new income and growth pool - requirement for yield from new investments • Sub-scale investments being divested • Minimum £10
Slide 25: Strategy – actions to improve returns
Strategy – actions to improve returns • Focus on investment themes – pools of capital - Managed by executives with relevant skills - New talent recruited to enhance existing team • Concentrate on fewer larger investments in direct investments • Increase portfolio yield – income to be an increasingly
Slide 26: Strategy – pools of capital
Strategy – pools of capital Pool Investment executive 31 Mar 2011 31 Mar 2011 Possible future £m % disposition Quoted Mathew Masters 427.0 34% 20-30% Unquoted Duncan Johnson 281.2 22% 20-30% Asia John May 159.0 13% 15-20% Property Charles Cayzer 105.3 8% 5-10% Funds Jamie Cayzer-Colvin 198.6 16% 10-
Slide 27: Key Themes for each Pool
Key Themes for each Pool Quoted - Concentrated portfolio of 10-15 companies, partnership approach, long hold periods Unquoted - 8-10 companies, MBOs, growth/development capital, structured equity, co-investment Asia - India – selective direct portfolio of 3-5 companies with local partners, funds and
Slide 28: Strategy – actions to improve returns
Strategy – actions to improve returns • Focus on investment themes – pools of capital - Managed by executives with relevant skills - New talent recruited to enhance existing team • Concentrate on fewer larger investments in direct investments • Increase portfolio yield – income to be an increasingly
Slide 29: Geography – 31 March 2011
Geography – 31 March 2011 Cash and other 6% North America 7% Asia 14% United Kingdom 58% Continental Europe 15% Final results 2011 28
Slide 30: Closing Remarks
Closing Remarks Will Wyatt Chief Executive 29
Slide 31: Outlook
Outlook • Outlook for Western developed markets likely to reflect continued low economic growth • Better growth opportunities exist in Asia and Far East • Value to be found in certain equity markets but UK mid cap looks expensive • Continued volatility expected in capital markets which can present o
Slide 32: Appendices
CALEDONIA INVESTMENTS Appendices
Slide 33: NAV Summary by Pool year to 31 March 2011
NAV Summary by Pool year to 31 March 2011 Value Value 31 Mar 10 Investments Disposals Gains 31 Mar 11 Total £m £m £m £m £m return Quoted 444.2 19.6 (55.3) 18.5 427.0 7.1% Unquoted 264.1 2.6 (26.6) 41.1 281.2 19.6% Asia 125.0 40.5 (8.3) 1.8 159.0 2.4% Property 106.7 8.3 (1.3) (8.4) 105.3 (6.7)% Funds
Slide 34: Quoted Pool
Quoted Pool Net cash Value investment Net gains Value 31 Mar 10 and income and income 31 Mar 11 Total return Significant investments £m £m £m £m % Close Brothers 152.1 (7.7) 21.5 165.9 15% Bristow Group 60.7 0.1 11.2 72.0 18% Avanti Communication 55.5 (3.0) 3.4 55.9 6% AG Barr 32.3 (0.8) 10.5 42.0 3
Slide 35: Unquoted Pool
Unquoted Pool Net cash Value investment Net gains Value 31 Mar 10 and income and income 31 Mar 11 Total return Significant investments £m £m £m £m % Cobepa 72.9 (1.2) 13.4 85.1 19% Oval 43.9 (1.2) (1.1) 41.6 (2)% Satellite Information Services 30.5 - 8.0 38.5 26% Sterling Industries 15.6 - 9.8 25.4
Slide 36: Asia Pool
Asia Pool Net cash Value investment Net gains Value 31 Mar 10 and income and income 31 Mar 11 Total return Significant investments £m £m £m £m % Dewan Housing Finance 27.1 2.8 7.7 37.6 27% Alok Industries 31.7 (2.2) (0.7) 28.8 (2)% DP Home Finance - 20.6 0.4 21.0 3% Capital Today China 11.7 2.2 6.8
Slide 37: Property Pool
Property Pool Net cash Value investment Net gains Value 31 Mar 10 and income and income 31 Mar 11 Total return Significant investments £m £m £m £m % London & Stamford 37.4 (0.9) 2.9 39.4 8% Quintain Estates 31.5 - (7.1) 24.4 (22)% Edinmore Investments 5.1 6.9 0.3 12.3 4% Buckingham Gate 10.3 - 0.2 1
Slide 38: Funds Pool
Funds Pool Net cash Value investment Net gains Value 31 Mar 10 and income and income 31 Mar 11 Total return Significant investments £m £m £m £m % British Empire Securities 122.0 (34.5) 15.8 103.3 15% Nova Springboard 22.7 - 1.5 24.2 7% Pragma funds 12.8 0.1 0.5 13.4 4% Perlus Microcap - 8.5 1.8 10.3