Caledonia Investments Plc · LSE:CLDN
Caledonia Investments — H1 2024 Earnings Presentation
40 slides from Caledonia Investments's earnings presentation, Nov 21, 2023
Slide 1: Half-Year Results
Half-Year Results Six months ended 30 September 2023 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 2003 Self-managed investment company Caledonia NAV TR FTSE All-Share TR CPIH+4.5% 700 Net assets of £2.9 billion 600 500 Targeting long-term compounding real returns 400 CPIH +3% to +6% 300 Progressive dividend policy 200 100 Successful tra
Slide 4: We Are A Long-Term Investor
We Are A Long-Term Investor With the aim of generating consistent returns for our shareholders We invest in high We buy to hold, investing in high quality companies with strong market positions and fundamentals, alongside investments in private equity quality companies that funds with track records
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 Private Equity Funds Strategic Allocation: 30%-40% Strategic Allocation: 25%-35% Strategic Allocation: 25%-35% • Global portfolio • Direct investments focused on
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 Financials Primarily Financials 23% investments in Industrials 19% platforms & investment manag
Slide 7: Consistent Long-Term Outperformance
Consistent 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 ov
Slide 8: Half-Year Results
Half-Year Results Six months ended 30 September 2023 Half-year results 2023 7
Slide 9: Highlights
Highlights Six months ended 30 September 2023 All investment pools contributed to NAV growth • Private Capital +5.9% Net assets per share ‒ Key driver was the agreed sale of 7IM ‒ Acquisition of AIR-serv Europe 5,203p +3.7% (£2.9bn) Total return • Public Companies +2.8% Dividend ‒ Reflecting mixed p
Slide 10: Private Capital
Private Capital Six months ended 30 September 2023 Half-year results 2023 9
Slide 11: Private Capital
Private Capital Direct investments in established high quality businesses Value First 30 Sept % of Net £1,027m invested in nine predominantly UK focused companies, Portfolio (£m) Invested 2023 Assets with the top six representing c.94% of value 7IM 2015 248.5 8.6 Performance Cobehold 2004 178.8 6.2
Slide 12: Private Capital (cont'd): 7IM – AUM tripled over period of ownership
Private Capital (cont’d) 7IM – AUM tripled over period of ownership Corporate & Investment Timeline Investment: 2002:7IM 2015: Majority 2019: Dean 2020: Acquisition 2020: Acquisition 2023: Bolt-on • Date: Sept 2015 founded, backed by Killik acquisition by Caledonia Proctor appointed as CEO of Partne
Slide 13: Investment in 7IM generated an IRR of 15%
Private Capital (cont’d) Investment in 7IM generated an IRR of 15% and a 2.3x multiple of cost Investment: Lifetime Returns (£m) • Hold period: 8+ years 291 • Sep 2023 valuation: c.£248.5m* Invested cost Capital gain 225 • Distributions received/accrued to date: c.£44m Cumulative dividends 198 Exit:
Slide 14: Private Capital (cont'd): Five further investments
Private Capital (cont’d) Five further investments represent over 70% of the Private Capital pool’s value Valuation £157m Investment £143m Valuation £135m Return 11.7% Return Held at cost Return 2.3% Year of Investment 2019 Year of Investment 2023 Year of Investment 2016 Sector Financials Sector Cons
Slide 15: Private Capital (cont'd): Five further investments
Private Capital (cont’d) Five further investments represent over 70% of the Private Capital pool’s value Valuation £102m Valuation £179m Return -17.5% Return 3.1% Year of Investment 2018 Year of Investment 2004 Sector Industrials Sector Financials Equity Stake: 93.2% Equity Stake: 5.2% • Leading man
Slide 16: Public Companies
Public Companies Six months ended 30 September 2023 Half-year results 2023 15
Slide 17: Public Companies
Public Companies High quality companies where long-term ownership will be rewarded Value £865m invested in 30 companies, with a bias towards resilient First 30 Sep % of Net companies with high returns on capital and pricing power Portfolio (£m) Invested 2023 Assets Performance Watsco* 2017 73.9 2.6
Slide 18: Public Companies (cont'd): Oracle
Public Companies (cont’d) Oracle – a long term investment that has generated a 16% annualised total return since inception Initial investment: 2014 Investment rationale Share Price 140 • Attractive risk/return dynamic with a reasonable entry price Initial Topped up our Top slicing: number of into a
Slide 19: Private Equity Funds
Private Equity Funds Six months ended 30 September 2023 Half-year results 2023 18
Slide 20: Private Equity Funds
Private Equity Funds Providing exposure to over 600* companies operating in North America and Asia £963m invested in 75 funds managed by 44 managers Value First 30 Sep % of Net 58% focused on the North American small-mid market buyouts and Portfolio (£m) Invested 2023 Assets 42% on Asian growth/VC f
Slide 21: Private Equity Funds (cont'd): CenterOak Partners
Private Equity Funds (cont’d) CenterOak Partners - Dallas-based lower mid-market control buyout fund Background to relationship Target company criteria • The US lower mid-market has been a core part of our • Enterprise Value: $50m - $500m investment strategy for the last 10 years and we have built •
Slide 22: CenterOak Partners - Buy-and-build strategy
Private Equity Funds (cont’d) CenterOak Partners - Buy-and-build strategy in the US lower mid-market Portfolio Company Snapshots Sub-Sector Categories HVAC / Plumbing Auto Collision Repair Lawn Care Pest Control Portfolio Company Provider of residential Provider of exterior Provider of auto body Pro
Slide 23: Financial Review
Financial Review Half-year results 2023 22
Slide 24: Financial Overview
Financial Overview £2.9bn NAV – strong balance sheet with zero structural leverage £2.9bn Portfolio value – high quality, diversified portfolio 4.1% Portfolio return – good returns across all investment pools £485m Pro forma liquidity – significant liquidity to support investments 4.0% Increase in i
Slide 25: Investment Portfolio & Returns
Investment Portfolio & Returns Total portfolio return of 4.1% Investments by Pool (£m) Net investments PE Funds Private £223m £963m £1,027m £2,855m Public £865m Return Yield* % % Public Companies 2.8 4.2 Private Capital 5.9 4.7 Private Equity Funds 4.6 n/a Total Portfolio Return 4.1 3.5 Half year re
Slide 26: Change in Net Asset Value
Change in Net Asset Value NAV return of 3.7% Foreign Currency Exposure 3.7% Investment portfolio gains £120m US dollar 51% Pound sterling 39% Euro 7% Other currencies 3% Half year results 2023 25
Slide 27: Net Cash / (Debt) & Facilities
Net Cash / (Debt) & Facilities Significant liquidity available • £250m RCF facility - £112.5m to July 2025 - £137.5m to November 2027 • £255m of 7IM sale proceeds expected in early 2024 Caledonia Net Debt 30 September 2023 £(20)m Caledonia Pro Forma Liquidity £485m* Half year results 2023 * Pro Form
Slide 28: Share Price Performance
Share Price Performance TSR of 0.6% in the six months Annualised Performance • Longer term performance remains strong, with 20% TSR outperforming the FTSE All-Share TR on a 3, 5 and 10 year basis +15.0% 15% • Shorter term TSR has been impacted by sector +11.8% sentiment and ongoing concerns about th
Slide 29: Summary
Summary Half-year results 2023 28
Slide 30: 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 31: Appendix
Appendix Half-year results 2023 30
Slide 32: Private Capital
Private Capital Portfolio as at 30 September 2023 3 years 5 years 10 years Value Annualised Returns 29.4% 12.3% 14.5% First 30 Sep Portfolio (£m) Invested 2023 Sector 7IM 2015 248.5 Distribution Cobehold 2004 178.8 Financials 57% Stonehage Fleming 2019 157.0 Consumer Discretionary 30% Industrials 12
Slide 33: Public Companies – Capital Portfolio
Public Companies – Capital Portfolio Top holdings as at 30 September 2023 Value 3 years 5 years 10 years First 30 Sep Top Holdings (£m) Invested 2023 Annualised Returns 9.3% 11.9% 11.1% Microsoft 2014 72.3 Sector Information Technology 29% Oracle 2014 69.8 Distribution Industrials 18% Watsco* 2017 5
Slide 34: Public Companies – Income Portfolio
Public Companies – Income Portfolio Top holdings as at 30 September 2023 3 years 5 years 10 years Value Annualised Returns 4.6% 3.3% 4.6% First 30 Sep Yield** Top Holdings (£m) Invested 2023 % Annualised Yield 4.5% 4.7% 4.2% Watsco* 2020 19.0 5.9 Sector Unilever 2019 18.4 3.5 Distribution Consumer S
Slide 35: Private Equity Funds
Private Equity Funds Top holdings as at 30 September 2023 3 years 5 years 10 years Value First 30 Sep Annualised Returns 24.1% 17.1% 19.2% Top Holdings (£m) Invested 2023 HighVista Strategies* 2015 123.5 Sector Healthcare 21% Distribution Information Technology 15% Axiom Asia funds 2012 88.1 Consume
Slide 36: Statement of Financial Position
Statement of Financial Position Six months ended 30 September 2023 30 Sep 2023 31 Mar 2023 Change £m £m £m Portfolio value* 2,855 2,535 320 Other investments 50 260 (210) Total investments 2,905 2,795 110 Property and PPE 43 43 - Other assets 44 35 9 Cash 15 222 (207) Total assets 3,007 3,095 (88) E
Slide 37: Summary of Comprehensive Income
Summary of Comprehensive Income 30 Sep 2023 30 Sep 2022 Change £m £m £m Investment income - portfolio 25 25 - Other investment income 9* - 9 Capital gains - portfolio 95 121 (26) Capital gains - other investments (7) (16) 9 Other income 1 2 (1) Total income 123 132 (9) Expenses - ongoing management
Slide 38: Returns In The Period
Returns In The Period All three pools generated good, positive returns 31 Mar 30 Sep 2023 Accrued Gains / 2023 £m Investments Realisations income (losses) £m Income Return % Public Companies 837 41 (25) - 12 865 12 2.8 Private Capital 824 157 - 2 44 1,027 12 5.9 Private Equity Funds 874 65 (15) - 40
Slide 39: 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 40: Caledonia Investments plc
Caledonia Investments plc Cayzer House 30 Buckingham Gate London SW1E 6NN Tel: +44 20 7802 8080 Web: www.caledonia.com
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