Caledonia Investments PLC · LSE:CLDN
Caledonia Investments — Shareholder Meeting (July 2019)
32 slides from Caledonia Investments's shareholder meeting presentation, Jul 24, 2019
Slide 1: Annual General Meeting
Annual General Meeting 24 July 2019 www.caledonia.com
Slide 2: Introduction and Highlights of the Year
Introduction and Highlights of the Year Will Wyatt Chief Executive AGM 2019 1
Slide 3: NAV total return growth since 1987
NAV total return growth since 1987 Consistent growth in returns and dividends • +9.2% NAV per share annualised total return for period since 1987 1,600 (vs 7.8% for FTSE All-Share) Caledonia NAVTR FTSE All-Share TR • 10 year NAV per share annualised total return +11.1% (10 year FTSE All-Share TR ann
Slide 4: Highlights
Highlights Year ended 31 March 2019 NAV total return • +10.9% NAV per share total return for year +10.9% • +14.8% share price total return (2018: +1.4%) NAV per share • Positive returns from all pools 3582 pence +9.0% • Favourable FX movements (2018: 3285p) • Discount range during year 14% - 22% Dis
Slide 5: Performance Track Record
Performance Track Record Consistent long term outperformance • Aim to grow capital value and income over the long term (10 years) measured in real terms ✓Achieved • Target return of RPI +3% to +6% over medium term ✓Achieved • Aim to outperform FTSE All-Share Total Return over 10 years ✓Level 16 Annu
Slide 6: NAV Summary Performance by Pool
NAV Summary Performance by Pool Positive returns across all four pools Value Investment Total Total Total Return 31 Mar 2019 Income Return Return excl. FX Investment Pool £m £m £m % % Quoted 464.4 9.6 88.9 +21.0% +15.5% Income 224.5 13.4 6.7 +2.9% +1.7% Unquoted 659.5 27.6 63.4 +11.4% +11.7% Funds 4
Slide 7: Analysis by Geography
Analysis by Geography Good geographical diversification Geography by Domicile 9% United Kingdom 10% 35% Europe North America Geography by Revenue Source Asia 9% 27% United Kingdom 5% 25% Cash and other Europe 19% North America 19% Asia 17% Other countries Cash and other 25% AGM 2019 6
Slide 8: Analysis by Currency
Analysis by Currency As at 31 March 2019 Currency Distribution 2% 7% Pound sterling US dollar Euro 37% 54% Other currencies AGM 2019 7
Slide 9: Quoted Pool
Quoted Pool Concentrated portfolio of high quality compounding companies • 19 core holdings • £464m portfolio • 23% of net assets • £10m of income (estimate annual yield of c.2%) • 21% return in year, against a target of 10% % Annualised Performance 20 15 Target 10 5 0 Over 1 year Over 3 years Over
Slide 10: Quoted Pool
Quoted Pool Exceptional performance in a turbulent year Strong return driven by: • Strong contribution from US quoted equities • Selective partial divestment of some overweight holdings • Net divestment of £67m in the year • Strong relative performance during Q4 market dip (+5% vs FTSE All-Share –(1
Slide 11: Quoted Pool
Quoted Pool Ten largest holdings as at 31 March 2019 Value Ten Largest Holdings (£m) 31 Mar 2019 Sector Microsoft 43.2 Distribution 2%7% Financial 18% Industrial AG Barr 40.4 Consumer goods 28% Spirax Sarco 40.3 5% Healthcare Oracle 31.5 Telecommunications 16% Technology Thermo Fisher Scientific 31.
Slide 12: Income Pool
Income Pool Concentrated portfolio of international businesses with strong income characteristics • 20 holdings • £225m portfolio • 11% of net assets • £13m of income (estimate annual yield of 5.8%) • 2.9% return in year, against a target of 7% (2.5% capital, 4.5% income) % Annualised Performance 10
Slide 13: Income Pool
Income Pool Ten largest holdings as at 31 March 2019 Value Yield Ten Largest Holdings (£m) 31 Mar 2019 % Sector Phoenix Group 15.3 6.6 Distribution 10% Financial Sabre Insurance 14.6 5.1 8% Oil & Gas Industrial Tritax Big Box 14.1 5.2 7% 46% Consumer goods 13.9 4.2 Healthcare SCOR Consumer services
Slide 14: Unquoted Pool
Unquoted Pool Majority and minority growth capital in established UK businesses • 11 holdings • £660m portfolio • 33% of net assets • 11.4% return in year against a 14% target return (9% capital, 5% income) • Invest £25m - £125m of equity % Annualised Performance 15 Target 10 5 0 Over 1 year Over 3
Slide 15: Unquoted Pool
Unquoted Pool Year ended 31 March 2019 • 3 completed acquisitions (majority stakes in Cooke Optics (£63m + £30m loan) and Deep Sea Electronics (£117m) and an 8.8% stake in BioAgilytix (£23m)) • Acquired 36.7% of Stonehage Fleming in Dec 2018 for £92m, s/t regulatory clearance • Follow-on investment
Slide 16: Unquoted Pool – Investments
Unquoted Pool – Investments Year ended 31 March 2019 • Market-leading UK manufacturer of premium-end cinematography lenses for film and television, founded in 1886 • Subscribed to £62.5m of equity to acquire a c. 89% stake and advanced £30.0m of debt Investment by Caledonia • Known by cinematographe
Slide 17: Unquoted Pool – Investments
Unquoted Pool – Investments Year ended 31 March 2019 • One of the world’s leading independently owned family offices • Agreed to acquire a 36.7% shareholding, subject to regulatory clearance • Deferred consideration of up to £20.6m Investment by Caledonia • Two Board seats £92m • Over 540 employees
Slide 18: Unquoted Pool – Realisations
Unquoted Pool – Realisations Year ended 31 March 2019 • Owner and operator of residential care homes for adults with learning disabilities and mental health disorders • Sold to iCON fund for EV £152.5m, cash to Caledonia £99.4m • Lifetime IRR 14.3%, Money multiple 1.9x Investment by Caledonia £55m •
Slide 19: Unquoted Pool – Trading Updates
Unquoted Pool – Trading Updates Year ended 31 March 2019 • Additional £14.5m invested to support the rebrand to Buzz Bingo and Valuation launch of on-line business £90m 2% • Stabilised retail performance Year of Investment 2015 • On-line launch ahead of target (but early days) • John Kelly re-join
Slide 20: Unquoted Pool
Unquoted Pool Portfolio as at 31 March 2019 First Value Sector Portfolio (£m) Invested 31 Mar 2019 Distribution 2% 1% 21% Deep Sea Electronics 2018 117.2 19% Financial Industrial Seven Investment Management 2015 107.7 Consumer services Cobehold 2004 104.9 TMT Cooke Optics 2018 92.5 28% Healthcare 29
Slide 21: Funds Pool
Funds Pool We seek proven fund managers operating in North America and Asia • £392m portfolio of US and Asian PE funds • £71m invested in quoted market funds • 15% return in year, against blended target return of 12.5% • 24% of net assets % Annualised Performance 20 15 Target 10 5 0 Over 1 year Over
Slide 22: Funds Pool
Funds Pool Year ended 31 March 2019 Strong returns driven by: • Strong contribution from PE funds, particularly US based PE funds • £104m of redemptions from Quoted Managed Funds, to provide capital for PE funds • £104m of PE fund subscriptions net of £61m of PE funds distributions • Committed to 5
Slide 23: Funds Pool
Funds Pool Ten largest holdings as at 31 March 2019 Value Ten Largest Holdings (£m) 31 Mar 2019 Sector Distribution 13% 1% 13% Financial Aberdeen US PE funds 86.5 Oil & Gas 1% 8% Industrial JF Lehman funds 38.2 16% Consumer Axiom Asia funds 34.4 TMT Real estate Asia Alternatives funds 33.2 23% Healt
Slide 24: Asset Allocation
Asset Allocation Year ended 31 March 2019 % of NAV by Pool and Other 100% 3% 9% 9% 13% 14% 90% 19% 80% 20% 24% 21% 25% 70% 60% 39% 31% 50% 30% 33% 25% 40% 12% 12% 30% 11% 11% 11% 20% 28% 27% 25% 25% 10% 23% 0% 2015 2016 2017 2018 2019 Quoted Pool Income Pool Unquoted Pool Funds Pool Cash and other A
Slide 25: Financial Review
Financial Review Tim Livett Chief Financial Officer AGM 2019 24
Slide 26: Summary of Comprehensive Income
Summary of Comprehensive Income 31 Mar 2019 31 Mar 2018 Change £m £m £m Investment and other income 53.1 46.2 6.9 Gains on investments and property 171.4 0.9 170.5 Total income 224.5 47.1 177.4 Expenses - ongoing management (17.9) (16.9) (1.0) - performance awards (allocated to capital expenses) (8.
Slide 27: Change in Net Asset Value
Change in Net Asset Value Year ended 31 March 2019 NAV Movement (millions) 2080 £52 £2,034 2030 £126 £26 £1 £2,002 1980 £32 1930 £46 1880 £1,837 1830 1780 Opening NAV FX gain Investment Investment Management Other Closing NAV Dividends Closing NAV gain income expenses before dividends AGM 2019 26
Slide 28: Income
Income • 8% cash and 25% in funds earning little income Year end 2019 Income £52.7m Cash and non-pool Quoted £0.6m 2.1% £9.6m 51.6 52.7 2.7% 44.4 42.8 48.0 47.7 46.8 Portfolio yield £52.7m Income Unquoted Income 5.7% 4.6% £13.4m £27.6m Funds 0.3% £1.5m 2013 2014 2015 2016 2017 2018 2019 AGM 2019 27
Slide 29: Net Cash and Facilities
Net Cash and Facilities Revolving 3-year facility with RBS at Caledonia Net Cash 150bp over LIBOR 31 March 2019 £25m £112m Caledonia Net Cash £250m Committed 31 March 2018 facilities £208m comprising Revolving 3 and 5-year facilities with RBS and £225m ING at a blended average margin of 175bp over L
Slide 30: Caledonia Discount
Caledonia Discount Year ended 31 March 2019 • Discount at month end NAV/ share Caledonia NAV/Share and Discount to Share Price range from 14% to 22% pence (31 March 2014 to 31 March 2019) Discount in year 3500 Caledonia NAV/share 25% • Cayzer concert party Discount holding constrains buy- 3300 backs
Slide 31: Outlook
Outlook 1 Significant capital available to be deployed as opportunities identified 2 Pricing discipline for new investments remains key to generating return 3 There will continue to be geographical tensions in the coming year that will affect markets 4 Portfolio construction and underlying investmen
Slide 32: Annual General Meeting
Annual General Meeting 24 July 2019 www.caledonia.com
Caledonia Investments — Shareholder Meeting (July 2019) on 6ix