Caledonia Investments PLC · LSE:CLDN

Caledonia Investments — Investor Presentation (January 2004)

27 slides from Caledonia Investments's investor presentation, Jan 19, 2004

  1. Slide 1: Performance driven

    Performance driven 19th January 2004 www.caledonia.com

  2. Slide 2: What is Caledonia?

    What is Caledonia? „ A diversified investment company „ Invest in an international spread of interests (usually headquartered in the UK) „ Building value through active participation in strategic investments „ Measure ourselves in terms of overall return 1

  3. Slide 3: Brief History of Caledonia

    Brief History of Caledonia „ Started as shipping company in 1880’s (Clan Line and subsequently Union Castle) „ Diversified into a portfolio of investments in 1960’s as British and Commonwealth „ Caledonia sold investment in B&C in 1987 „ Caledonia 37.7% owned by Cayzer Trust Company, 49.9% by wider

  4. Slide 4: Financial aims

    Financial aims „ To outperform FTSE All-Share TR over 5 and 10 years „ To maintain a progressive dividend 3

  5. Slide 5: Total return

    Total return Caledonia TSR to 31.12.03 FTSE Outperformance All-Share 250 5 year +58% -5% +63% Caledonia - Total Return Index 10 year +136% +81% +55% FTSE All-Share - Total Return Index 200 150 100 50 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 -50 Source: FTSE/Datastream 5 yr 10 yr Cale

  6. Slide 6: Annual dividend growth

    Annual dividend growth 200 Annual dividend Retail Price Index 175 150 125 100 93 94 95 96 97 98 99 00 01 02 03 Excluding special dividends of 30p and 70p per share in relation to 1997 and 2000 respectively Caledonia dividend CAGR 5.7% RPI 4.7% Caledonia has a 36 year record of annual dividend growth

  7. Slide 7: Business aims

    Business aims „ Manage portfolio of significant investments „ Supportive, proactive long term investor „ Sector diversification (achieve medium overall risk) „ Emphasis on selected sectors 6

  8. Slide 8: Business policies

    Business policies „ New investments typically £10 million - £25 million „ Influential minority stakes „ Quoted and unquoted „ Investee management appraisal paramount „ Extensive analysis „ 3rd party fund managers for sectors where in-house resource not available „ Seek stakes in 3rd party fund manag

  9. Slide 9: Business policies

    Business policies „ Board representation „ Working closely with investee management „ Proactively bringing growth opportunities „ Promoting synergies among investee companies „ Regular team reviews „ Investment disposals − Regular management review of all investments − Formal annual board review of

  10. Slide 10: Business policies

    Business policies „ Not less than 50% of portfolio in quoted investments and liquid assets „ Focus on 30 to 40 principal investments „ Moderate gearing, when appropriate, to enhance returns „ Cost control 9

  11. Slide 11: Investment Decision Flowchart

    Investment Decision Flowchart FINANCIAL FINANCIAL INDUSTRY INDUSTRY EXISTING EXISTING PRINCIPALS PRINCIPALS INTERMEDIARIES INTERMEDIARIES SOURCES SOURCES INVESTMENTS INVESTMENTS INVESTMENT INVESTMENTPROPOSALS PROPOSALS REJECTED REJECTED INITIAL IMMEDIATELY INITIALAPPRAISAL APPRAISALBY BYINVESTMENT I

  12. Slide 12: Investment team

    Investment team Investment management Specialist support headed by Peter Buckley* Joined in 1967 Graeme Denison* Legal & secretarial Tim Ingram* Joined in 2002 Paul Whiteley Finance Jonathan Cartwright* Joined in 1989 Tony Carter Taxation David Kinloch* Joined in 1985 Jonathan Hale Treasury Charles

  13. Slide 13: Board changes

    Board changes Strengthening of Board of Directors: „ 3 new independent non-executive directors appointed in last 18 months „ Appointment of Tim Ingram as Chief Executive in June 2002 „ Appointment of John May as Executive Director in September 2003 12

  14. Slide 14: Investment trust rationale

    Investment trust rationale Outstanding performance: „ TSR1 outperformance 55% (10 years to 31 December 2003) „ TSR1 outperformance 63% (5 years to 31 December 2003) „ Top decile performance over 1 year and top quartile performance over 3, 5, and 10 years to 31st December 2003 (AITC Global Growth) „

  15. Slide 15: Investment trust rationale

    Investment trust rationale Reasons for significant discount included: „ Liability for tax on chargeable gains „ No real comparator in Speciality and Other Finance sector listing „ Insufficient market understanding of strategy and valuation „ Absence of regular information on NAV „ Limited stock liqu

  16. Slide 16: Investment trust advantages

    Investment trust advantages Post conversion: „ More efficient tax structure „ Clearer understanding of Caledonia „ NAV published monthly (based on BVCA guidelines) „ Potential enhanced appeal to retail investors „ Narrowing of share price discount to NAV (reduced from 33.5% at 30 September 2002 to 2

  17. Slide 17: Investment trust advantages

    Investment trust advantages „ No CGT liability: ¾ no actual CGT payable ¾ avoids costly tax planning ¾ purer divestment decisions 16

  18. Slide 18: Sector distribution vs FTSE All-Share at 31 December 2003

    Sector distribution vs FTSE All-Share at 31 December 2003 Caledonia Sector Caledonia FTSE % % Financial 33 25 Leisure and media 20 11 Managed Funds 18 2 FTSE All-Share Industrial and services 14 19 Property 10 4 Technology 2 11 Other sectors 3 28 Caledonia % weighting versus FTSE All-Share % weighti

  19. Slide 19: Analysis of NAV by currency

    Analysis of NAV by currency 31 December 2003 76% Sterling US dollar Euro Other 1% 3% 20% 18

  20. Slide 20: Analysis of NAV by geography

    Analysis of NAV by geography 31 December 2003 76% United Kingdom Rest of Europe North America Rest of the World 2% 3% 19% 19

  21. Slide 21: Top ten investments – 31 December 2003

    Top ten investments – 31 December 2003 Business % holding Valuation Country % of of holding portfolio £m Close Brothers Group * Merchant bank 17.6 186 UK 21.0 Kerzner International ** Resort operator 20.7 129 Bahamas 14.5 British Empire Securities Investment trust 19.9 72 UK 8.1 & General Trust * Ra

  22. Slide 22: Principal investments since year end

    Principal investments since year end „ £13m cash at 31 December 2003 „ £60m of bank facilities available „ Investments since 31 March 2003 totalling £83m (at 31 December 2003), including:- - Easybox (£9m) - Amber (£3m) - Paladin (£4m) - Polar funds (£3m) - Edinmore (£6m) - Oval (£5m) - SVB (£14m) -

  23. Slide 23: Investment trust….performance driven

    Investment trust….performance driven „ Key Differentiators ¾ Valued reputation strong deal flow (very choosy) ¾ Added value of constructive active management ¾ Largely self-managed ¾ More than £460m of distributable reserves underpins progressive dividend policy 22

  24. Slide 24: Appendix 1 Biographies

    £ 9 a CALEDONIA INVESTMENTS Appendix 1 Biographies

  25. Slide 25: Biographies of investment team

    Biographies of investment team Peter Buckley: Chairman A member of the Institute of Chartered Accountants of Scotland, he joined B&C in 1967 and became a director of Caledonia in 1976, chief executive in 1987 and chairman in 1994. He is a non-executive director of Close Brothers Group, Offshore Logi

  26. Slide 26: Biographies of investment team

    Biographies of investment team Charles Cayzer: Executive Director Having gained experience of merchant banking, commercial banking and corporate and project finance with Baring Brothers, Cayzer Irvine & Co and Cayzer Ltd, he was appointed a director of Caledonia in 1985. He is also a director of sev

  27. Slide 27: Biographies of investment team

    Biographies of investment team Tony Hambro: Associate Director Was a consultant to Caledonia from November 2002. Joined as an Associate Director in July 2003.After a 17 year banking career at Samuel Montagu and Grindlays Bank, in 1984 he set up his own corporate finance consultancy, Anthony Hambro &

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