Caledonia Investments PLC · LSE:CLDN
Caledonia Investments — Shareholder Meeting (July 2018)
34 slides from Caledonia Investments's shareholder meeting presentation, Jul 19, 2018
Slide 1: Annual General Meeting
Annual General Meeting 19 July 2018 www.caledonia.com
Slide 2: Introduction and Highlights of the Year
Introduction and Highlights of the Year Will Wyatt Chief Executive AGM 2018 1
Slide 3: Highlights
Highlights Year ended 31 March 2018 NAV total return • +1.4% NAV per share total return for year +1.4% • Sale of The Sloane Club in October 2017 for £80m (2017: +18.0%) NAV per share • Special dividend of £55m (100p per share) paid during year 3285 pence (3.2%) • Ordinary dividend of 57.0p (+4.0%) (
Slide 4: Performance Track Record
Performance Track Record Year ended 31 March 2018 • Aim to grow capital value and income over the long term (10 years) measured in real terms • Outperformance of RPI +3% to +6% over medium term • 5 year outperformance against FTSE All-Share total return • Diversified portfolio across both quoted and
Slide 5: NAV Summary Performance by Pool
NAV Summary Performance by Pool Year ended 31 March 2018 Value Investment Total Total Total Return 31 Mar 2018 Income Return Return excl. FX Investment Pool £m £m £m % % Quoted 452.3 10.0 16.3 +3.6% +10.9% Income 194.6 10.6 (21.2) (9.6%) (7.1%) Unquoted 463.5 15.9 24.5 +4.9% +4.4% Funds 470.5 1.5 34
Slide 6: Quoted Pool - Highlights
Quoted Pool - Highlights Year ended 31 March 2018 Income Invested in the year Realised in the year £10m £52m £72m Return for the year Consumer Entire holdings +4% CHARTER COMMUNICATIONS Industrial Top-slicing of holdings Technology/growth AGM 2018 5
Slide 7: Quoted Pool – Highlights
Quoted Pool – Highlights Year ended 31 March 2018 • Strong FX headwind (+10.9% return in constant currency) • US dollar exposure 54% • 19 core holdings • Bottom of allocation range • 5 year CAGR 7.7% vs FTSE All-Share 6.6% AGM 2018 6
Slide 8: Quoted Pool
Quoted Pool First Value Value Capital Total Return Significant Contributors (£m) Invested 31 Mar 2018 31 Mar 2017 Income Gain/(Loss) For Year % Polar Capital 2001 31.3 25.5 1.8 12.2 +64% Microsoft 2014 37.3 35.4 0.9 8.3 +26% Flowserve 2015 30.0 37.6 0.5 (7.6) (19%) British American Tobacco 2015 28.5
Slide 9: Income Pool - Highlights
Income Pool - Highlights Year ended 31 March 2018 Income Positive performers Track record since inception in March 2011 £11m 6% p.a. Return for the year Negative performers (10%) Net yield 5% AGM 2018 8
Slide 10: Income Pool - Highlights
Income Pool - Highlights • Difficult year for equity income investors • Income target exceeded • Stock selection and FX both negatives • Volatility not loss of value • 5 year CAGR 3.3% vs FTSE All-Share 6.6% AGM 2018 9
Slide 11: Income Pool
Income Pool First Value Value Capital Total Return Significant Contributors (£m) Invested 31 Mar 2018 31 Mar 2017 Income Gain/(Loss) For Year % Imperial Brands 2015 7.9 9.9 0.5 (4.4) (35%) Greene King 2015 6.8 8.4 0.4 (3.4) (31%) Pennon Group 2015 8.2 10.0 0.4 (2.9) (24%) Telenor 2014 10.7 8.9 0.5 1
Slide 12: Unquoted Pool - Highlights
Unquoted Pool - Highlights Year ended 31 March 2018 Income Invested in the year Realised in the year £16m £31m £144m Return for the year Follow-on Entire holding (October 2017) 5% Top-slicing of holdings AGM 2018 11
Slide 13: Unquoted Pool - Highlights
Unquoted Pool - Highlights Year ended 31 March 2018 • Strong deal flow – 231 opportunities reviewed • 7 serious bids, no new investments • 2 follow-on investments • High pricing in PE markets • Bottom of asset allocation model • 5 year CAGR 15.4% vs FTSE All-Share 6.6% AGM 2018 12
Slide 14: Unquoted Pool – Sale of The Sloane Club
Unquoted Pool – Sale of The Sloane Club Year ended 31 March 2018 A private members’ club in the heart of Chelsea with over 130 bedrooms Originally acquired in 1991 Lifetime IRR Sold to Queensway and Clearbell in October 2017 for £80m 8.3% Reasons for sale: • Interest rate cycle turning • Leasehold t
Slide 15: Unquoted Pool – Partial Sale of Cobehold
Unquoted Pool – Partial Sale of Cobehold Year ended 31 March 2018 A private Belgian investment company First investment made in 2004 Reduced stake by £51m in year Lifetime IRR Portfolio of c.14 unlisted businesses continuing to perform 13.5% well Provides good unquoted investment exposure to Europe,
Slide 16: Unquoted Pool – Trading Updates
Unquoted Pool – Trading Updates Year ended 31 March 2018 • Difficult year with lower footfall and increased expenses • Profits fell year-on-year • New management team Valuation £75m 33% • Online bingo to be launched in 2018/19 Year of Investment • Valuation reduction reflecting trading performance
Slide 17: Unquoted Pool – Trading Updates
Unquoted Pool – Trading Updates Year ended 31 March 2018 • Expanded capacity now being occupied • Heading towards full capacity (c.94/95%) Valuation £82m 54% • Positive trading Year of Investment • Valuation increased due to increased profits, higher 2013 multiples and lower discount • Strong infl
Slide 18: Unquoted Pool
Unquoted Pool First Value Value Capital Total Return Significant Contributors (£m) Invested 31 Mar 2018 31 Mar 2017 Income Gain/(Loss) For Year % Gala Bingo 2015 74.5 104.2 0.2 (36.0) (33%) Choice Care Group 2013 81.9 54.6 1.9 27.0 +54% The Sloane Club 1991 61.4 3.7 15.3 +31% Liberation Group 2016 7
Slide 19: Funds Pool - Highlights
Funds Pool - Highlights Year ended 31 March 2018 Income Invested in the year Realised in the year £2m £100m £67m Return for the year 8% (+19% on constant currency basis) Positive performers USA % Asia % UK % Total % Negative contributors Private equity 29 29 4 62 Quoted market 15 23 38 Total 44 52 4
Slide 20: Funds Pool - Highlights
Funds Pool - Highlights Year ended 31 March 2018 • PE programme maturing • Capital Today China 13x, 46% IRR • 95% US$ denominated • 5 year CAGR 18.0% vs FTSE All-Share 6.6% Invested in the year Realised in the year Private equity Private equity £92m £61m Quoted managed Quoted managed £8m £6m AGM 201
Slide 21: Funds Pool
Funds Pool First Value Value Capital Total Return Significant Contributors (£m) Invested 31 Mar 2018 31 Mar 2017 Income Gain/(Loss) For Year % Capital Today China Growth 2006 31.0 34.4 0.2 21.0 +81% Aberdeen US PE funds 2013 58.7 41.8 0.1 8.5 +19% PVAM Perlus Microcap 2010 26.1 30.4 – (4.4) (14%) Ar
Slide 22: Strategic Allocation
Strategic Allocation Allocation Above/Below 31 Mar 2018 Strategic Target Investment Pool £m % Range Return Description Equity holdings in high quality, listed Quoted 452.3 25 25-40 10.0% companies Income 194.6 11 15-20 7.0% Global equity portfolio, 4.5% net yield 8-10 direct stakes in private Unquot
Slide 23: Income
Income Year end 2018 Income £46.8m Cash and Quoted non-pool 2.2% £8.8m £10.0m 51.6 48.0 2.3% 44.4 42.8 47.7 46.8 Portfolio yield £46.8m Income Income 5.0% Unquoted £10.6m 3.2% £15.9m Funds 0.3% £1.5m 2013 2014 2015 2016 2017 2018 AGM 2018 22
Slide 24: 51 Years of Consecutive Dividend Growth
51 Years of Consecutive Dividend Growth Year ended 31 March 2018 Annual dividend (pence) • 4.0% increase in annual dividend; 60 51st consecutive year of dividend growth 50 • Final dividend of 41.5 pence proposed, giving 57.0 pence 40 for the year 30 20 10 0 AGM 2018 23
Slide 25: Caledonia Discount
Caledonia Discount Year ended 31 March 2018 NAV/ Caledonia NAV/Share and Discount to Share Price • Discount range from share pence (31 March 2013 to 31 March 2018) Discount 12% to 21% in year 3400 35% Caledonia NAV/share • Cayzer concert party 3200 Discount holding constrains 30% significant volume
Slide 26: Diversified Investments in Quoted and Unquoted Markets
Diversified Investments in Quoted and Unquoted Markets Year ended 31 March 2018 Quoted Investments Unquoted Pool Quoted Pool £464 £452 £822m Unquoted Investments NAV £m Income Pool £759m Funds Pool - £195 Private equity £295 Funds Pool - Quoted managed £175 AGM 2018 25
Slide 27: Currency Distribution
Currency Distribution 3% Other 7% € 40% $ 50% £ AGM 2018 26
Slide 28: Map of 'Look Through' Revenue Generation
Map of ‘Look Through’ Revenue Generation 15% Continental Europe 21% North America 40% 20% United Kingdom Asia 4% Other countries AGM 2018 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 2018 £25m £208m Caledonia Net Cash £250m Committed 31 March 2017 facilities £207m comprising Revolving 3 and 5-year facilities with RBS and £225m ING at a blended average margin of 175bp over L
Slide 30: Update Since Year End
Update Since Year End • 4.9% NAV per share total return for the quarter to June 2018 • Investments of £112m • £65m in Quoted and Income pools • £31m in fund subscriptions and drawdowns • £14m in Gala Bingo for online launch and rebrand to Buzz Bingo • Divestments of £93m • Principally from fund rede
Slide 31: Unquoted Pool – Acquisition of Cooke Optics
Unquoted Pool – Acquisition of Cooke Optics UK manufacturer of premium-end cinematography lenses for film, television and advertising industries Investment made in July 2018 Transaction Value Subscribed to £62.5m of equity and £30.0m of debt to acquire a c.89% stake £92.5m Founded in 1886 Headquarte
Slide 32: Unquoted Pool – Acquisition of Cooke Optics
Unquoted Pool – Acquisition of Cooke Optics AGM 2018 31
Slide 33: Outlook
Outlook 1 Significant capital available for deployment 2 Pricing discipline remains key 3 Brexit negotiations and uncertain UK growth prospects an uncomfortable backdrop 4 Portfolio is positioned to continue to deliver performance in line with strategic targets and risk tolerance AGM 2018 32
Slide 34: Annual General Meeting
Annual General Meeting 19 July 2018 www.caledonia.com
Caledonia Investments — Shareholder Meeting (July 2018) on 6ix