Caledonia Investments PLC · LSE:CLDN
Caledonia Investments — Shareholder Meeting (July 2024)
37 slides from Caledonia Investments's shareholder meeting presentation, Jul 17, 2024
Slide 1: Annual General Meeting
Annual General Meeting 17 July 2024 www.caledonia.com
Slide 2: David Stewart, Chair
David Stewart Chair www.caledonia.com
Slide 3: Presentation of Full-year results
Presentation of Full-year results Year ended 31 March 2024 Mat Masters CEO Rob Memmott CFO Alan Murran Co-Head of Public Companies www.caledonia.com
Slide 4: 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 5: Caledonia
Caledonia Overview NAV Growth NAV total return growth since 2004 Self-managed investment company Caledonia NAV TR CPIH+4.5% 700 Net assets of £3.0 billion 600 500 Targeting long-term compounding real returns 400 CPIH +3% to +6% 300 200 Progressive dividend policy 100 2004 2009 2014 2019 2024 Success
Slide 6: Time Well Invested
Time Well Invested Our history, structure and culture underpins our long-term approach to investment We invest in high We buy to hold, investing in companies with strong market positions and fundamentals, alongside investments in private equity funds with track quality companies that records of succ
Slide 7: A well-balanced portfolio
A well-balanced portfolio Provides shareholders with access to both private and public companies globally Public Companies Private Capital Funds Strategic Allocation: 30%-40% Strategic Allocation: 25%-35% Strategic Allocation: 25%-35% • Global portfolio • Direct investments focused on high • Proven
Slide 8: 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 Industrials Industrials 27% Consumer discretionary 12% Includes Private Capital investments Inf
Slide 9: Long-term outperformance
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 over 10 years
Slide 10: Full-year results
Full-year results Year ended 31 March 2024 AGM 2024 9
Slide 11: Highlights
Highlights Year ended 31 March 2024 All investment pools contributed to growth, despite foreign exchange headwinds • Private Capital +12.3% Net assets ‒ Performance driven by sale of 7IM and good operating performance £3.0bn +7.4% ‒ Acquisition of AIR-serv Europe (5,369p per share) Total return • Pu
Slide 12: Private Capital
Private Capital Year ended 31 March 2024 AGM 2024 11
Slide 13: Private Capital
Private Capital Direct investments in established high quality businesses £820m invested in eight predominantly UK focused companies, with % Annualised Performance – Total return five investments representing over 90% of value 30% Performance 25% 23.5% 20% • 12.3% total return (12.9% in local curren
Slide 14: Private Capital: AIR-serv Europe
Private Capital AIR-serv Europe – leading designer and manufacturer of air, vacuum and jet wash machines Investment: Opportunity for growth in existing and new geographies • Date: April 2023 • £143m invested HQ Wigan, Lancashire Investment thesis: • Expand the installed machine estate, focusing c. 2
Slide 15: AIR-serv Europe value creation plan
Private Capital AIR-serv Europe – early stages in the value creation plan, business is performing well Key actions since acquisition: High performance products, built using the best quality Structure and governance parts and designed for durability: Standard Air Air & Screenwash Air, Vacuum & Standa
Slide 16: Four further investments
Private Capital Four further investments represent over 70% of the Private Capital pool’s value Valuation £181m Valuation £169m Valuation £135m Valuation £105m Return 4.3% Return 18.8% Return 2.6% Return -14.9% Year of Year of Year of Year of 2004 2019 2016 2018 Investment Investment Investment Inve
Slide 17: Public Companies
Public Companies Year ended 31 March 2024 AGM 2024 16
Slide 18: Public Companies
Public Companies High quality companies where long-term ownership will be rewarded Annualised Performance – total return £950m invested in 30 companies, with a bias towards resilient 15% Internal companies with high returns on capital and pricing power +12.7% targets 10.7% +10.2% Performance 10% 8.6
Slide 19: Watsco: Distributor of air conditioning equipment
Public Companies Watsco: Distributor of air conditioning, heating and refrigeration equipment (largest in North America) Long-term investment returns Overview2 22% annualised total return1 • Market leader in highly fragmented Timing of initial investments $60bn+ distribution industry • 2017 Capital
Slide 20: Watsco: 22% annualised total return
Public Companies Watsco: 22% annualised total return since inception Share price $2 Investment thesis: Top slicing of 18% at an avg price of $379 • Increasing investments in technology supports: Initial investment at an avg price of o Market share growth and margin $146 improvements Top up adding To
Slide 21: Funds
Funds Year ended 31 March 2024 AGM 2024 20
Slide 22: Funds
Funds Providing exposure to over 600 companies operating in North America and Asia £926m invested in 74 funds managed by 42 managers Annualised Performance – total return 59% focused on the North American lower mid market 25% buyouts and 41% on Asian buyout, growth & VC funds 20% +17.0% +17.3% +16.0
Slide 23: Realisations gaining momentum in North America
Funds Realisations gaining momentum in North America Portfolio maturity (excl. funds of funds) FY 2024 North America realisations Realisations < 1 year 5% North America 25 1 - 3 years 30% • Level of realisations in North America continuing to improve GBP £m 3 - 5 years 29% particularly in Q4 - under
Slide 24: New Heritage Capital
New Heritage Capital Boston-based, lower mid-market control buyout manager Background to relationship Target company criteria • The US lower mid-market has been a core part of our • Enterprise Value: $50m to $200m investment strategy for the last 15 years and we have built a • Revenue: $30m to $150m
Slide 25: New Heritage Capital
New Heritage Capital Boston-based, lower mid-market control buyout manager Portfolio company snapshots Healthcare Business Business Sub-sector Categories Specialty Manufacturing Services Services Services Sold Sold Portfolio Company Leading developer and Leading provider of mental Provider of SaaS-b
Slide 26: Financial review
44), CALEDONIA INVESTMENTS > Time Well Invested Financial review AGM 2024 25
Slide 27: Financial overview
Financial overview £3.0bn NAV – strong balance sheet with zero structural leverage £2.7bn Portfolio value – high quality, diversified portfolio 8.7% Portfolio return – good returns across all investment pools £477m Liquidity – significant liquidity to support investments 4.5% Increase in total divid
Slide 28: Investment portfolio and returns
Investment portfolio and returns Total portfolio return of 8.7% Investment movement (£m) Investments by Pool (£m) Net realisations £25m Funds Private Capital £926m £820m £2,696m Public Companies £950m Return Return Yield* % (excl. % FX) % Public Companies 12.0 13.7 3.7 Private Capital 12.3 12.9 3.9
Slide 29: Change in net asset value
Change in net asset value NAV return of 7.4% NAV movement (£m) Foreign Currency 7.4% Exposure (NAV) Total return £232m US dollar 52% Pound sterling 39% Euro 7% Other currencies 2% AGM 2024 28
Slide 30: Net cash & facilities
Net cash & facilities Significant liquidity available Movement in net cash (£m) • £250m RCF facility Net realisations £27m - £112.5m to July 2025 - £137.5m to November 2027 • £256m of 7IM sale proceeds received in January 2024 Caledonia Net Cash 31 March 2024 £227m Caledonia Liquidity £477m AGM 2024
Slide 31: Share buybacks and communications
Share buybacks and communications Share price undervalues the quality of investment portfolio and its long-term performance Share buybacks • Discount widened from 33.1% to 38.9% over the year Annualised NAVTR and TSR • 290,219 shares repurchased in March and April 2024 at an average discount of 36%
Slide 32: 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 33: Manifesto
Manifesto We believe in the power of time. While others fight against it, Trying to conquer every passing minute, We work with it. We invest it patiently and judiciously, Harnessing its power year after year. Never afraid to wait, but always ready to act. Time is key to our knowledge, the trust we'r
Slide 34: David Stewart, Chair
David Stewart Chair www.caledonia.com
Slide 35: Q&A
44), CALEDONIA Q&A INVESTMENTS Time Well Invested AGM 2024 34
Slide 36: Formal business
. 2.87, CALEDONIA Formal business ae INVESTMENTS > Time Well Invested AGM 2024 35
Slide 37: Annual General Meeting
Annual General Meeting 17 July 2024 www.caledonia.com
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