Caledonia Investments PLC · LSE:CLDN

Caledonia Investments — FY2008 Earnings Presentation

28 slides from Caledonia Investments's earnings presentation, May 2008

  1. Slide 1: Presentation of Preliminary results to 31 March 2008

    Presentation of Preliminary results to 31 March 2008 www.caledonia.com

  2. Slide 2: About Caledonia

    About Caledonia „ Investment trust since 1 April 2003 „ Global Growth sector of investment trusts „ Quoted since 1960 (FTSE 250) „ Distinctive style: − Long term supportive shareholder − Significant minority stakes − Normally with board position − Focused approach: top 10 holdings represent more tha

  3. Slide 3: Principal Objectives

    Principal Objectives „ Outperform FTSE All-Share TR over 5 and 10 years „ Positive total returns over rolling five year periods „ Pay a progressive annual dividend 2

  4. Slide 4: Highlights to 31 March 2008

    Highlights to 31 March 2008 „ 4.6% decrease in diluted NAV per share - but 6.3% outperformance vs. FTSE All Share Index (down 10.9%) „ TSR increase − 254% over 5 years – 155% outperformance − 228% over 10 years – 187% outperformance „ Global Growth ranking (source: Lipper) − 9th out of 32 trusts (1

  5. Slide 5: Highlights to 31 March 2008 (continued)

    Highlights to 31 March 2008 (continued) „ £204m invested and £114m realised during the year „ Ungeared at year end „ Cautious stance - £12m invested in FTSE 250 put options - Counter-cyclical investments (e.g. Begbies Traynor, London & Stamford Property) - Hedge funds „ Continuing to invest in Asia

  6. Slide 6: Summary of the twelve months to 31 March 2008

    Summary of the twelve months to 31 March 2008 31.03.08 31.03.07 Change Diluted NAV per share 2155p 2258p -4.6% FTSE All-Share Index 2927 3283 -10.9% Share price 2050p 2066p -0.8% Discount 4.9% 8.5% narrowed 5

  7. Slide 7: Total return: 5 years

    Total return: 5 years to 31 March 2008 400 375 Total shareholder return rebased to 100 350 325 FTSE All-Share total return rebased to 100 300 275 250 225 200 175 150 125 100 75 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Sep-03 Dec-03 Sep-04 Dec-04 Sep-05 Dec-05 Sep-

  8. Slide 8: Diluted NAV per share performance: 31 March 2003 – 15 May 2008

    (p) 700 900 1,100 1,300 1,500 1,700 1,900 2,100 2,300 2,500 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Diluted NAV/share (p) Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05 O

  9. Slide 9: Annual dividend growth: 10 years to March 2008

    Annual dividend growth: 10 years to March 2008 175 Annual dividend Retail Price Index 150 125 100 98 99 00 01 02 03 04 05 06 07 08 Excluding a special dividend of 70p per share in relation to 2000 Caledonia dividend CAGR 4.7% RPI CAGR 2.8% Caledonia has a 41 year record of annual dividend growth 8

  10. Slide 10: Performance attribution for the 12 months and 5 years

    Performance attribution for the 12 months to 31 March 2008 and 5 years since conversion 12 month 5 year change (%) change (%) Net asset value per share performance -4.6% +135.0% FTSE All-Share Index -10.9% +68.6% Outperformance +6.3% +66.4% Relative performance due to sector exposure -2.2% +10.7% Re

  11. Slide 11: Principal outperformers in the year to 31 March 2008

    Principal outperformers year to 31 March 2008 Investment Value Net additions Value Gross % Change 31.03.07 less income 31.03.08 return in value distributions £m £m £m £m Oval 32.6 5.0 65.9 +28.3 +75% TGE Marine 19.9 -0.1 38.0 +18.2 +92% Bristow Group 38.8 -0.4 55.0 +16.6 +43% Cobepa 35.9 -0.8 48.0 +

  12. Slide 12: Principal underperformers in the year to 31 March 2008

    Principal underperformers year to 31 March 2008 Investment Value Net Value Gross % Change 31.03.07 additions 31.03.08 return in value less income distributions £m £m £m £m Close Brothers 182.2 -4.3 118.7 -59.2 -33% Quintain Estates 84.6 26.1 58.6 -52.1 -47% Incisive Media 16.5 15.6 14.4 -17.7 -55% P

  13. Slide 13: Principal investments in the year: new investments

    Principal investments in the year to 31 March 2008 „ Investments of £204m and realisations of £114m i) New investments Aggregate Percentage held £m £m London & Stamford Property 6.8% 19.5 Retif 15.4% 12.9 Vietnamese portfolio 9.7 Celona 49.9%* 5.0 Arihant 3.3% 1.0 48.1 C/fwd 48.1 * On conversion of

  14. Slide 14: Principal investments in the year: follow on investments

    Principal investments in the year to 31 March 2008 ii) Follow on investments Aggregate Percentage held £m £m Quintain Estates 10.0% 27.5 Incisive Media 15.6 Hedging subsidiary (FTSE 250 put options) 100% 12.0 Polar Capital funds 10.0 Eddington Capital fund 10.0 Serica Energy 13.2% 9.8 Oval 24.1%* 9.

  15. Slide 15: Principal realisations in the year

    Principal realisations in the year to 31 March 2008 £m Polar Capital Funds (Redemption) 23.3 Marketform (Full sale of holding) 21.0 CF AVI Global Fund (Redemption) 9.3 BIA Pacific Fund (Redemption) 6.0 Kandia (Capital distribution) 5.8 Pragma (Capital distribution) 5.7 Conduit Latin American Power F

  16. Slide 16: Significant activity since year end

    Significant activity since year end „ Flotation of TGE Marine on AIM „ Sale of FTSE put option and purchase of put spread „ ….but no major investments „ £22m of liquidity at the end of April 2008 15

  17. Slide 17: Portfolio value by business sector as at 31 March 2008

    Portfolio value by business sector as at 31 March 2008 26% Financial 30% 28% Funds 28% 13 % Property 14 % 9% Oil and Gas 9% 13 % Industrial 8% 2008 2007 11% Consumer 11% 0% 5% 10% 15% 20% 25% 30% 35% 16

  18. Slide 18: Portfolio value by security type as at 31 March 2008

    Portfolio value by security type as at 31 March 2008 55% Equities listed 62% Equities 20% unlisted 15% Loans and fixed 12 % income 9% 2008 Hedge and 13 % 2007 other funds 14 % 0% 20% 40% 60% 80% 17

  19. Slide 19: Portfolio value by currency as at 31 March 2008

    Portfolio value by currency as at 31 March 2008 77% Pound sterling 83% 10 % Euro 6% 7% US dollar 6% 5% Indian rupee 4% 2008 1% 2007 Other 1% 0% 20% 40% 60% 80% 100% 18

  20. Slide 20: Portfolio value by geography as at 31 March 2008

    Portfolio value by geography as at 31 March 2008 60% United Kingdom 6 7% 16 % Continental Europe 11% 7% North America 7% 11% Asia 12 % 1% Other countries 1% 2008 2007 5% Unallocated 2% 0% 20% 40% 60% 80% 100% 19

  21. Slide 21: Net assets as at 31 March 2008 vs. current nature limits

    Net assets as at 31 March 2008 vs. current nature limits Business Sector Currency Actual Nature Limit Actual Nature Limit % % % % Financial 26 40 Sterling 77 - Funds 28 30 Euro 10 15 Property 13 20 US Dollar 7 15 Consumer 11 30 Indian Rupee 5 10 Industrial/Oil & Gas 22 30 Other 1 10 100 100 20

  22. Slide 22: Share price discount/(premium) to NAV

    Share 40% Price discount/(premium) to NAV per share 1 Apr 2003: Conversion to 35% investment Caledonia Global Growth Sector trust status Share price discount/(premium) to NAV 30% 25% 4 5 % 20% 13 Jul 2006: 15% 4 5 % Elective special dividend paid 10% 21 Nov 2002: 5% Announcement of 2 Jul 2004: propo

  23. Slide 23: Movement in Retained Earnings in the year to 31 March 2008

    Movement in Retained Earnings in the year to 31 March 2008 £m £m Opening balance 268.8 Investment income 30.2 Interest receivable 4.1 303.1 Dividends: ordinary -18.2 284.9 Management expenses -11.2 Other (net) 0.6 Closing balance (all distributable) 274.3 22

  24. Slide 24: Key styles for outperformance

    Key styles for outperformance „ Identifying value creating and committed management teams „ Investing at lower prices than others „ Careful not to overpay „ Prepared to be geared (maximum 20%) when good opportunities available „ Structured unquoted investments „ Focus on few key investments (top 10

  25. Slide 25: Outlook

    Outlook „ Cautious approach „ Anticipate good conditions for investing „ Asia continues to present opportunities „ May take on some borrowing 24

  26. Slide 26: Comparison of Caledonia's costs vs. Private Equity Industry

    Comparison of Caledonia’s costs vs. Private Equity Industry Caledonia Private Equity* Year end £m £m 31.03.04 9.9 65.1 31.03.05 11.4 44.3 31.03.06 12.8 75.6 31.03.07 12.0 40.1 31.03.08 13.4 7.9# Total 59.5 233.0 Per share 102p 399p * Management’s estimates. Assumes Private Equity style fee of 2% + 2

  27. Slide 27: Potential of Caledonia's Investee Companies

    Potential of Caledonia’s Investee Companies „ Fund of Hedge Fund „ VCT? „ Indian funds „ Others? 26

  28. Slide 28: Performance driven

    4 =) CALEDONIA INVESTMENTS Gl Performance driven

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