TIDMCLDN
RNS Number : 9650Z
Caledonia Investments PLC
27 May 2021
Caledonia Investments plc
Final results for the year ended 31 March 2021
Financial highlights
31 Mar 2021 31 Mar 2020 Change
Net asset value total return 25.9% -8.1%
Net asset value 4000p 3236p +23.6%
Net assets GBP2,225m GBP1,787m +24.5%
Annual dividend per share 62.9p 61.1p +2.9%
Hi ghlights
-- 25.9% NAV total return for the year.
-- 2.9% increase in the dividend to 62.9p per share, 54th consecutive
year of increase.
-- Strong investment returns across whole portfolio.
-- Negative impact from exchange rates on NAV total return of
6%.
-- Strong balance sheet with GBP249m of available resources
(GBP14m cash and GBP235m undrawn facilities).
Quoted Equity
-- Strong performance from Quoted Equity portfolios, up by 30.3%
in the year reflecting significant rebound in global public
equity markets and considered stock selection within both
the Capital and Income portfolios.
-- Performance of US public equities was particularly notable.
Private Capital
-- Private Capital portfolio performed well, generating total
return of 23.2%, despite loss on sale of holding in Buzz
Bingo.
-- Two substantial strategic bolt-on acquisitions made by portfolio
businesses during the year.
-- Portfolio companies recovering well from Covid-19 related
disruption.
Funds
-- Funds portfolio generated total return of 34.8% for the year.
-- Good underlying performance from PE fund investments
-- Reversion to fund valuations based on managers' NAV, without
GBP86m Covid-19 valuation adjustment applied last year.
Will Wyatt, Chief Executive , commented:
"Through what has been a challenging and uncertain period, our
diversified holdings have continued to perform, supporting our
strategy of growing net assets and dividends over the long
term.
"We remain confident that the strength of our portfolio,
invested in high-quality businesses across a range of geographies
and sectors, combined with our strong balance sheet and long-term
approach, will ensure that we can continue to deliver for our
shareholders."
26 May 2021
Enquiries
Caledonia Investments plc Tulchan Communications
Will Wyatt, Chief Executive Tom Murray
Tim Livett, Chief Financial Officer +44 20 7353 4200
+44 20 7802 8080
Chairman's statement
Results
The NAV total return ('NAVTR') for the year of 25.9% was strong
and included positive returns from each part of our portfolio. The
Quoted Equity pool delivered an annual return of 30.3%, aided by
the rebound in global equity markets. Investee companies within the
Private Capital portfolio, with the exception of Buzz Bingo,
adapted well to the challenges presented by Covid-19 to produce a
total return of 23.2%. The Funds portfolio delivered an annual
return of 34.8%, buoyed by good underlying fund performance. We
have retained a strong, largely ungeared balance sheet with total
liquidity of GBP249m available at 31 March 2021.
Income and dividend
Total income was GBP 45 m, a reduction of 16% from the previous
year. This reflects the negative impact of the pandemic on economic
activity in a small number of investee companies and the change in
focus of the Quoted Equity Income portfolio towards higher quality
businesses with slightly lower yields. The Board is recommending a
final dividend of 45.9p per share, which represents a full year
dividend of 62.9 p, an increase of 2.9% when compare to the
previous year. While this payment is not covered by the income
generated this year, the Board, cognisant of Caledonia's
significant retained earnings, believes the dividend is a crucial
element of the total return for our shareholders and that it is
appropriate to utilise the company's available reserves.
It also should be noted that no dividends have been received
during the year from The Liberation Group or Buzz Bingo, the only
two beneficiaries of the UK Government's job retention scheme in
our portfolio.
Covid-19
The pandemic has created uncertainty and financial hardship for
many people in the UK and overseas. Caledonia responded by
establishing a fund focused on assisting those employees working
for investee companies negatively impacted by Covid-19. The safety
and well-being of our staff, together with those working for our
investee companies, have been important priorities for the board
throughout this challenging period.
In response to the pandemic, central banks have provided
additional liquidity to alleviate these effects which has
benefitted the portfolio as a whole. As we look forward, The
Liberation Group, our remaining consumer leisure focussed business
is expected to benefit from pent up demand from customers,
particularly as trading restrictions ease.
The Caledonia team has excelled in adapting to remote working,
with IT colleagues ensuring systems and controls continued to
function seamlessly. We continue to believe that the office has an
important role to play to facilitate training and development and
to ensure that Caledonia's values and culture continue to permeate
amongst new recruits. We are now working on plans, following
official guidelines, to enable staff to return to the office via
increased use of a hybrid working model which recognises that many
have welcomed the flexibility that some home working has
brought.
Board and staff
On behalf of the board I would like to thank all Caledonia staff
for their outstanding response to the challenges faced over the
past year. Our strong financial performance speaks for itself but
this potentially understates the volatile market conditions
experienced and the hard work which has been required to respond
proactively to the many challenges faced.
The effectiveness of the board has been appraised in a recent
external review . This review, alongside a skills analysis of
current directors, will enable us to continue to refresh the board
with new non-executive directors. Caledonia remains committed to
increasing board diversity and this will be an important factor as
we commence a search for a new audit chair to replace Stuart
Bridges who is expected to retire during 2022.
Outlook
There are positive signs that vaccines will provide the answer
to society being able to live with Covid-19. However, there remains
a risk that new mutations of the disease will require further
adaptations of both vaccines and governmental response in order to
control their spread.
We continue to be confident that Caledonia's portfolio is
invested in assets that are of sufficient quality to weather most
storms and enable us to achieve our purpose of growing assets and
dividends over the long term. We also believe that the strength of
Caledonia's balance sheet will enable us to continue to take
advantage of opportunities as they arise.
David Stewart
Chairman
Chief Executive's report
Purpose
Caledonia's purpose is to grow net assets and dividends paid to
shareholders over the long term, whilst managing risk to avoid
permanent loss of capital.
Results for the year
The rapid recovery of markets from the sharp falls witnessed
towards the end of our previous financial year provided a
supportive backdrop to these results. The NAV total return for the
year was 25.9% which included positive results from each part of
our portfolio. The strength derived from our diversified holdings
in listed equities, directly owned private companies and funds,
helped to mitigate the effect of the pandemic. Overall, our
investments responded positively to the impact of Covid-19 on the
operating environment to deliver good growth in revenues and
earnings. The companies with a technology or healthcare focus have
witnessed particularly high levels of demand for their products and
services, leading to marked uplifts in growth, profits and
valuations.
There were two notable adverse impacts on investment returns for
the year. Caledonia supported an initial financial restructure of
one of the Private Capital portfolio businesses, Buzz Bingo, which
was particularly affected by the Government-enforced shutdown in
the summer of 2020, before choosing not to participate in a further
fundraising in March 2021. This resulted in the sale of our
interest for a nominal sum as previously announced, creating a
write-down in the year of GBP69m. In addition, with approximately
45% of our assets denominated in US dollars, the strengthening of
Sterling by some 11% over the year negatively impacted the annual
return by more than six percentage points.
Investment income in the year fell by 16% to GBP45m. This was
the result of a reduction in dividends received from portfolio
companies and from the Quoted Equity Income portfolio. The revenue
account of our income statement reflected this fall in income, with
the pre-tax profit for the year down by 34% to GBP22m. Total
pre-tax profit of GBP456m was recorded for the year, dominated by
net gains on investments of GBP437m (prior year GBP206m loss).
Maintaining a strong balance sheet remains a key component of
strategy, providing us with the flexibility to support our
portfolio (especially the illiquid assets) without being forced to
sell at a time not of our choosing. Caledonia's balance sheet
remains strong, with minimal gearing and access to bank facilities
of GBP250m. At the year-end there was a net debt position of GBP1m,
consisting of GBP15m of drawn facilities and a cash balance of
GBP14m. New or follow-on investments of GBP246m were made during
the year alongside divestments totalling GBP138m.
Investment performance
Caledonia aims to grow NAVTR by 3-6% ahead of inflation over the
short-term, leading to results over the long-term that exceed the
FTSE All-Share index. However, we incentivise the management and
the investment teams in line with these objectives on an absolute,
rather than a relative, return basis. The table below shows our
investment performance over one, three, five and ten years.
Performance of 8-9% per annum over three, five and ten year period
is ahead of the short-term target and long-term performance remains
satisfactory and within the target range, significantly
outperforming the FTSE All-Share index.
Years to 31 March 1 year 3 years 5 years 10 years
% % % %
------------------- ------- -------- -------- ---------
NAVTR 25.9 28.2 53.4 129.2
FTSE All-Share 26.7 9.9 35.7 79.0
NAVTR v FTSE
All-Share TR -0.8 +18.3 +17.7 +50.2
Annualised
NAVTR 25.9 8.6 8.9 8.6
RPI 1.6 2.2 2.6 2.5
NAVTR v RPI +24.3 +6.4 +6.3 +6.1
FTSE All-Share
TR 6.3 6.0
NAVTR v FTSE
All-Share TR +2.6 +2.6
------------------- ------- -------- -------- ---------
Strategy and allocation
The investment portfolio consists of the following three pools
of capital:
Pool name 2021 2020 Strategic allocation
% % %
----------------- ----- ----- ---------------------
Quoted Equity 32.2 32.1 35-50
Private Capital 37.2 34.2 35-45
Funds 28.6 25.2 20-30
Cash and other 2.0 8.5 +/-10
Net assets 100 100
----------------- ----- ----- ---------------------
The strategic allocation ranges shown in the table above are a
guide to ensure that the portfolio remains proportionately
balanced. During the year, the top end of the allocation to funds
was increased by 5% to 30%.
The table below summarises the pool targets and strategic
allocation:
Pool name Description Return requirements Strategic
allocation
------------------- ----------------------------- --------------------- ------------
10% total return,
no yield target
Capital strategy 7% total return,
Caledonia Quoted 3.5% yield (on
Equity Income strategy cost) 30-50%
Majority and minority
investments predominantly
in UK mid-market companies
with equity values
Caledonia Private of between GBP25m 14% total return,
Capital and GBP125m 5% yield 35-45%
US and Asian private
equity funds and funds
Caledonia Funds of funds 12.5% total return 20-30%
------------------- ----------------------------- --------------------- ------------
Pool performance
Years to 31 1 year 3 years 5 years 10 years
March
Pool name % % % %
Quoted Equity 30.3 48.9 76.7 139.7
Capital portfolio 35.9 66.6 108.2 178.3
Income portfolio 17.5 16.3 23.0 n/a
Private Capital 23.2 12.5 42.6 153.7
Funds 34.8 50.6 100.3 247.4
Portfolio 30.0 36.0 69.7 166.4
Caledonia Quoted Equity
The total return of the Quoted Equity portfolio was 30.3% for
the year. This strong performance reflected the significant rebound
in global public equity markets and considered stock selection
within both the Capital and Income portfolios, which delivered
total returns of 35.9% and 17.5% respectively. The performance of
the US public equities in both portfolios was particularly notable
and was responsible for the majority of the returns. As can be seen
in the table above, the three and five year performance of the
Capital portfolio has been outstanding, with comparative five year
returns from the S+P500 of 116% and FTSE100 of 32%.
Trading activity over the year has been limited, in line with
our long-term investment approach. In the Capital portfolio Waters
Corporation, a laboratory and software company, was the single
significant disposal, alongside reduced positions in a small number
of other holdings. The evolution of the Income portfolio has
included developing new positions in Fortis Inc, a North American
utilities business, and in international consumer business Reckitt
and the sale of our holdings in Direct Line and Tritax Big Box.
Caledonia Private Capital
Caledonia's Private Capital portfolio includes significant
positions in five UK businesses and one private European investment
company. These six investments represent over 90% of its value. The
portfolio recovered strongly and generated a total return of 23.2%
for the year, including the absorption of the write-down of GBP69m
relating to the holding in Buzz Bingo. The industrial and financial
services businesses have adapted well to the Covid-19 environment
and have been trading strongly. The impact of the pandemic has been
felt more acutely by Liberation Group and, prior to disposal, Buzz
Bingo. The investment in Cobehold and its diverse portfolio
continues to perform well.
The holding in Buzz Bingo, the UK's biggest omni-channel bingo
business, was sold for a nominal sum in March 2021 after a very
challenging year. In summer 2020, following a period of retail club
closures caused by the Government's response to the Covid-19
pandemic, the business successfully completed a company voluntary
arrangement. Retail trading post re-opening was good but renewed
opening restrictions through the late autumn and winter periods
resulted in further significant losses which led Buzz Bingo to
review its funding options once again. Caledonia, having carefully
assessed the available investment opportunity, chose not to
participate in the resulting funding round and we disposed of our
interest. Lessons have been learnt from this disappointing outcome
particularly in regard to the scale of business that we invest in
and the structuring of debt within investee companies.
The Liberation Group, a pub, restaurant and drinks business with
operations predominantly in the Channel Islands and the South West
of the UK has been heavily impacted by Covid-19 restrictions. While
the business traded well through the summer and autumn periods, it
has suffered further Government-enforced closures of its pubs and
restaurants over recent months. However, the UK brewery has
operated throughout the period, supporting trade and growing online
sales. The wholesale businesses in Jersey and Guernsey also
remained open and traded strongly. In November 2020, Caledonia
invested GBP36m of new equity to support the acquisition of a
substantial portfolio of pubs from Wadworth, complementing existing
UK sites, and various value accretive capital projects across the
enlarged estate. This investment, backed by the strong trading
performance last summer, reflects our confidence in the long-term
prospects for the business.
The financial services businesses, Seven Investment Management
('7IM') and Stonehage Fleming, have developed well during the year.
Both businesses have seen strong growth in the level of assets
under management achieved through a mix of fund performance, fund
inflows and acquisitions which has resulted in good trading
performances. 7IM acquired Partners Wealth Management, a high net
worth financial planning business, at the end of September, and
Stonehage Fleming acquired Cavendish Asset Management in July
2020.
Deep Sea Electronics ('DSE') and Cooke Optics ('Cooke'), our
industrial businesses, have traded successfully through the year.
The performance of DSE has been particularly strong, with good
growth, product development and cash generation. The control
technology developed by DSE should have wide applications in the
development of mixed source power provision, providing further
growth opportunities. Performance at Cooke improved in the second
half of the year due to better operational planning and controls,
new senior appointments and an uplift in demand as film related
activity returned to more normal levels.
The market for private businesses remains buoyant, and we
regularly receive offers for our businesses from interested parties
there being three such approaches of note in the past year. These
conversations often lead nowhere but can develop into a process
which might conclude in a sale of a business. The insight gained
from these indicative offers is incorporated into our valuation
process and can lead to a situation where the range of reasonable
fair value estimates for a given asset can be significant. The
private equity industry has raised a substantial amount of capital
to deploy and we anticipate further mergers and acquisitions in the
future.
Caledonia Funds
The total return for the Funds portfolio was 34.8% for the year.
This reflects good underlying fund performance, which reverted to
valuations based on managers' NAV, without the need to reflect the
potential Covid-19 impact as was the case in March 2020.
Caledonia's valuation policy is to utilise the latest valuations
reported by managers of the funds in which it is invested.
Our fund investments are principally in third party managed
private equity funds operating in the US and Asia. The feedback
from the fund managers is currently positive, with a clear majority
of the investee businesses progressing in line with, or ahead of,
internal plans. The level of transactional activity picked up
strongly in the second half of the year with several successful
exits delivered through trade sales or IPOs. Over the year,
Sterling has strengthened by 11% compared to the US dollar,
creating a significant headwind to the positive returns from this
portfolio.
The strategy for the Funds portfolio involves committing around
US$100m per annum to new fund opportunities. During the year,
GBP109m was invested and distributions of GBP87m were received. As
noted earlier, there was a notable pick up in distributions as we
progressed through the year, with 84% of the distributions received
in the second half of the year.
Covid-19
Covid-19 has had a major impact on our businesses and the people
who work within them. We have made every effort to keep our staff
safe, motivated and able to fulfil their roles effectively despite
the challenges they have faced from lockdowns, social distancing
and remote working. We have deployed technology to allow staff to
work effectively from home with business meetings and events held
virtually.
We have equally been aware of the impact on the employees of our
investee companies. The Caledonia Fund was established in spring
2020 to support employees of these business suffering financial
hardship due to the pandemic. This fund has supported staff
particularly at Buzz Bingo and Liberation Group, the two businesses
most adversely affected by lockdown regulations over the past
year.
Responsible Investment
As a long-term investor our aim is to identify companies that
can generate sustainable growth. We believe that responsible
investment and business success go hand in hand. We also understand
that environmental, social and governance ('ESG') factors are
important to our shareholders and broader stakeholders.
Historically our stewardship activities have focused primarily on
governance matters. Our intent is to build on this approach by
fully incorporating ESG matters into our investment decision making
and monitoring processes; we aim to progress this area over the
coming year.
Outlook
The outlook for our financial year ending 31 March 2022 is
dependent on the continued management of the Covid-19 pandemic and
its economic impact around the world. The response by central banks
has been fulsome and timely, ensuring that there has been
sufficient liquidity in the financial system to allow its continued
operation. A consequence might be increased volatility on any signs
that this largesse might be tempered. We also remain appropriately
cautious that the valuations of assets remain elevated. There are
also nascent risks associated with higher inflation as pent up
demand potentially exceeds supply and the effects of broken global
supply chains and increasing domestic protectionism become more
prevalent.
The majority of our assets are in a good position to withstand
this challenging period of continuing uncertainty. We will maintain
our considered approach to new investment opportunities and
protecting our strong balance sheet. We believe that the portfolio
is well placed to achieve our aims of growing net assets and
dividends paid to shareholders over the long-term.
Will Wyatt
Chief Executive
Investments summary
Holdings over 1% of net assets at 31 March 2021 were as
follows:
Net
Value assets
Name Pool Geography Business GBPm %
------------------------- ---------------- ---------- ----------------------- -------- ------
Deep Sea Electronics Private Capital UK Control systems 193.0 8.7
Liberation Group Private Capital Jersey Pubs & restaurants 127.7 5.7
Seven Investment
Management Private Capital Jersey Investment management 126.4 5.7
Stonehage Fleming Private Capital Guernsey Family office services 115.5 5.2
Cobehold Private Capital Belgium Investment company 112.3 5.0
Aberdeen US PE funds Funds US Funds of funds 98.2 4.4
Cooke Optics Private Capital UK Cine lens manufacturer 95.6 4.3
Axiom Asia funds Funds Asia Funds of funds 72.5 3.3
Texas Instruments Quoted Equity US Semiconductors 54.0 2.4
Watsco Quoted Equity US Ventilation products 50.8 2.3
Microsoft Quoted Equity US Software 50.6 2.3
Oracle Quoted Equity US Software 48.4 2.2
Charter Communications Quoted Equity US Cable communications 40.7 1.8
Stonepeak funds Funds US Private equity funds 39.8 1.8
Asia Alternatives
funds Funds Asia Funds of funds 39.1 1.8
British American
Tobacco Quoted Equity UK Tobacco & Vaping 36.2 1.6
Spirax-Sarco Quoted Equity UK Steam engineering 34.0 1.5
Polar Capital Quoted Equity UK Fund manager 33.6 1.5
Pharma & life science
Thermo Fisher Scientific Quoted Equity US services 33.2 1.5
Fastenal Quoted Equity US Industrial supplies 32.8 1.5
Hill & Smith Quoted Equity UK Infrastructure 31.6 1.4
JF Lehman funds Funds US Private equity funds 30.8 1.4
Decheng funds Funds Asia/US Private equity funds 30.3 1.4
LYFE fund Funds Asia Private equity funds 28.4 1.3
Unilever Quoted Equity UK Consumer goods 28.2 1.3
BioAgilytix Private Capital US Bioanalytical testing 26.2 1.2
Becton Dickinson Quoted Equity US Medical technology 25.7 1.2
PAG Asia fund Funds Asia Private equity funds 25.6 1.2
AG Barr Quoted Equity UK Drinks manufacturing 22.1 1.0
Croda International Quoted Equity UK Chemicals 21.4 1.0
Other investments 475.3 21.1
Investment portfolio 2,180.0 98.0
Non-pool investments 14.0 0.6
Cash and other 31.3 1.4
-------------------------------------------------------------------------------- -------- ------
Net assets 2,225.3 100.0
-------------------------------------------------------------------------------- -------- ------
Geography is based on the country of listing, country of
domicile for unlisted investments and underlying regional analysis
for funds.
Risk management
Effective risk management is a key component of the company's
business model and assists in ensuring that the different parts of
the group operate within strategic risk parameters. The board has
overall responsibility for setting and monitoring the company's
risk appetite.
Principal risks Mitigation Key developments
----------------------------- ------------------------------- -----------------------------
Strategic
Risks in relation The company's business Approach to ESG and
to the appropriateness model and strategy climate change under
of the business model are reviewed periodically, development, with
to deliver long-term against market conditions commitment to fully
growth in capital and target returns. integrate into corporate
and income. strategy in the current
The performance of financial year.
Strategic risks include the company and its
the allocation of key risks are monitored Quoted Equity strategy
capital between public regularly by management for Income portfolio
and private equity, and the board. implemented with emphasis
and in relation to on yield quality;
geography, sector, partially complete
currency, yield, liquidity, and continuing in
ESG factors and climate the current financial
change. year.
Private Capital focus
now on driving value
creation from existing
portfolio of businesses.
Annual net cash requirement
for Funds pool diminishes
as the portfolio matures.
----------------------------- ------------------------------- -----------------------------
Investment
Risks in respect of Investment opportunities Quoted Equity pool
specific investment are subject to rigorous has developed a "quality
and realisation decisions. appraisal and a multi-stage matrix" to guide robust
approval process. investment decision
Investment risks include Investment managers making and ongoing
the appropriate research have well-developed monitoring.
and due diligence networks through which
of new investments they attract proprietary ESG and climate change
and the timely execution deal flow. considerations will
of both investments be factored explicitly
and realisations for Target entry and exit into investment decision
optimising value. events and prices making and monitoring
are monitored and in the current financial
updated regularly, year.
in relation to market
conditions and strategic Funds portfolio commitment
aims. level supports detailed
due diligence of existing
and potential managers,
supporting robust
manager selection
----------------------------- ------------------------------- -----------------------------
Market
Risk of losses in Market risks and sensitivities Quoted Equity pool
value of investments are reviewed weekly operates a structured
arising from sudden with actions taken, approach to market
and significant movements where appropriate, price movements; purchases
in market prices, to balance risk and only made when target
particularly in highly return. stocks are in the
volatile markets. correct price range
A regular review of and systematic reductions
Caledonia's principal market and portfolio made to holdings when
market risks are therefore volatility is conducted prices rise above
equity price volatility, by the board. Reviews target levels.
foreign exchange rate also consider investment
movements and interest concentration, currency Foreign exchange exposure
rate volatility. exposure and portfolio reduced using hedging
liquidity. contracts in the second
half of the year,
which were then closed
in March 2020. Balance
sheet currently fully
exposed to foreign
exchange movement
with use of hedging
under periodic review
in line with market
movements.
----------------------------- ------------------------------- -----------------------------
Liquidity
Risk that liabilities Detailed cash forecasting Significantly improved
cannot be met or new for six months ahead three year financial
investments made due is updated and reviewed planning in place
to a lack of liquidity. weekly, including providing a more robust
Such risk can arise the expected drawdown liquidity outlook.
from not being able of capital commitments.
to sell an investment Committed banking
due to lack of a market Loan facilities are facilities of GBP250m
or from not holding maintained to provide in place. Overdraft
cash or being able appropriate liquidity facilities renewed
to raise debt. headroom. The liquidity with RBSI and HSBC
of the portfolio is renewal underway.
reviewed regularly.
Short term capital
requirements for Private
Capital pool largely
removed following
decision to focus
on existing portfolio
businesses.
Strong performance
of Quoted Equity portfolios
provides increased
level of highly liquid
assets.
----------------------------- ------------------------------- -----------------------------
Operational
Risks arising from Systems and control Full review of approach
inadequate or failed procedures are developed to cyber security
processes, people and reviewed regularly. and technology undertaken
and systems or from They are tested to using third party
external factors. ensure effective operation. expertise. Limited
areas for further
Operational risks Appropriate remuneration improvements identified
arise from the recruitment, and other policies and implemented to
development and retention are in place to facilitate mitigate risk of malicious
of staff, systems the retention of key threats.
and procedures and staff. Business continuity
business disruption plans are maintained Business cyber security
and updated as the group established
business evolves, to raise awareness
and in response to and champion new processes
emerging threats. to limit vulnerabilities.
Enhanced cyber security
training and testing
regime deployed to
all staff.
Programme of work
underway to upgrade
/ replace key back
office business systems
to provide enhanced
functionality and
management information.
Successful recruitment
of senior staff into
the finance team.
----------------------------- ------------------------------- -----------------------------
Global pandemic (Covid-19)
Operational risk arising Operational risk mitigated Remote, secure working
from staff sickness by robust IT contingency swiftly introduced,
and other restrictions planning, secure remote supported with effective
adversely impacting working and careful technology.
critical business adherence to the latest
operations. government guidance. Staff welfare and
ongoing communication
Investment risk due Increased frequency prioritised.
to limitations on of investment reviews,
earnings growth and particularly Private Additional operational
NAV performance from Capital businesses, and financial support
key investments, coupled to identify, assess provided, as needed,
with erosion of market and address pandemic for Private Capital
confidence. related risks. businesses.
Liquidity further
enhanced to provide
increased flexibility
to respond to market
conditions.
----------------------------- ------------------------------- -----------------------------
Regulatory and legal
Risk arising from Caledonia has internal Approach to ESG and
exposure to litigation resources to consider climate change, subject
or fraud or failure regulatory and tax to ongoing development,
to adhere to the tax matters as they arise: to be integrated into
and regulatory environment. with professional corporate strategy
Caledonia operates advisers engaged where in the current financial
across a number of necessary to supplement year.
jurisdictions and internal knowledge
in an industry that in specialised areas. Health and safety
has been subject to protocols developed
increasing regulatory Caledonia is a member and implemented for
oversight. of the Association Covid-19 working in
of Investment Companies line with evolving
and operates in line government guidance.
with industry standards.
Regular staff training
----------------------------- ------------------------------- -----------------------------
EU/UK trade
Risk arising from Continued monitoring Private Capital businesses
a failure to reach of performance of have adapted supply
a trade agreement directly held unquoted chain activity successfully
with the EU adds cost investments and business to address new trading
to UK trade and negatively model exposure to arrangements, without
impacts economic growth. potential EU/UK trade any significant adverse
arrangements. impact.
Potential volatility
to public equity and Continued monitoring No change required
foreign exchange markets of public equity and to head office operations.
due to uncertainty foreign exchange market
surrounding a trade in response to EU/UK Continued monitoring
agreement and its trade negotiations. of the potential impact
potential impact. of further EU/UK trade
negotiations on our
public equities and
our Private Capital
businesses.
Group statement of comprehensive income
for the year ended 31 March 2021
2021 2020
Revenue Capital Total Revenue Capital Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ------- ------- ------ ------- ------- -------
Revenue
Investment income 44.6 - 44.6 53.4 - 53.4
Other income 0.1 0.8 0.9 - - -
Net gains and losses on fair
value investments - 437.0 437.0 - (206.3) (206.3)
Net gains and losses on fair
value property - 3.2 3.2 - - -
Total revenue 44.7 441.0 485.7 53.4 (206.3) (152.9)
Management expenses (18.9) (7.6) (26.5) (17.2) 0.6 (16.6)
Profit/(loss) before finance
costs 25.8 433.4 459.2 36.2 (205.7) (169.5)
Treasury interest receivable 0.1 - 0.1 0.6 - 0.6
Finance costs (2.7) - (2.7) (2.1) - (2.1)
Exchange movements (0.8) - (0.8) (0.9) - (0.9)
--------------------------------- ------- ------- ------ ------- ------- -------
Profit/(loss) before tax 22.4 433.4 455.8 33.8 (205.7) (171.9)
Taxation 7.4 2.8 10.2 0.8 (1.8) (1.0)
--------------------------------- ------- ------- ------ ------- ------- -------
Profit/(loss) for the year 29.8 436.2 466.0 34.6 (207.5) (172.9)
Other comprehensive income
items never to be reclassified
to profit or loss
Re-measurements of defined
benefit pension schemes - 2.3 2.3 - 1.1 1.1
Tax on other comprehensive
income - (0.7) (0.7) - (0.7) (0.7)
Total comprehensive income 29.8 437.8 467.6 34.6 (207.1) (172.5)
Basic earnings per share 54.3p 795.0p 849.3p 63.1p -378.1p -315.0p
Diluted earnings per share 53.6p 784.2p 837.8p 62.6p -378.1p -315.0p
--------------------------------- ------- ------- ------ ------- ------- -------
The total column of the above statement represents the group's
statement of comprehensive income, prepared in accordance with
IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union.
The revenue and capital columns are supplementary to the group's
statement of comprehensive income and are prepared under guidance
published by the Association of Investment Companies.
The profit for the year and total comprehensive income for the
year is attributable to equity holders of the parent.
Statement of financial position
at 31 March 2021
Group Company
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
--------------------------------------- ------- ------- ------- -------
Non-current assets
Investments held at fair value through
profit or loss 2,194.0 1,656.7 2,198.9 1,658.1
Investments in subsidiaries held at
cost - - 0.9 0.9
Investment property 13.3 8.7 - -
Property, plant and equipment 29.0 28.0 - -
Deferred tax assets 8.4 1.0 6.1 -
Employee benefits 4.0 5.1 - -
Non-current assets 2,248.7 1,699.5 2,205.9 1,659.0
---------------------------------------- ------- ------- ------- -------
Current assets
Trade and other receivables 3.4 6.6 37.7 36.4
Current tax assets 7.3 2.6 7.3 2.6
Cash and cash equivalents 14.2 114.7 14.5 112.6
---------------------------------------- ------- ------- ------- -------
Current assets 24.9 123.9 59.5 151.6
---------------------------------------- ------- ------- ------- -------
Total assets 2,273.6 1,823.4 2,265.4 1,810.6
---------------------------------------- ------- ------- ------- -------
Current liabilities
Trade and other payables (26.4) (30.0) (34.9) (30.0)
Employee benefits (2.6) (0.9) - -
Current liabilities (29.0) (30.9) (34.9) (30.0)
---------------------------------------- ------- ------- ------- -------
Non-current liabilities
Interest bearing loans and borrowings (15.0) - (15.0) -
Employee benefits (2.9) (5.2) - -
Deferred tax liabilities (1.4) - - -
Non-current liabilities (19.3) (5.2) (15.0) -
---------------------------------------- ------- ------- ------- -------
Total liabilities (48.3) (36.1) (49.9) (30.0)
---------------------------------------- ------- ------- ------- -------
Net assets 2,225.3 1,787.3 2,215.5 1,780.6
---------------------------------------- ------- ------- ------- -------
Equity
Share capital 3.2 3.2 3.2 3.2
Share premium 1.3 1.3 1.3 1.3
Capital redemption reserve 1.3 1.3 1.3 1.3
Capital reserve 1,979.1 1,541.3 1,979.8 1,543.2
Retained earnings 254.3 255.5 243.8 246.9
Own shares (13.9) (15.3) (13.9) (15.3)
---------------------------------------- ------- ------- ------- -------
Total equity 2,225.3 1,787.3 2,215.5 1,780.6
---------------------------------------- ------- ------- ------- -------
Undiluted net asset value 4055p 3259p
Diluted net asset value 4000p 3236p
---------------------------------------- ------- ------- ------- -------
The Company profit for the year ended 31 March 2021 was
GBP464.5m (2020: GBP175.3m loss)
The financial statements were approved by the board and
authorised for issue on 26 May 2021 and were signed on its behalf
by:
Will Wyatt Tim Livett
Chief Executive Chief Financial Officer
Statement of changes in equity
for the year ended 31 March 2021
Capital
Share Share redemption Capital Retained Own Total
capital premium reserve reserve earnings shares equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Group
Balance at 31 March 2019 3.2 1.3 1.3 1,748.4 292.4 (44.6) 2,002.0
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income
Loss for the year - - - (207.5) 34.6 - (172.9)
Other comprehensive income - - - 0.4 - - 0.4
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income - - - (207.1) 34.6 - (172.5)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners
of the company
Contributions by and distributions
to owners
Share-based payments - - - - (1.5) - (1.5)
Transfer of shares to employees - - - - (37.2) 37.2 -
Own shares purchased - - - - - (7.9) (7.9)
Dividends paid - - - - (32.8) - (32.8)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (71.5) 29.3 (42.2)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2020 3.2 1.3 1.3 1,541.3 255.5 (15.3) 1,787.3
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income
Profit for the year - - - 436.2 29.8 - 466.0
Other comprehensive income - - - 1.6 - - 1.6
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total comprehensive income - - - 437.8 29.8 - 467.6
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners
of the company
Contributions by and distributions
to owners
Share-based payments - - - - 5.5 - 5.5
Transfer of shares to employees - - - - (2.8) 2.8 -
Own shares purchased - - - - - (1.4) (1.4)
Dividends paid - - - - (33.7) - (33.7)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (31.0) 1.4 (29.6)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2021 3.2 1.3 1.3 1,979.1 254.3 (13.9) 2,225.3
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Company
Balance at 31 March 2019 3.2 1.3 1.3 1,754.2 282.7 (44.6) 1,998.1
Loss and total comprehensive
income - - - (211.0) 35.7 - (175.3)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners
of the company
Contributions by and distributions
to owners
Share-based payments - - - - (1.5) - (1.5)
Transfer of shares to employees - - - - (37.2) 37.2 -
Own shares purchased - - - - - (7.9) (7.9)
Dividends paid - - - - (32.8) - (32.8)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (71.5) 29.3 (42.2)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2020 3.2 1.3 1.3 1,543.2 246.9 (15.3) 1,780.6
Profit and total comprehensive
income - - - 436.6 27.9 - 464.5
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Transactions with owners
of the company
Contributions by and distributions
to owners
Share-based payments - - - - 5.5 - 5.5
Transfer of shares to employees - - - - (2.8) 2.8 -
Own shares purchased - - - - - (1.4) (1.4)
Dividends paid - - - - (33.7) - (33.7)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Total transactions with owners - - - - (31.0) 1.4 (29.6)
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Balance at 31 March 2021 3.2 1.3 1.3 1,979.8 243.8 (13.9) 2,215.5
----------------------------------- ------- ------- ---------- ------- -------- ------ -------
Statement of cash flows
for the year ended 31 March 2021
Group Company
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- ------- -------
Operating activities
Dividends received 42.3 48.8 42.3 48.8
Interest received 2.3 1.7 2.3 1.7
Cash received from customers 0.1 - - -
Cash paid to suppliers and employees (17.8) (23.3) (14.4) (28.7)
Taxes received 0.1 0.2 0.1 0.2
Taxes paid (0.1) (0.1) (0.1) (0.1)
Group tax relief received 0.9 3.7 0.7 3.7
Group tax relief paid - (0.1) (0.2) -
Net cash flow from operating activities 27.8 30.9 30.7 25.6
-------------------------------------------- ------- ------- ------- -------
Investing activities
Purchases of investments (240.2) (383.1) (240.2) (383.1)
Proceeds from disposal of investments 142.7 397.2 142.2 399.6
Purchases of property, plant and equipment (3.5) (2.7) - -
Net cash flow from/(used in) investing
activities (101.0) 11.4 (98.0) 16.5
-------------------------------------------- ------- ------- ------- -------
Financing activities
Interest paid (3.1) (1.7) (2.9) (1.6)
Dividends paid to owners of the company (33.7) (32.8) (33.7) (32.8)
Proceeds from bank borrowings 65.0 10.0 65.0 10.0
Repayment of bank borrowings (50.0) (10.0) (50.0) (10.0)
Loan receipts from subsidiaries - 2.5 - 2.5
Loan payments to subsidiaries (4.1) - (7.8) (1.0)
Purchases of own shares (1.4) (7.9) (1.4) (7.9)
-------------------------------------------- ------- ------- ------- -------
Net cash flow used in financing activities (27.3) (39.9) (30.8) (40.8)
-------------------------------------------- ------- ------- ------- -------
Net increase/(decrease) in cash and
cash equivalents (100.5) 2.4 (98.1) 1.3
Cash and cash equivalents at year start 114.7 112.3 112.6 111.3
Cash and cash equivalents at year end 14.2 114.7 14.5 112.6
-------------------------------------------- ------- ------- ------- -------
Notes to the final results announcement
1. General information and basis of preparation
Caledonia Investments plc is an investment trust company
domiciled in the United Kingdom and incorporated in England in
1928, under number 235481. The address of its registered office is
Cayzer House, 30 Buckingham Gate, London SW1E 6NN. The ordinary
shares of the company are premium listed on the London Stock
Exchange.
Under the UK Corporate Governance Code and applicable
regulations, the directors are required to satisfy themselves that
it is reasonable to presume that the company is a going concern.
The group balance sheet shows net current liabilities of GBP4.1m,
as a result of trade payables due within 12 months. As at 31 March
2021 the group holds GBP730m of liquid assets and has access to
GBP235m of undrawn committed banking facilities, GBP97.5m of which
expires in July 2022 and GBP137.5m of which expires in May 2025.
The directors therefore believe the group will be able to meet
these current liabilities as they fall due for at least 12 months
from the date of approval of the financial statements.
The group has conducted a going concern assessment which
considered future cash flows, the availability of liquid assets and
debt facilities, banking covenant requirements and consideration of
the risks arising from the Covid-19 pandemic over at least 12
months from the date of approval of these financial statements. In
making this assessment a number of stress scenarios were developed.
A severe but plausible scenario assumed: (a) reduction in income
from quoted equities and privately held investments; (b) a
significant fall in distributions from private equity funds; and
(c) continued investment into private businesses. A stress scenario
used the above assumptions and additionally assumed that (d) all
outstanding private equity fund commitments are drawn.
Under these scenarios the group would have a range of mitigating
actions available to it, including usage of banking facilities,
disposal of some liquid assets and reduction in discretionary spend
which would enable it to meet all of its liabilities as they fall
due and still hold significant liquid assets over the assessment
period. As a result of this assessment the directors are confident
that the company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
2. Dividends
Amounts recognised as distributions to owners of the company in
the year were as follows:
2021 2020
p/share GBPm p/share GBPm
--------------------------------------------------------- ------- ---- ------- ----
Final dividend for the year ended 31 March 2020 (2019) 44.5 24.4 43.2 23.7
Interim dividend for the year ended 31 March 2021 (2020) 17.0 9.3 16.6 9.1
61.5 33.7 59.8 32.8
--------------------------------------------------------- ------- ---- ------- ----
Amounts proposed after the year end and not recognised in the
financial statements were as follows:
Proposed final dividend for the year ended 31 March 2021 45.9 25.2
--------------------------------------------------------- ---- ----
The proposed final dividend for the year ended 31 March 2021 was
not included as a liability in these financial statements. This
dividend, if approved by shareholders at the annual general meeting
to be held on 21 July 2021, will be payable on 5 August 2021 to
holders of shares on the register on 2 July 2021. The ex-dividend
date will be 1 July 2021. The deadline for elections under the
dividend reinvestment plan offered by Link Group will be the close
of business on 15 July 2021.
For the purposes of section 1158 of the Corporation Tax Act 2010
and associated regulations, the dividends payable for the year
ended 31 March 2021 are the interim and final dividends for that
year, amounting to GBP34.5m (2020 - GBP33.5m).
3. Earnings per share
Basic and diluted earnings per share
The calculation of basic earnings per share of the group was
based on the profit/(loss) attributable to shareholders and the
weighted average number of shares outstanding during the year. The
calculation of diluted earnings per share included an adjustment
for the effects of dilutive potential shares.
The profit/(loss) attributable to shareholders (basic and
diluted) was as follows:
2021 2020
GBPm GBPm
-------- ----- -------
Revenue 29.8 34.6
Capital 436.2 (207.5)
-------- ----- -------
Total 466.0 (172.9)
-------- ----- -------
The weighted average number of shares was as follows:
2021 2020
000's 000's
---------------------------------------------------------------------- ------ ------
Issued shares at the year start 55,374 55,374
Effect of shares held by the employee share trust (507) (490)
---------------------------------------------------------------------- ------ ------
Basic weighted average number of shares in the year 54,867 54,884
Effect of performance shares, share options and deferred bonus awards 754 388
---------------------------------------------------------------------- ------ ------
Diluted weighted average number of shares in the year 55,621 55,272
---------------------------------------------------------------------- ------ ------
4. Operating segments
The following is an analysis of the profit/(loss) before tax for
the year and assets analysed by primary operating segments:
Profit/(loss) before tax Total assets
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
-------------------------- ------------ ------------ ------- -------
Quoted Equity 174.0 (1.7) 716.1 574.0
Private Capital 150.0 (128.5) 826.8 611.3
Funds 165.9 (13.6) 637.1 450.1
Investment portfolio 489.9 (143.8) 2,180.0 1,635.4
Other investments (4.2) (9.1) 14.0 21.3
-------------------------- ------------ ------------ ------- -------
Total revenue/investments 485.7 (152.9) 2,194.0 1,656.7
Cash and cash equivalents 0.1 0.6 14.2 114.7
Other items (30.0) (19.6) 65.4 52.0
-------------------------- ------------ ------------ ------- -------
Reportable total 455.8 (171.9) 2,273.6 1,823.4
-------------------------- ------------ ------------ ------- -------
5. Share-based payments
In the year to 31 March 2021, participating employees in the
performance share scheme were awarded options over 273,597 shares
at nil-cost (2020 - 239,138 shares).
Also in the year to 31 March 2021, participating employees
received deferred awards over 5,229 shares (2020 - 41,386
shares).
The IFRS 2 expense included in profit or loss for the year was
GBP6.3m (2020 - GBP2.4m credit).
6. Net asset value
The group's undiluted net asset value is based on the net assets
of the group at the year end and on the number of ordinary shares
in issue at the year-end less ordinary shares held by The Caledonia
Investments plc Employee Share Trust. The group's diluted net asset
value assumes the calling of performance share and deferred bonus
awards.
2021 2020
Net Number Net Number
assets of shares(1) NAV assets of shares(1) NAV
GBPm 000's p/share GBPm 000's p/share
------------- ------- ------------ ------- ------- ------------ -------
Undiluted 2,225.3 54,882 4055 1,787.3 54,839 3259
Share awards - 754 (55) - 388 (23)
------------- ------- ------------ ------- ------- ------------ -------
Diluted 2,225.3 55,636 4000 1,787.3 55,227 3236
------------- ------- ------------ ------- ------- ------------ -------
(1) . Number of shares in issue at the year-end is stated after
the deduction of 491,716 (2020: 535,092) ordinary shares held by
the Caledonia Investments plc Employee Share Trust.
Net asset value total return is calculated in accordance with
AIC guidance, as the change in NAV from the start of the period,
assuming that dividends paid to shareholders are reinvested at NAV
at the time the shares are quoted ex-dividend.
2021 2020
p p
------------------------------ ----- -----
Diluted NAV at year start 3236 3582
------------------------------ ----- -----
Diluted NAV at year end 4000 3236
Dividends payable in the year 62 60
Reinvestment adjustment(2) 11 (6)
4073 3290
------------------------------ ----- -----
NAVTR over the year 25.9% -8.1%
------------------------------ ----- -----
(2) (.) The reinvestment adjustment is the gain or loss
resulting from reinvesting the dividends in NAV at the ex-dividend
date.
7. Capital commitments
At the reporting date, the group and company had entered into
unconditional commitments to limited partnerships, committed loan
facility agreements and a conditional loan and purchase agreement,
as follows:
Group Company
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
-------------------------- ----- ----- ----- -----
Investments
Contracted but not called 285.9 305.2 290.4 313.5
Conditionally contracted 75.6 75.6 75.6 75.6
361.5 380.8 366.0 389.1
-------------------------- ----- ----- ----- -----
Amounts are callable within the next twelve months. The group
has conducted a going concern assessment which considered future
cash flows, the availability of liquid assets and debt facilities,
and consideration of the risks arising from the Covid-19 pandemic
over the 12 month period required. In making this assessment a
number of stress scenarios were developed. The most severe scenario
included all outstanding private equity fund commitments being
drawn. Under this severe scenario the group would have a range of
mitigating actions available to it, including usage of banking
facilities, disposal of some liquid assets and reduction in
discretionary spend which would enable it to meet all of its
liabilities and still hold significant liquid assets.
8. Performance measures
Caledonia uses a number of performance measures to aid the
understanding of its results. The performance measures are standard
within the investment trust industry and Caledonia's use of such
measures enhances comparability. Principal performance measures are
as follows:
Net assets
Net assets provides a measure of the value of the company to
shareholders and is taken from the IFRS group net assets.
Net asset value ('NAV')
NAV is a measure of the value of the company, being its assets -
principally investments made in other companies and cash held -
minus any liabilities. NAV per share is calculated by dividing net
assets by the number of shares in issue, adjusted for shares held
by the Employee Share Trust and for dilution by the exercise of
outstanding share awards. NAV takes account of dividends payable on
the ex-dividend date.
NAV total return ('NAVTR')
NAVTR is a measure of how the net asset value per share has
performed over a period, considering both capital returns and
dividends paid to shareholders. NAVTR is calculated as the increase
in NAV between the beginning and end of the period, plus the
accretion from assumed dividend reinvestment during the period. We
use this measure as it enables comparisons to be drawn against an
investment index in order to benchmark performance. The calculation
follows the method prescribed by the Association of Investment
Companies ('AIC').
Total shareholder return ('TSR')
TSR measures the return to shareholders through the movement in
the share price and dividends paid during the measurement
period.
9. Financial instruments - private asset valuation
Caledonia makes private equity investments in two forms: direct
private equity investments (the Private Capital pool) and
investments into externally managed unlisted private equity funds
and fund of funds (the Funds pool). The directors have made two
estimates which they deem to have a significant risk of resulting
in a material adjustment to the amounts recognised in the financial
statements within the next financial year, which relate to the
valuation of assets within these two pools.
For directly owned private investments (Private Capital pool),
totalling GBP826.8m (2020 - GBP611.3m) valuation techniques using a
range of internally and externally developed unobservable inputs
are used to estimate fair value. Valuation techniques make maximum
use of market inputs, including reference to the current fair
values of comparator businesses that are substantially the same
(subject to appropriate adjustments). For each asset, a range of
valuation methods are considered, and methods judged most
appropriate are used, taking into consideration the quantity and
quality of data points available. Methods include, inter alia,
consideration of indicative offers from third parties, applying an
earnings multiple to the maintainable earnings of a business, and
net assets, sometimes employing third-party net asset
valuations.
For private equity fund investments (unlisted Funds Pool),
totalling GBP627.5m (2020 - GBP437.4 m) held through externally
managed fund vehicles, the estimated fair value is based on the
most recent valuation provided by the external manager, usually
received within 3-6 months of the relevant valuation date. Where
required, valuations are adjusted for investments and distributions
between the valuation date and the reporting date. These valuations
depend upon the reasonableness of the fair value estimation made by
third-party managers, which are assumed to be reliable in the
absence of contrary information.
The following table provides information on significant
unobservable inputs used at 31 March 2021 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Private company (Private Capital) assets have been disaggregated
into categories as follows:
-- Assets in the large, earnings based category have an Enterprise
Value of >GBP150m, and benefit from a reasonable number of
comparative data points, as well as having sufficient size
to make their earnings reliable and predictable.
-- The asset in the medium, earnings based category has an Enterprise
Value of GBP50-GBP100m and has a more limited universe of
comparable businesses available.
-- Assets in the smaller, earnings based category have an Enterprise
value of <GBP50m. Their smaller size results in fewer data
points due to a lack of available listed comparators, and
makes them generally more vulnerable than larger assets to
changes in economic conditions.
-- The asset in the large, leisure category is Liberation Group,
which operates in a sector subject to significant uncertainty
as at 31 March 2021.
-- Manager valuations are used for assets where the net asset
method is employed.
For private company assets we have chosen to sensitise and
disclose EBITDA multiple or tangible asset multiple inputs because
their derivation involves the most significant judgements when
estimating valuation, including which data sets to consider and
prioritise. Valuations also include other unobservable inputs,
including earnings and tangible assets, which are based on historic
and forecast data and are less judgmental. For each asset category,
inputs were sensitised by a percentage deemed to reflect the
relative degree of estimation uncertainty, and valuation
calculations re-performed to identify the impact.
Private equity fund assets (unlisted Funds Pool investments) are
each held in and managed by the same type of fund vehicle, valued
using the same method of adjusted manager valuations, and subject
to broadly the same economic risks. They are therefore subject to a
similar degree of estimation uncertainty. They have been sensitised
at an aggregated level by 5% to reflect a degree of uncertainty
over managers' valuations which form the basis of their fair
value.
Description/ Weighted average
valuation method Fair value Unobservable input input Input sensitivity Change in valuation
GBPm +/- +/- GBPm
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
Internally developed
Private companies
Large, earnings 434.9 EBITDA multiple 13.3x 10.0% 42.9 / (45.8)
Medium, earnings 95.6 EBITDA multiple 13.0x 12.5% 10.2 / (11.4)
Small, earnings 21.9 EBITDA multiple 3.9x 15.0% 2.4 / (2.4)
Large, Leisure, Tangible assets
tangible assets 127.7 multiple 1 17.5% 25.8 / (27.6)
Net assets / manager
valuation 146.7 Multiple 1 0.1x 14.7 / (14.7)
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
826.8 96.0 / (101.9)
Non-pool companies 14.0
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
Total internal 840.8
Externally developed
Private equity fund
Net asset value 627.5 Manager NAV 1 5% 31.4 / (31.4)
-------------------- ---------- -------------------- -------------------- ----------------- -------------------
1,468.3 127.4 / (133.3)
10. Financial information
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 March 2021 or
2020 but is derived from those accounts. Statutory accounts for 31
March 2020 have been delivered to the Registrar of Companies, and
those for 31 March 2021 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2021 will be
delivered to shareholders on 18 June 2021 and made available for
download from the company's website on that date. Also, a copy will
be delivered to the Registrar of Companies in accordance with
section 441 of the Companies Act 2006, following approval by
shareholders.
The statutory accounts for the year ended 31 March 2021 include
a 'Directors' statement of responsibility' as follows:
We confirm that, to the best of our knowledge:
- the group and parent company financial statements, which have
been prepared in accordance with applicable accounting standards,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the company and the undertakings
included in the consolidation taken as a whole
- the strategic report includes a fair review of the development
and performance of the business and the position of the company
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks
and uncertainties that it faces.
Signed on behalf of the board by:
Will Wyatt Tim Livett
Chief Executive Chief Financial Officer
26 May 2021 26 May 2021
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a trade mark of the London Stock Exchange Group companies and is
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FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors.
Neither FTSE nor its licensors accept any liability for any errors
or omissions in the FTSE indices and/or FTSE ratings or underlying
data. No further distribution of FTSE Data is permitted without
FTSE's express written consent.
END
Copies of this statement are available at the company's
registered office, Cayzer House, 30 Buckingham Gate,
London SW1E 6NN, United Kingdom, or from its website at www.caledonia.com .
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