TIDMCLDN
RNS Number : 4868E
Caledonia Investments PLC
07 July 2021
Caledonia Investments plc
Unaudited net asset value and portfolio update
Caledonia Investments plc (" Caledonia ") announces its
unaudited diluted net asset value per share (" NAV ") as at 30 June
2021, calculated on a cum-income basis, was 4258p.
The NAV total return (" NAVTR ") for the three months to 30 June
2021 was 6.5%.
This announcement provides an update on Caledonia's portfolio
and should be read in conjunction with the factsheet dated 30 June
2021 and released on 7 July 2021, a copy of which is available at
www.caledonia.com .
Summary
The first quarter has seen good returns generated by all three
investment pools. The Quoted Equity portfolio has benefited from
continued positive public equity markets, producing a return of
9.1%. The sale of Deep Sea Electronics (" DSE "), as previously
announced, resulted in a healthy gain and was the main contributor
to the 6.7% return from the Private Capital portfolio with little
change for the rest of the portfolio as investee companies are
revalued biannually, with the next review taking place on 30
September 2021. The Funds portfolio produced a return of 7.1% based
on strong valuation growth from a number of holdings across our
maturing investments.
Performance for the first three months is summarised in the
table below.
Caledonia pool per f o rmance
Net asset value - three months to 30 June 20 21
GBPm Opening Net Capital Other Closing Income Total
balance investment gains balance Return
/(disposal) /
(losses)
Quoted Equity 716.1 (15.9) 61.1 - 761.3 4.2 9.1%
Private Capital 826.8 (228.3) 33.6 0.9 633.0 16.7 6.7%
Funds 637.1 (20.5) 44.0 - 660.6 0.5 7.1%
--------- ------------- ---------- ------ --------- ------- --------
Portfolio 2,180.0 (264.7) 138.7 0.9 2,054.9 21.4
-------
Net Cash/(debt) (0.8) 264.7 - 1.1 265.0
Other assets 46.1 - - 4.4 50.5
Net assets 2,225.3 - 138.7 6.4 2,370.4 NAVTR 6.5%
--------- ------------- ---------- ------ --------- --------
Caledonia has continued to invest and dispose of assets, in line
with our active approach to portfolio management, with a net cash
inflow of GBP266m in the first quarter of the year. As noted below,
the DSE business was sold in June generating cash proceeds of
GBP242m including a pre-disposal dividend. The Quoted Equity
portfolio reduced its holdings in two companies and refined
positions in a number of others, generating net investment proceeds
of GBP16m. The Funds portfolio continued to see an increased level
of fund distributions. In the quarter, there was a net cash inflow
of GBP21m, including GBP9m from the sale of a fund position.
Total liquidity remains healthy with cash of GBP265m and undrawn
bank facilities of GBP250m as at 30 June 2021. Caledonia's GBP250m
banking facilities include GBP137.5m expiring in May 2025, with the
balance of GBP112.5m expiring in July 2022.
Caledonia Quoted Equity - Capital and Income portfolios (32% of
NAV)
The total return on the Quoted Equity pool was 9.1% over the
first three months of the year. This strong performance reflected
the positive movement in global public equity markets and our stock
selection within both the Capital and Income portfolios, delivering
total returns of 9.9% and 7.1% respectively. The performance
reflected good returns from a broad range of sectors and across
both UK and US holdings.
Trading activity has been relatively limited, in line with our
long-term investment approach. The main activity was in the Capital
portfolio, with a reduction in our holdings in A G Barr and Polar
Capital. Other activity was restricted to refining positions in
existing investments.
Caledonia Private Capital (27% of NAV)
Caledonia's Private Capital portfolio is comprised of
significant positions in four UK based businesses and one private
European investment company. These five investments represent over
90% of its value. Investee companies are revalued in March and
September each year.
On 1 June 2021, Caledonia announced that portfolio company DSE,
a leading provider of backup power control systems, had been
acquired by Generac Holdings Inc. ("Generac"). Generac is listed on
the New York Stock Exchange (NYSE: GNRC) and is a leading global
designer and manufacturer of energy technology solutions and other
power products. DSE was acquired by Caledonia in October 2018 and
had grown strongly. It had secured a larger share of core target
markets having developed and launched power control products in
load-sharing and synchronisation; successfully captured adjacent
market opportunities with new products in off-highway control; and
was addressing the control needs of a growing number of customers
seeking distributed power solutions enabled with intelligence and
data capture. Caledonia received net proceeds of GBP242m in cash,
net of fees, for the sale of its 84.2% fully diluted stake. This
included a pre-disposal dividend of GBP12.7m. DSE was valued at
GBP193m in Caledonia's accounts as at 31 March 2021.
The total return on the Private Capital portfolio, including the
impact of the DSE disposal, was 6.7% for the first three months of
the year. The positive return was dominated by the disposal
transaction, with foreign exchange having a minor impact on
non-sterling denominated holdings.
Liberation Group, a pub, restaurant and drinks business with
operations in the Channel Islands and the South West of the UK has
traded well since Covid-19 restrictions started to be relaxed. Its
portfolio is well positioned to benefit from the gradual opening of
the hospitality sector with many destination pubs, a strong food
offering, large outdoor spaces and, in some cases, quality
accommodation. Weekly revenues have picked up strongly and have
been broadly in line with, or ahead of historic levels. A number of
the pubs recently acquired from Wadworth have been upgraded and are
performing well. Overall, the business is trading ahead of internal
plans and the outlook for the summer, with the expectation of large
numbers of holidaymakers staying in the UK, is positive.
The remaining portfolio businesses have adapted well to the
Covid-19 trading and operating environment and continue to perform
satisfactorily. The financial services businesses continue to see
revenue and profit growth, which reflects underlying investment
performance and fund inflows. The integration of last year's
acquisitions by both Seven Investment Management and Stonehage
Fleming are progressing well. Cooke Optics, the manufacturer of
cine lenses, is trading ahead of plan and the Cobehold portfolio
continues to perform well.
A more detailed update on trading and valuation of all investee
companies within the Private Capital portfolio will be provided in
Caledonia's half year results announcement in November 2021.
Caledonia Funds (28% of NAV)
The total return on the Funds portfolio was 7.1% for the first
three months of the year. This reflects strong valuation growth,
particularly from the fund of funds managers. The key managers in
this group are Aberdeen US private equity funds ("Aberdeen"), Axiom
Asia funds and Asia Alternatives funds. Updated valuations dated 31
March 2021 amount to 84% of the Funds' NAV: the holdings in
Aberdeen (16% of Funds NAV) remain at the manager's 31 December
2020 valuation.
Caledonia's fund investments are principally in third party
managed private equity funds operating in the US and in Asia. The
feedback from the fund managers is increasingly positive. The
majority of the underlying business investments are performing
well, in line with, or ahead of plan, with only a small number
tracking below expectations. As noted below, the level of deal
activity in the market is high and valuations remain strong.
During the first three months of the year, GBP28m was invested
and GBP49m was received, comprising distributions of GBP40m and
GBP9m from the sale of a fund position in the secondary market. The
level of distributions remains very positive reflecting deal flow
and IPO activity in the broader private equity markets.
Company contacts
Caledonia Investments plc +44 20 7802 8080
Will Wyatt,
Chief Executive
Tim Livett,
Chief Financial Officer
Media contacts
Tulchan Communications +44 20 7353 4200
Tom Murray
caledonia@tulchangroup.com
7 July 2021
Notes
Valuation approach and methodology
The valuation approach utilised for each asset portfolio is
summarised below.
Caledonia Quoted Equity : all listed companies are valued based
on the closing bid price on the relevant exchange as at 30 June
2021.
Caledonia Private Capital : the holdings are valued biannually
on a normalised EBITDA x market multiple basis where appropriate
(in line with the latest IPEV guidelines). This approach was
applied to the majority of significant assets in the portfolio at
31 March 2021, with the exception of our holdings in Liberation
Group and Cobehold. Liberation was valued on an industry specific
method using a multiple of tangible fixed assets and Cobehold's
fair value was derived from the external valuation prepared by
Cobepa.
The holdings have not been revalued at 30 June 2021; however,
the valuations have been updated to reflect FX movements and cash
transactions completed in the last quarter.
Caledonia Funds : the fund valuations are based on the most
recent valuations provided by the fund managers, subject to cash
movements from the valuation date. Valuations are received 60 to
180 days from the valuation date.
Caledonia Investments plc
Caledonia is a self-managed investment trust company. Its aim is
to grow net assets and dividends paid to shareholders, whilst
managing risk to avoid the permanent loss of capital. This is
achieved by investing in proven, well-managed businesses that
combine long term growth characteristics with an ability to deliver
increasing levels of income. Investments are held in both listed
and private markets, a range of sectors and, particularly through
the fund investments, with a global reach.
For additional information on Caledonia, please visit
www.caledonia.com .
END
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