Half Yearly Report

RNS Number : 8686X
Caledonia Investments PLC
25 November 2014
 



Caledonia Investments plc

Half-year results for the six months ended 30 September 2014

 

 

Financial highlights

 

6 months 

Year 

 

30 Sep 2014 

31 Mar 2014 

Net asset value per share total return

+4.6% 

+14.9% 

Net asset value per share

2675p 

2593p 

Net asset value

£1,493m 

£1,446m 

Interim dividend per share

13.8p 

13.4p 

 

 

Highlights

 

-

NAV per share total return of 4.6% for the six months to 30 September; twelve months to 30 September 2014 of 17.7%

 

 

-

NAV per share of 2675p marks a new high

 

 

-

Interim dividend up 3.0% to 13.8p

 

 

-

£138m invested, particularly in attractively valued Asian markets

 

 

-

£222m realised, including sale of Oval for £70m

 

 

-

Strong performance from Funds pool, driven principally by the indirect holding in JD.com

 

 

Will Wyatt, Chief Executive, commented:

 

"Caledonia has delivered another good overall performance with a total return of 4.6% over the six months, resulting in our net assets approaching £1.5bn. Accordingly, we have increased the interim dividend by 3.0% to 13.8p. Whilst global markets remain uncertain, we are confident our long term investment strategy will continue to offer attractive returns for our shareholders."

 

 

25 November 2014

 

 

Enquiries

Caledonia Investments plc

Tulchan Communications

Will Wyatt, Chief Executive

Peter Hewer

Stephen King, Finance Director

+44 20 7353 4200

+44 20 7802 8080

 

 

 

Management report

 

Results

Caledonia has delivered another good overall performance. The net asset value total return per share ('NAVTR') was 4.6% for the six months to 30 September 2014, continuing the strong growth seen over the last financial year. For the 12 months to 30 September 2014, NAVTR was 17.7%, comfortably ahead of our shorter term objective of delivering average annual returns of between RPI +3% and RPI +6%, and the NAV per share of 2675p marks a new high point for the company. Our share price has increased by some 20% over the same 12 months with a corresponding narrowing of the discount from 23% to 19%.

 

Investment performance

The board's measure of longer term performance is the comparison of NAVTR with the FTSE All-Share Total Return index over rolling ten year periods. On this basis, the annualised performance of Caledonia's NAVTR was 9.2% over ten years, representing an outperformance against the FTSE All-Share of 1.0%. A summary of Caledonia's NAVTR performance against both RPI and the FTSE All-Share is shown in the table below:

 

 

6 months 

1 year 

3 years 

5 years 

10 years 

 

NAVTR

4.6 

17.7 

51.8 

51.7 

141.4 

NAVTR annualised

4.6 

17.7 

14.9 

8.7 

9.2 

RPI annualised

1.1 

2.3 

2.7 

3.7 

3.2 

Caledonia RPI outperformance

3.5 

15.4 

12.2 

5.0 

6.0 

FTSE All-Share TR annualised

 

 

 

 

8.2 

Caledonia FTSE outperformance

 

 

 

 

1.0 

NAVTR and RPI increases in the 6 months column are over the six month period.

 

During the six month period, growth has been driven in particular by the Funds pool, which achieved an overall return of 28.3%. This was principally due to a substantial increase in the value of its indirect holding in JD.com following the company's May listing on NASDAQ and strong performances from Caledonia's other Asia-centric funds.

 

The Income & Growth and Unquoted pools both made satisfactory positive returns over the half-year, of 2.9% and 4.7% respectively. The value of companies in the Unquoted pool benefited from some stronger trading, particularly in our industrial businesses. The Quoted pool had a negative return of 2.5% over the six months, although increased by 14.6% over the past year. Whilst global stock markets have been volatile this year, the Quoted pool has a strong portfolio of companies with good long term prospects, which we believe match Caledonia's objectives and strategy.

 

Portfolio income, a vital component of total return, totalled £22m for the first half of the year. This is a considerable increase over the £16m for the equivalent period last year, though this was mainly due to the timing of dividend receipts from unquoted companies within the portfolio.

 

Management expenses have increased over the comparative period due to increased costs in respect of future long term incentive payments, which reflects our improving recent performance. We expect our long term ongoing charges ratio to remain broadly comparable with prior years.

 

Investment activity

We invested £112m during the half-year, net of recycling of investments within the Income & Growth pool. We have taken advantage of reasonable valuations available in Asian listed markets to make three new public equity fund investments and have made two further commitments to our Asian private equity fund portfolio. This is in line with our strategy to gain exposure to companies outside the UK via both quoted and private equity funds. We have also added several new holdings to our Quoted pool.

 

Realisations during the six months amounted to £196m, net of recycling of investments within the Income & Growth pool. The Unquoted pool sold its holding in Oval for £70m. The Quoted pool took profits on part of its holding in Dewan Housing Finance, following a strong run, and sold down various other holdings, realising £61m in total. The Funds pool sold several positions across its portfolio, including some Indian and European fund investments, which, together with distributions, generated £36m in proceeds.

 

Balance sheet

Net cash at the period end totalled £49m, which, together with our undrawn committed bank facilities of £155m, gives us adequate liquidity to take advantage of opportunities as they are presented. Our strategic preference is to avoid taking long term borrowing directly onto Caledonia's balance sheet, but instead utilise modest levels of gearing in our unquoted investments.

 

Investment portfolio - asset allocation

 

 

 

 

 

 

Strategic 

 

30 September 2014

31 March 2014

allocation 

Pool

£m 

£m 

Quoted

470.0 

31.5 

497.8 

34.5 

35-50 

Unquoted

484.8 

32.5 

568.3 

39.3 

20-35 

Funds

284.2 

19.0 

204.4 

14.1 

15-20 

Income & Growth

188.9 

12.6 

189.6 

13.1 

15-20 

Cash and other

65.5 

4.4 

(14.5)

(1.0)

(10)-10 

Net assets

1,493.4 

100.0 

1,445.6 

100.0 

 

 

Quoted pool (£470m, 32% of net assets)

Longer term investment in listed companies with established business models, strong balance sheets and good returns on capital.

 

The total return for the Quoted pool, which is managed in-house, was -2.5% over the period. We took advantage of a particularly strong share price performance from Dewan Housing Finance, which has benefited from the surge in optimism following Narendra Modi's election as Prime Minister of India, to lighten our holding, generating £18m. Offsetting this to some degree was a weak share price performance from Avanti Communications, despite the confidence shown in the company by debt investors who took up its $150m bond issue to finance its fourth satellite. Following strong gains over the past two years, other UK holdings such as Polar Capital, Quintain Estates and Close Brothers were either flat or lost some value over the period, despite encouraging financial results.

 

We added two new investments, Microsoft and Oracle, to the pool, which we consider are good prospects to deliver reliable returns to investors over the long term. We sold our holdings in Petroceltic International and Urban & Civic, following their respective mergers. In total, we invested £51m via the Quoted pool and realised £61m from sales over the six months under review.

 

Unquoted pool (£485m, 32% of net assets)

Investment in unlisted businesses requiring capital and an investor with a balance sheet to support a long term perspective. We invest in both majority and minority positions.

 

The total return for the Unquoted pool, which is managed in-house, was 4.7% over the six months. The strengthening trading at our industrial businesses, which we have noted at various stages over the past 18 months, is now being reflected in increased valuations. TGE Marine, in particular, has seen an uptick in value of 15% following its year end results and the increase in its order book. Latshaw Group, a US based group of engineering businesses, also continued its impressive financial performance and we remain optimistic about its future prospects. The two most recent additions to the pool, Choice Care and Park Holidays, have made seamless transitions to our ownership and both are trading ahead of expectations. We took the opportunity to syndicate 7% of Park Holidays to F&C private equity funds during the period, realising £7m. We sold our holding in Oval to Arthur J Gallagher in April, for which we received cash proceeds of £70m.

 

Funds pool (£284m, 19% of net assets)

Investment in both private and public equity funds, with an emphasis on providing exposure to areas of the world where we are less willing to invest directly.

 

The total return for the Funds pool for the period was 28.3%, driven, as noted earlier, by the successful IPO of JD.com, a China based e-commerce retailer held within the Capital Today China Growth Fund, a private equity fund launched in 2006 in which Caledonia was a cornerstone investor. JD.com is the leader in China's online direct sales, with a market share of 46%, and is growing at a phenomenal rate. At 30 September, the company had a market capitalisation of $36bn (£22bn), which was reflected in Caledonia's attributable look through value of £75m. If held directly, JD.com would be our third largest investment.

 

In addition, we have been active making investments in Asia via three new public equity funds, the New Silk Road Asia Landmark Fund, NTAsian Discovery Fund and Newton Asia Income fund. We believe that Asian listed markets are currently offering reasonable value and in these three funds we have found particularly good managers with first-rate track records. The private equity fund portfolio continues to expand as we make new commitments to both Asian and US funds. In total, we invested £60m and realised £36m from the Funds pool during the period.

 

Income & Growth pool (£189m, 13% of net assets)

Investment in a concentrated global equity portfolio that provides a reliable and increasing dividend stream.

 

The Income & Growth pool produced a creditable total return of 2.9% for the half-year. Since it was launched in March 2011, the pool has broadly tracked its target of achieving an annualised 10% total return, including an income yield of between 4.5% and 5.0%. The portfolio, which is managed in-house, comprises 38 large cap international companies that we expect will grow their annual dividends ahead of inflation. It provides Caledonia with exposure to high quality, relatively low risk, international companies to offset the potential volatility of some of our small and mid-sized investments in the quoted and unquoted worlds. It also acts as a source of liquidity if required.

 

Stephen Mitchell, who has run the pool since its inception, is leaving Caledonia at the end of this year in order to take up a new challenge. We are grateful for his contribution at Caledonia and wish him every success in his next role. We are well advanced with the process of recruiting his successor, details of which we will include within our monthly fact sheet once an appointment has been made.

 

Investment portfolio - pool performance

 

 

31 Mar 

Invest- 

 

Change 

30 Sep 

 

 

Pool

2014 

ments 

Disposals 

in value 

2014 

Income 

Return 

 

£m 

£m 

£m 

£m 

£m 

£m 

Quoted

497.8 

51.2 

(61.3)

(17.7)

470.0 

5.6 

(2.5)

Unquoted

568.3 

1.6 

(98.5)

13.4 

484.8 

8.8 

4.7 

Funds

204.4 

59.5 

(36.2)

56.5 

284.2 

1.8 

28.3 

Income & Growth

189.6 

25.2 

(25.9)

188.9 

5.5 

2.9 

Portfolio

1,460.1 

137.5 

(221.9)

52.2 

1,427.9 

21.7 

5.5 

 

Dividend

The directors have declared an interim dividend of 13.8p per share. This represents an increase of 3.0% over the equivalent dividend last year and will be paid on 8 January 2015.

 

Outlook

Markets have returned to a more febrile state, having digested the news that Europe is exhibiting little to no growth, and expectations for the future are no better. The US and UK economies seem to be in better shape and Asia, in particular China, continues to grow, albeit at a slightly lower rate than we have been accustomed to in the recent past. Companies trade at prices on listed markets in the US and UK that leave little room for disappointment, as evidenced by the sharp negative reaction to some of the recently announced profit warnings. The prices being paid for unquoted companies are underpinned by the availability of cheap credit and the volume of equity that has been raised by funds, which are now finding it difficult to deploy under their time constrained models. We will retain our pricing discipline and seek to stick to our objective of buying businesses that are best suited to our shareholders' capital and investment timeframe.

 

We have set out a clear strategy. The current allocation between the four pools of capital reflects our view of listed market valuations at this time and our deliberate, steady deployment of capital into funds in Asia and, to a lesser extent, the US private equity markets. We believe our current portfolio, combined with our ongoing search for suitable companies and funds, will continue to offer shareholders attractive returns.

 

 

Portfolio summary

 

Holdings of 1% or more of net assets at 30 September 2014 were as follows:

 

 

 

 

 

 

Net 

 

 

 

 

Value

assets 

Name

Pool

Geography

Business

£m 

Cobehold

Unquoted

Belgium

Investment company

96.2 

6.4 

Capital Today China

Funds

China

Private equity fund

92.3 

6.2 

Park Holidays

Unquoted

UK

Caravan parks operator

81.1 

5.4 

Bristow Group

Quoted

US

Helicopter services

68.3 

4.6 

Close Brothers

Quoted

UK

Financial services

65.5 

4.4 

AG Barr

Quoted

UK

Soft drinks

58.4 

3.9 

Choice Care Group

Unquoted

UK

Care homes provider

50.2 

3.4 

The Sloane Club

Unquoted

UK

Residential club

45.7 

3.1 

TGE Marine

Unquoted

Germany

LNG engineering

45.3 

3.0 

Sterling Industries

Unquoted

UK

Engineering

39.2 

2.6 

Latshaw Group

Unquoted

US

Manufacturing

37.2 

2.5 

Polar Capital

Quoted

UK

Fund manager

33.2 

2.2 

Quintain Estates

Quoted

UK

Property services

29.3 

2.0 

Dewan Housing Finance

Quoted

India

Housing finance

28.1 

1.9 

Perlus Microcap

Funds

US

Public equity fund

25.2 

1.7 

Bowers & Wilkins

Unquoted

UK

Audio equipment

24.0 

1.6 

Avanti Communications

Quoted

UK

Satellite communications

23.8 

1.6 

Rolls-Royce Holdings

Quoted

UK

Power systems

21.8 

1.5 

Satellite Information Services

Unquoted

UK

Broadcasting services

20.6 

1.4 

LondonMetric Property

Quoted

UK

Property investment

19.8 

1.3 

Spirax-Sarco

Quoted

UK

Steam engineering

17.6 

1.2 

Brookshire Capital

Unquoted

UK

Property investment

16.7 

1.1 

Microsoft

Quoted

US

Infrastructure technology

16.4 

1.1 

New Silk Road Asia Landmark

Funds

Asia

Public equity fund

15.8 

1.1 

Jardine Matheson

Quoted

Singapore

Industrial engineering

15.7 

1.0 

Nova Springboard

Funds

UK

Private equity fund

15.6 

1.0 

Other investments[2]

 

 

 

424.9 

28.4 

Investment portfolio[3]

 

 

 

1,427.9 

95.6 

Cash and other items

 

 

 

65.5 

4.4 

Net assets

 

 

 

1,493.4 

100.0 

 

1.

Geography is based on the country of listing, country of domicile for unlisted investments and underlying regional analysis for funds.

2.

Includes an investment of £10.2m in Polar Capital Global Financials Trust, a UK investment trust.

3.

Excludes £13.5m of unallocated investments.

 

 

Pool distribution

 

Geographic distribution

 

Asset class distribution

Quoted

32%

 

United Kingdom

51%

 

Listed equities

44%

Unquoted

32%

 

Continental Europe

17%

 

Private companies

33%

Funds

19%

 

North America

15%

 

Private equity funds

12%

Income & Growth

13%

 

Asia

16%

 

Public equity funds

7%

Cash and other items

4%

 

Other countries

1%

 

Cash and other items

4%

 

 

Risks and uncertainties

 

Caledonia has a risk management framework that provides a structured process for identifying, assessing and managing risks associated with the company's business objectives and strategy.

 

The principal risks and uncertainties faced by the company are set out in the strategic report section of Caledonia's annual report 2014. External risks arise from political, legal, regulatory and economic changes. Strategic risks arise from the conception, design and implementation of the company's business model. Investment risks occur in relation to specific investment decisions, subsequent performance or concentration of exposure. Treasury and funding risks arise from counterparties, uncertainty in market prices and rates and liquidity availability. Operational risks arise from potentially inadequate or failed controls, processes, people or systems.

 

The principal risks and uncertainties identified in the annual report 2014 remain unchanged and each of them has the potential to affect the company's results during the remainder of the year ending 31 March 2015.

 

Caledonia actively monitors key risk factors, including portfolio concentration, liquidity and volatility, and aims to manage risk by:

-

diversifying the portfolio by sector and geography

-

ensuring access to relevant information from investee companies, particularly, in the case of unquoted investments, through board representation

-

managing cash and borrowings to ensure that liquidity is available to meet investment and operating needs

-

reducing counterparty risk by limiting maximum aggregate exposures.

 

 

Going concern

 

The factors likely to affect the company's ability to continue as a going concern were set out in the annual report 2014. As at 30 September 2014, there have been no significant changes to these factors. Having reviewed the company's forecasts and other relevant evidence, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-year condensed financial statements.

 

 

Directors' responsibility statement

 

We confirm that to the best of our knowledge:

-

the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

-

the interim management report includes a fair review of the information required by:

 

-

DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year;

 

-

DTR 4.2.8R of the Disclosure and Transparency Rules, being related parties transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and any changes in the related party transactions described in the last annual report that could do so.

 

Signed on behalf of the board

 

Will Wyatt, Chief Executive

25 November 2014

 

 

Independent review report

to Caledonia Investments plc

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014, which comprises the condensed group statement of comprehensive income, the condensed group and company statements of financial position, the condensed group and company statements of changes in equity, the condensed group and company statements of cash flows and the related explanatory notes on a group and company basis. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA'). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

 

As disclosed in note 2, the annual financial statements of the group and company are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

 

 

Jonathan Mills

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square, London E14 5GL

25 November 2014

 

 

Condensed group statement of comprehensive income

for the six months ended 30 September 2014

 

 

 

Restated

 

 

Six months 30 Sep 2014

Six months 30 Sep 2013

Year 31 Mar 2014

 

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

 

£m

£m

£m

£m

£m

£m

£m

£m

£m

Revenue

 

 

 

 

 

 

 

 

 

Investment income

22.1 

22.1 

15.9 

15.9 

41.7 

41.7 

Gains and losses on fair value investments

54.4 

54.4 

9.4 

9.4 

151.4 

151.4 

Total revenue

22.1 

54.4 

76.5 

15.9 

9.4 

25.3 

41.7 

151.4 

193.1 

Management expenses

(8.2)

(0.2)

(8.4)

(5.2)

(0.3)

(5.5)

(13.6)

(0.5)

(14.1)

Other expenses (non-recurring)

(1.8)

(1.8)

Performance fees

(0.6)

(0.6)

Guarantee obligation provided

(0.8)

(0.8)

Warranty provision released

3.5 

3.5 

3.5 

3.5 

Profit before finance costs

12.1 

53.6

65.7 

10.7 

12.6 

23.3 

28.1 

153.6 

181.7 

Treasury interest receivable

0.1 

0.1 

1.1 

1.1 

1.1 

1.1 

Finance costs

(0.9)

(0.9)

(0.6)

(0.6)

(1.7)

(1.7)

Exchange movements

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Profit before tax

11.0 

53.6 

64.6 

10.9 

12.6 

23.5 

27.2 

153.6 

180.8 

Taxation

2.0 

2.0 

0.4 

0.8 

1.2 

1.5 

0.8 

2.3 

Profit for the period

13.0 

53.6 

66.6 

11.3 

13.4 

24.7 

28.7 

154.4 

183.1 

Other comprehensive income items never to be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

Actuarial gain on defined benefit pension schemes

1.4 

1.4 

Tax on other comprehensive income

0.2 

0.2 

0.1 

0.1 

(0.3)

(0.3)

Total comprehensive income

13.2 

53.6 

66.8 

11.4 

13.4 

24.8 

29.8 

154.4 

184.2 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

Basic

23.6p 

97.3p 

120.9p 

20.4p 

24.1p 

44.5p 

51.9p 

279.2p 

331.1p 

Diluted

23.3p 

96.0p 

119.3p 

20.1p 

23.9p 

44.0p 

51.3p 

276.1p 

327.4p 

 

The results for the six months ended 30 September 2013 were restated for the adoption of IFRS 10 Consolidated Financial Statements.

 

The total column of the above statement represents the group's statement of comprehensive income, prepared in accordance with IFRSs as adopted by 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 period and total comprehensive income for the period is attributable to equity holders of the parent.

 

 

Condensed statement of financial position

at 30 September 2014

 

 

Group

Company

 

 

Restated 

 

 

 

 

 

30 Sep 

30 Sep 

31 Mar 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

2014 

2013 

2014 

 

£m 

£m 

£m 

£m 

£m 

£m 

Non-current assets

 

 

 

 

 

 

Investments held at fair value through
profit or loss

1,441.4 

1,249.4 

1,451.9 

1,424.9 

1,235.8 

1,435.9 

Investments in subsidiaries held at cost

0.8 

0.8 

0.8 

Property held at fair value

18.5 

18.5 

18.5 

Plant and equipment held at cost

0.1 

0.1 

0.1 

Deferred tax assets

1.4 

1.1 

1.0 

Employee benefits

3.3 

2.7 

3.2 

Non-current assets

1,464.7 

1,271.8 

1,474.7 

1,425.7 

1,236.6 

1,436.7 

Current assets

 

 

 

 

 

 

Trade and other receivables

6.9 

6.1 

7.3 

5.2 

4.5 

5.6 

Current tax assets

0.8 

1.8 

1.6 

2.1 

0.1 

Cash, cash equivalents and restricted cash

70.2 

57.8 

35.5 

70.2 

56.6 

35.5 

Current assets

77.9 

65.7 

42.8 

77.0 

63.2 

41.2 

Total assets

1,542.6 

1,337.5 

1,517.5 

1,502.7 

1,299.8 

1,477.9 

Current liabilities

 

 

 

 

 

 

Bank overdrafts

(1.1)

(2.6)

Interest-bearing loans and borrowings

(20.0)

(20.0)

Trade and other payables

(14.3)

(12.7)

(15.0)

(3.4)

(1.7)

(6.8)

Employee benefits

(0.4)

(0.3)

(2.1)

Current tax liabilities

(0.2)

Provisions

(9.4)

(7.5)

(8.3)

(12.1)

(10.0)

(10.9)

Current liabilities

(45.2)

(20.5)

(48.2)

(15.5)

(11.7)

(17.7)

Non-current liabilities

 

 

 

 

 

 

Interest-bearing loans and borrowings

(19.9)

(20.0)

(20.0)

Employee benefits

(3.8)

(4.6)

(3.4)

Deferred tax liabilities

(0.2)

(0.2)

(0.3)

Non-current liabilities

(4.0)

(24.7)

(23.7)

(20.0)

Total liabilities

(49.2)

(45.2)

(71.9)

(15.5)

(11.7)

(37.7)

Net assets

1,493.4 

1,292.3 

1,445.6 

1,487.2 

1,288.1 

1,440.2 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

3.2 

3.2 

3.2 

3.2 

3.2 

3.2 

Share premium

1.3 

1.3 

1.3 

1.3 

1.3 

1.3 

Capital redemption reserve

1.3 

1.3 

1.3 

1.3 

1.3 

1.3 

Capital reserve

1,204.5 

1,010.5 

1,151.5 

1,207.6 

1,013.8 

1,154.5 

Retained earnings

300.6 

293.2 

305.5 

291.3 

285.7 

297.1 

Own shares

(17.5)

(17.2)

(17.2)

(17.5)

(17.2)

(17.2)

Total equity

1,493.4 

1,292.3 

1,445.6 

1,487.2 

1,288.1 

1,440.2 

 

 

 

 

 

 

 

Undiluted net asset value per share

2711p 

2346p 

2624p 

 

 

 

Diluted net asset value per share

2675p 

2319p 

2593p 

 

 

 

 

The group balances at 30 September 2013 were restated for the adoption of IFRS 10 Consolidated Financial Statements.

 

 

Condensed group statement of changes in equity

for the six months ended 30 September 2014

 




Capital 








redemp- 






Share 

Share 

tion 

Capital 

Retained 

Own 

Total 


capital 

premium 

reserve 

reserve 

earnings 

shares 

equity 


£m 

£m 

£m 

£m 

£m 

£m 

£m 

Six months ended 30 September 2014

 

 

 

 

 

Balance at 1 April 2014

3.2 

1.3 

1.3 

1,151.5 

305.5 

(17.2)

1,445.6 

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

53.6 

13.0 

66.6 

Other comprehensive income

0.2 

0.2 

Total comprehensive income

53.6 

13.2 

66.8 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

0.4 

0.4 

Share-based payments

1.6 

1.6 

Own shares purchased

(0.7)

(0.7)

Own shares cancelled

(0.6)

(0.6)

Dividends paid

(19.7)

(19.7)

Total transactions with owners

(0.6)

(18.1)

(0.3)

(19.0)

Balance at 30 September 2014

3.2 

1.3 

1.3 

1,204.5 

300.6 

(17.5)

1,493.4 

 

 

 

 

 

 

 

 

Restated six months ended 30 September 2013

 

 

 

 

 

Balance at 1 April 2013

3.2 

1.3 

1.3 

1,012.1 

301.5 

(17.0)

1,302.4 

Total comprehensive income for the period

 

 

 

 

 

 

 

Profit for the period

13.4 

11.3 

24.7 

Other comprehensive income

0.1 

0.1 

Total comprehensive income

13.4 

11.4 

24.8 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

1.1 

1.1 

Share-based payments

(0.6)

(0.6)

Own shares purchased

(1.3)

(1.3)

Own shares cancelled

(15.0)

(15.0)

Dividends paid

(19.1)

(19.1)

Total transactions with owners

(15.0)

(19.7)

(0.2)

(34.9)

Balance at 30 September 2013

3.2 

1.3 

1.3 

1,010.5 

293.2 

(17.2)

1,292.3 

 

 

 

 

 

 

 

 

Year ended 31 March 2014

 

 

 

 

 

Balance at 1 April 2013

3.2 

1.3 

1.3 

1,012.1 

301.5 

(17.0)

1,302.4 

Total comprehensive income for the year

 

 

 

 

 

 

 

Profit for the year

154.4 

28.7 

183.1 

Other comprehensive income

1.1 

1.1 

Total comprehensive income

154.4 

29.8 

184.2 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

1.7 

1.7 

Share-based payments

0.7 

0.7 

Own shares purchased

(1.9)

(1.9)

Own shares cancelled

(15.0)

(15.0)

Dividends paid

(26.5)

(26.5)

Total transactions with owners

(15.0)

(25.8)

(0.2)

(41.0)

Balance at 31 March 2014

3.2 

1.3 

1.3 

1,151.5 

305.5 

(17.2)

1,445.6 

 

The balances and movements for the six months ended 30 September 2013 were restated for the adoption of IFRS 10 Consolidated Financial Statements.

 

 

Condensed company statement of changes in equity

for the six months ended 30 September 2014

 




Capital 








redemp- 






Share 

Share 

tion 

Capital 

Retained 

Own 

Total 


capital 

premium 

reserve 

reserve 

earnings 

shares 

equity 


£m 

£m 

£m 

£m 

£m 

£m 

£m 

Six months ended 30 September 2014

 

 

 

 

 

Balance at 1 April 2014

3.2 

1.3 

1.3 

1,154.5 

297.1 

(17.2)

1,440.2 

Profit and total comprehensive income for the period

53.7 

12.3 

66.0 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

0.4 

0.4 

Share-based payments

1.6 

1.6 

Own shares purchased

(0.7)

(0.7)

Own shares cancelled

(0.6)

(0.6)

Dividends paid

-

(19.7)

(19.7)

Total transactions with owners

-

(0.6)

(18.1)

(0.3)

(19.0)

Balance at 30 September 2014

3.2 

1.3 

1.3 

1,207.6 

291.3 

(17.5)

1,487.2

 

 

 

 

 

 

 

 

Six months ended 30 September 2013

 

 

 

 

 

Balance at 1 April 2013

3.2 

1.3 

1.3 

1,015.1 

294.9 

(17.0)

1,298.8 

Profit and total comprehensive income for the period

13.7 

10.5 

24.2 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

1.1 

1.1 

Share-based payments

(0.6)

(0.6)

Own shares purchased

(1.3)

(1.3)

Own shares cancelled

(15.0)

(15.0)

Dividends paid

(19.1)

(19.1)

Total transactions with owners

(15.0)

(19.7)

(0.2)

(34.9)

Balance at 30 September 2013

3.2 

1.3 

1.3 

1,013.8 

285.7 

(17.2)

1,288.1 

 

 

 

 

 

 

 

 

Year ended 31 March 2014

 

 

 

 

 

Balance at 1 April 2013

3.2 

1.3 

1.3 

1,015.1 

294.9 

(17.0)

1,298.8 

Profit and total comprehensive income for the year

154.4 

28.0 

182.4 

Transactions with owners of the company

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Exercise of options

1.7 

1.7 

Share-based payments

0.7 

0.7 

Own shares purchased

(1.9)

(1.9)

Own shares cancelled

(15.0)

(15.0)

Dividends paid

(26.5)

(26.5)

Total transactions with owners

(15.0)

(25.8)

(0.2)

(41.0)

Balance at 31 March 2014

3.2 

1.3 

1.3 

1,154.5 

297.1 

(17.2)

1,440.2 

 

 

Condensed statement of cash flows

for the six months ended 30 September 2014

 

 

Group

Company

 

 

Restated 

 

 

 

 

 

6 mths 

6 mths 

Year 

6 mths 

6 mths 

Year 

 

30 Sep 

30 Sep 

31 Mar 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

2014 

2013 

2014 

 

£m 

£m 

£m 

£m 

£m 

£m 

Operating activities




 

 

 

Dividends received

21.4 

15.4 

38.7 

21.4 

15.4 

39.7 

Interest received

3.0 

4.6 

5.9 

2.4 

3.9 

4.4 

Cash received from customers

0.7 

0.4 

1.5 

Cash paid to suppliers and employees

(10.1)

(8.9)

(15.5)

(10.8)

(8.3)

(13.9)

Taxes received

1.2 

1.3 

1.2 

1.3 

Group tax relief received

0.6 

0.4 

3.1 

0.6 

0.4 

3.4 

Net cash flow from operating activities

15.6 

13.1 

35.0 

13.6 

12.6 

34.9 

Investing activities




 

 

 

Purchases of investments

(139.7)

(167.8)

(327.1)

(138.6)

(166.9)

(318.7)

Sales of investments

200.0 

154.3 

255.7 

201.1 

149.8 

246.6 

Purchases of plant and equipment

(0.1)

Sales of plant and equipment

0.3 

Net cash flow from/(used in) investing activities

60.3 

(13.5)

(71.2) 

62.5 

(17.1)

(72.1)

Financing activities




 

 

 

Interest paid

(1.0)

(1.2)

(2.5)

(0.8)

(1.0)

(2.0)

Dividends paid to owners of the company

(19.7)

(19.1)

(26.5)

(19.7)

(19.1)

(26.5)

Proceeds from new borrowings

35.0 

35.0 

Repayment of borrowings

(20.0)

(15.0)

(20.0)

(15.0)

Proceeds from group company loans

2.0 

Repayment of group company loans

(0.1)

(0.4)

Exercise of options

0.4 

1.1 

1.7 

0.4 

1.1 

1.7 

Purchase of own shares

(1.3)

(16.4)

(17.0)

(1.3)

(16.4)

(17.0)

Net cash flow used in financing activities

(39.7)

(35.6)

(24.7)

(41.4)

(35.4)

(23.8)

Net increase/(decrease) in cash and cash equivalents

36.2 

(36.0)

(60.9)

34.7 

(39.9)

(61.0)

Cash and cash equivalents at period start

32.9 

93.8 

93.8 

35.5 

96.5 

96.5 

Cash and cash equivalents at period end

69.1 

57.8 

32.9 

70.2 

56.6 

35.5 

 

The group cash flows for the six months ended 30 September 2013 were restated for the adoption of IFRS 10 Consolidated Financial Statements.

 

 

Notes to the condensed financial statements

 

1. General information

Caledonia Investments plc is an investment trust company domiciled in the United Kingdom. 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.

 

This condensed set of financial statements was approved for issue on 25 November 2014 and is unaudited.

 

The information for the period ended 30 September 2014 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 31 March 2014 has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not draw attention to any matters by way of emphasis of matter and did not contain a statement under section 498(2) and (3) of the Companies Act 2006.

 

2. Accounting policies

Basis of accounting

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the annual financial statements for the year ended 31 March 2014, which were prepared in accordance with IFRSs as adopted by the European Union.

 

This condensed set of financial statements has been prepared in accordance with the recommendations of the SORP issued by the Association of Investment Companies.

 

Going concern

The directors have assessed the risks facing the group and consider that it has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-year condensed set of financial statements.

 

Changes in accounting policies

As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 March 2014.

 

Judgements and estimates

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affected the application of accounting policies and the reported amounts of assets and liabilities, income and expense.

 

The significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 March 2014.

 

3. Dividends

Amounts recognised as distributions to owners of the company in the period were as follows:

 

 

6 mths 

6 mths 

Year 

 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

 

£m 

£m 

£m 

Final dividend for the year ended 31 March 2014 of 35.7p per share (2013 - 34.3p per share)

19.7 

19.1 

19.1 

Interim dividend for the year ended 31 March 2014 of 13.4p per share

7.4 

 

19.7 

19.1 

26.5 

 

The directors have declared an interim dividend for the year ending 31 March 2015 of 13.8p per share, totalling £7.6m, which has not been included as a liability in this condensed set of financial statements. This dividend will be payable on 8 January 2015 to holders of shares on the register on 12 December 2014. The ex-dividend date will be 11 December 2014.

 

4. Provisions

During the period the group and company recognised a provision for expected legal costs of £1.1m, included in 'Other expenses (non-recurring)' in the Statement of Comprehensive Income. The company also recognised £0.1m relating to bank guarantees.

 

During the prior period, the group and company released a warranty provision of £3.5m relating to an investment disposal in 2006. During the year ended 31 March 2014, the group and company recognised a £0.8m investment provision relating to a solvency guarantee (30 September 2013 - £nil).

 

5. Share capital

During the period, the company purchased for cancellation 30,000 of its own shares for £0.6m and its Employee Share Trust sold 51,900 shares for £0.4m and purchased 31,407 shares for £0.7m in connection with the exercise of share options and calling of deferred bonus awards.

 

In the six months ended 30 September 2013, the company purchased for cancellation 811,011 of its own shares for £15.0m and its Employee Share Trust sold 90,503 shares for £1.1m and purchased 69,533 shares for £1.3m.

 

In the year ended 31 March 2014, the company purchased for cancellation 811,011 of its own shares for £15.0m and its Employee Share Trust sold 120,707 shares for £1.7m and purchased 99,237 shares for £1.9m.

 

6. Net asset value per share

The group's undiluted net asset value per share is based on the net assets of the group at the period end and on the number of shares in issue at the period end less shares held by the Caledonia Investments plc Employee Share Trust. The group's diluted net asset value per share assumes the exercise of all outstanding in-the-money share options and the calling of performance share and deferred bonus awards at the closing mid-market price on the reporting date.

 

7. Operating segments

The chief operating decision maker has been identified as the Executive Committee, which reviews the company's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

 

The performance of operating segments is assessed on a measure of group total revenue, principally comprising gains and losses on investments and investment income. Reportable profit or loss is after 'Treasury income' and 'Other items', which comprise management and other expenses and provisions. Reportable assets equate to the group's total assets. Cash, cash equivalents and restricted cash, net of bank overdrafts, and other items are not identifiable operating segments.

 

'Other investments' comprise subsidiaries not managed as part of the investment portfolio.

 

 

Profit before tax

Total assets

 

 

Restated 

 

 

 

 

 

6 mths 

6 mths 

Year 

 

Restated 

 

 

30 Sep 

30 Sep 

31 Mar 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

2014 

2013 

2014 

 

£m 

£m 

£m 

£m 

£m 

£m 

Pool

 

 

 

 

 

 

Quoted

(12.1)

13.2 

92.1 

470.0 

442.8 

497.8 

Unquoted

22.5 

24.8 

80.1 

484.8 

451.9 

568.3 

Funds

60.5 

(3.9)

21.3 

284.2 

182.6 

204.4 

Income & Growth

5.5 

(8.4)

0.2 

188.9 

180.2 

189.6 

Portfolio

76.4 

25.7 

193.7 

1,427.9 

1,257.5 

1,460.1 

Other investments

0.1 

(0.4)

(0.6)

13.5 

10.4 

10.3 

Total revenue/investments

76.5 

25.3 

193.1 

1,441.4 

1,267.9 

1,470.4 

Cash and equivalents

0.1 

1.1 

1.1 

69.1 

57.8 

32.9 

Other items

(12.0)

(2.9)

(13.4)

32.1 

11.8 

14.2 

Reportable total

64.6 

23.5 

180.8 

1,542.6 

1,337.5 

1,517.5 

 

Profit before tax and total assets for the six months ended 30 September 2013 were restated for the adoption of IFRS 10 Consolidated Financial Statements.

 

8. Related parties

The nature of related party transactions has not changed significantly from those described in the company's annual report for the year ended 31 March 2014. There were no transactions with related parties during the six months ended 30 September 2014 which have a material effect on the results or the financial position of the company or of the group.

 

Caledonia Group Services Ltd, a wholly-owned subsidiary of the company, provides management services to the company. During the period, £8.4m was charged to the company (30 September 2013 - £5.5m and 31 March 2014 - £13.8m).

 

9. Capital commitments

At 30 September 2014, the company had undrawn fund and other commitments totalling £125.5m (30 September 2013 - £104.0m and 31 March 2014 - £107.5m).

 

10. Fair value hierarchy

The table below analyses financial instruments held at fair value according to the subjectivity of the valuation method, using the following hierarchy:

 

Level 1

Quoted prices (unadjusted) in active markets for identical assets.

Level 2

Inputs other than quoted prices included within Level 1 that are directly or indirectly observable.

Level 3

Inputs for the asset that are not based on observable market data.

 

 

Group

Company

 

30 Sep 

30 Sep 

31 Mar 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

2014 

2013 

2014 

 

£m 

£m 

£m 

£m 

£m 

£m 

Investments held at fair value

 

 

 

 

 

 

Level 1

666.5 

644.5 

703.2 

666.5 

644.5 

703.2 

Level 2

84.0 

35.1 

39.4 

73.7 

35.1 

39.4 

Level 3

690.9 

569.8 

709.3 

684.7 

556.2 

693.3 

 

1,441.4 

1,249.4 

1,451.9 

1,424.9 

1,235.8 

1,435.9 

 

Movement in Level 3 financial instruments was as follows:

 

 

6 mths 

6 mths 

Year 

 

30 Sep 

30 Sep 

31 Mar 

 

2014 

2013 

2014 

 

£m 

£m 

£m 

Group

 

 

 

Balance at the period start

709.3 

494.7 

494.7 

Transfers to Level 3

4.4 

-  

Purchases

18.8 

73.5 

186.8 

Disposal proceeds

(105.9)

(11.8)

(45.2)

Realised gains/(losses) on sales

25.6 

(0.5)

7.5 

Gains through profit or loss

38.7 

13.9 

65.5 

Balance at the period end

690.9 

569.8 

709.3 

Company

 

 

 

Balance at the period start

693.3 

476.6 

476.6 

Transfers to Level 3

14.6 

Purchases

17.7 

72.6 

183.4 

Disposal proceeds

(105.3)

(7.3)

(40.5)

Realised gains/(losses) on sales

25.6 

(0.5)

7.5 

Gains through profit or loss

38.8 

14.8 

66.3 

Balance at the period end

684.7 

556.2 

693.3 

 

During the period, the group and company transferred £4.4m and £14.6m respectively from Level 2 to Level 3 in respect of property investments.

 

The methods used to determine fair value investments are unchanged from those described in the annual report 2014. Listed investments are valued at bid price or the most recent transaction price. Unlisted companies are valued according to the International Private Equity and Venture Capital Valuation Guidelines (December 2012), using one of the following methods: price of a recent investment, multiples or net assets. The valuation of fund interests is based on the latest fund managers' NAVs and other investments are valued using appropriate techniques.

 

11. Share-based payments

The company operates a current performance share scheme and a legacy executive share option scheme, as well as current and historic deferred bonus plans. Full details of these schemes were disclosed in the annual report 2014 and the basis of measuring fair value was consistent with those disclosures.

 

In the six months ended 30 September 2014, no awards were issued under the performance share scheme (30 September 2013 and 31 March 2014 - 206,761 awards). Compulsory and voluntary deferred bonus awards over 60,052 and 549 shares respectively were granted (30 September 2013 and 31 March 2014 - 51,510 and nil awards respectively). Matching awards were also granted over 60,601 shares (30 September 2013 and 31 March 2014 - 51,150 shares).

 

Expenses in respect of share-based payments in the period were £1.6m (30 September 2013 - £0.6m credit and 31 March 2014 - £0.7m).

 

12. Prior period restatement

The group adopted IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosures of Interest in Other Entities in the financial year ended 31 March 2014. This resulted in prior period adjustments for the period ended 30 September 2013. The impact of the adoption of the standards to the prior period opening statement of financial position at 31 March 2013 was disclosed in the notes to the financial statements for the year ended 31 March 2014.

 

 

FTSE International Limited ('FTSE') © FTSE 2014. 'FTSE®' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the 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. Neither the contents of the company's website, nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of, this announcement.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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