Year ended 31 March 2024
Annual Report 2024
Caledonia Investments plc Annual Report 2024
Introduction
1 Performance
2 At a glance
11
Strategic report
12 Chair’s statement
14 Chief Executive Officer’s report
18 How we create value
20 Key performance indicators
22 Investment review
26 Public Companies
30 Private Capital
34 Funds
38 Financial review
42 Sustainability
57 Risk management
62 Going concern and viability
65
Corporate governance
66 Board of directors
68 Governance framework
70 Corporate governance report
74 Section 172 statement
80 Nomination Committee report
82 Audit and Risk Committee report
88 Governance Committee report
90 Directors’ remuneration report
109 Directors’ report
113 Responsibility statements
115 Financial statements
116 Independent auditor’s report
124 Financial statements
128 Significant accounting policies
133 Notes to the financial statements
152 Other information
152 Company performance record
153 Glossary of terms and alternative
performance measures
155 Investments summary
156 Valuation methodology
158 Information for investors
159 Directors and advisers
Caledonia is a FTSE 250 self-managed
investment trust company with a long
track record of delivering consistent
returns and progressive annual
dividend payments to shareholders.
Our aim is to generate long-term
compounding real returns that outperform
inflation by 3%-6% over the medium
to long term, and the FTSE All-Share
index over 10 years.
We are a long-term investor and hold
investments in both listed and private
markets across three pools: Public
Companies, Private Capital and Funds.
Each has a strategic allocation of capital,
investment strategy and target return.
The result is a well-balanced diversified
portfolio of investments with a
global reach.
Welcome to Caledonia
Sources: Caledonia Investments plc (‘Caledonia’) © Caledonia 2024 and FTSE International Limited
(‘FTSE’) © FTSE 2024. Caledonia Investments, Time Well Invested and the sealion guardant are
registered trademarks. ‘FTSE®’ is a trademark 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.
The images displayed throughout the annual report are a
selection of the following:
Charities supported by The Caledonia Investments Charitable
Foundation
The Caledonia office and artefacts on display from the Cayzer
Family archive
Employees of Caledonia, either in the central London office or
on an offsite strategy day
Images relating to Caledonia portfolio companies
Performance
Highlights
"Caledonia’s long-standing philosophy of investing in high-quality, well-
managed companies, with a truly long-term view, continues to serve us well.
All three investment pools have contributed to our growth over the past year,
despite a background of continuing macro economic and geopolitical uncertainty,
and we are delighted to be increasing our dividend for the 57th consecutive year."
Mat Masters
Chief Executive Officer
£3.0bn
Net asset value (NAV)
(31 March 2023: £2.8bn)
70.4p
Dividend per share
(31 March 2023: 67.4p)
3,280p
Share price
(31 March 2023: 3,390p)
7.4%
NAV per share total return1
(31 March 2023: 5.5%)
4.5%
Dividend growth
(31 March 2023: 4.0%)
1. Alternative Performance Measure – see page 153 for details.
(1.2)%
Total shareholder return1
(31 March 2023: 2.4%)
Strong consistent long-term
NAV growth
NAV total return growth since 2004
Annual dividend / share (p)
57 consecutive years of
dividend increases
APM
1
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Time well invested
We are investors, not traders, driven by
fundamentals, not trends. We invest time to make
confident, well-balanced compounding investments
and build rewarding partnerships.
At a glance
What differentiates us
Expert
team
Our team has deep
knowledge of the
companies and sectors
in which we invest. Our
culture is centred around
a collection of values
that shape our approach
to every aspect of investing:
insightful, supportive,
responsible, considered
and long-term.
Investment
process
We build rewarding
relationships and a
deep understanding of
our investments that
aligns with our risk
appetite, with ESG
factors embedded.
Long-term
investors
We buy to hold, investing in
high-quality companies with
strong market positions and
fundamentals, alongside
investments in funds with
track records of success.
Alignment
As a self-managed
vehicle, we invest from the
balance sheet, ensuring our
interests are wholly aligned
with our shareholders.
History
Caledonia traces its history back to the Cayzer
family’s shipping business, founded in the late 1800s.
Towards the end of the boom in shipping, Caledonia
was converted into a broader investment holding
company, and later to an investment trust. The
Cayzer family remain supportive shareholders
and the family’s long-term investment approach
underpins how Caledonia is run today.
2
Caledonia Investments plc Annual Report 2024
We invest via
three pools
Public Companies,
Private Capital and
Funds. Each has a
strategic allocation
of capital, investment
strategy and target
return. The result
is a well-balanced
diversified portfolio
of investments with
global reach.
Geography2
Sector
NAV
Annualised performance
Today
With net assets of £3bn, Caledonia has a
long track record of delivering consistently
strong returns and progressive annual
dividend payments. We seek to generate
long-term compounding real returns for
shareholders, targeting total returns that
outperform inflation by 3%-6%, and the
FTSE All-Share index over 10 years.
2. Headquartered
3. Includes AIR-serv Europe and
Cooke Optics
1. Consumer Prices Index including owner
occupiers’ housing costs (‘CPIH’)
Public Companies
32%
Private Capital
28%
Funds
31%
Cash and other
9%
North America
45%
UK & Channel Islands
34%
Asia
13%
Europe
8%
0%
5%
10%
CPIH1
3%
Over 10 years
Caledonia NAVTR
Caledonia Share Price TR
FTSE All-Share TR
Target
return
+10%
+9%
+6%
+4%
Industrials3
27%
Consumer discretionary
12%
Information technology
12%
Funds of funds
11%
Financials
9%
Healthcare
8%
Materials
7%
Consumer staples
6%
Communication services
2%
Other sectors
6%
Strategic report
Corporate governance
Financial statements
Other information
Introduction
3
We invest in high-quality businesses where long-term ownership will be rewarded.
The companies in our portfolio typically have similar characteristics, including:
One investment team across two strategies, with the same research methodology and
operational discipline:
Capital portfolio
Unconstrained investments in well-
managed, publicly quoted companies,
held for the long term. We select mature,
enduring businesses that have a significant
presence in their market, and where assets
consistently produce strong returns on
capital, enabling reinvestment and growth.
The Income portfolio is constructed
using similar quality criteria as the Capital
portfolio: we invest selectively in mature,
long-term businesses with resilient
business models, and the capacity and
management culture to pay sustainable
dividends. Our objective is to deliver a 7%
annual return, with an initial yield of 3.5%
based on the cost of investment.
Income portfolio
Public Companies
Strategic allocation
30%-40%
of net assets
10% p.a.
Total return target
7% p.a.
Total return target
Actual
32%
of net assets
Strong market
position
Capable management
closely aligned with
long-term investors
Profitable with good
and sustainable returns
on capital
Underlying growth
and pricing power
£950m of NAV
30 companies
0%
5%
10%
15%
Over 1 year
Total Public Companies pool
Over 3 years
Over 5 years
Over 10 years
Capital Portfolio
Income Portfolio
12%
9%
11%
9%
14%
10%
13%
10%
7%
6%
5%
6%
Annualised performance – total return
At a glance (continued)
Further detail
Turn to page 26
4
Caledonia Investments plc Annual Report 2024
Case study
Oracle is the world’s largest database
management company.
£26m
Weighted average cost
17% p.a.
Return since initial
investment (£)
2014
Date of initial investment
Information
technology
Sector
£83m
Valuation at 31 March 24
Original investment thesis
• an attractive risk/return dynamic with a reasonable entry price into a cash
generative company benefiting from high levels of recurring profit providing
downside protection
• strong possibility of accelerated growth driven by transition to a cloud and
subscription business model
• significant share buybacks at highly attractive prices to drive substantial value.
Since Caledonia initially invested in Oracle in 2014, the company has successfully
transitioned to a cloud and subscription business model and earnings growth has
accelerated to mid/high single digits. In addition, Oracle has reduced share count by
c. 50% over the last decade at an average price of c. $45, which has been highly accretive
to EPS. During the Covid-19 pandemic, we increased our holding by c. 30%, taking
advantage of the dislocation in the share price at the time. More recently, we crystalised
gains on a portion of our holding, following a period of share price appreciation. At 31
March 2024, Oracle was Caledonia’s eighth largest portfolio company, representing
2.8% of net assets.
Share price US$
Initial investment at an avg buy price of $41
17% annualised return (£)
Topped up our investment
during Covid adding 30%
Top slicing: number oi trades reducing holding by ~14%
0
20
40
60
80
100
120
140
Mar 14
Sep 14
Mar 15
Sep 15
Sep 16
Mar 16
Mar 17
Sep 17
Mar 18
Sep 18
Mar 19
Sep 19
Mar 20
Sep 20
Mar 21
Sep 21
Mar 22
Sep 22
Mar 23
Sep 23
Mar 24
5
Strategic report
Corporate governance
Financial statements
Other information
Introduction
The Private Capital team invests directly, either on a majority or minority basis, in a small
number of private companies, predominantly in the UK mid-market. The team work very
closely with portfolio companies, providing operational and strategic support alongside
long-term capital in order to drive value. The qualities we focus on include:
Private Capital
Strategic allocation
25%-35%
of net assets
Actual
28%
of net assets
Well-established
businesses with strong
market positions
Prudent capital
structures
Profitable and cash
generative
Experienced
management teams
£820m of NAV
8 companies
Annualised performance – total return
At a glance (continued)
Further detail
Turn to page 30
We target a total return target of
14% p.a. with a 2.5% yield on cost,
by investing in established businesses
with robust operating margins, led by
strong management teams targeting
meaningful growth.
0%
10%
20%
30%
Over 1 year
Over 3 years
Over 5 years
Over 10 years
12%
24%
14%
14%
14% p.a.
Total return target
6
Caledonia Investments plc Annual Report 2024
Case study
7IM is a leading UK-based wealth
management firm.
£128m
Total investment
15%
IRR
2015
Date of initial investment
2.3x
Multiple of cost
Financial
services
Sector
£298m
Total proceeds received
Investment thesis
• expand direct to consumer distribution to grow AUM
• management succession
• invest in people, operations and technology.
Caledonia Private Capital acquired 7IM in 2015, initially investing £74m in the business for
a 94% equity stake. Over the next eight years, we invested a further £54m of follow-on
capital into the business, funding accretive acquisitions and investing heavily in technology
to expand 7IM’s direct to consumer offering. Alongside this, we transitioned the retiring
senior management team, appointing a new CEO and Chair and, working closely with the
management team, successfully pivoted the business from a pure investment manager to
a ‘platform-led’ wealth manager. During our ownership, assets under management almost
tripled, and 7IM’s revenue and profitability were significantly enhanced. In January 2024,
we exited the business to Ontario Teachers’ Pension Plan Board generating net proceeds
of £256m which, together with the £42m of dividends received over the lifetime of the
investment, resulted in a return of 2.3x cost.
Lifetime returns (£m)
Mar 16
74
86
97
117
98
145
198
225
298
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Mar 23
Exit
Invested cost
Capital gain
Cumulative dividends
7
Strategic report
Corporate governance
Financial statements
Other information
Introduction
We invest in funds managed by leading managers in North America and Asia. We seek
to partner with some of the world’s most talented managers in long and profitable
relationships. We focus on regions that are the engines of well-proven global growth,
namely North America and Asia. Our relationships tend to span multiple fund vintages
and we often take advisory board positions to influence fund development.
The qualities that we focus on are:
Funds
Strategic allocation
25%-35%
of net assets
North American fund investments
• buyout, lower mid-market. Focus on small
to medium sized, often owner-managed,
established businesses
• usually first institutional investment and will
support their professionalisation and growth,
both organically and through M&A activity.
59%
of pool NAV
• focus on venture, growth and buyout (through
funds of funds) investments in non-cyclical,
new economy sectors such as healthcare and
technology, which are well placed to benefit
from wider demographic trends
• investing into businesses in the early years
of significant growth, having successfully
developed their business model. Whilst
focused on local markets, a number,
particularly those with a healthcare focus,
also invest into the US.
Asia fund investments
41%
of pool NAV
Actual
31%
of net assets
£926m of NAV 74 funds
42 managers 600+ companies
At a glance (continued)
Successful track record
Alignment of interest
Expertise in driving
value through cycles
Stable team
Further detail
Turn to page 34
Annualised performance – total return
0%
10%
5%
15%
20%
Over 1 year
Over 3 years
Over 5 years
Over 10 years
2%
17%
16%
17%
We seek diversified fund holdings
in private companies that provide
long-term and consistent returns
in geographic markets that
counterbalance our quoted
equity and UK-centric private
capital investments.
12.5% p.a.
Total return target
8
Caledonia Investments plc Annual Report 2024
Case study
Founded in 2014, CenterOak Partners is a Dallas-based firm that
makes control buyouts of small business services, industrial
services and consumer essential services companies, where these
can be transformed through operational efficiency and a “buy-and-
build” value creation strategy. Typically CenterOak will be the first
institutional capital into closely-held or family-owned businesses
or they will look to invest in non-core subsidiaries or divisions of
larger public or private companies where they can grow revenue
and improve net margins through operating efficiency.
Target company criteria
Portfolio company snapshots
CollisionRight – Provider of auto body repair services across the Central and North-East
US. Since the original investment in 2020, CollisionRight acquired 30 companies and the
company was sold in January 2024, generating a 2.5x net multiple of cost.
Turf Masters – Provider of exterior residential services including lawn care services and
exterior pest programmes. Since the original investment in 2022, Turf Masters has
acquired six companies.
HomeTown – Provider of residential HVAC, plumbing and electrical maintenance and
repair services in the Southern US. Since the original investment in 2021, HomeTown
has acquired 26 companies.
Caledonia’s commitment
The senior team at CenterOak have been working together for more than two decades.
Caledonia started formal due diligence on CenterOak in 2014, ahead of making a
commitment to their first fund in 2015.
Caledonia serves on the Limited Partner advisory board for CenterOak I and II.
Fund name
CenterOak I
CenterOak II
Vintage year
2015
2021
Fund size
$420m
$690m
Caledonia's commitment
$30m
$30m
$50m-$500m
Enterprise value
$30m-$150m
Total equity investment
$50m-$500m
Revenue
9-10
Platform investments
per fund
$7m-$35m
EBITDA
1-3
Investments per annum
9
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Insightful
& supportive
Through our extensive network of contacts,
we identify and select companies with
strong fundamentals and great potential.
We maintain effective and constructive
relationships with the people, companies
and funds in which we invest.
Wheelyboat Trust
The Caledonia Investments Charitable Foundation supported The Wheelyboat
Trust which is dedicated to providing mobility, learning and sensory impaired
people of all ages with independent access to activities such as powerboating,
nature watching, pleasure boating and angling in uniquely designed
wheelchair-accessible Wheelyboats.
10
Caledonia Investments plc Annual Report 2024
Strategic
report
Chair's statement
12
Chief Executive Officer’s report
14
How we create value
18
Key performance indicators
20
Investment review
22
Public Companies
26
Financial review
38
Going concern and viability
62
Funds
34
Risk management
57
Private Capital
30
Sustainability
42
11
Strategic report
Corporate governance
Financial statements
Other information
Introduction
David Stewart
Chair
Each of the Public Companies, Private
Capital and Funds pools contributed
to growth over the year.
Results
I am pleased to report another year of growth at
Caledonia, with net assets increasing to £3bn. NAVTR
was 7.4%, within our long-term target of inflation plus
3% to 6%. Each of the Public Companies, Private Capital
and Funds pools contributed to growth, despite foreign
exchange headwinds. It is also welcoming to see our
longer-term performance continuing to outperform
inflation and FTSE All-Share total return, both key
strategic objectives for the company.
Income and dividend
The board is recommending a final dividend of 51.47p
per share which, if approved by shareholders, will be
payable on 1 August 2024 to ordinary shareholders on
the register on 28 June 2024. This represents a full-year
dividend of 70.4p, an increase of 4.5% when compared to
the previous year, and 57 consecutive years of increased
annual dividends.
Investment and other income1 increased from £44m to
£63m2. Total net revenue was £41m, sufficient to cover
the dividend for the year. As previously reported, we
expect a gradual reduction in investment income as
we maintain our focus on total returns and, over time,
we anticipate that net distributions from our investments
will play a more material role in dividend cover.
Board
We welcomed Rob Memmott as our new Chief Financial
Officer on 1 September 2023. Rob, a chartered accountant
with over 20 years’ experience in senior financial
leadership roles, has made an excellent start. He succeeds
Tim Livett who retired last year. I would like once again
to extend the board’s thanks to Tim for his contribution
to Caledonia and we wish him every success as he pursues
a portfolio of non-executive roles. Stuart Bridges also
retired as a non-executive director at the conclusion of last
year’s annual general meeting and we remain very grateful
for his wise counsel over the years.
As previously reported, following a period of notable
change, the board has asked that I extend my tenure until
the annual general meeting in 2025, subject to ongoing
approval by shareholders.
Chair’s statement
1. Revenue account.
2. Including the benefit of £15m of revenue from non-consolidated subsidiaries.
12
Caledonia Investments plc Annual Report 2024
Share buybacks
The board firmly believes that the company’s ability to
make market purchases of its own shares is in the best
interest of all shareholders. The Cayzer family concert
party is a long-term shareholder and the source of
Caledonia’s strong culture and long-term outlook.
Given the obligation that could arise on the concert party
to make a general offer for the company under Rule 9 of
The City Code on Takeovers and Mergers (‘Code’), we will
once again be seeking shareholder approval of the waiver
of the Code’s mandatory offer provisions. Further details
are set out in the Governance report on page 70.
Annual general meeting
Each year I, together with my board colleagues, welcome
the opportunity to meet with shareholders in person at
our annual general meeting which once again takes place
in London on 17 July 2024.
Outlook
Caledonia’s investment strategy takes a long-term view,
with the premise being that exposure to good-quality
companies over long time periods is preferable to short-
term trading. Focusing on the long term necessitates a
balanced approach to building a portfolio and has resulted
in Caledonia’s exposure being well-diversified and having
a global reach.
The economic, fiscal, geopolitical and technological
environments appear to be in a state of flux and
somewhat unpredictable. Our key steps to mitigate
these risks continue to be with the quality and resilience
of each investment being carefully considered, as well
as avoiding debt to drive returns. While Caledonia
is a long-term investor, an active approach to portfolio
management enables us to take advantage of
opportunities as they arise.
David Stewart
Chair
20 May 2024
13
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Mat Masters
Chief Executive Officer
Our performance has been delivered
against a background of continuing
macroeconomic and geopolitical
uncertainty, underlining the strength
of our investment strategy.
7.4%
NAV total return
Caledonia’s long-standing philosophy is to invest in
high-quality, well-managed companies, with a truly
long-term view. This has continued to serve us well over
the past year, with NAVTR increasing by 7.4% and all three
investment pools contributing to growth.
This performance has been delivered against a
background of continuing macroeconomic and geopolitical
uncertainty, underlining the strength of our investment
strategy, which has generated consistent long-term real
returns outperforming inflation by 7.2% p.a. over the last
decade. We have continued to increase dividends paid to
shareholders, which we have now done for 57 consecutive
years – a track record we are incredibly proud of.
Annualised performance
0%
5%
10%
15%
CPIH
6%
CPIH
4%
CPIH
3%
Target
return
Over 5 years
Over 3 years
+13%
+11%
+8%
Over 10 years
Caledonia NAVTR
Caledonia Share Price TR
FTSE All-Share TR
Target
return
Target
return
+11%
+5% +5%
+10%
+9%
+6%
+5%
+6%
+4%
Strategy and allocation
We hold investments in both listed and private markets via
three pools: Public Companies, Private Capital and Funds.
The diversity and long-term outlook of our investment
approach mean we can effectively manage risk, both
through diversification and disciplined capital allocation
across our three pools, providing shareholders with
a well-balanced, global portfolio.
Chief Executive Officer’s report
14
Caledonia Investments plc Annual Report 2024
Performance highlights
The overall portfolio generated a return of 8.7% in the
year, despite foreign exchange headwinds which impacted
returns by (0.6)%.
0%
5%
10%
15%
20%
25%
Public Companies
Private Capital
Funds
Annualised investment pool returns
1 year
3 years
5 years
10 years
Our Public Companies pool is invested in high-quality,
well-managed businesses with strong market positions and
pricing power. The global portfolio is split between capital
and income investments, with the latter providing an
important contribution to covering our cost base and
dividend. Performance in the year was driven by the
Capital Portfolio, with material contributions from
Microsoft, Oracle and Watsco. Each of these investments
is a testament to our long-term strategy, having been held
for many years and all have delivered double digit annual
returns since our initial investment.
Within Private Capital, we sold Seven Investment
Management (‘7IM’) for £256m, a 32% increase on the
31 March 2023 valuation and a 2.3x multiple of cost.
Our ownership of 7IM embodies our investment
philosophy. We acquired the business in 2015 and, over
the following almost eight years, worked with the
management team to successfully pivot the business
from pure investment manager to a ‘platform-led’ wealth
manager. The team integrated four acquisitions and almost
tripled assets under management, significantly enhancing
7IM’s revenue and profitability before agreeing the sale
of the business to Ontario Teachers’ Pension Plan Board
last year. In April 2023, we announced the acquisition of
AIR-serv Europe, adding an excellent business to our
portfolio. AIR-serv Europe is a leading designer and
manufacturer of air, vacuum and jet wash machines,
which it provides as a turnkey solution to fuel station
forecourt operators across Western Europe.
AIR-serv Europe case study
Turn to page 32
Growth from our Funds pool was lower than in recent
years, with positive performance from our North
American funds partially offset by weaker results from
our Asia growth and venture capital funds. We also
saw a slowdown in distributions, reflecting the broader
market environment for private equity exits. During the
last quarter of our financial year, we began to see an
increase in distributions from our North American funds,
with the underlying managers cautiously optimistic that
exit markets will continue to improve. In contrast, we
believe continued market volatility in Asia, and the
portfolio’s focus on earlier stage businesses, will likely
mean that it will take longer for distributions from this
region to improve.
Liquidity and balance sheet
Caledonia ended the year with net cash of £227m which,
alongside our existing £250m revolving credit facility,
provides significant liquidity to invest in attractive
opportunities as they arise.
Shareholder returns
Sentiment towards investment companies, and in
particular those investing in private assets, continues
to weigh on discounts across the sector. Caledonia’s share
price has not been immune to this, with the shares
delivering a total return of (1.2)% in the year, and our
discount widening from 33% to 39%. We believe that
the share price fundamentally undervalues the quality
of Caledonia’s investment portfolio and its long-term
performance. The ongoing support of the Cayzer family
underpins Caledonia’s long-term culture and investment
approach. However, given the family’s significant holding,
there are limitations to the number of shares we are able
to repurchase. In March and April of this year, we
purchased 290,219 shares at an average discount of 36%,
resulting in a 10.1p accretion to NAV per share.
During the year, we also instigated a review of our investor
relations and communications programme and activities,
to ensure our investment proposition is well understood
and recognised by the market. We will be building on
several initiatives this year and will continue to improve
and expand these in the coming months to increase our
profile among existing and new investors.
15
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Chief Executive Officer’s report (continued)
Our culture and purpose
A healthy and vibrant culture, built around a set of aligned
values, is fundamental to the success of any business.
When I became CEO, one of my first priorities was to
thoroughly interrogate what we do as a business, how
we do it and, most importantly, why we do it. The project
has brought our culture and values to the forefront of who
we are – a long-term investor, investing in high-quality
companies that have the potential to generate exceptional
long-term value, alongside building rewarding relationships
and a deep understanding of our investments. I am grateful
to my colleagues and other stakeholders who provided
invaluable feedback to help create our new manifesto,
written by a broad cross section of employees and rooted
in the concept of ‘time well invested’. This manifesto (page
17) will guide us as we look ahead, underpinning our focus
on generating long-term compounding real returns that
outperform inflation by 3%-6% over the medium to long
term, and the FTSE All-Share index over 10 years.
Further information on Time Well Invested
is available on the website
www.caledonia.com
People
Our employees remain our most important asset and we
seek to create an environment that enables us to attract,
retain and develop exceptional people. Alongside Rob
Memmott’s appointment as Chief Financial Officer, we
also strengthened the team across a number of functions,
promoting internal talent and hiring new expertise. I would
like to thank my colleagues for their ongoing enthusiasm
and commitment across the business.
In 2021, we implemented a formal internship programme,
underscoring our commitment to developing future talent
within the investment management industry, having
provided internships on an informal basis for many years.
In 2023, we welcomed a cohort of 12 interns with all
respondents to our post-programme survey describing it
as “excellent” and one which they would recommend. We
look forward to continuing to support our interns’ ongoing
growth and development through our alumni programme.
Further information on our People and Culture
can be found in our Sustainability section
Turn to pages 42-56
Our approach to responsible investment
Over the course of the year, we have further developed
our approach to responsible investment through our
working group, embedding skills within our investment
teams and strengthening our investment processes.
We continue to consider the issues associated with
climate change and its potential impact on our business
and portfolio. Our second Taskforce on Climate-related
Financial Disclosures report has been published alongside
this annual report.
Further details on our activities in this area are
provided within the Sustainability section
Turn to pages 42-56
Looking forward
While the external environment remains uncertain, we
remain focused on what we can control. Our long-term
approach, diversified global portfolio and strong balance
sheet position us well to take advantage of investment
opportunities and continue delivering attractive
long-term returns.
Mat Masters
Chief Executive Officer
20 May 2024
The Strategic report includes the Section 172
statement, which sets out further detail of our
stakeholders, on pages 74 to 78
16
Caledonia Investments plc Annual Report 2024
We believe in the power of time.
While others fight against it,
Trying to conquer every passing minute,
We work with it.
We invest it patiently and judiciously,
Harnessing its power year after year.
Never afraid to wait, but always ready to act.
Time is key to our knowledge, the trust we’re given,
And the relationships we build
It is the source of our enduring partnerships,
Carefully tended over decades.
Never fleeting, always meaningful
We dedicate time to our people:
Giving it generously to nurture their growth,
Both personal and professional.
We invest time now to plan for success in the future,
To sow seeds that will flourish for generations to come.
Time cannot be tamed or altered,
But its power can be harnessed,
Invested in the things that matter most,
To create something that lasts.
17
Strategic report
Corporate governance
Financial statements
Other information
Introduction
How we create value
The company invests in proven, well-managed businesses that combine long-term
growth characteristics with an ability to deliver increasing levels of income. We are a
self-managed investment trust, and we utilise our resources and relationships to identify
opportunities, apply a disciplined investment process and robust risk management to
deliver long-term capital growth and dividends for our shareholders.
Key enablers
of value
• expert team
• long-term approach
• investment process
• careful portfolio
construction and risk
mitigation
• strength of the
balance sheet
• reputation and
network
Expert team
Our team has deep
knowledge of the
companies and sectors
in which we invest. Our
culture is centred around
a collection of values that
shape our approach to
every aspect of investing:
insightful, supportive,
responsible, considered
and long-term.
Long-term
approach
We buy to hold,
investing in high-
quality companies
with strong market
positions and
fundamentals
alongside investments
in funds with track
records of success.
Investment process
Source opportunities
Opportunities are identified through our business network and our own
research. An initial review will identify opportunities with characteristics
which meet our strategic risk/return appetite.
Analyse and invest
Extensive and ongoing business and financial due diligence is conducted,
often using independent advisers, before a final investment decision is made.
Collaboration
We build long-term rewarding relationships with our investee companies and
funds. Investments are subject to continuous performance monitoring and
risk reviews.
Reinvest or return
Proceeds from the sales of investee companies and funds are reinvested in
new investment opportunities or returned to shareholders through dividends
or share buybacks.
Investment and monitoring
Capital
allocation
Responsible
investing
Collaboration
Source
opportunities
Reinvest or
return
Analyse and
invest
Investment
Committee
Risk
management
18
Caledonia Investments plc Annual Report 2024
Investment pools
Public Companies
Target return:
10.0% p.a. Capital portfolio
7.0% p.a. Income portfolio
Further information
Turn to page 26
Private Capital
Target return:
14.0% p.a.
Further information
Turn to page 30
Funds
Target return:
12.5% p.a.
Further information
Turn to page 34
Our investment process is tailored to the nature and risk of each asset group.
All investments are approved by the Investment Committee with board approval
required for investments and disposals over a defined threshold.
Careful portfolio
construction and risk
management
We primarily invest in equities, on
a global basis, to achieve our target
returns. We manage the risk of
permanent loss of capital by diversifying
our interests and avoiding excessively
risky investments. Effective risk
management is a key component of our
investment approach and we consider
a number of key risk areas which assist
in ensuring that the different parts of
the group operate within strategic
risk parameters.
Strength of the
balance sheet
We invest solely from our own balance
sheet and have no permanent corporate
debt. We aim to maintain sufficient cash,
liquid assets and committed facilities to
cover our liabilities and commitments
as they fall due. This provides us with
the flexibility to invest in both private
equity and quoted opportunities over
longer (10-year) timeframes, significantly
reducing the investment cycle risk.
Reputation and network
Our reputation as a supportive and
constructively involved long-term
investor enables us to develop our
network of effective business contacts.
This network enables us to identify
opportunities and carry out due
diligence, as well as being invaluable
to the management of our investee
companies.
Who benefits
Our shareholders
Our shareholders provide
Caledonia’s permanent capital
and it is for their benefit that the
directors are required to promote
the company’s success
Our people
Our employees are our most
important asset, and we invest
time to foster their professional
development and wellbeing
Our portfolio companies
and funds
We build rewarding relationships
and a deep understanding of our
investments
Suppliers
We build and value long-term
relationships
Community
Through our foundation, we have
an ongoing commitment to the
wider community
Further information
Turn to page 74
19
Strategic report
Corporate governance
Financial statements
Other information
Introduction
KPI
Rationale
Progress in the year
Net asset value total
return ('NAVTR')
NAVTR is a measure of how the net
asset value (‘NAV’) per share has
performed over a period, taking into
account both capital returns and
dividends paid to shareholders
APM
Alternative performance measure
- see page 154 for details
• the company has continued to build on its strong
performance, reporting NAVTR 7.4% in the year
• over five and 10 years the company has reported a
NAVTR of 10.9% p.a. and 10.0% p.a. respectively,
outperforming inflation by 6.6% and 7.2% over
the same periods
• over 10 years our NAVTR has outperformed the
FTSE All-Share TR Index by 4.2% p.a.
Total shareholder
return ('TSR')
TSR measures the return to our
shareholders through the movement in
the share price and dividends paid
during the measurement period
APM
Alternative performance measure
- see page 154 for details
• the company’s TSR for the year was (1.2)%
• over five and 10 years, the company’s TSR is
5.0% and 8.6% respectively
• over 10 years the company’s TSR has
outperformed the FTSE All-Share index by
2.8% and inflation by 5.7%.
Dividend growth
over time
A reliable source of income is
important for our shareholders.
Caledonia has a progressive
dividend policy
Annual dividend is the per share
amount payable to shareholders out
of profits for the year, excluding any
special dividends
• the company paid an interim dividend of 18.93p
and has proposed a final dividend of 51.47p, taking
total dividends to 70.4p per share, a 4.5% increase
year on year, extending our record of growing
annual dividends for 57 consecutive years
• over the last five and 10 years, our dividend has
grown by 3.5% p.a. and 3.4% p.a.
• over the same period, inflation has increased by
4.2% p.a. and 2.9% p.a.
NAV per share
The measure of the company assets,
calculated by dividing net assets by the
fully diluted number of shares in issue
Please see note 17 of the financial
statements
• at 31 March 2024, the company had net assets of
£2,965m (5369p per share), reporting a 5.9%
return over the year
• over five and 10 years the company has reported
a NAV per share growth of 8.4% p.a. and 7.5%
p.a. respectively.
We measure our performance against four strategic objectives
using key performance indicators.
Key performance indicators
20
Caledonia Investments plc Annual Report 2024
Links to strategic objectives and risks
Metric
Risks:
Strategic
Investment
Market
Liquidity
Risks:
Strategic
Investment
Market
Liquidity
Risks:
Strategic
Investment
Market
Liquidity
Risks:
Strategic
Investment
Market
Liquidity
Our strategic objectives
Generate total returns
that outperform
inflation by 3%-6%
over the medium to
long term
Generate total returns
that outperform the
FTSE All-Share index
over 10 years
Pay annual dividends
increasing by inflation
or more over the
long term
Manage investment risk
effectively for long-term
wealth creation
2024
2015
2016
2017
2018
2019
2020
2021
2022
2023
0
1,000
2,000
3,000
4,000
5,000
6,000
NAV/share over 10 years (p)
0
20.0
10.0
30.0
40.0
50.0
60.0
70.0
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Annual dividend/share over 10 years (p)
0%
2%
4%
6%
8%
10%
12%
14%
Caledonia NAVTR
CPIH +3% to CPIH+6%
March 2014
March 2016
March 2018
March 2020
March 2022
March 2024
NAVTR annualised 10-year rolling performance
Caledonia NAVTR
Caledonia TSR
FTSE All Share TR
0%
2%
4%
6%
8%
10%
12%
14%
16%
March 2014
March 2016
March 2018
March 2020
March 2022
March 2024
TSR annualised 10-year rolling performance
21
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Investment review
Overall performance
At 31 March 2024, the investment portfolio was valued at
£2.7bn, delivering a return of 8.7% during the year, despite
foreign exchange headwinds, building on our long-term
track record of delivering real returns.
All investment pools contributed to growth, with Public
Companies and Private Capital pools delivering double-
digit growth of 12.0% and 12.3% respectively and our
Funds pool delivering a return of 2.2% in the year. Within
the Public Companies pool, performance was principally
driven by our Capital portfolio. Performance across our
Private Capital portfolio was driven by realisation activity
and continued good operating progress across the
majority of the portfolio. Performance from the Funds
pool was lower than in recent years, with continued
good performance from our North American mid-market
buyout funds, partially offset by weaker performance
from our Asia growth and venture capital funds.
Investment activity
During the year, we invested a total of £346.3m into
the portfolio, against which £371.3m of proceeds were
received, resulting in net movement of £25.0m.
New investment activity was primarily driven by the
£142.5m acquisition of AIR-serv Europe by Private Capital,
£108.6m into our Funds pool and £76.5m into our Public
Companies pool.
Realisations proceeds were driven by the sale of Seven
Asset Management (‘7IM’) for £255.8m and distributions
from the Funds pool of £72.0m, the majority of which
came from our maturing North American funds. Within
the Public Companies pool, the team crystalised £43.5m
on a small portion of several holdings following a period
of strong share price appreciation.
Caledonia’s portfolio is invested
across three investment pools,
each managed by a specialist
team investing in well-managed
businesses that combine long-term
growth characteristics with, in
many cases, an ability to deliver
increasing levels of income. We
invest in both listed and private
markets, covering a range of
sectors, resulting in a well-balanced
diversified portfolio of investments
with a global reach.
Public Companies
Private Capital
Funds
30%-40%
Strategic asset allocation
25%-35%
Strategic asset allocation
25%-35%
Strategic asset allocation
32%
NAV
28%
NAV
31%
NAV
At 31 March 2024, 9% of NAV was held in cash and other.
22
Caledonia Investments plc Annual Report 2024
Sector
The following chart shows the distribution of the portfolio
at 31 March 2024 by sector, demonstrating a highly diverse
sector exposure across our investments.
Currency
The following chart analyses net assets at 31 March
2024 by currency exposure, based on the currencies in
which investments, cash or other assets are denominated
or traded. During the year, Sterling strengthened by
2% against the US dollar, adversely impacting our
annual return.
Geographic diversification
The following chart shows the distribution of the portfolio
at 31 March 2024 between regions. The basis of this
analysis is the country of listing for quoted securities,
country of residence for unlisted investments and
underlying regional analysis for funds.
The following chart illustrates geographic analysis
at 31 March 2024 by revenue generation,
demonstrating a highly diverse geographic
exposure across our investments.
March
2023
£m
Investments
£m
Realisations
£m
Accrued
income
£m
Gains/
(losses)
£m
March
2024
£m
Income
£m
Return1
%
Pool
Public Companies
836.9
76.5
(43.5)
–
79.9
949.8
21.8
12.0
Private Capital
824.0
161.2
(255.8)
1.4
89.5
820.3
21.7
12.3
Funds
873.8
108.6
(72.0)
–
15.9
926.3
3.6
2.2
Total pools
2,534.7
346.3
(371.3)
1.4
185.3
2,696.4
47.1
8.7
1. Returns for investments are calculated using the Modified Dietz Methodology.
Investment movements in the year
2. Includes AIR-serv Europe and
Cooke Optics
Geography by region (headquartered)
North America
45%
UK & Channel Islands
34%
Asia
13%
Europe
8%
Geography by revenue generation
North America
43%
Asia
18%
UK & Channel Islands
16%
Europe
16%
Other countries
7%
Sector
Industrials2
27%
Consumer discretionary
12%
Information technology
12%
Funds of funds
11%
Financials
9%
Healthcare
8%
Materials
7%
Consumer staples
6%
Communication services
2%
Other sectors
6%
Currency exposure
US dollar
52%
Pound Sterling
39%
Euro
7%
Other currencies
2%
23
Strategic report
Corporate governance
Financial statements
Other information
Introduction
At 31 March 2024, our top 10 investments were valued at £1,227.9m and represent 41.4% of net assets.
Top 10 investments
Investment review (continued)
Sector
Financials
Investment pool
Private Capital
Belgium-based independent investment company with net assets of €4.7bn, investing in private businesses
in Europe and North America.
Investment thesis
• first invested with Cobepa in 2004 and the investment has since delivered strong, compounding returns
• long-term partner, with similar investment philosophy to Caledonia Private Capital
• geographic diversification and source of potential co-investments.
Value £181.0m
% of NAV 6.1%
1
Sector
Industrials
Investment pool
Private Capital
Leading designer and manufacturer of air, vacuum and jet wash machines, providing turnkey solutions to fuel
station forecourt operators across Western Europe.
Investment thesis
• expand the installed machine estate, focusing on jet wash and incremental air opportunities in the UK and
air growth in existing and new European geographies
• create a standalone business, investing in people, operations and governance
• drive performance efficiencies and cash generation.
Value £170.1m
% of NAV 5.7%
2
Sector
Financials
Investment pool
Private Capital
Largest independent multi-family office in EMEA, providing family office, fiduciary, investment management,
corporate services, treasury and custody services.
Investment thesis
• attractive long-term growth dynamics of the ultra high net worth market
• geographic and product based acquisition strategy
• significant investment in technology platform and people.
Value £168.5m
% of NAV 5.7%
3
Sector
Diversified sector exposure
Investment pool
Funds
Private equity funds of funds investing in the US lower mid-market managed by HighVista Strategies (formerly
Aberdeen US PE Funds).
Investment thesis
• provides diversified exposure to US private equity
• committed to five funds of funds.
Value £139.7m
% of NAV 4.7%
4
Sector
Consumer discretionary
Investment pool
Private Capital
Inns and drinks business with a pub estate stretching from south-west London to Bristol and the Channel Islands.
Investment thesis
• defensive, asset-backed business generating robust cash flow from its Channel Islands operations
• capital growth generated through targeted capex within the UK estate, both enhancing current assets and the
acquisition of additional pubs
• market share gains and synergies from acquisitions.
Value £135.2m
% of NAV 4.6%
5
24
Caledonia Investments plc Annual Report 2024
Investments summary
Turn to page 155
Sector
Industrials
Investment pool
Private Capital
Leading manufacturer of cinematography lenses.
Investment thesis
• market-leading UK manufacturer of premium-end cinematography lenses for film and TV, founded in 1886
• market growth in streaming and production studios worldwide
• investment in manufacturing capacity, NPD and global distribution network.
Value £105.4m
% of NAV 3.6%
6
Sector
Information technology
Investment pool
Public Companies
Leading developer of computer software systems, applications and cloud services.
Investment thesis
• focuses on Microsoft’s strength as a top tier cloud platform and a leader in enterprise software. In addition
they are an important player in AI and are quickly integrating AI technology across their product range
• long duration of growth due to long term enterprise cloud transition with Microsoft’s economics driven by
Azure and Microsoft Office 365.
Value £84.3m
% of NAV 2.8%
7
Sector
Information technology
Investment pool
Public Companies
One of the largest global providers of products and services, including enterprise applications and infrastructure,
for enterprise information management.
Investment thesis
• revenue growth should accelerate due to increasing demand for Oracle cloud infrastructure services
• long term economics benefit from the continued transition to a cloud and subscription based model.
Value £83.5m
% of NAV 2.8%
8
Sector
Diversified sector exposure
Investment pool
Funds
A leading private equity investment firm focused on the Asia Pacific region with total commitments of over $8bn
across 10 funds.
Investment thesis
• access to top-tier mid-market private equity funds diversified across buyout, growth and venture capital
• primarily invests in mid-market, country-specific funds with proven track records and strategies
• committed to five funds of funds.
Value £83.2m
% of NAV 2.8%
9
Sector
Industrials
Investment pool
Public Companies
Largest distributor of air conditioning, heating and refrigeration equipment in North America.
Investment thesis
• sustained investment in digitalisation of the business should support market share growth, margin improvement
and enhance the attractiveness of Watsco as an owner of other smaller distributors
• continued positive industry dynamics should lead to strong compounding of earnings.
Value £77.0m
% of NAV 2.6%
10
All trademarks used on pages 24 and 25 are the property of their respective owners and their use here does not imply endorsement.
25
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Public Companies
Strategy
The Public Companies pool provides Caledonia with
exposure to a concentrated portfolio of high-quality
well-managed businesses. We take a long-term ownership
approach because we believe that it is better to allow the
companies to drive returns, rather than simply trading
them. The qualities we focus on include a strong market
position, good and sustainable returns on capital and
capable management closely aligned with long-term
investors. We expect that a combination of these factors
will reward long-term ownership.
Caledonia invests its own balance sheet, so our
strategy does not need to contend with subscriptions
or redemptions. This structure enables us to introduce
and realise capital to and from the pool when markets
provide good opportunities. Our approach allows us to
introduce capital into the portfolio with a margin of
safety around each investment, which cumulatively
provides downside protection.
The global portfolio comprises two strategies, the Capital
portfolio and the Income portfolio, each generally holding
between 15 and 20 companies. There are five stocks that
are held in both portfolios. The Income portfolio aims to
deliver an initial yield on invested cost of 3.5% with the
dividend per share from these holdings growing ahead
of inflation over the longer term. The Capital portfolio
has no dividend target, is unconstrained and, as a
consequence, should produce higher returns over time.
The portfolios are managed by a single team, with the
same research methodology and operational discipline
used across both.
Performance
During the year, the Public Companies pool generated
a total return of +12.0%, or +13.7% in local currencies,
reflecting positive performance of a number of our
holdings. Over the last 10 years the Public Companies
pool has delivered returns of 8.6% p.a.
We believe you build wealth by
owning companies, not trading them
on the stock market. Focused on
‘co-owning’ companies that are built
on solid foundations and generate
cash, we target businesses that we
understand with underlying growth
and pricing power that can deliver
good returns on capital.
Sector
Geography by
revenue generation
North America
49%
Europe
16%
Other countries
16%
Asia
11%
UK & Channel Islands
8%
Consumer staples
15%
Materials
14%
Consumer discretionary
2%
Healthcare
8%
Industrials
21%
Communication services
3%
Information technology
24%
Financials
6%
Real estate
3%
Utilities
4%
Annualised returns (%)
0%
5%
10%
15%
20%
1 year
3 years
5 years
10 years
12%
9%
11%
9%
26
Caledonia Investments plc Annual Report 2024
Performance
At the year end, the Capital portfolio was valued at
£698.2m and delivered a return of +14.0% (+16.0% in local
currencies) in the year. The portfolio is concentrated, with
18 holdings with no benchmark. Including the impact of
foreign exchange, over the last 10 years the Capital
portfolio has delivered returns of 10.2% p.a.
Operating performance was generally good across the
portfolio. The strongest performers in terms of share price
returns were Hill & Smith (+49.2%), Microsoft (+44.2%),
Fastenal (+43.0%), Oracle (+38.1%) and Watsco (+37.2%).
Their performance was driven by a combination of
underlying company operating results coupled with future
growth prospects. Hill & Smith demonstrated strong
momentum in its US businesses across both composites
and galvanising together with increased M&A, and both
Microsoft and Oracle benefited from strong growth in
cloud services.
Gains were partially offset by negative contributions
from companies including Alibaba (-27.9%), Charter
Communications (-21.3%) and Croda International (-19.1%).
This was primarily due to company or industry dynamics.
For example, following a period of underperformance,
Alibaba has undertaken some notable management
changes with a new CEO and a renewed focus on its
core ecommerce business. We continue to closely
monitor all our holdings as they adapt through time.
Investment activity
Consistent with our long-term investment approach,
trading activity remained targeted, primarily with
increased holdings in Croda International, Philip Morris,
Spirax Sarco and Symrise. Following a period of strong
share price appreciation, we crystalised gains on a portion
of our holdings in Microsoft, Oracle and Watsco.
Capital portfolio
Significant portfolio investments
Name
Business
Geography
First
invested
Value
£m
Portfolio
%
Return
%
Microsoft
Software
US
2014
84.3
12.1
44.2
Oracle
Software
US
2014
83.5
12.0
38.1
Watsco
Ventilation products
US
2017
57.7
8.3
37.2
Thermo Fisher Scientific
Pharma & life sciences services
US
2015
46.1
6.6
(1.1)
Texas Instruments
Semiconductors
US
2018
46.1
6.6
(4.7)
Hill & Smith
Infrastructure
UK
2011
45.7
6.5
49.2
Philip Morris
Tobacco & smoke-free products
US
2016
38.2
5.5
(2.3)
Fastenal
Industrial supplies
US
2020
37.5
5.4
43.0
Spirax Sarco
Steam engineering
UK
2011
34.1
4.9
(10.2)
Moody’s Corporation
Financial services
US
2022
33.0
4.7
26.8
Charter Communications
Cable communications
US
2017
32.5
4.7
(21.3)
Becton Dickinson
Medical technology
US
2015
28.6
4.1
(0.9)
Other investments
130.9
18.6
698.2
100.0
14.0
0%
5%
10%
15%
20%
1 year
3 years
5 years
10 years
14%
10%
13%
10%
Annualised portfolio returns - Capital
Opening
value
Investments Realisations Investment
income
received
Closing
value
Total
return
618.0
40.3
(32.7)
(13.3)
85.9
698.2
Portfolio movements (£m) - Capital
“We like to own high-quality
companies that will continue
to provide compounding
returns to shareholders
over the long term. The
unconstrained nature of the
portfolio allows us to focus
on finding these special
companies. When we purchase
shares in new investments or
add to holdings, we look to do
so at attractive prices with a
margin of safety.”
Alan Murran
Co-Head of
Caledonia Public
Companies
Oracle case study
Turn to page 5
27
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Public Companies (continued)
Performance
The Income portfolio was valued at £251.6m and
generated a return of +6.8% (+7.7% in local currencies).
Like the Capital portfolio, it is concentrated, comprising
17 holdings and is not managed against a benchmark.
Including the impact of foreign exchange, over the last
10 years the Income portfolio has delivered returns of
4.9% p.a.
The strongest performers were Fastenal (+43.5%),
Watsco (+37.7%), RELX (+43.0%), DS Smith (+34.6%)
and Sabre Insurance (+61.4%). Fastenal and Watsco are
leading distributors in their end markets and continue to
execute particularly well. The performance of RELX reflects
its improved growth as the business continues to shift
towards data and analytics. DS Smith received two
takeover approaches during March 2024, following which,
we decided to exit our position post the year end. Sabre
Insurance has enjoyed a strong recovery as the UK motor
insurance market improved after a challenging period
last year.
Gains were partially offset by weaker share price
performances from Reckitt Benckiser (-24.5%) and
Diageo (-15.2%). Reckitt Benckiser was impacted by
litigation concerns within its infant nutrition business.
Diageo was impacted by the slowing macro-environment
and broader destocking, particularly in its Latin American
business. This follows several strong years and we have
used the share price weakness to add to our position.
Investment activity
The team added one new company to the portfolio, RELX,
the global provider of information-based analytics and
decision tools and made selective partial realisations and
investments in existing portfolio companies to take
advantage of share price movements.
Income portfolio
Significant portfolio investments
Name
Business
Geography
First
invested
Value
£m
Portfolio
%
Return
%
Diageo
Alcoholic drinks
UK
2020
19.5
7.8
(15.2)
Watsco
Ventilation products
US
2020
19.3
7.7
37.7
National Grid
Transmission & distribution utilities UK
2015
19.2
7.6
3.5
Unilever
Consumer goods
UK
2019
18.0
7.2
(1.6)
Texas Instruments
Semiconductors
US
2020
17.5
7.0
(3.5)
SGS
Testing & certification
Europe
2020
16.8
6.7
8.1
Fortis
Transmission & distribution utilities Canada
2020
16.5
6.6
(4.1)
RELX
Data analytics & decision tools
UK
2023
16.1
6.4
43.0
Fastenal
Industrial supplies
US
2020
15.6
6.2
43.5
Philip Morris
Tobacco & smoke-free products
US
2021
14.9
5.9
(2.1)
LondonMetric
REIT
UK
2020
14.6
5.8
21.9
Other investments
63.6
25.1
251.6
100.0
6.8
“The strategy offers a resilient
and growing income stream
from a concentrated portfolio
of high quality companies.
We closely monitor the
companies to risk manage
the portfolio appropriately
and continually seek to
improve the investment
process over time.”
Ben Archer
Co-Head of
Caledonia Public
Companies
0%
5%
10%
1 year
3 years
5 years
10 years
7%
6%
6%
5%
Annualised portfolio returns - Income
Opening
value
Investments Realisations Investment
income
received
Closing
value
Total
return
218.9
36.2
(10.8)
(8.5)
15.8
251.6
Portfolio movements (£m) - Income
28
Caledonia Investments plc Annual Report 2024
Case study
Watsco is the largest distributor of air
conditioning, heating and refrigeration
equipment in North America.
£28m
Weighted average cost
22% p.a.
Return since initial
investment (£)
2017
Date of initial investment
Industrials
Sector
£77m
Valuation at 31 March 24
Original investment thesis
• sustained investment in digitalisation of the business should support market
share growth, margin improvement and enhance the attractiveness of Watsco
as an owner of other smaller distributors
• continued positive industry dynamics should lead to strong compounding
of earnings.
We first invested in Watsco in 2017 with the business displaying many of the quality
characteristics we look for, including significant barriers to entry, product necessity in a
large and growing installed base with drivers that support a recurring sales model, and
relative scale versus competitors. The business is decentralised with an entrepreneurial
culture and a long-term focus on value creation; where technology and digitalisation sit
at the core of the business.
Since December 2017 revenue has grown by 68% and the EBIT margin has improved by
2.7% to 10.9%. Since our initial investment the share price has tripled, and the investment
has delivered a total return of 22% p.a. Following a period of share price appreciation we
recently crystalised gains on a portion of our holding and at 31 March 2024, Watsco was
Caledonia’s 10th largest portfolio company, representing 2.6% of net assets.
Share price (US$)
0
100
200
300
400
500
Feb 17
May 17
Aug 17
Nov 17
Feb 18
May 18
Aug 18
Nov 18
Feb 19
May 19
Aug 19
Nov 19
Feb 20
May 20
Aug 20
Nov 20
Feb 21
May 21
Aug 21
Nov 21
Feb 22
May 22
Aug 22
Nov 22
Feb 23
May 23
Aug 23
Nov 23
Feb 24
Mar 24
Top up
adding ~60%
Top up
adding ~12%
Top up of ~2%
Top slicing of 18% at
an avg price of $379
Opportunistic trading during
Covid adding a net ~50%
across Capital and Income
Initial investment at an avg price of $146
22% annualised total return (£)
29
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Private Capital
Strategy
The Private Capital pool comprises a small number
of direct investment holdings in private companies,
predominantly in the UK mid-market. We focus on
cash generative businesses with strong growth potential.
We typically invest £50m to £150m in private companies
with low leverage, providing long-term capital along with
operational and strategic support to portfolio company
management teams. Unlike many private equity firms,
as a balance sheet investor, we are not constrained by the
finite life of a private equity fund, which allows us to take
a truly long-term approach to managing and realising value
from our investments.
Performance
At 31 March 2024, the Private Capital portfolio consisted
of eight companies, with five investments representing
over 90% of value.
The portfolio was valued at £820.3m and generated a
return of +12.3% (+12.9% in local currencies), driven by the
sale of Seven Investment Management (‘7IM’), generating
a £59m or 32% uplift to the 31 March 2023 carrying value
and good operating performance across the majority of
the investee companies. Over the last 10 years the Private
Capital pool has delivered a return of 13.9% p.a.
The majority of the portfolio is valued on an earnings
multiple basis, with multiples in the range 9 to 14 times
current year earnings. Gearing levels are low, with net debt
typically in the range of 2 to 2.5 times earnings before
interest, tax, depreciation and amortisation (‘EBITDA’).
7IM Case study
Turn to page 7
Concentrating on mid-market
companies, we take a long-term
approach that is focused on delivering
enduring value in the shape of capital
growth and a current yield
throughout the business cycle.
“We take a long-term approach
working closely with our
portfolio companies to deliver
enduring capital and support.
This, along with our buy-to-
own, rather than buy-to-sell,
philosophy differentiates us
from other private equity
managers. We seek to invest in
high quality, well established,
UK centric businesses with a
mid-market focus.”
Tom Leader
Head of Private
Capital
Annualised pool returns - Private Capital
0%
10%
20%
30%
Over 1 year
Over 3 years
Over 5 years
Over 10 years
12%
24%
14%
14%
Opening
value
Investments Realisations Investment
income
received
Closing
value
Total
return
824.0
161.2
(255.8)
(20.3)
111.2
820.3
Portfolio movements (£m) - Private Capital
Geography by
revenue generation
UK & Channel Islands
45%
Europe
32%
North America
12%
Asia
7%
Other countries
4%
Sector
Industrials1
44%
Healthcare
2%
Financials
21%
Consumer discretionary
24%
Materials
3%
Consumer staples
1%
Information technology
1%
Other sectors
4%
1. Includes AIR-serv Europe and
Cooke Optics
30
Caledonia Investments plc Annual Report 2024
Investment activity
We invested a total of £161.2m during the year, primarily
driven by our £142.5m acquisition of AIR-serv Europe in
April 2023. We received £255.8m of proceeds from the
sale of 7IM in January 2024.
AIR-serv Europe case study
Turn to page 32
Portfolio summary
Cobepa, the Belgian-based investment company, owns
a diverse portfolio of private global investments. The
majority of the businesses within the Cobepa portfolio
continue to trade well, with many delivering good
performance and valuation progression. The valuation at
31 March 2024 was £181.0m, a return of 4.3% for the year.
AIR-serv Europe, a leading designer and manufacturer
of air, vacuum and jet wash machines, which it provides
to fuel station forecourt operators across the UK and
Western Europe, was acquired by Caledonia in April 2023.
The business has since reported year-on-year growth,
trading ahead of expectations. Having been held at equity
purchase cost since acquisition in April 2023, the business
is now valued on an earnings basis, leading to an increase
in value of £28m. The valuation at 31 March 2024 was
£170.1m, a return of 19.4% for the year.
Stonehage Fleming, the international multi-family office,
continues to deliver good revenue and margin growth
across each of the Family Office, Investment Management
and Financial Services businesses, driven by client wins and
increased activity levels. The valuation at 31 March 2024
was £168.5m, a return of 18.8% for the year.
Liberation Group, an inns and drinks business with a pub
estate stretching from south-west London to Bristol and
the Channel Islands. The business has been adversely
impacted by the cost of living crisis, reducing consumer
discretionary incomes and sustained cost inflation,
particularly UK energy costs. Profitability and revenue
growth continues to improve and the optimisation of
the Cirrus Inns business, acquired in December 2022,
is ongoing. The valuation at 31 March 2024 was £135.2m,
a return of 2.6% for the year.
Cooke Optics, a leading manufacturer of cinematography
lenses, as previously reported, has been heavily impacted
by the Hollywood writers’ strike which started in early
May 2023 and the subsequent actors’ strike. Both disputes
were resolved in November 2023. We are pleased to see
improvement in demand for Cooke Optics’ core products
and the success of the new SP3 ‘prosumer’ range. The
valuation at 31 March 2024 includes a 10% equity discount
to reflect continued uncertainty around the timing and
nature of the post-strike recovery. The valuation at 31
March 2024 was £105.4m, a return of (14.9)% for the year.
Significant pool investments
Name
Business
Geography
First
invested
Equity held
%
Value
£m
Pool
%
Return
%
Cobepa
Investment company
Belgium
2004
5.2
181.0
22.1
4.3
AIR-serv Europe
Forecourt vending
Europe
2023
99.8
170.1
20.7
19.4
Stonehage Fleming
Family office services
Guernsey
2019
37.2
168.5
20.5
18.8
Liberation Group
Pubs, bars & inns
Jersey
2016
83.6
135.2
16.5
2.6
Cooke Optics
Cine lens manufacturer
UK
2018
98.0
105.4
12.8
(14.9)
Other investments
60.1
7.4
820.3
100.0
12.3
31
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Case study
AIR-serv Europe is a leading
designer and manufacturer of air,
vacuum and jet wash machines.
£143m
Original investment
19%
Return since initial
investment
8
countries
c.220
employees
c.22,000
machines
2023
Date of initial investment
Industrials
Sector
£170m
Valuation at 31 March 24
Investment thesis
• expand the installed machine estate, focusing on:
- jet wash and incremental air opportunities in the UK
- air growth in existing and new European geographies
• create a standalone business, investing in people, operations and governance
• drive performance efficiencies and cash generation.
Headquartered in Wigan, the business is a leading provider of turnkey solutions for air,
vacuum and jet wash machines. It serves a large and embedded customer base of fuel
station forecourt operators across the UK and Western Europe, as well as a range of
commercial partners across a number of end markets.
Caledonia Private Capital acquired AIR-serv Europe in April 2023, investing £143m. We
have since worked with the business to enhance its value creation plan and supported
investment in the team, with the appointment of a new Non-Executive Chair and Chief
Commercial Officer. In the last 12 months AIR-serv Europe has increased its estate by
over 1,000 new machines and has invested over £12m in capex to support its growth
and maintain its unrivalled quality of service.
Private Capital (continued)
32
Caledonia Investments plc Annual Report 2024
“Within Private Capital our
strategy is to focus on high-
quality companies operating
predominantly in the mid-
market. Our approach is to
work with management to
drive value through operational
improvement over the business
cycle. Our partnership with AIR-
serv over the first year has got
off to a good start and we look
forward to working with the
team to deliver the next stage
of growth.”
Tom Leader
Head of Private Capital
33
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Annualised pool returns - Funds
Funds
We seek diversified fund holdings
in private capital that provide long-
term returns in geographic markets
that counterbalance our quoted
equity and UK-centric private
capital investments.
Strategy
We invest in funds operating in North America and Asia
with a bias to buyouts. The pool provides attractive
diversification, investing in 74 funds managed by 42
managers with an underlying portfolio of over 600
companies, across a wide range of sectors and
company sizes.
The North American based funds, which represent 59%
of the Funds pool (18% of Caledonia’s NAV), invest into the
lower mid-market, with a focus on small to medium sized,
often owner-managed, established businesses. These funds
regularly provide the first institutional investment into these
businesses, and support their professionalisation and
growth, both organically and through M&A activity.
Realisations are typically through trade sales or to other,
larger private equity funds. The pool is a combination of
directly owned funds (45% of Funds pool), with a broad
range of managers generally managing funds under
US$750m. The balance is in funds of funds investments
(13% of Funds pool) with HighVista Strategies US private
equity funds, our largest single manager over five separate
funds with highly diversified portfolios.
Our Asia funds which represent 41% of the Funds pool
(13% of Caledonia’s NAV) invest across a wide range of
sectors, which are set to benefit from wider demographic
trends, such as healthcare and technology. The funds
typically invest in businesses in the early years of significant
growth, having successfully developed their business model.
Whilst focused on local markets, a number, particularly
those with a healthcare focus, also invest into the US. The
market is less developed than in North America with
divestments, in the absence of a mature buyout market,
mainly achieved through an IPO or trade sale. The pool is a
combination of directly owned funds (23% of Funds pool),
with a broad range of managers, the balance (18% of Funds
pool) is invested with Asia Alternatives, Axiom and Unicorn,
all funds of funds providers, investing in buyout, growth
and venture capital.
“We have developed
relationships with talented
fund managers and, through
careful selection, have
generated strong long-term
investment returns.”
Jamie Cayzer-Colvin
Head of Funds
Geography by region
N. America
59%
Asia
41%
By strategy
N. America buyout
45%
N. America fund of funds
13%
N. America other
1%
Asia fund of funds
18%
Asia venture and growth
23%
0%
10%
5%
15%
20%
Over 1 year
Over 3 years
Over 5 years
Over 10 years
2%
17%
16%
17%
Opening
value
Investments Realisations Investment
income
received
Closing
value
Total
return
873.8
108.6
(72.0)
(3.6)
19.5
926.3
Portfolio movements (£m) - Funds
34
Caledonia Investments plc Annual Report 2024
Performance
At 31 March 2024, the pool was valued at £926.3m,
generating a total return of +2.2%, or +4.3% in local
currencies, driven by continued positive performance
from our North American holdings (+9.8% in local currency)
partially offset by the decline in the value of our Asia
holdings (-3.1% in local currency) reflecting the more
challenging market conditions in the region. Over the last
10 years, the Funds pool has delivered returns of 17.3% p.a.
Looking at the performance drivers in our North American
primary fund programme, alongside realisation activity,
robust operating performance continues to be a key driver
of returns. Within our Asia portfolio, we believe underlying
portfolios are well positioned, and trading is generally
healthy. However, valuations have continued to be
impacted by the weakness in local public markets and
reduced attractiveness of foreign public markets for IPOs.
Investment activity
The Funds pool invested £108.6m over the year, with 63%
deployed into North American funds and the balance into
Asia funds. Distributions of £72.0m were broadly split
75%/25% between North America and Asia. After a
quieter first half, we have seen a meaningful increase
in activity in the North American portfolio, especially
in the last quarter of the financial year, with our underlying
managers cautiously optimistic that exit markets will
continue to improve. In our Asia portfolio, given the
market volatility and macro uncertainty in the region,
alongside its earlier stage focus, we expect the pace of
distributions to take longer to regain momentum.
Portfolio maturity
Our primary funds portfolio has a weighted average age
of approximately 4.3 years. The weighted average age
of our North American holdings is 4.0 years, within the
window of a four to six year holding period typically
targeted by our managers. Given the earlier stage focus
of our Asia portfolio the weighted average age of these
holdings is 5.1 years. As noted above, we expect exit
activity in Asia to take longer to improve.
Portfolio maturity (excluding funds of funds)
< 1 year
5%
1 - 3 years
30%
3 - 5 years
29%
5 - 7 years
24%
7 years plus
12%
Uncalled commitments
During the year, we made a new commitment to a leading
North American mid-market industrials fund and one
secondary purchase of an Asia fund. We have a good
investment pipeline of potential new fund commitments
and in particular, we expect a number of our US managers
to be fundraising over the next 12-18 months, as broader
market conditions for exits in this market improve.
At 31 March 2024, uncalled commitments were £377m,
66% to North America and 34% to Asia.
Significant manager exposure
Name
Business
Geography
First
invested
Value
£m
Pool
%
Return
%
HighVista Strategies1
Funds of funds
US
2013
139.7
15.1
2.7
Axiom Asia funds
Funds of funds
Asia
2012
83.2
9.0
(0.3)
Decheng funds
Private equity funds
Asia/US
2015
59.0
6.4
19.6
Asia Alternatives funds
Funds of funds
Asia
2012
44.2
4.8
(3.1)
Unicorn funds
Funds of funds
Asia
2012
39.9
4.3
(1.8)
Ironbridge Funds
Private equity funds
Canada
2016
35.9
3.9
11.4
Stonepeak funds
Private equity funds
US
2015
34.9
3.8
(2.8)
Boyne funds
Private equity funds
US
2017
33.8
3.6
41.1
Other investments
455.7
49.1
926.3
100.0
2.2
1 Formerly Aberdeen US PE funds.
New Heritage Capital case study
Turn to page 36
35
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Funds (continued)
Case study
$50m-$200m
Enterprise value
$15m-$50m
Total equity investment
$30m-$150m
Revenue
10-12
Platform investments per fund
$4m-$20m
EBITDA
1-3
Investments per annum
Founded in 2006 and based in Boston, New Heritage Capital
(‘NHC’) pursues control-oriented investments in small companies
in the business services, healthcare services and specialised
manufacturing sectors.
Typically NHC will invest in closely-held or family/founder-owned
companies where founders are looking to retain a stake in the
business by rolling their proceeds and remain for the next phase
of growth alongside the team at NHC to create value.
Target company criteria
Portfolio company snapshots
FMS – Provider of SaaS-based business process outsourcing services to multi-unit
retailers, with focus on independent grocery.
Carnegie – Enrolment strategy and marketing solutions for higher education.
Sold in February 2024.
Revela Foods – Leading developer and manufacturer of savoury food ingredients,
seasonings and flavourings. Sold in January 2024.
Caledonia’s commitment
Caledonia first identified NHC in 2015, ahead of making a commitment to its third
fund in 2020 and made a follow on commitment to NHC IV in 2022.
Caledonia serves on the Limited Partner advisory board for NHC III and NHC IV.
Fund name
NHC III
NHC IV
Vintage year
2019
2024
Fund size
$260m
$438m
Caledoniaʼs commitment
$20m
$30m
Funds (continued)
36
Caledonia Investments plc Annual Report 2024
“The lower mid-market
is a core part of our North
American strategy and
we have built a successful
relationship with New Heritage
Capital over many years.”
Eloise Fox
Director, Funds
37
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Financial review
Rob Memmott
Chief Financial Officer
Our diversified portfolio underpinned another year
of growth for Caledonia, with the company reporting
a NAVTR of 7.4%, despite continuing challenges from
elevated levels of inflation, higher interest rates and
geopolitical uncertainty. This continued positive
performance has further extended our long-term track
record of consistent returns, with the company reporting
NAVTR of 10.0% over 10 years, a 7.2% and 4.2% respective
outperformance of inflation and the FTSE-All Share index
over the same period.
Caledonia ended the year with net assets of £2,965m
(5369p per share) (2023: £2,798m; 5068p per share),
with the uplift largely reflecting capital gains and
investment income across our portfolio, partially offset
by foreign exchange movements, dividend payments
to our shareholders and the group’s cost base.
Change in net assets
3,200
3,000
2,900
2,800
2,700
3,002.3
3.2
2,965.3
(37.0)
£m
Net
investment
gains
Opening
value
Portfolio
investment
income
FX
Management
expenses
Other
Dividends
paid
Closing
value
NAV
before
dividends
(31.3)
(38.8)
47.1
224.1
2,798.0
Total comprehensive income
The company seeks to generate total profits from both
investment income and capital growth. For the year ended
31 March 2024, the total comprehensive income was
£203.4m (2023: £144.0m), of which £40.5m (2023:
£20.6m) derived from income and £162.9m (2023:
£123.4m) from capital.
£m
31 Mar
2023
Investments
Realisations
Investment
income1
Total
return
31 Mar
2024
Total investment portfolio
2,534.7
346.3
(371.3)
(45.7)
232.4 2,696.4
Other investments2
260.2
(2.9)
(228.4)
(10.9)
18.0
Total investments3
2,794.9
343.4
(599.7)
(45.7)
221.5
2,714.4
Net cash
221.6
227.4
Other net (liabilities)/assets4
(218.5)
23.5
Net assets
2,798.0
2,965.3
Summary balance sheet
1. Investment income is net of the movement in accrued income of £1.4m.
2. Other investments comprise legacy investments and cash, receivables and deferred tax liability in subsidiary investment entities.
3. Total investment portfolio includes £19.0m of investments that are classified as assets held for sale in the Group’s Statement of financial position.
4. Movement in other net (liabilities) / assets primarily relates to the repayment of the loan to a non-consolidated subsidiary.
Our robust balance sheet has no
structural leverage. With total
liquidity of £477m we are well
positioned to take advantage
of new investment opportunities.
38
Caledonia Investments plc Annual Report 2024
Revenue performance
Total comprehensive income was £40.5m (2023: £20.6m),
an increase of £19.9m, primarily driven by the £14.7m
investment income from a non-consolidated intra-group
entity and a movement in the tax charge of £6.1m.
Investment income in the year totalled £47.1m, £3.9m
higher than the prior year. Investment income from
the Private Capital pool was to £21.8m (2023: £20.8m).
Investment income from Private Capital was £21.7m
(2023: £20.6m). Investment income from the Funds
pool was £3.6m (2023: £1.8m).
Investment income from other investments totalled
£14.7m representing a distribution paid by an intra-group
non-consolidated entity. This primarily comprised income
from the Funds pool and treasury income retained by the
subsidiary over the preceding four years.
The company’s revenue management expenses were
£1.6m higher than last year at £22.9m (2023: £21.3m),
reflecting higher personnel expenses of £0.9m, primarily
driven by an inflationary increase, coupled with an increase
in the average number of employees in our investment
teams to support our growth. This was partially offset by
a reduction in pension costs on our closed defined benefit
scheme. There was also an increase in other costs,
primarily driven by an increase in property expenses and
marketing and communication expenditure.
Capital performance
Total comprehensive income was £162.9m (2023: £123.4m).
The movement compared to last year was generated by
higher levels of capital gains achieved by our investments.
Our investment portfolio continued to provide a degree of
diversification, generating gains over the year. Net fair value
gains from the portfolio were £185.3m (2023: £126.4m),
and together with portfolio investment income, as
described above, of £47.1m (2023: £43.2m) generated a
total return of £232.4m (2023: £169.6m), an 8.7% return.
Foreign exchange detracted from performance, with 52%
of our NAV denominated in US dollars, predominantly the
2% strengthening of Sterling against the US dollar resulted
in the £38.8m loss across our investment pools. Further
information on the key drivers of performance across our
investment portfolio can be found on pages 22 to 37.
Within the net fair value gains from other investments is
a loss of £10.9m related principally to foreign exchange
losses on loans and tax movements in a non-consolidated
subsidiary. The loan to the non-consolidated subsidiary was
fully repaid at 31 March 2024. There is a reduction of £3.9m
on property (2023: £1.4m reduction), reflecting higher
yields on commercial properties.
The company’s capital management expenses relating
to performance awards were £8.3m (2023: £8.2m).
Transaction costs of £0.1m (2023: £0.4m) were incurred,
mainly linked to due diligence work on new private equity
fund investments.
31 Mar 2024
31 Mar 2023
£m
Revenue
Capital
Total
Revenue
Capital
Total
Investment income - portfolio1
47.1
-
47.1
43.2
-
43.2
Net gains on fair value investments - portfolio2
-
185.3
185.3
-
126.4
126.4
Total return
47.1
185.3
232.4
43.2
126.4
169.6
Investment income - other investments1
14.7
-
14.7
-
-
-
Net (losses)/gains on fair value investments - other investments2
-
(10.9)
(10.9)
-
6.6
6.6
Net losses on fair value property
-
(3.9)
(3.9)
-
(1.4)
(1.4)
Other income
0.9
0.6
1.5
0.8
1.3
2.1
Total revenue
62.7
171.1
233.8
44.0
132.9
176.9
- ongoing management
(22.9)
-
(22.9)
(21.3)
-
(21.3)
- performance awards
-
(8.3)
(8.3)
-
(8.2)
(8.2)
- transaction costs
-
(0.1)
(0.1)
-
(0.4)
(0.4)
- exchange movements and other
(0.7)
-
(0.7)
-
-
-
- other transactions with intra-group (non-consolidated) entities3
(0.2)
-
(0.2)
(0.1)
-
(0.1)
Net finance costs
(0.2)
-
(0.2)
2.3
-
2.3
Taxation and other
1.8
0.2
2.0
(4.3)
(0.9)
(5.2)
Total comprehensive income
40.5
162.9
203.4
20.6
123.4
144.0
Income statement
1. Total investment income from the portfolio and other investments £61.8m (2023: £43.2m).
2. Total net gains on fair value investments from the portfolio and other investments £174.4m (2023: £133.0m).
3. Other transactions with intra-group (non-consolidated) entities includes a £7.2m foreign exchange gain (2023: £nil) on an intra-group loan facility and a £7.2m
(2023: £0.1m) interest expense on the intra-group loan facility which is reflected in finance costs in the Group statement of comprehensive income.
Caledonia allocates expenses between revenue and capital in accordance with guidance from the Association of Investment Companies and broader market
practice. In addition to transaction costs, share-based payment expenses are allocated to capital. Caledonia’s share-based compensation is directly linked to
investment performance and is therefore viewed as an expense against gains on investments.
39
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Financial review (continued)
Ongoing charges
Our ongoing charges ratio for the year was 0.81%
(2023: 0.77%). The ongoing charges ratio is calculated
on an industry standard basis, comprising published
management expenses over the monthly average
net assets. Full details of the calculation are provided
on page 154.
Valuation
The company maintains a considered valuation approach
to all investments, applying caution in exercising
judgement and making the necessary estimates. Our
valuation methodology is described on pages 156 to 157.
All listed investments are valued based on the closing bid
price on the relevant exchange as at 31 March 2024.
Private Capital investments are valued biannually,
principally on a normalised EBITDA/market multiple basis,
in line with the latest IPEV guidelines. Our holding in
Cobepa is derived from the external valuation it prepares.
The Funds pool valuations are based on the most recent
valuations provided by the fund managers, subject to cash
movements from the valuation date. Within our Funds
pool, we also reviewed the underlying valuation
methodologies adopted by our fund managers and were
satisfied that the techniques utilised were appropriate.
The NAV of the Funds pool comprised 0.9% based on
valuations dated 29 February 2024, 74.6% dated 31
December 2023, 24.4%, mostly funds of funds holdings,
dated 30 September 2023 and 0.1% at 30 June 2023.
The following chart summarises the source of valuations
across the portfolio, illustrating that 76% of the portfolio
value is subject to either market prices or independent
external valuation.
Pool assets by valuation method
Quoted price
35%
Fund NAV1
41%
Earnings
24%
Dividend
We recognise that a reliable source of growing dividends
is an important part of shareholder return over both the
short and longer term and have extended our record of
growing annual dividends to 57 consecutive years. We paid
an interim dividend of 18.93p per share on 4 January 2024
and have proposed a final dividend of 51.47p. The total
annual dividend for the year of 70.4p is an increase of 4.5%
on last year.
Including the proposed final dividend, the dividends to be
paid out of revenue earnings for the year ended 31 March
2024 total £38.3m, which was covered by net revenue for
the year of £40.5m.
Capital allocation
Prudent and disciplined management of our balance sheet
is key to its continued strength and to ensure an efficient
allocation of capital. We have performed additional
modelling and stress testing during the year, which has
informed our viability assessment, details of which are
included on page 62.
To ensure that we maintain a balanced portfolio, each
of our investment pools has a strategic allocation range
(see page 22). At 31 March 2024, all of our investment
pools were within their strategic allocation range, albeit
both our Public Companies and Private Capital pools are
at the lower end of their respective ranges.
Alongside allocation to our investment strategies, we are
committed to our dividend policy and, when appropriate,
share buybacks. As more fully outlined in the Chair’s
and Chief Executive Officer’s statements pages 12 to 16,
we are limited in the number of shares we can repurchase.
However, with the shares trading at a significant discount
to NAV, the company has purchased and cancelled
290,219 shares at an average discount of 36% during
March and April 2024, resulting in a 10.1p NAV per
share accretion.
1. Includes Private Capital
investment in Cobepa
40
Caledonia Investments plc Annual Report 2024
Cash flows, liquidity and facilities
Our net investment cashflows were an inflow of £27.6m.
Investments into our portfolio totalled £343.7m, relating
mainly to our Private Capital investment into AIR-serv
Europe of £142.5m, £76.5m of investment into our Public
Companies pool and £108.6m of investment into our
Funds pool. Realisations from our portfolio totalled
£371.3m, relating to the sale of our Private Capital
investment 7IM for £255.8m, realisations of our Public
Companies holdings of £43.5m and £72.0m of distributions
from our Funds pool.
After investment income, management expenses and
dividend payments to our shareholders, net cash inflow
was £5.8m. Movement in net cash is analysed as follows:
Movement in net cash £m
At 31 March 2024, our net cash was £227.4m (31 March
2023: £221.6m). This combined with our undrawn
revolving credit facility of £250m, provides the group
with total liquidity of £477.4m.
Uncalled commitments
Our total uncalled commitments were US$476m
(£377m), split 66% in North America and 34% Asia.
During the year we committed US$59m.
Uncalled commitments US$m
Treasury management
Our treasury department provides a central service
to group companies and conducts its operations in
accordance with clearly defined guidelines and policies.
Treasury transactions are only undertaken as a
consequence of underlying commercial transactions
or exposures and we do not seek to take active
risk positions.
It is the treasury function’s role to ensure that the group
has sufficient available funds and facilities to meet its
needs in the foreseeable future. Credit facilities of the
group totalled £250m, comprising £112.5m from ING
Group expiring in July 2025 and £137.5m from RBSI
expiring in November 2027. One of the outcomes from
the capital allocation modelling described above has
informed an ongoing review and renewal of our
credit facilities.
61% of our net asset value is non-Sterling denominated.
We do not hedge our foreign currency exposure.
However, this risk is fully recognised by the business
and considered carefully within our risk
management approach.
Shareholder communication
Since joining Caledonia in September 2023, one of
the areas I have focused on has been to enhance
the company’s investor relations and communications
programme to ensure our investment proposition is well
understood and recognised by the market. As part of this
process, we have recently reviewed and made significant
updates to our monthly factsheet, and have increased
our disclosures and case studies in the annual report and
half and full year results presentations. We will continue
to evolve this in future periods.
I have also reviewed the company’s shareholder
reporting cycle. Going forward, we will continue to
announce a monthly NAV and factsheet, which capture
movements in the value of our Public Companies and
Funds investment pools, foreign exchange movements
and key newsflow. Our Private Capital pool is revalued
twice a year and these valuations will be included in our
March and September NAV and factsheets. Detailed
analysis and commentary on all of our investment pools
will be released in our half and full-year results
announcements.
Rob Memmott
Chief Financial Officer
20 May 2024
300
200
100
0
-100
200
£m
Opening
value
Investments
- portfolio
Realisations
- portfolio
Investment
income
received
Dividends
paid
Closing
value
Management
expenses
& other
221.6
227.4
371.3
43.8
(28.6)
(37.0)
(343.7)
600
500
400
300
200
100
0
$m
Opening
value
Drawdowns
New
commitments
Other
Closing
value
523.8
(116.1)
59.6
8.6
475.9
41
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Sustainability
At Caledonia we are committed to
building our business for the long
term. This section explores how
we manage our business, acting
responsibly for our employees
and wider stakeholders, and, as
an investment company, how we
approach our investment decisions
responsibly, managing our
investment portfolio for today
and the future.
Our people and culture
Centred around a collection of values that
shape our approach to every aspect of
investing, our team is key to delivering
long-term performance. We seek to create
an environment that enables us to attract,
retain and develop exceptional people.
• Employee engagement
• Intern programme
• Equality, diversity and inclusion
• Working environment
• The Caledonia Investments
Charitable Foundation
Further information on our stakeholders
in the Section 172 statement
Turn to page 74
42
Caledonia Investments plc Annual Report 2024
“I really appreciate being
able to be more long-term and
accountable for the investment
decisions I make. I want to see
the consequences of my actions
and stand over them.”
Employee
Environment
We continue to recognise the importance of
communicating ESG performance clearly to
our stakeholders. We recognise a need to
support the journey to net zero, with a
commitment to supporting a sustainable
future as we deliver investment performance
for our shareholders over the long term.
Task Force on Climate-Related Financial
Disclosures (‘TCFD’)
Our second standalone TCFD
report sets out our progress
towards meeting all TCFD
recommendations and can be
found at www.caledonia.com
We recognise that the level of detail provided
in our TCFD report may not be required by all
stakeholders, so a summary is provided on
pages 55 - 56.
Responsible investment
Acting responsibly is a key part of our long-
term investment philosophy. We commit to
constructive, long-term engagement with the
companies and funds in which we invest,
believing that careful and thoughtful
stewardship is essential to addressing
Environmental, Social and Governance (‘ESG’)
risks and to driving positive change.
• Our investments
• Public Companies
• Private Capital
• Funds
43
Strategic report
Corporate governance
Financial statements
Other information
Introduction
43
Sustainability (continued)
Our people and culture
Employee engagement
Last year, we completed our first colleague engagement
survey to help us better understand the views of our
employees and how we can continue to develop and
improve. We received a 94% response rate to an
anonymous survey conducted by a third-party provider
and were delighted that 98% of those who participated
would recommend Caledonia as a “great place to work”.
A healthy and vibrant culture, built around a set of aligned
values, is fundamental to the success of any business.
This year, as detailed in the Chief Executive Officer’s
statement on page 16, we sought invaluable feedback
from employees and other stakeholders to articulate
what makes Caledonia so unique. Written by a broad
cross section of employees, we created our new
manifesto, built around ‘time well invested,’ to underpin
and clearly articulate our culture, values and purpose.
For further information on Caledonia’s manifesto, please
visit our website www.caledonia.com
Our team is key to delivering long-term performance.
At Caledonia we seek to create a culture that enables us
to attract, retain and develop exceptional people. We are
committed to creating an inclusive environment where our
employees can develop and contribute fully, underpinned
by good remuneration packages, favourable parental leave
policies and health and wellbeing support, alongside
training and development to support progression. Further
information on our remuneration policy can be found in
the Directors’ remuneration report on pages 90 to 108.
At Caledonia, we operate a flatter management structure
than is often found in many other companies. Honest and
open communication, both on a formal and informal basis,
is encouraged. We take time to nurture the personal
and professional growth of colleagues, who enjoy
regular communication through informal channels such
as bi-weekly staff lunches, with more formal dialogue
taking place in regular team meetings, off-site strategy
and team building days, together with annual
performance appraisals.
Dedicating time to our people, giving it
generously to nurture their growth, both
personal and professional.
44
Caledonia Investments plc Annual Report 2024
Intern programme
For many years, Caledonia provided internship
opportunities on an informal basis. In 2021, we
created a formal intern programme to demonstrate
our commitment to developing future talent within the
investment management industry. Successful candidates
are those who we believe will benefit the most from the
experience. With support from an independent facilitator
and involvement from employees across all investment
teams and business functions, the ‘Sealions’ programme
provides interns with a unique insight into Caledonia
and first-hand access to investment management, helping
build skills for their future careers. We regularly welcome
our growing Sealions programme alumni back to
Caledonia, creating an important network of talent
for the future.
We welcomed a very successful cohort of interns last
year and were delighted that 100% of respondents to
our post-course survey rated the overall programme as
“excellent” and would recommend it to others. Following
a successful application process, we look forward to
welcoming this year’s interns in June.
Equality, diversity and inclusion
At Caledonia, we believe that a diverse workforce creates
the optimum environment in which our business will
continue to thrive and grow.
Our employment and recruitment policies are compliant
with relevant UK legislation. Recruitment, development
and promotion are based solely on suitability for the role.
We will not discriminate on the basis of gender, sexual
orientation, marital status, pregnancy, gender
reassignment, age, race, nationality, ethnicity,
disability, political or religious belief.
Caledonia is committed to increasing diversity and
inclusion over time. We are mindful of the need for orderly
succession planning and ensuring an appropriate mix of
skills and experience is maintained both on the board and
throughout our business.
At 31 March 2024 the gender split at different levels within
our business is as follows:
“Being part of the intern mentorship
scheme at Caledonia was transformative.
The support and encouragement I
received allowed me to see the potential
in myself that I wasn’t aware of before.
It widened my horizons, enriched my
understanding of the company and
created opportunities for development
that I didn’t know were possible.”
Intern alumni
Investment and support
employees 20231
Male
68%
Female
32%
Investment employees
Male
37%
Female
63%
Support employees
Investment and support
employees 20241
Male
70%
Female
30%
Investment employees
Male
35%
Female
65%
Support employees
1. Excluding non-executive directors
Caledonia operates a flatter management structure than is often found in
many other companies and, for information, 55% (2023: 56%) of direct
reports to members of our Investment Committee are female.
Male number (%)
Female number (%)
2024
2023
2024
2023
Board
7 (64%)
8 (67%)
4 (36%)
4 (33%)
Senior managers
15 (60%) 12 (57%) 10 (40%)
9 (43%)
All employees
(including board)
38 (46%) 36 (49%) 44 (54%) 38 (51%)
45
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Number of
board members
Percentage of
the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
Men
7
63.6%
4
6
85.7%
Women
4
36.4%
-
1
14.3%
Not specified/prefer not to say
-
-
-
-
-
Number of
board members
Percentage of
the board
Number of
senior positions
on the board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including
minority-white groups)
10
90.9%
4
7
100%
Mixed/Multiple Ethnic Groups
-
-
-
-
-
Asian/Asian British
1
9.1%
-
-
-
Black/African/Caribbean/Black British
-
-
-
-
-
Other ethnic group, including Arab
-
-
-
-
-
Not specified/prefer not to say
-
-
-
-
-
Working environment
At Caledonia, we look to establish and maintain high
standards of behaviour and conduct. We have a set of
policies in place intended to protect employees from
unlawful discrimination and provide them with a working
environment where they have a right to be treated fairly,
with consideration and respect, and which supports high
standards of conduct and performance.
Annual performance appraisals, through which
employees may be set objectives and against which their
achievements are assessed, are intended to ensure that
employees have a clear view of their performance and
to identify additional learning and development needs
to help them meet their full potential.
Grievance procedure and whistleblowing
Caledonia’s staff handbook outlines the company’s formal
grievance procedures and the steps colleagues can take
to raise concerns, either formally or informally.
In addition, there are formal whistleblowing arrangements
in place which enable staff to raise any issue of concern
regarding possible impropriety in the conduct of the
company’s business, confidentially and independently
of line management. Responsibility for whistleblowing
procedures rests with the board.
Health and safety
We look to continually improve health and safety
within our workplace, operating in accordance with
applicable legislation.
Due to the nature of our business, our employees are
engaged in low-risk occupational activities. However,
we seek to provide safe working conditions and
equipment, delivering adequate training to support this
and prevent accidents and cases of work-related ill health.
Our health and safety policies are provided within our
staff handbook. Workstation assessments are undertaken
to identify employee needs and actioned as required.
This year, following feedback from staff and in line with
the recognised health benefits, we trialled standing desks
and plan to implement them later in 2024.
During the year we had no RIDDOR reported
incidents (‘Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations 2013’) and
no work-related accidents.
In accordance with Listing Rule 9.8.6 (9) of the FCA’s Listing Rules, the table below sets out details of the diversity of the
individuals serving on the board and executive management as at 31 March 2024. Our executive management consists
of members of our Investment Committee, being the most senior level of management. Data was obtained on a
voluntary self-reported basis. The board met the ethnicity diversity target set out in LR 9.8.6 (9)(a) but not the two
gender diversity targets. The targets were introduced in 2022 and, given the gradual change in board membership,
it will take time to meet them.
Sustainability (continued)
46
Caledonia Investments plc Annual Report 2024
The Caledonia Investments
Charitable Foundation
Established in 2020, the Foundation was initially
established to provide grants to eligible applicants
closely connected to our investee companies, who
faced financial hardship due to the Covid-19 pandemic.
Today, through the Foundation, we are proud to support
causes which link closely to Caledonia’s history, values,
culture and team. The company made a grant of £300,000
to the Foundation during the year. The Foundation
provides support to a number of charities each year
and seeks to create an enduring legacy by supporting
the development of a small number of these through
a multi-year donation programme. One such charity
that has benefited from this support is Horatio’s Garden.
Alongside Horatio’s Garden, the Foundation also made
material donations to the Cornwall Community Foundation,
Maritime Volunteer Service, The Wheelyboat Trust and
LMK (Let Me Know). Smaller grants benefited other
charities connected with Caledonia and its employees,
including the Mountain Adventure Trust (partnered with
the Mountain Training Trust) and The Quinnian Trust,
alongside donations to support charitable fundraising
activities by colleagues such as marathons,
fun runs and bike rides.
We also provide colleagues with up to two additional days
of leave each year to encourage them to volunteer their
time to support the Foundation’s activities, together with
other charities and good causes.
Horatio’s Garden nurtures the wellbeing of people after
spinal injury in beautiful vibrant sanctuaries within the
heart of NHS spinal injury centres.
The charity’s vision is to sustainably grow thriving
communities and biodiverse gardens in all 11 NHS
spinal injury centres in the UK.
The gardens are vital places for reflection and
adjustment for people facing these life-changing injuries
and long stays in hospital. The profoundly positive
impact of a Horatio’s garden is clear for patients, their
loved ones and hospital staff. Research shows that 94%
of beneficiaries see an improvement in their wellbeing
with 91% reporting that the gardens have supported
their mental health.
“Support from the Caledonia Investments
Charitable Foundation has been pivotal to
the growth of our corporate partnership
income enabling Horatio’s Garden to secure
crucial sustainable funding for the future
running costs of our regional projects in the
UK’s spinal injury centres. We are extremely
proud and grateful to be working with the
Caledonia Foundation team.”
Dr Olivia Chapple
Chair of Trustees, Horatio’s Garden
47
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Our investments
We believe that responsible investment and business
success go hand in hand. We are committed to building
businesses for the long term and consider the ESG impact
of the investments that we own.
We are committed to constructive, long-term focused
engagement with the companies in which we invest and
believe that careful stewardship is key to addressing ESG
risks and driving positive change.
We expect to invest in businesses which will:
Grow, provide employment and generate
economic benefit in an environmentally and
socially responsible way, both during and after our
ownership.
We aim to invest in companies and funds that:
Take a responsible approach towards the
environment and society, built on good
governance practices.
In the past, our stewardship activities focused primarily on
governance matters, most notably in our majority owned
investee businesses, which we seek to operate in line with
industry good practice. Today, we continue to build on
these foundations by incorporating ESG matters into our
investment decision-making to ensure that a broader
spectrum of issues that are important to us are formally
evaluated alongside our key investment criteria. Our
investment team consider these issues in its due diligence
process when proposing new additions to our portfolio.
Responsible Investment/Responsible
Corporate Working Group
Chaired by the Chief Executive Officer (‘CEO’), our
Responsible Investment/Responsible Corporate Working
Group (‘RI/RC Working Group’) advises and assists in the
development and implementation of our approach to ESG
matters across the business. The group has met regularly
throughout the year. A review of our progress for each
investment pool and our business operations is provided
on pages 49 - 54.
Members
CEO (Chair)
Chief Financial Officer
Company Secretary
Senior members of –
Public Companies
Private Capital
Funds
Other key corporate
managers
Function
1.
Advises and assists in
the continued
development and
implementation of
our approach to ESG
matters across the
business
2.
Seeks to ensure
that ESG matters
are appropriately
factored into
decision-making
processes
3.
Continues to
develop
understanding of
climate-related
matters
4.
Supports the
development of
our reporting,
particularly on
climate-related
matters
Sustainability (continued)
Responsible investment
48
Caledonia Investments plc Annual Report 2024
Public Companies
We aim to invest in global businesses with recognised
brands, intellectual property and strong market
positions that have a good track record of delivering
attractive returns.
Our approach means that we do not generally invest in
capital intensive businesses or companies directly involved
in the extraction and production of coal, oil or natural gas.
As a consequence of our highly selective and quality
orientated investment style:
• we make considered use of our voting rights and vote
all our stock ahead of shareholder meetings
• we expect to vote in line with management
recommendations but are prepared to abstain or vote
against resolutions where we consider they are not in
the interests of our own shareholders
• we will use our influence through engagement and
voting to encourage companies to plan and demonstrate
the actions they have taken to address climate risks and
opportunities.
Progress during the year
• ESG factors incorporated into investment process,
together with ongoing monitoring
• Principles of Responsible Investment (‘PRI’)
Advanced RI analysis training completed within
the team
• major climate transition and physical risks
monitored as part of TCFD reporting.
Further information on Public Companies –
climate change metrics and targets
Turn to page 54
49
Strategic report
Corporate governance
Financial statements
Other information
Introduction
49
Sustainability (continued)
Private Capital
We invest in established businesses, across a range of
sectors, which have robust operating margins, strong
management teams and good growth opportunities:
• we introduce a high standard of corporate governance
into these businesses, generally with an independent,
experienced non-executive chair and formal audit and
remuneration committees to support the board
• our team take non-executive roles in these businesses
and use their positions to maintain close relationships
with the management teams
• we hold frequent meetings with management which
cover a wide range of subjects, including ESG matters,
and regularly review performance
• we seek to ensure that these companies understand
and manage their own environmental impacts
• we seek to encourage them to invest in suitable
technology to improve energy efficiency and make
a successful transition to renewable energy and a
low carbon future.
Progress during the year
• ESG factors incorporated into processes and
shareholder documentation
• responsible investment training delivered by
the British Venture Capital Association completed
• online platform implemented to track agreed
Sustainability Accounting Standards Board
(‘SASB’), Key Performance Indicators (‘KPIs’)
and ESG policies
• SASB KPIs/policies in place for the majority of our
core holdings
• good progress has been made with most portfolio
companies gathering and reporting Scope 1 and 2
data with defined parameters. We will continue to
review and assess the quality of the data received
to enhance our external reporting in the future.
Funds
The Funds team invest in private equity funds managed by
leading managers in North America and Asia:
• we expect managers to consider all factors, including
ESG matters, when seeking to maximise returns whilst
taking account of the associated risks
• we will encourage our fund managers to consider the
risks and opportunities presented by climate change in
their investment selection process and in the future to
explore initiatives to reduce emissions from the
businesses within their funds.
Progress during the year
• integrating consideration of ESG matters into
all stages of the investment process – diligence,
portfolio monitoring and General Partner
(‘GP’) engagement
• became a signatory to the ESG Data Convergence
Initiative (‘EDCI’), established to address the
fragmented nature of ESG frameworks and
regulation that aim to standardise and promote
ESG reporting and benchmarking in private
equity portfolios
• third-party ESG team training completed alongside
the ESG Fundamentals and Best Practice
Institutional Limited Partners Association courses
• inaugural ESG survey issued, with 100% response
rate, providing the Funds team with insight and
analysis into the maturity of our GP ESG policies
• we have begun the process of obtaining
suitable proxy emissions data for our Funds
pool investments.
50
Caledonia Investments plc Annual Report 2024
Working with our portfolio -
Cooke Optics
Cooke, a leading manufacturer of cinematography
lenses, has made significant progress in developing
its approach to sustainability since Caledonia’s
investment in 2018.
Working with the management team, we have
supported initiatives to invest in the future of the
business, including the large scale implementation
of solar panels at Cooke’s Leicestershire factory,
to reduce its purchased energy requirements.
All electricity for the business is now sourced
from renewable sources.
Solar panel transition rationale
• key priorities for Cooke were to reduce its overall
energy consumption, move to renewable energy
tariffs and mitigate future energy pricing risks
• since investment approval, procurement and
implementation in 2023, Cooke has reported a
significant reduction in energy usage from the grid
• newly installed solar panels are expected to
generate approximately 220,000 kWh of electricity
each year, circa 20% of Cooke’s total energy
requirement, which over time will significantly
reduce its carbon footprint
• return on investment will be principally
dependent on variability of unit rates, although
a payback period of between three and four years
is anticipated.
51
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Corporate governance
Financial statements
Other information
Introduction
The climate challenge and transition to net zero
We are committed to supporting a sustainable future to
deliver investment performance for our shareholders
over the long term.
Our biggest environmental impact is through the
companies and funds we invest in.
We recognise the challenges of climate change and the
likely material risk this poses for the investments we make,
potentially from regulation, adjustments in consumer
preferences or pressure to reduce carbon emissions
and address broader environmental concerns.
We have set an expectation that the businesses in which
we invest should target net zero emissions (Scope 1 and
Scope 2, market-based) by 2050. The pace of planning and
delivery of this commitment will vary across the businesses
in our investment portfolio, although we anticipate that
many will achieve this target more swiftly.
We will continue to keep this commitment under review.
We are actively engaging with underlying portfolio
companies and fund managers to assess the quality
and availability of their carbon emissions data and, where
possible, we have implemented suitable monitoring
and reporting to enable us to track progress.
Sustainability (continued)
Environment
Our business
All our employees operate from a single office located in
central London. Our business operations therefore have
a modest carbon footprint compared to the impact of our
investment portfolio.
We remain committed to minimising our direct impact
on the environment and mitigating the risks posed by
climate change.
We have set a target to achieve net zero Scope 1 and
Scope 2 emissions (market-based) by 2030 through the
following initiatives:
• the reduction and eventual elimination of gas used
for heating
• further energy efficiency in areas such as lighting,
cooling and IT equipment
• continuing to ensure that all electricity is procured
from renewable sources.
During 2021, we switched to sourcing all our electricity
from a renewable energy supplier, which resulted in
a significant reduction in our market-based Scope 2
carbon emissions. Almost all our waste is recycled and
all waste water is returned to the sewer. The resulting
carbon emissions from water consumption and waste
generation are captured within ‘other’ Scope 3 emissions
in the table on page 53 and are deemed to be immaterial
emission sources.
Electricity usage since 2020 has increased, primarily due to
employees returning to the office following the Covid-19
pandemic and, to a lesser extent, our decision to operate
24 hour security at our business premises for the
continued safety of colleagues and to protect against
crime. In 2023, an external provider was engaged to
conduct an Energy Savings Opportunity Scheme (‘ESOS’)
assessment audit of the energy used in our office building,
which may help us to identify further cost-effective
energy-saving measures.
Looking forward, we expect our transition planning to
primarily focus on finding technological solutions to
replace our gas boilers with low carbon-emitting
technologies when feasible.
Travel
Most colleagues commute to the office in central London
on public transport. A cycle to work scheme is available
to employees and we provide a secure facility for bike
storage, alongside changing and shower facilities.
All of our meeting rooms are equipped with modern
audiovisual and teleconferencing facilities for our
employees to access, reducing travel where appropriate.
Our Scope 3 emissions principally arise from business-
related international travel. Whilst we are able to hold
many meetings virtually, face-to-face meetings remain
an important aspect of our ongoing governance and
stewardship activities. We believe that our business
benefits from the relationship this contact builds. We
aim to manage travel in an informed way. We will monitor
these emissions and look for opportunities, where
appropriate, to reduce our impact; however, we are
reliant upon technological advancements to achieve
net zero emissions from aviation. As we gain experience
and knowledge around our greenhouse gas (‘GHG’)
emissions, we will continue to look to enhance our carbon
emissions disclosures to include more of our Scope 3
indirect emissions.
52
Caledonia Investments plc Annual Report 2024
Climate change metrics and targets including greenhouse gas emissions
The data in the following tables has been prepared in accordance with the regulations with the Companies (Directors’
Report) and Limited Liability Partnerships (Energy and Carbon report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018, which implemented the Government’s policy on Streamlined Energy and Carbon
Reporting (‘SECR’).
Emissions data
Tonnes CO2e
Scope
Source of GHG emissions – year to 31 March
2020
2021
2022
2023
2024
Scope 1
(direct emissions)
Combustion of fuel & facilities operation,
including company car use (sold in April 2022)
24
19
21
16
14
Scope 2
(indirect emissions)
Electricity (location-based)
57
47
45
52
59
Electricity (market-based)
57
47
-
-
-
Scopes 1 and 2 - location-based
81
66
66
68
73
Scopes 1 and 2 - market-based
81
66
21
16
14
Scope 3
(indirect emissions)
Business travel
371
7
94
243
375
Other
-
-
-
1
1
Total – location-based
452
73
160
312
449
Total – market-based
452
73
115
260
390
KPI – location-based
Total emissions per average number of
employees
8
1
3
5
6
KPI – market-based
Total emissions per average number of
employees
8
1
2
4
6
Per average number of employees
60
61
61
62
71
Notes:
1. These emissions have been calculated in accordance with the GHG Protocol Corporate Accounting and Reporting Standard guidelines using UK Government
GHG Conversion Factors for Company Reporting.
2. Caledonia consumes all its water from the mains which we understand is sourced from outside high stress areas, with all its waste water currently being
returned to the sewer. The resultant CO2 emissions from its use of water are <1 tonne.
3. Caledonia has a mix of recycled and general waste; the related Scope 3 GHG emission data is included under ‘Other’ in the table above.
4. Location-based method reflects the average emissions intensity of grids on which energy consumption occurs (using mostly grid-average emission factor data).
The market-based method reflects emissions from 100% renewable sourced electricity that we have chosen to purchase.
5. 100% of our reported emissions are in the UK, involving business travel primarily departing from or arriving in the UK. Accordingly, this table does not include
a column indicating the yearly UK proportion of global emissions.
6. The sources of GHG emissions shown in the table above are from the companies included in the consolidated financial statements. Under the SECR regime
we are not required to report any emissions from companies that are not included in our consolidated financial statements.
7. Caledonia does not release any hazardous air pollutants. Caledonia only has material hazardous waste in the form of batteries and print toner, both of which
are responsibly recycled.
Other metrics
Unit
2020
2021
2022
2023
2024
Electricity usage
KWh(k)
224
199
214
270
286
Gas usage
KWh(k)
100
93
91
76
67
Water consumption
m3
Data not available but will be
tracked going forward
798
1,166
General mixed waste
tonnes
-
-
Mixed recycling
tonnes
-
-
WEEE waste
tonnes
-
-
Confidential waste
tonnes
2
2
Waste generation
tonnes
2
2
Waste recycled
%
99%
99%
53
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Our investment portfolio
Sustainability (continued)
Public Companies – climate change metrics
and targets
Key to monitoring progress to minimise climate change
transition risk across the portfolio is ensuring all businesses
develop and successfully implement plans to achieve net
zero (Scope 1 and Scope 2) emissions by 2050 or earlier.
The MSCI World Index is used as a benchmark for TCFD
reporting purposes as this has a similar sector exposure
to that of the companies in the Public Companies pool.
As illustrated in the table below, we have outlined primary
metrics used to determine the Scope 1 and Scope 2 GHG
emissions generated by our Public Companies pool,
which form part of the overall emissions linked to our
investment portfolio.
The Public Companies pool has a significantly lower total
carbon footprint and weighted average carbon intensity
(‘WACI’) compared with the benchmark. This is primarily
due to our careful selection process of proven, well-
managed and sustainable businesses. The companies
in the pool tend to have a lower carbon intensity than
the benchmark (even in most of the high carbon-emitting
sectors such as materials, utilities and industrials).
The data held within the MSCI One platform lags behind
our reporting date. 2024 primarily reflects data reported
by investee companies from 1 June 2022 to 31 May 2023.
The 2023 comparative primarily reflects data from 1 June
2021 to 31 May 2022.
Our Public Company investments have seen a 19%
increase in total carbon emissions over the last year. This
is due to the 2023 comparative primarily relating to 2021,
which was heavily impacted by the Covid-19 pandemic.
The 2024 data primarily reflects that of 2022, where
the impact of the Covid-19 pandemic on emissions
was less significant.
The following table shows other key climate metrics
used to monitor how the companies in which we invest
have a decarbonisation plan and are managing climate
risk exposure.
Other metrics
Portfolio
(2024)
Portfolio
(2023)
Companies targeting net zero for
Scopes 1 and 2 by 2050
93%
93%
Companies with top quartile carbon
management score
68%
71%
Green revenue exposure
6%
6%
The majority of the companies in our Public Companies
pool have plans to achieve net zero emissions by 2050
or sooner, giving us comfort that they are aligned to our
goal. The companies that have yet to establish net zero
targets contribute circa 8% of the pool’s total carbon
emissions and, based on our knowledge and engagement
of the companies and their commitment to good
corporate governance, we believe they will establish
appropriate targets.
It is also worth noting that 68% of the companies in
our Public Companies pool have a top quartile carbon
management score, indicating that they have the
capability and resources to manage their climate risks
and opportunities. This gives us further comfort that the
companies we invest in will achieve their net zero target
by 2050. We will continue to monitor progress on
these metrics.
Latest annual reported data1
Scope
Portfolio
(2024)
Benchmark
(2024)
Variance vs
benchmark
Portfolio
(2023)
Units
Total carbon emissions
1 and 2
19,345
48,894
-60%
16,3152
Tonnes CO2e
Carbon footprint
1 and 2
16
39
-58%
152
Tonnes CO2e/$m invested
WACI
1 and 2
60
95
-37%
-50%
Tonnes CO2e/$m sales
1. Carbon emission data for our public equity investments was obtained from the MSCI One platform. MSCI collects the data from publicly available sources,
including annual reports, the Carbon Disclosure Project (‘CDP’) and government databases. All carbon emission data collected is classified per the GHG
Protocol methodology to enable aggregation and comparability across investee companies and sectors. We have not sought to verify this data and assume
no responsibility for its accuracy or completeness.
2. Due to a development to the MSCI One platform we have updated our metrics from using Market Capitalisation to Enterprise value including
cash (‘EVIC’) as the denominator. We have restated the 2023 comparative to an EVIC calculation.
54
Caledonia Investments plc Annual Report 2024
We continue to recognise the importance of clearly
communicating both financial and non-financial ESG
performance to our stakeholders.
This is the second year we have produced a detailed
TCFD report, a copy of which can be found at
www.caledonia.com. This provides a review of how we
are progressing to meet the recommendations of the TCFD.
We have prepared this report as we recognise that the
level of detail needed to comply with TCFD may not be
required by all stakeholders. The following table, which
should be read in conjunction with our TCFD report,
summarises our response to each of the TCFD
recommendations, and explains how we incorporate
climate-related risks and opportunities into each of the
four TCFD pillars of governance, strategy, risk management,
and metrics and targets.
As required by Listing Rule 9.8.6R (8), we consider these
climate-related disclosures to be consistent with the TCFD
recommendations and recommended disclosures, other
than the completion of scenario analysis (strategy pillar
disclosure (c)) and the development of metrics and targets
for all of our investment assets (metrics and targets pillar
disclosures (a), (b) and (c)). We have fully addressed the
assets within our Public Companies pool. We have also
addressed the strategy pillar disclosure (c) for our Private
Capital pool. Due to limitations in obtaining quality data,
we anticipate that information will be available to enable us
to fully address the constituents of the Private Capital pool
in the coming years and the Funds pool several years later.
Task Force on Climate-Related Financial Disclosures
Governance
Disclose the
organisation’s
governance around
climate-related risks
and opportunities.
Read more in our TCFD
report.
The board is collectively responsible for Caledonia’s success. It sets the company’s strategy, ensures that the necessary
financial and human resources are in place to enable the company to meet its objectives, and reviews management
performance. We are continuing to embed an assessment of climate-related risks and opportunities into our strategic
approach. The board is ultimately accountable for the oversight of climate-related risks and opportunities that could impact
our business.
Caledonia has a well-defined governance framework, appropriate for a relatively small business, based on delegated
authority. The board has adopted a formal schedule that sets out those matters which it specifically reserves for its own
decision and those which are delegated to board committees and executive management. The Chief Executive Officer
(‘CEO’) is responsible for the development and implementation of the strategy for the business. The board receives briefings
on sustainability matters, including climate-related issues, through a well-defined reporting framework.
Our Responsible Investment/Responsible Corporate (‘RI/RC’) Working Group, chaired by the CEO, advises and assists in the
development and implementation of Caledonia’s approach to sustainability matters, including those which are climate-
related issues. The board is updated periodically on progress of the RI/RC Working Group and in 2024 received specific
sustainability updates from each of Caledonia’s three investment pools, which included climate-related matters and, where
relevant, progress against climate targets.
The annual bonus award for our executive directors is determined by a combination of corporate financial performance and
personal objectives. The board’s Remuneration Committee reviews these measures and objectives, which includes RI/RC
elements, annually.
Task Force on Climate-Related Financial
Disclosures (‘TCFD’)
Our second standalone TCFD
report sets out our progress
towards meeting all TCFD
recommendations and can be
found at www.caledonia.com
55
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Sustainability (continued)
Strategy
Disclose the actual and potential
impacts of climate-related
risks and opportunities on
the organisation’s businesses,
strategy and financial planning
where such information
is material.
Read more in our TCFD report.
As a long-term asset owner, we recognise our responsibility to support the transition to a lower carbon economy.
This is why we have set an expectation that the businesses in which we invest should target net zero emissions
by 2050 (Scope 1 and Scope 2, market-based). We are developing our capability to identify and assess actual and
potential impacts of climate-related risks and opportunities on our investment portfolio. This will allow us to adapt
our business model, strategy and financial planning where impacts are considered to be material.
Our business is impacted by a broad range of risks and opportunities. This reflects the diverse nature of our
investment portfolio, although it should be noted that our analysis shows that high carbon-emitting industries
(oil and gas, for example) and certain geographic regions, where Caledonia has very low exposure, are more
likely to experience an elevated level of transition risk. We have considered both physical and transition risks over
three time horizons. We anticipate that the businesses and funds in which we invest will develop plans to address
climate-related risks and opportunities which impact them. We expect to use this information, as it becomes
available, to enhance our understanding and risk assessment activity.
The availability of robust data and quality information is a prerequisite to effective analysis. We have used the
most recent data and information for the constituent businesses in the Public Companies pool using MSCI’s One
platform. This data has been used to support a scenario analysis exercise, which has provided valuable insights
to confirm the resilience of the pool to both physical and transition risks, under various climate scenarios.
This year, we have expanded our analysis to include the Private Capital pool. With the help of an external
consultant, we have identified key climate change risks and opportunities facing portfolio companies and
performed qualitative scenario analysis to assess potential risks and opportunities.
We anticipate that similar information will be developed for the constituents of the Funds pool in the coming years,
to broaden our scenario analysis to cover a greater proportion of our investment portfolio.
Our business operations have a modest carbon footprint when compared with the impact of our investment
portfolio, with all our employees operating from a single location in central London. However, we are committed
to minimising our direct impact on the environment and mitigating the risks posed by climate change. We have
therefore set a target to achieve net zero Scope 1 and Scope 2 emissions (market-based) by 2030. We have
already taken actions to reduce our energy usage and since 2021 our electricity supply is sourced from 100%
renewable sources.
Risk
management
Disclose how the organisation
identifies, assesses, and manages
climate-related risks.
Read more in our TCFD report.
The corporate approach to risk management is covered on pages 57 to 59 of this report.
To meet the challenges presented by climate change, the global economy will need to transition to a net zero
alternative, the repercussions of which will raise opportunities and risks for investments within our portfolio and
for our business operations. Climate change risk management is being embedded into our existing processes.
The board sets strategy and has collective responsibility for the management, direction and performance of the
business. Climate-related risks are being incorporated into our strategy and, in discharging its responsibilities,
the board is ultimately accountable for the oversight of climate-related risks that could impact the business.
In recognition of the importance of climate-related risks to our business, ‘ESG and climate change’ has been
identified as one of our principal risks. This means that actions to manage and mitigate this risk, together with key
developments, are reviewed by the Audit and Risk Committee at least biannually with material changes elevated
to the board for consideration. This level of review seeks to ensure full visibility at board level of any emerging
climate-related risk issues.
Climate-related risks are assessed and managed in accordance with our corporate risk framework and process.
Each area of the business is responsible for identifying, monitoring and reporting on relevant risks and controls,
with appropriate oversight from the relevant corporate departments. We recognise that climate change is a
pervasive risk across many of our principal risk categories. Across the business, senior managers are responsible
for identifying these climate-related risks and assessing the impacts either to their area of investment portfolio
or to their functional specialism, depending on their role.
We analyse potential climate-related risks through the lens of both physical and transition risks over the short,
medium and long term, and using both internal and external analysis. Many of our key processes are being, or have
been, adapted to incorporate climate-related risk assessments, including our approach to investment research
and decision-making, active ownership and engagement with our investee companies and funds, and ongoing
assessment and monitoring of our own business operations.
Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material.
Read more in our TCFD report.
To hold ourselves accountable against our strategy, we are continuing to improve our analysis and disclose more
metrics and targets where we consider these to be material. As part of this process, we will investigate options for
new data sources to aid us in showing an increasingly holistic view of the carbon emissions of our investments and
our own operations.
Information on specific metrics and targets are provided on pages 52 to 54. In line with SECR requirements,
we have also listed our GHG data on the same pages.
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Caledonia Investments plc Annual Report 2024
Risk management
Effective risk management is an
integral part 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.
Board of directors
Oversees risk identification and management, carrying out robust
assessments of the company’s principal and emerging risks. Reviews
and sets overall risk appetite.
Audit and Risk Committee
Assesses and monitors the risk management approach. Specifically
reviews our controls and assurance programme, which identifies key
mitigating controls, tests their operation and reports on compliance
and effectiveness.
Investment Committee
Considers risks associated with investments.
Valuation Committee
Considers risks associated with the valuation of Caledonia’s unquoted
investments.
Responsible Investment / Responsible
Corporate Working Group
Considers risks associated sustainability matters, including climate-
related issues.
Operational Risk Committee
Identifies and manages operational risks and other internal controls
and risk management systems.
Investment executives
Risks are considered by all executives as part of their work, including
the origination of investments and ongoing monitoring, portfolio
management and transactional activity.
Investee management
Investee management is responsible for identifying and managing key
risks. These are monitored by the investment teams.
Risk
identification
& management
Governance
– oversight &
challenge
Finance
Risks are identified, managed and mitigated that could impact
reporting, treasury operations, tax management, planning and the
integrity of finance systems.
Information technology
Risks, together with internal and external threats that could impact
the integrity and security of our systems and IT infrastructure are
assessed and managed to industry standards. Defences are in place
against external threats.
HR
Risks that could impact employee wellbeing or our ability to recruit
and retain are closely monitored.
Risk
management
process
Control Assurance
Programme
Risk analysis &
reporting
57
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Risk governance and structure
Risk management and its governance is the responsibility
of the board, with the executive given the task of managing
an effective and transparent process to ensure emerging
and principal risks are identified, documented, assessed,
managed and, where appropriate, mitigated. The board
sets the risk appetite in line with the business model and
strategy. This is communicated through the executive to all
those with managerial responsibilities. Risks are present in all
parts of the business and are considered by all executives as
part of their work, including the origination of investments
and ongoing monitoring, portfolio management,
transactional activity and business operations.
The Audit and Risk Committee assesses and monitors the
risk management approach and specifically reviews our
controls assurance programme. This programme identifies
key mitigating controls, tests their operation and reports
on compliance and effectiveness. This, together with the
audit findings report received from the external auditor
and good practice guidance from other advisers, provides
input to the board as a whole on the status of the risk
management programme. Governance was strengthened
this year with the formation of the Operational Risk
Committee. In addition to reviewing principal risks, it also
assesses and challenges more granular assessments from
the corporate departments, ensuring that all material
exposures have been captured.
Principal risks
The board has undertaken a robust assessment of the
principal risks facing Caledonia, including those that would
threaten its business model, future performance, solvency
or liquidity. Principal risks are defined as those that have
the potential to materially impact the delivery of our
strategic objectives and damage our reputation. We
periodically review additions or deletions from our list of
principal risks, reflecting new and emerging risks arising
from changes in the external environment or from within
our own business activity.
During the financial year, the Audit and Risk Committee
considered our list of principal risks and associated risk
appetite. It was concluded that this remained appropriate,
and no significant new emerging risks were identified.
Overall, therefore, the risk profile remained static for the
year, with no material issues raised.
The risk associated with successful integration of ESG and
climate change matters into our investment activity drove
further management activity. This involved increasing the
scope of analysis and engaging an expert third party to
consider particular risk and opportunities. Wider economic
pressures from increased inflation and higher interest rates
continued to be monitored and managed through the
year, but noting a more positive outlook towards the end
of the year. From an operational risk perspective, planned
remediation activity was progressed, strengthening the
effectiveness of our control framework.
We have identified seven principal risks, described in more
detail on pages 60 and 61, which can be considered in the
following three groups.
Strategic risks
The principal risks covering our strategic approach and
investment decision-making are fundamental to the
execution of our business model. The risks and
opportunities associated with ESG matters and climate
change continue to be important to the successful
implementation of our strategy.
Risk management (continued)
58
Caledonia Investments plc Annual Report 2024
External risks
The principal risks associated with the market, liquidity,
and regulatory and legal matters capture the key
external risks which impact our business.
Operational risks
Our operational risks, which include business continuity,
attracting and retaining talent, cyber security and fraud
risk, form the final group.
We have assessed the change in risk status for each
of our principal risks over the last year and concluded
that the level of risk is largely unchanged. As noted
above, we have observed a decrease in market risk
and a corresponding reduced level of volatility in public
equity markets during 2023 and into 2024. However,
whilst the level of market risk was reduced last year,
there are still notable ongoing challenges from
geopolitical issues, inflation and interest rates,
keeping the assessment static.
Caledonia risk management activities
We operate a number of interrelated activities,
illustrated here, to deliver an integrated approach to risk
management, which is overseen by the board, the Audit
and Risk Committee, the executive and the Investment
Committee. We manage business risk through a set of
integrated processes to provide risk visibility.
Risk management reporting
We manage and report risk via investment and
operational risk dashboards. Both dashboards are
considered by the Audit and Risk Committee at least
biannually, with any major issues or changes arising
from these reviews escalated to the board for
further discussion.
The investment risk dashboard focuses on investment
portfolio risks arising from our investment strategy. It is
supported by a detailed portfolio analysis report, which
considers risks such as asset allocation and performance,
investment volatility, value at risk, diversification,
liquidity and concentration.
The operational risk dashboard considers risks
associated with our business operations and includes
business continuity, IT and cyber security, regulatory,
legal and financial controls.
Strategic review
• Board review of investment
pool strategies and approval
of overall asset allocation
• approval of strategic
objectives.
Investment decisions
• Investment Committee
implements investment
strategy and approves
individual investments
• Board approval required for
investments above certain
parameters.
Sustainability
• ESG approach implemented
through the Responsible
Investment / Responsible
Corporate Working Group
• long-term assessment of
sustainability will be one key
criteria in investment
decision-making process.
External influences
• regular monitoring of market,
economic and geopolitical
developments
• analysis of key external trends
that underpin performance of
investee businesses and funds.
Ongoing risk monitoring
• biannual investment pool
reviews
• regular updates to the board
and Audit and Risk Committee
• rigorous valuation process
for private assets.
Risk mitigation framework
and analysis
• biannual risk dashboards
review by the Audit and
Risk Committee
• assessment of principal,
new and emerging risks
• assessment of risk appetite
• testing of viability and going
concern scenarios.
Our strategic objectives
Turn to page 21
59
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Risk management (continued)
Principal risks
Mitigation and management
Key developments
Current risk status
and movement
in year to
March 2024
Strategic
Risks in relation to the
appropriateness of the business
model to deliver long-term growth
in capital and income.
Strategic risks include the
allocation of capital between
public and private equity, and
in relation to geography, sector,
currency, yield and liquidity.
The company’s business model and strategy
are reviewed periodically, against market
conditions and target returns.
The performance of the company and its key
risks are monitored regularly by management
and the board.
All pools operated within the defined
banding. As part of the financial planning
cycle, enhanced stress testing was completed
to ensure resilience to financial market
volatility. The stress testing was supported
by a third-party analytics company and the
output supported backtesting pool assets over
historical periods of volatility, for example, the
global financial crisis.
MEDIUM
Investment
Risks in respect of specific
investment and realisation
decisions. Investment risks include
appropriate research and due
diligence for new investments
and the timely execution of both
investments and realisations for
optimising value.
Investment opportunities are subject to
rigorous appraisal and a multi-stage approval
process. Investment managers have well-
developed networks through which they
attract proprietary deal flow.
Opportunities to enter or exit investments
are reviewed regularly, being informed
by market conditions, pricing and
strategic aims.
The investment teams continue to review
capacity and capability to ensure appropriate
skills and resources are in place. New positions
have been approved, including expertise in
data and analytics.
The Investment Committee met throughout
the year to consider all material investment
decisions.
MEDIUM
Market
Risk of losses in value of
investments arising from sudden
and significant movements in
public market prices, particularly
in highly volatile markets. Private
asset valuations have an element
of judgement and could also be
impacted by market fluctuations.
Caledonia’s principal market
risks are therefore equity price
volatility, foreign exchange rate
movements and interest rate
volatility. An explanation of these
risks is included in note 23.
Market risks and sensitivities are reviewed
weekly with actions taken, where appropriate,
to balance risk and return.
A regular review of market and portfolio
volatility is conducted by the board. Reviews
also consider investment concentration,
currency exposure and portfolio liquidity.
Portfolio construction, including use of private
assets, provides some mitigation.
Market volatility has remained a factor during
the year, although through the second half
of 2023 and early 2024 this has reduced.
Geopolitical conflicts remain, with the wars
in the Ukraine and Middle East. Inflation
pressures have reduced but remain higher than
central bank targets, with interest rates likely to
be higher for longer.
The Public Companies team, whilst focused
on long-term returns, remain alert to pricing
opportunities around their core holdings.
Foreign exchange movements continue to
be an inherent risk in the business. Ongoing
monitoring remains the key control, with no
appetite to hedge at the current time.
MEDIUM
Liquidity
Risk that liabilities, including
private equity fund drawdowns,
cannot be met or new investments
cannot be made due to a lack of
liquidity. Such risk can arise from
being unable to sell an investment
due to lack of a market, or from
not holding cash or being able to
raise debt.
Detailed cash forecasting for the year
ahead is updated and reviewed quarterly,
including the expected drawdown of capital
commitments. A weekly cash update is
produced, focused on the short-term
cash forecast.
Loan facilities are maintained to provide
appropriate liquidity headroom.
The liquidity of the portfolio is
reviewed regularly.
£227m of cash on balance sheet at 31 March
2024, in addition to £250m of undrawn
revolving credit facilities, providing significant
capacity to fund attractive investment
opportunities. Enhanced stress-testing and
capital allocation modelling completed during
the year, with activity in place to review and
renew credit facilities.
All excess cash placed in AAA-rated money
market funds on an overnight basis. Regular
counterparty reviews are undertaken. No bank
term deposits utilised.
LOW
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Caledonia Investments plc Annual Report 2024
Principal risks
Mitigation and management
Key developments
Current risk status
and movement
in year to
March 2024
ESG & climate change
Risks in relation to the successful
incorporation of ESG matters and
climate change impacts into our
investment approach.
Identifying opportunities to drive
our approach to ESG matters,
deliver strong returns and
manage the risks to meet evolving
stakeholder expectations.
Caledonia continues to build ESG
knowledge, particularly on climate
change, and develop policy and processes
to integrate ESG matters into our
investment approach. The assessment
of new and existing investments will fully
incorporate ESG and climate change risks
and opportunities.
Biannual pool reports to the board include ESG
information and developments relating to that
pool. Third party consultants were engaged to
support the assessment of climate risks and
opportunities associated with the Private Capital
pool, enabling increased disclosure in this year’s
TCFD Report.
MEDIUM
Regulatory & legal
Risks arising from exposure to
litigation or fraud, or failure to
adhere to the tax and regulatory
environment.
Caledonia operates across a
number of jurisdictions and in
an industry that is subject to
significant regulatory oversight.
Caledonia has internal resources to
consider regulatory and tax matters
as they arise. Professional advisers are
engaged, where necessary, to supplement
internal knowledge in specialised areas
or when new regulations are introduced.
Activities supported by regular staff
training.
Caledonia is a member of the Association
of Investment Companies and operates in
line with industry standards.
Key changes to the UK Corporate Governance
Code occurred, including enhancements to the
reporting of the monitoring and review of the
effectiveness of the company’s risk management
and internal control framework, and a future
declaration of the effectiveness of the material
controls. Additional resource has been engaged
to drive the company’s response, coupled with
the further enhancement of existing governance
arrangements with the formation of an
Operational Risk Committee. The requirements are
non-prescriptive, with core developments planned
for 2024 in preparation for pilot reporting to the
board in March 2025.
LOW
Operational
Risks arising from inadequate
or failed processes, people and
systems, or from external factors.
Operational risks arise from
the recruitment, development
and retention of staff, systems
and procedures, and business
disruption.
Systems and control procedures are
developed and reviewed regularly. They
are tested to ensure effective operation.
Appropriate remuneration and other
policies are in place to facilitate the
retention of key staff.
Business continuity plans are maintained
and updated as the business evolves and
in response to emerging threats. This
includes a specific focus on cyber security.
Cyber security remains a material risk exposure,
with focused activity during the year to further
strengthen the control environment. Technology
control improvements included firewall
enhancements, penetration testing and disaster
recovery improvements. Human error remains
a key potential weakness for all businesses and,
to further strengthen controls, compulsory
annual cyber security training has been enhanced
alongside targeted phishing campaigns.
Simulated scenario exercises have helped focus
remediation on weaker controls. These were a key
driver in migrating servers from Cayzer House to a
secure off-site data centre, mitigating a number of
potential threats to business continuity.
A real-time cyber security simulation was
facilitated by a third-party for executives, which
strengthened planned incident management and
cyber defence improvements.
Oracle NetSuite replaced legacy finance systems,
bringing greater resilience and facilitating a refresh
of key processes. A new expenses system is being
rolled out to further enhance controls and assist
with the automation of tax compliance processes.
MEDIUM
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Introduction
Going concern and viability
Going concern and viability
The review of going concern and viability was considered
and approved by the board, following full scrutiny by the
Audit and Risk Committee. This review considered the key
risks to the group, their potential financial impact and
mitigating actions. A number of scenarios were considered
to stress-test the robustness of the group’s position to
adverse events. These scenarios were applied to a detailed
three-year financial plan that was approved by the board
in March 2024.
Going concern
The board has undertaken an assessment of the
appropriateness of preparing its financial statements on a
going concern basis, taking into consideration future cash
flows, current cash holdings of £227m, undrawn banking
facilities of £250m and readily realisable assets of £950m
as part of a wider process in connection with its viability
assessment. It has concluded that the group has sufficient
cash, other liquid resources and committed bank facilities
to meet existing and new investment commitments.
The directors have concluded that the group has adequate
resources to continue in operational existence for a
period of at least 12 months from the date of approval
of the financial statements. Accordingly, they continue to
consider it appropriate to adopt the going concern basis
in preparing the financial statements.
Viability statement
The directors have assessed the viability of the group over
the period to May 2027 (three years from the date of
signing the financial statements), having determined
that this is an appropriate period for which to provide
this statement given the group’s long-term investment
objective, the resilience demonstrated by the stress
testing and the relatively low working capital requirements
of the group.
The viability assessment takes into account the group’s
position, its investment strategy and the potential impact
of the relevant risks set out in this strategic report. In
making this statement, the board is satisfied that the
group operates an effective risk management process
and confirms that it has conducted a robust assessment
of the principal and emerging risks facing the group.
This includes those that would threaten its strategic
objectives, its business model, its ability to operate and
its future performance, solvency or liquidity. Based on this
assessment, the directors have concluded that the group
will be able to continue in operation and meet its liabilities
as they fall due over the period to May 2027.
In making this assessment, the directors took comfort
from the results of two stress tests over the five-year
period to 31 March 2029 that considered the impact
of significant market downturn conditions.
The first stress test addressed three discrete scenarios:
a 5% reduction in the value of Sterling versus the US dollar
compared to the rate on 31 March 2024, a 12-month delay
to Private Capital realisations and all Funds pool
commitments falling due.
The second stress test modelled a market downturn
event over a two-year period reflecting: a fall in Public
Companies investment income of 20% and Private
Capital investment income of 100%, a reduction in Public
Companies market prices of 20%, an inability to realise
the Private Capital portfolio and a 50% reduction in
distributions from the group’s funds portfolio. To simulate
an extreme downside scenario the impact of a market
downturn event and all fund commitments falling due
was also assessed. The directors do not believe the
extreme downside scenario, is likely but factors this into
the viability assessment.
We concluded that even under a market downturn
event and all fund commitments falling due, the group
has sufficient liquidity on the balance sheet to meet its
obligations as they fall due.
Overall, through our stress testing, we were able to
demonstrate the strength of the group’s financial
position and, in particular, its ability to settle projected
liabilities as they fall due, even under extremely
adverse circumstances.
The Strategic report was approved by the board on
20 May 2024 and signed on its behalf by:
Mat Masters
Chief Executive Officer
20 May 2024
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Other information
Introduction
Flexible
& responsible
We invest from our own balance sheet,
which allows us to be flexible. It also
means that our own and our shareholders’
interests are absolutely aligned.
Mountain Adventure Fund (in partnership with
the Mountain Training Trust)
During the year, The Caledonia Investments Charitable Foundation approved
a grant to the Mountain Adventure Fund (in partnership with the Mountain
Training Trust) which aims to give every inner-city child the opportunity to be
inspired and motivated by the rugged outdoors and the challenges mountain
environments have to offer.
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Caledonia Investments plc Annual Report 2024
Corporate
governance
Board of directors
66
Governance framework
68
Corporate governance report
70
Section 172 statement
74
Nomination Committee report
80
Audit and Risk Committee report
82
Directors’ remuneration report
90
Governance Committee report
88
Directors’ report
109
Responsibility statements
113
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Financial statements
Other information
Introduction
Board of directors
David Stewart
Chair
Jamie Cayzer-Colvin
Executive Director
Date of appointment: 17 March 2015
Tenure: 9 years 2 months. Appointed to the
board of directors on 17 March 2015 and as
Chair on 20 July 2017
External appointments:
• Chairman and co-founder of IMM Associates
• Chairman of Hermes Investment Management
• Non-executive director of Longview Partners
Skills and experiences:
• Extensive experience of international business
and asset management in the UK, Asia and
emerging markets
• Effective leadership of Caledonia’s board and
valuable insight and advice in relation to the
company’s global portfolio
Date of appointment: 4 April 2005
Tenure: 19 years 1 month
External appointments:
• Member of the advisory committees of a
number of Caledonia’s fund investments
• Chair of The Caledonia Investments Charitable
Foundation
Skills and experiences:
• Previously served as Chairman of The
Henderson Smaller Companies Investment
Trust and as a non-executive director of Polar
Capital Holdings and Polar Capital Funds
• Senior management experience and
investment expertise
• Specifically contributes to the long-term
sustainable success of the company through
his leadership of Caledonia’s funds investment
strategy
Date of appointment: 1 April 2022
Tenure: 2 years 1 month. Appointed to the
board of directors and as Chief Executive Officer
Designate on 1 April 2022, becoming Chief
Executive Officer on 27 July 2022
Skills and experiences:
• Qualified chartered accountant
• Specialised in corporate finance before joining
Caledonia, helping small and mid-sized
companies access private equity finance
• Investment expertise, senior management,
international business experience and
leadership skills to enable him to execute the
board’s strategy
Date of appointment: 28 March 2023
Tenure: 1 year 1 month
External appointments:
• Non-executive director and Chair of the Audit
Committee at Aurora Investment Trust
• Non-Executive director of Apollo Syndicate
Management Limited
• Non-executive director of Leeds Building
Society
• Adviser to technology start-up Grafterr
Skills and experiences:
• Qualified chartered accountant
• Over 20 years working in financial services
across audit, mergers and acquisitions and
private equity
• Worked on numerous transactions within the
retail, consumer and leisure sectors at
boutique corporate finance house McQueen
• Brings extensive innovation and strategy
experience to the board, with a particular focus
on technology and environmental, social and
governance matters
Date of appointment: 1 September 2023
Tenure: 8 months
External appointments:
• Treasurer and Pro Chancellor of the University
of Sheffield
Skills and experiences:
• Qualified chartered accountant
• Significant listed company experience, having
previously served as CFO of Arrow Global
Group, which included its successful IPO,
and John Laing Group, before its take private
transaction with KKR
• Extensive commercial and financial experience,
with over 20 years’ experience in senior
financial leadership roles
Date of appointment: 18 July 1985
Tenure: 38 years 10 months
External appointments:
• Chairman of The Cayzer Trust Company and
Bedford Estates
Skills and experiences:
• Experience of merchant banking, commercial
banking and corporate and project finance
with Baring Brothers, Cayzer Irvine and
Cayzer Ltd
• Responsible for a large number of investment
acquisitions and disposals as an executive
director of Caledonia
• Extensive knowledge of the commercial
property sector and broad commercial
management experience, which enable him
to provide insight and constructive challenge
across the breadth of Caledonia’s investment
activities
N
R
Mat Masters
Chief Executive Officer
Farah Buckley
Independent Non-Executive Director
Rob Memmott
Chief Financial Officer
The Hon Charles Cayzer
Non-independent Non-Executive Director
R
G
N
N
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Caledonia Investments plc Annual Report 2024
Guy Davison
Senior Independent Non-Executive Director
Lynn Fordham
Independent Non-Executive Director
Date of appointment: 1 January 2018
Tenure: 6 years 4 months
External appointments:
• Trustee of the Sussex Community Foundation
• Non-executive director of Cinven Funds
Skills and experiences:
• Qualified chartered accountant
• Founding partner of Cinven, central to the
development and expansion of the business.
During his 29 years, he represented the firm
as Chairman or non-executive director at some
25 of its portfolio companies
• 30 years’ knowledge and experience of private
equity investing, both in the UK and Europe,
which is of particular benefit to the board and
Caledonia’s Private Capital team in evaluating
new unquoted investment opportunities and
managing its existing unquoted portfolio
Date of appointment: 1 January 2022
Tenure: 2 years 4 months
External appointments:
• Chair of RMA-The Royal Marines Charity
• Non-executive director of Dominos Pizza
Group, NCC Group, Enfinium and NewRiver
REIT
Skills and experiences:
• Qualified chartered accountant
• Formerly the Managing Partner of Larchpoint
Capital, CEO of SVG Capital, non-executive
director of Fuller, Smith & Turner
• Previously held senior finance, risk and strategy
positions at Barratt Developments, BAA, Boots,
ED&F Man, BAT and Mobil Oil
• Wide ranging listed company, private equity
and finance experience across a range of
sectors, the latter being of particular
importance to her role as Chair of the Audit
and Risk Committee
Date of appointment: 28 March 2022
Tenure: 2 years 1 month
External appointments:
• Non-executive director of Blue River
Acquisition Corp
Skills and experiences:
• Former director of Electra Partners and
Providence Equity Partners and former
non-executive chair of Pershing Square
Holdings
• Worked with both established and early-stage
companies during her private equity and
investment career across a range of different
sectors and jurisdictions
• Extensive private equity and investment
experience in Europe, North America and Asia,
enabling her to provide constructive challenge
across a broad range of the company’s
investments
Date of appointment: 4 April 2005
Tenure: 19 years 1 month
External appointments:
• Non-executive director of Cobehold
• Trustee of the Rank Foundation
• Chairman of Real Estate Investors
Skills and experiences:
• Joined the Caledonia group in 1997 from Close
Brothers Corporate Finance, working at
Sterling Industries before transferring to
Caledonia’s head office in 1999 as an
investment executive
• Held board positions at numerous Caledonia
investee companies
• Corporate finance and investment expertise,
broad senior management experience and
team leadership skills, which benefit the
successful delivery of the board’s strategy
Date of appointment: 22 July 2019
Tenure: 4 years 9 months
External appointments:
• Non-executive director of Schroders
• Involved in a number of charitable trusts and
foundations, including as a director of the
Schroder Charity Trust and as a trustee of
the Schroder Foundation
Skills and experiences:
• Former executive director of Gauntlet
Insurance Services before becoming
non-executive in 2004 until 2019
• Broad experience in both the financial services
and charitable sectors, as well as a deep
experience of public and private businesses
with significant family shareholdings
Anne Farlow
Independent Non-Executive Director
Will Wyatt
Non-independent Non-Executive Director
Claire Fitzalan Howard
Independent Non-Executive Director
R
G
N
N
A
G
N
A
G
N
R
A
G
N
A
G
N
R
Audit and Risk
Governance
Nomination
Remuneration
Committee chair
Committee membership key
Board diversity
Male
7
Female
4
White
10
Asian/Asian British
1
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Corporate governance
Financial statements
Other information
Introduction
Governance framework
RI/RC Working
Group
Advises and assists in
the development and
implementation of
Caledonia’s approach
to sustainability matters,
including climate-related
issues.
Operational Risk
Committee
Considers the company’s
overall risk strategy,
reviews the internal
financial control systems,
and develops and
implements the procedures
for detecting fraud and
preventing bribery.
Investment
Committee
Considers and formally
approves new investments
and proposed realisations.
Other matters considered
include the day to day
management of the
company’s business where
not delegated elsewhere.
Valuation
Committee
Formally reviews
valuations of all of the
company’s investments at
each half-year and full-year
end. Meetings are
observed by
representatives from
the external auditor.
Investment
Management
Committee
Considers matters relating
to the company’s
investment portfolio.
Private Capital
Investment
Committee
Reviews the management
of investments held within
the Private Capital pool
and considers potential
Private Capital
transactions.
The board as a whole is collectively responsible for the success of the company and for supervising its affairs.
It sets the company’s strategy, ensures that the necessary financial and human resources are in place to enable
the company to meet its objectives and reviews management performance. It also defines the company’s purpose
and culture, and sets the company’s values and standards to ensure that its obligations to its shareholders and
other stakeholders are understood and met. It aims to provide leadership of the company within a framework
of prudent and effective controls, which enables risk to be assessed and appropriately managed.
Chair
The Chair is primarily responsible for the
leadership of the board to ensure that it
carries out its role effectively and for
succession planning.
Senior Independent Director
The Senior Independent Director is
responsible for providing a sounding board
for the Chair and, if necessary, to serve
as an intermediary for the other directors
and shareholders.
Chief Executive Officer
The Chief Executive Officer is responsible
for the implementation of the board’s
strategy, policies and the management of
the company’s activities, other than those
matters specifically reserved for the board.
Audit and Risk
Committee
Governance
Committee
Nomination
Committee
Remuneration
Committee
Disclosure and
Delegation
Committee
Deals with routine
administrative matters
or matters for which
board approval has
already been given in
principle. It also considers
potential disclosure
matters as required.
Further detail
See page 82
Further detail
See page 88
Further detail
See page 80
Further detail
See page 90
MANAGEMENT COMMITTEES
INVESTMENT TEAM
BOARD COMMITTEES
THE BOARD
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Other information
Introduction
Corporate governance report
Membership and attendance
The board held six scheduled meetings during the year, together
with two additional meetings convened at short notice. Attendance
of the directors was as follows:
Director
Meetings
attended
Meetings
eligible
to attend
D C Stewart
8
8
M S D Masters1
7
8
T J Livett2
3
3
R W Memmott3
5
5
J M B Cayzer-Colvin4
7
8
S J Bridges5
2
2
F A Buckley
8
8
Hon C W Cayzer6
7
8
G B Davison
8
8
M A Farlow
8
8
L R Fordham
8
8
C L Fitzalan Howard
8
8
W P Wyatt
8
8
1. Mat Masters was unable to attend one meeting due to a family funeral.
2. Tim Livett retired as a director on 1 September 2023.
3. Rob Memmott was appointed as a director on 1 September 2023.
4. Jamie Cayzer-Colvin was unable to attend one meeting, which was called
at short notice, due to a pre-existing commitment.
5. Stuart Bridges retired as a director on 19 July 2023.
6. The Hon C W Cayzer was unable to attend one meeting due to ill health.
Further information on the matters
reserved for the board
Statement of compliance
The board considers that the company has complied with the UK
Corporate Governance Code (‘Code’) published in July 2018 for
the duration of the reporting period.
A copy of the Code is available on the website of the Financial
Reporting Council at www.frc.org.uk.
Pages 70 to 112 comprise the company’s corporate
governance statement.
The board
Overall responsibility and operation
As part of the company’s governance framework, which is
summarised on page 68, the board has adopted a formal schedule
that sets out those matters which it specifically reserves for its own
decision and those which are delegated to board committees and
to executive management. Matters reserved for the board’s own
decision include the following:
• responsibility for the company’s strategy, values and culture
• approval of the company’s half-year results, full-year results
and annual report
• approval of the company’s dividend policy and dividend
distributions
• the appointment, re-appointment and removal of the
external auditor
• the appointment and removal of directors of the company,
as prescribed by the company’s articles of association, and
of certain other executives, including the Company Secretary
• the terms of reference of board committees and the
membership thereof
• directors’ remuneration and terms of appointment
• setting annual budgets
• the company’s systems of risk management and internal control,
including procedures for detection of fraud and prevention
of bribery
• responsibility for the company’s arrangements to enable
its employees to raise any matters of concern
• treasury policies, banking counterparties and counterparty
exposure limits
• significant capital transactions
• political donations.
The roles of the Chair, the Chief Executive Officer and the Senior
Independent Director are separated and clearly defined in separate
statements of responsibilities. These responsibilities are
summarised in the governance framework on page 68.
The matters reserved for the board and the statements of
responsibilities of the Chair, the Chief Executive Officer and the
Senior Independent Director are reviewed by the board annually
and published on the company’s website.
Caledonia recognises the value of
good corporate governance to deliver
long-term sustainable success.
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Caledonia Investments plc Annual Report 2024
Appointment, induction and training
The company complies with the recommendation of the Code
that all directors of FTSE 350 companies should be subject to
annual re-election by shareholders.
On appointment, new directors are offered induction and training
considered appropriate by the board, and subsequently as
necessary. Recently appointed directors Farah Buckley and Rob
Memmott both benefited from comprehensive tailored induction
programmes. The annual performance evaluation of the board
encompasses the identification of any individual training needs
of board members so that, if necessary, these can be reviewed
by the Chair with the directors concerned. The directors receive
briefings at board meetings on regulatory and other issues relevant
to the company and its business sector and, in addition, may attend
external courses to assist in their professional development.
Board composition
The board currently comprises 11 directors. Excluding the Chair,
three of the directors are executive and seven are non-executive.
The board considers all of the non-executive directors to be
independent other than Will Wyatt and The Hon C W Cayzer
who were executive directors prior to becoming non-executive
directors and are members of the Cayzer family concert party
(‘Cayzer Concert Party’).
David Stewart was appointed to the board as an independent
non-executive director in March 2015, before taking on the role
of company Chair in July 2017. The board, on the recommendation
of the Nomination Committee, which was chaired by Guy Davison,
Caledonia’s Senior Independent Director, extended David’s tenure
as Chair in May 2023 until the company’s annual general meeting
in 2025, subject to his annual re-election by shareholders. This
lengthened David’s anticipated service on the board by a little
over one year, beyond the nine years recommended in the Code.
As reported in 2023, the extension was considered appropriate
following a period of notable board development which included
the appointment of three new non-executive directors and two
executive directors since January 2022.
For the reasons set out in last year’s annual report, the board asked
Stuart Bridges, a former independent non-executive director,
to extend his tenure until no later than the 2023 annual general
meeting, which extended his tenure beyond nine years. The board
recognised that service over nine years is one of the circumstances
set out in the Code that is considered likely to, or could appear to,
impair independence. However, following a careful assessment,
including feedback obtained as part of the 2023 board evaluation
process, the board concluded that Stuart remained strongly
independent in character and judgement.
As expected in the Code, at least half of the board’s
members throughout the year, excluding the Chair,
were considered independent.
Board committees
As identified in the governance framework, which is summarised
on page 68, the board has delegated certain specific areas of
responsibility to the following standing committees: the
Nomination Committee, the Audit and Risk Committee, the
Governance Committee and the Remuneration Committee.
Further details of the work of each of these committees and their
membership during the year are set out in their respective reports
on pages 80 to 108.
The terms of reference of each committee are reviewed annually
and are available on the company’s website.
Board performance evaluation
The board conducts an annual evaluation of its performance and
that of its committees and, in accordance with good practice,
engages an independent third party facilitator to assist in this
process every three years. For the year ended 31 March 2024,
Board Level Partners (‘BLP’) was engaged to conduct an externally
facilitated evaluation of the board, its committees and individual
directors. Its selection followed a formal tender process led by
company Chair David Stewart supported by Guy Davison, Senior
Independent Director, and the Company Secretary. BLP, which
had not undertaken any previous assessments for Caledonia, has
no other connection with the company. Following appointment,
the Company Secretary was responsible for providing BLP with
the access and support required to undertake its review, with
the company Chair available throughout.
BLP conducted a comprehensive process which included
structured interviews with each director and the Company
Secretary. After observing a board meeting and reviewing past
board and committee papers, BLP presented its findings in a
detailed report to the board. As part of its review, BLP completed
an appraisal of the company Chair and delivered its findings to
the Senior Independent Director. This was used to inform the
non-executive directors’ annual appraisal of David Stewart’s
performance. BLP also presented individual confidential reports
on each director to the Chair.
Progress in achieving the priorities identified and considered in
previous annual board evaluations was reviewed as part of BLP’s
external review. BLP’s overall conclusion was that the board
oversees the management of the company effectively and has the
necessary skills and expertise to safeguard stakeholders’ interests.
The external board review did not highlight any material
weaknesses or concerns, but it did identify some areas for further
focus in 2024 and beyond. These included:
• long-term succession planning
• structuring investor relations to further enhance shareholder
communications
• reviewing the management committee structure
• ongoing learning and development.
BLP was provided with the opportunity to review this summary
ahead of its publication.
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Introduction
Corporate governance report (continued)
Key stakeholders, engagement and board decision making
Details in respect of the company’s key stakeholders, together
with commentary on how the directors addressed the matters
set out in section 172(1)(a) to (f) of the Companies Act 2006 (‘the
Companies Act’) as they made decisions during the year, are set
out in the Section 172 statement on pages 74 to 78.
Shareholders
Annual general meeting
As noted in the Section 172 statement, the company’s annual
general meeting remains an important part of Caledonia’s
shareholder communications programme.
All resolutions proposed at the 2023 annual general were passed.
However, more than 20% of participating independent
shareholders voted against the usual resolution to approve a
waiver of the mandatory offer provisions set out in Rule 9 of The
City Code on Takeovers and Mergers (‘Rule 9 Waiver Resolution’)
in relation to the Cayzer Concert Party. A Rule 9 Waiver Resolution
is sought by the board each year given the obligation that could
arise on the Cayzer Concert Party to make a general offer for the
entire issued share capital of the company as a result of purchases
by the company of ordinary shares pursuant to the authority
received from shareholders to make market purchases.
The company is grateful to those shareholders that took the time
to engage on the Rule 9 Waiver Resolution following the conclusion
of the annual general meeting. One large shareholder who, having
previously supported the resolution, has adopted a policy of voting
in line with the voting recommendations of a proxy voting adviser
which is generally not supportive of such resolutions given their
potential to lead to creeping control. In response to the feedback
received from this shareholder, who continues to be supportive
of management, the company has sought to engage with the
proxy voting adviser to explain the board’s position. Whilst the
board recognises its position, the directors continue to believe
that the company’s ability to exercise the authority to make
market purchases of its own shares warranted, and continues
to warrant, approval of a Rule 9 Waiver Resolution. A similar
resolution will therefore be proposed once again at this year’s
annual general meeting.
The ninety-fifth annual general meeting of the company will be
held at 6 Park Place, St. James’s, London SW1A 1LR on Wednesday,
17 July 2024 at 11.30 am. The notice of the annual general meeting
and details of all of the resolutions to be put to shareholders are
set out in a separate circular published at the same time as this
annual report.
Relations with controlling shareholders
As at 20 May 2024, being the latest practicable date prior to the
publication of this annual report, the Cayzer Concert Party held
48.8% of Caledonia’s voting rights.
Under the Financial Conduct Authority’s Listing Rules, where
a premium listed company has a controlling shareholder or
shareholders (being a person or persons acting in concert who
exercise or control 30% or more of the company’s voting rights),
the company is required to enter into a written and legally binding
agreement which is intended to ensure that the controlling
shareholder undertakes to comply with certain independence
provisions, namely that:
• transactions and arrangements with the controlling shareholder
(and/or any of its associates) will be conducted at arm’s length
and on normal commercial terms
• neither the controlling shareholder nor any of its associates
will take any action that would have the effect of preventing
the listed company from complying with its obligations under
the Listing Rules
• neither the controlling shareholder nor any of its associates will
propose or procure the proposal of a shareholder resolution
which is intended or appears to be intended to circumvent the
proper application of the Listing Rules.
The board confirms that agreements specified under the Listing
Rules as described above (which were required to be in place by
17 November 2014) were entered into by the company on
30 October 2014 with The Cayzer Trust Company Limited (‘Cayzer
Trust’) and separately with the Trustee of The Caledonia
Investments plc Employee Share Trust (‘Employee Share Trust’),
which is deemed by The Panel on Takeovers and Mergers to form
part of the Cayzer Concert Party, and remain in place. Under the
terms of its agreement, Cayzer Trust has undertaken to procure
the compliance with the independence provisions of all of the
other members of the Cayzer Concert Party, other than the
Employee Share Trust.
The board confirms that, during the period under review and up to
20 May 2024, being the latest practicable date prior to the
publication of this annual report:
• the company has complied with the independence provisions
included in the agreements with Cayzer Trust and the Employee
Share Trust
• so far as the company is aware, the independence provisions
included in the agreements have been complied with by Cayzer
Trust and the Employee Share Trust
• so far as the company is aware, the procurement obligation
included in the agreement with Cayzer Trust has been complied
with by that company.
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Directors’ conflicts of interest
Each director has a duty under the Companies Act to avoid a
situation where they have, or could have, a direct or indirect
interest which conflicts, or may possibly conflict, with the
company’s interests. The Companies Act, however, allows directors
of public companies to authorise conflicts and potential conflicts
where the articles of association contain a provision to this effect.
The Companies Act also allows the articles to contain other
provisions for dealing with directors’ conflicts of interest to avoid
a breach of duty.
There are safeguards in the company’s articles which apply when
the directors decide whether to authorise a conflict or potential
conflict of interest. First, only independent directors, being those
who have no interest in the matter being considered, are able to
take the relevant decision and, second, in taking the decision,
the directors must act in a way which they consider, in good faith,
will be most likely to promote the success of the company. The
directors are able to impose limits or conditions when giving
authorisations if they think this is appropriate.
The board has adopted procedures to address the requirements
of the Companies Act in relation to directors’ conflicts of interest.
Each new director on appointment is required to declare any
potential conflict situations, which may relate to them or their
connected persons. These are reviewed by the board and, if
necessary, also by the Governance Committee, which then
considers whether these situations should be authorised and,
if so, whether any conditions to such authority should be attached.
Each board meeting includes a standing agenda item on conflicts
of interest to ensure that all directors disclose any new potential
conflict situations. These are then reviewed, again if necessary
by the Governance Committee, and authorised by the board
as appropriate. A register of directors’ conflicts of interest is
maintained by the Company Secretary and is reviewed annually
by the Governance Committee.
The Corporate governance report was approved by the board on
20 May 2024 and signed on its behalf by:
David Stewart
Chair of the board
20 May 2024
The table below highlights where key content can be located
elsewhere in this annual report to enable shareholders to
evaluate how the company has applied the principles set out
in the UK Corporate Governance Code.
Page
Board leadership and company purpose
Chair’s statement
12
Chief Executive Officer’s report
14
Section 172 statement
74
Performance measures
20
Sustainability
42
Key stakeholders
75
Division of responsibilities
The board
70
Board committees
71
Membership and attendance
70
Composition, succession and evaluation
Board of directors
66
Board composition
71
Board performance evaluation
71
Nomination Committee report
80
Board and committee diversity policy
80
Audit, risk and internal control
Audit and Risk Committee report
82
Responsibility statements
113
Risk management
57
Going concern and viability
62
Internal control systems
86
Remuneration
Annual statement by the Chair of the
Remuneration Committee
90
Remuneration policy
93
Annual report on directors’ remuneration
99
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Corporate governance
Financial statements
Other information
Introduction
Section 172 of the Companies Act 2006 (the ‘Act’) requires
each of our board directors, individually and collectively,
to act in the way they consider, in good faith, would most
likely promote the long-term success of the company for
the benefit of its members as a whole. In doing this they
are required to have regard, amongst other relevant
matters, to the:
a. likely consequences of any decisions in the long term
b. interests of the company’s employees
c. need to foster the company’s business relationships
with suppliers, customers and others
d. impact of the company’s operations on the community
and environment
e. desirability of the company maintaining a reputation for
high standards of business conduct
f. need to act fairly as between members of the company.
In discharging their duties, each director will seek to
balance the interests, views and expectations of
Caledonia’s stakeholders, whilst recognising that every
decision the board makes will not necessarily result in a
positive outcome for all. However, the board’s aim is to
make sure that decisions are consistent and predictable.
In so doing, it seeks to generate long-term compounding
real returns that outperform inflation by 3%-6% over the
medium to long term, and the FTSE All-Share index over
10 years. The company does not have customers. Rather,
its shareholders are the stakeholders who most closely
resemble customers.
In this section, we describe each of our key stakeholder
groups, their importance and how we engaged with them
during the year. Also provided are examples of the ways
in which the board considered the interests of these
stakeholders and had regard to the matters set out in
section 172(a) to (f) of the Act when making its decisions.
Further details on how the board operates can also be
found in the Corporate governance report on page 70
and at www.caledonia.com.
Section 172 statement
How we engage with stakeholders and make decisions
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Caledonia Investments plc Annual Report 2024
Our stakeholders and their importance
Centred around a collection of values
that shape our approach to every
aspect of investing, our team is key
to delivering long-term performance.
We seek to create an environment that
enables us to attract, retain and
develop exceptional people
Our people
The Caledonia Investments Charitable
Foundation - we look to support
communities which resonate with
our history, values, culture and team
Caledonia intern programme - we
remain committed to advancing new
talent in our industry
Community
Our portfolio companies, both public
and private, and private equity funds
provide the source of returns to our
shareholders. We build rewarding
relationships with, and a deep
understanding of, our investments
Our portfolio
companies and
funds
We build and value long-term
supplier relationships built on
transparency, reliability and
quality to support our
investment activities
Suppliers
Our shareholders provide Caledonia’s
permanent capital and it is for their
benefit that the directors are required
to promote the company’s success
Our shareholders
Stakeholders
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Financial statements
Other information
Introduction
Section 172 statement (continued)
Why we engage
How we engage
How the board engages
Outcomes
Shareholders provide
Caledonia’s permanent capital
and it is for their benefit that
the directors are required
to promote the company’s
success.
We remain committed to a
proactive and constructive
dialogue with shareholders
to ensure:
• there is a good understanding
of the company’s purpose,
performance and approach
to environmental, social and
governance matters
• the board is aware of issues
that are important to them.
We communicate with investors
through numerous channels:
• our Chief Executive Officer
and Chief Financial Officer
hold regular meetings with
institutional investors, private
client stockbrokers and fund
managers, particularly following
the publication of our half-year
and annual results
• regular market announcements,
including monthly NAV
announcements, half-year
and annual results webcasts
keep shareholders apprised of
performance.
Further details on relations with
controlling shareholders can be
found on page 72.
• The Chair and other non-
executive directors are available
to attend shareholder meetings
if requested.
• Caledonia’s annual general
meeting is an important
part of our communications
programme, providing directors
with the opportunity to meet
shareholders in person and to
hear their opinions.
• Views put forward by
shareholders and analysts
are reported back to the
board, with periodic reports
and presentations from
the company’s brokers and
management on shareholder
feedback and general market
perception of the company.
• Shareholder perspectives and ongoing
engagement are considered as part of
strategy and other discussions.
• During the year, we instigated a
review of our investor relations and
communications programme and
activities, to ensure our investment
proposition is well understood and
recognised by the market.
• Sentiment towards investment
companies, and in particular those
investing in private assets, continues
to weigh on discounts across the
sector. We believe that the share price
fundamentally undervalues the quality
of the investment portfolio and its long
term performance. In March and April
2024, we repurchased 290,219 shares at
an average discount of 36%, resulting in a
10.1p accretion to NAV per share.
• In making its decision regarding the
2023 interim and final dividends,
the board considered shareholders’
expectations, the net revenue generated
by the company and the capacity of the
company to pay dividends out of free
cash flow, taking into account future
dividend liquidity requirements and
availability.
Our shareholders
Why we engage
How we engage
How the board engages
Outcomes
Our team is key to delivering
long-term performance.
Recruiting and retaining
engaged and experienced
employees who share our
values and culture is central to
delivering Caledonia’s purpose.
We encourage honest and open
communication, both formally and
informally, to ensure employees
remain closely involved with the
success of the business.
Further details on our workplace can
be found on page 46.
• Caledonia has a small number
of employees which enables
regular formal and informal
access to board directors,
irrespective of seniority,
together with frequent
colleague involvement in board
and committee meetings.
• Formal periodic reports
on staff-related matters,
including any instances of
concerns or grievances raised
and suggestions received for
improvements to the workplace
culture, assist the board in
understanding the views of
employees.
• Last year we completed our first
colleague engagement survey to help
us better understand the views of our
employees and how we can continue to
develop and improve. This year invaluable
insight from our employees in 2023 has
helped create our new manifesto, rooted
in the concept of ‘time well invested’ to
articulate our culture and values.
Our people
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Caledonia Investments plc Annual Report 2024
Why we engage
How we engage
How the board engages
Outcomes
Our portfolio companies, both
public and private, and private
equity funds provide the source
of returns to our shareholders.
Our focus remains on long term
careful stewardship to create value
for our shareholders.
We seek to build rewarding
relationships with, and a deep
understanding of, our investments.
Public Companies
• We use in-house and third party
research to closely monitor the
performance of companies in the
Income and Capital portfolios.
• Meetings with management
teams are an important part of our
ongoing stewardship activities.
• We make considered use of our
voting rights at all shareholder
meetings.
Private Capital
• Our employees serve as non-
executive directors on the boards
of portfolio companies in which
we hold a significant investment,
providing oversight and helping
to ensure that our board is kept
apprised of key developments and
the views of a broader group of
stakeholders.
Funds
• Alongside proactive monitoring
of fund performance, we are
represented by employees on
numerous advisory committees
established by the managers of the
funds in which we invest.
• A regular programme of meetings
with fund general partners, other
limited partners and investee
businesses enables us to gain
real insight into the ongoing
management of our portfolio.
Further details on our stewardship
activities can be found on page 48.
• Decision making is supported
by comprehensive regular
reporting to the board by the
Heads of Quoted Companies,
Private Capital and Funds,
supported by members of their
respective teams.
Private Capital
• Our programme of regular
presentations from the
leadership of portfolio
companies provides directors
additional insight to assist with
investment decision-making.
• In January 2024, the directors
attended a conference and
dinner with portfolio company
management, which included
business presentations and
provided the opportunity to
meet a broader group of senior
management.
• Following the acquisition of
Cirrus Inns, the board engaged
with the leadership and
employees of portfolio company
Liberation Group over two days,
gaining first hand experience of
its inns and drinks business.
Public Companies
• Over the course of the year, the team
attended numerous meetings with
portfolio company management and
used their voting rights at all shareholder
meetings.
Private Capital
• As part of our long-term approach to
investment, close engagement with our
Private Capital companies contributes
to a strong governance framework to
support growth and create value.
• 7IM, the vertically integrated retail wealth
management business, was sold to
Ontario Teachers’ Pension Plan (‘OTPP’)
board during the year.
The board carefully considered the offers
received deciding that it was in the best
interests of Caledonia’s shareholders
to conclude a sale to OTPP, providing
a significant premium over carrying
value and creating future opportunities
for 7IM’s employees and the ongoing
development of the business as a
‘platform led’ wealth manager.
• Caledonia acquired AIR-serv Europe, a
leading designer and manufacturer of air,
vacuum and jet wash machines.
The acquisition was consistent with
Caledonia’s strategy of investing in
quality, robust, well established private
companies, with proven management
teams, and seeking long-term growth.
Funds
• Over the course of the year, the team
has attended in excess of 120 meetings
with our portfolio fund managers,
including annual meetings, advisory
board meetings, in-person meetings in
the UK, Asia or North America and virtual
meetings held online.
Our portfolio companies
and funds
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Financial statements
Other information
Introduction
Section 172 statement (continued)
Why we engage
How we engage
How the board engages
Outcomes
We look to support the
communities in which the
company and our investee
companies operate and
charities which resonate
with our history, values,
culture and team.
We support advancing new
talent and social mobility
within the investment
management industry.
Charitable giving
The Caledonia Investments
Charitable Foundation
(‘Foundation’) is the focus for
Caledonia’s charitable activity,
providing support to many good
causes each year. The company
made a grant of £300,000 to the
Foundation during the year.
Volunteering
As part of our ongoing charitable
commitment and to further
encourage employees to support
the Foundation, together with
other charities and good causes, we
provide up to two additional days
of leave each year to employees so
they can volunteer their time.
Intern and alumni programme
With support from an independent
facilitator and involvement from
employees across the business, the
programme provides interns with
an invaluable insight into Caledonia,
the investment management
industry and helps build skills for
their future careers.
Further details on our community
activities can be found on pages 45
and 47.
Charitable giving
The Foundation reports
formally on its activities to
the board each year. This is
accompanied by an annual
showcase event to which all
directors are invited.
Intern and alumni programme
Each year, one of our non-
executive directors is invited
to participate in an event in
which our interns pitch their
investment ideas.
Charitable giving
Numerous charities received varying levels of
support over the year.
Notable multi-year donations were provided to:
• the Cornwall Community Foundation which seeks
to improve the lives of individuals within Cornwall
• the Maritime Volunteer Service to purchase
equipment and to train its members in maritime,
engineering, operations and communications
skills
• Horatio’s Garden for the continued development
of gardens in NHS Spinal Injury wards.
Other notable donations included those to the
Wheelyboat Trust, providing disabled people with
freedom and independence on the water, and Let
Me Know (‘LMK’), an education charity working
with young people to prevent relationship abuse,
domestic violence and sexual assault.
Volunteering
Employees support the Foundation, charities and
other good causes by volunteering their time,
alongside fundraising and participating in charitable
events.
Intern and alumni programme
• 12 successful candidates who aspire to have a
career in investment management were offered
places on our annual internship programme.
• We recently established an intern alumni
programme to help foster enduring relationships
with our ‘Sealions’ as they begin their careers
and to provide us with access to potential future
talent and networks.
Community
Why we engage
How we engage
How the board engages
Outcomes
We value long-term
supplier relationships built
on transparency, reliability
and quality to support our
investment activities.
We benefit from good relationships,
often built over many years, with
suppliers and advisers who share
our values.
The board is informed on
key supplier matters where
relevant.
We operate clear payment practices to ensure fair
and prompt payment for the goods and services
we receive. We agree payment terms when
contracting with suppliers and abide by them when
we are satisfied that we have received the goods or
services in accordance with the agreed terms and
conditions. Whilst we are not a signatory of the UK
Prompt Payment Code, we paid more than 89%
(2023: 98%) of our supplier invoices within 30 days
during the year, with 98.5% paid within 60 days.
Suppliers
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Corporate governance
Financial statements
Other information
Introduction
Nomination Committee report
Membership and attendance
The membership and attendance record of the Nomination
Committee during the year was as follows:
Meetings
attended
Meetings
eligible
to attend
D C Stewart (Chair)
1
1
S J Bridges1
1
1
F A Buckley
1
1
Hon C W Cayzer
1
1
G B Davison
1
1
M A Farlow
1
1
C L Fitzalan Howard
1
1
L R Fordham
1
1
W P Wyatt
1
1
1. Stuart Bridges retired from the board on 19 July 2023.
Responsibilities
The Committee is responsible for:
• regularly reviewing the structure, size and composition of the
board, including its skills, knowledge, experience and diversity
• considering succession planning for directors and, if requested
by the board, other senior executives
• identifying and recommending to the board candidates to
fill board vacancies, using external search consultants
where necessary
• keeping under review the leadership needs of the company,
both executive and non-executive
• reviewing the time commitment required from non-executive
directors, ensuring they receive formal letters of appointment
that set out clearly the company’s expectations.
Diversity and inclusion
Caledonia’s policy is to appoint candidates to roles based on merit
and against objective criteria. The Committee seeks to ensure that
the board and its committees have a diverse mix of skills,
experience, perspectives, opinion and knowledge, which facilitates
discussion and debate to enable the successful delivery of the
company’s strategy. It remains committed to increasing diversity
and inclusion over time.
Whilst Caledonia has not adopted any measurable diversity and
inclusion objectives to date, external search consultants are
required to put forward diverse candidates for new positions.
The Committee continues to focus on achieving the board
composition targets set by the FTSE Women Leaders Review,
the Parker Review and the Listing Rules during the year.
Detailed gender and ethnicity diversity analysis in respect of the
board, including progress against the targets set out in the Listing
Rules, and Caledonia more broadly, is provided on pages 45 and 46.
Work of the Nomination Committee
The Committee met on a single occasion during the year. Areas of
focus included:
• the appointment of Rob Memmott as Chief Financial Officer
• the extension of David Stewart’s tenure as company Chair until
the company’s annual general meeting in 2025, subject to annual
re-election by shareholders, and the associated renewal of his
letter of appointment
• consideration of a detailed skills, experience and diversity matrix,
which sought to identify future recruitment priorities based
on identified gaps, industry and stakeholder expectations and
good practice
• consideration of the contributions and effectiveness of the
non-executive directors seeking election and/or re-election
at the 2023 annual general meeting, prior to giving
recommendations to the board and shareholders for their
election and/or re-election.
The Nomination Committee
focuses on evaluating the directors,
considering the skills and attributes
needed for the long term. It identifies
suitable board candidates and assists
with succession planning.
Further information on the Nomination
Committee’s terms of reference
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Caledonia Investments plc Annual Report 2024
Company Chair
David Stewart was appointed to the board as an independent
non-executive director in March 2015, before taking on the role
of Chair in July 2017. The board, on the recommendation of the
Committee, which was chaired by Guy Davison, Caledonia’s Senior
Independent Director, extended David’s tenure as Chair in May
2023 until the company’s annual general meeting in 2025, subject
to his annual re-election by shareholders. This extended David’s
service on the board by a little over one year, beyond the nine
years recommended in the UK Corporate Governance Code. As
previously reported, the extension was considered appropriate
following a period of notable board development which included
the appointment of three new non-executive directors and two
executive directors since January 2022.
Chief Financial Officer
The search for a new Chief Financial Officer was successfully
concluded during the year. Rob Memmott succeeded Tim Livett
on 1 September 2023 following a comprehensive search exercise
supported by Russell Reynolds. Russell Reynolds, which is
accredited by the Enhanced Voluntary Code of Conduct for
Executive Search Firms, was selected following a formal tender
process. Particular care was taken to ensure that equity was part
of the search process from the outset.
Committee evaluation
The activities of the Committee were considered as part of the
external effectiveness review conducted by BLP summarised on
page 71. BLP found that the Committee functioned well, with the
appropriate balance of membership, skills and experience.
David Stewart
Chair of the Nomination Committee
20 May 2024
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Financial statements
Other information
Introduction
Audit and Risk Committee report
Membership and attendance
The membership and attendance record of the Audit and Risk
Committee during the year was as follows:
Member
since
Meetings
attended
Meetings
eligible
to attend
L R Fordham (Chair)
January 2022
3
3
G B Davison
January 2018
3
3
M A Farlow
March 2022
3
3
Dear Shareholder
I am pleased to present the Audit and Risk Committee’s report
once again.
The Committee’s responsibilities include:
• monitoring the integrity of the company’s financial statements
and reviewing any significant financial reporting judgements they
contain, together with associated company announcements
• reviewing the company’s systems of internal control
• considering Caledonia’s approach to risk, including strategy,
risk appetite and the identification of principal and emerging
risks, together with the monitoring, management and
mitigation of such risks
• overseeing the relationship with the external auditor
• considering annually whether an internal audit function
is required.
The Committee comprised exclusively of independent non-
executive directors with significant financial and sector experience,
meeting three times in the year ended 31 March 2024, in May
and November 2023 and in March 2024. Since the year end,
the Committee met again in May 2024 to consider matters
relating to the 2024 annual report and financial statements.
The Chief Executive Officer, the Chief Financial Officer, the
Company Secretary and members of the finance team attended
all meetings, together with company’s external auditor, BDO LLP
(‘BDO’). From time to time, other board members and/or senior
executives may also be invited to join all or part of a meeting. The
Committee also held separate discussions with BDO’s audit partner
without management participation.
The areas of focus for the Committee during the year included:
• the valuation of unlisted assets
• the company’s financial reporting, together with BDO’s audit
findings and viability and going concern reviews
• the company’s Task Force on Climate-related Financial
Disclosures (‘TCFD’) reporting
• the development of indicators to assess the quality of the
independent audit by BDO in light of the Financial Reporting
Council’s (‘FRC’) Audit Committee and the External Audit:
Minimum Standards
• the company’s risk dashboard and controls assurance reports.
In the year ahead, amongst the Committee’s usual areas of focus,
we plan to consider management’s proposed approach to the
changes set out in the 2024 edition of the UK Corporate
Governance Code (the ‘Code’), with a particular focus on the
changes to audit, risk and internal control.
I will once again be available at this year’s annual general meeting
to answer any questions on the work of the Committee.
Lynn Fordham
Chair of the Audit and Risk Committee
20 May 2024
The Audit and Risk Committee plays
a significant role in ensuring that the
company’s financial statements are
properly prepared and the system
of controls that is in place is effective
and appropriate to manage and
mitigate risk.
Further information on the Audit and Risk
Committee’s terms of reference
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Caledonia Investments plc Annual Report 2024
Area of
responsibility
Activity
Meetings considered at
May
Nov
Mar
Reporting
• Reviewed draft results and annual report for the financial year ended 31 March 2023, including key
accounting judgements, going concern and viability, and considered whether the report was fair
balanced and understandable
• Reviewed draft half-year results and reporting for the six months ended 30 September 2023,
including key accounting judgements and going concern and viability
• Reviewed accounting standard amendments, together with likely impact (if any)
• Reviewed TCFD reporting for the year ended 31 March 2023
• Reviewed approach to TFCD reporting for the year ended 31 March 2024
Valuations
• Considered valuations of private assets as at 31 March 2023 and 30 September 2023, including
assessments undertaken by the Valuation Committee
• Approved non-material adjustments to the company’s valuation policies to reflect updated
IPEV guidelines
Internal control
• Considered control assurance reports in respect of Private Capital pool processes and financial
statement reporting
• Considered control environment reporting for companies within the Private Capital pool
• Considered controls assurance reports for the investment accounting system, new ERP
and physical and IT access controls
Risk
• Reviewed the company’s investment and operational risk dashboards
• Considered the company’s investment risk report
• Received a comprehensive update on cyber security, disaster recovery and information
technology matters
• Considered principal risks, risk appetite and planned developments to risk management framework
External audit
• Reviewed BDO’s external audit report on the draft results and annual report for the financial year
ended 31 March 2023, together with the management representation letter
• Considered BDO’s review of the results for the six months ended 30 September 2023
• Approved BDO’s fee proposals for the year ended 31 March 2024 and engagement letters
• Reviewed BDO’s external audit plan and strategy
• Considered the FRC’s Audit Quality Inspection and Supervision Report in respect of BDO, together
with the FRC’s overview of the audit quality of the largest audit firms, and BDO’s response to the
FRC’s findings
• Approved indicators to assess the quality of the independent audit by BDO
Internal audit
• Considered the need for an internal audit function
Governance
• Reviewed the Committee’s terms of reference
• Reviewed and approved the policy for the provision of non-audit services by the
independent auditor
• Considered FRC changes to the UK Corporate Governance Code and management’s
planned approach
Other matters
• Considered ongoing investment trust status compliance
• Reviewed status of the ERP system implementation
1.
Since March, the Committee considered matters regarding the year ended 31 March 2024, which included:
• reviewing the results and annual report, accounting judgements, going concern and viability and consideration of whether the annual report was fair
balanced and understandable
• reviewing BDO’s external audit report on the results and annual report for the financial year ended 31 March 2024
• approval of this report.
Work of the Committee
The Committee undertook the following activities during the year1:
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Other information
Introduction
Audit and Risk Committee report (continued)
Topic
Description of the matter
Committee considerations
Financial
statements
The Committee reviewed the form and content of the 2024 annual
report and financial statements, including TCFD reporting. In conducting
its review, the Committee considered reports prepared by management
and the external auditor. Management’s reports provided an analytical
review of the financial statements, comparing the current to prior year
financial position and results, and detailed the judgements and sources
of estimation uncertainty involved in applying the accounting policies
to the financial statements. The Committee also noted that there were
no new accounting standards applicable for the current year other
than a minor adjustment such that the company is now required to
disclose its material accounting policy information instead of significant
accounting policies. In addition, the Committee considered reports
prepared by management to support the going concern and viability
statements and, as requested by the board, compliance with the annual
report’s ‘fair, balanced and understandable’ provisions of the Code.
The Committee recommended approval of the 2024 annual report
and financial statements to the board.
The significant issue the Committee considered in relation
to the 2024 financial statements was the valuation of unlisted
investments. The key inputs into the valuation of Private
Capital businesses were considered, including the broad
range of factors impacting market multiples utilised in the
valuation process.
The Committee remains cognisant that private equity funds
are an increasingly material element of the company’s
investment portfolio. Private equity funds therefore
continued to receive an enhanced level of scrutiny and
debate. Given that the majority of valuations used in the
company’s financial statements are based on reports by third
party private equity fund managers dated on, or before,
31 December 2023, particular focus was given to the risk
of outdated pricing. This resulted in the Committee receiving
supporting data from management on the composition of
assets within the Funds pool, with information provided
on the processes used to assess the reasonableness of fund
manager valuations and analysis on the level of movement
in related public equity markets in the final two quarters of
the financial year.
Unlisted
valuations
The Committee recognises that unlisted investments in the Private
Capital and Funds pools are a significant component of the company’s
assets and that their valuation is subject to considerable judgement
and uncertainty.
The Chair of Committee also chairs meetings of the Valuation
Committee, which scrutinises the valuation of private asset investments,
adherence to the company’s valuation policy and consistency of
valuation methodologies over time. Reporting is provided to the
Committee on the assessments undertaken, including the quality
of review and challenge.
The Committee, supported by the work of the Valuations
Committee, was conscious of the slowdown in private equity
fund activity and reduced realisations during the financial
year. Consideration was given to market movements and
capital flows, together with management’s assessment of
the underlying trading performance of companies within the
North American funds portfolio. Management’s review of
top twenty positions held by Asia focused funds, including
operational metrics and cash levels, informed challenge and
debate. The increase in disposal activity by North American
funds in the final quarter at net asset value (‘NAV’) or at a
premium to NAV provided comfort.
BDO’s audit partner attends Valuation Committee meetings,
with other members of the Audit and Risk Committee invited
to participate.
Significant matters considered
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Caledonia Investments plc Annual Report 2024
Topic
Description of the matter
Committee considerations
Going concern
and viability
The directors are required to make a statement in the annual report as to going
concern and Caledonia’s longer-term viability. The Committee provides advice
to the board on the form and content of this statement, including the underlying
assumptions. The Committee evaluated a report from management setting out
its view of Caledonia’s longer-term viability and the content of the proposed going
concern and viability statements. This report was based on the group’s base case
of forecast liquidity over three years to May 2027, developed from the corporate
financial plan. In making this assessment, the directors took comfort from the results
of three stress tests that considered the potential impact of significant market
downturn conditions.
The first stress test addressed three discreet scenarios: a 5% reduction in the value
of Sterling versus the US dollar compared to the rate on 31 March 2024, a 12 month
delay to anticipated realisations by the Private Capital pool and a reduction in fund
distributions and all commitments for the Funds pool falling due.
The second stress test modelled a market downturn event over a two-year period
reflecting: a fall in Public Companies investment income and Private Capital
investment income of 20% and 100% respectively, a 20% reduction in market prices
of stocks held in the Public Companies pool, an inability to realise the Private Capital
pool and a 50% reduction in distributions from the Funds pool. To simulate an
extreme downside scenario, the impact of a market downturn event coupled with
all fund commitments falling due was also assessed.
The three-year period was chosen as it provided a reasonable degree of certainty,
based on the company’s expected activities.
Taking into account the assessment of the group’s
stress testing results, the Committee agreed
to recommend the going concern and viability
statements and three-year viability period to the
board for approval.
The outcome of this activity led the Committee to
recommend to the board to make the statement
on page 62.
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Corporate governance
Financial statements
Other information
Introduction
Audit and Risk Committee report (continued)
Financial reporting
Fair, balanced and understandable statement
The Committee reviewed the draft annual report and, taken as
a whole, considered it to be fair, balanced and understandable.
To assist in reaching this view, the Committee considered a report
prepared by management highlighting the positive and negative
statements it included to ensure that they fairly reflected the
results for the year. The Committee recommended to the board
that the statement of directors’ responsibilities in respect of the
annual report and the financial statements, set out on page 113,
should be signed accordingly.
Assurance
The Committee obtains a range of assurance to provide comfort
that the company’s controls are providing adequate protection
from risk. These principally comprise external audit and controls
assurance reports from management. Use is also made of external
benchmarking and frameworks to provide additional assurance
in certain areas of the company’s operations. For example,
the National Institute of Standards and Technology (‘NIST’)
Cybersecurity Framework has been used to assess Caledonia’s
ability to prevent, detect and respond to cyber attacks and also
to identify areas for improvement.
Internal control and risk management
The board of directors is responsible for the company’s system of
internal control and for reviewing its effectiveness. The system is
designed to manage, rather than eliminate, the risk of failure to
achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss.
The Committee completed a review of the investment and
operational risk dashboards prepared by management, identifying
the principal business risks impacting the company, together with
the mitigating controls in operation and actions identified for
continuous improvement.
The Committee considered the effectiveness of the company’s
internal control environment and the structure in place to resolve
identified weaknesses. It reviewed controls assurance reports,
including an appraisal of processes within the Private Capital pool
and to support financial reporting. The approach to governance
and the control environment of investee companies within the
Private Capital pool was also subject to review. Ongoing
compliance with requirements for investment trust status was also
considered, together with the implementation of the replacement
of Caledonia’s enterprise resource planning (‘ERP’) system.
A comprehensive update on cyber security, disaster recovery and
information technology matters was once again provided to the
Committee, to which all members of the board were invited. This
included an explanation of Caledonia’s maturity against the NIST
Cybersecurity Framework, technology improvements made during
the year and the planned roadmap for further developments
during the next 12 months and beyond, and the ongoing evolution
of cyber resilience and disaster recovery preparedness.
Internal audit
As the company does not have an internal audit function, the
Committee considers annually whether there is a need for one.
The company is an investment trust and manages its non-
consolidated subsidiaries as other private company investments,
with each business operating its own risk management processes.
The company closely monitors its control environment and those
of its private company investments. The Committee recommended
to the board that an internal audit function was not required at the
present time.
External auditor
External auditor
BDO LLP
Appointed
July 2021
Re-appointment
To be proposed at the 2024 annual general
meeting
Lead partner
Peter Smith
Lead partner appointed
July 2021
Audit effectiveness
Audit quality is reviewed continuously throughout the year by both
the Chief Financial Officer and the Committee. The focus is centred
on the following:
• the quality and seniority of the external auditor’s staff
• the use of specialist staff in areas including the valuation of
unlisted assets and pensions
• the appropriateness of the planned audit methodology as
applied to Caledonia’s business activity
• the level of challenge on key areas of judgement and professional
scepticism displayed, together with the quality of reporting to
the Committee
• the quality of delivery, including achieving key audit project
milestones and reporting to the Committee.
In response to the FRC’s Minimum Standard for Audit Committees,
the Committee has development of a series of indicators by which
to assess BDO’s audit quality. These focus on:
• FRC quality inspection results, when available
• the percentage of hours of continuity across the
engagement team
• partner and manager hours, including independent partner
reviews, as a percentage of the total hours
• hours of specialist time
• percentage of hours spent before year end company to budget
• percentage of key milestones met.
During the year, the Committee considered the FRC’s Audit Quality
Inspection and Supervision Report of BDO, published in July 2023,
and sought assurance from the audit partner regarding BDO’s
response to the FRC’s findings. Regular updates on the progress
of BDO’s response have been sought by the Committee.
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Caledonia Investments plc Annual Report 2024
The Committee considered the following situations where the
auditors had challenged management’s assumptions, including:
• the identification of observable inputs to assess the valuation of
Private Capital businesses
• the valuation of private equity funds, particularly the risk posed
by stale pricing
• the valuation of defined benefit pension scheme assets and
liabilities, including an expert review
• management override of controls.
Independence, objectivity and non-audit work
To safeguard the auditor’s independence and objectivity, the
Committee maintains a schedule of specific non-audit activities
which may not be undertaken by the external auditor, within the
broad principles that the external auditor should not audit its own
work, should not make management decisions on behalf of the
company, should not be put into the role of advocate for the
company and that no mutuality of interest should be created
between the company and the external auditor. As a result of the
rigorous review by the Committee on non-audit services carried
out by BDO, reliance on the auditor’s internal independence
controls is limited.
The Committee has in place a policy for the provision of non-audit
services, meeting the requirements of the 2018 edition of the FRC’s
Revised Ethical Standard 2019 which was last reviewed in March
2024. Certain non-audit services are prohibited. Permitted services
are subject to approval by the Chief Financial Officer and the
Committee. Total fees payable for non-audit work carried out by
the company’s auditor are subject to limits.
The lead audit partner is required to rotate every five years
and other key audit engagement partners every seven years.
No contractual obligations restrict the Committee’s choice of
external auditor.
For the financial year ended 31 March 2024, the total fees for
non-audit services were £188,500, 15.5% of the total audit fees
(2023: £183,500, 18.1%).
BDO/Auditor fees
Audit fees
£1,028,924 84%
Non-audit fees1
£188,500 16%
2024
Audit fees
£831,833 82%
Non-audit fees2
£183,500 18%
2023
1. The majority of which related to BDO’s independent review of the
company’s half-year report.
2. The balance was incurred by Seven Investment Management in
connection with CASS assurance activities. These services were closely
related to the work performed by BDO during the audit or required by law
or regulation.
3. Analysis is provided in note 2 to the financial statements on page 133.
During the year, BDO provided non-audit services to associated
company Stonehage Fleming. As the company does not control
Stonehage Fleming, the Committee has limited oversight over
the fees incurred. However, BDO confirmed that appropriate
safeguards are in place and an assessment to possible threats
to independence from non-controlled affiliates was performed.
The Committee concluded that BDO remains independent
and objective, and that the level of non-audit to audit fees
remains acceptable.
Key audit matters raised by the external auditor
The following key audit matters were raised by the external
auditor:
• valuation of unquoted Private Capital investments
• valuation of fund investments.
Areas reviewed by the external auditor at the
Committee’s request
The Committee did not request any specific areas for review by
BDO beyond the normal cycle of audit activity.
Private meetings
During the year, the Chair of the Committee met separately and
privately with the Chief Financial Officer and BDO. The Committee
also met BDO without management present.
Statement of compliance
This report has been prepared in compliance with the Competition
and Markets Authority 2014 Order on statutory audit services for
large companies.
Lynn Fordham
Chair of the Audit and Risk Committee
20 May 2024
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Financial statements
Other information
Introduction
Governance Committee report
Membership and attendance
The membership and attendance record of the Governance
Committee during the year was as follows:
Meetings
attended
Meetings
eligible
to attend
G B Davison (Chair)
2
2
S J Bridges1
1
1
F A Buckley
2
2
M A Farlow
2
2
C L Fitzalan Howard
2
2
L R Fordham
2
2
1. Stuart Bridges retired from the board on 19 July 2023.
Responsibilities
The Committee is responsible for:
• keeping under review corporate governance matters relating to
the company
• monitoring and reviewing the company’s compliance with the
Listing Rules relating to companies with controlling shareholders
• considering the ability of each director to act in the interests of
shareholders as a whole and to exercise independence of
judgement free from relationships or circumstances that are
likely to, or could appear to, affect their judgement
• reviewing actual or potential conflict situations relating to
directors, which may require the prior authorisation of the board
under the Companies Act 2006, and making recommendations
to the board as to whether such situations should be authorised
and, if so, whether any conditions, such as duration or scope,
should be attached
• an annual review of all actual or potential conflict situations
previously authorised by the board to ensure they remain
appropriate
• making recommendations to the board in circumstances where
it believes that a director may be subject to a conflict of interest
that may prejudice their ability to exercise independence of
judgement, including that the director abstains from
participating in any decision of the board or any of its
committees on the matter concerned.
The Governance Committee monitors
and reviews the ability of each
director to act in the interests of
shareholders as a whole and to
exercise independence of judgement.
Further information on the Governance
Committee’s terms of reference
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Caledonia Investments plc Annual Report 2024
Work of the Committee
The Committee met twice during the year and the principal
matters it considered included:
• the review and approval of the Corporate governance and
Governance Committee reports for the year ended
31 March 2023
• the influence of the Cayzer family concert party (‘Cayzer Concert
Party’) on Caledonia’s board and whether it was in the general
interest of the non-Cayzer Concert Party shareholders, with the
conclusion that it was
• the review and approval, on behalf of the board, of statements
of compliance with the independence provisions of the
Listing Rules relating to premium listed companies with
controlling shareholders
• a review of the agreements, described on page 72, entered
into by the company on 30 October 2014 with The Cayzer
Trust Company Limited and separately with the Trustee of
The Caledonia Investments plc Employee Share Trust, which is
deemed by The Panel on Takeovers and Mergers to form part
of the Cayzer Concert Party
• the review of potential conflict situations notified by directors in
accordance with the Companies Act 2006 and the making of
recommendations to the board in relation thereto
• proposed changes to the UK Corporate Governance Code and
Listing Rules.
Committee evaluation
The activities of the Committee were considered as part of the
external effectiveness review completed by BLP summarised on
page 71. BLP found that the Committee functioned well, with the
appropriate balance of membership, skills and experience.
Guy Davison
Chair of the Governance Committee
20 May 2024
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Financial statements
Other information
Introduction
Directors’ remuneration report
Annual statement by the Chair of the Remuneration Committee
Membership and attendance
The membership and attendance record of the Remuneration
Committee during the year was as follows:
Member
since
Meetings
attended
Meetings
eligible
to attend
M A Farlow (Chair)
March 2022
3
3
F A Buckley
March 2023
3
3
C L Fitzalan Howard
July 2019
3
3
D C Stewart
July 2015
3
3
Dear Shareholder
On behalf of the board, I am pleased to introduce Caledonia’s
Directors’ remuneration report for the year ended 31 March 2024.
Remuneration policy
The Committee’s overriding objective remains to motivate
Caledonia’s leadership team to generate sustainable long-term
returns with remuneration packages that are linked to the company’s
long-term strategy and performance. We look to ensure that the
overall quantum and structure of pay are competitive, but
not excessive, and are closely aligned to the experience of our
shareholders through the measurement of NAVTR growth and the
exposure to share price performance and dividends. This is achieved
in the policy using equity-based remuneration (deferral of bonus into
shares and long-term performance share scheme awards) and
shareholding requirements.
Our remuneration policy was approved by shareholders at last year’s
annual general meeting by a majority of almost 99%, following
consultation with the company’s largest shareholders. The principal
elements of this policy are reproduced on pages 93 to 98 for ease
of reference. No changes to the policy are proposed this year.
The Committee continues to keep abreast of developments
impacting executive pay including, for example, the new UK
Corporate Governance Code (‘Code’) published by the Financial
Reporting Council in January. The small number of remuneration
related changes, with which the Committee expects to comply in full,
will first apply to Caledonia’s financial year commencing 1 April 2025.
Caledonia has a small number of employees based in a single office.
This enables the Committee to set the remuneration of both
executive directors and senior management in context. Regular
reporting provides us with wide-ranging data, including employee
attrition rates, promotion decisions and training and development,
together with gender pay gap analysis to ensure Caledonia maintains
equal pay for work of equal value.
Notwithstanding that Caledonia is not legally required to do so, we
have once again reported pay ratio information in relation to the Chief
Executive Officer, in accordance with The Companies (Miscellaneous
Reporting) Regulations 2018. This information is set out on pages
106 and 107.
New Chief Financial Officer
In May 2023, we announced the recruitment of Rob Memmott as
Caledonia’s Chief Financial Officer. Rob succeeded Tim Livett on
1 September 2023. The Committee agreed that Rob should receive
a basic salary of £420,000, a maximum bonus opportunity of 100%
of salary (for which any amount in excess of 50% of salary would
be compulsorily deferred for three years under the company’s
deferred bonus plan), an annual award of 150% of basic salary
under the company’s performance share scheme and, consistent
with all employees, a pension entitlement of 15% of salary. Rob did
not receive any sign-on commitments or compensation for loss
of benefits from a previous employer. The terms of Rob’s
recruitment, together with the previously reported arrangements
for Tim’s retirement, were in accordance with the company’s
remuneration policy.
The Remuneration Committee ensures
that remuneration arrangements
remain closely aligned to Caledonia’s
business model and strategy, the
ultimate aim of which is to generate
long-term compounding real returns
that outperform inflation over the
medium to long term, and the FTSE
All-Share index over 10 years.
The Companies Act 2006 requires the company’s auditor to report to
the shareholders on certain parts of the Directors’ remuneration
report and to state whether, in its opinion, those parts of the report
have been properly prepared in accordance with the Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013. The parts of the Annual report on
directors’ remuneration that have been audited are indicated in the
report. The Annual statement by the Chair of the Remuneration
Committee and the Remuneration policy are not subject to audit.
Further information on the Remuneration
Committee’s terms of reference
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Caledonia Investments plc Annual Report 2024
Remuneration for the year ended 31 March 2024
The Annual report on directors’ remuneration set out on pages 99
to 108 describes in detail how our remuneration policy has been
applied for the year ended 31 March 2024. It is also summarised in
Remuneration at a glance on page 92. However, I would like to
highlight the following points.
Fund performance
During the year, the Committee reviewed the basis on which
performance of the Funds pool is calculated for both the annual bonus
and performance share plan. It determined that opening and closing
NAVs would be based on third-party fund valuations received for the
March NAV announcement published in April each year to allow for
a consistent year-on-year comparison for remuneration purposes.
In some years this may give rise to a minor variation between the
performance result used to calculate Funds pool remuneration and
that reported in the main body of the Annual Report. There was no
impact arising from this change on the reward outcomes in 2024.
Annual bonus
Half of the bonus for Mat Masters, Rob Memmott and Tim Livett was
determined by reference to company performance and half subject
to the delivery of individual performance objectives. For Jamie
Cayzer-Colvin, who has specific responsibility for the Funds pool, 25%
of his bonus was determined by reference to company performance,
25% to his pool’s performance, 35% to his pool’s objectives and 15%
to individual performance objectives.
For the 2024 financial year, the company performance element of the
annual bonus was assessed by reference to the relative performance
of the company’s NAVTR against inflation, which for bonus purposes
was taken as 3%, or actual inflation if greater, with a 10% pay-out if the
company’s NAVTR matched inflation, increasing incrementally to the
maximum entitlement payable if outperformance of 7% or more was
achieved. As described in the remuneration policy, a phased transition
from the Retail Prices Index (‘RPI’) to the Consumer Prices Index including
owner occupiers’ housing costs (‘CPIH’) as the measure of inflation for
bonus purposes over the three year policy period has commenced,
weighted 67:33 on RPI:CPIH for the year ended 31 March 2024.
Caledonia delivered NAVTR for the year of 7.4%, outperforming the
increase in inflation (for bonus purposes) of 4.1%, resulting in a 43%
payment for this element. The Funds pool achieved a total return over
the year on a constant currency basis which, for Jamie, was below the
return needed to achieve the minimum pay-out for that element of his
bonus. After assessing their individual performance and, for Jamie, the
attainment of pool objectives, the Committee awarded overall
bonuses to Mat and Rob of 71.5% of basic salary, 64% of basic salary to
Tim (subject to pro rata adjustment for the period up to his retirement)
and 60.75% of basic salary to Jamie.
Performance share scheme awards
The remaining two-thirds of the performance share scheme awards
granted in 2019 (measured over five years) and the first one-third of
the awards granted in 2021 (measured over three years) reached the
end of their performance periods in March this year. In each case, the
awards were measured by reference to Caledonia’s annualised NAVTR
over the relevant periods, which was 10.9% for the 2019 awards and
13.1% for the 2021 awards. This led to full vesting of Tim Livett’s 2019
and 2021 awards (subject to pro rata adjustment for the period up to
his retirement) and this portion of Mat Masters’ and Jamie Cayzer-
Colvin’s 2019 and 2021 awards.
Mat was previously Head of the Capital portfolio before taking
on broader responsibility for the Income strategy in 2019 and his
appointment as Chief Executive Officer in 2022. The Capital portfolio’s
annualised total return (relevant for 80% of his 2019 award and 53.3%
of his 2021 award) was 12.9% and 10.4% respectively (excluding Polar
Capital) and the Income portfolio’s annualised return (relevant for
26.7% of his 2021 award) was 5.8%. This meant that this portion of
his 2019 awards also vested in full, whereas the performance
conditions attached to his 2021 award were met in part. The Funds
pool’s annualised total return, relevant for 60% of Jamie’s 2019 and
2021 awards, was 16.0% (measured in Sterling) and 14.8% (on a
constant currency basis) respectively, which resulted in this element
of his awards vesting in full.
The Committee once again conducted analysis before concluding that
no windfall gain had arisen in connection with share price growth for
performance share scheme awards which vested during the year.
Further analysis is set out on page 100.
The details of the vesting scales for these awards can be found on
page 100. The Committee considers that these performance
outcomes are appropriate.
The remaining two-thirds of the 2021 performance share scheme
awards will be tested in March 2026 at the end of the five-year
performance period.
The Committee has sought to address each of the following
six factors set out in the UK Corporate Governance Code
when determining remuneration policy and practice:
Clarity – our policy is understood by directors and senior
management and has been clearly articulated to shareholders
and investor bodies.
Simplicity – we believe the current remuneration structure is
simple and have sought to avoid complex structures which
may have the potential to deliver unintended outcomes.
Risk – our policy and approach to target setting seeks to
discourage inappropriate risk-taking. We have also embedded
malus and clawback provisions where appropriate.
Predictability – incentive arrangements are clearly set out
and are subject to individual participation caps.
Proportionality – there is a clear link between the outcome
of individual awards, delivery of Caledonia’s strategy and
long-term performance.
Alignment to culture – pay and policies are cascaded to
Caledonia employees and are consistent with Caledonia’s
purpose, values and strategy.
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Corporate governance
Financial statements
Other information
Introduction
Remuneration at a glance
Element
Year 1
Year 2
Year 3
Year 4
Year 5
Year 5+
Application in 2024
Application in 2025
Salary
Salary
Mat Masters:
£472,500
Rob Memmott:
£420,000
Jamie Cayzer-Colvin:
£385,000
Salary
Mat Masters:
£491,500
Rob Memmott:
£437,000
Jamie Cayzer-Colvin:
£400,500
Pension
Pension entitlement
15% of salary
Other
benefits
Other benefits
Family private medical insurance, death-in-service
insurance, permanent health insurance
Directors’ and officers’ liability insurance
Mat Masters and Jamie Cayzer-Colvin: a legacy cash
allowance in lieu of a company car
Bonus
Malus and
clawback
provisions apply
Up to 50%
of salary in
cash
Mandatory deferral in
shares of any bonus
exceeding 50%
Annual bonus
Mat Masters:
£337,838
Rob Memmott:
£175,175
Jamie Cayzer-Colvin:
£233,888
Annual bonus
Maximum bonus potential:
100% of salary
Performance
share scheme
Malus and
clawback
provisions apply
1/3 of award:
performance measured over
three years
Post-vesting holding
period
2024 PSS award
150% of salary
Mat Masters:
20,573 shares
Rob Memmott:
17,573 shares
Jamie Cayzer-Colvin:
16,763 shares
2025 PSS award
150% of salary
2/3 of award:
performance measured over five years
Shareholding
requirement
Shareholding requirement
Mat Masters: 200% of salary
Rob Memmott and Jamie Cayzer-Colvin: 150% of salary
Remuneration for the year ending 31 March 2025
Looking ahead to the 2025 financial year, the basic salaries of the
executive directors have been increased with effect from 1 April
2024 by 4%, broadly in line with inflation, which was the same
standard increase applied to the rest of the company’s employees.
The non-executive director basic fee was increased by 3.7%. No
changes have been made to the fees paid to the chairs and members
of the Audit and Risk and Remuneration Committees or to the fee
paid to the company’s Chair.
We plan to make performance share scheme awards to the
executive directors following the release of our 2024 full-year results
in line with our normal grant cycle. These awards will be subject to
the same performance measures used for the 2023 award grants,
which are summarised in the notes to the remuneration policy table
on page 100.
At the forthcoming annual general meeting, we will also be seeking
shareholder approval to enable the introduction of an HMRC
approved, all-employee Share Incentive Plan in the future to further
encourage a share ownership culture amongst employees.
Finally, I would like to take this opportunity to thank my colleagues
on the Committee for their continued diligence and support over
the past year.
Anne Farlow
Chair of the Remuneration Committee
20 May 2024
Directors’ remuneration report (continued)
Annual statement by the Chair of the Remuneration Committee
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Caledonia Investments plc Annual Report 2024
Introduction
Set out below are the material elements of the directors’
remuneration policy approved by shareholders at the annual general
meeting held on 19 July 2023. This policy came into effect from that
date and will apply until a revised remuneration policy is approved by
shareholders, which it is expected will be proposed at the annual
general meeting in 2026.
Implementation of the policy
There have been no changes to the current policy since its
implementation and the extracts included below are for information
only and to provide context for the 2024 Annual report on directors’
remuneration which follows. Executive directors’ service contract
information has been updated.
The full directors’ remuneration policy is contained on pages 75 to 82
of the company’s Annual report 2023, which is available in the
‘Results & reports’ section of Caledonia’s website at
www.caledonia.com.
Under the current statutory regime, a company may make a
remuneration payment to a director or a payment for loss of office
only if it is consistent with the most recently approved remuneration
policy or, if not, an amendment to the policy to allow the payment
must be separately approved by shareholders. The Remuneration
Committee considers that an effective remuneration policy needs
to be sufficiently flexible to take account of future changes in the
company’s business environment, and in remuneration practice
generally. In framing its policy, the Remuneration Committee has
therefore sought to combine a level of breadth and flexibility to
enable it to react to changed circumstances without the need for
a specific shareholder approval, whilst at the same time
incorporating sufficient detail and transparency to enable
shareholders to understand how it will operate in different scenarios
and feel comfortable that payments made under it are justified.
Components of remuneration where the Remuneration Committee
wishes to retain a level of discretion are identified in the relevant
sections of the policy. The Remuneration Committee may also make
minor amendments to the remuneration policy to aid its operation
or implementation without seeking shareholder approval, for
example to take account of a change in legislation or for regulatory,
exchange control, tax or administrative purposes, provided that any
such change is not to the material advantage of the directors.
Legacy arrangements
The policy is essentially forward looking in nature. In view of the
long-term nature of the company’s remuneration structures —
including obligations under service contracts, pension arrangements
and incentive schemes — a substantial number of pre-existing
obligations will remain outstanding at the time that the new policy is
approved, including obligations that are ‘grandfathered’ by virtue of
being in force prior to the introduction of the binding remuneration
policy regime in the UK on 27 June 2012 or which were incurred
under the previous remuneration policies approved by shareholders.
It is the company’s policy to honour in full any pre-existing obligations
that have been entered into prior to the effective date of this policy.
Objectives
The key objectives of the Remuneration Committee in setting
the company’s remuneration policy are as follows:
• remuneration of executive directors should be linked to the
company’s long-term performance and its business strategy
• performance related remuneration should seek to align the
interests of executive directors with those of the shareholders
• a significant proportion of executive directors’ remuneration
should be linked to the performance of the company and
receivable only if demanding performance targets are achieved
• remuneration packages for executive directors should be
competitive, but not excessive, in terms of market practice, in
order to attract, retain and motivate executive directors of the
quality needed to manage and grow the company successfully.
Remuneration structure
Executive directors
The table below sets out Caledonia’s policy in relation to each component of executive director remuneration, with further explanations
in the notes that follow.
Salary (fixed pay)
Purpose and link to strategic
objectives
To support the recruitment and retention of executive directors of the calibre required to manage and grow
the company successfully.
Operation
Reviewed annually.
Opportunity and recovery or
withholding provisions
Salary increases are normally awarded by reference to any increase in the salaries of other Caledonia staff/the cost of
living, but may take into account other factors such as external market positioning, change in the scope of the individual’s
responsibilities or level of experience, development in the role and levels of pay elsewhere in the company.
Normally year on year increases in basic salaries will not exceed inflation by more than 5%, other than where there is a
significant change in role or responsibilities or in such other circumstances as the Remuneration Committee may determine.
No recovery or withholding provisions.
Performance measurement
framework
Not applicable.
Directors’ remuneration report
Remuneration policy
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Other information
Introduction
Directors’ remuneration report (continued)
Remuneration policy
Benefits (fixed pay)
Purpose and link to
strategic objectives
To provide a range of benefits alongside basic salary to recruit and retain high calibre executive directors.
Operation
Executive directors are provided with family private medical insurance cover, death-in-service insurance, and permanent health
insurance and, in the case of Mr Masters and Mr Cayzer-Colvin, a legacy cash allowance in lieu of a company car. They are also
entitled to receive minor benefits that are available to other Caledonia staff.
The executive directors are also covered by the company’s directors’ and officers’ liability insurance policy and have the benefit
of an indemnity under the company’s articles of association.
Where there is a valid business reason for doing so, the company may pay for the cost of spouses or partners accompanying directors
on business trips and reimburse directors for hotel accommodation and travel expenses (including payment of any tax thereon).
Executive directors are also eligible to receive other minor benefits and expenses payments (again including payment of any tax thereon).
Executive directors will be eligible to participate in any all-employee share schemes of the company on the same basis
as other employees.
Opportunity and
recovery or withholding
provisions
A taxable benefits package that is competitive with the marketplace.
The value of taxable benefits provided, other than ad hoc items incurred in connection with Caledonia’s business that
may be deemed taxable benefits such as travel and other expenses, will not in aggregate exceed 10% of basic salary.
No recovery or withholding provisions.
Performance
measurement
framework
Not applicable.
Short-term incentives (variable pay)
Purpose and link to
strategic objectives
To reward performance on an annual basis against key financial, operational and individual objectives.
Operation
Discretionary annual bonus scheme and deferred bonus plan under which a proportion of bonus may be compulsorily deferred
into shares.
Bonus is not pensionable.
Opportunity and
recovery or withholding
provisions
The maximum potential bonus is 100% of basic salary. Any bonus over 50% of basic salary is compulsorily deferred into shares
for a period of three years.
Participants will also receive an amount or additional number of shares equal to the value of the dividends that would have accrued
on the deferred shares.
All bonus payments are subject to the overriding discretion of the Remuneration Committee, which also retains discretion
to amend the proportions of bonus subject to compulsory deferral or not to require any deferral in exceptional circumstances.
In order to be entitled to an annual bonus, an executive director must normally be in the group’s employment and not under notice
of termination (either given or received) at the time the bonus is paid.
The Remuneration Committee has the right to cancel or reduce any cash bonus or deferred bonus shares granted after the effective
date of this policy which have not yet been paid or vested.
The Remuneration Committee also has the right to recover all or part of cash bonus paid or deferred bonus shares and dividend
shares or equivalent amounts awarded after 29 July 2020 within the two years following date of payment or vesting as applicable.
Performance
measurement
framework
By reference to a combination of company performance against external benchmarks and individual performance against personal
objectives. Executive directors with responsibility for pools of capital will have a proportion of bonus determined by reference to pool
performance and objectives.
Long-term incentives (variable pay)
Purpose and link to
strategic objectives
To motivate executive directors to deliver long-term shareholder value, thereby aligning the interests of management with those
of shareholders.
To encourage long-term retention of key executives.
Operation
A performance share scheme under which participants are granted awards (normally in the form of nil-cost options) over the
company’s shares.
Opportunity and
recovery or withholding
provisions
The maximum value of awards that may be granted in any year is 200% of basic salary, although the company’s current intention
is to grant annual awards of no more than 150% of basic salary.
Participants will also receive an amount or additional number of shares equal to the value of the dividends that would have
accrued on the shares awarded.
Performance is measured over three years for one-third of awards which is subject to a post-vesting holding period, on an
after-tax basis, of two years. The remaining two-thirds of awards is subject to performance over five years, with no post-vesting
holding requirement.
The Remuneration Committee has the right to cancel or reduce long-term incentive awards which have not yet vested.
The Remuneration Committee also has the right to recover all or part of the value of long-term incentive awards and dividend
equivalents received within two years of the date that such awards vested and became exercisable.
Performance
measurement
framework
For executive directors who are not directly responsible for a pool of capital, awards under the performance share scheme are
subject to the performance of the company’s annualised diluted net asset value per share total return (‘NAVTR’) measured over
three or five years. For executive directors directly responsible for a pool of capital, the awards are subject to a combination of the
performance of the company’s annualised NAVTR as above and the annualised total returns achieved by the relevant pool for which
he or she is responsible, again measured over three or five years.
The rules of the scheme provide discretion to the Remuneration Committee to amend the performance targets or impose different
performance targets and to determine the appropriate proportion of any award subject to each performance measure.
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Pension related benefits (fixed pay)
Purpose and link to
strategic objectives
To provide a means of retirement saving as part of a range of benefits alongside basic salary to recruit and retain high
calibre executive directors.
Operation
Executive directors are offered defined contribution funding, based on a percentage of salary, to a personal pension
scheme or a cash salary supplement (or a combination of both) at their choice.
Opportunity and
recovery or withholding
provisions
Executive directors receive the same percentage of basic salary as a pension contribution as all Caledonia’s staff, currently
15%. If a director chooses to take a cash supplement in lieu of some or all of their pension entitlement, the payment is
reduced by such amount as is necessary to make the cash supplement cost neutral for the company after taking into
account National Insurance contributions.
No recovery or withholding provisions.
Performance
measurement
framework
Not applicable.
Notes to the policy table
1. Performance measures and targets
Annual bonus
For the Chief Executive Officer and the Chief Financial Officer, a maximum
of 50% of bonus is determined by reference to company performance and
50% by reference to individual performance objectives. For executive
directors responsible for a specific pool of capital, 25% of bonus is
determined by reference to the company’s performance, 25% to pool
performance, 35% to pool objectives and 15% to individual performance
objectives. In all cases, the company performance element is determined
by reference to the relative performance of the company’s NAVTR against
inflation. The inflation benchmark will transition from RPI to CPIH over the
three year policy period, weighted 67:33 on RPI:CPIH for the 2024 financial
year, moving to 50:50 for 2025, 33:67 for 2026 and 100% on CPIH for 2027.
Inflation is taken as the higher of the weighted RPI/CPIH benchmark over the
bonus year or 3%, being broadly in line with its historic long-term average.
Bonus payments for this element currently commence with a 10% pay-out
if NAVTR matches the inflation benchmark, increasing incrementally to the
maximum entitlement payable if outperformance of 7% or more is achieved.
Pool performance is judged by the Remuneration Committee by reference
to the return achieved by the pool against a set target return and by
objectives such as deal flow and delivery of portfolio strategy. Individual
performance is assessed by reference to personal objectives set at the start
of the year, including non-financial measures such as risk management,
environmental, social and governance matters, marketing of the company,
team leadership and engagement, management skills and promotion of
Caledonia’s corporate culture and profile both internally and externally.
The Remuneration Committee retains discretion to amend or adopt
alternative annual bonus targets and/or levels in future years in order
to achieve better alignment with the company’s strategic objectives.
Compulsory deferral of bonus
Deferred bonus plan
Shares subject to compulsory deferral will normally only vest if the
director remains an employee of the Caledonia group for a three-year
period commencing on the first day of the financial year in which the
award is made.
Long-term incentive plans
Performance share scheme
One-third of awards granted will be measured over three years and two-
thirds over five years. In all cases, shares that vest will become immediately
exercisable/transferable and, if the award is structured to grant nil-cost
options, will lapse if not exercised within ten years of grant.
Awards granted to the Chief Executive Officer and Chief Financial Officer will
vest on a graduated basis, with vesting currently commencing at 10% on the
achievement of an annualised NAVTR of 3%, rising incrementally to 100%
vesting on achievement of an annualised NAVTR of 10%, measured over three
and five years. For Mr Cayzer-Colvin, who is head of the Funds pool, 60% of his
performance share scheme awards will be measured against the annualised
total returns achieved by the Funds pool, measured over three and five years.
Awards will similarly vest on a graduated basis, with vesting commencing at
10% on achievement of an annualised Funds pool total return of 6%, rising
incrementally to 100% vesting on achievement of an annualised total return of
13.5%. The remaining 40% of Mr Cayzer-Colvin’s performance share scheme
awards will be measured against Caledonia’s annualised NAVTR as above.
Malus and clawback provisions
The Remuneration Committee has the right to cancel or reduce any cash
bonus or deferred bonus shares granted which have not yet been paid or
vested and long-term incentive awards which have not yet vested, in the event
of a material misstatement of the company’s financial results, miscalculation
of a participant’s entitlement, individual misconduct or an event resulting in
material loss or reputational damage to the company or any member of the
group. The Remuneration Committee may, acting fairly and reasonably,
reduce the level of vesting to take account of any matter which it considers
appropriate including the broader performance of the company,
the shareholder experience and the conduct of the participant.
The Remuneration Committee also has the right to recover all or part of
cash bonus paid or deferred bonus shares and dividend shares or equivalent
amounts awarded after 29 July 2020 within the two years following date of
payment or vesting as applicable and the value of long-term incentive awards
and dividend equivalents received within two years of the date that such
awards vested and became exercisable, in the event of a material
miscalculation of a participant’s entitlement, a material misstatement or
restatement of the company’s financial results for the years to which the
performance periods relate, or material personal misconduct that would
justify summary dismissal, result in significant reputational damage to the
company, have a material adverse effect on the company’s financial position,
or reflect a significant failure of the company’s risk management or control.
Rationale for choice of performance measures for the short and long-term
incentive plans
The Remuneration Committee has chosen NAVTR as the basis of performance
measurement for the company for both its short-term and long-term incentive
arrangements as it regards this as the best indicator of the success or failure of
management decisions in terms of creating value for the company.
For the company performance element of the annual bonus scheme, the
board has taken the view that benchmarking against a stock market index
or indices over a short period is not relevant given Caledonia’s long-term
investment horizon and the nature of its portfolio. The Remuneration
Committee has therefore instead chosen UK inflation, subject to a minimum
of 3%, as the comparator, as on this basis executives will only be rewarded to
the extent that they are able to deliver positive real returns for shareholders.
The Remuneration Committee will review the rate of increase in UK inflation
at the start of each financial year and may adjust the level of outperformance
required for the incremental and maximum bonus payments in order to
ensure that they remain a fair measure of performance.
For awards under the performance share scheme, the Remuneration
Committee has chosen Caledonia’s annualised NAVTR as the performance
measurement, as it believes that this is the most effective method of aligning
directors’ rewards with the long-term strategic objective of the company of
delivering annualised returns over rolling ten-year periods of between inflation
+3% and inflation +6% over the medium and longer term. For Mr Cayzer-
Colvin, the Remuneration Committee believes that a significant proportion
of his variable pay should be weighted towards the annualised total return
performance of the Funds pool of capital for which he is responsible and
has therefore determined that 60% of his performance share scheme
awards should be tested by reference to this.
The targets for each component of the long-term incentive plans have
been set by the Remuneration Committee with the aim of delivering
increasing reward for greater outperformance. The Remuneration Committee
keeps these under review and may adjust the measures and levels at which
incremental and maximum entitlements are earned in order to ensure that
they remain sufficiently challenging and aligned with the company’s strategy
and key performance indicators.
2. New components introduced into the new remuneration policy
There are no new components included in the above policy table which
were not a part of the remuneration policy previously operated for
executive directors by the company.
3. Changes to components included in the previous remuneration policy
The only substantive change to the company’s previous remuneration policy
is the move to use CPIH in place of RPI as the inflation benchmark for annual
bonus purposes, which will be phased in over the course of the three year
remuneration policy period. Flexibility to determine the method by which
dividend equivalents are calculated has also been included. Minor changes
have been made to the wording of the policy to reflect evolving market
trends and improve the clarity of operation.
4. How the remuneration policy for executive directors relates to
remuneration of Caledonia group employees generally
Caledonia applies a similar reward philosophy for group employees.
Executive directors’ remuneration packages tend to be higher than those
of other employees, but also include a higher proportion of variable pay.
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Other information
Introduction
Directors’ remuneration report (continued)
Remuneration policy
Chair and non-executive directors
The table below sets out each component of the Chair’s and the non-executive directors’ remuneration and the approach taken
by the company in relation thereto.
Component
Approach
Chair’s and non-executive
directors’ fees
The Chair’s fee is determined by the Remuneration Committee and the non-executive directors’ fees
are set by the board (excluding the non-executive directors). These are reviewed periodically taking
into account the responsibilities and time commitments required and non-executive director fee
levels generally.
The Chair receives an annual fee, which includes their basic non-executive director’s fee, but does
not receive any other remuneration.
Non-executive directors receive basic fees, which are subject to an aggregate annual limit for non-
executive directors’ ordinary remuneration contained in the articles of association, currently £600,000.
In addition, special fees are paid to the chair and members of the Audit and Risk and Remuneration
Committees and also for the role of Senior Independent Non-Executive Director and Chair of the
Governance Committee. Additional fees may be payable for other additional board responsibilities
and/or time commitment.
Additional fees payable
for services to other
group companies
Exceptionally, non-executive directors may receive fees in connection with subsidiary and investee
companies for services provided to them. Fees for services provided to such companies are set and
reviewed by the boards of those companies, but will not exceed £100,000 per annum in aggregate
for any non-executive director.
Other benefits
The Chair and the non-executive directors are all covered under the company’s directors’ and officers’
liability insurance policy and have the benefit of an indemnity under the company’s articles of association.
The Chair is also provided with an office and secretarial support.
The company may, where appropriate, pay for the cost of spouses or partners accompanying non-
executive directors on trips where there is a business reason for doing so and reimburse non-executive
directors for hotel accommodation and travel expenses (in each case including payment of any
tax thereon).
Remuneration policy for new appointments
Executive directors
In the case of the appointment of a new executive director,
the Remuneration Committee would typically seek to align the
remuneration package with the above remuneration policy.
The Remuneration Committee however retains the discretion to
make special remuneration commitments on the appointment of
a new executive director, including the use of awards made under
Rule 9.4.2 of the Listing Rules, if such were necessary to ensure
the recruitment of a candidate. In doing so, the Remuneration
Committee would take into consideration all relevant factors,
including, but not limited to, overall quantum, type of remuneration
offered and comparability with the packages of other Caledonia
senior executives and the total variable pay would not exceed
the maxima stated in the policy table for executive director
remuneration above.
The Remuneration Committee may in addition make bonus
commitments or share awards on the appointment of an external
candidate to compensate for remuneration arrangements forfeited
or foregone on leaving a previous employer, taking into account
factors such as any performance conditions attached to these
awards, the form in which they were granted, for example cash or
shares, and the time over which they would have vested. The aim
would be to ensure that replacement awards would be made on
no greater than a comparable basis.
In order to attract and retain suitable executives, the Remuneration
Committee retains discretion, in exceptional circumstances,
to offer service contracts with up to an initial 24 month notice
period, which then reduces to 12 months at the end of this initial
period. If it considers it appropriate, the Remuneration Committee
may also offer a lower salary initially, but with a series of increases
to achieve the desired salary positioning over a period of time, as
the individual develops into the role.
If a new appointment is the result of an internal promotion, the
Remuneration Committee would expect to honour any pre-existing
contractual arrangements or benefits package agreed with the
relevant individual. In the event that a new director needs to
relocate to take up the role, the Remuneration Committee
may agree a reasonable relocation package and tax
equalisation arrangements.
In recruiting any new executive director, the Remuneration
Committee would apply the overall policy objective that executive
directors’ remuneration should be competitive, but not excessive.
In the event that the Remuneration Committee determines that it is
necessary for special commitments or sign-on arrangements to be
offered to secure the recruitment of a new executive director, an
explanation of why these are required and details thereof would
be announced at the time of appointment.
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Caledonia Investments plc Annual Report 2024
Chair and non-executive directors
Terms for the appointment of any new Chair or non-executive
director would also be determined by the Remuneration
Committee or the board within the above remuneration policy.
Executive directors’ service contracts and the Chair’s and
non-executive directors’ letters of appointment
Executive directors
Executive directors have service contracts with Caledonia Group
Services Ltd, a wholly-owned subsidiary of the company, details
of which are summarised below:
Date of
contract
Notice period
for company
and director Unexpired term
M S D Masters
15 May 2008
12 months
12 months
R W Memmott
22 May 2023
12 months
12 months
J M B Cayzer-Colvin
19 Apr 2005
12 months
12 months
If notice is served by either party, the director can continue
to receive basic salary, benefits and pension payments for the
duration of the notice period, during which time the company
may require the individual to continue to fulfil their current duties
or may assign a period of gardening leave. Alternatively, the
company may, in its discretion, terminate the contract without
notice and make a lump sum payment in lieu of notice. This lump
sum would include an amount equivalent to the basic salary and
benefits (based on a fixed percentage of salary specified in the
service contract) for the unexpired period of notice to which the
payment relates. Mr Masters’ and Mr Cayzer-Colvin’s service
contracts provide that an amount equivalent to 80% of the average
of the annual bonuses paid for the previous three financial years
would also be included in the payment in lieu of notice. Mr Masters’
and Mr Cayzer-Colvin’s service contracts also include provisions
whereby a liquidated sum is payable in the event of termination
within one year following a change of control. The payment would
be calculated on the same basis as a payment in lieu of notice,
except that an amount equivalent to 100% of the average of the
annual bonuses paid for the previous three financial years would
be included.
Mr Memmott’s service contract contains provisions whereby,
as an alternative to the payment of a lump sum in lieu of notice,
the company may elect to pay the equivalent amount in equal
monthly instalments, such instalments to be reduced by 50% of
one-twelfth of the basic salary in excess of £20,000 per annum that
Mr Memmott receives from any alternative employment that he
takes up during the notice period.
Executive directors’ service contracts may be terminated without
notice and without any further payment (other than in respect of
amounts due at the date of termination) on the occurrence of
certain events such as gross misconduct.
Chair and non-executive directors
The Chair and the non-executive directors do not have service
contracts, but are appointed under letters of appointment,
which provide for termination without notice or compensation.
Inspection
Executive directors’ service contracts and the Chair’s and
non-executive directors’ letters of appointment are available
for inspection at the registered office of the company.
Policy on external non-executive directorships held by
executive directors
It is the company’s policy to allow executive directors to hold
non-executive directorships unrelated to the company’s business
to broaden their commercial experience, provided that the time
required is not material. Normally the company will retain any fees
arising from such non-executive directorships, but may permit the
executive director to retain fees on a case-by-case basis.
Policy on payments for loss of office
Executive directors
It is the policy of the company that, other than in exceptional
circumstances on recruitment as stated above, no executive
director should be offered a service contract that requires more
than one year’s notice of termination or which contains provision
for predetermined compensation in excess of one year’s total
emoluments. In the event of a termination, the Remuneration
Committee will consider a director’s past performance and the
circumstances of the departure in exercising any discretions relating
to the arrangements for loss of office, including contractual
obligations, prevailing best practice, the reason for the departure
and any transition or handover required.
The termination provisions in executive directors’ current service
contracts are described above in the section on executive directors’
service contracts. It is the Remuneration Committee’s intention that
all future executive directors’ service contracts should include
provisions enabling the company to reduce compensation payments
in the event that the director takes up alternative employment within
the notice period. However, if a new director is appointed internally,
the Remuneration Committee would expect to honour any existing
contractual arrangements agreed with the relevant individual before
he or she becomes a director.
In applying the company’s right to make a lump sum payment
in lieu of notice, the Remuneration Committee would normally
expect to prorate the lump sum for the unexpired period of
notice to which the payment relates.
The company’s annual bonus scheme provides that an employee
must be in the group’s employment and not under notice of
termination (either given or received) in order to be entitled to
receive a bonus for the relevant financial year. The Remuneration
Committee would expect to apply this principle to executive
director terminations, but retains discretion to make bonus
payments on termination if it believes it appropriate to do so.
If any bonus payment is made, the Remuneration Committee
also retains discretion as to whether it will require any part of the
bonus to be deferred into shares under the deferred bonus plan.
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Introduction
Directors’ remuneration report (continued)
Remuneration policy
Executive directors would also be entitled under their service
contracts to be paid on termination for any accrued, but untaken,
holiday entitlement. The Remuneration Committee may, where
it considers it appropriate in the circumstances, make payments
for loss of statutory rights or waiver thereof and a contribution
towards legal and outplacement fees. The Remuneration
Committee may also make a payment to ensure that any
restrictive covenants remain enforceable.
Where the director holds unvested awards under the company’s
long-term incentive schemes, the Remuneration Committee may
exercise its discretions as to vesting in accordance with the relevant
scheme rules. In good leaver circumstances, for example where
cessation of employment is by reason of death, retirement, injury,
disability, ill-health, redundancy, or such other reason as the
Remuneration Committee may decide, the Remuneration
Committee will normally determine the level of vesting based on
the attainment of the performance targets, either at the time of
cessation or at the normal test date if permitted by the scheme
rules, but in the case of the former may decrease or increase the
level of vesting if the Remuneration Committee considers that the
targets would have been met to a lesser or greater extent at the
end of the performance period. The number of shares that vest will
normally be reduced to reflect the proportion of the performance
period that the director was in employment, although the
Remuneration Committee has discretion not to scale down the
number of shares if it believes it appropriate in the circumstances.
The Remuneration Committee has the discretion to assess good
leaver treatment for participants should circumstances change
after the date they leave but prior to vesting. Any holding period
will continue to apply in respect of shares held by a leaver,
unless otherwise determined by the Remuneration Committee.
Where the director holds unvested awards under the company’s
deferred bonus plan, the Remuneration Committee may
exercise its discretion as to vesting in accordance with the
relevant scheme rules. In good leaver circumstances,
awards will vest on leaving employment.
Following termination, the company may continue insurance related
benefits for the former employee until the end of the insurance
policy period. The company’s directors’ and officers’ liability
insurance policy also provides for a six-year period of run-off
cover for former directors. A director may remain in employment
after ceasing to be a director for a limited period to allow time for
an effective handover or for a successor to be appointed.
In the event of a change of control before the expiry of the
performance measurement period of a long-term incentive
award, the vesting level of the award will be determined by the
Remuneration Committee based on the extent to which the
Remuneration Committee considers that the performance targets
have been achieved and vested shares will then be scaled down
to reflect the shortened measurement period. The Remuneration
Committee may modify such vesting levels if it considers that the
performance target would be met to a greater or lesser degree at
the testing date and/or if the application of time prorating would
be inappropriate in the circumstances.
Chair and non-executive directors
The Chair and the non-executive directors have no entitlement to
any compensation on termination of their appointments, although
they would have the benefit of run-off cover under the directors’
and officers’ liability insurance policy as described above. However,
in appropriate circumstances they may receive de minimis
retirement gifts from the company.
Executive directors’ minimum shareholding guidelines
In order to align the interests of executive directors with those of
shareholders, the Remuneration Committee has adopted guidelines
for minimum shareholdings, which executive directors will be
expected to attain through the retention of all post-tax share awards
vesting under the company’s long-term incentive plans until the
minimum shareholding is met. For these purposes, shareholdings
include those of connected persons and also the value, net of any
exercise costs, income tax and National Insurance contributions, of
unexercised awards granted under its performance share scheme
for which the performance targets have been met. Also included are
bonuses deferred compulsorily under the company’s deferred bonus
plan, again net of income tax and National Insurance contributions.
In addition, executive directors are subject to a post-cessation
shareholding requirement of two years, with the Committee
retaining discretion to override this arrangement, for example,
for regulatory reasons, on compassionate grounds or where an
executive experiences financial hardship.
For the Chief Executive Officer, the minimum guideline shareholding
has been set at 200% of basic salary and for other executive
directors 150% of basic salary.
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Caledonia Investments plc Annual Report 2024
The following report sets out details and explanations of remuneration paid to directors over the financial year to 31 March 2024 and
describes how Caledonia’s remuneration policy will be implemented for the 2025 financial year.
Single total figure of remuneration for each director (audited)
Executive directors
The table below provides an analysis of total remuneration of each executive director for the financial year ended 31 March 2024 and a
comparison with the previous financial year.
M S D Mastersa
R W Memmottb
J M B Cayzer-Colvin
T J Livettc
W P Wyattd
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Fixed remuneration and
benefits
Salary
473
450
245
n/a
385
367
171
410
n/a
176
Taxable benefits1
25
17
4
n/a
29
28
5
8
n/a
6
Pension related benefits
63
59
32
n/a
51
48
23
54
n/a
23
Total fixed remuneration
561
526
281
n/a
465
442
198
472
n/a
205
Variable remuneration
Short-term incentives2
338
203
175
n/a
234
176
153
185
n/a
–
Long-term incentives3
453
521
-
n/a
647
715
650
275
594
949
Total variable remuneration
791
724
175
n/a
881
891
804
460
594
949
Total
1,351
1,250
456
n/a
1,346
1,333
1,002
932
594
1,154
Due to rounding, individual columns do not necessarily add up to the total.
a. Mat Masters was appointed to the board as Chief Executive Officer designate on 1 April 2022. He succeeded Will Wyatt on 27 July 2022.
b. Rob Memmott was appointed to the board as Chief Financial Officer on 1 September 2023.
c. Tim Livett ceased to be a director on 1 September 2023 and left employment on 31 October 2023. Salary and benefits he received for the period 1
September 2023 to 31 October 2023 are excluded from the table above and are reported in ‘Payments to past executive directors’ on page 102.
d. Will Wyatt ceased to be an executive director on 27 July 2022. The figures relating to long-term incentives reflect certain awards he retained from his
employment. The fees he received as a non-executive director after that date are excluded from the table above and are shown in the table of non-
executive director fees on page 101.
1. Taxable benefits
Taxable benefits principally comprised private medical insurance cover, a
small Christmas supplement paid to all Caledonia’s employees and
business-related expense reimbursements deemed to be taxable by
HMRC. The taxable benefits for Mat Masters and Jamie Cayzer-Colvin also
included legacy cash allowances of £7,776 and £15,024 respectively in lieu
of a company car.
In addition to taxable benefits, other non-taxable benefits were provided
to executive directors, including death-in-service insurance (4x basic
salary), permanent health and income protection insurance, directors’
and officers’ liability insurance and certain other benefits of minor value
provided to all of Caledonia’s employees.
2. Short-term incentives
Bonus metrics
For Mat Masters, Rob Memmott and Tim Livett, a maximum of 50% of
bonus was determined by reference to company performance and 50% by
reference to individual performance objectives. For Jamie Cayzer-Colvin,
who has specific responsibility for the Funds pool, 25% of his bonus was
determined by reference to the company’s performance, 25% to his pool’s
performance, 35% to his pool’s objectives and 15% to individual
performance objectives.
Company performance
For the 2024 financial year, the company performance element was
determined by reference to the relative performance of the company’s NAVTR
against inflation, which for bonus purposes was taken as 3%, or actual inflation
if greater (weighted 67:33 on RPI:CPIH), with bonus payments for this element
commencing with a 10% pay-out if the company’s NAVTR matched inflation,
increasing incrementally to the maximum entitlement payable if
outperformance of 7% or more was achieved. The company’s NAVTR was 7.4%
over the year against an increase in inflation (for bonus purposes) of 4.1%,
giving a 43% payment for this element.
Funds performance
Jamie Cayzer-Colvin’s pool performance was assessed by reference to the
return achieved by the Funds pool over the year on a constant currency
basis, with payments commencing on achievement of a total return of 6%,
rising to a maximum pay-out against a total return of 13.5%.
The Funds pool’s return over the year was below this threshold and therefore
there was no payment for this element.
Funds pool objectives
In assessing Jamie Cayzer-Colvin’s achievement of his pool objectives,
the Committee took account of:
• improved reporting, particularly with respect to asset valuations
• assessment of secondary market opportunities
• engagement with general and limited partners
• development of portfolio management processes.
It was concluded that Jamie Cayzer-Colvin should be awarded a bonus of
35% of salary for attainment of pool objectives.
Individual performance objectives
The Committee assessed performance against the individual objectives
which included the following:
Name
Objective
M S D Masters
Development of investor relations strategy,
embedding responsible investment, successful
transition to new ERP system, team development
initiatives
R W Memmott
As above, together with improvements to
management information, development of risk
reporting, implementation of corporate
simplification opportunities, cyber security
developments
T J Livett
As above, together with ensuring a smooth
transition to successor
J M B Cayzer-Colvin
Developing the approach and supporting
infrastructure for responsible investment,
enhancing Cayzer House facilities for employees,
driving Caledonia’s charitable activities and
internship programme, team development
initiatives
The Committee decided to award the maximum bonus for individual
performance for Mat Masters, Rob Memmott and Jamie Cayzer-Colvin, and
85% for Tim Livett.
Directors’ remuneration report
Annual report on directors’ remuneration
99
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Directors’ remuneration report
Annual report on directors’ remuneration (continued)
Total bonuses
The total bonuses awarded to the executive directors for the year were
therefore determined as follows:
M S D
Masters
R W
Memmott
T J
Livett
J M B
Cayzer-Colvin
Award
%
Max
%
Award
%
Max
%
Award
%
Max
%
Award
%
Max
%
Performance
Company
21.5
50
21.5
50
21.5
50
10.75
25
Pool
n/a
n/a
n/a
n/a
n/a
n/a
-
25
Objectives
Pool
n/a
n/a
n/a
n/a
n/a
n/a
35
35
Individual
50
50
50
50
42.5
50
15
15
Total
71.5 100
71.5
100
64 100
60.75 100
In accordance with the company’s remuneration policy, the following
amounts included in the short-term incentives row for 2024 were
compulsorily deferred via the deferred bonus plan for a period of three
years in the form of nil-cost options:
M S D
Masters
RW
Memmottb
TJ
Livettc
J M B
Cayzer-
Colvin
2024
£,000
2023
£,000
2024
£,000
2023
£,000
2024
£,000
2023
£,000
2024
£,000
2023
£,000
Compulsorily
deferred
102
-
-
n/a
n/ad
-
41
-
Cash
236
203
175
n/a
153
185
193
176
Totala
338
203
175
n/a
153
185
234
176
a. Due to rounding, individual columns do not necessarily add up to
the total.
b. Bonus adjusted pro rata to reflect the period served as a director from 1
September 2023.
c. Bonus adjusted pro rata to reflect the time period served as a director
until 1 September 2023 and up to the date of cessation of employment on
31 October 2023.
d. Consistent with the remuneration policy, as Tim Livett had ceased to be
an employee by the time the bonus was paid, the pro rata amount due
was paid in cash.
3. Long-term incentives
The long-term incentive awards for which performance measurement
periods ended during the year were the two-thirds of the awards granted in
2019 under the performance share scheme and one-third of the awards
granted under that scheme in 2021. All such awards were nil-cost options.
The performance measures and outturn following testing for the awards
made to the executive directors were:
Year of
award
Performance
measure
% of
award
Performance
outturn %
% vested
M S D Masters
2019
NAVTRa
20
10.9
100
Capital
portfolio TRb
80
12.9
100
2021
NAVTRa
20
13.1
100
Capital
portfolio TRb
53.3
10.4
94
Income
portfolio TRc
26.7
5.8
76
T J Livett
2019
NAVTRa
100
10.9
100
2021
NAVTRa
100
13.1
100
W P Wyatt
2019
NAVTRa
100
10.9
100
2021
NAVTRa
100
13.1
100
J M B
Cayzer-Colvin
2019
NAVTRa
40
10.9
100
Funds pool
TRd
60
16.0
100
2021
NAVTRa
20
13.1
100
Funds pool
TRd
60
14.8
100
a. Vesting on a graduated basis, commencing at 10% on achievement of
an annualised NAVTR of 3%, rising incrementally to 100% vesting on an
annualised NAVTR of 10% over five years for the 2019 awards and over
three years for the 2021 awards.
b. Vesting on a graduated basis, commencing at 10% on achievement of
an annualised total return of 4%, rising incrementally to 100% vesting
on achievement of an annualised total return of 11% over five years for
the 2019 awards and three years for the 2021 awards. The
performance metric excluded Polar Capital which, if included,
decreased the outturn for the 2019 and 2021 awards to 12.7% and
9.7% respectively.
c. Vesting on a graduated basis, commencing at 10% on achievement of
an annualised total return of 3.5%, rising incrementally to 100% vesting
on achievement of an annualised total return of 7% over three years.
d. Vesting on a graduated vesting basis, commencing at 10% on
achievement of an annualised total return of 6%, rising incrementally to
100% vesting on achievement of an annualised total return of 13.5%
over five years for the 2019 awards and over three years for the 2021
awards. The performance metric for the 2019 award was measured on
a Sterling basis (16.3% based on constant currency) and for the 2021
awards on a constant currency basis (18.2% based on Sterling).
The remaining two-thirds of the awards granted in 2019 will vest on 30
May 2024. The first one-third of the awards granted in 2021 will vest on 4
June 2024 and, for Will Wyatt and Jamie Cayzer-Colvin, will be subject to a
post-vesting holding period of two years. The values, as reflected in the
2024 long-term incentives row above, are calculated using the three-
month average share price to 31 March 2024 of 3320.23p, together with
the value of dividends that will have accrued on the shares at vesting. The
overall value of the long-term incentives shown in the table above are
therefore analysed as follows:
Estimated
value of
long-term
incentive
awards at
vesting
£
Value of
dividend
equivalents
at vesting
£
Estimated
total
at vestingb
£
M S D Masters
398,760
54,132
452,892
T J Livetta
572,042
78,426
650,469
J M B Cayzer-Colvin
569,253
77,758
647,012
W P Wyatt
520,878
72,995
593,873
a. Entitlements pro rata to reflect the time period served.
b. Due to rounding, individual rows do not necessarily add up to the
total.
The estimated value attributable to share price appreciation since grant in
2019 and 2021, based on the three-month average share price to 31 March
2024, for Mat Masters, Tim Livett, Jamie Cayzer-Colvin and Will Wyatt was
£41,149, £60,253, £59,506 and £57,377 respectively. No discretion was
exercised by the Remuneration Committee in respect of share price
appreciation.
The Committee was satisfied that no windfall gains have arisen in
connection with the vesting of the performance share awards granted in
2019 and 2021, taking into account the share price at the time of grant and
progression in the share price over the period relative to NAVTR and typical
market returns.
100
Caledonia Investments plc Annual Report 2024
The 2023 figures shown in the long-term incentives and total rows on page
99 have been restated to replace estimated values for performance share
scheme awards included in last year’s report. The estimated values, which
included dividend equivalents, were £538,916 for Mat Masters, £284,218
for Tim Livett, £739,708 for Jamie Cayzer-Colvin and £981,055 for Will
Wyatt. The restated figures, which reflect the values on the vesting dates,
are as follows:
Value of
long-term
incentive
awards at
vesting
£
Value of
dividend
equivalents
at vesting
£
Total value
at vesting
£
M S D Masters
461,852a
59,423
521,275
T J Livett
248,248b
26,943
275,191
J M B Cayzer-Colvin
632,983c
82,454
715,437
W P Wyatt
838,493d
110,313
948,806
a. 8,170 shares granted in 2018 vested on 30 May 2023. The mid closing
price was 3400p per share. 5,398 shares granted in 2020 vested on 4
August 2023. The mid closing price was 3410p per share.
b. 7,280 shares granted in 2020 vested on 4 August 2023. The mid closing
price was 3410p per share.
c. 12,088 shares granted in 2018 vested on 30 May 2023. The mid closing
price was 3400p per share. 6,510 shares granted in 2020 vested on 4
August 2023. The mid closing price was 3410p per share.
d. 16,969 shares granted in 2018 vested on 30 May 2023. The mid closing
price was 3400p per share. 7,670 shares granted in 2020 vested on 4
August 2023. The mid closing price was 3410p per share.
Chair and non-executive directors
Fees and other remuneration paid to the Chair and the non-executive
directors during the year ended 31 March 2024 and the previous year were
as follows:
Fees
Taxable
expenses5
Total9
2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
D C Stewart
165
165
-6
-
165
165
S J Bridges1
14
48
3
-
18
48
F A Buckley2
49
1
-7
-
49
1
Hon C W Cayzer3
52
50
-
-
52
50
G B Davison
56
54
-
-
56
54
M A Farlow
58
55
-
-
58
55
C L Fitzalan Howard
49
47
-
-
49
47
L R Fordham
57
53
-
-8
57
53
W P Wyatt4
47
30
3
-
50
30
1. Stuart Bridges retired as a director on 19 July 2023.
2. Farah Buckley was appointed as a director on 28 March 2023.
3. The Hon C W Cayzer received an additional fee of £5,000 per annum in
respect of his services as a trustee of the Caledonia Pension Scheme.
4. Will Wyatt became a non-executive director on 27 July 2022. This table
reflects the fee received in respect of his non-executive role after that
date.
5. Taxable expenses include expense reimbursements relating to travel,
accommodation and subsistence in connection with board and committee
attendance during the year, which are deemed by HMRC to be taxable in
the UK. Amounts are the value of the expense plus the grossed-up tax paid
by the company. Non-taxable expense reimbursements have not been
included in the table.
6. David Stewart incurred taxable expenses during 2024 at a total cost,
including tax, of £476.
7. Farah Buckley incurred taxable expense during 2024 at a total cost,
including tax, of £187.
8. Lynn Fordham incurred a taxable expense during 2023 at a total cost,
including tax, of £313.
9. Due to rounding, amounts stated do not necessarily add up to the total
column.
The Chair and the non-executive directors did not receive any
taxable benefits, short-term incentives, long-term incentives
or pension related benefits.
Total pension entitlements (audited)
Defined contribution
Pension benefits paid to executive directors during the year, either
as contributions to personal pension arrangements or as cash
supplements, were as follows:
Pension
contribution
Cash supplement
Total
2024
£
2023
£
2024
£
2023
£
2024
£
2023
£
M S D Masters
7,383
2,813
55,793
56,494
63,176
59,307
R W Memmott1
-
n/a
32,294
n/a
32,294
n/a
T J Livett2
-
-
22,518
53,700
22,518
53,700
J M B Cayzer-
Colvin
-
-
50,747 48,002
50,747 48,002
1. Rob Memmott was appointed as a director on 1 September 2023.
2. Tim Livett retired from the board on 1 September 2023 and left
employment on 31 October 2023. Pension amounts received for the
period 1 September 2023 to 31 October 2023 are excluded from the table
above and are reported in Payments to past executive directors on page
102.
Defined benefit
On 26 April 2017, The Hon C W Cayzer reached his retirement age
of 60 and now receives an annual pension under the Caledonia
Pension Scheme, a final salary defined benefit scheme.
101
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Scheme interests awarded during the financial year (audited)
The table below sets out the awards made to each executive director during the year under the performance share scheme. No deferred
bonus plan awards were made.
Scheme
Type of award
Basis of award
Date of
grant
Face
value of
award
£’000
Share
price at
grant
Shares
comprised
in award
number1
Receivable if
minimum
performance
achieved2
End of
performance
period3
M S D Masters
Performance share scheme
Nil-cost option
150% of salary
30.05.23
709
3445p
20,573
10%
31.03.28
R W Memmott
Performance share scheme
Nil-cost option
150% of salary
24.11.23
630
3585p
17,573
10%
31.03.28
J M B Cayzer-Colvin
Performance share scheme
Nil-cost option
150% of salary
30.05.23
577
3445p
16,763
10%
31.03.28
1. The number of shares comprised in the awards under the performance share scheme was determined by reference to the company’s share price at the time
that the awards were made.
2. The performance targets for awards under the performance share scheme are set out under the statement of directors’ share scheme interests on page
100.
3. One-third of the awards under the performance share scheme are subject to performance testing at 31 March 2026, followed by a two-year holding period,
with the remaining two-thirds subject to performance testing at 31 March 2028.
External directorships
The table below sets out details of external directorships held by
executive directors where it had been agreed that they could retain
the fees arising therefrom.
Fees
Name
Position
20241
£’000
2023
£’000
T J Livett
Non-executive director,
Premier Marinas Holdings
15.5
37.5
Non-executive director,
Worldwide Healthcare Trust
17
20
1. Fees received in respect of period from 1 April 2023 to 1 September 2023.
Payments to past executive directors (audited)
W P Wyatt
Will Wyatt retired as Caledonia’s Chief Executive and ceased
employment with the Caledonia group on 27 July 2022. He
continues to serve on the board as a non-independent non-
executive director.
Will exercised all of the vested 2018 performance share scheme
award over 16,969 shares on 26 September 2023 and all of the
vested 2020 performance share scheme award over 7,670 shares
on 26 January 2024. The awards were subject to performance
testing as at 31 March 2023 and vested in May and August 2023
respectively. The total pre-tax value was £960,618, including
dividend equivalents of £111,765.
Will’s pro rata entitlements to performance share scheme awards
made in 2019 and 2021 were subject to performance testing on
31 March 2024, of which 12,062 shares and 3,626 shares vested
respectively. As he remains a director, the details are reported in
the single total figure of remuneration table on page 99.
In line with Caledonia’s post-cessation shareholding
requirements, Will continues to hold the minimum
guideline shareholding.
T J Livett
As previously reported, in November 2022, Tim Livett advised the
board of his intention to retire as Chief Financial Officer and leave
the company’s employment once his successor joined the board.
He was employed under a service agreement dated 14 November
2018 which provided for a 12 month notice period. Tim stepped
down from the board on 1 September 2023 and ceased
employment with the group on 31 October 2023. He received
salary and benefits (including pension) of £78,401 in respect of
this two month period during which he completed a handover to
Rob Memmott. He waived any entitlement to payment in lieu of
notice for the period from 1 to 21 November 2023 and was not
granted a performance share scheme award in 2023.
Tim retained an entitlement to a pro rata bonus to reflect his
employment during the 2024 financial year, which, assessed in
the usual way, resulted in a payment of £153,067, representing
64% of his total bonus opportunity, as reflected in the single
figure table on page 99.
Tim exercised all of the vested 2020 performance share scheme
award over 7,280 shares on 18 September 2023. The award was
subject to performance testing as at 31 March 2023 and vested in
August 2023, at a total pre-tax value of £283,199, including
£26,943 in respect of dividend equivalents.
Share awards made under the performance share scheme
outstanding on 31 October 2023 continue and are capable of
vesting on the scheduled vesting dates, subject to their applicable
performance conditions, but have been reduced to reflect
the proportion of such performance period that Tim was in
employment. His vested and unvested performance share
scheme awards pre- and post-reduction, are shown in the
table below.
Date of grant
Number of shares
pre-reduction
Number of shares
post-reduction
30.05.19
12,887
11,813
04.08.20
14,561
10,435
04.06.21
18,868
11,915
30.05.22
16,444
6,365
Total
62,760
40,528
Directors’ remuneration report (continued)
Annual report on directors’ remuneration
102
Caledonia Investments plc Annual Report 2024
The two-year holding period will continue to apply to the portion
of performance share scheme awards granted in 2020, 2021 and
2022 that are subject to three-year performance.
In accordance with the remuneration policy, Tim’s awards under
the deferred bonus plan, being compulsorily granted in 2021 and
2022 over 4,956 shares and 5,217 shares respectively, vested in
full on his retirement date. Tim exercised these options on 30
November 2023, at a total pre-tax value of £395,026, including
£32,613 in respect of dividend equivalents.
Any amounts received by Tim in respect of future exercises of
performance share scheme awards, will be disclosed in the
Annual report on directors’ remuneration for the year in which
the receipts occur.
In line with Caledonia’s post-cessation shareholding
requirements, Tim will hold any shares acquired following the
exercise of share awards (net of any sales to meet the tax
liabilities due) until the minimum shareholding guideline of 150%
of his salary on leaving has been met for the two years following
his retirement date. At date of cessation, Tim held shares to the
value of £0.4m, representing 67% attainment of the guideline.
As at 31 March 2024, the guideline had been met in full.
S A King
Stephen King, formerly Caledonia’s Finance Director, ceased
employment with the Caledonia group and resigned from the
board on 30 November 2018. He exercised all of the vested
2018 performance share scheme award over 1,908 shares on
25 September 2023. The award was subject to performance
testing as at 31 March 2023 and vested in May 2023, at a total
pre-tax value of £75,324, including £9,212 in respect of
dividend equivalents.
Payments for loss of office (audited)
Tim Livett stepped down from the board on 1 September
2023 and ceased employment with the Caledonia group on
31 October 2023.
Treatment of his payment in lieu of notice, bonus and share
awards is described under ‘Payments to past executive
directors’ above.
There were no other payments made for loss of office during
the year.
Statement of directors’ shareholdings and scheme
interests (audited)
Executive directors’ minimum shareholding guidelines
Executive directors’ minimum shareholding guidelines are set
out on page 98. Mat Masters and Jamie Cayzer-Colvin have
attained the minimum guideline shareholding as at 31 March
2024. Rob Memmott, who joined the company on 1 September
2023, has begun to meet the guidelines. The values of the
relevant shareholdings of each executive director as at 31 March
2024, calculated by reference to Caledonia’s closing share price
on that date of 3280p, and the percentage level by which the
value of the minimum guideline shareholding has been achieved
were as follows:
Value of
shareholding1
£m
Attainment
of guideline
%
M S D Masters
2.3
240
R W Memmott
0.1
15
J M B Cayzer-Colvin
8.6
1,496
1. Shareholdings include those of connected persons; the value, net of any
exercise costs, income tax and National Insurance contributions, of
unexercised awards granted under the performance share scheme for
which the performance targets have been met; and bonuses deferred
compulsorily under the company’s deferred bonus plan net of income tax
and National Insurance contributions.
Directors’ shareholdings
The interests of the directors who served during the year and their
connected persons in the ordinary share capital of the company as
at 31 March 2024 (or date of cessation in the case of Stuart Bridges
and Tim Livett) were as follows:
Beneficial
Non-beneficial
2024
number
2023
number
2024
number
2023
number
D C Stewart
6,944
4,072
-
-
M S D Masters
58,376
50,298
-
-
R W Memmott1
2,852
n/a
-
n/a
T J Livett2
3,323
3,323
-
-
J M B Cayzer-Colvin3
249,435
250,024
198,554
198,554
S J Bridges4
5,309
5,309
-
-
F A Buckley
250
-
-
-
Hon C W Cayzer3
41,092
41,092
15,500
15,500
G B Davison
8,100
8,100
-
-
M A Farlow
2,000
2,000
-
-
C L Fitzalan Howard
2,000
2,000
-
-
L R Fordham
1,330
1,330
-
-
W P Wyatt3
1,224,644 1,203,005
96,705
93,705
1. Rob Memmott was appointed as a director on 1 September 2023.
2. Tim Livett retired as a director on 1 September 2023.
3. Will Wyatt’s beneficial interests included 1,054,794 shares (2023:
1,045,524 shares) held by The Dunchurch Lodge Stud Company and 9,869
shares (2023: 1,900) held by Knossington Holdings Company, both private
family companies controlled by Mr Wyatt and certain of his connected
persons, and 1,000 shares in which The Hon C W Cayzer had a non-
beneficial interest (2023: 1,000 shares). His non-beneficial interests
included 14,500 shares (2023: 14,500 shares) in which The Hon C W
Cayzer also held a non-beneficial interest. The Hon C W Cayzer’s beneficial
interests included 5,200 shares (2023: 5,200 shares) in which Mr Wyatt
and Mr Cayzer-Colvin had non-beneficial interests.
4. Stuart Bridges retired as a director on 19 July 2023.
There have been no changes in the directors’ interests shown
above notified up to the date of this report.
103
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Directors’ remuneration report (continued)
Annual report on directors’ remuneration
Directors’ share scheme interests
The interests of directors as at 31 March 2024, or the date of cessation of directorship in the case of Tim Livett, in the share-based incentive
schemes operated by the company are set out in the following table. Tim Livett’s share scheme interests are shown before reduction as
described under ‘Payments to past executive directors’ on page 102.
Share price
at date
of award
Unvested
with
performance
conditions1
Unvested
without
performance
conditions2
Vested
but un-
exercised3
Total
M S D Masters
Performance share scheme awards
Granted 30.05.19 (nil-cost)
2910p
–
7,792
–
7,792
Granted 04.08.20 (nil-cost)
2640p
10,795
–
–
10,795
Granted 04.06.21 (nil-cost)
3102.5p
9,331
4,218
–
13,549
Granted 30.05.22 (nil-cost)
3740p
18,048
–
–
18,048
Granted 30.05.23 (nil-cost)
3445p
20,573
–
–
20,573
Performance share scheme total
58,747
12,010
–
70,757
Deferred bonus plan – compulsory awards4
Granted 04.06.21 (nil-cost)
3102.5p
–
–
4,593
4,593
Granted 30.05.22 (nil-cost)
3740p
–
3,870
–
3,870
Deferred bonus plan total
–
3,870
4,593
8,463
Total share scheme interests
58,747
15,880
4,593
79,220
During the year, Mat Masters exercised performance share scheme and deferred bonus plan awards over a total of 15,286 shares at a pre-tax gain of £531,640 plus
an additional sum of £65,700 in respect of dividend equivalents.
W P Wyatt
Performance share scheme awards
Granted 30.05.19 (nil-cost)
2910p
–
12,062
–
12,062
Granted 04.08.20 (nil-cost)
2640p
9,205
–
–
9,205
Granted 04.06.21 (nil-cost)
3102.5p
4,351
3,626
–
7,977
Performance share scheme total
13,556
15,688
–
29,244
Total share scheme interests
13,556
15,688
–
29,244
During the year, Will Wyatt exercised performance share scheme and deferred bonus plan awards over a total of 24,639 shares at a pre-tax gain of £848,852.71
plus an additional sum of £111,765 in respect of dividend equivalents.
R W Memmott
Performance share scheme award
Granted 24.11.23 (nil-cost)
3585p
17,573
–
–
17,753
Performance share scheme total
17,573
–
–
17,753
Total share scheme interests
17,753
–
–
17,753
T J Livett
Performance share scheme awards
Granted 30.05.19 (nil-cost)
2910p
12,887
–
–
12,887
Granted 04.08.20 (nil-cost)
2640p
14,561
–
7,280
21,841
Granted 04.06.21 (nil-cost)
3102.5p
18,868
–
–
18,868
Granted 30.05.22 (nil-cost)
3740p
16,444
–
–
16,444
Performance share scheme total
62,760
–
7,280
70,040
Deferred bonus plan – compulsory awards4
Granted 04.06.21 (nil-cost)
3102.5p
–
–
4,956
4,956
Granted 30.05.22 (nil-cost)
3740p
–
–
5,217
5,217
Deferred bonus plan total
–
–
10,173
10,173
Total share scheme interests
62,760
–
17,453
80,213
Tim Livett did not exercise any performance share scheme or deferred bonus plan awards during the part of the year up to his cessation of his directorship. Details
of exercises following cessation of his directorship are set out on pages 102 and 103.
J M B Cayzer-Colvin
Performance share scheme awards
Granted 30.05.19 (nil-cost)
2910p
–
11,520
–
11,520
Granted 04.08.20 (nil-cost)
2640p
13,018
–
6,510
19,528
Granted 04.06.21 (nil-cost)
3102.5p
11,248
5,625
–
16,873
Granted 30.05.22 (nil-cost)
3740p
14,699
–
–
14,699
Granted 30.05.23 (nil-cost)
3445p
16,763
–
–
16,763
Performance share scheme total
55,728
17,145
6,510
79,383
Deferred bonus plan – compulsory awards4
Granted 04.06.21 (nil-cost)
3102.5p
–
–
4,431
4,431
Granted 30.05.22 (nil-cost)
3740p
–
4,666
–
4,666
Deferred bonus plan total
–
4,666
4,431
9,097
Total share scheme interests
55,728
21,811
10,941
88,480
During the year, Jamie Cayzer-Colvin exercised performance share scheme awards over a total of 12,088 shares at a pre-tax gain of £433,003 plus an additional
sum of £58,361 in respect of dividend equivalents.
104
Caledonia Investments plc Annual Report 2024
1. Performance conditions
Performance share scheme
Of the awards shown as unvested with performance conditions, for nil-cost
options granted to Will Wyatt and Tim Livett on 4 August 2020 and 4 June
2021, to Mat Masters and Tim Livett on 30 May 2022, to Mat Masters on 30
May 2023 and to Rob Memmott on 24 November 2023 shares will vest on a
graduated basis, with vesting commencing at 10% if the company achieves
an annualised NAVTR of 3%, rising incrementally to 100% vesting on
achievement of an annualised NAVTR of 10%.
For Jamie Cayzer-Colvin, who is Head of the Funds pool, 60% of his
performance share scheme awards granted on these dates will be
measured against the annualised total returns achieved by the Funds pool.
Awards will similarly vest on a graduated basis, with vesting commencing at
10% on achievement of an annualised Funds pool total return of 6%, rising
incrementally to 100% vesting on achievement of an annualised total return
of 13.5%. The remaining 40% of Jamie Cayzer-Colvin’s performance share
scheme awards for these grants will be measured against Caledonia’s
NAVTR as above.
Mat Masters was previously Head of the Capital portfolio before taking on
broader responsibility for the Income portfolio from 2019 until his
appointment as Chief Executive Officer. For nil-cost options granted on 4
August 2020 and 4 June 2021, 53.3% will be measured by reference to the
annualised total return achieved by the Capital portfolio, with awards
vesting on a graduated basis, commencing at 10% on achievement of an
annualised total return of 4%, rising incrementally to 100% vesting on
achievement of an annualised total return of 11%. 26.7% will be measured
by reference to the annualised total return achieved by the Income
portfolio over the performance measurement period, with graduated
vesting commencing at 10% on achievement of an annualised total return
of 3.5%, rising incrementally to 100% vesting on achievement of an
annualised total return of 7%. The remaining 20% of the performance share
scheme awards for these grants will be measured against Caledonia’s
NAVTR as above.
The relevant performance conditions will be tested over three years for
one-third of the shares comprised in an award and over five years for the
remaining two-thirds of the shares comprised in an award.
The nil-cost options granted on 30 May 2019, shown as unvested without
performance conditions, were performance-tested against their relevant
target as at 31 March 2024 and achieved a vesting level of 100% for those
measured against Caledonia’s NAVTR. The proportion of Mat Masters’ and
Jamie Cayzer-Colvin’s nil-cost options awarded at that date measured
against the Funds pool’s and Capital portfolio’s return respectively achieved
a 100% vesting level. The awards will vest on 30 May 2024.
The one-third of the shares comprised in the nil-cost options granted on 4
June 2021, also shown as unvested without performance conditions,
subject to three-year performance testing was tested as at 31 March 2024
and achieved a vesting level of 100% for those measured against
Caledonia’s NAVTR. The proportion of Mat Masters’ nil-cost options
awarded at that date measured against the Capital and Income portfolios
achieved a vesting level of 94% and 76% respectively. Jamie Cayzer-Colvin’s
nil-cost options awarded at that date measured against the Funds pool’s
return achieved a 100% vesting level. The awards will vest on 4 June 2024.
Other exercise conditions
2. Performance share scheme
Nil-cost options that vest following the three- or five-year performance
testing become immediately exercisable on the third or fifth anniversary of
grant, as applicable.
3. Vested but unexercised
Shares vested but unexercised represent those awards that are immediately
exercisable without any conditions.
4. Deferred bonus plan
Compulsory awards under the deferred bonus plan normally vest if the
director remains an employee of the group for a three-year period
commencing on the first day of the financial year in which the award is
made.
Performance graph of total shareholder return and table
of Chief Executive Officer’s total remuneration
The graph below shows the company’s total shareholder return
(‘TSR’) against that of the FTSE All-Share Total Return index for
the 10 financial years ending on 31 March 2024. TSR has been
calculated assuming that all dividends are reinvested on their
ex-dividend dates. The FTSE All-Share Total Return index has been
chosen as it is the benchmark by which the company measures
its delivery of value over the longer term.
TSR growth over 10 years
2014
80
120
160
200
240
280
320
360
2016
2018
2020
2022
2024
Caledonia TSR
FTSE All-Share TR
The table below shows the total remuneration received by the
Chief Executive Officer in each of the 10 years to 31 March 2024,
prepared on the same basis as in the single total figure in the table
on page 99, and the percentage of the maximum potential short-
and long-term incentives received in those years.
Total
remuneration
£’000
Incentives vested
as a percentage
of maximum
Years ended
31 March
Chief Executive
Officer
Short-term
%
Long-
term %
2015
W P Wyatt
2,285
100.0
100.0
2016
W P Wyatt
1,648
45.0
100.0
2017
W P Wyatt
1,799
100.0
85.0
2018
W P Wyatt
1,795
40.0
84.7
2019
W P Wyatt
1,864
90.7
94.7
2020
W P Wyatt
805
–
20.9
2021
W P Wyatt
1,896
85.0
87.9
2022
W P Wyatt
2,326
100.0
100.0
2023
W P Wyatt1
1,1542
–
100.0
2023
M S D Masters1
1,2502
45.0
100.0
2024
M S D Masters
1,351
71.5
96.4
1. Mat Masters succeeded Will Wyatt as Chief Executive Officer on 27 July
2022.
2. Restated from last year’s single total figure table to reflect the company’s
share price on the vesting date of the 2018 and 2020 performance share
scheme awards.
105
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Directors’ remuneration report (continued)
Annual report on directors’ remuneration
Percentage change in remuneration of the directors
The following table shows the percentage change in the basic
salary/fees, value of taxable benefits and short-term incentives
paid to directors in the year to 31 March 2024 against the prior
financial year, compared with the average percentage changes in
those components of pay of Caledonia’s other employees,
excluding directors, on a per capita basis.
Standard salary increases awarded from 1 April 2023 were 6% for
senior employees and, in recognition that elevated levels of
inflation had a disproportionate impact, 8% for those on lower
incomes. The per capita percentage increase in basic salary for
employees shown in the table is higher than this due to the effect
of non-standard increases awarded for promotions, increased
responsibilities or other such adjustments. The average per capita
percentage change for employee taxable benefits increased over
the year principally due to changes in benefit cover for certain
employees under the company’s private medical insurance plan
and small variances in employee benefits. Mat Masters, Tim Livett
and Jamie Cayzer-Colvin were awarded bonuses of 71.5%, 64% and
60.75% of salary respectively, compared with 45%, 45% and 48% in
the previous financial year. Certain members of Caledonia’s staff
were awarded bonuses of varying levels in each year depending on
company performance, investment pool performance (where
relevant) and individual performance. Increases in non-executive
fees include any changes to responsibilities made during the year.
2024
2023
2022
2021
Basic
salary/
fees
%
Taxable
benefits/
expenses
%
Short-
term
incentives
%
Basic
salary/
fees
%
Taxable
benefits/
expenses
%
Short-
term
incentives
%
Basic
salary/
fees
%
Taxable
benefits/
expenses
%
Short-
term
incentives
%
Basic
salary/
fees
%
Taxable
benefits/
expenses
%
Short-
term
incentives
%
Executive directors
M S D Masters1
5.0
45.6
66.8
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
W P Wyatt2
n/a
n/a
n/a
(67.5)
(70.7)
(100)
n/a
(4.1)
17.7
n/a
12.9
100
T J Livett3
(58.3)
5.0
(17.4)
5.1
6.3
(52.7)
1.5
22.8
12.8
2.5
23.6
100
R W Memmott4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
J M B Cayzer-Colvin
5.1
5.1
33.0
5.0
15.6
(49.6)
1.5
8.9
12.8
2.5
6.2
100
Chair and non-executive directors
D C Stewart
–
100
–
10.0
–
n/a
–
–
n/a
–
–
n/a
S J Bridges5
(70.5)
100
–
6.1
–
n/a
–
–
n/a
–
–
n/a
F A Buckley6
4.8
100
–
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Hon C W Cayzer
4.5
–
–
11.4
–
n/a
–
–
n/a
6.6
–
n/a
G B Davison
4.2
–
–
13.1
–
n/a
–
(100)
n/a
3.5
100
n/a
M A Farlow
6.0
–
–
n/a
–
n/a
–
–
n/a
n/a
n/a
n/a
L R Fordham
8.9
(100)
–
10.7
100
n/a
n/a
–
n/a
n/a
n/a
n/a
C L Fitzalan Howard
4.8
–
–
13.3
–
n/a
–
–
n/a
43.8
n/a
n/a
W P Wyatt7
5.0
100
–
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Staff per capita
(excluding directors)
10.1
4.7
98.8
10.2
17.5
(43.2)
4.0
7.5
22.9
7.4
5.2
157.5
1. Mat Masters was appointed to the board on 1 April 2022, succeeding Will Wyatt as Chief Executive Officer on 27 July 2022.
2. Will Wyatt served as Chief Executive until 27 July 2022 and has served as a non-executive director since 27 July 2022.
3. Tim Livett retired as a director on 1 September 2023.
4. Rob Memmott was appointed during the year and therefore has no prior year comparison.
5. Stuart Bridges retired as a director on 19 July 2023.
6. Farah Buckley served for the final four days of the year ended 31 March 2023. To enable a meaningful year-on-year comparison to be made, the percentage change
has been calculated using a hypothetical annualised fee for the full financial year.
7. Will Wyatt served as a non-executive director from 27 July 2022. To enable a meaningful year-on-year comparison to be made, the percentage change has been
calculated using a hypothetical annualised fee for the full financial year.
Pay ratio information in relation to the total remuneration
of the Chief Executive Officer
With fewer than 250 UK employees, Caledonia is not required to
disclose Chief Executive Officer to employee pay ratios under The
Companies (Miscellaneous Reporting) Regulations 2018. However,
as recommended by The Investment Association, the Committee
has decided voluntarily to publish the information below. The ratios
compare the total remuneration of the Chief Executive Officer, as
set out on page 107, against the lower quartile, median and upper
quartile total remuneration of the company’s employees as at 31
March 2024. This disclosure will build up over time to cover a rolling
10 year period.
A significant proportion of the Chief Executive Officer’s total
earnings potential is comprised of share-based incentives, which are
linked to Caledonia’s performance and share price movement over
the longer term. This will inevitably lead to an element of volatility in
the year-on-year total remuneration of the Chief Executive Officer
and consequently variations in the ratios, as some employees do not
participate in the long-term incentive scheme or participate at lower
levels. As the majority of awards under the scheme vest over five
years, participants will only build up equivalent annual vesting to the
Chief Executive Officer over this period of time, which may further
distort the comparison.
In order to provide further context, the table includes ratios based
on basic salary only to demonstrate over time that the underlying
pay structures do not show a divergent trend between the Chief
Executive Officer’s pay and that of employees generally and also
that employees are paid fairly.
106
Caledonia Investments plc Annual Report 2024
Pay ratios
Remuneration values
Year
Methodology
P25
(lower
quartile)
P50
(median)
P75
(upper
quartile) Basis
Chief
Executive
Officer
P25
(lower
quartile)
P50
(median)
P75
(upper
quartile)
2019
Option A
32:1
13:1
5:1 Total remuneration (£’000)
1,864
58
140
403
Salary only
13:1
6:1
4:1 Salary only (£’000)
540
42
88
150
2020
Option A
14:1
9:1
4:1 Total remuneration (£’000)
814
57
94
217
Salary only
12:1
7:1
4:1 Salary only (£’000)
540
46
73
144
2021
Option A
30:1
15:1
6:1 Total remuneration (£’000)
1,828
61
122
329
Salary only
12:1
7:1
4:1 Salary only (£’000)
540
46
78
138
2022
Option A
42:1
19:1
6:1 Total remuneration (£’000)
2,294
54
122
392
Salary only
12:1
7:1
4:1 Salary only (£’000)
540
45
76
138
2023
Option A
20:1
14:1
6:1 Total remuneration (£’000)
1,268
63
91
227
Salary only
9:1
6:1
3:1 Salary only (£’000)
450
50
70
135
2024
Option A
20:1
13:1
5:1 Total remuneration (£’000)
1,351
68
106
268
Salary only
9:1
6:1
3:1 Salary only (£’000)
473
51
77
143
Relative importance of spend on pay
The graph below shows the personnel expenses for the year of
group companies consolidated under IFRS 10, compared with
amounts distributed to Caledonia’s shareholders by way of
dividends and share purchases.
a. Dividends paid in 2023 include a special dividend of £1.75 per ordinary
share paid on 4 August 2022.
Statement of implementation of remuneration policy
in the 2025 financial year
The company expects to operate the remuneration policy as
described in the approved remuneration policy set out on pages
93 to 98 without any changes in the financial year ending
31 March 2025.
Basic salaries of executive directors
For the 2025 financial year, the Committee has awarded an
increase in basic salary of 4% to Mat Masters, Rob Memmott and
Jamie Cayzer-Colvin, broadly in line with inflation, which was the
same standard increase given to the company’s employees.
The executive directors’ salaries for the 2024 financial year
are as follows:
Salary for year to 31 March
2025
£
2024
£
M S D Masters
491,500
472,500
R W Memmott
437,000
420,000
J M B Cayzer-Colvin
400,500
385,000
Chair’s and non-executive directors’ fees
The Chair’s fee will be unchanged for the year ahead. The non-
executive director basic fee has been increased by 3.7%.
No changes have been made to the fees paid for chairing and
membership of the Audit and Risk and Remuneration Committees
or to the fee paid to the Senior Independent Director.
The fees are as follows:
Fees for year to 31 March
2025
£
2024
£
Chair
165,000
165,000
Non-executive director basic fee
49,000
47,250
Chair of the Audit Committee
10,000
10,000
Member of the Audit Committee
2,500
2,500
Chair of the Remuneration Committee
8,000
8,000
Member of the Remuneration Committee
2,000
2,000
Senior Independent Director/Chair of the
Governance Committee
6,000
6,000
No additional fees are paid for membership of the Governance
and Nomination Committees.
140
120
100
80
60
40
20
0
£m
Personnel expenses
Dividends/share purchases
2024
2023a
£38.2m
£92.8m
£20.2m
£134.5m
£21.2m
£42.3m
1. The employees at the lower, median and upper quartiles were determined as at 31 March in the relevant year.
2. ‘Option A’ methodology, as set out in The Companies (Miscellaneous Reporting) Regulations 2018, which requires determination of the total full-time
equivalent earnings of all UK employees for the relevant financial year, has been used as this is considered the most statistically accurate under the reporting
regulations.
3. To determine full-time equivalent earnings, joiners during the year are assumed to have worked for the full year with salary, benefits and bonus pro rata
accordingly. Reduced hours employees similarly have been assumed to have worked on a full-time basis. No adjustments have been made to the value of
share-based incentives that vested during the year for relevant employees, other than that awards held by reduced hours employees have been recalculated
to reflect the number of shares that would have been granted based on the full-time equivalent salary of the participant at the time of grant.
107
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Directors’ remuneration report (continued)
Annual report on directors’ remuneration
Annual bonus scheme and long-term incentive schemes
RPI was previously used as a reference point for inflation in the
overall bonus calculation. Whilst RPI is still published by the Office
for National Statistics, it is recognised that the CPIH is now the
leading and preferred indicator of inflation in the UK. Since 2023,
Caledonia has use CPIH in place of RPI as the measure for UK
inflation. However, given the differential between the two inflation
rates last year, the Committee has commenced a phased transition
from RPI to CPIH as the inflation benchmark for bonus purposes
over the course of the three-year remuneration policy period. The
inflation benchmark was weighted 67:33 on RPI:CPIH for the 2024
financial year, moving to 50:50 for 2025, 33:67 for 2026 and 100%
on CPIH for 2027.
No other changes to the performance metrics or award
opportunities for the company’s annual bonus or long-term
incentive schemes are anticipated for the 2025 financial year.
Approach
The Committee will keep the implementation of the remuneration
policy under review in order to take account of any changes in the
company’s business environment and remuneration practice
generally, but with the overall aim of ensuring that Caledonia’s
remuneration arrangements continue to support the company’s
strategy and deliver long-term shareholder value by attracting and
retaining talent and rewarding executives appropriately in the light
of the company’s performance.
Consideration by the directors of matters relating to
directors’ remuneration
The current members of the Committee are Anne Farlow (Chair),
Farah Buckley, Claire Fitzalan Howard and David Stewart.
During the year, the Committee received advice from Freshfields
Bruckhaus Deringer LLP, the company’s principal legal advisers,
which covered matters including the preparation of the directors’
remuneration report, share plans and the arrangements for Rob
Memmott’s appointment. Ellason LLP, appointed by the Committee
following a formal tender process completed in 2022, provides
remuneration advice. The Committee is satisfied that advice
received was objective and independent. Ellason has no connection
with individual directors and is a member of the Remuneration
Consultants Group (the professional body for remuneration
consultants) and adheres to its code of conduct. The fees for Ellason
for work relating to the Committee for 2024 were £22,070 (2023:
£72,690). Fees incurred are charged on the basis of each firm’s
standard terms of business. Ellason did not provide any other
services to the company. The Committee assesses the performance
of its advisers, the associated level of fees and reviews the quality of
advice provided to ensure that it is objective and independent of any
support provided to management.
The Committee also consulted with the Chief Executive Officer
in relation to the remuneration of the executive directors and
other senior executives and internal support was provided to the
Committee by the Company Secretary. No executive participates
in discussions in respect of their own remuneration. Given the
composition of the Committee and this requirement, we are
comfortable that no conflicts arose in respect of decision-making
by the Committee.
Statement of voting at general meetings
At the annual general meeting of the company held on 19 July 2023,
the votes lodged for the resolutions relating to directors’
remuneration and the remuneration policy were as follows:
Number
%
To approve the 2023 Directors’ remuneration
report (other than the directors’
remuneration policy)
Votes in favour
35,110,844
98.9
Votes against
403,439
1.1
Total votes cast
35,609,903
Votes withheld
95,620
Number
%
To approve the remuneration policy
Votes in favour
35,087,565
98.8
Votes against
412,670
1.2
Total votes cast
35,609,903
Votes withheld
109,668
This report was approved by the board on 20 May 2024 and signed
on its behalf by:
Anne Farlow
Chair of the Remuneration Committee
20 May 2024
108
Caledonia Investments plc Annual Report 2024
Directors’ Report
The Directors’ report for the year ended 31 March 2024 has
been prepared in accordance with the disclosure requirements
of the following:
• Companies Act 2006
• The Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 (as amended)
• Financial Conduct Authority’s Listing Rules (‘LRs’) and Disclosure
Guidance and Transparency Rules (‘DTRs’).
The Directors’ report, together with the Strategic report on pages
10 to 62, represents the management report for the purpose of
compliance with DTR 4.1.5R(2).
Information included elsewhere
The following information required to be included in the
Directors’ report has been included elsewhere and is incorporated
by reference:
Disclosure
Section of annual report
Page(s)
Information on exposure to
liquidity risk1
Strategic report
60
Likely future developments
in the business1
Strategic report
60-61
Engagement with suppliers,
customers and others1
Corporate governance
report, Section 172
statement
76-78
Greenhouse gas emissions,
energy consumption and
energy efficiency action1
Strategic report
52-54
Disclosure of information
to auditors
Responsibility statements
113
Financial risk management
objectives and policies
Note 23
141-146
1. In accordance with section 414C (11) of the Companies Act 2006.
Dividends
Dividend policy
The company’s policy is to pay an increasing annual dividend per
share in real terms, which it has now done for 57 consecutive years.
In addition, the company may supplement the annual dividend with
special dividends when the board considers it appropriate, for
example if the company has surplus cash reserves in excess of
its strategic investment plans.
The board historically aimed for the annual dividend to be fully
covered by net revenue for the relevant financial year in a period of
normal trading but modified this approach in 2023 to reduce the
strategic level of net revenue cover from fully covered to around
0.5x and also to factor in net cash inflow from the maturing funds
portfolio. The expectation is that this will provide an aggregate cash
flow cover for the dividend of at least 1x over the medium term. The
company has available distributable reserves of £2,592m, broadly
equivalent to 68 years’ payment of the current annual dividend to
maintain an increasing annual dividend per share in real terms.
2024 dividend distributions
An interim dividend of 18.93p per share (2023: 18.2p) was paid on
4 January 2024 and the board has recommended a final dividend
of 51.47p per share (2023: 49.2p), giving total annual dividends for
the year of 70.4p per share (2023: 67.4p).
Shares
Share capital structure
The company has two classes of share capital: ordinary shares of
5p each and deferred ordinary shares of 5p each.
The holders of the ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per share
at meetings of the company. All voting rights are, however,
suspended in respect of any of the company’s shares that are
held in treasury or by group companies.
The deferred ordinary shares carry no voting rights and are not
redeemable. They carry the right to a fixed cumulative preference
dividend of 1% per annum of the nominal value of a deferred
ordinary share, being 0.05p per share, or £4,000 in aggregate, for
all such shares currently in issue. The company is required to pay
the dividend to the extent that it has distributable profits. On a
winding-up or other return of capital, the deferred ordinary shares
carry the right to the payment of the amount paid up on the shares
only after holders of the ordinary shares have received the sum of
£100,000 in respect of each ordinary share. All of the deferred
ordinary shares are held by Sterling Industries Ltd, a wholly-owned
subsidiary of Caledonia.
At 31 March 2023, 54,663,662 ordinary shares and 8,000,000
deferred ordinary shares were in issue. The ordinary shares
therefore represented approximately 87% and the deferred
ordinary shares approximately 13% of the total issued share capital
by nominal value. Of the ordinary shares in issue at 31 March 2024,
3,000 shares were held by a group company. As stated above, all
voting rights are suspended on these shares.
During the year, the company purchased 51,903 of its ordinary
shares at a total cost of £1.7m. These shares had a nominal value of
£2,595, represented 0.09% of the issued ordinary share capital as at
31 March 2023 and were immediately cancelled. These shares were
purchased to take advantage of the wide discount of the company’s
share price to its net asset value. Since the year end, a further
238,316 ordinary shares have been purchased and cancelled at a
total cost of £8.2m. The company’s issued share capital after these
transactions, as at 20 May 2024, being the last practicable date prior
to signature of these accounts, was 54,373,443 ordinary shares and
8,000,000 deferred ordinary shares.
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Other information
Introduction
Restrictions on the transfer of shares
There are no specific restrictions on the transfer of the company’s
shares, although the articles of association contain provisions
whereby the board may refuse to register a transfer of a certificated
share which is not fully paid, provided that such refusal does not
prevent dealings in the share from taking place on an open and
proper basis. The board may also refuse to register the transfer of a
certificated share unless it is (a) lodged, duly stamped (if stampable),
at the registered office or at such other place as the board may
appoint, accompanied by the certificate for the shares to which it
relates and such other evidence as the board may reasonably
require to show the right of the transferor to make the transfer;
(b) in respect of only one class of shares; and (c) in favour of not
more than four transferees.
The directors may refuse to register a transfer of shares if a
shareholder has not supplied information to the company in default
of a request duly served under section 793 of the Companies Act
2006 and such shares represent at least 0.25% of the class of
shares concerned.
Substantial interests
As at 31 March 2024 and at the date of this report, the company
had received formal notifications of the following holdings in its
ordinary shares in accordance with the requirements of the DTRs:
Number of
voting rights
Percentage
of voting
rights
The Cayzer Trust Company Ltd
19,292,364
35.03%1
1. Percentage holding based on total voting rights at 6 August 2021.
Employee Share Trust
The Caledonia Investments plc Employee Share Trust acquires and
holds ordinary shares in the company for subsequent transfer to
employees exercising options under the company’s performance
share scheme or deferred bonus plan. The voting rights of shares
held by the trust are exercisable by the independent trustee
however, in practice, these are not voted. The trust is financed
by an interest free loan facility from Caledonia and the trustee has
waived all dividends payable in respect of the ordinary shares held
by the trust.
At 31 March 2024, the trust held 223,666 ordinary shares,
representing 0.41% of the total issued voting share capital.
Restrictions on voting rights
The directors may direct that a shareholder shall not be entitled to
attend and vote either personally or by proxy or exercise any other
right conferred by membership in relation to general meetings of
the company in respect of some or all of the shares held by them if
they or any person with an interest in such shares has been duly
served with a notice under section 793 of the Companies Act 2006
and is in default for the prescribed period in supplying to the
company the information required or, in purported compliance with
such a notice, has made a statement which is false or inadequate in
a material particular.
Agreements which may restrict the transfer of shares or exercise
of voting rights
The company is not aware of any arrangements which may restrict
the transfer of any of its shares or the exercise of any voting rights.
Authority to allot shares
At the annual general meeting of the company held on 19 July 2023,
shareholders granted to the directors authority to allot ordinary
shares up to a nominal amount of £911,000, representing
approximately one-third of the ordinary share capital then in issue,
with authority to allot additional ordinary shares up to a nominal
value of £911,000, representing approximately a further one-third
of the ordinary share capital then in issue, by way of pre-emptive
rights issues only, in accordance with guidance issued at that time by
the Investment Association. The directors were further authorised
to issue ordinary shares up to a nominal amount of £136,659 other
than pro rata to existing ordinary shareholders. These authorities
last until 27 October 2023 or, if earlier, the conclusion of the next
annual general meeting.
Authority to purchase shares
At the annual general meeting held on 19 July 2023, shareholders
also granted authority for the company to make market purchases
of up to 5,466,300 of its own ordinary shares, being approximately
10% of the ordinary share capital then in issue, at a price not more
than the higher of (a) 5% above the average of the middle market
quotations for ordinary shares during the five business days
preceding any such purchase; and (b) the higher of (i) the price of
the last independent trade in ordinary shares; and (ii) the highest
current independent bid relating thereto on the trading venue
where the purchase is carried out, nor less than 5p, being the
nominal value of an ordinary share. This authority lasts until 19
October 2024 or, if earlier, the conclusion of the next annual general
meeting. At the same time, shareholders who were not members of
the Cayzer family concert party (‘Cayzer Concert Party’) gave their
approval for a waiver by The Panel on Takeovers and Mergers of the
obligation that could arise on the Cayzer Concert Party under Rule 9
of the City Code on Takeovers and Mergers to make a general offer
for Caledonia on the implementation by the company of the above
authority to purchase its own shares. The approval was subject to
the maximum percentage of voting rights in which the Cayzer
Concert Party is interested not exceeding 49.9% as a result of
purchases by the company. This waiver expires on 19 October 2024
or, if earlier, the conclusion of the next annual general meeting.
Due to the level of the shareholding of the Cayzer Concert Party and
the maximum percentage of voting rights permitted to be held by it
under the Rule 9 waiver, the board has only limited scope to utilise
the authority to purchase the company’s shares. It will however
consider using the authority when it considers it in the company’s
and shareholders’ best interests to do so and will result in an
increase in net asset value per ordinary share. In considering
whether to exercise the authority, the board will take into account
both the longer-term investment opportunities available to the
company and any discount at which the ordinary shares are trading
in the market relative to the net asset value per ordinary share.
Directors’ Report (continued)
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Caledonia Investments plc Annual Report 2024
Change of control rights
There are no special change of control rights in relation to the
company’s shares.
Awards granted under the company’s performance share scheme
and its deferred bonus plan may become exercisable or vest as a
result of a change of control, although the number of shares
comprised in those awards may be reduced. The service contracts
of certain directors and other senior executives also contain
provisions whereby a liquidated sum is payable by the company
in the event of termination within one year following a change
of control.
Further details of these change of control rights applicable to
directors are set out in the Directors’ remuneration report.
The company is party to two revolving credit agreements that give
each lender the right to require early repayment of outstanding
loans and cancellation of its available commitments upon a change
of control of the company occurring. At the date of this report,
change of control provisions were included in the revolving facility
agreements dated 6 July 2017 between the company and each of
ING Bank N.V., London branch, and The Royal Bank of Scotland
International Limited, London branch, as amended and restated
from time to time. The company is not aware of any other
agreements with change of control provisions that are significant in
terms of their potential impact to the business.
Directors
The directors of the company are shown on pages 66 and 67.
All of the directors served throughout the year, other than Rob
Memmott, who was appointed on 1 September 2023. Stuart
Bridges and Tim Livett also served as directors for part of the year
until 19 July 2023 and 1 September 2023 respectively.
Directors’ indemnity
Each of the directors has the benefit, under the company’s articles
of association, of an indemnity, to the extent permitted by the
Companies Act 2006, against any liability incurred by them for
negligence, default, breach of duty or breach of trust in relation
to the affairs of the company.
Appointment and removal of directors
The appointment and removal of directors is governed by the
company’s articles of association and prevailing company law.
The articles of association provide that at every annual general
meeting one-third of the directors, or if not a multiple of three, the
number nearest to one-third, shall retire by rotation and therefore
be required to seek re-election by shareholders. New directors
may be appointed by the board, but are subject to election by
shareholders at the next annual general meeting of the company
following their appointment. However, to comply with the
provisions of the UK Corporate Governance Code (the ‘Code’),
the company requires that all directors should be subject to annual
election by shareholders. Shareholders may also appoint new
directors by ordinary resolution. The articles of association limit the
number of directors to not less than three and not more than 12,
unless the shareholders resolve otherwise.
In accordance with the Financial Conduct Authority’s Listing Rules,
the election of those directors determined by the board to be
independent under the Code must be subject to the approval of
both all shareholders of the company and separately those
shareholders who are not controlling shareholders, being the Cayzer
Concert Party.
Political donations
The company made no political donations and incurred no political
expenditure during the year.
Research and development
The company does not engage in research and development.
Overseas branches
The company does not have any overseas branches.
Investment trust status
Caledonia has been accepted as an approved investment trust by
HM Revenue & Customs, subject to continuing to meet eligibility
conditions. The directors are of the opinion that the company has
conducted its affairs in a manner which will satisfy the conditions
for continued approval as an investment trust under section 1158
of the Corporation Tax Act 2010.
Registered office and number
The registered office of the company is at: Cayzer House, 30
Buckingham Gate, London SW1E 6NN. The company is registered
in England under number 235481.
Post balance sheet events
There are no post balance sheet events.
The Directors’ report was approved by the board on 20 May 2024
and signed on its behalf by:
Richard Webster
Company Secretary
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Other information
Introduction
Directors̕ Report (continued)
Cross references to information required to be disclosed by Listing Rule 9.8.4 R
To comply with Listing Rule 9.8.4 C, the following table provides references to where relevant information required to be disclosed
under Listing Rule 9.8.4 R can be found.
Listing Rule
Required information
Location
9.8.4 R (12)
Details of any arrangement under which a shareholder has waived or agreed
to waive any dividends.
Directors’ report – page 110. Waiver of
all dividends by the trustee of The
Caledonia Investments plc Employee
Share Trust.
9.8.6 R (13)
Where a shareholder has agreed to waive future dividends, details of such
waiver together with those relating to dividends which are payable during
the period under review.
As above.
9.8.4 R (14)(a)
A statement made by the board that the listed company has entered into an
agreement with a controlling shareholder under Listing Rule 9.2.2 AD R (1).
Corporate governance report – page 72.
Relations with controlling shareholders.
9.8.4 R (14)(c)
A statement made by the board that:
1. the listed company has complied with the independence provisions
included in any agreement with a controlling shareholder entered into
under LR 9.2.2 AD R (1)
2. so far as the listed company is aware, the independence provisions included
in any agreement with a controlling shareholder entered into under LR 9.2.2
AR R (1) have been complied with during the period under review by the
controlling shareholder or any of its associates
3. so far as the listed company is aware, the procurement obligation (as set out
in LR 9.2.2 BR (2)(a)) included in any agreement entered into under LR 9.2.2
AD R (1) has been complied with during the period under review by a
controlling shareholder.
As above.
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Caledonia Investments plc Annual Report 2024
Responsibility statements
Statement of directors’ responsibilities in respect of the
annual report and the financial statements
The directors are responsible for preparing the annual report and
financial statements in accordance with UK adopted international
accounting standards and applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have prepared the group and parent company financial statements
in accordance with UK adopted international accounting standards.
Under company law, the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the company and of
the profit or loss of the group for that period.
In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply
them consistently
• make judgements and estimates that are reasonable
and prudent
• state whether they have been prepared in accordance with
UK adopted international accounting standards, subject to
any material departures disclosed and explained in the
financial statements
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the
company will continue in business
• prepare a directors’ report, a strategic report and directors’
remuneration report which comply with the requirements of the
Companies Act 2006 (the ‘Act’).
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the company and the group and enable them
to ensure that the financial statements comply with the Act. They
are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for ensuring that the annual report
financial statements, taken as a whole, are fair, balanced, and
understandable and provide the information necessary for
shareholders to assess the group’s performance, business model
and strategy.
Website publication
The directors are responsible for ensuring the annual report and
financial statements are made available on a website.
Financial statements are published on the company’s website in
accordance with legislation in the UK governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of
the company’s website is the responsibility of the directors. The
directors’ responsibility also extends to the ongoing integrity of
the financial statements contained therein.
Disclosure of information to auditors
Each of the persons who is a director at the date of approval of this
report confirms that:
1. so far as the director is aware, there is no relevant information
of which the company’s auditor is unaware
2. the director has taken all steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit
information and to establish that the company’s auditor is aware
of that information.
This confirmation is given, and should be interpreted, in accordance
with the provisions of section 418 of the Act.
Responsibility statements under the Disclosure Guidance
and Transparency Rules and the UK Corporate
Governance Code
Each of the directors, whose names and functions are listed on
pages 66 and 67 confirm that, to the best of their knowledge:
1. 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
2. the annual 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:
Mat Masters
Rob Memmott
Chief Executive Officer
Chief Financial Officer
20 May 2024
20 May 2024
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Introduction
Considered
& long-term
Our independence and reputation enables
us to take the long term view, which is key
to our goal of building a store of wealth
and delivering steady and rising income
for our shareholders.
The Quinnian Trust
The Caledonia Investments Charitable Foundation provided an additional grant
to The Quinnian Trust, following its original donation in 2022. The Quinnian
Trust supports young people in leisure activities, promoting self-reliance,
resourcefulness and a sense of responsibility for others. In particular, where
such activities are associated with maritime pursuits, The Quinnian Trust
provides aid and equipment to other organisations with similar aims.
© Doon Williams
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Financial
statements
Independent auditor’s report
116
Financial statements
124
Material accounting policies
128
Notes to the financial statements
133
Other information
Company performance record
152
Glossary of terms and alternative
performance measures
153
Valuation methodology
156
Investments summary
155
Information for investors
158
Directors and advisers
159
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Other information
Introduction
Independent auditor’s report
to the members of Caledonia Investments plc
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of
the Group’s and of the Parent Company’s affairs as at 31 March
2024 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly
prepared in accordance with UK adopted international
accounting standards and as applied in accordance with the
provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Caledonia Investments
plc (the ‘Parent Company’) and its consolidated subsidiaries (the
‘Group’) for the year ended 31 March 2024 which comprise the
Group statement of comprehensive income, the Group and
Company Statement of financial position, the Group and Company
Statement of changes in equity, the Group and Company Statement
of cash flows, and notes to the financial statements, including a
material accounting policy information. The financial reporting
framework that has been applied in their preparation is applicable
law and UK adopted international accounting standards and as
regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion. Our audit opinion is consistent with the additional report
to the audit committee.
Independence
Following the recommendation of the audit committee, we were
appointed by the Members of the Parent Company on 21 July
2021 to audit the financial statements for the year ended 31
March 2022 and subsequent financial periods. The period of
total uninterrupted engagement including retenders and
reappointments is three years, covering the years ended 31
March 2022 to 31 March 2024. We remain independent of the
Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard
were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
1. Obtaining the Directors’ assessment of the going concern status
and long-term viability of the group and the parent;
2. Checking the accuracy of the underlying models used in the
Directors’ assessment;
3. Challenging management’s assumptions and judgements made
with regards to stress-testing forecasts;
4. Assessing the availability of bank facilities; and
5. Assessing the liquidity of the quoted investment portfolio.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and the Parent Company’s ability to continue as a going concern for
a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied
the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in
the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Statutory Auditor
BDO LLP
20 May 2024
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Caledonia Investments plc Annual Report 2024
Overview
Coverage
100% (2023: 100%) of Group profit before tax
100% (2023: 100%) of Group revenue
100% (2023: 100%) of Group total assets
Key audit
matters (KAMs)
2024
2023
KAM 1 -Valuation of
Unquoted Private
Capital Investments
•
•
KAM 2- Valuation of
Fund investments
•
•
Materiality
Group financial statements as a whole
£44.5m (2023: £41.8m) based on 1.5%
(2023: 1.5%) of Net Assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of
the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement
in the financial statements. We also addressed the risk of
management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group engagement team carried out a full scope audit of
significant components as well as non-significant components of
the group mentioned below as they required audits for statutory
purposes. Caledonia Investments plc and Caledonia Group Services
Limited were considered to be significant components for this
audit. The Group consisted of the following components:
1. Caledonia Investments plc;
2. Caledonia Group Services Limited;
3. Caledonia Treasury Limited;
4. Buckingham Gate Limited.
The Group audit team performed the Group audit as if it related to
a single aggregated set of financial statements, using the Group
materiality levels set out above.
Climate change
Our work on the assessment of potential impacts on climate-
related risks on the Group’s operations and financial statements
included:
1. Enquiries and challenge of management to understand the
actions they have taken to identify climate-related risks and their
potential impacts on the financial statements and adequately
disclose climate-related risks within the annual report; and
2. Review of the minutes of Board and Audit Committee meetings
and performance of a risk assessment as to how the impact of
the Group’s commitment as set out in the other information may
affect the financial statements and our audit.
We challenged the extent to which climate-related considerations
have been reflected, where appropriate, in management’s going
concern assessment and viability assessment.
We also assessed the consistency of managements disclosures
included as other ‘information’/‘Statutory Other Information’
within the financial statements and with our knowledge obtained
from the audit.
Based on our risk assessment procedures, we did not identify
there to be any Key Audit Matters materially impacted by climate-
related risks.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
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Other information
Introduction
Independent auditor’s report (continued)
Overview
Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of
unquoted private
capital investments
The Group’s accounting
policy for valuation is
described in the
Significant Accounting
Policies (Investments)
and Note 8 to the
financial statements.
The unquoted private
capital investments total
£820.3 million (2023:
£824.0 million),
representing 30.4%
(2023: 29.5%) of the
investments held at fair
value through profit or
loss.
We consider the valuations of the
private capital investments to be
one of the most significant audit
areas. An objective of the Group is
to maximise long-term capital
growth, and as such, private capital
investments will be a key driver of
performance.
The main risk factor relating to the
valuations of the private capital
investments relates to the lack of
observable inputs to those
valuations, which classifies them as
‘Level 3’ investments as well as the
level of estimation uncertainty
involved in valuing these
investments.
To address this key audit matter, we:
1. Assessed the appropriateness of the valuation methodology given the circumstances
under the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines;
2. Discussed valuations with management to understand management assumptions
included in valuations and assess the reasonableness of the assumptions applied;
3. Challenged and corroborated the key inputs to the valuation with reference to
management information on investee companies, market data and our own research;
4. Gained an understanding of the movements in valuations between 31 March 2023 and
31 March 2024;
5. Considered the economic environment in which the investment operates to identify
factors that could impact the investment valuation;
6. Attended Valuations Committee meetings to obtain evidence of governance over the
valuation process and observe challenges from the members of the Committee on the
inputs in the valuation preparation;
7. Consulted and involved BDO valuation experts in assessing the methodology, assumptions
and key inputs used in the valuation of material investments at year-end; and
8. Where we concluded reasonable alternative assumptions could have been applied, we
developed our own point estimate which we assessed in the context of materiality.
9. We gained comfort on ownership through available third party documentation such as
share purchase agreements, share certificates, annual accounts and companies house
documentation, where relevant.
Key observations:
Based on the procedures we performed, we did not identify any material exceptions with
regards to the valuation of unquoted private capital investments. We deem the assumptions
and judgements applied by management in the valuation of unquoted private capital
investments to be appropriate.
Valuation of fund
investments
The Group’s accounting
policy for valuation is
described in the
Significant Accounting
Policies (Investments)
and Note 8 to the
financial statements.
The unquoted fund
investments total £926.3
million (2023: £873.8
million), representing
34.4% (2023: 31.3%) of
the investments held at
fair value through profit
or loss.
There is a risk of ‘stale pricing’ due
to the availability of NAV
statements and the time lag
between the date that statements
relate to and the balance sheet
date.
There is also a risk over incorrect
General Partner ("GP") statements
being received from the underlying
fund investments, as well as the
reliability of GP statements, which
could result in incorrect valuations
of fund investments at year end.
To address this key audit matter, we:
1. Considered the appropriateness of the overall valuation policies undertaken by underlying
GP fund managers in line with the International Private Equity and Venture Capital Valuation
(“IPEV”) Guidelines;
2. Obtained an understanding of the Company’s processes surrounding the valuation and
ownership by performing walkthrough procedures to observe the investment processes;
3. Assessed the design and implementation of fund investment valuation processes by attending
the Investment Manager’s Valuation Committee meeting to observe review of fund investment
valuations;
4. Compared the year-end valuations per the accounting records to the valuation statements
received from the managers of the underlying funds. Where an up-to-date fund manager’s
valuation is not available, we agreed the cash roll forward to direct confirmation from the GP;
5. Reviewed the need for the Investment Manager to adjust the underlying valuations for
specific cases, such as carried interest, and agreed these adjustments to the underlying
support;
6. Tested the accuracy of the underlying GPs’ valuation process by comparing the Net Asset
Value per the most recent audited financial statements for all available funds to the GP
statement for the coterminous period in order to determine the reliability of the year end GP
reports. We determined whether the audit firm signing the financial statements was a
recognised audit firm and checked whether there were any modifications made to their
audit reports;
7. Reviewed the year end GP statements for any possible inconsistent information pertaining to
the valuations;
8. For non-coterminous GP statements, assessed whether any significant market movements
or events occurred from the GP statement date that would render the GP statement as
inappropriate basis of the valuation;
9. Where there has been sale of fund investments in the year, we agreed the proceeds of the
disposal to the GP statements and performed back testing by comparing the sale price and
subsequent cash receipts to the most recent valuation recorded by the Company for the
investment;
10. Reviewed final NAV statements received over the course of the audit period up to the date
of approving the financial statements and considered the impact on the valuations; and
11. Gained comfort over ownership by obtaining direct confirmations from 100% of the
underlying GPs in the portfolio at year-end.
Key observations:
Based on the procedures we performed, we did not identify any material exceptions with regards
to the valuation of fund investments. We deem the assumptions and judgements applied by
management in the valuation of unquoted private capital investments to be appropriate.
118
Caledonia Investments plc Annual Report 2024
Component materiality
For the purposes of our Group audit opinion, we set materiality
for each significant component of the Group. Component
materiality was ranged from £650k to £42m (2023: £5k to £39m)
based on the materiality levels set for components’ individual
entity audits, while also considering the size and our risk of
material misstatement of that component and capping its
materiality level where relevant to take into consideration
aggregation risk. In the audit of each significant component, we
further applied performance materiality levels of 75% (2023:
75%) of the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to
them all individual audit differences in excess of £1.1 million
(2023: £1 million). We also agreed to report differences below
this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual
report other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Group financial statements
Parent company financial statements
Key audit matter
2024
£m
2023
£m
2024
£m
2023
£m
Materiality
44.5
41.8
42.3
39.7
Basis for determining materiality
1.5% of Net Assets
1.5% of Net Assets
95% of Group materiality
95% of Group materiality
Rationale for the
benchmark applied
Net Asset Value is a key indicator of performance and as
such the most relevant benchmark on which to base
materiality for the users of the financial statements.
We considered the aggregation risk within the Group
and then set materiality as a percentage of Group
materiality.
Performance materiality
33.6
31.4
31.7
29.8
Basis for determining
performance materiality
75% of Materiality
75% of Materiality
Rationale for the percentage
applied for performance
materiality
The level of performance materiality applied was set after having considered a number of factors, including our
assessment of the Group and parent’s control environment and the expected total value of known and likely
misstatements and the level of transactions in the year.
119
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Independent auditor’s report (continued)
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the parent company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with regards to the
appropriateness of adopting the going concern
basis of accounting and any material
uncertainties identified set out on page 62;
and
• The Directors’ explanation as to their
assessment of the Group’s prospects, the
period this assessment covers and why the
period is appropriate set out on page 62.
Other Code
provisions
• Directors’ statement on fair, balanced and
understandable set out on page 86;
• Board’s confirmation that it has carried out a
robust assessment of the emerging and
principal risks set out on page 86;
• The section of the annual report that describes
the review of effectiveness of risk management
and internal control systems set out on page
86; and
• The section describing the work of the audit
committee set out on page 86.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work
performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions
and matters as described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken
in the course of the audit:
• the information given in the Strategic report
and the Directors’ report for the financial
year for which the financial statements are
prepared is consistent with the financial
statements; and
• the Strategic report and the Directors’ report
have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding
of the Group and Parent Company and its
environment obtained in the course of the audit,
we have not identified material misstatements
in the strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’
remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the
following matters in relation to which the
Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been
kept by the Parent Company, or returns
adequate for our audit have not been received
from branches not visited by us; or
• the Parent Company financial statements and
the part of the Directors’ remuneration report
to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information
and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’
Responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
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Caledonia Investments plc Annual Report 2024
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
Non-compliance with laws and regulation
Based on:
• Our understanding of the Group and the industry in which it
operates;
• Discussion with management and those charged with
governance;
• Obtaining an understanding of the Group’s policies and
procedures regarding compliance with laws and regulations; and
• Consideration of the risk of acts by the Group which were
contrary to applicable laws and regulations, including fraud.
We considered the significant laws and regulations to be
compliance with the Companies Act 2006, UK-adopted IFRS, UK tax
legislation, the Financial Conduct Authority’s regulations and Listing
and DTR rules, the UK Corporate Governance Code, and industry
practice as represented by the AIC Statement of Recommended
Practice (SORP).
We focused on laws and regulations that could give rise to a
material misstatement in the financial statements. Our procedures
included:
• Review of minutes of meeting of those charged with governance
for any instances of non-compliance with laws and regulations;
• Review of correspondence with regulatory and tax authorities for
any instances of non-compliance with laws and regulations;
• Review of financial statement disclosures and agreeing to
supporting documentation;
• Involvement of tax specialists in the audit; and
• Review and challenge of management’s consideration of the
Parent Company’s compliance with the Investment Trust rules set
out under UK tax legislation.
Fraud
We assessed the susceptibility of the financial statements to
material misstatement, including fraud. Our risk assessment
procedures included:
• Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and
procedures relating to:
- Detecting and responding to the risks of fraud; and
- Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and
where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud; and
• Considering remuneration incentive schemes and
performance targets and the related financial statement
areas impacted by these.
121
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Independent auditor’s report (continued)
Based on our risk assessment, we considered the areas most
susceptible to fraud to be management override of controls and
valuation of private capital and fund investments.
Our procedures in respect of the above included:
• Testing the data elements of the journals population which the
audit team utilised as part of completeness and accuracy testing;
• Determining key risk characteristics to filter the population of
journals, then reviewing and agreeing the journals identified to
supporting documentation;
• Using our IT audit specialists to assist with extracting the
journal population;
• Evaluating findings from the evaluation of the design and
implementation of IT general controls;
• Critically reviewing the consolidation and, in particular,
manual and/or late journals posted at consolidation level;
• Reviewing the estimates and judgements applied by management
in the financial statements to assess their appropriateness and the
existence of any system biases. This included considering whether
the split between revenue and capital is appropriate and key
accounting estimates around the valuation of private capital and
fund investments;
• Reviewing unadjusted audit differences for indications of bias or
deliberate misstatement; and
• Other key procedures related to valuation of private capital and
fund investments are set out in the Key Audit Matters section
above.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members who
were all deemed to have appropriate competence and capabilities
and remained alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk
of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements,
the less likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might
state to the Parent Company’s members those matters we are
required to state to them in an auditor’s 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 Parent Company
and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Peter Smith
Senior Statutory Auditor
For and on behalf of BDO LLP, Statutory Auditor
London, UK
20 May 2024
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
122
Caledonia Investments plc Annual Report 2024
123
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Group statement of comprehensive income
for the year ended 31 March 2024
2024
2023
Note
Revenue
£m
Capital
£m
Total
£m
Revenue
£m
Capital
£m
Total
£m
Revenue
Investment income
1
61.8
–
61.8
43.2
–
43.2
Other income
1
0.9
0.6
1.5
0.8
1.3
2.1
Net gains on fair value investments
8
–
174.4
174.4
–
133.0
133.0
Net losses on fair value property
9,10
–
(3.9)
(3.9)
–
(1.4)
(1.4)
Total revenue
62.7
171.1
233.8
44.0
132.9
176.9
Management expenses
2
(22.9)
(8.4)
(31.3)
(21.3)
(8.6)
(29.9)
Profit before finance costs
39.8
162.7
202.5
22.7
124.3
147.0
Treasury interest receivable
3
3.2
–
3.2
4.6
–
4.6
Finance costs
4
(10.6)
–
(10.6)
(2.4)
–
(2.4)
Exchange movements
6.3
–
6.3
–
–
–
Profit before tax
38.7
162.7
201.4
24.9
124.3
149.2
Taxation
5
1.8
0.6
2.4
(4.3)
(2.0)
(6.3)
Profit for the year
40.5
163.3
203.8
20.6
122.3
142.9
Other comprehensive income items never to be
reclassified to profit or loss
Re-measurements of defined benefit pension schemes
25
–
(0.8)
(0.8)
–
1.4
1.4
Tax on other comprehensive income
5
–
0.4
0.4
–
(0.3)
(0.3)
Total comprehensive income
40.5
162.9
203.4
20.6
123.4
144.0
Basic earnings per share
7
74.5p
300.2p
374.7p
37.9p
225.3p
263.2p
Diluted earnings per share
7
73.3p
295.7p
369.0p
37.3p
221.7p
259.0p
The total column of the above statement represents the group’s statement of comprehensive income, prepared in accordance with IFRSs
adopted in the United Kingdom.
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.
The accounting policies and notes on pages 128 to 151 are an integral part of these financial statements.
124
Caledonia Investments plc Annual Report 2024
Statement of financial position
at 31 March 2024
Group
Company
Note
2024
£m
2023
£m
2024
£m
2023
£m
Non-current assets
Investments held at fair value through profit or loss
8
2,695.4
2,794.9
2,700.7
2,803.2
Investments in subsidiaries held at cost
8
–
–
0.9
0.9
Investment property
9
13.3
15.1
–
–
Property, plant and equipment
10
25.2
27.9
–
–
Deferred tax assets
11
5.3
5.7
–
–
Other receivables
12
–
–
35.5
37.1
Employee benefits
25
4.3
4.0
–
–
Non-current assets
2,743.5
2,847.6
2,737.1
2,841.2
Current assets
Asset held for sale
8
19.0
–
19.0
–
Trade and other receivables
12
7.3
6.9
5.0
3.1
Current tax assets
5
1.7
19.3
2.0
20.3
Cash and cash equivalents
13
227.4
221.6
227.3
221.1
Current assets
255.4
247.8
253.3
244.5
Total assets
2,998.9
3,095.4
2,990.4
3,085.7
Current liabilities
Interest bearing loans and borrowings
14
–
(266.0)
–
(266.0)
Trade and other payables
15
(24.4)
(22.1)
(38.2)
(33.8)
Employee benefits
25
(3.1)
(2.4)
–
–
Current liabilities
(27.5)
(290.5)
(38.2)
(299.8)
Non-current liabilities
Employee benefits
25
(5.0)
(5.1)
–
–
Deferred tax liabilities
11
(1.1)
(1.8)
–
–
Non-current liabilities
(6.1)
(6.9)
–
–
Total liabilities
(33.6)
(297.4)
(38.2)
(299.8)
Net assets
2,965.3
2,798.0
2,952.2
2,785.9
Equity
Share capital
16
3.1
3.1
3.1
3.1
Share premium
16
1.3
1.3
1.3
1.3
Capital redemption reserve
1.4
1.4
1.4
1.4
Capital reserve
2,716.6
2,555.4
2,717.1
2,554.3
Retained earnings
250.2
247.4
236.6
236.4
Own shares
(7.3)
(10.6)
(7.3)
(10.6)
Total equity
2,965.3
2,798.0
2,952.2
2,785.9
Undiluted net asset value
17
5452p
5150p
Diluted net asset value
17
5369p
5068p
The Company profit for the year ended 31 March 2024 was £202.4m (2023: £144.8m)
The financial statements on pages 124 to 151 were approved by the board and authorised for issue on 20 May 2024 and were signed on its
behalf by:
Mat Masters
Rob Memmott
Chief Executive Officer
Chief Financial Officer
The accounting policies and notes on pages 128 to 151 are an integral part of these financial statements.
125
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Statement of changes in equity
for the year ended 31 March 2024
Note
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Capital
reserve
£m
Retained
earnings
£m
Own
shares
£m
Total
equity
£m
Group
Balance at 31 March 2022
3.1
1.3
1.4
2,527.0
263.2
(13.3)
2,782.7
Total comprehensive income
Profit for the year
–
–
–
122.3
20.6
–
142.9
Other comprehensive income
–
–
–
1.1
–
–
1.1
Total comprehensive income
–
–
–
123.4
20.6
–
144.0
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments
–
–
–
–
5.8
–
5.8
Transfer of shares to employees
–
–
–
–
(6.7)
6.7
–
Own shares purchased
–
–
–
–
–
(4.0)
(4.0)
Dividends paid
6
–
–
–
(95.0)
(35.5)
–
(130.5)
Total transactions with owners
–
–
–
(95.0)
(36.4)
2.7
(128.7)
Balance at 31 March 2023
3.1
1.3
1.4
2,555.4
247.4
(10.6)
2,798.0
Total comprehensive income
Profit for the year
–
–
–
163.3
40.5
–
203.8
Other comprehensive income
–
–
–
(0.4)
–
–
(0.4)
Total comprehensive income
–
–
–
162.9
40.5
–
203.4
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments
–
–
–
–
6.2
–
6.2
Transfer of shares to employees
–
–
–
–
(6.9)
6.9
–
Own shares purchased and cancelled
–
–
–
(1.7)
–
–
(1.7)
Own shares purchased
–
–
–
–
–
(3.6)
(3.6)
Dividends paid
6
–
–
–
–
(37.0)
–
(37.0)
Total transactions with owners
–
–
–
(1.7)
(37.7)
3.3
(36.1)
Balance at 31 March 2024
3.1
1.3
1.4
2,716.6
250.2
(7.3)
2,965.3
Company
Balance at 31 March 2022
3.1
1.3
1.4
2,526.0
251.3
(13.3)
2,769.8
Profit and total comprehensive income
–
–
–
123.3
21.5
–
144.8
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments
–
–
–
–
5.8
–
5.8
Transfer of shares to employees
–
–
–
–
(6.7)
6.7
–
Own shares purchased
–
–
–
–
–
(4.0)
(4.0)
Dividends paid
6
–
–
–
(95.0)
(35.5)
–
(130.5)
Total transactions with owners
–
–
–
(95.0)
(36.4)
2.7
(128.7)
Balance at 31 March 2023
3.1
1.3
1.4
2,554.3
236.4
(10.6)
2,785.9
Profit and total comprehensive income
–
–
–
164.5
37.9
–
202.4
Transactions with owners of the company
Contributions by and distributions to owners
Share-based payments
–
–
–
–
6.2
–
6.2
Transfer of shares to employees
–
–
–
–
(6.9)
6.9
–
Own shares purchased and cancelled
–
–
–
(1.7)
–
–
(1.7)
Own shares purchased
–
–
–
–
–
(3.6)
(3.6)
Dividends paid
6
–
–
–
–
(37.0)
–
(37.0)
Total transactions with owners
–
–
–
(1.7)
(37.7)
3.3
(36.1)
Balance at 31 March 2024
3.1
1.3
1.4
2,717.1
236.6
(7.3)
2,952.2
The accounting policies and notes on pages 128 to 151 are an integral part of these financial statements.
126
Caledonia Investments plc Annual Report 2024
Statement of cash flows
for the year ended 31 March 2024
Reconciliation of net cash flow to movement in net debt
for the year ended 31 March 2024
Group
Company
Note
2024
£m
2023
£m
2024
£m
2023
£m
Operating activities
Dividends received
57.9
41.6
57.9
44.5
Interest received
3.8
6.5
3.8
6.5
Cash received from customers
1.5
2.6
0.6
1.8
Cash paid to suppliers and employees
(24.5)
(25.3)
(24.7)
(28.2)
Taxes received
0.1
0.1
0.1
0.1
Group tax relief received
20.9
2.0
21.1
2.1
Group tax relief paid
(0.8)
–
–
(0.1)
Net cash flow from operating activities
58.9
27.5
58.8
26.7
Investing activities
Purchases of investments
(340.8)
(468.1)
(340.8)
(468.1)
Proceeds from disposal of investments
599.7
192.1
599.7
192.1
Purchases of property, plant and equipment
(0.5)
(0.3)
–
–
Net cash flow from/(used in) investing activities
258.4
(276.3)
258.9
(276.0)
Financing activities
Interest paid
(10.4)
(2.2)
(10.4)
(2.0)
Dividends paid to owners of the company
(37.0)
(130.5)
(37.0)
(130.5)
Proceeds from bank borrowings
70.0
–
70.0
–
Proceeds from group borrowings
–
266.0
–
283.7
Repayment of bank borrowings
(70.0)
–
(70.0)
–
Loan payments to subsidiaries
(258.8)
–
(258.8)
(17.8)
Purchases of own shares
(5.3)
(4.0)
(5.3)
(4.0)
Net cash flow (used in)/from financing activities
(311.5)
129.3
(311.5)
129.4
Net increase/(decrease) in cash and cash equivalents
5.8
(119.5)
6.2
(119.9)
Cash and cash equivalents at year start
221.6
341.1
221.1
341.0
Cash and cash equivalents at year end
13
227.4
221.6
227.3
221.1
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Net increase/(decrease) in cash and cash equivalents in the year
5.8
(119.5)
6.2
(119.9)
Cash inflow from increase in borrowings
(70.0)
(266.0)
(70.0)
(283.7)
Cash outflow from decrease in borrowings
328.8
–
328.8
17.8
Change in net debt resulting from cash flows
264.6
(385.5)
265.0
(385.8)
Change in net debt resulting from foreign exchange movements
7.2
–
7.2
(0.1)
Net (debt)/cash at the start of the year
(44.4)
341.1
(44.9)
341.0
Net cash/(debt) at the end of the year
227.4
(44.4)
227.3
(44.9)
The accounting policies and notes on pages 128 to 151 are an integral part of these financial statements.
127
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Material accounting policies
General information
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.
These financial statements were authorised for issue by the
directors on 20 May 2024.
These financial statements are presented in pounds Sterling, as
this is the currency of the primary economic environment in which
Caledonia operates.
Material accounting policies
Critical accounting judgements and estimates
Critical judgements
In the course of preparing the financial statements, one judgement
has been made in the process of applying the group’s accounting
policies, other than those involving estimations, that has had a
significant effect on the amounts recognised in the financial
statements as follows:
1. Assessment as an investment entity
The board has concluded that the company continues to meet
the definition of an investment entity, as its strategic objective
of investing in a portfolio of investments for the purpose of
generating returns in the form of income and capital
appreciation remains unchanged. The company is exempt from
UK corporation tax on capital gains provided it meets the HM
Revenue & Customs criteria for an investment company set out
in Section 1158 of the Corporation Tax Act 2010. This is
judgemental based on assessments performed by management
prepared to maintain investment trust status in accordance with
relevant taxation legislation.
Critical estimates
In addition to this significant judgement the directors have made
one estimate, 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. The details of the
estimate was as follows:
1. Fair values of private equity financial instruments
For directly owned private investments (Private Capital
investments), totalling £820.3m (2023: £824.0m) 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 instruments that are
substantially the same (subject to appropriate adjustments).
Private Capital assets have been disaggregated into categories
and sensitised according to the degree of uncertainty attached
to their estimation in note 23.
For private equity fund investments (unlisted Funds Pool
investments), totalling £898.8m (2023: £869.0m) 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. Management periodically assesses whether
reported net asset values are fair value based through
consideration of a range of information, including but not limited
to underlying valuation methodologies, governance and assurance
frameworks, and correspondence with third-party managers.
Management were satisfied that the valuations provided in the
current period were on a fair value basis.
Where required, valuations are adjusted for investments and
distributions between the valuation date and the reporting date.
The delay in manager NAV receipts creates a risk of changes or
events occurring between the NAV and reporting dates which
could impact valuations.
Fair value estimates for the above private assets are made at a
specific point in time, based on market conditions and information
about the financial instrument. These estimates are subjective
in nature, and involve uncertainties and matters of significant
judgement and therefore cannot be determined with precision.
Other judgement
Management has exercised judgement in determining the
classification of money market investments held by the group
as cash equivalents under IAS 7. In arriving at this judgement,
management has noted that it uses money market funds to
manage day-to-day working capital requirements, and that all such
funds are highly liquid Low Volatility Net Asset Value products with
a minimum credit rating of AAAm, and a maximum weighted-
average maturity of 60 days. They have therefore judged that the
risk of changes in value is insignificant and investments can be
readily converted to a known amount of cash upon redemption,
and therefore classification as cash equivalents is appropriate. They
note that, although remote, there is not a zero risk of significant
change in value and that therefore this classification is judgemental.
Going concern
As at 31 March 2024, the board has undertaken an assessment
of the appropriateness of preparing its financial statements on
a going concern basis, taking into consideration future cash flows,
current cash holdings of £227m, undrawn banking facilities of
£250m and readily realisable assets of £950m as part of a
wider process in connection with its viability assessment. It has
concluded that the group has sufficient cash, other liquid resources
and committed bank facilities to meet existing and new
investment commitments.
The directors have concluded that the group has adequate
resources to continue in operational existence for a period of
at least 12 months from the date of approval of the financial
statements. Accordingly, they continue to consider it
appropriate to adopt the going concern basis in preparing
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 (see note 14) and
consideration of the economic environment 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, factoring in (a) adverse foreign exchange movements,
(b) a delay in disposals of directly owned private equity
investments, (c) drawdown of all existing private equity fund
commitments, (d) a significant market decline for two years and
(e) the cumulative impact of (c) and (d) above.
128
Caledonia Investments plc Annual Report 2024
Under these scenarios the group would have a range of mitigating
actions available to it, including sales of liquid assets, and usage of
banking facilities, which would provide sufficient funds 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. For further details on assessment of going concern
and viability, please refer to page 62.
Basis of accounting
These group and parent company financial statements were
prepared in accordance with UK-adopted international accounting
standards in conformity with the requirements of the Companies
Act 2006. IFRSs comprise accounting standards issued by the
International Accounting Standards Board and its predecessor body
as well as interpretations issued by the International Financial
Reporting Interpretations Committee and its predecessor body.
The financial statements have been prepared on an historical cost
basis, except for the revaluation of certain financial instruments
and properties. Where presentational guidance set out in the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts (‘SORP’)
issued by the Association of Investment Companies in October
2019 is consistent with the requirements of UK-adopted
international accounting standards, the directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
The Statement of comprehensive income of the company has been
omitted from these financial statements in accordance with
section 408 of the Companies Act 2006.
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.
After reviewing the company’s performance projections for a
period of at least 12 months, the directors are satisfied that in
taking account of reasonably possible downsides the company has
adequate access to resources to enable it to meet its obligations as
they fall due for at least 12 months from the date of approval of the
financial statements. Accordingly, the directors have adopted the
going concern basis in preparing these financial statements.
Adopted IFRSs and IFRSs not yet applied
In the current year, the group has not adopted any new standards
or interpretations. Amendments to IFRS adopted in the year have
not had a material impact on the group.
At the date of approval of these financial statements, there were
no standards, which had not been applied in these financial
statements, in issue but not yet effective.
Assessment as investment entity
Entities that meet the definition of an investment entity within IFRS
10 are required to account for most investments in controlled
entities as held at fair value through profit or loss. Subsidiaries that
provide investment related services or engage in permitted
investment-related activities with investees continue to be
consolidated unless they are also investment entities.
Having considered the following, the board has concluded that the
company meets the definition of an investment entity.
An investment entity is one which:
• obtains funds from investors for the purpose of providing
them with investment management services
• invests funds solely for returns from capital appreciation
and/or investment income
• measures and evaluates the performance of substantially
all of its investments on a fair value basis.
Basis of consolidation
In accordance with the IFRS 10/IAS 28 Investment entities
amendments, the consolidated financial statements include the
financial statements of the company and service entities controlled
by the company made up to the reporting date. Control is achieved
where the company has the power over the potential investee as a
result of voting or other rights, has rights to positive or negative
variable returns from its involvement with the investee and has the
ability to use its power over the investee to affect significantly the
amount of its returns.
The following subsidiaries are deemed service entities and are
consolidated in the group financial statements:
• Caledonia Group Services Ltd
• Buckingham Gate Ltd
Other associated entities and subsidiaries are disclosed in notes 26
and 27 to the financial statements and are not consolidated in the
group financial statements, being held at fair value through profit
or loss.
Foreign currencies
Transactions in foreign currencies are recorded at the rate of
exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the reporting
date are translated to the functional currency at the foreign
exchange rate ruling at the reporting date. Non-monetary assets
and liabilities that are measured in terms of historical cost in a
foreign currency are translated to the functional currency using the
exchange rate at the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at
fair value are translated to the functional currency at foreign
exchange rates ruling at the dates the fair values were determined.
In the financial statements, foreign exchange gains or losses are
recognised in capital or revenue reserve, depending on whether
the gain or loss is of a capital or revenue nature respectively.
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Corporate governance
Financial statements
Other information
Introduction
Material accounting policies (continued)
Income
Dividends receivable on equity shares are recognised as revenue
when the shareholders’ right to receive payment has been
established, normally the ex-dividend date. Where no ex-dividend
date is available, dividends receivable on or before the period end
are treated as revenue. Overseas dividend income is shown net of
withholding tax under investment income.
The fixed returns on debt securities, loans and non-equity shares
are recognised on an effective interest rate basis, which is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying
amount.
Rental income is recognised on a straight-line basis over the
lease term.
The company’s share of net income from limited partnerships
is recognised as revenue when received.
Where uncertainty arises over the collectability of an amount
already included in income, the uncollectible amount or the
amount in respect of which the recovery has ceased to be
probable, is recognised as an expense. When the uncertainty
over collectability is removed, normally on receipt, the income
is recognised in the Statement of comprehensive income.
Expenses
All expenses are accounted for on an accrual basis. In the financial
statements, ongoing management expenses are included in
revenue reserves, whereas performance fees and share-based
payment expenses – costs relating to compensation schemes that
are linked directly to investment performance – are included in
capital reserves. Expenses of acquisition of an investment
designated as held at fair value through profit or loss or expenses
of an aborted acquisition or disposal of an investment are
presented as transaction costs, or deducted from the proceeds
of sale as appropriate, and included in capital reserves.
Leases
Lessor
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-
line basis over the term of the relevant lease. Initial direct costs
incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised on a
straight-line basis.
Benefits provided as an incentive to enter into an operating lease
are also spread on a straight-line basis over the lease term.
Lessee
On commencement of a contract which gives the group the right
to use assets for a period of time in exchange for consideration, the
group recognises a right-of-use asset and a lease liability, unless the
lease qualifies as a ‘short-term’ lease (that is, the term is 12 months
or less with no option to purchase the lease asset) or a ‘low-value’
lease. Payments associated with short-term leases are recognised
on a straight-line basis as an expense in the income statement.
Employee benefits
Pension schemes
Payments to defined contribution schemes are charged as an
expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using the projected unit credit method, with actuarial
valuations being carried out at each reporting date. Re-
measurement gains and losses are recognised in full in the period
in which they occur in other comprehensive income.
Past service cost is recognised immediately in the period of a
plan amendment.
The retirement benefit obligation recognised in the Statement of
financial position represents the present value of the defined benefit
obligations as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to the present value of
available refunds and reductions in future contributions to the plan.
Profit sharing and bonus plans
The group recognises a liability and an expense for bonuses and
profit sharing, based on a formula that takes into consideration the
profit attributable to the company’s shareholders after certain
adjustments. The group recognises a provision where contractually
obliged or where there is a past practice that has created a
constructive obligation.
Share-based payments
The group issues equity-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at
fair value at the date of grant and the fair value is expensed on a
straight-line basis over the vesting period, based on the group’s
estimate of the number of shares that will eventually vest.
As part of the share-based payment arrangements, the group pays
a cash amount to employees on exercise of options, equating to
the dividend entitlement on the option shares between grant and
vesting dates. This payment is treated as a cash-settled share-
based payment and is expensed on a straight-line basis over the
vesting period, based on the group’s estimate of the number of
shares that will eventually vest and a re-estimate of the fair value of
the dividend entitlement.
Where employees of a subsidiary are granted rights to the equity
instruments of its parent as consideration for the services provided
to the subsidiary, the subsidiary recognises an equity-settled
share-based payment transaction expense with a corresponding
intercompany balance with the parent. In addition, the parent
recognises an increase in equity and an increase in inter-company
balance for the amount of the share-based payment transaction.
An employee share trust is used for distributing shares awarded to
employees under Caledonia’s share remuneration schemes. The
trustee purchases shares with money lent interest-free by Caledonia
and transfers shares to participating employees on exercise.
The transactions the employee share trust undertakes are
considered to be performed by the trust as an agent for Caledonia.
The transactions of the employee share trust are included in the
separate financial statements of the parent company and, following
the requirements of IFRS 10, in the consolidated financial
statements as if they arose in that company. Own shares held by
the employee share trust as at the reporting date are accounted
for as treasury shares.
130
Caledonia Investments plc Annual Report 2024
National Insurance on share-based payment awards
National Insurance payable on the exercise of share awards has
been charged as an expense spread over the respective vesting
periods of the awards. The charge is based on the difference
between the market value of the estimated number of shares that
will vest and on the vested but unexercised awards at the reporting
date, less any consideration due, calculated at the latest enacted
National Insurance rate.
Taxation
The tax expense represents the sum of tax currently payable and
deferred tax.
The tax currently payable is based on the taxable profit for the
period. Taxable profit differs from net profit as reported in the
Statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible.
The group’s liability for current tax is calculated using tax rates that
were applicable at the reporting date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
liability method. Deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that future taxable
profits will be available against which deductible temporary
differences can be utilised. Investment trust companies that have
approval as such under section 1159 of the Corporation Tax Act
2010 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each
reporting date and adjusted to the extent that it is probable that
sufficient future taxable profits will be available to allow all or part
of the assets to be recovered.
Dividend distribution
Dividends are recognised in the period in which they are
appropriately authorised and no longer at the discretion of the
entity. For interim dividends, this will normally mean the date on
which they are paid and, for final dividends, the date on which they
are approved in general meeting.
Investments
Investments are recognised and de-recognised on the date when
their purchase or sale is subject to a relevant contract and the
associated risks and rewards have been transferred. Where a
purchase or sale is made under a contract whose terms require
delivery within the timeframe established by the market
concerned, transactions are recognised on the trade date.
Investments held as part of the group’s business of investing in
financial assets are designated as held at fair value through profit
or loss in both the consolidated financial statements and the
company financial statements.
Investments designated as held at fair value through profit or loss
are measured at subsequent reporting dates at fair value. Gains or
losses arising from changes in the value of investments designated
as held at fair value through profit or loss, including foreign
exchange movements, are included in net profit or loss for the
period as a capital return.
When management is committed to a plan to sell an investment,
the asset is available for immediate sale and the sale is deemed
highly probable at the balance sheet date., the asset is classified as
held for sale and held within current assets.
Listed investments are valued at bid price or the last traded price
when a bid price is not available. Unlisted investments are valued
using recognised valuation methodologies, based on the
International Private Equity and Venture Capital Valuation
Guidelines, which reflect the amount for which an asset could be
exchanged between knowledgeable, willing parties on an arm’s
length basis. The portfolio valuation methodology is detailed on
pages 156 to 157.
Distributions from investment limited partnerships are treated as
disposal proceeds or income in accordance with the nature of the
distribution. Any surplus capital distributions after repaying
partner’s capital are treated as realised gains.
Service subsidiaries are either designated as held at fair value
through profit or loss or held at amortised cost in the company
financial statements.
Capital reserve
The company maintains a capital reserve. The following items are
transferred into the capital reserve from profit or loss:
• gains and losses on investments held at fair value through profit
or loss
• gains and losses on derivatives used to hedge the fair value of
investments
• fees and share-based payment expenses linked to investment
performance
• expenses and finance costs incurred directly in relation to capital
transactions
• actuarial gains and losses on defined benefit pension schemes
• taxation on items recognised in the capital reserve.
Investment property
Investment properties are properties which are held either to earn
rental income or for capital appreciation or for both. Investment
properties are stated at fair value.
The valuations are prepared by considering the aggregate of the
net annual rents receivable from the properties and where
relevant, associated costs. A yield which reflects the specific risks
inherent in the net cash flows is then applied to the net annual
rentals to arrive at the property valuation.
Any gain or loss arising from a change in fair value is recognised in
profit or loss. Rental income is recognised on a straight-line basis
over the lease term.
131
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Corporate governance
Financial statements
Other information
Introduction
Material accounting policies (continued)
Property, plant and equipment
Property is measured at fair value. Gains arising from changes in
the fair value are included in other comprehensive income for the
period in which they arise and losses included in profit or loss.
To the extent gains represent the reversal of cumulative losses
previously recognised they are included in profit or loss.
Plant and equipment is measured at cost less accumulated
depreciation and any accumulated impairment loss.
Assets in course of construction are measured at cost less any
accumulated impairment loss.
Depreciation is calculated to write off the fair value or cost of items
of property, plant and equipment less their estimated residual
values using the straight-line method over their estimated
useful lives. Land and assets in course of construction are
not depreciated.
The estimated useful lives of property, plant and equipment are
as follows:
Buildings
25 and 50 years
Fixtures and fittings
5-10 years
Office equipment
3-5 years
Accumulated depreciation on revalued property is eliminated
against the gross carrying amount of the asset.
The gain or loss on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the Statement of
comprehensive income.
Impairment of assets
At each reporting date, the group reviews the carrying amounts
of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such
indication exists, an impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable
amount, if any. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use.
Receivables
Receivables do not carry any interest and are stated at their
nominal value as reduced by expected credit losses (‘ECL’) arising
from an annual ECL assessment of recoverable amounts. The
company has applied the three-stage model to inter-company
receivables and determined they are not impaired on a stage
one basis because credit risk has not increased significantly since
initial recognition.
Cash and cash equivalents
Cash comprises cash in hand, demand deposits and money market
funds. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash and that
are subject to an insignificant risk of changes in value.
Bank balances are stated net of bank overdrafts in accordance with
the group banking overdraft arrangement.
Borrowings
Interest-bearing bank loans and overdrafts are recorded at the fair
value of proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or redemption
and direct issue costs, are accounted for on an accrual basis in the
Statement of comprehensive income using the effective interest
method and are added to the carrying amount of the instrument
to the extent that they are not settled in the period in which they
arise. The effective interest method allocates the interest expense
over the life of the instrument so as to reflect a constant return
on the carrying amount of the liability.
Payables
Payables are stated based on the amounts which are considered
to be payable in respect of goods or services received up to the
balance sheet date. Financial liabilities are recognised at amortised
cost in accordance with IFRS 9.
Provisions
A provision is recognised in the Statement of financial position
when the company has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
Provisions are measured at the directors’ best estimate of the
expenditure required to settle the obligation at the reporting date
and are discounted to present value where the effect is material.
In the financial statements, provisions recognised for investments
are included in the Statement of comprehensive income as a
capital return.
Share capital
Equity instruments issued by the company are recorded as the
proceeds received, net of direct issue costs.
Where The Caledonia Investments plc Employee Share Trust
purchases the company’s equity share capital, the consideration
paid, including any directly attributable incremental costs (net of
income taxes), is deducted from equity attributable to the
company’s owners until the shares are transferred. Where such
shares are subsequently transferred, any consideration received,
net of any directly attributable incremental transaction costs and
the related income tax effects, is included in equity attributable to
the company’s owners.
Operating segments
Operating segments are based on the financial information
reported to the chief operating decision-maker.
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Caledonia Investments plc Annual Report 2024
Notes to the financial statements
1. Revenue
Investment income
2024
£m
2023
£m
Income statement revenue column
Income from pool investments
Dividends from UK listed companies
11.5
11.2
Dividends from overseas listed companies
10.3
9.6
Dividends from unlisted companies
19.2
18.8
Distributions from limited partnerships
3.6
1.8
Interest on loan facilities
2.5
1.8
47.1
43.2
Income from other investments
Dividends from unlisted companies1
14.7
–
61.8
43.2
1. During the year £14.7m of dividend income was received from Caledonia
US Investments Ltd.
Other income
2024
£m
2023
£m
Income statement revenue column
Property income
0.9
0.8
Income statement capital column
US limited partnerships tax refunds
0.6
1.3
2. Expenses
Management expenses
2024
£m
2023
£m
Income statement revenue column
Personnel expenses
12.9
12.0
Depreciation
1.1
1.1
Auditor’s remuneration
0.4
0.4
Other administrative expenses
9.6
8.7
Directors’ fees and disbursements recharged
(0.9)
(0.8)
Management fees and recharges
(0.2)
(0.1)
22.9
21.3
Income statement capital column
Personnel expenses
8.3
8.2
Transaction costs
0.1
0.4
8.4
8.6
31.3
29.9
Further information
Auditor’s remuneration
Fees payable to BDO LLP in respect of services to Caledonia
Investments plc were as follows:
2024
£m
2023
£m
Audit services
Annual report
0.3
0.3
Other services
Other assurance, due diligence and tax compliance
0.1
0.1
0.4
0.4
Fees payable to BDO LLP in respect of services to Caledonia
Investments plc’s non-consolidated subsidiaries were as follows:
2024
£m
2023
£m
Audit services
Audit of subsidiaries
0.7
0.5
Other services
Other assurance, due diligence and tax compliance
0.1
0.1
0.8
0.6
Personnel expenses
2024
£m
2023
£m
Income statement revenue column
Wages and salaries
11.1
9.7
Compulsory social security contributions
1.7
1.5
Contributions to defined contribution plans
1.1
1.0
Defined benefit pension plans expense (note 25)
(1.0)
(0.2)
12.9
12.0
Income statement capital column
Share-based payments (note 24)
7.1
7.4
National Insurance on share awards
1.2
0.8
8.3
8.2
21.2
20.2
The average number of employees, including executive directors,
throughout the year was as follows:
2024
No
2023
No
Average number of employees
71
62
Total directors’ remuneration expensed for the year was £5.3m
(2023: £4.8m), as follows:
Group
2024
£m
2023
£m
Short-term employee benefits
2.8
2.7
Gains on exercise of share awards
2.5
2.1
5.3
4.8
Full details on Directors’ fees is provided in the Directors’
remuneration report.
133
Strategic report
Corporate governance
Financial statements
Other information
Introduction
3. Treasury interest receivable
2024
£m
2023
£m
Interest on bank deposits and liquidity funds
3.2
4.6
4. Finance costs
2024
£m
2023
£m
Interest on bank loans and overdrafts
3.4
2.3
On loans from group companies
7.2
0.1
10.6
2.4
5. Taxation
Recognised in profit for the year
2024
£m
2023
£m
Current tax income
Current year
3.4
13.4
Adjustments for prior years
(1.5)
(1.3)
1.9
12.1
Deferred tax income/(expense)
Origination and reversal of temporary differences
0.5
(25.6)
Adjustments for prior years
–
7.2
0.5
(18.4)
Total tax income/(expense)
2.4
(6.3)
Adjustments for prior years represented settlement of prior year
tax loss relief surrendered to group companies, finalised in the year.
Reconciliation of effective tax expense
2024
£m
2023
£m
Profit before tax
201.4
149.2
Tax expense at the domestic rate of 25%/19%
(50.4)
(28.4)
Non-deductible expenses
2.1
0.1
Derecognition of losses
(4.7)
(19.3)
Non-taxable gains on investments1
42.8
25.1
Non-taxable dividend income
14.0
9.0
Other temporary differences
0.1
1.3
Adjustments for prior years
(1.5)
5.9
Tax income/(expense)
2.4
(6.3)
1. The Company is exempt from UK corporation tax on capital gains as it
meets the HM Revenue & Customs criteria for an investment company set
out in Section 1158 of the Corporation Tax Act 2010.
Recognised in other comprehensive income
2024
£m
2023
£m
Current tax income
Current year
0.6
0.5
Deferred tax income/(expense)
On re-measurements of defined benefit
pension schemes
0.2
(0.5)
On share options and awards
(0.4)
(0.3)
(0.2)
(0.8)
Total tax income/(expense)
0.4
(0.3)
Current tax assets
Current tax assets of £1.7m in the group and £2.0m in the company
represented tax loss relief surrender for settlement (2023: £19.3m
in the group and £20.3m in the company).
6. Dividends
Amounts recognised as distributions to owners of the company
in the year were as follows:
2024
2023
p/share
£m
p/share
£m
Final dividend for the year
ended 31 March 2023 (2022)
49.20
26.7
47.3
25.6
Special dividend for the year
ended 31 March 2022
175.0
95.0
Interim dividend for the year
ended 31 March 2024 (2023)
18.93
10.3
18.2
9.9
68.13
37.0
240.5
130.5
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 2024
51.47
28.0
The proposed final dividend for the year ended 31 March 2024
was not included as a liability in these financial statements.
The dividend, if approved by shareholders at the annual general
meeting to be held on 17 July 2024, will be payable on 1 August
2024 to holders of shares on the register on 28 June 2024. The
ex-dividend date will be 27 June 2024. The deadline for elections
under the dividend reinvestment plan offered by Link Group will
be the close of business on 11 July 2024.
For the purposes of section 1158 of the Corporation Tax Act 2010
and associated regulations, the dividends payable for the year
ended 31 March 2024 are the interim and final dividends for that
year, amounting to £38.3m (2023: £36.6m).
7. Earnings per share
Basic and diluted earnings per share
The calculation of basic earnings per share of the group was based
on the profit 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 attributable to shareholders (basic and diluted) was
as follows:
2024
£m
2023
£m
Revenue
40.5
20.6
Capital
163.3
122.3
Total
203.8
142.9
The weighted average number of shares was as follows:
2024
000’s
2023
000’s
Issued shares at the year start
54,664
54,664
Effect of shares cancelled
(1)
–
Effect of shares held by the employee share trust
(270)
(376)
Basic weighted average number of shares
in the year
54,393
54,288
Effect of performance shares, share options
and deferred bonus awards
844
881
Diluted weighted average number of shares
in the year
55,237
55,169
Notes to the financial statements (continued)
134
Caledonia Investments plc Annual Report 2024
8. Investments
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Investments held at fair value
through profit or loss
Investments listed on a
recognised stock exchange
949.8
836.9
949.8
836.9
Unlisted investments
1,745.6
1,958.0
1,750.9
1,966.3
2,695.4
2,794.9
2,700.7
2,803.2
Investments held at cost
Service subsidiaries
0.9
0.9
Held for sale
Unlisted investments
19.0
19.0
2,714.4
2,794.9
2,720.6
2,804.1
The movements in non-current investments were as follows:
Listed
equity
£m
Unlisted
equity1
£m
Unlisted
debt
£m
Total
£m
Group
Balance at 31 March 2022
830.1
1,525.3
30.0
2,385.4
Transfers
–
(1.6)
1.6
–
Purchases at cost
54.4
413.7
–
468.1
Disposal proceeds
(28.2)
(156.8)
(6.0)
(191.0)
Gains/losses on investments
(19.4)
152.4
–
133.0
Accrued income
–
(0.6)
–
(0.6)
Balance at 31 March 2023
836.9
1,932.4
25.6
2,794.9
Transfer to Held for sale
–
(19.0)
–
(19.0)
Purchases at cost
76.5
265.0
1.9
343.4
Disposal proceeds
(43.5)
(556.2)
–
(599.7)
Gains/losses on investments
79.9
94.5
–
174.4
Accrued income
–
1.4
–
1.4
Balance at 31 March 2024
949.8
1,718.1
27.5
2,695.4
Company
Balance at 31 March 2022
830.1
1,535.4
30.0
2,395.5
Transfers
–
(1.6)
1.6
–
Purchases at cost
54.4
413.7
–
468.1
Disposal proceeds
(28.2)
(156.8)
(6.0)
(191.0)
Gains/losses on investments
(19.4)
151.5
–
132.1
Accrued income
–
(0.6)
–
(0.6)
Balance at 31 March 2022
836.9
1,941.6
25.6
2,804.1
Transfer to Held for sale
–
(19.0)
–
(19.0)
Purchases at cost
76.5
265.0
1.9
343.4
Disposal proceeds
(43.5)
(556.2)
–
(599.7)
Gains/losses on investments
79.9
91.5
–
171.4
Accrued income
–
1.4
–
1.4
Balance at 31 March 2024
949.8
1,724.3
27.5
2,701.6
1. Unlisted equity included limited partnership and open-ended fund
investments, including a loan facility to a wholly owned investment
subsidiary investing in US PE funds. It also included £18.0m of non-pool
investments (2023: £260.2m non-pool investments).
9. Investment property
Freehold
property
£m
Cost
Balance at 31 March 2022
19.7
Acquisitions
0.1
Balance at 31 March 2023 and 2024
19.8
Revaluation
Balance at 31 March 2022
(3.7)
Revaluation in the year
(1.0)
Balance at 31 March 2023
(4.7)
Revaluation in the year
(1.8)
Balance at 31 March 2024
(6.5)
Carrying amounts
At 31 March 2022
16.0
At 31 March 2023
15.1
At 31 March 2024
13.3
At 31 March 2024, the group held one property classified as
investment property, comprising that part of its head office
building occupied by a third-party tenant.
The fair value of the investment property was determined by
Tuckerman, an external, independent property valuer, holding
recognised and relevant professional qualifications and with recent
experience in the location and category of the property being
valued. The valuation conforms to the Royal Institution of
Chartered Surveyors (‘RICS’) Valuation Professional Standards.
Fees paid to the valuer are based on a fixed price contract.
As the property was let to a third-party tenant, it was valued on
the basis of the terms of the lease and current rent payable.
The investment property held by the group is classified as Level 3
under the fair value hierarchy (see page 143).
Property
Market
value
£m
Valuation
technique
Key unobservable
inputs
Range
(weighted
average)
Buckingham
Gate
13.3
Residual
development
Rent per sq ft pa
£38.00 –
£85.00
(£73.78)
value
Rent-free period
1.5 yrs
Capitalisation rate
5.25%
Purchaser’s costs
6.8%
An increased capitalisation rate of 0.25% would result in a
decreased asset valuation of £0.1m and a decrease of 0.25% would
result in an increased asset valuation of £0.1m. Conversely, an
increase in the estimated rent by 5% would result in an increase in
the asset valuation of £1.3m and a decrease of 5% would result in
a decrease in the asset valuation of £1.3m. The above inputs are
interdependent and partially determined by market conditions.
The impact on the valuation could be mitigated by the inter-
relationship between these inputs.
135
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
The prior year sensitivity to inputs was as follows:
The investment property held by the group is classified as Level 3.
Property
Market
value
£m
Valuation
technique
Key unobservable
inputs
Range
(weighted
average)
Buckingham
Gate
15.1
Residual
development
value
Rent per sq ft pa
£38.00 –
£85.00
(73.78)
Rent-free period
0.5 yrs
Capitalisation rate
4.75%
Purchaser’s costs
6.8%
An increased capitalisation rate of 0.25% would result in a
decreased asset valuation of £0.8m and a decrease of 0.25%
would result in an increased asset valuation of £1.0m. Conversely,
an increase in the estimated rent by 5% would result in an
increase in the asset valuation of £0.8m and a decrease of 5%
would result in a decrease in the asset valuation of £0.7m. The
above inputs are interdependent and partially determined by
market conditions. The impact on the valuation could be
mitigated by the inter-relationship between these inputs.
10. Property, plant and equipment
Group
Property
£m
Office
equip-
ment
£m
Total
£m
Cost
Balance at 31 March 2022
32.4
4.5
36.9
Acquisitions
–
0.2
0.2
Balance at 31 March 2023
32.4
4.7
37.1
Acquisitions
–
0.5
0.5
Disposals
–
(0.2)
(0.2)
Balance at 31 March 2024
32.4
5.0
37.4
Depreciation
Balance at 31 March 2022
–
(2.6)
(2.6)
Depreciation charge
(0.6)
(0.5)
(1.1)
Eliminate depreciation
0.6
–
0.6
Balance at 31 March 2023
–
(3.1)
(3.1)
Depreciation charge
(0.6)
(0.5)
(1.1)
Eliminate depreciation
0.6
–
0.6
Disposals
–
0.2
0.2
Balance at 31 March 2024
–
(3.4)
(3.4)
Revaluation
Balance at 31 March 2022
(5.1)
–
(5.1)
Revaluation in the year
(0.4)
–
(0.4)
Eliminate depreciation
(0.6)
–
(0.6)
Balance at 31 March 2023
(6.1)
–
(6.1)
Revaluation in the year
(2.1)
–
(2.1)
Eliminate depreciation
(0.6)
–
(0.6)
Balance at 31 March 2024
(8.8)
–
(8.8)
Carrying amounts
At 31 March 2022
27.3
1.9
29.2
At 31 March 2023
26.3
1.6
27.9
At 31 March 2024
23.6
1.6
25.2
Property is measured at fair value and comprised freehold land and
buildings.
Property was revalued at 31 March 2024 by an independent valuer.
Had the property been carried under the cost model, the carrying
amount would have been £24.6m (2023: £25.1m).
The fair value of the property was determined by Tuckerman, an
external, independent property valuer, holding recognised and
relevant professional qualifications and with recent experience in
the location and category of the property being valued. The
valuation conforms to the Royal Institution of Chartered Surveyors
(‘RICS’) Valuation Professional Standards. Fees paid to the valuer
are based on a fixed price contract.
The external valuations were prepared by considering the
aggregate of the net annual rents receivable from the property and
where relevant, associated costs. A yield which reflects the specific
risks inherent in the net cash flows is then applied to the net annual
rentals to arrive at the property valuation.
The property held by the group is classified as Level 3 under the fair
value hierarchy (see page 143).
Property
Market
value
£m
Valuation
technique
Key unobservable
inputs
Range
(weighted
average)
Buckingham
Gate
23.6
Rental
yield
Rent per sq ft pa
£40.00 –
£85.00
(£73.32)
Capitalisation rate
5.25%
Purchaser’s costs
6.8%
An increased capitalisation rate of 0.25% would result in a
decreased asset valuation of £1.2m and a decrease of 0.25%
would result in an increased asset valuation of £1.2m. An increase
in the estimated rent by 5% would result in an increase in the
asset valuation of £1.1m and a decrease of 5% would result in a
decrease in the asset valuation of £1.2m. The above inputs are
interdependent and partially determined by market conditions.
The impact on the valuation could be mitigated by the inter-
relationship between these inputs.
The prior year sensitivity to inputs was as follows:
Property
Market
value
£m
Valuation
technique
Key unobservable
inputs
Range
(weighted
average)
Buckingham
Gate
26.3
Rental
yield
Rent per sq ft pa
£40.00 –
£85.00
(£73.32)
Capitalisation rate
4.75%
Purchaser’s costs
6.8%
An increased capitalisation rate of 0.25% would result in a decreased
asset valuation of £1.5m and a decrease of 0.25% would result in an
increased asset valuation of £1.6m. An increase in the estimated rent
by 5% would result in an increase in the asset valuation of £1.3m and
a decrease of 5% would result in a decrease in the asset valuation
of £1.3m. The above inputs are interdependent and partially
determined by market conditions. The impact on the valuation could
be mitigated by the inter-relationship between these inputs.
136
Caledonia Investments plc Annual Report 2024
11. Deferred tax
Deferred tax assets and liabilities were attributable
to the following:
Group
Assets
£m
Liabilities
£m
Net
£m
2024
Employee benefits
5.4
(1.0)
4.4
Other timing differences
(0.1)
(0.1)
(0.2)
5.3
(1.1)
4.2
2023
Employee benefits
5.5
(1.4)
4.1
Other timing differences
0.2
(0.4)
(0.2)
5.7
(1.8)
3.9
Movement in temporary differences during the year
Group
Balance at
year start
£m
Compre-
hensive
income
£m
Other
compre-
hensive
income
£m
Balance at
year end
£m
2024
Employee benefits
4.1
0.5
(0.2)
4.4
Other timing differences
(0.2)
–
–
(0.2)
3.9
0.5
(0.2)
4.2
2023
Employee benefits
5.1
(0.2)
(0.8)
4.1
Tax losses
18.1
(18.1)
–
–
Other timing differences
(0.1)
(0.1)
–
(0.2)
23.1
(18.4)
(0.8)
3.9
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply to the period when the asset is realised or
the liability settled, based on rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax balances are calculated on all temporary differences
using a tax rate of 25%.
Group and company
Unrecognised deferred tax assets
Deferred tax assets were not recognised in respect of the
following items:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Tax losses
20.1
18.6
20.1
15.0
Corporate Interest
Restrictions
1.0
–
1.0
–
A deferred tax asset was not recognised given the composition of
the company’s portfolio and the restrictions on the utilisation of
brought-forward tax losses, it is not likely that this asset will be
utilised in the foreseeable future. The tax losses do not include
capital losses. The unrecognised deferred tax assets do not have an
expiry date.
Given the company’s status as an investment trust company and
the intention to continue meeting the conditions required to obtain
approval, the company has not provided for deferred tax on any
capital gains or losses arising on the revaluation or disposal of
investments held by the company itself.
12. Trade and other receivables
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Non-current assets
Other receivables
–
–
35.5
37.1
Company non-current other receivables comprise £35.5m due from a
wholly owned subsidiary and in the prior year £1.6m due from the
overseas tax authorities.
Current assets
Trade receivables
2.2
2.8
2.0
2.1
Non-trade receivables and
prepayments
5.1
4.1
3.0
1.0
7.3
6.9
5.0
3.1
We estimate expected credit losses on the group and company
receivables to be under £0.1m (2023: less than £0.1m). Our ECL
assessment included a review of recoverability of the Trade
receivables which comprise quoted investment income and private
capital sales balances to confirm amounts were received within
one month of the reporting date.
An aged analysis of group trade receivables is disclosed below.
Total
£m
Within
terms
£m
0-1 month
£m
2024
2.2
2.1
0.1
2023
2.8
2.7
0.1
13. Net cash and cash equivalents
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Bank balances1
3.9
7.3
4.5
6.8
Money market funds
223.5
214.3
222.8
214.3
Cash and cash equivalents
227.4
221.6
227.3
221.1
1. Bank balances are stated net of bank overdrafts in accordance with the
group banking overdraft arrangement.
14. Interest-bearing loans and borrowings
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Current liabilities
Loans from group companies
–
266.0
–
266.0
During the year ended 31 March 2024 the group and company fully
repaid loans from group companies of $328.8m (£266.0m) (2023:
$328.8m (£266.0m)) bearing interest at 4.85% (4.85%), being the
Fed Funds Target Range Lower Limit (DFEDTARL) plus 0.1% and is
repayable on demand.
As at 31 March 2024 the group had undrawn committed facilities
totalling £250m (2023: £250m), comprising £112.5m from ING
Group expiring in July 2025 and £137.5m from RBSI expiring in
November 2027. The facilities are in place to ensure the group has
sufficient liquid funds to meet its working capital and investment
requirements, most notably drawdown notices from private equity
funds, whose exact timing can be unpredictable.
137
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
Covenants attached to the group loan facilities assess borrowing
levels against the net assets of Caledonia plc and sub-categories
of assets held therein, adjusted to take account of liquidity, asset
concentration and the markets in which they are invested. As at
31 March 2024, Caledonia plc had remaining borrowing capacity
under the covenants of £560m (2023: £523m), considerably in
excess of undrawn facilities. Compliance with covenants is
tested monthly.
During the year, the group and company utilised £70m (2023: £nil)
of an available £250m of bank revolving credit facilities.
15. Trade and other payables
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Trade payables
1.1
1.0
10.5
9.2
Non-trade payables and
accrued expenses
3.1
0.8
13.6
10.1
Other payables
20.2
20.3
14.1
14.5
24.4
22.1
38.2
33.8
Other payables included short-term borrowing from subsidiaries.
16. Share capital
Ordinary
shares
£m
Deferred
ordinary
shares
£m
Share
premium
£m
Total
£m
Balance at 31 March
2022,2023 and 2024
2.7
0.4
1.3
4.4
The number of fully paid shares in issue was as follows:
Ordinary shares
Deferred
ordinary shares
2024
000’s
2023
000’s
2024
000’s
2023
000’s
Balance at the year start
54,664
54,664
8,000
8,000
Shares purchased and cancelled
(52)
–
–
–
54,612
54,664
8,000
8,000
The company had outstanding performance share scheme and
deferred bonus awards (note 24).
As at 31 March 2024, the issued share capital of the company
comprised 54,611,759 ordinary shares (2023: 54,663,662) and
8,000,000 deferred ordinary shares (2023: 8,000,000). The
ordinary and deferred ordinary shares have a nominal value of
5p each.
The holders of the ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the company. In respect of the company’s
ordinary shares that are held by subsidiaries, all voting rights
are suspended.
The deferred ordinary shares carry no voting rights and are not
redeemable. They carry the right to a fixed cumulative preference
dividend of 1% per annum (exclusive of any associated tax credit) of
the nominal value of such deferred ordinary shares, being 0.05p
per share, or £4,000 in aggregate, for all such shares currently in
issue. The company is required to pay the dividend to the extent
that it has distributable profits. On a winding-up or other return of
capital, the deferred ordinary shares carry the right to the payment
of the amount paid up on such shares only after holders of the
ordinary shares have received the sum of £100,000 in respect of
each such ordinary share. All of the deferred ordinary shares are
held by Sterling Industries Ltd, a wholly owned group company.
17. 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.
2024
2023
Net
assets
£m
Number
of shares1
000’s
NAV
p/share
Net
assets
£m
Number
of shares1
000’s
NAV
p/share
Undiluted
2,965.3
54,388
5452 2,798.0
54,326
5150
Share awards
–
844
(83)
–
881
(82)
Diluted
2,965.3
55,232
5369 2,798.0
55,207
5068
1. Number of shares in issue at the year end is stated after the deduction of
223,666 (2023: 337,962) ordinary shares held by the Caledonia
Investments plc Employee Share Trust.
Net asset value total return is calculated in accordance with
guidance from the Association of Investment Companies (‘AIC’),
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.
2024
p
2023
p
Diluted NAV at year start
5068
5041
Diluted NAV at year end
5369
5068
Dividends payable in the year
68
241
Reinvestment adjustment2
6
9
5443
5318
NAVTR over the year
7.4%
5.5%
2. The reinvestment adjustment is the gain or loss resulting from
reinvesting the dividends in NAV at the ex-dividend date.
138
Caledonia Investments plc Annual Report 2024
18. 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 derivatives hedging those 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 and cash equivalents and other items are not
identifiable operating segments.
‘Other investments’ comprise subsidiaries not managed as part of
the investment portfolio.
Reportable segments are identified with reference to investment
‘pools’ which are used by management to organise the asset
allocation and performance measurement of the business.
The pools are quoted equity, private companies (Private Capital)
and private equity funds (Funds), with each pool exposed to
different risks, and operated by different teams according to
distinct investment criteria and subject to different internal
performance targets.
Profit/(loss) before tax
Total assets
2024
£m
2023
£m
2024
£m
2023
£m
Public Companies
101.8
1.4
949.8
836.9
Private Capital
111.2
64.6
820.3
824.0
Funds
19.4
103.6
926.3
873.8
Investment portfolio
232.4
169.6
2,696.4
2,534.7
Other investments1
1.4
7.3
18.0
260.2
Total revenue/investments
233.8
176.9
2,714.4
2,794.9
Cash and cash equivalents
3.2
4.6
227.4
221.6
Other items
(35.6)
(32.3)
57.1
78.9
Reportable total
201.4
149.2
2,998.9
3,095.4
1. Other investments included £18.0m of non-pool investments (2023:
£260.2m of non-pool investments).
Geographical segments
In presenting information on the basis of geographical segments,
segment revenue is based on the currency of primary listing for
listed securities, or country of residence for unquoted investments,
and segment assets are based on the geographical location of the
assets. Non-current assets below comprise investment property
and property, plant and equipment (notes 9-10).
UK
£m
US
£m
Other
£m
Total
£m
2024
Revenue
7.8
102.6
123.4
233.8
Non-current assets
38.5
–
–
38.5
2023
Revenue
19.4
114.7
42.8
176.9
Non-current assets
43.0
–
–
43.0
19. Related parties
Identity of related parties
The group and company had related party relationships with its
subsidiaries (note 27) and associates (note 26) and with its key
management personnel, being its directors.
Transactions with key management personnel
Certain directors of the company and their immediate relatives had
significant influence in The Cayzer Trust Company Ltd, which held
35.6% of the voting shares of the company as at 31 March 2024
(2023: 35.3%).
During the year, the group invoiced and received £0.1m (2023:
£0.1m) in rent and administration fees from The Cayzer Trust
Company Ltd.
In addition to their salaries, the group provided non-cash and
post-employment benefits to directors and executive officers.
Details of directors’ pension benefits are set out in the Directors’
remuneration report on page 99.
The key management personnel compensation was as follows:
Group
2024
£m
2023
£m
Short-term employee benefits
2.8
2.7
Equity compensation benefits
1.5
2.0
4.3
4.7
Total remuneration of directors is included in ‘Personnel expenses’
(note 2).
139
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
Other related party transactions
Subsidiaries
Transactions between the company and its subsidiaries were
as follows:
2024
2023
Amount
of trans-
actions
£m
Balance at
year end
£m
Amount
of trans-
actions
£m
Balance at
year end
£m
Comprehensive income items
Dividends receivable on
equity shares1
22.2
–
16.6
–
Interest receivable
2.4
–
1.9
–
Management fees payable
(31.4)
(11.4)
(29.9)
(9.9)
Interest payable
(7.3)
–
(0.1)
(0.1)
Taxation received
21.1
–
2.1
–
Taxation paid
–
–
(0.1)
–
Financial position items
Investments purchased2
–
–
273.7
–
Equity subscribed
–
–
14.1
–
Investment loans
13.9
66.6
(24.4)
52.6
Loans receivable
–
35.5
–
35.5
Loans payable3
266.0
(20.2)
(265.9)
(286.2)
1. During the year £14.7m of dividend income was received from Caledonia
US Investments Ltd. In addition £216.6m of capital distributions were
received from Caledonia US Investments Ltd.
2. During the prior year $338m (£274m) of fund investments were acquired
from Caledonia US Investments Ltd, a wholly owned subsidiary.
3. During the year $328m (£266m) was repaid to Caledonia US Investments
Ltd on the loan facility provided in the prior year.
Associates
Transactions between the company and group and associates
were as follows:
2024
2023
Amount
of trans-
actions
£m
Balance at
year end
£m
Amount
of trans-
actions
£m
Balance at
year end
£m
Directors’ fees1
0.1
–
0.1
–
Dividends receivable on
equity shares
9.1
–
5.0
–
1. Transactions with subsidiary.
20. Operating leases
Leases as lessor
The group leases out its investment property under operating
leases (note 9). The future minimum lease receipts under non-
cancellable leases were as follows:
2024
£m
2023
£m
Less than one year
0.9
0.9
Between one and five years
1.2
2.1
2.1
3.0
During the year ended 31 March 2024, £0.8m (2023: £0.7m) was recognised
as income in the statement of comprehensive income in respect of operating
leases.
21. 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
2024
£m
2023
£m
2024
£m
2023
£m
Investments
Contracted but not called
377.3
422.6
377.3
422.6
Conditionally contracted
–
–
4.5
4.5
377.3
422.6
381.8
427.1
Amounts are callable within the next 12 months. The group has
conducted a going concern assessment which considered future
cash flows, the availability of liquid assets and debt facilities, over
the 12-month period required. In making this assessment a number
of stress scenarios were developed. All scenarios include all
outstanding private equity fund commitments being drawn. Under
these scenarios the group would have a range of mitigating actions
available to it, including sales of liquid assets and usage of banking
facilities, which would provide sufficient funds to meet all of its
liabilities as they fall due and still hold significant liquid assets over
the assessment period. For further details on assessment of going
concern and viability, please refer to page 62.
22. Contingencies
The company has provided guarantees capped at £6.5m,
£9.0m and £5.0m to the trustees of the Caledonia Pension Scheme,
the Sterling Industries Pension Scheme and the Amber Industrial
Holdings PLC Pension & Life Assurance Scheme respectively
in respect of the liabilities of the participating employers of
those schemes.
Management have not set out a maturity analysis in relation to
the pensions guarantees totalling £20.5m on the grounds that
management are unable to accurately allocate to the earliest
period in which the guarantee could be called due to the conditions
of this guarantee.
140
Caledonia Investments plc Annual Report 2024
23. Financial instruments
Financial instruments comprise securities and other investments,
cash balances, borrowings, and receivables and payables that arise
from operations. The investment portfolio includes listed and
unlisted equity investments, debt instruments and investments
in funds that are intended to be held for the long term.
Risk analysis
The main types of financial risk to which the group is exposed are
market risk (which encompasses price risk, currency risk and fair
value interest rate risk), credit risk and liquidity risk.
The nature and extent of the financial instruments outstanding
at the reporting date and the risk management policies employed
are discussed below.
Market risk
Market risk embodies the potential for both losses and gains,
and includes price risk, currency risk and fair value interest rate risk.
The strategy for managing market risk is driven by the company’s
objectives, which are to outperform the CPIH by 3% to 6% in the
short term and the FTSE All-Share Total Return index over rolling
10-year periods. Investments are made in a range of instruments,
including listed and unlisted equities, debt and investment funds,
in a range of sectors and regions.
Price risk
Price risk may affect the value of listed and unlisted investments
as a result of changes in market prices (other than arising from
interest rate risk or currency risk), whether caused by factors
specific to an individual investment, its issuer or factors affecting
all instruments traded in the market. Factors affecting instruments
traded in the market could include changes in market prices
whether driven by market sentiment, information specific to
individual investments, or the movements in foreign currency
relative to the group’s functional currency of Sterling.
As the majority of financial instruments are carried at fair
value, with fair value changes recognised in the Statement of
comprehensive Income, all changes in market conditions will
affect portfolio asset prices.
Price risk is managed by constructing a diversified portfolio
of instruments traded on various markets and hedging
where appropriate.
The exposures of listed and unlisted equity investments and fund
interests were as follows:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Investments held at fair value
through profit or loss
2,667.9
2769.3
2,673.2
2777.6
The following table details the sensitivity to a 10% variation in
equity prices. The sensitivity analysis includes all equity and fund
investments held at fair value through profit or loss and adjusts
their valuation at the year end for a 10% change in value.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Increase in prices
266.8
276.9
267.3
277.7
Decrease in prices
(266.8)
(276.9)
(267.3)
(277.7)
The sensitivity to equity and fund investments has decreased during
the year due to investment realisations in the year, reducing the
portfolio value at the year end.
Currency risk
The group’s currency risk is attributable to monetary items which
are denominated in currencies other than the group’s functional
currency of Sterling. This excludes the impact of foreign currency
movements on equity instruments which carry price risk (see price
risk section above). There is exposure to the risk that the exchange
rate of the functional currency may change relative to other
currencies in a manner that has an adverse effect on the value
of that portion of assets and liabilities denominated in currencies
other than the functional currency.
The company’s non-functional currency denominated monetary
items and gains and losses thereon are reviewed regularly by the
directors and the currency risk is managed by the directors within
the overall asset allocation strategies.
The fair values of the monetary items that have foreign currency
exposure were as follows:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Investments in debt
instruments
1.6
1.6
1.6
1.6
Cash and cash equivalents
15.9
6.7
15.8
6.7
Loans and borrowings
–
(266.0)
–
(266.0)
17.5
(257.7)
17.4
(257.7)
The following table details the sensitivity to a 10% variation in
exchange rates. This level of change is considered to be reasonable,
based on observation of market conditions and historic trends. The
sensitivity analysis includes all foreign denominated debt
investments.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Sterling depreciates (weakens)
1.6
(23.2)
1.6
(23.2)
Sterling appreciates
(strengthens)
(1.3)
19.0
(1.3)
19.0
The exposure to foreign currency has decreased in the year
due to a decrease in foreign denominated group borrowings,
partially offset by an increase in foreign denominated cash and
cash equivalents.
Interest rate risk
Interest rate movements may affect the fair value of investments
in fixed interest securities and the level of income receivable
from fixed income securities and cash at bank and on deposit.
The company and group held cash at bank, term deposits and
money market funds, with the term to maturity of up to three
months and fixed and floating rate, interest-bearing financial
assets and floating rate borrowings.
141
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
The company’s interest-bearing assets and liabilities are reviewed
periodically by the company and interest rate risk is managed by
the directors within the overall asset allocation strategies.
The exposure to interest rate risk on financial assets and liabilities
was as follows:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Fixed rate
Interest-bearing loans to
non-consolidated subsidiaries
1.6
1.6
1.6
1.6
Floating rate
Investments in debt
instruments
25.9
24.0
25.9
24.0
Cash and cash equivalents
227.4
221.6
227.3
221.1
Loans and borrowings
–
(266.0)
–
(266.0)
The sensitivity analysis below has been determined based on the
exposure to interest rates at the reporting date from a 50 basis
point change taking place at the beginning of the financial year
and held constant throughout the year. This level of change is
considered to be reasonable, based on observation of market
conditions and historic trends.
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Decrease in interest rates
(1.1)
0.2
(1.1)
0.2
Increase in interest rates
1.1
(0.2)
1.1
(0.2)
The group’s sensitivity to interest rates has increased over the year
due to a reduction in floating rate loans and borrowings, increasing
net cash balances.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument
will fail to discharge an obligation or commitment. A credit policy is
in place and exposure to credit risk is monitored regularly.
The exposure to credit risk in financial assets was as follows:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Investments in debt instruments
27.5
25.6
27.5
25.6
Operating and other receivables
7.3
6.9
40.5
40.2
Cash and cash equivalents
227.4
221.6
227.3
221.1
262.2
254.1
295.3
286.9
The group’s credit risk is primarily attributable to its cash and cash
equivalents, trade receivables and debt investments. For an aged
analysis of trade receivables see note 12. A group analysis of credit
ratings for cash and cash equivalents is presented below. All other
financial assets are unrated.
Group
Credit rating
2024
£m
2023
£m
AAAm1
223.5
214.3
A+ / A-1
3.9
7.3
227.4
221.6
1. The group holds £223.5m (2023 - £214.3m) in Low Volatility Net Asset
Value money market funds which all hold a AAAm rating from Standard &
Poors and £3.9m (2023- £7.3m) of cash in current accounts with three
commercial banks with credit ratings from Standard & Poors of A+ and A-.
Debt instruments relate to loans to investees within the Private
Capital pool totalling £27.5m (2023: £25.6m). Prior to making
investments in debt instruments, management has in place
a process of review that includes an evaluation of a potential
investee company’s ability to service and repay its debt.
Management assess the credit risk relating to these instrument
as part of an overall ongoing monitoring of its debt and equity
positions in each relevant investee.
The exposure to credit risk on operating and other receivables
is mitigated by performing credit evaluations on investee
companies as part of the due diligence process.
Credit risk arising on money market liquidity funds and cash and
cash equivalents is mitigated by spreading liquidity investments
and deposits across a number of approved counterparties in
accordance with board policy. These are ‘AAA’ rated money market
funds, as determined by the rating agencies Fitch, Moody’s or
Standard & Poor’s; highly-rated banks operating in the London
money market; or investment-grade clearing banks specifically
approved by the board. These credit ratings are reviewed regularly.
At the year end, the group and company had money market
liquidity funds of £223.5m respectively (2023: £214.3m).
At the year end, the group and company had £30.5m invested in
the JP Morgan GBP and US Dollar liquidity funds, £30m invested
in each of the ILF GBP liquidity fund from Insight and the LGIM
Liquidity Fund GBP, £28.6m invested in the Institutional Sterling
and US Dollar Liquidity funds from Blackrock, £26.0m invested
in each of the Aberdeen Liquidity Fund (Lux) GBP, the Sterling
Liquidity fund from Aviva Investors and the Sterling Liquid Reserves
Fund from Goldman Sachs. In addition the company and group
had £25.7m and £26.4m invested respectively in the HSBC Global
Liquidity Funds plc Sterling and US Dollar Liquidity Funds.
At the prior year end, the group and company had £30m invested
in each of the Aberdeen Liquidity Fund (Lux) GBP, the LGIM
Liquidity Fund GBP, the Institutional Sterling Liquidity fund from
Blackrock, the Sterling Liquidity fund from Aviva Investors and the
ILF GBP Liquidity Fund from Insight, £25.5m invested in Sterling
Liquid Reserves Fund from Goldman Sachs, £24.0m in the JP
Morgan GBP liquidity fund, £14.8m in the HSBC Global Liquidity
Funds plc Sterling and US Dollar Liquidity Fund.
All transactions in listed securities are settled on contract terms
using approved brokers. The risk of default is considered minimal,
as delivery of securities sold is only made once the broker has
received payment. Payment is made on a purchase once the
securities have been received by the broker. The trade will fail if
either party fails to meet their obligations. Listed security trades
are settled through HSBC Global Custody.
Fair value
Most of the financial instruments are carried at fair value in
the Statement of financial position. Usually, the fair value of
the financial instruments can be reliably determined within
a reasonable range of estimates. For certain other financial
instruments, specifically operating and other receivables and
payables, the carrying amounts approximate fair value due to the
immediate or short-term nature of these financial instruments.
142
Caledonia Investments plc Annual Report 2024
Liquidity risk
Liquidity risk arises as a result of the possibility that the group and
company may not be able to meet its obligations as they fall due.
The corporate treasury function provides services to the company
and group, coordinating access to domestic financial markets for
both borrowing and depositing. Group companies access local
financial markets when this is more favourable, in liaison with the
corporate treasury function. Executive management monitors the
group’s liquidity on a weekly basis, including the level of undrawn
committed bank facilities.
Bank facilities were undrawn at 31 March 2024 and 2023.
Capital management policies and procedures
The group’s capital management objectives are:
• to ensure that the group and company will be able to continue
as a going concern
• to maximise the income and capital return to the company’s
shareholders, principally through the use of equity capital,
although the group will maintain appropriate borrowing facilities,
to be used for short-term working capital or bridging finance,
currently £250m (2023: £250m).
The group’s total capital at 31 March 2024 was £2,965.3m (2023:
£3,064.0m) and comprised equity share capital and reserves of
£2,965.3m (2023: £2,798.0m) and £nil of borrowings (2023:
£266.0m). The group was ungeared at the year end (2023: £266.0m
of group borrowings) and had £250m (2023: £250m) of undrawn
committed bank facilities.
The board monitors and reviews the broad structure of the group’s
and company’s capital on an ongoing basis. This review includes:
• the planned level of gearing, which takes into account planned
investment activity
• the possible buyback of equity shares for cancellation, which
takes account of the discount of the share price to net asset
value per share
• the annual dividend policy.
The group’s objectives, policies and processes for managing capital
are unchanged from the preceding year.
The parent company is subject to the following externally imposed
capital requirements:
• as a public limited company, the company is required
to have a minimum issued share capital of £50,000
• to maintain its approval as an investment trust company, the
company is required to comply with the provisions of section
1158 of the Corporation Tax Act 2010 as amended by the
Investment Trust (Approved Company) (Tax) Regulations 2011.
The parent company has complied with these requirements,
which are unchanged since the previous year end.
Fair value hierarchy
The company measures fair values using the following fair value
hierarchy, reflecting the significance of the inputs used in making
the measurements:
Level 1
Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments.
Level 2
Inputs other than quoted prices included in Level 1
that are observable either directly or indirectly.
Level 3
Inputs that are unobservable.
The table below analyses financial instruments held at fair value
according to level in the fair value hierarchy into which the fair
value measurement is categorised:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Investments held at fair value
Level 1
949.9
836.9
949.9
836.9
Level 2
8.4
4.8
8.4
4.8
Level 3
1,737.1
1,953.2
1,742.4
1,961.5
2,695.4
2,794.9
2,700.7
2,803.2
The following table shows a reconciliation from the opening
balances to the closing balances for fair value measurements in
Level 3 of the fair value hierarchy:
Group
Company
2024
£m
2023
£m
2024
£m
2023
£m
Balance at the year start
1,953.2
1,549.1
1,961.5
1,558.3
Transferred to Held for Sale
(19.0)
–
(19.0)
–
Purchases
269.8
413.5
269.8
413.5
Disposal proceeds
(327.8)
(162.8)
(327.8)
(162.8)
Gains and losses on
investments sold in the year
122.7
126.7
122.7
126.7
Gains and losses on
investments held at the
year end
(263.2)
27.3
(266.2)
26.4
Accrued income
1.4
(0.6)
1.4
(0.6)
Balance at the year end
1,737.1
1,953.2
1,742.4
1,961.5
The following table provides information on significant
unobservable inputs used at 31 March 2024 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
143
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
Private company assets have been disaggregated into categories
as follows: Assets in the large, earnings-based category have an
enterprise value of >200m (2023: >£150m), and benefit from a
reasonable number of comparative data points, as well as having
sufficient size to make their earnings reliable and predictable. The
assets in the small and medium, earnings based category have an
Enterprise Value of <£200m (2023: £50-£150m) and have a more
limited universe of comparable businesses available. Manager
valuations are used for assets where the net asset method is
employed. During the year the large categorisation was increased
to >£200m.
For private company assets, we have chosen to sensitise and
disclose EBITDA 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, 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 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.
At 31 March 2024
Description /
valuation method
Fair
value £m
Unobser-
vable
input
Weighted
average
input
Input
sensit-
ivity
+/-
Change
in valu-
ation
+/- £m
Internally developed
Private companies
Large, earnings
473.9
EBITDA
multiple
12.1x
10.0%
+51.1/-
52.7
Small and medium,
earnings
164.0
EBITDA
multiple
9.1x 10.0%-
15.0%
+15.3/-
14.4
Net assets /
manager valuation
182.4
Multiple
1
0.1x
+18.6/-
18.8
820.3
+85.0/-
85.9
Non-pool companies
18.0
Total internal
838.3
Externally developed
Private equity funds
Net asset value
898.8 Manager
NAV
1
5%
+/-44.9
1,737.1
+129.9/-
130.8
The table below sets out information about significant
unobservable inputs used at the prior year end, 31 March 2023 in
measuring financial instruments categorised as Level 3 in the fair
value hierarchy.
At 31 March 2023
Description /
valuation method
Fair
value £m
Unobser-
vable
input
Weighted
average
input
Input
sensit-
ivity
+/-
Change
in valu-
ation
+/- £m
Internally developed
Private companies
Large, earnings
460.6
EBITDA
multiple
14.0x 10.0%
+39.6/-
55.5
Medium, earnings
160.6
EBITDA
multiple
11.0x 10.0%
+/-13.1
Small, earnings
10.3
EBITDA
multiple
4.6x 15.0%
+/-1.2
Net assets / manager
valuation
192.5
Multiple
1
0.1x
+/-21.8
824.0
+75.7/-
91.6
Non-pool companies
260.2
Total internal
1084.2
Externally developed
Private equity funds
Net asset value
869.0 Manager
NAV
1
5%
+/-43.5
1,953.2
+119.2/-
135.1
144
Caledonia Investments plc Annual Report 2024
Private capital companies
Valuation approach
For each asset, management consider a range of valuation methods
and select those which are considered most appropriate for each
asset, taking into consideration the quantity and quality of data
points available with each method. Methods include inter alia:
Indicative offers. We regularly receive indications of interest from
potential acquirers for our private capital assets, either as part of a
structured sale process or in the form of a direct approach. Where
we judge it appropriate, the insight gained from such approaches is
incorporated into the data sets used in arriving at valuations. Where
there is an offer from credible buyer or buyers, and there is an
intention to advance discussions, our practice is to consider fair
values derived from an indicative enterprise value based on offers
received with an appropriate discount applied. Discounts aim to
reflect the unique uncertainty associated with the execution of
each transaction, and are normally in a range of 5-20%.
Multiples
This method involves the application of an earnings multiple to
the maintainable earnings of the business, most commonly earnings
before interest, tax, depreciation and amortisation (‘EBITDA’)
multiples, and is likely to be appropriate for investments in
established businesses with an identifiable ongoing earnings stream.
Such multiples are derived from (i) comparable public companies
based on geographic location, industry, size, target markets and
other factors that management considers to be reasonable and
(ii) reported mergers and acquisitions transactions involving
comparable companies. EBITDA multiples ranged from 4x to 15x
(2023: 4x to 14x), weighted average 11.5x (2023: 13.1x). Earnings
are obtained from portfolio company statutory and management
accounts and forecast management accounts. Maintainable
earnings are estimated by adjusting reported and forecast earnings
for non-recurring items (for example restructuring expenses),
for significant corporate actions, and, in exceptional cases,
run-rate adjustments.
Net assets
This method is likely to be appropriate for businesses whose value
derives principally from the underlying value of its assets rather than
its ongoing earnings. A third-party valuation may be used to derive
the fair value of a particular asset or group of assets, most
commonly property assets.
Having selected an appropriate method, management then
consider a range of data relevant to each asset. The data selected
and the assumptions used are in each case examined by the
Valuation Committee and Audit and Risk Committee to ensure
sufficient challenge and reflection has been made on the decisions
made to arrive at valuations.
In arriving at valuations for the Private Capital portfolio, the
directors have conducted a portfolio analysis, examining company
and sector specific vulnerabilities, the quantity and quality of data
available, as well as considering operating and financial leverage and
liquidity. They have classified the investments into five categories
based on a combination of enterprise value, valuation technique
and sector as shown adjacent.
Investment
Category
EV Range
£m
Valuation
technique
Valuation
£m
Cobehold
Utilise external
valuation
N/A
Net assets
181.0
AIR-serv
Europe
Large, internally
developed
>200m
Earnings
170.1
Stonehage
Fleming
Large, internally
developed
>200m
Earnings
168.5
Liberation
Group
Large, internally
developed
>200m
Earnings
135.2
Cooke Optics Small and medium,
internally developed
<200m
Earnings
105.4
Sports
Information
Services
Small and medium,
internally developed
<200m
Earnings
35.0
Other
investments
25.1
820.3
At 31 March 2023, the investments were classified as follows:
Investment
Category
EV Range
£m
Valuation
technique
Valuation
£m
Seven
Investment
Management
Large, internally
developed
>150m
Earnings
187.1
Cobehold
Utilise external
valuation
N/A
Net assets
176.1
Stonehage
Fleming
Large, internally
developed
>150m
Earnings
141.6
Liberation
Group
Large, internally
developed
>150m
Earnings
131.9
Cooke Optics Medium, internally
developed
50-150m
Earnings
124.5
BioAgilytix
Utilise external
valuation
N/A
Net assets
16.4
Other
investments
Smaller
<50m
46.4
824.0
145
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
The valuation of Private Capital companies has also been informed
by offers we have received from interested parties in the year
ended 31 March 2024.
More details on the valuation process for individual assets within
these categories is outlined below.
Large, internally developed
AIR-serv Europe, Stonehage Fleming and Liberation Group use an
earnings multiple method with earnings derived from trading over
historic, current and forecast periods. A particularly high-quality set
of comparator companies was identified when arriving at an
appropriate multiple.
Medium, internally developed
Cooke Optics and Sports Information Services use an earnings
multiple method with earnings derived from trading over historic,
current and forecast periods. Multiples were arrived at after
considering a basket of sector specific transactions and sector
specific multiples.
Cooke Optics and Sports Information Services are market-leading
companies operating in niche sectors so the quantity of available
suitable publicly quoted comparators is low.
Utilise external valuation
Cobehold’s fair value is derived from the valuation prepared by
Cobepa (the manager) which reflects the net asset value of the
group as at 31 December 2023, Cobehold’s year end.
Non-pool companies
Non-pool companies comprise principally cash or group company
receivables or payables held in subsidiary investment entities.
Private equity funds
Private equity fund interests are valued on a net assets basis,
estimated based on the managers’ NAVs. Manager’s NAVs apply
valuation techniques consistent with IFRS and are normally subject
to audit. Managers’ NAVs are usually published quarterly, two to
four months after the quarter end. Consequently, the fund
valuations included in these financial statements were based
principally on the 31 December 2023 managers’ NAVs.
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Caledonia Investments plc Annual Report 2024
24. Share-based payments
The company has a performance share scheme that entitles senior
executives to receive options over the company’s shares, which
are exercisable subject to service and performance conditions.
For nil-cost option awards granted in 2014, half of the shares
comprised in the awards may be exercised after three years and half
after five years. For nil-cost option awards granted in 2015 onwards,
one-third of the shares comprised in the awards may be exercised
after three years and two-thirds after five years.
The company also has a deferred bonus plan, under which senior
employees compulsorily defer part of their annual bonus, being any
bonus in excess of 50% of their basic salary for the bonus year,
into shares.
The terms and conditions of the grants outstanding were as follows,
whereby all grants are settled by physical delivery of shares:
Grant date
Entitlement
Vesting
conditions
Number
of shares
Performance share scheme awards
27.11.14
Award grant to senior staff
Note 1
2,075
26.06.15
Award grant to senior staff
Note 3
916
26.05.16
Award grant to senior staff
Note 3
2,585
21.07.17
Award grant to senior staff
Note 3
3,769
30.05.18
Award grant to senior staff
Note 3
9,319
31.05.19
Award grant to senior staff
Note 3
134,935
04.08.20
Award grant to senior staff
Note 3
167,343
04.06.21
Award grant to senior staff
Note 3
157,716
30.06.21
Award grant to senior staff
Note 3
7,893
30.05.22
Award grant to senior staff
Note 3
153,846
25.11.22
Award grant to senior staff
Note 3
5,169
30.05.23
Award grant to senior staff
Note 3
190,309
24.11.23
Award grant to senior staff
Note 3
19,665
855,540
Deferred bonus awards to senior staff
04.06.21
Compulsory award
Note 2
33,614
30.05.22
Compulsory award
Note 2
34,283
30.05.23
Compulsory award
Note 2
1,976
69,873
1. Three/five years of service with vesting on a graduated basis from 10% to
100% for annualised NAV total return of 3% to 10% and (for investment
executives) annualised pool total returns in a range of 4% to 15%, in each
case measured over three years for one-half of the award and five years
for the other half of the award. Investment executives’ awards are
measured as to 80% by reference to pool total returns and 20% by
reference to NAV total return, other than Mr Cayzer-Colvin’s awards,
which are 60% and 40% respectively.
2. Three years of service.
3. Three/five years of service with vesting on a graduated basis from 10% to
100% for annualised NAV total return of 3% to 10% and (for investment
executives) annualised pool total returns in a range of 4% to 15%, in each
case measured over three years for one-third of the award and five years
for the remaining two-thirds of the award. Investment executives’ awards
are measured as to 80% by reference to pool total returns and 20% by
reference to NAV total return, other than Mr Cayzer-Colvin’s awards,
which are 60% and 40% respectively.
All performance share awards have a life of 10 years and all
deferred bonus awards have a life of four years.
The fair value of services received in return for performance share
scheme and deferred awards granted was measured indirectly,
by reference to the share price at the date of grant.
The weighted average share price at the date of exercise of share
awards during the year was as follows:
2024
p
2023
p
Weighted average share price
3467
3731
Under the schemes, awards were granted with service and
non-market performance conditions. Such conditions were not
taken into account in the fair value measurement of the services
received at the dates of grant.
Employee expenses were as follows:
Years ended 31 March
2024
£m
2023
£m
Performance share awards granted in 2018
0.6
0.4
Performance share awards granted in 2019
0.4
0.7
Performance share awards granted in 2020
0.7
0.8
Performance share awards granted in 2021
1.1
1.9
Performance share awards granted in 2022
1.1
1.4
Performance share awards granted in 2023
0.8
1.1
Performance share awards granted in 2024
1.3
–
Deferred bonus awards for 2019
–
0.1
Deferred bonus awards for 2021
0.6
0.6
Deferred bonus awards for 2022
0.5
0.4
7.1
7.4
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Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
25. Employee benefits
Group
2024
£m
2023
£m
Non-current assets
Defined benefit pension asset
4.3
4.0
Current liabilities
Profit sharing bonus
(3.1)
(2.4)
Non-current liabilities
National Insurance on performance shares and
deferred bonus awards
(2.7)
(2.7)
Dividends payable on performance shares and
deferred bonus awards
(2.3)
(2.4)
(5.0)
(5.1)
Total employee liabilities
(8.1)
(7.5)
Defined benefit pension obligations
The group operates three plans in the UK that provide pension
benefits for employees and makes contributions to one of the
plans. The schemes are approved by HMRC for tax purposes and
operated separately from the group, being managed by an
independent set of trustees, whose appointment is determined
by the schemes’ documentation and legislation. The schemes are
subject to UK funding regulations, which require the group and the
trustees to agree a funding strategy and contribution schedule
where necessary. Three (2023: three) of the schemes were in
surplus on an IAS 19 basis. One scheme surplus was recognised in
full as the company considers there is an unconditional right to a
refund under IFRIC 14, one scheme surplus was capped at the
economic benefit of reduced future contributions and one scheme
surplus was unrecognised. Two schemes were effectively closed to
new members in April 1996 and the other scheme in April 1997.
New employees joining after that date were offered alternative
defined contribution pension arrangements. Caledonia Group
Services Ltd, a wholly owned subsidiary of Caledonia Investments
plc, is the sponsoring employer for all schemes.
2024
£m
2023
£m
Present value of funded obligations
(49.0)
(50.6)
Fair value of plan assets
74.1
71.9
Present value of net assets
25.1
21.3
Irrecoverable surplus
(20.8)
(17.3)
4.3
4.0
Changes in the present value of defined benefit obligations were
as follows:
2024
£m
2023
£m
Balance at the year start
50.6
68.4
Service cost
0.1
0.1
Interest cost
2.4
1.7
Actuarial loss/(gain) from changes:
- in demographic assumptions
(0.6)
(0.5)
- in financial assumptions
(0.9)
(17.3)
- experience gains
0.2
1.4
Actual benefit payments
(2.8)
(3.2)
Balance at the year end
49.0
50.6
Changes in the fair value of plan assets were as follows:
2024
£m
2023
£m
Balance at the year start
71.9
78.9
Interest income
3.4
2.0
Return on plan assets less interest income
1.5
(5.9)
Employer contributions
0.1
0.1
Actual benefit payments
(2.8)
(3.2)
Balance at the year end
74.1
71.9
Amounts recognised in management expenses in the Statement
of comprehensive income were as follows:
2024
£m
2023
£m
Service cost
0.1
0.1
Interest on obligations
2.4
1.7
Interest on plan assets
(3.4)
(2.0)
(0.9)
(0.2)
Amounts recognised in other comprehensive income
were as follows:
2024
£m
2023
£m
Actuarial gains arising from financial assumptions
0.9
17.3
Actuarial gains/(losses) arising from demographic
assumptions
0.6
0.5
Actuarial losses from experience adjustments
(0.2)
(1.4)
Return on plan assets less interest income
1.5
(5.9)
Increase in irrecoverable surplus
(3.6)
(9.1)
Re-measurement (losses)/gains in the year
(0.8)
1.4
An analysis of plan assets at the end of the year was as follows:
2024
£m
2023
£m
Equities
35.3
32.1
Bonds
27.2
22.5
Cash
11.6
17.3
74.1
71.9
The analysis of plan assets above included an underlying asset
allocation of investment funds.
Principal actuarial assumptions at the reporting date (expressed
as weighted averages) were as follows:
2024
%
2023
%
Discount rate at the year end
4.8
4.8
Future salary increases
3.0
4.5
Future pension increases
3.3
3.4
RPI price inflation
3.3
3.4
Mortality rates are assumed to follow the Self-Administered Pension
Schemes ‘Series 3’ Light tables applicable to each member’s year of
birth, projected to calendar year 2020 in line with the core CMI scale
of improvements. Allowance has also been made for further
improvements in line with CMI core projections with a long-term
trend of 1.5% pa. Life expectancy on retirement in normal health is
assumed to be 27.8 years (2023: 27.7 years) for males and 28.8 years
(2023: 28.7 years) for females who are currently 62 years of age.
Expected contributions to group post-employment benefit plans for
the year ending 31 March 2025 were £0.1m (2024: £0.1m).
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Caledonia Investments plc Annual Report 2024
In the UK, the funding is set on the basis of a triennial funding
valuation by the actuaries for which the assumptions may differ
from those above. IAS 19 requires ‘best estimate’ assumptions to
be used whereas the funding valuation uses ‘prudent’ assumptions.
As a result of these valuations, the group and the scheme trustees
agree a Schedule of Contributions, which sets out the required
contributions from the employer and employees for current
service. Where the scheme is in deficit, the Schedule of
Contributions also includes required contributions from the
employer to eliminate the deficit. The most recent triennial
valuations were completed in 2021 and 2023. A summary of the
recent funding obligations and weighted average duration of the
defined benefit obligations was as follows:
Obligations
at 31 Mar
2021
£m
Weighted
average
duration
at 31 Mar
2024
years
Amber Industrial Holdings Pension Scheme
13.0
11
Caledonia Pension Scheme
31.7
12
At 30 Sep
2022
£m
At 31 Mar
2024
years
Sterling Industries Pension Scheme
17.2
9
Sensitivities
The calculation of the defined benefit obligation is sensitive to the
assumptions set out above. The following table summarises the
estimated increase in defined benefit obligations to a change in
individual actuarial assumptions, while holding all other
assumptions constant. This sensitivity analysis may not be
representative of the actual change in the defined benefit
obligation as it is unlikely that the change in an assumption would
occur in isolation, as some of the assumptions may be correlated.
2024
£m
2023
£m
Reduction in the discount rate of 0.25%
1.3
1.4
Increase in inflation of 0.25%
0.9
1.0
Increase in life expectancy of one year
2.0
2.1
Risks
The pension schemes typically expose the group to risks such as:
• investment risk – the schemes hold their investments in equities
and bonds, the value of which fluctuates, whether caused by
factors specific to an individual investment, its issuer or factors
affecting all instruments traded in the market
• interest rate risk – the schemes’ liabilities are assessed using
market rates of interest, based on corporate bond yields, to
discount the liabilities and are therefore subject to any volatility
in the movement of the market rate of interest. The net interest
income or expense recognised in profit or loss is calculated using
the market rate of interest
• inflation risk – a significant proportion of the benefits under the
schemes is linked to inflation. Although the schemes’ assets are
expected to provide a good hedge against inflation over the long
term, movements over the short term would increase the
schemes’ net deficit
• mortality risk – in the event that members live longer than
assumed, the liabilities may turn out to have been understated
originally and a deficit may emerge if funding has not been
adequately provided for the increased life expectancy.
26. Interests in associates
Company
Class
Holding %
Registered office
Bloom Engineering Holdings Inc.
Common
49.0
100 Vista Drive, Charleroi, PA 15022-3486
Sports Information Services (Holdings) Ltd
Ordinary
22.6
Unit 2 Whitehall Avenue, Kingston, Milton Keynes, Buckinghamshire,
MK10 0AX
Stonehage Fleming Family & Partners Ltd
Preferred
36.1
Third Floor, 1 Le Truchot, St Peter Port, Guernsey, GY1 1WD
The company is an investment trust company and, accordingly,
does not equity account for associates that are designated as
investments held at fair value through profit or loss.
Aggregated amounts relating to associates, extracted on a 100%
basis, were as follows:
2024
£m
2023
£m
Assets
395.9
381.3
Liabilities
(269.4)
(251.7)
Equity
126.5
129.6
Revenues
429.1
390.2
Profit
15.7
19.1
149
Strategic report
Corporate governance
Financial statements
Other information
Introduction
Notes to the financial statements (continued)
27. Subsidiaries
Company
Class
Holding %
Key to
Registered
office
Company
Class
Holding %
Key to
Registered
office
Caledonia Investments
Amber 2010 Ltd
Ordinary
100.01
6
Caledonia US Investments Ltd
Ordinary
100.01
6
Buckingham Gate Ltd2
Ordinary
100.01
6
Crewkerne Investments Ltd
A Ordinary
B Ordinary
50.51
100.01
6
Caledonia CCIL Distribution Ltd
Ordinary
100.01
6
Easybox Self-Storage Ltd
Ordinary
100.01
6
Caledonia Financial Ltd
Ordinary
100.01
6
Edinmore Investments Ltd
Ordinary
100.01
6
Caledonia Group Services Ltd2
Ordinary
100.01
6
Sterling Crewkerne Ltd
Ordinary
100.01
6
Caledonia Land & Property Ltd
Ordinary
100.01
6
Sterling Industries Ltd
Ordinary
100.01
6
Caledonia Treasury Ltd2
Ordinary
100.01
6
The Union-Castle Mail
Steamship Co Ltd
Ordinary
A Ordinary
100.01
100.01
6
AIR-serv
AIR-serv Belgium BV3
Ordinary
100.0
7
AIRvending Ltd3
Ordinary
100.0
12
AIR-serv France SARL3
Ordinary
100.0
8
Crossbow Bidco Ltd3
Ordinary
100.0
12
AIR-serv Germany GmbH3
Ordinary
100.0
9
Crossbow Midco Ltd3
Ordinary
100.0
12
AIR-serv Netherlands BV3
Ordinary
100.0
10
Crossbow Topco Ltd
Ordinary
99.81
12
AIR-serv Spain SLU3
Ordinary
100.0
11
Cooke Optics
Chaplin Bidco Ltd4
Ordinary
100.0
13
Cooke Optics Group Ltd4
Ordinary
100.0
13
Chaplin Midco Ltd4
Ordinary
100.0
13
Cooke Optics (Hong Kong)
Limited4
Ordinary
100.0
16
Chaplin Topco Ltd
A Ordinary
B Ordinary
C Ordinary
100.01
75.31
98.61
13
Cooke Optics Holdings Ltd4
Ordinary
100.0
13
Cooke Optics Inc.4
Ordinary
100.0
14
Cooke Optics Ltd4
Ordinary
100.0
13
Cooke (Shanghai) Optics
Technology Co Ltd4
Ordinary A
100.0
15
Cooke Optics TV Ltd4
Ordinary
100.0
13
Liberation Group
A.E. Smith & Son Ltd5
Ordinary
100.0
17
La Cave des Vins Ltd5
Ordinary
100.0
17
A.S.B.M. Ltd5
Ordinary
100.0
17
La Rocque Enterprises Ltd5
Ordinary
100.0
17
A.S.B.O. Ltd5
Ordinary
100.0
17
La Rocque Inn (Jersey) Ltd5
Ordinary
100.0
17
A.S.B.T. Ltd5
Ordinary
100.0
17
Lapwing (Trading) Ltd5
Ordinary
100.0
17
Aurora Hotel Ltd5
Ordinary
100.0
17
Le Hocq Hotel Ltd5
Ordinary
100.0
17
Bath Street Wine Cellar Ltd5
Ordinary
100.0
17
Les Garcons Ltd5
Ordinary
100.0
18
Brasserie du Centre Ltd5
Ordinary
100.0
17
Longueville Distributors Ltd5
Ordinary
100.0
17
Bucktrout & Company Ltd5
Deferred
Ordinary
Preference
100.0
100.0
100.0
18
M Still Catering Ltd5
Ordinary
100.0
19
Butcombe Brewery Ltd5
Ordinary
100.0
19
Marais Hall Ltd5
Ordinary
100.0
20
Butcombe Brewing
Company Ltd5
Ordinary
100.0
19
Mary Ann Products
(Jersey) Ltd5
Ordinary
100.0
17
Caesarea Hotel (Jersey) Ltd5
Ordinary
100.0
17
Mitre Hotel (Jersey) Ltd5
Ordinary
100.0
17
Café de Paris (Jersey) Ltd5
Ordinary
100.0
17
Nightbridge Ltd5
Ordinary
100.0
17
Caledonia TLG Bidco Ltd5
Ordinary
100.0
19
Old Court House Hotel
(St Aubin) 1972 Ltd5
Ordinary
100.0
17
Caledonia TLG Ltd
Ordinary A
Ordinary B
Ordinary C
Preference
Deferred
100.01
0.91
75.41
66.91
100.01
17
Parade Hotel (Jersey) Ltd5
Ordinary
100.0
17
Caledonia TLG Midco Ltd5
Ordinary
100.0
17
Peirson (1971) Ltd5
Ordinary
100.0
17
Captains Holdings Ltd5
Ordinary
100.0
18
Puffin NewCo Ltd5
Ordinary
100.0
17
Channel Wines & Spirits
(Jersey) Ltd5
Ordinary
100.0
17
Red Lion Ltd5
Ordinary
100.0
17
Cirrus Inns Holdings Ltd5
Ordinary
100.0
19
Robin Hood (Jersey) Ltd5
Ordinary
100.0
17
Cirrus Inns Ltd5
Ordinary
100.0
19
S.L. Ltd5
Ordinary
100.0
17
Citann Ltd5
Ordinary
Preference
100.0
100.0
17
Ship Holdings Ltd5
Ordinary
100.0
18
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Caledonia Investments plc Annual Report 2024
Company
Class
Holding %
Key to
Registered
office
Company
Class
Holding %
Key to
Registered
office
Cosy Corner (Jersey) Ltd5
Ordinary
100.0
17
Square Ltd5
Ordinary
100.0
17
Craig Street Brewing
Company Ltd5
Ordinary
100.0
17
St John’s Hotel Ltd5
Ordinary
100.0
17
Divette Holdings Ltd5
Ordinary
100.0
18
Stag Hotel (Jersey) Ltd5
Ordinary
100.0
17
Don Inn (Jersey) Ltd5
Ordinary
100.0
17
Sussex Hotel Ltd5
Ordinary
100.0
17
Evenstar Ltd5
Ordinary
100.0
17
The Guernsey Brewery Co
(1920) Ltd5
Ordinary
Preference
100.0
100.0
18
Exeter Hotel (Jersey) Ltd5
Ordinary
100.0
17
The Independent Brewing
Company Ltd5
Ordinary
100.0
17
Farm Street Inns Ltd5
Ordinary
100.0
19
The Liberation Group Ltd5
Ordinary
100.0
17
Farmers Inn Ltd5
Ordinary
100.0
17
The Liberation Group UK Ltd5
Ordinary
100.0
19
Five Oaks Hotel Ltd5
Ordinary
100.0
17
The Liberation Pub Company
(Guernsey) Ltd5
Ordinary
100.0
18
Foresters Arms (Jersey) Ltd5
Ordinary
100.0
17
The Liberation Pub Company
(Jersey) Ltd5
Ordinary
100.0
17
Gimbels (Jersey) Ltd5
Ordinary
100.0
17
The Post Horn Ltd5
Ordinary
100.0
17
Glo’ster Vaults Ltd5
Ordinary
100.0
17
The Royal Oak Inn Trading Ltd5
Ordinary
100.0
19
Great Union Hotel (Holdings) Ltd5 Ordinary
100.0
17
Trafalgar Hotel (Jersey) Ltd5
Ordinary
100.0
17
Great Western Hotel Ltd5
Ordinary
100.0
17
Union Inn (Jersey) Ltd5
Ordinary
100.0
17
Guernsey Leisure Company Ltd5
Ordinary
100.0
18
Victor Hugo Ltd5
Ordinary
100.0
17
Guppy’s Holdings Ltd5
Ordinary
100.0
18
Victoria (Valley) Ltd5
Ordinary
100.0
17
Guppy’s of Guernsey Ltd5
Ordinary
100.0
18
Victoria Hotel (Jersey) Ltd5
Ordinary
100.0
17
Hautville Ltd5
Ordinary
100.0
18
Wellington Hotel Ltd5
Ordinary
100.0
17
Horse & Hound (Jersey) Ltd5
Ordinary
100.0
17
Wests Cinemas Ltd5
Ordinary
100.0
17
John Tregear Ltd5
Ordinary
100.0
17
White Hart Ltd5
Ordinary
100.0
18
6. Cayzer House, 30 Buckingham Gate, London SW1E 6NN
7. Rubensstraat 104/57, 2300 Turnhout, Belgium
8. Parc d’Activités les Béthunes, 16 rue du compas, 95310 Cergy Pontoise
Cedex, France
9. Elisabethstr. 1, 52428 Jülich, Germany
10. Spuiweg 22 D, 5145 NE Waalwijk, The Netherlands
11. C/ Isla de Alegranza 2, nave 53, 28703 San Sebastián de los Reyes,
Madrid, Spain
12. Redgate Road, South Lancashire Industrial Estate, Ashton-In-Makerfield,
Wigan, Lancashire, WN4 8DT
13. 1 Cooke Close, Thurmaston, Leicester LE4 8PT
14. 4131 Vanowen Place, Burbank, CA 91505, USA
15. Rooms 503/504, No 1 Building, No 908 Xiuwen Road, Minhang District,
Shanghai, China
16. TMF Hong Kong Limited, 31F, Tower Two, Times Square, Matheson
Street, Causeway Bay, Hong Kong
17. Tregear House, Longueville Road, St Saviour, Jersey JE2 7WF
18. Hougue Jehannet, Vale, Guernsey GY3 5UF
19. Butcombe Brewery Havyatt Road Trading Estate, Havyatt Road,
Wrington, Bristol, BS40 5PA
20. Marais Hall, Marais Square, St Anne, Alderney GY9 3TS
1. Directly held by the company
2. Included in the consolidation
3. Subsidiary of Crossbow Topco Ltd
4. Subsidiary of Chaplin Topco Ltd
5. Subsidiary of Caledonia TLG Ltd
Registered office addresses
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Financial statements
Other information
Introduction
The 10-year record of the company’s financial performance is as follows:
Company performance record (unaudited)
Profit/
(loss) for
the year
£m
Diluted
earnings
per share
p
Annual
dividend
p
Net
assets
£m
Diluted
NAV per
share
p
Share
price
p
Rolling 10 years annualised
Total share-
holder
return
%
FTSE
All-Share
Total Return
%
2015
207.7
371.1
50.6
1,627
2906
2281
7.5
7.7
2016
41.1
73.1
52.6
1,644
2890
2285
3.8
4.7
2017
290.1
518.4
54.8
1,899
3395
2750
5.2
5.7
2018
26.5
47.4
57.0
1,837
3285
2650
5.3
6.7
2019
198.2
354.7
59.3
2,002
3582
2980
11.6
11.1
2020
(172.5)
(315.0)
61.1
1,787
3236
2435
6.7
4.4
2021
467.6
837.8
62.9
2,225
4000
2645
7.1
6.0
2022
611.3
1101.5
64.8
2,783
5041
3540
11.9
7.2
2023
144.0
259.0
67.4
2,798
5068
3390
9.5
5.8
2024
203.4
369.0
70.4
2,965
5369
3280
8.6
5.8
1. Annual dividends are stated in relation to the year’s results from which they were paid. Dividends for 2017 and 2022 exclude the special dividend of 100.0p
and 175.0p.
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Caledonia Investments plc Annual Report 2024
Alternative performance measures (‘APMs’)
APMs are not prescribed by accounting standards but are industry
specific performance measures which help users of the annual
accounts and financial statements to better interpret and
understand performance.
Terms in this glossary identified as APMs
have been highlighted by the symbol:
Discount
Ordinary shares are quoted on the stock market and can trade
at a discount to the NAV of the company. The following discount
applied to the shares:
Distributable profits
Distributable profits include profits distributable under the
Companies Act 2006 and include distributable reserves, being
realised revenue and capital profits, less any unrealised losses in
excess of unrealised profits.
Dividend cover
Dividend cover is the ratio of net revenue (as defined below)
to the annual dividend payable (excluding special dividends) to
shareholders out of profits for the year. It helps to indicate the
sustainability of annual dividends.
Ex-dividend date
The date immediately preceding the record date (as described
below) for a given dividend. Shareholders who acquire their shares
on or after the ex-dividend date will not be eligible to receive the
relevant dividend.
APM Investment and pool returns
The company uses the modified Dietz method as a measure of the
performance of an investment or investment pool over a period.
This method divides the gain or loss in value plus any income, less
any capital cash flows, by the average capital invested over the
period of measurement. Average capital takes into account the
timing of individual cash flows.
Glossary of terms and alternative
performance measures (unaudited)
31 Mar 2024
£m
31 Mar 2023
£m
Share price (b)
3280p
3390p
NAV (a)
5369p
5068p
Discount ((a-b)/a)
(expressed as a percentage)
38.9%
33.1%
31 Mar 2024
£m
31 Mar 2023
£m
Net revenue (b)
40.5
20.6
Dividend payable (a)
38.3
36.6
Dividend cover ((b)/a)
(expressed as a percentage)
106%
56%
31 Mar 2024
£m
31 Mar 2023
£m
Retained earnings
176.4
174.6
Distributable capital gains and losses
2,415.2
1,988.0
2,591.6
2,162.6
APM
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Other information
Introduction
153
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 company’s Employee Share Trust and for dilution by the
exercise of vested share awards. NAV takes account of dividends
payable on the ex-dividend date.
See financial statements note 17.
APM NAV total return (‘NAVTR’)
NAVTR is a measure of how the NAV per share has performed over
a period, considering both capital returns and dividends paid to
shareholders. NAVTR is calculated as the increase in NAV per share
between the beginning and end of the period, plus accretion from
the assumed dividend reinvestment in the period. We use this
measure as it enables comparisons to be drawn against an
investment index in order to compare performance. The result is
plotted on page 21 and the calculation follows the method
prescribed by the Association of Investment Companies (‘AIC’).
See financial statements note 17.
Net revenue
Net revenue comprises income from investments less
management expenses, financing costs and tax. Net revenue
comprises the revenue column presented in the Group statement
of comprehensive income on page 124 and differs from total
comprehensive income in excluding gains and losses on
investments and other items of a capital nature. The separation of
revenue and capital profits and losses is required by the AIC SORP
as of fundamental importance to shareholders and other users of
the financial statements of investment trust companies.
APM Ongoing charges
Ongoing charges are the total of investment management fees and
other expenses as shown in the income statement, as a percentage
of the average monthly net asset value, following the guidance
provided by the Association of Investment Companies.
Expense items included in the ongoing charges calculation
comprise recurring costs relating to the operation of the company.
Ongoing charges exclude transaction costs, external performance
fees and share-based payment expenses, which are directly linked
to investment performance, and re-measurement of defined
benefit pension schemes, also linked to market movements.
Share-based payments comprise awards under the company’s
performance share scheme, which vest subject to achieving NAVTR
targets, as well as service requirements, plus deferred bonus
awards which arise from annual bonus awards over 50% of basic
salary, which also relate to the company’s investment performance.
Record date
The cut-off date on which a shareholder needs to be beneficially
entitled to a share on the company’s share register in order to
qualify for a forthcoming dividend.
APM Total Shareholder Return (‘TSR’)
TSR measures the return to shareholders through the movement in
the share price and dividends paid during the measurement period.
31 Mar 2024
£m
31 Mar 2023
£m
Management expenses (a)
22.9
21.3
Annualised average net assets (b)
2,841.1
2,764.4
Ongoing charges (a)/(b)
(expressed as a percentage)
0.81%
0.77%
31 Mar
2024
31 Mar
2023
Closing NAV per share (p)
5369p
5068p
a
Dividends paid out (p)
68p
241p
b
Effect of re-investing dividends (p)
6p
9p
c
Adjusted NAV per share (p)
5443p
5318p
d=a+b+c
Opening NAV per share (p)
5068p
5041p
e
NAV total return (%)
7.4%
5.5%
=(d/e)-1
Annualised average net assets -
31 Mar 2024 £m
Apr 23
2,791.4
May 23
2,796.1
Jun 23
2,779.3
Jul 23
2,781.5
Aug 23
2,804.1
Sep 23
2,876.1
Oct 23
2,854.0
Nov 23
2,848.3
Dec 23
2,863.5
Jan 24
2,859.4
Feb 24
2,873.7
Mar 24
2,965.3
Average
2,841.1
Annualised average net assets -
31 Mar 2023 £m
Apr 22
2,805.7
May 22
2,794.8
Jun 22
2,700.6
Jul 22
2,733.4
Aug 22
2,780.8
Sep 22
2,781.4
Oct 22
2,770.8
Nov 22
2,780.6
Dec 22
2,729.2
Jan 23
2,743.8
Feb 23
2,753.5
Mar 23
2,798.0
Average
2,764.4
Glossary of terms and alternative performance measure (unaudited) (continued)
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Caledonia Investments plc Annual Report 2024
Holdings over 1% of net assets at 31 March 2024
Name
Pool
Geography
Business
Value £m
Net assets %
Cobepa1
Private Capital
Europe
Investment company
181.0
6.1
AIR-serv Europe2
Private Capital
United Kingdom
Forecourt vending
170.1
5.7
Stonehage Fleming3
Private Capital
Channel Islands
Family office services
168.5
5.7
HighVista Strategies4
Funds
United States
Funds of funds
139.7
4.7
Liberation Group5
Private Capital
Channel Islands
Pubs, bars & inns
135.2
4.6
Cooke Optics6
Private Capital
United Kingdom
Cine lens manufacturer
105.4
3.6
Microsoft
Public Companies
United States
Software
84.3
2.8
Oracle
Public Companies
United States
Software
83.5
2.8
Axiom Asia funds7
Funds
Asia
Funds of funds
83.2
2.8
Watsco
Public Companies
United States
Ventilation products
77.0
2.6
Texas Instruments
Public Companies
United States
Semiconductors
63.6
2.1
Decheng funds
Funds
Asia
Private equity funds
59.0
2.0
Fastenal
Public Companies
United States
Industrial supplies
53.2
1.8
Phillip Morris
Public Companies
United States
Tobacco & smoke-free products
53.1
1.8
Thermo Fisher Scientific
Public Companies
United States
Pharma & life sciences services
46.1
1.6
Hill & Smith
Public Companies
United Kingdom
Infrastructure
45.7
1.5
Asia Alternatives funds
Funds
Asia
Funds of funds
44.2
1.5
Unicorn funds
Funds
Asia
Funds of funds
39.9
1.3
Ironbridge Funds
Funds
Canada
Private equity funds
35.9
1.2
SIS
Private Capital
United Kingdom
Content services
35.0
1.2
Stonepeak funds
Funds
United States
Private equity funds
34.9
1.2
Spirax Sarco
Public Companies
United Kingdom
Steam engineering
34.1
1.1
Boyne funds
Funds
United States
Private equity funds
33.8
1.1
British American Tobacco
Public Companies
United Kingdom
Tobacco & vaping
32.4
1.1
Moody’s Corporation
Public Companies
United States
Financial services
33.0
1.1
Charter Communications
Public Companies
United States
Cable communications
32.5
1.1
Becton Dickinson
Public Companies
United States
Medical technology
28.6
1.0
CenterOak funds
Funds
United States
Private equity funds
28.3
1.0
Other investments
735.2
24.9
Investment portfolio
2,696.4
91.0
Cash and other net assets
268.9
9.0
1. In its last audited accounts the company’s turnover, pre-tax profits and net assets attributable to shareholders were £82m, £21m and £2,797m respectively.
Investment cost is £32m and total revenue recognised by Caledonia in the period is £8m.
2. Investment cost is £142m and total revenue recognised by Caledonia in the period is £28m.
3. Investment cost is £92m and total revenue recognised by Caledonia in the period is £19m.
4. Investment cost is £51m and total revenue recognised by Caledonia in the period is £1m.
5. Investment cost is £138m and total income recognised by Caledonia in the period is £3m.
6. In its last audited accounts the company’s turnover, pre-tax profits and net assets attributable to shareholders were £31m, (£2)m and £38m respectively.
Investment cost is £97m and total income recognised by Caledonia in the period is -£19m.
7. Investment cost is £37m and total income recognised by Caledonia in the period is -£nil.
Investments summary
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Other information
Introduction
Valuation methodology
Investments are measured at the directors’ estimate of
fair value at the reporting date, in accordance with IFRS
13 Fair Value Measurement. Fair value is the price that
would be received to sell an asset in an orderly
transaction between market participants at the
measurement date.
Publicly traded securities
Listed investments in an active market are valued based
on the closing bid price on the relevant exchange on the
reporting date. When a bid price is unavailable, the price
of the most recent transaction will normally be used.
Unquoted securities
Caledonia’s valuation methodology for unquoted securities
is derived from the International Private Equity and
Venture Capital (‘IPEV’) Valuation Guidelines (December
2022). This guidance came into effect for periods
beginning on or after 1 January 2023 and supersedes
previous guidance.
Unquoted companies
Unquoted company investments are valued by applying
an appropriate valuation technique, which makes
maximum use of market-based information, is consistent
with models generally used by market participants and is
applied consistently from period to period, except where
a change would result in a better estimation of fair value.
The value of an unquoted company investment is generally
crystalised through the sale or flotation of the entire
business, rather than the sale of an individual instrument.
Therefore, the estimation of fair value is based on the
assumed realisation of the entire enterprise at the
reporting date. Recognition is given to the uncertainties
inherent in estimating the fair value of unquoted
companies and appropriate caution is applied in exercising
judgements and in making the necessary estimates.
The valuation methodology applies the following steps:
1. determine the enterprise value using an appropriate
valuation technique
2. adjust the enterprise value for factors that a market
participant would take into account, such as surplus
assets, excess liabilities and other contingencies
3. deduct the value of instruments ranking ahead of
those held to derive the attributable value
4. apportion the attributable value between the
remaining financial instruments
5. allocate the amounts derived according to the
holding in each financial instrument.
Valuation methods
Enterprise value is normally determined using one
of the following valuation methodologies:
Multiples
This methodology involves the application of an earnings
multiple to the maintainable earnings of the business
and is likely to be appropriate for an investment in
an established business with an identifiable stream
of continuing earnings.
Maintainable earnings are assessed using the latest
available financial data. Earnings and balance sheet
data are adjusted, where appropriate, for exceptional
or non-recurring items and an average of more than one
year’s earnings may be used to estimate maintainable
earnings for cyclical or volatile businesses.
The earnings multiple used is most commonly earnings
before interest, tax, depreciation and amortisation
(‘EBITDA’) and is determined by reference to market-based
multiples appropriate for the business. Where possible,
an average of several appropriate market multiples will
be used. The aim is to identify comparator companies that
are similar in terms of risk and growth prospects to the
company being valued. The transaction multiples of similar
comparator unquoted companies may also be considered
in determining the earnings multiple.
Multiples of comparable companies may be adjusted
individually or in aggregate to reflect points of difference
between the comparators and the company being valued,
with reference to the risk profile and earnings growth
prospects that underpin the earnings multiple. Risk arises
from a range of factors, including the nature of the
company’s operations, markets, competitive position,
quality of management and employees and capital
structure. Other reasons for adjustment may include the
size and diversity of the entity, the rate of growth of
earnings, reliance on key employees, diversity of products
and customer base, and the level of borrowing.
Adjustment will also be considered to the extent that a
prospective acquirer would take account of additional risks
associated with holding an unquoted share, including their
ability to drive a realisation at will.
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Caledonia Investments plc Annual Report 2024
Net assets
The net assets methodology is likely to be appropriate for
a business whose value derives mainly from the underlying
value of its assets rather than its ongoing earnings, such as
a property holding company or an investment business. It
may also be appropriate for a business that is not making
an adequate return on assets and for which a greater value
can be realised by liquidating the business and selling its
assets. A third-party valuation may be used to give the fair
value of a certain asset or group of assets, most commonly
property assets.
Indicative offers
We regularly receive indications of interest from potential
acquirers for our private capital assets, either as part of a
structured sale process or in the form of a direct approach.
Where we judge it appropriate, the insight gained from
such approaches is incorporated into the data sets used
in arriving at valuations. Where there is an offer from
a credible buyer or buyers, and there is an intention to
advance discussions, our practice is to consider fair values
derived from an indicative enterprise value based on offers
received with an appropriate discount applied. Discounts
aim to reflect the unique uncertainty associated with the
execution of each transaction and are normally in a range
of 5-20%.
Calibration and backtesting
When the price of an initial investment is deemed
fair value (which is generally the case if the investment
is considered an orderly transaction), the valuation
techniques that are expected to be used to estimate
fair value in the future are calibrated by using market
inputs at the date the investment was made. Calibration
validates that the valuation techniques using
contemporaneous market inputs will generate fair
value at inception and therefore give confidence that
subsequent valuations using updated market inputs will
generate fair value at each future measurement date.
Backtesting enables the valuer to understand any
substantive differences that legitimately occur between
the exit price and the previous fair value assessment,
by applying the information known at exit to the
previous valuation technique. Backtesting is used
to help refine the valuation process.
Fund interests
Fund interests refer to participations in externally
managed investment vehicles that invest in a wider range
of assets than is feasible for an individual investor to
value separately.
Open-end funds, including investment companies with
variable capital, typically report regular net asset values,
which usually provide a reliable basis to estimate fair
value. Management periodically assesses whether
reported net asset values are fair value based through
consideration of a range of information, including but
not limited to underlying valuation methodologies,
governance and assurance frameworks, and
correspondence with third-party managers. If the price
reported by the fund is not available at the reporting
date, the latest available price is used and may be
adjusted to take account of changes or events to the
reporting date, if material.
Closed-end funds include unlisted investment companies
and limited partnerships. For these investments, the fair
value estimate is based on a summation of the estimated
fair value of the underlying investments (‘fund NAV’)
attributable to the investor. Fund NAV may be used
where there is evidence that the valuation is derived
using fair value principles. Fund NAV reports are normally
received some time after the reporting date, typically
two or three months, but sometimes up to six months.
The latest available fund NAV will normally provide the
basis of a fair value estimate, adjusted for subsequent
investments and realisations. Adjustment may also be
necessary for features of the fund agreement not
captured in the valuation report, such as performance
fees or carried interest. The timing of fund NAV reports
creates a risk of changes or events occurring between
the fund NAV and reporting dates, which impacts
valuation. This issue is monitored carefully and, if of a
material nature, can lead to adjustments either at the
specific fund level or more broadly across the relevant
funds affected by the identified change or event. If a
decision has been made to sell the fund interest or
portion thereof, the expected sale price would normally
provide the best estimate of fair value.
Other investments
Other investments include preference shares, loan notes
or facilities, options, warrants and treasury instruments
that are not publicly traded and do not form part of an
investment in an unlisted company. For such investments,
appropriate valuation techniques are adopted and
used consistently.
Environmental, Social and Governance factors
Environmental, Social and Governance (‘ESG’) factors,
both quantitative and qualitative, may impact fair value.
Our fair estimates therefore incorporate ESG initiatives
and the ESG regulatory environment to the extent they
are known or knowable.
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Corporate governance
Financial statements
Other information
Introduction
Information for investors
Registrar
Our Registrar is:
Link Group (‘Link’)
Central Square
29 Wellington Street
Leeds
LS1 4DL
Shareholder enquiries: (open 9.00am to 5.30pm)
0371 664 0300 or +44 371 644 0300 if calling
from overseas
Share dealing service: (open 8.00am to 4.30pm)
0371 664 0445 or +44 371 664 0445 if calling
from overseas
Calls to 0371 are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom
are charged at the applicable international rate.
Link also provides an online service, Signal Shares, through
which you can view your shareholding details, transaction
and dividend histories, change your address, bank
mandate and electronic communication preference and
use the online proxy voting service. Signal Shares is
available at www.signalshares.com.
Financial calendar
Final dividend ex-dividend date
27 June 2024
Final dividend record date
28 June 2024
Annual general meeting
17 July 2024
Final dividend payment date
1 August 2024
Half-year results announcement
November 2024
Anticipated interim dividend payment date January 2025
2025 Annual results announcement
May 2025
2025 Annual report publication
June 2025
Electronic communications
You may elect to receive communications from the
company electronically via its website as an alternative to
receiving hard copy accounts and circulars. If you would
like to change your communication preference, you may
do so at www.signalshares. com or by writing to Link at
FREEPOST SAS, Link Group, Central Square, 29 Wellington
Street, Leeds, LS1 4DL (if you are a UK-based shareholder)
or to SAS, Link Group, Central Square, 29 Wellington
Street, Leeds, LS1 4DL. No stamp is required for letters
from UK shareholders.
Share price information
The company’s ordinary shares are premium listed on the
London Stock Exchange under the SEDOL code of 0163992
or TIDM code of CLDN. Prices are published daily in the
Financial Times under the ‘Investment Companies’ heading
and in other leading newspapers and can also be viewed
on the company’s website at www.caledonia.com.
The ISIN for Caledonia’s ordinary shares is GB0001639920.
Monthly net asset value
The company releases a net asset value announcement
and publishes a factsheet shortly after each month end.
These can be found on the company’s website at www.
caledonia.com.
Boiler room and other scams
Investment and pension scams are often sophisticated and
difficult to spot. Shareholders are advised to be wary of
any unexpected offers received by email, post or
telephone and to check the Financial Conduct Authority’s
Warning List if any unsolicited communication is received.
Visit www.fca.org.uk/scamsmart for more information.
158
Caledonia Investments plc Annual Report 2024
Directors and advisers
Chair
David C Stewart2,3
Executive directors
Mathew S D Masters (Chief Executive Officer)
Robert W Memmott (Chief Financial Officer)
Jamie M B Cayzer-Colvin
Non-executive directors
Farah A Buckley2,3,4
The Hon Charles W Cayzer2
Guy B Davison1,2,4
M Anne Farlow1,2,3,4
Claire L Fitzalan Howard2,3,4
Lynn R Fordham1,2,4
William P Wyatt2
1. Member of the Audit and Risk Committee
2. Member of the Nomination Committee
3. Member of the Remuneration Committee
4. Member of the Governance Committee
Secretary
Richard Webster
Registered office
Cayzer House
30 Buckingham Gate
London SW1E 6NN
Registered number
Registered in England no 235481
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Registrar
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Brokers
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Winterflood Securities Ltd
Riverbank House
2 Swan Lane
London EC4R 3GA
Solicitors
Freshfields Bruckhaus Deringer LLP
100 Bishopsgate
London EC2P 2SR
159
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Other information
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ShareGift
We support ShareGift, the charity share donation scheme (registered charity number 1052686). Through ShareGift, shareholders who have
only a small number of shares, which might be considered uneconomic to sell, are able to donate them to charity. Donated shares are
aggregated and sold by ShareGift, the proceeds being passed on to a wide range of UK charities. See sharegift.org or call +44 20 7930 3737
for further details.
Updates
If you would like to receive up-to-date information about the company, please scan the QR code to the right of this page to visit our website.
If you have a smartphone, you can activate the QR code by opening the camera on your device and pointing it at the QR code. This will open
a link to the Contact us page on the website where you can subscribe to receive or amend email alert notifications, including factsheets,
news, reports and/or RNS announcements. To find out how we process personal data, please read the Privacy Policy available at
www.caledonia.com/privacy-policy.
Caledonia Investments plc
Cayzer House
30 Buckingham Gate
London SW1E 6NN
tel
+44 20 7802 8080
email enquiries@caledonia.com
web
www.caledonia.com