Caledonia Investments plc

Okay, well, welcome everybody, both online and in the room, to our half-year results presentation. I'm Matthew Masters, Chief Executive of Caledonia, and we'll be joined during this presentation by Tom Leder, who runs our private capital portfolio, and then by Rob Memmott, who's just joined us as Finance Director. And what we're going to do is take you a little bit through the strategy. I'll give some highlights on the half year and then we'll go through the portfolio. There's been some activity in the private capital portfolio, hence Tom joining us. And then Rob will take us through the finance section. So moving through the cautionary statement and onto an overview and just a reminder of Caledonia, which we are a self-managed investment trust. And I'll come on to explain why that's special a bit later on. And our net assets are 2.9 billion pounds. And we're focused on delivering our shareholders real returns over the longer term. And you can see on the chart, that we compare ourselves really against inflation. So we're aiming to beat consumer price, CPIH, inflation over the medium and longer term. And then there's a reference point over 10-year periods we're looking to outperform against the FTSE All-Share Index. But we're really focused on protecting and growing the real value of our shareholders' money and also the real value of the dividend over time. And those are our principal objectives. And you can see our dividend track record also on this chart. showing you how we've progressed that over the years. There's 56 years of growing the dividend. And in fact, over the last 10 years, we've distributed by way of normal dividends and to special dividends, 460 million pounds to our shareholders. which sort of evidences the fact that we're not at all averse at returning money to our shareholders, and we think the most sort of fair way of doing that is through the dividend mechanism. The company was founded off the back of the Kayser family's businesses. The history is dating back to the late 1800s. And we're very lucky to have the case of family as a very long-term and supportive shareholder. It's an absolute underpin to the investment culture here and is an important part of the ecosystem. So we're a long-term investor. So this will give you a bit more of a feel for how we approach job investing. I think there's not much beats investing in a company over a long period of time. The trouble is you need to know which one to invest in. So we have a portfolio of companies that we invest in. It's even better if you can pick out high-quality companies and high-quality investment opportunities in those companies. And that's what Caledonia is all about. It's investing in companies. We have... focused strategies, which we'll come on to in a minute, that spend all their time researching and developing relationships so that we can pick from the very best opportunities that come our way within those strategies. So we're highly selective in picking from what we think is a high-quality opportunity set. and we have a robust selection process. Every single pound that's invested or committed goes through a central investment committee, which I chair, which is attended by the, and manned by the heads of the pools, the finance director and company secretary. and every investment, every pound that leaves the door is carefully thought through. And included within that is what we would call being a responsible investor, and what everyone else is sort of calling ESG, is we consider just how sustainable are the things that we're investing in, because as a long-term investor, there's a strong correlation between investing in sustainable things and delivering good long-term returns. That's always been in the DNA here, and it's integrated into our investment process. So we're self-managed. We invest the money ourselves. We are totally aligned with the shareholders against absolute metrics rather than relative metrics. And what does that mean? So the investment teams here are only working for our shareholders, our present shareholders. We're not raising money. We're not working for separate funds elsewhere. We're only working for Caledonia. So we have a lot of control over... what they're thinking about, how the time is directed, and all the learning is shared across the business. And there's very little time from the investment team spent selling Caledonia to try and drive AUM. In fact, there's none at all, really. And we're really just focused on investing as best we can for our shareholders. And I think those ingredients are what's behind delivering very strong performance over time. This next slide gives you a snapshot of the three different strategies. We invest in public companies, and that is 30 to 40% of the Ness assets. We have quite a broad range for that. And that's a global portfolio, but it's mostly North American, Northern European headquartered companies where we're investing in companies that we understand, which are predictable and have pricing power. So these are strong companies. And we have two portfolios. We have a capital portfolio and an income portfolio. Capital portfolio is unconstrained in terms of income target. And we're targeting a 10% return there. And then the income pool has a 7% target. And then we're looking for a 3.5% yield on cost rather than yield on valuation. And that keeps us as investors rather than traders and companies. And both portfolios are concentrated. We have about 15 companies in each portfolio. And so a lot of thought goes into those investments. And I'll talk you through one a bit later so you can get a bit of insight into it. We have private capital. Tom will talk a bit more about that later on. This is directly investing into UK-headquartered companies. We're aiming to have six to eight significant UK companies that we're invested in, and we partner over the longer term with management and other shareholders sometimes to improve these businesses and grow them over time. The return target there is 14.5% and they have a 2.5% yield on cost. And you can see actually over 10 years, they've performed beyond the top end of their range. So we're pleased about that. And then we have private equity funds, which invest behind proven managers, the focus on North America, lower mid-market, and also providing us very interesting exposure to new economies in Asia. And that has a 12.5% target return, and they are performing handsomely against their target. So we're very pleased about all that. This slide provides some information from a high level about the geographic and sector allocation of the portfolio. So just to let you understand that, although Caledonia is built from the ground up, We invest in high-quality companies and funds. And so this sort of sector allocation is really something that is a result of all of that, as opposed to an investment committee saying we want to have 10% in this, that or the other. So it's a really bottom-up process and people following where the quality is. This does provide you a window into our risk appetite and things we like and don't like. So we have... noted that in financials, these are principally investments in platforms and investment managers. So I think 7IM and Stonehague Fleming. And so we're not taking balance sheet risk in our financials. So we don't have any banks in there, for example. And then with energy, we have very little energy exposure. I hesitate to do this because I don't like comparing us to an index, but just to give some context, the FTSE all-share, you'd be 12% in energy, which would be sort of BP and Shell, and we're not a big fan of capital-intense businesses, which are cyclical. So it just gives you a sense of our approach. And then on to our performance. So we're primarily focused on the net asset total return and looking at that against inflation. We certainly wouldn't look at it over six months, so we haven't put it up for you. We really look at it over three and then five and ten and we're really focused over the longer term because you do have to let things play out. and we're pleased that we're managing to keep the net asset value ahead of inflation over the 10-year period. We'll get asked lots of questions about discounts and things. And what I would point out is that over 10 years, we have returned to shareholders 460 million pounds in dividends. At the beginning of that period, our share would have cost 18 pounds 39. You've had eight pounds 55 back in dividends. That's just under half your money back in dividends over that period. We're a long-term investment house, I would argue. I would encourage people to invest in us for the longer term. And the payment of dividends and special dividends over the longer period of time does help shareholders through this journey of discounts moving around over time. So moving on to the half-year results. So over the half year, we delivered 3.7%. And we were pleased that all pools contributed towards this performance. I suppose we should call out the private capital pool where we sold 7IM. And that was a good driver of performance for us. 7IM was sold. at a 29% premium to what it was held in our books a year ago, and a 23% premium to what it was held in our, to the carrying value at the time. So we've got a nice uplift on sale. Over the period, foreign exchange did not have much impact on returns. And today we're announcing a dividend of 18.93 pence per share, which is up 4% over last year. On the people side of things, delighted to be joined by Rob Emmett as finance director. And we'll hear more from him later on. And we wish Tim Libet, who I'm sure is watching well, and look forward to catching up with him at his leaving due. So thanks very much to Tim. Hot off the press, Caledonia won investment trust of the year within the flexible investment sector at the investment week investment company awards. So that's I think the second year we've won that in a row, I think. So obviously pleased about that. So I shall hand over to Tom Leder who will take us through private capital.

Thanks, Matt. As Matt said, my name's Tom Leader. I run the private capital team here, and I'm going to take you through a bit of a deeper dive on what we get up to. We are a team of 11 in total. We have a strategic allocation of 25 to 35 percent of the Caledonia balance sheet targeting, as Matt said, a 14 percent return and a reasonably well-balanced portfolio of six to eight similarly sized investments. What we look for are high-quality, well-established, UK-centric businesses. We have a mid-market focus. That means a lot of things to a lot of people. But for us, we try and buy businesses when they are making profits of 7 to 10 million EBITDA and take them on the journey of getting to 20 to 30. So that's the area of the mid-market that we work in. And that means that we are typically deploying equity in check sizes of about 100 to 120 million, and we're buying businesses with an enterprise value of 150 to 250 million. So that's the sort of size deal that we focus on. We avoid turnarounds and carve outs and all those sorts of things. And we are a low volume investor, one, maybe two deals per annum. So we're a long way from the Lloyd's Development Capital and other high volume shops. Some points of difference between what we do and Main Street private equity. We approach the world with a buy-to-own philosophy rather than a buy-to-sell philosophy. So we have, as a balance sheet investor, permanent capital, and we are not driven by the fundraising cycle and deployments that typical P firms operate to. And that, we believe, generates... a much better level of engagement with our management teams. It's not that we never sell assets, of course we do, but we have a great deal of flexibility to pick the moment working with our management partners to optimise the exit. And so we can and do hold things for seven, eight, nine years, and I'll talk about 7IM in a second, which is a good case in point. The partnership approach we have with management manifests itself in two particular ways, which is very different from Main Street private equity. On the one hand, we have a very high degree of economic alignment with our management teams. We don't use loan notes, which are endemic in the private equity community. And we do use the reward of dividends, even from our private capital portfolio companies, some of which get shared with management teams. And the other dimension is that we have a very modest appetite for leverage. would use gearing, but two, three, sometimes a bit more than that times EBITDA. Whereas Main Street, probably you're looking at five or six. Obviously that's slightly different now with interest rates where they are, but typically our appetite leverage is considerably lower than you would see elsewhere in the market. So that's just a bit of background on what we're doing. At the half year, 30th September, we had a portfolio of nine companies, six big ones, and three comparatively speaking minnows, total NAV of just over a billion, and the top six represent 95% of the value in the pool. Two big events during the first six months, the first, Back in April was the acquisition of a majority stake in AirServe Europe. And the second, at the beginning of September, was that we exchanged contracts to sell 7IM to Ontario Teachers Pension Plan. And I'll come back to that in a bit more detail. Across the portfolio, trading has been reasonably solid, despite the headwinds of inflation and interest rates and consumer confidence. Following the sale of 7IM, whilst we're roughly 36% of the NAV of the group at the moment, we will drop back to the mid-20s. So we will be a little underweight, not drastically, but a little underweight when that deal transaction completes. So we will be looking to add one or two new high-quality investments over the course of the coming years. A deeper dive on 7IM, which is a great example of what we do and how we do it. This was an investment first made in 2015 and it captured all of the five critical things that we typically look for when appraising a new investment. The first is We want the businesses to be operating in a growing market. And at 7 IM, with increasing amounts of UK household wealth, with an aging population, with a very significant advice gap in financial advice, and the opening up of all sorts of pension freedoms, this was a market where there were lots of tailwinds and lots of growth opportunities to be had for agile firms. So good growing market. 7IM was very well positioned in that market. It was a pioneer in multi-manager risk profile funds and at the heart of its intermediary offering was an award-winning tech platform helping independent financial advisors, frankly, make their lives simpler. So it was well positioned in this growing market with a good management team, with a caveat, the founders of 7IM were all getting to retirement stage, and so we knew we had to put through quite a complex succession plan, which took several years to do in an orderly manner, but a good team, which is another thing we look for, and strong financial metrics in terms of operating margins, and cash flow generation. So that's the fourth thing we seek to tick off. And finally, lots of different growth levers. We had the opportunity to pull the organic growth lever, Lots of white space in the market for 7IM to go at. We made multiple acquisitions, four in this case, to help pivot 7IM from being really a pure asset management business to a platform-led wealth management business and lots of growth capex opportunities, particularly in the platform area. So it captured all of those five things that we look for. And you can see in this chart at the bottom right that over our whole period we nearly trebled AUM. So we went from just over 7 billion to about 21 billion by the time that we had finished the journey. So it's a great story. And I'm also pleased to say that in terms of returns, it also worked out very satisfactorily. We have, along the journey, received about 44 million in dividends from 7IM. And we've dealt with all of the turbulence of management change and integrating for acquisitions, COVID, a regulatory environment which gets more complex every day. But we've pulled up nearly 50 million in dividends and our expected returns when we When this deal closes, which we expect to be in calendar Q1 next year, we should make an IRR of about 15% over an eight-year period and 2.3x of our investment cost. And it will be our single biggest cash gain at Caledonia. So a great story. Very different, I hope you will agree, from... from what you will see from most private equity firms out there who don't have the term flexibility that we do. Picking up some of our other investments, the other big ones ranked pretty much in order are Stonehaig Fleming will become our biggest operating company. We have a 35% stake just under in Stonehaig. It's a multifamily office focused on the ultra high net worth market. Within Stonehaig, there is a big investment management business, and just to give that some scale, it's about $17 billion in AUM. So that's approximately a third of the business in terms of revenues and profits, and the rest is an array of fiduciary and family office services. We have been growing this business also by acquisition. We've made three acquisitions over the course of of the four years that we've owned a stake in it. And the key issue we're working on now is a planned succession of our CEO. AirServe is our newest investment, 142.5 million invested in April this year. So we're seven months in. The key achievements have been successfully separating it from its parents, CSC ServiceWorks, which was a US corporation. We've put in a new non-exec chairman, Justin Tideman. And I'm pleased to say that it has been trading ahead of plan every month since we bought it. So lots of good news there and plenty of encouragement from lots of incremental value creation opportunities which were outside the original investment case. So that's going very nicely. Liberation, obviously in as a sector which has been affected by the challenges of COVID and Brexit and consumer confidence and what have you. But the key focus in Liberation is on raising the standard and operating performance of the Cirrus pubs. We bought 21 pubs from Cirrus at the end of last year. to the standard that we operate the rest of the group at. So that's the key mission of the management team here. The sector as a whole is definitely recovering. You may have seen that Young's agreed to buy City Pub Group just last week. So the animal spirits are returning to the sector, which I think bodes well for the future as and when we seek to realise liberation. The next one to talk about is Cooke. Cooke is involved in the manufacture of high-end cinematography lenses. It has been very heavily impacted by the Hollywood strikes. You would have seen in the press the writers' strike, which started at the beginning of May, and the actors' strike. which started at the beginning of July, have more or less paralysed film and movie production in the US, and in fact it's had a ripple effect across many other non-US markets. So this has heavily impacted revenues and profits at Cook. The team have done a very good job in managing through that and I'm pleased to say that both strikes are now over and meanwhile they have in fact launched a very new range of prosumer cinematography lenses which are flying off the shelves. So we do expect Cooke to recover. The gradient at which it recovers remains to be seen but it has very low It has almost no external debt cook, so it has got a robust balance sheet, and I'm sure it will bounce back in due course. And that brings us to our final big investment, which is a little different to the other four operating businesses. Kbipa is a Belgium-based private equity investment vehicle. It is private, so unlike Catalonia, it has no stock market listing. It has a total NAV of about 4.5 billion euros, and they have an investment portfolio numbering nearly 20 different companies. They invest in Europe and the US. They have no UK operation. It's been a very long-term investment for us. We first invested back in 2004, and it's been extremely successful. It typically generates a return of between 11 and 13% per annum and pays us a dividend. We have a very close relationship with Kabeepa and regularly look at deals together, investment opportunities both in the US and in Europe, including, for those who've been shareholders for a while, our very successful investment in bioagiletics. So Kabeepa is slightly different from the rest of the portfolio, but an interesting and very profitable partnership over the years. So that's it from me. I'm going to hand back to Matt to talk to you about quoted pool and our business in public companies.

Thanks Tom. So moving on to our public companies strategy where we aim to invest in high quality companies where long term ownership is likely to be rewarded. And I've got an example coming up which will show you what that all means. As I mentioned, there are about 15 companies within each portfolio. So very concentrated portfolios, which means the investment team understand the companies very well. And they also understand their investment opportunity set incredibly well. And we've got a culture here where we're not doing sort of short interval management of them. So things are allowed time to play through. I'll come on to why that's all very interesting in a second. During the six months, we've had a positive return in the capital portfolio and a slightly negative return in the income portfolio. A little bit of what we call top slicing and bottom slicing of positions. So we have core holdings. As things get expensive rating-wise, we'll sell a bit of them. And as they get cheaper rating-wise, we'll buy a bit of them. And that just augments returns over time, and it also installs a sort of value-orientated investment discipline within the team, which I think is very healthy. We added one new position in Relics, which is an information and analytics business, a UK-listed business, and increased our holding in a couple of other positions. So here's the example, which is Oracle, which we invested in in 2014, which is in fact when I was running the portfolio. So I should know a bit about it, but please don't test me too hard. So we invested at $40 in 2014, and when we worked it through, we saw a very persistent level of profit at Oracle. We spent time with the company, got to know it well, and could see that the recurring level of profit was actually a lot higher than the recurring level of revenue. So it was an incredibly stable cash flow. But it had been caught up in the legacy tech, have they missed the boat on cloud and SaaS sort of narrative. And so the rating was quite cheap. And so we got in at about the way we thought about it, a 7% sort of yield on the earnings, not dividend yield, just on the earnings. So we thought we got in at a really good, stable company at a good price. with an amazing position in cloud, a potential position in cloud and SaaS, which they were telling people about, but it was very early days. And so nobody was rewarding them for it rating wise. And, you know, it didn't do much for us for a long period of time because you've travelled from 2014 into 2017 and the share price hasn't really moved. But that's fine because we're following the fundamentals of the company. We're very happy with how it's performing on a fundamental basis, not worried about the share price. And we could see it was making progress. So we were entirely comfortable with that journey. And then over time, as the cloud and SaaS parts of the business became more prominent, and in fairness, the company became a bit more helpful with telling people about it, people could see the benefits of all that, and profit and cash flow grew, and the share price has done magnificently well. And it's delivered, so far, a 16% annualised return for us over a long period of time, almost 10 years. The added benefit was that they bought back, over the last 10 years, Oracle, which is an S&P 500 company, it's a massive company, bought back half of its shares. And that has sort of turbocharged the progress of the company through to the share price. And we were reasonably confident that that would happen because when you have a big shareholder in a company telling you what they're going to do, then it pays to listen to them. And so we got into a business which was stable. We could accurately value, we thought, and we could give it time for the investment story to to play out and for the value story to play out as well. So we're very, very pleased with that one. And that just gives you an example of how we think about investing in the capital portfolio and also in the income portfolio in Caledonia. The share price recently went what I believe they call parabolic, which is when it shoots up because they've managed to get on the end of artificial intelligence. And so we sold a few shares because it got very expensive. The rating went up and it got quite big in the portfolio. And so as risk management and sort of good housekeeping, we sold some of our holding. We will still maintain our core position in it. Moving on to our private equity funds. As I mentioned before, we're investing behind proven managers in North America and Asia. Now, unlike our other strategies, there are lots of companies in here. This is very fragmented. So there are 600 companies within the underlying exposure here, and that's not including the investments in the funder funds portfolio, which is harder to count. So there's lots of companies here. So there's very low idiosyncratic risk. Just under 60% of the net assets are in the US lower mid-market, and I'll show you an example of that in a minute, which will bring that to life. These North American lower mid-market funds, they tend to be about US$500 million, limited partner LP funds. Usually, not always, but usually we're the only European... or limited partner in these funds, so they are difficult to access if you're in the UK. And we're on the advisory board, so we have a close relationship with 80% of these funds. So we're very fortunate to have this access and exposure, and it's proven to be a very good asset class. I'll come on to give an example about that in a minute. 48% is in our Asian portfolio. This is roughly split 50% between buyout type private equity activity and 50% sort of growth and venture capital activity in Asia, focusing on new economy. So growth areas in healthcare, consumer and technology. We're highly selective in both markets. Both markets have large opportunity sets which are visible, which we can easily pick from. For example, in North America, they're looking to find typically two new funds to invest in each year, and then they typically re-up with two existing funds each year. So there's quite a lot of time spent doing research and evaluating what to do, and then we just pick which ones we want to take action on. Over the six months, this strategy gave us 4.6% return. In local, in North America, that was 4%, and in Asia, that was more muted at 1%. As you can see, distributions have declined compared to the last few years. Both markets are going through some reflecting the liquidity issues of them at the moment. But we are obviously very close to those markets. And we're told, especially in North America, that managers can see that things are improving. So here's an example to try and bring it to life. This is an American low and mid-market company called Centeroak. We've invested in two of their funds, Fund 1 and Fund 2. We've committed US$30 million to both of those funds. US low-mid markets, core part of the investment strategy. We had been looking at the team from Centroke for a little while. They worked at a previous house together for 15 years, and then they left that house to set up Centroke. So this is a well-established team with a good track record behind them. So this wasn't a sort of fresh from scratch fund one situation. And we like the fact that the team was led by Randall Fertigier, who was an interesting character. He had been CEO of a family business, which had been through a couple of hands of private equity. And then he established a previous private equity house. So he had to establish a track record as an investor as well. So this is a great example of a great businessman. becoming a great investor. And so we were delighted to be able to have the opportunity to back him and his colleagues who we hold in high regard. And they've been, as I said, been working together for a long time. They have a, as the Americans term it, playbook of operational and strategic improvement, which they apply to smaller companies. They make them more efficient, they make them more capable, so they can do more. They do bolt-ons. You'll see in a minute that they add quite a few companies to each of the businesses. And then you have this enormous home market in America for these companies to grow into. So let's look at some of their holdings. So these are regular businesses, plumbing, collision repair, lawn care and pest control. And they would have bought smaller businesses as an initial platform and then they make a series of add-ons to them and you can see the sort of numbers there. It's a very powerful formula in America. It works very well. It's partnering to improve and grow these small businesses in this very large home market and then capitalizing on it. And the whole thing is sort of geared up for it. So it's a good formula for generating returns. it's not reliance on debt they do use debt but it's not they're not sort of maxing it it's more about operational improvement improving the strategy and improving how these businesses are run and then and then selling them on and say with that i shall hand over to rob who will take you through the financial review

Thank you, Matt. Good morning, everybody. Before I take you through the numbers, I thought I would give you a few of the reasons as to why I joined Caledonia. The first is track record. Caledonia has delivered great returns to shareholders, 56 years of growing dividends, 460 million returned to shareholders over the last 10 years by way of both ordinary and specials. and that annualised NAV growth over the same period, 10 years, of 11%. Second is the people and culture, which is transparent and non-hierarchical and with an incredibly skilled and capable team. And since joining, this has been reinforced daily. I particularly like the fact that the team and the people are focused on the current balance sheet and future opportunities and not distracted by the need to raise new funds. Long-term investment philosophy, concentrating on operating cash flows and business improvement with low levels of leverage, Caledonia build a deep understanding of the companies and the funds which we invest in, forming strong relationships. And that underpins the investment discipline as we appraise new opportunities and manage the current portfolio. Fourth one is robust balance sheet. Capital is allocated centrally, investing in a diverse range of quality businesses and funds. There's a cautious approach to asset valuation. I'll come on to talk about that in a moment. There's no structural debt at the Calendonia balance sheet level and with a good level of liquidity enabling us to invest when we want to act on quality investments. I'm therefore delighted to join Matt and the rest of the team in order to drive long-term shareholder value. Now, one of my key areas of focus so far has been IR. to ensure that our investment proposition is properly understood and also rated by the market. And hopefully you've seen in the presentation some increased disclosure and found some of the case studies informative as to how we do what we do at Caledonia. We'll continue to involve this in future releases going forward. So to the numbers, what you've all been waiting for. The NAV at the end of the six-month period to 30th of September has grown to 2.9 billion, generating a total return of 3.7%. We're 100% invested in a diversified portfolio of listed privately held companies, private equity funds that have global reach. And as I said, we have zero structural leverage at the balance sheet level. Portfolios delivered 4.1% return, and this compares favourably to the FTSE All Share, which was 1.4% over the same period. As Tom has talked through, we've recently agreed the sale of 7IM. That, combined with the facilities which we have, gives us £485 million of pro forma liquidity. And then our interim dividend, we've announced that this will increase by 4% to 18.93p. This equates to 10.3 million, which will be paid to shareholders on the 4th of January, which is my birthday. Important date for the diary. So you'll see on the next few slides that I love a waterfall chart and a bridge. So I'll take you through three of them. The first one is the movement in the portfolio. Start over on the left-hand side. At the start of the period, 2.5 billion, 2535. The net cash invested into the portfolio, 223 million, including 143 million into AirServe, as Tom talked about, within the private capital pool. 50 million net inflows or investments into the funds pool. and 60 million into the public companies, which included that new position in RELEX. Received cash yield from investments of 23 in the period, and then total return of 120, that's 4.1%. And this includes 51 million pounds worth of uplift following the agreed sale of 7IM, and then a little bit of FX, 18 million. On the right-hand side, the little pie shows the split of the assets. Private capital, just over a billion pounds, that's 36%. That's slightly higher than our strategic allocation. That will pair back, as Tom says, once 7IM completes in the early new year. Since I've joined the business, I've spent quite a bit of time looking at our portfolio valuation, in particular the private capital assets. We follow the IPEV guidelines. That means that we account at fair value. These assets are cash generative, conservatively levered. The valuation multiples are typically between 9% and 14%, which is slightly down on prior periods. And overall, I'm comfortable that we're valued towards the conservative end of the valuation range. And this is evidenced really by that sale of 7 IM, where we've got a 51 million pounds uplift to the carrying value just before we sold it. On the table on the bottom right of the slide, you'll see the returns and yields by pool. Overall 4.1% return, 3.5% yield with each of the pools contributing positively. Next little chart. is the overall net assets moving from the left-hand side, £2.8 billion at the start of the period, the net investment gains of £120 billion, Management expenses of 17, that takes us to 2.9, and then we pay the dividend, the prior year final dividend, which brings us back to just under 2.9 billion. The pie chart on the right-hand side shows the breakdown of our net assets by currency. Very much weighted, 51% U.S. dollar, 39% sterling, and therefore movements in the sterling dollar exchange rate will impact on our in-year results in the period 18 million benefit. Net debt, net cash, the start of the period of 222 million. We've effectively net invested all of that during this period. 223 million net invested. There's a cash yield coming from the assets, 23 million management expenses, and there's a little bit of working capital also in that number of 15 million, and then dividends paid, and that takes us to 20 million of net debt at the end of the period. At the end of September we had cash on balance sheet of 15 within that 20 million, undrawn revolving credit facility of 215 million and we expect to receive in early 2024 calendar 255 million from 7IM meaning that we've got Proforma liquidity of £485 million and this provides us with capital to invest in new assets and act quickly to invest in attractive opportunities that meet our criteria. Slide on, share price performance. The chart's over three, five and ten years and you'll see that that performance is favourable relative to the FTSE All Share total return. The discount over the six months has widened from 32.8% to 35.4%. And I suppose something coming into the organisation, thinking about the discount, it being talked about as a liquidity discount. And when you think about the pools of the assets of the organisation, the public companies where we invest, that pool is marked to cash every single day. You then think about, well, we've agreed the sale for 7 IM. £255 million. So combining those two, we've got 1.1 billion of net asset value, which is marked to cash currently within the balance sheet. And therefore, the private company assets are effectively trading at a 60% discount, which to me feels pretty excessive, particularly given my earlier comment, where the valuation were towards the conservative end of the valuation range. I suppose one of the areas that we've been thinking within is the IR project, which I talked to. And that's very much about making sure that Caledonia is understood by the market, that it's rated by the market. And in addition, we're actively working with our broker advisors to widen the shareholder register with the objective of generating more marginal buyers. In summary then, Caledonia has built a diverse portfolio that is well-placed to deliver long-term returns. We invest in quality businesses focused on free cash flow, meaning that the portfolio is very much capable of meeting the challenges that are currently posed by the macro. We've got a robust balance sheet with assets marked at the conservative end of the range, with a pro forma liquidity of £485 million, giving us that firepower should we want to act and invest on an attractive asset. The experienced team are 100% focused on continuing to invest and manage the portfolio of high quality companies and private equity funds. Thank you. We're now going to take some questions. Initially, we'll take them from the room and then we'll go remotely and Richard will help deliver those to us. Laura, I think has got a microphone and therefore if you would like to ask a question, please raise your hand and Matt will join me up here to cover that. So any questions?

Hi there. On the 7 IM sale, just wondering what the trigger point for the sale and reassessment of that. The trigger point for the sale on 7 IM.

Make sure I understand your question. The first is that the... The conditionality in relation to the sale of 7IM is simply FCA approval of the change in control. So we're underway on that. Why did we sell it? Well, the financial services space is very fragmented. 7IM had made four acquisitions. There are plenty of additional opportunities for 7IM to grow by acquisition and deploy considerably more capital. And we felt that the time was right, as did the team, to pass the baton to a bigger and more well-resourced investor. OTPP have got NAV of in excess of 250 billion Canadian. So just a much, much bigger balance sheet than us. And we have a very ambitious team who plan to tap into that.

Mark, can you just give some more colour on the Asian VC exposure? How much is it and what parts of the VC market are you exposed to?

Yeah, sure. Thanks for the question. So the Asian portfolio is about 14% of Caledonia's NAV. And of that 14%, about half of it would characterise as buyout. So PAG, which is quite a big buyout house, is one of the funds in that bit of a portfolio. Investing in companies with billions of dollars of revenue and hundreds of millions of EBITDA, so buyout type opportunities. The other half is in growth and more venture, although not at the very, very early stage of venture. And that area is really focused on those new sectors, those growing sectors of healthcare, technology and consumer. So that's the sort of buyout versus venture split. Of the 14%, around half of it is in the ground in China, and then the other half is more widely invested in Asia. So to give you a sense of the geographic split. Does that help?

Yeah, thank you. Richard, shall we?

Yeah. Yeah. So the first question is, are you considering any measures to close the current discount?

The discount question. So I think the first thing about the discount is sticking to the knitting of focusing on investing well so that we can keep growing less asset value and dividends and keeping the real value of those moving over time. So that's the primary focus of the organisation. I think we've recognised that we can do a little more with investor relations activity, which Rob has talked about. and being, as I term it, a better partner to the secondary market. We're not looking to do any primary issuance at Caledonia, but we could help the secondary market understand us better and perhaps find a few more shareholders who can help with the discount through that process. And also... But we do have this track record of giving shareholders money back through dividends over time, reminding people about that.

Thank you. And looking at the equity stake in Stonehaig Fleming, this is perhaps for Tom, are you content holding minority stakes in private companies?

Yes, we do have the flexibility to invest across minority and majority positions. Stonehague farming is far from our only minority investment. We've obviously got the position in Kibipa, in Bloom and in SIS. A couple of our smaller investments are all minorities. So we do play... both in control and non-control investments, and in fact always have done.

Thank you. And then there's two similar questions around the deployment of proceeds from 7IM and how they might be deployed.

So the money comes back into the bank at Caledonia and sits there, and we don't necessarily change the pace at which we're investing or doing things. We will just look to see what the next best opportunity is that comes along, be that in private capital, be that secondary somewhere, or the listed markets giving us an opportunity.

And then in terms of the public equity holdings, is there a typical range of multiples that we look at or when we're looking to trim or add to those holdings?

So I suppose the way I'd answer that question is because we're generally investing in very predictable companies, they also have quite predictable or consistent rating track records. And so you can sort of, by doing the work, and it's a lot of work, we can see over the past when things are expensive and when things are cheaper against their particular rating track record. This is all about buying a good company at a reasonable price, is what we're doing. and we'll amend that for the interest rate environment. So if interest rates are higher, that'll inform how that river works for us, so we'll build that into it. And so when things are at the lower end of that rating river, as we call it, we'll think about adding, and when things are... the upper end and they are big and for their risk profile within the portfolio we will then sell a bit of it. So that's the process for working out whether things are expensive or cheap.

Okay, thank you. Right, thank you everybody for those questions. Thank you for your attendance. And we'll see you for the full year.