Caledonia Investments Plc (LON: CLDN)

London Stock Exchange-traded Caledonia Investments Plc is a UK-headquartered diversified close-ended investment trust. The group is also a constituent stock of FTSE 250 index with outstanding market capitalisation stood at £1.64bn, which ranks it among the mid-cap companies listed and traded at the LSE.

Interim Results: H1FY20 (ended as on September 30, 2019)

Source: Co filing.

During the period under consideration, the group’s NAV total return stood at 4.9% against 10.9% return recorded in the H2 FY19, including 2.8% from forex gains. Net Asset Value per share surged by 3.6% to 3,712p. The group recorded continued growth, and interim dividend declared also increased by 3.1% to 16.6p/share against 16.1p/share recorded in the H2FY19.

Pool Performance

Source: Co. filing.

The group’s quoted pool delivered a 10.3% return in the current period, benefited from US holding and dollar appreciation. The Income pool comprises a portfolio of 19 investments in listed international businesses. Total returned generated stood at 3.4% for the half-year, benefiting from a slight rebound in the UK markets. The Funds pool returned 10.8% for the six-month period, which comprises of investments in both private equity and quoted market funds.

Stock Performance
 
Daily Price Chart (as on November 27, 2019), before the market close. (Source: Thomson Reuters).

Shares of CLDN delivered approximately 6.78% return on a YoY basis, up by 8.67% on a YTD basis and bagged more than 3% in the past three months, respectively. In a year-over period, its shares registered a 52w high of GBX 3,129.12 and a 52w low of GBX 2,705.0.

At the time of writing (before the market close at 11:37 AM GMT), shares of CLDN traded marginally higher against the previous close at GBX 3,075.0.

Conclusion
The group’s performance in the first half of FY20 was moderate. However, market volatility in both equity and fixed income markets has impacted the group’s business in the first half of FY20.

The trend would continue in the second half of the FY20, which could weigh on the group’s performance in future as well. Also, the group’s business is significantly exposed to the currency translation risks as many of its portfolio company are based out in the United States, and a devaluation on US dollar could have an impact on the group's bottom line.

Also, Brexit related risks could also have an impact on the group's investee companies, as it could lower demand for their product and services, regulatory issues post-Brexit, input cost risk and others.

Therefore, based on the group’s moderate performance in the H1FY20 and ongoing uncertainties in the market, we have given a “Watch” recommendation at the current price of GBX 3,075.0 (as on November 27, 2019, before the market closed), while we look for any upcoming catalysts in the near term.

Augmentum Fintech Plc (LON:AUGM)

London Stock Exchange-traded Augmentum Fintech Plc is the UK’s only investment company focusing on “fintech sector”. As on March 13, 2018, its shares were admitted to the main market of the London Stock Exchange. The group is one of the leading venture capital investors with investment interest exclusively on Fintech sector.

Recent Events and Developments
On October 01, 2019 exchange filing with the LSE, Augmentum Fintech Plc reported that it had completed its first investment in Germany into a technology-based rentals platform “Grover” for consideration of €6.0m.

In the August 02, 2019 exchange filing, the company announced that it had made an investment of £5.0m into a UK-based online mortgage broking and lending platform “Habito”.

Regulatory Announcement
In the November 25, 2019, exchange filing, the board of the company announced that the publication of the company's interim results for six-month ended as on September 30, 2019, would be delayed beyond the scheduled date of November 26, 2019.

As, the group noted that, as on December 04, 2018, Zopa Bank Ltd, a subsidiary of its portfolio company Zopa Group Ltd. had been granted a banking license with restriction and full license would be handed once regulatory requirements are meet. That’s why the board of Augmentum Fintech Plc decided to report the interim financial results during the early December 2019.

Financial Highlights: FY19 (ended as on March 31, 2019)

Source: Co. fillings.

During the financial year under consideration, which is also the first fiscal year of the group post it went public in March 2018, the group's capital gain during the period stood at £12.18m, and interest income earned from portfolio investments stood at £0.22m respectively.

Total return for the period stood at £10.02m, which stood for 80.8% of the consolidated capital gain and interest income accumulated during the period.

Company’s return per share since incorporation (as on December 19, 2017) stood at 13.0p/share, driven by 15.6p/share return from capital gain and partly offset by loss per share of 2.6p, respectively.

Return per share since the company went public stood at 10.6p/share, led by 12.8p/share from capital gain and partly offset by 2.2p/share loss from revenue.

Augmentum Fintech PLC’s Dividend Policy
In the FY19 Annual report, the group stated that it believes in attaining long-term capital growth and do not expect that revenue dividend would be handed to shareholders in the foreseeable future. Also, it intends to pay dividends out of revenue only to maintain its investment trust status.

Investment Portfolio Overview
Out of the group's total investments, around 28.3% of the group's investment is parked with Zopa, which has delivered an investment return of approximately 18.6% since IPO to March 31, 2019. The second-largest portfolio company is Interactive Investor which delivered a return of 235.05% from IPO to March 31, 2019. Other portfolio details are mentioned below:


Source: Co. filings.

Stock Performance

FTSE All Share and Augmentum Fintech Plc 1Yr. Price Chart (as on November 27, 2019, before the market close). Source: Thomson Reuters.

Shares of AUGM delivered a price return of 10.55% on a YoY basis, whereas during the same time, benchmark FTSE All Share index delivered approximately 6.15% return. However, AUGM stocks performance was marginally negative in the past three months, one-month and in the last 5-day trading sessions, respectively.

At the time of writing (before the market close at 11:37 AM GMT), shares of AUGM traded marginally lower at GBX 108.35 against the previous close. Its shares have registered a 52w high of GBX 116.0 and a 52w low of GBX 97.0, and at the current trading level, shares of AUGM traded 6.4% below its 52w high.

Conclusion
The group is the UK’s only listed fintech focused investment company. Its performance in the FY19 was decent, with many of its portfolio companies like Zopa, Interactive Investor, Monse and Tide delivered decent investment return.
However, the performance of the investment portfolio depends heavily on prevailing macro-economic conditions and demand for the investee company’s services depends heavily upon that. At present, the Brexit related uncertainties could weigh on the performance of the portfolio companies in near-term.

Also, the group's performance is very sensitive to the currency exchange rates and interest rate, as it has investments outside the UK as well.

Therefore, based on the above rationale, we have given a “Watch” recommendation at the closing price of GBX 109.0 (November 26, 2019), while we look for any upcoming catalysts in the near term.

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