Caledonia’s investment portfolio delivered resilient performance in 2017

Caledonia Investments acquires minority stake in BioAgilytix

Caledonia’s investment portfolio delivered resilient performance in 2017 – Caledonia Investments (CLDN) has reported its final results for the year ended 31 March 2018.

Caledonia Investments is a self-managed investment trust. It was acquired by the Cayzer family in 1951 as a holding company for their shipping interests and morphed over the years into the family investment trust – they still own a large percentage of the shares and have a large influence on the fund’s investment policy. Caledonia owns a globally diversified range of quoted and unquoted equities and funds and stresses its long-term approach to managing money with an emphasis on providing development capital for growing businesses.

Caledonia’s NAV total return for the year was 1.4% following a particularly strong year in 2017, when it increased by 18.0%.

The company’s performance has enabled it to increase the annual dividend by 4%, (the 51st year of increasing dividends).  The total dividend for the year was 57.0p, which was an increase of 4.0% over 2017, at a total cost of £23m.

Returns have been significantly impacted by foreign exchange movements, in particular, between the US dollar and sterling. On a constant currency basis, the NAV total return for the year would have been 6.3%. However, taken over the past two years, the impact of foreign exchange movements has been minimal. The investment manager employs a structure of separate pools. Positive performance from the fund’s quoted and unquoted assets pools, was offset by negative returns from its income pool.  The pool investing in other funds returned of 8.0% for the year. This masked an excellent performance, as the pool is over 95% invested in US dollar denominated funds.

Income generated from the portfolio fell slightly to £46.0m and management expenses were also down on the previous year.

The NAV  of the company fell by 3.2% during the year, due to the payment of a 100p per share special dividend.


David Stewart, Chairman and Will Wyatt, Chief Executive

“Caledonia’s portfolio is well diversified geographically and invested in sound companies that will continue to generate strong cash flows. We have substantial reserves of cash and the ability to draw bank facilities should market conditions turn more favourable or we encounter attractive, well-priced investments. However, with pricing in quoted and, particularly, unquoted markets remaining at elevated levels, there is no guarantee that we will be able to deploy capital in the immediate future.

We remain mindful of the continuing political and economic uncertainty, despite the strong growth seen across global stock markets. In the UK, the mechanics and implications of Brexit are unresolved, whilst higher inflation and the potential for higher borrowing costs is likely to impact consumer spending. In the US, the Federal Reserve has been increasing interest rates and has begun the process of quantitative tightening. US Treasury yields have risen accordingly, which has historically been a warning for equity investors.

Despite these uncertainties, we remain confident that our portfolio is well positioned to deliver our long term return targets, growing the net assets and annual dividend of the company. We have carefully built substantial reserves of cash, which, coupled with our bank facilities, will enable us to capitalise on future opportunities as they emerge. We will, however, remain patient and disciplined, deploying capital only where we see value to our shareholders.”

CLDN : Caledonia’s investment portfolio delivered resilient performance in 2017


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