Caledonia Investments confident of growth

CALEDONIA INVESTMENTS yesterday said it was making good progress in refocusing the business — despite overall performance lagging behind its peer group rivals in the last year.

Although net asset value (NAV) fell by 7% on a total return basis over the year to March 31 compared with a 1.4% increase in the FTSE All-share Total Return Index, the Trust maintained its record of increasing the dividend for a 45th consecutive year after announcing a 15.6% rise to 42.9p.

The trust also said it expected further dividend increases as its portfolio income continued to rise on the back of a new investment strategy which has been implemented by chief executive Will Wyatt over the past year.

Caledonia was incorporated in 1928 as the Foreign Railways Investment Trust Ltd and was acquired by the Cayzer family in 1951 and listed on the stock exchange nine years later.

Some members of the family remain shareholders in Caledonia through the Cayzer Family Trust Company.

However the late Sir James Cayzer — who lived at Kinpurnie Estate near Newtyle and died this year — and his nephew Nigel Cayzer who has a home in Angus, are understood to have divested their interests some years ago.

Caledonia chairman James Loudon, who is due to be succeeded by Rod Kent in July, admitted the company had underperformed in recent years but he said there were positive signs for the future.

He said: “With a concentrated and long term portfolio such as ours, deviation in our performance from the index over any one year is not surprising.

“However, the underperformance over five years is disappointing. Our total shareholder return performance has also been significantly affected by the widening of our share price discount to net asset value.

“We have increasingly bought in our own shares as the discount has widened, as we believe that this represents good value for our shareholders but ultimately we believe it will be investment performance, rather than share buy-backs, which will cause our discount to narrow.

“The extent of our buy-backs is limited by the shareholding of the Cayzer concert party.

“The future outlook is much more positive.

“One of the cornerstones of the strategy set out in last year’s annual report was to increase, without undermining our core objective of long term capital growth, the yield flowing from our portfolio, in order to enable us in turn to enhance the income element of the total return for our shareholders.

“The re-shaping of our portfolio over the past year has laid the foundation to achieve this and the board’s confidence in a steadily rising trend in income over the next few years has enabled it to make the recommendation for a significant increase in the final dividend.”

Mr Wyatt added: “Much has been achieved in refocusing our portfolio to a smaller number of larger holdings and our ‘pool’ strategy has given our managers greater accountability and focus.

“These are not easy markets, but I am confident that what we are doing will deliver our shareholders a good return over the longer term.”

Caledonia, with a market capitalisation value of £728.3m, saw its shares rise to 1284.00p during trading yesterday.