Caledonia Investments lifts FY NAV against equity market uncertainty

Caledonia Investments managed to raise its full year net asset value 1.1% to £1.64bn for a total return of 2.6% against a backdrop of falling markets and global uncertainty with the UK European Union referendum and US Presidential election looming this year.

The annual dividend was increased 4% to 52.6% a share – the 49th consecutive rise.

Caledonia said instability in the global equity markets was more than offset by the strong performance from the unquoted and funds pools.

It added that it's two major acquisitions, Seven Investment Management and Gala Bingo were both trading in line with expectations.

“The bull market in commodity related stocks is well and truly over, following sharp falls in the price of oil and gas and other basic commodities,” Caledonia said.

“However, markets recovered their poise within a couple of months on both occasions, as the requirement for income drove investors back into yielding equity investments. Having taken money out of the market last year, we took advantage of the market volatility during the year to make selective purchases of high quality businesses that match our quoted pool's long term strategy.”

Chief executive Will Wyatt said the global economy was face with “several seminal moments this year” with the referendum on British membership of the EU and the US Presidential election “both of which have the potential to destabilise the existing order”.

“There is a lack of fundamental confidence in GDP growth, be it in China, the US, Europe, or at home in the UK. The central bankers have utilised extreme monetary policies to stimulate economies without much effect and seemingly have few tools to bring to bear if growth deteriorates,” he said.

“Equity markets have witnessed a prolonged period of growth but are seemingly expensive, perhaps lacking the underlying earnings growth from companies to justify those valuations. However, investors have few alternative options, with bond yields at record lows.”