Caledonia Investments H1 2026 Earnings Report

Caledonia Investments EPS Results

• Actual EPS: GBX 7.30
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Caledonia Investments Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Caledonia Investments Announcement Details

• Quarter: H1 2026
• Date: 11/25/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 25, 2025
• Conference Call Time: 4:30AM ET

Caledonia is a FTSE 250 self-managed investment trust company with a long track record of delivering consistent returns and progressive annual dividend payments to shareholders. Our aim is to generate long-term compounding real returns that outperform inflation by 3%-6% over the medium to long term, and the FTSE All-Share index over 10 years. We are a long-term investor and hold investments in both listed and private markets across three pools: Public Companies, Private Capital and Funds. Each has a strategic allocation of capital, investment strategy and target return. We buy to hold, investing in high quality companies with strong market positions and fundamentals, alongside investments in private equity funds with track records of success. The result is a well-balanced diversified portfolio of investments with a global reach.

Caledonia Investments H1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Caledonia reported a half‑year NAV total return of 4.4% and total shareholder return of 8.5%, and announced an interim dividend of 3.68p (50% of prior year) payable 8 January 2026.
• Positive Sentiment: The agreed sale of Stonehenge Fleming is expected to complete in mid‑2026, delivering approximately £288m in cash and representing about a 3.2x multiple on cost (subject to regulatory approvals and a small deferred true‑up).
• Positive Sentiment: Public holdings drove performance—Oracle returned significant cash (£101m) on a £35m investment and was partially top‑sliced (position still held at ~£89m), and Caledonia opened a new $35m position in Charles Schwab during market volatility.
• Negative Sentiment: FX was a material headwind as sterling strength produced an exchange loss of ~£59m, reducing NAV by about 2%; 54% of assets are dollar‑denominated, so currency moves remain a risk.
• Negative Sentiment: Shares trade at a wide discount of ~33% to NAV; management is pursuing buybacks (£14m this period, £78m since March 2024) and IR initiatives, but the persistent discount is a significant valuation concern.

Presentation

[Operator]

Good morning, everyone, and thank you for joining us today for Caledonia Investments half-year results presentation. The presentation will commence shortly. After the presentation, we will conduct a Q&A session. If you wish to ask a question, you'll be able to ask a question either through the Zoom webinar link provided separately or by submitting written questions using the Ask a Question button on the Spark Live webcast page. Please note that this call is being live-streamed to a webcast for a wider audience and will be recorded. I would now like to hand over to Mathew Masters, Chief Executive Officer, to open the presentation. Please go ahead.

[Mathew Masters, CEO at Caledonia Investments]

Hello, I'm Mathew Masters, CEO of Caledonia Investments, and welcome to our results presentation for our half-year to 30th September 2025. You will also hear from Tom Leader, who leads our private capital strategy, and Robert Memmott, our Chief Financial Officer. Before we go through these results, a short reminder about Caledonia. We are long-term stewards of our shareholders' capital, including the Cayzer family, who have entrusted us with theirs for generations. Looking after multi-generational capital shapes everything we do. We need to make returns, but do so whilst limiting the risk of losing capital. We target absolute returns of inflation +3% to 6%, and this influences the level of risk we're prepared to take.

[Mathew Masters, CEO at Caledonia Investments]

Over time, our approach to investing has delivered results at the top end of this target range at 9.8% per annum, outperforming inflation by 6.5% per annum, and we have consistently increased our dividend for over half a century. Our approach to investing is straightforward. We invest in high-quality businesses and hold them for the long term. Our maxim, "Time well invested," captures the essence of our approach perfectly. Our in-house investment team is fully aligned with shareholders. We do not manage anyone else's money, and there is no fundraising. Performance is measured against NAV per share over time and rewarded in Caledonia shares. Our incentives are directly tied to long-term value creation.

[Mathew Masters, CEO at Caledonia Investments]

Our investment strategy is perfectly encapsulated by "Time well invested." We use our strong balance sheet, long-term approach, and in-house investment team to underpin our focus on long-term results and be robust during downturns and, in fact, aim to use these to our advantage. We're organized across three main strategies, providing access to private and public companies across different sectors and geographies. We're looking for the same three key ingredients, which are attractive markets to operate in, resilient businesses with strong fundamentals and return characteristics, and that are well managed and aligned with shareholders. The strategies have together generated Caledonia's overall performance, which is shown in the chart. Over five and ten years, we have delivered at or beyond the top end of our targets, and across all periods, both NAV per share total return and share price total return have kept ahead of inflation, which is our core aim.

[Mathew Masters, CEO at Caledonia Investments]

In the last three years, share price total return has been stronger than NAV per share total return, as the discount has reduced from 37% to 33%. Moving on to the highlights for the half-year, we're pleased to report another positive performance with NAV total return of 4.4% and total shareholder return of 8.5%. This was driven by strong public companies and private capital performance, partially offset by funds and including the impact of the pound strengthening against the dollar, reducing NAV by approximately 2%. Today, we are announcing our interim dividend of GBP 0.0368 per share, which reflects the change in dividend payment profile to 50% of the prior year's annual total dividend. This dividend will be paid on 8th January 2026. Moving on to public companies, this comprises two portfolios, each taking a concentrated approach to making long-term investments in high-quality companies.

[Mathew Masters, CEO at Caledonia Investments]

We're looking for high-quality, durable businesses, which we think have got great futures ahead of them. We aim to buy well and hold for the long term. The overall public company strategy delivered 9.9%, driven by a capital portfolio, and within that primarily Oracle, Microsoft, and Alibaba, who are benefiting from continuing demand for Cloud-based services, including AI. We initiated a new position in Charles Schwab, the U.S.-listed brokerage business that we've been tracking since 2017. We like Schwab because of its massive scale, with just over $10 trillion in client assets and market-leading focus on driving down costs for its clients. Its track record speaks for itself, with annualized total shareholder return of 17% since it listed in 1987. It's well managed, with good continuity of leadership, with the eponymous Charles Schwab still on the board.

[Mathew Masters, CEO at Caledonia Investments]

We deployed $35 million, mostly on 7th April, shortly after President Trump's Liberation Day, which was followed by a downturn in the equity markets and presented the lowest price that Schwab and the market traded in the last year. This de-risked our point of entry and is a good demonstration of our "Time well invested" approach. We purposely set ourselves up to buy shares in wonderful companies when they become more attractively priced. On the same theme, Oracle delivered a standout performance for us, and we were able to realize gains, selling three-quarters of the value of our holding at the start of the period as its share price doubled and its risk characteristics changed. We first invested in Oracle in 2014 when it was rated as legacy tech and judged late to the Cloud and as a service.

[Mathew Masters, CEO at Caledonia Investments]

We looked closer and saw a business with a good market position in an attractive market, excellent business fundamentals with high levels of recurring revenue and plans to increase this, and excellent returns metrics run by a management team that was certainly aligned with shareholders and very well proven. Our analysis helped us establish that long-term ownership was very likely to be rewarded. As you can see from the chart, Oracle took a little while to get going, but we could see that they were doing what great long-term businesses do, which is accept some short-term pain as they invested in a comprehensive move to the Cloud and as a service offering, whilst using their low rating to undertake a massive share buyback, with them buying back $120 billion of their shares and share count reduced by 38%.

[Mathew Masters, CEO at Caledonia Investments]

As their transition to the Cloud and as a service became better understood by the market, share price performance improved, and more recently, Oracle's Cloud offering and incumbent position in corporate and governmental data places them very well for AI, and this has driven the doubling of its share price during the first half of our year. Our overall investment performance from only Oracle has been good, with GBP 35 million invested, delivering GBP 101 million in cash returns through top slicing and dividends, with the position worth GBP 89 million at the end of the period, so 5.4 times our money. I will now hand over to Tom to talk about private capital.

[Tom Leader, Head of Private Capital at Caledonia Investments]

Thank you, Mat. Today, I'll walk you through our performance, portfolio highlights, and recent developments, focusing on how we continue to support private companies in creating enduring value. As a reminder, Caledonia Private Capital is focused on making direct investments, usually on a majority basis, into high-quality, mid-market, U.K.-centric businesses. Our model is built on permanent capital, genuine partnership, a patient long-term perspective, with moderate use of leverage. Unlike private equity firms whose funds have limited lifespans, restricting the time when investments must be made, grown, and sold, we have no time limitations on our investments. We can build genuine partnerships with strong management teams and help them create enduring value without the constraints of short-term capital. Our current portfolio has a net asset value of GBP 907 million, invested across eight companies, and represents approximately 30% of the NAV of Caledonia as a whole.

[Tom Leader, Head of Private Capital at Caledonia Investments]

For the half-year, we delivered a total return of 7.7%. This result was primarily driven by the agreed sale of our minority stake in Stonehage Fleming to Corient Wealth, on which we exchanged contracts in September, along with continued good operating performance from Air Serv. I will cover Stonehage Fleming in a bit more detail on the next slide, but clearly, the sale, when it completes, will deliver an excellent result for Caledonia. Air Serv was another strong performer, valued at GBP 193 million as of 30th September. In the half-year, it delivered an 11% return, driven by strong revenue and profit growth. The business paid Caledonia a dividend of GBP 24.5 million in the period. The other companies in the portfolio continue to make progress in executing their value creation plans.

[Tom Leader, Head of Private Capital at Caledonia Investments]

Looking at our long-term performance, private capital has delivered annualized returns of 8.5% over three years, 20.7% over five years, and 12.5% over 10 years, all versus our 14% target. Stonehage Fleming is a full-service multifamily office, helping discerning clients address the challenges of creating and preserving wealth. It is focused on the ultra-high net worth market, which is the fastest-growing segment of the wealth market. The firm's clients have entrusted it with the management, fiduciary oversight, and administration of assets in excess of $175 billion. Stonehage Fleming provides its services from 20 offices in 14 geographies. With an initial investment of approximately GBP 90 million in July 2019, we acquired a minority stake alongside Giuseppe Cucci and the other founder partners.

[Tom Leader, Head of Private Capital at Caledonia Investments]

The management were not looking for a conventional private equity investor, but instead for a capital provider which shared their long-term perspective and multi-generational approach to preserving and growing capital. Together, we restructured the balance sheet and the shareholder base of the group to position it for the next phase of growth. Over the following six years, we have worked in close partnership with the leadership team to deliver upon our original investment thesis, which entailed, first, streamlining the governance structure by financing and supporting succession management; second, investing in technology, which improved margins and allowed Stonehage Fleming to internalize services that were previously outsourced; third, enhancing business development, which delivered strong organic growth; and fourth, completing four strategic acquisitions, which have expanded the firm's geographic reach and diversified its product and service offering. The business has been a consistent performer, a true compounder.

[Tom Leader, Head of Private Capital at Caledonia Investments]

Strong cash generation and disciplined reinvestment have driven returns steadily upward through our ownership. This investment is a hallmark example of our unique approach: long-term, partnership-driven, and unconstrained by fixed fund life, and has delivered exceptional value for all stakeholders. We expect the deal to close in mid-2026, subject to the required regulatory consents, at which point it should deliver cash proceeds of approximately GBP 288 million, representing, including dividends received along the way, a 3.2 times multiple on cost of investment. As of 30 September, Stonehage Fleming was valued in the portfolio at GBP 259.7 million, net of an approximately 10% discount to reflect the transaction execution risk and the time value of money. The bubble chart here illustrates for all our major realizations since 2012, on the X-axis, the realized IRR, and on the Y-axis, the NAV uplift at exit compared to the carrying value 12 months prior to exit.

[Tom Leader, Head of Private Capital at Caledonia Investments]

For Stonehage Fleming, the expected exit proceeds of GBP 288 million represent a 30% uplift to its carrying value as at the 31 March 2025. This result is comparable with a 37% uplift relative to the carrying value when we sold 7 IM in January 2024. Overall, across the portfolio, we have a strong track record of realizations. Since 2012, we've generated GBP 1.4 billion in proceeds, returning around GBP 700 million in net cash to Caledonia. Our realized investments have delivered a 17% IRR and a two-times multiple on cost, which, given the low appetite for and use of leverage, compares very favorably with the returns delivered by U.K. mid-market private equity. Let me finish by saying we continue to deliver strong and consistent returns, underpinned by our disciplined approach and the strength of our partnerships.

[Tom Leader, Head of Private Capital at Caledonia Investments]

The success of Stonehage Fleming exemplifies the power of our permanent capital model, enabling us to back exceptional businesses and management teams, support their long-term growth, and realize substantial value for our shareholders. Thank you, and I'll now hand over to Rob.

[Robert Memmott, CFO at Caledonia Investments]

Thank you, Tom. Our funds pool has been running for more than 15 years. The opportunity is significant. These funds tend not to market in Europe, meaning that we are often the only European investor, a real differentiator. The pool now of GBP 884 million is a diverse portfolio invested in some 82 funds by 46 managers and in more than 600 underlying businesses. 64% of the NAV is focused on the North America lower mid-market buyouts. The funds are typically the first institutional investment into relatively small, often owner-managed businesses. The playbook is to transform the companies by strengthening the management team, improving operational efficiency, growing sales by product and geography, both organically and through bolt-on acquisitions. These improved companies with greater scale provide feedstock to mid-market private equity. It's a very pure form of capitalism.

[Robert Memmott, CFO at Caledonia Investments]

Of the North American companies, 2/3 are providing services, with a balance having very little exposure to international trade flows. 36% of the pool NAV is invested in Asian buyout, growth, and venture. The buyout assets are focused on domestic consumption and supply chains fueled by the aging population, growing middle class, and tech adoption. The venture and growth funds are invested in government-supported new technologies and health. Whilst there is very limited exposure to the direct impact of trade tariffs, as expected, economic uncertainty has reduced investment and realization activity in the short term. The pool has delivered solid returns of 13.3% over five and 10-year periods. Performance over the six months reflects the continuation of trends experienced for the last three years. During that period, the North American pool delivered local currency returns of 8.9%, driven by the trading performance of the underlying companies.

[Robert Memmott, CFO at Caledonia Investments]

In Asia, the companies are making progress; however, the continued reduction in capital market flows has impacted on fundraising and exits, suppressing our returns. Overall, the pool NAV grew by 4.3% in local currency but reduced by 1.8% in GBP. Our capital commitments are GBP 394 million, 75% of which is to North America. GBP 52 million was invested in the six-month period, and $55 million of new commitments were made to two North American managers. Looking at the cash flows in a bit more detail, the chart shows the realization and investment activity over recent six-month periods. As I mentioned earlier and as expected, economic uncertainty has reduced investment activity in the last six months, which can be seen on the graph. The pie chart details the weighted average life of the primary portfolio. For North America, the weighted average life is 4.3 years. For Asia, it's 5.5 years.

[Robert Memmott, CFO at Caledonia Investments]

We expect a longer hold period in Asia, given that the assets are weighted towards venture, growth, and fund-of-fund investments. To the numbers. During the six-month period, our NAV total return was 4.4%, growing our NAV to just over GBP 3 billion, of which GBP 2.9 billion is invested in a diversified portfolio of listed and privately held companies and funds that have got global reach. Cash on balance sheet was GBP 105 million. This, combined with our undrawn revolving credit facility of GBP 325 million, enables us to act quickly to invest in companies and funds that we find attractive. This was demonstrated in April when we deployed approximately GBP 50 million into the public company strategy, taking advantage of opportunities provided by the market volatility around Liberation Day. We have reprofiled the interim dividend such that it is 50% of the prior year total.

[Robert Memmott, CFO at Caledonia Investments]

This equates to 3.68p, which will be paid to shareholders on the 8th of January, 2026. Now to my beloved waterfall chart. This chart shows the movement in NAV over the period. We started the year at GBP 2.9 billion. The portfolio return of GBP 145 million includes the negative impact of foreign exchange. We then deduct management expenses of GBP 17 million. There is then the cash return to shareholders, GBP 14 million allocated to share buybacks, and GBP 28 million for the final dividend from the prior year. That results in a closing NAV of just over GBP 3 billion. Our OCR is 87 basis points, slightly up on the prior year, reflecting some investment in our teams. I expect this to increase slightly over the next 12 months, taking account of full-year effects. 54% of our assets are domiciled in U.S. dollars and 37% in sterling.

[Robert Memmott, CFO at Caledonia Investments]

Movements in the sterling-dollar exchange rate will therefore impact our impaired results. In the last six months, we suffered an FX loss of GBP 59 million, reducing our NAV by approximately 2%. We have a robust balance sheet with no structural leverage. Walking you through the cash movements, we started the year with GBP 151 million, and net GBP 27 million has been invested. The investment income from our assets was GBP 47 million, higher than in previous periods as it includes the GBP 25 million dividend from Air Serv. We have consumed GBP 24 million in the cash cost of management expenses and working capital. Next, there is the payment of the prior year final dividend, GBP 28 million, and GBP 14 million allocated to share buybacks, resulting in a closing cash position of GBP 105 million. This, combined with our undrawn revolving credit facility of GBP 325 million, means that we have liquidity of GBP 430 million.

[Robert Memmott, CFO at Caledonia Investments]

Of the revolving credit facility, GBP 150 million has just under four years remaining duration, and GBP 175 million just under two years. We expect to complete the sale of Stonehage Fleming in Q2 2026 once all of the regulatory approvals are obtained. GBP 251 million will be received on completion, with two further amounts of GBP 18 million being due six and twelve months following. These amounts will come back onto the balance sheet. We feel no pressure to invest, and we will continue to embrace investment opportunities on their merits and as they arise. The discount at the end of the period was 33%. We believe this fundamentally undervalues the quality of the portfolio, our track record, and prospects. We are taking actions over the things that we can control, including share buybacks, which remain an attractive investment for us.

[Robert Memmott, CFO at Caledonia Investments]

We have a prudent capital allocation policy to investments, our dividend, and when appropriate, share buybacks. During the six months, we allocated GBP 14 million to share buybacks, increasing the total since March 2024 to GBP 78 million, delivering a 7.44p NAV per share accretion. We continue to evolve our IR and communications to ensure that the Caledonia investment proposition is understood and rated. We held capital market spotlight events in January and June, focused on private capital and public companies. If you've not had the opportunity, I would encourage you to visit the website and watch the presentations. They provide a great insight into how the pools operate, what differentiates us, and how we add value. When you visit the website, you will see that this has been significantly improved with new content.

[Robert Memmott, CFO at Caledonia Investments]

A date for your diaries, the 27th of January 2026, we will be holding the third spotlight session focused on the funds pool. We believe Caledonia is a great home for long-term investors. Following shareholder approval, we have completed the 10-for-1 share split. In addition, we have rebalanced the profile of the dividend, increasing the interim to 50% of the prior year total rather than the historic rate of approximately 25%. These measures will improve visibility of income, make payments more balanced, and I expect will improve accessibility for all shareholders. I'll now pass back to Mat.

[Mathew Masters, CEO at Caledonia Investments]

Thanks, Rob. We're pleased with our six-month performance, which supports our track record of delivering NAV total return of 9.8% per annum over the last 10 years, which is at the top end of our target range. Across both public and private markets, our portfolio is high-quality, diversified, and deliberately positioned to withstand short-term market volatility while compounding value over time. None of this would be possible without our strong balance sheet, exceptional team, fully aligned with shareholders, and focused on long-term value creation. Thank you very much for joining us today, and we will now take questions.

[Operator]

Participants who have joined via Spark Live can submit questions in written format via the webcast page by clicking the Ask a Question button. If you are dialed into the call and wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. If you are dialing via phone, you can raise your hand using star nine and unmute yourself pressing star six. We will pause for a moment to assemble the queue. Our first question comes from Ian Schmuller with Stifel. Please unmute your line and ask your question.

[Ian Schmuller, Analyst at Stifel]

Good morning. I just wanted to ask about the valuation of Stonehage Fleming. I think in the statement you're saying it's at a 5% discount to the expected proceeds, but in the presentation, you're talking about a 10% discount. I just wonder if you could clarify that.

[Tom Leader, Head of Private Capital at Caledonia Investments]

Certainly, the total discount relative to the expected proceeds is approximately 10%, rising two separate adjustments. One, approximately 5% discount for execution risk and a 5% discount for the time value of money. The total discount relative to expected proceeds is 10%.

[Ian Schmuller, Analyst at Stifel]

Okay, thank you. When do you expect to receive the proceeds?

[Tom Leader, Head of Private Capital at Caledonia Investments]

Expect to receive the proceeds on completion of all the regulatory approvals. There are, in fact, slightly more than 20 regulatory approvals required in multiple jurisdictions. That process will take several months. We expect the deal to complete towards the back end of the first half of calendar 2026.

[Ian Schmuller, Analyst at Stifel]

Okay, thank you very much.

[Operator]

Our next question comes from Anthony Leatham with Peel Hunt. Please unmute your line and ask your question.

[Anthony Leatham, Analyst at Peel Hunt]

Good morning, everyone. Thank you very much for the update. A couple of questions, if I may. You were particularly active in kind of April, that Liberation Day volatility on the public company side. How are you feeling about the environment and the positioning of the portfolio today? I had a couple of questions on the private equity side. Maybe a comment on the maturity profile of the funds portfolio. We are hearing from private equity trusts and managers that realization activity is actually improving. I did not know whether you had seen the same trend within your holdings. Thank you.

[Mathew Masters, CEO at Caledonia Investments]

Morning, Anthony. Thanks for the question. Matt here. Yes, we did. Following President Trump's what's been termed Liberation Day sort of announcements and things, the stock markets sold off. We added, very pleased to add, Charles Schwab to the portfolio. That is absolutely the sort of the playbook for when we sort of invest in the equity markets is to keep our powder dry until opportunities present themselves. We also topped up other holdings in the wake of that. That has all thus far performed very well for us. The portfolio is a long-term portfolio. We try not to judge precisely where it is on any particular day, but we do feel as we risk manage the portfolio as we go forward.

[Mathew Masters, CEO at Caledonia Investments]

We will talk about the fact that we top slice Oracle as that went up in value and loss ratio went up. We do that across the whole portfolio. We feel good about the medium and long-term prospects of the portfolio. Obviously, impossible to predict what share prices do on a day-to-day basis, though, as I'm sure you'll appreciate. Maybe Rob could tackle the funds questions.

[Robert Memmott, CFO at Caledonia Investments]

Yeah, thanks, Anthony. Morning. Just in terms of the funds activity, as we mentioned in the presentation, the level of realization and investment activity in the last six months has reduced quite significantly. What we're seeing is that start to increase the weighted average life of the portfolio compared to where we were a year ago. In terms of recent activity in the market, certainly there is sort of noise of increased activity taking place. We're yet to see that sort of flow through into sort of real pound notes coming back through to us. Certainly from a sort of planning and thinking about sort of liquidity, we're sort of still quite cautious in terms of the speed of that recovery getting back up to the norms, which I guess we were experiencing in the prior financial year.

[Operator]

As a reminder, if you have joined via Spark Live, you can submit a question in written format via the webcast page by clicking the Ask a Question button. If you are dialed into the call, please use the raise hand function at the bottom of your Zoom screen. If you are dialed in via phone, please raise your hand by pressing star nine and unmute yourself by pressing star six. There are no further questions on the webinar. I'll now hand over to Rebecca Hughes to read out the written questions. Please go ahead.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

Morning. The first question is about Oracle. What is your view and future prospects for your Oracle holding, and have you sold any more since the period end?

[Mathew Masters, CEO at Caledonia Investments]

Thanks for the question. Matt here again. We think Oracle has a fantastic future ahead of it. Most of its current trading is still sort of legacy type business. What's really happened is it's bought all of it. It's grown a lot and a lot of that is sort of AI related. Yeah, actually, that's reflecting the opportunity expanding ahead of it. We're quite excited about the future for Oracle. Nevertheless, the rating has changed materially during the period, and we do sort of respond to that. We have altered the size of the position. We talked about the money we've had of it over the course of our investment period, but over the year, over the half year, rather, we've taken GBP 54 million off it.

[Mathew Masters, CEO at Caledonia Investments]

We have trimmed the holding according to the change in risk, really rate risk with it. We remain pretty excited about its medium and long-term future.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

A question on Stonehage Fleming. Are the proceeds contingent on anything or just deferred? What are the most attractive areas for new investment?

[Tom Leader, Head of Private Capital at Caledonia Investments]

Dealing with the Stonehage Fleming completion mechanism first, as I alluded to earlier, completion is conditional on regulatory approval in multiple jurisdictions. That will crystallize payment of the bulk of the proceeds, just over GBP 250 million. There is a deferred element, which is payable in two tranches, six and twelve months post completion. Those deferred proceeds are interest bearing, and they are subject to adjustment depending on the finalization of a closing balance sheet audit, which includes a true-up mechanism. That could go either up or down, positive or negative, against the estimated closing balance sheet just prior to closing. There is bound to be a small difference between the two, but we do not expect it to be material.

[Tom Leader, Head of Private Capital at Caledonia Investments]

In terms of the second part of the question, future opportunities, we scan somewhere between 300 and 350 new opportunities a year across a very broad range of sectors. Our historic strengths have been in financial services and business services and technology-driven industrial businesses. There is a regular flow of opportunities in all of those sectors. I would add that it is a difficult market in which to deploy capital. Good quality assets are still transacting at very high prices, and less good quality assets are either taking longer to sell or not selling at all. We will remain selective, and we have the liquidity to finance new acquisitions when we can find the right opportunity.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

Thanks, Tom. Question around discount. What plans do you have to reduce the very large discount now that the buyback may have marginal benefits but does not seem to benefit? Why have you only bought back GBP 13 million worth of stock given the discount is just over 30% and you have a lot of liquidity?

[Tom Leader, Head of Private Capital at Caledonia Investments]

Yeah, thank you, Bex. As you rightly point out, the discount of around 33%, we certainly feel undervalues the value of the portfolio, our track record, and our prospects. I guess the buybacks, we sort of see those as an investment opportunity for us. We do not see that we do not have a discount control mechanism. The things that we are doing to influence the discount are the things that we can control, which is continue to invest in a good quality, high-quality portfolio, make sure that we communicate with as large an investor base as possible to make sure that the proposition is properly understood and rated. There are some of the sort of smaller sort of tactical things that we have done around the share split, rebalancing the dividend payment to make sure that the shares are as attractive to a broader investor base as possible.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

Another question here about hedging. You mentioned return in sterling is diminished by your U.S. dollar weakness. Do you hedge?

[Tom Leader, Head of Private Capital at Caledonia Investments]

The answer to that is that we do not hedge. We're a long-term investor. If you like, the short-term volatility coming from exchange rates, we sort of understand those and sort of monitor them. It is about sort of long-term sort of value sort of creation. Generally, if you sort of hedge the balance sheet position, you pay a premium in order to end up in the same place. We do not hedge unless there are specific cash flows that we would do so for. I think that the weighting of the portfolio, which is more dollar denominated, reflects the fact that the size and the quality of the companies which we're investing in, a lot of those are based in North America or headquartered in North America.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

Another question here on special dividend. In the past, there was a loose policy of providing a special dividend every three years or so. Is this policy still operative?

[Mathew Masters, CEO at Caledonia Investments]

Thanks for the question. We have a track record of occasionally paying special dividends. I do not think we have ever sort of announced a policy about when we would do it. We have not made any announcement about paying a special dividend. That is the case at the moment.

[Rebecca Hughes, Head of Investor Relations at Caledonia Investments]

Another question here about equity market valuations. What do you think of them?

[Mathew Masters, CEO at Caledonia Investments]

Thanks for the question. Equity market valuations vary around the globe. There will be one market up and one market not quite so far up. Actually, it is a really difficult question to address and actually respond to in your portfolio. What we do is to try and keep it very simple. We invest in good quality companies and hold them for the longer term and try not to worry too much about what is going on in the macro and make sure we invest in things where we do not have to worry too much about the macro. We have gone through the questions now, and we are very grateful for everyone joining us on the call today and for the questions. We look forward to connecting with you next time.

Participants

Executives

• Robert Memmott, CFO
• Tom Leader, Head of Private Capital
• Mathew Masters, CEO
• Rebecca Hughes, Head of Investor Relations

Analysts

• Ian Schmuller, Analyst at Stifel
• Anthony Leatham, Analyst at Peel Hunt