Caledonia Investments H2 2025 Earnings Report

Caledonia Investments EPS Results

• Actual EPS: GBX 57.50
• 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: H2 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Monday, May 19, 2025
• Conference Call Time: 3:30PM 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 H2 2025 Earnings Call Transcript

Key Takeaways

• Caledonia delivered a NAV total return of 3.3% and a TSR of 10.2% for the year, while narrowing its discount from 39% to 35%.
• The board announced a 4.5% increase in the total dividend to 73.6p and deployed £63m in share buybacks, which added around 1% to NAV per share.
• The private capital pool saw a significant write-down of Cook Optics to £44m following prolonged trading headwinds driven by the film production slowdown.
• Caledonia secured a new £325m revolving credit facility and, together with £151m cash, now holds £476m of liquidity to pursue opportunistic investments.
• Shareholder approval will be sought at the AGM for a 10-for-1 share split and a more balanced dividend profile to improve accessibility and visibility for investors.

Presentation

[Mathew Masters, CEO at Caledonia Investments]

Well, morning, everybody. I'm Matt Masters, CEO of Caledonia Investments and myself and my colleague, Rob Bemmott, our Chief Financial Officer, will take you through the results for our full year to March 2025. Now we're a long term investment business, so we'll balance this results presentation by providing information for the year as well as a reminder of the strategy and our longer term performance. Important cautionary statement. And then I'll bring out the key features of Caledonia that make it a really great place to do long term investing.

[Mathew Masters, CEO at Caledonia Investments]

The first area is that we're a self managed investment company, meaning all the investments and all the funds are selected by our in house team. And that means they're only working for our shareholders and they are wholly aligned with them. We're targeting absolute returns, so long term compounding returns aiming to keep NAV per share and dividend per share ahead of inflation. Now despite elevated inflation in recent years, we have managed to keep pace with it. And our track record shows that over the longer term, we have managed to exceed this target by some margin.

[Mathew Masters, CEO at Caledonia Investments]

The company traces its history back to the Quezor family shipping business, which dates back to the late 1800s, and the family remains supportive shareholders. And their long term investment approach underpins what we do at Caledonia. Now we're very grateful to all shareholders for enabling the family holding to go through 50% at the special AGM at the end of last year in December. And this provided us with flexibility to carry on making NAV per share enhancing share buybacks. And you will see later on that share buybacks have made a meaningful contribution to returns this year.

[Mathew Masters, CEO at Caledonia Investments]

So our maxim is time well invested, and it perfectly encapsulates our approach. It's the guiding principle that explains every aspect of our operations. And I'll just focus on three key areas. Our in house team of expert investors and support staff are dedicated to making carefully considered investments and providing the best platform to do so. Throughout the year, we welcome new colleagues to both teams and we're delighted to have them with us.

[Mathew Masters, CEO at Caledonia Investments]

Our opportunity set. Our investment teams are focused on attractive long term markets that enable them to develop high quality opportunities that we can select from. And the alignment, returning to that point, the teams are wholly aligned with shareholders. They're only investing Caledonia's money, and there's no fundraising distraction for them. They're incentivized by reference to their contribution to Caledonia's NAV per share growth, and the incentive is paid in Caledonia shares.

[Mathew Masters, CEO at Caledonia Investments]

So they're very well aligned with shareholders. Our approach aims to capitalize on time being the good being the friend of good companies. We invest to enable us to look through short term market cycles and capitalize on opportunities. And this approach allows compounding to do its work. And all of this is underpinned by our evergreen balance sheet.

[Mathew Masters, CEO at Caledonia Investments]

Our portfolio is well balanced. We have three different areas, three different each run by specialist teams. The teams take quite a concentrated approach to what they do, but obviously shareholders have the protection of the diversification of having exposure to all three of them. And the chart on this slide, the boxes on this slide summarize each of the areas showing the returns targets, ten year performance and the NAV weight. Just running briefly through them because we'll do a longer explanation a bit later in the presentation.

[Mathew Masters, CEO at Caledonia Investments]

We have public companies, which has two portfolios, one focused on capital and one focused on income. And we hold around 30 companies across both portfolios. And they're all making long term investments in what we call compounders. We have private capital, where we invest alongside management in predominantly U. K.-based operating companies, and we typically hold between five and ten companies in that area.

[Mathew Masters, CEO at Caledonia Investments]

And then we have funds, where we invest mainly in the smaller end of the North American private equity market or the low mid market as we term it, and growth orientated funds in Asia. Now this area is highly diversified, 80 funds run by 45 managers and over 600 companies within the portfolio. When we invest, we look for companies to drive value for us over the long term. We are seeking to back and invest in companies with long term fundamental value drivers and avoid areas of the market susceptible to cycles. And perhaps being a trader would be more suitable in those areas, and we are not traders.

[Mathew Masters, CEO at Caledonia Investments]

I'll just talk briefly about Trump and the impact that we assess he's had on the portfolio. And our initial assessment is he actually there is actually quite low primary impact from Trump. And what I mean by primary impact, I mean, that's a direct impact on a sort of fundamental aspects of the companies we're invested in as opposed to a sort of secondary impact, which might be the effect of an economic slowdown or something like that, which is, of course, would affect all companies and at this stage is difficult to predict. Where we have seen some primary exposure is within public companies, where we have exposure to the Life Sciences sector. We've got two investments in there.

[Mathew Masters, CEO at Caledonia Investments]

They're both global companies. And the reduction in federal grants, that sector has had some impact on these companies, but it is very minor in the context of Caledonia's NAV. So moving on to our long term performance. This chart shows the combined results of all the pools and how the NAV has worked for shareholders. The vertical gold bar represents our overall long term NAV per share return, which exceeds our target over the five ten year periods.

[Mathew Masters, CEO at Caledonia Investments]

However, our performance over three years is lower than our targets, albeit it's aligned with inflation. And this is due to recent market volatility, elevated inflation, increasing interest rates and the cost of capital going up over the last few years, which has reduced short term real returns. Despite these challenges, we remain confident in our investment strategy. We focus on investing in high quality, well managed companies and funds with track records of success, which position us well to navigate uncertainty. Regarding share price performance, it's lower than the NAV due to an increase in our discount over the past few years.

[Mathew Masters, CEO at Caledonia Investments]

However, over the year that we're reporting on, the discount reduced from 39% to 35%, and Rob will discuss more about this later. So moving to the full year results, and I will take you through the highlights. Caledonia delivered another year of positive performance with NAV total return of 3.3%, and all three investment pools contributed towards this positive performance. And this is against an increasingly difficult macroeconomic and geopolitical backdrop. So that was a bit of a headwind towards the end of the year.

[Mathew Masters, CEO at Caledonia Investments]

The investment portfolio delivered a return of 3.5%. And then for information, foreign exchange reduced returns by around £42,000,000 or 1.4%. And remember, we don't hedge our foreign currency exposure. The total shareholder return was higher at 10.2% with the discount reducing during the period. Public Companies pool delivered a 4.7% return.

[Mathew Masters, CEO at Caledonia Investments]

Performance was strong for most of the year, but it was eroded by market volatility in March by around three by around 7%. Private capital delivered a return of 3.7% with strong returns from Stonehaig, Fleming and AirServe, but this was impacted by further write down in Cook, which we talked about at the half year mark. We've taken a number of actions to deal with Cook, we'll talk about these later. And we were very pleased to acquire DTM during the year. The funds pool delivered 2.2% return.

[Mathew Masters, CEO at Caledonia Investments]

To give you a sense how the areas performed in their underlying markets, the American private equity funds delivered an 8.4% return in dollars, but the overall return was dampened by a slight negative return in the Asian portfolio and then obviously the pound strengthening against the dollar during the year. Today, we are announcing our final dividend at 53.91p, bringing the total dividend for the year to 73.6p. And this represents a 4.5% increase in the dividend, And so continuing our fifty eight year record of increasing dividends. Throughout the year and benefiting from the permission we obtained from the non family or non concert party shareholders at the December special AGM, we were able to do share buybacks that amounted around £63,000,000 And these buybacks are, in many ways, the easiest investment we make in the business because they straightaway add value to NAV per share. And £63,000,000 worth of share buybacks added about 1% to the returns.

[Mathew Masters, CEO at Caledonia Investments]

So the permission that we got at the special AGM is good for all shareholders, and so I suppose everyone is thankful for receiving that permission. Additionally, to enhance liquidity and make Caledonia more accessible to a broader range of shareholders, we're going to seek shareholder approval at the forthcoming AGM to do a 10 for one share split. So this will effectively if you hold one share now, you hold 10 and the value of the shares will be reduced proportionally to that. This will bring back bring down the cost per share. We're also changing the profile of our dividend, so it makes it more even.

[Mathew Masters, CEO at Caledonia Investments]

And I don't want to steal any more of Rob's thunder on this, so he'll explain more about this later on. So moving on to each of the areas, and I'll cover public companies first. So before I get into it, an advert for the public company spotlight, which is on June 24. Details are on the website, and I highly recommend tuning in for it. It will be available, obviously, afterwards to watch.

[Mathew Masters, CEO at Caledonia Investments]

And it'd be a good chance to hear more about the strategy and hear firsthand from the team as well. Now the quoted pool or public companies pool invests in high quality companies where long term ownership is likely to be rewarded. So what do we mean by high quality? Well, we look for resilience, pricing power, attractive returns on capital, and an absence of leverage of leverage, so not using too much debt in the business or vulnerability to economic cycles. And they must all be well managed.

[Mathew Masters, CEO at Caledonia Investments]

So these are sort of the key features we're looking for. We're patient. We tend to initiate positions when there's a market sell off or a sale, as we call them. And so we're looking to access these high quality companies at opportunistic moments. Now during the year, both portfolios delivered good results, delivering in the neighborhood of 7% at the half year, and performance continued to improve until market volatility in the last two months reduced returns.

[Mathew Masters, CEO at Caledonia Investments]

The more UK orientated and slightly more defensive income portfolio proved more resilient and delivered 8% for the year with capital delivering 3.6%. The table shows the largest holdings across both portfolios and also shows when we first invested. And you can see they've been held between seven and eleven years, demonstrating our long term approach. When I look at the list, it's interesting that I'm just as excited about their prospects as I was when we first invested. And those companies continue to innovate and develop their businesses from already strong positions.

[Mathew Masters, CEO at Caledonia Investments]

So we're very pleased with them. And they've all delivered double digit annualized returns for us. During the year, within capital portfolio, we added Pool Core, which is a North American distributor of swimming pool and all the equipment required to service them. Slightly unusually for us, we saw a bit of churn within the income portfolio with sort of three in and three out during the year. The levers were largely due to corporate activities.

[Mathew Masters, CEO at Caledonia Investments]

So DS Smith got sold and Pennant was really a sort of leftover holding after they had sold Viridor, and it was a bit of a vestigial holding. So they mainly left because of corporate activity. And then we've added Sage, Croda and Howdons to the portfolio, having followed them for some time and being presented with market weakness to be able to invest in them. To talk about Trump a bit more. Aside from share price weakness, we think Trump has had limited impact on the fundamental health of the portfolio.

[Mathew Masters, CEO at Caledonia Investments]

It has threatened Farcenal, which is a 1.4% of Caledonia NAV Holding because some of its products are only made at scale in China. And so the very high China tariffs presented an issue really for the market and Farsenal. This has now been reversed, and so this risk has receded for now, but we'll obviously continue to monitor the situation closely. And then we have the two global life sciences companies representing around 2% of Caledonia's NAV, who anticipate seeing some areas of weakness in their US markets because of reduction in the n h NIH federal funding. And those companies have reduced their growth guidance as a result of that.

[Mathew Masters, CEO at Caledonia Investments]

Now we continue to like the prospects of the portfolio and our whip list. And so during the market sell off, we added GBP 50,000,000 to the portfolio, adding to existing positions and initiating a new holding. In this presentation, we're going to do a sort of deep dive on Moody's, which is The US headquartered credit ratings and analytics business. Now it's no secret that Moody's is a fine business. It's been within Warren Buffett's Berkshire Hathaway portfolio for a long time, and we've been following it for a long time.

[Mathew Masters, CEO at Caledonia Investments]

But the obstacle to owning it was really it's quite high rating, probably merited, but we tend to avoid going in at very high ratings. However, given our time well invested approach, the team had been following the company for around five years, including visiting it and doing all the work on it because patience is rewarded in the stock market. Now a bit about the business. The business is one of the very few providers of credit rating services used by debt issuers. I think Buffett has described it as a toll business in that before you issue, you have to pay Moody's and people like that money.

[Mathew Masters, CEO at Caledonia Investments]

So it's a bit like a toll on the toll road. The business is very underpinned by regulatory requirements for their products to be used in support of an ever growing outstanding debt and debt issuance market and benefits from adding value far in excess of their cost to issuers. Additionally, Moody's has developed a range of data analytics products, which not only provides organic growth but also provides attractive investment opportunities for bolt on M and A. Now here's where the opportunity came in. When the U.

[Mathew Masters, CEO at Caledonia Investments]

S. Fed started raising interest rates, the market predicted that debt issuance would go down, and that was correct. We also thought that would be the case. And the market also predicted the short term impact on credit ratings earnings, and therefore, the share price of these companies went down. However, we remained reasonably confident that debt would remain cheaper than equity and so trading would recover.

[Mathew Masters, CEO at Caledonia Investments]

And so we used the share price weakness, as you can see on the chart, to initiate our holding. And thus far, Moody's performance has recovered and the share price has recovered, and we benefited from a 17% IRR over the course of our holding. So we're very pleased with that. This is really how we kind of always invest in this area. It's an example of the market being very efficient in one respect, the short term, but not very efficient over the longer term.

[Mathew Masters, CEO at Caledonia Investments]

And really, it's how long term investing provides attractive returns without having to take too much risk. Moving on to private capital, which is our opportunity to own companies and partner with management to grow them and improve their quality over the longer term. We invest in well established profitable companies using low levels of debt. We use around 2.5 times net debt to EBITDA because we want business performance to drive returns and dividends and not financial engineering. We avoid paying speculative multiples for companies and typically pay and value our holdings in the range of nine to 14.5 times EBITDA.

[Mathew Masters, CEO at Caledonia Investments]

The operating companies are all based in The U. K. We aim to hold between five and ten of them at any particular time, and we'd aim to invest around £100,000,000 in them when we first invest, but we're quite flexible around that. The realized track record for this strategy since 2012 is 17% annualized with £1,100,000,000 in cash generated. And I would also just note that during the year, we sold Bloom at a 43% uplift to the March 2024 NAV.

[Mathew Masters, CEO at Caledonia Investments]

Over the last five and ten years, the portfolio has delivered good returns of nineteen percent and twelve point four percent. Recent performance has been impacted by the write down of Cook Optics. I'll get into that in a minute. We enjoyed strong performance from Stonehague Fleming and AirServe, which resulted in an increase of their valuations, mainly driven by cash generation and improvement in trading. And during the year, we welcomed DTM into the portfolio, inquiring this for 55,000,000 and disposing of Bloom for 34,000,000.

[Mathew Masters, CEO at Caledonia Investments]

Now talk about being long term. We've been invested in Bloom, which is a lower emission industrial boilers or industrial burners business for 35 years, and we very much enjoyed our partnership with them and especially the last decade with David Boyce and his team. And we had a wonderful partnership with them, and we're sort of sorry to see them go, but we wish them very well. We do not see any primary impact from Trump in this portfolio, from the tariffs in this portfolio. The companies don't seem to have any exposure to it.

[Mathew Masters, CEO at Caledonia Investments]

I'll go through the key holdings. And bear in mind that there is a spotlight available to watch capital on our website, which is a really useful way of learning more about the strategy and the people behind it. So firstly, AirServe, which designs, manufactures and operates air vacuum and jet washing machines, delivered a return of 20% during the year, reflecting continuation of its growth and cash generation. It's trading well. It's increasing the number of machines and the revenue per machine, And we received a dividend of £6,200,000 during the year, demonstrating the strong cash generation of the business and the benefit of our prudent capital structure.

[Mathew Masters, CEO at Caledonia Investments]

Cobeeper, which is not an operating company, it's an investment company, is Belgium headquartered and has a diversified portfolio of 19 private investments. We've been invested for over twenty years, and Koebipa has delivered low double digit annualized returns for us. The current year's returns are slightly depressed by some cash drag and the relative strength of the pound versus the euro, but we continue to be very happy partners with them. On to the next page and looking at Butcombe, which was previously called Liberation. Liberation is the Channel Islands beer brand and Butcombe is The UK brand.

[Mathew Masters, CEO at Caledonia Investments]

And the center of gravity of that business and scale has moved to The UK, and so we reflected that in the name change to the business. Pleasingly, all three revenue categories of food, drink and accommodation have grown year on year, and cost inflation pressure, with one exception, has eased, resulting in revenue and margin growth. Now the exception, some of this good work has been negated by the increase in National Insurance introduced in the October budget, and this explains the reversal in NAV performance between the half year and our final results. However, the business is now well positioned to grow value from here. DTM, the provider of tire management services to specialist fleet operators, joined the portfolio during the year and has traded positively since we bought it.

[Mathew Masters, CEO at Caledonia Investments]

We are inside its first full year of ownership, and so it's valued at cost with a small return showing generated by some bridge finance we provided during our first few months of ownership, which has now been refinanced. Team have made great progress bedding the company in, and we've appointed David Brennan as Non Executive Chairman. He's got great experience and expertise to offer, and we've also appointed a new Chief Revenue Officer that's making great initial progress. Now moving on to Cook. As previously reported, the business was heavily impacted by the Hollywood Actors And Writers' Strikes in 2023, and this has reduced demand for its core cine lenses as content production in The U.

[Mathew Masters, CEO at Caledonia Investments]

S. And the worldwide has suffered. It's quite a severe slowdown actually. Now content producers and those serving them are cautiously adapting their business models. And whilst production models are improving slowly, Cook's revenue and profit remains badly impacted.

[Mathew Masters, CEO at Caledonia Investments]

So what have we done about it? Well, we've appointed a new CEO in David Hancock, who joined the business in January, bringing fresh energy and relevant experience with dealing with these kinds of situations. We're very pleased with how he's getting on. The cost base has been rightsized for the current revenues, and we have provided additional funding to the business. So the business now has new leadership, a cost base to suit its new lower revenues, and is on a more robust economic footing.

[Mathew Masters, CEO at Caledonia Investments]

There are exciting new products being developed, including the prosumer lens and a digital product that offers post production industry strong value proposition. However, we have written down the value of the business over the course of the year to £44,000,000 to reflect the impact of what looks like is going to be a longer downturn in trading. We're profiling Stonehay Fleming as part of this presentation. And Stonehay Fleming is a wealth manager supporting leading families and wealth creators across generations and geographies. We first invested in 2019, and we were very pleased to be approached by Giuseppe and his partners to provide finance to aid succession and the development of the business.

[Mathew Masters, CEO at Caledonia Investments]

Over the course of the last six years, profit has more than doubled with organic growth and bolt on acquisitions contributing to this. A number of key areas contributing towards the development of the business, which are being driven by the management team with our support. These include really simplifying the governance by providing finance and working through the succession management, we ended up with a far more efficient and sort of quicker decision making body enabling the business to go forward better. We've invested in technology, which has improved profit margin and is enabling us to internalize profit from third party providers. We've improved business development.

[Mathew Masters, CEO at Caledonia Investments]

This is required, which is really about winning new clients, and this is occurring through organizational and cultural change, and that has yielded good results. And we've completed three bolt on acquisitions, and these improved the reach and diversified the offering of the business. And we've benefited from cash generation, and the chart shows you how returns have grown over the period of our ownership. It's been a steady performer. It's a real compounder and has delivered an 18% IRR or 2.5x multiple of invested cost.

[Mathew Masters, CEO at Caledonia Investments]

So we're very pleased with how this investment has progressed for us. It's a very interesting business. It is positioned in the fastest growing part of the wealth management market. So we're very pleased to be long term shareholders of this business and delighted to carry on holding it. And with that, I'd like to hand over to Rob, who will carry on through the presentation.

[Rob Memmott, CFO & Director at Caledonia Investments]

Thank you, Matt. Good morning, everybody. Our funds pool has been running for more than a decade and the opportunity is significant. These funds tend not to market in Europe, meaning that we are often the only European investor, which is a real differentiator for Caledonia. The pool of NAV of just under 900,000,000 is a diverse portfolio of some 80 funds managed by 45 managers invested in more than 600 underlying businesses.

[Rob Memmott, CFO & Director at Caledonia Investments]

63% of the pool is focused on North America lower mid market buyouts and 37% in Asian buyout growth and venture funds. No portfolio was immune from the geopolitical and macroeconomic headwinds. We believe the diversified pool of companies is capable of navigating this period of uncertainty. The North American assets are focused in that lower mid market, two thirds of the companies provide services and the balance have very little exposure to international trade flows. Within the Asian pool, the fund of funds, the buyout assets are focused on domestic consumption and supply chains fueled by the aging population, growing middle class and tech adoption.

[Rob Memmott, CFO & Director at Caledonia Investments]

The venture and growth funds are invested in government supported new technologies and health. We therefore feel there's limited exposure to the direct risk of the trade tariffs, although economic uncertainty is likely to reduce investment and realization activity in the short term. The pool has delivered strong returns of 1713% over five ten years. In the current year, the North American pool delivered local currency returns of 8.4 driven by good trading performance of the underlying companies. In Asia, despite the companies making good progress, the continued reduction in capital market flows impacts on fundraising and exits and this presses our returns in the short term.

[Rob Memmott, CFO & Director at Caledonia Investments]

Overall, the pool delivered 2.2%, four point six % in local currency. Our capital commitments increased from £377,000,000 to £416,000,000 1 hundred and 30 2 million pounds was invested in the year with 155,000,000 of new commitments being made, the majority into North America and in total of which approximately half is committed to new funds and half to funds where we have existing relationships with managers. We've included on the top left hand side the pie chart which details the weighted average life of the portfolio. For North America, the weighted average life is four years. This compares to a typical fund hold period of four to six years.

[Rob Memmott, CFO & Director at Caledonia Investments]

For Asia, the weighted average life is four point nine years. We expect a longer hold period in that market given the weighting towards venture and growth businesses. The chart at the bottom covers some of the cash flow aspects. The realizations is the bar chart. And you can see significant improvement in the level of realizations in both North America and in Asia in the last twelve months.

[Rob Memmott, CFO & Director at Caledonia Investments]

And this has resulted in the bullets at the bottom, which show that the pool has been cash positive £44,000,000 as it has for three of the four years as the program matures. As I mentioned earlier though, that economic uncertainty, we think it's likely that investment and realization activity will reduce in the short term. KLH Capital is based in Tampa, Florida. It's typical of one of our U. S.

[Rob Memmott, CFO & Director at Caledonia Investments]

Funds focused on The U. S. Low and mid market. They sector specialize in services for critical infrastructure and industrial businesses. The investments are in relatively small, in U.

[Rob Memmott, CFO & Director at Caledonia Investments]

S. Terms, typically owner managed businesses, profitable, cash generative companies, where often this is the first institutional capital. The plan is to transform these companies through building out management teams, operational efficiency and where appropriate bolt on acquisitions. These improved companies then provide the feedstock for the mid market private equity market. Prior to investing, the Fund's team has built a really close relationship with the Fund principals, diligencing their performance track record and understanding their investment culture.

[Rob Memmott, CFO & Director at Caledonia Investments]

Caledonia are members of the Fund Advisory Board as we offer about 80% of the North American portfolio. And this provides a level of oversight and influence over the GP as well as giving access to chief executives, pricing and valuation information. The first commitment that we made into KLH was in 2019, '20 '7 point '5 million of a total fund size of $2.00 £9,000,000 And then we followed with a commitment of £30,000,000 into Fund V in 2023. As I mentioned, we are the only European investor, which is a differentiator for Caledonia. Both of these funds, four and five, we expect a two to 2.5 times gross money multiple, and we feel that the team is on track to deliver this.

[Rob Memmott, CFO & Director at Caledonia Investments]

On the next slide, there's four companies from the underlying portfolio. These are focused on services to critical infrastructure, equipment and assets. The first of these businesses on the left hand side, D and H United, was sold at the back end of twenty twenty two at a five times gross money multiple. Building out the management teams, enhancing corporate infrastructure and identifying bolt on acquisitions are key drivers to the value creation. And this is a very similar playbook to the other lower mid market funds within the portfolio.

[Rob Memmott, CFO & Director at Caledonia Investments]

We'll now move to the numbers. During the year, our NAV of just under £2,900,000,000 generated a total return of 3.3%. Volatility in the public markets in March impacted returns of the capital pool by 7.3% and overall NAV by just under 2%. We have £2,700,000,000 invested in a diversified portfolio of listed and privately held companies and funds that have global reach. During the period, we completed our new revolving credit facility with an increased size of £325,000,000 on improved terms.

[Rob Memmott, CFO & Director at Caledonia Investments]

The facility is provided by three banks, pounds 175,000,000 has three year tenor, 150,000,000 5 year tenor. Facility is currently undrawn. That combined with £151,000,000 of cash on balance sheet gives us £476,000,000 of liquidity. This enables us to act quickly to invest in companies or funds that we find attractive. For those of you who have seen the April fact sheet, and as Matt mentioned, you'll have seen that we deployed £50,000,000 into the public company's portfolio in April, taking advantages of opportunities provided by that recent market volatility.

[Rob Memmott, CFO & Director at Caledonia Investments]

Our proposed final dividend of 53.91p brings the total to the year to 73.6p, that's a year on year increase of 4.5%. The final dividend of £28,000,000 therefore will be paid to shareholders on the 08/07/2025. To my beloved waterfall charts, the first of which is portfolio of investments. We start on the left hand side of just under 2,700,000,000.0 and we roll through to the right hand side just over £2,700,000,000 but clearly a lot of activity taking place during the year. Pounds $320,000,000 of investments were made, including £55,000,000 into DTM within the private capital portfolio, pounds 130,000,000 to the funds pool and £107,000,000 into the public companies pool, including that new position of Pool Corp, Howden, Sage, Croda.

[Rob Memmott, CFO & Director at Caledonia Investments]

Our realizations of $336,000,000 included the realization of Bloom, 42% increase on NAV from the prior year, pounds 174,000,000 return from the funds pool and £114,000,000 from public companies where we took advantage of market pricing, trading around our core position in addition to disposing of BAT in the capital portfolio and DS Smith, Wreckett and Pennant in the income portfolio. On the right hand side, just a sort of summary table of returns. And you'll see that the return period 3.5% and the cash yield of 2.6%. A little bit on valuation of the assets. Our quoted assets are marked to market daily.

[Rob Memmott, CFO & Director at Caledonia Investments]

Within Private Capital, we follow the IPEV guidelines and account at fair value. A full valuation is carried out at the half year and at the full year. This is reviewed and challenged by the Valuation and Audit Committee and, of course, the auditors. For the funds pool, we rely on the manager NAV statements. 67% of the NAV at the March 31 was valued based upon statements at the December 31.

[Rob Memmott, CFO & Director at Caledonia Investments]

These statements are audited by reputable firms on an IFRS or U. S. GAAP basis, which is essentially fair value. The team reviewed the valuations to ensure that any trends or company specific issues are appropriately reflected. And this year included a thorough review of the impact of the Trump trade tariffs.

[Rob Memmott, CFO & Director at Caledonia Investments]

Our NAV of £2,900,000,000 You can see the portfolio return in the middle, the impact of FX, then management expenses of £32,000,000 Our OCR is 87 basis points, slightly up on the prior year reflecting some of the investment in the investment teams, which Matt mentioned earlier. That takes the NAV to just over £3,000,000,000 in the center. And then you can see the returns to shareholders, sixty three million in allocated share buybacks, 38,000,000 being the payments of the prior year and final dividend and the current year interim dividend. The pie on the right hand side shows the split of the assets domiciled currency, 53% U. S.

[Rob Memmott, CFO & Director at Caledonia Investments]

Dollars, thirty eight % sterling. Movements in that sterling dollar exchange rate will therefore impact on our in period results. And as we've mentioned in the last twelve months, there's an FX loss of £42,000,000 reducing NAV total return by 1.4%. We have a robust balance sheet with no structural leverage. Walking you through the cash movements from the left hand side, we started the year with £227,000,000 of cash and net £19,000,000 was returned from the investment portfolio.

[Rob Memmott, CFO & Director at Caledonia Investments]

Cash yield from the assets, 39,000,000 and pounds 31,000,000 the cash cost of management expenses. There's a little bit of working capital movement in a couple of the numbers, which is why the eagle eyed of you will notice is slightly different from the slide before. Then I have the payment of the dividend and the cash allocated to share buybacks leaves us £151,000,000 at the end of the year. That, combined with the RCF, gives us that $476,000,000 of liquidity. We fundamentally believe the long term shareholders should benefit from the increase in NAV.

[Rob Memmott, CFO & Director at Caledonia Investments]

NAV has grown by 9% over the last ten years, nine percent per annum over the last ten years, and TSR over that period is 7.5% per annum. Over three and five years, the gap between NAV per share growth and TSR has increased, driven by the dividend widening. The one year TSR of 10.2% reflects the dividend the discount coming back in from 39% at the start of the year to 35% at the end. We still consider that this current dividend this current discount undervalues the quality of our investments and our long term track record. This remains a live issue for the Board, and we are progressing the things that we can control.

[Rob Memmott, CFO & Director at Caledonia Investments]

Firstly, that is to continue to build on our track record of investing in quality companies and funds, delivering long term real returns. Second is continuing to evolve our IR and communications to ensure that Caledonian investment proposition is understood and rated. And to that end, we held the first Capital Markets Spotlight event in January focused on private capital. If you haven't had the opportunity to watch it yet, I would encourage you to do so and visit the website. It provides a great insight into how the pool operates, what differentiates us from other private equity funds, how we add value and our realized track record and performance.

[Rob Memmott, CFO & Director at Caledonia Investments]

And that date for your diaries again, June 24, will be the second Spotlight event focusing on the public companies. Third area of focus that we can control is on shareholder initiatives. In December, we were grateful that shareholders supported an uncapped Rule nine waiver. This provided us with the flexibility to enable us to complete more share buybacks. We have a prudent capital allocation policy to investments, our dividend and when appropriate share buybacks.

[Rob Memmott, CFO & Director at Caledonia Investments]

During the year, we allocated £63,000,000 to share buybacks, resulting in 59p accretion to NAV per share just over 1%. We believe Caledonia is a great home for long term investors. At the AGM in July, we will be seeking shareholder approval for a 10 for one share split. In addition, we are changing the profile of the dividend, making the interim dividend 50% of the prior year total. These measures will provide improved visibility of income, make payments more balanced and is expected to improve accessibility to a wider range of shareholders.

[Rob Memmott, CFO & Director at Caledonia Investments]

In summary then, Caledonia has built a diverse portfolio that is well placed to deliver long term returns. We invest in quality businesses focused on free cash flow, meaning the portfolio is capable of responding to challenges and opportunities posed by the macro and geopolitical environment. We have a robust balance sheet with liquidity of £476,000,000 giving us the firepower to act should we want to act on attractive investments. The experienced team are 100% aligned and focused on continuing to invest and manage a portfolio of high quality companies and private equity funds. And as a management team and board, we're committed to doing what we can to control and drive shareholder value.

[Rob Memmott, CFO & Director at Caledonia Investments]

We will now take questions initially from the room and then to those who dial in remotely. Thank you.

[Operator]

Thank you very much. Just thinking about the balance sheet position, it's obviously a position of strength, gives you a chance to act when markets are more volatile. How does that compare to previous years and what areas are you particularly looking at to add to?

[Mathew Masters, CEO at Caledonia Investments]

So we do have the odd year when we're might be a bit overdrawn because we might just bought a business or something. But generally, we like to be in this sort of position with this amount of cash. And really, the two areas of opportunities that present themselves are stock market weakness, where we've added and then we might also find we always like to be able to buy a business if a business opportunity comes along for private capital. So those would be the two areas of opportunity we'd be looking at.

[Rob Memmott, CFO & Director at Caledonia Investments]

Thanks.

[Executive]

There's one question from Ian Scouler, who says, I know 30% of the funds pool were last valued at the September 30. Why is there such a time lag in these valuations?

[Rob Memmott, CFO & Director at Caledonia Investments]

Predominantly that portion of the portfolio is the fund of funds portfolio. So where we're investing in a fund of fund manager and then they are investing in underlying primary funds. And there is a lag as they collect the data from the underlying funds and then consolidate that and bring them through. And since we finished the year end or closed the year end, more of those funds have reported and we obviously sort of track that to make sure there's not a material difference to the numbers which we reported at the March, which there isn't. But then also, as I mentioned in the presentation, the funds team do an awful lot of analytical review and challenge to make sure that they are comfortable with the valuation.

[Rob Memmott, CFO & Director at Caledonia Investments]

If there's any sort of stale pricing or market movements that they are reflecting those appropriately in the valuation. And indeed, we completed a a really thorough review to consider the impact of the Trump tariffs on valuation.

[Mathew Masters, CEO at Caledonia Investments]

Okay. Well, that's it. No more questions. Thank you for everyone's attention today.

Participants

Executives

• Mathew Masters, CEO
• Rob Memmott, CFO & Director

Analysts

• Executive