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Caledonia ditches British Empire and halves Close weighting
by James Phillipps on May 30, 2013 at 07:59
In its annual results announcement, the trust said it will up its dividend by 10% but will stop benchmarking its one year returns against the FTSE All Share index on the basis it operate on a longer time horizon.
The trust delivered an 18.9% gain over 12 months to the end of March on a net asset value (NAV) basis, but emphasised that with the Cayzer family continuing to hold 48% of its shares, avoiding short-term benchmarking will better reflect its ‘generational’ approach to running money.
The £2.3 billion trust said it is continuing to diversify its holdings away from the UK economy and some 38% of its assets are held in unquoted stock. Caledonia holds £96 million, equivalent to 7% of net assets, in cash, and has redrawn its five year bank facilities, reducing the gearing available from £100 million to £75 million, which it said reflects its cash position.
Key trades over the year included reducing its holding in Close Brothers from 13% to 7% on the back of the stock’s strong share price performance and selling its remaining £49 million holding in British Empire.
Chairman Rod Kent (pictured) said: ‘Markets finally gave Close Brothers the rating it undoubtedly deserves, being one of the very few banks to have come through the GFC with a clean bill of health.
‘It has continued to grow its lending book profitably without taking undue risks, and we took advantage of this rise in valuation to sell over £100 million of shares during the period and to reduce the size of this investment in relation to the portfolio.’
Kent added that Caledonia bought back 1.1 million shares over the last year, equivalent to around 2% of the trust’s issued share capital and with the discount still at -19.2%, it will look for shareholder approval to extend the buyback programme at its next AGM.
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