Caledonia 'committed' to dividend after upping payout

Caledonia Investments said it was committed to its dividend after increasing the payout despite a fall in asset values caused by the Covid-19 crisis.

The FTSE 250 investment company raised the annual dividend for the year to the end of March by 3% to 61.1p a share marking 53 consecutive years of increases.

Caledonia's net asset value return dropped by 8.1% as the value of its net assets fell 10.7% to £1.79bn. The company warned income in the current financial year was likely to fall because of Covid-19 disruption.

The company, based in Westminster, said any shortfall in income would require it to use its £256m retained earnings, leaving it able to pay dividends if the board agrees.

"As a board we are committed to the dividend and where income shortfalls do occur, we have retained earnings to maintain those payments in the future," David Stewart, Caledonia's chairman, said.

The company's quoted equity investments held up well, recording a -0.3% annual return compared with -18.5% for the FTSE All-Share index. The return on private company investments was -18%, including an assessment of the potential impact of Covid-19.

Caledonia said most of the companies it invested in were trading with a low degree of disruption from the coronavirus. Buzz Bingo and Liberation Group leisure venues are closed but Buzz Bingo is making good progress on line, it said.

Will Wyatt, Caledonia's chief executive, said: "Our diversified portfolio and our preference for investing in high quality businesses has so far provided some resilience to the impact of Covid‑19 on the company. The quoted equity portfolios were particularly effective at protecting shareholders' capital in volatile markets.

"Despite a decrease in net assets for the year, the majority of our investments are in a good position to withstand this challenging economic period though those in the consumer leisure sector face an uncertain future.

"It is likely that income for the current year will be lower than in 2020. However, our strong balance sheet and, in particular, our reserves of retained earnings, should give shareholders comfort that Caledonia is well placed to achieve its aims of growing net assets and dividends over the long term."