Final Results

Caledonia Investments PLC 12 June 2001 2001 PRELIMINARY RESULTS ANNOUNCEMENT 'Continued progress in building value for shareholders' Caledonia Investments plc, the diversified trading and investment company, today announces its preliminary results for the twelve months ended 31 March 2001. Key Financial Results 2001 2000 % change Total operating profit £ 53.5m £ 45.2m +18.4 Profit before taxation £ 55.7m £ 51.8m +7.5 Shareholders' funds £854.8m £764.3m +11.8 Basic earnings per ordinary share 53.2p 46.1p +15.4 Adjusted basic earnings per ordinary share 49.6p 37.0p +34.1 Dividends per ordinary share - Annual 24.0p 23.0p +4.3 - Special - 70.0p - Net asset value per ordinary share 1082p 960p +12.7 Underlying net asset value per ordinary share 1198p 1189p +0.8 Highlights Profit before taxation up 7.5% Profit before taxation for the year ended 31 March 2001 rose to £55.7m from £ 51.8m in the previous period. Key components of the result were a first time contribution of £5.4m from Sun International Hotels which has been treated as an associate with effect from 1 October 2000, following a buy-in of its own shares by Sun which resulted in Caledonia's effective interest rising from 18% to 22%. Also included was a further boost from Close Brothers and higher investment income which more than offset increased goodwill amortisation and a loan provision. Strong growth in earnings per share Basic earnings per share increased by more than 15% from 46.1 pence to 53.2 pence and, when adjusted to exclude non-recurring items and goodwill amortisation, increased by 34% from 37.0 pence to 49.6 pence. If the first time contribution from Sun was excluded, adjusted earnings per share increased by over 16%. Recommended dividend payment marks 34th year of unbroken annual increases Caledonia is recommending a final dividend of 16.2 pence per share which will bring the total for the year from 23 pence to 24 pence. This increase is made notwithstanding the significant special dividend distribution of 70 pence per share last year and marks the 34th year of annual dividend increases. This is a robust record and is in line with Caledonia's stated aim of steadily increasing dividends. Total dividends paid out during the year amounted to £ 74m, including £55m for the special dividend declared last year. Underlying net asset value per share rises despite unfavourable market conditions Net assets per share as reflected in the balance sheet as at 31 March 2001 have risen from 960 pence to 1082 pence and when adjusted to reflect the market value of Caledonia's quoted associate companies rose to 1198 pence, ahead of last year's 1189 pence. This represents considerable outperformance against comparator indices during the period. Discount to net asset value narrows The discount of the Caledonia share price to underlying asset value, if the contingent capital gains tax liability is taken into account, has narrowed to 30% as at 31 March 2001 from 34% a year earlier - but in the view of the company remains too high. However, since the end of the year the company estimates that the discount on a comparable basis has narrowed further to 21%. During the course of the year Caledonia has continued to buy-in its own shares on a judicious basis and will again seek to renew the buy-in authority at its annual general meeting. Active management of Caledonia's assets has continued with £92m spent on new investments and £52m received in cash from realisations during the year Caledonia has continued to find interesting investment opportunities and during the 12 months to 31 March 2001 made new investments totalling £92m. For the first time in recent years Caledonia did not have net cash in the balance sheet at the year end. After taking account of the new investments and the special dividend payment, and notwithstanding £77m of disposals of which £25m relating to Robert Fleming is still held in loan notes, Caledonia's net cash balances to have moved from £105.2m to a net borrowed position of £8.5m. However, its liquid resources, combined with its capacity to borrow, gives it ample scope to pursue new opportunities. Investment strategy - longer term growth in shareholder value Over the year and in line with its stated strategy, Caledonia has selectively increased its involvement in the technology sector. Although these investments still represent a small proportion of Caledonia's overall portfolio, the company has decided in presenting its results this year to group its various holdings in this sector together under a 'technology' heading for the first time. Whilst there has been a set back in this sector, Caledonia still believes that a commitment to technology, based on sensible criteria, will prove rewarding in the long term. However this is not to play down the importance of many of the company's other holdings in non-technology sectors where good long term growth has flowed from the diverse trading and investment situations which it has successfully found over the years. Caledonia believes that it will continue to derive significant growth and value over time from such holdings. Indeed the year to 31 March 2001 has seen the realisation of several holdings where substantial value has been generated and the company is confident that there will be more to come. Commenting on the results, Peter Buckley, said: 'Despite the turbulent market conditions we endured during the year, Caledonia has produced very good results for its shareholders. 'We have a well spread portfolio of interests which we believe will deliver good value to shareholders going forward and our long record of achievement continues to bring us interesting opportunities.' Enquiries: Caledonia Investments plc: 020 7481 4343 Peter Buckley, Chairman and Chief Executive Citigate Dewe Rogerson: 020 7638 9571 Bill Trelawny REVIEW OF OPERATIONS FINANCIAL Close Brothers (associate: 19%) Close Brothers celebrated its twenty-fifth consecutive year of profits growth with a sparkling set of results for its year to 31 July 2000. Profit before tax increased from £76.3m to £144.8m and included a period between November 1999 and March 2000 of quite exceptional turnover on stock markets from which the market making activities of Winterflood Securities derived some £50m of additional profit which will not be repeated in current market conditions. This added to an otherwise strong result from market making which combined with good progress in the corporate finance and asset management activities - the latter boosted by the acquisition of Rea Brothers in the late summer of 1999. Annual dividends increased by 56%. Results for the six months to 31 January 2001 did not benefit from any of the additional Winterflood profit seen in the previous comparable period, but if these are set aside, overall growth in the rest of the group amounted to some 25%. The Asset Management and Banking divisions showed the best progress, and within the latter, PROMPT, the insurance premium financing business, showed strong organic growth and benefited from the recent acquisition of a rival business. This continuing improvement is very encouraging and remains the hallmark of this well run business. However, the recent slow down in the US economy reflected in the set back in stock markets generally, and particularly in the technology sector, will inevitably affect many aspects of the financial services sector, but Close Brothers with its carefully segregated and well managed business units is well placed to surmount the challenges. Polar Capital Partners (associate: 20%) Polar Capital Partners is the name given to the new specialist investment management company founded by Brian Ashford-Russell and his technology team and in which Caledonia has become a 20% shareholder. The business is now established with some £650m under management and a Japanese specialisation has recently been added. Further growth is being explored. Friends Ivory & Sime (investment: 6%) 2000 was a year of further progress for Friends Ivory & Sime, in spite of volatile markets, characterised by a pronounced swing in sentiment away from the technology sector into 'Old Economy' sectors, and a switch from growth-style to value-style investment. Earnings per share and dividends advanced by 14% and 15% respectively, and the share price moved ahead steadily as the company's progress was recognised increasingly by the market. Although FIS's growth style was not well suited to markets prevailing at the time, its past strategy of developing focussed teams in specialist areas, such as the AIM market, private equity, property and undervalued assets, proved particularly valuable during the year. In December 2000, FIS announced the acquisition of the retail division of Friends Provident. This transaction has since been completed at a cost of some £129m and has given FIS full control of 27 unit trusts, representing funds under management of £1.1bn, managed on behalf of over 120,000 retail clients in the UK. This should augur well for FIS's development into the mainstream UK retail market. Rathbones (investment: 12%) Rathbones has continued to develop its successful private client asset management business and the results for the year to 31 December 2000 saw continuing growth in funds under management. Profit before tax and goodwill amortisation rose by 14% with increases of 8% and 14% in earnings per share and dividends respectively. The hasty amalgamations of the larger fund management businesses, with the attendant discontent amongst some of the key contributors, continues to provide a source of new opportunity for those smaller businesses where the emphasis is placed on building long term client relationships. Rathbones is well regarded in this respect as witnessed by the steady stream of business producers who have joined the company in recent times. Whilst lower market levels must inevitably affect fund management profitability, Rathbones is better placed than many to weather these conditions and to continue to make progress as markets improve. Robert Fleming The offer for Robert Fleming by Chase Manhattan Corporation - now J P Morgan Chase & Co - was chronicled last year but the gain of £25.8m over our carrying value of £20.4m is reflected in the year under review. Total sale proceeds amounted to £46.2m compared with an original cost of £7.5m, of which Caledonia elected to receive £25m in the form of loan notes which are still held and the balance in J P Morgan Chase shares which have now been sold at near to the deal price. Garban-Intercapital (investment: 4%) Garban-Intercapital, the world's largest interdealer broker, reported excellent results for its year to 31 March 2001 with adjusted profit before tax and earnings per share up 53% and 65% compared with the previous 15 month period. The dividend increased by 20%. The business in the interdealer broking world has become very fast changing and increasingly subject to the complexities of technological innovation. The management has responded well to these challenges and is to be congratulated on the progress achieved. INDUSTRIAL AND SERVICES Sterling Industries (subsidiary: 100%) The first full year of Caledonia's ownership of Sterling Industries has been disappointing with operating profits falling from £3.4m to £1.5m. Considerable improvement had been anticipated in the second half of the year following a difficult showing for the first six months, but this did not materialise. The Hydraulics division, which manufactures a sophisticated range of cartridge valves for mobile equipment, has continued to encounter reduced demand both in Europe and the USA. Measures initiated by the recently appointed managing director are however showing some promise and should help to improve results provided there is no further downturn in the market. Improved results from two of the units in the Thermal Process division were more than offset by a problem contract in the Far East, and the severe downturn in the North American steel industry where many companies have now filed for Chapter 11 protection. New managing directors have been introduced at two of the units and change is planned in a third. These management changes give considerable encouragement for better results and every effort will be made to secure such opportunities as are available in these very competitive markets. Amber (subsidiary: 100%) Overall trading profits, net of central overheads but before goodwill amortisation, fell from £2.5m last year to £1.9m as pressure on margins continued for the UK industrial consumables division. In addition, the UK silicones business was adversely affected by customers switching sourcing from the UK and Europe to the lower cost regions of Asia. There was a mixed picture in the USA, with new initiatives in silicone technology bringing Quantum Silicones into profit for the first time, whilst for Taylor Chemical Company, based in Atlanta, market penetration has been slower than anticipated. The Milan based businesses, Treco and Alchimica, reported encouraging overall growth. Results in Germany were steady. As reported in the interim statement, American Silicones, a 49% Amber associate, which no longer fitted with the strategy for the silicones sector, was sold yielding a profit of almost £4m. Amber now needs to capitalise on its market position in both industrial consumables and silicones to deliver improved profitability and justify recent investment. Targeted management initiatives are in hand to achieve this. Edinburgh Crystal (subsidiary: 89%) The continuing competitive pressures in the market for crystal glass products have resulted in a loss of £0.1m at the operating level compared with a £0.5m profit last year. The ongoing need to restructure the business has resulted in management changes and downsizing the hot end production facility, for which further costs of £0.5m have been incurred. The industry as a whole is facing major challenges and Edinburgh Crystal is being orientated, through further cost efficiencies and design initiatives, to take best advantage of a highly competitive, market led, environment. Further structural change is under review in order to achieve better value for shareholders. Offshore Logistics/Bristow (investment: 6%/49%) It is pleasing to report that the improving trend indicated last year has continued. Offshore Logistics has enjoyed a strong recovery in trading results for its year to 31 March 2001 and earnings per share have recovered from 42 cents to $1.32. An upturn in activity in the Gulf of Mexico, which is being followed in the North Sea, has been complemented by improving results from the International division. Considerable resource, both human and financial, has been devoted during the year to improving internal efficiencies and the better co-ordination between the US and UK companies has continued to contribute on this front. An ongoing and constructive dialogue with customers has also brought about an improvement in flying rates, which was absolutely essential in the context of the demand for very high operational standards and more modern equipment. Looking forward it will be necessary to maintain the recent higher operational utilisation at these improved rates in order to ensure a continuation of the fleet renewal programme. Nonetheless, OLOG's leading position in its industry leaves it well positioned for the future. Wallem (investment: effective 74%) Wallem continued its recovery following the difficulties which arose at the time of the 1998 Asian crisis. Its results benefited from better economic conditions and, in addition, from the restructuring which followed the 1998 problems. Trading results continue to be good in the current year, particularly from its shipmanagement division, which constitutes the core activity of the group. AHL Services (investment: 11%) The year to 31 December 2000 saw AHL undertake a strategic reorganisation by selling its former core aviation and facilities services business together with the discontinuance of its store set-up business. The former was sold in the light of increasing competition at a significant profit and the proceeds deployed to reduce gearing. The latter was closed after the business failed to live up to expectations. The company now plans to concentrate on its European specialised staffing business and the US based marketing services activity. Whilst the restructuring of the business is welcome, it remains to be seen whether these businesses will regain their growth momentum, though the company has reported increasing revenues from these operations for its first quarter to March 2001. INVESTMENT FUNDS English & Scottish Investors (associate: 32%) English & Scottish Investors delivered another good performance for its year to 31 January 2001, with net asset value per ordinary share rising by 13% - well ahead of its comparator indices. English & Scottish acquired a further 8.5% of its own shares bringing the total percentage purchased since the buy-in programme started to some 15%. These purchases have had some beneficial influence on the discount at which the English & Scottish ordinary shares have traded in relation to their net asset value. The discount has narrowed over the year under review from 20.8% to 16.4% which is a welcome trend but it is always as well to remember that this discount is exaggerated when reference to the liability of the debentures is taken into account. Caledonia's shareholding has increased from 27.4% to 32.4% since the share buy-ins commenced. British Empire Securities and General Trust (associate: 18%) British Empire Securities delivered another good performance during its year to 30 September 2000. Net asset value per share rose a further 26% on top of the 37% achieved in the previous year. Furthermore, a narrowing of the discount contributed to a share price uplift of 90% over the two year period. The managers are to be congratulated for sticking tenaciously to their well-proven value style, thereby avoiding the excesses and subsequent disappointments of following fashion. At its year end, British Empire Securities was strongly liquid and this should provide it with the scope to continue to seek interesting opportunities in undervalued assets situations in the future. Investments The AIM Trust, which has a large weighting in technology stocks has, despite the setback in the sector, delivered outstandingly good performance in recent years. European Asset Value Fund, with its emphasis on 'value' holdings, has also performed extremely well over the past year. Other investments include commitments to a number of private equity funds and also a 25% participation in a fund recently launched by Aberforth Partners, where Caledonia is the lead investor, to access value opportunities in smaller listed companies. TECHNOLOGY For the first time Caledonia has grouped a number of existing and new investments under this heading. Caledonia's strategy for investing in this specialist sector has been to seek to participate in a number of collective investment vehicles, principally with the dual aim of spreading risk and tapping into proven sector expertise. Caledonia's largest investment has been in the Amerindo Internet Fund, launched on the London Stock Market as an investment trust in April 2000. After an encouraging start, its performance has been disappointing. However, its managers have a good long term record and proven knowledge of the sector, and recovery in the future is therefore expected. In addition to the above, Caledonia has participated in three new limited partnerships for investment mainly in the US unquoted technology sector. The managers of these vehicles have adopted a very cautious stance since launch, with the result that, of the £24m committed by Caledonia in total, only £6m had been drawn down by the year end. Caledonia also held directly a number of smaller technology-related investments. In summary, Caledonia has a broad spread of interests in the sector through funds managed by a variety of well-experienced managers, and it expects to benefit from a recovery which it is believed will take place over the longer term. LEISURE AND MEDIA The Sloane Club (subsidiary: 100%) Profits at The Sloane Club grew by 14% during the past year, which is a testimony to the growing appreciation by members of the excellent service and value offered by the Club. Year round occupancy has increased to 67% but weekend occupancy still remains to be improved. The Club continues to seek opportunities to broaden its base of operations and it has developed its links with Cadogan Estates, its partner in the 16 adjacent flats marketed as 'Club Suites'. This has been a worthwhile start on which the Club plans to build. Sun International Hotels (associate: 22%) Sun International Hotels reported a year of consolidation with its resort properties continuing to build on their reputation for outstanding guest appeal. Earnings per share before non-recurring items slipped from $2.19 to $1.93. The initiative to take the company private at a price of $24 per share referred to last year did not succeed as the independent directors did not recommend the offer to shareholders. Since then SIHL has bought in more of its own shares which has increased Caledonia's effective shareholding from 18% to 22%. As a result Sun has been accounted for as an associate company from 1 October 2000. Atlantis on Paradise Island in The Bahamas enjoyed record occupancies. Renovation of a further 700 of the original rooms was completed during the year and the remainder will be finished this year. Sales of housing plots around the newly landscaped golf course realised $109m. The first phase of a timeshare development was completed and a condominium development is under consideration. Over 100 acres of land still remain to be developed. Although trading at Atlantic City had started to improve following management changes, it was decided to sell the property in the light of continuing difficulties with the city authorities in obtaining better infrastructure access. The disappointment in Atlantic City had already led to the termination of the purchase of the Desert Inn property in Las Vegas and both these withdrawals are now complete. In Connecticut, the change whereby the management contract for the Mohegan Sun Casino was surrendered in exchange for a longer term share of revenue, led to a lower profit contribution for the year 2000. However the record trading results at the casino combined with the near $1bn expansion which is being managed for the Mohegan Tribe by SIHL and due to open in stages at the end of 2001 and into 2002, should result in a significantly improved profit contribution. The five hotels in Mauritius, where SIHL has the management contract coupled with a 20% interest in the owning company Sun Resorts, continue to trade well. The new build contract for a 50 luxury villa hotel on Mahe Island in The Seychelles, together with the purchase of a 25% interest in a 120 room deluxe hotel in The Maldives continue to build SIHL's portfolio of interests in the Indian Ocean. The Royal Mirage hotel in Dubai, which is managed by SIHL, is planning to double its capacity on the back of the success being enjoyed since opening in August 1999. Radio Investments (associate: 39%) Activity in the radio sector remained at a high level during the year and the valuations attributable to radio stations continued to climb. Radio Investments' strategy of seeking to consolidate its position in its three hubs, centred on the north west, the south west and the south east has proved successful, and at its year end it owned 23 stations. At the end of 2000, the GWR group agreed to exchange its minority interests in certain RIL-controlled radio stations for a 20% shareholding in RIL itself. The combination of Guardian Media Group, GWR and Caledonia constitutes a strong grouping in the sector, which it is believed will offer further rewards in the future. News Communication & Media As mentioned last year, Caledonia realised its holding in Newscom for £25.2m, following an offer for the company in May 2000. The surplus over the carrying value of £21.4m has been reflected in reserves for the year under review and this represents a very satisfactory outcome from this investment, which cost £ 6.3m. PROPERTY AND GENERAL Subsidiaries St Lawrence Properties successfully realised the remaining 3 acres of its development land in Oxford at a profit of £4.1m during the first half of the year, following the £5.1m profit recorded in the previous year. Edinmore, which seeks out interesting land and residential property opportunities in the UK, and especially Scotland, also made a useful contribution. Central European Land (associate: 44%) Central European Land's third year has seen another increase in operating profit and surplus cash flows have been used to acquire three new properties which are showing good rates of return. The company has also continued to invest in major refurbishment of existing properties. Quintain Estates and Development (investment: 7%) Quintain has reported an increase in net asset value of 17% together with a dividend increase of 18%. The company has been invited to help in planning the regeneration of the site surrounding the Millennium Dome, close to which it owns or controls some 25 acres. The management's expertise lies in unlocking value from complicated property situations and Caledonia looks forward to their success in turning the interesting opportunity at the Dome to good account. Other This heading includes an externally managed portfolio of holdings in listed smaller companies which has performed well over the years and especially during the one under review. It also includes a number of holdings in listed and unlisted stocks, which are held primarily for capital appreciation and some of which arose from co-investment opportunities as a result of private equity participations. GROUP PROFIT AND LOSS ACCOUNT for the year ended 31 March 2001 2001 2000 £m £m -------------- ------------ Group turnover 135.2 90.2 Trading profit 9.7 12.2 Income from investments 12.6 7.7 Interest receivable 3.1 4.6 Amounts written off current assets (3.9) - Other income 0.9 0.7 Group overheads (7.7) (6.2) --------------- ------------ Group operating profit 14.7 19.0 Share of operating profit of associates 40.1 26.4 Amortisation of goodwill on acquisition of (1.3) (0.2) associates --------------- ------------ Total operating profit 53.5 45.2 Profit on sale of operations 9.9 9.8 Interest payable (7.7) (3.2) --------------- ------------ Profit on ordinary activities before taxation 55.7 51.8 Tax on profit on ordinary activities (12.8) (13.2) --------------- ------------ Profit on ordinary activities after taxation 42.9 38.6 Minority interests (equity) (1.0) (0.9) --------------- ------------ Profit for the financial year 41.9 37.7 Dividends (18.8) (73.7) --------------- ------------ Profit retained for the financial year 23.1 (36.0) --------------- ------------ Earnings per ordinary share Basic 53.2p 46.1p Diluted 53.1p 46.0p Adjusted basic 49.6p 37.0p -------------- ------------ Dividends per ordinary share Annual 24.0p 23.0p Special - 70.0p -------------- ------------ GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 March 2001 2001 2000 £m £m --------------- ------------- Profit for the financial year 41.9 37.7 Realised gains and losses on sale of investments 58.1 23.1 Provision against investments (1.5) (5.0) Movement in revaluation reserve (14.5) (15.8) Tax on sale of investments (1.5) (3.3) Exchange differences 16.7 0.6 Share of reserve movements of associates Realised gains and losses on sale of investments 14.1 15.5 Movement in revaluation reserve 0.2 16.1 Tax on sale of investments - (0.1) Exchange differences 0.4 0.1 Other movements - 0.6 --------------- ------------ Total recognised gains and losses 113.9 69.5 --------------- ------------ GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS for the year ended 31 March 2001 2001 2000 £m £m -------------- ------------ Total recognised gains and losses 113.9 69.5 Dividends (18.8) (73.7) -------------- ------------ 95.1 (4.2) Issue of shares - 39.2 Purchase of own shares (5.1) (9.6) Reclassification of share capital - (56.7) Goodwill on disposals written back 0.5 3.8 Share of goodwill movements of associates - (1.5) -------------- ------------ Net movement in shareholders' funds 90.5 (29.0) Opening balance of shareholders' funds 764.3 793.3 -------------- ------------ Closing balance of shareholders' funds 854.8 764.3 -------------- ------------ GROUP BALANCE SHEET at 31 March 2001 2001 2000 £m £m -------------- ------------ Fixed assets Intangible assets 11.4 11.1 Tangible assets 68.3 48.6 Investments Investment in associates 405.3 256.6 Other investments 389.1 425.0 -------------- ------------ 874.1 741.3 -------------- ------------ Current assets Stocks 16.5 18.2 Debtors 37.9 47.5 Short term deposits 9.0 108.5 Cash at bank and in hand 11.4 16.0 -------------- ------------ 74.8 190.2 -------------- ------------ Creditors falling due within one year Short term borrowings (23.4) (13.7) Other creditors (35.8) (117.6) -------------- ------------ (59.2) (131.3) -------------- ------------ Net current assets 15.6 58.9 -------------- ------------ Total assets less current liabilities 889.7 800.2 Creditors falling due after more than one year Long term borrowings (5.5) (5.6) Provision for liabilities and charges Deferred taxation (28.0) (28.4) -------------- ------------ 856.2 766.2 Minority interests (equity) (1.4) (1.9) -------------- ------------ 854.8 764.3 -------------- ------------ Capital and reserves Called up share capital 4.4 4.4 Share premium account 1.3 1.3 Capital redemption reserve 0.8 0.8 Revaluation reserve 119.1 191.2 Profit and loss account 729.2 566.6 -------------- ------------ Shareholders' funds (equity) 854.8 764.3 -------------- ------------ Net asset value per ordinary share 1082p 960p -------------- ------------ GROUP STATEMENT OF CASH FLOWS for the year ended 31 March 2001 2001 2000 £m £m ------------- ----------- Net cash inflow from operating activities 32.7 15.4 ------------- ----------- Dividends from associates 7.6 8.2 ------------- ----------- Servicing of finance Interest paid (0.3) - Dividends paid to minority shareholders (1.8) - ------------- ----------- (2.1) - ------------- ----------- Taxation (9.2) (20.3) ------------- ----------- Capital expenditure and financial investment Purchase of intangible fixed assets - (0.1) Purchase of tangible fixed assets (23.7) (2.8) Sale of tangible fixed assets 0.3 0.3 Purchase of investments (73.9) (50.5) Sale of investments 51.7 58.3 ------------- ----------- (45.6) 5.2 ------------- ----------- Acquisitions and disposals Purchase of operations (0.5) (17.5) Net cash acquired with operations - 12.3 Dividends paid to a subsidiary's former shareholders - (10.6) Investment in associates (18.7) (7.8) Sale of operations - (0.8) Sale of interests in associates 0.2 - ------------- ----------- (19.0) (24.4) ------------- ----------- (35.6) (15.9) Equity dividends paid (73.6) (18.6) Management of liquid resources 99.9 39.7 Financing 16.8 (10.1) ------------- ----------- Increase in cash in the year 7.5 (4.9) ------------- ----------- GROUP RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS for the year ended 31 March 2001 2001 2000 £m £m ------------- ----------- Group operating profit 14.7 19.0 Depreciation and amortisation 5.5 3.6 Loss and provision against own shares 0.1 - Profit on sale of fixed assets (0.1) (0.1) Investment income and interest accruals increase (1.9) 2.8 Stocks decrease 2.2 0.6 Debtors decrease 14.8 (14.7) Creditors decrease (2.6) 4.2 ------------- ----------- 32.7 15.4 ------------- ----------- NOTES TO THE ACCOUNTS 1. Dividends 2001 2000 £m £m ------------ ----------- Interim of 7.8p paid (2000 - 7.5p) 6.1 6.2 Final of 16.2p proposed (2000 - 15.5p) 12.7 12.2 Special of nil (2000 - 70p) - 55.3 ------------ ----------- 18.8 73.7 ------------ ----------- The proposed final dividend will be paid on 1 August 2001 to shareholders on the register at the close of business on 6 July 2001. 2. Earnings per ordinary share The calculation of basic earnings per ordinary share was based on the profit for the financial year after deduction of minority interests, amounting to £ 41.9m (2000 - £37.7m) and on the 78,766,291 weighted average number of ordinary shares in issue during the year (2000 - 81,864,429) after excluding shares held during the year by the Caledonia Investments plc Employee Share Trust and a subsidiary company. The adjusted basic earnings per ordinary share were calculated as a measure of the group's earnings excluding sale of operations, amortisation of goodwill and other items, net of any tax adjustments. This is considered to provide a more consistent indication of underlying operating performance. The adjusted basic earnings per ordinary share are reconciled as follows: 2001 2000 pence pence ------------- ----------- Basic earnings per ordinary share 53.2 46.1 Adjustments Profit on sale of operations (12.7) (11.9) Share of associate's restructuring costs - 1.8 Amortisation of goodwill 4.4 0.8 Write off of current assets 4.9 - Related tax effect (0.2) 0.2 ------------- ------------ Adjusted basic earnings per ordinary share 49.6 37.0 ------------- ------------ 3. Analysis of changes in net debt Opening Exchange Cash flow Closing balance differences balance £m £m £m £m ------------ ------------ ------------ ----------- Cash at bank and in hand 16.0 0.2 (4.8) 11.4 Bank overdrafts (13.5) - 12.3 (1.2) ------------ ------------ ------------ ----------- 2.5 0.2 7.5 10.2 Short term deposits 108.5 0.4 (99.9) 9.0 Debt due within one year (0.2) 0.1 (22.1) (22.2) Debt due after more than (5.6) (0.1) 0.2 (5.5) one year ------------ ------------- ------------ ----------- 105.2 0.6 (114.3) (8.5) ------------ ------------- ------------ ----------- ANALYSIS BY BUSINESS SECTOR Financial Group Attributable Name Business share profits Book value Valuation % £m £m £m ---------- ---------------- -------- --------- Associates Close Brothers Merchant 18.7 25.0 77.4 200.6 Group plc+ banking Polar Capital Fund 20.0 (0.3) 1.2 1.5 Partners Ltd management Investments Friends Ivory & Fund 6.2 1.6 35.1 35.1 Sime plc+ management Rathbone Brothers Fund 12.3 1.1 34.6 34.6 Plc+ management JP Morgan Chase & Financial 0.1 1.1 33.7 33.7 Co+ services Robert Fleming Merchant 0.3 Holdings Ltd banking Garban-Intercapital Interdealer 4.1 0.7 19.8 19.8 plc+ broking Other - 0.9 0.9 -------------- ----------- ---------- -------- 29.5 202.7 326.2 -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges Industrial and Services Group Attributable Name Business share profits Book Valuation value % £m £m £m -------------- ----------- ---------- -------- Subsidiaries Sterling Industries Engineering 100 1.3 26.7 26.7 PLC Amber Industrial Specialty 100 1.9 20.4 20.4 Holdings PLC chemicals Edinburgh Crystal Crystal glass 88.9 (0.9) 2.7 2.7 Glass Co Ltd manufacture Associates Other 0.4 13.3 17.3 Investments Offshore Logistics Helicopter 6.1 0.4 31.1 31.1 Inc+(1) operator Bristow Aviation Helicopter 49.0 0.7 4.9 4.9 Holdings Ltd operator Wallem Group Ltd(2) Shipping 74.4 2.2 13.3 13.3 services AHL Services Inc+ Outsourcing 11.0 - 9.4 9.4 services Other 0.2 3.5 3.5 -------------- ----------- ---------- -------- 6.2 125.3 129.3 -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges. 1. The holding in Offshore Logistics Inc includes £8.4m of loan stock. 2. The holding in Wallem Group Ltd comprises 26% of voting ordinary shares and 91.2% of non-voting ordinary shares. Investment Funds Group Attributable Name Business share profits Book value Valuation % £m £m £m -------------- ----------- ---------- -------- Associates English & Scottish Investment 32.4 3.8 117.2 91.0 Investors plc+ trust British Empire Investment 18.1 1.9 65.6 60.5 Securities and trust General Trust plc+ Investments European Asset Value Investment 23.5 - 12.6 12.6 Fund fund The AIM Trust plc+ Investment 6.4 - 6.6 6.6 trust Other 0.2 35.7 35.7 -------------- ----------- ---------- -------- 5.9 237.7 206.4 -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges. Technology Group Attributable Name Business share profits Book value Valuation % £m £m £m -------------- ----------- ---------- -------- Associates Other (0.2) 0.3 0.5 Investments Polar Capital Global Investment fund 17.3 - 6.5 6.5 Technology Fund Ltd Amerindo Internet Investment 5.0 - 6.1 6.1 Fund plc+ trust Other - 16.9 16.9 (0.2) 29.8 30.0 -------------- ----------- ---------- -------- -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges. Leisure and Media Group Attributable Name Business share profits Book value Valuation % £m £m £m -------------- ----------- ---------- -------- Subsidiaries The Sloane Club Residential 100 2.1 14.6 14.6 Group Ltd club Associates Sun International Resort 21.7 5.4 103.2 94.8 Hotels Ltd+ operator Radio Investments Local radio 39.2 2.7 14.9 14.9 Ltd Other (1.7) 3.2 5.1 Investments Other - 5.0 5.0 -------------- ----------- ---------- -------- 8.5 140.9 134.4 -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges. Property and General Group Attributable Name Business share profits Book value Valuation % £m £m £m -------------- ----------- ---------- -------- Subsidiaries 5.1 17.7 17.7 Associates Central European Property 44.4 0.9 5.5 6.4 Land Ltd investment Other - property 0.9 1.7 1.7 Other - general (0.3) 1.1 1.5 Investments Quintain Estates Property 6.9 0.5 16.3 16.3 and investment Development PLC+ Other - property 0.5 9.0 9.0 Other - general 2.2 68.9 68.9 -------------- ----------- ---------- -------- 9.8 120.2 121.5 -------------- ----------- ---------- -------- + Listed on the UK or overseas stock exchanges. SUMMARY Attributable profits Book value Valuation £m £m £m --------------- --------------- -------------- Financial 29.5 202.7 326.2 Industrial and services 6.2 125.3 129.3 Investment funds 5.9 237.7 206.4 Technology (0.2) 29.8 30.0 Leisure and media 8.5 140.9 134.4 Property and general 9.8 120.2 121.5 -------------- -------------- ------------- 59.7 856.6 947.8 Other items (6.2) Unallocated net liabilities (1.7) (1.7) ------------- ------------- ------------- 53.5 854.9 946.1 ------------- ------------- ------------- If the group was to have realised its investments at 31 March 2001 at the stated underlying value, it is calculated that tax of £64.8m, amounting to 82 pence per share, would have arisen. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2001 or 2000. The financial information for 2000 is derived from the statutory accounts for 2000 which have been delivered to the registrar of companies. The auditors have reported on the 2000 accounts: their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2001 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies following the company's annual general meeting. Copies of this statement are available at the company's registered office, Cayzer House, 1 Thomas More Street, London, E1W 1YB.

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