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Caledonia Inv PLC (CLDN)

  Print      Mail a friend       Annual reports

Tuesday 12 June, 2001

Caledonia Inv PLC

Final Results

Caledonia Investments PLC
12 June 2001


           '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

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


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

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.'


Caledonia Investments plc:

020 7481 4343

Peter Buckley, Chairman and Chief Executive

Citigate Dewe Rogerson:

020 7638 9571

Bill Trelawny



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.


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

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.


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

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.


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.


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


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

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 £



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


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.


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)
                                                    --------------- ------------
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

                                                    -------------- ------------


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

                                                  ---------------  ------------


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

                                                 --------------    ------------


at 31 March 2001
                                                           2001            2000
                                                             £m              £m

                                                  --------------   ------------
Fixed assets
Intangible assets                                          11.4            11.1
Tangible assets                                            68.3            48.6
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

                                                  --------------   ------------


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)

                                                      ------------- -----------


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

                                                    -------------   -----------


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
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)

                           ------------   ------------- ------------ -----------


                                       Group Attributable
Name                     Business      share      profits  Book value Valuation
                                           %           £m          £m        £m

                                  ---------- ---------------- -------- ---------
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
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
                                             %           £m        £m        £m

                                  -------------- ----------- ---------- --------
Sterling Industries      Engineering       100          1.3      26.7      26.7
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
Other                                                   0.4      13.3      17.3
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
AHL Services Inc+        Outsourcing      11.0            -       9.4       9.4
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

                                  -------------- ----------- ---------- --------
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+
European Asset Value   Investment     23.5            -        12.6       12.6
Fund                         fund
The AIM Trust plc+     Investment      6.4            -         6.6        6.6
Other                                               0.2        35.7       35.7

                                  -------------- ----------- ---------- --------
                                                    5.9       237.7      206.4

                                  -------------- ----------- ---------- --------

+ Listed on the UK or overseas stock exchanges.

                                       Group Attributable
Name                     Business      share      profits Book value  Valuation
                                           %           £m         £m         £m

                                  -------------- ----------- ---------- --------
Other                                               (0.2)        0.3        0.5
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

                                  -------------- ----------- ---------- --------
The Sloane Club      Residential        100          2.1        14.6       14.6
Group Ltd                   club
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
Other                                              (1.7)         3.2        5.1
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
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
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.

                               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

Copies of this statement are available at the company's registered office,
Cayzer House, 1 Thomas More Street, London, E1W 1YB.