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Caledonia Inv PLC (CLDN)

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Tuesday 28 May, 2002

Caledonia Inv PLC

Final Results

Caledonia Investments PLC
28 May 2002

                     2002 PRELIMINARY RESULTS ANNOUNCEMENT



  'Caledonia achieves further relative outperformance against a background of
                       more difficult market conditions'



Caledonia Investments, the long established diversified trading and investment
company with international scope, today announces its preliminary results for
the twelve months ended 31 March 2002.



Highlights



•        Eighth year in ten of cumulative total return outperformance against
         FTSE All Share TR index

•        Thirty-fifth year of unbroken annual dividend increases

•        Adjusted net asset value outperformance against FTSE All Share over the
         year

•        Sale of English & Scottish Investors nets cash of £88m

•        Cash reserves rise to £67m



Key Financial Results


                                                                                            2002                  2001

                                                                                              £m                    £m

                                                                                   -------------         -------------
Total operating profit                                                                      26.1                  53.5
Profit before taxation                                                                       8.2                  55.7
Shareholders' funds                                                                        737.9                 854.8
Per ordinary share                                                                             P                     P

                                                                                  --------------         -------------
Basic earnings                                                                               3.8                  53.2
Adjusted basic earnings                                                                     18.6                  49.6
Dividends                                                                                   25.0                  24.0
Net asset value                                                                             1010                  1082
Adjusted net asset value                                                                    1172                  1198

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



The adjusted net asset value per ordinary share excludes tax that may have
arisen if the group had realised its portfolio at valuation at 31 March 2002,
amounting to 63p (2001 - 82p).



Summary of Results



Delivering on strategy



Caledonia's strategy seeks to deliver an above average total return for its
shareholders from a sector-focused portfolio of interests with medium overall
risk. The guiding principles of Caledonia's investment approach are:

•        to work closely with the management of companies it has backed

•        to make available to investee companies the considerable experience of
         Caledonia's own management team

•        to invest in both quoted and unquoted situations

•        to be prepared to commit substantial resources to individual
         investments including taking majority control

•        to enhance shareholder returns by the use of gearing where appropriate



The longstanding ownership of a major shareholding in Caledonia by The Cayzer
Trust Company has been an important factor in enabling the business to develop
and has underpinned its ability to take a longer term approach. This
distinguishes Caledonia from other investment companies and attracts a flow of
opportunities not always available to others.



Caledonia's strategy has delivered thirty five years of unbroken annual dividend
growth to its shareholders.  Over the last ten years, Caledonia has achieved a
total shareholder return of 329%* compared with the FTSE All Share TR index of
207%* over the same period. This represents a compound average annual growth
rate of 15.7% compared with the FTSE All Share TR index of 11.9%.



*Source FTSE/Datastream



Net asset value



Caledonia's robust performance for the year under review is reflected through
its balance sheet, as adjusted for the market value of its associate companies,
with net assets per share amounting to 1172 pence down from the previous year
end by only 2.2%. This compares favourably with a reduction in the FTSE All
Share index of 5.7% and reflects the breadth and quality of Caledonia's
holdings.



Profit and loss account



The profit and loss account shows significantly lower numbers than in the
previous year, although it is not the principal financial yardstick by which
Caledonia seeks to measure itself. Earnings per share decreased from 53.2 pence
to 3.8 pence and adjusted earnings per share moved from 49.6 pence to 18.6
pence.



Results from subsidiaries, in difficult economic circumstances, fell by £7.5m to
£2.2m before a £3.5m write-off of goodwill relating to Sterling Industries. An
overall addition of £8.5m in interest payable included £4m relating to
Caledonia's associates. Furthermore Caledonia's share of results from associate
companies fell by £14m due largely to the absence of the exceptional
market-making profits previously earned by Close Brothers.



Dividend



Caledonia has recommended an increased final dividend of 17.2 pence resulting in
a total distribution for the year of 25 pence costing £18.2m. This compares with
24 pence last year and marks the thirty-fifth year of unbroken annual dividend
increases. This consistent increase must also be seen in the context of the very
substantial return of funds to shareholders over the past five years by way of
special dividends and share buy-backs, amounting to £80m and £62m respectively -
£142m in total. However, given that the holding of the concert party, which is
deemed to exist by virtue of the Cayzer family interests, has now risen to
49.6%, Caledonia does not envisage being able to continue to buy in many more
shares.



Discount to net asset value



The discount of the Caledonia share price to underlying asset value, although
not ultimately under its control, has continued to show a further reduction over
its financial year from 30% to 25% on 31 March 2002, if contingent tax on
capital gains and accrual for the final dividend is taken into account. Although
there have been times when the discount has been lower, Caledonia will seek to
reduce this further by pursuing a number of initiatives including increasing the
market awareness of its good long term performance. Caledonia continues to
consider ways of achieving greater value for shareholders, but believes its
present structure has served it well and is suited to its investment approach.



English & Scottish Investors



Caledonia's holding in English & Scottish Investors had been under review for
some time as the rationale for continuing to hold such significant value in a
generalist investment trust had passed.  During the year, Caledonia formulated
proposals with the trust's board to enable it to exit its shareholding on
favourable terms, whilst enabling those shareholders who wished to retain their
holdings to do so. Following approval by English & Scottish Investors'
shareholders, Caledonia received net proceeds of £88.2m at the end of March
which amounted to a discount to underlying assets of only 4.1% excluding the
cost of redeeming the relevant proportion of the long term borrowings.
Caledonia's holding originally cost £25.8m in 1988 and it has therefore realised
an historic cost profit of some £71.5m including earlier warrant realisations
but excluding cash dividends received of some £15m. During Caledonia's period of
ownership English & Scottish Investors achieved a total shareholder return of
440% compared with 384% for the FT All Share TR index.



Board Changes



At the time of its interim results last November, Caledonia announced that it
had strengthened the independent non-executive representation on its board by
the appointment of Charles Allen-Jones, former senior partner of Linklaters, and
Adrian Evans, chief executive of Lazard. Tragically, Adrian Evans died suddenly
on 14 April and Caledonia will greatly miss his wise counsel and encouragement.
As already announced, Joe Burnett-Stuart, the senior independent non-executive
director, had planned to retire at the conclusion of Caledonia's forthcoming
annual general meeting, but in these circumstances has agreed to stay until the
end of this calendar year. Additionally, Caledonia has since announced the
appointment of a further independent non-executive director, Mark Davies,
formerly chief executive of Gerrard Group plc. Michael Wyatt stood down as
deputy chairman last November and as an executive director at the end of March,
but will remain as a non-executive director. James Loudon succeeded Michael
Wyatt as deputy chairman.



As intimated at last year's annual general meeting, Caledonia has given further
consideration to the separation of the roles of chairman and chief executive. In
furtherance of this, Tim Ingram, a former senior executive director of Abbey
National, has been appointed as chief executive with effect from 10 June 2002.
Peter Buckley will continue as chairman.



Commenting on the results, Peter Buckley said:



'Following the realisation of our holding in English & Scottish Investors for a
net consideration of £88m, we had net cash funds at the year end of £67m. This
leaves us well placed to pursue our strategy of seeking interesting investment
opportunities. Whilst the outlook is far from clear and markets are volatile,
these conditions favour our long term approach.'





Enquiries:



Caledonia Investments plc:
020 7802 8080
Peter Buckley, Chairman and Chief Executive



Citigate Dewe Rogerson:
020 7638 9571
Bill Trelawny/Charles Vivian



REVIEW OF OPERATIONS



FINANCIAL



Close Brothers (associate: 19%)



The results of Close Brothers for its year to 31 July 2001 did not escape the
significant reduction in stock market activity which affected the financial
sector generally. Profits before taxation reduced from £145m to £90m, as not
only did they lack the £50m of exceptional market-making profits made in the
boom conditions of the previous year, but the profit stream from this activity
dwindled to almost break-even in the second six months. Otherwise, the three
traditional divisions of banking, asset management and corporate finance all
made good progress. The first six months of its current financial year, although
considerably down on the comparable period in 2001, showed profits slightly
ahead of the immediately preceding six months. Banking performed strongly, asset
management declined slightly, market-making staged some recovery although,
unsurprisingly, corporate finance continued to suffer. Given the impact of
11 September and the fact that the business is essentially non-seasonal, this
was a creditable result.



Caledonia's continued belief in this business has, in part, been based on the
quality and depth of its management. The period under review heralds a number of
key management changes and foremost is Rod Kent's decision to step down as chief
executive towards the end of this year after 28 years' service, although he will
remain a non-executive director. He will be succeeded by Colin Keogh who, along
with Peter Winkworth and Stephen Hodges who are promoted to group managing
directors, have all had many years' experience with the group. Brian Winterflood
has also stood down from the highly successful eponymous market-making activity
to become its non-executive chairman and has been succeeded by younger founder
members of that business. Caledonia's confidence going forward is clearly shared
by Scottish Widows which agreed recently to subscribe £55m for a 5% new equity
stake in the company at a slight premium to the market price.



Polar Capital Partners (associate: 20%)



Polar Capital, the new fund management business, has got off to a profitable
start despite difficult markets, especially in technology which is its main
sector of activity. It has broadened its specialisations during the year with
the launch of a range of hedge funds specialising in technology, Japan and the
UK. Funds under management at 31 March 2002 totalled £0.6bn.



Friends Ivory & Sime (investment: 6%)



Against a background of difficult stock markets, Friends Ivory & Sime ('FIS')
has continued to make good progress in establishing a more diversified and yet
focused asset management business. Profit before tax for its year to 31 December
2001, excluding goodwill and exceptional items, increased slightly to £27.0m.
However, earnings per share declined by 16.5% reflecting, in part, the
significantly enlarged equity base following the purchase of the retail and
managed pension businesses from Friends Provident in early 2001. This, together
with the repayment at that time of the company's £17.0m of loan stock, was
financed by the issue of additional equity.  Funds under management at 31
December 2001 totalled £33.8bn.



In April 2002, FIS announced that conditional agreement had been reached with
Royal & SunAlliance Group, whereby FIS will purchase the latter's investment
management business for £240m in cash. This bold initiative, which will result
in more than doubled funds under management, constitutes a transformational step
forward and has been well received. Following this acquisition, FIS will rank
among the top ten active fund management companies in the UK and will be well
placed to build its market share in the future.



Rathbones (investment: 12%)



Rathbones has continued to build its successful private client fund management
business even though profits before taxation and goodwill amortisation for its
year to 31 December 2001 declined by 22% to £20.6m. Recruitment of new business
providers continued apace with 26 promising new executives having joined over
the past 18 months.  Funds under management rose by some 5% in markets which had
fallen broadly by 16%. This is most encouraging but the early days of the new
business providers do place some burden on profits. However the overall picture
bodes well for the future and Caledonia has recently added modestly to its
holding.



ICAP (investment: 4%)



In March of this year, ICAP reported that active trading had continued through
the first calendar quarter of 2002. The North American businesses had recovered
strongly following the events of 11 September when ICAP's New York office was
destroyed.  Completion and occupation of new US premises is planned later this
year. The company has continued to expand its electronic broking business with
new products including Australian and Korean government bonds, together with
European corporate bonds.



Profits for the year to 31 March 2002 are anticipated to be in line with market
expectations and in April of this year ICAP announced the acquisition of First
Brokers Securities Inc. This company is the leading New York interdealer broker
in US dollar denominated corporate debt, and is expected to add significantly to
ICAP's global bond position.



LEISURE AND MEDIA



Sun International Hotels (associate: 21%)



The year to 31 December 2001 has been one of two halves for Sun International
Hotels Ltd ('SIHL'). Results for the first six months of the year showed strong
growth in earnings per share resulting from continued progress from all
operations, but the events of 11 September and Hurricane Michelle had a marked
impact on the second six months. Occupancy at Atlantis in The Bahamas fell to
35% in September and losses were recorded for both of the last two quarters,
resulting in overall earnings per share for the year of $1.48 compared with
$1.93 in 2000.



A rigorous response to the difficulties was put in hand by the management and
the outcome has been very encouraging.  Occupancy at Atlantis in the first
quarter of 2002 recovered strongly with revenues for the month of March reaching
an all time high.  Earnings per share for this first quarter, seasonally the
best, amounted to $1.04 compared with $1.21 in 2001.



The $1bn expansion by the Mohegans of their casino in Connecticut, from which a
royalty based on turnover is received by SIHL, is on schedule. The enlargement
to the casino and the convention arena was opened in October 2001 and the major
part of the new 1,200 room luxury resort hotel opened in April 2002. The Indian
Ocean hotels have continued to benefit from their high reputation in the market
place. The St Geran reopened at the start of 2000 following substantial
renovation and Le Touessrok will reopen this coming October following a similar
refurbishment.



The strong recovery in trading, together with the number of new opportunities
being assessed for expanding the luxury hotel and resort operations worldwide,
bodes well for the longer term outlook of this group.



During the course of 2001, a substantial re-alignment took place between the
controlling shareholders. Kersaf, the South African leisure group which owns and
operates hotels and casino properties in southern Africa, has agreed to divest
itself of its SIHL shares and intends to embark on its own expansion plans
independent of SIHL.  As part of this shareholder re-alignment, Kersaf paid
$15.5m to SIHL, which will launch a new brand name for its luxury properties and
will change its corporate name to Kerzner International.



Radio Investments (associate: 39%)



Radio Investments continued to make good progress, with gross revenues from
continuing operations of its portfolio of 22 local radio stations advancing to
£8.9m, an increase of 18% compared with the previous year. In spite of subdued
levels of radio advertising in the industry generally, significant further
revenue growth is being experienced in the current year.



Recent announcements from the government relating to the planned liberalisation
of the regulatory environment auger well for Caledonia's investment in this
sector.



The Sloane Club (subsidiary: 100%)



Despite a downturn in the London hotel sector in the early part of 2001 and the
impact of 11 September, the Club's overall occupancy fell by only 8%. This
strong performance relative to the sector underlines the benefit of the Club's
long established membership.



INDUSTRIAL AND SERVICES



Sterling Industries (subsidiary: 100%)



Sterling Industries has continued to suffer from the difficult conditions in the
engineering sector and the modest improvement in the second half of the year was
not enough to eliminate the loss reported for the first six months. Declining
results have led Caledonia to take action to re-structure the group by closing
the small headquarters and concentrating the management effort in three distinct
business segments - hydraulic valves, burners and thermal process engineering.
Management changes have been made in each division and non-core activities will
either be sold or closed, which may give rise to some exceptional costs in the
current year. Moreover, Caledonia has deemed it prudent to write-off the
capitalised acquisition goodwill of £3.5m, notwithstanding that it expects to
see some improvement in the operating performance of the group.



Amber (subsidiary: 100%)



Overall trading profits for Amber, net of central overheads but before goodwill
amortisation, were just below the previous year at £1.8m. Management actions in
the UK industrial consumables division yielded improved profitability through
better customer servicing and pricing, combined with continuing cost control
measures. A slight overall improvement in the German and Austrian selling
companies was offset by start-up costs of a sales operation in France.



The silicones division, which reported lower overall profits, has continued to
reorientate its business to target growth sectors, as customers for the more
traditional ranges relocate out of Europe to avoid the high labour and
regulatory costs, which have adversely affected Amber's businesses in the UK and
Italy. In the USA, underlying progress for Taylor Chemical Company was offset by
one-off restructuring costs. The dynamics of the silicones industry are changing
rapidly, with new entrants buying market share, but there are still a number of
attractive opportunities for the group to develop. To this end, the group has
established a dedicated product development function to exploit new technologies
and products focused on higher margins.



Edinburgh Crystal (subsidiary: 93%)



Inventory rationalisation and restructuring costs incurred against the
background of a flat market resulted in an operating loss for Edinburgh Crystal
of £0.5m. The crystal glass industry generally continues to show weakness and
significant efforts are being made to deliver profitability and consequent value
for shareholders. The company enjoys strong brand recognition in the UK and is
seeking to improve performance through a number of marketing initiatives and
cost efficiencies.



Offshore Logistics / Bristow (investment: 6% / 49%)



For its year to 31 March 2002 Offshore Logistics, which includes Bristow
Helicopters, reported a further improvement in earnings per share, which rose to
$1.84 compared with $1.32 for the previous year. This was a record for the
company, with all major operating divisions making significant contributions.
Higher oil prices and improved activity levels were a feature of the first half
year and, though activity levels fell back somewhat as the year progressed,
overall results ahead of the prior year were achieved in the US and UK as
necessary improvements in contract prices fed through to revenue. The company
has continued to invest in new equipment to provide the best possible service
and safety standards for customers, but cost efficiencies remain a key issue in
this competitive business.



Wallem (investment: 74%)



Wallem reported lower earnings during its year ended 30 September 2001. However,
its well-regarded shipmanagement business recorded further progress against a
background of consolidation within the sector. Wallem will continue its strategy
of delivering dedicated expert service to shipowners and intends to resist the
trend towards increased size through consolidation, as it believes that its
advanced systems will enable it to remain competitive both in terms of price and
service levels.



AHL Services (investment: 10%)



AHL Services has recorded a much reduced operating loss of $42.2m for the year
to 31 December 2001 as the company booked final costs in relation to the closure
of discontinued businesses and undertook further restructuring. A new chief
executive and finance director have been recruited - the former with good
experience in the company's core marketing services business - to bring about
the much needed restoration of profitability and share price.



PROPERTY AND GENERAL



Group Property Companies



Following profits of £9.2m recorded over the past two years by St Lawrence
Properties from development land in Oxford, the year under review has been
quieter. Of greater significance is the inclusion under this heading of the
acquisition of Caledonia's new office building in Buckingham Gate which cost of
£21m, which the company believes will prove to be a rewarding purchase.  Of the
two properties owned in Thomas More Street, one has been sold at a modest profit
and the other is for sale. Edinmore, which seeks out interesting land and
residential properties in the UK, and especially Scotland, has added further
properties to its portfolio, which have interesting potential.



Central European Land (associate: 44%)



Central European Land has continued to make progress with a further increase in
operating profits.  Certain low yielding Hungarian properties have been sold and
the cash applied to the repayment of some €1.5m of bonds and the purchase of
good quality property in the Czech Republic. Caledonia follows with interest the
planned expansion of the EU to include both Hungary and the Czech Republic.



Quintain (investment: 7%)



Quintain continues to hold a strongly reversionary portfolio and has a 49%
interest in the consortium that is currently in exclusive negotiations with
government to redevelop the Millennium Dome and Greenwich Peninsula.  This site
totals 186 acres and is expected to produce 5,000 new homes and 3.5m square feet
of commercial space over a 25 year programme. The company has also continued to
reduce its gearing and the 21% share price increase over the year reflects the
good progress which has been made.



General Investment Portfolio



This heading includes an externally managed portfolio of holdings in smaller
listed companies. Whilst the performance of this fund was disappointing for the
year under review, it still shows considerable outperformance against relevant
market indices since its inception in 1995. The general investment portfolio
also includes a number of holdings in listed and unlisted stocks, which are
primarily held for capital appreciation and some of which arose from
co-investment opportunities as a result of private equity participations.



INVESTMENT FUNDS



English & Scottish Investors



Caledonia's holding in English & Scottish Investors had been under review for
some time as the rationale for continuing to hold such significant value in a
generalist investment trust had passed.  After exploring a number of
initiatives, Caledonia formulated proposals with the trust's board to enable
Caledonia to exit its shareholding on favourable terms, whilst enabling those
shareholders who wished to retain their holdings to do so. The proposals were
strongly endorsed by shareholders and Caledonia received net proceeds of £88.2m
at the end of March, which amounted to a discount to underlying assets of only
4.1% excluding the cost of redeeming the relevant proportion of the long term
borrowings. Caledonia's holding originally cost £25.8m in 1988 and it has
therefore realised an historic cost profit of some £71.5m including earlier
warrant realisations, but excluding cash dividends of some £15m. During
Caledonia's period of ownership, English & Scottish Investors achieved a total
shareholder return of 440% compared with the FTSE All Share total return index
of 384%, which is a highly satisfactory outperformance.



British Empire Securities (associate: 19%)



British Empire Securities delivered another year of excellent performance during
its year to 30 September 2001. Although net asset value declined by 8% over the
year, this represented a very strong relative outperformance, with its benchmark
index declining by 31% over the period. During the year, the share price
discount to net asset value narrowed steadily from some 20% to 8%, aided by
regular share buy-backs and an enhanced market awareness of its outperformance
against its peer group in recent years.



British Empire Securities was named Best Global Trust by Money Observer, won the
Standard & Poor's Awards for Best Global Trust over one and three years and
holds a Standard & Poor's five star rating.



Aberforth Partners' fund (investment)



In March last year Caledonia committed up to £25m to a £165m geared limited
partnership managed by Aberforth Partners. The fund seeks to identify value
opportunities through investment in the UK smaller quoted companies sector and
during the year the drawdown on Caledonia's commitment was £8.7m, bringing the
total to £10m. This has since increased to £12.5m.  Performance to date is
promising and Caledonia believes that the smaller companies sector continues to
offer good opportunities in a volatile market.



European Asset Value Fund



During the year Caledonia sold its holding in the European Asset Value Fund.
Originating from Caledonia's stake in French Property Trust, this holding
delivered sale proceeds amounting to £12.2m compared with original cost of
£6.8m.



TECHNOLOGY



Values in the technology sector continued to fall during the year as sector
sentiment deteriorated. Overall, Caledonia believes that this sector merits
continuing attention, although it has maintained a deliberately cautious stance
over the year, as it is clear that the timing of a recovery is uncertain and is
indeed being regularly pushed back by industry commentators.



Polar Capital's Global Technology Fund (investment)



Polar Capital's Global Technology Fund, which has a small to mid-size company
focus, performed in line with its volatile sector. An increase in Japanese
exposure proved beneficial, although the European investments continued to
perform disappointingly.



Amerindo Internet Fund (investment: 5%)



Caledonia's investment in the Amerindo Internet Fund has performed poorly.
Furthermore, its high weighting in unquoted holdings has contributed to a
widening discount which amounted to 38% at its 31 March year end.



Other investments



Caledonia's participation in limited partnerships, referred to last year,
reflected a continuation of the cautious stance adopted by their managers. Of
Caledonia's total £24m commitment, only an additional £3m was drawn during the
year under review, bringing the total to £9m.



FINANCIAL REVIEW



Profit before taxation



Profit before taxation for the year to 31 March 2002 totalled £8.2m, compared
with £55.7m reported last year.



Total operating profit



Total operating profit of £26.1m for the year to 31 March 2002 decreased by 51%
compared with last year's figure of £53.5m.



A number of factors contributed to a decrease in trading results from a £9.7m
profit last year to a £1.3m loss this year. Sterling Industries reported a loss
of £0.4m, compared with a profit of £1.5m last year and, in addition, £3.5m of
capitalised goodwill was written off.  Amber recorded profits of £1.6m, down
£0.4m from last year, Edinburgh Crystal reported a loss of £0.8m compared with
£0.6m last year and The Sloane Club dipped from £2.1m last year to £1.7m.  Last
year's results also included a £4.1m profit on the sale of development land by
St Lawrence Properties.



Investment income of £10.8m compared with £12.6m in 2001, with last year's
figure boosted by additional distributions from Wallem of £0.9m and the timing
of dividends from Friends Ivory & Sime adding a further £0.6m.



Group interest costs of £1.4m compared with income last year of £3.1m, as
deployment of funds resulted in the use of debt facilities for most of the year.
Cash flow is discussed in more detail below.



Last year's results included £3.9m written off current assets in respect of a
loan, for which legal proceedings to recover the amounts due are in progress.



Other income fell slightly from £0.9m last year to £0.8m and group overheads
rose from £7.7m to £8.5m, due principally to employment costs and duplicated
running costs during the head office move.



The group's share of operating profit of associates decreased by 37% to £25.2m,
compared with £40.1m in 2001. his decrease was due principally to a £12.3m
reduction in the contribution from Close Brothers of £13.7m, an increase of
£2.0m to £11.4m from Sun International Hotels, although last year's result was
for six months only, and losses from Artsworld Channels of £1.9m.



Other gains and losses



The loss on sale of operations of £6.2m resulted mainly from a £5.1m accounting
loss on the sale of English & Scottish Investors. This arose by reference to the
underlying net assets of English & Scottish Investors, which was accounted for
as an associate. In addition, a £1.0m provision was made against the loan to
Artsworld Channels and a £1.3m accounting loss arose on the dilution of
Caledonia's interest in Sun International Hotels as a result of new shares
issued under its share option plan.



Interest payable on long term funding, mainly attributable to associates,
increased from £7.7m to £11.7m, principally due to a £3.4m increase in the £7.4m
interest payable by Sun International Hotels as a full year's results were taken
into account.



Realised gains, net of losses, on the sale of investments of £7.9m, compared
with £58.1m in 2001, reflected a number of transactions including gains of £5.4m
on the realisation of the investment in the European Asset Value Fund and a gain
of £1.7m on the sale of part of the investment in ICAP.



The overall decrease in the valuation of investments of £28.5m included some
gains, notably ICAP, outweighed by reductions mostly relating Friends Ivory &
Sime and technology investments.



Currency exchange effects were not a significant factor in 2002, with a small
net gain of £0.1m.



Cash flow



The group's net funds at the year end were £67.1m, compared with net debt at
last year end of £8.5m - an increase of £75.6m.  Significant outflows were
incurred on the purchase of own shares, amounting to £47.1m, and dividend
payments of £18.5m. Investment purchases totalling £39.6m included £8.7m
invested in an Aberforth Partners' fund in the year and the purchase of shares
in Cazenove for £7.0m. Investment sales totalling £83.4m included proceeds of
£34.2m from JP Morgan Chase & Co loan notes and common stock and £12.2m from the
sale of shares in the European Asset Value Fund. Receipts from the sale of
associates of £92.0m included £88.2m net cash proceeds from the sale of English
& Scottish Investors.



GROUP PROFIT AND LOSS ACCOUNT

for the year ended 31 March 2002


                                                                                              2002                 2001
                                                                                                £m                   £m

                                                                                    --------------       --------------
Group turnover                                                                               114.1                135.2
Trading loss                                                                                 (1.3)                  9.7
Income from investments                                                                       10.8                 12.6
Interest net                                                                                 (1.4)                  3.1
Amounts written off current assets                                                               -                (3.9)
Other income                                                                                   0.8                  0.9
Group overheads                                                                              (8.5)                (7.7)

                                                                                   ---------------     ----------------
Group operating profit                                                                         0.4                 14.7
Share of operating profit of associates                                                       25.2                 40.1
Amortisation of goodwill on acquisition of associates                                          0.5                (1.3)

                                                                                   ---------------     ----------------
Total operating profit                                                                        26.1                 53.5
Loss on sale of operations                                                                   (6.2)                  9.9
Interest payable                                                                            (11.7)                (7.7)

                                                                                  ----------------     ----------------
Profit on ordinary activities before taxation                                                  8.2                 55.7
Tax on profit on ordinary activities                                                         (5.1)               (12.8)

                                                                                  ----------------     ----------------
Profit on ordinary activities after taxation                                                   3.1                 42.9
Minority interests (equity)                                                                  (0.2)                (1.0)

                                                                                  ----------------     ----------------
Profit for the financial year                                                                  2.9                 41.9
Dividends                                                                                   (18.2)               (18.8)

                                                                                  ----------------     ----------------
Loss retained for the financial year                                                        (15.3)                 23.1

                                                                                  ----------------     ----------------
Earnings per ordinary share
    Basic                                                                                     3.8p                53.2p
    Diluted                                                                                   3.8p                53.1p
    Adjusted basic                                                                           18.6p                49.6p

                                                                                  ----------------     ----------------
Dividends per ordinary share                                                                 25.0p                24.0p

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



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

for the year ended 31 March 2002


                                                                                               2002                 2001
                                                                                                 £m                   £m

                                                                                     --------------       --------------
Profit for the financial year                                                                   2.9                 41.9
Realised gains and losses on sale of investments                                                7.9                 58.1
Provision against investments                                                                (11.5)                (1.5)
Movement in revaluation reserve                                                              (24.9)               (14.5)
Tax on sale of investments                                                                    (1.5)                (1.5)
Exchange differences                                                                            0.1                 16.7
Minority interests                                                                            (0.1)                    -
Share of reserve movements of associates
    Realised gains and losses on sale of investments                                            1.4                 14.1
    Movement in revaluation reserve                                                          (20.4)                  0.2
    Exchange differences                                                                      (1.2)                  0.4
    Other movements                                                                             0.5                    -

                                                                                    ---------------       --------------
Total recognised gains and losses                                                            (46.8)                113.9

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



RECONCILIATION OF SHAREHOLDERS' FUNDS

for the year ended 31 March 2002


                                                                                              2002                 2001
                                                                                                £m                   £m

                                                                                   ---------------       --------------
Total recognised gains and losses                                                           (46.8)                113.9
Dividends                                                                                   (18.2)               (18.8)

                                                                                   ---------------       --------------
                                                                                            (65.0)                 95.1
Purchase of own shares                                                                      (47.1)                (5.1)
Goodwill on disposals written back                                                           (5.5)                  0.5
Share of goodwill movements of associates                                                      0.7                    -

                                                                                   ---------------      ---------------
Net movement in shareholders' funds                                                        (116.9)                 90.5
Opening balance of shareholders' funds                                                       854.8                764.3

                                                                                   ---------------      ---------------
Closing balance of shareholders' funds                                                       737.9                854.8

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



GROUP BALANCE SHEET

at 31 March 2002


                                                                                               2002                 2001
                                                                                                 £m                   £m

                                                                                     --------------        -------------
Fixed assets

Intangible assets                                                                               7.5                 11.4
Tangible assets                                                                                68.0                 68.3
Investments
    Investment in associates                                                                  289.4                405.3
    Other investments                                                                         316.7                389.1

                                                                                     --------------      ---------------
                                                                                              681.6                874.1

                                                                                     --------------      ---------------
Current assets

Stocks                                                                                         21.3                 16.5
Debtors                                                                                        31.2                 37.9
Short term deposits                                                                            61.0                  9.0
Cash at bank and in hand                                                                       20.2                 11.4

                                                                                    ---------------      ---------------
                                                                                              133.7                 74.8

                                                                                    ---------------      ---------------
Creditors falling due within one year

Short term borrowings                                                                         (8.8)               (23.4)
Other creditors                                                                              (33.4)               (35.8)

                                                                                    ---------------      ---------------
                                                                                             (42.2)               (59.2)

                                                                                    ---------------      ---------------
Net current assets                                                                             91.5                 15.6

                                                                                    ---------------      ---------------
Total assets less current liabilities                                                         773.1                889.7
Creditors falling due after more than one year

Long term borrowings                                                                          (5.3)                (5.5)
Provision for liabilities and charges

Deferred taxation                                                                            (29.0)               (28.0)

                                                                                    ---------------      ---------------
                                                                                              738.8                856.2
Minority interests (equity)                                                                   (0.9)                (1.4)

                                                                                    ---------------      ---------------
                                                                                              737.9                854.8

                                                                                    ---------------      ---------------
Capital and reserves

Called up share capital                                                                         4.1                  4.4
Share premium account                                                                           1.3                  1.3
Capital redemption reserve                                                                      1.1                  0.8
Revaluation reserve                                                                            73.9                119.1
Profit and loss account                                                                       657.5                729.2

                                                                                   ----------------      ---------------
Shareholders' funds (equity)                                                                  737.9                854.8

                                                                                   ----------------      ---------------
Net asset value per ordinary share                                                            1010p                1082p

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



GROUP CASH FLOW STATEMENT

for the year ended 31 March 2002


                                                                                              2002                 2001
                                                                                                £m                   £m

                                                                                   ---------------     ----------------
Net cash inflow from operating activities                                                     10.2                 32.7

                                                                                   ---------------     ----------------
Dividends from associates                                                                      9.5                  7.6

                                                                                   ---------------     ----------------
Servicing of finance

Interest paid                                                                                (0.3)                (0.3)
Dividends paid to minority shareholders                                                      (1.0)                (1.8)

                                                                                  ----------------     ----------------
                                                                                             (1.3)                (2.1)

                                                                                  ----------------     ----------------
Taxation                                                                                     (2.0)                (9.2)

                                                                                  ----------------     ----------------
Capital expenditure and financial investment

Purchase of tangible fixed assets                                                            (5.1)               (23.7)
Sale of tangible fixed assets                                                                  0.4                  0.3
Purchase of investments                                                                     (39.6)               (73.9)
Sale of investments                                                                           83.4                 51.7

                                                                                   ---------------      ---------------
                                                                                              39.1               (45.6)

                                                                                   ---------------      ---------------
Acquisitions and disposals

Purchase of operations                                                                       (0.1)                (0.5)
Investment in associates                                                                     (6.2)               (18.7)
Sale of interests in associates                                                               92.0                  0.2

                                                                                   ---------------      ---------------
                                                                                              85.7               (19.0)

                                                                                   ---------------      ---------------
                                                                                             141.2               (35.6)
Equity dividends paid                                                                       (18.5)               (73.6)
Management of liquid resources                                                              (52.0)                 99.9
Financing                                                                                   (69.4)                 16.8

                                                                                   ---------------      ---------------
Increase in cash in the year                                                                   1.3                  7.5

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



RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS

for the year ended 31 March 2002


                                                                                              2002                 2001
                                                                                                £m                   £m

                                                                                    --------------       --------------
Group operating profit                                                                         0.4                 14.7
Depreciation and amortisation                                                                  9.0                  5.5
Loss and provision against own shares                                                            -                  0.1
Profit on sale of fixed assets                                                               (0.1)                (0.1)
Investment income and interest accruals decrease                                               0.4                (1.9)
Stocks increase                                                                              (4.8)                  2.2
Debtors decrease                                                                               6.4                 14.8
Creditors decrease                                                                           (1.1)                (2.6)

                                                                                    --------------        -------------
Net cash inflow from operating activities                                                     10.2                 32.7

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



NOTES



1.   Dividends


                                                               2002              2001              2002             2001
                                                              pence             pence                £m               £m

                                                       ------------      ------------      ------------    -------------
Interim paid                                                    7.8               7.8               5.8              6.1
Final proposed                                                 17.2              16.2              12.4             12.7

                                                      -------------      ------------      ------------    -------------
                                                               25.0              24.0              18.2             18.8

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



The proposed final dividend will be paid on 1 August 2002 to shareholders on the
register at the close of business on 5 July 2002.



2.   Earnings per 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 £2.9m
(2001 - £41.9m) and on the 75,400,648 weighted average number of ordinary shares
in issue during the year (2001 - 78,766,291) 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 were reconciled as follows:


                                                                                               2002                 2001
                                                                                              pence                pence

                                                                                     --------------        -------------
Basic earnings per ordinary share                                                               3.8                 53.2
Adjustments

Loss on sale of operations                                                                      8.2               (12.7)
Amortisation and impairment of goodwill                                                         7.4                  4.4
Write off of current assets                                                                       -                  4.9
Related tax effect                                                                            (0.8)                (0.2)

                                                                                    ---------------       --------------
Adjusted basic earnings per ordinary share                                                     18.6                 49.6

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



3.   Analysis of changes in net funds


                                                                           Opening                             Closing
                                                                           balance         Cash flow           balance
                                                                                £m                £m                £m

                                                                     -------------     -------------     -------------
Cash at bank and in hand                                                      11.4               8.8              20.2
Bank overdrafts                                                              (1.2)             (7.5)             (8.7)

                                                                     -------------     -------------     -------------
                                                                              10.2               1.3              11.5
Short term deposits                                                            9.0              52.0              61.0
Debt due within one year                                                    (22.2)              22.1             (0.1)
Debt due after more than one year                                            (5.5)               0.2             (5.3)

                                                                     -------------     -------------     -------------
                                                                             (8.5)              75.6              67.1

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



ANALYSIS BY BUSINESS SECTOR



Financial


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

                                                           -------------    -------------   -------------  -------------
                                                                                            
Associates
Close Brothers Group plc+        Merchant banking                   18.6             12.3            80.0          189.2
Polar Capital Partners Ltd       Fund management                    19.7              0.1             1.3            1.2
Investments
Rathbone Brothers Plc+           Fund management                    12.2              1.1            36.3           36.3
ICAP plc+                        Interdealer broking                 3.8              0.9            31.0           31.0
Friends Ivory & Sime plc+        Fund management                     6.2              1.0            20.0           20.0
Other                                                                                 1.0             7.5            7.5

                                                           -------------   --------------   -------------   ------------
                                                                                     16.4           176.1          285.2

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

+  Listed on the UK or overseas stock exchanges.



Leisure and media


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

                                                          -------------- --------------- ---------------  --------------
                                                                                         
Subsidiaries
The Sloane Club Group Ltd        Residential club                    100             1.7            14.6            14.6
Associates
Sun International Hotels Ltd+    Resort operator                    21.0            11.3           105.4           111.4
Radio Investments Ltd            Local radio                        39.4           (2.2)            13.8            15.5
Other                                                                              (2.0)             0.5               -
Investments
Other                                                                                  -             5.0             5.0

                                                         ---------------  --------------   -------------   -------------
                                                                                     8.8           139.3           146.5

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

+  Listed on the UK or overseas stock exchanges.



Industrial and services


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

                                                           -------------   -------------  --------------   -------------
                                                                                          
Subsidiaries
Sterling Industries PLC          Engineering                         100           (3.9)            23.1            23.1
Amber Industrial Holdings PLC    Specialty chemicals                 100             1.4            21.2            21.2
Edinburgh Crystal Glass Co Ltd   Crystal glass                      92.9           (1.1)             1.8             1.8
                                 manufacture
Associates
Other                                                                              (0.3)            13.3            18.9
Investments
Offshore Logistics Inc+1         Helicopter operator                 5.9             0.4            27.5            27.5
Bristow Aviation Holdings Ltd    Helicopter operator                49.0             0.5             4.9             4.9
Wallem Group Ltd2                Shipping services                  74.4             1.4            13.2            13.2
AHL Services Inc+                Marketing services                  9.7               -             2.6             2.6
Other                                                                                0.5             5.0             5.0

                                                          --------------   -------------   -------------   -------------
                                                                                   (1.1)           112.6           118.2

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

+  Listed on the UK or overseas stock exchanges.

1. The holding in Offshore Logistics Inc includes £7.8m of loan stock.

2. The holding in Wallem Group Ltd comprises 26% of voting ordinary shares and
91.2% of non-voting ordinary shares.





Property and general


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

                                                           --------------   -------------   -------------   ------------
                                                                                            
Subsidiaries
Group property companies                                                              0.2            29.6           29.6

Associates
Central European Land Ltd        Property investment                 44.4             1.2             5.3            6.2
Other                                                                                 0.3             2.3            0.9

Investments
Quintain Estates and             Property investment                  7.0             0.6            19.8           19.8

Development PLC+


Other property                                                                        0.6             9.0            9.0
General investment portfolio                                                          1.7            51.0           51.0

                                                            -------------   -------------   -------------   ------------
                                                                                      4.6           117.0          116.5

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

+  Listed on the UK or overseas stock exchanges.



Investment funds


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

                                                         -------------   -------------   -------------    ------------
                                                                                         
Associates
British Empire Securities and    Investment trust        18.8            1.3             65.7            62.3
    General Trust plc+
English & Scottish 
Investors plc +1                 Investment trust                        4.0                          
Investments
Aberforth Partners' fund         Investment fund                         -               10.0            10.0
Other                                                                    0.5             34.9            34.9

                                                         --------------  --------------  --------------  -------------
                                                                         5.8             110.6           107.2

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

+  Listed on the UK or overseas stock exchanges.

1. English & Scottish Investors plc has been renamed Gartmore Global Trust plc.



Technology


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

                                                          --------------  --------------    ------------    ------------
                                                                                            
Associates
Other                                                                              (0.5)             1.0             1.7
Investments
Polar Capital's Global           Investment fund                                       -             6.1             6.1

    Technology Fund
Amerindo Internet Fund plc+      Investment trust                    5.0               -             3.0             3.0
Other                                                                                  -            21.2            21.2

                                                          --------------  --------------   -------------   -------------
                                                                                   (0.5)            31.3            32.0

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

+  Listed on the UK or overseas stock exchanges.



SUMMARY


                                                                        Attributable        Book value
                                                                             profits                £m         Valuation
                                                                                  £m                                  £m

                                                                     ---------------    --------------     -------------
                                                                                        
Financial                                                                       16.4             176.1             285.2
Leisure and media                                                                8.8             139.3             146.5
Industrial and services                                                        (1.1)             112.6             118.2
Property and general                                                             4.6             117.0             116.5
Investment funds                                                                 5.8             110.6             107.2
Technology                                                                     (0.5)              31.3              32.0

                                                                     ---------------    --------------   ---------------
                                                                                34.0             686.9             805.6
Cash and deposits                                                              (0.8)              58.7              58.7
Other items                                                                    (7.1)
Unallocated net liabilities                                                                      (7.7)             (7.7)

                                                                     ---------------   ---------------   ---------------
                                                                                26.1             737.9             856.6

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



If the group was to have realised its portfolio at 31 March 2002 at the stated
valuation, it is calculated that tax of £46m, amounting to 63 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 2002 or 2001.  The financial
information for 2001 is derived from the statutory accounts for 2001 which have
been delivered to the registrar of companies.  The auditors have reported on the
2001 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 2002 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, 30 Buckingham Gate, London, SW1E 6NN.





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            The company news service from the London Stock Exchange