Caledonia Investments PLC
21 February 2003
Caledonia Investments plc
Conversion to Investment Trust Status: Capitalisation Issue
As explained in its circular to shareholders dated 16 January 2003 in connection
with its proposed conversion to investment trust status for UK tax purposes (the
'Proposals'), Caledonia Investments plc ('Caledonia') today issued 390,000,000
deferred ordinary shares of £1 each, credited as fully paid up out of certain
reserves of Caledonia, to Shield Trust Limited, a wholly-owned subsidiary of NM
Rothschild & Sons Limited, which is acting as joint financial adviser to
Caledonia in respect of the Proposals.
It is proposed that all of these deferred ordinary shares will be cancelled
pursuant to a reduction of capital of Caledonia confirmed by the High Court of
Justice (the 'Court').
Subject to the Court confirming the proposed reduction of capital, at a hearing
scheduled to take place on 5 March 2003, Caledonia intends to convert to
investment trust status with effect from 1 April 2003, being the start of its
next financial year.
21 February 2003
For further information, please contact:
Caledonia Investments plc Tel: 020 7802 8080
College Hill Tel: 020 7457 2020
Notes to editors
Caledonia is a long established investment company with international scope
listed on the London Stock Exchange. Caledonia's strategy has delivered
outperformance against its benchmark FTSE All-Share Total Return index of 26%
over the five year period to 31 December 2002 and 37% over the ten year period
to 31 December 2002. Caledonia has a policy of delivering a progressive annual
dividend growth with a 35-year record of unbroken annual dividend increases.
Through holding a diversified portfolio, Caledonia aims to maintain a medium
overall risk position.
At 31 December 2002, Caledonia had a Net Asset Value of 939 pence per ordinary
share (after deducting £20 million for contingent tax and other costs associated
with conversion to investment trust status, being the amount which such costs
are not expected to exceed). Based on a share price as at 31 December 2002 the
discount to its Net Asset Value per share (after deducting costs associated with
conversion referred to above) was 30.1 per cent.
Following Tim Ingram's appointment as chief executive in June 2002, a strategy
review was undertaken. The results of the strategy review were announced on 21
November 2002 together with the interim report for the half year to 30 September
Caledonia plans to focus on a portfolio of around 30 to 40 principal
investments, with a policy that at least 50% of the total portfolio should be in
quoted securities or other liquid assets. New investments will typically be in
the range £10 million to £25 million. Careful control is exercised over costs,
notwithstanding Caledonia's active and participative management style. The Board
believes that Caledonia has a long established and valuable reputation for being
a supportive long term investor, which brings a strong deal flow of
opportunities not always available to others.
Caledonia's investments are focused on a selected range of sectors where it has
good in-house knowledge that can add value to management of investee companies.
Where particular expertise is not held in-house, investments may be made through
third party managed funds where Caledonia will often seek a significant stake in
the management company.
Caledonia's selected sectors are: Financial comprising 33% of the portfolio,
including holdings in Close Brothers Group plc, ICAP plc and Rathbone Brothers
Plc; Leisure and Media comprising 17% of the portfolio, including holdings in
Kerzner International Ltd and The Sloane Club Group Ltd; Property and General
comprising 17% of the portfolio, including holdings in Quintain Estates and
Development PLC; Industrial and Services comprising 15% of the portfolio,
including investments in Offshore Logistics Inc. and Amber Industrial Holdings
PLC. Investment Funds comprising 15% of the portfolio includes holdings in
British Empire Securities and General Trust plc and funds managed by Aberforth
Partners. Technology comprises 3% of the portfolio. The percentages of the
portfolio quoted are as at 31 December 2002.
Conversion to investment trust status will eliminate Caledonia's future
liability for corporation tax on chargeable gains. As a result, Caledonia
believes it will be able to build greater value for shareholders and be more
appealing to retail shareholders which ultimately should contribute towards a
lower discount of Caledonia's share price to Net Asset Value per share. As an
investment trust, Caledonia expects to be included in the AITC Global Growth
sector where its investment performance would have put it in the top quartile by
reference to both five and ten year total shareholder returns for the period to
31 December 2002.
The Cayzer Trust Company Limited and other Cayzer family interests together
control some 49.9% of Caledonia.
This information is provided by RNS
The company news service from the London Stock Exchange SCTBMITMMATBIJ