Final Results - Year Ended 31 March 2000

Caledonia Investments PLC 8 June 2000 2000 PRELIMINARY RESULTS ANNOUNCEMENT 'Continued progress in building value for shareholders' Caledonia Investments plc, the diversified trading and investment company, today announces its preliminary results for the twelve months ended 31 March 2000. The salient features are: Key Financial Results 2000 1999 Total operating profit £45.2m £41.3m Profit before taxation £51.8m £93.9m Shareholders funds £764.3m * £793.3m Basic earnings per ordinary share 46.1p 79.3p Adjusted basic earnings per ordinary share 37.0p 34.7p Dividends per ordinary share - Annual 23.0p 22.0p - Special 70.0p - Net asset value per ordinary share 960p * 951p Underlying net asset value per ordinary share 1189p * 1070p * After providing for the proposed special dividend of 70.0 pence per ordinary share * Total operating profit increased by 9.4% from £41.3m to £45.2m. * Adjusted basic earnings per ordinary share rose 6.6% from 34.7 pence to 37.0 pence. * Before deduction of the special dividend, net asset value per ordinary share rose 8.3% to 1030 pence and 17.7% to 1259 pence when adjusted to reflect market value of the group s quoted associate companies. * Annual dividend up 4.5% from 22.0 pence to 23.0 pence per ordinary share, continuing over 30 years of unbroken dividend growth. * Proposed special dividend of 70.0 pence per ordinary share reflecting strong asset growth. Business Highlights Operating profit The principal factors behind the increase in total operating profit are a substantial £7.1m increase to £21.1m in Caledonia's share of profits from Close Brothers and a profit of £5.1m from the sale of development land in Oxford, partially offset by a reduction in net interest receivable from £9.1m to £4.6m mainly as a result of exchange losses and lower cash balances. Profit before taxation Profit before taxation for the year ended 31 March 2000 was £51.8m (1999 - £93.9m). Last year's figure was boosted by a substantial profit on sale of operations, amounting to £55.8m. This year, profit on sale of operations was £9.8m. Special dividend In recent years, the group has recorded strong investment gains with adjusted net assets per share increasing to 1259 pence, subject to the effect of any taxation. At 31 March 2000, Caledonia s net cash balances stood at some £111m with the prospect of further realisations to come from the sale of the group's interests in Robert Fleming and News Communications & Media. Caledonia has therefore decided to recommend a special dividend of 70.0 pence per share, at a total cost of £55m. After payment of the special dividend, the group will retain substantial cash or near cash balances for future investment and has no net gearing. The special dividend is in addition to the recommended final annual dividend of 15.5 pence per share, which increases the total annual dividends for the year from 22.0 pence last year to 23.0 pence in line with Caledonia's progressive dividend policy. Discount to net asset value Caledonia's share price remained at a substantial discount to underlying assets throughout the year. Two significant initiatives were taken to help address this. First the cross shareholding between Caledonia and Sterling Industries, which was not seen to be helping the share price of either company, was unwound by the acquisition of the 73% of Sterling Industries not already owned. As a consequence, 8m Caledonia shares owned by Sterling were effectively cancelled and some 5.6m new Caledonia shares were issued to shareholders in Sterling, resulting in a net reduction in the total number of shares in issue of almost 3%. Secondly, in the last quarter of the financial year, Caledonia bought in nearly 2% of its equity at attractive prices which enhanced net asset value per share. Caledonia will seek to renew the authority to purchase its shares at the Annual General Meeting in July, which will enable it to continue the buy in policy on a judicious basis. Investments in new technology sectors As signalled at the time of the interim results in November, Caledonia has been steadily increasing its commitment to the telecommunications, media and technology sectors. The group has taken a number of small initiatives in this field, mainly through funds but some directly, at a total cost of some £10m. At 31 March 2000, these investments had appreciated in value to around £40m and at the current time are still valued at nearly three times their total purchase cost even after taking account of the recent downturn in the technology sector. Caledonia believes that its traditional approach of taking relatively significant stakes in individual investment opportunities is less appropriate to this sector and that, given the complexities and range of these emerging technologies, a mainly collective approach is likely to be more effective. At the year end, Caledonia took a £20m cornerstone investment in the recently launched Amerindo Internet Fund, whose US-based management has had a long and successful record of investing in the technology field. Commenting on the results, Peter Buckley, said: 'These results show robust and successful progress for the twelve months to 31 March 2000. The Board remains focused on maximising value over the long term. We are confident that our strategy will leave us well positioned to continue this and to seize opportunities both in so-called old economy situations where we think there are still interesting prospects and in the fast emerging telecommunications, media, and technology sectors.' 'Although it is too early to make any meaningful comment about the year in prospect, a considerable market correction has now taken place which has impacted more widely than the technology sector and which will inevitably have affected our underlying net asset value per share. Nonetheless, given our strong balance sheet, we remain well placed to take advantage of investment opportunities in the context of our longer term approach.' Enquiries: Caledonia Investments plc: 020 7481 4343 Peter Buckley, Chairman and Chief Executive Citigate Dewe Rogerson: 020 7638 9571 Bill Trelawny Charles Vivian REVIEW OF OPERATIONS FINANCIAL Close Brothers (associate: 19%) Close Brothers celebrated its twenty-fourth consecutive year of profits growth with a solid 10% improvement for its year to 31 July 1999. Since then the group has announced a sparkling 110% advance in earnings per share for its half year to 31 January 2000. During the year, new initiatives were taken in the field of private client investment management and instalment finance for personal insurance premiums, as well as the expansion of the corporate finance operation into France and Germany. In August, Rea Brothers was acquired for £56m, adding additional fund management and banking activities in London as well as offshore private client business. Subsequently, Warrior, a business specialising in finance for Armed Forces personnel, was acquired at a cost of £21m and merged with the existing Close Brothers business in this field. The property lending operation has also been expanded by the acquisition of a complementary activity from Granville Bank. The significant uplift in stock market bargains recorded from November last year - particularly in smaller company and AiM stocks - has contributed to a significant increase in the profits of Winterflood Securities. Whilst the initial increase seems linked to the increased investment activity surrounding the e-commerce excitement, it will remain to be seen at what levels this activity is sustained. Technological change will call for vigilance and a market downturn will almost certainly subdue volumes, but management is keenly aware of this and must be congratulated on their highly impressive performance. Rathbones (investment: 13%) For the year to 31 December 1999, Rathbones saw growth of 22% in funds under discretionary management to £5bn. Operating profit rose by 24% to £22.4m, with increases in earnings and dividends per share of 15% and 16% respectively. The year also saw good growth in revenues from its trust division, which is now starting to make a meaningful contribution to the profits of the group. Following new marketing initiatives, unit trust funds under management doubled during 1999. The company was also voted Discretionary Fund Manager of the Year by readers of the Investors Chronicle and was a major winner in the Private Asset Managers Awards for 2000. Robert Fleming (investment: 1%) As anticipated last year, Robert Fleming has experienced buoyant trading conditions, particularly in South East Asia. Furthermore, the timing of its acquisition of the other 50% of Jardine Fleming held by Jardine Matheson proved propitious. In April 2000, the Board of Robert Fleming announced a recommended offer of £27.44 per share for the company from Chase Manhattan Corporation. Completion of the offer at the values prevailing at the time of the announcement would give us an exit value of some £46.7m, against a carrying value of £20.4m and an original purchase cost of £7.5m. Friends Ivory & Sime (investment: 8%) 1999 was a very successful year for Friends Ivory & Sime. Funds under management at its year end increased to over £37bn (1998 - £25bn). Earnings per share and dividends grew impressively by 30% and 18% respectively on an annualised basis. In May 2000, Friends Provident Life Office, which has a controlling interest in FIS, announced that it would be seeking a Stock Exchange listing in mid- 2001 following demutualisation. We believe that this should enhance the long term growth prospects of FIS. INDUSTRIAL AND SERVICES Sterling Industries (subsidiary 100%) Caledonia's bid, valuing the whole of Sterling Industries at £97m, was successfully concluded in January 2000. Aside from the 10% shareholding in Caledonia already referred to above, the group held cash balances of some £13.5m, which were paid out by way of dividend to Sterling's shareholders at the time of acquisition, and two engineering divisions with promising niche positions in global markets. The Hydraulics division, which manufactures a sophisticated range of cartridge valves for mobile equipment, performed slightly behind last year. A delivery backlog in the UK plant has now been rectified and a new managing director has just been appointed. Outright ownership of this division by Caledonia broadens the scope to take further advantage of its position in this specialist market. The Thermal Process division had a difficult year due to a shortage of orders in the aftermath of the Asian crisis and the closure of one of its operations in the UK. Consideration is being given to re-aligning the business units within the division, which should enable greater focus to be brought to bear on the skill sets within each activity. The outlook for both engineering divisions remains very competitive but we believe that the decision to purchase these businesses will be amply justified. Amber (subsidiary: 100%) The Amber group achieved trading profits just ahead of last year at £2.5m (1999 - £2.4m), with a strong performance from the group's UK silicone business and Treco Srl, based in Italy, as well as a first full year contribution from Taylor Chemical Company in Atlanta. Improved profitability in Amber's German selling companies was offset by exchange differences when reporting in sterling, but activity levels were good. Amber's traditional UK industrial consumables division encountered a more difficult year, and a review is underway to identify new opportunities for this activity. Overall, higher interest costs resulting from recent acquisitions, together with increased goodwill amortisation, brought pre-tax profits in at £1.9m (1999 - £2.2m). During the year, the group made two small acquisitions, Alchimica Srl in Italy and Quantum Silicones LLC in the USA, to further Amber's strategy of becoming a leading independent silicone compounder. The new financial year has started with an encouraging level of activity for Amber's silicone businesses, particularly in the USA. The UK market for industrial consumables remains challenging, though improving trends are evident in Germany. Edinburgh Crystal (subsidiary: 89%) Edinburgh Crystal achieved a welcome turnaround during the past year, with operating profit in excess of £0.5m after reporting a loss of £0.9m last year. However, the sector remains challenging and aggressive discounting persists in the market place, mainly due to over capacity. Our strategy continues to focus on means of improving the company's market position. Offshore Logistics/Bristow (investments: 6%/49%) As indicated a year ago, the year to 31 March 2000 proved to be a difficult one and earnings per share of Offshore Logistics decreased from 97 cents to 42 cents. The group as a whole suffered from the aftermath of the very low oil price and this particularly impacted Bristow's activities in the North Sea. Co-ordination of the US and UK operations of the group has improved over the past year and a three division structure has been put in place comprising the Gulf of Mexico, the North Sea and International. The outlook for the year ahead as a whole is better, with improvements anticipated in the market place and from further operating efficiencies. Wallem (investment: effective 74%) Wallem has continued to record improved profitability following the difficult trading conditions which resulted from the 1998 Asian crisis. In particular, its increased focus on its well regarded shipmanagement operations has contributed to substantially better results. Prospects for continuing improvement are good. AHL Services (investment: 10%) AHL Services recorded a further year of growth but not at quite the same 111% and 65% rates as in its first two years as a NASDAQ listed company. Earnings per share grew by 22% but the last quarter to December 1999 disappointed market expectations and the share price reacted accordingly. The group has continued to develop both organically and by acquisition in its two main fields of expansion - marketing and operational support services. The former incorporates some e-fulfilment business and the company is seeking to develop this further. INVESTMENT FUNDS English & Scottish Investors (associate: 30%) English & Scottish Investors performance for its year to 31 January improved significantly with overall net asset value per share increasing by 15.6% to a year end record 222 pence per share. This was in line with the MSCI World Index and ahead of the FTSE All-Share Index. English & Scottish Investors also took advantage of the new freedom for investment trusts to purchase their own shares and has since bought in over 9% of its issued ordinary capital. Whilst these purchases to date have increased Caledonia's shareholding from 27.4% to 30.2% and have benefited net asset value per share, the share price, in common with most of its peer group, has remained at an unsatisfactory discount. The share buy in policy on its own, whilst never the complete solution, still has a part to play. Supply and demand for the shares and underlying investment performance will be the key determinants and we are watching these closely. British Empire Securities and General Trust (associate: 18%) British Empire Securities and General Trust recorded good results for the year to 30 September 1999, with net asset value per share increasing by 37% - well ahead of its benchmark. Its subsequent half year to 31 March 2000 has seen a continuation of satisfactory performance. We remain of the view that the manager's 'value' style investing has considerable merit and the long term record of solid achievement, is commendable. Investments As can be seen from the table at the end of this announcement, two holdings, The AIM Trust and European Asset Value Fund, which were previously included in the 'other' total, have been highlighted following the significant rise in their respective valuations. The AIM Trust reported exceptional performance, making it the best performing smaller companies investment trust over the 12 months to 31 January 2000. European Asset Value Fund has merged with another holding in this category - French Property Trust. The 'other' total includes a number of holdings which have performed well, including a stake in the Amerindo Technology Growth Fund taken last summer. LEISURE AND MEDIA The Sloane Club (subsidiary: 100%) Steady progress continued during the year. The joint venture with Cadogan Estates to manage 16 club suites has prospered with encouragingly good occupancy rates. The Sloane Club continues to seek new opportunities to leverage off its existing management resources and expand its operations. Radio Investments (associate: 49%) Activity in the radio sector remained high and valuations attributable to radio stations increased steadily throughout the period. During the year, the Guardian Media Group purchased an interest in the company, which matched our own shareholding. We believe that their understanding of the media sector will be of considerable benefit to us and that investment in this sector will deliver good returns in the run up to deregulation. Sun International Hotels (investment: 18%) Sun International Hotels ('SIHL') experienced a varied year. The first full season of the acclaimed 1250 room expansion on Paradise Island went well. The management challenges of doubling the size of the resort were well executed as also the handling of Hurricane Floyd, which was the worst storm to hit the area for over 25 years. Fortunately, no serious structural damage was suffered and the opportunity was taken to advance the enlargement and improvement of the Ocean Club and also to re-landscape the golf course, which provided the basis to develop some 120 luxury home sites around the new course and along the beach front. These are beginning to be sold at encouraging prices. Development of 198 timeshare apartments has also started. Whilst Paradise Island has continued to live up to expectations and build its international reputation, the casino operations in Atlantic City have been disappointing as the recently completed $50m refurbishment did not bring about the anticipated uplift in business. Further attention is being given to this situation, management changes have been made and some signs of improvement are now evident. This setback, combined with the potential exposure to the highly competitive Las Vegas gaming market following the announcement a year ago of SIHL's intention to purchase The Desert Inn property, caused a significant decline in the SIHL share price. This purchase arrangement has since been cancelled. On 12 January 2000, Sun International Investments ('SIIL') which together with its shareholders, controls 53% of SIHL and in which we are equal one third investors with the listed South African leisure group, Kersaf Investments and the Kerzner family, decided to put forward a merger proposal to acquire, for $24 per share, the 47% of SIHL not already owned, amounting to some $368m. This initiative will involve an increase in SIIL's gearing which should be well within the cash flow potential from its operations and remains conditional on financing being in place and a recommendation from the independent committee of the SIHL board to minority shareholders regarding the fairness of the offer. The two other important operations within SIHL - the Mohegan Sun casino in Connecticut and the Sun Resorts properties in Mauritius - have both continued to develop satisfactorily. SIHL's share of the management fees from the Mohegan Sun casino has grown for the fourth year in succession since opening, but at the end of 1999, the management contract, which was due to expire at the end of 2003 was bought out by the Mohegan Tribe in exchange for a 5% revenue sharing agreement which runs to 2015. This will result in a lower contribution for SIHL in the current year, but as the $850m expansion of the casino comes on stream in late 2001 and early 2002, it is expected that the annual contribution will approach or exceed the amounts receivable under the original arrangement. In Mauritius, a substantial refurbishment of the world famous St. Geran Hotel was completed in December. Plans are also in hand for SIHL to manage a new 90 room hotel being built in The Seychelles by Sun Resorts. The Royal Mirage Hotel in Dubai, for which Sun has the management contract, opened successfully last August. News Communications & Media (investment: 6%) Following good profit growth in recent years, the board of Newscom announced a recommended cash offer of £18 per share for the company in May 2000. Our acceptance of the offer will give us an exit value of £25.2m against a carrying value of £21.4m and an original purchase cost of £6.3m. Swallow Group Swallow Group, formerly Vaux Group, closed its brewing activities on 2 July 1999 and subsequently sold its tenanted pub estate to Pubmaster Inns, with the intention of developing its hotels and managed houses and extending its leisure club operations. However, having received an approach from Whitbread, the boards of Whitbread and Swallow Group announced on 22 November 1999 a recommended cash offer at 390 pence per share as well as a second interim dividend of 8 pence. The offer represented a 41% premium over the reference Swallow Group share price. Gross proceeds for Caledonia's 4.8% holding in Swallow Group totalled £26.7m, yielding a £12.3m profit on the aggregate historic cost of the investment of £14.4m. PROPERTY AND GENERAL Subsidiaries Over the years, we have held a number of smaller interests in the property sector. Last year, Edinmore, which seeks out interesting land and residential property opportunities in the UK and especially Scotland, made a useful contribution. This year, St. Lawrence Properties sold a 5.5 acre development site in Oxford for £12.8m realising a £5.1m profit. The company retains 3 acres from which it is hoped to generate additional profit. Central European Land (associate: 44%) With our partner, Meinl Bank of Vienna, we have seen an increase in operating profit in the company's second year of operation and have made some additions to the portfolio of retail properties in both the Czech Republic and Hungary. Both countries are likely to be among the early new entrants to the EU and their economies should benefit from their accession. Quintain Estates and Development (investment: 5%) We added 0.7m shares to our holding in 1999 and took advantage of weak market conditions to buy a further 1.9m shares in April 2000, bringing our holding to 9m. The company is rationalising the recently acquired Chesterfield Properties and English and Overseas Properties portfolios to good effect. We continue to have confidence in the management's special skills in dealing with complicated situations, which should have a beneficial effect on the net asset value. Other These comprise a number of holdings in the technology sector and a separately managed portfolio of holdings in listed smaller companies, which have performed well. In addition, part of the group's liquidity is invested in a portfolio of equity market holdings. GROUP PROFIT AND LOSS ACCOUNT for the year ended 31 March 2000 2000 1999 £m £m Group turnover 90.2 58.2 -------- -------- Trading profit 12.2 5.0 Income from investments 7.7 8.5 Interest receivable 4.6 9.1 Other income 0.7 0.8 Group overheads (6.2) (5.7) -------- -------- Group operating profit 19.0 17.7 Share of operating profit of associates 26.4 24.0 Amortisation of goodwill on acquisition of associates (0.2) (0.4) -------- -------- Total operating profit 45.2 41.3 Profit on sale of operations 9.8 55.8 Interest payable (3.2) (3.2) -------- -------- Profit on ordinary activities before taxation 51.8 93.9 Tax on profit on ordinary activities (13.2) (27.6) -------- -------- Profit on ordinary activities after taxation 38.6 66.3 Minority interests (equity) (0.9) (0.6) -------- -------- Profit for the financial year 37.7 65.7 Dividends (73.7) (18.2) -------- -------- Loss retained for the financial year (36.0) 47.5 ======== ======== Earnings per ordinary share Basic 46.1p 79.3p Diluted 46.0p 79.2p Adjusted basic 37.0p 34.7p -------- -------- Dividends per ordinary share Annual 23.0p 22.0p Special 70.0p - -------- -------- GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31 March 2000 2000 1999 £m £m Profit for the financial year 37.7 65.7 Realised gains and losses on sale of investments 23.1 18.3 Provision against investments (5.0) (4.3) Movement in revaluation reserve (15.8) (73.5) Tax on sale of investments (3.3) 3.4 Exchange differences 0.6 7.0 Share of reserve movements of associates Realised gains and losses on sale of investments 15.5 30.5 Movement in revaluation reserve 16.1 (35.7) Tax on sale of investments (0.1) (5.4) Exchange differences 0.1 (0.3) Other movements 0.6 (3.6) -------- -------- Total recognised gains and losses 69.5 2.1 ======== ======== GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS for the year ended 31 March 2000 2000 1999 £m £m Total recognised gains and losses 69.5 2.1 Dividends (73.7) (18.2) -------- -------- (4.2) (16.1) Issue of shares 39.2 - Purchase of own shares (9.6) - Reclassification of share capital (56.7) - Goodwill on disposals written back 3.8 18.4 Goodwill capitalised into investments - 3.0 Share of goodwill movements of associates (1.5) (1.3) -------- -------- Net movement in shareholders' funds (29.0) 4.0 Opening balance of shareholders' funds 793.3 789.3 -------- -------- Closing balance of shareholders' funds 764.3 793.3 ======== ======== GROUP BALANCE SHEET at 31 March 2000 2000 1999 £m £m Fixed assets Intangible assets 11.1 6.5 Tangible assets 48.6 39.3 Investments Investment in associates 256.6 224.9 Other investments 425.0 408.0 -------- -------- 741.3 678.7 -------- -------- Current assets Stocks 18.2 11.8 Debtors 47.5 21.0 Short term deposits 108.5 147.8 Cash at bank and in hand 16.0 19.2 -------- -------- 190.2 199.8 -------- -------- Creditors falling due within one year Short term borrowings (13.7) (12.1) Other creditors (117.6) (42.2) -------- -------- (131.3) (54.3) -------- -------- Net current assets 58.9 145.5 -------- -------- Total assets less current liabilities 800.2 824.2 Creditors falling due after more than one year Long term borrowings (5.6) (0.7) Provision for liabilities and charges Deferred taxation (28.4) (29.1) -------- -------- 766.2 794.4 Minority interests (equity) (1.9) (1.1) -------- -------- 764.3 793.3 ======== ======== Capital and reserves Called up share capital 4.4 4.2 Share premium account 1.3 1.3 Capital redemption reserve 0.8 0.7 Revaluation reserve 191.2 205.2 Profit and loss account 566.6 581.9 -------- -------- Shareholders' funds (equity) 764.3 793.3 ======== ======== Net asset value per ordinary share 960p 951p GROUP STATEMENT OF CASH FLOWS For the year ended 31 March 2000 2000 1999 £m £m Net cash inflow from operating activities 15.4 23.1 -------- -------- Dividends from associates 8.2 14.0 -------- -------- Servicing of finance Interest paid - (0.1) Dividends paid to minority shareholders - (0.2) -------- -------- - (0.3) -------- -------- Taxation (20.3) (7.6) -------- -------- Capital expenditure and financial investment Purchase of intangible fixed assets (0.1) - Purchase of tangible fixed assets (2.8) (2.9) Sale of tangible fixed assets 0.3 0.2 Purchase of investments (50.5) (43.6) Sale of investments 58.3 60.8 Loans to associates - (0.1) -------- -------- 5.2 14.4 -------- -------- Acquisitions and disposals Purchase of operations (17.5) (15.3) Net cash acquired with operations 12.3 0.5 Dividends paid to a subsidiary's former shareholders (10.6) - Investment in associates (7.8) (11.1) Sale of operations (0.8) 47.1 Sale of interests in associates - 56.6 -------- -------- (24.4) 77.8 -------- -------- (15.9) 121.4 Equity dividends paid (18.6) (17.4) Management of liquid resources 39.7 (102.8) Financing (10.1) - -------- -------- Decrease in cash in the year (4.9) 1.2 -------- -------- RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS For the year ended 31 March 2000 2000 1999 £m £m Group operating profit 19.0 17.7 Depreciation and amortisation 3.6 2.9 Loss and provision against own shares - 0.8 Profit on sale of fixed assets (0.1) (0.1) Tax credits on franked investment income - (0.7) Investment income and interest accruals decrease 2.8 (2.3) Stocks decrease 0.6 1.0 Debtors increase (14.7) 2.7 Creditors increase 4.2 1.1 -------- -------- 15.4 23.1 -------- -------- NOTES TO THE ACCOUNTS 1. Dividends 2000 1999 £m £m Interim of 7.5p paid (1999 - 7p) 6.2 5.8 Final of 15.5p proposed (1999 - 15p) 12.2 12.4 Special of 70.0p proposed (1999 - nil) 55.3 - -------- -------- 73.7 18.2 -------- -------- The proposed final and special dividends will be paid on 2 August 2000 to shareholders on the register at the close of business on 30 June 2000. 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 £37.7m (1999 - £65.7m), and on the 81,864,429 weighted average number of ordinary shares in issue during the year (1999 - 82,800,050) after excluding shares held during the year by the Caledonia Investments plc Employee Share Trust. 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: 2000 1999 pence pence Basic earnings per ordinary share 46.1 79.3 Adjustments Profit on sale of operations (11.9) (67.4) Share of associate's restructuring costs 1.8 1.3 Amortisation of goodwill 0.8 0.6 Related tax effect 0.2 20.9 -------- -------- Adjusted basic earnings per ordinary share 37.0 34.7 -------- -------- Share of associate's restructuring costs in 2000 represented the group's share of the exceptional restructuring costs incurred by Close Brothers as part of its reorganisation after its acquisition of Rea Brothers and Warrior. Share of associate's restructuring costs in 1999 represented the group's share of the exceptional restructuring costs incurred by Exco prior to its offer to acquire the broking operations of Intercapital Group. 3. Analysis of changes in net funds Opening Exchange Cash Closing balance differences flow Acquisitions balance £m £m £m £m £m Cash at bank and in hand 19.2 0.1 (3.3) - 16.0 Bank overdrafts (11.9) - (1.6) - (13.5) ------------------------------------------------------ 7.3 0.1 (4.9) - 2.5 Short term deposits 147.8 (0.1) (39.7) 0.5 108.5 Debt due within one year (0.2) - - - (0.2) Debt due after more than one year (0.7) 0.1 0.3 (5.3) (5.6) ------------------------------------------------------ 154.2 0.1 (44.3) (4.8) 105.2 ------------------------------------------------------ ANALYSIS BY BUSINESS SECTOR Financial Name Business Group Attributable Book share profits value Valuation % £m £m £m ------------------------------------------------------------------------------ Associates Close Brothers Group plc * Merchant banking 19.0 21.1 65.0 269.2 Investments Rathbone Brothers plc * Fund management 12.8 0.9 45.1 45.1 Robert Fleming Holdings Ltd Merchant banking 1.0 0.5 20.4 20.4 Friends Ivory & Sime plc * Fund management 7.9 0.3 19.0 19.0 Garban Intercapital plc * Moneybroking 4.1 0.5 11.5 11.5 Other - 1.1 1.1 ------------------------------------------------------------------------------ 23.3 162.1 366.3 ------------------------------------------------------------------------------ * Listed on the UK or overseas stock exchanges. Industrial and services Name Business Group Attributable Book share profits value Valuation % £m £m £m ------------------------------------------------------------------------------ Subsidiaries Sterling Industries PLC (3) Engineering 100.0 2.7 25.1 25.1 Amber Industrial Specialty Holdings PLC chemicals 100.0 2.1 17.2 17.2 Edinburgh Crystal Crystal glass Glass Co Ltd manufacture 88.9 0.2 3.2 3.2 Other (0.4) - - Associates Sterling Industries PLC (3) Engineering 0.7 Other 0.4 6.4 9.6 Investments Offshore Logistics Helicopter Inc *(2) operator 6.1 0.4 16.8 16.8 Bristow Aviation Helicopter Holdings Ltd operator 49.0 0.7 4.9 4.9 Wallem Group Ltd (1) Shipping services 74.4 - 12.0 12.0 AHL Services Inc * Outsourcing 10.2 - 10.7 10.7 Other 5.5 5.5 ------------------------------------------------------------------------------ 6.8 101.8 105.0 ------------------------------------------------------------------------------ * Listed on the UK or overseas stock exchanges. (1) The holding in Wallem Group Ltd comprises 26% of voting ordinary shares and 91.2% of non-voting ordinary shares. (2) The holding in Offshore Logistics Inc includes £5.8m of loan stock. (3) The holding in Sterling Industries PLC was transferred from associates to subsidiaries on 14 January 2000. Investment funds Name Business Group Attributable Book share profits value Valuation % £m £m £m ------------------------------------------------------------------------------ Associates English & Scottish Investors plc * Investment trust 29.8 2.1 105.1 93.1 British Empire Securities and General Trust plc * Investment trust 17.9 1.4 61.8 50.7 Investments Amerindo Internet Fund plc * Investment trust 5.0 - 20.0 20.0 The AIM Trust plc * Investment trust 6.4 - 10.4 10.4 European Asset Value Fund Investment company 19.1 - 10.2 10.2 Other 0.2 39.1 39.1 ------------------------------------------------------------------------------ 3.7 246.6 223.5 ------------------------------------------------------------------------------ * Listed on the UK or overseas stock exchanges. Leisure and media Name Business Group Attributable Book share profits value Valuation % £m £m £m ------------------------------------------------------------------------------ Subsidiaries The Sloane Club Group Ltd Residential club 100.0 1.8 15.2 15.2 Associates Radio Investments Ltd Local radio 48.7 (0.3) 11.2 8.7 Investments Sun International Hotels Ltd * Resort operator 17.7 - 71.0 71.0 News Communications Newspaper & Media PLC * publishing 5.8 0.4 21.4 21.4 Swallow Group plc Hotels 0.8 Other - 6.4 6.4 ------------------------------------------------------------------------------ 2.7 125.2 122.7 ------------------------------------------------------------------------------ Listed on the UK or overseas stock exchanges. Property and general Name Business Group Attributable Book share profits value Valuation % £m £m £m ------------------------------------------------------------------------------ Subsidiaries 4.7 19.5 19.5 Associates Central European Property Land Ltd investment 44.4 0.6 5.5 6.1 Other 0.1 0.2 0.1 Investments Quintain Estates and Property Development PLC * investment 5.4 0.3 9.0 9.0 Other - property 0.2 6.2 6.2 Other - general 1.6 72.1 72.1 ------------------------------------------------------------------------------ 7.5 112.5 113.0 ------------------------------------------------------------------------------ * Listed on the UK or overseas stock exchanges. SUMMARY Attributable Book profits value Valuation £m £m £m ------------------------------------------------------------------------------ Financial 23.3 162.1 366.3 Industrial and services 6.8 101.8 105.0 Investment funds 3.7 246.6 223.5 Leisure and media 2.7 125.2 122.7 Property and general 7.5 112.5 113.0 44.0 748.2 930.5 Cash and deposits 5.5 97.5 97.5 Other items (4.3) Unallocated liabilities (81.4) (81.4) ------------------------------------------------------------------------------ 45.2 764.3 946.6 ------------------------------------------------------------------------------ If the group were to have realised its investments at 31 March 2000 at the stated underlying value, it is calculated that tax of £85.9m, amounting to 108 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 2000 or 1999. The financial information for 1999 is derived from the statutory accounts for 1999 which have been delivered to the registrar of companies. The auditors have reported on the 1999 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 2000 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies following the company's annual general meeting. Copies of this statement are available at the company's registered office, Cayzer House, 1 Thomas More Street, London E1W 1YB.

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Caledonia Investments (CLDN)
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