Extracts-Circular to Shrhldrs

Creston PLC
29 September 2000

       
CRESTON PLC

The following is extracted from a circular dated 29 September 2000 being sent
to shareholders.

'
                 Non-cash dividend and annual general meeting                 

Background

The 2000 annual general meeting is to be held at The Honourable Artillery
Company, Armoury House, City Road, London, EC1Y 2BQ on 16 November 2000.  You
will find on pages 33 and 34 of the group's Annual Report 2000, which
accompanies this document, the Notice convening this annual general meeting.  
In addition to the ordinary business of the annual general meeting, there are
four resolutions to be considered which constitute special business.  Three of
these resolutions have become routine business at the annual general meeting
of most public companies and relate to:

- renewal of the authority for your directors to allot relevant securities    
  (Resolution 4);
- renewal of the powers for your directors to allot equity securities as if   
  the pre-emption rights did not apply (Resolution 5); and
- renewal of the authority for the company to purchase certain of its own     
  shares (Resolution 6).

In this document I will provide some detailed explanation in relation to the
resolution approving the payment of a non-cash dividend (Resolution 7).

Non-cash dividend
Industrial & Commercial Holdings plc ('ICH') is a recently incorporated wholly
owned subsidiary of the company.  It is the intention of the company, subject
only to your approval, to distribute shares in ICH to you as a dividend.  
A number of the group's property assets have been transferred into ICH
including Dougalston, which your directors believe is the only remaining
property asset of any significance to the group.  

In a circular to you dated 16 February 2000 I explained that, following the
sale by the company and certain subsidiaries of a portfolio of properties to a
number of subsidiaries of Ashtenne Holdings PLC, the property known as
Dougalston was to remain within the group. 

As I described at the time, Dougalston comprises land of approximately 167
acres, of which a part your directors believe has the potential for
residential development, subject to planning consent being obtained.  The
market value of Dougalston amounted to £86,300 at 28 July 2000.  If the
residential potential is realised its value will be considerably more, but
your directors believe that it is unlikely such consent will be obtained in
the short term.  

In addition to Dougalston, a number of other property assets of the group have
been transferred into ICH.  These comprise several ransom strips of land which
currently derive no income.

The proposed dividend to you will take the form of shares in ICH on the basis
of one fully paid ordinary share with a nominal value of 1p each in the
capital of ICH for each ordinary share you hold in the capital of the company.
 
The value of each share in the capital of ICH is expected to be 1.5p.
Following payment of this non-cash dividend you will continue to hold the same
number of shares in the capital of the company and will additionally hold an
equal number of shares in the capital of ICH.

If the resolution approving this dividend is passed at the annual general
meeting, the effective date of the distribution will be 17 November  2000 and
the record date will be 27 October 2000.  Shares in the company are expected
to be quoted ex-dividend on 23 October 2000.  It is expected that share
certificates in respect of your shares in ICH will be despatched to you on 17
November 2000 with your final cash dividend payment in respect of the period
ended 31 March 2000.

At this time it is not intended that all or any part of the issued share
capital of ICH be listed upon any recognised investment exchange.

Taxation
The information below, which relates only to United Kingdom taxation, is based
on current law and practice.  It is a general guide only and applies only to
persons who are United Kingdom residents holding ordinary shares in the
capital of the company as investments.  If you are in any doubt as to your tax
position or whether you may be subject to tax in a jurisdiction other than the
United Kingdom you are strongly recommended to consult your own independent
professional tax adviser.

Income tax
Individual shareholders resident or ordinarily resident in the UK will for the
purposes of income tax be treated as receiving a dividend which is expected to
be equal to 1.5p per ordinary share in the capital of the company.  This
dividend will be taxable for income tax purposes in the same manner as a
dividend paid in cash.  As such, a tax credit of 1/9th will attach to the
dividend.  Taxpayers who are subject to tax at the basic or starting rate will
have no further liability to income tax in respect of the distribution.  For
higher rate taxpayers a tax liability equal to 25% of the value of the
dividend, or 32.5% of the net dividend plus tax credit, will arise.  For
example, an individual higher rate taxpayer holding 1000 shares will be deemed
to have received a net dividend, at 1.5p per share, of £15.  The tax payable
at 25% will be £3.75.  UK resident trustees of discretionary trusts liable to
account for income tax at the rate of 25% on the trust's income may also be
required to account for additional tax.

Individual shareholders whose income tax liability is less than the tax credit
will not be entitled to claim a repayment of all or part of the tax credit
associated with the distribution.  However, if individual shareholders hold
their investment in the company through an Individual Savings Account ('ISA')
or under a current Personal Equity Plan ('PEP'), the ISA or PEP may be
entitled to make a claim for the 10% tax credit associated with the dividend,
subject to the possible application of section 703, Income & Corporation Taxes
Act 1988 ('ICTA').

There are special rules that apply to charities. Shareholders which are
charities should consult their professional advisers as to their entitlement,
if any, to a refund of part of the tax credit and should note the possible
application of section 703 referred to below.

If section 703 ICTA were to be applied a claim for the tax credit may be
denied.  No clearance has been or will be sought by the company from the
Inland Revenue to the effect that they will not apply section 703 ICTA in this
way.  However, section 703 ICTA will generally not be applicable when the
transaction is carried out in the ordinary course of making or managing
investments.

UK corporate shareholders will be deemed to have received a distribution from
another UK company and no tax charge will arise unless the corporate
shareholder is a dealer in securities. However, such shareholders who are in
the scope of the Corporation Tax (Treatment of Unrelieved Surplus Advance
Corporation Tax) Regulations 1999 (the 'Regulations') should note that the
possible application of section 703 ICTA may prevent the treatment of the
distribution as franked investment income for the purposes of the Regulations.

Capital gains tax
Individual and corporate shareholders' base cost in shares in the capital of
ICH will be equal to the value of the net dividend which is expected to be
1.5p per share.

The capital gains tax position of all shareholders in relation to their
holding of shares in the capital of the company will be unaffected by the
proposed non-cash dividend.  It will not give rise to any chargeable disposal
of their share in the capital of the company.

The above information assumes no adjustment will be required by the Inland
Revenue to the 1.5p per share value of ordinary shares in the capital of ICH. 
Your directors have made every effort to ensure that no adjustment to the
value will prove necessary.  In the event that an amendment to the value is
required, shareholders will be advised of the necessary changes to the
foregoing information.

Recommendation
Your directors believe that the proposed distribution of shares in ICH to you
is in the best interests of the company and its shareholders as a whole and,
accordingly, they unanimously recommend you to vote in favour of the
resolution number 7 set out in the Notice of annual general meeting.

David C Marshall
Chairman'