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. This information is provided by RNS The company news service from the London Stock Exchange

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