27th Nov 2007 07:01
Caledonia Investments PLC27 November 2007 Caledonia Investments plc Half-year results for the six months ended 30 September 2007 Key points • 357% total shareholder return over ten years (276% outperformance vs FTSE All-Share Total Return index) • 289% total shareholder return over five years (172% outperformance vs FTSE All-Share Total Return index) • 137% increase in NAV per share (undiluted) over five years (53% outperformance against FTSE All-Share index) • 4.2% increase in interim dividend to 9.9p • £113m invested and £40m realised • 2.0% decrease in NAV per share (undiluted) over the period Tim Ingram, Chief Executive, commented: "Our strategy has continued to deliver over the medium term, and we havecontinued our progressive dividend policy with a 4.2% increase in the interimdividend. We have a sound portfolio and, with no gearing at this stage, are wellplaced to take advantage of the opportunities that are likely to arise in themore constrained circumstances that now prevail in the markets." 27 November 2007 Enquiries: Caledonia Investments plc 020 7802 8080 Tim Ingram, Chief Executive Jonathan Cartwright, Finance Director College Hill 020 7457 2020 Tony Friend Roddy Watt Chairman's statement The first half of our financial year has seen considerable turbulence andvolatility in markets, triggered by the US sub-prime crisis, and our net assetvalue per share fell by 2.0%, compared with a 1.0% increase in the FTSEAll-Share index. Nonetheless, we take a long term view and our well established strategy ofacquiring significant, usually minority, stakes in promising listed and unlistedcompanies and working with proven managements to add value over the longer termhas enabled us to continue to record outperformance against our benchmark FTSEAll-Share Total Return index over five and ten years of 172% and 276%respectively. Dividend The directors have declared an interim dividend of 9.9 pence per share,representing an increase of 4.2% over last year's interim dividend andmaintaining our aim to make progressive annual dividend payments. This dividendwill be paid on 8 January 2008. Share price and discount Despite a small reduction in our net asset value per share over the period, ourshare price rose by 3.3% to 2135 pence from 2066 pence, outperforming the 1.0%increase in the FTSE All-Share index, with a consequent narrowing of thediscount of the market value of our shares to their underlying net asset valuefrom 9.5% to 4.6%, although this discount can vary, particularly in volatilemarkets such as we are experiencing at present. It is important to bear in mindthat the handsome outperformance in total shareholder return referred to abovefor the five and ten year periods stems substantially from the relatively largediscounts, of over 30%, which attached to our share price at the outset of theseperiods. Whilst we have worked strenuously over the years to build an awarenessof our investment approach and the performance which has derived from it, wehope that such wide discounts will not prevail going forward, albeit we do not,as I have mentioned before, control our share price. However, we remain mindfulthat the share price discount affects shareholder value and we will continue touse our authority to buy back our own shares, when we believe it is in theinterest of our shareholders. Portfolio The level of investment activity during the period reflected our ability toaccess opportunities that are not always available to others and our continuedinvestment in Asia. Further details are given in the Chief Executive's review. Outlook Markets have now been visited by the shockwaves of the sub-prime lending folliesin the USA egged on by the greed of big investment banks. This has combined withthe failure of the UK watchdogs to avert the Northern Rock crisis despitevolumes of burdensome regulatory impositions on the financial sectors. It is abit surprising that reality has been so slow to reflect in the markets and wehave, even now, probably not felt the full impact. Whilst our long term approachdoes not always facilitate maximum liquidity for the perfect moment of timing,we believe that we have a sound portfolio and, with no borrowings on our balancesheet, are well placed to take advantage of the opportunities which these moreconstrained circumstances should present. Peter BuckleyChairman Chief Executive's review Performance summary Our aim continues to be to provide consistently over five and ten year periodstotal shareholder returns ('TSR') which outperform the FTSE All-Share TotalReturn index and to provide positive total returns over rolling five yearperiods. The Chairman has referred in his statement to these returns, which have beensignificantly enhanced by the narrowing of the discount between our share priceand net asset value ('NAV') per share. It is our wish for this discount toremain in future within modest limits or, at the higher end of our expectations,to reach a premium. As we cannot control our own share price, our performancefocus is on growing our NAV per share. We can now measure, on a consistent basis, our NAV per share for the five yearperiod to 30 September 2007. We can therefore report that, over this five yearperiod, NAV per share increased by 137%, which reflects an outperformance of 53%over the FTSE All-Share index. The first six months of our financial year has seen significant turbulence inthe markets initiated by the sub-prime mortgage crisis in the USA. The ensuingdrying up in the credit markets has led to emergency funding from central banksin the USA, Europe and the UK and a 0.5% cut in dollar interest rates by theFederal Reserve Bank in September (and a further 0.25% cut in October). Slightlysurprisingly, but perhaps as a result of the huge quantities of funding put intothe markets by government bodies, the FTSE All-Share index ended 1.0% up overthe period, with the FTSE 100 up 2.5%. Our company NAV per share, on an undiluted basis, was 2237p at 30 September2007, compared with 2283p at 31 March 2007. The principal components of this 2%decline were a total return loss of 24p and dividends paid of 22p. Total returnwas mainly impacted by the decreasing valuations of some of our larger quotedholdings, notably Close Brothers, Quintain Estates and Melrose Resources,partially offset by a strong performance in aggregate from our Indianinvestments and gains in the share price of Bristow Group. Investment income andexpenses were at a similar level to the same period last year. We have continued to maintain our prudent approach and have remained ungearedthroughout the period with £36m of cash at the end of September. Investment activity In the first six months of our financial year we made around £113m of new andfollow-on investments. Most (approximately £86m) of this was for follow-oninvestments and in many cases we have taken advantage of some low share pricesduring the period to add to our existing stakes in businesses that we know well.Major new and follow-on investments included: Resulting equity holding Country of CostName % Category domicile Business £m New investmentsRetif 15.4 Equity/loans France Shop fittings supplier 12.9Hedging subsidiary(1) 100 Loans UK FTSE 250 put options 8.0Vietnamese portfolio Equity Vietnam 3.1Celona(2) Loans UK Telecoms 3.0 27.0Follow-on investmentsQuintain Estates 9.6 Equity UK Property invest/develop 24.7Incisive Media Capital UK Business publisher 15.5Eddington Capital Shares Cayman Hedge fund 10.0fundAvanti Communications 19.9 Loans UK Satellite comms services 7.0Polar Capital funds Shares Cayman Hedge fund 5.0Pragma Shares France Private equity fund 3.5Other investments 20.4 86.1Total 113.1 1. Subsidiary company used to purchase FTSE 250 put options.2. The company also holds warrants to subscribe for shares representing up to 49.9% of the equity. During the six months, we realised a total of £40m. Significant realisationsincluded: Realised Proceeds gainName Nature of realisation £m £mPolar Capital funds Redemption 11.1 0.2CF AVI Global fund Redemption 9.3 2.3Pragma fund Distributions 5.7 4.1Savills Sale of remaining holding 2.9 2.5Other realisations 11.0 4.5 40.0 13.6 In view of the general uncertainties in economic outlook, we felt it prudent toprotect in part the considerable value gains we have achieved in the portfolioby hedging against possible significant falls in equity values. Accordingly,during the period we invested a total of £8m in purchasing one-year put optionson the FTSE 250 index through a subsidiary (included in new investments above),which provides some downside protection on approximately £85m of our portfolio. Net liquidity at 30 September of £36m has reduced from £109m at the last yearend. Whilst we have increased our level of investment over the period, we havecontinued to maintain our prudent approach and have remained ungeared. Outlook The market turbulence resulting from the USA sub-prime mortgage crisis is likelyto continue into the second half of the year and equity markets will faceuncertainty as credit spreads widen, confidence is tested and volumes are low.Nevertheless, we are continuing to see a healthy flow of opportunities and arewilling to make further investments, but we remain cautious in these uncertaintimes. We expect to remain ungeared for the rest of the year, but, at some timein the future, conditions could bring opportunities which may justify a moderateamount of borrowing. Over the longer term, we believe that our strategy will continue to deliverenhanced performance. Tim IngramChief Executive Our portfolio Significant holdings Equity Net holding Country Business Total assets ofName % domicile sector Nature of business £m %Close Brothers(1,2) 12.2 UK Financial Merchant banking 146.3 11.4British Empire Securities 18.3 UK Funds Investment trust 140.9 10.9(1,2)Quintain Estates(1) 9.6 UK Property Property investor/ 92.1 7.1 developerRathbone Brothers(1,2) 10.7 UK Financial Funds management 55.9 4.3Bristow Group(1,2) 6.9 USA/UK Oil and gas Helicopter services 44.5 3.5Polar Capital funds(2) Ireland/ Funds Hedge funds 42.4 3.3 CaymanCobepa(2) 9.9 Belgium Funds Investment company 41.7 3.2Oval(2) 27.4 UK Financial Insurance broking 34.4 2.7Incisive Media(2) UK Consumer Business publisher 32.1 2.5Melrose Resources(1,2) 9.4 UK Oil and gas Oil and gas exploration 31.1 2.4Satellite Information 22.5 UK Consumer Betting information 25.9 2.0Services(2) distributionEddington Triple Alpha Cayman Funds Fund of hedge funds 25.4 2.0Fund(2)India Capital Growth Fund 26.3 Guernsey Funds Investment company 24.5 1.9(1,2)Sterling Industries(2) 100.0 UK Industrial Engineering 22.3 1.7Alok Industries(1,2) 14.8 India Consumer Textiles manufacturer 22.2 1.7A G Barr(1) 9.4 UK Consumer Soft drinks 21.9 1.7Polar Capital(1,2) 15.9 UK Financial Funds management 21.7 1.7Ermitage(2) 60.0 Jersey Financial Hedge funds management 20.7 1.6Novae Group(1,2) 6.1 UK Financial Insurance services 20.3 1.6TGE Gas Engineering(2) 49.9 Germany Industrial Gas engineering 19.5 1.5Avanti Communications 19.9 UK Consumer Satellite comms services 17.2 1.3(1,2)Nova Springboard fund Guernsey Funds Investment fund 16.0 1.2Terrace Hill(1,2) 8.3 UK Property Property development 15.1 1.2Serica Energy(1) 10.2 UK Oil and gas Oil and gas exploration 15.1 1.2Marketform(2) 26.8 UK Financial Insurance services 14.4 1.1Begbies Traynor(1,2) 10.9 UK Industrial Corporate recovery 13.8 1.1 servicesEdinmore(2) 100.0 UK Property Property trading 13.7 1.1The Sloane Club(2) 100.0 UK Consumer Residential club owner/ 13.5 1.0 operatorVarun Shipping(1,2) 11.7 India Industrial Shipping services 13.3 1.0Retif(2) 15.4 France Industrial Shop fittings supplier 12.9 1.0Buckingham Gate(2) 100.0 UK Property Property investment 12.9 1.0Other investments 228.5 17.7Total investments 1,272.2 98.6Cash and other net assets 18.0 1.4Net assets 1,290.2 100.0 1. Equity securities listed on UK or overseas stock exchanges.2. Board or equivalent representation. Net assets by business Net assets by geography Net assets by currencysectorFinancial 27% United Kingdom 64% Pounds sterling 82%Funds 28% Continental Europe 13% Euro 7%Property 13% North America 9% US dollar 6%Oil and gas 7% Asia 12% Indian rupee 4%Industrial 11% Other countries 1% Other currencies 1%Consumer 13% Cash and other 1%Cash and other 1% Responsibility statement of the directors in respect of the half-yearlyfinancial report We confirm that to the best of our knowledge:o the condensed set of financial statements has been prepared in accordance with IAS 34 ' Interim Financial Reporting'; ando the interim management report includes a fair review of the information required by: 1. DTR 4.2.7 of the 'Disclosure Rules and Transparency Rules', being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and 2. DTR 4.2.8 of the 'Disclosure Rules and Transparency Rules', being related parties transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the enterprise during that period and any changes in the related parties transactions described in the last annual report that could have a material effect on the financial position or performance of the enterprise in the first six months of the current financial year. Signed on behalf of the Board Tim Ingram Jonathan CartwrightChief Executive Finance Director Independent review report to Caledonia Investments plc Introduction We have been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprises the income statement, the statement of recognisedincome and expense, the balance sheet, the cash flow statement and related notes1 to 9 on a company and group basis. We have read the other informationcontained in the half-yearly financial report and considered whether it containsany apparent misstatements or material inconsistencies with the information inthe condensed set of financial statements. This report is made solely to the company in accordance with InternationalStandard on Review Engagements 2410 issued by the Auditing Practices Board. Ourwork has been undertaken so that we might state to the company those matters weare required to state to them in an independent review report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our review work, for thisreport, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in note 2, the annual financial statements of the company areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard 34'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. Deloitte & Touche LLPChartered Accountants and Registered AuditorLondon, UK27 November 2007 Condensed income statementfor the six months ended 30 September 2007 Company Group 6 mths 6 mths Year 6 mths 6 mths Year 30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £mGains and losses on investments (35.2) 2.3 96.5 (39.2) (15.2) 66.0 held at fair value through profit or lossGains and losses on derivatives used to 0.3 5.9 5.6 1.4 6.1 5.9 hedge the fair value of investmentsProvisions - - - - (3.1) (3.1)Investment income 16.8 13.1 40.1 15.1 10.7 25.5Gross portfolio return (18.1) 21.3 142.2 (22.7) (1.5) 94.3Management expenses (5.2) (5.3) (11.0) (5.2) (5.3) (11.0)Other expenses (0.2) (0.8) (1.1) (0.2) (0.8) (1.1)Net portfolio return (23.5) 15.2 130.1 (28.1) (7.6) 82.2Revenue from sales of goods and services - - - 57.1 64.4 135.0Operating expenses - - - (53.4) (55.2) (120.0)Gain on disposal of operations - - - - - 4.4Gain on investment property - - - 2.9 - -Share of results of joint ventures - - - 1.8 1.7 6.1Profit/(loss) before finance costs (23.5) 15.2 130.1 (19.7) 3.3 107.7Gains on money market funds - 1.0 1.0 - 1.0 1.0 held at fair value through profit or lossTreasury interest receivable 3.0 0.9 3.5 3.6 1.6 4.3Exchange movements (0.2) (0.5) (0.7) (0.2) (0.5) (0.7)Finance costs - (0.6) (0.3) (2.1) (2.1) (4.1)Profit/(loss) before tax (20.7) 16.0 133.6 (18.4) 3.3 108.2Taxation 6.5 1.2 2.5 5.0 (0.7) (0.3)Profit/(loss) for the period (14.2) 17.2 136.1 (13.4) 2.6 107.9 Attributable toEquity holders of the parent (14.2) 17.2 136.1 (13.4) 1.6 106.1Minority interest - - - - 1.0 1.8 (14.2) 17.2 136.1 (13.4) 2.6 107.9 Basic earnings per ordinary share -24.5p 28.2p 228.6p -23.1p 2.6p 178.3pDiluted earnings per ordinary share -24.5p 28.0p 226.9p -23.1p 2.6p 176.9p Condensed statement of recognised income and expensefor the six months ended 30 September 2007 Company Group 6 mths 6 mths Year 6 mths 6 mths Year 30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £mExchange differences on translation - - - 0.1 (0.7) (1.2) of foreign operationsActuarial gains and losses on defined - - (0.3) - 2.5 0.2 benefit pension schemesTax on items recognised directly in equity (0.2) - 1.9 (0.2) - 1.7Net income/(expense) recognised (0.2) - 1.6 (0.1) 1.8 0.7 directly in equityProfit/(loss) for the period (14.2) 17.2 136.1 (13.4) 2.6 107.9Total recognised income and expense (14.4) 17.2 137.7 (13.5) 4.4 108.6 Attributable toEquity holders of the parent (14.4) 17.2 137.7 (13.5) 3.4 106.8Minority interest - - - - 1.0 1.8 (14.4) 17.2 137.7 (13.5) 4.4 108.6 Condensed balance sheetas at 30 September 2007 Company Group 30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £mNon-current assetsInvestments held at fair value through profit 1,271.4 1,142.9 1,228.1 1,157.2 1,031.7 1,125.9or lossInvestments in subsidiaries held at cost 0.8 2.8 0.8 - - -Available for sale investments - - - 0.5 0.5 0.5Intangible assets - - - 40.6 40.6 40.7Property, plant and equipment - - - 76.9 75.1 78.6Investment property - - - 4.3 5.8 5.8Interests in joint ventures - - - 9.7 11.0 11.6Deferred tax assets 6.9 2.3 5.8 8.9 4.2 8.0Non-current assets 1,279.1 1,148.0 1,234.7 1,298.1 1,168.9 1,271.1 Current assetsInventories - - - 16.8 29.5 19.5Trade and other receivables 2.6 4.3 6.5 34.6 28.4 29.0Current tax assets - - - - 0.6 0.2Money market funds held at fair value through - - - 0.3 0.3 0.3profit or lossCash and cash equivalents 36.1 84.1 108.6 52.7 115.0 123.2Current assets 38.7 88.4 115.1 104.4 173.8 172.2Total assets 1,317.8 1,236.4 1,349.8 1,402.5 1,342.7 1,443.3 Current liabilitiesBank overdrafts - - - (0.4) (1.7) (1.5)Interest-bearing loans and borrowings - - - (1.3) (1.0) (1.3)Trade and other payables (8.9) (5.6) (4.8) (31.2) (23.7) (27.1)Employee benefits - - - (1.3) (1.4) (3.1)Current tax liabilities (1.0) (7.6) (5.2) (2.8) (9.8) (6.6)Provisions (13.5) (13.5) (13.5) (14.0) (14.7) (14.1)Current liabilities (23.4) (26.7) (23.5) (51.0) (52.3) (53.7)Non-current liabilitiesInterest-bearing loans and borrowings - - - (58.0) (63.4) (64.7)Employee benefits (1.0) (1.7) (0.9) (5.4) (4.9) (5.4)Deferred tax liabilities (3.2) - (2.2) (4.4) (1.1) (3.6)Provisions - - - - (4.0) -Non-current liabilities (4.2) (1.7) (3.1) (67.8) (73.4) (73.7)Total liabilities (27.6) (28.4) (26.6) (118.8) (125.7) (127.4)Net assets 1,290.2 1,208.0 1,323.2 1,283.7 1,217.0 1,315.9 EquityShare capital 3.3 3.3 3.3 3.3 3.3 3.3Share premium 1.3 1.3 1.3 1.3 1.3 1.3Capital redemption reserve 1.2 1.2 1.2 1.2 1.2 1.2Capital reserve 1,011.7 935.6 1,048.6 - - -Retained earnings 272.7 266.6 268.8 1,273.7 1,207.4 1,305.9 Foreign exchange translation reserve - - - (0.6) (0.2) (0.7)Equity attributable to owners of the parent 1,290.2 1,208.0 1,323.2 1,278.9 1,213.0 1,311.0 Minority interest - - - 4.8 4.0 4.9Total equity 1,290.2 1,208.0 1,323.2 1,283.7 1,217.0 1,315.9 Net asset value per ordinary share (undiluted) 2237p 2083p 2283pNet asset value per ordinary share (diluted) 2212p 2061p 2258p Condensed cash flow statementfor the six months ended 30 September 2007 Company Group 6 mths 6 mths Year 6 mths 6 mths Year 30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £mOperating activitiesDividends received 12.3 9.8 29.7 12.8 8.7 12.8Interest received 4.7 2.9 7.9 4.6 3.2 7.2Cash received from customers - - - 61.2 69.0 144.8Cash paid to suppliers (6.5) (6.9) (10.1) (58.5) (75.0) (130.5)Taxes received/(paid) 2.1 - 0.9 (3.3) (4.5) -Group relief received 0.1 0.6 0.4 - - -Net cash from operating activities 12.7 6.4 27.9 21.0 2.6 29.8Investing activitiesPurchases of property, plant and equipment - - - (2.1) (12.1) (18.9)Proceeds from disposal of property, - - - - - 0.7 plant and equipmentPurchases of investments held at fair value (112.6) (168.4) (290.4) (105.0) (138.7) (253.3) through profit or lossPurchases of money market funds - - - - (0.3) - held at fair value through profit or lossProceeds on disposal of investments 40.9 176.3 309.5 43.5 145.5 255.0 held at fair value through profit or lossProceeds on disposal of money market funds - 76.8 76.8 - 76.8 76.8 held at fair value through profit or lossProceeds on disposal of investment property - - - 4.5 - -Net receipts/(payments) from derivatives 0.3 5.3 4.4 (7.4) 6.0 5.1Purchase of subsidiary net of cash acquired - - - (0.7) (17.1) (17.1)Proceeds on disposal of subsidiaries - - - - 0.9 3.0 net of cash disposedTaxes received - - - - 0.9 -Net cash from/(used in) investing activities (71.4) 90.0 100.3 (67.2) 61.9 51.3Financing activitiesInterest paid - (0.3) (0.3) (2.0) (1.5) (2.7)Distributions paid to holders of equity (12.5) (13.0) (18.5) (12.5) (13.0) (18.5)sharesDividends paid to minority interests - - - (0.1) (0.4) (0.4)Elective special dividend paid - (102.9) (102.9) - (102.0) (102.0)Proceeds from new borrowings - 38.0 43.0 1.3 51.2 83.8Repayment of borrowings - (38.0) (43.0) (8.6) (41.8) (73.9)Net purchase of own shares (1.3) 0.1 (1.7) (1.3) 0.1 (1.7)Net cash used in financing activities (13.8) (116.1) (123.4) (23.2) (107.4) (115.4)Net increase/(decrease) in cash (72.5) (19.7) 4.8 (69.4) (42.9) (34.3) and cash equivalentsCash and cash equivalents at period start 108.6 103.8 103.8 121.7 156.5 156.5Exchange gains/(losses) on cash and cash - - - - (0.3) (0.5)equivalentsCash and cash equivalents at period end 36.1 84.1 108.6 52.3 113.3 121.7 Notes to the condensed set of financial statements 1. General information Caledonia Investments plc is an investment trust company domiciled in the UnitedKingdom and incorporated in England, under the Companies Acts 1908 to 1917. Theaddress of its registered office is Cayzer House, 30 Buckingham Gate, LondonSW1E 6NN. The ordinary shares of the company are listed on the London StockExchange and the New Zealand Exchange. The information for the period ended 30 September 2007 does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for the year ended 31 March 2007 has been delivered tothe Registrar of Companies. The auditors' report on those accounts was notqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The half-year results are unaudited. They should not be taken as a guide to thefull year and do not constitute the statutory accounts. 2. Accounting policies This condensed set of financial statements has been prepared using accountingpolicies consistent with International Financial Reporting Standards ('IFRS') asadopted by the European Union and in accordance with International AccountingStandard 34 'Interim Financial Reporting'. The half-yearly condensed set offinancial statements should be read in conjunction with the annual financialstatements for the year ended 31 March 2007, which were prepared in accordancewith IFRS as adopted by the European Union. The same accounting policies, presentations and methods of computation arefollowed in this condensed set of financial statements as were applied in thecompany's latest audited annual financial statements. 3. Dividends 6 mths 6 mths Year 30 Sep 30 Sep 31 Mar 2007 2006 2007 £m £m £mAmounts recognised as distributions to equity holders in the periodFinal dividend for the year ended 31 March 2007 12.5 13.0 13.0 of 21.6p per share (2006 - 20.5p)Interim dividend for the year ended 31 March 2007 of 9.5p per share - - 5.5Elective special dividend paid on 13 July 2006 of 1902.17p per share - 102.9 102.9elected 12.5 115.9 121.4 The directors have proposed an interim dividend for the year ending 31 March2008 of 9.9p per share, totalling £5.7m, which has not been included as aliability in this condensed set of financial statements. This dividend will bepayable on 8 January 2008 to holders of shares on the register on 7 December2007. The ex-dividend date will be 5 December 2007. 4. Earnings and net asset values per share Basic and diluted earnings per share The calculation of basic earnings per share of the company and of the group at30 September 2007 was based on the profit attributable to ordinary shareholdersand the weighted average number of ordinary shares outstanding during the sixmonths ended 30 September 2007. The calculation of diluted earnings per share takes account of the share optionsand deferred bonus plan awards with dilutive potential. The weighted averagenumber of ordinary shares takes account of the number of dilutive potentialordinary shares that could be issued as a result of the exercise of shareoptions and the vesting of shares under the deferred bonus plan. Company Group 6 mths 6 mths Year 6 mths 6 mths Year 30 Sep 30 Sep 31 Mar 30 Sep 30 Sep 31 Mar 2007 2006 2007 2007 2006 2007 £m £m £m £m £m £mEarnings (basic and diluted) (14.2) 17.2 136.1 (13.4) 1.6 106.1 000's 000's 000's 000's 000's 000'sWeighted average shares (basic) 57,924 61,081 59,537 57,921 61,051 59,520Effect of share options and deferred bonus - 389 455 - 389 455awardsWeighted average shares (diluted) 57,924 61,470 59,992 57,921 61,440 59,975 Undiluted and diluted net asset values per share The company's undiluted net asset value per ordinary share is based on the netassets of the company at the period end and on the number of ordinary shares inissue at the period end less shares held by the Caledonia Investments plcEmployee Share Trust and shares held in treasury or by a subsidiary. The company's diluted net asset value per ordinary share assumes the exercise ofall outstanding, in-the-money share options, the calling of shares in thedeferred bonus plan and the reissue of shares held in treasury at the mid-marketprice at the balance sheet date. 30 Sep 30 Sep 31 Mar 2007 2006 2007UndilutedNet assets (£m) 1,290.2 1,208.0 1,323.2Number of shares (000's) 57,673 57,988 57,952Net asset value per share (p) 2237 2083 2283DilutedNet assets (£m) 1,311.5 1,221.2 1,336.1Number of shares (000's) 59,302 59,243 59,169Net asset value per share (p) 2212 2061 2258 5. Related parties Caledonia Group Services Ltd, a wholly-owned subsidiary of the company, providesmanagement services to the company. During the period, £5.0m was charged to thecompany (30 September 2006 - £5.0m and 31 March 2007 - £11.3m). 6. Segment reporting The following is an analysis of the revenue and results for the period analysedby business segment, the group's primary basis of segmentation: Financial Industrial/ Investing services consumer Property Total £m £m £m £m £m6 mths 30 Sep 2007Gross portfolio return (20.7) - - - (20.7)Trading revenue - 7.4 44.3 5.7 57.4Inter-segment sales (2.0) - - (0.3) (2.3) (22.7) 7.4 44.3 5.4 34.4Segment result (28.0) 2.0 2.8 1.7 (21.5)Unallocated net income 8.1Loss for the period (13.4)6 mths 30 Sep 2006Gross portfolio return 4.5 - - - 4.5Trading revenue - 6.9 48.1 9.9 64.9Inter-segment sales (2.9) - - (0.5) (3.4) 1.6 6.9 48.1 9.4 66.0Segment result (6.5) 2.5 5.0 0.6 1.6Unallocated net income 1.0Profit for the period 2.6Year 31 Mar 2007Gross portfolio return 113.2 - - - 113.2Trading revenue - 14.3 99.0 22.4 135.7Inter-segment sales (15.8) - - (0.7) (16.5) 97.4 14.3 99.0 21.7 232.4Segment result 86.3 4.6 5.9 4.8 101.6Unallocated net income 6.3Profit for the year 107.9 7. Impairment of assets There was no group impairment loss for the period (30 September 2006 - £nil and31 March 2007 - £0.6m). 8. Capital commitments On 30 September 2007, the company had undrawn fund and other commitmentstotalling £63.3m (30 September 2006 - £50.1m and 31 March 2007 - £73.9m). 9. Share based payments The company operates two types of share based payment plans. The executive shareoption scheme is a discretionary plan for directors and senior management,entitling participants to purchase shares in the company at the market price atthe date of grant, subject to service and company performance criteria, betweenthree and ten years after the date of grant. The company also has a deferredbonus plan under which senior employees compulsorily defer part of their annualbonus, being any bonus in excess of 50% of their basic salary for the bonusyear, into shares and may voluntarily defer up to 50% of their remaining cashbonus into shares. The company will match the number of shares comprised in thevoluntary deferral, subject to service and company performance criteria. In the period to 30 September 2007, participating employees in the executiveshare option scheme were awarded options over 172,930 shares at a price of 2158pper share (30 September 2006 and 31 March 2007 - 172,690 shares at 1878p pershare). The weighted average fair value of these shares at the date of grant,using a binomial valuation model, was estimated at 588p per share (30 September2006 and 31 March 2007 - 496p per share). Also in the period to 30 September 2007, participating employees in the deferredbonus plan applied a proportion of their annual bonuses to purchase 40,561shares at a price of 2158p per share (30 September 2006 and 31 March 2007 -65,347 shares at 1878p per share). Matching awards of 16,733 shares were granted(30 September 2006 and 31 March 2007 - 20,859 shares), which depend on companyperformance. The fair value of the bonus deferral shares was measured directlyas the bonus foregone. The fair value of the matching shares was also 2158p pershare, on a market neutral valuation basis (30 September 2006 and 31 March 2007- 1878p per share). The IFRS 2 expense charged to the income statement for the period was £0.7m (30September 2006 - £0.3m and 31 March 2007 - £1.6m). Copies of this statement are available at the company's registered office,Cayzer House, 30 Buckingham Gate, London SW1E 6NN, England, or from its websiteat www.caledonia.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Caledonia