CALEDONIA INVESTMENT PLC
 
Caledonia is a long established investment company with international scope
listed on the London Stock Exchange. Since April 2003 Caledonia has been
classified in the AITC Global Growth sector of investment trusts where its
investment performance puts it in the top decile by reference to all the main
reference periods used by the AITC, i.e. 3 months, 6 months, 1 year, 3 years, 5
years and 10 years (to 31 July 2003 - the most recent date for which AITC data
is available). Caledonia's strategy has delivered outperformance against its
benchmark FTSE All-Share Total Return index of 56% over the five year period to
31 August 2003 and 76% over the ten year period to 31 August 2003. Its total
shareholder return outperformance for the 12 months to 31 August 2003 was 38%.
Caledonia has a policy of delivering progressive annual dividends with a 36-year
record of unbroken annual dividend increases. Through holding a diversified
portfolio, Caledonia aims to maintain a medium overall risk position.
 
 
 
At 31 August 2003, Caledonia had an unaudited Net Asset Value of 1154p per
ordinary share. Based on the share price as at the end of August 2003 the
discount to its Net Asset Value per share was 20.1%.
 
 
 
Caledonia's strategy is to focus on a portfolio of around 30 to 40 principal
investments, where it has significant and influential stakes with a policy that
at least 50% of the total portfolio should be in quoted securities or other
liquid assets. New investments will typically be in the range £10 million to
£25 million. Careful control is exercised over costs, notwithstanding
Caledonia's active and participative management style. The Board believes that
Caledonia has a long established and valuable reputation for being a supportive
long term investor, which brings a strong deal flow of opportunities not always
available to others.
 
 
 
Caledonia's investments are focused on a selected range of sectors where it has
good in-house knowledge that can add value to management of investee companies.
Where particular expertise is not held in-house, investments may be made through
third party managed funds where Caledonia will often seek a significant stake in
the management company.
 
 
 
Caledonia's selected sectors are: Financial: comprising 34% of total assets,
including holdings in Close Brothers, ICAP and Rathbone Brothers; Leisure and
Media: comprising 19% of the total assets, including holdings in Kerzner
International and The Sloane Club; Managed General Funds: comprising 19% of the
total assets including holdings in British Empire Securities and a fund managed
by Aberforth Partners; Industrial and Services: comprising 15% of the total
assets, including investments in Offshore Logistics and Paladin Resources;
Property: comprising 10% of the total assets, including a holding in Quintain
Estates; and Other: comprising 3% of the total assets. The percentages of the
total assets quoted are as at 31 August 2003.
 
 
 
As an investment trust Caledonia is not subject in the future to liability for
corporation tax on chargeable gains. As a result, Caledonia believes it will be
able to build greater value for shareholders and be more appealing to retail
shareholders which ultimately should contribute towards a lower discount of
Caledonia share price to Net Asset Value per share.
 
 
 
 
 
 
Shown below is a table# illustrating how the value of £100 invested in Caledonia
over a period of 1 year, 3 years, 5 years and 10 years to 31 July 2003 (the
latest date for which all comparative data is available) compares with an
equivalent theoretical investment in:
 
 
 
(i) The Association of Investment Trust Companies ('AITC')
 Global Growth weighted average index
 
(ii) The FTSE All-Share Total Return Index, and
 
(iii) UK Savings 25,000*
 
 
 
 
 
Period invested to 31 July 2003
 
 
 1yr 3yr 5yr 10yr
 £ £ £ £
Caledonia  135.5 131.4 127.9 279.7
 
AITC Global Growth 103.7 67.5 88.3 169.2
 
FTSE All-Share Index  103.4 72.9 85.6 195.5
 
UK Savings 25,000* 102.1 108.4 117.3 146.5
 
 
 
 
 
As can be seen in the table above, £100 invested in Caledonia shares would have
generated a significantly higher return over 1 year, 3 years, 5 years and 10
years than alternative investments in either the overall AITC Global Growth
Investment Trust sector, the FTSE All-Share Index or an index representative of
the building society industry.
 
 
# Source data prepared by Fundamental Data Limited on behalf of AITC Services
Limited.
 
 
* UK Savings 25,000 is an index compiled from an aggregate of 20 bank building
society rates to represent the industry, for a deposit of £25,000 up to 90-day
notice accounts.
 
Caledonia is a member of the Association of Investment Trust Companies (AITC).
 
For further information please visit 

http://www.caledonia.com