Details of the return of cash to shareholders were set out by the Directors in a Circular to shareholders dated 20 September 2002.

Detailed below is an extract of the relevant parts of the circular. Since this document was published Liquidators to Railtrack Group (now RT Group) have been appointed, and four instalments of returned cash, totalling 260.5 pence per share, have been posted to shareholders. Please refer to the Joint Liquidators' annual reports for more information.

Extract from Circular to Shareholders dated 20 September 2002

Expected distribution

On 27 June 2002 the Board estimated that, were all Railtrack Group's assets to be realised as expected and were no further liabilities to arise, Railtrack Group would be able to return to Shareholders between 245 and 255 pence per Share. The Board has made significant progress in realising various of the Group's other assets (principally through the disposal of the Group's interest in the Broadgate Development and Railtrack (Spacia) Limited, both sold at prices in excess of their respective book values) and extinguishing its liabilities (including certain inter-company balances owed to Railtrack PLC). As a result, the Board, in consultation with the Proposed Liquidators, now estimates that, were the Group's remaining assets to be realised as expected and were no further liabilities to arise, Railtrack Group will be able to return to Shareholders between 252 and 260 pence per Share. Further details on the return of cash including factors which could affect the amount to be returned are set out below.

Instalments

On 27 June 2002 the Board also stated that, subject to certain guarantees having been released, it believed that a first instalment of 160 to 180 pence per Share could be returned within four months of Completion of the Disposals of Railtrack PLC and the Group's interests in the CTRL. The disposals of the Group's interest in the Broadgate Development and Railtrack (Spacia) Limited have been completed and the guarantee by Railtrack Group of certain obligations relating to the Broadgate Development has been released earlier than the Board previously expected. As a result, assuming that the guarantees relating to the CTRL are released, that the Disposals of Railtrack PLC and the Group's interests in the CTRL are completed sufficiently before the EGM and that the resolution to commence the Proposed Liquidation is passed on 18 October 2002, the Board, in consultation with the Proposed Liquidators, now believes that, were no further liabilities to arise, the first instalment could be increased to 200 to 220 pence per Share and could be returned by early January 2003. Further details on the return of cash including factors, which could affect the amount to be returned, and the timing, are set out below.

The timing of further instalments of cash will depend on the amount and timing of the realisation of value and the settlement of liabilities relating to RTS and RDL and the timing of the agreement of any other liabilities including tax liabilities. The Directors, in consultation with the Proposed Liquidators, expect that further distributions representing the remainder of the total cash to be returned (save for the one pence per Share referred to below) will be made before the end of 2003. On the basis of present indications however, this is unlikely to be before the end of March 2003. Further details on the return of cash including factors which could affect the amount to be returned, and the timing, are set out below.

The proceeds of the Disposals and other surplus cash will be invested by the Company in a combination of money market deposits, money market funds and commercial paper. The Directors have been informed by the Proposed Liquidators that they intend to continue this policy for the first six months of the Proposed Liquidation. Insolvency legislation requires that liquidators pay the balance of funds under their control into the "Insolvency Services Account" at the Bank of England six months after the commencement of liquidation at which point funds are placed in an interest bearing account or invested in Government securities.

The Directors, in consultation with the Proposed Liquidators, expect that a small amount, likely to be approximately one pence per Share, will be retained by the Company for a period of six years from the commencement of the Liquidation. The reason for retaining this amount would be to defend any unexpected claims against the Company and to cover any other miscellaneous expenses incurred by the Proposed Liquidators in the discharge of their duties. The reason for retaining this sum for a period of six years is that this is the applicable statutory limitation period for most claims. The Directors expect that this sum would therefore be returned to Shareholders in 2008.

Factors which could affect the amount to be returned and timing

The total amount of cash which can be returned to Shareholders remains dependent upon a number of factors including the prices which purchasers may be prepared to pay for Railtrack Group's remaining assets including RDL and RTS, the amounts required to settle outstanding liabilities, transaction costs incurred by Railtrack Group and any taxes payable on the disposal of any assets. The Board's estimate of the total amount to be returned, and the timing and the amount of the first instalment of cash is subject to any liabilities that are brought to the attention of the Liquidators or the Board after the date of this document, the existence or extent of which the Board is not or may not be aware as at the date of this document (whether as a result of not having been provided with access to information which relates to Railtrack Group and which is in the possession or under the control of the Administrators of Railtrack PLC or otherwise).

The Board cannot guarantee that the Liquidators will return cash to Shareholders as described in this document because the decision as to the amount and timing of cash instalments will be under the control of the Liquidators and taken in view of the circumstances at the time. In addition, the Liquidators may seek directions from the High Court prior to returning cash to Shareholders.

The amount and/or timing of the first instalment will depend on the release of the CTRL Financial Guarantees. If the CTRL Financial Guarantees are not released by Completion either:

1. the amount of the first instalment may be reduced unless the CTRL Financial Guarantees are released after Completion of the Disposals but prior to the payment of the first instalment; or
2. the payment of the first instalment may be delayed until six months (being the applicable time limit under insolvency legislation) after the repayment of the CTRL Bank Facilities unless the CTRL Financial Guarantees are released in the intervening period.

Taxation

The Board has been advised that, if a solvent liquidation of Railtrack Group is effected, the cash returned to Shareholders will be deemed to be received by way of capital rather than income. Broadly, if a Shareholder paid more for his Shares than he receives back by way of cash distribution, he should not have any tax to pay.