Final Results - Year Ended 31 December 1999

Guinness Peat Group PLC 7 March 2000 GUINNESS PEAT GROUP plc ('GPG' or 'the Company') PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999 CHAIRMAN'S STATEMENT The 1999 net profit of £112 million is the highest GPG has ever produced and, in the circumstances, is unlikely to be repeated in the foreseeable future. As already well documented in previous reports, the major component is the £95 million surplus on the sale of Tyndall Australia shares. Otherwise, the result is satisfactory but not outstanding. Nevertheless, the 1999 year as a whole was obviously an exceptional one by any standard of measurement. If the sale of Tyndall shares had not occurred, it is likely their realisable value would be much less in today's climate. Notwithstanding the impression of a very buoyant sharemarket, it is rather more narrow than generally realised. While the technology and communications sectors have shown remarkable gains, many traditional industry leaders have receded in price. Suitable buying opportunities have therefore been more prolific than originally anticipated with the consequence that GPG's level of reinvestment has been quite rapid. The flight of capital into speculative issues has been to GPG's advantage as a 'value investor' but, ironically, has also been a factor adversely affecting our own share price performance. This distortion of relative values cannot endure indefinitely. Balance Sheet stability is the key factor in GPG's value and future prospects and, in this respect, the position at 31 December 1999 (or more positively, 1 January 2000) is very reassuring. Restated Group Balance Sheet at 31 December 1999 (listed subsidiaries at GPG's net underlying book values) £m £m Creditors/Provisions 23 Cash at bank 83 Shareholders' funds 284 Debtors 5 Canberra Investment Corp 4 Mid East Minerals 12 Turners & Growers 8 Staveley Industries (29%) 27 De Vere Group (4.5%) 35 Coats Viyella (6.3%) 19 AMP Income Notes 16 Brickworks (4.8%) 10 Tarmac (1%) 9 Other share portfolio 79 ----- ----- £307m £307m ----- ----- Net assets per share at book value are 60p and at market value of the portfolio, 66p. Since balance date, we have received £19 million (£1.60 per share) capital return from De Vere Group (formerly The Greenalls Group). Staveley has been a poor investment but there are some redeeming features since last year's bleak scenario. We now hold 29% of the capital, at an average cost of 80p per share (after writedowns), which enabled us to obtain Board representation and provide positive input into maximising the return from Staveley's asset realisation program. Some recovery in value in the current year can be reasonably anticipated. Notwithstanding GPG's successful record and its strong financial position, it is clear there is some disappointment with the static share price in recent months. As mentioned earlier, this is partly a product of GPG being somewhat 'unfashionable' at present in favour of 'new age' technology issues. Also, the decision to retain a high level of liquidity post Tyndall, while undoubtedly correct in the longer term, has created a perception and, to a lesser extent, the reality of lower returns in the shorter term. The Board has considered an appropriate response to more closely align corporate and market objectives and now proposes as follows - 1. An increase in dividend from 0.6p (0.545p adjusted for bonus issue) to 1.00p per share which will be paid as an interim for 1999. 2. Suspension of the scrip dividend alternative. 3. A continuation of the policy of making an annual 1 for 10 bonus issue of shares (this year, after completion of the issue referred to herewith). 4. The issue of up to 200 million 8% convertible unsecured notes of 50p. Shareholders will have the opportunity to exchange at least 40% of their shares on a 1 for 1 basis. The principal will be redeemed in 5 equal instalments commencing 30 June 2001 or, at the option of the holder, the amount due for redemption in any year may be converted back to shares (ex 1 for 10 bonus) at 50p in 2001, 55p in 2002, 60p in 2003, 65p in 2004 and 70p in 2005. Fuller details of the proposed issue will be contained in a Circular to be sent to shareholders. As the Company approaches its optimum size, an increased proportion of profits will be available for distribution to shareholders. It is hoped that the convertible note concept will introduce an exciting new dimension for GPG investors and depending upon experience, may become a regular feature of the Company's future capital structure. The year 2000 will be an active and, hopefully, rewarding one for GPG although, of course, the profit will be substantially less than in 1999. Ron Brierley, Chairman 7 March 2000 Enquiries: Guinness Peat Group plc 020 7236 0336 Blake Nixon, UK Executive Director Square Mile Communications 020 7601 1000 Kevin Smith GUINNESS PEAT GROUP plc PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999 Consolidated Profit and Loss Account Year Year ended ended 31 31 December December 1999 1998 Unaudited Re-stated Notes £000's £000's Turnover: group and share of joint venture - continuing operations 54,890 17,300 Less: share of joint venture (5,309) (2,494) ------------------- Group turnover - continuing operations 49,581 14,806 Group turnover - discontinued operations 54,193 161,219 ------------------- Group turnover 103,744 176,025 Profit on disposal of investments and other investment income 40,780 37,838 Net operating expenses (121,329) (185,543) ------------------- Operating profit - continuing operations 12,177 13,884 Operating profit - discontinued operations 11,048 14,436 ------------------- Total group operating profit 23,225 28,320 Share of operating profit of associated undertakings and joint venture - continuing operations 2,550 1,618 ------------------- 25,775 29,938 Profit on disposal of discontinued operations 2 95,498 - ------------------- Profit on ordinary activities before interest 121,273 29,938 Interest payable and similar charges (619) (528) ------------------- Profit on ordinary activities before taxation 120,654 29,410 Taxation 3 (5,462) (2,810) ------------------- Profit on ordinary activities after taxation 115,192 26,600 Minority interests (3,246) (6,526) ------------------- PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS £111,946 £20,074 ------------------- Equity dividends payable 5 (4,695) (2,515) ------------------- Retained profit 107,251 17,559 ------------------- Earnings per ordinary share - basic (p) 4 23.99 4.46 Earnings per ordinary share - diluted (p) 4 23.66 4.40 Dividends per ordinary share (pence) 5 1.00 0.545 GUINNESS PEAT GROUP plc PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999 Consolidated Balance Sheet As at As at 31 31 December December 1999 1998 Unaudited Audited Notes £000's £000's Commercial and investment activities Fixed assets Intangible assets - 612 Tangible fixed assets 1,665 6,021 Investments 181,408 82,505 ----------------------- 183,073 89,138 Current assets Debtors 11,501 16,269 Development work-in-progress 3,053 2,981 Investments 36,747 10,341 Cash at bank and in hand 85,044 72,854 ----------------------- 319,418 191,583 Assets of Life assurance business - 409,679 ----------------------- TOTAL ASSETS 319,418 601,262 ----------------------- Capital and reserves Share capital 6 46,953 41,911 Share premium 21,635 26,060 Profit and loss account 215,321 99,081 ----------------------- EQUITY SHAREHOLDERS' FUNDS 283,909 167,052 Minority interests 3,512 42,689 ----------------------- NET ASSETS 287,421 209,741 ----------------------- Commercial and investment activities Creditors: amounts falling due within one year Trade and other creditors 26,292 19,635 Borrowings 2,632 2,931 Creditors: amounts falling due after one year Trade and other creditors 83 891 Borrowings 451 11,263 Provisions for liabilities and charges 2,539 3,221 ----------------------- 31,997 37,941 Liabilities of Life assurance business - 353,580 ----------------------- TOTAL FUNDS EMPLOYED 319,418 601,262 ----------------------- Net asset backing per ordinary share (pence) 60.47 36.24 NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 1999 1 PRESENTATIONAL CHANGES The directors have amended the presentation of the financial statements in the following respects: a) proceeds from the disposal of current asset investments are now included within turnover, whereas previously the gains from these disposals were recognised as investment income, b) in accordance with FRS12, the unwinding of the discount on provisions is now presented as a financing cost whereas previously it was included in operating costs. Comparative figures have been restated accordingly, although there is no impact on profit after tax. 2 ACQUISITIONS/DISPOSALS During the period GPG increased its holding in Staveley Industries plc to 29% and, having obtained Board representation, is treating it as an associated undertaking with effect from 3 November 1999. GPG sold its holding in Tyndall Australia Ltd in May 1999 and recorded a profit of £95.5 million. There is no taxation attributable to this gain. Tyndall Australia Ltd and its subsidiaries have been treated as discontinued operations. 3 TAXATION 12 months 12 months to to 31 December 31 December 1999 1998 £000's £000's Tax attributable to franked investment income (252) (475) Prior year corporation tax credit 222 - ACT written back - 412 Overseas tax charge - current year (4,585) (2,395) Overseas tax charge - deferred tax (847) (352) --------------------------- (5,462) (2,810) --------------------------- In Tyndall's Life operations, quoted shares and other securities held in the long-term funds were recorded at market value and tax was accrued on the potential gain. The tax charge is proportional to investment returns up to the date of disposal in May 1999. 4 EARNINGS PER SHARE Earnings per share is calculated on a net basis using earnings of £111,946,000 (1998: £20,074,000) on the adjusted weighted average number of 466,693,539 shares in issue during the period (1998: 449,735,079) and amounts to 23.99 pence (1998: 4.46 pence). Earnings per ordinary share for 1998 has been adjusted for the 1999 Capitalisation Issue of shares. For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares, which are options granted to employees. 5 DIVIDEND No final dividend is recommended for the year ended 31 December 1999. The Directors have declared an interim ordinary dividend of 1.00p per share (1998: nil) making a total of 1.00p per share for the year (1998: 0.545p, adjusted for the 1999 Capitalisation issue). The interim dividend will be paid on 28 March 2000 to shareholders whose names appear on the Register on 17 March 2000. The ex-dividend date for shares traded on the London Stock Exchange and the Australian Stock Exchange will be 13 March 2000. For the New Zealand Stock Exchange the ex-dividend date will be 20 March 2000. The cash payment will be made to Australian and New Zealand shareholders in Australian and New Zealand dollars respectively, calculated at the rates of exchange ruling on 17 March 2000. 6 ISSUES OF SHARES During the year the movement on the Company's share capital was as follows: Ordinary shares at 1 January 1999 419,105,258 Employee options exercised 4,050,912 Capitalisation issue of shares 42,474,712 Scrip dividend alternative 3,895,980 ---------------------------------------------------------------- Ordinary shares at 31 December 1999 469,526,862 ---------------------------------------------------------------- 7 RESTATED GROUP BALANCE SHEET The restated Group balance sheet presented in the Chairman's Statement shows GPG's share of the net assets of its listed subsidiaries, rather than the respective assets and liabilities of those companies, and the book value of the Group's remaining net assets. The shareholders' funds are those reported in the published balance sheet. 8 NON-STATUTORY ACCOUNTS This announcement does not constitute full financial statements. The information for the year ended 31 December 1998 is based on the latest published accounts, as adjusted for the presentational changes discussed in note 1. These accounts were delivered to the Registrar of Companies. The report of the auditors on the 1998 accounts was unqualified and did not contain a statement under s237(2) or s237(3) of the Companies Act 1985.

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