Final Results

RNS Number : 8426B
Guinness Peat Group PLC
24 February 2011
 



 

GUINNESS PEAT GROUP plc

("GPG" or "the Company")

 

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

 

CHAIRMAN'S STATEMENT

 

The 2010 financial year has been an important and challenging one for GPG and its shareholders.  The Board has reviewed and addressed key issues concerning the Company's governance and future strategic direction and on 11 February 2011 announced a strategy to realise value.  This will be executed in a manner and timeframe which is intended to maximise value for shareholders.

The management team have been able to achieve some strong results from the investment portfolio over the financial year.  GPG's net profit attributable to members in the year was £46m compared to a loss of £36m in 2009.  Net assets increased by £118m to £1,062m at 31 December 2010, partly as a result of the profit contribution and also partly from foreign exchange gains of £58m recognised in reserves.  As a consequence of these factors, the net asset backing per share increased during the year by 12.3% from a capitalisation adjusted 48.64p to 54.63p.  The net profit for the year represented a return of 5.0% (2009: (4.1)%) on average shareholders' funds.

Investment highlights

Some of the key investment highlights from the year are set out below:

·    Excellent Coats performance with strong sales recovery year on year in the Industrial business and modest growth in Crafts.  Attributable GPG profit of £39m from a £3m loss in 2009.  (Coats results announcement is published on the GPG website, www.gpgplc.com)

·    £16m contribution to profit from the disposal of GPG's investment in Maryborough Sugar Factory and a trading contribution from Capral of £2m despite the background of poor market conditions in its sector

·    Increase during the year of £72m in the unrealised surplus of market value to cost in the GPG listed investment portfolio (excluding listed subsidiaries and associates)

·    Good progress in disposal of non-core investments in the year and also in positioning certain investments for disposal in 2011

 

Strategy to realise value

On 11 February 2011, GPG announced a recommended strategy to realise value.  Key elements of the strategy include:

·    GPG to discontinue new investment, although it will contribute capital to existing investments if this is viewed as value enhancing

·    GPG to pursue an orderly value realisation of its investment portfolio

·    As part of the orderly value realisation, GPG's investment portfolio may be reduced to the point where an investment in GPG becomes a pure exposure to Coats.  In the interim, GPG will continue to evaluate other alternatives for realising value for Coats

·    Cash proceeds from the orderly realisation of investments to be used to return capital to shareholders as expeditiously as possible, having regard to the actual and contingent liabilities of the GPG group ("Group")

·    Initial capital return to shareholders of at least £75m (NZ$158m / A$120m) subject to shareholder and other approvals (see below)

·    GPG has commenced a search to seek to appoint a senior executive to implement the orderly value realisation strategy

 

The Board will work closely with management to implement the strategy and will continue to inform shareholders of any material developments.

Capital return and dividend

As announced on 11 February 2011, GPG intends to make a capital return to shareholders of at least £75m (NZ$158m / A$120m).  The capital return is expected to be implemented via a Scheme of Arrangement.  Under the Scheme of Arrangement, each GPG shareholder will receive a cash payment in return for a cancellation of a proportion of their GPG shareholding.  The capital return will be subject to the usual regulatory approvals including from the UK Court, Shareholders and taxation authorities.

GPG intends to send a Scheme Circular to shareholders, in advance of its AGM, subject to receiving prior UK Court approval.  Shareholder approval will then be sought at the time of its AGM, which is intended to be held on 8 June 2011 in Auckland, New Zealand.  GPG is working towards completion of the capital return by July 2011, subject to all requisite approvals being obtained, and will advise of further details in due course, including the cash payment per share, the number of shares proposed to be cancelled and the treatment of the capital return for tax purposes for shareholders.

No dividend has been declared at the present time, but the Board intends to maintain the standard 1p dividend and the share election scheme will continue to operate in lieu of cash.  The Board intends that the dividend will be paid at the same time as the capital return and further details will be included in the communication regarding the capital return.

Simplified Balance Sheet

GPG remains in a strong financial position as shown in the 31 December 2010 Simplified Group Balance Sheet below:

 
2010
 
2009
 
£ million
 
£ million
Cash at Bank
203 
 
265 
Debtors
15 
 
13 
Coats
319 
 
295 
Tower NZ
97 
 
85 
Turners & Growers
78 
 
69 
Clearview
76 
 
37 
Capral
48 
 
37 
CIC Australia
39 
 
28 
Other Trading Subsidiaries and Associates
38 
 
50 
CSR
72 
 
65 
Youngs
61 
 
43 
Ridley
52 
 
26 
Other portfolio investments
181 
 
118 
 
1,279 
 
1,131 
Creditors & provisions
(74)
 
(73)
Capital Notes
(212)
 
(191)
SHAREHOLDERS’ FUNDS
993 
 
867 

 

Simplified Income Statement

GPG's financial performance in 2010 is shown below in the Simplified Group Income Statement.  GPG's profit before taxation from continuing operations in the year was £73m, compared to £7m in 2009.

 
2010
 
2009
 
£ million
 
£ million
Gross profit
 
 
 
Parent Group
1 
 
1 
Coats
370 
 
298 
Other Subsidiaries
92 
 
74 
Total
463 
 
373 
 
 
 
 
Profit on disposal of investments and other net investment income
 
 
 
Parent Group
33 
 
23 
Coats
3 
 
2 
Other Subsidiaries
5 
 
1 
Total
41 
 
26 
 
 
 
 
Exchange gains/(losses)
 
 
 
Parent Group
(7)
 
(7)
Coats
- 
 
1 
Other Subsidiaries
- 
 
(2)
Total
(7)
 
(8)
 
 
 
 
Net operating expenses
 
 
 
Parent Group
(26)
 
(20)
Coats
(294)
 
(265)
Other Subsidiaries
(83)
 
(71)
Total
(403)
 
(356)
 
 
 
 
Share of profit/(loss) of joint ventures and associated undertakings
 
 
 
Parent Group
5 
 
10 
CIC Australia
7 
 
(7)
Total
12 
 
3 
 
 
 
 
Profit/(loss) on ordinary activities before interest
 
 
 
Parent Group
6 
 
7 
Coats
79 
 
36 
Other Subsidiaries
21 
 
(5)
Total
106 
 
38 
 
 
 
 
Finance costs (net)
 
 
 
Parent Group
(18)
 
(15)
Coats
(10)
 
(12)
Other Subsidiaries
(5)
 
(4)
Total
(33)
 
(31)
 
 
 
 
Profit/(loss) before taxation from continuing operations
 
 
 
Parent Group
(12)
 
(8)
Coats
69 
 
24 
Other Subsidiaries
16 
 
(9)
Total
73 
 
7 

 

AGM

The AGM is intended to be held in Auckland, New Zealand on Wednesday 8 June 2011.  Further details of the exact location and timing of the meeting will be provided in the Notice of Meeting which GPG intends to send to shareholders in May 2011.

Summary

The 2010 financial year was both a challenging and important one for GPG shareholders and a lot has been achieved.

The Board believes that the strategy to realise value provides a clear path for seeking the optimisation of value for all shareholders.  The Board and management can now dedicate their sole focus to maximising returns on GPG's investments as we implement the orderly value realisation strategy.

 

 

 

Mark Johnson

Chairman

Guinness Peat Group plc

25 February 2011

 

 

 

Enquiry details are:

 

 

New Zealand Media:

Geoff Senescall on:

+64 9 309 5659

Australian Media:

Andrew Stokes on:

+61 2 8298 6100

UK Media:

Kevin Smith on:

+44 207 282 1054

 

 

 

 


 

Guinness Peat Group plc










Consolidated Income Statement











Unaudited


Audited


Year ended 31 December

2010


2009





Restated*



£m


£m


Continuing Operations





Revenue

1,345 


1,172 







Cost of sales

(882)


(799)







Gross profit

463 


373 







Profit on disposal of investments and other net investment income

41 


26 







Distribution costs

(176)


(164)


Administrative expenses

(234)


(200)







Operating profit

94 


35 







Share of profit/(loss) of joint ventures

8 


(6)







Share of profit of associated undertakings

4 


9 







Finance costs (net)

(33)


(31)







Profit before taxation from continuing operations

73 


7 







Tax on profit from continuing operations

(21)


(28)







Profit/(loss) for the year from continuing operations

52 


(21)







Discontinued Operations





Profit/(loss) from discontinued operations

1 


(17)







Profit/(loss) for the year

53 


(38)












Attributable to:





EQUITY HOLDERS OF THE PARENT

46 


(36)


Non-controlling interests

7 


(2)



53 


(38)







Earnings/(loss) per Ordinary Share from continuing and discontinued operations:





Basic

2.57p


(2.04p)

**

Diluted

2.41p


(2.04p)

**






Earnings/(loss) per Ordinary Share from continuing operations:





Basic

2.54p


(1.32p)

**

Diluted

2.39p


(1.32p)

**






*   Restated to reflect the results of ClearView Wealth Ltd (note 6) and Staveley Inc. as discontinued operations.

** Adjusted for the 2010 Capitalisation Issue.

 

 

 

Guinness Peat Group plc








Consolidated Statement of Comprehensive Income









Unaudited


Audited

Year ended 31 December

2010


2009


£m


£m





Profit/(loss) for the year

53 


(38)





Gains on revaluation of fixed asset investments

87 


32 

Losses on cash flow hedges

(5)


(4)

Exchange gains on translation of foreign operations

58 


20 

Actuarial losses on retirement benefit schemes

(17)


(13)

Tax on items taken directly to equity

(14)


9 

Net income recognised directly in equity

109 


44 





Transfers




Transferred to profit or loss on sale of fixed asset investments

(17)


(13)

Transferred to profit or loss on sale of businesses

(7)


(6)

Transferred to profit or loss on cash flow hedges

8 


4 


(16)


(15)





TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR

146 


(9)









Attributable to:




EQUITY HOLDERS OF THE PARENT

130 


(12)

Non-controlling interests

16 


3 






146 


(9)

 

 

Guinness Peat Group plc








Consolidated Statement of Financial Position









Unaudited


Audited

31 December

2010


2009


£m


£m

NON-CURRENT ASSETS




Intangible assets

180 


192 

Property, plant and equipment

427 


424 

Investments in associated undertakings

236 


157 

Investments in joint ventures

56 


47 

Fixed asset investments

333 


220 

Deferred tax assets

13 


20 

Pension surpluses

31 


27 

Trade and other receivables

27 


24 


1,303 


1,111 





CURRENT ASSETS




Inventories

265 


179 

Trade and other receivables

276 


239 

Current asset investments

14 


15 

Derivative financial instruments

5 


3 

Cash and cash equivalents

313 


402 


873 


838 





Non-current assets classified as held for sale

2 


3 





TOTAL ASSETS

2,178 


1,952 





CURRENT LIABILITIES




Trade and other payables

288 


256 

Current income tax liabilities

8 


8 

Other borrowings

121 


80 

Derivative financial instruments

20 


16 

Provisions

72 


65 


509 


425 





NET CURRENT ASSETS

364 


413 





NON-CURRENT LIABILITIES




Trade and other payables

11 


13 

Deferred tax liabilities

29 


22 

Capital notes

212 


191 

Other borrowings

231 


235 

Derivative financial instruments

5 


3 

Retirement benefit obligations:




Funded schemes

37 


39 

Unfunded schemes

56 


56 

Provisions

26 


24 


607 


583 





TOTAL LIABILITIES

1,116 


1,008 





NET ASSETS

1,062 


944 

 

 

Guinness Peat Group plc








Consolidated Statement of Financial Position (continued)









Unaudited


Audited

31 December

2010


2009


£m


£m

EQUITY




Share capital

91 


81

Share premium account

62 


63

Translation reserve

165 


123

Unrealised gains reserve

124 


68

Other reserves

270 


274

Retained earnings

281 


258

EQUITY SHAREHOLDERS' FUNDS

993 


867

Non-controlling interests

69 


77

TOTAL EQUITY

1,062 


944









Net asset backing per share *

54.63p


48.64p









*  The net asset backing (based on equity shareholders' funds) per share at 31 December 2009 has been adjusted for the 2010 Capitalisation Issue.

 












 

 

Guinness Peat Group plc


Consolidated Statement of Changes in Equity


Year ended 31 December 2010



Share







Non-


Share

Premium

Translation

Unrealised

Other

Retained



Controlling


Capital

Account

Reserve

Gains Reserve

Reserves

Earnings

Total


Interests


£m

£m

£m

£m

£m

£m

£m


£m











Balance as at 1 January 2009

71 

61 

118 

36 

281 

311 

878 


71 











Total comprehensive income and (expense)

  for the year

 

- 

 

- 

 

5 

 

32 

 

(1)

 

(48)

 

(12)


 

3 

Dividends

- 

- 

- 

- 

- 

(14)

(14)


(6)

Capitalisation issue of shares

7 

- 

- 

- 

(7)

- 

- 



Scrip dividend alternative

2 

(2)

- 

- 

- 

7 

7 


- 

Other share issues

1 

4 

- 

- 

- 

- 

5 


- 

Share based payments

- 

- 

- 

- 

1 

- 

1 



Dilution of investment in subsidiaries

- 

- 

- 

- 

- 

- 

- 


18 

Disposal of subsidiaries

- 

- 

- 

- 

- 

- 

- 


(7)

Acquisition of non-controlling interests

- 

- 

- 

- 

- 

2 

2 


(2)











Balance as at 31 December 2009

81 

63 

123 

68 

274 

258 

867 


77 











Total comprehensive income for the year

- 

- 

42 

56 

3 

29 

130 


16 

Dividends (note 11)

- 

- 

- 

- 

- 

(16)

(16)


(5)

Capitalisation issue of shares (note 10)

8 

- 

- 

- 

(8)

- 

- 


- 

Scrip dividend alternative (note 10)

1 

(1)

- 

- 

- 

10 

10 


- 

Other share issues (note 10)

1 

- 

- 

- 

- 

- 

1 


- 

Share based payments

- 

- 

- 

- 

1 

- 

1 


- 

Rights issue by subsidiary

- 

- 

- 

- 

- 

- 

- 


15 

Disposal of subsidiaries

- 

- 

- 

- 

- 

- 

- 


(34)











Balance as at 31 December 2010

91 

62 

165 

124 

270 

281 

993 


69 

 

 

 

Guinness Peat Group plc








Consolidated Statement of Cash Flows













Unaudited


Audited

Year ended 31 December

2010


2009


£m


£m





Cash (outflow)/inflow from operating activities




Net cash inflow from operating activities

61 


121 

Interest paid

(42)


(46)

Taxation paid

(25)


(20)

Net cash (absorbed in)/generated by operating activities

(6)


55 





Cash (outflow)/inflow from investing activities




Dividends received from associated undertakings and joint ventures

9 


10 

Capital expenditure and financial investment

(29)


(16)

Acquisitions and disposals

(90)


27 

Net cash (absorbed in)/generated by investing activities

(110)


21 





Cash outflow from financing activities




Issue of ordinary shares

1 


5 

Equity dividends paid to the Company's shareholders

(6)


(6)

Dividends paid to non-controlling interests

(5)


(6)

Net increase/(decrease) in borrowings

8 


(30)

Net cash absorbed in financing activities

(2)


(37)





Net (decrease)/increase in cash and cash equivalents

(118)


39 

Cash and cash equivalents at beginning of the year

388 


347 

Exchange gains on cash and cash equivalents

17 


2 

Cash and cash equivalents at end of the year

287 


388 





Cash and cash equivalents per the Consolidated Statement of Financial Position

313 


402 

Bank overdrafts

(26)


(14)

Cash and cash equivalents at end of the year

287 


388 









Summary of net debt








-  Parent Group * cash

203 


265 

-  Capital Notes

(212)


(191)

-  Parent Group net (debt)/cash

(9)


74 

-  Other group cash

110 


137 

-  Other group debt

(352)


(315)





Total group net debt

(251)


(104)









* Parent Group comprises the Group's central investment activities.




 

 

 

 


Guinness Peat Group plc

 

NOTES TO FINANCIAL INFORMATION

 

1.         The preliminary financial information ("the financial information") set out in this report is based on the Group's unaudited financial statements, which are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and complies with the disclosure requirements of the Listing Rules of the UK Financial Services Authority and the Listing Rules of the Australian Securities Exchange.  Other than the adoption of IFRS 3 (2008) ("Business Combinations") and IAS 27 (2008) ("Consolidated and Separate Financial Statements"), the accounting policies adopted by the Group have been consistently applied to all periods presented.

 

2.         The financial information set out in this report does not constitute the Group's statutory accounts for the years ended 31 December 2010 and 2009.  Other than the restatement of the Consolidated Income Statement to reflect ClearView Wealth Ltd - see note 6 - and Staveley Inc. as discontinued operations the financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year, which have been filed with the Registrar of Companies.  The auditors' report on those accounts included an emphasis of matter paragraph to highlight the significant uncertainty in relation to the European Commission competition investigation into alleged market sharing agreements relating to the European haberdashery market.  Further details relating to this matter are set out in note 12.  The auditors' report did not contain statements under Sections 498(2) or 498(3) of the Companies Act 2006.

 

3.         Group foreign exchange movements - during the year ended 31 December 2010, GPG recognised in operating profit £7 million of net foreign exchange losses which compares with £8 million of net foreign exchange losses in the year ended 31 December 2009.  Foreign exchange gains of £58 million (2009: £20 million) were recognised in reserves.

 

4.         Tax on profit from continuing operations

 

 

2010

 

2009

 

£m

 

£m

 

 

 

 

UK Corporation tax at 28.0% (2009: 28.0%)

- 

 

- 

Overseas tax

(27)

 

(21)

 

(27)

 

(21)

Deferred tax

6 

 

(7)

 

(21)

 

(28)

 

            The tax charge for 2010 includes a non-cash tax credit of £14 million (2009: non-cash tax charge of £9 million) in respect of movements in deferred tax assets relating to tax losses.  This credit (2009: charge) arises from a similar increase (2009: decrease) in deferred tax liabilities recognised through the unrealised gains reserve.  The tax charges for both years also reflect the impact of unrelieved losses in certain subsidiary undertakings.

 

5.         Associated undertakings and joint ventures

 

 

2010

 

2009

 

 

 

 

Australian Country Spinners Ltd

50.0%

 

50.0%

Green's General Foods Pty Ltd

72.5%

 

72.5%

Autologic Holdings plc

26.2%

 

26.2%

Capral Ltd

47.4%

 

44.4%

ClearView Wealth Ltd (formerly MMC Contrarian Ltd)

49.0%

 

na   

Peanut Company of Australia Ltd

24.8%

 

24.8%

Rattoon Holdings Ltd

44.4%

 

44.4%

The Maryborough Sugar Factory Ltd

na

 

22.9%

Tower Ltd

34.7%

 

35.0%

 

2010

 

2009

 

£m

 

£m

 

 

 

 

 Autologic Holdings plc

(1)

 

2 

 Capral Ltd

4 

 

- 

 Green's General Foods Pty Ltd

1 

 

(1)

 Peanut Company of Australia Ltd

(5)

 

(1)

 Tower Ltd

7 

 

6 

6.         Disposal of subsidiary undertaking

 

 

£m

 

 

Intangible assets

4 

Deferred tax assets

8 

Trade and other receivables

2 

Cash and cash equivalents

94 

Trade and other payables

(3)

Net assets at disposal

105 

Non-controlling interests

(34)

Group share of net assets at disposal

71 

Cumulative translation differences recycled from reserves

(3)

 

68 

Residual carrying value as an associated undertaking

67 

Loss on disposal

1 

 

7.         Other investments - Fixed asset investments within non-current assets are classified under IFRS as available-for-sale investments, and current asset investments within current assets are classified under IFRS as held-for-trading investments.

8.         Earnings/(loss) per share - The calculation of basic earnings/(loss) per Ordinary Share from continuing and discontinued operations is based on profit/(loss) for the year attributable to equity shareholders of the parent and the weighted average number of 1,806,847,546 Ordinary Shares in issue during the year.

 

9.         The net tangible assets (net assets excluding intangible assets) per share at 31 December 2010 were 48.57p (2009: 42.16p as adjusted for the 2010 Capitalisation Issue).

 

10.       Other changes in the issued share capital during the year ended 31 December 2010 comprise the following:

 

 

£m

At 1 January 2010

81

Employee options exercised

1

Scrip dividend alternative shares issued (17 May 2010)

1

Capitalisation Issue (4 June 2010)

8

At 31 December 2010

91

 

11.       Dividends - An interim dividend of 0.91 pence per share (adjusted to reflect the 2010 Capitalisation Issue) in respect of the year ended 31 December 2009 was paid on 17 May 2010 to GPG shareholders.

12.       European Commission Investigation - As noted in previous reports, in September 2007 the European Commission concluded its investigation into European fasteners - the last part outstanding of its general investigation into thread and haberdashery markets which began in 2001.  It imposed fines against several producers, including a fine against the Coats plc Group of €110.3 million (equivalent to £94.5 million at 31 December 2010 exchange rates).  This fine is in respect of the Commission's allegation of a market sharing agreement in the European haberdashery market.  Coats totally rejects this allegation.  Coats is vigorously contesting the Commission's decision in an appeal which has been lodged with the European General Court (formerly known as the Court of First Instance) in Luxembourg.

13.       Environmental costs - The US Environmental Protection Agency has notified Coats that it is a potentially responsible party under the US Superfund for investigation and remediation costs in connection with the Lower Passaic River Study Area in New Jersey, in respect of former facilities which operated in that area prior to 1950.  Approximately 70 companies to date have formed a cooperating parties group to fund and conduct a remedial investigation and feasibility study of the area.  Coats is in the process of joining this group and $2.5 million (£1.6 million) has been charged in the year in respect of Coats' estimated share of the cost of this study and associated legal and consultancy expenses.

 

 

14.       Directors - The following persons were, except as noted, directors of GPG during the whole of the year and up to the date of this report:

 

15.       Directors' Report - The Chairman's Statement appearing in the Preliminary Results and signed by Mark Johnson provides a review of the operations of the Group for the year ended 31 December 2010.

 

16.       Director's Declaration - In accordance with a resolution of the directors of Guinness Peat Group plc we state that:

 

a)         The preliminary Results of the consolidated entity comply with the recognition and measurement principles of applicable International Financial Reporting Standards as adopted by the Group; and

b)         There are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable.

 

17.       Publication - This statement will be available at the registered office of the Company, First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP.  A copy will also be displayed on the Company's website on www.gpgplc.com.

 

On behalf of the Board

BA Nixon and Dr GH Weiss

Directors

25 February 2011

 

UNITED KINGDOM

First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP

Tel:  020 7484 3370        Fax:  020 7925 0700

 

AUSTRALIA

c/o Computershare Investor Services Pty Limited


GPO Box 242, Melbourne, VIC 3001 Australia

Tel:  03 9415 4083           Fax:  03 9473 2506

 

NEW ZEALAND

c/o Computershare Investor Services Limited


Private Bag 92119, Auckland 1020, New Zealand

Tel:  09 488 8700              Fax:  09 488 8787

 

Registered in England No. 103548


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