Letter to NZ Shareholders

Guinness Peat Group PLC
12 July 2006



                            GUINNESS PEAT GROUP PLC

                                ANNOUNCEMENT


The following is the text of a letter posted today to GPG Shareholders whose
shares are registered on the New Zealand Register.

Copies, for information, are also being sent to GPG's Shareholders registered on
the UK and Australian share register.

"12 July 2006

Dear Shareholder

Update on Proposed Tax Changes for New Zealand Shareholders

GPG has recently completed its submissions on the proposed tax legislation and
filed those submissions with the New Zealand Finance and Expenditure Select
Committee.

The five year "holiday" from the proposed regime is in the draft legislation and
is not under threat.

However, as I have said from the start, we are philosophically opposed to the
concept of a capital gains tax and will continue to make that point to the
Government.

GPG has submitted, first, that the grey list should be retained and that
individuals, trusts, companies and managed funds should be treated as holding
all shares in grey list countries on capital account.  This is far more positive
than the Government's proposals to limit that capital account treatment to
shares in New Zealand and Australian companies.

I believe that this submission if accepted would have a dramatic and positive
effect on the way that New Zealanders perceive equity investment, relative to
investment in residential property for example.  It would also provide a
platform for New Zealand to develop a funds management industry attractive to
global investors.

GPG's second submission is broadly to retain the grey list and the current rules
in relation to whether shares are held on capital account or not.

If the first or second submission is accepted, the five year holiday will no
longer be relevant.  However, if the first and second submissions are not
accepted, GPG's New Zealand shareholders will need the five year holiday.  GPG
in its third submission calls for all New Zealand GPG shareholders to be treated
consistently in respect of their GPG shares for the five year holiday.  GPG
understood that the five year holiday would mean that managed funds would all
hold their GPG shares on capital account. That is not the case in the draft
legislation to date.  It is a point I feel very strongly about and I will
endeavour to get the Select Committee to support the agreement we thought we
already had on this point.

An executive summary and the full submissions can be found on our New Zealand
website www.gpg.co.nz

I shall be presenting orally to the Select Committee. I am sure that many of you
have made written submissions and will also be appearing before the Select
Committee.

Once again, thank you for all of your support on these issues."

Richard Russell
Company Secretary
Guinness Peat Group plc
Tel: [phone]




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