Interim Results

Guinness Peat Group PLC 09 September 2002 9 September 2002 GUINNESS PEAT GROUP plc ('GPG' or 'the Company') Interim Results for the Six Months to 30 June 2002 Chairman's Statement The period to 30 June 2002 has continued the steady success of 2001 - and, indeed, of the past decade. The main contributors to the reported net profit of £20.0 million were sales of shares in Inchcape Motors in Singapore, Brickworks in Australia and a number of smaller UK holdings. As always envisaged, GPG was instrumental in influencing the outcome in Inchcape Motors which was a good deal both for minorities and for the parent company, Inchcape plc. Recurring income from interest and dividends and operating subsidiary profits is now a growing element of GPG profitability. In this respect, the former Staveley units have performed well, particularly in the USA, where GPG has supported the development of the two quite large (1,200 employees) and previously underrated businesses - one a National testing service company headquartered in Chicago, the other an NDT instrument manufacturer based in Washington State. At the inception of the 'new' GPG in 1990, it was accepted there was more limited potential in New Zealand than in UK and Australia. In the event, however, there has been more activity than expected and 2002 is no exception. The full acquisition of Enza was completed in April with the intention of merging its operations with our 45% associated company, Turners & Growers Ltd (after spinning off Turners Auctions Ltd). This will introduce two excellent new listings to the New Zealand market - Turners Auctions Ltd, the country's largest motor vehicle outlet and Turners & Growers Ltd the largest fresh fruit and produce merchant, now enhanced by Enza's important export role. Combined annual sales of the existing organisations are approximately NZ$1.2 billion so they are obviously important contributors to the overall economic picture. More recently, we acquired 20% of Rubicon Ltd which is the major shareholder in Fletcher Challenge Forests Ltd, the owner of forestry assets of considerable size and significance. The future structure of these companies is a matter of some debate in which GPG is an active participant. The proposal which was announced at the recent AGM, to merge the corporate structure of GPG with that of another, smaller UK company, has now been agreed, subject only to formal documentation. Full details are expected to be available in early October. The immediate implications for shareholders are negligible but the longer term benefits will be considerable. A relatively lower profile for GPG's Australian portfolio but plenty of good work behind the scenes. We have previously reported on the 5% shareholding in Caltex Australia, the pleasing revival of Joe White Maltings and our strong support for Capral Aluminium (30%). To these can be added Solution 6 and Western Metals, which have yet to prove their worth but where hope is far from abandoned. The sale of half our Brickworks holding took advantage of a substantial increase in price and availability of demand where there is normally limited marketability for large parcels of shares. We are still a large shareholder (current market value A$42 million) and will continue to be a vocal advocate for improved shareholder accountability. We have maintained a high level of liquidity, which is standard practice for GPG but even more the right decision in an uncertain climate. An exception is the large purchases of shares in Coats plc which reinforces our long term commitment to that company. Post Inchcape, GPG has continued its involvement in the rationalisation of the UK motor vehicle trade. As a consequence of a successful takeover offer for Nationwide Accident Repair Services plc, we now own 50% of the UK's largest group of repair shops, in conjunction with J O Hambro Capital Management Ltd. We also hold shares in various retail distributors. In the last Annual Report, we were critical of so called 'International accounting standards' (IAS) which has since become very topical after Enron and other US revelations. Unfortunately, IAS has largely lost sight of the basic function to accurately quantify and inform in a comprehensible manner. Although auditor 'independence' provides a simplistic target for corporate 'trendies', it is virtually irrelevant in reality. Competence and a return to commonsense standards are the real issues. As always, GPG accounts are presented on a most conservative basis and we set out below an updated simplified balance sheet which, hopefully, provides a useful snapshot of the present financial position: Simplified Balance Sheet at 30 June 2002 £m £m Creditors 19 Cash at bank 136 Note Issues 83 Debtors 7 Shareholders' funds 348 Coats 77 Nationwide 12 Staveley (UK & USA) 9 Joe White Maltings 14 MEM* 6 Canberra Investment Corp 7 Turners & Growers 9 Turners Auctions 1 Enza 20 Share Portfolio 152 ---- ---- £450 £450 ---- ---- * 40% of Aurora Gold Ltd is held by MEM at book value of £2.1 million The outlook for the remainder of the financial year is positive, although it is unlikely that realised profits will reach the same level as in 2001. Ron Brierley Chairman 9 September 2002 Enquiries: Guinness Peat Group plc 020 7484 3370 Blake Nixon, Executive Director Weber Shandwick Square Mile 020 7950 2800 Kevin Smith/Josh Royston CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 June Year ended 31 December 2002 2001 2001 Unaudited Unaudited Unaudited Restated Restated £000 £000 £000 Group turnover 254,505 189,322 350,824 ------------ ------------ ------------ Group operating profit 31,539 20,272 59,937 Share of operating profit/(loss) of joint ventures and associates 1,376 (3,695) 1,271 ------------ ------------ ------------ Profit before interest payable 32,915 16,577 61,208 Interest payable and similar charges (4,244) (1,339) (5,301) ------------ ------------ ------------ Profit before taxation 28,671 15,238 55,907 Taxation (7,199) (1,217) (7,902) ------------ ------------ ------------ Profit after taxation 21,472 14,021 48,005 Minority interests (1,451) (1,688) (1,667) ------------ ------------ ------------ PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS £ 20,021 £ 12,333 £ 46,338 ------------ ------------ ------------ Dividends proposed - - (5,393) ------------ ------------ ------------ Profit retained for the period 20,021 12,333 40,945 ------------ ------------ ------------ Earnings per ordinary share - basic (pence) 3.34p 2.13p 7.90p Dividends per ordinary share (pence) - - 0.91p CONSOLIDATED BALANCE SHEET As at 30 June 2002 2001 31 December 2001 Unaudited Unaudited Unaudited Restated Restated £000 £000 £000 Fixed assets Intangible assets (5,309) (2,986) (3,123) Tangible assets 69,481 48,959 47,164 Investments 226,452 214,808 202,082 ------------ ------------ ------------ 290,624 260,781 246,123 ------------ ------------ ------------ Current assets Debtors 124,745 78,056 88,601 Stocks/Development work in progress 53,637 22,653 22,596 Investments 34,887 19,099 24,101 Cash at bank 161,035 53,680 169,985 ------------ ------------ ------------ 374,304 173,488 305,283 ------------ ------------ ------------ Creditors: amounts falling due within one year Trade and other creditors (139,859) (79,237) (107,666) Convertible subordinated loan notes (3,863) (3,863) (3,863) Other borrowings (54,461) (6,822) (5,035) ------------ ------------ ------------ (198,183) (89,922) (116,564) ------------ ------------ ------------ Net current assets 176,121 83,566 188,719 ------------ ------------ ------------ Total assets less current liabilities 466,745 344,347 434,842 Creditors: amounts falling due after one year Trade and other creditors (1,344) (923) (1,708) Convertible subordinated loan notes (11,587) (15,450) (11,587) Capital notes (67,511) - (67,502) Other borrowings (8,207) (8,938) (6,868) ------------ ------------ ------------ (88,649) (25,311) (87,665) Provisions for liabilities and charges (10,567) (10,185) (9,938) ------------ ------------ ------------ Net assets 367,529 308,851 337,239 ------------ ------------ ------------ Capital and reserves Share capital 60,704 53,578 53,926 Share premium account 7,312 11,628 12,857 Capital redemption reserve 3,863 3,863 3,863 Profit and loss account 276,048 221,600 249,497 ------------ ------------ ------------ EQUITY SHAREHOLDERS' FUNDS 347,927 290,669 320,143 Minority interests (equity) 19,602 18,182 17,096 ------------ ------------ ------------ CAPITAL EMPLOYED 367,529 308,851 337,239 ------------ ------------ ------------ Net assets per share * - (pence) 57.31 49.32 53.97 - (Australian cents) 155.63 136.51 153.45 - (New Zealand cents) 179.87 172.60 188.64 *The net assets per share for June 2001 and December 2001 have been adjusted for the 2002 Capitalisation Issue. CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June Year ended 2002 2001 31 December Unaudited Unaudited 2001 Restated Audited £000 £000 £000 Net cash inflow from operating activities 28,441 31,274 70,451 Dividends received from associates and joint ventures 1,362 396 2,014 Returns on investments and servicing of finance (4,037) (1,372) (5,516) Taxation (1,950) (1,104) (2,277) Capital expenditure and financial investment (26,948) (17,570) (5,716) Acquisitions and disposals (14,179) (586) 6,332 Equity dividends paid (1,845) (1,033) (1,041) ------------ ------------ ------------ Cash (outflow)/inflow before management of liquid resources and financing (19,156) 10,005 64,247 Management of liquid resources 19,302 8,607 (96,597) Financing Issue of ordinary shares 1,481 207 306 Increase/(decrease) in debt 4,522 (13,318) 48,170 ------------ ------------ ------------ Increase in cash for the period 6,149 5,501 16,126 ------------ ------------ ------------ Reconciliation of net cash flow to movement in net funds Increase in cash for the period 6,149 5,501 16,126 Cash (inflow)/outflow from decrease/increase in liquid resources (19,302) (8,607) 96,597 Cash (inflow)/outflow from increase/decrease in debt (4,522) 13,318 (48,170) ------------ ------------ ------------ Change in net funds resulting from cash flows (17,675) 10,212 64,553 Acquisition of subsidiaries (45,682) - - Currency translation differences 3,633 (1,456) (850) Other non-cash movements (see note below) - - 1,576 ------------ ------------ ------------ Movement in net funds for the period (59,724) 8,756 65,279 Net funds as at 1 January 75,130 9,851 9,851 ------------ ------------- ------------ Closing net funds 15,406 18,607 75,130 ------------ ------------- ------------ Non-cash transactions: On 6 July 2001, the Company redeemed the first 10p tranche of the convertible subordinated loan notes, of which £2,287,000 was paid in cash and the balance of £1,576,000 was satisfied by the issue of Ordinary Shares. In December 2001, the Group sold its investment in Otter Gold Mines Ltd, an associated undertaking, and received in exchange shares in Normandy NFM Ltd, which were included in current asset investments at 31 December 2001, but which were sold during the six months to 30 June 2002. NOTES TO THE INTERIM FINANCIAL INFORMATION 1. The interim financial information has been prepared on a basis consistent with the accounting policies adopted in the group's financial statements for the year ended 31 December 2001, except for the adoption of Financial Reporting Standard 19 ('FRS 19') - Deferred Tax. This change has increased/(reduced) the profit for the six months to 30 June 2001 by £27,000, for the year to 31 December 2001 by £(1,229,000) and for the six months to 30 June 2002 by £(51,000), and has increased shareholders' funds as at those dates by £2,585,000, £1,329,000 and £1,278,000 respectively. 2.GPG acquired effective control of Enza Limited ('Enza'), a New Zealand fruit storage and distribution company, on 18 April 2002 and its results have been consolidated into the group with effect from that date. Enza contributed £58,481,000 to group turnover and a loss of £824,000 before taxation during the period. 3. On 30 April 2002 GPG completed the acquisition of Nationwide Accident Repair Services plc ('Nationwide') under a joint venture with J O Hambro Capital Management Ltd, and the results of Nationwide have been included in the accounts under the gross equity method from that date. The group's share of Nationwide's operating loss and loss before taxation for the period were £215,000 and £228,000 respectively. 4. Having regard to the timing of the acquisitions of Enza and Nationwide, it has not been possible to complete detailed investigations of the fair values, which are therefore considered to be provisional. 5. Earnings per share - The calculation of earnings per ordinary share is based on profit after taxation attributable to shareholders and the weighted average number of 599,023,390 ordinary shares in issue during the six months. The comparatives for the six months to 30 June 2001 and the year to 31 December 2001 have been adjusted for the Capitalisation Issue which took place in May 2002. 6. Dividends - The directors have not recommended the payment of an interim dividend. The dividend of 1.00p per share for the year ended 31 December 2001 has been adjusted for the 2002 Capitalisation Issue. 7. Changes in the issued share capital during the six months to 30 June 2002 comprise the following: £000 At 31 December 2001 53,926 Employee Options exercised (various dates) 557 Scrip Dividend Alternative shares issued (13 May 2002) 709 Capitalisation Issue (20 May 2002) 5,512 ------------ At 30 June 2002 60,704 ------------ 8. On 5 July 2002, those holders of the Company's CLNs who elected to convert their Election Amounts were issued with 6,286,786 Ordinary shares of 10p each ('Conversion Shares'), resulting in there being 613,330,716 fully paid Ordinary Shares of 10p each in issue, and the remaining noteholders were repaid Redemption Amounts of £1.0 million in cash. As no Interim Dividend has been declared, the Conversion Shares will, with immediate effect, rank equally with the other shares of the Company. 9. Simplified balance sheet - The simplified balance sheet presented in the Chairman's Statement shows GPG's share of the net assets of, together with the goodwill attributable to, certain subsidiaries: Staveley (including Staveley Inc), MEM Group Ltd, Canberra Investment Corporation Ltd, Joe White Maltings Ltd and Enza Ltd, rather than their respective assets and liabilities. The Group's remaining net assets are shown at their book value. The net assets attributable to Staveley exclude the cash it held but which is generally available to the Company for investment purposes; such cash is presented instead within the aggregate cash balance. The shareholders' funds are those reported in the published balance sheet. 10. Abridged accounts (Companies Act 1985) - The information for the year ended 31 December 2001 is based on the latest published accounts which have been delivered to the Registrar of Companies, as adjusted for the implementation of FRS 19. The report of the auditors on the 2001 accounts was unqualified. 11. Publication - This statement is being sent to shareholders and copies will be available at the registered office of the Company, First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP. United Kingdom First Floor, Times Place, Tel: 020 7484 3370 Fax: 020 7925 0700 45 Pall Mall, London SW1Y 5GP Australia c/o Pannell Kerr Forster PO Box R67 Tel: 02 9251 4100 Fax: 02 9240 9821 Level 20, 1 York Street, Sydney NSW 2000 New Zealand c/o Computershare Investor Services Limited Private Bag 92119, Auckland 1020, New Zealand Tel: 09 488 8777 Fax: 09 488 8787 Guinness Peat Group plc Supplementary information required for Australian Stock Exchange (ASX) Appendix 4B For the six months ended 30 June 2002 Unaudited £000 Profit on disposal of investments and other net investment income 27,250 Expenses from ordinary activities (250,216) Diluted EPS 3.17p Depreciation 3,651 Interest capitalised 52 Retained profits brought forward 248,168 Net profit 20,021 Scrip dividend alternative 3,548 Currency translation differences (net) 2,982 Net effect of changes in accounting policies 1,329 ------------ Retained profits carried forward 276,048 ------------ Amortisation of goodwill (309) Amortisation of other intangibles 38 ------------ Total amortisation of intangibles (271) ------------ Non-current equity accounted investments 45,001 Non-current tax assets 1,393 Current tax liabilities 10,042 Dividends received from associates 625 Other dividends received 3,731 Interest and other income receivable 4,209 Interest and other finance costs payable (4,037) This information is provided by RNS The company news service from the London Stock Exchange

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