Interim Results
Guinness Peat Group PLC
29 August 2007
RESULTS OF GUINNESS PEAT GROUP PLC ("GPG") FOR THE SIX MONTHS ENDED
30 JUNE 2007
GPG results for announcement to the Market for the six months ended 30 June
2007.
Please note the following key information:
* Revenue decreased by £23 million (3%) over the corresponding period in 2006;
* Profit from ordinary activities after tax attributable to members increased
by £61 million (185%) over the corresponding period in 2006;
* Net profit for the period attributable to members increased by £61 million
(185%) over the corresponding period in 2006;
* No interim dividend has been declared for the period (nil for the
corresponding period in 2006; 0.91p paid during the period in respect of the
year ended 31 December 2006, as adjusted for the 2007 Capitalisation Issue).
J R Russell
Company Secretary
29 August 2007
Chairman's Statement
A relatively uneventful 6 months for GPG on the surface but plenty of planning
and analysis, directed, as always, to the continuing enhancement of net asset
value.
The main component of the £94 million profit for the period was the sale of
Australian Wealth Management shares, albeit at a lesser value than their 31
December level, but it was considered timely to exit, with GPG having completed
its role in the creation of a credible independent funds management company.
There were other useful contributions from Coats, Nationwide Accident Repair
Services and Green's General Foods.
Coats has achieved the progress which we hoped and anticipated at this stage
with the exception of the unwelcome downturn in key crafts markets. However,
Coats' crafts division is a structurally mature, well established business and
future expectations are firmly based on a return to better conditions. Overall,
Coats should record further momentum for the full year and beyond, as it
gradually moves from transition to an acceptable return on capital invested.
A detailed analysis of Coats' half yearly results is available at www.coats.com
or a printed copy can be obtained on request at any of GPG's offices.
To the extent Coats has met expectations, Capral Aluminium has not. That is
doubly disappointing for GPG because we believe the company has done everything
right in terms of modernisation of manufacturing processes, upgraded customer
service and streamlined distribution channels. However, the full impact of a
high aluminium price, Chinese imports and a depressed NSW housing market is a
powerful combination to overcome. GPG is working with the company to devise
potential solutions until market conditions ultimately improve.
The strength of the NZ$ has had some adverse effect on the half year accounts
due to the higher level of eventual Capital Note repayments. But that is not all
bad because of the corresponding increase in the value of New Zealand assets
which is not directly reflected in the published accounts.
GPG's financial position continues to be very sound with strong liquidity as
shown in the simplified balance sheet below:
SIMPLIFIED BALANCE SHEET AT 30 JUNE 2007
£m
Cash at Bank 239
Debtors 21
Coats Group 252
Canberra Investment Corp 19
Turners & Growers 50
Capral 60
Tower Australia 77
Tower NZ 34
Rattoon 39
Green's General Foods 16
Share portfolio 443
Total Assets 1,250
Creditors (76)
Note issues (215)
Shareholders' Funds £ 959
An interesting second half is unfolding with increased market volatility and the
probability of a more severe correction to "blue sky" values in the foreseeable
future. Nevertheless, the Board looks forward to presenting a positive result
for the full year to 31 December 2007.
Ron Brierley
CHAIRMAN
29 August 2007
Consolidated Income Statement
Unaudited
Unaudited 6 months to Audited
6 months to 30 June Year to
30 June 2006 31 December
2007 Restated ** 2006
£m £m £m
Continuing Operations
Revenue 657 680 1,356
Cost of sales (454) (467) (956)
Gross profit 203 213 400
Profit on disposal of investments and other net investment 90 18 45
income
Distribution costs (79) (88) (177)
Administrative expenses (116) (85) (196)
Operating profit 98 58 72
Share of loss of joint ventures (1) - -
Share of profit/(loss) of associated undertakings 7 2 (1)
Profit on sale of businesses - continuing operations 25 - 5
Finance costs (19) (20) (40)
Profit before taxation from continuing operations 110 40 36
Tax on profit from continuing operations (18) (10) (12)
Profit for the period from continuing operations 92 30 24
Discontinued Operations
Gain on discontinued operations - 1 10
Profit for the period 92 31 34
Attributable to:
EQUITY SHAREHOLDERS OF THE COMPANY 94 33 36
Minority interests (2) (2) (2)
92 31 34
Earnings per Ordinary Share from continuing and discontinued operations:
Basic (pence) 7.46p 2.67p 2.89p
Earnings per Ordinary Share from continuing operations:
Basic (pence) 7.44p 2.62p 2.08p
** Restated to reflect a change in accounting policy - see note 1b.
Consolidated Balance Sheet
Unaudited
Unaudited 30 June Audited
30 June 2006 31 December
2007 Restated ** 2006
£m £m £m
NON-CURRENT ASSETS
Intangible assets 199 204 198
Property, plant and equipment 402 388 391
Investments in associates 141 23 122
Investments in joint ventures 34 24 17
Fixed asset investments 431 410 423
Deferred tax assets 7 5 6
Pension surpluses 38 36 32
Trade and other receivables 18 15 18
1,270 1,105 1,207
CURRENT ASSETS
Inventories 238 254 216
Trade and other receivables 295 302 238
Current asset investments 18 27 19
Derivative financial instruments 7 3 3
Cash and cash equivalents 280 244 254
838 830 730
Non-current assets classified as held for sale 2 3 3
TOTAL ASSETS 2,110 1,938 1,940
CURRENT LIABILITIES
Trade and other payables 287 260 254
Current tax liabilities 9 6 9
Capital notes - 82 -
Other borrowings 97 128 123
Provisions 89 91 87
482 567 473
NET CURRENT ASSETS 356 263 257
NON-CURRENT LIABILITIES
Trade and other payables 12 20 21
Deferred tax liabilities 35 16 18
Capital notes 215 70 201
Other borrowings 212 198 150
Retirement benefit obligations:
Funded schemes 14 29 14
Unfunded schemes 55 65 58
Provisions 32 41 37
575 439 499
TOTAL LIABILITIES 1,057 1,006 972
NET ASSETS 1,053 932 968
Consolidated Balance Sheet
Unaudited
Unaudited 30 June Audited
30 June 2006 31 December
2007 Restated ** 2006
£m £m £m
EQUITY
Share capital 63 57 57
Share premium account 61 60 61
Translation reserve (7) (16) (24)
Unrealised gains reserve 162 154 188
Other reserves 298 305 303
Retained earnings 382 278 291
EQUITY SHAREHOLDERS' FUNDS 959 838 876
Minority interests 94 94 92
TOTAL EQUITY 1,053 932 968
Net asset backing per share*
Pence 75.31 66.58 69.49
Australian cents 178.10 165.76 172.55
New Zealand cents 195.59 201.84 192.88
* The net asset backing per share for June 2006 and December 2006 has been adjusted for the 2007 Capitalisation
Issue.
** Restated to reflect a change in accounting policy - see note 1b.
Blake Nixon, Director Approved by the Board on 28 August 2007
Consolidated Statement of Recognised Income and Expense
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
Restated **
£m £m £m
Gains on revaluation of fixed asset investments 51 64 109
Gains/(losses) on cash flow hedges 1 3 (2)
Exchange differences on translation of foreign operations 17 (28) (36)
Actuarial gains on defined benefit pension schemes - - 9
Net income recognised directly in equity 69 39 80
Transfers
Transferred to profit or loss on sale of fixed asset (78) 3 (7)
investments
Transferred to profit or loss on sale of businesses 1 - -
Transferred to profit or loss on cash flow hedges (1) (1) 1
Profit for the period 92 31 34
Total recognised income and expense for the period 83 72 108
Attributable to:
EQUITY SHAREHOLDERS OF THE COMPANY 85 74 110
Minority interests (2) (2) (2)
83 72 108
** Restated to reflect a change in accounting policy - see note 1b.
Reconciliation of Consolidated Movements in Equity Shareholders' Funds
6 months ended 30 June 2007
Share Unrealised
Share premium Translation gains Other Retained
capital account reserve reserve reserves earnings Total
£m £m £m £m £m £m £m
Balance as at 1 January 2007 57 61 (24) 188 303 291 876
Total recognised income and expense for the period - - 17 (26) - 94 85
Dividends (note 9) - - - - - (11) (11)
Capitalisation issue of 6 - - - (6) - -
shares
Scrip dividend alternative - - - - - 8 8
Share based payments - - - - 1 - 1
Balance as at 30 June 2007 63 61 (7) 162 298 382 959
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 June 30 June 31 December
2007 2006 2006
£m £m £m
Cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from operating activities 60 (4) 151
Interest paid (24) (23) (42)
Taxation paid (9) (9) (18)
Net cash generated by/(absorbed in) operating activities 27 (36) 91
Cash outflow from investing activities
Dividends received from associates and joint ventures 5 4 5
Capital expenditure and financial investment (63) (11) (82)
Acquisitions and disposals (12) 2 (30)
Net cash absorbed in investing activities (70) (5) (107)
Cash inflow from financing activities
Issue of ordinary shares 1 48 48
Equity dividends paid to Company's shareholders (4) (4) (4)
Dividends paid to minority interests (2) (2) (4)
Increase in debt 35 23 9
Net cash generated by financing activities 30 65 49
Net (decrease)/increase in cash and cash equivalents (13) 24 33
Cash and cash equivalents at beginning of the period 241 238 238
Exchange gains/(losses) on cash and cash equivalents 39 (29) (30)
Cash and cash equivalents at end of the period 267 233 241
NOTES TO THE FINANCIAL INFORMATION
1a. The interim financial information has been prepared in accordance with the recognition and measurement
principles of applicable International Financial Reporting Standards (IFRSs) as adopted by the Group, and
comply with the disclosure requirements of the Listing Rules of the UK Financial Services Authority and
the Listing Rules of the Australian Securities Exchange. The accounting policies adopted have been
consistently applied to all periods presented, other than as set out in 1b. below.
1b. The income statement for the six months ended 30 June 2006 has been restated to reflect emerging best
practice in respect of the treatment of deferred tax assets recognised following the recognition on
implementation of IFRS of unrealised gains and losses on non-current investments. Deferred tax assets
recognised were previously offset against deferred tax liabilities in the unrealised gains reserve, but
are now separately recognised through the income statement. The impact of this restatement is an increase
in retained earnings of £30 million at 30 June 2006 and a corresponding decrease in the unrealised gains
reserve of £30 million at that date, but has no impact on either profit for the six months ended 30 June
2006 or shareholders' funds at that date.
2. The figures for the year ended 31 December 2006 do not constitute statutory accounts for that year but
have been extracted from the statutory accounts, which have been filed with the Registrar of Companies.
The auditors reported on those accounts and that report was unqualified and did not contain statements
under Section 237(2) or (3) of the Companies Act 1985. The financial information for the six months ended
30 June 2007 has been reviewed - see attached Independent Review Report - but has not been audited. The
financial information for the equivalent period in 2006 was similarly reviewed but not audited.
3. Group foreign exchange movements - during the six months to 30 June 2007, GPG recognised in operating
profit £11 million of net foreign exchange losses compared to £20 million of net foreign exchange gains in
the six months to
30 June 2006 (£3 million net gains in the year to 31 December 2006).
4. Tax on profit from continuing operations
30 June 30 June 31 December
2007 2006 2006
£m £m £m
UK Corporation tax at 30% - (3) -
Overseas tax (10) (6) (21)
(10) (9) (21)
Deferred tax (8) (1) 9
(18) (10) (12)
5. The Group's significant joint venture and associate entities were as
follows:
30 June 30 June 31 December
2007 2006 2006
Green's General Foods Pty Ltd 72.5% na na
Australian Country Spinners Ltd 50.0% 50.0% 50.0%
Rattoon Holdings Ltd 44.4% 20.2% 44.8%
The Maryborough Sugar Factory Ltd 27.3% 22.4% 24.3%
Tower Australia Group Ltd 24.4% na 23.9%
Autologic Holdings plc 21.9% na na
Nationwide Accident Repair Services plc na 50.0% 31.3%
Green's Foods Ltd na 37.4% 37.6%
CPI Group Ltd na 22.9% na
Significant contributions to profit for the period from joint venture and associate entities
were:
30 June 30 June 31 December
2007 2006 2006
£m £m £m
Rattoon Holdings Ltd 3 - -
Tower Australia Group Ltd 3 - -
Nationwide Accident Repair Services plc 1 2 2
Green's General Foods Pty Ltd (2) - -
Australian Country Spinners Ltd - (2) (2)
Green's Foods Ltd - - (5)
NOTES TO THE FINANCIAL INFORMATION - continued
6. 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 1,264,378,670 Ordinary shares in issue
during the six months ended 30 June 2007. The comparatives for the six months to 30 June 2006 and the year
to 31 December 2006 have been adjusted for the Capitalisation Issue which took place in June 2007.
Calculations of earnings per share are based on results to the nearest £'000s.
7. The net tangible assets per share at 30 June 2007 were 67.04p (30 June 2006: 57.88p, 31 December 2006:
61.03p).
8. Changes in the issued share capital during the six months to 30 June 2007 comprise the following:
£000
At 1 January 2007 57,310
Employee options exercised 97
Scrip dividend alternative shares issued (18 May 2007) 441
Capitalisation Issue (22 June 2007) 5,780
At 30 June 2007 63,628
9. Dividends - The directors have not recommended the payment of an interim dividend (6 months to 30 June 2006
Nil). An interim dividend of 0.91p per share, adjusted for the 2007 Capitalisation Issue, was paid during
the period in respect of the year ended 31 December 2006. A final dividend of 0.91p per share, adjusted for
the 2006 Capitalisation Issue, was paid during the six months ended 30 June 2006 in respect of the year
ended 31 December 2005.
10. Directors - The following persons were directors of GPG during the whole of the period and up to the date
of this report:
Sir Ron Brierley
G J Cureton
A I Gibbs
B A Nixon
Dr G H Weiss
11. Directors' Report - The Chairman's Statement appearing in the Interim Results and signed by Sir Ron
Brierley provides a review of the operations of the Group for the six months ended 30 June 2007.
12. Director's Declaration - In accordance with a resolution of the directors of Guinness Peat Group plc I
state that:
in the opinion of the Directors:
a. the Interim Results of the consolidated group:
(i) give a true and fair view of the financial position as at 30 June 2007 and the performance of
the consolidated group for the half-year ended on that date; and
(ii) 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.
13. 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. A copy will also be
displayed on the Company's website at www.gpgplc.com.
On behalf of the Board
B A Nixon
Director
29 August 2007
UNITED KINGDOM
First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP Tel: 020 7484 3370 Fax: 020 7925 0700
AUSTRALIA
c/o Registries Ltd
PO Box R67, Royal Exchange, Sydney NSW 1224, Australia Tel: 02 9290 9600 Fax: 02 9279 0664
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
INDEPENDENT REVIEW REPORT TO GUINNESS PEAT GROUP PLC
Introduction
We have been instructed by Guinness Peat Group plc ("the Company") to review the
consolidated financial information of the Company and its subsidiaries
(together, "the Group") for the six months ended 30 June 2007 which comprise the
consolidated income statement, the consolidated balance sheet, the consolidated
statement of recognised income and expense, the reconciliation of consolidated
movements in equity shareholders' funds and the consolidated cash flow statement
and the related notes 1 to 13. We have read the other information contained in
the interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
Deloitte & Touche LLP
Chartered Accountants
London
29 August 2007
Neither an audit nor a review provides assurance on the maintenance and
integrity of the website, including controls used to achieve this, and in
particular whether any changes may have occurred to the financial information
since first published. These matters are the responsibility of the directors
but no control procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
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