Letter to Shareholders

Guinness Peat Group PLC
05 May 2006

                            Guinness Peat Group plc

The following is the text of a letter posted yesterday 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.


"4 May 2006

Dear Shareholder,

Capital gains tax to hit thousands of New Zealand GPG shareholders

I am writing to you regarding the Government's recently announced proposed
changes to the tax rules on share investments.

Unfortunately, if these changes become law thousands of New Zealand GPG
shareholders will be affected. As a director, I feel it is my duty to inform you
of the threats contained in the new tax proposals. In addition I respectfully
seek your support in persuading the Government to drop the proposals, or at
least amend the proposed legislation before it is introduced into Parliament.

GPG is owned and run predominantly by New Zealanders. The majority of our
directors and shareholders are New Zealanders and we have significant NZ
investments. But because GPG is registered in the UK it will be treated under
the new proposals as a foreign company.

At the moment New Zealanders' investments in companies in what is termed the
"grey list" of countries generally attract New Zealand tax on dividends only.
These countries include Australia, US, UK, Canada, Japan, Germany and Norway.
GPG is treated as a UK company.

The Government now proposes to abolish the grey list which will mean that
investors who hold foreign shares (except in Australian companies) stand to be
hit with a capital gains tax on 85% of the unrealized gains on their
investments.

We have asked the Government to keep the grey list for UK companies, or
otherwise amend the proposed changes so that they do not apply to New Zealanders
holding GPG shares. The request has not been granted. However, the Government
has been prepared to grant an exemption for all Australian listed companies,
whether or not the Australian company has anything to do with New Zealand and
whether or not it pays any New Zealand tax. I am staggered that the Government
is not prepared to treat GPG at least as well as it is prepared to treat all
Australian listed companies.

The details behind the Government's proposed changes are complex and not
everyone is affected. However, the overall result will be negative for New
Zealand investors in GPG. For further details on the proposed changes please go
to www.gpg.co.nz


We will continue to seek to have the proposed changes amended. I urge you to
write to the Prime Minister requesting her Government to rethink these proposed
changes so that an unrealised capital gains tax is not imposed on thousands of
New Zealand GPG shareholders.

Yours faithfully

A I (Tony) Gibbs

You can write to the Prime Minister using the enclosed envelope or alternatively
you can send correspondence to the Prime Minister by email to
[e-mail]"


Richard Russell
Company Secretary

Date:  5 May 2006

Tel:   [phone]



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