RNS Number:1554P
GPG (UK) Holdings PLC
28 August 2003
GPG (UK) Holdings plc
("GPGUKH" or "the Company")
Interim Results for the six months to 30 June 2003
As I reported in the Annual Report for GPG (UK) Holdings plc
on 14 March 2003, the Company is now a wholly owned subsidiary
of Guinness Peat Group plc ("GPG") following a reverse
acquisition on 13 December 2002. Since the operations of
GPGUKH for the half year to 30 June 2003 substantially
comprised those operations reported by GPG for that period, I
consider it most helpful and informative to reproduce here an
extract from the Statement made by the Chairman of GPG, Sir
Ron Brierley, in his interim report for the same period which
is also being released today.
Blake Nixon, Chairman
28 August 2003.
Extract from the statement by the Chairman of Guinness Peat
Group plc, in respect of the half year ended 30 June 2003.
"Another 6 months of steady progress, of which the outstanding
feature was the successful conclusion to the takeover offer
for Coats plc. As a consequence, GPG now holds 64% of the
joint venture company which, in turn, holds 100% of Coats
ordinary shares.
The joint venture acquisition cost approximately#400 million,
which was partly financed by an advance of#248 million from
Bank of Scotland. Subsequently, this is being consolidated
with Coats own borrowings so that the financial profile will
be - Shareholders' Funds#149 million and various bank loans
#483 million (#446 million net of cash). It is intended to
reduce borrowings to a more permanent lower level and in the
first instance various surplus properties will be sold and the
UK bedwear manufacturing business is in negotiations for sale.
After a series of disposals in recent years, Dorma bedwear is
the last remaining "non core" division and Coats is now
otherwise, for the first time in decades, exclusively focussed
on its traditional thread business in which it is the clear
world leader.
Coats has a proud history, having been listed on the Stock
Exchange since 1909 and, in its prime, was reputed to be the
largest company in the UK. It has always been synonymous with
the best of British industry, although the changed economics
of textile manufacture means that much of the company's
overall production is now located in developing countries
around the world (operating with 31,000 employees in 63
countries, including manufacturing plants in 40 of those).
The future performance of Coats will obviously be an important
component of GPG's results and we are confident it will be a
worthy contributor. In conjunction with the takeover offer,
GPG received a pre acquisition dividend of#4.5 million less a
preliminary accounting loss of#1.3 million, both of which are
included in the half year results.
GPG's cash balance at 30 June was#156 million which is
slightly at the higher end of our normal desired operating
range. As we have stated before, there is a cost involved in
maintaining a high level of liquidity but, in our view, it is
more than compensated by advantages of flexibility, safety and
the capacity to act quickly when required.
Consistent with our cash philosophy, we are currently making
another issue of capital notes in New Zealand which also
facilitates an increased level of investment in New Zealand
companies, notably to date, Turners & Growers, Rubicon and
Tower.
GPG provided strong support for Tower's "rights" offer and now
holds 17% of the issued capital. The original proposal to
subscribe for 30% of Tower was not well received by other
major shareholders, possibly due to a failure to recognise
that the NZ$200 million capital injection is only the first of
a number of measures requiring strong and experienced
proprietorial input to redress what has emerged as very poor
management and direction since demutualisation.
Since GPG's previous NZ$250 million capital notes issue in
2001, the NZ$ has appreciated quite considerably but GPG's
liability is fully hedged against a payment of#70 million (=
NZ$195 million at current exchange rates) in 2006 and interest
accruals well below the initial 9% coupon rate.
The half year result includes profits on the sales of shares
in Abelle (which we received as consideration in a takeover
offer for our previous 42% holding in Aurora Gold), Turners
Auctions, Brickworks and Caltex. There was also an exchange
gain of #27 million on the value of Australian and New Zealand
assets of which #14 million is recorded in the revenue
accounts and#13 million transferred direct to reserves. This
effectively reverses corresponding losses in past years'
accounts and reinforces the view that GPG's diverse currency
exposure is neutral in the long run.
A big disappointment, particularly after earlier success, has
been the recent performance of Dawson International, the
Scottish textile and "Ballantyne" cashmere manufacturer. As a
consequence, we have written down the book value of the shares
to 10p each, closer to the anticipated level at which GPG will
have the option to subscribe for more shares. This results in
a charge to profits of #9 million, of which some is so called
"equity accounting" and the balance correctly denominated.
GPG is now taking a much stronger role in Dawson's management
and direction.
GPG was a somewhat reluctant seller of the residual 5% holding
in Brickworks which had been a very good investment over a 3
year period, (partly due to our own agitation for change).
However, Brickworks has paid a very full price for the
acquisition of Bristile which, although undoubtedly the right
industry move in the longer term, loads an additional A$600
million of debt on an already distorted capital structure, so
GPG prefers to watch from the sideline, at least for the time
being.
So far, there has been plenty of activity in the second half,
which, hopefully, will convert to another satisfactory result
for the full year to 31 December 2003.
Ron Brierley
CHAIRMAN
28 August 2003
Enquiries:
Weber Shandwick Square Mile
Kevin Smith/Josh Royston Telephone: 020 7067 0700
GPG (UK) Holdings plc
Mark Butcher Telephone: 020 7484 3370
Consolidated Profit and Loss Account
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Group turnover 320,097 254,505 514,836
____________________________________________________________________________________________
Group operating profit 45,728 31,539 46,989
Share of operating profit of joint
ventures and associates 4,810 1,376 2,534
________ ________ ________
50,538 32,915 49,523
Profit on sale of subsidiary -
discontinued operations - - 12,238
________ ________ ________
Profit before interest payable 50,538 32,915 61,761
Interest payable and similar charges (10,883) (4,244) (10,529)
________ ________ ________
Profit before taxation 39,655 28,671 51,232
Taxation (14,380) (7,199) (5,203)
________ ________ ________
Profit after taxation 25,275 21,472 46,029
Minority interests (1,199) (1,451) (3,425)
____________________________________________________________________________________________
PROFIT ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 24,076 20,021 42,604
____________________________________________________________________________________________
Dividends proposed - - (106,033)
________ ________ ________
PROFIT/(LOSS) RETAINED FOR THE PERIOD 24,076 20,021 (63,429)
________ ________ ________
Consolidated Balance Sheet
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
FIXED ASSETS
_______________________________________________________________________________________________________________
Intangible assets (8,779) (5,309) (10,734)
Tangible assets 75,049 69,481 73,752
Investments 251,951 226,452 256,189
________ ________ ________
TOTAL FIXED ASSETS 318,221 290,624 319,207
________ ________ ________
CURRENT ASSETS
_______________________________________________________________________________________________________________
Debtors 135,253 124,745 118,614
Stocks/Development work in progress 43,512 53,637 13,981
Investments 21,347 34,887 36,874
Cash at bank 178,091 161,035 113,818
________ ________ ________
TOTAL CURRENT ASSETS 378,203 374,304 283,287
________ ________ ________
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
_______________________________________________________________________________________________________________
Trade and other creditors (235,597) (143,722) (210,571)
Convertible subordinated loan notes (3,425) (3,863) (3,863)
Other borrowings (35,873) (54,461) (5,404)
________ ________ ________
TOTAL CURRENT LIABILITIES (274,895) (202,046) (219,838)
________ ________ ________
________ ________ ________
Net current assets 103,308 172,258 63,449
________ ________ ________
TOTAL ASSETS LESS CURRENT LIABILITIES 421,529 462,882 382,656
________ ________ ________
CREDITORS: AMOUNTS FALLING DUE AFTER 1 YEAR
_______________________________________________________________________________________________________________
Trade and other creditors (792) (1,344) (306)
Convertible subordinated loan notes (3,425) (7,724) (7,725)
Capital notes (67,887) (67,511) (67,765)
Other borrowings (15,504) (8,207) (13,672)
________ ________ ________
TOTAL LONG-TERM CREDITORS (87,608) (84,786) (89,468)
________ ________ ________
PROVISIONS FOR LIABILITIES AND CHARGES (13,970) (10,567) (14,337)
________ ________ ________
NET ASSETS 319,951 367,529 278,851
________ ________ ________
CAPITAL AND RESERVES
_______________________________________________________________________________________________________________
Share capital 61,630 60,704 61,340
Share premium account 10,590 7,312 9,562
Capital redemption reserve 3,863 3,863 3,863
Profit and loss account 227,001 276,048 189,684
_______________________________________________________________________________________________________________
EQUITY SHAREHOLDERS' FUNDS 303,084 347,927 264,449
_______________________________________________________________________________________________________________
Minority interests (equity) 16,867 19,602 14,402
________ ________ ________
CAPITAL EMPLOYED 319,951 367,529 278,851
________ ________ ________
Consolidated Cash Flow Statement
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Net cash inflow from operating activities 31,509 28,441 73,096
Dividends received from associates and joint ventures 1,915 1,362 2,955
Returns on investments and servicing of finance (5,705) (4,037) (10,131)
Taxation (4,846) (1,950) (4,093)
Capital expenditure and financial investment (15,984) (26,948) (59,134)
Acquisitions and disposals 16,779 (14,179) (16,200)
Equity dividends paid - (1,845) (1,924)
_________ _________ _________
CASH INFLOW/(OUTFLOW) BEFORE MANAGEMENT OF LIQUID
RESOURCES AND FINANCING 23,668 (19,156) (15,431)
Management of liquid resources (67,103) 19,302 85,866
Financing
Issue of ordinary shares 1,621 1,481 1,670
Increase/(decrease) in debt 28,768 4,522 (44,355)
_________________________________________________________________________________________________________________
(DECREASE)/INCREASE IN CASH FOR THE PERIOD (13,046) 6,149 27,750
_________________________________________________________________________________________________________________
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(Decrease)/increase in cash for the period (13,046) 6,149 27,750
Cash outflow/(inflow) from decrease/increase in liquid resources 67,103 (19,302) (85,866)
Cash (inflow)/outflow from increase/decrease in debt (28,768) (4,522) 44,355
_________ _________ _________
Change in net funds resulting from cash flows 25,289 (17,675) (13,761)
Acquisition of subsidiaries - (45,682) (49,889)
Disposal of subsidiaries - - 2,491
Currency translation differences 11,299 3,633 (1,448)
Other non-cash movements (see note below) - - 2,866
_________ _________ _________
Movement in net funds for the period 36,588 (59,724) (59,741)
Net funds as at 1 January 15,389 75,130 75,130
_________________________________________________________________________________________________________________
CLOSING NET FUNDS 51,977 15,406 15,389
_________________________________________________________________________________________________________________
Non-cash transactions:
On 13 December 2002 the shares in the former Guinness Peat Group plc were acquired by the former Brunel Holdings
plc, as part of a reverse acquisition takeover, in exchange for an issue of shares in that company.
On 31 December 2002 the Group in effect sold a 19.96% interest in ENZA Ltd, formerly a 100% subsidiary, in return
for an additional 34.12% of Turners & Growers Ltd, formerly a 45.92% associated undertaking.
On 14 February 2003 the Group redeemed 4,378,034 convertible subordinated loan notes, amounting to #1,313,000,
satisfied by the issue of Ordinary Shares in Guinness Peat Group plc.
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 2002.
2. Abridged accounts (Companies Act 1985) - The information for the year ended 31 December 2002 is based on the
latest published accounts which have been delivered to the Registrar of Companies.
3. Coats Group Ltd ("Coats Group"), a joint venture company in which GPGUKH holds a 64% economic interest and a
50% voting interest, became the parent company of Coats plc ("Coats") when its offer for Coats was declared
unconditional on 7 April 2003. Coats Group contributed a loss of #1,274,000 before taxation during the period.
4. Having regard to the timing of the acquisition of Coats, it has not been possible to complete detailed
investigations of the fair values of its assets at acquisition, which are therefore considered to be provisional.
5. The Group's significant associate and joint venture entities are as follows:
30 30 31
June June December
2003 2002 2002
Coats Group 63.97% n/a n/a
Nationwide Accident Repair Services 50.00% 50.00% 50.00%
Harcourt Hill Estate 50.00% 50.00% 50.00%
Dawson International 29.91% n/a 29.91%
Capral Aluminium 31.63% 30.04% 31.26%
Green's Foods 25.93% n/a 22.93%
Turners Auctions n/a 45.67% 38.78%
Turners & Growers n/a 45.67% n/a
6. On 4 July 2003, those holders of GPGUKH CLNs who elected to convert their Election Amounts were issued with
2,886,806 Ordinary shares of 10p each in the Company which, through the "Step-up Rights" in the Articles of
Association, were converted to an equivalent number of 5p shares in GPG. The remaining
CLN holders were repaid Redemption Amounts of #2.1 million in cash.
7. On 9 July 2003, those holders of Guinness Peat Group plc's shares who elected to accept that company's
Buyback Offer were issued with 26,047,947 GPGUKH CLNs of 20p each in exchange for their holdings of 10,419,320
Ordinary shares of 5p each in Guinness Peat Group plc.
8. 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, 45 Pall Mall, London SW1Y 5GP Tel: 020 7484 3370 Fax: 020 7925 0700
AUSTRALIA
c/o PKF Chartered Accountants and Business Advisers
Level 10, 1 Margaret Street, Sydney NSW 2000 Tel: 02 9251 4100 Fax: 02 9240 9821
NEW ZEALAND
c/o Computershare Investor Services Limited
Private Bag 92119, Auckland 1020, New Zealand Tel: 09 488 8777 Fax: 09 488 8787
Registered in England No. 159975
This information is provided by RNS
The company news service from the London Stock Exchange
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