14th Mar 2006 07:02
Guinness Peat Group PLC14 March 2006 14 March 2006 Guinness Peat Group plc ("GPG" or "the Company" or "the Group") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 CHAIRMAN'S STATEMENT GPG experienced a good year in 2005 with an increase in net profit from £30million to £97 million. That is the best result since the 1999 profit of £112million which was mostly the "one off" Tyndall sale and was "unlikely to berepeated". Needless to say, in reality, it has always been our objective todisprove that prediction and this remains so for the future. Several of the factors which contributed to the 2005 result were the same asthose which operated adversely in the 2004 downturn. In particular, there were anumber of completed capital transactions, most notably the sale of De Vereshares and the disposal of Staveley Industries' UK trading operations. Staveleyhas been an excellent investment since GPG acquired full control in 2000 with ahigh return on funds employed and a final realisation of assets well in excessof book value. GPG was never the most logical ultimate owner of the Staveleytrading businesses but had a valid role in developing them for sale tospecialised industry purchasers. Coats contributed a profit of £25 million compared to an IFRS-adjusted profit of£4 million in 2004 which was important to the GPG result but even more so asevidence that Coats' 3 year plan is continuing to take effect. Cash flow hascontinued to be very strong with a significant reduction in debt included inGPG's group accounts. Coats' financial profile at 31 December 2005 £m Intangible assets 164Other fixed assets 342Net current assets 81 Total assets 587 Net debt (209)Provisions (116)Minorities (16) Shareholders' Funds £246 Coats' Preliminary Results for 2005 are being released today in a separateannouncement and will be posted on the GPG website. Currency fluctuations resulted in an overall gain of £35 million of which £2million was allocated to GPG profit, £10 million to Coats and £23 milliontransferred direct to reserves. A marked contrast with the loss of £15 millionin 2004 but if it is accepted that GPG's basket of currencies must inevitablyneutralise in the long run then one year's gain is effectively another year'sloss. IFRS produced some weird anomalies within the accounts but did not have amaterial impact in aggregate on earnings other than the artificial gain of £8million referred to in the Interim Report. Unfortunately the restated 2004figures overall are largely unrecognisable from the original "audited" accounts- a sad reflection on the decline in financial reporting standards, whetherlabelled IFRS or whatever. One figure which should be noted as relevant to analysing GPG's performance isthe unrealised surplus of market value over cost of the investment portfoliowhich was £111 million at 31 December 2005. £mUnrealised surplus as at 31 December 2004 127Realised during 2005 (55) ____ 72Net unrealised gains during 2005 39 ____Balance at 31 December 2005 £111 This figure can, of course, fluctuate considerably but is nevertheless somewhatof a guide to the source of present and potential future profitability. It doesnot include investments in subsidiary and associated companies which are carriedat book value and would otherwise increase the surplus by £16 million. One of the successes of 2005 was the "spin off" of Australian Wealth Management(AWM) from Tower. In the first instance, there was a somewhat negative receptionfrom analysts and the market but GPG recognised the potential value from theoutset and now holds 34.7% of the capital, acquired by underwriting the originalshare issue and by subsequent purchases. AWM now proposes to merge with Select Managed Funds which will produceconsiderable economies of scale and create an even stronger force to compete atthe top level of the funds management industry. Funds management is one of thefew corporate areas where increased size is consistent with growth in value. Capral again recorded a poor result but GPG demonstrated its continuedconfidence by underwriting another cash issue and now holds 52% of the capital.The additional funding was required for an acquisition which ideally complementsCapral's existing operations and was a very sensible deal for both purchaser andvendor (Crane Group). There are distinct similarities between Capral and Coats insofar as both areestablished manufacturers completely remodelling traditional operations and theGPG formula for both companies is "not cutting corners". "Not cutting corners" means that GPG provides the necessary financial and othersupport to eliminate any pressure to compromise on long term planning in favourof short term expediencies. This can mean heavy upfront costs but which might bebetter regarded as investments in the future rather than wholly realised losses.The timing may be uncertain and mistakes are made along the way but the bigpicture is eventually a whole new phase of incremental prosperity for GPGshareholders. As usual, a simplified GPG Balance Sheet is set out below. The company'sfinancial position is strong with a continuing high level of liquidity. SIMPLIFIED BALANCE SHEET AT 31 DECEMBER 2005 £m Cash at Bank 191Debtors 21Coats 246Nationwide 6Canberra Investment Corp 19Turners & Growers 45Capral 60Tower 58Australian Wealth Management 39Share portfolio 285 ____TOTAL ASSETS 970 Creditors (67)Note Issues (183) ____SHAREHOLDERS' FUNDS £720 ==== Capital and Dividend The Board has declared the standard 1p dividend and a 1 for 10 bonus issue (the13th in succession, multiplying an original 1990 holding 3.45 times). The shareelection scheme is available and will operate, in lieu of a cash dividend, atthe rate of 1 new share for each 90 already held. Outlook Notwithstanding the excellent result in 2005, the fluctuations in annual profits(2003: £64 million (under UK GAAP), 2004: £30 million) support the view thatGPG's performance is better measured over a longer period than one year.Therefore, it remains to be seen whether the 2005 result can be repeated in 2006but what is more certain is that the company's overall growth in value should bevery satisfactory in the next few years. Ron Brierley Chairman 14 March 2006 Guinness Peat Group plcConsolidated Income StatementYear ended 31 December Unaudited Unaudited 2005 2004 £m £mContinuing OperationsRevenue 1,195 920 Cost of sales (825) (645) Gross profit 370 275 Profit on disposal of investments and other net investment income 77 64 Distribution costs (179) (136)Administrative expenses (153) (134) Operating profit 115 69 Share of profit/(loss) of joint ventures 4 (2) Share of loss of associated undertakings (1) (6) Profit on sale of business - continuing operations 1 - Finance costs (43) (35) Profit before taxation 76 26 Tax on profit from continuing operations (23) - Profit for the year from continuing operations 53 26 Discontinued operationsGain on discontinued operations 44 6 Profit for the year 97 32 Attributable to:EQUITY HOLDERS OF THE PARENT 97 30Minority interests - 2 97 32 Earnings per Ordinary Share from continuing and discontinued operations:Basic (pence) 10.02p 3.35pDiluted (pence) 8.76p 2.83p Earnings per Ordinary Share from continuing operations:Basic (pence) 5.48p 2.73pDiluted (pence) 5.23p 2.32p Guinness Peat Group plcConsolidated Balance Sheet31 December Unaudited Unaudited 2005 2004 £m £m NON-CURRENT ASSETSIntangible assets 221 152Property, plant and equipment 426 343Investments in associates 62 47Investments in joint ventures 26 12Available-for-sale investments (2004: Other investments) 287 159Deferred tax assets 4 17Pension surpluses 33 15Trade and other receivables 15 12 1,074 757 CURRENT ASSETSInventories 241 186Trade and other receivables 274 268Investments held for trading (2004: Current asset investments) 27 20Available-for-sale investments 5 -Cash and cash equivalents 253 283 800 757Non-current assets classified as held for sale 18 60TOTAL ASSETS 1,892 1,574 CURRENT LIABILITIESTrade and other payables 283 273Current income tax liabilities 5 24Convertible subordinated loan notes - 6Capital notes 99 -Other borrowings 113 45Provisions 90 102 590 450 NET CURRENT ASSETS 210 307 NON-CURRENT LIABILITIESTrade and other payables 24 4Deferred tax liabilities 8 15Capital notes 84 172Other borrowings 217 267Retirement benefit obligations: Funded schemes 29 63 Unfunded schemes 66 61Provisions 45 23 473 605 Liabilities directly associated withnon-current assets classified as held for sale - 30 TOTAL LIABILITIES 1,063 1,085 NET ASSETS 829 489 EQUITYShare capital 49 44Share premium account 16 11Translation reserve 14 (8)Unrealised gains reserve 118 -Other reserves 306 305Retained earnings 217 83 EQUITY SHAREHOLDERS' FUNDS 720 435 Minority interests 109 54 TOTAL EQUITY 829 489 Net asset backing per share * 73.56p 45.49p Net asset backing 720 435IAS 39 transitional adjustments - 120 Pro forma net asset backing including IAS 39 transitional adjustments 720 555 Pro forma net asset backing per share * 73.56p 58.19p * The net asset backing per share for December 2004 has been adjusted for the 2005 Capitalisation Issue which took place in May 2005. Guinness Peat Group plcConsolidated Statement of Recognised Income and ExpenseYear ended 31 December Unaudited Unaudited 2005 2004 £m £m Gains on revaluation of available-for-sale investments 46 -Gains on cash flow hedges 4 -Exchange differences on translation of foreign operations 23 (8)Actuarial gains/(losses) on retirement benefit schemes 49 (19) Net income recognised directly in equity 122 (27) TransfersTransferred to profit or loss on sale of available-for-sale (57) -investments Profit for the year 97 32 Total recognised income and expense for the year 162 5 Attributable to:Equity holders of the parent 162 3Minority interests - 2 162 5 IAS 32 and 39 transitional adjustments 105 - Attributable to:Equity holders of the parent 120 -Minority interests (15) - 105 - Guinness Peat Group plcReconciliation of Consolidated Movements in Equity Shareholders' FundsYear ended 31 December 2005 Share Share premium Translation Unrealised Other Retained capital account reserve gains reserves earnings Total reserve £m £m £m £m £m £m £m Balance as at 31 December 44 11 (8) - 305 83 4352004IAS 32 and 39 adjustments - - (1) 129 - (8) 120 Balance as at 1 January 44 11 (9) 129 305 75 5552005 Total recognised income and - - 23 (11) 4 146 162expenses for the year Dividends - - - - - (9) (9)Capitalisation issue of 4 - - - (4) - -sharesScrip dividend alternative - - - - - 5 5Other share issues (net of 1 5 - - - - 6expenses)Share based payments - - - - 1 - 1 Balance as at 31 December 49 16 14 118 306 217 7202005 Guinness Peat Group plcConsolidated Cash Flow StatementYear ended 31 December Unaudited Unaudited 2005 2004 £m £mCash inflow/(outflow) from operating activitiesNet cash inflow from operating activities 227 190Interest paid (42) (34)Taxation paid (25) (19)Net cash generated from operating activities 160 137 Cash inflow/(outflow) from investing activitiesDividends received from associates and joint ventures 7 4Capital expenditure and financial investment (60) (36)Acquisitions and disposals (81) 12Net cash absorbed in investing activities (134) (20) Cash inflow/(outflow) from financing activitiesIssue of ordinary shares 1 4Equity dividends paid to Company's shareholders (4) (2)Dividends paid to minority interests (6) (1)Decrease in debt (58) (131)Net cash absorbed in financing activities (67) (130) Net decrease in cash and cash equivalents (41) (13)Cash and cash equivalents at beginning of the year 271 290Exchange gains/(losses) on cash and cash equivalents 8 (6)Cash and cash equivalents at end of the year 238 271 Guinness Peat Group plcNOTES TO FINANCIAL STATEMENTS 1. The preliminary financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS"), as endorsed by the European Union, and the accounting policies adopted have been consistently applied to all periods presented except for those relating to the classification and measurement of financial instruments. The Group made use of the exemption available under IFRS 1 only to apply IAS 32 and IAS 39 from 1 January 2005. As a UK company listed on the London Stock Exchange, GPG is obliged under European Union requirements to adopt IFRS with effect from 1 January 2005. Previously GPG produced its accounts under UK Generally Accepted Accounting Principles ("UK GAAP"). A number of differences arise from the adoption of IFRS, and UK listed entities have therefore also been obliged to produce a document re-presenting their results for the prior period in accordance with IFRS. GPG therefore published on 12 September 2005 a separate announcement explaining the impact on its 2004 results arising from the adoption of IFRS. This separate announcement also appears on GPG's website. The comparative balance sheet as at 31 December 2004 has been adjusted in respect of retirement benefit obligations - funded schemes by £28 million compared to that presented in the results for the six months ending 30 June 2005, to exclude provision for pension fund administration costs. This is to reflect emerging best practice for administration costs to be deducted annually from the expected and actual return on pension plan assets, rather than for provision to be made for the present value of the costs expected over the life of the plan. Whilst the financial information included in this announcement has been computed in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. GPG expects to publish full financial statements that comply with IFRS in April 2006. 2. The figures for the year ended 31 December 2004 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, and adjusted as appropriate to reflect the restatement of those accounts from UK GAAP to IFRS. The auditors reported on the UK GAAP accounts and that report was unmodified and did not contain a statement under Section 237(2) of the Companies Act 1985. The figures contained in this report are in the process of being audited. 3. Foreign exchange movements - during the year ended 31 December 2005, GPG recognised in operating profit £12 million of foreign exchange gains compared to £7 million of foreign exchange losses in the year to 31 December 2004. 4. Tax on profit from continuing operations 2005 2004 £m £m UK Corporation tax at 30% - 3 Overseas tax (26) (21) (26) (18) Deferred tax 3 18 (23) - 5. The Group's interests in significant associate and joint venture entities are as 2005 2004 follows: Nationwide Accident Repair Services plc 50.0% 50.0% Harcourt Hill Estate Ltd 50.0% 50.0% Australian Country Spinners Ltd 50.0% - Dawson International plc na 29.9% Capral Aluminium Ltd - see note 6 below na 34.3% Green's Foods Ltd 36.9% 28.9% Australian Wealth Management Ltd 34.7% - CPI Group Ltd 21.6% 21.6% NOTES TO THE FINANCIAL STATEMENTS - continued Australian Wealth Management Ltd ("AWM") became an associated undertaking in March 2005, and contributed £2 million to Group profit in the year to 31 December 2005. The carrying value of AWM at 31 December 2005 amounted to £39 million. Other significant contributions to the profit for the year from associate and joint venture entities were: 2005 2004 £m £m Coats Group Ltd (to 31 March 2004) - (3) Nationwide Accident Repair Services plc 3 1 Capral Aluminium Ltd (to 31 October 2005) (6) (10) Green's Foods Ltd 1 3 6. On 31 October 2005, GPG acquired control of Capral Aluminium Ltd, a former associated undertaking registered in Australia, when its shareholding in that company increased from 38.28% to 52.37%, at a cost of £35 million. The goodwill arising on the acquisition amounted to £3 million. Immediately following GPG's acquisition of Capral, Capral acquired control of certain businesses of Crane Group Ltd at a cost of £55 million. The goodwill arising on this acquisition amounted to £33 million. Capral contributed a loss of £10 million in 2004, and a loss of £6 million in the period to 31 October 2005. The combined Capral and Crane businesses contributed a loss of £3 million between 31 October 2005 and 31 December 2005. 7. Earnings per Ordinary Share: The calculation of earnings per Ordinary Share from continuing and discontinued operations is based on profit for the year attributable to equity shareholders of the parent and the weighted average number of 968,373,963 Ordinary Shares in issue during the year. The calculation of earnings per Ordinary Share from continuing operations is based on profit for the year from continuing operations attributable to equity shareholders of the parent and weighted average number of 968,373,963 Ordinary Shares in issue during the year. The comparatives for the year to 31 December 2004 have been adjusted for the Capitalisation Issue which took place in May 2005. 8. The net tangible assets (net assets excluding intangible assets) per share at 31 December 2005 were 62.11p (2004: 35.23p). 9. Changes in the issued share capital during the year to 31 December 2005 comprise the following: £000 At 1 January 2005 43,451 Employee options exercised 250 Scrip dividend alternative shares issued (13 May 2005) 288 Capitalisation issue (23 May 2005) 4,384 Conversion of Convertible Loan Notes ("CLNs") (5 July 2005) 586 At 31 December 2005 48,959 10. The Directors have approved the payment of an interim ordinary dividend of 1.00 pence per Ordinary Share payable on 30 May 2006 and making a total of 1.00 pence per share for the year. This is subject to a right for shareholders to elect, instead of the cash dividend, to receive one new Ordinary Share for every 90 existing Ordinary Shares held at the appropriate record date. A final cash dividend of 0.91 pence for Ordinary Share (adjusted to reflect the 2005 Capitalisation Issue) in respect of the year to 31 December 2004 was paid on 16 May 2005 to GPG shareholders. There are local regulatory differences in the countries in which the Group's shares are listed, which can result in different taxation treatment and timing. This may have a significant effect on the tax treatment of the dividend for shareholders resident outside the UK. Shareholders are advised to obtain their own professional advice. The tax treatment of the cash dividend and the scrip dividend alternative, including the availability of tax credits such as franking credits, will be dealt with more fully in the Circular which will accompany the Company's Annual Report and Accounts (see note 11 below). Shareholders are recommended to obtain their own professional advice. NOTES TO THE FINANCIAL STATEMENTS - continued 11. The Annual General Meeting of the Company will be held on 13 June 2006 to consider, amongst other things, the proposed 2006 Capitalisation Issue. A circular posted to accompany the Annual Report and Accounts in late April will contain details of the Interim Dividend, the Scrip Dividend Alternative and the 2006 Capitalisation Issue. The 2006 Capitalisation Issue allotment cannot be run until shareholders have given their approval at the 2006 AGM. In order to accommodate the different market practices of the London Stock Exchange ("LSE"), Australian Stock Exchange ("ASX") and New Zealand Stock Exchange ("NZSX"), being those markets on which GPG's shares are quoted and subject to approval of the Capitalisation Issue by shareholders, the Stock Events timetable will be as follows*: Preliminary announcement of results, interim dividend and Scrip Dividend Alternative and 14.03.06 Capitalisation Issue Shares marked ex-dividend (ASX) 20.03.06 Shares marked ex-dividend (UK) 22.03.06 Record date for dividend 24.03.06 Head securities quoted ex-dividend (NZSX) 27.03.06 Post out Circular with Forms of Election for the Scrip Dividend 28.04.06 Final date for receipt of Scrip Dividend elections 22.05.06 Allotment of Scrip Shares (5.00pm UK time) 26.05.06 Dispatch of FASTER mailings notifying NZ holders of the change in holdings following the Scrip 29.05.06 Dividend allotment Dispatch of Scrip Dividend holding statements (AUS) 29.05.06 Dealings commence in Scrip Dividend Shares (AUS and NZ) 29.05.06 Dispatch of Scrip Dividend Share Certificates (UK) 30.05.06 Update of UK CREST accounts (5.00am UK time) 30.05.06 Dealings commence in Scrip Dividend Shares (UK) 30.05.06 Payment of Cash Dividend** 30.05.06 Last date for receipt of AGM proxies (5.00pm locally) 09.06.06 AGM (11.00am UK time) 13.06.06 Shares marked Ex-Capitalisation on ASX and traded on deferred settlement basis 19.06.06 Record date for Capitalisation Issue 23.06.06 Dealings commence in Capitalisation Shares on a deferred basis on NZSX 26.06.06 Head shares marked Ex-Capitalisation in NZ 26.06.06 Allotment of Capitalisation Shares (5.00pm UK time) 30.06.06 Last day of deferred settlement trading on NZSX 30.06.06 Last day of deferred settlement trading on ASX 03.07.06 Update of UK CREST accounts (5.00am UK time) 03.07.06 Dealings commence in Capitalisation Shares 03.07.06 Post out Capitalisation Share Certificates (UK) and holding statements (AUS) 03.07.06 Dispatch of FASTER statements in NZ notifying NZ holders of change in holdings following 03.07.06 Capitalisation Issue Shares marked Ex-Capitalisation in UK 03.07.06 Notes: *Actions take place on all three Exchanges on the date specified unless otherwise indicated ** The cash payment will be made to Shareholders on the Australian and New Zealand share registers in Australia and New Zealand dollars respectively, calculated at the rates of exchange ruling at 4:30pm (UK time) on 22 May 2006. Shareholders on all three registers will have the opportunity to elect for one of the other two currencies, and a circular containing further information and a currency election form will be circulated with the Notice of AGM. To ensure the integrity of the registers over record dates and 'ex' dates the 3 registers will be closed for transmissions between the registers at certain times. 12. On 5 July 2005, those holders of GPG (UK) Holdings plc CLNs who elected to convert their Election Amounts were issued with 11.7 million Ordinary Shares of 5p each ("Conversion Shares") and the remaining CLN holders were repaid Redemption Amounts of £1 million in cash. NOTES TO THE FINANCIAL STATEMENTS - continued 13. Directors - The following persons were directors of GPG during the whole of the year and up to the date of this report: Sir Ron Brierley G J Cureton A I Gibbs B A Nixon Dr G H Weiss 14. Directors' Report - The Chairman's Statement appearing in the Preliminary Results and signed by Sir Ron Brierley provides a review of the operations of the Company for the year ended 31 December 2005. 15. Directors' 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 Preliminary Results of the consolidated entity: (i) give a true and fair view of the financial position as at 31 December 2005 and the performance of the consolidated entity for the year ended on that date; and (ii) comply with applicable International Financial Reporting Standards and the UK Companies Act 1985; 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. 16. Publication - This statement 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 on www.gpgplc.com. On behalf of the BoardB A NixonDirector14 March 2006 Contacts Blake Nixon (UK) 020 7484 3370Gary Weiss (Australia) 02 8288 4302Tony Gibbs (New Zealand) 09 379 8888 UNITED KINGDOMFirst Floor, Times Place, 45 Pall Mall, London SW1Y 5GP Tel: 020 7484 3370 Fax: 020 7925 0700 AUSTRALIARegistries LtdPO Box R67, Royal Exchange, Sydney NSW 1224, Australia Tel: 02 9290 9600 Fax: 02 9279 0664 NEW ZEALANDc/o Computershare Investor Services LimitedPrivate Bag 92119, Auckland 1020, New Zealand Tel: 09 488 8700 Fax: 09 488 8787 Registered in England No. 103548 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Coats