Half Year Results to 30 June 2010

Condensed Consolidated Income Statement

Unaudited

Unaudited

Audited

6 months to

6 months to

Year to

30 June

30 June

31 December

2010

2009

2009

Restated *

Restated **

£m

£m

£m

Continuing Operations

Revenue

643 

577 

1,172 

Cost of sales

(417)

(395)

(799)

Gross profit

226 

182 

373 

Profit on disposal of investments and other investment income

5 

18 

26 

Distribution costs

(90)

(85)

(164)

Administrative expenses

(110)

(87)

(200)

Operating profit

31 

28 

35 

Share of profit/(loss) of joint ventures

5 

(9)

(6)

Share of profit of associated undertakings

7 

3 

9 

Finance costs

(17)

(16)

(31)

Profit before taxation from continuing operations

26 

6 

7 

Tax on profit from continuing operations

(15)

(18)

(28)

Profit/(loss) for the period from continuing operations

11 

(12)

(21)

Discontinued Operations

Profit/(loss) on discontinued operations

1 

(12)

(17)

Profit/(loss) for the period

12 

(24)

(38)

Attributable to:

EQUITY SHAREHOLDERS OF THE COMPANY

10 

(22)

(36)

Non-controlling interests

2 

(2)

(2)

12 

(24)

(38)

Earnings/(loss) per Ordinary Share from continuing and discontinued operations:

Basic (pence)

0.54p

(1.23p) ***

(2.04p) ***

Diluted (pence)

0.54p

(1.23p) ***

(2.04p) ***

Earnings/(loss) per Ordinary Share from continuing operations:

Basic (pence)

0.47p

(0.57p) ***

(1.32p) ***

Diluted (pence)

0.47p

(0.57p) ***

(1.32p) ***

* Restated to reflect the results of Capral Ltd and Staveley Inc. as discontinued operations

** Restated to reflect the results of ClearView Wealth Ltd and Staveley Inc. as discontinued operations

*** Adjusted for the 2010 Capitalisation Issue

Condensed Consolidated Statement of Comprehensive Income

Unaudited

Unaudited

Audited

6 months to

6 months to

Year to

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

Profit/(loss) for the period

12 

(24)

(38)

(Losses)/gains on revaluation of fixed asset investments

(1)

8 

41 

Gains/(losses) on cash flow hedges

2 

(1)

(4)

Exchange gains/(losses) on translation of foreign operations

21 

(33)

15 

Actuarial losses on retirement benefit schemes

(23)

(17)

(13)

Net (loss)/income recognised directly in equity

(1)

(43)

39 

Transfers

Transferred to profit or loss on sale of fixed asset investments

(3)

(7)

(13)

Transferred to profit or loss on sale of businesses

(3)

(2)

(6)

Transferred to profit or loss on cash flow hedges

3 

2 

4 

(3)

(7)

(15)

Net comprehensive income/(expense) for the period

8 

(74)

(14)

Attributable to:

EQUITY SHAREHOLDERS OF THE COMPANY

5 

(72)

(12)

Non-controlling interests

3 

(2)

(2)

8 

(74)

(14)

Condensed Consolidated Statement of Financial Position

Unaudited

Unaudited

Audited

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

NON-CURRENT ASSETS

Intangible assets

199

190

192

Property, plant and equipment

416

463

424

Investments in associated undertakings

230

123

157

Investments in joint ventures

47

43

47

Fixed asset investments

259

169

220

Deferred tax assets

15

13

20

Pension surpluses

28

25

27

Trade and other receivables

23

24

24

1,217

1,050

1,111

CURRENT ASSETS

Inventories

257

236

179

Trade and other receivables

308

302

239

Current asset investments

13

8

15

Derivative financial instruments

2

4

3

Cash and cash equivalents

255

317

402

835

867

838

Non-current assets classified as held for sale

4

- 

3

TOTAL ASSETS

2,056

1,917

1,952

CURRENT LIABILITIES

Trade and other payables

278

262

256

Current tax liabilities

9

5

8

Other borrowings

130

126

80

Derivative financial instruments

17

20

16

Provisions

61

67

65

495

480

425

NET CURRENT ASSETS

340

387

413

NON-CURRENT LIABILITIES

Trade and other payables

11

15

13

Deferred tax liabilities

28

20

22

Capital Notes

195

167

191

Other borrowings

257

248

235

Derivative financial instruments

4

3

3

Retirement benefit obligations:

Funded schemes

59

44

39

Unfunded schemes

53

58

56

Provisions

25

18

24

632

573

583

TOTAL LIABILITIES

1,127

1,053

1,008

NET ASSETS

929

864

944

Condensed Consolidated Statement of Financial Position (continued)

Unaudited

Unaudited

Audited

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

EQUITY

Share capital

91

80

81

Share premium account

62

61

63

Translation reserve

140

83

123

Unrealised gains reserve

65

37

68

Other reserves

270

275

274

Retained earnings

239

267

258

EQUITY SHAREHOLDERS' FUNDS

867

803

867

Non-controlling interests

62

61

77

TOTAL EQUITY

929

864

944

Net asset backing per share*

Pence

47.69

45.42

48.64

Australian cents

84.48

92.53

87.34

New Zealand cents

103.76

115.47

107.95

*

The net asset backing per share for June 2009 and December 2009 has been adjusted for the 2010 Capitalisation Issue.

Blake Nixon, Director

Approved by the Board on 26 August 2010

Condensed Reconciliation of Consolidated Changes in Equity

6 months ended 30 June 2010

Share

Unrealised

Non-

Share

premium

Translation

gains

Other

Retained

controlling

capital

account

reserve

reserve

reserves

earnings

Total

interests

£m

£m

£m

£m

£m

£m

£m

£m

Balance as at 1 January 2009

71 

61 

118 

36 

281 

311 

878 

71 

Total comprehensive income and expense

for the period

- 

- 

(35)

1 

- 

(38)

(72)

(2)

Other currency translation differences

- 

- 

- 

- 

- 

- 

- 

(3)

Dividends (note 11)

- 

- 

- 

- 

- 

(14)

(14)

(3)

Scrip dividend alternative

2 

(2)

- 

- 

- 

8 

8 

- 

Capitalisation issue of shares

7 

- 

- 

- 

(7)

- 

- 

- 

Other share issues

- 

2 

- 

- 

- 

- 

2 

- 

Share based payments

- 

- 

- 

- 

1 

- 

1 

- 

Acquisition of subsidiaries

- 

- 

- 

- 

- 

- 

- 

(2)

Balance as at 30 June 2009

80 

61 

83 

37 

275 

267 

803 

61 

Balance as at 1 January 2009

71 

61 

118 

36 

281 

311 

878 

71 

Total comprehensive income and expense

for the period

- 

- 

5 

32 

(1)

(48)

(12)

(2)

Other currency translation differences

- 

- 

- 

- 

- 

- 

- 

5 

Dividends (note 11)

- 

- 

- 

- 

- 

(14)

(14)

(6)

Scrip dividend alternative

2 

(2)

- 

- 

- 

7 

7 

- 

Capitalisation issue of shares

7 

- 

- 

- 

(7)

- 

- 

- 

Other share issues

1 

4 

- 

- 

- 

- 

5 

- 

Share based payments

- 

- 

- 

- 

1 

- 

1 

- 

Acquisition of subsidiaries

- 

- 

- 

- 

- 

- 

- 

18 

Disposal of subsidiaries

- 

- 

- 

- 

- 

- 

- 

(7)

Acquisition of non-controlling interests

- 

- 

- 

- 

- 

2 

2 

(2)

Balance as at 31 December 2009

81 

63 

123 

68 

274 

258 

867 

77 

Total comprehensive income and expense

for the period

- 

- 

17 

(3)

4 

(13)

5 

3

Other currency translation differences

- 

- 

- 

- 

- 

- 

- 

3

Dividends (note 11)

- 

- 

- 

- 

- 

(16)

(16)

(3)

Scrip dividend alternative

1 

(1)

- 

- 

- 

10 

10 

- 

Capitalisation issue of shares

8 

- 

- 

- 

(8)

- 

- 

- 

Other share issues

1 

- 

- 

- 

- 

- 

1 

- 

Additional investment in subsidiaries

- 

- 

- 

- 

- 

- 

- 

16 

Disposal of subsidiaries

- 

- 

- 

- 

- 

- 

- 

(34)

Balance as at 30 June 2010

91 

62 

140 

65 

270 

239 

867 

62 

Condensed Statement of Consolidated Cash Flows

Unaudited

Unaudited

Audited

6 months to

6 months to

Year to

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

Cash (outflow)/inflow from operating activities

Net cash (outflow)/inflow from operating activities

(72)

- 

121 

Interest paid

(20)

(23)

(46)

Taxation paid

(15)

(11)

(20)

Net cash (absorbed in)/generated by operating activities

(107)

(34)

55 

Cash (outflow)/inflow from investing activities

Dividends received from associated undertakings and joint ventures

8 

6 

10 

Capital expenditure and financial investment

(10)

(9)

(16)

Acquisitions and disposals

(90)

- 

27 

Net cash (absorbed in)/generated by investing activities

(92)

(3)

21 

Cash inflow/(outflow) from financing activities

Issue of ordinary shares

1 

2 

5 

Equity dividends paid to Company's shareholders

(6)

(6)

(6)

Dividends paid to non-controlling interests

(4)

(5)

(6)

Increase/(decrease) in debt

42 

7 

(30)

Net cash generated by/(absorbed in) financing activities

33 

(2)

(37)

Net (decrease)/increase in cash and cash equivalents

(166)

(39)

39 

Cash and cash equivalents at beginning of the period

388 

347 

347 

Exchange gains/(losses) on cash and cash equivalents

8 

(1)

2 

Cash and cash equivalents at end of the period

230 

307 

388 

Cash and cash equivalents per the balance sheet

255 

317 

402 

Bank overdrafts

(25)

(10)

(14)

Cash and cash equivalents at end of the period

230 

307 

388 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed consolidated financial statements included in this half-yearly financial report have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting, as adopted by the European Union, 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.

After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these condensed consolidated financial statements.

Other than the adoption of IFRS 3 (2008) ("Business Combinations") and IAS 27 (2008) ("Consolidated and Separate Financial Statements"), the same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.

2.

The information for the year ended 31 December 2009 does not constitute statutory accounts (as defined in section 435 of the Companies Act 2006) but has been extracted from the statutory accounts for that year, which have been filed with the Registrar of Companies. The audit report on those accounts did not contain statements under Sections 498(2) or 498(3) of the Companies Act 2006. The audit opinion contained in that report was unqualified but contained an emphasis of matter paragraph drawing attention to the significant uncertainty surrounding the ultimate outcome of the appeal by Coats plc against the European Commission fine of €110.3 million (equivalent to £90.3 million at 30 June 2010 exchange rates). That uncertainty remains as at 30 June 2010 and the independent review report on these condensed consolidated financial statements contains a similar emphasis of matter paragraph. The directors remain of the view that any anticipated eventual payment of the fine is adequately covered by existing provisions.

The condensed consolidated financial statements for the six months ended 30 June 2010 have been reviewed - see attached independent review report - but have not been audited. The condensed consolidated financial statements for the equivalent period in 2009 were also reviewed but not audited.

3.

Group foreign exchange movements - during the six months to 30 June 2010, GPG recognised in operating profit £2 million of net foreign exchange losses compared to £7 million of net foreign exchange gains in the six months to 30 June 2009 (£8 million net losses in the year to 31 December 2009).

4.

Tax on profit from continuing operations

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

UK Corporation tax at 28.0% (2009: 28.0%)

- 

- 

- 

Overseas tax

(11)

(10)

(21)

(11)

(10)

(21)

Deferred tax

(4)

(8)

(7)

(15)

(18)

(28)

5.

The Parent Group's significant joint ventures and associated undertakings are as follows:

30 June

30 June

31 December

2010

2009

2009

Autologic Holdings plc

26.2%

26.2%

26.2%

Australian Country Spinners Ltd

50.0%

50.0%

50.0%

Capral Ltd

44.4%

na

44.4%

ClearView Wealth Ltd (formerly MMC Contrarian Ltd)

47.9%

28.6%

na

Green's General Foods Pty Ltd

72.5%

72.5%

72.5%

The Maryborough Sugar Factory Ltd

24.3%

24.0%

22.9%

Peanut Company of Australia Ltd

24.8%

24.8%

24.8%

Rattoon Holdings Ltd

44.4%

44.4%

44.4%

Tower Ltd

35.0%

35.0%

35.0%

5.

ClearView Wealth Ltd ("ClearView"), a former subsidiary undertaking which was part of the Group's investment segment, became an associated undertaking on 5 May 2010, as a result of a share placement by that company (see note 7). ClearView, as an associated undertaking, contributed £3 million to the Group result for the period. The carrying value of ClearView at 30 June 2010 amounted to £64 million.

Other significant contributions to the profit/(loss) for the period from Parent Group joint ventures and associated undertakings were:

30 June

30 June

31 December

2010

2009

2009

£m

£m

£m

Autologic Holdings plc

- 

1 

2 

Green's General Foods Pty Ltd

- 

- 

(1)

Peanut Company of Australia Ltd

(2)

1 

- 

Tower Ltd

5 

2 

6 

Other contributions to the profit/(loss) for the period from joint ventures and associated undertakings, held by operating subsidiaries, include a CIC joint venture £5 million profit (6 months to 30 June 2009: £9 million loss; year to 31 December 2009: £7 million loss). The CIC joint venture profit for the period includes an impairment charge of £Nil (6 months to 30 June 2009: £12 million; year to 31 December 2009: £12 million).

6.

Segmental Analysis - Analysis by activity

Non-

operating

Thread

Fruit/produce

Aluminium

Other

items

Investment

manufacture

distribution

extrusion

activities

(see note)

Total

£m

£m

£m

£m

£m

£m

£m

6 months ended 30 June 2010:

Revenue:

External sales

- 

497 

134 

- 

12 

- 

643 

Profit/(loss) after tax:

Continuing operations

(19)

25 

1 

- 

4 

- 

11 

Discontinued operations

(1)

- 

- 

- 

2 

- 

1 

Total assets 30 June 2010

470 

890 

199 

- 

97 

400 

2,056 

6 months ended 30 June 2009:

Revenue:

External sales

1 

443 

120 

- 

13 

- 

577 

(Loss)/profit after tax:

Continuing operations

(1)

(4)

2 

-

(9)

- 

(12)

Discontinued operations

- 

- 

- 

(12)

- 

- 

(12)

Total assets 30 June 2009

503 

792 

176 

126 

68 

252 

1,917 

Year ended 31 December 2009:

Revenue:

External sales

2 

903 

237 

- 

30 

- 

1,172 

(Loss)/profit after tax:

Continuing operations

(23)

3 

4 

- 

(5)

- 

(21)

Discontinued operations

4 

(2)

- 

(19)

- 

- 

(17)

Total assets 31 December 2009

524 

815 

148 

- 

83 

382 

1,952 

Note:

Non-operating items comprise cash and cash equivalents, derivatives and investments held by operating subsidiaries (which are not considered to be financial operations).

7.

Discontinued operations

As stated in note 5, in May 2010 ClearView became an associated undertaking. ClearView has been treated as a discontinued operation in the 2010 and the 2009 comparative Condensed Consolidated Income Statements.

The impact of the deemed disposal of ClearView was as follows:

£m

Intangible assets

4 

Deferred tax assets

8 

Trade and other receivables

2 

Cash and cash equivalents

94 

Trade and other payables

(3)

Net assets at disposal

105 

Non-controlling interests

(34)

Group share of net assets at disposal

71 

Cumulative translation differences recycled from reserves

(3)

68 

Residual carrying value as an associated undertaking

67 

Loss on disposal

1 

Also during the 6 months to 30 June 2010, Staveley Inc. sold its two remaining trading businesses, resulting in a gain of £3 million. That gain, together with the results of those businesses for the period and for the 2009 comparatives, is included within the profit/(loss) on discontinued operations.

8.

Earnings/(loss) per share - The calculation of earnings/(loss) per Ordinary Share is based on profit/(loss) after taxation attributable to shareholders and the weighted average number of 1,794,939,109 Ordinary Shares in issue during the six months ended 30 June 2010.

For the calculation of diluted earnings/(loss) per Ordinary Share, the weighted average number of Ordinary Shares in issue is adjusted, where appropriate, to assume conversion of all dilutive potential Ordinary Shares, being share options granted to employees and Capital Notes. All dilutive potential ordinary Shares were not dilutive during the period.

The comparatives for the six months to 30 June 2009 and the year to 31 December 2009 have been adjusted for the Capitalisation Issue which took place in June 2010 - see Note 10.

Calculations of earnings/(loss) per share are based on results to the nearest £000s.

9.

The net tangible assets per share figure at 30 June 2010 was 40.14p (30 June 2009: 38.14p, 31 December 2009: 42.16p). The comparatives for 30 June 2009 and 31 December 2009 have been adjusted for the 2010 Capitalisation Issue.

10.

Changes in the issued share capital during the six months to 30 June 2010 comprise the following:

£000

At 1 January 2010

81,046

Employee options exercised

162

Scrip dividend alternative shares issued (17 May 2010)

1,456

Capitalisation Issue (4 June 2010)

8,266

At 30 June 2010

90,930

11.

Dividends - The directors have not recommended the payment of an interim dividend (6 months to 30 June 2009: Nil). An interim dividend of 0.91p per share, adjusted for the 2010 Capitalisation Issue, was paid during the period in respect of the year ended 31 December 2009. An interim dividend of 0.91p per share, adjusted for the 2009 Capitalisation Issue, was paid during the six months ended 30 June 2009 in respect of the year ended 31 December 2008.

12.

Contingent liabilities - During the period a subsidiary was released from its previously reported A$12 million exposure to provide funding to, or acquire assets from, an entity in which it has an existing investment.

13.

There have been no changes to the principal risks and uncertainties compared to those outlined in note 40 to the Financial Statements in the 2009 Annual Report, comprising risks associated with currency, interest rate, market price, liquidity, credit and capital.

14.

Related party transactions - There have been no related party transactions or changes in related party transactions described in the latest annual report that could have a material effect on the financial position or performance of the Group in the first six months of the financial year.

15.

Directors - The following persons were, except where noted, directors of GPG during the whole of the period and up to the date of this report:

Sir Ron Brierley

A I Gibbs (to 28 June 2010)

R Langley

B A Nixon

Dr G H Weiss

16.

Interim Management Report - The Chairman's Statement appearing in the half-yearly financial report and signed by Sir Ron Brierley provides a review of the operations of the Group for the six months ended 30 June 2010.

17.

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.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with a resolution of the directors of Guinness Peat Group plc I state that:

in the opinion of the Directors and to the best of their knowledge:

a.

the condensed set of unaudited financial statements:

(i)

give a true and fair view of the financial position as at 30 June 2010 and the performance of the consolidated Group for the half-year ended on that date;

(ii)

have been prepared in accordance with IAS 34 "Interim Financial Reporting";

(iii)

comply with the recognition and measurement principles of applicable International Financial Reporting Standards as adopted by the Group; and

b.

the half-yearly financial report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8;

c.

there are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable.

Signed on behalf of the Board

B A Nixon, Director

26 August 2010

UNITED KINGDOM

First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP

Tel: 020 7484 3370

Fax: 020 7925 0700

AUSTRALIA

c/o Computershare Investor Services Limited

GPO Box 242, Melbourne VIC 3001

Tel: 03 9415 4083

Fax: 03 9473 2506

NEW ZEALAND

c/o Computershare Investor Services Limited

Private Bag 92119, Auckland 1142, New Zealand

Tel: 09 488 8777

Fax: 09 488 8787

Registered in England No. 103548

INDEPENDENT REVIEW REPORT TO GUINNESS PEAT GROUP PLC

Introduction

We have been engaged by Guinness Peat Group plc (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the condensed consolidated income statement, the condensed consolidated statement of financial position, the condensed statement of comprehensive income, the condensed reconciliation of consolidated changes in equity, the condensed statement of consolidated cash flows and related notes 1 to 17. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.