Coats Regulatory News (COA)

RESULTS OF GUINNESS PEAT GROUP PLC ("GPG") FOR THE

SIX MONTHS ENDED 30 JUNE 2009

CHAIRMAN'S STATEMENT

GPG recently issued a Market Update as at 10 August 2009, which provides a detailed current profile of the company. This is reproduced in full herewith. The Market Update gives our assessment of the net asset position at 10 August, compared to the IFRS accounts which are prepared as at 30 June.

In respect of the formal half year period to 30 June, there was an accounting loss of £22 million. That includes a loss of £6 million by Coats, a detailed analysis of which is available at www.coats.com or a printed copy can be obtained from any of GPG's offices.

GPG suffered a serious blow in June with the sudden death of Bruce Maclean, our Australian Company Secretary. Bruce was an integral member of our small management team and he is greatly missed by all. Mr Philip Tunstall has joined GPG in Bruce's place.

Ron Langley has been appointed a Director of GPG. Many shareholders will be aware of Ron's long experience and record of achievement in the corporate world and he is a valuable addition to the Board.

It is unlikely there will be any significant improvement in the accounting result for the full year to 31 December but GPG will be well placed to resume its traditional upward trend in 2010.

Ron Brierley

Chairman

28 August 2009

Condensed Consolidated Income Statement

Unaudited

Unaudited

Audited

6 months to

6 months to

Year to

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

Continuing Operations

Revenue

664 

701 

1,381 

Cost of sales

(460)

(460)

(964)

Gross profit

204 

241 

417 

Profit on disposal of investments and other investment income/(expense)

18 

(5)

61 

Distribution costs

(90)

(94)

(180)

Administrative expenses

(113)

(124)

(276)

Operating profit

19 

18 

22 

Share of (loss)/profit of joint ventures

(9)

5 

1 

Share of profit/(loss) of associated undertakings

3 

(14)

(9)

Finance costs

(19)

(24)

(43)

Loss before taxation from continuing operations

(6)

(15)

(29)

Tax on loss from continuing operations

(18)

(27)

(48)

Loss for the period from continuing operations

(24)

(42)

(77)

Discontinued Operations

Gain on discontinued operations

- 

1 

4 

Loss for the period

(24)

(41)

(73)

Attributable to:

EQUITY SHAREHOLDERS OF THE COMPANY

(22)

(42)

(50)

Non-controlling interests

(2)

1 

(23)

(24)

(41)

(73)

Loss per Ordinary Share from continuing and discontinued operations:

Basic (pence)

(1.36p)

(2.72p)

(3.24p)

Diluted (pence)

(1.36p)

(2.72p)

(3.24p)

Loss per Ordinary Share from continuing operations:

Basic (pence)

(1.37p)

(2.75p)

(3.51p)

Diluted (pence)

(1.37p)

(2.75p)

(3.51p)

Condensed Consolidated Statement of Comprehensive Income

Unaudited

Unaudited

Audited

6 months to

6 months to

Year to

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

Loss for the period 

(24)

(41)

(73)

Gains on revaluation of fixed asset investments

8 

10 

22 

Losses on cash flow hedges

(1)

- 

(11)

Exchange (losses)/gains on translation of foreign operations

(33)

25 

114 

Actuarial losses on retirement benefit schemes

(17)

(4)

(58)

Net (loss)/income recognised directly in equity

(43)

31 

67 

Transfers 

Transferred to profit or loss on sale of fixed asset investments

(7)

(9)

(80)

Transferred to profit or loss on sale of businesses

(2)

- 

(9)

Transferred to profit or loss on cash flow hedges

2 

- 

1 

(7)

(9)

(88)

Net comprehensive expense for the period

(74)

(19)

(94)

Attributable to:

EQUITY SHAREHOLDERS OF THE COMPANY

(72)

(20)

(71)

Non-controlling interests

(2)

1 

(23)

(74)

(19)

(94)

Condensed Consolidated Statement of Financial Position

Unaudited

Unaudited

Audited

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

NON-CURRENT ASSETS

Intangible assets

190

210

218

Property, plant and equipment

463

449

508

Investments in associated undertakings

123

216

126

Investments in joint ventures

43

50

59

Fixed asset investments

169

238

177

Derivative financial instruments

-

2

-

Deferred tax assets

13

13

11

Pension surpluses

25

34

29

Trade and other receivables

24

33

25

1,050

1,245

1,153

CURRENT ASSETS

Inventories

236

261

261

Trade and other receivables

302

323

302

Current asset investments

8

10

7

Derivative financial instruments

4

4

7

Cash and cash equivalents

317

292

362

867

890

939

Non-current assets classified as held for sale

-

3

7

TOTAL ASSETS

1,917

2,138

2,099

CURRENT LIABILITIES

Trade and other payables

262

300

306

Current tax liabilities

5

7

8

Capital Notes

-

82

-

Other borrowings

126

119

109

Derivative financial instruments

20

12

20

Provisions

67

90

79

480

610

522

NET CURRENT ASSETS

387

280

417

Condensed Consolidated Statement of Financial Position (continued)

Unaudited

Unaudited

Audited

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

NON-CURRENT LIABILITIES

Trade and other payables

15

14

18

Deferred tax liabilities

20

12

21

Capital Notes

167

132

172

Other borrowings

248

270

295

Derivative financial instruments

3

-

7

Retirement benefit obligations:

Funded schemes

44

1

32

Unfunded schemes

58

54

64

Provisions

18

19

19

573

502

628

TOTAL LIABILITIES

1,053

1,112

1,150

NET ASSETS

864

1,026

949

EQUITY

Share capital

80

71

71

Share premium account

61

61

61

Translation reserve

83

38

118

Unrealised gains reserve

37

95

36

Other reserves

275

290

281

Retained earnings

267

373

311

EQUITY SHAREHOLDERS' FUNDS

803

928

878

Non-controlling interests

61

98

71

TOTAL EQUITY

864

1,026

949

Net asset backing per share*

Pence

49.96

59.50

56.23

Australian cents

101.78

123.39

115.95

New Zealand cents

127.02

155.58

138.33

*

The net asset backing per share for June 2008 and December 2008 has been adjusted for the 2009 Capitalisation Issue.

Blake Nixon, Director

Approved by the Board on 28 August 2009

Condensed Reconciliation of Consolidated Changes in Equity

6 months ended 30 June 2009

Share

Share

premium

Translation

Unrealised

Other

Retained

capital

account

reserve

gains reserve

reserves

earnings

Total

£m

£m

£m

£m

£m

£m

£m

Balance as at 1 January 2008

64

61 

13 

94 

295 

424 

951 

Total comprehensive income and expense for the period

-

- 

25 

1 

- 

(46)

(20)

Dividends (note 10)

-

- 

- 

- 

- 

(13)

(13)

Capitalisation issue of shares

6

- 

- 

- 

(6)

- 

- 

Scrip dividend alternative

1

- 

- 

- 

- 

8 

9 

Share based payments

-

- 

- 

- 

1 

- 

1 

Balance as at 30 June 2008

71

61 

38 

95 

290 

373 

928 

Balance as at 1 January 2008

64

61 

13 

94 

295 

424 

951 

Total comprehensive income and expense for the period

-

- 

105 

(58)

(10)

(108)

(71)

Dividends (note 10)

-

- 

- 

- 

- 

(13)

(13)

Capitalisation issue of shares

6

- 

- 

- 

(6)

- 

- 

Scrip dividend alternative

1

- 

- 

- 

- 

8 

9 

Share based payments

-

- 

- 

- 

2 

- 

2 

Balance as at 31 December 2008

71

61 

118 

36 

281 

311 

878 

Total comprehensive income and expense for the period

-

- 

(35)

1 

- 

(38)

(72)

Dividends (note 10)

-

- 

- 

- 

- 

(14)

(14)

Capitalisation issue of shares

7

- 

- 

- 

(7)

- 

- 

Scrip dividend alternative

2

(2)

- 

- 

- 

8 

8 

Other share issues

-

2 

- 

- 

- 

- 

2 

Share based payments

-

- 

- 

- 

1 

- 

1 

Balance as at 30 June 2009

80

61 

83 

37 

275 

267 

803 

*

Re-stated to reflect certain cash flows arising in the normal course of the Parent Group's investment business as part of operating cash flows, rather than as cash flows from investing activities.

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 forseeable future. Accordingly, they continue to adopt the going concern basis in preparing these condensed consolidated financial statements.

Other than the adoption of IAS 1 (2007) ("Presentation of Financial Statements"), IFRS 8 ("Operating Segments") and IFRIC 14 ("IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction"), the same accounting policies, presentation and methods of computation are followed in the condensed consolidated financial statements as applied in the Group's latest annual audited financial statements.

2.

The information for the year ended 31 December 2008 does not constitute statutory accounts (as defined in section 240 of the Companies Act 1985) 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 237(2) or 237(3) of the Companies Act 1985. 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 £93.9 million at 30 June 2009 exchange rates). That uncertainty remains as at 30 June 2009 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 2009 have been reviewed - see attached independent review report - but have not been audited. The condensed consolidated financial statements for the equivalent period in 2008 were also reviewed but not audited.

3.

Group foreign exchange movements - during the six months to 30 June 2009, GPG recognised in operating profit £7 million of net foreign exchange gains compared to £7 million of net foreign exchange gains in the six months to 30 June 2008 (£4 million net losses in the year to 31 December 2008).

4.

Tax on loss from continuing operations

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

UK Corporation tax at 28.0% (2008: 28.5%)

- 

2 

2 

Overseas tax

(10)

(10)

(18)

(10)

(8)

(16)

Deferred tax

(8)

(19)

(32)

(18)

(27)

(48)

5.

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

30 June

30 June

31 December

2009

2008

2008

Australian Country Spinners Ltd

50.0%

50.0%

50.0%

Autologic Holdings plc

26.2%

21.5%

23.5%

Green's General Foods Pty Ltd

72.5%

72.5%

72.5%

The Maryborough Sugar Factory Ltd

24.0%

27.1%

24.0%

MMC Contrarian Ltd

28.6%

na

26.4%

Peanut Company of Australia Ltd

24.8%

23.8%

23.8%

Rattoon Holdings Ltd

44.4%

44.4%

44.4%

Tower Australia Group Ltd

na

29.7%

na

Tower Ltd

35.0%

35.0%

35.0%

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued

5.

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

30 June

30 June

31 December

2009

2008

2008

£m

£m

£m

Australian Country Spinners Ltd

- 

1 

4 

Autologic Holdings plc

1 

(2)

(4)

Green's General Foods Pty Ltd

- 

(2)

(3)

Rattoon Holdings Ltd

- 

(14)

(12)

Tower Australia Group Ltd

na 

4 

4 

Tower Ltd

2 

na 

5 

Other contributions to the (loss)/profit for the period from joint ventures and associated undertakings, held by operating subsidiaries, include a CIC joint venture £9 million loss (6 months to 30 June 2008:

£1 million profit; year to 31 December 2008: £3 million profit). The CIC joint venture loss for the period includes an impairment charge of £12 million (6 months to 30 June 2008: £Nil; year to 31 December 2008: £Nil).

There have been no changes in the segments reported above, following the adoption of IFRS 8.

Other than the impact of foreign exchange rate movements, there have been no significant changes to the segmentation of total assets since the year end.

Note:

Non-operating items comprise interest and investment income in operating subsidiaries, which are not considered to be financial operations.

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 consolidated unaudited financial statements:

(i)

give a true and fair view of the financial position as at 30 June 2009 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 4.2.7R and DTR 4.2.8R; and

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

28 August 2009

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

GPO Box 3993, Sydney NSW 2000, Australia

Tel: 02 9290 9600 Fax: 02 9279 0664

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

We have been engaged by Guinness Peat Group plc ("the Company") to review the condensed consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed reconciliation of consolidated changes in equity, the condensed statement of consolidated cash flows and related notes 1 to 16. We have read the interim management report (excluding the Guinness Peat Group plc Market Update as at 10 August 2009) and the directors' responsibility statement contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated 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.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with 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.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated financial statements in the half-yearly financial report based on our review.

Scope of Review 

We conducted our review 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 for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

INDEPENDENT REVIEW REPORT TO GUINNESS PEAT GROUP PLC - continued

Emphasis of matter - uncertainty relating to the amount of a potential liability arising from a European Commission investigation

Without qualifying our conclusion, we draw attention to the disclosures made in note 2 to the condensed consolidated financial statements concerning the European Commission competition investigation into alleged market sharing agreements relating to the European haberdashery market. In September 2007, the European Commission imposed a fine of €110.3 million (equivalent to £93.9 million at 30 June 2009 exchange rates) in relation to these allegations, against which one of the Company's subsidiaries, Coats plc, has lodged an appeal. Significant uncertainty surrounds the ultimate outcome of this matter. The directors are of the view that any anticipated eventual payment of the remaining fines is adequately covered by existing provisions.

Deloitte LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

28 August 2009

£m 

Gross assets 

862 

Less creditors minorities & provisions

(590)

Net book value

£272 

UK SHARE PORTFOLIO

Share price

£m

8.9% x Adnams "B"

92.00

2.3

5.9% x AH Medical Properties

0.17

0.6

3.6% x Ashley House

0.81

1.4

26.2% x Autologic

0.33

5.5

4.1% x Brookwell

0.42

0.2

4.6% x Chrysalis Group

0.67

2.1

3.7% x Creative Entertainment

0.00

0.0

6.8% x Daniel Thwaites

1.62

7.0

15.2% x Dawson International

0.03

1.0

11.3% x Dickinson Legg

0.18

0.8

5.7% x Fuller Smith & Turner

4.75

8.8

5.7% x M J Gleeson

0.74

2.2

14.2% x Inspired Gaming Group

0.04

0.4

5.5% x Inspired Gaming Prefs

0.33

1.7

  6.5% x Jersey Electricity "A"

69.00

2.6

  6.4% x Jersey New Water Works

35.00

0.6

1.1% x M & G Equity

0.02

0.0

7.0% x Nationwide Accident Repair

0.93

2.8

27.7% x Newbury Racecourse

7.25

6.4

3.1% x Shepherd Neame "A"

7.42

2.6

1.1% x Sweet China

0.03

0.0

6.0% x Sysmedia

0.01

0.0

5.7% x Third Advance Value

0.10

0.1

10.9% x 333 Holdings

1.00

0.2

14.2% x Young & Co's Brewery "A"

4.58

18.9

33.7% x Young & Co's Brewery "NV"

4.03

26.0

£94.2m

AUSTRALIAN SHARE PORTFOLIO

Share price

A$m

7.7% x A V Jennings

0.34

7.2

10.6% x Babcock & Brown Power

0.08

5.8

71.2% x Canberra Investment Corp

0.55

46.6

9.8% x Capilano Honey

1.20

0.6

75.6% x Capral

0.10

29.4

55.8% x Capral Notes

58.80

16.4

4.7% x CSR

1.99

121.9

19.0% x eServglobal

0.41

15.5

13.0% x Farm Pride Foods

0.27

1.9

5.8% x GME Resources

0.11

1.0

 1.3% x IOOF Holdings

4.55

13.2

24.0% x Maryborough Sugar

2.10

23.4

7.6% x MetalsX

0.12

10.3

28.6% x MMC Contrarian

0.43

17.4

12.8% x NSX

0.25

2.4

24.8% x Peanut Co of Aust

4.20

7.6

44.4% x Rattoon Holdings

0.20

4.5

10.0% x Ridley Corp

0.95

29.4

8.7% x Symex Holdings

0.53

5.9

19.9% x Tandou

0.26

4.6

25.0% x Tooth & Co

0.01

0.3

Sundries including Tourism Property Group,

Tasmanian Pure Foods and 4 undisclosed listed investments

33.0

A$398.3m

=£199.75m

AUSTRALIAN TRADING SUBSIDIARIES AND JOINT VENTURES

Australian Country Spinners (50%)

Greens General Foods (72.5%)

Gosford Quarry (100%)