Last checked at 7 Jan 2009 10:20
GUINNESS PEAT GROUP PLC - MARKET UPDATE
The accounts to 31 December are in the course of preparation but it is clear that 2008 was a very unsatisfactory year for GPG.
A number of portfolio writedowns have been necessary as a consequence of the global financial crisis although we believe many of these will ultimately recover as a more realistic reflection of intrinsic value.
Not so good are those which are the product of poor investment judgment in earlier years and where we must accept a permanent loss.
All of that is essentially what was stated in the Interim Report but which became worse in the second half.
Our principal operating subsidiary, Coats, has also been affected by the economic downturn and 2008 profit will be less than originally anticipated.
On a more favourable note, GPG's financial position remains strong with good liquidity and conservatively stated net assets well in excess of the current share price. This represents a critical advantage in the present climate.
The Board is still focussed on returning value to shareholders in 2010 but this must obviously be qualified by market conditions which were not fully foreseen earlier in the year.
Attached is a detailed internal valuation of GPG at 22/12/08. This is unaudited and E & OE but it is the management working model and unlikely to contain significant error. It is a more relevant and useful measure of GPG than the "IFRS" distortions and "equity accounting" absurdities which have made conventional reporting increasingly meaningless.
COATS
The book value of Coats is £289 million comprising:
| £m | ||
| Gross assets | 915.3 | |
| Less borrowings & minorities | (626.3) | |
| Net book value | £289.0 |
The ultimate realisation value of Coats is considered to be significantly in excess of this figure.
In the present circumstances, however, that has become a speculative evaluation and we have prudently confined its value to the level of GPG's invested funds and earnings since acquisition.
| UK SHARE PORTFOLIO | Share price | £m | ||
| 8.9% x Adnams "B" | 94.50 | 2.4 | ||
| 5.9% x AH Medical Properties | 0.17 | 0.6 | ||
| 5.0% x Ashley House | 0.74 | 1.6 | ||
| 26.3% x Autologic | 0.11 | 1.9 | ||
| 4.1% x Brookwell | 0.40 | 0.4 | ||
| 5.5% x Creative Entertainment | 0.00 | 0.0 | ||
| 6.1% x Daniel Thwaites | 1.77 | 6.8 | ||
| 15.2% x Dawson International | 0.02 | 0.5 | ||
| 11.3% x Dickinson Legg | 0.18 | 0.7 | ||
| 9.3% x Ennstone | 0.01 | 0.2 | ||
| 3.1% x Fiberweb | 0.27 | 1.0 | ||
| 4.9% x M J Gleeson | 0.59 | 1.5 | ||
| 14.4% x Inspired Gaming Group | 0.04 | 0.5 | ||
| 6.2% x Inspired Gaming Prefs | 0.37 | 1.8 | ||
| 6.5% x Jersey Electricity "A" | 55.00 | 2.1 | ||
| 6.4% x Jersey New Water Works | 35.00 | 0.6 | ||
| 0.4% x Lookers | 0.20 | 0.1 | ||
| 8.0% x Nationwide Accident Repair | 0.85 | 2.9 | ||
| 29.0% x Newbury Racecourse | 9.75 | 8.6 | ||
| 3.1% x Shepherd Neame "A" | 7.52 | 2.6 | ||
| 2.6% x Sweet China | 0.04 | 0.0 | ||
| 6.0% x Sysmedia | 0.01 | 0.0 | ||
| 5.7% x Third Advance Value | 0.70 | 0.6 | ||
| 10.9% x 333 Holdings | 1.00 | 0.3 | ||
| 13.7% x Young & Co's Brewery "A" | 4.00 | 15.9 | ||
| 32.3% x Young & Co's Brewery "NV" | 3.82 | 23.7 | ||
| Two undisclosed listed companies. | 5.7 | |||
| £83.0m | ||||
| AUSTRALIAN SHARE PORTFOLIO | Share price | A$m | ||
| 7.9% x AVJennings | 0.39 | 8.1 | ||
| 68.8% x Canberra Investment Corp | 0.60 | 47.3 | ||
| 9.9% x Capilano Honey | 1.20 | 0.6 | ||
| 75.6% x Capral | 0.06 | 19.1 | ||
| 55.8% x Capral Notes | 60.00 | 16.7 | ||
| 4.8% x CSR | 1.67 | 101.7 | ||
| 19.5% x eServglobal | 0.50 | 16.7 | ||
| 13.0% x Farm Pride Foods | 0.25 | 1.8 | ||
| 5.3% x GME Resources | 0.08 | 1.1 | ||
| 5.0% x IOOF Holdings | 3.11 | 10.6 | ||
| 24.0% x Maryborough Sugar | 1.90 | 21.3 | ||
| 7.6% x MetalsX | 0.08 | 7.6 | ||
| 26.4% x MMC Contrarian | 0.40 | 14.7 | ||
| 13.5% x MYOB | 1.10 | 57.5 | ||
| 11.3% x NSX | 0.16 | 1.3 | ||
| 23.8% x Peanut Co of Aust | 4.45 | 7.6 | ||
| 44.4% x Rattoon Holdings | 0.12 | 26.9 | ||
| 8.7% x Symex Holdings | 0.42 | 4.7 | ||
| 17.0% x Tandou | 0.14 | 2.1 | ||
| 25.0% x Tooth & Co | 0.01 | 0.3 | ||
| Sundries including Tourism Property Group, | ||||
| Tasmanian Pure Foods and 1 undisclosed listed | ||||
| investment. | 8.2 | |||
| A$375.9m | ||||
| = £171.9m | ||||
| AUSTRALIAN TRADING SUBSIDIARIES AND JOINT VENTURES | ||||
| Australian Country Spinners (50%) | ||||
| Green's General Foods (72.5%) | ||||
| Gosford Quarry (100%) | ||||
| Tafmo (56%) | ||||
| These companies have an aggregate book value of A$64.4m but for the purpose of this update, no market value has been attributed because all incurred losses in 2008. In the case of Tafmo, losses have been a necessary product of the development and initial marketing of the company's point-of-sale technology. This is making good progress towards break even, after which the potential for increasing profitability is considerable. | |||
| NEW ZEALAND SHARE PORTFOLIO | Share Price | NZ$m | ||
| 1.4% x ASB Capital Prefs | 0.76 | 3.8 | ||
| 4.7% x Allied Farmers | 0.80 | 0.7 | ||
| 1.5% x Fisher & Paykel Appliances | 1.27 | 5.5 | ||
| 35.0% x Tower | 1.43 | 96.0 | ||
| 19.4% x Turners Auctions | 0.55 | 2.9 | ||
| 65.9% x Turners & Growers | 1.55 | 102.4 | ||
| NZ$211.3m | ||||
| =£81.57m | ||||
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| SINGAPORE SHARE PORTFOLIO | Share Price | S$m | ||
| 0.3% x Isetan (Singapore) | 2.97 | 0.4 | ||
| 2.2% x Ossia International | 0.16 | 0.9 | ||
| 17.3% x Pertama Holdings | 0.10 | 4.1 | ||
| S$5.4m | ||||
| = £2.49m | ||||
| GPG SIMPLIFIED BALANCE SHEET AT 22/12/08 | ||
| £m | ||
| Cash at Bank | 316 | |
| Coats | 289 | |
| Share Portfolio - | ||
| UK | 83 | |
| Australia | 172 | |
| NZ | 82 | |
| SQ | 2 | |
| Total Assets | 944 | |
| Net creditors | (25) | |
| Contingencies, say | (25) | |
| Capital Notes | (165) | |
| NET EQUITY | £729 | |
| 1.42 bn shares on issue = 51.37p per share
| ||
Ron Brierley
Chairman
7 January 2009
UK Contact:
Richard Russell
Company Secretary
+44 20 7484 3370