Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


GPG shares plunge 16% since Wednesday on pension woes

GPG shares plunge 16% since Wednesday on pension woes

By Suze Metherell

Aug. 15 (BusinessDesk) - Shares of Guinness Peat Group have dropped 16 percent since announcing it is still grappling with its UK pension liability on Wednesday, while its sole investment, the Coats threadmaker unit, reported a near trebling of first-half profit.

The shares fell for a third day, down 7.3 percent in afternoon trading to 57.5 cents, the lowest level since October last year. In its first-half announcement on Wednesday, GPG, which plans to rebrand as Coats once it settles the pension liability, said it was still in negotiations with the UK Pensions Regulator and the trustees of the two schemes, which have been holding up its return to shareholders.

GPG generated $1.4 billion from the asset sales programme since 2011 after a shareholder revolt over plans to split up the company along regional lines saw a board shake-out. It had cash of $734 million as at June 30, and shareholder funds of $782 million.

"The half-year report that came out the other day had a pretty bearish view on the timeframe around sorting out pension issue with regulator," Paul Harrison, head of equities at Salt Fund Management told BusinessDesk. "The basis for buying GPG would be around when you think you can get a return on capital, the longer that takes the less there is, and the more uncertainty around it as well, and it may actually be a reasonably negative outcome."

GPG and the trustees of the schemes have until Sept. 30 to make a written submission to the regulator, and any formal hearing would be unlikely to happen before the first half of next year. As at June 30, the pension obligation was valued at 222 million pounds, up from 178 million pounds six months earlier.

The investment firm's board has proposed to retain 170 million pounds across the two pension schemes through cash invested directly in the schemes and cash invested into sponsoring employers of the schemes, it said in a statement. The board had previously agreed to retain 124 million pounds to support the two pension schemes.

The investment firm spent 10 million pounds in advisory fees in 2013 with a further 8 million provided for to deal with anticipated costs in 2014.

"The issue for it will be the discount rate that's going to be used by the regulator and with interest rates on bonds quite low, it keeps pushing up the liability of the pension scheme further out," Harrison said. "High interest rates mean that liability is lower, but because bonds have rallied then it works the other way, the liability gets bigger.

"It becomes an issue for GPG if they want to cash up and get out of it, they have to pay an enormous amount to get rid of that liability," Harrison said.

Substantial shareholder notices showed American investor Southeastern Asset Management had reduced its holding below 5 percent. According to GPG's annual report it had 5.6 percent stake in Dec. 31, 2013. UK investor Prudential, parent company of the British M & G Investments company, boosted its holding above the 5 percent threshold to 7.3 percent.

The investment company's Coats unit, which is now GPG's sole investment, reported a profit of 11 million pounds in the six months ended June 30 from a profit of 4 million pounds a year earlier. Revenue edged down to US$837.1 million from US$839.7 million, due to the British pound strengthening against the greenback, with sales up 2 percent on a like-for-like basis. Operating profit climbed to US$63 million from $59.4 million, driven by gains in the industrial division.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news