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


GPG sinks back into the red on Coats' fine

GPG sinks back into the red on Coats' fine; pace of asset sales too slow

By Paul McBeth

Aug. 29 (BusinessDesk) - Guinness Peat Group, which now counts British billionaire George Soros as a substantial shareholder, sank into the red in the first six months of the year after the European Court imposed a 110 million pound fine on threadmaker Coats, more than had been provided for.

The investment firm made a loss of 36 million pounds, or 2.23 pence per share, in the six months ended June 30, compared to a profit of 13 million pounds, or 0.72 pence, a year earlier. The loss came primarily from the European Court's fine, which was bigger than the 76 million pound penalty GPG had provided for.

The company, which is in the process of winding itself down, made a profit of 37 million pounds on asset sales, up from 35 million pounds a year earlier, and has generated total net proceeds of 310 million pounds since January last year. Excluding Coats, the investment portfolio was valued at 363 million pounds as at June, compared to its starting valuation of 677 million pounds on Jan. 1, 2011.

"Progress has been made though Coats' trading performance has fallen short of our aims and the asset disposal programme has not progressed at the pace I would have liked," chairman Rob Campbell said in his report. "Nothing has changed in our objectives, and the work currently underway in each of the areas is still directed towards substantive achievement by the close of the year."

GPG said it expects to complete more asset sales this year, representing some 20 million pounds of divestments.

Britain's Soros emerged as a major investor in the firm this week, securing a 8.2 percent stake via his Quantum Strategic Partners unit. GPG's biggest investment is the Coats threadmaker unit, a global company which is based in the UK.

The Coats unit reported a 5 percent fall in sales to US$819.3 million, with a 28 percent drop in operating profit to US$59.9 million. Including the fine, it made a first-half loss of US$105.2 million.

"The trading results are not acceptable and steps are being implemented to improve capital utilisation and cash generation throughout the business," Campbell said. "Trading conditions are not easy for Coats but like all businesses, it has to play the game on the pitch and in the conditions it finds."

Campbell said GPG will embark on an on-market buyback of shares, and will kick off the process by buying up to 10 million pounds of stock.

Shareholder funds fell to 503 million pounds as at June 30 from 602 million pounds six months earlier.

The board didn't declare a dividend, and Campbell said "further surplus cash will be returned to shareholders in appropriate forms, taking into account the obligations in respect of the capital notes and support to the pension schemes."

The shares slipped 1 percent to 52 cents in trading yesterday, and have shed 11 percent this year. The stock is rated an average 'outperform' based on six analyst recommendations compiled by Reuters, with a median target price of 63 cents.

Campbell said the takeover bid for ASX-listed financial services firm ClearView Wealth from buyout company Crescent Capital Partners is inadequate, and GPG is backing the subsidiary company's board in advising shareholders to reject the offer.

GPG has encouraged NZX-listed insurer Tower to review its strategies and is waiting on news from the firm, and wants the company to rejig its structure to optimise shareholder value.

"We believe the value of Tower's component parts is not being fully reflected," Campbell said.

The investment company is exploring ways to contain GPG's future costs for pension schemes with a carrying value of 214 million pounds as at June 30.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Consumer NZ: Buy-now, Pay-later Raking In $10m+ In Late Fees Annually

A Consumer NZ survey has found buy-now, pay-later services are costing shoppers more than $10 million a year in late fees. Close to four out of 10 Kiwi consumers use buy-now, pay-later services, such as Afterpay, Laybuy and Zip... More>>

Westpac: Catherine Mcgrath Appointed New Zealand CEO

Westpac Group CEO Peter King and the Westpac New Zealand Board today announced the appointment of Catherine McGrath as Chief Executive Officer, Westpac New Zealand... More>>

Amazon: AWS To Open Data Centres In New Zealand

Today, Amazon Web Services (AWS), announced plans to open an infrastructure region in Aotearoa New Zealand in 2024. The new AWS Asia Pacific (Auckland) Region will consist of three Availability Zones (AZs) and join the existing 81 Availability Zones across 25 geographic AWS Regions at launch... More>>


Statistics: Surge In Imports Results In Record Monthly Trade Deficit
Imports increased $1.8 billion in August 2021 compared with August 2020, resulting in a record monthly trade deficit of $2.1 billion, Stats NZ said today. Exports were little changed, down $42 million. "This is a larger deficit than normal because of higher values for imports.. More>>

Fonterra: Completes reset, announces annual results and long-term growth plan out to 2030

Fonterra Co-operative Group Limited today announced a strong set of results for the 2021 financial year, reflected in a final Farmgate Milk Price of $7.54, normalised earnings per share of 34 cents and a final dividend of 15 cents... More>>

Statistics: GDP rises in the June 2021 quarter

Gross domestic product (GDP) rose by 2.8 percent in the June 2021 quarter, following a 1.4 percent increase in the March 2021 quarter, Stats NZ said today. June 2021 quarter GDP was 4.3 percent higher when compared with the December 2019 quarter... More>>