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


GPG focuses on cost cutting as restructuring plan delayed

GPG focuses on cost cutting as restructuring plan delayed by UK pensions regulator

By Tina Morrison

Aug. 28 (BusinessDesk) - Guinness Peat Group is focussing on cutting costs as an investigation by the UK pensions regulator delays its plan to wind up most of its investments and focus on threadmaker Coats.

GPG will cut board fees starting on Oct. 1 to reflect that it is now a simpler company, holding board meetings by conference call to reduce travel and other costs, close its last Australian office by November and its principal London office by the end of the year and cut permanent staff to eight from 15 in the year to December, the London-based company said in a statement.

The diversified investment firm has been selling off its varied businesses to focus on Coats, its biggest holding. The plan to return capital to investors and rebrand itself as Coats has been stymied by the regulator’s concerns about whether the firm is retaining enough capital to cover its pension scheme liabilities.

“Further capital returns have been deferred for the present time,” chairman Rob Campbell said in the statement. “The board is very conscious of the need to manage costs during this interruption in the capital return process.”

Shares in GPG rose 0.9 percent to 54 cents.

GPG’s only remaining investment aside from Coats is Tower, which returned $119 million to investors in April following the sale of its health insurance and investments businesses.

In August, Tower completed the sale of the bulk of its life insurance business and the company’s board is now considering its capital management strategy and exploring disposal options for the balance of its life business, GPG said.

GPG said it values its investment in Tower at $1.95 a share even as Tower’s share price fell to $1.72 as at Aug. 23.

“GPG considers the ongoing Tower business has an intrinsic value in excess of the current share price,” Campbell said. “GPG’s strategic holding in the company will continue to be managed in this context.”

Meanwhile, Coats boosted sales 2 percent to US$840 million in the six months ended June 30. Sales rose 4 percent in constant currency terms, as both the industrial and crafts divisions built on an improved performance in the second half of 2012, GPG said. Operating profit before one-time items rose 12 percent to US$64 million.

The Coats profit attributable to GPG amounted to US$7 million, compared with a loss of US$126 million in the year earlier period. GPG has increased its carrying value of Coats in its balance sheet to US$78 million from US$185 million on an improved valuation of employee benefits.

The thread maker has scaled back one of its planned restructuring projects, which will reduce a one-time charge this financial year to about $20 million from $35 million. As a result, plans to sell some properties won’t take place meaning the reorganisation plan will no longer be self-funding and will result in a net cash outflow over 2013 and 2014 of about $20 million, the company said.

“Coats continues to make good progress and the business is well placed to sustain and grow both revenue and profit, although trading conditions remain mixed across different geographies,” chief executive Paul Forman said.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Commerce Commission: Appeals Record $2.25m Fine In Vodafone FibreX Case

The Commerce Commission has filed an appeal in the High Court against a record $2.25 million fine imposed on Vodafone NZ Limited (Vodafone) for its offending under the Fair Trading Act during its FibreX advertising campaign. While the sentence imposed in the Auckland District Court on April 14 was the largest-ever fine under the Fair Trading Act, the Commission will argue that it is manifestly inadequate... More>>

All District Health Boards: Historic Pay Equity Settlement

An historic agreement has been ratified that addresses a long-standing undervaluation of a workforce that is critical to the smooth running of our hospitals and the delivery of healthcare... More>>

MPI: Dry Autumn In Waikato And South Auckland Leads To Drought Classification Drought conditions affecting the primary sector in the Waikato and South Auckland were today classified as a medium-scale adverse event, enabling a package of support for farmers and growers... More>>

Barfoot & Thompson: Rents Up By Around 3% In Most Areas

The average weekly rent paid for homes in most areas of Auckland has risen by around 3 percent year-on-year. The figures for end March from more than 16,000 properties... More>>

DoC: Smeagol The ‘Gravel Maggot’ Leaves Its Rare Mark On The Remote West Coast
An extremely rare species of sea slug or ‘gravel maggot’ has been detected for the first time on a remote beach in South Westland... More>>

Immigration: Annual Net Migration Loss Of 7,300

The provisional net loss of 7,300 people in the year ended March 2022 was the lowest net migration for a March year since 2012, Stats NZ said today... More>>