Forum Archive Index - March 2001

["DR" <kat47@bigfoot.com>]

RNS Number:9551A
Guinness Peat Group PLC
23 March 2001


                                                      23 March 2001

                      GUINNESS PEAT GROUP PLC
                     ('GPG'or 'the Company')
                                
      PRELIMINARY RESULT FOR THE YEAR ENDED 31 DECEMBER 2000
                                
                       CHAIRMAN'S STATEMENT
                       
  '2000 was the most difficult year for global stockmarkets since
  1990 and reflected the overbought nature of most markets at the
                      beginning of the year'
                                  ----- Merrill Lynch Annual Survey

The  net  profit  of #18.7 million appears relatively ordinary  but
otherwise  the  year 2000, as a whole, was rather  more  successful
than indicated in pure accounting terms.

It  was  a  year of much useful activity and, in the  post  Tyndall
phase,  there  was  a quite high level of reinvestment  from  which
there  has  not  yet  been any material return.   However,  it  has
created a definite level of added potential for the present and the
future.

If  there  is any weakness in the GPG scenario, it is possibly  the
need  to  be more vigorous in crystallising and completing a greater
number of what is always a wide range of investment projects in the
Company's  portfolio.  This is not to abandon a long term  approach
but  to  recognise,  in  today's market, a  demand  for  more  rapid
revisions of corporate strategies.

Already, in the current term, we have initiated various avenues  of
'shareholder  activism'which have been on the  drawing  board  for
some  time and which are referred to later in this report.  Without
an   unlikely   first  round  'knockout',  these  initiatives   are
invariably  characterised as 'failures' by the media  and  analysts
but  this  is  a necessary part of the process where  sensible  and
supportable  proposals  to  enhance shareholder  value  are  seldom
unrewarded in the longer run.

Successful investments are the key to GPG's future performance  and
among  the  more  significant  new  subsidiaries,  associates   and
portfolio additions, not previously reported to shareholders are -

STAVELEY INDUSTRIES PLC
Staveley has been a difficult and unrewarding investment but, as  a
consequence  of a successful takeover offer late last year,  it  is
now wholly owned by GPG.

After  the  sale  of  the main subsidiary, British  Salt  Ltd,  the
residual  group comprises some six engineering based  manufacturing
and  contracting businesses in UK and USA.  As the problems of  the
previous  regime steadily diminish, GPG is probably  not  the  most
logical  permanent owner of these businesses but, in the  meantime,
it  has  a valid role to support management in achieving consistent
profitability and improved capital values.


JOE WHITE MALTINGS
Joe White has exceeded expectations since we took effective control
in  March  2000  with  a  45%  holding.  Necessary  structural  and
personnel changes, the sale of the difficult foods businesses  and,
not  least,  an upturn in the malt price cycle have all contributed
to a much better outlook than for many years past.

ENZA
So  far, less than satisfactory.  Prior to the appointment  of  the
new  Board,  the  company was in a worse position  than  previously
known, with possible severe repercussions for New Zealandapple and
pear growers.

GPG  has contributed a disproportionate level of input relative  to
the absolute size of our investment (18% of the capital with a book
value  of #1.8 million) but which we accept, within reason, as  our
contribution to the rescue of an important national industry.

Enza  can  become a large (Year 2000 sales of NZ$800  million)  and
successful  organisation  if industry politics  embrace  a  greater
sense of unity and commercial logic.

WRIGHTSONS
Not  a  major  investment (#3.3 million at cost) but a timely  one,
insofar  as  improved performance has reflected a morebuoyant  New
Zealand  rural economy.  The market value of the shares is now  80%
above our entry price.

OTTER GOLD
Another  difficult  situation where the  adverse  legacies  of  the
previous  convoluted  ownership structure have  lingered  on.   The
recent  cash  issue has lifted GPG's holding to  44%  and  provides
funds  and  greater proprietorial focus to extract the  best  value
from the company's three gold mining ventures.

TOMORROW LTD
This  arises from a reconstruction of Mid-East Minerals  which  has
reduced  GPG's  ownership from 88% to a fully diluted  36%  of  the
enlarged company.

Tomorrow  is  not  a 'technology' stock in its  own  right  but  an
investor  in distressed situations in that sector where  additional
funding  is  considered  likely to produce  a  credible  commercial
result.

             ---------------------------------------

GPG's  other  subsidiary  and  associated  companies  are  Canberra
Investment  Corporation  (69%), a Canberra based  residential  land
developer with a solid, if unspectacular, earnings record and  good
asset  strength and Turners & Growers (45%), one of  New  Zealand's
oldest  and most respected corporate names, which has made  a  most
valued contribution to the group.

GPG's  largest portfolio investments are Coats Viyella plc (12%  at
cost, #38 million) and Inchcape plc (16% at cost, #37 million).

Coats  is the world's leading thread manufacturer and was once  one
of  Britain's major industrial concerns but its textile  operations
including fashion labels 'Jaeger' and 'Viyella', have been severely
impacted  by  the steady decline of the UK manufacturing  industry.
An  exciting and worthwhile challenge for GPG's recently  appointed
Board representative!

Inchcape  is  another  historic British Empire  trading  house  but
nowadays  is  a much smaller company operating exclusively  in  the
motor  trade (it contains a significant portion of the former  TKM,
an important subsidiary of BIL in the 1980's).

In   our   view,  Inchcape's  international  model  is  no   longer
appropriate in the modern age and considerably greater value  would
be  obtained  by  realising the strategic value of  its  individual
components.  The present Board of Inchcape does not share this view
and the debate continues in the current term.

Other  major  investments  are De Vere  Group  (5%,  at  cost,  #18
million)  and  Brickworks (10%, at cost, #20 million).   These  two
companies could not be further apart in geography and industry  but
they  share  a  common characteristic of intrinsic  value  well  in
excess  of  market capitalisation and requiring serious  structural
reform to release that value to shareholders.

A  badly  directed company with good assets may be a little  harsh,
but  is nevertheless a succinctdescription of De Vere.  It owns  a
mix of prestige hotels, budget accommodation and leisure facilities
in  the  UK  which  GPG  proposes should  be  split  into  separate
corporate  units.  This will happen eventually (if De Vere  is  not
taken  over in the meantime) but at present the 'synergy' card  has
not yet been played out to exhaustion.

During  2000,  GPG made a takeover offer for Brickworks  which  was
unsuccessful at that time but we retain complete confidence in  the
ultimate outcome of this investment.

The Board's capital and dividend proposals for this year are:

*  A  cash dividend of 1.0p per share (an effective increase  of
   10%)
*  Reinstatement of the scrip dividend alternative
*  The  8th  successive 1 for 10 bonus issue.  (An investor  who
   purchased the equivalent of 100 10p shares in the 1991 placement
   at  an  effective cost of NZ90 cents and who took no  subsequent
   action  would now hold 195 shares at a cost of NZ46c  each.   In
   reality, cash issues and scrip dividends would have reduced  the
   cost to less than 40c.)
*  Serious  consideration  was  given  to   offering  shareholders
   another series of redeemable convertible notes on terms similar
   to last year's issue.  However, it  was  decided  preferable to
   conserve the  company's administrative  and financial resources
   for a very full  program of investment activity during the rest
   of the year rather than the  diversion of non essential capital
   adjustments.

The year 2001 will be a critical one for GPG insofar as the Company
has  never  been  better placed toachieve a strong combination  of
realised  profits,  higher  asset  backing  and  the  momentum  for
continuing gains in the future.

Ron Brierley
CHAIRMAN23 March 2001

D.