| Guinness announces profits
increase but turns away Lookers |
Guinness Peat, the aggressive
investment group, announced a firm set of interim results today but
qualified potential enthusiasm by saying it is the long-term performance
that really counts.
The company reported a rise in pre-tax profits
in the six months to 30 June to £15.24 million against £12.15 million in
the same period last year.
The figure would have been higher but
Guinness Peat (GPG) had to write off £5.3 million invested in a
New Zealand company called Otter Gold. Sir Ron Brierley, chairman of GPG,
said in a statement: ‘Otter Gold has proved to be a resounding dud.’ He
said the problems at the company were the traceable back to the previous
‘convoluted regime’ but admitted GPG’s timing had been poor with its
investment. GPG still hopes to salvage some of the loss in years to come.
The company also deducted £3.1 million in foreign exchange losses
from the headline profit figure. Overall, profit attributable to
shareholders was £12.3 million. Earnings per share came in at 2.34p, up
from 2.05p last year.
Brierley said the company had pursued its
strategy of shareholder activism with mixed success in terms of corporate
action but overall to the advantage of GPG and other shareholders in the
stocks it holds.
He referred to Inchcape (INCH), the motor retailer as an example of this.
GPG argued the company should be broken up and sold off in February but
did not succeed. However, the exercise was not a waste of time. ‘Although
Inchcape has not accepted these arguments, the market value of the shares
has been re-rated on other factors which may only be of temporary
duration. We have therefore sold approximately half of our shareholding,
although we remain one of the largest shareholders,’ said Brierley.
GPG maintains an 8% stake in Inchcape Motors in Singapore, which
is 63% owned by Inchcape in the UK. Brierley said he plans to keep
agitating for the company to be taken private.
GPG was closer to
the mark with its investment in Time Products (TIP), the luxury watch distributor. Time is to be
taken private by its founder Marcus Margulies but the return from this
will not be seen until GPG’s final results.
There was more good
news from Staveley Industries (SVY), a wholly owned subsidiary of GPG as of the
start of the financial year. Staveley, which is a service group with
operations such as safety testing and fire protection, contributed £2.2
million to the group. Brierley described this as ‘modest but acceptable’.
There are plans afoot to sell the company off though since GPG believes
its business would benefit from the economies of scale of being part of a
larger company.
Among its Australian and New Zealand-based
investments, GPG said it sold out of agricultural business Wrightson at
double its entry price two years ago. GPG sold its 19.9% stake to dairy
giant GlobalCo for NZ$1 per share after buying in 1999 at 40 cents.
Australia’s largest malt producer Joe White Maltings, of which GPG owns
52%, is gaining strength and its investment in Capral Aluminium has
benefited from a resurgence in the building products sector, said
Brierley.
In last year’s annual report GPG told of a new
investment vehicle called Tomorrow, which it planned to use to take stakes
in technology-based special situations. This project has been shelved.
‘This was a worthwhile experiment, but did not make the impact we
originally hoped and the structure has been dismantled without material
loss and before ‘cash burn’ exceeded a minimal level,’ said Brierley.
GPG closed today at 48.5p, unchanged on the day. This is some way
below the 54p net asset value per share figure given in the latest
figures, a situation GPG tends to find intolerable in other companies.
GPG also reduced its stake in £41.5 million motor retailer Lookers
(LOOK), it was announced today. After the sale of 300,000
shares, GPG holds a little more than 1.2 million or 3.59% of the company.
Lookers trades at 125.5p, up 3p on the day, and has enjoyed a
surging run up from a low of 59p in April last year. No date or price were
given for the sale.
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