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Notes to Financial Statements - Guinness Peat Group plc

ContentsGPG FINANCE PLC1Chairman’s Statement 2Directors’ Report 3Supplementary Information 6Independent Auditors’ Report 8Profit and Loss Account 9Balance Sheet 10Cash Flow Statement 11Notes to Financial Statements 12Addresses 18


2 A N N U A L R E P O R T 2 0 0 5Chairman’s StatementGPG Finance plc is a company established andorganised in England and has securities listedon the New Zealand Stock Exchange (“NZ”).Its ultimate parent company is Guinness PeatGroup plc (“GPG”).This report has beenprepared in a manner which complies withthe UK Companies Act 1985 and UK GenerallyAccepted Accounting Practice.The Company’s sole activity is to borrow, byway of capital notes, and lend to companieswithin the Guinness Peat Group at a marginabove average cost. It has raised a total ofNZ$465 million through the issue ofunsecured subordinated fixed interest LoanNotes in New Zealand (“Capital Notes”). As aconsequence, and unusually for a UKcompany, it reports in New Zealand dollars.The first issue of Capital Notes by theCompany raised NZ$250 million in 2001 (“the2001 Notes”). These bear an interest rate of9%. A second issue was made in 2003 whichraised NZ$215 million and bears interest at arate of 8.7% (“the 2003 Notes”).The obligations of the Company under the2001 Notes are guaranteed by GPG (UK)Holdings plc (“GPGUKH”) on a subordinatedbasis. If the interest payments on the CapitalNotes are not paid on the due date, for as longas such payments remain unpaid GPGUKHcovenants not to pay any dividends or makecertain other returns of capital ordistributions in respect of its ordinary shares.GPG has provided a similar guarantee inrespect of the 2003 Notes, and has enteredinto a subordinated and unsecured guaranteein respect of the GPGUKH covenant for the2001 Notes.The Company has lent the proceeds from thetwo issues of Capital Notes to a companywithin the Guinness Peat Group in accordancewith the terms of the issue of the CapitalNotes and receives interest income on thatloan. The loan attracts interest at an averagefixed rate of 10.14% per annum. Repayment ofthe loan may not be demanded by theCompany. However, to the extent that theCapital Notes are purchased and cancelled byfellow members of the Guinness Peat Groupor exchanged for Ordinary Shares in GPG, anequivalent amount of the above loan shall bedeemed to have been satisfied. No amountswere in arrears at 31 December 2005.More detailed information on the CapitalNotes and their form can be found in notes 9and 10 on pages 13 and 14.The Company does not have a formallyconstituted audit committee of its Board.BA NixonChairman11 April 2006


GPG FINANCE PLC5Directors’ ResponsibilitiesThe directors are required by UK company law to prepare financial statements for each financial year that give a true andfair view of the state of affairs of the Company as at the end of the financial year and of the profit or loss of the Companyfor that period.The directors confirm that suitable accounting policies have been used and applied consistently, and reasonable and prudentjudgements and estimates have been made, in the preparation of the financial statements for the year ended 31 December2005. The directors also confirm that applicable accounting standards have been followed and that the financial statementshave been prepared on the going concern basis.The directors are also responsible for keeping proper accounting records, for the system of internal control, for safeguarding theassets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.Corporate GovernanceThe corporate governance policies, practices and procedures of GPG Finance plc depend upon, and are integrated within, thoseof its ultimate parent company, GPG, details of which appear in the Corporate Governance section of that company’s AnnualReport for the year to 31 December 2005.AuditorA resolution to re-appoint Deloitte & Touche LLP as auditor will be proposed at the Company’s 2006 Annual General Meeting.By order of the BoardJ R RussellSecretary11 April 2006


6 A N N U A L R E P O R T 2 0 0 5Supplementary Information (unaudited)SUPPLEMENTARY INFORMATION REQUIRED BY THE NEW ZEALAND STOCK EXCHANGE LISTING RULESFOR THE YEAR ENDED 31 DECEMBER 2005a) The top 20 registered holdings of the issued 2001 Capital Notes at 28 February 2006 were as follows:HolderHoldingInvestment Custodial Services Limited 8,793,000First NZ Capital Custodians Limited 8,581,000Asset Custodian Nominees Limited – A/c NZCSD 8,261,000Guardian Trust Investment Nominees (RWT) Limited – A/c NZCSD 5,302,000NZ Guardian Trust Investment Nominees Limited – A/c NZCSD 3,375,000Custodial Services Limited – A/c 3 3,009,000Masfen Holdings Limited 2,900,000Custodial Services Limited – A/c 2 1,975,000Forbar Custodians Limited – A/c PPM Medium 1,860,000Private Nominees Limited 1,811,000Tea Custodians Limited – A/c NZCSD 1,630,000Forbar Custodians Limited – A/c PPM Low 1,552,000Westpac Banking Corporation – Client Assets No 2 – A/c NZCSD 1,169,000New Zealand Methodist Trust Association 1,100,000NZ Airline Pilots Mutual Benefit Fund – Air Traffic Controllers 1,050,000Presbyterian Support Services (South Canterbury) Incorporated 1,000,000Oakwood Securities Limited 942,000Presbyterian Savings & Development Society of New Zealand Incorporated 750,000Auckland Medical Research Foundation 700,000John Richard Avery & Peter Glen Inger & Joanne Adele Inger 700,000b) The spread of holdings in the issued 2001 Capital Notes at 28 February 2006 was as follows:Holding No. % Value (NZ$) %1 - 1,000 – 0.00% – 0.00%1,001 - 5,000 1,388 18.41% 6,924,000 2.77%5,001 - 10,000 1,878 24.90% 18,093,000 7.24%10,001 - 50,000 3,682 48.83% 97,517,000 39.01%50,001 - 100,000 414 5.49% 33,906,000 13.56%over 100,000 179 2.37% 93,560,000 37.42%7,541 100.00% 250,000,000 100.00%


GPG FINANCE PLC7c) The top 26 registered holdings of the issued 2003 Capital Notes at 28 February 2006 were as follows:HolderHoldingWestpac Banking Corporation – Client Assets No 2 – A/c NZCSD 8,000,000Forbar Custodians Limited – A/c PPM Medium 4,840,000Investment Custodial Services Limited 3,748,000Private Nominees Limited 3,041,000Forbar Custodians Limited – A/c PPM Low 2,580,000First NZ Capital Custodians Limited 2,507,000Portfolio Custodian Limited – A/c 085148 2,000,000National Nominees New Zealand Limited – A/c NZCSD 1,500,000Custodial Services Limited – A/c 3 1,488,000Forbar Custodians Limited – A/c PPM High 1,244,000George Gerbic 1,000,000Carter Holt Harvey Retirement Plan 1,000,000Fidelity Life Assurance Company Limited 1,000,000Portfolio Custodian Limited – A/c 042388 1,000,000Guardian Trust Investment Nominees (RWT) Limited – A/c NZCSD 996,000Custodial Services Limited – A/c 2 993,000Forbar Custodians Limited – A/c Resident – 19.5% 874,000Eastern Central Community Trust Inc. 700,000Russell Hilton Pettigrew 500,000AMI Insurance Limited 500,000Charles Joseph Monaghan & Enid Monaghan 500,000The Nursing Sisters of the Little Company of Mary Trust Board 500,000Portfolio Custodian Limited – A/c 084924 500,000Presbyterian Support 500,000Rotorua Energy Charitable Trust 500,000Te Popo Farm Limited 500,000d) The spread of holdings in the issued 2003 Capital Notes at 28 February 2006 was as follows:Holding No. % Value (NZ$) %1 - 1,000 – 0.00% – 0.00%1,001 - 5,000 1,171 15.84% 5,845,000 2.72%5,001 - 10,000 2,105 28.47% 19,879,000 9.25%10,001 - 50,000 3,623 49.00% 95,588,000 44.46%50,001 - 100,000 354 4.79% 28,962,000 13.47%over 100,000 141 1.90% 64,726,000 30.10%7,394 100.00% 215,000,000 100.00%e) None of the directors has, or had at any time during the year to 31 December 2005, any holding in the issued Capital Notes.


8 A N N U A L R E P O R T 2 0 0 5Independent Auditors’ ReportINDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF GPG FINANCE PLCWe have audited the financial statements of GPG Finance plc for the year ended 31 December 2005 which comprise the profitand loss account, the balance sheet, the cash flow statement and the related notes 1 to 17. These financial statements havebeen prepared under the accounting policies set out therein.This report is made solely to the company’s member, in accordance with Section 235 of the Companies Act 1985. Our audit workhas been undertaken so that we might state to the company’s member those matters we are required to state to them in anauditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility toanyone other than the company and the company’s member, for our audit work, for this report, or for the opinions we haveformed.Respective responsibilities of directors and auditorsThe directors’ responsibilities for preparing the annual report and the financial statements in accordance with applicable lawand United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in thedirectors’ report.Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatoryrequirements and International Standards on Auditing (UK and Ireland).We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the relevantfinancial reporting framework, and are properly prepared in accordance with the Companies Act 1985. We also report to you if,in our opinion, the directors’ report is not consistent with the financial statements, if the company has not kept properaccounting records, if we have not received all the information and explanations we require for our audit, or if informationspecified by law regarding directors’ remuneration and other transactions is not disclosed.We read the directors’ report and other information contained in the annual report for the above year as described in thecontents section and consider the implications for our report if we become aware of any apparent misstatements or materialinconsistencies with the financial statements.Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the AuditingPractices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in thefinancial statements. It also includes an assessment of the significant estimates and judgements made by the directors in thepreparation of the financial statements and of whether the accounting policies are appropriate to the company’scircumstances, consistently applied and adequately disclosed.We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from materialmisstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overalladequacy of the presentation of information in the financial statements.OpinionIn our opinion the financial statements:• give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of thecompany’s affairs as at 31 December 2005 and of its profit for the year then ended; and• have been properly prepared in accordance with the Companies Act 1985.Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon11 April 2006Note: an audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changesmay have occurred to the financial statements since first published.These matters are the responsibility of the directors but no control procedures can provide absoluteassurance in this area. Legislation in the United Kingdom governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.


Profit and Loss AccountGPG FINANCE PLC9Year ended 31 December 2005 2004Notes NZ$ NZ$Interest receivable 3 45,208,455 45,207,865Interest payable 4 (44,326,802) (44,335,355)881,653 872,510Other operating expenses 5 (381,777) (264,178)Operating profit and profit on ordinary activities before taxation 499,876 608,332Tax on profit on ordinary activities 6 (339,185) –RETAINED PROFIT FOR THE FINANCIAL YEAR 160,691 608,332Continuing operationsThe Company was incorporated on 2 July 2001, for the specific purpose of issuing NZ$250 million fixed interest Capital Notesand lending the proceeds to its parent company, GPGUKH, under the terms of a subordinated loan agreement. During 2003 theCompany issued a further NZ$215 million Capital Notes, which have an initial term of five years and may also be converted intoordinary shares in the ultimate holding company, GPG. See notes 9 and 10 on pages 13 and 14.All results are derived from continuing operations.Statement of total recognised gains and lossesThe Company has no recognised gains or losses in the current or prior financial year other than the profit for those years.The movements in reserves are disclosed in note 12 to the financial statements.The notes on pages 12 to 17 form part of these financial statements.


1 0 A N N U A L R E P O R T 2 0 0 5Balance Sheet31 December 2005 2004Notes NZ$ NZ$CURRENT ASSETSDebtors: amounts falling due within one year 7 19,280,668 15,936,390Debtors: amounts falling due after more than one year 8 445,390,991 445,390,991464,671,659 461,327,381Cash at bank and in hand 901,219 898,606TOTAL CURRENT ASSETS 465,572,878 462,225,987Creditors: amounts falling due within one year 9 (252,413,222) (3,655,564)NET CURRENT ASSETS 213,159,656 458,570,423Creditors: amounts falling due after more than one yearCapital Notes 10 (211,574,487) (457,145,945)NET ASSETS 1,585,169 1,424,478CAPITAL AND RESERVESCalled up share capital 11 140,931 140,931Profit and loss account 12 1,444,238 1,283,547EQUITY SHAREHOLDER’S FUNDS 13 1,585,169 1,424,478These financial statements were approved by the Board of Directors on 11 April 2006.B A Nixon, DirectorR L Todd, DirectorThe notes on pages 12 to 17 form part of these financial statements.


Cash Flow StatementGPG FINANCE PLC1 1Year ended 31 December 2005 2004Notes NZ$ NZ$Net cash (outflow)/inflow from operating activities 14a) (60,124) 113,410Taxation recovered/(paid) 14b) 62,737 (76,186)INCREASE IN CASH FOR THE YEAR 2,613 37,224RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBTIncrease in cash for the year 2,613 37,224Non-cash movements (3,121,802) (3,130,354)Movement in net debt for the year (3,119,189) (3,093,130)Net debt as at 1 January (456,247,339) (453,154,209)NET DEBT AS AT 31 DECEMBER 14c) (459,366,528) (456,247,339)The non-cash movements comprise the amortisation of issue costs for Capital Notes.The notes on pages 12 to 17 form part of these financial statements.


1 2 A N N U A L R E P O R T 2 0 0 5Notes to Financial Statements1. Statement of accounting policiesa) ACCOUNTING CONVENTIONThe accounts have been prepared under the historical cost convention and in accordance with applicable accountingstandards in the United Kingdom.The Company operates as a finance vehicle, and accordingly its interest receivable and interest payable are presented withinoperating profit.The accounting policies adopted in preparing these financial statements have been consistently applied throughout the yearand the preceding year.b) REPORTING CURRENCYThe Company’s assets, liabilities and cash flows are mainly denominated in New Zealand dollars (“NZ$”), and the Directorshave therefore decided to present the financial statements in that currency. The exchange rate on 31 December 2005 wasNZ$2.5207: £1 (31 December 2004: NZ$2.6580: £1).c) FOREIGN CURRENCIESTransactions in currencies other than the New Zealand dollar are recorded at the exchange rate in force on the date of thetransaction. Monetary assets and liabilities denominated in currencies other than the New Zealand dollar are translated at therate of exchange ruling at the balance sheet date. All exchange differences are taken to the profit and loss account.d) DEBTConvertible debt is reported as a liability unless and until conversion actually occurs. No gain or loss is recorded on conversion.The costs incurred in issuing Capital Notes are deducted from the proceeds of issue. The issue costs are then charged to theprofit and loss account as a financing cost over the initial term of the Capital Notes.e) TAXATIONProvision is made for domestic and foreign taxation assessable on the profit for the year as adjusted for disallowable and nontaxableitems. Deferred taxation is provided in full in respect of timing differences which have arisen but not reversed at thebalance sheet date, except that deferred tax assets (including those attributable to tax losses carried forward) are onlyrecognised if it is considered more likely than not that they will be recovered.2. Directors’ emolumentsThe Directors are employed and remunerated as directors or executives of the ultimate holding company, and received noemoluments in respect of their services to the Company (2004: NZ$Nil).3. Interest receivableYear ended 31 December 2005 2004NZ$NZ$Bank interest 67,544 66,954Interest on loan to parent undertaking 45,140,911 45,140,91145,208,455 45,207,8654. Interest payableYear ended 31 December 2005 2004NZ$NZ$Interest payable on Capital Notes 41,205,000 41,205,000Amortisation of issue costs for Capital Notes 3,121,802 3,130,35544,326,802 44,335,355


GPG FINANCE PLC1 35. Other operating expensesAuditors’ remuneration is borne by the parent company in the current and preceding year.There were no employees (2004: Nil).6. Tax on profit on ordinary activitiesYear ended 31 December 2005 2004NZ$NZ$CURRENT TAXOverseas withholding tax – prior year 332,431 –Overseas withholding tax – current year 6,754 –339,185 –The tax charge can be reconciled as follows:Profit on ordinary activities before taxation 499,876 608,332Profit on ordinary activities multiplied by standard rate of tax in the UK of 30% (2004: 30%) 149,963 182,500Effect of group relief surrendered without charge (143,209) (175,805)Adjustment in respect of prior years’ overseas tax suffered 332,431 –Overseas withholding tax – current year 6,754 –Double tax relief (6,754) (6,695)CURRENT TAX CHARGE FOR THE YEAR 339,185 –7. Debtors: amounts falling due within one year31 December 2005 2004NZ$NZ$Due from parent undertaking 19,280,668 15,534,468Amount due from fellow subsidiary undertakings – 332,431Taxation recoverable – 69,49119,280,668 15,936,390Due from parent undertaking includes NZ$14,931,762 of interest receivable (2004: NZ$10,945,851), none of which is in arrears(2004: NZ$Nil).8. Debtors: amounts falling due after more than one year31 December 2005 2004NZ$NZ$Loan to parent undertaking 445,390,991 445,390,991The loan to GPGUKH, which is denominated in New Zealand dollars, is unsecured and subordinated to all other creditorsof GPGUKH. The loan attracts interest at an average fixed rate of 10.14% per annum. Repayment of the loan may not bedemanded by the Company other than on the commencement of the liquidation of GPGUKH. However, to the extent thatthe Capital Notes referred to in Notes 9 and 10 are purchased and cancelled by GPGUKH or GPG or exchanged for OrdinaryShares in GPG, an equivalent amount of the above loan shall be deemed to have been satisfied.9. Creditors: amounts falling due within one year31 December 2005 2004NZ$NZ$Accrued interest payable 3,719,962 3,655,564Capital Notes 248,693,260 –252,413,222 3,655,564


1 4 A N N U A L R E P O R T 2 0 0 5Notes to Financial Statements – continued9. Creditors: amounts falling due within one year - continuedBetween 2 August 2001 and 11 September 2001, the Company issued NZ$250 million of unsecured, subordinated fixedinterest Capital Notes (“the 2001 Notes”). The issue costs amounted to NZ$9,275,107, and these costs are being charged to theprofit and loss account over the initial five year term of the debt. As at 31 December 2005, the unamortised balance of thesecosts was NZ$1,306,740. The 2001 Notes bear interest at a fixed rate of 9.0% per annum, payable on a quarterly basis.The 2001 Notes have an initial election date of 15 November 2006, prior to which the Company will provide terms andconditions on which noteholders may elect to roll-over their Notes. Noteholders may then elect to retain some or all of their2001 Notes for a further period on the new terms and conditions and/or to convert some or all of their 2001 Notes. The 2001Notes are initially convertible into ordinary shares of GPGUKH. However, under the terms of the “Step-up Rights” in GPGUKH’sArticles of Association any future requirement to issue or transfer shares in that company on conversion of 2001 Notes will resultin those shares being automatically transferred to GPG in exchange for the issue of an equal number of fully paid shares inGPG. Conversion of the 2001 Notes will be into such number of GPGUKH shares as is equal to the number of GPG shareshaving a value equal to the aggregate of the principal amount of, and any accrued interest and unpaid interest on, the 2001Notes being converted, such GPG shares being valued for this purpose at a price of 97% of the weighted average sale price ofan Ordinary Share in GPG over the five business days prior to the election date. These elections are subject to GPGUKH’s overridingright (at its option) to purchase for cash some or all of the Notes for their principal amount, together with any accruedinterest and unpaid interest.GPGUKH has provided a subordinated and unsecured guarantee in respect of the repayment of principal and the payment ofaccrued interest and unpaid interest due on the 2001 Notes on liquidation of the Company or of GPGUKH itself. In the event thatthe Company is in liquidation and GPGUKH is not, the guarantee is only enforceable after the scheduled election date for the2001 Notes which next follows the liquidation of the Company. This guarantee ranks pari passu with those provided for the loanto GPGUKH from the Company, but is subordinated to all other creditors. GPG has entered into a deed of guarantee pursuantto which it has guaranteed (on a subordinated basis) the obligations of GPGUKH as guarantor in respect of the payment ofprincipal, accrued interest and unpaid interest on the 2001 Notes in the event of, but following completion of, a liquidationof GPGUKH.10. Creditors: amounts falling due after more than one year31 December 2005 2004NZ$NZ$Capital Notes repayable between one and two years – 246,838,238Capital Notes repayable between two and five years 211,574,487 210,307,707211,574,487 457,145,945Between 1 August 2003 and 4 September 2003, the Company issued a further NZ$215 million of unsecured, subordinated fixedinterest Capital Notes (“the 2003 Notes”). The issue costs amounted to NZ$6,333,902, and these costs are being charged to theprofit and loss account over the initial five year term of the debt. At 31 December 2005 the unamortised balance of these costswas NZ$3,425,513. The 2003 Notes bear interest at a fixed rate of 8.7% per annum, payable on a quarterly basis.These 2003 Notes have an initial election date of 15 December 2008, prior to which the Company will provide terms andconditions on which noteholders may elect to roll-over their 2003 Notes. Noteholders may then elect to retain some or all of their2003 Notes for a further period on the new terms and conditions and/or to convert some or all of their 2003 Notes into Ordinaryshares.Conversion of the 2003 Notes will be at a price of 97% of the weighted average sale price of an Ordinary share on each of thefive business days prior to the election date.These elections are subject to GPG’s over-riding right (at its option) to purchase forcash some or all of the 2003 Notes for their principal amount,together with any accrued interest and unpaid interest.GPG has provided a subordinated and unsecured guarantee in respect of the repayment of principal and the payment ofinterest and unpaid interest due on the 2003 Notes on liquidition of the Company or of GPG itself. In the event that theCompany is in liquidation and GPG is not, the guarantee is only enforceable after the scheduled election date for the 2003Notes which next follows the liquidation of the subsidiary. This guarantee ranks pari passu with the guarantees provided forthe loan to GPGUKH from the Company and the existing Capital Notes, but is subordinated to all other creditors.


GPG FINANCE PLC1 511. Share Capital31 December 2005 2005 2004 2004No. NZ$ No. NZ$Authorised:Ordinary shares of £1 each 50,000 140,931 50,000 140,931Issued and fully paid:Ordinary shares of £1 each 50,000 140,931 50,000 140,931The ordinary shares have no pre-determined dividend rate, and all such shares have equal voting rights. The ordinary shareshave no maturity date or conversion rights and are not redeemable, and all ordinary shares have equal rights in any surplus onwinding up of the company.There are no restrictions on the allotment of ordinary shares.12. Profit and Loss AccountYear ended 31 December 2005 2004NZ$NZ$At 1 January 1,283,547 675,215Retained profit for the year 160,691 608,332AT 31 DECEMBER 1,444,238 1,283,54713. Reconciliation of Movements in Equity Shareholder’s FundsYear ended 31 December 2005 2004NZ$NZ$At 1 January 1,424,478 816,146Retained profit for the year 160,691 608,332AT 31 DECEMBER 1,585,169 1,424,47814. Notes to Cash Flow Statementa) Reconciliation of operating profit to net cash (outflow)/inflow from operating activitiesYear ended 31 December 2005 2004NZ$NZ$Operating profit 499,876 608,332Amortisation of issue costs for Capital Notes 3,121,802 3,130,355Increase in debtors (3,746,200) (3,625,278)Increase in creditors 64,398 1NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (60,124) 113,410The net cash (outflow)/inflow from operating activities includes interest received and interest paid, since the Companyoperates as a finance vehicle.


1 6 A N N U A L R E P O R T 2 0 0 5Notes to Financial Statements – continued14. Notes to Cash Flow Statement - continuedb) Taxation recovered/(paid)Year ended 31 December 2005 2004NZ$NZ$Overseas tax recovered/(paid) 62,737 (76,186)c) Analysis of net debt1 January Non-cash 31 December2005 Cash flow movements 2005NZ$ NZ$ NZ$ NZ$Cash at bank and in hand 898,606 2,613 – 901,219Debt due within one year – – (248,693,260) (248,693,260)Debt due after more than one year (457,145,945) – 245,571,458 (211,574,487)NET DEBT (456,247,339) 2,613 (3,121,802) (459,366,528)15. Financial InstrumentsThe Company’s main financial instruments comprise:– trade debtors and creditors that arise from its operations;– loans to group companies;– cash and bank deposits; and– Capital Notes.The main risk arising from the Company’s financial instruments relates to interest rate fluctuations, which impact on the fairvalue of its most significant financial instruments (being the Capital Notes in issue and the loan to its parent company).The Company’s sole activity is to borrow, by way of Capital Notes, and then lend the proceeds to other companies owned byGPG at a margin. The Company pays and receives interest at a fixed rate on the Capital Notes and on the loan to its parentcompany.All of the Company’s financial assets and liabilities are denominated in New Zealand dollars, with the result that the Companyis not subject to a significant exchange rate risk.Repayment by the Company of the loan to its parent company may not be demanded other than on the commencement ofthe liquidation of GPGUKH.Interest rate profile of financial liabilitiesThe Company’s financial liabilities total NZ$463,987,709 (2004: NZ$460,801,509), being the Capital Notes plus accrued interestpayable. The Capital Notes are denominated in New Zealand dollars and bear interest at a weighted average fixed rate of 8.86%(2004: 8.86%). The weighted average period for which the rate is fixed is a further 22 months (2004: 34 months).Interest rate profile of financial assetsThe Company’s financial assets total NZ$465,572,878 (2004: NZ$461,893,556), being the loan to its parent company, accruedinterest receivable and cash at bank. The parent company loan of NZ$445,390,991 (2004: NZ$445,390,991) receives aweighted average fixed rate of interest at 10.14% (2004: 10.14%). The weighted average period for which the rate is fixed is afurther 22 months (2004: 34 months). The cash deposits of NZ$901,219 (2004: NZ$898,606) earn a floating rate interest basedon LIBID equivalents.


GPG FINANCE PLC1 715. Financial instruments - continuedMaturity of financial liabilitiesThe maturity profile of the Company’s financial liabilities is shown below:31 December 2005 2004NZ$NZ$Within one year 248,693,260 –In one to two years – 246,838,238In more than two years but not more than five years 211,574,487 210,307,707460,267,747 457,145,945Fair value of financial assets and financial liabilitiesThe fair value of the Company’s financial assets and liabilities is summarised below:31 December 2005 2005 2004 2004Book value Fair value Book value Fair valueNZ$ NZ$ NZ$ NZ$Cash at bank 901,219 901,219 898,606 898,606Short term debtors 19,280,668 19,280,668 15,603,959 15,603,959Loan to parent company 445,390,991 465,547,687 445,390,991 472,955,054Capital Notes (460,267,747) (462,102,285) (457,145,945) (472,689,481)Other short term creditors (3,719,962) (3,719,962) (3,655,564) (3,655,564)The fair value of the Capital Notes is based on their market value. The fair value of the parent company loan is determined bydiscounting the future cash flows using the discount rate implicit in the market value of the Capital Notes.The fair value of the cash at bank has been assumed to approximate to its book value because of the short maturity of theyear-end balances.16. Related PartiesThere were no transactions with entities that are part of the Guinness Peat Group or investees of the Guinness Peat Groupother than as disclosed in these financial statements.17. Controlling PartiesThe Company is controlled by GPGUKH, a company incorporated in the United Kingdom and registered in England and Wales,which owns 100% of the issued share capital.The ultimate parent company of the Company is GPG, a company incorporated in the United Kingdom and registered inEngland and Wales. Copies of the accounts of GPG are available from the Company Secretary, First Floor, Times Place, 45 PallMall, London SW1Y 5GP, England.GPG is the parent undertaking of the smallest and largest groups respectively to consolidate the Company’s financialstatements.


1 8 A N N U A L R E P O R T 2 0 0 5GPG Finance plcUNITED KINGDOMFirst Floor, Times Place, 45 Pall Mall, London SW1Y 5GP(Registered office)Tel: 00 44 20 7484 3370 Facsimile: 00 44 20 7925 0700NEW ZEALANDc/o Computershare Investor Services LimitedPrivate Bag 92119, Auckland 1020Tel: 09 488 8700 Facsimile: 09 488 8787Registered in England No. 4244726LOCATION OF CAPITAL NOTE REGISTERThe Company’s register of Capital Notes is maintained in New Zealand.Register enquiries may be addressed direct to the Company’s registrars named below:Registrar Telephone and postal enquiries Inspection of RegisterComputershare Investor Private Bag 92119, Auckland 1020 Level 2, 159 Hurstmere Road,Services Limited Tel: 09 488 8777 Facsimile: 09 488 8787 Takapuna,North Shore CityLOCATION OF SHARE REGISTERS OF GUINNESS PEAT GROUP PLCThe register of members of Guinness Peat Group plc, the listed parent company of GPG Finance plc, is maintained in the UK withbranch registers in Australia and New Zealand. Register enquiries may be addressed direct to its share registrars named below:Register Telephone and postal enquiries Inspection of RegisterUK Main Register:Computershare Investor PO Box 82, The Pavilions, Bridgwater Road, The Pavilions,Services PLC Bristol BS99 7NH Bridgwater Road,Tel: 0870 702 0000 Facsimile: 0870 703 6143 Bristol BS99 7NHAustralian Branch Register:Registries Ltd PO Box R67, Level 2, 28 Margaret Street,Royal Exchange, Sydney NSW 1224 Sydney NSW 2000Tel: 02 9290 9600 Facsimile: 02 9279 0664New Zealand Branch Register:Computershare Investor Private Bag 92119, Auckland 1020 Level 2, 159 Hurstmere Road,Services Limited Tel: 09 488 8777 Facsimile: 09 488 8787 Takapuna,North Shore City

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