Guinness Peat Group plc

Guinness Peat Group plc ANNUAL REPORT 2004

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 1ContentsChairman’s Statement (including Coats Report) 2Financial Profile of Operations 10Summary of Principal Quoted Investments 11Board of Directors 12Directors’ Report 13Consolidated Profit and Loss Account 16Consolidated Balance Sheet 17Company Balance Sheet 18Consolidated Statement of Total RecognisedGains & Losses and Reconciliation ofMovements in Shareholders’ Funds 19Consolidated Cash Flow Statement 20Notes to Financial Statements 21Corporate Governance 57Independent Auditor’s Report 66Notice of Annual General Meeting 67Company and Registrar Addresses 71

2 GUINNESS PEAT GROUP PLC • ANNUAL REPORTChairman’s Statement“The directors anticipatean exciting and successfulyear for GPG in 2005”A relatively modest year for GPG inaccounting terms with profit down from£64.0 million to £25.3 million. A ratherbetter result was the continued overallincrease in value of the Company(expressed in terms of market value ofquoted investments and book valueelsewhere) of some £87 million which isprobably a more appropriate measure fora company such as GPG.The reasons for the lower profit arereadily identifiable and are worth furtherexplanation.1. A fewer number of completedcapital transactions.This is essentially a timing issue withvarious projected asset sales now inthe pipeline for 2005.2. Coats’ net loss of £5.6 million.In view of Coats’ importance to GPG,a separate report on this investmentis produced on pages 7 to 9.3. An “exchange translation” lossof £7.0 million compared with aprofit of £15.9 million in 2003.Regardless of annual fluctuations, inthe longer run, the basket ofcurrencies in which our portfolio isheld, must largely equalise. Since1991, the net aggregate outcome ofcurrency changes to date is a deficitof £1 million.4. A £6 million write-off in thevalue of Intellect Holdings Ltd.As foreshadowed in the Interim Report,it has been necessary to make aprovision in respect of what has so farbeen an unsuccessful investment and itwas decided to write off the book valueentirely.We do not believe it to be allbad,however,and since 30 June,wehave contributed an additional £1.3million (wisely or not,remains to beseen) in recapitalising the company.Our holding is now 18%.We have alsoinvested £6.6 million in a new entitycalled TAFMO Ltd, an unlisted publiccompany in which we have a direct56% interest and Intellect has a further28%.TAFMO appears to have goodcredentials in the development ofelectronic payments technology.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 35. An “equity accounted” loss of £9.8million ex Capral Aluminium Ltd.This is purely accounting fiction asGPG has no entitlement to CapralAluminium Ltd’s profits or lossesother than dividends received (or, inthis case, not received).Capral’s poor result (which includesthe write-off of a “future tax benefit”of A$27.2 million) is, however, ofdefinite concern to GPG in respect ofits substantial investment in thecompany. There are distinct parallelswith Coats insofar as a majorrelocation of the main manufacturingoperations has adversely affectedcurrent profitability but must pay off inthe longer term. The market price ofthe shares has held up well, reflectingthe confidence of GPG and othermajor shareholders in the company’sfuture prospects.The sale of Charter shares was a majorcontributor to the 2004 result and therewere also useful profits from Solution 6,Reinsurance Australia and AustralianPharmaceutical Industries.Compound growth in GPG’sNet Asset Value per shareComparison with total return onvarious indices£7£6£5£4£3£2£117.4%GPG£6.848.0%FTSE£2.5312.3%ASX£4.0111.3%NZX£3.60Growth in value of £1 invested overthe period 1 January 1993 to31 December 2004Compound annual growth rateGPG = Increase in NAV per GPG Ordinary Share asadjusted for stock events since 1 January 1993.Total return indices:FTSE = London Stock Exchange FTSE 100ASX = Australian Stock Exchange All OrdinariesNZX = New Zealand Stock Exchange Top 40(from January 2004 NZX-50)

4 GUINNESS PEAT GROUP PLC • ANNUAL REPORTChairman’s StatementcontinuedIn 2003 we wrote off the value of our30% holding in Dawson Internationalbut the company has actually recoveredreasonably well and recently repaid£4.0 million of its convertible notes.Also, it has now acquired Dorma Groupfrom Coats. Dorma has been a problemarea in the past but in the Dawsonenvironment it has every opportunityto succeed, as indeed it should, with itsstrong brands in linen and bedwearand an extensive marketing network inthe UK.The “spinoff” by Tower of certain of itsAustralian operations into a new listingof Australian Wealth Management Ltdis proceeding to plan. This is the firstsignificant move by Tower since GPGbecame involved several years ago and itis very positive for all concerned. GPGwill continue to be the major shareholderin both companies - AWM, a formidablenew entrant in a strongly growing areaof financial services and for Tower, thenext phase in the development of aleaner, more streamlined organisation.Since balance date, we have sold most ofour shareholding in De Vere Group on asatisfactory basis. After some years ofmild confrontation, it was finally ahappy ending all round. For GPG, thesuccessful sale of De Vere’s main asset,The Belfry hotel and golf course,produced the long awaited rerating inthe market value of the shares which wehad consistently advocated and De Verewelcomed the departure of anunwanted activist shareholder.Turners & Growers’ (GPG 78%) StockExchange listing duly occurred and it isoperating according to projectionsnotwithstanding that New Zealand applereturns are well down this year for bothgrowers and exporters.Otherwise,GPG’s subsidiaries,associatesand major investments are largelyunchanged from the profile in the InterimReport. New holdings in MaryboroughSugar,Tassal (salmon farming), Tandou(cotton), Farm Pride Foods (eggs),

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 5NSX (formerly the Newcastle Stock Exchange)and Rattoon Holdings (investor in“Tattersalls”) have been noted in the mediabut all are relatively small scale and too soonat this stage to make any material impact.As usual, a simplified GPG Balance Sheet(book value figures) is set out below.This provides a more useful analysis ofGPG as an investor than the conventionalgroup accounts.Simplified Balance Sheet at 31 December 2004 £mCash at Bank 193Debtors 14Coats 222Nationwide 9Staveley (UK & USA) –Canberra Investment Corp 13Turners & Growers 44De Vere Group 33Capral 20Tower 35Share portfolio 133Total Assets 716Creditors (24)Note Issues (178)SHAREHOLDERS’ FUNDS £514

6 GUINNESS PEAT GROUP PLC • ANNUAL REPORTChairman’s StatementcontinuedCapital and DividendThe Board has declared the standard1p dividend and a 1 for 10 bonus issue(the 12th in succession, multiplying anoriginal 1990 holding 3.14 times).The share election scheme is availableand will operate, in lieu of a cashdividend, at the rate of 1 new share foreach 80 already held.Shareholders’ Funds(2000 to 2004: Adding Convertible Loan Notes(CLNs))1998 £167.1m19992000£283.9m£291.5mDirectorsTrevor Beyer has retired as a Director andwe thank him for his many years ofvaluable service.No replacement has been made at thisstage with the Chairman and Blake Nixonassuming additional responsibilities inthe UK.2001200220032004£332.9m£379.8m£441.8m £441.9m£520.4mOverall, the Directors operate as acohesive unit with regular Boardmeetings in London.OutlookThe Directors anticipate an exciting andsuccessful year for GPG in 2005.The published figure for 2001 has been adjusted for achange in accounting policy in 2002, but earlier yearshave not been re-stated.The figures for CLNs are £19.3m (2000),£15.5m (2001),£11.6m (2002),£12.0m (2003) and £6.0m (2004).Ron BrierleyCHAIRMANLondon, 28 February 2005

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 7Chairman’s StatementCoats ReportThis report records the best (Crafts,cashflow) and the worst (EC, relocationcosts) of Coats since acquisition.Based on a 3 year plan for the restorationof profitability and at least the doublingof capital value, we are slightly behindschedule at this stage but 1 January 2005was a symbolic date when Coats began anew financial year for the first time as afully fledged subsidiary of GPG and freeof the disruption of ownership changes.AcquisitionThe period of acquisition, which beganin 2003 and which proved to be moredifficult and prolonged than anticipated,concluded on 31 December 2004, with allof the required accounting adjustmentscompleted.The resultant structure is that GPG owns100% of Coats Group Ltd which, througha subsidiary, owns all of Coats HoldingsLtd (formerly Coats plc) other than thepreference shares which are listed onthe LSE.GPG’s total cost of acquisition was£226.1 million.The overall Coats financial profile asincluded in GPG’s group accounts is:Coats financial profile £mFixed assets 305Net current assets 222Goodwill 139Total Assets 666Net debt (211)Provisions (193)Minorities (40)SHAREHOLDERS’ FUNDS £222There was initial goodwill on acquisitionof £34.1 million but ‘fair value’adjustmentshave been made at the Coats Group levelof £62 million upwards and £172 milliondownwards, thus increasing the goodwillcomponent to £144.0 million which isbeing amortised on a 20 year basis (2004charge : £4.8 million).GPG’s share of Coats’ post acquisition netdeficit incurred to 31 December 2004 is£3.7 million, so that net equity is now£222.4 million, comprising net tangibleassets of £83.1 million and goodwill of£139.3 million.

8 GUINNESS PEAT GROUP PLC • ANNUAL REPORTChairman’s StatementCoats Report continuedGeographyCoats’ geographic reach is impressive.It has manufacturing units in 41 countriescovering the whole world and isparticularly strong in the high growthareas of India, China and other Far Eastcountries. In November 2004, it openeda major new plant (80,000 sq.m.) inShenzhen, China which is indicative ofthe trend to larger facilities in lowercost areas. This follows the recentestablishment of similar modern facilitiesin Mexico and Romania.Coats’ real estate value is substantialbut more important is the totalreplacement cost of an establishednetwork which would be virtuallyimpossible to replicate.No other thread producer can match thislevel of international service.RelocationsIn the decade prior to GPG’s arrival, therewas a major shift of production capacityto developing countries but there is stillmuch to be done - more than weoriginally estimated would be required.There are very heavy one-off costs ofclosing traditional sites but it isimperative the process continues tocompletion as it represents an essentialinvestment for the future.2005 will be a further period of transitionbut on a lesser scale than 2004 and thereal benefits will begin to flow in 2006and beyond.Cash FlowCash flow has proved to be very strongand a sound indicator of basic businesshealth. To some extent this has beenat the expense of profitability with anemphasis on reducing surplus inventoryand tighter debtor control rather thanincreased sales. 2004 net cash inflowfrom operations was £131 million. Cashgeneration for essential capitalexpenditure and debt reduction willcontinue to be a priority.Real EstateA number of well situated propertiesare surplus or will be so in the nearfuture. Disposals to date also includevarious fringe assets (lochs in Scotland,a racecourse in India) which hadaccumulated in Coats’ 100 years or moreof existence.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 9The anticipated proceeds from propertysales will, to a large extent, compensatefor the one-off costs of reorganisation.CraftsThe value and potential of the craftsdivision of Coats has exceededexpectations. Initially viewed as asomewhat secondary adjunct to threadmanufacture, that is not the reality. It isa growing and substantial business in itsown right, partly due to a revival intraditional crafts activities, particularlyin the USA.Crafts was seriously underrated as anasset of the listed Coats plc.ECThe least welcome aspect of the Coatsacquisition is the emergence of “the EClegacy” - three separate but relatedproceedings against the companyresulting from a European Commissioninvestigation into trading practices inthe European haberdashery and threadindustry in the early 1990’s.One has been determined at anadministrative level, resulting in a claimof e30 million and the other two haveyet to reach a conclusion.The e30 million claim relates to handsewing needles for which total sales inthe relevant period were e3 millionand therefore appears grosslydisproportionate, whatever thecircumstances at the time.It should be stressed that the presentBoard had no involvement in thesematters and is simply objectively dealingwith the facts as established.The next stage of these proceedings isa more formal tribunal hearing at whichthe company has much greater rights ofadvocacy which will be actively pursued.Full provision has already been madefor any anticipated eventual payment sono adverse impact on profit is foreseen.Unfortunately, it will be 2 to 3 years beforeany final resolution is obtained and in themeantime there are continuing costs anddiversion of effort.On a more positive note, that coincideswith the period when Coats’transformation will become fully effectiveand the EC matter is something whichmust and will be overcome togetherwith other difficult challenges which willno doubt arise from time to time.

10 GUINNESS PEAT GROUP PLC • ANNUAL REPORTFinancial Profile of OperationsConsolidated figuresConsolidated figuresyear ended 31 December 2004 at 31 December 2004GPG holding Net profit Shareholders’31 December before minority Group fundsOperating Subsidiaries2004 interests turnover Total assets (GPG share)% £m £m £m £mUNITED KINGDOMCoats Group Ltd 100.00% 2.3 653.3 780.8 222.4Thread manufactureStaveley Industries plc 100.00% 2.5* 253.3 94.9† 19.1Building services*Excludes interest received from GPG of £1.0 million†Includes net cash of £37.5 million which is generally available to GPG for investment purposesNEW ZEALANDTurners & Growers Ltd 78.46% 3.5 209.4 102.4 44.4Fresh produce wholesalerAUSTRALIACanberra Investment Corporation Ltd 66.34% 1.1 15.4 37.6 12.8Property developerTAFMO Ltd 56.21% (0.9) 0.8 12.8 6.0Electronic products and servicesUNITED STATES OF AMERICAStaveley Inc 100.00% 1.2* 25.4 23.4† 19.1Testing services*Includes £1.8 million in respect of gain on sale of subsidiary but excludes interest received from GPG of £2.2 million†Includes net cash of £9.9 millionThe net profit amounts shown above in respect of subsidiaries exclude the following amounts in respect of goodwill:Charge/(release)for year£mCoats Group Ltd 4.8Staveley Industries plc (0.1)Turners & Growers Ltd (0.8)TAFMO Ltd –GPGshare of income GPG Latest publishedGPG holding year ended book value at shareholders’ funds31 December 31 December 31 December 31 DecemberAssociates and Joint Ventures2004 2004 2004 2004% £m £m £mUNITED KINGDOMCoats Group Ltd – (3.1) – –(became a subsidiary during the year)Nationwide Accident Repair Services plc 50.00% 1.1 9.3 23.0Dawson International PLC 29.91% np – npnp: This information had not been published by the relevant company at 7 April 2005, the last practicable date beforeprinting this Annual Report.AUSTRALIACapral Aluminium Ltd 37.25% (9.8) 20.5 69.2Green’s Foods Ltd 31.91% 0.5 6.8 20.8CPI Group Ltd 21.58% 0.1 4.3 22.0For associates and joint ventures, goodwill has been reflected in the amounts shown above.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 11Summary of Principal QuotedInvestmentsDisclosed Shareholdings as at 31 March 2005ShareholdingSUBSIDIARIESCanberra Investment Corporation Ltd 66.3%Turners & Growers Ltd 61.3%OTHER SHAREHOLDINGSUnited KingdomDawson International PLC 29.7%Young & Co’s Brewery P.L.C. (‘A’ Shares) 23.3%NewMedia SPARK plc 3.7%AustraliaCapral Aluminium Ltd 37.2%Green’s Foods Ltd 34.8%Australian Wealth Management Ltd 31.5%Tooth & Co. Ltd 24.9%CPI Group Ltd 21.6%Metals Exploration Ltd 19.9%Eservglobal Ltd 19.9%Intellect Holdings Ltd 18.0%Farm Pride Foods Ltd 17.9%Premier Investments Ltd 15.9%The Maryborough Sugar Factory Ltd 15.0%Rattoon Holdings Ltd 13.3%Tassal Group Ltd 12.2%NSX Ltd 12.1%Tasmanian Perpetual Trustees Ltd 9.4%MYOB Ltd 7.4%Tandou Ltd 6.9%GME Resources NL 5.4%AV Jennings Homes Ltd 5.0%New ZealandRubicon Ltd 20.0%Tower Ltd 19.9%United States of AmericaSante Fe Financial Corporation 6.4%CostMarket valueAnalysis of Total Holdings in above Companies as at 31 March 2005 £m £mSubsidiaries 23.8 56.1Other 158.0 248.9TOTAL 181.8 305.0

12 GUINNESS PEAT GROUP PLC • ANNUAL REPORTBoard of DirectorsSir Ron Brierley, ChairmanSir Ron Brierley (67) was appointed Chairman on29 March 1990. He founded Brierley Investments Ltdin 1961 and as chairman of that company implementedhis investment approach successfully over the next30 years, retiring as a director on 30 March 2001. Hisother directorships include The Australian Gas LightCompany Ltd and Premier Investments Ltd.Chairman of the Audit Committee and the Remuneration CommitteeG. J. Cureton, Executive DirectorGraeme Cureton (60) has broad experience in theAustralian business scene. He is a director of CapralAluminium Ltd, CPI Group Ltd and Green’s Foods Ltd.A. I. Gibbs, Executive DirectorB. A. Nixon, Executive DirectorBlake Nixon (44) has wide experience of corporatefinance both in the UK and Australia. He is chairmanof Staveley Industries plc and his other directorshipsinclude Coats plc, Nationwide Accident RepairServices plc and Staveley Inc.Member of the Audit Committee and the Remuneration CommitteeDr G. H. Weiss, Executive DirectorGary Weiss (51) has considerable experience in theinternational business scene. He is chairman ofCoats plc and a director of various public companiesoutside the UK including Australian WealthManagement Ltd, Capral Aluminium Ltd, PremierInvestments Ltd and Tower Ltd.Member of the Remuneration CommitteeTony Gibbs (57) has been involved with publiccompany boards for many years. His experienceincludes mergers, acquisitions and divestments.He is chairman of Turners & Growers Ltd, Tenon Ltdand Staveley Inc., and a director of Coats plc,Rubicon Ltd and Tower Ltd.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 13Directors’ ReportThe directors present their annual report andaudited financial statements for the year ended31 December 2004.Review of ActivitiesThe Company is a strategic investment holdingcompany.Significant EventsDuring the year, Coats became a wholly-ownedsubsidiary. A separate report on Coats, andcomments on other activities during the year andalso on the outlook for 2005, are set out in theaccompanying Chairman’s Statement.Significant events occuring since the year end arelisted in note 37 on page 52.Results and DividendsThe results of the Group are shown on page 16 andmovements on reserves are set out in note 27. A finaldividend of 1.0p per ordinary 5p share (“OrdinaryShare”) for the year ended 31 December 2004 isproposed, payable on 16 May 2005, and represents thetotal payable for the year. In respect of the year ended31 December 2003 GPG paid a final dividend of0.91p, adjusted for the 2004 Capitalisation Issue, inMay 2004. This was the only dividend for that year.Scrip Dividend Alternative andCapitalisation IssueAt the 2005 Annual General Meeting a resolution*will be proposed extending the existing authoritywhich enables the directors to allot, in lieu of thecash dividend payable in any year, Ordinary Shares inthe Company.The directors propose to extend theauthority to the fifth annual general meetingfollowing this year’s AGM, the maximum periodpermitted by the Company’s Articles of Association.The directors will also propose a resolutionauthorising the directors to allot up to 88,205,516further shares on 20 May 2005, in respect of the 2005Capitalisation Issue, in a ratio of 1 new Ordinary Sharefor every 10 shares held.Share CapitalDuring 2004, 11,248,786 Ordinary Shares were allottedto those holders of the Group’s 8% ConvertibleSubordinated Loan Notes (“CLNs”) who exercised theirright to convert their CLN Redemption Amounts.During the year, 75,754,914 ordinary shares wereissued as part of the consideration for the acquisitionof all the ‘A’ ordinary shares in Coats Group Limitedwhich were not previously owned by the Group.These events, together with the exercise of options,the 2004 Scrip Dividend Alternative and the 2004Capitalisation Issue, resulted in a total increase duringthe year of 179,787,118 Ordinary Shares. Furtherdetails of changes to the Company’s share capitalduring the year are set out in note 26 to the financialstatements.At the Annual General Meeting of the Company to beheld on 11 May 2005 (“the AGM”), shareholders willbe asked to approve a resolution,* in accordance withSection 80 of the Companies Act 1985 (“the Act”),which authorises the directors to exercise all thepowers of the Company to allot relevant securitieswithout first offering them to existing shareholders.This is a general power in respect of relevantsecurities not exceeding £20,024,540, representingone-third of the total enlarged issued share capital ofthe Company assuming maximum take-up of theScrip Dividend Alternative, full implementation of the2005 Capitalisation Issue, maximum conversion of the8% unsecured Subordinated Convertible Notes(“CLNs”) maturing during the year and allowing forthe possible exercise by the directors of the authoritygranted to them at the 2004 AGM to issue shares forcash (as described in the following paragraph), takentogether with the total number of shares outstandingunder the Group’s share option schemes. Theresolution also preserves a similar authorityconferred by Resolution 9 passed at last year’s annualgeneral meeting. This is in addition to the generalauthority described above. The directors have nopresent intention to exercise these powers.* See Explanatory Note to the Notice of Annual General Meeting on page 69 for further explanation of the reasons for resolutions 8-12 inclusive.

14 GUINNESS PEAT GROUP PLC • ANNUAL REPORTDirectors’ Report – continuedAt the Annual General Meeting held on 12 May 2004shareholders gave limited authority to the directorspursuant to Section 95 of the Act to allot unissuedshares for cash and to do so without regard to thestatutory rights of pre-emption of existingshareholders. Such authority was limited to theallotment of shares in connection with, inter alia, arights issue or a placement of up to an aggregatenominal value not exceeding £2,009,047. It isintended that the directors be authorised at the 2005AGM to allot unissued shares for cash in similarcircumstances. A special resolution relating to thepowers of directors to allot shares pursuant toSection 95 of the Act (as described above) will be putto the AGM. The number of shares which may be soallotted for cash will be up to an aggregate nominalvalue of £2,580,706 representing some 5% of theissued share capital of the Company. Such authority,unless renewed or varied by the Company in generalmeeting, will expire on 11 May 2010.The Company’s shares are listed on the London,Australian and New Zealand Stock Exchanges. Themain and branch share registers are maintained inthe countries where the Company’s shares are listedand the respective addresses are set out on page 71.Authority to Purchase Own SharesA special resolution renewing GPG’s generalauthority to purchase its own issued Ordinary Shareswill also be proposed at the AGM.* This authority islimited to purchases through the markets on whichthe Company’s shares are traded as set out above ata price of not less than 5p per share and not morethan 5% above the average of the middle-marketquotations of the Company’s shares as shown in theLondon Stock Exchange Daily Official List for the5 business days before the purchase is made. It willcover a maximum number of 130,500,000 shares,being no more than 14.99% of the Company’spresent issued ordinary share capital.The directors would not propose to exercise theauthority to make purchases unless the expectedeffect of the purchase would be generally in the bestinterests of shareholders. The directors presentlyintend that a resolution to renew this authority will beproposed at each succeeding Annual General Meeting.The total number of options that are outstandingunder the Group’s share option schemes is54,114,728. These options equate to 6.21% of thecurrent issued share capital. If the full authority topurchase on market 14.99% of its issued OrdinaryShares were to be exercised by the Company theseoptions would then represent 7.31% of the reducedissued share capital.Circular to ShareholdersNotice of an EGM, and a full explanation of theresolutions to be put, is being sent to all shareholdersin a Circular dated 8 April 2005. The Circular alsodeals with the proposed Scrip Dividend Alternative,the 2005 Capitalisation Issue and provides a fullexplanation of the resolutions to be put to the EGM,including a summary of the provisions of the 2002Share Option Scheme.Substantial InterestsNotification has been received by the Company and ismaintained in its Register of Substantial ShareInterests, as required under the Act, that as at 1 April2005 Sir Ron Brierley held 30,391,624 OrdinaryShares, 3.5% of GPG’s current issued capital.The Company has not received any other notificationunder ss.198-202 of the Act of any other substantialshareholders.Fixed AssetsDetails of fixed assets are set out in the notes to thefinancial statements.DirectorsThe directors who all served throughout the year arethose whose details appear on page 12. In addition,Trevor Beyer was a director until his retirement on30 September 2004.* See Explanatory Note to the Notice of Annual General Meeting on page 69 for further explanation of the reasons for resolutions 8-12 inclusive.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 15Creditor Payment PolicyThe majority of the Group’s investment activity takesplace on regulated exchanges and the Group abides bythe terms of payment laid down by those exchanges.Otherwise,and in the absence of dispute,amounts dueto trade and other suppliers are settled within theirterms of payment.The Group does not follow a specificcode or standard in respect within such creditors. As at31 December 2004,the Company’s trade creditors(excluding amounts attributable to investments)represented 13 days’purchases (2003:36 days).EmployeesParticipation in the conduct and affairs of relevantemploying companies is encouraged: arrangementsfor communication vary within each operating entity.Within the investment holding companies, full and fairconsideration to the employment of disabled personsis given having regard to their abilities and aptitudes,and any existing employee who becomes disabled istrained to ensure that, wherever possible, continuityof employment can be maintained. At operatingsubsidiary level, practice varies according to industrynorms and the legal and regulatory obligations in thecountry in which the company operates.DonationsDuring the year to 31 December 2004, the Companymade no charitable donations (2003: £nil). In the yearended 31 December 2004, the Group madecharitable donations of £101,089 (2003: £69,340).No contributions to political parties were madeduring the year.Directors’ ResponsibilitiesThe directors are required by UK company law toprepare financial statements for each financial yearthat give a true and fair view of the state of affairs ofthe Company and the Group as at the end of thefinancial year and of the profit or loss of the Groupfor that period. The directors confirm that suitableaccounting policies have been used and appliedconsistently and reasonable and prudentjudgements and estimates have been made in thepreparation of financial statements for the yearended 31 December 2004. The directors alsoconfirm that, except as disclosed in note 1 to thefinancial statements, applicable accountingstandards have been followed and the Group’saccounting policies have been applied consistently.The directors are responsible for keeping properaccounting records, for the system of internal control,for safeguarding the assets of the Company andhence for taking reasonable steps for the preventionand detection of fraud and other irregularities.AuditorsA resolution to re-appoint Deloitte & Touche LLP asauditor will be proposed at the AGM.By order of the BoardRichard RussellSecretary8 April 2005

16 GUINNESS PEAT GROUP PLC • ANNUAL REPORTConsolidated Profit and Loss AccountYear ended 31 December 2004 2003Notes £m £mTurnoverGroup and share of joint ventures 737.1 1,085.8Less: share of joint ventures (204.1) (541.8)Continuing operations (excluding acquisitions) 533.0 544.0AcquisitionsTurnover: group and share of joint ventures 654.1 –Less: share of joint ventures – –654.1 –Group turnover – continuing operations 1,187.1 544.0Group turnover – discontinued operations 7.7 9.0Group turnover 2 1,194.8 553.0Cost of sales 4 (874.5) (423.0)Gross profit 320.3 130.0Profit on disposal of investments and other net investment income 3 64.8 41.8Net operating expenses 4 (310.2) (104.3)Operating profit – continuing operations (excluding acquisitions) 53.4 66.4Operating profit – acquisitions (excluding joint ventures and associates) 20.8 –Operating profit – continuing operations 74.2 66.4Operating profit – discontinued operations 0.7 1.1Group operating profit 4 74.9 67.5Share of operating profit of joint ventures 5 3.0 24.8Share of operating loss of associated undertakings (2.2) (0.2)75.7 92.1Profit on sale of business – continuing operations 34 – 19.0Profit on sale of subsidiary – discontinued operations 34 1.8 –Interest payable and similar charges 7 (43.5) (23.4)Profit on ordinary activities before taxation 2, 6 34.0 87.7Tax on profit on ordinary activities 9 (8.0) (21.1)Profit on ordinary activities after taxation 26.0 66.6Equity minority interests (0.7) (2.6)PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS 25.3 64.0Equity dividends 12 (8.8) (6.9)RETAINED PROFIT FOR THE YEAR 16.5 57.1Restated*Earnings per Ordinary Share - basic (pence) 11 3.07p 8.43pEarnings per Ordinary Share - diluted (pence) 11 2.60p 6.16pDividend per Ordinary Share (pence) 12 1.00p 0.91p* Re-stated to reflect the 2004 Capitalisation IssueNotes on pages 21 to 56 form part of these financial statements

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 17Consolidated Balance Sheet31 December 2004 2003FIXED ASSETS Notes £m £mIntangible assetsGoodwill 14 141.3 1.4Negative goodwill 14 (8.5) (9.7)Intellectual property 14 5.1 –137.9 (8.3)Tangible assets 15 399.3 77.1Investments 16Investments in joint venturesShare of gross assets 21.7 601.2Share of gross liabilities (12.2) (505.9)9.5 95.3Investments in associates 39.6 38.3Other investments 159.2 157.9208.3 291.5TOTAL FIXED ASSETS 745.5 360.3CURRENT ASSETSStocks and development work in progress 17 183.8 28.2Debtors 18 339.3 93.2Investments 19 27.3 17.5Cash at bank and in hand 30j) 283.8 289.5TOTAL CURRENT ASSETS 834.2 428.4CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEARTrade and other creditors 20 (301.5) (126.9)Convertible subordinated loan notes 21 (6.0) (6.0)Other borrowings 23 (46.7) (0.8)TOTAL CURRENT LIABILITIES (354.2) (133.7)NET CURRENT ASSETS 480.0 294.7TOTAL ASSETS LESS CURRENT LIABILITIES 1,225.5 655.0CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEARTrade and other creditors 20 (3.6) (1.6)Convertible subordinated loan notes 21 – (6.0)Capital notes 22 (172.0) (166.5)Other borrowings 23 (267.2) (22.6)TOTAL LONG-TERM CREDITORS (442.8) (196.7)PROVISIONS FOR LIABILITIES AND CHARGES 24 (204.4) (10.6)NET ASSETS 2 578.3 447.7CAPITAL AND RESERVESShare capital 26 43.5 34.5Share premium account 27 10.6 3.4Capital redemption reserve 27 0.5 0.5Other reserve 27 304.4 260.6Profit and loss account 27 155.4 130.9EQUITY SHAREHOLDERS’ FUNDS 514.4 429.9Equity minority interests 63.9 17.8CAPITAL EMPLOYED 578.3 447.7Blake Nixon, DirectorApproved by the Board on 8 April 2005Notes on pages 21 to 56 form part of these financial statements

18 GUINNESS PEAT GROUP PLC • ANNUAL REPORTCompany Balance Sheet31 December 2004 2003FIXED ASSETS Notes £m £mInvestments 16 284.8 202.8CURRENT ASSETSLoans to subsidiary undertakings 90.8 86.6Other debtors 18 0.3 1.5Debtors 91.1 88.1Cash at bank and in hand 0.1 –TOTAL CURRENT ASSETS 91.2 88.1CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEARTrade and other creditors 20 (8.9) (7.1)Loans from subsidiary undertakings (unsecured) (18.9) (18.9)TOTAL CURRENT LIABILITIES (27.8) (26.0)Net current assets 63.4 62.1TOTAL ASSETS LESS CURRENT LIABILITIES 348.2 264.9PROVISIONS FOR LIABILITIES AND CHARGES 24 (1.1) (1.0)NET ASSETS 347.1 263.9CAPITAL AND RESERVESShare capital 26 43.5 34.5Share premium account 27 10.6 3.4Capital redemption reserve 27 0.5 0.5Other reserve 27 198.4 154.6Profit and loss account 27 94.1 70.9EQUITY SHAREHOLDERS’ FUNDS 347.1 263.9Blake Nixon, DirectorApproved by the Board on 8 April 2005Notes on pages 21 to 56 form part of these financial statements

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 19Consolidated Statement of TotalRecognised Gains and LossesYear ended 31 December 2004 2003£m £mProfit attributable to ordinary shareholders 25.3 64.0Currency translation differences on foreign currency net investments 3.3 0.5Deferred tax on foreign currency translation differences 0.1 3.5TOTAL RECOGNISED GAINS FOR THE YEAR 28.7 68.0Year ended 31 December 2004 2003£m £mThe currency translation differences arise as follows:Subsidiary undertakings 4.8 11.7Joint ventures 0.3 (12.8)Associated undertakings (1.8) 1.6TOTAL 3.3 0.5There are no differences between the profit figures reported on page 16 and their historical cost equivalents.Reconciliation of Movements inShareholders’ FundsYear ended 31 December 2004 2003£m £mProfit attributable to ordinary shareholders 25.3 64.0Currency translation differences on foreign currency net investments 3.3 0.5Deferred tax on foreign currency translation differences 0.1 3.5Total recognised gains for the year 28.7 68.0Dividends (8.8) (6.9)Scrip dividend alternative 4.3 3.7Release of negative goodwill on disposals – (0.3)Buy back of ordinary shares (including expenses) – (5.4)Issue of share capital (net of Capitalisation Issue) 52.8 0.2Share premium on issue of shares (net of expenses of issue) 7.5 2.4NET MOVEMENT IN SHAREHOLDERS’ FUNDS 84.5 61.7Shareholders’ funds as at 1 January 429.9 368.2SHAREHOLDERS’ FUNDS AS AT 31 DECEMBER 514.4 429.9Notes on pages 21 to 56 form part of these financial statements

20 GUINNESS PEAT GROUP PLC • ANNUAL REPORTConsolidated Cash Flow StatementYear ended 31 December 2004 2003Notes £m £mNet cash inflow from operating activities 30a) 196.0 102.3Dividends received from associates and joint ventures 30b) 2.7 5.6Returns on investments and servicing of finance 30c) (35.0) (13.2)Taxation paid 30d) (19.3) (6.0)Capital expenditure and financial investment 30e) (35.5) (51.7)Acquisitions and disposals 30f ) 10.7 30.6Equity dividends paid 30g) (2.3) (2.1)Cash inflow before management of liquidresources and financing 117.3 65.5Management of liquid resources 30h) 71.6 (157.9)Financing:Issue of ordinary shares, net of buy back expenses 30i) 3.9 (0.2)(Decrease)/increase in debt 30i) (133.3) 98.9INCREASE IN CASH FOR THE YEAR 59.5 6.3RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET (DEFICIT)/FUNDSIncrease in cash for the year 59.5 6.3Cash (inflow)/outflow from decrease/increase in liquid resources (71.6) 157.9Cash outflow/(inflow) from decrease/increase in debt 133.3 (98.9)Change in net funds resulting from cash flows 30j) 121.2 65.3Debt acquired with subsidiaries (415.6) –Currency translation differences (6.3) 4.3Other non-cash movements (see note below) 5.0 2.6Movement in net (debt)/funds for the year 30j) (295.7) 72.2Net funds as at 1 January 87.6 15.4NET (DEBT)/FUNDS AS AT 31 DECEMBER 30j) (208.1) 87.6Significant non-cash transactions:On 5 July 2004, the Group redeemed the fourth 10p principal amount of the remaining convertible subordinated loan notes through thepayment of £1.0m in cash, with the balance of £5.0m being satisfied by the issue of Ordinary Shares.Notes on pages 21 to 56 form part of these financial statements

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 21Notes to Financial Statements1. Statement of Accounting PoliciesThe following are the principal policies adopted in preparingthe financial statements. Except as noted in f ) below, thepolicies in this note have been consistently applied in thecurrent and prior year and have been expanded to reflectthe principal accounting policies adopted by the subsidiariesacquired during 2004.a) ACCOUNTING CONVENTION AND FORMATThe financial statements comply with applicable UKaccounting standards, modified where necessary to presenta true and fair view, and have been prepared under thehistorical cost convention.b) BASIS OF PREPARATIONPresentation of investment incomeFRS 3 – Reporting Financial Performance requires that the netgains from disposals of fixed asset investments (includingassociated undertakings) should be disclosed belowoperating profit. However, the directors believe that thispresentation would not give a true and fair view of theGroup’s results because its investment activities form anintegral part of the Group’s operations. Disposals of fixedasset investments provide a regular and substantial sourceof profit, and the directors believe that it is necessary toinclude the related net gains within operating profit in orderto provide a true and fair view. If these net gains werepresented below the Group’s operating profit, as requiredby FRS 3, the Group would have reported an operating profitfor 2004 of £29.5 million (2003: £36.7 million).The directors have also adapted the profit and loss accountformats included in Schedule 4 to the Act to reflect theimportance of the Group’s investment activities, as requiredby the Act. Accordingly, the Group’s other investment income(including dividends receivable, interest receivable andinvestment write-downs) is presented before net operatingexpenses, as part of the Group’s “Profit on disposal ofinvestments and other net investment income,” and isincluded in the Group’s operating profit.The presentation of investment income does not affect thenet profit attributable to GPG’s shareholders.c) BASIS OF CONSOLIDATIONThe principal subsidiaries are listed in note 35. The results ofsubsidiaries acquired or disposed of are consolidated in theGroup’s financial statements from and to the dates ofacquisition and disposal respectively. The consolidatedfinancial statements also include the Group’s share of theassets, liabilities, results and cash flows of its jointarrangements.Associates are accounted for using the equity method andjoint ventures are accounted for using the gross equitymethod.d) FOREIGN CURRENCIESAssets and liabilities in foreign currencies are translated atthe exchange rates ruling at the balance sheet date, unlesshedged through foreign currency transactions in which casethe relevant contract rate is used. Revenues and expensesarising in a foreign currency are translated either at the rateapplicable when the transaction occurred or, in the case offoreign subsidiaries, associates and joint ventures, at the yearend rate (except that the results attributable to businessessold during the year are translated using the exchange rateon the date of disposal).Differences on exchange arising from the retranslation ofopening net investments in subsidiaries,associates and jointventures are taken to reserves,including the exchangedifferences on loans between Group companies that form partof the net investment in foreign subsidiaries (and any relatedtaxation).All other foreign exchange differences are taken tothe profit and loss account in the year in which they arise.e) FIXED ASSETSFixed assets are stated at cost less accumulated depreciation.Depreciation is calculated using the straight-line methodover the expected useful life of the asset. The principalannual rates used are:– Freehold land not depreciated– Freehold buildings 1-5%– Leasehold buildings 2-5% or over the termof the lease if shorter– Plant and equipment 2-33%– Vehicles and office equipment 10-50%Land held for development is valued at cost or, where therehas been an impairment in value, at directors’ valuation.The cost of mineral rights is amortised over the expectedextraction period.

22 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continuedf) INVESTMENTSInvestments acquired with the intention of being held forthe long term (excluding investments in subsidiaries,associates, joint ventures and joint arrangements) arerecorded as fixed asset investments and are stated at cost or,where there has been a permanent diminution in value, atdirectors’ valuation. Investments in art portfolios are valuedat cost or, where there has been an impairment in value, atdirectors’ valuation.Listed investments held as current assets, includingderivatives held as part of the Group’s investment portfolio,are stated at market value. This represents a change from theprevious policy of stating such investments at the lower ofcost and market value, but the impact on prior periods is notmaterial and hence no prior year adjustment has beenrecorded in these financial statements. In addition, provisionis made for any losses arising from derivatives in excess ofthe amounts paid.Unlisted investments held as current assets are stated at thelower of cost and directors’ valuation, including subsidiariesacquired with the intention of resale.In the Company’s financial statements, investments insubsidiaries, associates and joint ventures are valued at costor, where there has been an impairment in value, at theirexpected recoverable amount.g) LEASESAssets held under finance leases are capitalised as fixedassets. The amount initially brought to account is the presentvalue of minimum lease payments. Finance lease paymentsare allocated between interest expense and reduction oflease liability over the term of the lease. Operating leasepayments are charged as an expense in the year in whichthey are incurred.h) GOODWILLGoodwill represents the difference between the cost ofacquiring subsidiaries, associates and joint ventures and thefair value of the attributable net assets. Positive goodwill hasbeen capitalised in the balance sheet and amortised throughthe profit and loss account on a straight line basis over itsestimated useful economic life. If, in future years, anygoodwill arises which is considered to have an indefiniteeconomic useful life, amortisation will not be charged butthe goodwill will instead be subject to an annual impairmentreview and, where appropriate, provided against.Negative goodwill is also capitalised in the balance sheet,and is then released through the profit and loss account inthe periods in which the acquired company’s non-monetaryassets are recovered, whether through depreciation or sale.Negative goodwill is matched with the acquired company’stangible fixed assets, and any excess is then attributed to thecompany’s other non-monetary assets.Prior to 1998, negative goodwill was written off directly toreserves. Any such goodwill has not been reinstated. This willbe released through the profit and loss account on disposalof the business, or underlying asset, to which it relates.i) TURNOVERTurnover, which excludes VAT and other sales taxes, consistsof amounts receivable in respect of goods supplied andservices rendered to third parties and the proceeds from thedisposal of current asset investments.Sales of goods are recognised in revenue when controlpasses to the customer, except that sales of aluminiumproducts are recorded when goods have been despatchedand the associated risks and rewards have been transferred.Income from sales of property is recognised on a percentageof completion basis.Contracting turnover comprises the value of work executedduring the year, including the settlement of monetary claimsarising from previous years.j) STOCKS, WORK IN PROGRESS AND LONG TERMCONTRACTSStocks and work in progress are stated at the lower of costand net realisable value. In general, cost is determined on afirst in first out basis and includes transport and handlingcosts. In the case of manufactured products, cost includes alldirect expenditure and production overheads based on thenormal level of activity. Net realisable value is the price atwhich stocks can be realised in the normal course ofbusiness after allowing for the costs of realisation and, whereappropriate, the cost of conversion from their existing stateto a finished condition. Provision is made for obsolete, slowmoving and defective stocks.Raw materials and consumable stores are valued at actual orweighted average cost as appropriate.Long term contracts are generally those exceeding a year induration and are valued at cost,comprising direct expenditureand the relevant production overheads,plus the profit

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 23attributable to the work performed to date.The amountsrecoverable from such contracts, being the excess of theirvaluation over payments received and receivable,are includedin debtors.Progress payments in excess of the value of thework performed are included in creditors as payments onaccount. Provision is made for all losses expected to arise oncompletion of the contracts entered into at the balance sheetdate, whether or not work on these has commenced.Land for resale, which is included within work in progress, isvalued at the lower of cost and net realisable value. Costincludes capitalised interest and those costs necessary toprepare the land for sale.k) PENSIONS AND OTHER POST RETIREMENT BENEFITSPension costs in respect of defined contribution schemes arecharged to the profit and loss account in the year to which theyrelate.Costs in respect of defined benefit pension schemes andother post retirement benefits are spread over the employees’service lives,in accordance with actuarial advice in such a waythat the pension cost is a substantially level percentage ofcurrent and expected future pensionable payroll.m) INVESTMENT INCOMEIncome from equity investments is recognised when thelegal entitlement vests.Dividends from UK companies are presented net of theattributable tax credit. Dividends received from overseascompanies include any withholding taxes, but exclude anyunderlying tax paid by the investee company on its ownprofit. Special dividends arising from the Group’s investmentsare included as income in the profit and loss account and,where appropriate, an impairment provision is recognisedagainst the investment.n) EMPLOYEE ENTITLEMENTSProvision is made for long service leave and annual leavepayable to employees on the basis of relevant statutoryrequirements or contractual entitlements.l) TAXATIONProvision is made for domestic and foreign taxation assessableon the profit for the year as adjusted for disallowable and nontaxableitems.Deferred taxation is provided in full in respect oftiming differences which have arisen but not reversed at thebalance sheet date,except that deferred tax assets (includingthose attributable to tax losses carried forward) are onlyrecognised if it is considered more likely than not that they willbe recovered.Deferred taxation is not provided in respect ofthe accumulated reserves of overseas subsidiaries,associatesand joint ventures unless a dividend has been declared orthere is a binding obligation to distribute those reserves.Deferred taxation is measured on a non-discounted basis.

24 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued2. Segmental Analysis – Turnover (including share of joint ventures)Continuing Discontinued Total Continuing Discontinued TotalYear ended 31 December 2004 2004 2004 2003 2003 2003£m £m £m £m £m £mGEOGRAPHIC ANALYSIS BY ORIGINUK/Europe 626.0 – 626.0 503.2 – 503.2Australasia 264.5 – 264.5 263.1 – 263.1North America 214.5 7.7 222.2 152.8 9.0 161.8Asia 205.1 – 205.1 109.0 – 109.0Other 81.1 – 81.1 57.7 – 57.71,391.2 7.7 1,398.9 1,085.8 9.0 1,094.8Amounts relating to acquired businesses:Group – UK/Europe 242.5 – 242.5 – – –Group – Australasia 6.4 – 6.4 – – –Group – North America 162.7 – 162.7 – – –Group – Asia 173.8 – 173.8 – – –Group – Other 68.7 – 68.7 – – –654.1 – 654.1 – – –GEOGRAPHIC ANALYSIS BY DESTINATIONUK/Europe 687.8 – 687.8 583.1 – 583.1Australasia 158.1 – 158.1 155.2 – 155.2North America 239.5 7.7 247.2 180.8 9.0 189.8Asia 225.8 – 225.8 109.0 – 109.0Other 80.0 – 80.0 57.7 – 57.71,391.2 7.7 1,398.9 1,085.8 9.0 1,094.8Amounts relating to acquired businesses:Group – UK/Europe 241.4 – 241.4 – – –Group – Australasia 6.4 – 6.4 – – –Group – North America 167.2 – 167.2 – – –Group – Asia 172.9 – 172.9 – – –Group – Other 66.2 – 66.2 – – –654.1 – 654.1 – – –BUSINESS ANALYSISInvestment 36.1 – 36.1 41.4 – 41.4Property development 15.4 – 15.4 10.4 – 10.4Testing services 18.7 7.7 26.4 34.0 9.0 43.0Building services 253.4 – 253.4 240.1 – 240.1Fruit/produce distributionand food processing 209.4 – 209.4 218.3 – 218.3Accident repair services 61.8 – 61.8 59.5 – 59.5Thread manufacture 795.6 – 795.6 482.1 – 482.1Other 0.8 – 0.8 – – –1,391.2 7.7 1,398.9 1,085.8 9.0 1,094.8Amounts relating to acquired businesses:Group – thread manufacture 653.3 – 653.3 – – –Group – other 0.8 – 0.8 – – –654.1 – 654.1 – – –TOTALGroup 1,187.1 7.7 1,194.8 544.0 9.0 553.0Joint ventures 204.1 – 204.1 541.8 – 541.81,391.2 7.7 1,398.9 1,085.8 9.0 1,094.8Notes:The turnover attributable to joint ventures arose from property development and investment activities in Australasia (2004: £Nil; 2003:£0.3 million), from accident repair services in UK/Europe (2004: £61.8 million; 2003: £59.5 million), and from thread manufacture in UK/Europe(2004: £142.3 million; 2003: £482.0 million).

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 252. Segmental Analysis - continued – Profit before tax and Net assetsProfit before tax Profit before tax Net assets Net assetsYear ended 31 December 2004 2003 2004 2003GEOGRAPHIC ANALYSIS£m £m £m £mContinuing operations:UK/Europe 6.3 37.5 (96.6) 292.9Australasia 3.7 29.2 158.8 147.1North America (9.0) 18.7 162.4 15.0Asia 28.3 – 165.5 –Other 6.2 – 55.4 –Goodwill (subsidiaries only) (4.0) 1.2 132.8 (8.3)31.5 86.6 578.3 446.7Discontinued operations:North America 0.7 1.1 – 1.0Profit on sale of subsidiary – North America 1.8 – – –34.0 87.7 578.3 447.7Analysis of goodwill:UK/Europe (4.8) 0.2 138.7 (1.0)Australasia 0.8 1.0 (6.0) (7.4)North America – – 0.1 0.1(4.0) 1.2 132.8 (8.3)Amounts relating to acquired businesses(including associates and joint ventures):Group – UK/Europe (15.6) – (243.8) –Group – Australasia (0.1) – 17.7 –Group – North America (5.3) – 143.5 –Group – Asia 22.6 – 165.5 –Group – Other 5.2 – 55.4 –Goodwill (subsidiaries only) (4.8) – 139.6 –2.0 – 277.9 –Analysis of goodwill:UK/Europe (4.8) – 139.3 –Australasia – – 0.3 –(4.8) – 139.6 –BUSINESS ANALYSISContinuing operations:Group:Investment 18.6 39.6 148.4 222.8Property development 0.7 5.4 17.5 16.8Testing services 1.1 16.5 19.2 15.5Building services 6.9 2.9 20.3 17.5Fruit/produce distribution and food processing 4.9 5.8 61.8 60.3Thread manufacture 7.6 – 123.9 –Other (0.9) – 10.1 –Goodwill (subsidiaries only) (4.0) 1.2 132.8 (8.3)34.9 71.4 534.0 324.6Analysis of goodwill:Building services 0.1 0.2 (0.5) (1.0)Thread manufacture (4.8) – 139.3 –Fruit/produce distribution and food processing 0.7 1.0 (6.4) (7.4)Other – – 0.4 0.1(4.0) 1.2 132.8 (8.3)

26 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued2. Segmental Analysis - continued – Profit before tax and Net assetsProfit before tax Profit before tax Net assets Net assetsYear ended 31 December 2004 2003 2004 2003£m £m £m £mDiscontinued operations:Testing services 0.7 1.1 – 1.0Profit on sale of subsidiary – testing services 1.8 – – –2.5 1.1 – 1.0Associates (including goodwill):Aluminium extrusion (5.7) (0.5) 20.5 25.2Fruit/produce distribution and food processing 1.9 1.1 8.3 6.7Other 0.8 (1.3) 6.0 2.2(3.0) (0.7) 34.8 34.1Joint ventures (including goodwill):Thread manufacture (1.7) 15.3 – 79.7Accident repair services 1.3 0.4 9.4 8.2Other – 0.2 0.1 0.1(0.4) 15.9 9.5 88.034.0 87.7 578.3 447.7Amounts relating to acquired business(including associates and joint ventures):Thread manufacture 7.6 – 123.9 –Other (0.8) – 14.4 –Goodwill (subsidiaries only) (4.8) – 139.6 –2.0 – 277.9 –Analysis of goodwill:Thread manufacture (4.8) – 139.3 –Other – – 0.3 –(4.8) – 139.6 –TOTALGroup 37.4 72.5 534.1 325.6Joint ventures (0.4) 15.9 9.5 88.0Associated undertakings (3.0) (0.7) 34.8 34.134.0 87.7 578.3 447.7Notes:i) Profit arising from the investment activities carried out by UK subsidiaries is deemed to be of UK origin, although a number of investeecompanies operate, and are listed, in other regions.ii) In arriving at the profit before tax figures reported above, interest receivable/payable is allocated to the businesses to which it relates(including interest on loans between Group companies).3. Profit on Disposal of Investments and Other Net Investment IncomeContinuing Discontinued Continuing Discontinuedoperations Acquisitions operations Total operations operations TotalYear ended 31 December 2004 2004 2004 2004 2003 2003 2003£m £m £m £m £m £m £mInterest receivable 10.4 3.0 – 13.4 9.1 – 9.1Profit on disposal of sharesin associated undertakings – – – – 3.9 – 3.9Profit on disposal of otherfixed asset investments 40.7 0.2 – 40.7 26.9 – 26.9Income from listed investments 8.9 0.7 – 9.6 7.6 – 7.6Net increase in investmentprovisions and write-downs (2.3) – – (2.3) (11.1) – (11.1)(Loss)/gain on derivatives held withinthe investment portfolio (1.8) – – (1.8) 1.4 – 1.4Other income 4.8 0.2 – 5.0 4.0 4.060.7 4.1 – 64.8 41.8 – 41.8

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 274. Operating ProfitContinuing Discontinued Continuing DiscontinuedYear ended 31 December operations Acquisitions operations Total operations operations Total2004 2004 2004 2004 2003 2003 2003GROUP £m £m £m £m £m £m £mCost of sales (427.3) (443.3) (3.9) (874.5) (418.2) (4.8) (423.0)Gross profit 105.7 210.8 3.8 320.3 125.7 4.3 130.0Distribution costs (7.0) (124.5) (0.4) (131.9) (12.5) – (12.5)Administration expenses (105.9) (69.7) (2.7) (178.3) (88.6) (3.2) (91.8)Net operating expenses ( 112.9) (194.2) (3.1) (310.2) (101.1) (3.2) (104.3)Profit on disposal of investments andother net investment income 60.6 4.2 – 64.8 41.8 – 41.8Operating profit 53.4 20.8 0.7 74.9 66.4 1.1 67.55. Operating Profit from Joint VenturesDuring the year, Coats plc, registered in the United Kingdom, became a subsidiary and ceased to be a joint venture undertaking.The Group’s share of the operating profit of Coats Group, Coats plc’s parent, for the period it was a joint venture during 2004was £1.7 million.6. Profit on Ordinary Activities Before TaxationYear ended 31 December 2004 2003£m £mProfit on ordinary activities before taxation is stated after charging/(crediting):Depreciation of tangible fixed assets 35.6 10.4Amortisation of goodwill (including associates and joint ventures) 5.6 0.9Release of negative goodwill from the balance sheet (including associates and joint ventures) (2.2) (2.1)Release of negative goodwill from reserves – (0.3)Group audit fees (see notes below):UK 1.5 0.4Overseas 0.3 0.1Operating lease rentals:Plant and equipment 8.7 6.3Other 10.9 5.6Net foreign exchange losses/(gains) 7.0 (15.9)Rental income from land and buildings (2.8) (2.7)Notes:The audit fee for the Company was £98,000 (2003: £93,000).Non-audit fees paid to Deloitte & Touche LLP were £2.3m (2003: £1.2m comprising £0.8m prior to their appointment as auditor and £0.4m postthe appointment).

28 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued7. Interest Payable and Similar ChargesYear ended 31 December 2004 2003£m £mInterest payable on bank loans and overdrafts (17.8) (3.3)Unwinding of discount on provisions (3.6) (0.2)Interest payable on CLNs (see note 21) (0.7) (0.9)Interest payable on Capital Notes (see note 22) (15.5) (9.0)Amortisation of issue costs on Capital Notes and CLNs (1.3) (0.9)Amortisation of issue costs on other borrowings (1.2) –(40.1) (14.3)Interest capitalised 0.7 0.2(39.4) (14.1)Net interest payable by associated undertakings (0.7) (0.5)Interest payable by joint ventures (net of amounts capitalised) (3.4) (8.8)(43.5) (23.4)The cumulative amount of capitalised interest included in development land held at 31 December 2004 was £0.7m(2003: £0.3m). Interest is capitalised gross of tax relief, at an average rate of 7.5% (2003: 7.9%).8. Employee InformationYear ended 31 December 2004 2003The average number of employees (including executive directors) during the year was:Continuing operations:Investment/corporate 31 28Property development 15 14Testing services 417 912Building services 2,939 2,785Fruit/produce distribution and food processing 1,155 1,272Thread manufacture 22,097 –Other 28 –26,682 5,011Discontinued operations: 117 115TOTAL NUMBER OF EMPLOYEES 26,799 5,126The average numbers stated above include the average number of employees of acquired businesses from the date theybecame subsidiaries and the average to the date of disposal for businesses disposed of during the year (rather than theweighted average for the year as a whole).Year ended 31 December 2004 2003£m £mGroup employment costs – all employees including directors:Aggregate gross wages and salaries 269.3 122.1Employer’s national insurance contributions or foreign equivalents 32.1 10.2Employer’s pension contributions 5.4 5.4TOTAL DIRECT COSTS OF EMPLOYMENT 306.8 137.7Directors’ emolumentsAggregate emoluments 2.5 5.6Gains made on exercise of share options 6.0 –Pension contributions 0.1 0.1Payment to former director on retirement 0.3 –8.9 5.7The aggregate emoluments for the highest paid director were £0.8 million (2003: £1.5m) excluding gains on share optionsexercised. Contributions paid to money purchase pension schemes in respect of the highest paid director were £48,998(2003: £50,505).Further details of directors’ emoluments are provided under the heading Report on Remuneration and Related Matters onpages 60 to 62.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 299. Tax on Profit on Ordinary ActivitiesYear ended 31 December 2004 2003£m £mCurrent tax:UK corporation tax at 30% (2003: 30%) 1.0 (1.4)Overseas tax (21.2) (6.7)Tax attributable to associated undertakings (4.6) (0.1)Tax attributable to joint ventures (1.5) (6.7)(26.3) (14.9)Deferred tax 18.3 (6.2)TOTAL TAX CHARGE (8.0) (21.1)The current tax charge is lower than the standard rate of corporation tax in the UK (30%). The differences are explained below:Year ended 31 December 2004 2003£m £mProfit on ordinary activities before taxation 34.0 87.7Profit on ordinary activities multiplied by standard rate of taxin the UK of 30% (2003: 30%) 10.2 26.3Impact of differences in overseas tax rates (9.8) 1.8Non-taxable income (0.1) (1.4)Utilisation of losses (11.9) (11.4)Non-deductible expenses 11.1 (1.1)Other permanent differences 16.6 (6.5)Accelerated capital allowances (6.3) 0.4Other short term timing differences 10.4 0.8Adjustments in respect of prior years – (0.8)Joint ventures and associated undertakings 6.1 6.8Current tax 26.3 14.9Deferred tax (18.3) 6.2TOTAL TAX CHARGE 8.0 21.110. Pension CostsThe Group operates three significant defined benefit schemes in the UK:the Coats Pension Plan (“Coats UK”), the Staveley IndustriesRetirement Benefits Scheme (“SIRBS”) and the Brunel Holdings Pension Scheme (“Brunel”). In addition,Coats operates as definedbenefit schemes the Coats North America Pension Plan in the US (“Coats US”) and a number of small funded and un-fundedarrangements at various locations around the world (most significantly in Germany).All schemes are administered in accordancewith their respective governing documentation and with the advice of independent,professionally qualified actuaries.The assetsof the funded schemes are held separately from those of the relevant companies.SIRBS is now closed to new members.An actuarial review of all the Coats arrangements was carried out as at 7 April 2003, using the projected unit method, for thepurposes of accounting under SSAP 24. For the Coats UK plan the estimated market value of the assets was £1,284 million andthe scheme was 104% funded assuming an investment return pre-retirement of 7.6% per annum, investment return postretirement of 5.4% per annum, salary increases of 3.5% per annum and inflation of 2.5% per annum. For the Coats US plan theestimated market value of the assets was £140 million and the scheme was 121% funded using the same assumptions as forthe Coats UK plan except with salary growth of 5% per annum. The company is on a contribution holiday for both the Coats UKand Coats US plans. Other Coats arrangements were also valued as at 7 April 2003 using suitable assumptions. The net pensioncredit to operating profit under SSAP 24 for the combined Coats arrangements was £0.4 million, and the net pension liability of£26.9 million at the year end comprised a liability of £65.1 million in respect of unfunded defined benefit schemes less aprepayment of £38.2 million (note 18), largely in respect of the Coats UK and Coats US schemes.The last actuarial valuations of the SIRBS and Brunel schemes were as at 5 April 2002 and 13 December 2002 respectively.These valuations have previously been updated to 31 December 2002. The assumptions used for the SIRBS and Brunel schemevaluations were, respectively, pre-retirement investment return of 8.1% (both schemes) per annum; post-retirement investmentreturn of 5.0% and 5.5% per annum; inflation of 2.25% (both schemes) per annum; pension increase of 3.25% and 3.3% perannum; and salary growth of 3.25% per annum (both schemes). The total market value of the combined scheme assets of£285.3 million represented 99% of the accrued liabilities. The valuation method was the projected unit credit method withsurpluses and deficits spread over the future working lifetime of the active membership. New valuations were in progress forboth of these schemes at the year end but have yet to be finalised.

30 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued10. Pension Costs - continuedContributions paid during the year are based on a percentage of pensionable salaries (14% for SIRBS and 16.4% for Brunel) andamounted to £2.2 million (2003: £2.4 million). The contribution rates for future years for both SIRBS and Brunel are currentlyunder review. The pension charge under SSAP24 for the two schemes amounted to £2.2 million (2003: £2.5 million) and the netpension liability at the year end was £0.9 million (2003: £1.0 million).The Group has a liability in respect of former employees’ pensions currently being paid directly by GPGUKH, amounting to£43,955 (2003: £48,313) per annum. Provision has been made for the estimated liability based on actuarial advice. The keyassumptions made in arriving at the liability are as follows: an annual growth rate for pension payments of 2.75% (2003: 2.75%),an average life expectancy of 8 years (2003: 8 years) and a discount rate of 5.25% (2003: 5.5%).The charge for the year in respect of the Group’s defined contribution arrangements was £3.6 million (2003: £2.9 million).The following disclosures are made solely for the purposes of Financial Reporting Standard 17 (“FRS 17”) and do notinclude information in respect of schemes operated by joint ventures and associated undertakings:The major assumptions used by the actuaries in updating the valuations to 31 December 2004 for the purposes of FRS 17 were:31 December 31 December 31 December2004 2003 2002Discount rate 5.30% 5.50% 5.50%Rate of increase in salaries 3.80% 3.75% 3.25%Inflation 2.70% 2.75% 2.25%Rate of increase in pensions in payment 2.60% 3.00% 2.80%These assumptions are weighted averages across all the arrangements of the Group (UK, US and other jurisdictions).The assets in the schemes as at 31 December 2004 and the expected rates of return were:Long termexpected rateof return at31 December Funded Unfunded Total2004 £m £m £mEquities 8.2% 605.6 – 605.6Bonds 5.1% 1,184.7 – 1,184.7Other 6.3% 51.7 – 51.7Total market value of assets 1,842.0 – 1,842.0Present value of schemes’ liabilities (1,901.4) (67.8) (1,969.2)Gross deficit in the schemes (59.4) (67.8) (127.2)Irrecoverable surplus in the schemes (16.0) – (16.0)Net FRS17 deficit in the schemes (75.4) (67.8) (143.2)The effects of adopting the requirements of FRS17 on the primary financial statements are shown below:2004 2003 2002£m £m £mNet assets 578.3 447.7 382.6Less net pension liabilities/(assets) recognised under SSAP24 19.5 0.7 (0.3)Net assets excluding net pension liabilities/(assets) recognised under SSAP24 597.8 448.4 382.3Net pension liability under FRS17 (143.2) (41.5) (27.1)Net assets including FRS17 pension liability 454.6 406.9 355.2Profit and loss reserve 155.4 130.9 72.0Less net pension liabilities/(assets) recognised under SSAP24 19.5 0.7 (0.3)Profit and loss reserve excluding net pension liabilities/(assets)recognised under SSAP24 174.9 131.6 71.7Net pension liability under FRS17 (143.2) (41.5) (27.1)Adjusted FRS17 profit and loss reserve 31.7 90.1 44.6

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 3110. Pension Costs - continuedThe assets in the SIRBS and the Brunel schemes as at 31 December 2003 and the expected rates of return were:Long term expectedValue as atrate of return at 31 December31 December 20032003 £mEquities 8.1% 84.4Bonds 5.0% 211.0Other 4.0% 2.4Total market value of assets 297.8Present value of schemes’ liabilities (339.3)FRS17 deficit in the schemes (41.5)The assets in the SIRBS and the Brunel schemes as at 31 December 2002 and the expected rates of return were:Long term expectedValue as atrate of return at 31 December31 December 20022002 £mEquities 8.1% 75.7Bonds 5.0% 208.5Other 4.0% 2.3Total market value of assets 286.5Present value of schemes’ liabilities (313.6)FRS17 deficit in the schemes (27.1)Analysis of amount that would be charged to operating profit under FRS17:2004 2003£m £mCurrent service cost 8.0 2.9Past service cost 0.2 –Settlements/curtailments 0.3 –Total operating charge 8.5 2.9Analysis of amount that would be credited to other finance income under FRS17:2004 2003£m £mExpected return on pension scheme assets 82.6 16.3Interest on pension scheme liabilities (80.8) (16.9)Net return 1.8 (0.6)Analysis of the amount recognised in statement of total recognised gains and losses under FRS17:2004 2003£m £mActual return less expected return on scheme assets 51.4 7.1Experience gains and losses arising on the schemes’ liabilities 10.7 (4.4)Changes in assumptions (79.1) (15.9)Actuarial loss on assets and liabilities (17.0) (13.2)Adjustment due to surplus cap (2.3) –Actuarial loss recognised in the STRGL (19.3) (13.2)Movement in FRS17 deficit during the year: 2004 2003£m £mDeficit at beginning of year (41.5) (27.1)Current service cost (8.0) (2.9)Past service cost (0.2) –Company contributions 8.3 2.3Deficit attributable to acquired business (83.8) –Extension of coverage (0.2) –Settlements and curtailments (0.3) –Other finance income (net) 1.8 (0.6)Actuarial loss (19.3) (13.2)Deficit at end of year (143.2) (41.5)

32 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued10. Pension Costs - continuedHistory of experience gains and losses:2004 2003 2002Difference between the expected and actual return on scheme assets:amount (£ millions) 51.4 7.1 (13.9)percentage of year end scheme assets 2.8% 2.4% (4.9%)Experience gains and losses on scheme liabilitiesamount (£ millions) 10.7 (4.4) 7.4percentage of the year end present value of the scheme liabilities 0.5% (1.3%) 2.4%Total amount recognised in statement of total recognised gains and lossesamount (£ millions) (19.3) (13.2) (14.3)percentage of the year end present value of the scheme liabilities (1.0%) (3.9%) (4.6%)The figures for 2002 and 2003 comprise SIRBS and Brunel only, whereas the 2004 figures include Coats.11. Earnings per Ordinary ShareBasic earnings per share (“EPS”) is calculated by dividing the earnings attributable to shareholders of £25.3m (2003: £64.0m) bythe weighted average number of shares in issue during the year of 826.3m (2003: 758.5m).For the calculation of diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversionof all dilutive potential Ordinary Shares, being share options granted to employees, Convertible Loan Notes (“CLNs”) andCapital Notes.ProfitAmount2004 per share£m Shares (m) penceEarnings attributable to ordinary shareholders 25.3 826.3 3.07pEffect of dilutive securities:Share options – 42.0Capital Notes 0.3 119.625.6 987.9 2.60pProfitPer share2003 amount£m Shares (m) penceEarnings attributable to ordinary shareholders 64.0 758.5 8.43pEffect of dilutive securities:Share options – 24.1CLNs 0.7 26.2Capital Notes 6.8 352.271.5 1,161.0 6.16p12. Equity DividendsThe directors of GPG have proposed a final dividend of 1.00p per share for the year (2003: 0.91p adjusted for the 2004Capitalisation Issue). The directors did not declare an interim dividend (2003: nil).13. Profits of Holding CompanyA profit of £27.4 million (2003: loss of £8.6 million) has been dealt with in the accounts of the Company.As permitted by Section 230 of the Companies Act 1985, the Company has not published a separate profit and loss account inthese financial statements.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 3314. Intangible Fixed AssetsNegative IntellectualGoodwill goodwill property Total£m £m £m £mCOSTAt 1 January 2004 1.4 (12.0) – (10.6)Currency translation differences – – 0.2 0.2Acquisition of subsidiaries (note 32) 144.4 – 5.3 149.7Additions 0.5 – – 0.5Reclassifications 0.2 – – 0.2AT 31 DECEMBER 2004 146.5 (12.0) 5.5 140.0CUMULATIVE AMOUNTS (CHARGED)/RELEASEDAt 1 January 2004 – 2.3 – 2.3(Charge)/release for the year (5.2) 1.2 (0.4) (4.4)AT 31 DECEMBER 2004 (5.2) 3.5 (0.4) (2.1)NET BOOK VALUE AT 31 DECEMBER 2004 141.3 (8.5) 5.1 137.9NET BOOK VALUE AT 31 DECEMBER 2003 1.4 (9.7) – (8.3)15. Tangible Fixed AssetsThe GroupCOSTVehiclesLand and Mineral Plant and and office Land forbuildings rights equipment equipment development Total£m £m £m £m £m £mAt 1 January 2004 53.5 0.6 70.4 33.2 2.7 160.4Currency translation differences (2.9) – (9.2) – (0.1) (12.2)Acquisition of subsidiaries (note 32) 201.5 – 461.0 104.5 – 767.0Additions 11.7 – 41.0 7.7 14.8 75.2Transfer to current assets – – – – (5.0) (5.0)Reclassifications (1.7) – 1.8 (0.3) – (0.2)Disposals (35.4) – (43.0) (15.3) – (93.7)Disposal of business (note 34) (0.3) – (2.7) (0.6) – (3.6)AT 31 DECEMBER 2004 226.4 0.6 519.3 129.2 12.4 887.9ACCUMULATED DEPRECIATIONAt 1 January 2004 7.7 – 48.9 26.7 – 83.3Currency translation differences (1.3) – (4.9) (0.1) – (6.3)Acquisition of subsidiaries (note 32) 76.0 – 290.1 78.2 – 444.3Charge for the year 4.4 0.3 21.6 9.3 – 35.6Reclassifications (1.2) – 1.7 (0.5) – –Disposals (16.5) – (33.9) (14.6) – (65.0)Disposal of business (note 34) (0.3) – (2.5) (0.5) – (3.3)AT 31 DECEMBER 2004 68.8 0.3 321.0 98.5 – 488.6NET BOOK VALUE AT 31 DECEMBER 2004 157.6 0.3 198.3 30.7 12.4 399.3NET BOOK VALUE AT 31 DECEMBER 2003 45.8 0.6 21.5 6.5 2.7 77.1

34 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued15. Tangible Fixed Assets - continuedGroupYear ended 31 December 2004 2003£m £mANALYSIS OF NET BOOK VALUE OF LAND AND BUILDINGSFreehold 143.6 44.1Leasehold:Over 50 years unexpired 3.8 0.2Under 50 years unexpired 10.2 1.5157.6 45.8The CompanyCOSTPlant andequipment£mAt 1 January and 31 December 2004 0.3ACCUMULATED DEPRECIATIONAt 1 January and 31 December 2004 0.3NET BOOK VALUE AT 31 DECEMBER 2004 AND 31 DECEMBER 2003 –16. Fixed Asset InvestmentsGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mInterests in joint ventures (see note a) below) 9.5 95.3 – –Interests in associated undertakings (see note a) below) 39.6 38.3 – –Interests in group undertakings (see note c) below) – – 276.9 195.8Other investments (see notes b) and c) below)– listed investments 155.4 154.1 7.9 7.0– unlisted investments 3.5 3.5 – –– art portfolio 0.3 0.3 – –208.3 291.5 284.8 202.8

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 3516. Fixed Asset Investments - continueda) The Group – Interests in joint ventures and associated undertakingsJointAssociatedventures undertakings£m £mAt 1 January 2004 95.3 38.3Currency translation differences 0.2 (1.8)Reclassified from fixed asset investments – 4.2Additions 0.2 8.4Acquisition of subsidiaries (note 32) – (0.1)Dividends receivable (0.1) (2.6)Subscription for secured convertible loan stock – 8.2Loans repaid (7.1) (7.5)Share of loss after tax and minorities (1.9) (7.5)Reclassified as a subsidiary (77.1) –AT 31 DECEMBER 2004 9.5 39.6Additions to joint venture and associated undertakings, including amounts reclassified from fixed asset investments, areanalysed in note 33.Joint venturesAssociated undertakingsYear ended 31 December 2004 2003 2004 2003£m £m £m £mShare of net assets on acquisition 8.1 90.7 62.6 49.4Share of post-acquisition reserves (1.4) (7.9) (20.4) (7.9)Share of net assets 6.7 82.8 42.2 41.5Goodwill 2.8 5.2 0.5 –Negative goodwill – – (8.0) (7.4)9.5 88.0 34.7 34.1Secured convertible loan stock – – 4.9 –Other loans – 7.3 – 4.29.5 95.3 39.6 38.3Joint venturesAssociated undertakingsMOVEMENTS IN GOODWILL/NEGATIVE GOODWILL Negative NegativeATTRIBUTABLE TO JOINT VENTURES AND Goodwill goodwill Goodwill goodwillASSOCIATED UNDERTAKINGS £m £m £m £mAt 1 January 2004 5.2 – – (7.4)Acquisitions during the year (see note 33) – – 0.6 (1.6)(Amortisation)/amounts released (0.3) – (0.1) 1.0Reclassified as a subsidiary (2.1) – – –AT 31 DECEMBER 2004 2.8 – 0.5 (8.0)

36 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued16. Fixed Asset Investments - continuedCapital and Latest Date of lastreserves profit/(loss) audited Country of Nature of GPGm m accounts incorporation business shareholding ClassThe Group’s significant associated undertakings at 31 December 2004 are listed below:Capral Aluminium Ltd A$169.6 A$(71.0) 31.12.04 Australia Aluminium 37.25% OrdinaryextrusionGreen’s Foods Ltd A$51.1 A$5.9 30.06.04 Australia Food 31.91% OrdinaryprocessingDawson International PLC £23.7 £(19.2) 31.12.03 Scotland Textiles 29.91% OrdinaryCPI Group Ltd A$51.6 A$(19.8) 30.06.04 Australia Paper 21.58% OrdinarymerchandisingThe Group’s significant joint ventures at 31 December 2004 are listed below:Nationwide Accident £23.0 £3.0 31.12.04 England Vehicle 50.00% OrdinaryRepair Services plcrepairHarcourt Hill Estate Ltd A$0.2 A$0.5 30.06.04 Australia Property 50.00% OrdinarydevelopmentThese associated and joint venture undertakings are all held indirectly by GPG.The following table provides summarised financial information on the Group’s share of its associated undertakings, relating tothe period during which they were associates and excluding goodwill:Year ended 31 December 2004 2003£m £mSUMMARISED PROFIT AND LOSS ACCOUNT INFORMATIONTurnover 135.3 161.7Loss before tax (2.9) (0.7)Taxation (4.6) –LOSS AFTER TAX (7.5) (0.7)SUMMARISED BALANCE SHEET INFORMATIONFixed assets 37.6 27.5Current assets 42.7 57.380.3 84.8Liabilities due within one year (30.8) (34.2)Liabilities due after more than one year (6.6) (4.8)Provisions (0.8) (4.3)NET ASSETS 42.1 41.5The Group’s share of associated undertakings’ borrowings is £12.5 million of which £6.0 million is repayable within one year and£6.5 million is repayable after more than one year. Liabilities due after more than one year are repayable over the period to 2009.There was one holding at year end that exceeded 20% but was not treated as an associated undertaking. The directorsconsider that the Group has not exercised significant influence over this company due to the dominant influence of othermembers and the composition of the Board. The details are as follows:Capital and Latest Date of lastreserves profit/(loss) audited Country of Nature of GPGm m accounts incorporation business shareholding ClassTooth & Co Ltd – A$(223.3) 30.06.04 Australia Investment 24.95% OrdinaryThis investment is held indirectly by GPG.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 3716. Fixed Asset Investments - continuedThe following table provides summarised financial information on the Group’s share of its joint venture undertakings, relatingto the period during which they were joint ventures, and excludes goodwill:Year ended 31 December 2004 2003£m £mSUMMARISED PROFIT AND LOSS ACCOUNT INFORMATIONTurnover 204.1 541.8(Loss)/profit before tax (0.4) 15.9Taxation (1.5) (6.7)(LOSS)/PROFIT AFTER TAX (1.9) 9.2SUMMARISED BALANCE SHEET INFORMATIONFixed assets 4.5 231.3Current assets 14.5 369.819.0 601.1Liabilities due within one year (10.3) (119.3)Liabilities due after more than one year – (280.2)Provisions (1.9) (88.5)6.8 113.1Minority interest – (30.3)NET ASSETS 6.8 82.8The Group’s share of joint venture undertakings’ borrowings is £Nil.The Group’s principal operating subsidiaries are listed in note 35.b) The Group – Other investmentsCOSTListed Unlisted Artinvestments investments portfolio Total£m £m £m £mAt 1 January 2004 167.3 3.6 0.3 171.2Additions 53.6 – – 53.6Acquisition of subsidiaries (note 32) – 0.5 – 0.5Disposals (39.6) (0.3) – (39.9)Reclassification from associated undertakings (4.2) – – (4.2)Repayment of capital (3.0) (0.2) – (3.2)AT 31 DECEMBER 2004 174.1 3.6 0.3 178.0PROVISIONSAt 1 January 2004 13.2 0.1 – 13.3Charge for the year 5.5 – – 5.5Disposals – – – –AT 31 DECEMBER 2004 18.7 0.1 – 18.8NET BOOK VALUE AT 31 DECEMBER 2004 155.4 3.5 0.3 159.2NET BOOK VALUE AT 31 DECEMBER 2003 154.1 3.5 0.3 157.9The market value of the Group’s listed investments at 31 December 2004 (excluding listed subsidiaries and associates) was£293.3 million (2003: £232.8 million). These listed investments are all quoted on recognised stock exchanges.

38 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued16. Fixed Asset Investments - continuedc) The CompanyInvestments Listedin subsidiaries investments Total£m £m £mCOSTAt 1 January 2004 301.8 7.0 308.8Additions 81.0 18.9 99.9Disposals – (17.9) (17.9)AT 31 DECEMBER 2004 382.8 8.0 390.8PROVISIONSAt 1 January and 31 December 2004 106.0 – 106.0NET BOOK VALUE AT 31 DECEMBER 2004 276.8 8.0 284.8NET BOOK VALUE AT 31 DECEMBER 2003 195.8 7.0 202.8As at 31 December 2004, the market value of the Company’s listed investments (excluding subsidiaries) was £13.8 million(2003: £18.9 million).17. Stocks and Development Work in ProgressGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mRaw materials and consumables 38.1 4.9 – –Work in progress 52.2 0.6 – –Finished goods and goods for resale 81.4 7.1 – –171.7 12.6 – –Development work in progress 12.1 15.6 – –183.8 28.2 – –18. DebtorsGroup Company2004 2003 2004 2003Year ended 31 December £m £m £m £mTrade debtors 211.1 61.4 – –Amounts recoverable on contracts 12.5 14.5 – –Properties held for resale 0.4 0.4 0.2 –Other debtors 47.0 8.7 – 0.2Pension prepayments (see note 10) 38.2 – – –Other prepayments and accrued income 14.9 4.6 0.1 0.2Deferred tax asset 15.2 3.6 – 1.1339.3 93.2 0.3 1.5The deferred tax asset for the Group is included within the analysis in note 24. The Company’s deferred tax asset relates tocapital losses carried forward.Group debtors recoverable after more than one year total £66.0 million (2003: £5.6 million) including £2.5 million (2003:£1.6 million) in respect of amounts recoverable on contracts, £15.2 million (2003: £3.6 million) in respect of deferred tax, and£38.2 million (2003: £Nil) in respect of pension prepayments.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 3918. Debtors - continuedThe movements in the deferred tax asset during the year were as follows:GroupCompany£m £mAt 1 January 2004 3.6 1.1Currency translation differences (0.1) –Acquisition of subsidiaries (note 32) 3.4 –Credited/(charged) to the profit and loss account 8.3 (1.1)AT 31 DECEMBER 2004 15.2 –19. Current Asset InvestmentsGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mListed investments 19.1 17.3 – –Unlisted investments 1.5 0.2 – –Business held for resale 6.7 – – –27.3 17.5 – –The listed investments are all quoted on recognised stock exchanges.As stated in note 1f ), listed investments are stated at market value. This represents a change in accounting policy but theimpact on 2003, which would have amounted to an increase of £1.0 million, is not considered material and consequently hasnot been re-stated. The combined impact on 2004 is an increase of £3.2 million.Unlisted investments substantially comprise short-term interest-bearing instruments.The business held for resale was Dorma Group, which has subsequently been sold to Dawson International plc, an associatedundertaking.20. Trade and Other CreditorsGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mAMOUNTS FALLING DUE WITHIN ONE YEARTrade creditors 142.4 51.8 – –Amounts owed to associated undertakings 0.7 – – –Corporate taxes 23.5 6.9 – –Other tax and social security payable 15.6 7.8 – –Payments received on account 22.4 20.2 – –Other creditors 28.9 9.1 – –Accruals and deferred income 36.8 21.2 0.2 0.2Employee entitlements 22.5 3.0 – –Dividends payable 8.7 6.9 8.7 6.9301.5 126.9 8.9 7.1AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAROther creditors 2.8 1.2 – –Employee entitlements 0.8 0.4 – –3.6 1.6 – –21. Convertible Subordinated Loan Notes (“CLNs”)GroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mCLNs repayable within one year 6.0 6.0 – –CLNs repayable between one and two years – 6.0 – –6.0 12.0 – –

40 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued21. Convertible Subordinated Loan Notes - continuedIn June 2000, GPGUKH issued 38.6 million CLNs of 50p each, and in July 2003, a further 26,047,862 CLNs were issued. The 2003issue costs amounted to £0.2 million, and these costs are being charged to the profit and loss account over the outstandingterm of the CLNs. At 31 December 2004 the unamortised balance of these costs was £0.1 million.The CLNs are convertible into ordinary shares of GPGUKH. However, under the terms of the 2002 reverse acquisition,“Step-upRights” were inserted into GPGUKH’s Articles of Association with the result that upon any future requirement to issue shares inthat company, for example on conversion of CLNs, those shares are automatically transferred to GPG in exchange for the issueinitially of an equal number of fully paid shares in GPG. This ratio will be subject to adjustment in future to reflect certaincapital events (such as capitalisation issues by the Company).In addition, GPG has entered into a deed of guarantee pursuant to which it has guaranteed (on a subordinated basis) theobligations of GPGUKH in respect of the payment of principal and accrued interest on the CLNs in the event of, and followingcompletion of, a liquidation of GPGUKH.Also under the terms of the reverse acquisition, holders of CLNs were given the option to convert their entire holdings intoordinary shares in GPGUKH which, in accordance with the “Step-up Rights”, were automatically transferred to GPG in exchangefor an issue of an equal number of fully paid GPG shares. On 14 February 2003, 4,378,034 CLNs were converted in this manner.The CLNs are subordinated, unsecured obligations of GPGUKH and bear interest at 8% per annum. The residual principalamount of 10p (2003: 20p) is redeemable in one instalment (2003: two equal instalments of 10p per CLN per annum) on30 June 2005 (2003: 30 June 2004) or, at the option of the holder, the instalment due for redemption then may be converted toOrdinary Shares on the effective basis of one Ordinary Share for every 47.7p in principal of CLNs.Any Ordinary Shares issued will rank pari passu with those already in issue, save that they will not rank for dividends or otherdistributions declared,made or paid in respect of financial periods or parts of financial periods ending on or prior to 30 June 2005.Conversion prices are subject to adjustment for capitalisation and rights issues and in certain other circumstances.22. Capital NotesGroupCompany2004 2003 2004 2003Year ended 31 December £m £m £m £mRepayable between one year and two years 92.9 – – –Repayable between two and five years 79.1 166.5 – –172.0 166.5 – –Between 2 August 2001 and 11 September 2001, the Group issued NZ$250 million of unsecured, subordinated fixed interestCapital Notes (“the 2001 Notes”). The issue costs amounted to NZ$9.3 million, and these costs are being charged to the profitand loss account over the initial five year term of the debt. As at 31 December 2004, the unamortised balance of these costswas NZ$3.2 million. 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 GPG Finance plc, being the issuing subsidiary,will provide terms and conditions on which noteholders may elect to rollover their 2001 Notes. Noteholders may then elect toretain some or all of their 2001 Notes for a further period on the new terms and conditions and/or to convert some or all oftheir 2001 Notes into Ordinary shares. The 2001 Notes are initially convertible into ordinary shares of GPGUKH. However, underthe terms of the 2002 reverse acquisition,“Step-up Rights” were inserted into GPGUKH’s Articles of Association with the resultthat upon any future requirement to issue or transfer shares in that company on conversion of 2001 Notes, those shares will beautomatically transferred to GPG in exchange for the issue of an equal number of fully paid shares in GPG. Conversion of the2001 Notes will be into such number of GPGUKH shares as is equal to the number of GPG shares having a value equal to theaggregate of the principal amount of, and any accrued interest and unpaid interest on, the 2001 Notes being converted, suchGPG shares being valued for this purpose at a price of 97% of the weighted average sale price of an Ordinary Share in GPG oneach of the five business days prior to the election date. These elections are subject to GPGUKH’s over-riding right (at itsoption) to purchase for cash some or all of the 2001 Notes for their principal amount, together with any accrued interest andunpaid interest.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 4122. Capital Notes - continuedGPGUKH has provided a subordinated and unsecured guarantee in respect of the repayment of principal and the payment ofinterest and unpaid interest due on the 2001 Notes on liquidation of the issuing subsidiary or of GPGUKH itself. In the eventthat the issuing subsidiary is in liquidation and GPGUKH is not, the guarantee is only enforceable after the scheduled electiondate for the 2001 Notes which next follows the liquidation of the subsidiary. This guarantee ranks pari passu with thoseprovided for the CLNs (see note 21) and the loan to GPGUKH from GPG Finance plc, but is subordinated to all other creditors.GPG has entered into a deed of guarantee pursuant to which it has guaranteed (on a subordinated basis) the obligations ofGPGUKH as guarantor in respect of the payment of principal, interest and accrued interest on the 2001 Notes in the event of,but following completion of, a liquidation of GPGUKH.Between 1 August 2003 and 4 September 2003, the Group issued a further NZ$215 million of unsecured, subordinated fixedinterest Capital Notes (“the 2003 Notes”). The issue costs amounted to NZ$6.3 million, and these costs are being charged to theprofit and loss account over the initial five year term of the debt. At 31 December 2004 the unamortised balance of these costswas NZ$4.7 million. The 2003 Notes bear interest at a fixed rate of 8.7% per annum, payable on a quarterly basis.These Notes have an initial election date of 15 December 2008, prior to which GPG Finance plc, being the issuing subsidiary,will provide terms and conditions on which noteholders may elect to rollover their 2003 Notes. Noteholders may then elect toretain some or all of their 2003 Notes for a further period on the new terms and conditions and/or to convert some or all oftheir 2003 Notes into Ordinary shares. Conversion of the 2003 Notes will be at a price of 97% of the weighted average saleprice of an Ordinary share on each of the five business days prior to the election date. These elections are subject to GPG’sover-riding right (at its option) to purchase for cash some or all of the 2003 Notes for their principal amount, together with anyaccrued interest and unpaid interest.GPG has provided a subordinated and unsecured guarantee in respect of the repayment of principal and the payment of interestand unpaid interest due on the 2003 Notes on liquidation of the issuing subsidiary or of GPG itself. In the event that the issuingsubsidiary 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 given in respectof the CLNs, the 2001 Notes and the loans to GPGUKH from GPG Finance plc, but is subordinated to all other creditors.23. Other BorrowingsGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mBank overdraft 12.0 – – –Borrowings repayable within one year 34.7 0.8 – –46.7 0.8 – –Borrowings repayable between one and two years 28.6 22.6 – –Borrowings repayable between two and five years 166.8 – – –Borrowings repayable after more than five years 71.8 – – –313.9 23.4 – –Bank overdraft 12.0 – – –Bank borrowings 297.9 23.4 – –Commercial bills 4.0 – – –313.9 23.4 – –Note:At 31 December 2004, the Group’s borrowings comprised £290.6 million of secured borrowings (2003: £23.4 million) and £23.3 million ofunsecured borrowings (2003: £Nil). Security comprises a combination of fixed and floating charges over certain Group assets of borrowingentities.

42 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued24. Provisions for Liabilities and ChargesGroupCompanyYear ended 31 December 2004 2003 2004 2003£m £m £m £mDeferred tax 5.4 1.8 – –Other provisions 199.0 8.8 1.1 1.0204.4 10.6 1.1 1.0GROUPAt 1 January 2004 10.6Currency translation differences 0.4Acquisition of subsidiaries (note 32) 205.9Utilised in year (36.3)Charged to the profit and loss account 20.3Unwinding of discount 3.6Released from reserves (0.1)AT 31 DECEMBER 2004 204.4Overseas taxation of £0.1 million (2003: £0.2 million) has been provided in respect of timing differences that are not expectedto reverse in the foreseeable future.As is described in the Chairman’s Statement, three separate proceedings have been initiated by the European Commissionagainst various subsidiaries of Coats plc. Provision has been made by the Group for its best estimate of the expenditurerequired to settle these matters. The Directors believe that disclosure of additional information regarding these provisionswould seriously prejudice the Group’s position, and consequently a number of the Group’s provisions have been disclosed inaggregate as “other provisions” in accordance with paragraph 97 of FRS 12. Subject to full resolution of the matters giving riseto these provisions, a full analysis will be provided in the 2005 financial statements.£mYear ended 31 December 2004 2004 2003 2003Provided Unprovided Provided Unprovided£m £m £m £mDEFERRED TAX IS ANALYSED AS FOLLOWS:Accelerated capital allowances 17.4 (6.6) (0.5) –Short term timing differences (0.7) (4.9) (0.2) (0.6)Revenue losses carried forward – (55.5) – (14.5)Capital losses carried forward (26.5) (85.2) (1.1) (72.7)(9.8) (152.2) (1.8) (87.8)Comprising:Deferred tax assets (15.2) (3.6)Deferred tax liabilities 5.4 1.8(9.8) (1.8)A number of Group companies have losses carried forward. Such losses are only recognised in the financial statements to theextent that it is considered more likely than not that sufficient future taxable profits will be available for offset.Year ended 31 December2004COMPANY £mOnerous leasesAt 1 January 2004 1.1Discount unwound 0.1AT 31 DECEMBER 2004 1.2

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 4325. Operating Lease CommitmentsLand andLand andbuildings Other buildings OtherYear ended 31 December 2004 2004 2003 2003£m £m £m £mAnnual commitments under operating leases expiring:Within one year 1.8 1.6 0.5 0.9Between one and two years 2.3 1.7 1.1 2.5Between two and five years 5.6 3.8 2.6 0.4Over five years 7.1 0.2 3.5 0.116.8 7.3 7.7 3.926. Share CapitalYear ended 31 December 2004 2004 2003 2003Number £m Number £mAuthorisedOrdinary Shares of 5p each 5,000,000,000 250.0 5,000,000,000 250.0Issued and fully paidOrdinary Shares of 5p each 869,007,293 43.5 689,220,175 34.5The issued ordinary share capital of GPG increased during the year to 31 December 2004 as follows:Date of event Stock event No. of shares £m1 January 2004 Brought forward 689,220,175 34.5Various dates Exercises of options 15,355,603 0.814 May 2004 Scrip dividend 6,632,381 0.324 May 2004 Capitalisation issue 70,795,434 3.524 May 2004 Acquisition of minority interestin Coats Group Ltd 75,754,914 3.82 July 2004 Conversion of CLNs 11,248,786 0.631 December 2004 Carried forward 869,007,293 43.5

44 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued26. Share Capital - continuedFollowing adjustments for the 2004 Capitalisation Issue, grants and exercises during the year, options outstanding under theGroup’s various share option schemes at 31 December 2004 were as set out below:Exercise priceShare Option Scheme Number Date granted (p per share) Exercise period1992 SHARE OPTION SCHEMEOrdinary 874,103 25.08.95 22.83 25.08.98 to 24.08.05Super 2,060,398 25.08.95 22.83 25.08.00 to 24.08.05Ordinary 40,828 03.01.96 26.03 03.01.99 to 02.01.06Super 156,086 03.01.96 26.03 03.01.01 to 02.01.06Ordinary 249,729 11.04.96 28.83 11.04.99 to 10.04.06Super 187,298 11.04.96 28.83 11.04.01 to 10.04.06Ordinary 1,531,035 08.05.96 29.80 08.05.99 to 07.05.06Super 1,531,035 08.05.96 29.80 08.05.01 to 07.05.06Ordinary 1,503,208 13.01.97 30.09 13.01.00 to 12.01.07Super 278,370 13.01.97 30.09 13.01.02 to 12.01.07Ordinary 2,930,493 01.09.97 37.54 01.09.00 to 31.08.07Ordinary 111,345 07.11.97 36.55 07.11.00 to 06.11.07Super 242,940 07.11.97 36.55 07.11.02 to 06.11.07Ordinary 64,925 03.08.98 25.97 03.08.01 to 02.08.08Super 32,506 03.08.98 25.97 03.08.03 to 02.08.08Ordinary 2,258,724 22.03.99 32.18 22.03.02 to 21.03.09Super 1,319,795 22.03.99 32.18 22.03.04 to 21.03.09Ordinary 28,183 02.09.99 30.11 02.09.02 to 01.09.09Super 13,649,067 02.09.99 30.11 02.09.04 to 01.09.091994 SHARE OPTION SCHEMEOrdinary 52,024 25.08.95 22.83 25.08.98 to 24.08.05Super 104,056 25.08.95 22.83 25.08.00 to 24.08.05Ordinary 18,722 11.04.96 28.83 11.04.99 to 10.04.06Ordinary 35,423 01.09.97 37.54 01.09.00 to 31.08.07Ordinary 26,572 22.03.99 32.18 22.03.02 to 21.03.09Ordinary 32,210 02.09.99 30.11 02.09.02 to 01.09.092001 SHARE OPTION SCHEMEOrdinary 8,105,790 17.10.01 30.43 17.10.04 to 16.10.11Ordinary 332,750 19.03.02 40.20 19.03.05 to 18.03.122002 SHARE OPTION SCHEMEOrdinary 810,696 08.01.03 35.95 08.01.06 to 08.01.13Ordinary 2,069,094 21.03.03 40.50 21.03.06 to 21.03.13Ordinary 693,000 16.10.03 57.73 16.10.06 to 15.10.13Ordinary 8,689,994 23.04.04 69.91 23.04.07 to 23.04.14Ordinary 1,000,000 27.08.04 68.50 27.08.07 to 27.08.14Super options are normally exercisable after five years from the date of grant. Options exercised during the year comprised 14,396,143shares under the 1992 scheme, 939,495 shares under the 1994 scheme and 19,965 shares under the 2001 scheme (all adjusted forthe 2004 Capitalisation Issue). Since the year end, options over 2,185,271 shares granted under the 1992 Scheme have also beenexercised. No options lapsed during the year.Options granted before 13 December 2002, being the effective date of the reverse acquisition of Brunel Holdings plc, were over sharesin GPG (UK) Holdings plc (“GPGUKH”) which had changed its name from Guinness Peat Group plc as a result of the reverse acquisition.Options granted since that date are over the shares of Guinness Peat Group plc (“GPG”) (formerly Brunel Holdings plc). Following thereverse acquisition, certain option holders “rolled over” their rights and thus became entitled to exercise their options directly intoordinary shares of GPG. As a result of the Step-Up Rights contained in GPGUKH’s Articles of Association, the remaining holders ofGPGUKH options will receive GPG shares, initially on a one-for-one basis, as an automatic consequence of exercise.Since the year end, further options have been granted over 4,800,000 shares at an exercise price of 84.1p, and over 4,025,000 shares atan exercise price of 77.5p.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 4527. ReservesGROUPShare Capital Profitpremium redemption Other and lossaccount reserve reserve account£m £m £m £mAt 1 January 2004 3.4 0.5 260.6 130.9Premium on shares issued (net of expenses) 7.5 – 47.3 –Capitalisation issue of shares – – (3.5) –Scrip dividend alternative (0.3) – – 4.6Currency translation differences – – – 3.3Deferred tax on foreign currency translation differences – – – 0.1Retained profit for the year – – – 16.5AT 31 DECEMBER 2004 10.6 0.5 304.4 155.4Cumulative negative goodwill taken directly to reserves in respect of acquisitions prior to 1998 amounts to £2.8 million.COMPANYShare Capital Profitpremium redemption Other and lossaccount reserve reserve account£m £m £m £mAt 1 January 2004 3.4 0.5 154.6 70.9Premium on shares issued (net of expenses) 7.5 – 47.3 –Capitalisation issue of shares – – (3.5) –Scrip dividend alternative (0.3) – – 4.6Retained profit for the year – – – 18.6AT 31 DECEMBER 2004 10.6 0.5 198.4 94.128. Contingent LiabilitiesGPG has guaranteed the repayment of principal,interest and unpaid accrued interest due on the NZ$250 million 2001 CapitalNotes and on the NZ$215 million 2003 Capital Notes in the event of a liquidation of the issuing subsidiary or GPGUKH (see note 22).In addition,it has guaranteed (on a subordinated basis) the obligations of GPGUKH in respect of the payment of principal andaccrued interest under the CLNs (see note 21).As at 31 December 2004, Coats Group Ltd had contingent liabilities of £9.8 million, including trade facility guarantees of£8.3 million and bank guarantees of £1.1 million.As at 31 December 2004, Staveley had contingent liabilities in respect of performance bonds, tender bonds and guarantees forthird parties amounting to £4.6 million (2003: £2.0 million). In addition, Staveley and certain of its subsidiaries are parties tolegal actions and claims arising in the ordinary course of business, which the directors are advised and believe are likely to beresolved without significant effect on the net assets of the Group.A subsidiary of Canberra Investment Corporation Ltd (“Canberra”) is jointly and severally liable for all the liabilities of theHarcourt Hill Estate joint venture. The assets of the joint venture at year-end were sufficient to meet such liabilities. In addition,Canberra has guaranteed the bank facilities of a joint arrangement in which it has a 50% interest. As at 31 December 2004,these facilities amounted to £Nil (2003: £Nil).29. Capital CommitmentsAs at 31 December 2004, the Group had commitments of £3.5 million in respect of contracts placed for future capitalexpenditure (2003: £5.7 million). Its share of the capital commitments reported by associated undertakings was £0.5 million(2003: £3.3 million). The Company did not have any capital commitments (2003: £Nil).

46 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued30. Notes to the Consolidated Cashflow Statementa) Reconciliation of operating profit to net cash inflow from operating activitiesYear ended 31 December 2004 2003£m £mOperating profit 74.9 67.5Depreciation 35.6 10.4Profit on disposal of tangible fixed assets (0.8) (0.3)Amortisation charge/(release) of intangible assets 4.3 (1.2)Amounts written off against investments 2.3 11.0(Increase)/decrease in debtors (6.5) 17.3Increase in land under development (6.0) (15.3)Decrease/(increase) in stocks 14.8 (1.7)Decrease in provisions (6.1) (1.1)Increase in creditors 38.7 5.6Decrease in current asset investments 24.3 21.8Currency and other adjustments 20.5 (11.7)NET CASH INFLOW FROM OPERATING ACTIVITIES 196.0 102.3Net cash inflow from operating activities includes the profits and losses resulting from the sale of investments, together withinterest and dividends received, all of which are considered to be cash inflows generated in the normal course of business.b) Dividends received from associates and joint venturesDividends received from associated undertakings 2.6 1.9Dividends received from joint ventures 0.1 3.72.7 5.6c) Returns on investments and servicing of financeInterest paid (34.0) (12.8)Dividends paid by subsidiaries to minority interests (1.0) (0.4)(35.0) (13.2)d) Taxation paidOverseas tax paid (18.8) (5.3)UK tax paid (0.5) (0.7)(19.3) (6.0)e) Capital expenditure and financial investmentPayments to acquire property, plant and equipment (60.4) (8.8)Purchase of fixed asset investments (53.5) (62.2)Receipts from the disposal of property, plant and equipment 29.6 0.9Sale of fixed asset investments, at book value 39.3 27.1Repayment of capital 3.2 2.0Loans advanced to associated undertakings (0.8) (3.4)Loans repaid by/(advanced to) joint venture undertakings 7.1 (7.3)(35.5) (51.7)

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 4730. Notes to the Consolidated Cashflow Statement - continuedf) Acquisitions and disposalsYear ended 31 December 2004 2003£m £mNet receipts from sale of shares in subsidiary undertakings – 16.6Net receipts from sale of business 5.0 23.4Net payments arising from the purchase of subsidiary undertakings (22.1) (1.7)Cash held by subsidiaries acquired (net of overdrafts) 36.3 –Net payments arising from the purchase of associated undertakings (8.3) (8.9)Net payments arising from the purchase of joint venture undertakings (0.2) –Sale of shares in associated undertakings, at book value – 1.210.7 30.6g) Equity dividends paidBalance payable as at 1 January (6.9) (6.2)Dividends payable re additional shares issued (0.1) –Less: shares issued in lieu of cash dividend 4.7 4.1(2.3) (2.1)h) Management of liquid resourcesCash placed on short term deposit (8.9) (168.5)Withdrawals from short term deposits 80.5 10.671.6 (157.9)i) FinancingIssue of ordinary shares by Company 3.9 0.2Expenses of share buy-back and share issues – (0.4)NET PROCEEDS FROM ISSUE OF ORDINARY SHARES 3.9 (0.2)New loans taken out (including Capital Notes) 64.6 148.9Capital Note and CLN issue expenses – (2.5)Loans repaid (197.9) (47.5)(DECREASE)/INCREASE IN DEBT (133.3) 98.9NET CASH (OUTFLOW)/INFLOW FROM FINANCING (129.4) 98.7j) Analysis of net funds/(debt)Exchange and1 January Acquisition of other non-cash 31 December2004 Cash flow subsidiaries movements 2004£m £m £m £m £mCash at bank and in hand 289.5 0.5 – (6.2) 283.8Bank overdrafts – (12.6) – 0.6 (12.0)Less: liquid resources (225.7) 71.6 – (11.8) (165.9)“FRS1” cash 63.8 59.5 – (17.4) 105.9Debt due within 1 year (6.8) (7.9) (23.9) (2.1) (40.7)Debt due after 1 year (195.1) 141.2 (391.7) 6.4 (439.2)(201.9) 133.3 (415.6) 4.3 (479.9)Liquid resources 225.7 (71.6) – 11.8 165.9NET FUNDS/(DEBT) 87.6 121.2 (415.6) (1.3) (208.1)Liquid resources comprise cash deposits with an original maturity of more than 24 hours.

48 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued31. Analysis of Changes in Cash and Liquid Resources2004 2003Year ended 31 December £m £mOpening balance 289.5 113.9Net cash inflow 59.5 6.3(Decrease)/increase in liquid resources (71.6) 157.9Increase/(decrease) in bank overdraft 12.0 (0.5)Currency translation differences (5.6) 11.9CLOSING BALANCE 283.8 289.532. Purchase of Subsidiary Undertakingsa) On 1 April 2004, when a director of one of the joint venture partners resigned from the Coats Group Ltd (“Coats Group”) board,the Group acquired effective control of Coats plc.The balance sheet of Coats Group at that date was as follows:Book Provisional fair Provisionalvalue value adjustments fair value£m £m £mACQUISITION SUMMARYIntangible fixed assets 134.6 (134.6) i) –Tangible fixed assets 320.8 (0.1) ii) 320.7Investment in associates (0.1) – (0.1)Other fixed asset investments 0.5 – 0.5Stocks 185.1 (2.0) iii) 183.1Debtors 233.0 0.4 iv) 233.4Current asset investments 31.4 – 31.4Cash 47.6 – 47.6Creditors (132.2) – (132.2)Borrowings – short term (39.1) – (39.1)Borrowings – long term (391.7) – (391.7)Provisions (205.9) – (205.9)Net assets at acquisition 184.0 (136.3) 47.7Minority interest (including share in subsidiary’s own accounts) (45.4)Net assets attributable to the Group’s interest 2.3Add back losses previously recognised as a joint venture 7.710.0Goodwill arising on acquisition 74.6Total consideration – paid in prior years 84.6The fair value adjustments relate to:i) Goodwill on acquisition in the accounts of Coats Group;ii) Impairment of certain overseas properties;iii) Write-down of slow-moving and obsolete stocks; andiv) Fair value of swaps outstanding at the date of acquisition.Period fromincorporation1 January to on 7 April toSUMMARISED COATS GROUP PROFIT AND LOSS ACCOUNT AND31 March200431 December2003STATEMENT OF RECOGNISED GAINS AND LOSSES £000 £000Turnover 204.9 753.6Operating profit 5.7 41.8Profit before tax 0.6 28.4Tax (2.2) (11.0)(Loss)/profit after tax (1.6) 17.4Equity minority interests (1.1) (5.6)(Loss)/profit for the period (2.7) 11.8Currency translation differences 0.5 (21.7)Net recognised loss for the period (2.2) (9.9)

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 4932. Purchase of Subsidiary Undertakings - continuedb) On 24 May 2004, the Group acquired the remaining 36.03% of shares in Coats Group from minority shareholders.The balance sheet of Coats Group at that date was as follows:Book Provisional fair Provisionalvalue value adjustments fair value£m £m £mACQUISITION SUMMARYIntangible fixed assets 134.4 (134.4) i) –Tangible fixed assets 316.5 (0.3) ii) 316.2Investment in associates 0.1 – 0.1Stocks 175.8 (2.0) iii) 173.8Debtors 227.3 1.1 iv) 228.4Current asset investments 30.6 – 30.6Cash 48.7 – 48.7Creditors (126.4) – (126.4)Borrowings – short term (38.8) – (38.8)Borrowings – long term (390.6) – (390.6)Provisions (207.3) – (207.3)Net assets at acquisition 170.3 (135.6) 34.7Minority interest in subsidiary’s own accounts (43.2)Shareholders’ funds at acquisition (8.5)Minority interest acquired (3.1)Consideration – satisfied by shares in GPG (51.1)Consideration – in cash (15.3)Total consideration (66.4)Goodwill arising on purchase of minority interest 69.5The fair value adjustments relate to:i) Goodwill on acquisition in the accounts of Coats Group;ii) Impairment of certain overseas properties;iii) Write-down of slow-moving and obsolete stocks; andiv) Fair value of swaps outstanding at the date of acquisition.On 30 June 2004, a further £75.0 million was subscribed by the Group for additional shares in Coats Group.

50 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued32. Purchase of Subsidiary Undertakings - continuedc) In September 2004, the Group acquired a 56% holding in TAFMO Ltd, an Australian supplier of electronics products andservices. The balance sheet of TAFMO at the date of acquisition was as follows:Book Provisional fair Provisionalvalue value adjustments fair value£m £m £mACQUISITION SUMMARYIntangible fixed assets 5.3 – 5.3Tangible fixed assets 2.0 – 2.0Stocks 0.6 – 0.6Debtors 0.9 – 0.9Cash 3.9 – 3.9Creditors due within 12 months (1.9) – (1.9)Creditors due after 12 months (0.1) – (0.1)Net assets at acquisition 10.7 – 10.7Minority interest (including share in subsidiary’s own accounts) (4.7)Net assets attributable to the Group’s interest 6.0Goodwill arising on acquisition 0.3Total consideration – paid in cash 6.3Since the year end, a further issue of shares by TAFMO has reduced the Group’s holding to 50.8%.d) The subsidiary undertakings acquired during the year contributed an inflow of £21.4 million to the Group’s net operatingcash flows, paid £19.6 million in respect of returns on investments and servicing of finance, paid £13.3 million in respect oftaxation and utilised £45.1 million for capital expenditure.33. Purchase of Associated UndertakingsDuring the year, the Group increased its investment in two existing associated undertakings and one company became anassociated undertaking. The Group increased its stake in Green’s Foods Ltd from 28.93% to 31.91%, and in Capral AluminiumLtd from 34.26% to 37.25%. In September CPI Group Ltd became an associated undertaking when the Group’s equityparticipation in that company increased to 21.58%.The goodwill arising from these transactions is analysed as follows:AssociatesGreen’sCapralFoods Aluminium CPI GroupLtd Ltd Ltd Total£m £m £m £mBook value of net assets (GPG share) 0.6 7.3 4.6 12.5Fair value adjustments – 0.4 – 0.4Fair value of net assets (GPG share) 0.6 7.7 4.6 12.9Consideration (1.3) (6.6) (4.1) (12.0)(POSITIVE)/NEGATIVE GOODWILL (0.7) 1.1 0.5 0.9The aggregate consideration of £12.0 million includes £2.6 million paid in prior years. The net assets of the associates are basedon their published accounts, as adjusted to reflect any identified differences between book values and fair values (includingrelevant accounting policy adjustments).The significant fair value adjustments for Capral relate to the revaluation of property, plant and equipment to depreciatedreplacement cost.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 5134. Disposal of Subsidiary UndertakingsIn October 2004 Staveley Inc disposed of the remainder of its non-destructive testing instrumentation business.The profit on disposal of that business was as follows2004£mTangible fixed assets 0.3Stocks 2.1Debtors 1.0Trade and other creditors (0.2)Group share of net assets at disposal 3.2Consideration received 5.0Profit on disposal 1.8The business was sold for cash, all of which was received in 2004.The profit on sale of business in 2003 related to the sale of the non-destructive testing division of one of Staveley Inc.’s NorthAmerican subsidiaries.35. Principal Subsidiary UndertakingsThe Group’s principal subsidiary undertakings at 31 December 2004, all of which are included in the Group’s consolidatedfinancial statements, are set out below:Country ofincorporation/Class and percentageCompany name registration of shares held Nature of businessGPG (UK) Holdings plc England 100% ordinary shares Investment companyGPG Finance plc* England 100% ordinary shares FinanceGPG Securities Trading Ltd* England 100% ordinary shares Securities trading100% preference sharesCoats plc* England 100% ordinary shares Thread manufactureStaveley Industries plc* England 100% ordinary shares Building servicesStaveley Inc* USA 100% ordinary shares Testing servicesGuinness Peat Group (Australia) Pty Ltd* Australia 100% ordinary shares Investment company100% preference sharesMEM Group Ltd* Australia 100% ordinary shares Investment companyCanberra Investment Corporation Ltd* Australia 66.34% ordinary shares Property developmentTAFMO Ltd* Australia 56.21% ordinary shares Electronic productsand servicesGuinness Peat Group New Zealand Ltd* New Zealand 100% ordinary shares Securities trading100% preference sharesTurners & Growers Ltd* New Zealand 78.46% ordinary shares Fresh producewholesaler*These subsidiaries are owned indirectly by the Company.36. Related Party TransactionsDuring the period since it became a subsidiary undertaking, a subsidiary of Coats plc had sales to one of its associatedundertakings of £0.3 million and purchases from that undertaking of £1.9 million. Other income received from thatundertaking during the period amounted to £0.8 million.The Company has taken advantage of the exemption in Financial Reporting Standard 8(3) not to disclose transactions orbalances between Group entities that have been eliminated on consolidation.

52 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued37. Post Balance Sheet EventsThe following events have occurred since the year end:a) Turners & Growers Ltd (“T&G”)GPG has sold 12.25m shares in T&G for NZ$33.7 million and GPG’s holding of T&G was thereby reduced from 78.5% to 61.3%.b) De Vere Group plcGPG has sold 10.2m shares in De Vere Group plc for a total consideration of £56.5 million.c) Australian Wealth Management Ltd (“AWM”)GPG has acquired an interest of 31.5% in AWM following the flotation out of Tower Ltd and the underwriting of an AWMRights Issue.d) Capral Aluminium Ltd (“Capral”)GPG has agreed to underwrite a 1 for 5 Rights Issue at a price of A$1.70 per Capral share. The maximum outlay would beA$33.1m, including GPG’s own entitlement.38. Derivatives and Other Financial InstrumentsThe Group’s main financial instruments comprise:– investments in equity shares with both UK and international exposure. These investments are held both as fixed andcurrent asset investments;– other investments, such as non-equity shares, secured convertible loan stock and guaranteed bank bills;– derivatives, including forward foreign currency contracts, cross-currency interest rate swaps, interest rate swaps, equity swapsand equity options;– trade debtors and trade creditors that arise directly from the Group’s operations;– cash and bank deposits;– bank borrowings and commercial bills;– convertible subordinated loan notes; and– capital notes.Guinness Peat Group plc is a strategic investment holding company and it, together with certain of its subsidiaries, is principallyinvolved in managing a portfolio of cash and investments.The profile of the Group’s financial assets, and in particular the relativebalance between cash and investments, varies during the year depending on the timing of purchases and sales of investments.The currency profile of the Group’s financial assets is similarly affected by the timing of investment transactions, and also tendsto vary during the year.Most of the Group’s investments are listed on a recognised stock exchange and so could be converted into cash or liquidresources at short notice. In addition, the Group typically holds cash balances in deposits with a short maturity, and furtherresources can be drawn through committed borrowing facilities. In managing liquidity, the Group’s objective is to ensure ithas access to the funds needed to take advantage of any attractive investment opportunities that may arise.The main risks arising from the Group’s financial instruments are as follows:– market price risk– currency risk– interest rate fluctuation risk.The Group’s policies for managing those risks are described below and, except as noted below, have remained unchangedsince the beginning of the year to which these financial statements relate.MARKET PRICE RISKThe Group can be affected by market price movements on its equity investments. Since it generally invests for the medium orlong term, the Board does not believe it is economic or necessary to hedge market price risk, which in any event it considersto be a relatively short term factor. No significant equity investment is made without exhaustive research and unless a marginof safety has been identified. Once a significant investment has been made, the investment is continually monitored andmanaged in the light of new information or market movements. As an active investor, the Group’s objective is to utiliseshareholder influence to enhance the value of its investments and therefore, ultimately, their price. Exposure to pricemovement is further mitigated through holding a spread of investments, diversified across a range of sectors and countries.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 5338. Derivatives and Other Financial Instruments - continuedEquity swaps and equity options are purchased from time to time as part of the Group’s investment portfolio. These derivativesdo not form a significant proportion of the portfolio, and are subject to the same rigorous research procedures as other equityinvestments.FOREIGN CURRENCY RISKThe income and capital value of the Group’s financial instruments can be affected by exchange rate movements as a significantportion of its financial assets (principally cash and investments) and financial liabilities are denominated in currencies other thanSterling, which is the Group’s reporting currency. The accounting impact of these exposures will vary according to whether ornot the Group company holding such financial assets and liabilities reports in the currency in which they are denominated.The Board recognises that the Group’s Sterling balance sheet will be affected by short term movements in exchange rates,particularly the value of the Australian, New Zealand and United States dollars. The Board takes the view that the majorcurrencies in which the Group is invested move within a relatively stable range and that currency fluctuations should even outover the long term. The Group’s policy is to hold over time a broad balance of cash and investments in Sterling and Australiandollars, being the two currencies in which it mainly invests.At certain times, the Board will make limited use of forward foreign currency contracts and swaps to maintain the Group’srelative exposure to the Australian dollar. These contracts tend to have a maturity of less than three months. Otherwise, thedistribution of the Group’s net assets between the principal currencies in which it does business is driven largely by theavailability of suitable investment opportunities within each country.Coats, Staveley Inc and Turners & Growers Ltd use forward foreign currency contracts to eliminate the currency exposure thatarises on business transacted in currencies other than their own reporting currencies. These companies only enter into suchforeign currency contracts when there is a firm commitment to the transaction. The contracts used to hedge futuretransactions typically have a maturity of between 6 months and 2 years.The borrowings drawn by the Group as at 31 December 2004 were mainly denominated in the reporting currency of therelevant company of which they were liabilities.INTEREST RATE RISKIn 2004, the Group financed its operations through shareholders’ funds, bank borrowings, commercial bills, the CLNs and theCapital Notes. The CLNs and the Capital Notes carry fixed interest rates. The Group’s trading subsidiaries use a mixture of fixedand floating rate debt. The Group also has access to bank facilities amounting to some £512.0 million, of which £313.9 millionhad been drawn down at year-end. This includes facilities negotiated by certain trading subsidiaries to meet their local needs.The Group’s interest income does not vary significantly from the returns it would generate through investing surplus cash atfloating rates of interest since the interest rates are re-set on a regular basis.In adopting the requirements of FRS13,Derivatives and other Financial Instruments,the Group has taken advantage of the exemptionthat short term debtors and creditors can be excluded from the following disclosures (other than the currency disclosures):INTEREST RATE AND CURRENCY PROFILE OF FINANCIAL LIABILITIESThe interest rate and currency profile of the Group’s financial liabilities,after taking account of the cross-currency interest rate swap,interest rate swaps and forward foreign currency contracts used to manage the interest and currency profile,was as follows:Year ended 31 December 2004 2003Floating Fixed Interest Floating Fixed Interestrate rate free Total rate rate free TotalCurrency £m £m £m £m £m £m £m £mSterling 24.4 6.0 8.1 38.5 3.9 11.9 0.3 16.1Australian dollars 12.3 – – 12.3 7.9 – – 7.9New Zealand dollars 19.3 172.0 – 191.3 16.3 166.5 – 182.8United States dollars 32.9 143.2 0.1 176.2 – – – –Euros 63.1 – – 63.1 2.3 – – 2.3Other 26.6 0.2 0.1 26.9 – – – –178.6 321.4 8.3 508.3 30.4 178.4 0.3 209.1The financial liabilities included above comprise the Group’s borrowings, onerous lease commitments, contractual employeeentitlements and certain derivatives.

54 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued38. Derivatives and Other Financial Instruments - continuedDetails of fixed and non interest-bearing liabilities are provided below:Year ended 31 December 2004 2003FinancialFinancialFixed rate liabilities on Fixed rate liabilities onfinancial which no financial which noliabilities interest is paid liabilities interest is paidWeighted Weighted average Weighted Weighted Weighted average Weightedaverage period for which average period average period for which average periodinterest rate rate is fixed until maturity interest rate rate is fixed until maturityCurrency % (months) (months) % (months) (months)Sterling 8.00% 6 45 8.00% 12 –New Zealand dollars 8.86% 34 – 8.86% 46 –United States dollars 3.80% 48 6 – – –Other 6.40% 21 8 – – –6.61% 40 43 8.80% 44 –The benchmark for determining floating rate liabilities in the UK is LIBOR for both sterling and United States dollar loans. InNew Zealand, floating rates are determined by reference to the New Zealand 90 Day Bank Bill rate.INTEREST RATE AND CURRENCY PROFILE OF FINANCIAL ASSETSThe interest rate and currency profile of the Group’s financial assets, after taking account of forward foreign currency contracts,was as follows:Year ended 31 December 2004 2003Investments Cash at bank Investments Cash at bankand other assets and in hand Total and other assets and in hand TotalCurrency £m £m £m £m £m £mSterling 82.7 64.2 146.9 79.7 28.6 108.3Australian dollars 55.6 85.7 141.3 59.0 126.6 185.6New Zealand dollars 52.1 43.1 95.2 47.7 102.0 149.7United States dollars 0.9 40.7 41.6 0.8 30.5 31.3Other currencies 2.3 50.0 52.3 0.9 1.8 2.7193.6 283.7 477.3 188.1 289.5 477.6Fixed rate 4.9 – 4.9 – – –Floating rate – 245.4 245.4 12.9 282.8 295.7No rate – 38.3 38.3 – 6.7 6.74.9 283.7 288.6 12.9 289.5 302.4The investments included above comprise listed and unlisted investments in shares (excluding associates and joint ventures),equity options and equity swaps. Other assets comprise amounts recoverable on contracts after more than one year, loans toassociates and certain derivatives.Deposits of £245.4 million (2003: £282.8 million) which have been placed on deposit with banks for a variety of fixed periods,not exceeding six months, earn available market rates based on LIBID equivalents and are for these purposes classified asfloating rate cash balances. The Group’s investment portfolio principally comprises equity shares and derivatives. All suchinvestments have been excluded from the interest rate analysis because the investments do not generate a fixed entitlementto interest. The interest-bearing investments comprise secured convertible loan stock in an associated undertaking. Interestbearing loans of £Nil (2003: £3.4 million) and £Nil (2003: £7.3 million) were provided to an associated undertaking and a jointventure respectively. A non-interest bearing loan of £0.8 million was owed by an associated undertaking in 2003 (2004: £Nil)which had no fixed repayment date. Non-interest bearing deposits are payable on demand.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 5538. Derivatives and Other Financial Instruments - continuedMATURITY OF FINANCIAL LIABILITIESThe maturity of the Group’s financial liabilities,other than short-term creditors such as trade creditors and accruals,was as follows:Year ended 31 December 2004 2003£m £mIn one year or less, or on demand 56.2 8.7In more than one year but not more than two years 124.2 29.3In more than two years but not more than five years 252.7 169.2In more than five years 75.2 1.9508.3 209.1BORROWING FACILITIESThe Group had the following undrawn committed borrowing facilities in respect of which all conditions precedent had beenmet at the year-end:Year ended 31 December 2004 2003£m £mExpiring within one year 90.6 6.0Expiring between one and two years 37.6 124.1Expiring between two and five years 69.9 –198.1 130.1FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESThe fair value of the Group’s financial assets and liabilities is summarised below:Year ended 31 December 2004 2003Book value Fair value Book value Fair valuePrimary financial instruments £m £m £m £mCash at bank 283.8 283.8 289.5 289.5Investments (fixed and current) 191.1 329.0 186.3 265.6Amount recoverable on contracts 2.5 2.2 1.6 1.5CLNs (6.0) (9.5) (11.9) (17.7)Capital Notes (172.0) (179.2) (166.5) (174.6)Other borrowings (313.9) (313.9) (23.4) (23.4)Other financial liabilities (16.5) (16.5) (7.2) (7.2)Derivative financial instruments heldas part of the investment portfolioEquity options and equity swaps – – 0.3 0.3Contracts for differences (0.1) (0.1) 1.3 1.3Derivative financial instruments heldto hedge currency exposuresForward foreign currency contracts (1.1) (1.4) – 0.1Investments are held for strategic growth or trading purposes. Market values have been used to derive the fair value of all listedinvestments, the CLNs and the Capital Notes. Unlisted investments are valued according to the most recent price at which theyhave been traded.For floating rate financial assets and liabilities, and for fixed rate financial assets and liabilities with a maturityof less than six months, it has been assumed that fair values are approximately the same as book values. Fair values for forwardforeign currency contracts have been estimated using applicable forward exchange rates at the year end.The fair values of theequity options, equity swaps and the forward foreign currency contracts have been determined by third party institutions, basedon market rates.All other fair values have been calculated by discounting expected cash flows at prevailing interest rates.Gains and losses on forward foreign currency contracts used for hedging future transactions are not recognised until the exposureto which they relate is itself recognised.Such gains and losses are incorporated in the value of the transaction being hedged.

56 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Financial Statements – continued38. Derivatives and Other Financial Instruments - continuedCURRENCY EXPOSUREThe table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than theirlocal currency after taking account of forward foreign currency contracts and cross-currency interest rate swaps held as hedges.Foreign exchange differences arising on retranslation of these assets and liabilities are taken to the Group’s profit and loss account.The table excludes loans between Group companies that form part of the net investment in overseas subsidiaries on which theexchange differences are dealt with through reserves. It also excludes investments held in equity shares, which are translated intothe investing company’s reporting currency at the historical rate on the date of acquisition and are not subsequently re-translated.Net foreign currency monetary assets/(liabilities)Australian New ZealandFunctional currency Sterling dollars dollars US dollars Other Total31 December 2004 £m £m £m £m £m £mSterling – 95.6 (276.4) 19.3 (17.2) (178.7)Australian dollars – – – (0.5) – (0.5)New Zealand dollars – 1.2 – 1.7 (0.2) 2.7US dollars (0.3) – – – 2.4 2.1Other 0.1 – – 7.0 8.7 15.8(0.2) 96.8 (276.4) 27.5 (6.3) (158.6)Net foreign currency monetary assets/(liabilities)Australian New ZealandFunctional currency Sterling dollars dollars US dollars Other Total31 December 2003 £m £m £m £m £m £mSterling – 98.4 (91.1) 18.5 (19.3) 6.5Australian dollars – – – (0.4) – (0.4)New Zealand dollars (0.1) 0.9 – 1.6 0.1 2.5US dollars – – – – 0.3 0.3(0.1) 99.3 (91.1) 19.7 (18.9) 8.9HEDGESDuring 2004, the Group has hedged the following exposures:– interest rate risk – using interest rate swaps– currency risk – using forward foreign currency contracts.The table below shows the extent to which the Group has off-balance sheet (unrecognised) gains and losses in respect offinancial instruments used as hedges at the beginning and end of the year. It also shows the amount of such gains and losseswhich have been included in the profit and loss account.GainsLosses£m £mUnrecognised gains on hedges at 1 January 2004 0.1 –Gains arising in previous years included in 2004 profit (0.1) –Gains not included in 2004 profit arising before 1 January 2004 – –Unrecognised losses arising in 2004 – (0.3)Losses not yet taken at 31 December 2004 – (0.3)Of whichLosses expected to be recognised in 2005 – (0.3)Losses expected to be recognised after 2005 – –GAINS/(LOSSES) ON FINANCIAL ASSETS/LIABILITIESThe net gain/(loss) from buying and selling financial assets and financial liabilities shown in the profit and loss account isanalysed as follows:Year ended 31 December 2004 2003£m £mGains on disposal of investments (excluding derivatives) 49.3 40.9(Losses)/gains on disposal of equity options and equity swaps (1.8) 1.4Net write-down of investments (excluding derivatives) (2.4) (11.1)Net write-back of equity options and equity swaps 0.1 –45.2 31.2

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 57Corporate GovernanceCOMPLIANCEGPG’s corporate governance arrangements follow the Group’s well established practice with a board structure and operationalcontrols and procedures appropriate to an international strategic investment company. However the Board does not seekactively to change their established procedures merely to ensure adherence with new best practice recommendations madeby regulators from time to time. GPG complies with Section 1 of the Combined Code appended to Listing Rules of the UKFinancial Services Authority (“the Code”) insofar as its terms are considered relevant and practical. For these reasons fullcompliance with the Code (or its equivalent in New Zealand and Australia) is considered inappropriate. Exceptions to theCode are mentioned under the appropriate subject headings and the position is regularly reviewed and monitored bydirectors and management.THE BOARDThe Board consists of the Chairman, Sir Ron Brierley, together with four executive directors. Short biographies of each of thedirectors appear on page 12.In accordance with the Articles of Association, Blake Nixon and Tony Gibbs retire by rotation at the conclusion of the 2005Annual General Meeting and, being eligible, offer themselves for re-election.Each member of the Board has considerable skill and experience in the running and management of both international anddomestic public companies as well as their direct involvement in the business of GPG. In addition, they all act from time to timeas non-executive directors of companies in which GPG invests.The Board as a whole is responsible for the Group’s assets and operations, the management of which, on a day-to-day basis, isdelegated to the executive directors – one of whom is situated in the United Kingdom, two in Australia and one in New Zealand.The directors are in frequent regular contact with each other and have put in place suitable communication and reportingsystems which enable them to have on a timely basis a clear appreciation and measure of the Group’s investment activities.Activity/OperationA consequence of the comprehensive evaluation of proposals by the directors is that meetings of the Board tend to be lessformal than in companies where the majority of the Board is in one time zone and operate discrete areas of responsibility.Instead the Board comes together over a period of days at least three times a year to discuss investment matters of particularinterest and to discuss new or existing investments. These informal meetings will in due course often lead to a formalprocedural meeting to agree and to record decisions.In this way the Group’s assets, being investments, are carefully scrutinised both before an investment is made and regularlythereafter. This practical approach is particularly important since the directors believe that the ability to move quickly and, inparticular, the speed of the final decision and its implementation, outweighs any benefit of more formal but slower procedures.The London office is responsible for all corporate activities including compliance requirements for the three Stock Exchangeson which the Company’s shares are listed and also for all treasury and communication functions. Executive responsibility forthe Group’s operations is shared as follows: Blake Nixon is responsible for the GPG (UK) Holdings plc and the London office,Gary Weiss is in charge of Guinness Peat Group (Australia) Pty Ltd and Tony Gibbs is in charge of Guinness Peat Group NewZealand Ltd.The Chairman is not appointed for a specified term but, in accordance with the Company’s Articles of Association, retires in histurn by rotation.In addition to those matters described elsewhere in this report:• The Company has a procedure in place by which directors can seek independent professional advice at the Company’sexpense if the need arises.• Sir Ron Brierley acted as non-executive Chairman for GPG during the year. He is remunerated by way of bonuses and shareoptions, although he receives no salary or directors’ fees.• There is no independent non executive director.• The small size of the Board of directors and the fact that they take direct responsibility for all significant matters affectingGPG, including the appointment of other directors (should such requirement arise), make the establishment of a formalprocedure for new appointments or a Nomination Committee unnecessary.

58 GUINNESS PEAT GROUP PLC • ANNUAL REPORTCorporate Governance – continued• GPG does not have a “senior independent non-executive director” but all the directors including Sir Ron as Chairman areavailable to shareholders. Given the geographic distribution of the Company’s shareholders between (largely) New Zealand,the UK and Australia, it is expected that shareholders in those countries will normally speak to their locally-based director ifthey cannot speak to the Chairman.• There is no formal evaluation method in respect of the Board or any individual director’s performance.• No statement to the Board confirming the Company’s financial condition, operational results, risk management or internalcompliance and control systems as envisaged by ASX Recommendations 4.1 or 7.2 is considered necessary as all of theDirectors are extensively involved in the process of preparing the Company’s financial reports.The interests of the directors, including connected persons, in the share capital of the Company and its subsidiaries are set outin the Report on Remuneration and Related Matters below. No director, either during or at the end of the year under review,was interested in any material contract (not being a contract of employment) with the Company or any of its subsidiaries norhas become so interested since the year end.INTERNAL CONTROLSThe directors describe below the system of internal control established within the Group. This has been in place throughoutthe year for GPG and its principal subsidiaries and has continued in force up to the date of approval of the Annual Report.Management distinguishes for this and other purposes between the Parent Group (being the long term structural entitieswithin the Group), the Operating Subsidiaries and the Group’s Joint Ventures of significant value. The Operating Subsidiaries,being discrete entities acquired by the Parent Group as investments, have their own boards of directors who operate andcontrol these businesses independently. The object of the internal control process is to identify, evaluate and manage risk,including the risk of non-compliance with the laws and regulations of the countries within which the Group operates. Thesystem is regularly reviewed by the Board and, except as described below, accords with the Turnbull guidance issued tocompanies listed on the London Stock Exchange.The directors acknowledge that they are responsible for the Group’s system of internal controls and for reviewing its effectiveness.However,it must be recognised that any system cannot provide absolute assurance against material misstatement or loss.The Board as a whole is responsible for setting and achieving the Group’s objectives and policies, and the maintenance andcustody of its assets. It meets with such frequency as is practical and necessary to ensure full and effective control over theGroup. Clear management responsibilities have been established in relation to internal controls, and clear procedures exist forBoard notification of control failures.Risks are identified by management and Board review. The identification and consequent management of risk is an inherentfeature in the investment evaluation process. The principal risk identified is market price risk. The investment evaluationprocess and its relationship to market risk is referred to in detail in note 38 to the financial statements, Derivatives and OtherFinancial Instruments, under the heading “Market price risk”.For the Group’s investment activities, information systems are in place to provide directors with a weekly report on cashmovements, investment transactions, portfolio holdings and market values. In addition, the Board monitors and regularlyreviews the progress of investment strategies.The major control procedures in place include the following:• Clear management responsibilities in relation to internal controls• Board and Audit Committee review of control procedures• Continual monitoring of the investments• Investment policy and strategy implemented by the local executive directors, in consultation with the boards of investinggroup companies• Investment transactions effected under the supervision of the relevant local investment manager pursuant to the agreedinvestment policy• Board approval required for any investment in excess of £2 million• Documents of title are held either within the Group or by a reputable custodian.In addition, the directors have carried out an annual review of the effectiveness of the internal controls across the Group’sinvestment activities and report as follows:As at 31 December 2004, the Group had five major operating subsidiaries of which two were partly owned. All are involved inactivities other than strategic investment. In aggregate, the Group’s share of the consolidated net assets (including goodwillbut excluding group loans) of the relevant subsidiaries (“Group Share”) represents some 62% of GPG’s shareholders’ funds of£514 million. At least one GPG director is appointed to the board of each of these subsidiaries. He is charged with ensuring thatthe appropriate resources are committed by the subsidiary to respond to the requirements of the Combined Code on a basis

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 59which in each case is commensurate with GPG’s Group Share, and that all material risks to the value of that investment aremanaged. Each subsidiary’s board has been notified of its responsibilities for identifying key business risks appropriate to itsown business sector and establishing appropriate and relevant control and compliance procedures. They are also required toacknowledge that they are responsible for their internal control systems. The systems operated by these companies arereviewed annually by GPG’s management and the results of these reviews are reported to the Audit Committee and the Board.Coats plc (“Coats”), became a wholly owned subsidiary during the year. It is by far the Company’s largest operating subsidiary(Group Share £222 million). The Chairman has reported separately on its activities. The Board of GPG monitors carefully Coats’sinternal controls.Coats’s directly owned subsidiary, Coats Holdings Limited (“Holdings”), which directly owns the entire operating business,formerly had a full listing on the London Stock Exchange until it de-listed its ordinary shares in June 2003. Therefore onacquisition by Coats, Holdings already had procedures in place to meet its Continuing Obligations, including internal controls.These procedures have been substantially retained and have been reviewed by GPG’s management.Staveley Industries plc, Group Share £19 million, has a continuous programme of risk assessment enabling its board continuallyto monitor its internal controls.Staveley Inc is a US operation which is unconnected to Staveley Industries plc.It has incorporated into its operations a set of systemsand procedures that are intended to ensure that the businesses have an embedded risk management programme.The key issuesemerging from these procedures are reported to the board of Staveley Inc,which is satisfied that all major risks have been identifiedand are monitored and controlled.Following certain disposals,the Group Share in Staveley Inc has reduced to £19 million.The Group’s partly owned subsidiaries are Canberra Investment Corporation (“CIC”), Group Share £13 million, which is listed onthe Australian Stock Exchange, and Turners & Growers, Group Share £44 million, which is listed on the New Zealand StockExchange. Both companies have prime reporting responsibilities to a recognised exchange, whose rules are similar to, but notthe same as, those of the London Stock Exchange. However, it may be that certain of these companies’ control procedures,whilst deemed sufficient by the GPG Board to identify, manage and control the principal risks to its investments, differ from themore strictly defined requirements of the Turnbull guidance (or their local equivalents). The position has been reviewed withboth CIC and Turners & Growers during the year, and these companies have submitted an annual report on their internal controls.Whilst none of these companies have a comprehensive formal procedure for reviewing the effectiveness of internal controls,their directors are closely involved in most of their day-to-day activities.For completeness the Board has also continued to review and monitor the internal controls procedures of Nationwide, whichbecame a Joint Venture in 2002.The Board of GPG is satisfied that each of the partly owned subsidiaries and the Joint Venture have satisfactory procedures toidentify, monitor and control their major risks, commensurate with the relevant Group Share. At least one GPG director isappointed to the board of each associate or joint venture. This enables them to review the investee company’s procedures fordealing with major risks. Associates are encouraged to review the effectiveness of their own internal controls, but the Group isnot able to enforce this. Associates are not normally requested to complete an internal control review each year.Guidance issued by the Financial Services Authority obliges the directors of public companies to consider the need for internalaudit. The Board reviews the position annually and considers that the Parent Group is not sufficiently large or complex tojustify a centralised internal audit function, although Coats Holdings Ltd and Staveley Industries plc consider their operationsto be sufficiently widespread to justify their own internal audit functions.SHAREHOLDER MEETINGSIn 2004, GPG held an Annual General Meeting in London. The level of proxies lodged for each resolution was announcedduring the meeting. In its annual and interim reports and other corporate announcements, GPG endeavours to present anaccurate, objective and balanced picture in a style and format which is appropriate for the intended audience.AUDIT COMMITTEEThe Group’s Audit Committee consists of Sir Ron Brierley, who chairs the committee, and Blake Nixon.Therefore the AuditCommittee does not comply with the membership provisions of the Combined Code in that it does not consist of three“independent”non-executive directors.The Board considers that given the direct participation by all members of the Board inthe operation, structure and financial control of the Group the appointment of Sir Ron Brierley and Blake Nixon to the AuditCommittee is sufficient to ensure the integrity of the Group’s financial reporting and controls.The Audit Committee was suppliedon establishment with written terms of reference, a copy of which is available for inspection at the Group’s London, Sydney andAuckland offices.These are reviewed periodically to ensure they remain appropriate.The Committee is reviewing and developingits policy on the supply of non-audit services by the Company’s auditor,Deloitte & Touche LLP,to ensure that audit objectivity andindependence are safeguarded.“Whistleblower”procedures exist within the larger operating subsidiaries.The Audit Committee is considering whether,and how,these procedures could and should be extended throughout the Group.

60 GUINNESS PEAT GROUP PLC • ANNUAL REPORTCorporate Governance – continuedGOING CONCERNGiving due consideration to the nature of the Group’s business and underlying investments, the directors consider that theCompany and the Group are a going concern and the financial statements are prepared on that basis.REPORT ON REMUNERATION AND RELATED MATTERSIntroductionFor completeness, this report covers the remuneration of executive and non-executive directors and also related matters suchas directors’ interests in shares. It therefore covers issues which are the concern of the Board as a whole, in addition to thosedealt with by the Remuneration Committee.Remuneration CommitteeThe Remuneration Committee is chaired by Sir Ron Brierley. It is the view of the Board that Sir Ron has qualities which aresufficient to ensure the integrity and independence of the Remuneration Committee in fulfilling its duties. The Committee alsoincludes two executive directors, but no director is involved in deciding his own remuneration. It has access to the professionaladvice it requires from the Group’s management or, on an ad-hoc basis, from the Group’s legal or other professional advisers.It sets the remuneration packages for all the directors. Save as aforesaid, this Committee complies with the Principles of GoodGovernance regarding directors’ remuneration as set out in Section B of Part 1 of the Combined Code. It meets with suchfrequency as may be required to fulfil its responsibilities. The Committee gives full consideration to the provisions in ScheduleA to the Combined Code in carrying out its duties.Current membership of this Committee is indicated on page 12.Directors’ Remuneration PolicyThe Remuneration Committee’s current policy is that remuneration and benefit levels should be sufficiently competitive,having regard to remuneration practice in the industry and the countries in which the Group invests, to attract, incentivise,reward and retain the directors.Each of the executive directors has a contract of service with the Company and the Chairman has a letter of appointment.These agreements provide for a rolling 12 months’ notice period to be given by the director and are terminable by the Companyon giving 18 months’ notice. In the case of early termination by the Company, the director would receive compensation basedon the unexpired portion of his notice period. In the event of a change in control, the agreements entitle each director tocompensation of two years’ remuneration if he elects to leave within 6 months.GPG’s Remuneration Committee considers that it is necessary to offer such rolling contracts and notice periods in order to retain,motivate and in the future recruit individuals of the right calibre and to ensure continuity of the Group’s management. This viewtakes into account the remuneration and notice period practices in the industry and the countries in which the Group operates.The make-up of directors’remuneration varies according to geographical location and the nature of the appointment but includes:• Annual benefits: including a competitive basic salary, directors’ fees as appropriate, health and car benefits and lifeassurance. Directors are also entitled to performance related cash bonuses (see below).• Long Service Leave based on one month’s leave for every five years worked,applied on a pro-rata basis.• Payment for holidays interrupted, curtailed or not taken.• Pension contributions: see the Notes below the following tables.• Long term incentives: directors are entitled to receive awards of options under the Group’s share option schemes.• Staff bonus scheme: directors are eligible to participate in a non-contractual bonus scheme, under which cash bonusesmay be paid to all staff in the GPG Parent Group. No such bonus will be payable in respect of any year when net profitsattributable to GPG shareholders do not achieve a 12.5% realised return on opening shareholders’ funds, as adjusted forshare issues during the year. If this target is achieved a bonus pool is established by the Remuneration Committee withreference to profit and the return on shareholders’ funds. There is no ceiling on the bonuses payable to directors. Thisscheme is operated in order to remain competitive, having regard to performance bonuses paid by internationalinvestment funds and companies comparable to GPG.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 61Details of individual directors’ emoluments (audited figures)The emoluments of the current directors of GPG are set out below. These amounts comprise emoluments payable to thedirectors by GPG and its subsidiaries for the year ended 31 December 2004 and 31 December 2003.Sir Ron Brierley T J N Beyer G J Cureton A I Gibbs B A Nixon Dr G H Weiss(retired30 September2004)£ £ £ £ £ £Remuneration package – 86,250 336,450 418,606 405,561 441,591Pension contributions – – (33,318) – (19,800) (48,998)Bonus – – – – – –Retirement payment – 300,000 – – – –TOTAL PAYMENTS IN 2004 – 386,250 303,132 418,606 385,761 392,593Accrual for 2004 (see table below) – – 22,173 51,501 40,230 28,999Prior years’ accrual (see table below) – – – 345,326 422,783 –TOTAL ACCRUALS IN 2004 – – 22,173 396,827 463,013 28,999TOTAL 2004 – 386,250 325,305 815,433 848,774 421,592Remuneration package – 122,277 336,700 396,188 393,750 441,919Pension contributions – – (34,343) – (29,273) (50,505)Bonus 75,000 – 876,500 1,000,000 1,000,000 1,100,000TOTAL 2003 75,000 122,277 1,178,857 1,396,188 1,364,477 1,491,414Gains on Options 2004 2,192,400 129,343 404,414 652,719 646,735 2,045,287Gains on Options 2003 – – – – – –Pension Contributions 2004 – – 33,318 – 19,800 48,998Pension Contributions 2003 – – 34,343 – 29,273 50,505The aggregate emoluments and gains on share options exercised for the highest paid director were £2,466,879 (2003:£1,491,414).Contributions paid to money purchase schemes in respect of the highest paid director were £48,998 (2003:£50,505).Holiday and Long Service LeaveIt has consistently been the policy of the Remuneration Committee that all executive directors should have standardised termsof employment in respect of their contractual entitlements to Long Service Leave and Holidays. In previous years, amountshave been accrued for all directors, in accordance with the Long Service Leave Act 1955 of New South Wales, Australia, and forG H Weiss and G J Cureton, in respect of payment in lieu of holidays taken less than their contractual entitlements. However,no such holiday entitlements have previously been accrued in respect of B A Nixon and A I Gibbs. In order to reflect thestandardised terms of employment, accruals have been made in 2004 to reflect such entitlements for these two directors.The following table shows the amounts accrued in 2004 for the year ended 31 December 2004 and for prior periods. Nopayments have been made to directors and the table also shows the year-end position for each director.ClosingTotalbalanceYear Prior accrued 31 December2004 years in 2004 2004£ £ £ £G J Cureton 22,173 – 22,173 280,666A I Gibbs 51,501 345,326 396,827 461,717B A Nixon 40,230 422,783 463,013 549,844Dr G H Weiss 28,999 – 28,999 507,438142,903 768,109 911,012 1,799,665

62 GUINNESS PEAT GROUP PLC • ANNUAL REPORTCorporate Governance – continuedNotesi) Overseas directors’ emoluments, which are paid in local currency, have been translated at the relevant year-endexchange rate.ii) Share options are awarded to directors and senior staff in accordance with the terms of the Group’s share optionschemes, the terms of which have been approved by the relevant shareholders. The Company does not operate any otherlong term incentive schemes. It is felt that the grant of options is more appropriate since this contains an element ofreward for individual achievement together with an incentive allied to the Group’s longer term performance. Theapproach also aligns management’s interests with those of shareholders. Awards are made in most years in the context ofthe Group’s recent trading performance, the individual’s contribution to that performance and his expected performanceand contribution in the future. In addition, awards are calculated having regard to the individual’s existing holdings.Directors are not required to hold their shares for a further period following exercise of their options.iii) All executive directors are entitled to direct that a variable amount of their total salary, as determined by theRemuneration Committee each year, be paid by way of contribution to any pension arrangement which they may establishfor the purpose.iv) All pension contributions are in respect of defined contribution arrangements.v) “Benefits in kind” includes, inter alia, private health insurance.vi) Of their total salary, as determined by the Remuneration Committee each year, directors are entitled to direct that avariable amount be paid in a form other than cash.vii) T J N Beyer’s remuneration figure includes £67,500 by way of director’s fees and £18,750 from a joint ventureundertaking. Mr Beyer was the jointly elected Chairman of the joint venture and his annual fees were borne by the jointventure (the Group’s share being 50%). This is a departure from the Company’s usual policy on directors’ remuneration,which is to remit directors’ fees from such entities back to the Company, because Mr Beyer was expected to actindependently in this instance.viii) The tables set out above, and these notes, comprise the auditable part of the directors’ remuneration report, being thedisclosures required by Part 3 of Schedule 7A to the Companies Act 1985.Performance Graph (Unaudited) – Total Shareholder Return5 year Comparison of GPG shares against Unchanged UK Investment Trust Index350300250200GPGUNUKINVT150Source: Bloomberg1005002000 2001 2002 2003 2004

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 63Directors’ Interests1 The interests of the directors who held office at the end of the year, and their connected persons (if any) in the shares,options, and listed securities of GPG and its subsidiaries as at 31 December 2004 and 2003, are set out below.i) Guinness Peat Group plcOrdinary 5p shares 31 December 31 December2004 2003Sir Ron Brierley 30,391,624 26,716,702T J N Beyer (retired 30 September 2004) 271,530 996,146G J Cureton 168,927 151,408A I Gibbs 1,112,206 466,421B A Nixon 6,505,052 4,291,155Dr G H Weiss 9,301,861 4,253,018Options under the Group’s share option schemes (audited figures)31 December 31 December Effective2004 2003 exercise priceNumber Number (pence per share) Exercise periodSir Ron BrierleyOrdinary – 3,082,363 23.04 12.05.97 to 11.05.04Super – 1,541,180 23.04 12.05.99 to 11.05.04Ordinary 306,207 306,207 29.80 08.05.99 to 07.05.06Super 306,207 306,207 29.80 08.05.01 to 07.05.06Ordinary 665,500 665,500 30.43 17.10.04 to 16.10.11Ordinary* 440,000 – 69.91 23.04.07 to 24.04.14T J N Beyer(retired 30 September 2004)Ordinary – 154,113 23.04 12.05.97 to 11.05.04Super – 154,113 23.04 12.05.99 to 11.05.04Ordinary 205,769 205,769 29.80 08.05.99 to 07.05.06Super 306,207 306,207 29.80 08.05.01 to 07.05.06Ordinary 100,433 100,433 29.80 08.05.99 to 07.05.06Ordinary 202,448 202,448 37.54 01.09.00 to 31.08.07Super 402,627 402,627 30.11 02.09.04 to 01.09.09Ordinary 199,650 199,650 30.43 17.10.04 to 16.10.11G J CuretonOrdinary – 350,263 19.79 06.10.97 to 05.10.04Super – 350,263 19.79 06.10.99 to 05.10.04Ordinary 249,741 249,741 22.83 25.08.98 to 24.08.05Super 499,489 499,489 22.83 25.08.00 to 24.08.05Ordinary 93,649 93,649 28.83 11.04.99 to 10.04.06Super 93,649 93,649 28.83 11.04.01 to 10.04.06Ordinary 835,117 835,117 30.09 13.01.00 to 12.01.07Super 278,370 278,370 30.09 13.01.02 to 12.01.07Ordinary 506,133 506,133 37.54 01.09.00 to 31.08.07Ordinary 446,432 446,432 32.18 22.03.02 to 21.03.09Super 262,189 262,189 32.18 22.03.04 to 21.03.09Super 2,335,239 2,335,239 30.11 02.09.04 to 01.09.09Ordinary 1,331,000 1,331,000 30.43 17.10.04 to 16.10.11Ordinary* 1,320,000 – 69.91 23.04.07 to 23.04.14

64 GUINNESS PEAT GROUP PLC • ANNUAL REPORTCorporate Governance – continued31 December 31 December Effective2004 2003 exercise priceNumber Number (pence per share) Exercise periodA I GibbsOrdinary – 154,114 23.04 12.05.97 to 11.05.04Super – 231,173 23.04 12.05.99 to 11.05.04Ordinary – 700,533 19.79 06.10.97 to 05.10.04Super – 350,263 19.79 06.10.99 to 05.10.04Ordinary 624,362 624,362 22.83 25.08.98 to 24.08.05Super 1,560,909 1,560,909 22.83 25.08.00 to 24.08.05Ordinary 306,207 306,207 29.80 08.05.99 to 07.05.06Super 306,207 306,207 29.80 08.05.01 to 07.05.06Ordinary 556,746 556,746 30.09 13.01.00 to 12.01.07Ordinary 506,133 506,133 37.54 01.09.00 to 31.08.07Ordinary 446,432 446,432 32.18 22.03.02 to 21.03.09Super 262,189 262,189 32.18 22.03.04 to 21.03.09Super 2,496,290 2,496,290 30.11 02.09.04 to 01.09.09Ordinary 1,331,000 1,331,000 30.43 17.10.04 to 16.10.11Ordinary* 1,320,000 – 69.91 23.04.07 to 23.04.14B A NixonSuper – 1,541,180 23.04 12.05.99 to 11.05.04Ordinary 306,207 306,207 29.80 08.05.99 to 07.05.06Super 306,207 306,207 29.80 08.05.01 to 07.05.06Ordinary 506,133 506,133 37.54 01.09.00 to 31.08.07Ordinary 111,607 111,607 32.18 22.03.02 to 21.03.09Super 65,546 65,546 32.18 22.03.04 to 21.03.09Super 2,496,290 2,496,290 30.11 02.09.04 to 01.09.09Ordinary 1,331,000 1,331,000 30.43 17.10.04 to 16.10.11Ordinary* 1,320,000 – 69.91 23.04.07 to 23.04.14Dr G H WeissOrdinary – 3,082,363 23.04 12.05.97 to 11.05.04Super – 1,541,180 23.04 12.05.99 to 11.05.04Ordinary 306,207 306,207 29.80 08.05.99 to 07.05.06Super 306,207 306,207 29.80 08.05.01 to 07.05.06Ordinary 506,133 506,133 37.54 01.09.00 to 31.08.07Ordinary 581,070 581,070 32.18 22.03.02 to 21.03.09Super 340,138 340,138 32.18 22.03.04 to 21.03.09Super 2,818,392 2,818,392 30.11 02.09.04 to 01.09.09Ordinary 1,331,000 1,331,000 30.43 17.10.04 to 16.10.11Ordinary* 1,320,000 – 69.91 23.04.07 to 23.04.14*Options granted during 2004.Options outstanding at 31 December 2003 have been restated as to price and number to reflect the impact of the 2004Capitalisation Issue.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 65During the year, the directors exercised options as follows:No. of sharesMarket valueDate of allotted on Expiry date on dateexercise exercise of option of exercise (p)Sir Ron Brierley 20.04.04 4,203,221 11.05.04 77.5T J N Beyer (retired 30 September 2004) 02.03.04 280,206 11.05.04 71.5G J Cureton 05.10.04 700,526 05.10.04 79.5A I Gibbs 20.04.04 350,261 11.05.04 77.521.06.04 1,050,799 05.10.04 66.5B A Nixon 02.03.04 1,401,073 11.05.04 71.5Dr G H Weiss 08.03.04 4,203,221 11.05.04 74.0On 1 April 2005, A I Gibbs exercised options over 2,185,272 shares which had an expiry date of 24.08.05. The market value on1 April was 77.5p.Since the year end, options have been granted at an exercise price of 84.1p to each director as follows:Sir Ron Brierley (400,000), G J Cureton (1,150,000), A I Gibbs (750,000), B A Nixon (1,250,000) and Dr G H Weiss (1,250,000).A further option over 500,000 shares was granted to A I Gibbs on 4 April 2005 at an exercise price of 77.5p.No options granted to directors lapsed during the year and no options have lapsed since the year end.As part of the reverse acquisition of Brunel Holdings plc, Trevor Beyer and Blake Nixon “rolled over” their options intoreplacement options over the Ordinary 5p shares of GPG. The other directors’ existing options granted before 13 December 2002are over Ordinary shares of 10p each in GPGUKH. Under the Step-Up rights in that company’s Articles of Association, any sharesissued by GPGUKH in respect of options will be acquired automatically by GPG in exchange for Ordinary 5p shares in GPG,initially on a one-for-one basis.The middle market price of GPG’s shares at 31 December 2004 was 79.5p and the range during the year was 61.4p to 79.5p.ii)GPG (UK) Holdings plc – Convertible Subordinated Loan Notes31 December2004 31 December(or on retirement) 2003Sir Ron Brierley 1,966,789 1,966,789T J N Beyer (retired 30 September 2004) 1,554,705 1,554,705G J Cureton – –A I Gibbs 913,433 913,433B A Nixon 675 675Dr G H Weiss – –

66 GUINNESS PEAT GROUP PLC • ANNUAL REPORTIndependent Auditor’s ReportINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF GUINNESS PEAT GROUP PLCWe have audited the financial statements of Guinness Peat Group plc for the year ended 31 December 2004 which comprisethe consolidated profit and loss account, the balance sheets, the consolidated statement of total recognised gains and losses,the reconciliation of movements in shareholders’ funds, the consolidated cash flow statement, and the related notes 1 to 38.These financial statements have been prepared under the accounting policies set out therein. We have also audited theinformation in the part of the directors’ remuneration report that is described as having been audited.This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Ouraudit work has been undertaken so that we might state to the company’s members those matters we are required to state tothem in an auditors’ report and for no other purpose.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or forthe opinions we have formed.Respective responsibilities of directors and auditorsAs described in the statement of directors’ responsibilities, the company’s directors are responsible for the preparation of thefinancial statements in accordance with applicable United Kingdom law and accounting standards. They are also responsiblefor the preparation of the other information contained in the annual report including the directors’ remuneration report. Ourresponsibility is to audit the financial statements and the part of the directors’ remuneration report described as having beenaudited in accordance with relevant United Kingdom legal and regulatory requirements and auditing standards.We report to you our opinion as to whether the financial statements give a true and fair view and whether the financialstatements and the part of the directors’ remuneration report described as having been audited have been properly preparedin accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent withthe financial statements, if the company has not kept proper accounting records, if we have not received all the informationand explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactionswith the company and other members of the group is not disclosed.We review whether the corporate governance statement reflects the company’s compliance with the nine provisions of theJuly 2003 FRC-Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report ifit does not. We are not required to consider whether the board’s statements on internal control cover all risks and controls, orform an opinion on the effectiveness of the group’s corporate governance procedures or its risk and control procedures.We read the directors’ report and the other information contained in the annual report for the above year as described in thecontents section including the unaudited part of the directors’ remuneration report and consider the implications for our reportif we become aware of any apparent misstatements or material inconsistencies with the financial statements.Basis of audit opinionWe conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An auditincludes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and thepart of the directors’ remuneration report described as having been audited. It also includes an assessment of the significantestimates and judgements made by the directors in the preparation of the financial statements and of whether the accountingpolicies are appropriate to the circumstances of the company and the group, 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 and the part of thedirectors’ remuneration report described as having been audited are free from material misstatement, whether caused byfraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation ofinformation in the financial statements and the part of the directors’ remuneration report described as having been audited.OpinionIn our opinion:• the financial statements give a true and fair view of the state of affairs of the company and the group as at 31 December2004 and of the profit of the group for the year then ended; and• the financial statements and part of the directors’ remuneration report described as having been audited have beenproperly prepared in accordance with the Companies Act 1985.Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon8 April 2005

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 67Notice of Annual General MeetingNotice is hereby given that the 2005 Annual General Meeting of Guinness Peat Group plc (“the Company”) will be held at11am on 11 May 2005 at The Army and Navy Club, 36 Pall Mall, London SW1Y 5JW to consider and, if thought fit, to pass thefollowing resolutions which will be proposed as:Ordinary Resolutions1 To receive the directors’ report, auditor’s report and the financial statements for the year ended 31 December 2004.2 To declare a final dividend of 1 penny per share, payable in cash.3 To receive and approve the directors’ remuneration report, as set out in the 2004 Annual Report, for the year ended31 December 2004.4 To re-elect Tony Gibbs a director of the Company.5 To re-elect Blake Nixon a director of the Company.6 To re-appoint Deloitte & Touche LLP as auditor of the Company, to hold office until the conclusion of the next generalmeeting at which accounts are laid before the Company.7 To authorise the directors to fix the remuneration of the auditor.8 That the directors be and they are hereby generally and unconditionally authorised in accordance with Section 80 of theCompanies Act 1985 (“the Act”) to exercise all the powers of the Company to allot relevant securities (as defined in Section 80(2)of the Act) up to an aggregate maximum nominal amount of £20,025,040,provided that this authority shall expire on the fifthanniversary of the passing of this resolution,save that the Company shall be entitled to make offers or agreements before theexpiry of such authority which would or might require relevant securities to be allotted after such expiry,and the directors shallbe entitled to allot relevant securities pursuant to any such offer or agreement as if this authority had not expired; and allunexercised authorities previously granted to the directors to allot relevant securities save for the unexercised authorityconferred by Resolution 9 passed at the Company’s 2004 Annual General Meeting be and are hereby revoked.9 That, upon the recommendation of the directors, it is desirable to capitalise up to £4,410,413 being part of the amountstanding to the credit of the Other reserve of the Company and accordingly such amount be set free for distributionamong the holders of the ordinary shares of 5p of the Company (“ordinary shares”) whose names are entered on theregister of members at the close of business on the UK register of members or on the New Zealand or Australian branchregisters on 20 May 2005, in proportion to the number of such ordinary shares then held by them respectively, on the basisthat it be not paid in cash but be applied in paying up in full at par up to 88,208,247 new ordinary shares and that suchshares be allotted and distributed, credited as fully paid up, to and among the said holders of ordinary shares in theproportion of 1 new ordinary share for every 10 ordinary shares held by them, and that the directors be authorised anddirected to apply the said £4,410,413 and generally and unconditionally authorised to allot the said new ordinary sharesaccordingly on or prior to 31 December 2005 upon such terms that such new ordinary shares shall rank in all respects paripassu with such of the existing issued ordinary shares as are fully paid or credited as fully paid.Special Resolutions10 That the directors be and they are hereby empowered pursuant to Section 95 of the Act to allot equity securities (asdefined in Section 94 of the Act) for cash pursuant to the authority conferred by Resolution 8 above, as if Section 89(1)of the Act did not apply to any such allotment, provided that this power shall be limited to:(i) the allotment of equity securities in connection with a rights issue, open offer or other offer of securities in favour ofthe holders of ordinary shares on the register of members at such record date, as the directors of the Company maydetermine, in any or all jurisdictions where equity securities are listed on any recognised stock exchange, in favour ofordinary shareholders where the equity securities respectively attributable to the interests of the ordinaryshareholders are proportionate (as nearly as may be) to the respective numbers of ordinary shares held by them onthe record date of such allotment but subject to such exclusions or other arrangements as the directors may deemnecessary or expedient to deal with any treasury shares, fractional entitlements or the legal or practical problems inrespect of overseas holders or otherwise; and(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) to any person or persons of equity securities forcash up to an aggregate nominal value not exceeding £2,580,706,such power, unless renewed or otherwise varied by the Company in general meeting, shall expire upon the expiry of thegeneral authority conferred by Resolution 8 above. The Company may make an offer or agreement before this power hasexpired, which would or might require equity securities to be allotted after such expiry and the directors may allot equitysecurities pursuant to any such offer or agreement as if the authority conferred hereby had not expired. Any earlier powerof the directors to allot equity securities as aforesaid be and is hereby revoked.

68 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotice of Annual General Meeting – continued11 That the Company be generally and unconditionally authorised for the purpose of Section 166 of the Act to make marketpurchases (within the meaning of Section 163(3) of the Act) of ordinary shares in the capital of the Company provided that:i) the maximum number of ordinary shares hereby authorised to be acquired is 130,500,000;ii) the minimum price which may be paid for any such share is 5p;iii) the maximum price which may be paid for any such share is the amount equal to 105% of the average of the middlemarket quotations for an ordinary share in the Company as derived from the London Stock Exchange Daily Official Listfor the five business days immediately preceding the day on which such share is contracted to be purchased(exclusive of associated expenses);iv) the authority hereby conferred shall expire on 10 November 2006 or the date of the next Annual General Meeting ofthe Company whichever shall be the earlier;vi) the Company may contract to purchase its ordinary shares under the authority hereby conferred prior to the expiryof such authority which will or might be executed wholly or partly after the expiration of such authority, and maypurchase its ordinary shares in pursuance of any such contract.12 That:(a) pursuant to Article 123 of the Articles of Association of the Company, the directors be and they are hereby authorisedto offer those shareholders entitled to any dividend declared or payable prior to the beginning of the fifth annualgeneral meeting next following the date on which this resolution is passed the right to elect in lieu of the cashdividend to receive additional ordinary shares, credited as fully paid on the terms and subject to any conditions thatthe directors consider to be in the best interests of the Company and provided that no partial elections be permittedunless the directors in their absolute discretion think fit and provided that any earlier power of the directors to offershares in lieu of a cash dividend as aforesaid be and is hereby revoked;(b) pursuant to Article 123(f ) of the Articles of Association of the Company, the directors be and are hereby authorised tocapitalise out of the amount for the time being standing to the credit of any reserve or fund whether or not the sameis available for distribution, or any profits which could otherwise have been applied in paying dividends in cash, asthe directors may determine, a sum equal to the aggregate nominal amount of the additional ordinary shares to beallotted pursuant to elections made as aforesaid, and to apply such sum in paying up in full the appropriate number ofunissued ordinary shares in the Company and to allot such ordinary shares to the members of the Company who havevalidly so elected;(c) in the event that the middle market quotation of an ordinary share of the Company on The Official Daily List of theLondon Stock Exchange as at the latest reasonably practicable date prior to the issue of the shares described in (a)above as determined by the directors in their absolute discretion is below the middle market quotation of an ordinaryshare on the date on which the proposed scrip dividend issue is publicly announced, the directors be and they arehereby entitled to withdraw the offer to shareholders who have elected in lieu of the relevant cash dividend to receiveadditional ordinary shares, who will receive the relevant cash dividend instead.REGISTERED OFFICE:By order of the BoardFirst FloorRichard RussellTimes PlaceSecretary45 Pall Mall 8 April 2005London SW1Y 5GPRegistered Number: 103548

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 69Explanatory Note in respect of Resolutions 8 to 12a) Resolution 8Under section 80 of the Companies Act 1985 (“the Act”) the Directors are not permitted to allot shares (or otherrelevant securities) unless they are authorised to do so by the Company’s shareholders in general meeting.This resolution, if passed, renews and increases the Directors’ authority (given by shareholders at last year’s AnnualGeneral Meeting) to allot shares (and other relevant securities) for up to 5 years subject to the maximum amount setout in the resolution, and is consistent with the level commonly proposed by other UK listed companies.b) Resolution 9This resolution, if passed, enables the Directors to carry out the proposed 1:10 capitalisation (“bonus”) issue (and is insimilar terms to the authority given by shareholders at previous Annual General Meetings).c) Resolution 10This resolution is to enable the Directors to allot shares for cash without first offering them to existing shareholders inproportion to their existing shareholdings (which would otherwise be required under UK statutory pre-emptionrights contained in section 95 of the Act).This resolution, if passed, renews and increases the Directors’ authority (given by shareholders at last year’s AnnualGeneral Meeting) to allot shares (and other equity securities) for cash, in appropriate circumstances, for up to 5 yearssubject to the maximum amount set out in the resolution, and is consistent with the level commonly proposed byother UK listed companies.d) Resolution 11This resolution, if passed, renews and increases the authority (given by shareholders at last year’s Annual GeneralMeeting) to allow the Company to re-purchase up to 130,500,000 ordinary shares representing approximately 15%of the current total share capital of the Company in issue, and again the proposed level is consistent with thatcommonly adopted by other UK listed companies.e) Resolution 12This resolution, if passed, enables the Directors to offer a Scrip Dividend Alternative (“SDA”) without the need to seekshareholders’ approval on each occasion an SDA is proposed, for up to 5 years, in accordance with the provisions ofthe Company’s Articles of Association.

70 GUINNESS PEAT GROUP PLC • ANNUAL REPORTNotes to Notice of Meeting1 The venue for this year’s AGM is The Army and Navy Club, which is a private members’ club. Shareholders intending to attendthe AGM are requested to conform to the Club’s dress code.2 A member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and,on a poll,to vote instead of the member. A proxy need not be a member of the Company.A relevant form of proxy is enclosed.3 Forms of proxy and a power of attorney or other authority, if any, under which they are signed or a notarially certified copyof a power or authority should be sent to Computershare Investor Services PLC, PO Box BS13, The Pavilions, BridgwaterRoad, Bristol BS99 7DS (from UK registered members), Computershare Investor Services Limited, Private Bag 92119,Auckland 1020 (from New Zealand registered members) or Registries Limited, PO Box R67, Royal Exchange, Sydney, NSW1224 (from Australian registered members) so as to arrive not later than 48 hours before the time appointed for themeeting. Completion and return of the appropriate form of proxy enclosed with this Notice will not preclude a memberfrom attending and voting at the meeting in person should he find himself able to do so.4 The Chairman intends to vote any undirected proxies in favour of all the Resolutions set out in the Notice of the AGM.5 Copies of the service contracts of Graeme Cureton, Tony Gibbs, Blake Nixon and Gary Weiss will be available for inspectionat the offices of the Company at First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP during normal business hours anyweek day (Saturdays and public holidays excepted) from the date of this document until 11 May 2005 being the date of theAnnual General Meeting and at the venue of the AGM from 15 minutes before the start of the meeting until the end of themeeting.6 A summary of the proceedings at the Annual General Meeting of the Company will be made available upon request to anyshareholder applying to any one of the Company’s share registrars whose locations are set out on page 72 or to theSecretary, Guinness Peat Group plc, First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP.7 To have the right to attend and vote at the Annual General Meeting (and also for the purposes of calculating how manyvotes a person may cast), a person must have his/her name entered on the register of members by no later than 48 hours inadvance of the time of the meeting in the UK. Changes to entries on the register after this time shall be disregarded indetermining the rights of any person to attend or vote at the Annual General Meeting.

GUINNESS PEAT GROUP PLC • ANNUAL REPORT 71Guinness Peat Group plcUNITED KINGDOMFirst Floor, Times Place, 45 Pall Mall, London SW1Y 5GPTelephone: 020 7484 3370 Facsimile: 020 7925 0700www.gpgplc.comAUSTRALIAc/o PKF Chartered Accountants and Business AdvisersLevel 10, 1 Margaret Street, Sydney NSW 2000Telephone: 02 9251 4100 Facsimile: 02 9240 9821NEW ZEALANDc/o Computershare Investor Services LimitedPrivate Bag 92119, Auckland 1020Telephone: 09 488 8700 Facsimile: 09 488 8787Registered in England No. 103548LOCATION OF SHARE REGISTERSThe Company’s register of members is maintained in the UK with branch registers in Australia and New Zealand.Register enquiries may be addressed direct to the Company’s share registrars named below:Register Telephone and postal enquiries Inspection of RegisterUK Main Register:Computershare Investor PO Box 82, The Pavilions, Bridgwater Road PO Box 82, The PavilionsServices PLC Bristol BS99 7NH Bridgwater RoadTel: 0870 702 0000 Facsimile: 0870 703 6143 Bristol BS99 7NHAustralian Branch Register:Registries Ltd PO Box R67 Level 2, 28 Margaret StreetRoyal 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 RoadServices Limited Tel: 09 488 8777 Facsimile: 09 488 8787 TakapunaNorth Shore City