Guinness Peat Group plc

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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.
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