Guinness Peat Group plc

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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.
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Guinness Peat Group plc

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