Summary Directors'Report - Guinness Peat Group plc

Summary Directors'Report - Guinness Peat Group plc

GPGS U M M A R I S E DANNUAL REPORT2007Guinness Peat Group plc07

GUINNESS PEAT GROUP PLC1ContentsChairman’s Statement 2Financial Profile of Operations 6Summary of PrincipalQuoted Investments 7Board of Directors 8Summary Directors’ Report 8Summary Directors’Remuneration Report 10Summary ConsolidatedIncome Statement 12Summary ConsolidatedBalance Sheet 13Notes to Summarised Accounts 14Independent Auditor’s Statement 15Notice of Annual General Meeting 16Company and Registrars Addresses 20This summarised report is derived from the Company’s fullannual financial statements and directors’ report. Theindependent auditors’ report on the full annual financialstatements was unqualified (but contained an ‘emphasis ofmatter’ paragraph) and did not contain a statement underS.237(2) or (3) of the Companies Act 1985.The Annual General Meeting will be held on 13 May 2008 inLondon.The Notice of Annual General Meeting setting out thebusiness to be transacted and the necessary arrangements canbe found at the end of this booklet.The Companies (Summary Financial Statement) Regulations 1995The Summary Financial Statement on pages 10 to 14 does notcontain sufficient information to allow as full an understandingof the results and state of affairs of Guinness Peat Group plcand of the policies and arrangements concerning directors’remuneration as is provided by the full annual financialstatements and directors’ report. Shareholders who requiremore detailed information may elect to receive the full annualaccounts and directors’ report for 2007, or for future years, freeof charge by writing to the Company’s Share Registrars, theaddresses for which appear on page 20.

2 SUMMARISED ANNUAL REPORT 2007Chairman’s StatementRecord net profit in 2007. Shareholders’ funds increased to£951 million.The 2007 net profit of £129 millionis easily a record, eclipsing the 1999result of £112 million which largelyrelated to the sale of our Tyndallsubsidiary. The main componentsthis time are the sales of shares inAustralian Wealth Management(AWM) and Premier Investments(subsequent to Premier’s ownsuccessful sale of its Coles Groupholding). However, there arenumerous other plus and minusitems which are important to theoverall group result. Various dealsinvolving Green’s Foods andNationwide Accident RepairServices made useful contributionsand, of course, the Coats result wasalso important.The biggest negative was CapralAluminium which has obviouslybeen a big disappointment but,if we dare to say, there have beensigns of real improvement in recentmonths.In the Interim Report, we expressedhigh hopes for the second half but,in the event, it was not as good asanticipated. The EC decision inrelation to Coats was an unwelcomeand unexpected blow. Although wewere well aware of the uncertaintiesof the third and final unresolved ECissue, which we inherited as a 1990’slegacy in the acquisition of Coats,the administrative “fine” of C110million is totally disproportionateand irreconcilable with the facts asknown to us.Perversely, that is also the goodnews. We believe that this amountwill eventually be provedunsustainable, even to the extent ofa complete reversal of the initialfinding, when it is eventually subjectto higher levels of EC scrutiny.A substantial provision continues tobe held in Coats’ accounts but notfor the full amount of C110 million,which reflects the considered view

GUINNESS PEAT GROUP PLC3of the Board and its advisersregarding the ultimate outcome.Shareholders’ FundsOtherwise, Coats’ trading continuedthe improvement noted in previousreports. The industrial threadbusiness is now starting to show thebenefit of the massively expensiverestructuring exercise both beforeand after the GPG acquisition.1998 £167m1999 £284m2000 £291mCrafts was relatively weak in 2007but this is a very well establishedoperation and it is only a matter oftime before profits return to morenormal levels. Coats’ detailed resultsfor the year and Chairman’s Revieware available at or aprinted copy can be obtained fromany GPG office.2001 £333m2002 £380m2003 £442m20042005£561m£720m2006£876mCoats’ financial profileat 31 December 2007 £mFixed assets 272Intangibles 149Net current assets 144Total Assets 565Net debt (183)Provisions (100)Minorities (9)SHAREHOLDERS’ FUNDS £2732007 £951m■ The figures for Convertible Loan Notes are £19m (2000), £16m(2001), £12m (2002), £12m (2003), £6m (2004), £Nil (2005 andsubsequently).Figures for 2004 and later years are prepared in accordance withInternational Financial Reporting Standards (“IFRS”), whereasprevious figures have been prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice (“UK GAAP”).For comparability, the 2004 figures have been adjusted to reflectthe IAS 32/39 transitional adjustments of £120m.

4 SUMMARISED ANNUAL REPORT 2007Chairman’s StatementContinuedBalance sheetGPG remains in a strong financialposition as shown in the SimplifiedBalance Sheet below.As always, there is a high level ofliquidity, which is particularly reassuringin the present climate of renewedemphasis on corporate stability.Simplified Balance Sheet as at 31 December 2007 £mCash at Bank 261Debtors 43Coats 273Canberra Investment Corp 21Turners & Growers 53Capral 56Tower Australia 88Tower (NZ) 34Rattoon 34Green’s Foods 16Share portfolio 330Total Assets 1,209Creditors (42)Note Issues (216)SHAREHOLDERS’ FUNDS £951The unrealised portfolio surplus wasdown quite sharply at 31 December,partly due to the AWM and Premiersales and, also, the overall slide inshare prices which began in late2007 and has, so far, extended intothe current term.GPG is not unreceptive to thechanged environment becausethe vast majority of our portfolio isin long term holdings where we areconfident of the real value regardlessof market fluctuations. In fact, we arenow seeing buying opportunitieswhich have not been available forsome time past. The ultimateoutcome of the present marketturmoil should be actively favourablefor GPG.

GUINNESS PEAT GROUP PLC5Portfolio investments –unrealised surplus before tax £mUnrealised surplus as at31 December 2006 192Realised during 2007 (129)63Net increase during 2007 34Balance at31 December 2007 £97Compound growth in GPG’sNet Asset Value per shareComparison with total return onvarious indices£12£1117.9%The above table does not includeinvestments in subsidiary andassociated companies (CanberraInvestment Corp, Capral,Maryborough Sugar, Rattoon,Tower Australia, Turners & Growersand Autologic) which are carried atbook value and would otherwisereduce the surplus by £3 million.£10£9£8£7£6£513.0%10.9%Capital and dividendThe Board has declared the standard1p dividend and 1 for 10 bonus issue(the 15th in succession, multiplyingan original 1990 holding 4.2 times).The share election scheme isavailable and will operate in lieu ofa cash dividend at the rate of 1 newshare for each 60 already held.Outlook2008 will be a significant year forGPG in developing the challenge ofincremental value realisation referredto in last year’s Annual Report.Ron BrierleyChairman28 February 2008£4£3£2£1%GPG£11.868.7%FTSE£3.48ASX£6.28Growth in value of £1 investedover the period 1 January 1993to 31 December 2007Compound annual growth rateNZX£4.74GPG = Increase in NAV per GPG Ordinary Share as adjustedfor stock events since 1 January 1993.Total return indices:FTSE = London Stock Exchange FTSE 100ASX = Australian Securities Exchange All OrdinariesNZX = New Zealand Stock Exchange NZX-50(pre-January 2004 NZX Top 40)

6 SUMMARISED ANNUAL REPORT 2007Financial Profile of OperationsConsolidated figuresConsolidated figuresyear ended 31 December 2007 at 31 December 2007GPG holding Net profit/(loss) Shareholders’31 December before minority Group fundsOperating Subsidiaries2007 interests turnover Total assets (GPG share)% £m £m £m £mUNITED KINGDOMCoats Group Ltd 100.0% 33 840 859 273Thread manufacturerNEW ZEALANDTurners & Growers Ltd 63.2% 5 189 125 53Fresh produce wholesalerAUSTRALIACanberra Investment Corporation Ltd 68.0% 2 15 55 21Property developerCapral Aluminium Ltd 53.1% (17) 236 194 56Aluminium extrusionsTAFMO Ltd 56.0% (4) 2 7 3Electronic products and servicesUNITED STATES OF AMERICAStaveley Inc. 100.0% (1)* 13 10† 7†Testing services* Excluding Group interest receivable from GPG of £2 million.†Includes cash of £5 million.GPGshare ofincome/(loss) GPG LatestGPG holding year ended book value at published31 December 31 December 31 December shareholders’Significant Associated Undertakings2007 2007 2007 fundsand Joint Ventures % £m £m £mUNITED KINGDOMAutologic Holdings plc 21.7% 1 13 46AUSTRALIARattoon Holdings Ltd 44.4% 5 34 88The Maryborough Sugar Factory Ltd 27.1% (1) 6 16Tower Australia Group Ltd 26.9% 5 88 232Green’s General Foods Pty Ltd 72.5% 2 16 **Australian Country Spinners Ltd 50.0% (3) (2) 6** Not available

GUINNESS PEAT GROUP PLC7Summary of Principal QuotedInvestmentsDisclosed Shareholdings as at 14 March 2008ShareholdingSUBSIDIARY UNDERTAKINGSCanberra Investment Corporation Ltd 68.0%Turners & Growers Ltd 65.1%Capral Aluminium Ltd 53.1%OTHER SHAREHOLDINGSUnited KingdomNewbury Racecourse plc 29.0%Autologic Holdings plc 21.5%Young & Co.’s Brewery P.L.C. (‘A’ Shares) 10.2%Ashley House plc 9.5%Dawson International PLC 6.8%Nationwide Accident Repair Services plc 5.6%AustraliaRattoon Holdings Ltd 44.4%Tower Australia Group Ltd 29.9%Gosford Quarry Holdings Ltd 29.2%The Maryborough Sugar Factory Ltd 27.3%Tooth & Co. Ltd 24.9%eServGlobal Ltd 18.7%Tandou Ltd 17.0%Intellect Holdings Ltd 15.7%MMC Contrarian Ltd 14.1%MYOB Ltd 13.6%Farm Pride Foods Ltd 13.2%NSX Ltd 9.9%Capilano Honey Ltd 9.4%AV Jennings Ltd 9.1%Symex Holdings 8.8%Metals X Ltd 8.0%GME Resources Ltd 5.6%New ZealandTower Ltd 19.8%Turners Auctions Ltd 19.4%FranceDolfus Mieg et Cie 24.3%SingaporePertama Holdings Ltd 14.0%United States of AmericaSanta Fe Financial Corporation 6.4%CostMarket valueAnalysis of Total Holdings in above Companies as at 14 March 2008 £m £mSubsidiary undertakings 113 106Associated undertakings 99 135Other 137 174TOTAL 349 415

8 SUMMARISED ANNUAL REPORT 2007Board of DirectorsSir Ron Brierley, ChairmanSir Ron Brierley (70) implemented his investmentapproach successfully having founded BrierleyInvestments Ltd in 1961.Following his appointment tothe Board of Guinness Peat Group plc in 1990, Sir Ronhas continued to apply and develop this approachwithin the Company.Chairman of the Audit Committee and the Remuneration CommitteeG. J. Cureton, Executive DirectorGraeme Cureton (63) has broad experience in theAustralian business scene. He is chairman of RattoonHoldings Ltd and a director of Capral Aluminium Ltd.A. I. Gibbs, Executive DirectorTony Gibbs (60) has been involved with publiccompany boards for many years. His experienceincludes mergers, acquisitions and divestments.He is chairman of Tower Ltd, Turners & Growers Ltdand Staveley Inc., and a director of Coats plc.B. A. Nixon, Executive DirectorBlake Nixon (47) has wide corporate experience bothin the UK and Australia. He is a director of Coats plcand Staveley Inc.Member of the Audit Committee and the Remuneration CommitteeDr G. H. Weiss, Executive DirectorGary Weiss (54) has considerable experience in theinternational business scene. He is chairman ofCoats plc and a director of various public companiesincluding Capral Aluminium Ltd, Tower AustraliaGroup Ltd and Westfield Group.Member of the Remuneration CommitteeSummary Directors’ ReportThe directors present their annual report andaudited financial statements for the year ended31 December 2007.Business ReviewThe Company is a strategic investment holdingcompany. Comments on the Group’s activities during2007 and also on the outlook for 2008 are set out inthe Chairman’s Statement on pages 2 to 5.The Group’s major operating subsidiaries (beingCanberra Investment Corporation, Coats, CapralAluminium and Turners & Growers) produce theirown Annual Reports in which can be found reportson their business operations.The Company’s key performance indicators (“KPIs”),comprising the growth in Shareholders’ Funds since1998 and the compound growth in GPG’s Net AssetValue per share, appear in the charts within theChairman’s Statement on pages 3 and 5. In addition,Net Asset Backing per share is shown on page 13.Significant EventsIn addition to the matters mentioned in theChairman’s Statement, during the year GPG disposedin the UK of a substantial part of its interest inNationwide Accident Repair Services plc which, as aresult, ceased to be an associated undertaking.Green’s Foods Limited in Australia also ceased to bean associated undertaking during the year followingits disposal. However, as a consequence of thistransaction, GPG acquired a joint venture interest inGreen’s General Foods Pty Ltd.Results and DividendsThe results of the Group are shown on page 12. Aninterim dividend of 1.0p per Ordinary Share for theyear ended 31 December 2007 has been declared,payable on 19 May 2008, and this represents the totalpayable for the year. In respect of the year ended31 December 2006, GPG paid an interim dividend of0.91p, as adjusted for the 2007 Capitalisation Issue,in May 2007. That was the only dividend for that year.

GUINNESS PEAT GROUP PLC9Summary Directors’ ReportA scrip dividend alternative of 1 new Ordinary Sharefor every 60 held in lieu of the interim cash dividendis being offered for the year ended 31 December 2007.Share CapitalDetails of the Company’s authorised and issued sharecapital, together with details of the movements in theCompany’s issued share capital during the year, areset out in note 2 on page 14.At the 2008 Annual General Meeting (“the 2008AGM”), separate resolutions will be put to shareholdersrelating to the share capital of the Company.The resolutions broadly mirror resolutions approvedby shareholders in 2007 and relate to the issue ofshares in certain circumstances (sections 80 and 95of the Companies Act 1985), the proposedCapitalisation Issue of 1 new Ordinary Share for every10 shares held and authorities for the directors tobuy back the Company’s shares on market and tooffer shares in lieu of a cash dividend. An explanatorynote giving a further explanation for Resolutions 8-12inclusive appears on page 18.The total number of options that are outstandingunder the Group’s share option schemes is 93,160,407.These options equate to 7.31% of the current issuedshare capital. If the full authority to purchase onmarket 14.99% of its issued Ordinary Shares onmarket were to be exercised by the Company, theseoptions would then represent 8.60% of the reducedissued share capital.GPG’s shares are listed on the London and NewZealand Stock Exchanges and on the AustralianSecurities Exchange. Addresses where the main andbranch share registers are maintained in thecountries where the Company’s shares are listed areset out on page 20.Changes to the Company’s Articles ofAssociation (“the Articles”)In accordance with the Company’s existing Articlesand following changes in UK legislation andregulation including the 2006 Companies Act, it isproposed that the Articles be amended by SpecialResolution at the 2008 AGM to make provision forthe following matters:• to allow the Board to deal with directors’ potentialconflicts of interest or duties, particularly wherethat director at the request of GPG takes anappointment on the board of a company in whichthe Group invests;• to make provisions for communication withshareholders by electronic means;• to update the indemnification arrangements inrespect of directors; and• to delete the existing Article requiring a directorover 70 standing for re-election at the AGM toprovide notice of his age (to conform with UK agediscrimination legislation).The above proposals are all in line with changeswhich have been, or which are proposed to be,adopted by many UK listed public limited companies.More extensive details and particulars will be set outin the Circular to shareholders described below.Circular to ShareholdersA Circular dealing with resolutions extending by afurther year the current 5-year authority granted atthe 2007 AGM allowing the directors to operate ascrip dividend alternative in lieu of the cash dividendwhenever such a dividend is paid, and dealing withthe proposed 2008 Capitalisation Issue, anddescribing the proposed changes to the Company’sArticles of Association, is being sent to shareholderswith this Summarised Report.Substantial InterestsNotification has been received by the Company and ismaintained in its Register of Substantial Share Interests,that as at 20 March 2008 Sir Ron Brierley held40,498,983 Ordinary Shares, 3.18% of GPG’s issuedshare capital.In addition, the Company has received notificationunder the Disclosure and Transparency Rules fromFranklin Resources Inc. and BlackRock Inc. that, as at20 March 2008, they held 63,790,498 Ordinary Shares(5.01% of GPG’s issued share capital) and 47,615,944(3.74%) respectively.DirectorsThe directors who all served throughout the year arethose whose details appear on page 8.AuditorA resolution to re-appoint Deloitte & Touche LLP asauditor will be proposed at the 2008 AGM.By order of the BoardRichard RussellSecretary20 March 2008

10 SUMMARISED ANNUAL REPORT 2007Summary Directors’ RemunerationReportReport on Directors’ RemunerationThe 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. These agreements provide for a rolling 12 months’notice period to be given by the director and are terminable by the Company on giving 18 months’ notice. In the case of earlytermination by the Company, the director would receive compensation based on the unexpired portion of his notice period. Inthe event of a change in control, the agreements entitle each director to compensation of two years’ remuneration if he electsto leave within 6 months. (Similar arrangements, on reduced periods, are in place for certain senior officers of the Company).GPG’s Remuneration Committee considers that it is necessary to offer such rolling contracts and notice periods in order toretain, motivate and in the future recruit individuals of the right calibre and to ensure continuity of the Group’s management.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; and• 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 adjusted IFRS opening shareholders’ funds,as further adjusted for share issues during the year. If this target is achieved a bonus pool is established by theRemuneration Committee with reference to profit and the return on shareholders’ funds. There is no ceiling on the bonusespayable to directors. This scheme is operated in order to remain competitive, having regard to performance bonuses paidby international investment funds and companies comparable to GPG.Details 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 years ended 31 December 2007 and 31 December 2006.Sir Ron Brierley G J Cureton A I Gibbs B A Nixon Dr G H Weiss£ £ £ £ £Remuneration package – 462,807 547,719 516,418 607,439Pension contributions – (45,468) – (19,800) (49,402)Bonus 150,000 1,364,859 1,708,574 1,708,574 2,053,289TOTAL PAYMENTS IN 2007 150,000 1,782,198 2,256,293 2,205,192 2,611,326Leave accrual for 2007 – 43,256 118,550 91,376 127,570TOTAL 2007 150,000 1,825,454 2,374,843 2,296,568 2,738,896Remuneration package – 393,068 474,813 480,389 515,902Pension contributions – (41,475) – (19,800) (48,327)TOTAL PAYMENTS IN 2006 – 351,593 474,813 460,589 467,575Leave accrual for 2006 – 25,202 (1,039) 11,411 6,003TOTAL 2006 – 376,795 473,774 472,000 473,578Gains on Options 2007 – 268,080 312,174 325,004 268,080Gains on Options 2006 383,987 922,714 688,346 383,967 387,066Pension Contributions 2007 – 45,468 – 19,800 49,402Pension Contributions 2006 – 41,475 – 19,800 48,327The aggregate emoluments and gains on share options exercised for the highest paid director were £3,006,976 (2006:£1,299,509).Contributions paid to money purchase schemes in respect of the highest paid director were £49,402 (2006: £41,475).

GUINNESS PEAT GROUP PLC11Holiday and Long Service LeaveIt is the policy of the Remuneration Committee that all executive directors should be contractually entitled to Long ServiceLeave in accordance with the Long Service Leave Act 1955 of New South Wales, Australia, and to holiday accruals wheredirectors have taken less holiday than their contractual entitlements. The following table shows the amounts accrued for theyear ended 31 December 2007 and for prior periods. No payments have been made to directors.ClosingTotalbalancePrior accrued 31 Decemberyears in 2007 2007£ £ £G J Cureton 340,245 43,256 383,501A I Gibbs 617,890 118,550 736,440B A Nixon 656,386 91,376 747,762Dr G H Weiss 635,724 127,570 763,2942,250,245 380,752 2,630,997The movement during 2007 also includes an element of foreign exchange differences where salaries and leave entitlementsare calculated and accrued in foreign currencies and translated back into sterling.Notesi) Overseas directors’ emoluments, which are paid in local currency, have been translated at the relevant year-end exchange rate.ii) Share options are awarded to directors in accordance with the terms of the Group’s share option schemes, the terms of whichhave been approved by shareholders. The Company does not operate any other long term incentive schemes. It is felt that thegrant of options is more appropriate since this contains an element of reward for individual achievement together with anincentive allied to the Group’s longer term performance. The approach also aligns management’s interests with those ofshareholders. Awards are made in most years in the context of the Group’s recent trading performance, the individual’scontribution to that performance and his expected performance and contribution in the future. In addition, awards arecalculated having regard to the individual’s existing holdings. Directors are not required to hold their shares for a further periodfollowing exercise of their options.iii) All executive directors are entitled to direct that a variable amount of their total salary, as determined by the RemunerationCommittee each year, be paid by way of contribution to any pension arrangement which they may establish for the purpose.iv) All pension contributions are in respect of defined contribution arrangements.v) Of their total salary, as determined by the Remuneration Committee each year, directors are entitled to direct that a variableamount be paid in a form other than Where directors are required by GPG to act as a director of an investee company outside the Parent Group, it is the Group’spolicy that director’s fees from such entities are paid directly to the Group.vii) 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.viii) An element of the bonus payable to B A Nixon is conditional upon him still being employed on 15 April 2008.Performance Graph (Unaudited) – Total Shareholder Return5-year Comparison of GPG shares against FTSE All-Share Equity Investment Instruments Index350300250200150100500Jan-03May-03Sep-03Jan-04May-04Sep-04Jan-05May-05Sep-05Jan-06May-06Sep-06Jan-07May-07Sep-07Jan-08GPGFTSE ASX Eqy InvSource: Bloomberg

12 SUMMARISED ANNUAL REPORT 2007Summary Consolidated IncomeStatementYear ended 31 December 2007 2006£m £mContinuing operationsRevenue 1,319 1,356Cost of sales (911) (956)Gross profit 408 400Profit on disposal of investments and other net investment income 145 45Distribution costs (163) (177)Administrative expenses (235) (196)Operating profit 155 72Share of loss of joint ventures (3) –Share of profit/(loss) of associated undertakings 11 (1)Profit on sale of business – continuing operations 25 5Finance costs (net) (38) (40)Profit before taxation from continuing operations 150 36Tax on profit from continuing operations (32) (12)Profit for the year from continuing operations 118 24Discontinued operationsGain on discontinued operations 8 10PROFIT FOR THE YEAR 126 34Attributable to:EQUITY HOLDERS OF THE PARENT 129 36Minority interests (3) (2)126 34Earnings per Ordinary Share from continuing and discontinued operations:Basic 10.21p 2.89pDiluted 8.86p 2.54pEarnings per Ordinary Share from continuing operations:Basic 9.60p 2.08pDiluted 8.38p 1.84p

GUINNESS PEAT GROUP PLC13Summary Consolidated Balance Sheet31 December 2007 2006NON-CURRENT ASSETS£m £mIntangible assets 204 198Property, plant and equipment 414 391Non-current investments 522 556Other non-current assets 64 621,204 1,207CURRENT ASSETSInventories 227 216Trade and other receivables 254 238Cash and cash equivalents 318 254Other current assets 17 22816 730Non-current assets classified as held for sale 5 3TOTAL ASSETS 2,025 1,940CURRENT LIABILITIESTrade and other payables 294 254Capital Notes 83 –Other borrowings 94 123Other current liabilities 98 96569 473NET CURRENT ASSETS 247 257NON-CURRENT LIABILITIESTrade and other payables 15 21Capital notes 133 201Other borrowings 168 150Retirement benefit obligations:Funded schemes 1 14Unfunded schemes 51 58Other non-current liabilities 43 55411 499TOTAL LIABILITIES 980 972NET ASSETS 1,045 968EQUITY SHAREHOLDERS’ FUNDS 951 876Minority interests 94 92Total equity 1,045 968Net asset backing per share 74.63p 69.49p**The net asset backing per share at December 2006 has been adjusted for the 2007 Capitalisation Issue.Blake Nixon, DirectorApproved by the Board on 20 March 2008

14 SUMMARISED ANNUAL REPORT 2007Notes to Summarised Accounts1. Investments31 December 2007 2006£m £mNON-CURRENT INVESTMENTSListed investments 315 409Unlisted investments 13 8328 417Interests in associated undertakings 149 122Interests in joint ventures 45 17TOTAL NON-CURRENT INVESTMENTS 522 556CURRENT INVESTMENTSListed investments 12 19TOTAL CURRENT INVESTMENTS 12 19The listed investments are all quoted on recognised stock exchanges.2. Share CapitalNumber ofsharesDuring the year, the movements in the share capital were as follows:Ordinary Shares of 5p each of Guinness Peat Group plc at 1 January 2007 1,146,182,605Exercises of options 4,194,463Scrip dividend 8,818,240Capitalisation issue 115,599,868Ordinary Shares of 5p each of Guinness Peat Group plc at 31 December 2007 1,274,795,176All the shares are fully paid.The Company’s authorised share capital is 6,000,000,000 Ordinary Shares of 5p each.3. ProvisionsIn September 2007, the European Commission concluded its investigation into European fasteners – the last part outstandingof its general investigation into thread and haberdashery markets which began in 2001. It imposed fines against severalproducers, including two fines against the Coats plc Group (“Coats”) of c12.2 million and c110.3 million. Following legaladvice, Coats has determined not to appeal the c12.2 million fine, which was paid in December 2007. The c110.3 million fineis in respect of the Commission’s allegation of a market sharing agreement in the European haberdashery market. Coatstotally rejects this allegation, and is vigorously contesting the Commission’s decision in an appeal which has been lodged withthe Court of First Instance in Luxembourg.As stated in previous years, the Group remains of the view that any anticipated eventual payment of the remaining fines isadequately covered by existing provisions.

GUINNESS PEAT GROUP PLC15Independent Auditors’ Statement to theMembers of Guinness Peat Group plcAUDITORS’ STATEMENTWe have examined the summary financial statement which comprises the summary directors’ remuneration report, thesummary consolidated income statement, summary consolidated balance sheet, and notes 1 to 3 to the summary financialstatement.This report is made solely to the company’s members, as a body, in accordance with section 251 of the Companies Act 1985.Our 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,for our audit report, or for the opinions we have formed.Respective responsibilities of directors and auditorsThe directors are responsible for preparing the summarised annual report in accordance with United Kingdom law.Our responsibility is to report to you our opinion on the consistency of the summary financial statement within thesummarised annual report with the full annual accounts, the directors’ report and the directors’ remuneration report, and itscompliance with the relevant requirements of section 251 of the Companies Act 1985 and the regulations made thereunder.We also read the other information contained in the summarised annual report as described in the contents section, andconsider the implications for our report if we become aware of any apparent misstatements or material inconsistencies withthe summary financial statement.Basis of opinionWe conducted our work in accordance with bulletin 1999/6 The Auditors’ Statement on the Summary Financial Statementissued by the Auditing Practices Board for use in the United Kingdom. Our report on the company’s full annual financialstatements describes the basis of our audit opinion on those financial statements.OpinionIn our opinion, the summary financial statement is consistent with the full annual financial statements, the directors’ reportand the directors’ remuneration report of Guinness Peat Group plc for the year ended 31 December 2007 and complies withthe applicable requirements of section 251 of the Companies Act 1985, and the regulations made thereunder.Emphasis of matter – uncertainty relating to the amount of a potential liability arising from a European CommissionInvestigationOur report on the Group’s full annual financial statements was not qualified but included an emphasis of matter paragraphrelating to the European Commission competition investigation into alleged market sharing agreements within the Europeanhaberdashery market. Further details relating to this matter are set out in Note 3 to the summary financial statement.Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon20 March 2008

16 SUMMARISED ANNUAL REPORT 2007Notice of Annual General MeetingNotice is hereby given that the 2008 Annual General Meeting of Guinness Peat Group plc (“the Company”) will be held at11.00a.m. on 13 May 2008 at The Army and Navy Club, 36 Pall Mall, London SW1Y 5JW to consider and, if thought fit, to passthe following resolutions of which resolutions 1-6 and 8-10 will be proposed as ordinary resolutions and resolutions 7, 11and 12 will be proposed as special resolutions:1 To receive the directors’ report, auditor’s report and the financial statements for the year ended 31 December 2007.2 To receive and approve the directors’ remuneration report, as set out in the 2007 Annual Report, for the year ended31 December 2007.3 To re-elect Dr. G.H. Weiss a director of the Company.4 To re-elect B.A. Nixon a director of the Company.5 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.6 To authorise the directors to fix the remuneration of the auditor.7 That the Articles of Association contained in the document produced to the meeting and signed by the Chairman for thepurposes of identification be approved and adopted as the new Articles of Association of the Company in substitutionfor, and to the exclusion of, the existing Articles of Association, with effect from the conclusion of the 2008 AnnualGeneral Meeting.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 inSection 80(2) of the Act) up to an aggregate maximum nominal amount of £28,884,155, provided that this authority shallexpire on the fifth anniversary of the passing of this resolution, save that the Company shall be entitled to make offers oragreements before the expiry of such authority which would or might require relevant securities to be allotted after suchexpiry and the directors shall be entitled to allot relevant securities pursuant to any such offer or agreement as if thisauthority had not expired; and all unexercised authorities previously granted to the directors to allot relevant securitiessave for the unexercised authority conferred by Resolution 9 passed at the Company’s 2004 Annual General Meeting beand are hereby revoked.9 That, upon the recommendation of the directors, it is desirable to capitalise up to £6,480,857 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 15 June 2008, in proportion to the number of such ordinary shares then held by them respectively, on thebasis that it be not paid in cash but be applied in paying up in full at par up to 129,617,144 new ordinary shares and thatsuch shares 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 £6,480,857 and generally and unconditionally authorised to allot the said new ordinary sharesaccordingly on or prior to 31 December 2008 upon such terms that such new ordinary shares shall rank in all respectspari passu with such of the existing issued ordinary shares as are fully paid or credited as fully paid.10 That:(i) pursuant to Article 123 of the Articles of Association of the Company, the directors be and they are herebyauthorised to offer those shareholders entitled to any dividend declared or payable prior to the beginning of thefifth annual general meeting next following the date on which this resolution is passed the right to elect in lieu ofthe cash dividend to receive additional ordinary shares, credited as fully paid on the terms and subject to anyconditions that the directors consider to be in the best interests of the Company and provided that any earlier powerof the directors to offer shares in lieu of a cash dividend as aforesaid be and is hereby revoked; and(ii)pursuant to Article 123(f ) of the Articles of Association of the Company, the directors be and are hereby authorisedto capitalise out of the amount for the time being standing to the credit of any reserve or fund whether or not thesame is available for distribution, or any profits which could otherwise have been applied in paying dividends incash, as the directors may determine, a sum equal to the aggregate nominal amount of the additional ordinaryshares to be allotted pursuant to elections made as aforesaid, and to apply such sum in paying up in full theappropriate number of unissued ordinary shares in the Company and to allot such ordinary shares to the membersof the Company who have validly so elected; and

GUINNESS PEAT GROUP PLC17(iii) 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 (i)above as determined by the directors in their absolute discretion is below the middle market quotation of anordinary share on the date on which the proposed scrip dividend issue is publicly announced, the directors be andthey are hereby entitled to withdraw the offer to shareholders who have elected in lieu of the relevant cash dividendto receive additional ordinary shares, and they will receive the relevant cash dividend instead.11 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 matters 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 £3,564,147,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 earlierpower of the directors to allot equity securities as aforesaid be and is hereby revoked.12 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 191,091,796; and(ii) the minimum price which may be paid for any such share is 5p; and(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); and(iv) the authority hereby conferred shall expire on 13 November 2009 or the date of the next Annual General Meeting ofthe Company whichever shall be the earlier; and(v)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.REGISTERED OFFICE:By order of the BoardFirst FloorRichard RussellTimes PlaceSecretary45 Pall Mall 20 March 2008London SW1Y 5GPRegistered Number: 103548For further information, see the Notes to the Notice of Meeting on page 19.

18 SUMMARISED ANNUAL REPORT 2007Notice of Annual General Meeting – continuedExplanatory 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 such as rights to subscribe for, or convert securities into, GPG ordinary shares) unless they areauthorised 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 the 2007 AGM)to allot shares and other relevant securities for up to 5 years subject to the maximum amount set out in theresolution, and is consistent with the level commonly proposed by other UK listed companies.The figure of £28,884,155 is calculated by reference to one-third of the issued share capital after making provisionfor maximum take-up of the Scrip Dividend Alternative, the section 95 authority granted by shareholders underResolution 10 at the 2007 AGM, adjusting for the 1:10 Capitalisation Issue proposed under Resolution 9 at the2008 AGM and assuming the exercise by option holders of all extant share options expiring before 31 December 2008.b) Resolution 9This resolution, if passed, enables the Directors to carry out the proposed 1:10 capitalisation (“bonus”) issue inrespect of all those shares issued and registered on the Company’s share registers on the relevant Record Date. It isin similar terms to the authority given by shareholders at previous annual general meetings.c) Resolution 10In accordance with the provisions of the Company’s Articles of Association, this resolution, if passed, enables theDirectors for up to 5 years to offer a Scrip Dividend Alternative (“SDA”) without the need to seek shareholders’approval on each occasion an SDA is proposed. It extends by approximately one year the 5-year authority grantedby shareholders in 2007.d) Resolution 11This resolution is to enable the Directors to allot shares either for a rights issue to existing shareholders or (up to thespecified amount) for cash without first offering them to existing shareholders exactly in proportion to theirexisting shareholdings (which would otherwise be required under UK statutory pre-emption rights contained insection 95 of the Act).This resolution, if passed, renews and increases the Directors’ authority (given by shareholders at the 2007 AGM) forup to 5 years to allot shares and other equity securities for cash, in appropriate circumstances, subject to themaximum amount set out in the resolution, and is consistent with the level commonly proposed by other UK listedcompanies.The maximum amount is calculated by reference to the current issued share capital and includes the maximumtake-up of the Scrip Dividend Alternative, the 1:10 Capitalisation Issue proposed under Resolution 9 at the 2008AGM, and the section 95 authority granted by shareholders at last year’s AGM, and assumes the exercise by optionholders of all extant share options expiring before 31 December 2008.e) Resolution 12This resolution, if passed, renews and increases the authority (given by shareholders at the 2007 AGM) to allow theCompany to re-purchase up to 191,091,796 ordinary shares representing approximately 15% of the current totalissued share capital of the Company and again the proposed level is consistent with that commonly adopted byother UK listed companies.

GUINNESS PEAT GROUP PLC19Notes to Notice of Annual General Meeting1 The venue for the 2008 AGM is The Army and Navy Club, which is a private members’ club. Shareholders intending toattend the 2008 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 toattend and, on a poll, to vote instead of the member. A member can appoint more than one proxy in relation to themeeting, provided that each proxy is appointed to exercise the rights attaching to different shares. A proxy need not be amember 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, The Pavilions, Bridgwater Road, BristolBS13 8FB (from UK registered members), Computershare Investor Services Limited, Private Bag 92119, Auckland 1020 (fromNew Zealand registered members) or Registries Limited, PO Box R67, Royal Exchange, Sydney, NSW 1224 (from Australianregistered members) so as to arrive not later than 11a.m. (local time) on Friday 9 May 2008. Completion and return ofthe appropriate form of proxy enclosed with this Notice will not preclude a member from attending and voting at themeeting in person should he find himself/herself able to do so.4 The Chairman intends to vote any undirected proxies given to him in favour of all the Resolutions set out in the Noticeof the 2008 AGM.5 Copies of the service contracts and directors’ indemnities in favour of Graeme Cureton, Tony Gibbs, Blake Nixon and GaryWeiss will be available for inspection at the offices of the Company at First Floor, Times Place, 45 Pall Mall, London SW1Y5GP during normal business hours any week day (Saturdays and public holidays excepted) from the date of thisdocument until 13 May 2008 being the date of the Annual General Meeting and at the venue of the 2008 AGM from15 minutes before the start of the meeting until the end of the meeting.6 A summary of the proceedings at the 2008 AGM will be made available upon request to any shareholder applying to anyone of the Company’s share registrars whose locations are set out below or to the Company Secretary, Guinness PeatGroup plc, First Floor, Times Place, 45 Pall Mall, London SW1Y 5GP.7 To have the right to attend and vote at the 2008 AGM (and also for the purposes of calculating how many votes a personmay cast) pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001, a person must have his/hername entered on the register of members by no later than 11a.m. (UK time) on the date two days prior to the date of themeeting or any adjourned meeting. Changes to entries on the register after this time shall be disregarded in determiningthe rights of any person to attend or vote at the meeting or adjourned meeting.8 As at the date of this Annual Report, the Company has 1,274,795,176 Ordinary Shares in issue, carrying one vote each.Therefore the total voting rights in the Company are 1,274,795,176.9 In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meetingso that (i) if a corporate shareholder has appointed the Chairman of the meeting as its corporate representative withinstructions to vote on a poll in accordance with the directions of all of the other corporate representatives for thatshareholder at the meeting, then on a poll those corporate representatives will give voting directions to the Chairmanand the Chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and(ii) if more than one corporate representative for the same corporate shareholder attends the meeting but the corporateshareholder has not appointed the Chairman of the meeting as its corporate representative, a designated corporaterepresentative will be nominated, from those corporate representatives who attend, who will vote on a poll and the othercorporate representatives will give voting directions to that designated corporate representative.10 A copy of this notice has been sent for information only to persons who have been nominated by a member to enjoyinformation rights under section 146 of the Companies Act 2006 (a “Nominated Person”). The rights to appoint a proxycannot be exercised by a Nominated Person: they can only be exercised by the member.

20 SUMMARISED ANNUAL REPORT 2007Company & Registrars AddressesUNITED KINGDOMFirst Floor, Times Place, 45 Pall Mall, London SW1Y 5GPTel: 020 7484 3370 Facsimile: 020 7925 0700www.gpgplc.comAUSTRALIAc/o PKF Chartered Accountants and Business AdvisersLevel 10, 1 Margaret Street, Sydney NSW 2000Tel: 02 9251 4100 Facsimile: 02 9240 9821NEW ZEALANDc/o Computershare Investor Services LimitedPrivate Bag 92119, Auckland 1020Tel: 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, The Pavilions,Services PLC Bristol BS99 7NH Bridgwater Road,Tel: 0870 707 1022 Facsimile: 0870 703 6143Bristol BS99 7NHAustralian Branch Register:Registries Ltd PO Box R67, Level 7, 207 Kent Street,Royal Exchange, Sydney NSW 1224 Sydney NSW 2000Tel: 02 9290 9600 Facsimile: 02 9279 0664New Zealand Branch Register:Computershare Investor Private Bag 92119, Auckland 1020 Level 2, 159 Hurstmere Road,Services Limited Tel: 09 488 8777 Facsimile: 09 488 8787 Takapuna,North Shore City 0622

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