KEY POINTS:
Investors in Sir Ron Brierley's investment company Guinness Peat Group punished the company's share price yesterday after the firm warned its 2008 year had been "very unsatisfactory".
The UK-based company, which is listed in London, Australia and New Zealand, dropped 5.8 per cent as its shares fell 6c to 98c a share on the NZX.
Chairman Sir Ron said in a statement the company had been forced to write down a number of investments as a result of the global financial crisis and while he expected many to recover some had to be accepted as a "permanent loss".
The writedowns had been signalled in the interim results released in August but since then the economic situation had become worse.
Sir Ron also warned the 2008 profit for its threadmaker business Coats would be down.
"Our principal operating subsidiary Coats has also been affected by the economic downturn and 2008 profit will be less than originally anticipated." Coats makes up around 40 per cent of GPG's investments.
New Zealand director Tony Gibbs said while further write-downs were possible the announcement had not been designed to prepare investors for bad news.
"This is as we saw things on December 22. Our annual accounts aren't even completed yet. All we know is we had a very bad first half year and since the first half of the year the world has turned purple.
"We just prepared a statement on a full and frank basis."
Gibbs said GPG had taken the unusual step "because we think it is right for these times".
He said it had been designed to be very conservative in its estimates.
As part of the announcement the company also released a full list of its investment holdings and the percentages it has in each company for the first time.
Gibbs said it was not much of a revelation as in the case of most companies where it owned over 5 per cent of the shareholding the information was already public.
But it revealed a 4.7 per cent stake in Allied Farmers as well as a 1.5 per cent stake in Fisher & Paykel Appliances that had previously been unknown to the market. GPG also revealed a $5.4 million investment in three Singaporean companies.
While the year had been tough Gibbs said the figures showed the company was still in a strong position regarding its liquidity with $819 million in the bank.
It had also very conservatively estimated the value of Coats at a book value of $749 million.
"The ultimate realisation value of Coats is considered to be significantly in excess of this figure. In the present circumstances, however, that has become a speculative evaluation and we have prudently confined its value to the level of GPG's invested funds and earnings since acquisition," Sir Ron stated.
Last year Coats was valued at US$1.4 billion ($2.35 billion) by analysts.
The company also warned it may not be able to make a value return to shareholders in 2010 as promised by Sir Ron in August.
"The board is still focused on returning value to shareholders in 2010 but this must obviously be qualified by market conditions which were not fully foreseen earlier in the year," said Sir Ron, who will step down from the company in 2010.
Gibbs said the company still wanted to return value to its shareholders but could not predict the economic situation.
"If the world gets into a bigger pear shape, the company still wants to make it - it's just whether it can."
GPG posted a first-half loss of 42 million ($105 million), although at the time Sir Ron said a deferred tax adjustment of 22 million was "purely IFRS (International Financial Reporting Standards) nonsense and could be safely disregarded as a legitimate inclusion in any proper analysis of the result".
Other than that the company had a profit of 15 million from normal trading sources and sales of shares, before share portfolio writedowns of 35 million.
WARNING
* GPG's 2008 very unsatisfactory.
* Coats profit expected to be less than anticipated.
* Value return to shareholders in 2010 under threat.
