As interest builds in Guinness Peat Group's annual meeting on May 7, executive director Tony Gibbs responds to Brian Gaynor.
I would like to comment on the Brian Gaynor article in the Herald on April 3, 2010 regarding GPG's recent performance.
The points I would like to make are as follows:
Growth in net asset value per share
Guinness Peat Group (GPG) manages its shareholders' funds to create value and outperformance against other alternative investments.
In this regard GPG's track record speaks for itself. GPG has achieved compound growth in net asset value per share over a 17-year period of 15.0 per cent per annum.
This is significantly ahead of all relevant market indices including the NZX-50, which increased by 6.5 per cent per annum over the same period.
Growth in shareholders' funds
GPG has grown shareholders' funds substantially since inception to £867 million ($1.8 billion) as at December 31, 2009.
The company is now one of the 10 largest companies listed on the NZ Stock Exchange, operating with a relatively small but very experienced management team spread across three main geographies.
Exchange rate impact
As an international investor, GPG's investment asset values are impacted by exchange rate movements - unlike many NZX listed companies or domestic equity fund managers.
In recent years, the GPG share price in New Zealand has been influenced by the New Zealand dollar appreciating against the pound and US dollar.
For example, in the past 12 months the GPG share price in London has gone up by 64 per cent, the GPG NZ share price by 24 per cent. This compares with 26 per cent for the NZX-50 gross index.
Short-run currency fluctuation can impact group performance, but over the long run we expect currency to impact minimally across the group.
Director remuneration
A significant portion of recently reported executive director remuneration relates to the impact of stock options exercised recently but relating to options that were granted 10 years previously.
The value of those stock options represents the significant increase in GPG's share price over that long time period.
If the GPG share price had not increased and delivered a benefit to all GPG shareholders, the options would have expired worthless.
This reflects GPG's investment philosophy of generating long-term returns for shareholders and not focusing solely on short-term market movements.
Directors' base salaries were held constant in local currency in 2009, however as the NZ dollar has appreciated, the remuneration which is converted to pounds has changed.
I have invested much time and effort securing positive tax change for our many smaller New Zealand shareholders and vow to continue driving GPG's performance to ensure we can maximise value for all shareholders, including our very supportive New Zealand shareholder base.
The global markets have presented many challenges for companies around the world over the past two years, resulting in some weak sharemarket performances.
The message I want to leave with our shareholders is to continue to hold on to our shares through periods of volatility and allow us to deliver the long-term value potential of our portfolio of investments.
* Tony Gibbs is executive director of Guinness Peat Group.
