Guinness Peat Group has closed its New Zealand office, saying the nation where chairman Ron Brierley cut his teeth as a corporate raider holds "little or no opportunities" for the investment company.
Brierley's investment company returned to a modest level of profit of £12 million(NZ$26.5m) in the first half of 2010, from a year earlier loss of £24 million (NZ$53m) at the same time it announced it had pulled back from its activities in this country.
"The New Zealand operation has necessarily become expendable for GPG," Brierley.
"During the forthcoming months, the corporate restructure will continue to be the main priority but not neglecting traditional 'value enhancement measures, expected to emerge before the end of the financial year."
In June Tony Gibbs was removed as an executive director of GPG after publicly opposing plans to spin off the company's Australian assets into a separate listed company while retaining its biggest investment, the Coats threadmaking company, until conditions for a sale improve.
Its shares have dropped 26 per cent this year and were last at 64 cents. Over the past five years they have shed some 65 per cent of their value.
"It is inescapable that the present corporate model no longer works for GPG and we are now revisiting alternative capital restructuring proposals and will shortly be appointing three new directors to assist in this task," Brierley said.
Following Mr Gibbs' departure from the GPG board, the company had closed its Auckland office and was selling off its New Zealand share portfolio other than the two major investments - Turners & Growers (66 per cent) and Tower (35 per cent) which have been transferred to Australian portfolio management.
"When we established in New Zealand, in the early 1990s, there were no undue expectations but, largely due to Tony's efforts, it proved more active and rewarding than anticipated," Sir Ron said.
"More recently, however, there have been little or no opportunities and the New Zealand operation has necessarily become expendable for GPG."
In the six months to the end of June GPG had returned to a modest level of profit, mainly due to a vastly improved result from the investment in Coats, as investment returns still showed a deficit after interest and overheads.
A small profit at Capral - a long time problem for GPG - was an encouraging sign after the previous seven years of losses, Sir Ron said.
"Both Coats and Capral still have a long way to go but, hopefully, the actual and intangible resource which GPG has invested over the years is now finally starting to pay off."
Three other events which had little profile but had an impact for the future were:
* eServGlobal, in which GPG have a 19 percent interest, sold its USP business to Oracle for $A107 million ($NZ135.2m) and was now examining capital management options;
* former subsidiary, MMC Contrarian made a major acquisition of life insurance and wealth management businesses from BUPA and changed its name to ClearView Wealth. GPG now held 48 percent of the enlarged company;
* the acquisition of 20 percent of Ridley, Australia's leading producer of salt and animal stockfeeds. After an unsuccessful North American expansion, Ridley was restoring the value of its Australian operations and believed it had a promising future ahead.
GPG's accounts showed revenue from continuing operations of Stg643m ($NZ1.42 billion) in the latest half year, compared to a restated Stg577m a year earlier. Operating profit was Stg31m compared to a restated Stg28m a year earlier, with a bottom line profit of Stg12m in the latest six months, compared to a restated loss of Stg24m the previous year.
- BusinessDesk / NZPA
GPG returns to profit, closes NZ office
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