GPG’s cash holdings rise to 329M pounds on asset sales

GPG’s cash holdings rise to 329M pounds on asset sales, pension deficit grows

May 15 (BusinessDesk) - Guinness Peat Group, which expects to rebrand itself as UK threadmaker Coats in the second quarter, has lifted its cash holdings to 329 million pounds, with a further 38 million pounds pending, though its UK pension liabilities are also growing.

GPG’s progress in selling down its portfolio has left its 34 percent stake in insurance group Tower, with a market value of about $128 million, as its only investment outside of Coats, according to a management statement from the company.

Its cash holdings will be boosted by 38 million pounds once its sale of 19.9 percent of CIC Australia to Peet Ltd is confirmed. Peet has waived most of the conditions for its takeover of CIC pending a capital raising.

GPG plans to return capital to shareholders once its asset sales are completed and the business transformed into Coats, though the total of the return can’t be determined yet because the UK’s Pensions Regulator is reviewing GPG’s obligations under the Coats Pension Plan and Brunel Holdings Pension Scheme, which remain on its books.

The regulator started the review because GPG’s asset sales and planned capital return could have a bearing on the security of funds set aside to meet the pension obligation.

GPG’s net IAS19, or International Accounting Standard Nineteen, deficit rose to 273 million pounds as at March 31 from 235 million pounds three months earlier, including 42 million pounds for a third obligation, the Staveley scheme. The valued is adjusted relative to inflation and movements in AA rated corporate debt, which outweighed stronger investment returns in the latest quarter, GPG said.

The regulator hasn’t given a deadline for its review.

GPG also gave a revenue update for Coats, which it says posted flat sales in the first quarter, though on an adjusted, like-for-like basis, sales rose 5 percent, it said.

“Operating margins have shown some encouraging progress and remain in line with management expectations,” the company said.

The shares rose 0.9 percent to 53.5 cents on the NZX today and have declined 9 percent this year.

(BusinessDesk)

© Scoop Media