Sir Ron Brierley's Guinness Peat Group has recorded its second consecutive loss, driven by its struggling global industrial threads business and a volatile stockmarket, and could consider a capital return to shareholders.
The investment house steered by the 1980's corporate raider said a plan to return value to investors by 2010 was derailed by the global financial crisis but that it now was top of the board's agenda with an announcement expected before the annual meeting in May.
It is widely speculated Guinness Peat, which owns a 1.131 billion pounds ($1.93 billion) share and investment portfolio, could distribute a portion of its 265 million pounds in cash to shareholders or conduct an in specie distribution of some of its equity holdings.
The company might also spin off or sell its threads and crafts business Coats. Coats is the biggest supplier of craft products and the world's second-largest maker of top-quality zips, and was purchased by Guinness Peat more than five years ago for 226.1 million pounds.
A capital return could mark the final chapter in Guinness Peat's colourful corporate history. In 2008 Sir Ron announced his intentions to resign from the company he founded 20 years ago. Since then executive director Graeme Cureton has left as has investment manager Ross Burney.
It is unknown if veteran Guinness Peat director Gary Weiss will take up the reins as Guinness Peat boss on Sir Ron's eventual retirement, or if the investment company will simply wind up and return all capital to shareholders.
Guinness Peat unveiled a full-year loss of 38 million pounds for the year to December 31, down significantly from a loss of 73 million pounds in 2008. Revenue from its investment activities and global equities portfolio was flat.
The loss, its second in a row, was mainly due to foreign exchange rate movements - which shifted from a gain of 7 million pounds at the half but to a loss of 8 million at the full year - more red ink at its industrial threads business Coats, and a 5 million-pound loss related to its investment in listed property group CIC Australia.
Sir Ron said Coats was ''right in the firing line'' of the global downturn which was particularly acute in the textiles industries. Coats recorded a full-year net loss of 4.5 million pounds, down from a loss of 8.3 million pounds, as revenue fell to 1.408 billion pounds from 1.645 billion pounds.
Industrial thread sales fell 17 per cent and the division's pre-exceptional operating profit fell by 35 per cent.
The crafts business returned to profitability however with a pre-exceptional operating profit of $US25 million pounds. Coats reduced its borrowings by 81 million pounds during the year.
egreenblat@theage.com.au
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