GPG shares tumble as 'value return' fails to materialise

Shares of Guinness Peat Group tumbled after the investment company chaired by Ron Brierley told shareholders they have to wait longer for details of the much-touted "value return" because of the complexities of its shares and investments.

GPG stock fell 4.6 per cent to 84 cents. The company had undertaken to announce its proposal at the annual shareholders' meeting in London on Friday, having dusted off an idea that was shelved when the global financial crisis hit.

Instead, Brierley said GPG was "making progress and will continue to do so," he said. "In terms of GPG's 20 year history, a few more weeks, or months, if necessary, is not critical."

As at December 31, GPG had some £265m of cash at hand and a share portfolio valued at £298m , according to the annual report. Unprofitable threadmaker Coats is its biggest single investment, with a value of £295m and its other investments include a stake in Tower at £85m and a holding in Turners & Growers at £69m.

As of Friday, the stock had been rated a 'buy' based on the consensus of six analyst recommendations compiled by Reuters. The shares have gained 27 per cent in the past 12 months, having slid from above $1.90 in mid-2006.

The company "is moving at a snail's pace and shareholders may have to wait a long, long time before the 'value realisation' - which was first signalled in February 2007 - is delivered," fund manager Brian Gaynor wrote in his blog.

"Unfortunately the company is looking more and more like the asset rich, poorly run and underperforming New Zealand companies of the 1960s and 1970s that Sir Ron cut his teeth on," Gaynor said.

The GPG statement shows shareholders endorsed most of the motions put to the meeting, though the remuneration report motion required the chairman to use his discretionary votes to get through.

GPG range of investments in four countries and stock listing in New Zealand, Australia and the UK, and its UK incorporation, "where corporate bureaucracy is simply spiralling out of control" have slowed work on the 'value return,' Brierley said.

"That is a model which no longer works for GPG but formulating structural changes where what shareholders already own is not eaten up in excessive taxes and other charges is a very complex equation," he said. "We are making progress and will continue to do so."

Still, he said the company recognises that "inescapably, substantial changes cannot be indefinitely postponed."