GPG
16/06/2010
GENERAL

REL: 1119 HRS Guinness Peat Group Plc

GENERAL: GPG: Demerger of GPG Australia and Restructure of GPG

16 June 2010

Demerger of GPG Australia and Restructure of Guinness Peat Group plc

- Unlock value through a demerger of the Australian business to create an
independent, regionally-focussed listed investment company, GPG Australia Ltd

- The GPG plc Group will be restructured to facilitate the flotation of Coats
in due course

- The GPG plc Group to retain UK and New Zealand investment portfolios with
potential for further geographic simplification over time

Following an extensive strategic review, Guinness Peat Group plc ("GPG plc")
today announces that it is to pursue a corporate restructuring to facilitate
the unlocking and enhancement of value for all GPG plc shareholders.

Demerger of GPG Australia

The first step in this process will be to demerge GPG Australia from the GPG
plc Group. GPG Australia consists of a portfolio of strategic investments in
Australia, actively managed by a dedicated team of investment professionals.
GPG Australia is well established in the Australian market and has excellent
prospects to generate strong shareholder returns by employing GPG's
traditional investment approach.

Key features of GPG Australia:

- To be listed on ASX and NZX
- Value-driven activist investment approach
- Proven track record of returns over the long term
- Strategic, diversified portfolio with significant upside potential
- Highly qualified and experienced local Board with a non-executive Chairman
and a majority of independent directors
- Highly experienced management team
- Historically attractive market conditions for activist investment
- Net asset value ("NAV") of approximately ?270 million (A$450 million)
(NZ$580 million) (based on the status of the portfolio as at April 2010 which
is likely to change prior to completion)

In addition to the separation of the investment portfolios on a geographical
basis, cash and liabilities will be allocated between the two entities prior
to the demerger. It is envisaged that the GPG plc Group will initially
retain an approximate 20% shareholding in GPG Australia.

The demerger will result in shareholders owning shares in both entities.

Restructure of GPG plc Group

The GPG plc Group will retain the UK and New Zealand investment portfolios
and will continue GPG plc's traditional value-focussed activist investment
approach.

A restructuring of the GPG plc Group is an important prerequisite to
facilitate an efficient and value-enhancing flotation of Coats in due course,
notwithstanding that Coats is largely stand-alone at present with regard to
its operating structure, banking facilities and working capital requirements.
The Board is pleased with the manner in which Coats responded to the global
financial crisis in 2009 and its much improved performance in the 2010 year
to date. Nevertheless it is considered that an immediate flotation of Coats
is not in shareholders' best interests given the nascent stage of recovery in
relation to Coats' markets and customers and the current uncertainty in
relation to international financial markets. The GPG plc Board currently
anticipates a flotation of Coats will be undertaken within the next two
years.

Key features of the GPG plc Group:

- To be listed on NZX and LSE
- Continuing strategic focus on traditional value-based activist investment
approach in New Zealand and the UK
- Proven track record of returns over the long term
- Portfolio of strategic investments with significant upside potential
- Renewed structure will facilitate flotation of Coats as soon as is
appropriate
- Potential for further geographical separation over time
- Highly experienced management team in New Zealand and the UK
- NAV, post demerger of GPG Australia, will be approximately ?570 million
(A$950 million) (NZ$1,230 million), including cash holdings of over ?100
million (A$160 million) (NZ$220 million) (based on the status of the
portfolio as at April 2010 which is likely to change prior to completion)

Rationale

The restructuring was considered alongside a range of alternatives from
maintaining the status quo to a liquidation of the Group's assets. It is
considered the best option to maximise value for shareholders over time as it
caters for a number of realities and opportunities:

- GPG plc holds a large portfolio of assets but within the current structure
their collective value is obscured by corporate complexity and geographical
diversity;

- An immediate liquidation under the current structure would destroy value
for shareholders given that GPG plc's investments and actual and contingent
liabilities (including in relation to pension funds) are at varying stages of
maturity and liquidity. Additionally, significant value leakage would be
incurred by a large body of GPG plc's shareholders if liquidation proceeds
were to be distributed by way of a dividend or capital return;

- GPG plc's non-Coats investments are increasingly subject to different
geographical and regulatory influences. It is considered that the GPG plc
investment model employed in Australia will be better implemented in the
future through an independent entity. In time there is potential for similar
geographical separation of the New Zealand and UK interests;

- While Coats has taken longer than expected to turn around, its
reorganisation is now largely complete. Under new chief executive, Paul
Forman, Coats is pursuing a growth strategy. The restructuring of the GPG plc
Group should enhance value for shareholders by creating flexibility for Coats
to be floated as soon as is appropriate;

- Value will likely be enhanced via the creation of two separately listed
companies providing flexibility for shareholders to choose whether to remain
invested in GPG plc, GPG Australia or both. Whilst this will necessitate
some replication of overheads, the overall benefits associated with reducing
geographic complexity and risk are expected to be significant; and

- The separate listed entities will have different profiles in terms of some
aspects of their investment approach as well as concentrated geographical
focus. The board believes the two entities collectively will have greater
and more focussed investor appeal than is currently the case.

Sir Ron Brierley, Chairman of GPG plc, said

"At the Annual General Meeting I noted that for a number of reasons the
current business model no longer worked for GPG but formulating a structural
change which preserved value for shareholders was a very complex equation.

The Board has for several months, in conjunction with management and its
advisers, been evaluating a number of alternatives to enhance value for
shareholders, always conscious that substantial changes cannot be
indefinitely postponed.

This proposal will create an exciting and regionally-focused activist
investment company in Australia with the entrepreneurial flair to create
value for shareholders in the best traditions of GPG, as well as a more
concentrated portfolio of high quality investments with a clear mission to
optimise and crystallise value for shareholders over time.

The GPG plc Group, with its portfolio of high quality investments, will
continue its traditional investment approach and will be ideally placed to
float Coats when the time is right.

Overall, this represents a streamlining of the traditional GPG structure,
without losing the investment philosophy and approach that has yielded
significant returns for shareholders over the past 20 years."

Next Steps

Further evaluation will proceed as expeditiously as possible with the
objective of implementing the proposal later in 2010.

Any decision to proceed will be subject to a range of factors including
finalisation of the appropriate capital structure for the two companies,
market conditions, regulatory and other third party approvals.

Indicative timing for the proposed restructuring is as follows:

- Full details of demerger proposal announced on receipt of initial
regulatory approvals September

- Documentation sent to shareholders October

- Shareholder vote on restructuring and demerger implemented
November

For media enquiries contact GPG plc:

Dr Gary Weiss Executive Director Aust +61 2 8298 4300

Tony Gibbs Executive Director NZ +64 9 379 8888

Blake Nixon Executive Director UK +44 20 7484 3370

This announcement is for information purposes only and does not constitute an
offer to sell or the solicitation of an offer to buy any securities of GPG
plc or any other entity. This announcement does not constitute a
recommendation concerning the proposed demerger, and should not be construed
as legal, business, tax or investment advice in any jurisdiction. The value
of shares can go down as well as up. Past performance is not a guide to
future performance.

Certain statements in this announcement are forward-looking statements, which
are based on GPG plc's expectations, intentions, projections, anticipated
events and other matters that are not current or historical facts. These
statements are subject to risks and uncertainties and are not guarantees of
future developments or performance. GPG plc does not undertake publicly to
update or revise any forward looking statement that may be made in this
announcement, whether as a result of new information, future events or
otherwise.

These materials are not an offer of securities for sale in the United States
or to, or for the account or benefit of, US persons. The securities to which
these materials relate have not been registered under the US Securities Act
of 1933, as amended (the "Securities Act"), and may not be offered or sold in
the United States or to, or for the account or benefit of, US persons absent
registration or an exemption from registration under the Securities Act. Any
shares to be distributed in connection with the proposed demerger have not
been, and will not be, registered under the Securities Act, nor have they
been approved or disapproved by the U.S. Securities and Exchange Commission
(the "SEC") or any U.S. state securities commission and neither the SEC nor
any U.S. state securities commission passed upon the accuracy or adequacy of
this announcement. Any representation to the contrary is a criminal offence
in the United States.
End CA:00196168 For:GPG Type:GENERAL Time:2010-06-16:11:19:56