GENERAL: GPG: Demerger of GPG Australia

25 Jun 2010 12:43 pm

GPG 25/06/2010 GENERAL

REL: 1243 HRS Guinness Peat Group Plc

GENERAL: GPG: Demerger of GPG Australia

Statement by A I (Tony) Gibbs

Tony Gibbs, Director of Guinness Peat Group plc (GPG), states that he has advised the Directors of GPG who had proposed the GPG Australia demerger that they should abandon the plan and that he believes a different strategic approach would be preferred by GPG's shareholders.

I have previously outlined my preferred strategy for GPG and have reiterated this to the Board in recent days. However previously, rather than take a firm stance against my colleagues I supported presenting the demerger proposal openly to shareholders to determine whether it was in fact a strategy that would be supported.

Following the announcement, it has become very clear to me that the GPG Australia demerger proposal does not have the support of many of our shareholders and would not succeed. Rather than spend the next 6 months investing time and shareholders' money developing this proposal further or seeking modifications, I believe we should abandon the proposal in favour of an alternative strategy.

The core elements of the strategy I prefer are:

A material cash distribution to shareholders to be paid before year end;

Implementation of a comprehensive corporate restructuring of the GPG Group to enable an efficient exit of Coats and future returns of funds;

In parallel with this, prepare for a trade sale or flotation of Coats as soon as is practicable after the completion of its December 2010 financial year; and

Following the completion of the trade sale or flotation of Coats the return of those proceeds to shareholders.

I have advised the GPG board of this strategy and believe a public statement of my view is important as I intend to engage with our shareholders to better understand their views over the coming weeks.

A I (Tony) Gibbs 25 June 2010 End CA:00196540 For:GPG Type:GENERAL Time:2010-06-25:12:43:24

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