Report and Accounts 2008
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RPC Group Plc Report & Accounts 2008 Accounts Plc Report & Group RPC RPC Group Plc Lakeside House Higham Ferrers Northants NN10 8RP Tel: +44 (0) 1933 410064 Europe’s Leader in Fax: +44 (0) 1933 410083 www.rpc-group.com Rigid Plastic Packaging Report and Accounts 2008 Typeset and printed by Park Communications, London Contents This Report and Accounts, including the Business Registered office Review and Statements by the Chairman and Chief Financial highlights 1 Lakeside House Executive, has been prepared solely for RPC Group Plc’s Higham Ferrers Statement by the Chairman 2 shareholders as a body. The Company, its directors, Northants NN10 8RP employees, agents or advisers do not accept Statement by the Chief Executive 3 responsibility to any other person and any such Website Geographic locations 7 responsibility or liability is expressly disclaimed. www.rpc-group.com Principal subsidiaries 8 The Business Review and other Statements within the Report and Accounts contain forward-looking Registered Auditors Directors’ biographies 9 statements, which KPMG Audit Plc Business review 10 – have been made by the directors in good faith based 1 Waterloo Way Leicester LE1 6LP Report of the directors 17 on the information available to them up to the time of their approval of the Report and Accounts; and Solicitors Remuneration report 29 – should be treated with caution due to the inherent Ashurst Statement of directors’ responsibilities 39 uncertainties, including both economic and business Broadwalk House Independent auditors’ report 40 risk factors, underlying such forward-looking 5 Appold Street information. London EC2A 2HA Consolidated income statement 41 The Company undertakes no obligation to update these Joint Financial Advisers Consolidated statement of recognised income and forward-looking statements and nothing in the Report N M Rothschild & Sons Limited and Accounts should be construed as a profit forecast. expense 41 New Court St Swithin's Lane Consolidated balance sheet 42 RPC Group Plc London EC4P 4DU Consolidated cash flow statement 43 RPC Group is Europe’s leading manufacturer of rigid JPMorgan Cazenove Limited plastic packaging and is unusual in that it is able to offer Company statement of 20 Moorgate products made by all three conversion processes, blow London EC2R 6DA recognised income and expense 44 moulding, injection moulding and thermoforming. It has 50 operations in 13 countries and employs over 6,900 Registrars Company balance sheet 45 people. RPC services a comprehensive range of customers Equiniti Company cash flow statement 46 – from the largest European manufacturers of consumer Aspect House products to the smallest national businesses. It has Notes to the financial statements 47 Spencer Road particularly strong positions in the beauty and personal Lancing Ten year financial record 84 care sector, the vending and drinking cup market, the West Sussex BN99 6DA margarine industry, and in multi-layer sheet and packs for Financial calendar 84 oxygen sensitive food products. Our objectives are to Principal Bankers Notice of annual general meeting 85 further strengthen RPC’s position in these and other Commerzbank AG sectors of the European market where we can have a 60 Gracechurch Street Explanatory notes 88 significant presence in the market, be in the forefront in London EC3V 0HR product design and development, and have sufficient size to enable us to optimise our production process. This Royal Bank of Scotland strategy, we believe, will produce a satisfactory return for 135 Bishopsgate our shareholders and the best possible security for our London EC2M 3UR employees, suppliers and customers. Joint Stockbrokers Directors JPMorgan Cazenove Limited 20 Moorgate J P Williams MA BComm London EC2R 6DA Non-Executive Chairman Panmure Gordon & Co R J E Marsh BA Moorgate Hall Chief Executive 155 Moorgate M J B Green FCA London EC2M 6XB Senior Independent Director P Hilton MA PhD P J H Hole BSc Drs H J Kloeze S Rojahn Dipl-Ing MSIE Independent Non-Executive Director C H Sworn MA PhD FCA Drs P R M Vervaat RC (appointed 1 November 2007) Finance Director D J Wilbraham BSc PhD Independent Non-Executive Director P S Wood FCA Independent Non-Executive Director Company Secretary Rebecca K Joyce BA ACA ACIS RPC Group annual report and accounts 2008 1 Financial highlights Turnover £m Adjusted operating profit £m 700 40 35 600 30 500 25 400 20 300 15 200 10 100 5 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 ● Record sales (up 7.7%) and adjusted operating profit (up 6.6%) achieved in a challenging environment ● Adjusted EPS improved to 21.5p (2007: 20.6p) ● Basic EPS of 4.4p (2007: 13.2p) due to significant restructuring costs and impairment charges ● Cost pressures being met by determined action on operational efficiencies and on underperforming businesses ● Improving trend in revenue and margins in the second half ● Pim Vervaat appointed as Finance Director on 1 November 2007 ● 7.1% increase in total dividend to 9.0p (2007: 8.4p) with recommended final dividend up to 6.1p (2007: 5.7p) 2 RPC Group annual report and accounts 2008 Statement by the Chairman As I am stepping down as Chairman at European leader in specialist rigid The last few years have been the AGM, I have decided to revert to a plastics packaging. The rising profits exceptionally difficult for the plastics more conventional format and make from our rapidly growing specialist packaging industry. In my view much this separate statement. business have largely offset the better days are ahead. Growth for deterioration in the profitability of our plastics packaging is expected to The Chief Executive’s statement that commodity businesses as a result of continue at rates above Gross Domestic follows this outlines RPC’s progress last these sustained cost pressures. The Product (GDP). Polymer costs appear year. Trading was challenging largely latter includes, of course, most of our set to move in our favour as a result of because of input cost pressures, original UK businesses. substantial new capacity coming on- particularly for polymers. Nevertheless, stream later this year. There are already RPC reported an improvement in This brings me to my decision to step early signs that a shift in the market is adjusted operating profit and ended the down. Some large shareholders have beginning which should lead in time to year in a strong financial position over the last few months indicated better returns from our commodity despite incurring significant their disappointment with the Group’s businesses. I expect our specialist restructuring and closure costs. RPC recent lack of progress and have businesses to continue to prosper and also continued to deliver on its expressed concerns about our strategy, the benefits of our recent strategy, growing organically and by management and the Board. Whilst I rationalisation programmes to be felt acquisition, and building its market and believe their concerns to be unjustified across the Group. While my positive technology leadership position in and result from the very difficult view of the future has to be tempered Europe. In my judgement, these are trading environment in which RPC has in the short-term by the adverse excellent results in the circumstances, operated for some time, I and the rest impact of the continuing surge in oil and are ahead of the latest market of the Board accept that over the last prices, I am convinced that RPC’s estimates; they also compare very few years there has been limited medium and long-term prospects are favourably with our European industry progress in underlying earnings per excellent. peer group. share and share shareholders’ frustration with the Group’s recent Lastly, I want to say it has been a Unfortunately, despite good strategic share price performance. Against this pleasure serving RPC shareholders. I execution and operational background, and in order to restore want to thank my Board colleagues and management, there has been only shareholder confidence, the Board has the management team for their limited progress in underlying earnings launched a strategic review, including a support over the years and to wish RPC per share over recent years. This is full property valuation, which will every success in the future. primarily due to the unprecedented and consider all options available to RPC to unrelenting rise in polymer costs and to maximise shareholder value. In coming the difficulties recovering these and to this decision I have concluded that other cost increases from our this will be best accomplished by customers. Over the last five years, appointing a new set of independent polymer prices have increased by eyes in my role. approximately 80%. Despite our improved efficiencies and the strong We are therefore following due process growth in specialist products, polymer to find my replacement as quickly as costs now represent 33% of our possible and hope to have the Peter Williams revenue compared with 25% five years appointment announced by the Chairman ago. Price increases over this period upcoming AGM. This should permit the have not kept pace, under-recovering new Chairman to participate in the the rapid escalation in input costs review process and to act on its including polymers. Thankfully, our conclusions as appropriate. focus on improving the product mix The strategic review will be completed towards more specialised, higher added as quickly as possible and the present value packaging, and at making strategic direction reconfirmed or a significant operational improvements, new direction established. Given has limited the decline in our adjusted current industry conditions there are an operating profit margin to 1%. unusually large number of attractive This resilience is a consequence of businesses potentially available at RPC’s long-term strategic development. reasonable prices. If the strategy A little over a decade ago, we were a remains to participate in industry UK based company producing mainly consolidation, RPC must avail itself of commodity products with no presence this window of opportunity.