Rexam annual report 2012 Rexam PLC 4 Millbank London SW1P 3XR United Kingdom www.rexam.com annual report 2012 WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_Cov_ifc_ibc.indd 1 27/02/2013 19:15 157 The modern lifestyle many of us take for granted is predicated on a smooth running, sustainable supply chain to get items from the factory to the shop shelves and into our homes. Consumer packaging is an integral part of that supply chain in that it protects and preserves to reduce waste from spoilage and enables efficient distribution of goods. It also helps brand owners to promote their goods and inform end users of contents. In that respect, consumer packaging makes an essential contribution to a sustainable society. find out more online On our website you will find an interactive Board photography: Marcus Lyon version of the annual report 2012. You will also Feature photography: find annual reports from previous years (dating L2PM Films back to 1999) as well as investor presentations, Design and production by Radley Yeldar publications and other material on Rexam, its www.ry.com markets and business. This report has been printed on Hello Silk, find out more online a paper which is certified by the Forest On our website you will find ® Stewardship Council . The paper is made an interactive version of the in a mill registered to EMAS, the Eco annual report 2012. You will Management Audit Scheme, and with also find annual reports from www.rexam.com ISO14001 environmental management previous years (dating back system accreditation. This report was to 1999) as well as investor printed using vegetable oil based inks by presentations, publications ® a CarbonNeutral printer registered to and other material on Rexam, The annual report 2012 may contain statements which are not based on current or historical fact and which are forward looking in nature. These forward looking EMAS and with ISO14001 environmental its markets and business. statements reflect knowledge and information available at the date of preparation of this annual report 2012 and the Company undertakes no obligation to update these management system accreditation. forward looking statements. Such forward looking statements are subject to known and unknown risks and uncertainties facing the Group including, without limitation, those risks described in this annual report 2012, and other unknown future events and circumstances which can cause results and developments to differ materially from those anticipated. Nothing in this annual report 2012 should be construed as a profit forecast. Rexam PLC is registered and domiciled in England and Wales: company number 191285. www.rexam.com WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_Cov_ifc_ibc.indd 2 27/02/2013 19:15 1 overview In this section our chairman reflects on 2012 and his first year 4 chairman’s statement at Rexam. The section explains what we make and where we 6 who we are operate, and our role in the greater supply chain. It also 7 what we make contains headline figures summarising our 2012 performance. 8 where we operate 9 how we performed in 2012 overview business review Our chief executive discusses how we performed against 12 chief executive’s review (including KPIs) our strategy to create shareholder value. The operating 18 market review and financial reviews describe our performance in 2012. 24 operating review We also give an overview of the global beverage can and 31 financial review healthcare markets, of the risks facing the business and 40 key risks what we are doing to mitigate them. business review sustainability This section provides a review of our sustainability performance 51 products in 2012. It explains our approach to and progress in this area and 54 operations details our commitments, measures and targets going forward. 56 people directors’ report directors’ sustainability governance We introduce our board and explain their commitment to 62 directors and officers maintaining high standards of corporate governance in a 64 corporate governance constantly evolving regulatory and governance environment. 77 remuneration report We give the framework for our remuneration policy and show 91 other disclosures how we implement this policy. governance financial statements 95 Rexam PLC consolidated financial statements 2012 144 five year financial summary 145 Rexam PLC Company financial statements 2012 financial statements financial 154 shareholder information 156 addresses WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_p01-p9.indd 1 04/03/2013 17:07 2 Rexam annual report 2012 overview best performance Our vision is to be the best global consumer packaging company, with the aim of creating shareholder value. WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_p01-p9.indd 2 04/03/2013 17:07 3 overview overview businessbusiness review review sustainabilitysustainability overview governance governance In this section our chairman reflects 4 chairman’s statement 6 who we are on 2012 and his first year at Rexam. 7 what we make The section explains what we make and 8 where we operate where we operate, and our role in the 9 how we performed in 2012 greater supply chain. It also contains financial statementsstatements financial financial headline figures summarising our 2012 performance. WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_p01-p9.indd 3 04/03/2013 17:08 4 Rexam annual report 2012 overview chairman’s statement I am pleased to report that, in less than ideal market conditions, 2012 was a year of progress on many fronts and our results demonstrate the underlying resilience of the business. This is reflected in the improvement to our ROCE and the value we have created for our shareholders with our total shareholder return in 2012 significantly ahead of the average for the FTSE 100 (see also page 85). Our focus on cash and continued discipline in our capital spend helped us maintain a strong balance sheet, and during the year, we refinanced some of our bonds in the US private placement market at better rates than previously and, as a result, will reduce our financing costs. In December 2012, we completed successfully the sale of our Personal Care business. As promised, we are returning £395m of the proceeds to shareholders by way of a B share scheme, together with a share consolidation. This has been my first year as Rexam’s dividend The board is proposing a final dividend of 10.2p per share, chairman – and it has been an inspiring one. making a total dividend of 15.2p for the year. This increase of 6% In my visits to our plants and businesses reflects the board’s continuing confidence in the future of the Group and is in line with our dividend policy to have a dividend cover in around the world, it is obvious that the range 2.0 to 2.5 times underlying earnings. manufacturing excellence lies at the very strategy With the sale of the Personal Care business, and the Healthcare heart of this company. I have been impressed business now being managed separately, our strategy has beverage cans at its very core. It continues to be based on by the efficiency of our plants and particularly operational excellence, deeper customer relationships, expansion struck by the skill, commitment and enthusiasm in emerging markets, innovation in processes and products as well as a commitment to a sustainable future and to building a winning of our people. organisation. During the year, we continued to drive cost efficiencies and In my first month I was in touch with each of generate cash. We will use this cash to fund disciplined investment in the business for longer term growth, pay dividends and – when our largest shareholders to learn about and the balance sheet allows – we will consider additional returns gauge their views of Rexam. I also had the to shareholders. opportunity to talk to many more at our AGM Although Rexam is a results focused organisation, we attach great importance to the way we do business. We have an integrated in May. There was a clear consistency about approach to the performance of our people, including setting financial and non financial objectives for management. Details what sort of company you expect Rexam to of this approach, and the way it embraces our senior management, be: a results focused business that can be are on page 82. corporate responsibility relied upon to deliver on its commitments – The sustainability agenda requires greater transparency around both short and long term. our environmental and social impacts, and the Sustainability section of this report describes our progress in key areas during the year. The publication of our separate Sustainability Report 2012 is further evidence of our commitment in this area and serves as an internal and external benchmark to monitor progress. WorldReginfo - 036ce036-ed0d-4059-b286-f429392a59db 015874_Rexam_AR12_p01-p9.indd 4 04/03/2013 17:08 5 dividend The board is proposing a final dividend of 10.2p per share, making a total dividend of 15.2p for the year. This 6% increase 5.0p + 10.2p = reflects the board’s continuing confidence in the Group’s future and is in line with our dividend policy to have a dividend cover overview in the range 2.0 to 2.5 times underlying earnings. Subject to shareholder approval at Rexam’s AGM on 18 April 2013, the 15.2p final dividend will be paid on 22 May 2013 to shareholders on the register at close of business on 26 April 2013. Rexam’s success is built on the hard work and commitment of our summary people and their safety has been – and will continue to be – of In the current challenging business environment, Rexam continues paramount importance. Our safety record, measured in the lost to take the actions the board believes necessary to remain business review time accident rate (LTAR), again improved year on year and in competitive and deliver value for shareholders.