Final Results

9 June 2015

RPC GROUP PLC

Full year results for the period ended 31 March 2015

RPC Group Plc, the international plastic products design and engineering company, announces its results for the year ended 31 March 2015.

1For continuing operations.

2Adjusted EBITDA, operating profit and return on sales are before restructuring, impairment charges and other exceptional items, amortisation of acquired intangibles and pension administration expenses, and adjusted profit before tax is also before non-underlying finance costs.

3Adjusted basic earnings per share is adjusted operating profit after interest, excluding non-underlying finance costs, and tax adjustments, divided by the weighted average number of shares in issue during the year.

4March 2014 restated for IFRS 11.

5Restated for rights issue.

6Excludes Ace, Promens and PET Power (acquired in the year).

Key developments

§    Implementation of the Vision 2020 growth strategy has progressed well with 4% organic sales growth, further consolidation of the European packaging market and enhancement of the Group's position outside Europe

§   The integration of the Promens Group (acquisition completed 20 February 2015) is on track with estimated synergies now doubled to €30m per annum

§    Revenues up 17% to £1,222m (2014: £1,047m) reflecting organic growth and the contribution of acquisitions with the adjusted operating profit at a record level of £131.6m (2014 restated: £101.0m) representing a 10.8% return on sales (2014 restated: 9.6%)

§    Adjusted basic EPS improved 12% to 41.0p (2014 restated: 36.5p) with good cash generation and net cash flow from operating activities at £92.7m (2014 restated: £100.2m)

§    Final dividend of 11.0p recommended giving a total year dividend of 15.4p (restated and 2014 restated: 13.8p) representing a 12% increase over last year and in line with our progressive dividend policy

Commenting on the results, Pim Vervaat, Chief Executive, said:

"I am pleased with the Group's performance in the financial year ending March 2015. We have made further progress in implementing the Vision 2020 strategy with additional platforms for growth established in Asia, North America, Africa and Europe. The integration of Promens is progressing well and the Group continues to explore further opportunities for growth. Despite the currency translation headwinds and the adverse impact from the time lag in passing through higher polymer prices, the start to the new financial year has been satisfactory and in line with management's expectations."

For further information:

This announcement contains forward-looking statements, which have been made by the directors in good faith based on the information available to them up to the time of the approval of this report and such information should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information.

Overview of the Year

I am pleased to report that 2014/15 was another successful year for the RPC Group. The business performed well and we made further progress in implementing our Vision 2020 growth strategy. We also finalised the Fitter for the Future business optimisation programme. Significant progress was made in delivering the Group's strategic objectives.

Sales for continuing businesses grew to £1,222m (2014: £1,047m), adjusted operating profit1 reached £131.6m (2014 restated: £101.0m), representing a 10.8% return of sales, whilst adjusted earnings per share2 increased to 41.0p (2014 restated: 36.5p). Net cash from operating activities was £92.7m (2014 restated: £100.2m). Net statutory profit for the year was £41.2m (2014: £28.0m).

It is also pleasing to note that the Group's health and safety record improved significantly in the year after a set back in 2013/14, with the reportable accident frequency rate reducing from 1,197 to 753.

1 Adjusted operating profit is defined as operating profit for continuing operations before restructuring, impairment charges and other exceptional items, amortisation of acquired intangibles and pension administration expenses.

2 Adjusted earnings per share is defined as adjusted operating profit for continuing operations after interest and tax adjustments but excluding non-underlying finance costs divided by the weighted average number of shares in issue during the year.

Strategy

Excellent progress was made in delivering the Group's Vision 2020 strategy, with its three strategic objectives of continuing focused organic growth in selected areas of the packaging markets, selective consolidation in the European packaging market through targeted acquisitions and creating a meaningful presence outside Europe where growth rates are considerably higher. The related financial minimum KPI hurdles of RONOA (>20%) and return on sales (>8%) were both met.

Organic growth was good despite the continued subdued economic environment in Europe. Underlying sales for continuing operations were 4% higher than the previous year with innovation and investments providing opportunities for further growth.

The acquisition of Promens combined two industry leading players and has accelerated the Group's programme for consolidation in Europe whilst providing access to new technologies and geographic expansion. The estimated steady state cost synergies from the combination are now projected to be €30m per annum. The PET Power acquisition (February 2015), together with the recent Innocan acquisition (May 2015), provide the Group with access to the growing market for PET products in mainland Europe. In addition the M&H Plastics and Helioplast acquisitions made in 2013/14 have now been integrated successfully and have both grown significantly under RPC's ownership.

The Group's presence outside Europe was significantly enhanced by the acquisition of the Hong Kong based Ace Corporation in June 2014. This acquisition provides the Group with a high quality platform for growth in Asia, specifically through its five factories in mainland China. Further, the expansion of the Group's existing facilities in Morgantown, PA (USA) and the acquisition of the Promens operations in Canada, Russia, Tunisia, India and China, have resulted in the Group now having a meaningful presence outside Europe.

In May 2014 the Group sold its non-core disposables trading business at Offenburg and in September 2014 it sold its Cobelplast sheet businesses in Belgium and Italy. The Fitter for the Future programme was completed during the year with the remaining sites closed and two further surplus properties sold. This brought to an end this internal restructuring plan for the existing businesses. New restructuring activities have commenced in connection with the integration of Promens and the realisation of synergies as a result of this acquisition.

Board

There were a number of changes to the Board during the year. I am pleased to welcome Lynn Drummond and Godwin Wong who were appointed as non-executive directors on 16 July 2014. Stephan Rojahn, an independent non-executive director who is currently chair of the Remuneration Committee and a member of the Audit and Nomination Committees, will retire from the Board with effect from the end of the AGM on 15 July 2015, after 9 years of service. I would like to take this opportunity to thank Stephan for his valuable contribution to the Board over this period. With effect from 25 March 2015, Lynn Drummond, was appointed as a member of the Remuneration, Audit and Nomination Committees and will take over the role of chair of the Remuneration Committee after Stephan's retirement. Godwin Wong was also appointed a member of the Nomination Committee on 25 March 2015. On 13 May 2015 Ilona Haaijer, who has been an independent non-executive director since May 2012 and a member of the Remuneration, Audit and Nomination committees, announced her retirement from the Board following her recent promotion and increase in responsibilities with her employer, Royal DSM NV. Ilona decided reluctantly that it was no longer possible for her to provide the necessary time to fulfil her duties as a non-executive director of the Company. I would like to thank Ilona for the contribution she has made to the Board and wish her well in her new role.

Governance

The Board continues to focus on ensuring that the UK Corporate Governance Code's principles of leadership and board effectiveness are applied. Corporate governance continues to evolve and emerging practice has remained a regular subject for discussion at the Board. We seek to run our businesses in a responsible way, recognising that good corporate governance supports the long-term health of the Group. The changes and new appointments to the Board, whilst bringing new skills and experience to constructively challenge and support the executive team, increase the Board's cultural and gender diversity.

The Group is able to provide many opportunities for individuals to make their own contribution to the business. On behalf of the Board I would like to thank all employees for their outstanding efforts, often in challenging circumstances. They have enabled the Group to deliver another good financial performance for its shareholders, and I look forward to their continued contribution in achieving our strategy for the Group.

Dividend

In line with RPC's progressive dividend policy, the Board is recommending a final dividend of 11.0p per share making a total for the year of 15.4p (restated and 2014 restated: 13.8p), which is a 12% increase on the previous year. The total dividend and 2014 comparator have been adjusted for the bonus element of the rights issue in the year connected with the Promens acquisition. This will be the 22nd successive year of dividend progression since RPC's flotation.

Subject to approval at the forthcoming AGM, the final dividend will be paid on 4 September 2015 to shareholders on the register on 7 August 2015.

J R P Pike

Chairman

Group Overview

RPC is a leading international plastic products design and engineering company. It operates in 24 countries from 93 manufacturing sites and 23 separate distribution and sales operations, including 17 design and development centres. The recent acquisitions of Ace and Promens have widened the customer base and market operations outside RPC's traditional packaging markets. This provides new opportunities for the Group to exploit its innovative design, engineering and manufacturing capabilities in plastic products.

The Group reframed its internal organisational structure following the acquisition of Promens and, from 1 April 2015, reorganised its operations into five divisions replacing the former cluster structure, servicing both the packaging and non-packaging markets. These are RPC Superfos, RPC Bramlage, RPC Promens, RPC Bebo and RPC Ace.

For the purpose of 2014/15 financial reporting the former cluster organisational structure has been retained, organised around the three main polymer conversion processes used within the Group, each site being managed within one of six clusters which are defined along technological and market lines.

Each cluster operates across a wide geographical area for reasons of customer proximity, local market demand and manufacturing resource, with the Ace cluster based in China.

The results of PET Power and Promens have been shown separately for the purpose of reporting this year, given that the businesses were acquired in February and by the year end had not been integrated within the organisational structure indicated above.

Strategy

The Group announced its Vision 2020 Focused Growth Strategy in 2013, of which there are three core elements:

· continuing focused organic growth in selected areas of the packaging markets;

· selective consolidation in the European packaging market through targeted acquisitions to strengthen and extend market positions; and

· creating a meaningful presence outside Europe where growth rates in GDP are considerably higher.

The Group also identified further opportunities to optimise its existing asset base, resulting in the final phase of the Fitter for the Future business optimisation programme which was completed this year.

The Group made good progress during the year in implementing this strategy.

Continuing focused organic growth

The Group achieved good underlying growth with sales up 4% on a like-for-like basis versus last year, supported by higher levels of investment in product and process innovation. Activity levels improved compared with the previous year with most of the growth experienced in the UK and USA, whilst sales volumes in mainland Europe were generally in line with last year. The Group won several awards for excellence in product design and was named the UK packaging company of the year (UK Packaging Awards), as well as the UK plastic processor of the year (Plastic Industry Awards). Improvements in technology continued across the Group, for example doubling the speed of the assembly lines for a single serve beverage system.

Selective consolidation in the European packaging market through targeted acquisitions

In 2013/14 the Group made two acquisitions in Europe: M&H Plastics, whose principal manufacturing site is based in Beccles, UK, and Helioplast, which is based in Bosnia-Herzegovina. Both have been successfully integrated within the Group and have made a positive contribution to the results with the anticipated synergies more than achieved. The combined organic growth realised in the year by these businesses was 19% compared with the same period last year (pre-acquisition).

In February 2015, RPC acquired Promens, a leading European manufacturer of rigid plastic products for a wide range of end markets and headquartered in Reykjavik, Iceland. This has strengthened our position across the enlarged Group's common packaging end markets and extended our geographic reach, adding new adjacent technologies to RPC's capabilities. With 42 production facilities spanning 20 countries (including sites in North America, Asia and North Africa) and with annual sales of €590m, this was a major acquisition for the Group; it will take time to fully integrate and realise the potential synergies from combining the two businesses.

Also in February 2015 the Group acquired PET Power, a Netherlands based manufacturer of PET products, serving the cosmetics, food and pharmaceutical markets. With sales of £37m it is recognised as a European leader in PET based products from an Injection Stretch Blowmoulding (ISBM) technology platform. PET is the fastest growing polymer material for conversion to rigid plastic in the packaging industry and has a number of unique characteristics which makes it an attractive material to develop for both packaging and other market applications.

More recently, in May 2015, the Group enhanced its position in PET further by acquiring Innocan, a Belgian based start-up company with a range of innovative and stackable PET containers.

Creating a meaningful presence outside Europe

During the year the Group completed its major expansion programme at Morgantown, PA, USA, providing additional capacity for growth in food packaging. In addition, further capital expenditure to support Superfos' growth in North America was made, alongside the expansion of M&H Plastic's facility at Winchester, VA, as its successful UK business model is rolled out to the USA. Sales in the USA relating to these sites have grown by 52% versus last year to a level of £89m for the total Group.

In June 2014 the Group acquired Ace Corporation Holdings Limited ('Ace'), a China based and Hong Kong headquartered award-winning manufacturer of plastic injection moulded components and injection moulding tools for the packaging and non-packaging markets. Operating from five factories in China and with sales of £104m, it provides RPC with a strong platform to support its international customer base with high quality, European standard packaging in Asia. It also provides opportunities to benefit from the high and sustained growth of this profitable niche manufacturer of injection moulded components and moulds.

Business Integration

Recent Acquisitions

Since its acquisition in June 2014, the strategic potential of Ace has been confirmed by both packaging and non-packaging customers. Good progress has been made in developing revenue synergies for the Group, with a number of RPC's European businesses benefiting from Ace's mould making expertise. A packaging sales presence has been established in Shanghai and Promens Asia will be integrated into the Ace division.

The integration of the Promens Group is also proceeding well. Within five weeks of acquiring the business a new organisation structure was put in place and the new management teams are working well together, with the Promens integration programme now well established. Early purchasing synergies have been realised and corporate overhead duplications have been eliminated. Given the increased opportunities identified to optimise the combined manufacturing footprint in Europe (42 RPC plants and 34 Promens plants), the Group is now projecting €30m per annum of overall profit synergies, increasing its initial estimate by €15m, with €12.5m expected to be realised in 2015/16. The total integration costs to deliver these are projected to be €70m, with the associated cash costs (excluding capital expenditure) expected to be lower at €25m.

The PET Power business, which is now being managed by the M&H Plastics business within the Bramlage division, is a stand-alone business and has already been integrated into the Group, with purchasing and working capital synergies quickly realised.

Fitter for the Future

The Group completed the final phase of Fitter for the Future, its business improvement programme, during the year. This programme focused on optimising the Group's existing business portfolio and European manufacturing footprint whilst disposing of its non-core businesses. The objectives and final actions included rationalising the manufacturing footprint in Sweden, France and Spain. The trading disposables business at Offenburg (Germany) was sold in May 2014 and the Cobelplast sheet business (comprising sites at Lokeren (Belgium) and Montonate (Italy)) was sold in September 2014.

The programme costs incurred were £24.4m in the period (£19.5m continuing business and £4.9m relating to Cobelplast including a £3.7m loss on sale). The programme delivered steady state cost savings of £5m in the year, with cumulative annual savings by the end of 2014/15 at £14m.

Group Performance

The Group's underlying profit growth was good despite a generally flat economic environment in mainland Europe and the impact of a foreign currency translation headwind due to a weakening Euro. Overall sales increased 17% during the year to £1,222m, with a significant contribution coming from acquisitions. Like-for-like sales grew 4%, after taking into account the impact of price reductions relating to the polymer content of sales passed on to customers, the currency translation headwind impact on sales values and other effects. Adjusted EBITDA was £187.6m (2014 restated: £145.3m) and adjusted operating profit of £131.6m increased by £30.6m, with return on sales improving to 10.8% (2014 restated: 9.6%). After adjusting for £26m of profit contribution from the newly acquired businesses, the main drivers of improvement were higher like-for-like activity levels and other business improvements (including £5m of benefits arising from the Fitter for the Future business programme), and a polymer tailwind arising in the second half of the year as a result of the fall in polymer prices. Changes in polymer prices are typically passed on to our customers, usually with a time lag, and the fall in polymer pricing in the second half of the year on the back of falling oil prices positively impacted margins, albeit temporarily. Offsetting these effects were a £6m translation impact on profits and the cost of inflation.

The Group invested heavily in growth and efficiency projects, with over £90m of capital expenditure invested in the year. Cash generation remained strong with £92.7m net cash from operating activities and free cash flow of £50.8m. Working capital as a percentage of sales for continuing operations was at 5.5% (2014: 3.0%). The Group retains a strong balance sheet with net debt of £431m, and having refinanced ahead of both the Ace and Promens acquisitions, it had total finance facilities of £862m at 31 March 2015.

Injection Moulding

The business comprises the Superfos, Bramlage-Wiko, UKIM and Ace clusters. The Ace business acquisition was completed on 2 June 2014 and these results include ten months of post-acquisition contribution. The M&H Plastics business, which was included in Injection Moulding in the results to 31 March 2014, is now reported in Blow Moulding (including the comparator year). The overall improvement in sales and adjusted operating profit reflects the contribution made by Ace and sales growth within the existing injection moulding businesses.

Superfos sales volumes were higher than last year. Helioplast performed very well with sales volumes up 39% on the previous year through growing market share in the south east Europe region. The cluster benefited from continued sales growth of its higher added value thin-walled products and innovative barrier packaging (SuperLock range). The consolidation of manufacturing facilities in Sweden as part of the Fitter for the Future programme was successfully completed in the year.

Overall activity levels for UKIM were in line with last year as the increase in the DIY market was offset mostly by the delay of new projects in other end markets. Sales of the SuperLock product range have gained traction in the UK market with local production commencing by the end of the year. The UKIM cluster was integrated into the Superfos division as a separate region on 1 April 2015.

The Bramlage-Wiko business performance recovered from a weak start to the year which was impacted by customer destocking. In the USA, food packaging sales increased following a major expansion of its production facilities at Morgantown, PA. In addition new investments in Tassimo production lines supported further growth in demand for coffee capsules. The Spanish business returned to profitability following the closure of its San Roque operation. The cluster continues to be successful in developing new product designs and is well positioned to exploit new business opportunities through its strong market positions and leading technological know-how.

The strategic potential of Ace as a platform for future growth in Asia for both the higher added value packaging and non-packaging markets was confirmed by major customers during the year. A sales presence for the rest of the Group has now been established in China with additional packaging sales anticipated in the current financial year. Overall the business traded satisfactorily with year-on-year growth realised despite being impacted by significantly lower activity levels in one of its major lifestyle product lines and European export sales being negatively influenced by the strong appreciation of the Renminbi versus the Euro in the second half of the year. Unfortunately on 26 October 2014 a fire incapacitated the electroplating lines at the Zhuhai factory. An insurance claim has been made to recover property damage and business interruption costs. Although no orders were lost and continuity of supply was achieved, this event slowed the rate of planned growth of the electroplating business. The new (and improved) lines are currently being installed and the forward order book is looking healthy as customers have appreciated the business' performance during the disruption. Further investment in plating capacity is therefore being considered. The process of integrating Ace into the Group in order to realise synergistic opportunities has progressed well.

Thermoforming

The thermoforming operations comprise the retail food packaging and beverage businesses which are managed by the Bebo cluster. The cluster performed well in the period, with profitability and RONOA significantly improved. The non-core trading disposables business at Offenburg (Germany) was sold in May 2014 which, together with loss of business arising from the flooding of a French factory and the appreciation of Sterling versus the Euro, accounts for the decrease in turnover in the period.

Overall activity levels on a like-for-like basis were similar to last year. The Group's cost competitiveness in the margarine and spreads market, which is a significant part of the thermoforming business and in which the Group has strong market positions, was improved by the reorganisation of the cluster under Fitter for the Future programme. The closure of the Beuningen site and the subsequent transfer of business to lower cost operations in the UK and Poland were completed in the year and have started to yield savings. This, together with new product development such as the development of in-mould labelling of thermoformed products (IML-T), is helping to improve market share. Sales into the French dairy market, which were adversely affected by the flood and subsequent closure of the Troyes site, have stabilised but were lower year on year. Further sales growth in single serve beverage systems and in particular the Dulce Gusto coffee capsule, was realised with new capacity being installed. We anticipate that the single serve beverage system will be extended into the tea market.

Blow Moulding

The blow moulding business comprises the Blow Moulding cluster which operates from 11 sites in the UK and mainland Europe, and the M&H Plastics business whose processes and markets are predominantly blow moulding.

The segment benefited from the acquisition of M&H Plastics, whose margins are generally higher, and its associated synergies, resulting in the significant increase in sales, operating profit and improved returns, and in particular from the impact of a full year of trading (2014: only 3 months). Sales volumes at M&H Plastics have grown since joining the Group in December 2013, particularly in the USA where investment in expanding its US facility at Winchester, VA, has resulted in higher sales. Further growth in the USA is foreseen in the new year. For the rest of the blow moulding business growth realised in agrochemicals and industrial products was offset by certain contract losses in personal care and barrier jars. The restructuring of the Blow Moulding cluster under the Fitter for the Future programme has reduced capacity costs and helped improve the return on sales of the cluster.

Recent Acquisitions

(Promens and PET Power)

This segment comprises the Group's recent acquisitions (Promens and PET Power), both of which were purchased in mid-February 2015 and contributed six and seven weeks of trading results respectively to the Group. The results were significantly impacted by certain acquisition accounting adjustments, in particular the restating of finished goods stocks to sales value thereby reducing margins close to zero in the period in which the acquired stocks are being sold. Underlying trading in the period (excluding acquisition accounting impacts) was in line with management's expectations.

Non-Financial KPIs

RPC has three main non-financial key performance indicators (KPIs). From an environmental and cost control perspective, electricity and water usage per tonne produced are measured, and from an employee welfare perspective reportable accidents are monitored.

These non-financial KPIs are set out below:

RAFR is defined as the number of accidents resulting in more than three days off work, excluding accidents where an employee is travelling to or from work, divided by the average number of employees, multiplied by 100,000.

It is very good to see the significant improvement made in health and safety performance with the RAFR improving by 37% compared with last year following the implementation of a new health and safety improvement plan. The lower RAFR for the year was achieved despite a significant increase in employee numbers following the acquisitions. Focus on health and safety remains our first priority and the transfer of RPC Safety Principles and the implementation of the RPC safety standards within the acquired businesses was a key work stream in the year. The commitment of senior management to safe working is now manifest in all sites and is helping to make tangible changes to the safety performance of manufacturing operations.

The Group continues to make stringent efforts to improve its efficient usage of electricity and water. The impact of a number of energy saving initiatives to replace older machinery with more modern energy conserving equivalents has been offset by the shift towards a higher consumption per polymer tonne converted associated with the manufacture of higher value added products. Water usage has reduced significantly in recent years following recycling initiatives including closed loop cooling systems introduced to manufacturing sites across the Group.

Outlook

I am pleased with the Group's performance in the financial year ending March 2015. We have made further progress in implementing the Vision 2020 strategy with additional platforms for growth established in Asia, North America, Africa and Europe. The integration of Promens is progressing well and the Group continues to explore further opportunities for growth. Despite the currency translation headwinds and the adverse impact from the time lag in passing through higher polymer prices, the start to the new financial year has been satisfactory and in line with management's expectations.

P R M Vervaat

Chief Executive

Acquisitions

On 2 June 2014 the Group acquired effective control over the share capital of Ace Corporation Holdings Ltd ("Ace"). The business was acquired for an initial consideration of US$301m (£178m) and total payments to vendors of up to US$430m (£255m) are expected on a cash-free, debt-free basis and subject to customary adjustments. The initial consideration was satisfied through the issue of 8,509,841 ordinary shares in RPC (consideration shares) and cash payments of US$207m (£123m) funded from the placement of 12,500,000 ordinary shares (placement shares) and from new debt facilities. Further contingent payments in cash of up to US$129m (£77m) are payable by the Group subject to Ace's financial performance up to the year ending 31 December 2017. The goodwill on acquisition amounted to £150.9m after fair value adjustments, and the trading results of the business after the acquisition date are included in the Group results.

On 12 February 2015 the Group acquired the share capital of PET Power for a consideration of €42.5m (£32.3m) on a cash-free, debt-free basis, and subject to customary adjustments, which was funded wholly through existing debt facilities. The provisional goodwill on acquisition amounted to £15.5m after fair value adjustments, and the trading results of the business after the acquisition date are included in the Group results.

On 20 February 2015, the Group acquired the entire share capital of Promens Group AS ("Promens") for a consideration of €386m (£299m) on a cash-free, debt-free basis, subject to customary adjustments. The consideration paid for Promens represents a multiple of 6.8 times 2013 EBITDA. The acquisition was funded in part through a fully underwritten rights issue of 62,596,987 new ordinary shares at 320 pence each, on the basis of 1 new ordinary share for every 3 existing ordinary shares, to raise approximately £200m. The balance was funded through the Group's existing revolving credit facility (RCF), which was increased from £350m to £490m for this purpose. The provisional goodwill on acquisition amounted to £153.6m after fair value adjustments, and the trading results of the business after the acquisition date are included in the Group results.

Transaction fees for all three acquisitions have been charged to the income statement as Exceptional costs. Each acquisition meets the Group's acquisition criteria being a good strategic fit, having strong incumbent management, a successful financial track record, quantifiable synergies and being earnings enhancing post acquisition with a ROCE greater than RPC's weighted average cost of capital.

Divestments

On 22 May 2014 the Group sold its disposables trading business at Offenburg, Germany (RPC Tedeco-Gizeh GmbH) to HOSTI International GmbH. The results of the business up until this date are included in the results of the Bebo cluster (Thermoforming segment).

On 30 September 2014 the Group sold its Cobelplast extruded sheet business, comprising its businesses at Lokeren, Belgium (RPC Cobelplast NV) and Montonate, Italy (RPC Cobelplast Montonate S.r.l.). These businesses had been put up for sale in September 2013 and their results reported as Discontinued operations.

Post Balance Sheet Events

On 5 May 2015 the Group acquired the share capital of Innocan BVBA, a Belgian based PET innovator, for €6.5m on a cash and debt free basis, with 35% of the consideration deferred and contingent on business growth in the first three years of the Group's ownership.

Business Performance

The financial review of the business is based on underlying business performance, excluding exceptional and non-underlying items which include the amortisation of acquired intangible assets, pension administration costs, the fair value changes of unhedged derivatives and the unwinding of the discount on deferred and contingent consideration including related exchange impacts.

The Group's results and financial position at 31 March 2015 have been affected by the acquisitions noted above.

Consolidated Income Statement

Group revenue from continuing operations increased by 17% to £1,222.4m (2014: £1,046.9m). Net acquisitions (Ace, Promens and PET Power in 2014/15, the full year impact of M&H Plastics and Helioplast acquired in 2013/14, net of the disposal of Offenburg) contributed an additional £213m sales and sales grew on a like-for-like basis by 4% but offsetting this were £54m of foreign currency translation effects (mainly the Euro which weakened from €1.19 to €1.27) and the impact of net sales price reductions arising from passing on falling polymer prices to customers with pass through clauses.

Adjusted operating profit (before restructuring costs, impairment and other exceptional items) was £131.6m (2014 restated: £101.0m) but after excluding the impact of net acquisitions of £26.3m, it represented a 4% increase on an underlying basis which was in line with activity levels. The net adverse translation impact of weakened foreign currencies was wholly offset by a polymer price tailwind arising from the fall in polymer prices in the second half of the year. The Fitter for the Future programme contributed an additional £5.0m of savings and the impact of volume, margin and general business improvements was offset by higher investment costs of additional depreciation from recent capital expenditure and inflationary cost increases which were experienced throughout the Group. The effect of the above was to improve return on sales from 9.6% to 10.8%.

Exceptional items for continuing operations totalling £42.9m (2014: £26.7m) comprised restructuring and closure costs of £22.0m (2014: £25.3m), acquisition and integration costs of £12.7m (2014: £1.4m), impairment losses of £4.2m (2014: £7.3m) and other items of £7.3m (2014: £1.0m) offset by insurance proceeds of £3.3m (2014: £8.3m). The restructuring and closure costs include £18.0m relating to the finalisation of the Fitter for the Future business optimisation programme, including redundancies and restructuring costs relating to the closure of San Roque, the closure of Tenhult and merger with the Mullsjö site in Sweden, the restructuring of Blow Moulding operations, rationalisation in Bramlage-Wiko (Pulheim and Vel'ky Meder) and ongoing costs relating to the closure of the Troyes site and the thermoformed spreads business. In addition the Promens businesses incurred £4.0m of ongoing restructuring costs in the post-acquisition period relating to Hockenheim and the site closures and resettlement of operations at Theessen, Germany. The impairment loss of property, plant and equipment includes the reduction in value of the Tenhult property transferred to Assets held for sale, and the fire damage at the Zhuhai factory in China. Other exceptional items includes a remuneration charge of £5.8m representing the expected contingent consideration earned in the period under the acquisition purchase agreement by the senior Ace executives employed in the business, which accounting standards (IFRS 3) require to be charged to profit rather than be attributed to goodwill on acquisition. Offsetting these were the £3.3m of recognised insurance proceeds from the Zhuhai fire.

Net financing costs at £16.3m were higher than the prior year (2014: £14.2m), reflecting both the increase in net interest payable on borrowings which increased over the period due to the acquisitions made, and the increase in non-underlying finance costs, the latter comprising net pension interest relating to the Group's defined benefit schemes, fair value changes to certain unhedged financial instruments, the unwinding of discount on deferred and contingent consideration including related exchange impacts and other non-recurring finance related costs.

Adjusted profit before tax increased from £89.5m to £119.0m mainly as a result of the improvement in adjusted operating profit. The tax rate on the adjusted profit before tax for the Group remained at 24.0% for the year, resulting in adjusted profit after tax of £90.4m (2014: £68.0m) and the adjusted basic earnings per share for continuing operations was 41.0p (2014 restated: 36.5p).

The Group's overall taxation charge for continuing operations was £21.3m (2014: £15.3m) resulting in a reported tax rate of 31.7% reflecting an underlying effective rate of 24.0% and a 14.1% tax credit on exceptional charges. The profit after tax for continuing operations was £45.8m (2014: £43.7m). The basic earnings per share for continuing operations was 20.8p (2014 restated: 23.5p).

Consolidated Balance Sheet and Consolidated Cash Flow Statement

The balance sheet of the Group was significantly strengthened by the acquisitions made in the year and the related funding arrangements. Goodwill increased as a consequence of the acquisitions of Ace, PET Power and Promens, which totalled £320.0m. Other intangible assets increased by net £61.0m comprising mainly customer relationships, technology and brands capitalised on acquisition and new product development expenditure, net of amortisation charges.

Property, plant and equipment increased by £213.2m; capital additions were £90.1m for continuing operations which was £36.5m (68%) ahead of depreciation charged in the period, due to higher capital investment levels.

The £23.3m of derivative financial instruments largely comprise the mark-to-market value of euro currency swaps taken out in 2011 to hedge the US dollar borrowings from the US Private Placement (USPP). The strengthening of the euro to the US dollar has served to decrease the value of these in the year.

Working capital (the sum of inventories, trade and other receivables and trade and other payables) was £96.1m, which was 5.5% of sales (annualised) compared with £29.9m at the previous year, 3.0% of sales. The increase is largely attributable to the working capital positions of the new acquisitions.

The long-term employee benefit liabilities increased from £72.5m at the prior year end to £109.3m, in part due to the assumption of new pension liabilities from acquired businesses but mainly due to net increase in actuarial losses on defined benefit schemes within the Group and other post retirement schemes impacted by lower interest rates.

Capital and reserves increased in the period by £309.5m, the net profit for the period of £41.2m, the issue of shares to acquire new businesses of £327.0m, favourable exchange movements on translation and net share issues and share-based payments from employee share schemes being offset by pension related net actuarial losses of £25.8m, dividends paid of £29.9m and adverse net fair value movements on derivatives. Further details are shown in the Consolidated statement of changes in equity which is included in the financial statements.

Net cash from operating activities (after tax and interest) was £92.7m compared with £100.2m in the prior year, with higher cash generated from operations after exceptional cash flows of £32m, being reduced by net increases in working capital, higher interest payments and higher tax payments as tax losses from prior years have been utilised.

Net debt, which includes the fair value of the cross currency swaps that will be used to repay the USPP funding, increased by £166.1m and at the end of the year stood at £431.3m (2014 restated: £265.2m). The fair value of the swaps increased by £34.4m in the year due to the weakening of the euro against the US dollar. Net cash from operating activities was utilised for, among other things, acquiring the Ace, Promens and PET Power businesses for a combined £450.4m, purchasing property, plant & equipment of £92.3m and for paying dividends of £29.9m. Additional proceeds were raised to fund the acquisitions from issuing shares and increasing borrowings from the banking group. Gearing reduced to 74% (2014: 98%) and reported leverage (net debt to EBITDA) was 1.97. The average net debt during the year was £369m (2014: £269m).

During the year the Group financed the Ace and Promens acquisitions in the capital markets, raising equity through a share placing, a full rights issue and increasing bank borrowings. As at 31 March 2015 the Group had total finance facilities of approximately £862m with an amount of £397m undrawn after taking account of bank guarantees and other adjustments. The facilities are mainly unsecured and comprise a revolving credit facility (RCF) of up to £490m, together with an uncommitted £75m accordion facility, with seven major UK and European banks maturing in 2019, USPP notes of $216m and €60m issued to 17 US life assurance companies maturing in 2018 and 2021, a bilateral term loan of £60m with a major UK bank maturing in 2017, mortgages of £12m, finance leases of £9m and other uncommitted credit and overdraft arrangements. The USPP notes were a debut issue raised in the USPP market in 2011, providing the Group with 7 year and 10 year dated borrowings. The Group has a NAIC-2 credit rating by the US National Association of Insurance Commissioners.

Financial Key Performance Indicators (KPIs)

The Group's main financial KPIs focus on return on investment, business profitability and cash generation.

1 Return on net operating assets (RONOA), which is measured over the previous 12 months, is adjusted operating profit for continuing operations divided by the average of opening and closing property plant and equipment and working capital for continuing operations for the year concerned.

2 Return on sales (ROS) is adjusted operating profit divided by sales revenue for continuing operations.

3 Free cash flow is cash generated from continuing operations less net capital expenditure, net interest and tax, adjusted to exclude exceptional cash flows and one off pension deficit reduction payments.

4 Return on capital employed (ROCE), which is measured over the previous 12 months, is adjusted operating profit for continuing operations, divided by the average of opening and closing shareholders' equity, after adjusting for net retirement benefit obligations, assets held for sale and net borrowings for the year concerned.

5 Added value per tonne is the difference between sales value per tonne produced and the cost of polymer per tonne produced for continuing operations. The 2013/14 comparative numbers have been restated using 2014/15 exchange rates.

6 Cash conversion is the ratio of cash generated from operations less net capital expenditure excluding exceptional cash flows and one-off pension deficit reduction payments, to adjusted operating profit.

The key measures of the Group's financial performance, which are now measured on a continuing basis, are its return on net operating assets (RONOA) and return on sales (ROS). The new hurdles agreed by the Board are for the Group is to exceed 20% RONOA and 8% ROS. The increase in return on sales, excluding Promens and PET Power, resulted from an improved gross margin and lower costs. ROCE is impacted by the increase in goodwill that arises as a result of recent acquisitions. Free cash flow is lower than last year mainly as a result of higher levels of capital expenditure, resulting in a lower cash conversion percentage.

S J Kesterton

Group Finance Director

Consolidated income statement

for the year ended 31 March 2015

Consolidated statement of comprehensive income

for the year ended 31 March 2015

Consolidated balance sheet

at 31 March 2015

Consolidated cash flow statement

for the year ended 31 March 2015

Consolidated statement of changes in equity

for the year ended 31 March 2015

1. Basis of preparation

The unaudited preliminary consolidated financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 March 2015 or 2014. The financial information for the year ended 31 March 2014 is derived from the statutory accounts for 2013/14 which have been delivered to the Registrar of Companies. The auditor has reported on the 2013/14 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act. The statutory accounts for 2014/15 will be finalised on the basis of the financial information presented by the directors in the results announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

2. Accounting policies

These extracts from the Group financial statements for the year ended 31 March 2015 have been prepared in accordance with International Accounting Standards and International Financial Reporting Standards that were effective as at that date and as adopted by the EU ('Adopted IFRS').

In the preparation of the financial statements, comparative amounts have been restated to reflect the following:

- the adoption of IFRS 11 'Joint Arrangements', which has resulted in the restatement of a joint venture previously proportionately consolidated and now accounted for under the equity method as an investment. See note 9.

- The segmental revenues and results by process and geography to reflect the impact of recent acquisitions. See note 3.

3. Operating Segments

The information reported to the Group's Board of Directors, considered to be the Group's chief operating decision maker for the purpose of resource allocation and assessment of segment performance, is based on manufacturing conversion process. The businesses that use these processes can be found in the Operating Review.

Information regarding the Group's operating segments is reported below.

Segment revenues and results

The accounting policies of the reportable segments are the same as the Group's accounting policies. Segment profit represents the profit earned by each segment with an allocation of central items. Pricing of inter-segment revenue is on an arm's length basis.

The following is an analysis of the Group's revenue and results by reportable segment:

The segmental sales and adjusted operating profit have been restated in prior years to transfer M&H Plastics, which was acquired in December 2013, from Injection Moulding to Blow Moulding, and for adjusted operating profit also to exclude non-underlying items and the share of joint venture results, now shown separately. The Ace results from 2 June 2014 are included within Injection Moulding revenue and operating profit. The results reported as Recent Acquisitions relate to PET Power and Promens since their acquisition in February 2015 and are shown separately as these businesses had not been integrated into the Group's organisational structure by the year end.

Geographical information - continuing operations

The Group's revenue and non-current assets (other than financial instruments and deferred tax assets) are divided into the following geographical areas:

2015

2014 restated

The period to March 2015 includes the Group's North American and Asian operations in a new 'Rest of World' category and the prior periods have been restated accordingly. The period to March 2015 includes turnover and profit from the Ace Group from 2 June 2014, the PET Power Group from 12 February 2015 and from the Promens Group from 20 February 2015. In prior periods the categories Mainland Europe and UK had included operations in the USA whose sales had been predominantly sourced from intra-group supplies manufactured in Germany and the UK.

Revenues from external customers have been identified on the basis of origin and non-current assets on their physical location.

4. Non-underlying Items

2015

Of the restructuring and closure costs, £18.0m relates to the Fitter for the Future programme affecting a number of sites across the Group. The remainder relates to restructuring that was on-going within the Promens group on acquisition. Acquisition costs include the transactional acquisition costs of Ace, Promens and PET. Integration costs relate to the integration of Ace and Promens. Impairment loss on property, plant and equipment includes a reduction in net book value for a building at Tenhult, Sweden transferred to Assets held for sale, impairment of assets damaged by flooding at Helioplast, Bosnia-Herzegovina and plant and equipment damaged in a fire at the Ace factory at Zhuhai, China. Insurance proceeds have been recorded for the fire at Ace. Other exceptional items for the year include £5.8m relating to a provision for remuneration as defined under IFRS 3, earned by shareholders of Ace who must remain as employees of the Group for the duration of the earn-out period to qualify for the remuneration. Also included in Other exceptional items are negative goodwill of £0.8m from the acquisition of Goiffon during the year and business interruption expenses relating to the flooding and fire mentioned above. Exceptional items relating to discontinued operations are disclosed in note 7.

Non-underlying operating items include amortisation of acquired intangibles and pension administration costs. Non-underlying finance items are described in note 5.

2014

The closure costs in the previous year comprise the costs of closing the sites at Antwerp (Belgium) and Beuningen (Netherlands) which formed the basis of the yellow fats production rationalisation under the Fitter for the Future business optimisation programme, and the costs of closure of the Troyes (France) site following the flood in May 2013. In addition there were restructuring costs under this programme at other sites. Acquisition costs comprise the costs relating to the acquisitions of M&H Plastics, Helioplast and Ace. Integration costs are those of M&H Plastics and Helioplast and the Manuplastics business which was acquired in the previous year. The impairment losses comprise goodwill written off relating to the disposables business at Offenburg. Impairments to property, plant and equipment at Offenburg, Troyes and other sites were as a result of restructuring activities under the Fitter for the Future programme, and a £0.8m impairment to surplus properties marketed for sale. Insurance proceeds relate to the flooding at Troyes.

5. Net financing costs

Non-underlying finance costs comprise defined benefit pension interest charges, fair value changes of unhedged financial instruments, the unwinding of discount on deferred and contingent consideration including related exchange impacts and other non-recurring finance related costs.

6. Taxation

7. Discontinued operations

Cobelplast, the RPC business which manufactured extruded sheet, was marketed for sale in the prior periods and was sold on 30 September 2014. In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', it was classified in the Consolidated balance sheet within assets and liabilities held for sale and reported as a Discontinued operation prior to its sale.

The Consolidated income statement with respect to total discontinued operations is set out below:

The loss on disposal of operations relates to the disposal of the Cobelplast business.