Final Results

21 June 2011

RPC GROUP PLC

Preliminary results for the year ended 31 March 2011

RPC Group Plc, Europe's leading supplier of rigid plastic packaging, announces today its results for the year ended 31 March 2011.

Highlights:

§ Sales increased by £99.3m to £819.2m due to 9% growth on a like-for-like basis and the inclusion of £37.5m Superfos turnover as from the 18 February acquisition date;

§ Adjusted operating profit improved by 36% to a record £55.8m (2010: £40.9m);

§ Adjusted EPS increased to 29.9p (2010 restated: 21.1p);

§ Net profit improved by 94% to a record £25.6m (2010: £13.2m);

§ Strong cash performance with a free cash flow of £50.9m (2010: £60.1m);

§ Net debt increased to £178.7m (2010: £80.2m) with £115.5m additional debt assumed to fund the Superfos acquisition;

§ Final dividend of 8.1p recommended giving a total year dividend of 11.5p (2010 restated: 8.4p);

§ RPC 2010 programme successfully concluded with the like-for-like ROCE rising to 14.6% compared with 9.1% in the year preceding the programme;

§ Steady state profit synergies related to Superfos acquisition anticipated of £15m to £25m together with £20m of working capital cash synergies.

Commenting on the results, Jamie Pike, Chairman, said:

"It is very pleasing to report another record performance ahead of market expectations. The RPC 2010 programme was successfully concluded thereby ensuring that the Group has the earnings capacity to deliver an average ROCE of at least 15% across the economic cycle. The Superfos acquisition will enhance profitability with the integration progressing well. The Group is well positioned to deliver on its growth strategy. In light of the Group's financial performance and prospects, the Board is proposing to increase the final dividend per share to 8.1p, implying a full year increase of 37%."

For further information:

This preliminary 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

The trading performance in 2010/11 was strong with the adjusted operating profit reaching a new record level of £55.8m despite significant raw material cost increases experienced during the year. Activity levels improved against a continued background of a subdued economic environment. Overall sales volumes on a like-for-like basis were 3% higher than the previous year but remain below the activity levels witnessed prior to the economic recession. Driving the growth are sales of higher added value products into sectors such as coffee capsules, personal care, long shelf-life and pharmaceuticals. Costs were further reduced as the RPC 2010 programme reached its conclusion.

Polymer costs represented approximately 36% of the turnover in 2010/11 compared with 30% in the previous year. Throughout the year polymer index prices have risen by circa 20% and reached record levels in March. The Group is able to pass through these costs onto its customer base, albeit with a time lag which has had a significant negative impact on full year margins. The Group is confident in its ability to pass through both the most recent and any future polymer price increases. The underlying supply-demand dynamics of the polymer market are expected to be relatively favourable as significant additional polymer capacity continues to come on stream.

The RPC 2010 programme was successfully concluded at the end of the financial year with the closure of the Goor facility and the transfer of its business to other sites. The performance enhancement work stream has evolved into on-going continuous improvement activities. The final steady state structural benefits are estimated at £24m per annum of which approximately £22m had been realised by March 2011.

The Group completed the acquisition of Superfos on 18 February for a cash-free debt-free consideration of €240m. Superfos is recognised as an industry leader, has an excellent strategic fit and extends the Group's presence to the Nordic region, Turkey and North Africa. The combination also positions the enlarged Group as a leader in barrier and light-weighting technologies with approximately 59% of products delivered to the resilient food sector. Cost and revenue synergies are projected to be in the range of £15m to £25m per annum from the third full year after acquisition, of which at least £5m is anticipated to be realised in 2011/12. In addition working capital synergies of £20m have been identified, of which £12m has already been realised in 2010/11. The overall cost for realising the synergies is expected to be circa £5m. The integration of the Superfos operations into the enlarged Group is progressing well. Unfortunately it has been deemed necessary to propose the closure of the Superfos UK operations at Runcorn, which is anticipated to be completed by June 2012.

Both RPC and Superfos are at the forefront of polymer conversion technology in the packaging industry and have a good reputation in the market place for innovative packaging design and concepts. During the year several innovative designs have come to market, whilst process developments with the aim of producing lighter weight packaging continued to make good progress. The trends for light-weighting and conversion from other packaging materials such as glass and metal continue as customers aim to reduce the weight of packaging in line with their sustainability policies.

Financial Highlights

Revenue for the year increased by 14% to £819.2m due to the inclusion of the Superfos business with effect from 18 February and 9% growth on a like-for-like basis. The like-for-like growth was driven by a 3% increase in sales volumes combined with higher selling prices due to sales mix improvements and the pass-through of higher polymer prices. The adjusted operating profit reached a record £55.8m representing an improvement of £14.9m compared with the previous year, of which £2.6m was due to the inclusion of Superfos results and £5.0m due to the alignment of the depreciation period for production machinery from 7.5 years to 10 years. The £7.3m like-for-like improvement in the adjusted operating profit was driven by the sales volume and mix improvements with further cost reductions coming through, which more than offset the impact of rising polymer prices.

The adjusted profit before tax1 increased by 41% to £51.6m (2010: £36.5m) due to the higher operating profit with net interest charges staying at a similar level as the previous year. Adjusted EBIT margins improved to 6.8% of revenue (2010: 5.7%). The ROCE for the full year on a like-for-like basis (excluding the Superfos impact and the depreciation alignment) improved to 14.6% compared with 11.8% for the previous year. Restructuring, impairment and other exceptional costs of £18.0m (2010: £18.1m) were incurred mainly in relation to the conclusion of the RPC 2010 programme and transaction costs associated with the Superfos acquisition. Overall the Group achieved a record net profit for the year of £25.6m (2010: £13.2m) with the adjusted basic earnings per share2 increasing by 8.8p to 29.9p.

Net cash from operating activities continued to be strong at £69.3m (2010: £64.7m) due to a good operating profit performance and a further improvement of the working capital position with the early realisation of Superfos cash synergies of circa £12m. Working capital efficiency measured as a percentage of sales for the enlarged Group of 3.1% compared favourably with the 3.6% recorded last year. Net debt at the year end was £178.7m (2010: £80.2m) as £115.5m of additional debt was assumed to fund the Superfos acquisition. The net debt to EBITDA ratio at year end remained a robust 1.5 times with an associated gearing of 68% (2010: 51%).

Capital expenditure paid of £43.3m (2010: £28.0m) was significantly higher than the previous year and above the depreciation level of £28.7m reflecting the focus on future growth particularly in higher added value products. The Group is committed to invest in projects that are innovative, provide a competitive advantage and generate attractive returns. Capital expenditure net of disposals was £41.1m (2010: £23.3m).

1 Adjusted profit before tax is defined as operating profit before restructuring, closure and impairment charges and other exceptional items less net interest.

2 Adjusted basic earnings per share is defined as adjusted profit before tax less tax adjustments divided by the weighted average number of shares in issue during the year.

Strategy

The Group has delivered on its aim of having an earnings capacity on average of at least 15% ROCE across the economic cycle following the completion of the RPC 2010 programme. The like-for-like ROCE has improved from 9.1% in the year preceding the programme to 14.6% in 2010/11, despite operating at activity levels that remain below those witnessed pre-recession and a strong headwind with respect to raw material prices.

The Board had previously concluded that the Group is well positioned to achieve growth by building on its existing strong market positions and technological know-how. The acquisition of Superfos fits very well in that strategy as it enhances the Group's market positions in Europe and combines two industry leading packaging groups with respect to technological capabilities. Opportunities for further organic and acquisitive growth continue to be explored, both in the European market as well as in less mature higher growth markets outside Europe.

Following the Superfos acquisition and the completion of the RPC 2010 programme, the Board has reviewed what the Group's profitability aspirations should be going forward. The Group's new target is to achieve a ROCE of 20% following the realisation of the steady state synergies related to the Superfos acquisition, assuming a non-recessionary economic environment with no significant volatility in raw material prices. It should be noted that the ROCE definition has been amended to improve comparability with larger quoted packaging companies such as Rexam. The enlarged Group's pro-forma ROCE in 2010/11, based on the new definition, has been calculated at circa 15%.

Board and Personnel

David Wilbraham has decided to retire from the Board at the next AGM. The Board would like to thank David for an outstanding contribution during his 13 years of service. Following his departure the Board will consist of six members, including the Group's Chief Executive and Finance Director.

As a consequence of a decentralised structure, the Group is able to provide many opportunities for individuals to make their own contribution to the Group. The Board appreciates the outstanding efforts by all who together have enabled the Group to conclude the RPC 2010 programme successfully and looks forward to their contribution in achieving the growth strategy.

Dividend

In light of the Group's financial performance and prospects, the Board is recommending a final dividend of 8.1p per share making a total for the year of 11.5p representing a 37% increase over the previous year (which has been adjusted to reflect the bonus element of the rights issue). Going forward, the Board intends to continue a progressive dividend policy taking into account the Group's leverage, earnings growth potential and future expansion plans. The intention is to target dividend cover of approximately 2.5 times adjusted earnings through the cycle.

Subject to approval at the forthcoming AGM, the final dividend will be paid on 2 September 2011 to shareholders on the register on 5 August 2011.

Outlook

The enlarged Group's outlook is positive with good growth opportunities existing both in more mature European markets as well as emerging markets. Following the conclusion of the RPC 2010 programme and the Superfos acquisition, the Group has a competitive cost base with good market positions based on leading technological capabilities. Building on continuous improvement and the realisation of the full synergy benefits in relation to Superfos, the aim is to achieve a ROCE of 20% assuming a non-recessionary economic environment and stable raw material prices. The new financial year has started satisfactorily with continued growth and results in line with management expectations.

J R P Pike R J E Marsh

Chairman Chief Executive

Principal Activities

RPC is Europe's leading supplier of rigid plastic packaging, with operations throughout Europe and one in the USA. Its product range comprises all forms of rigid packaging, namely injection moulded packs, thermoformed packs, sheet and extrusion blow-moulded packs, as well as injection-blown and injection-stretch-blown packs.

The business, which comprises 51 manufacturing sites and 6 separate distribution and sales centres, converts polymer granules into finished packaging product by a combination of moulding and assembly processes, with certain products undergoing additional value-adding decorating processes such as printing or label application.

Customers range from large multinational companies such as Unilever, Kraft, Nestlé and L'Oréal to local small and medium sized enterprises.

Operations are structured along market and technological lines. These groups of operations are organised into 7 clusters, aligned to the 3 main conversion processes used in the Group. The conversion process, cluster and markets they serve are as follows:

Each cluster has on average 7 manufacturing sites, operating across a wide geographical area for reasons of customer proximity, local market demand and manufacturing resource.

Each plant is run autonomously commensurate with maintaining overall financial control and effective co-ordination in each market sector. Hence every cluster and most operating sites have a separate management team headed by a cluster or general manager. This structure encourages focus on business issues and delivers enhanced performance.

Review of Operations

Injection Moulding

The business comprises the UK Injection Moulding, Bramlage-Wiko and Superfos clusters. The Superfos results have been included with effect from 18 February. The injection moulding business performed strongly over the year with significant volume growth in mainland Europe mitigating flat volumes in the UK. Revenue increased due to the inclusion of Superfos and 11% like-for-like growth, reflecting both volume gains and price as higher polymer prices were passed through. The adjusted operating profit improved by £10.2m of which £2.6m was due to the inclusion of Superfos and £2.5m related to aligning the depreciation period of production machinery to 10 years. The £5.1m like-for-like profit improvement is mainly driven by growth in the personal care, coffee capsules and pharmaceutical sectors which more than offset the reduction in gross margins due to the time lag in passing through rising polymer prices.

The UK Injection Moulding cluster, which comprises five sites in England, serves a wide range of customers in the food, health care and DIY markets. Overall sales volumes were on a similar level to last year, with volumes still being affected by weaker demand in the DIY retail sector. Strong growth was recorded in the healthcare sector on the back of the successful Postal Pack development. Production of new lighter weight paint pails commenced following a significant investment in new production line machinery over the last 2 years.

Bramlage-Wiko, which operates in Germany, France, Belgium, Slovakia and the USA, experienced significant volume growth. This was in part due to the absence of the de-stocking effects experienced in the previous year, but mainly due to organic growth through new product development leading to market share gains, particularly in the personal care and pharmaceutical sectors. Formatec, which manufactures for the pharmaceutical industry, benefited from a customer deciding to appoint it as its sole supplier. Following a period of restructuring, the Marolles (France) site returned to profitability having secured new business in cosmetics. Tassimo coffee capsule sales continued to show good growth.

Superfos manufactures and distributes a wide range of open top injection moulded containers, operating with 9 manufacturing sites, 5 distribution centres and 3 sales offices. As a leading European injection moulding manufacturer, it operates across Europe with exposure to markets outside the Group's pre-acquisition reach (the Nordic region, Turkey and North Africa). The business was acquired on 18 February and the injection moulding results include £2.6m of profit from Superfos, representing the trading results for the 6 weeks under RPC's ownership. Overall volumes are growing with good prospects particularly in light-weighting and barrier products.

Following an assessment of the overall UK manufacturing capacity, the proposed closure of the Superfos UK site at Runcorn was announced today with the existing business expected to be transferred to other sites, thereby safeguarding and ultimately improving service to the customer base.

Thermoforming

The thermoforming business comprises Bebo (retail food packaging), Tedeco-Gizeh (food service - vending and disposables), and Cobelplast (sheet production). Sales volumes were relatively flat year on year, the increase in revenue mainly reflecting the pass through of higher polymer costs. Overall operating profit increased by 26% to £14.7m, most of this improvement reflecting sales mix and cost improvements partly offset by lower margins due to the time lag in passing through rising polymer prices. The alignment of the depreciation period of production machinery resulted in an improvement in profit of £1.4m.

The Bebo cluster has been able to further strengthen its position in the margarine and spreads sector, where RPC has a leading market position. Investments made in the production of pre-printed lids using the patented Bebo print process have contributed to this position. Developments in oxygen barrier packaging (replacing glass and metal cans) continue to intensify, driven by environmental and safety considerations. The production of coffee capsules for Nestlé's Dolce Gusto business, which is also based on barrier technology, saw another year of unprecedented growth, resulting in further significant investment commitments. The restructuring of the Dutch thermoforming businesses was completed during the year, with the Goor site closed and all business and related machinery transferred to other RPC sites.

PET sheet sales continued to benefit from the development of new applications, but margins were adversely affected by the rising polymer costs which form a relatively high proportion of production costs. Further growth was achieved in the oxygen barrier sheet business. Sales volumes within the Tedeco-Gizeh cluster fell as the recessionary effects on the demand for vending machine cups continued, and margins remain tight within this competitive market.

Blow Moulding

The blow moulding operations are based both in the UK and in mainland Europe. Overall the blow moulding business has performed well in the period as the operating profit increased by £1.7m to £10.2m of which £1.1m was due to the depreciation alignment on production machinery. The like-for-like improvement in the adjusted operating profit was driven by higher sales volumes and reduced costs which more than compensated for the negative impact of the time lag in passing through higher polymer prices.

There was good demand from both the food and non-food sectors, particularly the agrochemical sector, with the Group in a good position to gain further business. Meanwhile the RPC 2010 restructuring activities were completed leading to further cost savings. Unfortunately part of the roof of an on-site warehouse in Kerkrade (the Netherlands) collapsed under heavy snow but through the pro-active response of management, continued supply to customers was ensured. Exceptional costs of £1.1m have been recognised.

The interest of customers in conversion projects from other packaging materials such as glass to plastic continued. The commitments of important customers regarding weight reduction targets had a positive influence on these conversion projects. The Group has leading multi-layer blow moulding capabilities necessary to benefit from these developments.

New Product Development

RPC remains at the forefront of polymer conversion technology in the packaging industry and has developed a good reputation in the market place for innovative packaging design and concepts. Through its design and development facilities, the Group is able to develop unique packaging solutions to meet the needs of individual customer demands. Throughout the RPC 2010 cost reduction programme the Group has maintained its development capability, which has been enhanced by the acquisition of Superfos.

Good progress has been made in developing light-weighting injection moulded products, most recently in the paint containers business, with both the UK Injection Moulding cluster and Superfos developing new technologies in this area. In thermoforming, the Group is among the world-wide leaders in the production and sealing of multi-layer, high barrier trays and tubs for oxygen sensitive foods thereby replacing long shelf-life packaging in other materials with light-weight plastic alternatives, such as packaging for baby food, sauces and ready meals. In blow moulding, developments in the multi-layer bottle and jar market continue to move forward where there is a potentially significant opportunity for substitution of glass by plastic due to, amongst others, weight reduction and a more favourable carbon footprint.

The overall innovation capabilities across the range of conversion technologies combined with the ability to continue to invest and the geographical reach of the Group provides RPC with a significant competitive advantage.

Principal Risks and Uncertainties

RPC is subject to a number of risks, both external and internal, some of which could have a significant impact on the performance of its business.

Each year a wide-embracing review is conducted of these risks. This process helps both identify the nature and magnitude of a risk and the manner in which it can be mitigated. The risks that are seen as being particularly important at the current time are:

Polymer price and availability:

The key raw material used in the manufacture of rigid plastic packaging is polymer, principally polypropylene, high density polyethylene and polystyrene. The prices of each of these polymers are subject to considerable volatility as they tend to follow the underlying price of oil, as well as changes in global supply and demand. Polymer prices have risen significantly in recent years but the Group is in a position to pass through the majority of these increases to its customer base albeit with a time lag. In the past some polymer supplies have been seriously affected by plant breakdowns and maintenance, resulting in shortages. As a consequence the Group has reduced its dependence on one or two suppliers and has adapted its manufacturing sites to convert a wider range of polymer grades. This will continue as new suppliers come on stream in areas such as the Middle East, Brazil and India.

Energy costs:

The action of heating and cooling polymer in the process of manufacturing rigid plastic packaging entails the use of substantial amounts of electricity. The Group has sought to adapt its plants to an era of higher and fluctuating electricity prices by the combination of a purchasing strategy which balances the risks by buying a proportion of expected electricity demand at fixed rates, and a drive to reduce the amount of electricity consumed per tonne of material converted through efficiency improvements. The Group also participates in a Climate Change Agreement, through the British Plastics Federation, which sets out energy reduction targets.

Dependency on key customers:

As the top 10 customers in the Group account for 33% of sales, the loss of any one of them could significantly affect the Group's results. Conversely, because of the Group's size, product range and the joint-investment often required to develop a product, many customers would have great difficulty in moving their business to another supplier in the short term. As a result there is a high degree of mutual dependency between RPC and its customers, which, of course, will be strengthened if the Group remains responsive to their requests, services them properly with quality products and continues to develop products that are suited to their needs.

Business interruption and the loss of essential services and supplies:

Every business faces the potential risk of operations being impacted by disruption due to loss of supply, failures with technology, industrial disputes and physical damage arising from fire, flood or other such event. The loss of essential services or products produced by a major supplier could have a significant impact on the Group's ability to service its customers. As such, the Group maintains alternative sources of supply wherever possible and if a problem is localised, in many cases it is possible to manufacture the product from another site within the RPC Group. In addition sites have established protocols and procedures to ensure business continuity in the event of a major incident.

Pricing and competitive pressures:

RPC supplies major European and multinational companies which have the ability to switch significant volumes between alternative suppliers thereby increasing pressure on prices. To mitigate these risks the Group continually strives to provide optimal customer service and be at the forefront of product and process innovation while at the same time seeking to reduce its cost base and to achieve improved productivity, efficiency and economies of scale. A significant part of the Group's sales are bespoke with longer-term contracts in place. In addition the Group's ability to continue to invest and maintain its innovation capabilities across a range of conversion technologies in the challenging economic environment of the last few years has improved its competitive position.

Financial risks:

RPC's treasury activities are governed by policies and procedures approved and monitored by the Board. The Group negotiates funding requirements in a timely manner ensuring appropriate headroom is secured and funding tenure obtained to mitigate availability risk. During the year the Group negotiated new funding arrangements, the majority of which expire in September 2015. Other financial risks relate to interest rate movements and foreign currency fluctuations. In the case of the former, RPC borrows at both fixed and floating rates in order to give a degree of stability to the composite interest rate charged each year. The Group has limited transactional exposure to the most influential currency risk, that of the sterling:euro rate. The balance sheet exposure is hedged by ensuring that, where appropriate, the borrowings in euros broadly balance the Group's net assets in euros, and significant transactional exposures are managed using approved financial derivatives (principally forward exchange contracts).

Safeguarding physical property:

The risk of fire represents the most significant physical risk to the Group and the impact of a major catastrophe of this type could be considerable. Mitigation of this risk has been achieved with most sites having sprinkler and/or smoke detection systems in place. In addition, the Group carries a comprehensive property damage and business interruption insurance policy.

Resources

RPC's success in generating good returns for its shareholders is dependent upon the resources available to it.

RPC is reliant upon the quality, dedication and commitment of its entire staff. RPC has enjoyed remarkable staff loyalty, partly because of the ethos of commitment and participation which is prevalent throughout the Group. The devolved nature of the management structure strongly contributes to a sense of challenge and fulfilment amongst the management of the Group, as a result of which, staff turnover continues to be very low.

RPC is dependent upon the capabilities of its manufacturing operations to enable it to meet its customers' needs. The Group has consistently invested in plant and equipment, factory and warehousing space as well as in product and process development, so that it can meet its customers' requirements for quality, innovation and service.

RPC monitors carefully major customer contracts with the objective of limiting its exposure to risks beyond its control; for other customers the Group applies its general conditions of sale which are broadly in line with those applied by its peers and in addition has public and product liability insurance.

Corporate Responsibility

RPC, as Europe's leading rigid plastic packaging manufacturer, has a responsibility to ensure that its own operations are conducted on a sustainable basis as well as working with its customers to ensure that the products it produces not only protect those customers' products but also have the minimum possible impact on the environment. To this end it has undertaken projects throughout the year to both reduce the amount of polymer used in its products and increase the percentage of post- consumer recyclate that is used. At the same time it has made investments in a large number of projects designed to reduce its impact on the environment.

The Group sets out more details of these projects in the Corporate Social Responsibility Report in the Annual Report and Accounts.

The Group's activities have the following direct impacts on the natural and social environment:

·; energy and water consumption;

·; transport;

·; materials;

·; noise;

·; airborne pollutants;

·; responsible employment; and

·; employees' health and safety.

This year the Group has concentrated on:

·; Working closely with customers to both increase the use of post-consumer recyclate and further light-weight product.

·; Reducing the number of accidents that happen as a consequence of moving machinery and vehicles.

·; Ensuring the Group complies with its obligations under the Bribery Act 2010, including the adoption of a formal anti-bribery policy which codifies the Group's existing stance on this issue.

·; Continuing to invest in projects that reduce the Group's impact on the environment through reduced energy use.

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

These non-financial KPIs are set out below:

Reportable accident frequency rate is defined as the number of accidents resulting in more than 3 days off work, excluding accidents where an employee is travelling to or from work, divided by the average number of employees, annualised and multiplied by the constant 100,000.

The Group continues to make stringent efforts to improve its efficient usage of electricity and water. Electricity usage per tonne further improved and water usage per tonne came down by 7% as a result of programmes to update and/or replace with more efficient chillers and the introduction of closed loop cooling systems. Following the significant improvements in the reportable accident frequency rate (RAFR) in 2009/10, the RAFR worsened in 2010/11. The single biggest contributor to this increase was slip, trip and fall accidents, a significant proportion of which were linked to the severe weather conditions in the UK and northern Europe. However the safety of employees in RPC sites continues to improve as the severity of accidents, and the total number of lost days due to accidents, have reduced considerably.

Financial Review

Acquisition of Superfos

On the 18 February 2011 the Group acquired 100% of the share capital of Superfos Industries a/s, a major European manufacturer of injection moulded plastic packaging. This was a significant acquisition for the Group which required shareholder approval and new funding.

The Group acquired the business for £198m debt-free, which it financed through a mixture of bank debt, including a term loan for €130m raised specifically for this purpose, and a rights issue which realised net proceeds of £85m. The goodwill on acquisition amounted to £38m after fair value adjustments. The trading results of Superfos from 18 February to the year end have been included in the results of the Group.

Transaction fees amounted to £9.2m, of which £3.5m relating to the rights issue have been included in share premium, £2.4m relating to the bank debt are included in net debt and will be amortised over the debt facilities, and £3.3m relating to acquisition advisory costs have been expensed.

RPC business performance

The Group's results and financial position at 31 March 2011 have been impacted by the following:

1) The acquisition of Superfos. In the 6 weeks under RPC ownership the business contributed £2.6m of operating profit. The increase in net assets to the Group arising from the acquisition, including funding effects, amounted to £91m at 31 March 2011.

2) A revision to the depreciation period estimate applied to production machinery. As part of the harmonisation of accounting policies and estimates for the enlarged Group, the depreciation period for production machinery has been aligned from 7.5 years to 10 years. This is in line with the Superfos depreciation policy as well as industry practice and, having evaluated the Group's existing plant and equipment, the harmonised depreciation period was considered to more accurately reflect its useful economic life. The change reduced the Group depreciation charge in the year by £5m.

In order to provide a clear understanding of the results of the Group for year, the consolidated results of the Group can be analysed as follows:

(1) RPC Group results before depreciation alignment and excluding Superfos and the incremental interest costs arising from the Superfos acquisition

(2) Impact on earnings of increase in useful economic life of production machinery from 7.5 to 10 years

(3) Results of Superfos from 18 February 2011 to 31 March 2011 consolidated into the RPC enlarged Group income statement, net of fair value adjustments, and including incremental acquisition funding costs

The analysis shows the Group results on a consistent basis with the prior year, as if the acquisition of Superfos and the depreciation period estimate change had not occurred (RPC 'As Was').

Consolidated income statement

Group revenue for the year increased by £99.3m of which Superfos contributed an additional £37.5m of sales. On a like-for-like basis, the growth was 9% reflecting a 3% increase in volumes, sales price increases mainly attributable to an improved sales mix and the pass through of polymer price increases to customers, partly offset by currency translation impacts (mainly due to the weakening of the euro against sterling over the period).

Adjusted operating profit (before restructuring costs, impairment and other exceptional items) increased by 36% to a record level of £55.8m (2010: £40.9m). After adjusting for Superfos and the depreciation adjustment, the improvement on a like-for-like basis was an increase of £7.3m to £48.2m, due to further cost reductions with an improved sales mix and higher volumes more than offsetting the negative impact of the time lag in passing through rising polymer prices, which rose on average by circa 20% during the year. Whilst the Group is confident in its ability to pass these increases through to customers, the time lag associated with this process has had a significant negative impact on the 2010/11 gross margins.

Superfos trading in the period following acquisition was better than the corresponding period in the previous year and contributed £2.6m of operating profit, net of fair value adjustments. Depreciation costs reduced by £5.0m as RPC sites realigned their production machinery depreciation period estimates.

Additional restructuring and closure costs of £11.8m (2010: £17.2m) and impairment losses of £0.7m (2010: £0.9m) were incurred as the Group completed the RPC 2010 programme. During the year the Group closed the last remaining site identified under the programme at Goor (the Netherlands) and completed the redistribution of its business to other sites. In addition the Group concluded the programme to reduce headcount at its Marolles site in France, as well as finishing all other restructuring initiatives that formed part of RPC 2010. The impairment losses reflect the reduction in value of the Goor property and other plant and equipment write-downs. Total exceptional costs of £50m for the RPC 2010 programme have been recognised since its commencement in 2008, with the anticipated profit on sale of closed sites reducing the expected total cost of the programme to circa £48m. The final steady state structural cost benefits are expected to be £24m, an increase of £3m compared with the previous estimate announced at the half year. Around £22m of these benefits are estimated to have been realised by March 2011.

Transaction costs of £3.3m were incurred in connection with the acquisition of Superfos Industries a/s. Other exceptional costs relate to substantial building damage to a warehouse at Kerkrade (the Netherlands) arising from severe weather conditions, and a legal claim brought in France relating to a dispute with respect to employment legislation.

Net financing costs reduced from £3.6m in 2009/10 to £3.2m in 2010/11. This is mainly attributable to a lower net interest charge of £4.2m in the year (2010: £4.4m), reflecting lower levels of average net debt as the cash generation of the Group was again strong, mitigated by the additional funding costs of the Superfos acquisition debt from 18 February. Favourable foreign exchange movements resulted in a net financial income of £1.0m (2010: £0.8m).

The adjusted profit before tax increased to £51.6m (2010: £36.5m) as a consequence of both the improvement in operating profit and the reduction in net interest charges. The tax rate on the adjusted profit before tax for the Group was 23.9% for the year (2010: 28.5%), mainly reflecting the utilisation of previously unprovided tax losses. The Group's overall taxation charge was £9.0m or 26.0% (2010: 31.2%). The resulting adjusted profit after tax is £39.2m (2010: £26.1m) and adjusted basic earnings per share increases by 42% from 21.1p (restated) in 2009/10 to 29.9p in 2010/11. The 2009/10 earnings per share measures have been restated to reflect the bonus element of the rights issue.

The improvement in operating profit, the small reduction in net financing costs and the lower tax rate resulted in a record net profit of £25.6m, compared with £13.2m in 2009/10. Basic earnings per share is 19.5p, compared with 10.7p (restated) in 2009/10.

Pro-forma 2010/11 income statement

The results of the Group are shown below on a pro-forma basis showing the results of Superfos as if the business had been acquired at the beginning of the year. The 12 month results to 31 March 2011 have been extracted from the management accounts of the Superfos group and adjusted where appropriate to align accounting policies. The pro-forma interest reflects an estimate of the interest charge of the enlarged Group, had the acquisition occurred on 1 April 2010.

(1) RPC Group results before depreciation alignment and excluding Superfos

(2) Impact on earnings of increase in useful economic life of production machinery from 7.5 to 10 years

(3) Trading results of Superfos for the period 1 April 2010 to 31 March 2011

(4) Pro-forma net interest charge for Superfos and the enlarged Group

(5) Pro-forma income statement for the year ended 31 March 2011- adjusted basis

Consolidated balance sheet and cash flow statement

The balance sheet of the Group at 31 March 2011 was significantly affected by the acquisition of Superfos and its funding arrangements. Overall net assets of the Group increased by £90.6m at 31 March 2011 as a result of the acquisition.

Other intangible assets increased by £4.3m mainly due to the recognition of the customer relationships acquired through Superfos. Excluding Superfos assets of £107.9m, property, plant and equipment increased by £14.9m from £258.1m last year to £273.0m in 2010/11. Capital additions were £21.4m higher than depreciation charged in the year, in part due to the effect of the depreciation realignment of £5.0m, but also due to increased capital investment. Capital investment levels at £50.1m (2010: £27.8m) were required to meet customer demand in growth sectors such as coffee capsules, and to support new product development in areas such as light-weighting in injection moulding and barrier technology development in thermoforming.

Working capital (the sum of inventories, trade and other receivables and trade and other payables) increased from £26.6m to £35.2m including £26.1m of working capital held by Superfos at the year end. Working capital synergies of £11.7m were achieved at Superfos in the 6 weeks of ownership to 31 March 2011. For the rest of the Group, working capital improvements were obtained in spite of higher polymer prices. Working capital as a percentage of sales for the year for the enlarged Group was 3.1% (2010: 3.6%) based on annualised second half revenue (including pro-forma Superfos revenue).

The long-term employee benefit liabilities decreased by £5.7m to £51.0m (2010: £56.7m), after assuming net liabilities of £6.6m from Superfos. The UK defined benefit pension scheme deficit of RPC 'As Was' reduced by £9.3m to £23.1m (pre-tax), mainly due to actuarial gains arising from beneficial movements in financial assumptions and increased contributions, which included a £5m one-off payment in the period (with an additional £5m being paid in 2011/12) as part of the pension fund deficit reduction plan agreed with the trustee. The UK pension scheme was closed to new entrants and to existing members for future service accrual on 31 July 2010 and has been replaced with a contract based defined contribution plan for future service. In addition the Group acquired two UK defined benefit pension schemes from Superfos, which have been closed both to new entrants and for future service accrual, and these had a combined funding deficit at the year end of £2.6m.

Capital and reserves increased in the period by £107.6m, from £156.4m in 2009/10 to £264.0m, the net profit for the year of £25.6m, issue of shares to purchase the Superfos business of £85.3m and pension related actuarial gains (net of tax) of £3.6m, offsetting dividends paid of £10.6m, exchange rate movements on translation and other share-based payment transactions. Further details are shown in the Consolidated Statement of Changes in Equity which is included in the financial statements.

The generation of net cash from operating activities (after tax and interest) at £69.3m (2010: £64.7m) was strong, with an improved EBITDA performance and working capital improvements offset by higher pension related payments, interest and tax expenditure.

Net debt at the end of the year stood at £178.7m (2010: £80.2m), reflecting an increase in bank borrowings of £115.5m required to acquire the Superfos business. Cash generated from operating activities of £69.3m were partially used for net investment in capital expenditure of £41.1m and dividends paid of £10.6m. Gearing increased to 68% (2010: 51%) whilst the net debt to EBITDA ratio stood at 1.5.

The Group obtained new finance facilities in December 2010, comprising the renewal of its £200m revolving credit facility with nine major UK and European banks, which expires in September 2015, and a €130m term loan provided for the purchase of Superfos which is repayable in August 2012. In addition the Group has seven year floating notes totalling €35m and $40m (repayable in March 2012), and various credit and overdraft arrangements, providing total facilities available to the Group of around £439m. Most of the facilities are unsecured and at the end of the year £260m were undrawn.

Group KPIs

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

(1) Return on capital employed, measured over the previous 12 months, as currently reported, is adjusted operating profit divided by the average of opening and closing shareholders' equity, adding back deferred tax assets and liabilities, net retirement benefit obligations and liabilities in connection with derivative financial instruments, and after adding back monthly average net borrowings for the year in question.

(2) Return on capital employed, measured over the previous 12 months, is redefined as adjusted operating profit divided by the average of opening and closing shareholders' equity, net retirement benefit obligations and net borrowings for the year in question.

(3) Added value per tonne is the difference between production sales value per tonne produced and the cost of polymer per tonne produced. The 2009/10 comparative numbers have been re-stated using 2010/11 exchange rates.

(4) Gross margin is the difference between sales price and all directly variable costs such as polymer, packaging, transport and electricity.

(5) Free cash flow is defined as cash generated from operations less net capital expenditure, net interest and tax, adjusted to exclude exceptional cash flows.

(6) Cash conversion is defined as the ratio of cash generated from operations less net capital expenditure excluding exceptional cash flows, to adjusted operating profit.

(7) RPC 'As Was' is the RPC Group before the acquisition of Superfos and before the depreciation realignment adjustment; the measure is shown to allow comparability with 2009/10 and earlier periods.

(8) Pro-forma enlarged Group comprises the trading results of Superfos from 1 April 2010 to 31 March 2011 and incremental interest and tax charges as if the acquisition had occurred on 1 April 2010.

The key measure of the Group's financial performance is return on capital employed (ROCE). Based on the existing definition, the Group achieved a return of 14.6% (2010: 11.8%) on a like-for-like basis (excluding the acquisition of Superfos and the depreciation alignment adjustment), representing a significant improvement over last year. The improvement was due to the higher adjusted operating profit and a reduced capital employed. Average capital employed reduced to £330m compared with £347m for the year 2009/10 driven by lower working capital requirements and average net debt levels at £118.2m (2010: £136.1m).

The ROCE definition has been amended to make it more consistent with other larger quoted packaging companies in order to improve comparability of performance. This ROCE definition will be used for external reporting purposes in future. The enlarged Group's pro-forma ROCE has been calculated at 15.1% for 2010/11.

Following completion of the RPC 2010 programme and the acquisition of Superfos, the Group's target has been revised to achieve a 20% ROCE following realisation of the steady state synergies relating to the acquisition, assuming a non-recessionary economic environment without significant volatility in raw material prices.

The added value per tonne has reduced mainly due to the effect of the constantly increasing polymer prices during the year, the majority of which the Group can pass through to the customer base but with a time lag. The effect of the time lag reduced the 2010/11 added value per tonne. Gross margins as a percentage of revenue reduced due to higher polymer prices. The continued good free cash flow performance and high cash conversion rate are a consequence of the Group's continued focus on cash generation.

Consolidated income statement

for the year ended 31 March 2011

Consolidated statement of comprehensive income

for the year ended 31 March 2011

Consolidated balance sheet

at 31 March 2011

Consolidated cash flow statement

for the year ended 31 March 2011

Consolidated statement of changes in equity

for the year ended 31 March 2011

1. Basis of Preparation

The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 March 2011 or 2010. The financial information for the year ended 31 March 2010 is derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies. The auditors have reported on the 2011 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 2006 in respect of the 2011 statutory accounts or under section 237(2) or (3) of the Companies Act 1985 in respect of the 2010 statutory accounts. The statutory accounts for 2011 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 2011 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').

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. Details of these processes can be found in the Business 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:

Geographical information

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

2011

2010

* Mainland Europe also includes an operation in the USA whose sales are predominantly sourced from intra-group supplies manufactured in Europe.

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

4. Restructuring, Closure Costs and Other Exceptional Items

2011

During the year the Group completed the RPC 2010 cost restructuring programme. In the year the Group closed the last remaining site identified under the programme, being Goor (the Netherlands), and concluded the social plan to reduce headcount at its Marolles site in France, as well as concluding the other restructuring initiatives that formed part of RPC 2010.

Transaction costs of £3.3m were expensed in connection with the acquisition of Superfos Industries a/s. Other exceptional costs relate to substantial building damage to a warehouse at Kerkrade (the Netherlands) arising from severe weather conditions, and a legal claim brought in France in connection with a dispute over matters relating to employment legislation.

2010

The Group completed the closure of the five sites announced under the RPC 2010 programme in 2008/09 and announced a social plan to reduce headcount at its Marolles site in France, a proposal to close its operation at Goor in the Netherlands, including restructuring its Dutch thermoforming businesses at Beuningen and Deventer, and the closure of its site at Ploiesti in Romania.

Impairment losses

During the year, the Group incurred a £0.4m write down of property, plant and equipment at the sites that were closed and £0.3m relating to the substantial damage to a warehouse at Kerkrade. In the previous year, there was a total charge of £0.9m in relation to the write down of property, plant and equipment at the sites that had been closed.

5. Net Financing Costs

6. Taxation

7. Earnings per Share

On 24 January 2011, the Company issued 62,069,640 ordinary shares by way of a 5 for 8 rights issue at a price of 143p per share under an authority given to the directors at an Extraordinary General Meeting held on 6 January 2011. The net proceeds of the rights issue were £85.3m after costs of £3.5m. Earnings per share has been restated for 2010 to reflect the bonus element of the 5 for 8 rights issue.

Basic

Earnings per share has been computed on the basis of earnings of £25.6m (2010: £13.2m) and on the weighted average number of shares in issue during the year of 131,167,065 (2010 restated: 123,790,024). The weighted average number of shares excludes shares held by the Employee Benefit Trust to satisfy future awards in respect of incentive arrangements.

Diluted

Diluted earnings per share is earnings per share after allowing for the dilutive effect of the conversion into ordinary shares of the weighted average number of options outstanding during the year of 2,305,920 (2010 restated: 1,294,888). The number of shares used for the diluted calculation for the year was 133,472,985 (2010 restated: 125,084,912).

Adjusted

The directors believe that the presentation of an adjusted basic earnings per ordinary share assists with the understanding of the underlying performance of the Group. For this purpose the exceptional costs and impairment losses identified separately on the face of the Consolidated Income Statement together with the debit or credit for the foreign currency hedging instruments and exchange differences on bonds, adjusted for the tax thereon, have been excluded.

A reconciliation from profit after tax as reported in the Consolidated Income Statement to the adjusted profit after tax is set out below:

Adjusted basic earnings per share 

The weighted average number of shares used in the adjusted basic earnings per share calculation is as follows:

Adjusted diluted earnings per share

The weighted average number of shares used in the adjusted diluted earnings per share calculation is as follows:

8. Non-current Liabilities

The maturity of bank loans, overdrafts and other borrowings is set out below:

These facilities comprise:

(i) A multi-currency revolving credit facility of up to £200.0m at normal commercial interest rates falling due on 30 September 2015;

(ii) A €130.0m term facility falling due on 18 August 2012;

(iii) Uncommitted overdraft facilities of £10.0m, €27.0m and other small local facilities;

(iv) Seven year floating loan notes totalling €35.0m and US$40.0m at a normal commercial margin over Euribor and Libor maturing in March 2012; and

(v) Mortgages secured on manufacturing facilities totalling £16.0m (2010: £nil) as at 31 March 2011, which were assumed on the acquisition of Superfos.

The currency and interest rate profile of the Group's net debt is as follows:

9. Acquisition

On 18 February 2011 the Group acquired 100% of the share capital of Superfos Industries a/s ("Superfos"). Superfos is one of Europe's leading producers of injection moulded rigid plastic packaging. This transaction has been accounted for using the acquisition method of accounting.

The book and fair value of the net assets of the acquired business were as follows:

The acquisition balance sheet has been adjusted to reflect fair value adjustments.

The adjustment to intangible assets represents customer contacts acquired with Superfos and will be amortised over the life of the relationships. The adjustment to property, plant and equipment represents the difference between book value and market value of the assets. The adjustment to provisions and taxes relates to out of market contracts, pension adjustments, legal claims, additional tax provisions and deferred tax on the fair value adjustments.

Total consideration of £197.6m was paid on 18 February 2011. In addition, £3.3m of acquisition costs have been expensed and reported as exceptional costs.

Since the acquisition date, Superfos contributed £2.6m to operating profit. If the acquisition of Superfos had taken place on 1 April 2010, the Group operating profit would have been £74.3m and revenue for continuing operations would have been £1,072.4m.

The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over the acquired business and assembled workforce and an increase in scale of the Group's injection moulding operations. The goodwill recognised is not deductible for tax purposes.

10. Employee Benefits

The liability recognised in the consolidated balance sheet for long-term employee benefits and the movement in retirement benefit obligations was:

Retirement Benefit Obligations

The liability recognised in the balance sheet for retirement benefit obligations is:

The Group operates a number of defined benefit pension and similar arrangements. In the UK and the Netherlands these are contributory with funds held separately from the finances of the Group either by trustee-administered funds or by insurance contracts. Elsewhere, principally in Germany and France, the retirement benefit obligations are unfunded arrangements financed by balance sheet provisions. The liability recognised in the balance sheet is the present value of the defined benefit obligation less the fair value of plan assets at the balance sheet date. The obligation is calculated by external actuaries using the projected unit method. Differences between the actual and expected return on assets, changes in actuarial assumptions and experience gains and losses on liabilities have been recognised in the Consolidated Statement of Comprehensive Income.

Following a 60 day consultation period with affected employees and agreement with the trustee, the UK Pension Scheme was closed to new entrants and to existing members for future service accrual on 31 July 2010 and replaced with a contract based defined contribution pension plan for future service.

The last completed triennial valuation performed by an independent actuary for the trustee of the UK Pension Scheme was carried out as at 31 March 2009. The valuation, which is calculated on an ongoing funding basis and is different from that prescribed by IAS 19 on accounting for employee benefits, showed a deficit of £45.9m. This had reduced to an estimated £36.0m at 31 March 2010 according to the annual actuarial report by the scheme actuary. In addition to the closure of the scheme, the Company agreed to make two one-off lump sum contributions of £5m each in September 2010 and April 2011, make contributions to cover the scheme's expenses and pay monthly deficit reduction contributions of £1.8m each year increasing by 3% per annum with the aim of eliminating the deficit over 13.2 years from 1 August 2010. Previously the deficit reduction contributions had been approximately £0.5m per annum. RPC Group Plc also agreed to a limited extension to the guarantee provided in respect of certain present and future liabilities of the members' employing companies.

As a result of the acquisition of Superfos Industries a/s, the Group has acquired two closed trustee administered defined benefit pension arrangements in the UK providing benefits based on final pensionable salary and pensionable service. The Superfos Runcorn Limited Pension Fund was closed to future accrual on 5 April 2010. The deficit in the fund calculated in accordance with IAS 19 was £2.2m compared with assets of £6.5m on acquisition. The most recent triennial actuarial valuation as at 31 March 2007 showed a funding deficit of £1.1m. The defined benefit section of the Peerless Limited Pension Scheme was closed to future accrual in 1994. The IAS 19 accounting deficit on acquisition was £0.8m and the market value of the assets was £1.6m. The most recent triennial actuarial valuation as at 31 August 2007 showed a funding deficit of £0.5m. The combined annualised deficit reduction contributions for both plans were £0.2m.

11. Exchange Rates

The closing rate of exchange for the euro at 31 March 2011 was €1.13 (2010: €1.12) and for the US dollar was $1.61 (2010: $1.51). The average rate of exchange for the euro for 2011 was €1.18 (2010: €1.13) and for the US dollar $1.56 (2010: $1.60).

12. Responsibility Statement

The 2011 Annual Report & Accounts contains a responsibility statement which was approved by the Board of Directors and signed by J R P Pike, Chairman and R J E Marsh, Chief Executive on 21 June 2011.

The directors confirm that to the best of their knowledge, the financial statements are prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and the Director's Report (incorporating the Business Review) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The Annual Report & Accounts will be sent to all shareholders in June 2011 and will be published on the Group's website (www.rpc-group.com). Additional copies will be available from the Company's registered office at Sapphire House, Crown Way, Rushden, Northants, NN10 6FB.