Final Results

4 June 2014

RPC GROUP PLC

Full year results for the period ended 31 March 2014

RPC Group Plc, Europe's leading supplier of rigid plastic packaging, announces its results for the year ended 31 March 2014.

1 For continuing operations; comparatives restated to exclude discontinued operations and adjusted for the adoption of IAS 19 (Revised 2011).

2 Adjusted operating profit and margin are for continuing operations and before restructuring, impairment charges and other exceptional items, amortisation of acquired intangibles and pension administration expenses.

3 Adjusted earnings per share is adjusted operating profit for continuing operations after interest and tax adjustments but excluding pension interest costs divided by the weighted average number of shares in issue during the year.

4 Adjusted in 2013/14 for depreciation reduction of £3.7m for change in accounting estimate.

Key developments:

§ Revenues up 7% to £1,047m (2013: £982m) reflecting good underlying organic growth and a 3% increase due to recent acquisitions;

§ Adjusted operating profit reached £101.3m (2013: £91.6m);

§ Adjusted basic EPS at 41.1p (2013: 36.9p);

§ Net cash flow from operating activities at £105.0m (2013: £85.5m);

§ RONOA improved to 24.5% (2013: 22.6%);

§ The Vision 2020 Focused Growth strategy is gaining momentum with good organic growth and the acquisitions of M&H Plastics and Helioplast in the financial year 2013/14. The recent acquisition of Ace this year provides the Group with a high quality platform for growth in Asia;

§ The business optimisation programme Fitter for the Future is progressing well with the timing of some of the benefits accelerated;

§ Final dividend of 11.0p recommended giving a total year dividend of 15.5p (2013: 14.9p).

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

"The Group delivered a strong performance in an economic environment which remained subdued for most of the year, before seeing a slight improvement in the second half. I am very pleased with the progress we achieved in the implementation of our Vision 2020 strategy, providing the Group with further platforms for profitable growth in the USA, Asia and South East Europe. The financial year 2014/15 has started 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.

CHAIRMAN'S REPORT

Overview of the Year

I am pleased to report that the Group has made significant progress in delivering against its strategic objectives during the year.

Sales for continuing businesses grew to £1,047m (2013: £982m) and adjusted operating profit1 reached £101.3m (2013: £91.6m) with the subdued economic environment beginning to show some signs of recovery in the second half of the year. Contributing to this improvement were the impact of two acquisitions made in December, M&H Plastics and Helioplast, which are being successfully integrated into the Group, as well as the benefits of the restructuring activities relating to Fitter for the Future, the final phase of the European asset base optimisation programme. Adjusted earnings per share2 was 41.1p (2013: 36.9p) and net cash from operating activities was £105.0m (2013: £85.5m).

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 pension interest costs divided by the weighted average number of shares in issue during the year.

Strategy and Performance

The Group announced its Vision 2020: Focused Growth strategy in November 2013, which builds on RPC's strong market positions, leading innovation capabilities and the success of its investments in recent years. There are three core elements to Vision 2020, which are:

1) continuing our focused organic growth strategy in selected areas of the packaging markets;

2) selective consolidation in the still fragmented European packaging market through targeted acquisitions; and

3) creating a meaningful presence outside Europe.

During the formulation of Vision 2020 the Group also identified a number of further opportunities to optimise its existing asset base resulting in the final phase of the Fitter for the Future business optimisation programme. This included the decision to sell the Cobelplast and Offenburg businesses. Alongside the targeted focused growth strategy, the Group established de minimis (through the cycle) levels for RONOA of 20% and return on sales of 8%. The expectation is that the ROCE for the group of businesses prior to the recent acquisitions will continue to achieve a return of 20% through the cycle.

Good progress has been made during the year in implementing all of these work streams, including the achievement of the financial KPI targets. Organic growth was strong, with sales revenues for continuing operations excluding the impact of acquisitions 4% higher than the previous year. Selective consolidation in Europe was achieved through the acquisitions of M&H Plastics in the UK and Helioplast in Bosnia-Herzegovina, and the acquisition of the M&H business in the USA, the expansion of the Group's existing facilities in Morgantown, PA (USA) and the recent acquisition of Ace Corporation Holdings in China, have together significantly increased RPC's presence outside Europe.

The Fitter for the Future programme is proceeding well, with three sites closed, three surplus properties sold, and three non-core businesses put up for sale of which the disposables trading business at Offenburg was sold in May 2014.

Board

Ron Marsh, the former Chief Executive, retired as a director on 10 July 2013, having transferred his executive responsibilities to Pim Vervaat on 1 May 2013. At the same time Simon Kesterton became Group Finance Director, having been appointed to the Board on 1 April 2013. I am pleased to welcome Lynn Drummond and Godwin Wong who have been appointed as non-executive directors with effect from 16 July 2014. Both of these appointments will enhance the breadth of expertise and experience of the Board.

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 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. With the appointment of Lynn Drummond, 25% of the Board will be women.

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 robust financial performance for its shareholders, and I look forward to their continued contribution in achieving our strategy for the Group.

Dividend

In line with the progressive dividend policy, the Board is recommending a final dividend of 11.0p per share making a total for the year of 15.5p (2013: 14.9p). This will be the 21st successive year of dividend progression since RPC's flotation.

Subject to approval at the forthcoming AGM, the final dividend will be paid on 5 September 2014 to shareholders on the register on 8 August 2014.

J R P Pike

Chairman

OPERATING REVIEW

Group Overview

RPC is a leading supplier of rigid plastic packaging with operations in 19 countries. The business, which at the end of the financial year comprised 49 manufacturing sites and six separate distribution and sales centres, converts polymer granules into finished packaging product by a combination of moulding and assembly processes. It is currently organised around the three main conversion processes used within the Group, each site being managed within one of six clusters which are defined along technological and market lines.

With effect from 2 June 2014, the date on which the Group acquired Ace Corporation Holdings, a new cluster was formed, Ace, which will be reported within the Injection Moulding business segment from 2014/15.

Each cluster operates 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 coordination in each market sector. Hence each 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.

Implementation of Vision 2020: Focused Growth Strategy

The Vision 2020 strategy focuses on achieving profitable growth through organic initiatives, selectively consolidating the European market through targeted acquisitions and establishing a meaningful presence outside Europe, whilst keeping (through the economic cycle) the RONOA for the Group above 20% and the return on sales above 8%. The Group made significant progress during the year in implementing this strategy.

Continued focused organic growth

The Group was able to achieve further growth in the selected markets it operates in by continuing to invest in product and process innovation, particularly in sectors for higher added value products and in developing technologies which generate growth by accelerating the ongoing conversion of other packaging types to plastic. Sales grew in the year by 4% excluding the impact of acquisitions, with overall activity levels higher than in the previous year but with proportionately higher levels of sales made in personal care, pharmaceuticals, single serve beverage systems and high barrier foods, all of which enhance profitability. The Group invested the majority of its £70m capital expenditure in the year on growth projects which will contribute to the future profitability of the existing businesses.

Selective consolidation in Europe

The Group made two acquisitions in the year which consolidate and strengthen its market positions in Europe.

Maynard & Harris Group (M&H Plastics), with an annual turnover of circa £80m and over 700 employees, is a well-established and highly respected business operating in the Group's core geographic and product markets and complements the Group's existing market positions very well. With its principal manufacturing site in Beccles, UK, it operates as an independent business within RPC's Bramlage cluster and enhances the Group's leading personal care product offering in the UK, mainland Europe and the USA. It extends the Group's product ranges to include flexible tubes and an industry-leading range of personal care packaging for short production runs as well as over-the-counter healthcare container designs. Pre-tax purchasing synergies of at least £1m are expected to be realised in 2014/15 with additional commercial and working capital synergies to be achieved going forward.

Helioplast, based in Bosnia-Herzegovina, and generating circa £7m of annual sales, is a leading supplier of injection moulded rigid plastic packaging within consumer food segments, serving the Balkans and the wider south eastern European region. It employs around 80 people and forms part of the Superfos cluster, extending the cluster's geographic reach into the Balkan region whilst providing a modern, high quality manufacturing base to support its own sales growth into south eastern Europe.

Creating a meaningful presence outside of Europe

The Group commenced an investment programme of $9m during the year in expanding its facility at Morgantown, PA, USA to accommodate additional capacity for the growth in spreads and single-serve beverage systems and provide in-house manufacturing capability for Superfos to grow business in North America. In addition the acquisition of M&H Plastics brought with it a manufacturing facility in Winchester, VA, USA, which is growing and being developed to replicate the M&H business model in the UK. Together these sites have created a stronger platform for the Group to grow in the USA, with total enlarged Group USA turnover of circa $85m p.a.

On 2 June 2014 the Group completed the acquisition of Ace Corporation Holdings, a China based and Hong Kong headquartered award-winning manufacturer of complex plastic injection moulded components and injection moulding tools for the packaging, lifestyle, medical, power and automotive end markets. Operating from five factories in China and with an annual turnover of around £104m, this is the Group's first major acquisition outside Europe. It provides a strong platform to support RPC's international customer base with high quality packaging of European standards in China, as well as the benefit from the high and sustained growth of this profitable niche manufacturer of injection moulded parts and moulds.

Fitter for the Future

Fitter for the Future is a business improvement programme, which is centred on rationalising RPC's European manufacturing footprint, optimising its existing business portfolio and realising value for the Group by disposing of its non-core businesses and redundant properties. Phase one of the programme was launched in 2012; it has now entered its final phase and should be largely complete by the end of 2015. Activities under the three main work streams are:

Rationalise manufacturing footprint: this includes the closure of sites at Antwerp and Beuningen with transfer of business to more efficient sites as part of a pan-European restructuring of the injection moulding and thermoforming spreads businesses, the closure of the Troyes site as part of the consolidation of the French dairy business and the closure of Tenhult, with its business merged into the nearby Mullsjö plant.

Optimise existing business portfolio: this includes a cost reduction and product rationalisation programme in the UK paint containers business, a strategic review of the blow moulding businesses including a strategic refocus of its Spanish operations, optimising the manufacturing footprint of the personal care business in Europe and other site specific cost efficiency programmes.

Divesting non-core businesses and properties: this comprises the planned sale of the Cobelplast sheet businesses (Lokeren and Montonate) and the disposables trading business at Offenburg, and the disposal of surplus properties from previous restructurings at Raunds, Runcorn, Goor and more recently Beuningen.

The programme is progressing well and is ahead of plan, with the site at Antwerp closed early in the year, the Beuningen site now vacated and the Troyes site, which was affected by a flood in May 2013 and identified for closure as a consequence, ceasing production in March 2014 earlier than anticipated. Work commenced at Mullsjö to expand its production facility preceding the site closure at Tenhult in 2014/15. Under the existing business optimisation work stream, restructuring activities, including redundancies, took place at Oakham (UKIM) and Envases, San Roque, Kutenholz and UKSC (Blow Moulding). The Cobelplast businesses at Lokeren and Montonate were put up for sale, with the sales process well advanced by the year end. The Offenburg business was sold in May 2014 and three of the surplus properties (Goor, Raunds and Runcorn) were sold in the financial year, with the property at Beuningen now marketed and available for sale.

The total investment in this programme, which includes non-cash impairments, is expected to be around £70m, of which £58m has been incurred to date. The programme is expected to deliver steady state annual cost savings of £17m by the end of 2016/17. The cumulative annual savings have accelerated and £7m was generated in the year.

Group Performance

The Group delivered a good performance for the year with sales increasing by 7% to £1,047m of which 3% related to acquisitions, with higher activity levels on the previous year and sales mix enhanced. The adjusted operating profit of £101.3m increased by £9.7m, with return on sales at 9.7% (2013: 9.3%) and RONOA at 24.5% (2013: 22.6%), both measures ahead of the de minimis levels established in Vision 2020. After adjusting for £3.5m of profit contribution from the newly acquired businesses, and excluding a depreciation adjustment of £3.7m, the main drivers of improvement were higher activity levels, particularly in higher added value products and other business improvements including £7m of benefits arising from the Fitter for the Future business programme, offsetting inflationary cost pressures. Polymer prices, although at high levels, did not experience the volatility in price movements that had been experienced over the last few years. These changes are passed on to our customers usually with a time lag which can result in an impact on margins; however due to the lower volatility of polymer price changes over the year the impact of the time lag associated with passing on these costs had little impact on the results for the year.

The ROCE performance of the Group excluding the recently acquired businesses was 20.2%, which was in line with the strategic targets. Cash management was strong with free cash flow up 41%. Although the Group's gearing increased through debt funded acquisitions the financial position of the Group remains robust with a leverage ratio of 1.7 and new £350m borrowing facilities arranged in April 2014 which increased the funding capability of the Group.

Adjusted basic earnings per share reached 41.1p (2013: 36.9p) and the recommended final dividend will result in a total dividend of 15.5p (2013: 14.9p) which is in line with the Group's progressive dividend policy.

Injection Moulding

The business comprises the Superfos, Bramlage-Wiko and UKIM clusters. Included within the results are the contributions made by M&H Plastics (sales £22.7m; operating profit £3.4m) and Helioplast (sales £1.8m; operating profit £0.1m) for the period under RPC ownership. After adjusting for these acquisitions and other adjustments, like-for-like profit improved by 5% over the year reflecting growth in volumes. Return on sales remained above 10% and return on net operating assets (RONOA) increased to 26.8% (2013: 25.5%).

Superfos manufactures and distributes open top filled injection moulded containers and has manufacturing facilities in France, Belgium, Spain, Poland, Denmark, Sweden and Bosnia-Herzegovina, with joint ventures in Turkey and North Africa. Overall activity levels were higher, with good growth in the Central/East and Nordic regions, and an improvement in sales in Iberia indicating some signs of a recovery in the Spanish economy. The dairy and paint sectors saw particularly strong growth and the cluster benefited from improved sales volumes of thin-walled packaging (TWP) and barrier products, with sales of Superlock increasing. The cluster acquired the Helioplast business in December 2013, which extends its production and sales capability in the Balkans. The planned merger of the two Swedish sites (Mullsjö and Tenhalt) under the Fitter for the Future programme commenced in February 2014 and is expected to deliver cost savings in 2014/15 providing a platform for future growth in the Nordic region, particularly in the barrier and TWP products, whilst achieving a more competitive cost base.

Bramlage-Wiko, which operates in Germany, France, Slovakia, UK and the USA, showed volume growth, with increased sales into the personal care and coffee capsule markets. The results were further enhanced by the M&H plastics business which was acquired in December 2013. New investments were made to increase production capacity for coffee capsules, and at Morgantown in the USA a $9m expansion of its facilities was commenced to accommodate additional capacity for single-serve beverage systems, growth in personal care products and higher added value food packaging, with new business already secured. The Manuplastics (UK) business, which was acquired in 2012, saw sales volumes and profits grow significantly in the year and it is now working closely with the M&H business to co-ordinate sales activities. During the year the cluster took responsibility for the Envases business in Madrid (formerly part of the Blow Moulding cluster), providing a strategic focus on injection moulding in Spain whilst continuing to serve the blow moulding market. Following a review of the business the closure of the San Roque facility was announced later in the year. Other Fitter for the Future initiatives included the closure of the Antwerp (Belgium) site earlier in the year, as part of the yellow fats manufacturing optimisation programme, with business successfully transferred to other sites. In addition the cluster is embarking on a review of its manufacturing footprint to improve efficiencies. Capital investment included the expansion of the US facility and the addition of production capacity for major new contract wins. The cluster remains well positioned to exploit new business opportunities through its strong market positions and leading technological know-how.

For UKIM, the UK injection moulding business, the business performance was stable, with overall sales down on last year, in part due to the transfer of some volumes to the lower cost Superfos facility in Poland. This was part of the cost reduction and product rationalisation initiative in paint containers, under the Fitter for the Future programme, which has been focused mainly on the Oakham site. Over the year the overall surface coatings market improved but activity levels in the second half were adversely impacted by the mild winter which reduced soup pot sales. New contracts were secured for the injection moulding spreads business in addition to the business transferred from Antwerp. The cluster also launched the Superlock product range into the UK market, a container with barrier capability developed by Superfos, and early signs indicate that this has good potential for future sales growth.

Thermoforming

The thermoforming operations comprise the retail food packaging, coffee capsules and the UK vending businesses which are managed by the Bebo cluster. Following the decision to dispose of the Cobelplast (sheet production) cluster during the period, its results for the current and prior periods have been excluded and are shown separately as Discontinued operations. Although activity levels were down in the year, the Bebo cluster performed well with adjusted operating profit up 12% reflecting the benefits of a reduced cost base from prior year restructuring activities and growth in key markets. RONOA improved to 34.9% (2013: 30.2%).

Sales were adversely affected by the flood at the Troyes (France) site, which lost part of its French dairy business as a consequence. Although some continuity of supply was maintained by transferring business to alternative RPC sites, the flood damage was extensive and the loss of part of its business made the viability of the site untenable. The site ceased production in March 2014 and is currently subject to an insurance claim for property damage and business interruption.

The yellow fats and spreads market is a significant part of the cluster's business and the Group has strong market positions in this area. As part of the Fitter for the Future programme the facility at Beuningen (Netherlands) was closed during the year, with business transferred closer to its customers to lower cost sites at Corby (UK) and Poznan (Poland). Offsetting this were improved sales across the rest of the businesses.

With respect to new product development, good progress was made in the development of IML-T technology. This will apply the benefits of in-mould labelling (including enhanced decoration), currently only enjoyed in injection moulding, to thermoformed products which should provide growth opportunities going forward. The business is also working with several customers on extending the single serve beverage systems range.

Following a review of the other businesses within the thermoforming segment, it was decided to sell the trading disposables business at Offenburg (Germany), which is considered a non-core business. The business was subsequently sold in May 2014. In addition the future of the Cobelplast cluster (comprising sites at Lokeren (Belgium) and Montonate (Italy)) was considered best served outside of the Group, with the cluster being put up for sale. Business improvement initiatives have continued at the Lokeren site, and there was good sales growth in the year at Montonate. A sales process for both sites was well advanced by the end of the financial year.

Blow Moulding

The blow moulding business operates from ten sites based in the UK, France, Germany, Belgium and the Netherlands, their location defined by the geographical markets they serve.

The business performed well with adjusted operating profit, return on sales and RONOA all ahead of last year with sales growth and cost reduction measures improving profitability. There were good volume increases across the UK sites with new contracts secured for PET containers in food, lubricants, industrial products and for bottle caps. In the multi-layer market volumes were slightly lower but sales of new weight-saving multi-layer catering jars increased and new growth opportunities are emerging for olives and preservative-free fruit.

In mainland Europe the business continues to benefit from growth in agrochemicals and is investing in automation to improve profitability. The operation in Kerkrade (Netherlands), which has refocused on serving the food sector, improved its profitability over the period. An improvement plan was initiated at Kutenholz (Germany) to optimise its cost base resulting in a number of redundancies.

In respect of product development, new growth opportunities are being pursued successfully in the PET food market with the Group commissioning a new production technology. Enhanced barrier applications are being researched which could potentially open up new market segments.

During the year the Blow Moulding cluster launched a Fitter for the Future initiative to further improve its competitive position by refocusing the business on specific markets and technologies, and optimising its manufacturing foot print. This includes investing in technology to move from medium to high barrier multi-layer products to secure the packaging growth driven by the substitution of glass and metal with plastic in the food sector, and to develop a more focused regional organisation to ensure that the strong market positions in key geographical areas are maintained and better served.

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:

Reportable accident frequency rate 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.

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. Focus on health and safety remains strong but a higher number of reportable accidents in the earlier part of the financial year led to an increase in the reportable accident frequency rate. A new improvement plan has been initiated which has already led to significant improvements in the safety programme in the current year.

Outlook

The Group is well placed to deliver on its Vision 2020 Focused Growth strategy. High quality platforms for growth in Asia, USA and South East Europe have been added to the Group whilst further acquisition opportunities to enhance shareholder value continue to be explored. The Fitter for the Future business optimisation programme is anticipated to deliver further benefits in the new financial year, which has started in line with management's expectations.

P R M Vervaat

Chief Executive

FINANCIAL REVIEW - continued

Acquisitions

On 9 December 2013 the Group acquired effective control of 100% of the share capital of Helioplast d.o.o, a leading supplier of injection moulded rigid plastic packaging based in Bosnia-Herzegovina, for a total consideration of €10.1m, with €4.9m paid on completion and the balance deferred until March 2016. It was funded wholly from existing debt facilities, the consideration represented circa 6 times Helioplast's 2012 EBITDA and is expected to be earnings enhancing from 2014/15. The goodwill on acquisition amounted to £4.0m after fair value adjustments and the trading results of the business have been included in the results of the Group since acquisition.

On 16 December 2013, the Group acquired effective control of 100% of the share capital of Maynard & Harris Group Limited (M&H), a major supplier of rigid plastic packaging to the personal care, healthcare and selected food segments, based in Beccles, UK, with a smaller operation in Winchester, Virginia, USA, for a total consideration of £103m. It was funded wholly from existing debt facilities. The consideration represents an EBITDA multiple of circa 6.5 times current year profits and the business is expected to be earnings enhancing from 2014/15. The goodwill on acquisition amounted to £76.4m after fair value adjustments and the trading results of the business have been included in the results of the Group since acquisition.

Transaction fees for both acquisitions have been charged to the income statement as Exceptional costs.

Both acquisitions meet the Group's acquisition criteria being a good strategic fit, having strong incumbent management, a successful financial track record, quantifiable synergies and being earnings accreting post acquisition with a ROCE greater than RPC's weighted average cost of capital.

Discontinued Operations

In September 2013 the Group decided to exit the plastic sheet manufacturing business that is currently served by the Cobelplast cluster, comprising the businesses at Lokeren (Belgium) and Montonate (Italy), and to put these businesses up for sale. Their net assets were impaired to their fair value less costs to sell, classified in the balance sheet as Assets and liabilities held for sale and their sales and results to date, including the exceptional costs of restructuring the Lokeren business, separately disclosed in the income statement as Discontinued operations.

Post Balance Sheet Events

On 1 May 2014 the Group announced the proposed acquisition of Ace Corporation Holdings Limited for an initial consideration of US$ 301m (£178m) and a total consideration up to US$ 430m (£225m) on a cash-free, debt-free basis. The transaction was completed on 2 June 2014 and the initial consideration was satisfied through the issue of 8,509,841 ordinary shares in RPC Group Plc (consideration shares) and cash payments of US$212m (£126m) subject to customary adjustments 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 (£76m) are payable by the Group subject to Ace's financial performance up to the year ending 31 December 2017.

On 22 May 2014 the Group sold its disposables trading business at Offenburg, Germany (RPC Tedeco-Gizeh GmbH) to HOSTI International GmbH for €3.0m.

Business Performance

The Group's results and financial position at 31 March 2014 have been affected by the following:

(i) The acquisitions of M&H Plastics and Helioplast. In the period of ownership by RPC the businesses contributed £24.5m of sales and £3.5m of operating profit.

(ii) A revision to the depreciation period estimate applied to primary production line machinery which was increased from 10 to 12 years, following a review of the useful economic life of these assets. This reduced the Group depreciation charge in the year by £3.7m.

Consolidated Income Statement

Group revenue from continuing operations increased by 7% to £1,046.9m (2013: £982.3m) of which M&H Plastics and Helioplast which were acquired in the year contributed £24.5m of sales. After excluding the impact of acquisitions, sales increased by 4% reflecting an underlying 2% increase in activity levels and an improved sales mix, with the translation effect of a strengthened euro (€1.19 v's €1.23) contributing a further 2% increase as circa 63% of turnover is generated from businesses in the Eurozone.

Adjusted operating profit (before restructuring costs, impairment and other exceptional items and now excluding the amortisation of acquired intangible assets and pension administration expenses) was £101.3m (2013 restated: £91.6m) but after excluding the impact of the acquisitions and depreciation adjustments was £94.1m, which represented a 3% increase in adjusted operating profit. This was largely in line with the underlying increase in activity levels, with margin improvements from higher added value products and savings from business improvements across the sites offsetting inflation and other cost pressures. Polymer prices although relatively high compared with prior years did not display the same degree of volatility and consequently the time lag effect of passing polymer price changes on to customers did not have a significant impact on the Group's result. The translation effect of the stronger Euro contributed £1.2m, the additional cost savings from the Fitter for the Future programme contributed £7.0m and the impact of volume, margin and general business improvements was offset by inflationary cost increases which were experienced throughout the Group. The effect of the above was to improve return on sales from 9.3% to 9.7%.

Exceptional items for continuing operations totalled £26.7m (2013: £28.4m) for the year. The Group incurred £9.2m of restructuring and closure costs relating to the yellow fats rationalisation programme which included the closure of the Antwerp (Belgium) and Beuningen (Netherlands) sites and transfers of their business to other sites in the injection moulding and thermoforming businesses. There were impairments of £5.2m and other costs related to the flood at Troyes, net of expected insurance proceeds and further costs and impairments related to its subsequent closure, £3.3m of impairments and restructuring costs relating to the Blow Moulding cluster, including restructuring at Kutenholz and UKSC, £1.2m of restructuring costs at Oakham as part of the business optimisation of the UKIM cluster, and £3.2m of other costs relating to the Fitter for the Future business optimisation programmes. In addition the Group impaired £1.8m of goodwill and £0.6m of property, plant and equipment relating to the Offenburg business ahead of its sale and £0.8m of property, plant and equipment which were carried as assets held for sale, and incurred £1.4m of acquisition costs relating to the two businesses acquired in the year and committed costs relating to the acquisition of Ace Corporation Holdings in 2014/15.

Net financing costs at £14.2m were slightly higher than the previous year (2013: £13.8m), reflecting mainly the increase in net finance expense from the Group's defined benefit schemes (net pension interest). The Group adopted IAS 19 (Revised 2011) which took effect from the beginning of the financial year. The key changes are the recognition of scheme expenses in operating profit and a reduction in the expected return on assets from the return on underlying assets to the return on corporate bonds (the basis of the discount rate used to value the schemes' liabilities). As these are changes to accounting policy brought about due to a change in IAS 19, comparative figures have been restated accordingly. The scheme expenses (pension administration costs) have been removed from operating profit in arriving at adjusted operating profit. The net interest costs on borrowings of £11.4m, excluding the additional funding drawn for the acquisitions in the year, showed a small reduction on the previous year, reflecting an improvement in cash management efficiency.

Adjusted profit before tax increased from £79.9m to £89.5m mainly as a result of the improvement in adjusted operating profit. The tax rate on the adjusted profit before tax for the Group was unchanged at 24.0% for the year, resulting in adjusted profit after tax of £68.0m (2013: £60.8m) and the adjusted basic earnings per share for continuing operations was 41.1p (2013: 36.9p).

The Group's overall taxation charge for continuing operations was £15.3m (2013: £14.2m) resulting in a reported tax rate of 25.9% reflecting an underlying effective rate of 24.0% and a 19.8% tax credit on exceptional charges. The profit after tax for continuing operations was £43.7m (2013: £34.0m). The basic earnings per share for continuing operations was 26.5p (2013: 20.6p).

Consolidated Balance Sheet and Consolidated Cash Flow Statement

Goodwill increased as a consequence of the acquisitions of M&H Plastics and Helioplast, which totalled £80.4m, reduced by the impairment of goodwill relating to Offenburg which was put up for sale in the period. Other intangible assets increased by a net £1.8m comprising customer relationships capitalised on acquisition and new product development expenditure, net of amortisation charges.

Property, plant and equipment increased to £418.0m; capital expenditure was £66.4m for continuing businesses which was £23.5m (55%) ahead of depreciation charged in the period, due to investment in capital related to future growth. The Group embarked on an expansion of its US facilities at Morgantown during the year and continued to invest in growth sectors such as coffee capsules, personal care and pharmaceuticals. Other movements include the addition of the property, plant and equipment attributable to the acquisitions and the transfer of the Cobelplast businesses, Offenburg and surplus properties to Assets held for sale.

The £8.2m of derivative financial instruments 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. 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) improved by £5.8m, decreasing after adjusting for discontinued operations to £32.0m compared with the previous year and represents 3.1% of sales (2013: 3.8%).

The long-term employee benefit liabilities increased from £62.7m at the previous year end to £72.5m, mainly due to the inclusion of the M&H Plastics defined benefit pension scheme, which was acquired with the business. The net deficit on the scheme at the end of the year was £10.1m. In addition there was a £3.3m increase in the net pension deficit of the RPC Containers defined benefit scheme which was offset by the transfer of the employee benefit liabilities of the businesses which are to be disposed of (now included in Liabilities held for sale) .

Capital and reserves decreased in the period by £0.1m, the net profit for the period of £28.0m, the share issues and share-based payments from employee share schemes of £2.9m and favourable net fair value movements on derivatives of £4.3m being offset by pension related net actuarial losses of £3.9m, adverse exchange movements on translation of £6.3m and dividends paid of £25.1m. 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 £105.0m compared with £85.5m in the previous year, with higher cash generated from operations after exceptional cash flows of £21.7m, being reduced by 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 used to repay the USPP funding, increased by £95.0m and at the end of the year stood at £266.4m (2013: £171.4m). The fair value of the swaps decreased by £15.4m in the year due to the strengthening of the euro against the US dollar. Net cash from operating activities was utilised for, amongst other things, acquiring the M&H Plastics and Helioplast businesses for £111.3m, purchasing property, plant & equipment of £70.2m and for paying dividends of £25.1m. Gearing increased to 98% (2013: 63%) and leverage (net debt to EBITDA) was 1.74. The average net debt during the year was £269m (2013: £228m).

The Group had total finance facilities of approximately £511m with an amount of £241m undrawn at 31 March 2014 after taking account of £4m of bank guarantees. The facilities which are unsecured comprised a revolving credit facility (RCF) of up to £200m with nine major UK and European banks maturing in 2015, US private placement 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 £14m, finance leases of £1m and other uncommitted credit and overdraft arrangements of £58m. The £60m term loan was arranged in January 2013 and was drawn in December 2013. The US notes were a debut issue raised in the US Private Placement (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.

Since the year end, the Group has refinanced its RCF to partially fund the acquisition of Ace Corporation Holdings Limited and to provide additional borrowing facilities, which have been obtained at improved rates. It cancelled its existing £200m facility and entered into a new £350m RCF agreement on 30 April 2014, with an additional uncommitted £75m accordion, taking the opportunity to reduce the size of its banking group. The RCF matures on 30 April 2019 and has strengthened the financial resources of the Group for future growth.

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 and normalised for the effect of acquisitions, 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 and normalised for the effect of acquisitions, 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 production sales value per tonne produced and the cost of polymer per tonne produced for continuing operations. The 2012/13 comparative numbers have been restated using 2013/14 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 and for ROCE to be maintained at 20% throughout the cycle for the 2013 pre-acquisition business portfolio. The ROCE for the Group including the 2013 acquisitions was 18.7% and excluding these acquisitions was 20.2% (2013: 19.4%). The increase in return on sales resulted from an improved gross margin and lower costs. The improvement in added value per tonne reflects the impact of an improved sales mix and a more stable polymer cost environment. Free cash flow was ahead of last year as a result of the stronger cash performance and consequently cash conversion improved.

S J Kesterton

Group Finance Director

Consolidated income statement

for the year ended 31 March 2014

Consolidated statement of comprehensive income

for the year ended 31 March 2014

Consolidated balance sheet

at 31 March 2014

Consolidated cash flow statement

for the year ended 31 March 2014

Consolidated statement of changes in equity

for the year ended 31 March 2014

NOTES TO THE RESULTS ANNOUNCEMENT

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 2014 or 2013. The financial information for the year ended 31 March 2013 is derived from the statutory accounts for 2012/13 which have been delivered to the Registrar of Companies. The auditor has reported on the 2012/13 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 2013/14 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 2014 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 discontinuance of the Cobelplast extruded sheet business. See note 7 for further information;

- the adoption of IAS19 (Revised 2011) 'Employee Benefits'. See note 13 for further information;

- changes to the definition of adjusted profit. See note 8 for further information.

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:

Geographical information - continuing operations

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

2014

2013 restated

* Mainland Europe also includes two sites (2013: one site) 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, impairments and other exceptional items

2014

The closure costs 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, net of insurance claims. In addition there were restructuring costs under this programme at other sites, including Kutenholz (Germany), Rushden (UK), Bremervörde (Germany), Oakham (UK) and Madrid (Spain). Integration/acquisition costs comprise the costs relating to the acquisitions of M&H Plastics and Helioplast and the integration costs of these business and Manuplastics which was acquired in the previous year. They also include the acquisition costs incurred in 2013/14 in connection with the acquisition of Ace Corporation Holdings. The impairment losses comprise goodwill written off relating to the disposables business at Offenburg, and impairments to property, plant and equipment at Offenburg, Troyes and other sites as a result of restructuring activities under the Fitter for the Future programme. The £0.8m impairment on assets held for sale relates to property impairments for the surplus properties marketed for sale.

2013

The closure costs in the previous year comprise the costs of the withdrawal from the vending cup business in mainland Europe and the closure and sale of the automotive parts business in Germany, together with the closure costs of the operations at Antwerp and Beuningen which commenced in 2012/13 under the Fitter for the Future business optimisation programme. In addition there were restructuring costs under this programme at other sites, including Bremervörde and Madrid. Integration/acquisition costs comprise the final closure costs at Runcorn (UK) and transfers of business to UKIM sites, together with other integration costs associated with Superfos. The impairment loss on intangible assets related to Offenburg and the impairment losses on property, plant and equipment included impairments on buildings held for sale and plant & equipment written down as a result of restructuring activities under the Fitter for the Future programme.

5. Net Financing Costs

6. Taxation

7. Discontinued operations

Cobelplast, the RPC cluster which manufactures extruded sheet, is currently being marketed for sale. In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', it has been classified in the Consolidated balance sheet within assets and liabilities held for sale and reported as a Discontinued operation (see note 9).

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

Restructuring costs during the year relate to redundancy and restructuring costs at Lokeren. Impairment losses relate to impairment of certain assets of the Cobelplast business at the time the business was classified as held for sale.

8. Earnings per Share

Basic

Earnings per share has been computed on the basis of earnings of £28.0m profit (2013: £24.7m), and on the weighted average number of shares in issue during the year of 165,360,202 (2013: 164,882,119). 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 1,111,941 (2013: 761,052). The number of shares used for the diluted calculation for the year was 166,472,143 (2013: 165,643,171).

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 restructuring, impairments and other exceptional items, amortisation of acquired intangibles and pension administration expense 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 and employee benefit net finance expense, adjusted for the tax thereon, have been excluded.

A reconciliation from operating profit 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:

9. Assets and liabilities classified as held for sale 

The assets and liabilities held for sale include the Cobelplast extruded sheet business (at Lokeren, Belgium and Montonate, Italy) which is classified as a Discontinued operation, the trading disposables business at Offenburg, Germany, and a surplus property in the Netherlands.

10. Net debt

11. Non-current Liabilities

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

These facilities comprised:

(i) a multi-currency revolving credit facility of up to £200m at normal commercial interest rates falling due on 30 September 2015;

(ii) US private placement notes of $92m and €35m expiring on 15 December 2018;

(iii) US private placement notes of $124m and €25m expiring on 15 December 2021;

(iv) a bilateral term loan of £60m expiring on 31 January 2017;

(v) uncommitted overdraft facilities of £10.0m, €30.5m and other small local facilities; and

(vi) mortgages secured on manufacturing facilities totalling £13.8m (2013: £14.5m) as at

31 March 2014.

The currency and interest rate profile of the Group's net debt, after taking account of the impact of interest rate swaps and net debt included in assets held for sale, is as follows:

12. Acquisitions

M&H Group

On 16 December 2013 the Group acquired effective control of 100% of the share capital of Maynard and Harris Group Ltd (M&H), the holding company for the M&H group of companies. M&H is a leading company specialising in the design and manufacture of high quality containers using extrusion blow moulding, injection stretch blow moulding, injection blow moulding, injection moulding and flexible tubes. Products cover the personal care, healthcare, pharmaceutical, nutritional, pet care, automotive and household products markets. 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: