6th Jun 2006 07:03
RPC Group PLC06 June 2006 6th June 2006 RPC GROUP PLC Preliminary results for the full year ended 31st March 2006 Reported under International Financial Reporting Standards (IFRS) RPC Group Plc ("RPC" or "the Group"), Europe's leading supplier of rigidplastics packaging, today announces its results for the year ended 31st March2006 reporting record turnover, operating profits and dividends per share. Financial highlights: • Group turnover increased by 19% to a record £611.5m (2005: £513.3m)• Reported operating profit before restructuring costs and negative goodwill increased by 19% to £36.8m (2005: £31m); operating profit after restructuring costs and negative goodwill up 7% to £34.4m (2005: £32.2m)• Adjusted basic earnings per share up 9% to 22.1p (2005:20.3p); basic earnings per share 19.9p (2005: 22.2p)• Underlying return on trading capital of 13.6% up from 12.9% in 2005• Enhanced financial strength with a reduction in gearing to 77% (2005: 79%)• Final dividend of 5.25p (2005: 4.8p) making a total dividend for the year of 7.75p per share, an increase of 9.2% Corporate highlights:• Strong results in a challenging operating environment • Significant cost increases being recovered with year-on-year operating margin-on-sales stable at 6%• Improving market conditions in Europe after prolonged weakness• Solid underlying volume growth of 3.5%• Healthy major project pipeline with blue chip clients• Many opportunities to buy complementary businesses• Integration of Nampak plants nearing completion Commenting on the results, PeterWilliams, Chairman said: "It is once again pleasing to report a record performance for the year. Salesexceeded £600m for the first time, an increase of 19%, reflecting good organicgrowth and the first full year contribution from our Nampak acquisitionin November 2004. Operating profit was also up 19% before taking into accountthe restructuring costs and negative goodwill. Accordingly, the Board iselighted to announce an increased full year dividend. This solid result was achieved in one of the most challenging years that ourrelatively young industry has experienced and while we expect somevolatility to continue in both energy and polymer markets we are confident ofour ability to manage this. We are buoyed by an encouraging start to thenew financial year and the Board anticipates further healthy developmentof the Group in 2006/2007." - Ends - Note:High resolution images are available for the media to view and download freeof charge from www.vismedia.co.uk For further information: RPC Group Plc 01933 410 064 Ron Marsh, Chief ExecutiveChris Sworn, Finance Director Merlin 020 7653 6620Michael Rummel 07879 890 405Tom Randell 0777 587 5847Angus Urquhart 07787 504 447 Statement by the Chairman and Chief Executive RPC again achieved a record performance in the year ended 31March 2006. Sales were up by 19% (10% without the benefit ofthe Nampak acquisition). Operating profit before restructuringcosts and negative goodwill was up by 19% (14% without thebenefit of the Nampak acquisition). Profit before tax on thesame basis was up by 18%. The basic earnings per share fell to 19.9p (2004/05:22.2p) as2005/06 was adversely impacted by charges for restructuringcosts related to the Nampak acquisition in November 2004 andthe requirement under IFRS to account for a foreign currencyhedge within the Income Statement. Conversely under IFRS, 2004/05 benefited from a net credit to the Income Statement as aresult of the release of negative goodwill arising from theNampak acquisition but after a charge for restructuring costs,again in relation to the Nampak acquisition. Eliminating theseitems, net of tax, resulted in an adjusted earnings per shareof 22.1p, an increase of 9% (2004/05: 20.3p) despite theplacing of 9.6m new shares in March 2005. This was achieved in one of the most challenging years thatour relatively young industry has experienced. With oil pricescontinuing to rise, the cost of polymer was 8% higher than theprevious year; this average percentage masks the very highlevel of volatility seen during the year. This had to bepassed on to customers at the same time as we sought to passon a raft of other increases, particularly electricity. The UKwas the worst case for electricity with our price simplydoubling on 1 October 2005, at a cost exceeding £6m in a fullyear. The results demonstrate that for the Group as a whole wehave largely succeeded in this endeavour, although the extentof the increases in the UK has resulted in some lags. Cash generated by operations was £64m, over £10m more thanlast year. Debt/equity gearing at the end of the year was 77%(2004/05: 79%) with interest cover a comfortable 4.6 times, inline with last year. Nampak Acquisition The progressive transfer of business and machinery from WoburnSands to our sites at Plenmeller, Raunds and Rushden has beengoing according to plan. We will therefore have completelyvacated the Woburn Sands site by the scheduled date of 31October 2006 and we will then benefit from a significantoverhead saving and improved operational efficiencies. Theother ex-Nampak sites in Wales, the Netherlands, Belgium andFrance, are performing in line with expectations. The Competitive Landscape The cost issues referred to above have had a detrimentaleffect on the performance of our industry as a whole. Theeffect of this has been to propel a number of competitors intoadministration or receivership. As we said half way throughthe year, it has also encouraged a number of owners to exploremore enthusiastically the opportunities for an exit. The factthat we have not yet concluded any further deals recently doesnot suggest that we have not been in active discussions;rather it demonstrates that we are only interested inopportunities that are both sensibly priced and enable us tostrengthen our position in specific rigid plastic packagingmarket sectors where we feel we can add value for ourcustomers and shareholders. These opportunities continue toexist, in ever greater numbers, and we continue to explorethem. Despite these challenges, there are also a small number offocused, well-run businesses, some publicly owned and moreprivately owned, which are thriving in this environment. Thisdoes illustrate that despite the general adverse tradingconditions in our industry there will be a handful ofsatisfactorily profitable survivors and winners emerging fromthis shake-out. These businesses can also sometimes becomeavailable and are of interest to us, but again only providedthe fit is good and the price is sensible in relation to theirperformance and potential. Organic Growth The outlook for organic growth remains excellent. Economicgrowth in Europe appears to be accelerating after a prolongedperiod of weakness. Plastic packaging continues to outpace thegrowth rate of other packaging materials and in our case alarge amount of organic growth is also coming fromcompetitors' rationalisation exercises which are invariablydisruptive to their customer service. We envisage thiscontinuing, albeit the timing and the quantum of suchopportunities are by their very nature difficult to forecast. The pipeline of new projects continues to be strong ascustomers emphasise innovation as their number one priorityeven before cost competitiveness. As far as existing projectsare concerned, they are all making a good contribution to theGroup's performance, although the more innovative onesrepresenting the launch of a completely new product are oftenslower than expected in achieving the forecast volumes. Our focus remains on developing in Europe but we will takeadvantage of attractive opportunities to grow outside Europeparticularly in response to major customer demands and wherewe can use our technology leadership to make superior returns.One example of this is the factory at Morgantown which wasrecently established to meet our customer's demand for thelaunch of beverage discs in the US. Margins The greatest challenge comes not from winning newopportunities where our track-record of success is very good.It comes rather from defending existing business againstailing competitors that are sometimes little short ofdesperate in their pricing or perhaps simply dressing theirbusiness up for sale. The figures for 2005/06 demonstrate thatwe are generally successful in this defence, but the successsometimes comes at the expense of some margin erosion.Fortunately a combination of volume growth, mix improvementand cost reduction has enabled us not only to halt the declinein our margins, but actually show a slight improvement in thesecond half and overall, at 6%, maintain the same level aslast year. The issue should diminish as the shake-out in theindustry progresses and recognition grows of the need torecover overhead cost increases and improve margins. Operations The performance and development of the various operatingclusters which comprise the Group is reviewed below and themain issues and risks are described; in most cases risks aregeneric rather than specific. On the face of it the mostsignificant exposure which the Group faces is movements inpolymer costs because they can account for up to one third ofturnover. However, our performance over the last few yearsdemonstrates that we have been able, in the main, to passthese on albeit with some time lags. Injection Moulding: Injection Moulding enjoyed a 14% increase in sales to £246.5m(2004/05: £216.5m). The Bramlage-Wiko cluster had mixed fortunes during 2005/06.Handihaler production reduced from the previous year's highlevel as a result of de-stocking. By contrast sales of theMagic Star range of dispensers nearly doubled so that, by theyear end, capacity had to be expanded through initialproduction runs in Poland. Bramlage's sales of personal carepackaging, principally deodorant sticks and cream jars, weresubdued during much of the year but had begun to growencouragingly by the year end. Our major project for the manufacture of beverage discs wasbrought onto a proper production footing during the course ofthe year. Inefficiencies were successfully tackled and thefull range of discs was launched. The US factory, atMorgantown in Pennsylvania, began production during the lastquarter in good time for the full scale launch of the systemin the North American market. Our successful execution of thisproject has led to a much closer relationship with the onemajor food group with whom we have traditionally done littletrading. In the UK severe price competition amongst food retailers anda fall in demand in the DIY/surface coatings market, combinedwith the high and rising polymer prices and the doubling ofelectricity costs, made this a challenging year. Encouragingly, however, the business was able to deliver goodvolume growth with sales of pails into food service markets,of PET containers into a variety of markets and ofpolypropylene pots into food retail markets such as freshsoup, all combining to more than offset the fall in paintcontainers and pails/pots into DIY markets. In particular thegrowth of yellow fats business at Hereford contributed to asignificant improvement in performance and the site's firstprofitable year in RPC ownership since it was acquired fromRexam in March 2004. A variety of cost saving initiatives, in purchasing,processing efficiency, restructuring, automation and otherareas helped to relieve some of the pressure on margins. Thenumber of employees was reduced by 10% without loss ofproduction capability or service performance. This improvementprogramme made a modest net contribution after costs in theyear and will deliver further significant benefits next year. Thermoforming: Total Thermoforming sales rose by 7% in the year to £222.2m(2004/05: £207.2m). The Cobelplast cluster enjoyed strong demand for its mono andmulti-layer sheet products despite having to implement somesignificant price increases as a result of the rising cost ofpolymer. It has been essential to pass on these additionalcosts because polymer accounts for close to 70% of the salesvalue of sheet. Despite these cost pressures and the lack ofenthusiasm of our customers for yet more price rises, we havesucceeded in broadly maintaining our margin in this areawhilst increasing our sales volume by 11%. The one sector inwhich we have lost business is flocked sheet where demand isgrowing only in the Far East, whilst in Europe volumes arefalling rapidly. We are planning to withdraw from this sectorin the near future. We have invested in additional multi-layer PP sheet equipmentwhich has the capacity to produce product of exceptionalclarity and functional performance. We expect this to open newmarkets in both pharmaceutical packaging and theform-fill-seal sector. During 2005/06 we have successfullygained a foothold in the plastic card market - initially inphone cards but trials are also proceeding in other sectorswith good growth prospects. The Bebo cluster of businesses, which produces and supplies awide range of thermoformed containers across Europe,demonstrated volume growth and a significantly improved returnfrom its existing operations, a situation enhanced by theaddition of the Bebo Print business purchased in April 2005.Manufacturing performance was improved, and leading positionsin both margarine containers and oxygen barrier packaging werestrengthened. The former benefited from Bebo's expertise inthe production of preprinted lids (using sheet now printedunder our control by Bebo Print), from strong relationshipswith major spreads producers, and from the introduction of anew pack in Poland. In the area of oxygen barrier packs(predominantly long shelf-life trays and cups), Bebo benefitedfrom growing demand, as well as from widening its customerbase. Competitive pressures, combined with the rising input costsand, in the case of supply outside Europe, dollar weakness,continue to challenge the businesses. In addition tocontinuing cost reduction, achieved through technologicaladvances in product and process design, as well as throughproductivity improvements, Bebo has a number of productinnovations near the stage of introduction. It is working,with some effect, to widen its geographic and market coveragein both barrier packaging and preprinted lids and to increaseits customer and product base in Eastern Europe in particular. Our Tedeco-Gizeh disposables business performed better in 2005/06 than in 2004/05. Despite an increasingly competitiveenvironment, the sales of vending cups grew as a result ofsome new contracts, the further expansion of our CentralEuropean activities and the introduction of embossed cups.Sales of our added value, market leading products Prestigo,the office coffee service system, and Hot=Cool, the insulatedvending cup, had grown substantially by the year end and wehave been able to exploit some exciting export opportunitiesfor these products. The catering and wholesale operationsachieved steady growth particularly in France and CentralEurope, whilst German sales remained flat because of the stateof the overall economy. The dairy business in France developedsatisfactorily despite the loss of a major contract: we haveone of the best stock tub ranges in France today and we haverecently entered the growing market for multi-layer packs. Blow Moulding: Including the full year benefit of the Nampak acquisition,total Blow Moulding sales increased by 60% to £142.8m (2004/05: £89.5m). Excluding Nampak the cluster still delivered substantiallyimproved results with sales 13% ahead. This improvement wasdue to a number of factors, including significant growth indemand for multi-layer jars for fruit pieces, a recovery inthe German personal care industry and some healthy sales tothe agrochemical industries. The integration of the ex-Nampakoperations has proceeded apace with some beneficial results -mainland Europe sites that were earlier loss-making are nowbreaking into profit and there is a new will from staff toexploit their experience and the existing machine base tosecure the future of these businesses. Overall demand in the UK and North West Europe forconventional blow moulded packs has remained flat andcompetition has therefore intensified. Despite this we havegrown our market share through our reputation for offeringgood service to our customers. We have the advantage of awell-reputed in-house design team equipped with the latest CADequipment and experienced technical staff - together theyfacilitate the development of new packs and concepts such asthe paint can we are producing for one of the largest Europeanmanufacturers of surface coatings. We are also investing in new multi-layer jar capacity in orderto deliver the larger volumes that are being sought today, andin state of the art material handling systems to enable us toproduce more consistent products. Our number two position in the European blow moulding industrymeans that we automatically receive many enquiries, but,because of our devolved structure, we pick up others throughour local representation. This well-spread sales activityreduces our vulnerability to the loss of major contracts. Inaddition, because of the inherent variability of the blowmoulding process we ensure that our staff and quality systemsare amongst the best in the industry. Financial Review These are the first full year results that we have presentedunder IFRS and, as with other companies reporting for thefirst time in this new format, this has necessitated therestatement of the base figures for prior periods. Theprincipal differences are changes in accounting for goodwill,pensions, deferred tax and dividends. The Group's 2005/06 turnover was 19% ahead of that in 2004/05reflecting a full year contribution from the acquisition on 1November 2004 of the seven Nampak operations in the UK andmainland Europe. On a like-for-like basis, the turnover growthwas 10% and the equivalent volume growth 3.5%: this reflectsour efforts in passing on the bulk of the increases in polymercosts and, in the UK, electricity charges. The movement in thesterling: euro exchange rate between 2004/05 and 2005/06 wasnegligible. The underlying operating margin-on-sales of the Group overallremained the same over the two years at 6% despite an 8%increase in polymer costs. There was however a slightimprovement in the second half of the year compared to thefirst half. The restructuring costs of £2.4m (2004/05: £4.5m) are entirelyattributable to the costs of closing the ex-Nampak WoburnSands plant: the site must be finally vacated by 31 October2006. Net financing costs (£8m) during 2005/06 include a chargeunder IFRS of £0.57m on account of the fair value movement ina dollar: euro swap entered into in March 2005. This wasarranged in order that $30m of the $40m dollar denominatedbonds which were issued in February 2005 would be hedgedagainst our euro denominated assets when they are repaid in2012. In addition, during the year we had to write-off at acost of £0.29m unamortised arrangement fees from the old loanfacility that was re-negotiated in June 2005 to take advantageof more favourable margins and increase the headroom. Theunderlying year-on-year increase in net interest charges istherefore £0.45m. The corporation tax rate charged as stated under InternationalAccounting Standards was 27% in the year. Last year's figureshows 24% but when non-recurring items such as the release ofnegative goodwill and restructuring costs are eliminated thetax rate for 2004/05 is comparable at 27%. Under IFRS, the basic earnings per share in 2005/06 fell to19.9p (2004/05: 22.2p) as a result of the adverse impact ofrestructuring costs and the foreign currency hedge charge;this was against a net benefit from restructuring costs andthe release of negative goodwill in 2004/05. The adjustedearnings per share, before these items, gives a more relevantcomparison being 22.1p in 2005/06 against 20.3p in 2004/05 -an increase of 9% despite the placing of 9.6m new shares inMarch 2005. The Balance Sheet remains sound, with gearing (the ratio ofbank borrowings and other externally secured funds toshareholders funds) falling from 79% at 31 March 2005 to 77%at 31 March 2006 despite a capex spend of over £50m. Thisincludes an investment of £18m in the Kraft Tassimo project -which means that the levels of 'ongoing' capital spend isapproximately similar to the depreciation charge for the year.Net borrowings rose from £105.7m in 2004/05 to £117.7m in 2005/06 reflecting the higher levels of capital spend and the BeboPrint acquisition. Total pension costs charged to the Income Statement rose 15%to £4.7m (2004/05: £4.1m). Within this the cost of the definedbenefits schemes increased by 9% to £3.5m. Total retirementbenefit obligations on the Balance Sheet fell by £2.8m to£29.7m. The underlying return on trading capital was 13.6% for theperiod under review against 12.9% in the preceding year. Personnel We are pleased to welcome two additional non-executivedirectors to strengthen the RPC Group Board. Stephan Rojahnwas appointed on 25 January 2006 and has a background in theGerman automotive component industry. Peter Wood, appointed on22 March 2006, has a broad background in industry and strongfinancial experience. The number of people employed by the Group as at 31 March 2006fell by 216 to 6,534 over the year as a result of retirement,natural attrition and redundancy. RPC has, we believe, a special ethos as a result of itsdecentralised structure which in consequence, affordswidespread opportunities for individuals to make their ownunique contribution to the development of the Group. Weappreciate the outstanding efforts made by all who togetherhave enabled the Group to meet the difficult and challengingcircumstances that have confronted us in today's market placeand we look forward with them to a continuation and indeedstrengthening of the Group's performance. To this end we aredelighted to see the enthusiasm for the Group's SavingsRelated Share Scheme. Dividend Your Board is recommending an increase in the final dividendto 5.25p per share (2004/05: 4.8p) making a total for the yearof 7.75p (2004/05: 7.1p), an increase of 9.2%. Subject toapproval at the forthcoming Annual General Meeting, the finaldividend will be paid on 8 September 2006 to shareholders onthe register on 11 August 2006. Outlook Having achieved a solid result in a difficult year and anencouraging start to the new financial year, the Boardanticipates further healthy development of the Group in 2006/07. J P Williams R J E MarshChairman Chief Executive RPC GROUP PLC Consolidated income statement for the year ended 31 March 2006 2006 2005 Note £'000 £'000 Revenue 2 611,483 513,284 Operating costs 3 (577,115) (481,100) ------------------------ Operating profit 2 34,368 32,184 Analysed as:Operating profit before: 36,768 30,999Restructuring costs 4 (2,400) (4,522)Negative goodwill - 5,707 --------------------- Operating profit 34,368 32,184 Financial income 5 234 190Financial expenses 5 (8,210) (6,857) ---------------------Net financing costs (7,976) (6,667) --------------------- Profit before taxation 2 26,392 25,517 Tax on profit on ordinary activities 6 (7,126) (6,025) ----------------------Profit for the period attributable to 19,266 19,492 ======================equity shareholders of the parent Basic earnings per ordinary share 8 19.9p 22.2p Diluted earnings per ordinary share 8 19.7p 22.0p Adjusted basic earnings per ordinary 8 22.1p 20.3pshare Consolidated statement of recognised income and expensefor the year ended 31 March 2006 Foreign exchange translation 1,438 3,690differencesEffective portion of movement on fair 1,231 -value of interestrate swapsDeferred tax liability on above (49) -Actuarial gains/(losses) on defined 3,092 (2,271)benefit pension plansDeferred tax on actuarial gains/losses (880) 717Equity-settled share based payment 300 91transactionsDeferred tax on share based payments 81 - ---------------------Net income recognised directly in 5,213 2,227equityProfit for the period 19,266 19,492 --------------------- Total recognised income and expensefor the period 24,479 21,719attributable to equity shareholders of ========== ===========the parent Consolidated balance sheet at 31 March 2006 2006 2005 £'000 £'000Non-current assetsGoodwill 12,217 8,892Other intangible assets 719 -Property, plant and equipment 243,073 226,560Derivative financial instruments 1,185 -Deferred tax assets 8,034 7,935 ---------- ----------- Total non-current assets 265,228 243,387 ---------- ----------- Current assetsInventories 86,365 84,107Trade and other receivables 117,292 110,776Cash and cash equivalents 25,487 32,815 ---------- -----------Total current assets 229,144 227,698 ---------- ----------- Current liabilitiesTrade and other payables (135,865) (129,323)Bank loans and overdrafts (2,860) -Current tax liabilities (9,128) (9,870)Employee benefits (1,459) -Provisions (235) -Deferred consideration (1,000) - ---------- -----------Total current liabilities (150,547) (139,193) ---------- ----------- Net current assets 78,597 88,505 ---------- ----------- Total assets less current liabilities 343,825 331,892 ---------- ----------- Non-current liabilitiesBank loans and other borrowings (140,367) (138,495)Deferred consideration - (1,000)Employee benefits (35,099) (40,309)Provisions - (675)Deferred tax liabilities (15,906) (17,470)Derivative financial instruments (262) - ---------- -----------Total non-current liabilities (191,634) (197,949) ---------- ----------- Net assets 152,191 133,943 ========== =========== EquityCalled up share capital 4,904 4,835Share premium account 24,032 22,184Capital redemption reserve 928 928Retained earnings 117,083 102,306Cash flow hedging reserve 116 -Cumulative translation differences 5,128 3,690reserve ---------- -----------Total equity attributable to equityshareholders of 152,191 133,943the parent ========== =========== Consolidated cash flow statement for the year ended 31 March 2006 2006 2005 £'000 £'000Cash flows from operating activitiesProfit before tax 26,392 25,517Financing costs 7,976 6,667 ---------- -----------Profit from operations 34,368 32,184Adjustments for:Amortisation of intangible assets 76 -Impairment loss on property, plant and - 925equipmentDepreciation 33,313 31,523Negative goodwill - (5,707)Share-based payment expense 300 91Gain on disposal of property, plant (1,117) (423)and equipment(Decrease)/increase in provisions (341) 1,929 ---------- -----------Operating cash flows before movements 66,599 60,522in working capitalMovement in working capital (2,098) (7,228) ---------- -----------Cash generated by operations 64,501 53,294Taxes paid (9,669) (3,487)Interest paid (7,916) (6,494) ---------- ----------- Net cash from operating activities 46,916 43,313 ---------- ----------- Cash flows from investing activitiesInterest received 234 191Proceeds on disposal of property, 4,808 588plant and equipmentAcquisition of property, plant and (50,312) (32,554)equipmentAcquisition of intangible assets (100) -Acquisition of subsidiary (5,798) (20,022)Reduction in consideration in respect - 658of earlier acquisition ---------- ----------- Net cash flows from investing (51,168) (51,139)activities ---------- ----------- Cash flows from financing activitiesDividends paid (7,082) (5,904)Proceeds from the issue of share 1,917 22,649capitalMovement in borrowings 729 (22,538)Proceeds from issue of bond finance - 44,969Payment of finance costs (568) (350) ---------- ----------- Net cash flows from financing (5,004) 38,826activities ---------- ----------- Net (decrease)/increase in cash and (9,256) 31,000cash equivalentsCash and cash equivalents at beginning 32,815 1,212of periodEffect of foreign exchange rate 944 603changes ---------- ----------- Cash and cash equivalents at end of 24,503 32,815period ========== =========== Cash and cash equivalents comprise:Cash at bank 25,487 32,815Bank overdraft (984) - ---------- ----------- 24,503 32,815 ========== =========== NOTES For the year ended 31 March 2006 Basis of Preparation The preliminary results for the year ended 31 March 2006 have been extracted from audited accounts which have not yet been delivered tothe Registrar of Companies. The financial information set out in thisannouncement does not constitute statutory accounts for the yearended 31 March 2006 or 31 March 2005. The financial information for the yearended 31 March 2005 is derived from the statutory accounts for that year, except that comparative information has been restated as a result of theadoption of International Financial Reporting Standards (IRFS). The reportof the auditors on the statutory accounts for the year ended 31March 2006 was unqualified and did not contain a statement under Section 237of the Companies Act 1985. The statutory accounts for the year ended31 March 2006 will be delivered to the Registrar of Companies followingthe Company's Annual General Meeting. The results represent the first annual financial statements prepared inaccordance with IFRS as adopted by the EU. An explanation of thetransition to IFRS was included as an appendix to the 'Interim Report 2005'that was issued on 30 November 2005. 1 Principal Accounting Policies These extracts from the financial statements for the year ended 31 March 2006have been prepared in accordance with International FinancialReporting Standards for the first time. The Group financial statementshave been prepared by the directors in accordance with InternationalFinancial Reporting Standards as adopted by the EU. 2 Segment AnalysisPrimary segments - Geographical The Group operates in two principal geographic regions - 'UK' and 'Mainland Europe'.Mainland Europe also includes our operation in the USA whose sales were predominantly manufactured in Germany. These two regions are the basis onwhich the Group reports its primary segment information. Segment informationabout these regions is presented below. Segment information by geographic segment UK Mainland Europe Other*/ Eliminations Consolidated 2006 2005 2006 2005 2006 2005 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000RevenueExternal sales 209,418 172,756 402,065 340,528 - - 611,483 513,284Inter-segmentsales - - 3,915 5,092 (3,915) (5,092) - - -----------------------------------------------------------------------------------Total revenue 209,418 172,756 405,980 345,620 (3,915) (5,092) 611,483 513,284 ------------------------------------------------------------------------------------ Profit from operations 4,904 6,806 29,757 23,439 (293) 1,939 34,368 32,184 Net financing costs (7,976) (6,667) ------------------Profit before taxation 26,392 25,517 ------------------ Segment assets 140,002 143,156 318,237 289,053 10,646 6,061 468,885 438,270 Segment liabilities (53,006) (56,967) (110,850) (100,287) (35,098) (41,393) (198,954) (198,647) --------------------Net segmentassets 269,931 239,623 Net borrowings (117,740) (105,680) Net assets perBalance Sheet 152,191 133,94 ----------------- Capitalexpenditure 12,052 13,990 38,707 20,726 245 - 51,004 34,716 Depreciationandamortisation 12,271 10,859 20,954 20,664 164 - 33,389 31,523 Secondary segments - Business Process The Group comprises the following principal secondary segments whose activities are all themanufacture,by their specific process, and sale of rigid plastic packaging and associated equipment. Segment information by business segment Revenue Segment assets Capital expenditure 2006 2005 2006 2005 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000Blow moulding 142,801 89,550 106,464 80,722 9,907 5,210Injection moulding 246,458 216,519 195,866 201,931 31,620 21,303Thermoforming 222,224 207,215 151,960 142,902 9,227 8,203 Other* - - 14,595 12,715 250 - --------------------------------------------------------------------- 611,483 513,284 468,885 438,270 51,004 34,716 Geographical analysis of revenue by destination UK Mainland Europe Consolidated 2006 2005 2006 2005 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000Revenue 197,210 173,960 414,273 339,324 611,483 513,284 * Other includes Head Office, current tax and deferred tax balances. 3 Operating Costs Total Total 2006 2005 £'000 £'000Raw material and consumables 276,339 228,472Own work capitalised (1,977) (2,028)Changes in stock of finished goods and work inprogress (1,113) (6,795)Other external charges 81,389 68,071Carriage 29,209 24,150Staff costs 163,962 147,337Depreciation of property, plant and 33,313 31,523equipmentAmortisation of intangibles 76 -Negative goodwill credit - (5,707)Other operating income (4,083) (3,923) -------- --------- 577,115 481,100 =================== 4 Restructuring Costs 2005 Restructuring Cost £'000Direct costs of the termination 3,757Operating loss of the operation up to 31 March 2005 765 --------- 4,522 ========= 2006 Restructuring Cost £'000Operating loss of the operation up to 31 March 2006 2,400 ========= The restructuring costs in 2005 and 2006 relate to the closure of Woburn Sandsin the UK; this operation was acquired from Nampak as part of the acquisitionof its Short Run business. The site will be closed by 31 October 2006. 5 Financial Income and Expenses 2006 2005 £'000 £'000 Interest receivable on cash at bank (234) (190) --------- ---------Total financial income (234) (190) ========= ========= Interest payable on bank loans and overdrafts 5,398 6,580Interest payable on bonds 1,818 109Foreign currency hedging instruments 568 -Other interest payable and similar charges 426 168 --------- ---------Total financial expenses 8,210 6,857 ========= ========= The foreign currency hedging instrument charge of £568,000 under IAS 39 'Financial Instruments: Recognition and Measurement' relates to the markto market position of foreign currency hedging instruments. 6 Tax on Profit on Ordinary Activities 2006 2005 £'000 £'000United Kingdom corporation tax at 30% (2005: 30%):Current year 131 135Adjustments in respect of prior periods - (14)Overseas taxation:Current year 7,086 5,830Adjustments in respect of prior periods 1,476 189 --------- ---------Total current tax 8,693 6,140 Deferred tax:United KingdomCurrent year (947) (955)Adjustments in respect of prior periods 60 (179)Terminations (note 4) - (309)OverseasCurrent year (316) 1,328Adjustment in respect of prior years (364) - --------- ---------Total tax expense in Income Statement 7,126 6,025 --------- --------- 7 Dividends 2006 2005 £'000 £'000Dividends on Ordinary Shares:Interim for 2005/06 paid of 2.5p per share 2,426 -Final for 2004/05 paid of 4.8p per share 4,656 -Interim for 2004/05 paid of 2.3p per share - 2,015Final for 2003/04 paid of 4.45p per share - 3,889 --------- --------- 7,082 5,904 ========= ========= The proposed final dividend for the year ended 31 March 2006 of 5.25p per sharehas not been included as a liability as at 31 March 2006. The recommended finaldividend of 5.25p per Ordinary Share will be paid on 8 September 2006 subjectto approval at the forthcoming Annual General Meeting of the Company to shareholders on the register at the close of business on 11 August2006, making the total dividend 7.75p per share. 8 Earnings per Share Basic The earnings per share have been computed on the basis of earnings of£19,266,000 (2005: £19,492,000), and on the weighted average numberof shares in issue during the year 97,019,926 (2005: 87,653,742). The number of shares in issue at 31 March 2006 was 98,072,180. Diluted Diluted earnings per share is the earnings per share after allowing for the dilutive effect of the conversion into Ordinary Shares of theweighted average number of options outstanding during the year 861,965 (2005: 965,341). The number of shares used for the diluted calculation forthe year was 97,881,891 (2005: 88,619,083). Adjusted The Directors believe that the presentation of an adjusted basic earningsper ordinary share assists with the understanding of the underlyingperformance of the Group. For this purpose we have excluded the restructuringcosts and impact of the negative goodwill, identified separately on the faceof the consolidated Income Statement, together with the charge for theforeign currency hedging instruments less the tax thereon. This is set out below A reconciliation from profit after tax as reported in the consolidatedIncome Statement to the adjusted profit after tax is set out below: 2006 2005 £'000 £'000Profit after tax as reported in the consolidatedIncome Statement 19,266 19,492Restructuring costs 2,400 4,522Negative goodwill - (5,707)Foreign currency hedging instruments 568 -Tax effect thereon (801) (537) --------- ---------Adjusted profits after tax 21,433 17,770 ========= ========= Adjusted basic earnings per share The weighted average number of shares used in the adjusted basic earningsper sharecalculations is as follows: 2006 2005 £'000 £,000Weighted average number of shares 97,109,926 87,653,742 Adjusted basic earnings per share 22.1p 20.3p Adjusted diluted earnings per share The weighted average number of shares used in the adjusted dilutedearnings per share calculation is as follows: Number NumberWeighted average number of shares 97,019,926 87,653,742 Effect of share options in issue 861,965 965,341 --------- --------- 97,881,891 88,619,083 ========================= Adjusted diluted earnings per share 21.9p 20.1p This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Rpc Group