Rpc full yearpresentation2014
- 1. RPC Group Plc 2013/14 Results Bringing packaging to life RPC GROUP PLC 2013/14 results 04 June 2014
- 2. RPC Group Plc 2013/14 Results AGENDA 2 • Vision 2020 PV • Business Review PV • Fitter for the Future SK • Financial Review SK • Outlook PV
- 3. RPC Group Plc 2013/14 Results Focused growth Continuing focus on organic growth Selective consolidation in Europe Creating a meaningful presence outside Europe ● Further growth in the selected markets ● 4% organic sales increase 3 VISION 2020: FOCUSED GROWTH PROGRESS ● Acquisition of M&H Plastics ● Acquisition of Helioplast ● Continuing pipeline of opportunities ●Investment in organic growth in the US ●Acquisition of M&H containing US operation ●Acquisition of Ace (China) post year end
- 4. RPC Group Plc 2013/14 Results M&H Plastics ● Purchasing synergies realised ● Sales integration with Manuplastics completed ● Further growth in the UK ● Roll out of M&H business model in preparation BUSINESS REVIEW ACQUISITIONS – INTEGRATION UPDATE 4 Helioplast ● Fully integrated into the Superfos cluster ● New machines and product lines allocated ● Increasing RPC presence in Balkans
- 5. RPC Group Plc 2013/14 Results 5 BUSINESS REVIEW ACQUISITIONS – ACE Production facilities and headquarters Sales by destination 2013 Factory location Production facilities Production site Headquarters Shanghai Hefei Shanghai Employs c.600 people Established in 2003 Hefei Employs c.330 people Established in 2013 Shenzhen (Gonghe) Employs c.1,100 people Established in 1997 Shenzhen (Shatou) Employs c.610 people Established in 1997 Zhuhai Employs c.630 people Established in 2008 Green Arburg machines 5 axis robots Electroplating plant HPH automation plant HPH automation plant Clean room moulding Zhuhai Hong Kong Shenzhen (Shatou) Shenzhen (Gonghe) 13% 19% 30% 38% Rest of the World China Europe Americas Ace has additional sales offices in the UK and the US Ace has presence across China through five manufacturing facilities
- 6. RPC Group Plc 2013/14 Results 6 BUSINESS REVIEW ACQUISITIONS – ACE: STRATEGIC RATIONALE Platform to create a meaningful presence in Asia Enhance Ace’s attractive standalone growth strategy ● High quality, modern manufacturing platform − Critical mass and capacity to grow higher added value packaging volumes in Asia ● Leverage RPC’s relationships with global customers calling for RPC to have a manufacturing presence in China ● Platform to accelerate acquisitive growth in the region ● Synergy opportunities: − Cost savings from increased in-sourcing of existing RPC tooling requirement − Potential for general purchasing savings for enlarged group ● Enhanced export sales for Ace through the RPC sales network ● Increased value offering for European tools through the support of a dedicated service tool centre ● Best practice transfer to Ace – complex moulding, automation, multi-part assembly Bilateral discussions between Ace and RPC relating to a potential combination were on-going for circa three years
- 7. RPC Group Plc 2013/14 Results BUSINESS REVIEW MARKET DEVELOPMENTS – GROWTH ON TRACK 7 MARKET SEGMENT ACTIVITY LEVELS COMMENT Personal care & cosmetics Acquisition of M&H strengthening position Spreads & dairy Stable market with trend continuing towards “In-Mould-Label” Injection moulding Single serve beverage systems Continued strong growth in capsules for single-serve beverage systems Surface coatings Signs of the Spanish economy recovering Pharmaceutical Promising pipeline of new projects Other food Stable market providing satisfactory returns Other non-food Healthy growth in chemicals 7% 7% 10% 11% 20% Other food Long shelf-life Single serve beverage systems Spreads Dairy products Food 55% 4% 9% 15% 17% Other non- food Pharmaceutical Personal care and cosmetics Surface coatings Non- Food 45% 33% of Group sales in High Added Value products
- 8. RPC Group Plc 2013/14 Results Polymer price development BUSINESS REVIEW POLYMER PRICE DEVELOPMENT PP polymer Supply/Demand 78% 80% 82% 84% 86% 88% 90% 92% 01530456075900809101112131415161718 TONNES (M) OPERATING RATE % Source: Chemical Market Associates, Inc. 8 Operating Rate Actual Demand Free Capacity Forecast Demand € PER TONNE Source: Platts / ICIS HDPE BM PP HOMO 400 600 800 1,000 1,200 1,400 1,600 Stable polymer prices in financial year 2013/14
- 9. RPC Group Plc 2013/14 Results FITTER FOR THE FUTURE UPDATE 9 Programme main work streams: Rationalise manufacturing footprint Optimise existing business portfolio Review of business portfolio ● Intended divestment of Cobelplast cluster ● Sale of disposable trading business ● Nordic region - merger of Tenhult into Mullsjö ●Merge French dairy operations ●Refocus Spanish operations ●Realise value of redundant properties Programme contents: ● Optimisation programme Blow Moulding cluster ● Optimisation programme Bramlage-Wiko cluster ● Optimisation of cluster overhead Update: ●Initial offers received, progressing with preferred bidders ●Sold 22nd May 2014 for €3m ●Project on plan ●Production at Troyes ceased in March 2014 ●Closure of San Roque in progress ●3 properties sold in the year ●Update of organisation structure & market approach ●Realigning production concepts in progress ●Completed
- 10. RPC Group Plc 2013/14 Results FITTER FOR THE FUTURE UPDATE 10 Total project cost 2 9 14 16 17 12/13 13/14 14/15 15/16 16/17 Estimated cumulative EBIT impact of programme (£m): Incurred to date Costs remaining £58m £12m Total project cost: £70m
- 11. RPC Group Plc 2013/14 Results FINANCIAL REVIEW KEY FIGURES 11 21.1p 30.0p 38.2p 36.9p 41.1p 09/10 10/11 11/12 12/13 13/14 40.9 56.0 95.5 91.6 101.3 09/10 10/11 11/12 12/13 13/14 Adjusted basic EPS* For continuing operations Adjusted = before restructuring costs, impairment losses, amortisation of acquisition intangibles and pension administration expenses * Restated following Rights Issue in 2011 Adjusted operating profit (£m) Revenue (£m) 661 752 1,056 982 1,047 09/10 10/11 11/12 12/13 13/14
- 12. RPC Group Plc 2013/14 Results FINANCIAL REVIEW KEY FIGURES 12 8.4p 11.5p 14.4p 14.9p 15.5p 09/10 10/11 11/12 12/13 13/14 14.1% 16.7% 23.9% 22.6% 24.5% Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 65 69 100 86 105 09/10 10/11 11/12 12/13 13/14 Net cash from operating activities (£m) Dividend per share Return on net operating assets Restated following Rights Issue in 2011 For continuing operations
- 13. RPC Group Plc 2013/14 Results FINANCIAL REVIEW CASHFLOW BRIDGE (£m) 13 * Includes discontinued operations, exchange rate movements, provision movements, one off pension deficit payments & movement on derivatives Net Debt Mar 2014 EBITDA Working Capital Interest & Tax Investing Activities Dividends Other* Net Debt Mar 2013 Exceptional Spend Acquisitions (171) (266) 145 (20) (71) (24) (25) (111) (5) 16
- 14. RPC Group Plc 2013/14 Results FINANCIAL REVIEW FINANCIAL POSITION 14 KPIs MAR 2014 Net debt (£m) 266 Undrawn facilities (£m) 391* Net debt to EBITDA ratio 1.7x 0 50 100 150 200 250 300 350 400 2014 2015 2016 2017 2018 2019 2020 2021 Renewal date main facilities USPP USPP Term £m RCF – New April 2014 * Recalculated using new £350m RCF
- 15. RPC Group Plc 2013/14 Results OUTLOOK 15 Vision 2020 strategy delivered platforms for further growth in Asia, US and South East Europe Financial year started in line with management expectations Further acquisition opportunities being explored Fitter for the Future benefits being delivered
- 16. RPC Group Plc 2013/14 Results FORWARD LOOKING STATEMENTS 16 This presentation 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 their approval of this presentation; and • should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. • The Group undertakes no obligation to update these forward-looking statements and nothing in this presentation should be construed as a profit forecast.
- 17. RPC Group Plc 2013/14 Results SUPPLEMENTARY MATERIAL 17
- 18. RPC Group Plc 2013/14 Results FINANCIAL REVIEW CONSOLIDATED INCOME STATEMENT £ million 2013/14 2012/13 Variance Revenue 1,046.9 982.3 64.6 Operating profit – adjusted 101.3 91.6 9.7 Interest charge (11.8) (11.7) (0.1) Profit before tax – adjusted 89.5 79.9 9.6 Tax on adjusted profit before tax (21.5) (19.1) (2.4) Profit after tax – adjusted 68.0 60.8 7.2 Exceptional items – restructuring and impairments (26.7) (28.4) 1.7 Amortisation of acquired intangibles, pension administration expense and employee benefit net finance expense (3.8) (3.3) (0.5) Tax relief on above items 6.2 4.9 1.3 Profit after tax – reported 43.7 34.0 9.7 Basic earnings per share (p) – adjusted 41.1p 36.9p 4.2p Basic earnings per share (p) – reported 26.5p 20.6p 5.9p 18 For continuing operations
- 19. RPC Group Plc 2013/14 Results FINANCIAL REVIEW SEGMENTAL ANALYSIS - IFRS 8 BASIS £ million 2013/14 2012/13 Variance Injection Moulding Revenue* 692.4 628.3 64.1 Operating profit ** 70.1 63.7 6.4 Return on sales ** 10.1% 10.1% - Return on net operating assets ** 26.8% 25.5% 1.3% Thermoforming Revenue* 182.0 184.1 (2.1) Operating profit ** 19.1 17.1 2.0 Return on sales ** 10.5% 9.3% 1.2% Return on net operating assets ** 34.9% 30.2% 4.7% Blow Moulding Revenue* 172.5 169.9 2.6 Operating profit ** 12.1 10.8 1.3 Return on sales ** 7.0% 6.4% 0.6% Return on net operating assets ** 20.7% 19.0% 1.7% For continuing operations * External sales only ** Based on adjusted operating profit before restructuring costs and impairment losses, amortisation of acquired intangibles and pension administration expense 19
- 20. RPC Group Plc 2013/14 Results FINANCIAL REVIEW SEGMENTAL ANALYSIS - GEOGRAPHICAL £ million 2013/14 2012/13 Variance UK Revenue* 269.8 234.4 35.4 Operating profit** 29.9 22.6 7.3 Return on sales** 11.1% 9.6% 1.5% Mainland Europe (including USA) Revenue* 777.1 747.9 29.2 Operating profit** 71.4 69.0 2.4 Return on sales** 9.2% 9.2% - 20 For continuing operations * External sales only ** Based on adjusted operating profit before restructuring costs and impairment losses, amortisation of acquired intangibles and pension administration expense
- 21. RPC Group Plc 2013/14 Results FINANCIAL REVIEW CONSOLIDATED BALANCE SHEET £ million MAR 2014 MAR 2013 Property, plant and equipment 418.0 395.3 Goodwill 169.8 93.1 Other non-current assets 37.3 33.1 Working capital 32.0 37.8 Employee benefit liabilities (LT) (72.5) (62.7) Other assets & liabilities (58.9) (58.2) Assets held for sale (excluding debt) 12.3 4.7 Net debt (including assets held for sale) (266.4) (171.4) Equity shareholder funds 271.6 271.7 21
- 22. RPC Group Plc 2013/14 Results FINANCIAL REVIEW PENSIONS UPDATE £ million MAR 2014 MAR 2013 Retirement benefit liability UK DBs 46.7 33.5 Other retirement benefit obligations 22.5 24.5 Termination benefits 1.2 1.6 Other employee benefit liabilities 2.1 3.1 Total employee benefit liability (LT) 72.5 62.7 22
- 23. RPC Group Plc 2013/14 Results BUSINESS REVIEW ACQUISITIONS – M&H PLASTICS 23 Leading position in UK plastic packaging to the personal care segment with significant exports to MLE and a growing presence in the US ● Recognised UK leader in plastic personal care packaging (blow moulded bottles, injection moulded jars, flexible tubes, closures, decoration) ● Unique position offering the widest range of personal care containers available ● Leading UK position with substantial MLE exports in short run, low volume, higher added value stock ranges alongside leading bespoke capability supported by in- house tool shop ● Focus on higher added value and niche brands, direct and via filler and distributor channels – business model underpinned by production flexibility and industry leading speed and excellence in design and new product development ● Product reach extended reach to healthcare and food ranges ● Significant exports to MLE (20% sales); rapid growth at US site M&H Plastics’ primary UK site at Beccles, UK The M&H site at Winchester, Virginia
- 24. RPC Group Plc 2013/14 Results BUSINESS REVIEW ACQUISITIONS – HELIOPLAST 24 ● Market leading provider of high quality injection moulded packaging ● Highly experienced management team ● Excellent technical capabilities ● Successful and long-standing exporter ● Well invested manufacturing capacity with new state-of-the-art facility ● Strong financial position Helioplast site in Bosnia-Herzegovina
- 25. RPC Group Plc 2013/14 Results 25 BUSINESS REVIEW ACQUISITIONS – ACE RPC acquisition criteria ● Strategic fit ● Strong incumbent management ● Financial track record ● Financial criteria: − ROCE > WACC of RPC − Quantifiable synergies − Earnings accretion − Impact on Group KPIs Vision 2020 financial metrics ● RONOA of at least 20% ● Return on sales of at least 8% Clear acquisition rationale and strategy Professional management team to be retained Strong profitability and growth achieved Pro forma ROCE ahead of WACC of c.9% Asian packaging growth EPS accretive in first full year post acquisition See below Ace RONOA at 31% in 2013 Ace return on sales at 18% in 2013
- 26. RPC Group Plc 2013/14 Results 26 BUSINESS REVIEW ACQUISITIONS – ACE Power Group Share of sales FY2013 £104m Services offered Products offered Lifestyle £52m Complete services from design and tooling through manufacturing and assembly • Consumer electronics • Water proof iPad cases • Bi-injection moulding • Sanitary products Automotive £21m Works with big automotive OEMs and tier 1 suppliers and produces customised structural and decorative parts • Remote control keys • Engine components • Chrome plated plastic Packaging £15m Complete service including concept design, prototype and tooling • Food packaging • Cosmetics packaging • Consumer packaging mould £10m Full service engineering expertise in micromachining / metal insert moulding • Connectors • Power switches • Metal insert moulding Medical £6m Medical device solutions for respected medical OEMs • Glucose meters • Syringes Main customers* Sample products Source Management information Notes 1. FX rates: GBP/HKD 12.93 14% 50% 6%10%20% *Top 10 customers represent 56% of total 2013 sales **Ace has been supplying Superfos (now part of RPC) since 2008 **
- 27. RPC Group Plc 2013/14 Results VISION 2020 PREDICTED GROWTH IN RIGID PLASTIC PACKAGING 27 13.510.82.713.64.715.412.13.521.66.5EuropeNorth AmericaSouth & Central AmericaAsiaRest of World2013 Predicted2018 Forecast Source: Smithers Pira, 2013 BRIC region (million tonnes) Rigid plastic packaging set to grow (million tonnes) Rigid plastic packaging grows across all regions: The BRIC countries show strong growth: 1.11.71.16.91.42.32.312.0BrazilRussiaIndiaChina2013 Predicted2018 Forecast 2.7% 2.3% 5.3% 9.8% 6.9% 5.2% 6.1% 15.2% 12.0% X% CAGR 2013-2018 X% CAGR 2013-2018
- 28. RPC Group Plc 2013/14 Results FINANCIAL REVIEW KEY FIGURES 28 2.5 2.6 2.7 2.5 2.7 09/10 10/11 11/12 12/13 13/14 13.5% 15.2% 20.5% 19.4% 20.2% Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 ROCE – Total Group Dividend Cover ROCE – Pre 2013/14 acquisitions For continuing operations 13.5% 15.2% 20.5% 19.4% 18.7% Mar 10 Mar 11 Mar 12 Mar 13 Mar 14