Rexam Advances Strongly On Robust Beverage Packaging Performance.
Business Editors
PART ONE OF TWO
LONDON--(BUSINESS WIRE)--Aug. 29, 2002--Rexam PLC (NASDAQ:
REXMY), the global consumer packaging group, announces its Interim
Results for the six months to 30 June 2002.
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2002 2001 Increase
----------- ------------ ------------
----------- ------------ ------------
Profit before tax(a) (pound)134m (pound)103m 30%
Earnings per share(a) 21.3p 17.1p 25%
Interim dividend per share 7.0p 6.7p 4.5%
Highlights
-- Operating profit(a) from ongoing operations, on a comparable
basis, advances 22% to (pound)171m on the back of volume
growth in European cans, US can price recovery and efficiency
savings
-- Profit before tax(a) jumps 30% from (pound)103m to (pound)134m
-- Earnings per share(a) rise sharply (25%) from 17.1p to 21.3p
-- Strong performance by Beverage Packaging with operating
profit(a) up 30%
-- (pound)40m investment in additional can making lines in
existing Russian and Spanish plants to meet market growth
-- Plastic Packaging continues to make progress
-- Six Sigma and other efficiencies add (pound)18m to the bottom
line
-- Disposal programme completed, raising (pound)794m in total
-- Improved debt profile following March bond issues
(a) Before goodwill amortisation and exceptional items
Commenting on the results Jeremy Lancaster, Chairman of Rexam,
said: "The first six months have been most encouraging, with Beverage
Packaging returning a robust performance based on higher volumes,
price recovery in the US and continued efficiencies. The second half
of the year has started on track and we remain confident that 2002
will be a strong year for the Group".
CHAIRMAN'S STATEMENT
The Rexam Group as a whole has had a most encouraging first six
months of the year. Our focus on consumer packaging, and especially
beverage packaging, appears to be serving the Company well. Sales and
profits have advanced strongly and we have completed our disposal
programme. We are now a Company fully focused on global consumer
packaging. Looking forward, we shall be working to further improve the
margins in the business. We also plan to grow in our existing markets,
both organically and by acquisition where we can usefully act as an
industry consolidator.
I am pleased to report that profit before tax was up 30% to
(pound)134m from (pound)103m, and there was a 25% rise in earnings per
share from 17.1p to 21.3p, both before goodwill amortisation and
exceptional items. Sales from ongoing operations, on a comparable
basis, increased by 4% to (pound)1,548m this year. Operating profit,
on the same comparable basis, rose steeply by 22% to (pound)171m, the
bulk of the increase being attributable to efficiency savings brought
about by our Six Sigma programme, a continued focus on operational
excellence and price recovery in the US beverage can market.
General trading
Our Beverage Packaging sales continued to develop very positively,
driven predominantly by price recovery in the Americas and increased
beverage can volumes in Europe where the Russian market has been
exceptionally strong. Sales of glass containers picked up in the
second quarter especially in Central Europe and are well ahead of last
year. Beverage Packaging operating profit rose strongly by 30%.
Continued operational efficiencies and lower energy costs also had a
positive impact.
Sales in Plastic Packaging were ahead of the figures reported for
the same period last year helped by the recently acquired US beauty
pumps business. Our Beauty businesses continue to feel the effects of
September 11 with our luxury goods customers destocking heavily and
postponing new product launches. Encouragingly, profits improved in
our Healthcare Flexibles and Plastic Containers businesses.
Investment in new can making lines
Volumes in Europe are growing faster than we can accommodate with
our normal year on year can making efficiencies and in July we
announced that we would be investing in two new lines, one in Spain
and one in Russia, where the market has doubled in the last year,
albeit from a low base. The total investment of (pound)40m includes
the conversion of the two can making lines from aluminium to steel in
one of our two Spanish can plants. Steel cans are currently more cost
effective to produce and the investment will therefore strengthen our
competitive position. Both investments will be completed by mid 2003
in time for the seasonal increase in demand.
Retirement benefits
The situation regarding the funding of retirement benefits and
their accounting is complex. Rexam provides pension benefits for many
of its employees through various funded pension schemes. Despite
difficult financial markets, the overall funding position of these
schemes is today reasonably satisfactory.
The accounting standard for recognising surpluses and deficits
within pension schemes is changing as explained in the Operating and
Financial Review on page 9. Looking beyond 2002, it seems likely that
a new accounting standard will introduce a degree of volatility into
the Group's results, which we have not experienced before.
Acquisitions and disposals
In January we completed the acquisition of a beauty pumps business
in Thomaston, USA, announced in December 2001. This business has
integrated well and performed in line with our expectations.
The sale of a number of non core businesses, including the
remaining part of the former Coated Films and Papers Sector, means
that our disposal programme is behind us and that only one small
business remains unsold. We have sold businesses to the value of
(pound)794m of which (pound)68m is in the form of deferred
consideration. This is close to our original target of (pound)800m.
Debt profile
Two bond issues in March, under a Medium Term Note programme have
enabled Rexam to access new sources of funding and complete the
refinancing process initiated when we bought ANC in 2000. We now have
an improved debt profile with borrowings of (pound)1,493m and interest
cover of more than four times.
Dividends
The Board has approved an interim dividend payment of 7.0 pence
per share, an increase of 4.5% on last year. The dividend will be paid
on 6 November 2002 to holders of ordinary shares registered on 11
October 2002.
Looking forward
The first six months have been encouraging. The second half of the
year has started on track and we remain confident that 2002 will be a
strong year for the Group.
Jeremy Lancaster
Chairman
29 August 2002
OPERATING AND FINANCIAL REVIEW
STRATEGY
During the past three years Rexam has completed its strategic
intent to become a focused consumer packaging group. The acquisition
of PLM in 1999 and ANC in 2000 has resulted in the Group becoming the
largest beverage can company in the world and the fourth biggest
consumer packaging business globally, with annual sales in excess of
(pound)3bn. The (pound)0.8bn programme to sell the Group's non
packaging and peripheral businesses was largely completed in the first
half of 2002. The benefits from this re-focusing programme have been
significant, as discussed in the following sections on performance and
segment analysis.
As to future strategy, Rexam aims to increase further its margins
by providing better customer service and improving the efficiency of
its operations. In addition the Group's position in its chosen markets
will be strengthened by growing both organically and by acting as an
industry consolidator.
PERFORMANCE
Trading during the first six months of the year has been robust
with profits and earnings up significantly from last year. There was
an outstanding performance from Beverage Packaging driven by higher
volumes and a better pricing environment. Plastic Packaging made some
progress although sales to the beauty industry were weaker than last
year. The following headline figures are before adjustment for
acquisitions and disposals.
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6 months to 6 months to
30.6.02 30.6.01 Change
(pound)m (pound)m %
------------- -------------- ----------
------------- -------------- ----------
Sales 1,668 1,804 (8)
------------- --------------
------------- --------------
Operating profit(a) 177 165 7
Interest(a) (43) (62) 31
------------- --------------
------------- --------------
Profit before tax(a) 134 103 30
------------- --------------
------------- --------------
Earnings per share(a)
(pence) 21.3 17.1 25
Dividends per share
(pence) 7.0 6.7 4.5
(a) Before goodwill amortisation and exceptional items
There have been three acquisitions and many disposals from Rexam's
portfolio in the past year. To assist with the comparison of trading
results, the tables below showing sales and operating profit (before
goodwill amortisation and exceptional items) compare the ongoing
Consumer Packaging Sectors on a consistent basis.
Sales (pound)m
----------
Sales reported 6 months to 30.6.01 1,804
Disposals and planned disposals (341)
----------
Ongoing operations 6 months to 30.6.01 1,463
Impact of acquisitions 32
----------
Ongoing operations 6 months to 30.6.01
pro forma basis 1,495
Currency fluctuations (4)
Improvement in sales 57 +4%
----------
Ongoing operations reported 6 months
to 30.6.02 1,548
----------
Sales on a comparable basis were up 4% excluding currency
fluctuations. Sales from Beverage Packaging were strong driven
principally by better volumes in Europe. Plastic Packaging did less
well. Beauty volumes were down in the duty free airport business,
following the impact of 11 September, as were sales to the European
luxury goods market.
Operating Profit (pound)m
----------
Operating profit as reported
6 months to 30.6.01 165
Disposals and planned disposals (29)
----------
Ongoing operations 6 months to 30.6.01 136
Impact of acquisitions 5
---------- -----------
Ongoing operations 6 months to 30.6.01
pro forma basis 141
Currency fluctuations (1)
Improvement in operating profit 31 +22%
---------- -----------
Ongoing operations reported 6 months
to 30.6.02 171
---------- -----------
Analysis of the improvement
in operating profit:
Prices and costs 8
Volume increases 9
Efficiency savings 18
---------- ------------
35
Share incentive schemes (6)
Retirement benefits change 2
---------- ------------
31
---------- ------------
On a comparable basis operating profits were up an impressive 22%,
excluding currency fluctuations. Much of this gain came from recovery
of prices in the beverage can market in the United States and from
higher can volumes in Europe. In addition, the beverage businesses in
particular continue to show good gains from Six Sigma and other
efficiency programmes. Overall, Plastic Packaging reported little
change in profitability. Performance in the Healthcare Flexibles and
Plastic Containers Sectors improved but the Beauty division reported
lower profits following reduced sales to the luxury goods market.
In the six months to 30 June 2002 a charge of (pound)7m (June
2001: (pound)1m) has been taken to reflect the additional liability
that has arisen under share option and other long term share based
incentive schemes. Further information on share based incentive
schemes is detailed in the Appendix to the Operating and Financial
Review on page 16.
SEGMENT ANALYSIS
The following analysis is based upon operations before goodwill
amortisation and exceptional items. All the disposals, businesses for
sale and discontinued operations are grouped together.
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6 months to 30.6.02
-----------------------------------------------
Operating Return
Sales profit on sales
(pound)m (pound)m %
Beverage Packaging 1,210 129 10.7
Plastic Packaging 338 25 7.4
------------ ---------------
Consumer Packaging 1,548 154 9.9
Retirement benefits - 17 -
------------ ---------------
Ongoing operations 1,548 171 11.0
Businesses sold and
for sale 120 6 5.0
------------ ---------------
1,668 177 10.6
------------ ---------------
6 months to 30.6.01
------------------------------------
Operating Return
Sales profit on sales
(pound)m (pound)m %
Beverage Packaging 1,136 99 8.7
Plastic Packaging 327 22 6.7
--------- ---------
Consumer Packaging 1,463 121 8.3
Retirement benefits - 15 -
--------- ---------
Ongoing operations 1,463 136 9.3
Businesses sold and
for sale 341 29 8.5
--------- ---------
1,804 165 9.1
--------- ---------
The improvement in margins to 11% for ongoing operations in the
first six months is a measure of the strong trading conditions
experienced by the Group this year.
Beverage Packaging
6 months to 6 months to 6 months to
30.6.02 31.12.01 30.6.01
------------ ----------- -----------
------------ ----------- -----------
Sales (pound)1,210m (pound)1,170m (pound)1,136m
Operating profit (pound)129m (pound)115m (pound)99m
Return on sales 10.7% 9.8% 8.7%
The benefits of consolidation in the beverage can market over the
past two years are apparent from the figures above. Rexam has
consciously adopted a policy of removing any excess capacity from its
network of plants, without compromising its ability to satisfy
customer needs, rather than chasing volume.
The most significant feature of these results has been the general
price recovery of about 5% in the United States market. Due to the
phasing of certain contracts Rexam will benefit to the extent of 4%
this year with a further 1% to follow in 2003 on annual sales of about
(pound)1bn. This price increase does not appear to have had a negative
impact on volume demand, which has remained broadly static and in line
with Rexam's expectations. Aluminium prices have weakened a little
this year and, in accordance with some contracts, the benefits have
been passed through to customers by way of lower sales prices.
The beverage can market in Europe continues to grow at about 5-6%
per annum with a generally stable pricing environment. For Rexam,
sales in Russia have been exceptionally strong with volumes at our
plant near Moscow reaching close to capacity. This plant was opened in
1998, during a period of financial turmoil for the Russian economy,
and initially lost money. In recent months the market for beer has
been transformed by a combination of the expansion of Western European
brewers' activities in Russia and a high profile promotional campaign
for beer in cans supported by Rexam. The growth of this market and
commitments from a number of its customers have persuaded Rexam to
invest in a third production line in Russia, which will be ready for
the summer season in 2003. The financial impact of the change in
prospects for the Russian business is further discussed in
`Exceptional items' below and in the Appendix to the Operating and
Financial Review on page 18. Rexam is also expanding with an
additional steel line in La Selva, Spain, another region that is
experiencing above average growth. The existing lines at La Selva are
being converted, since currently it is the lower cost alternative,
from aluminium to steel. In total these investments will cost about
(pound)40m.
Rexam's European glass business has shown some growth in both
sales and profit, particularly in the difficult Central European
market. Lower energy prices have also had a positive impact on
profits.
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Plastic Packaging
6 months to 6 months to 6 months to
30.6.02 31.12.01 30.6.01
----------------------------------------------
----------------------------------------------
Sales (pound)338m (pound)311m (pound)327m
Operating profit (pound)25m (pound)26m (pound)22m
Return on sales 7.4% 8.4% 6.7%
There has been some restructuring in Plastic Packaging since the
figures for 2001 were reported. A number of peripheral businesses have
been sold and the comparative figures restated as explained in Note 1
to the Accounts `Basis of preparation and accounting policies'. This
restatement reduced previously reported sales by (pound)59m and
operating profit by (pound)3m for the six months to 30 June 2001 and
by (pound)87m and (pound)2m respectively for the year to 31 December
2001. In January 2002 Rexam acquired a beauty pumps business based in
the United States for (pound)75m and its results are included for the
first time.
The results for Plastic Packaging were a little disappointing.
This is mainly attributable to the slow down in demand from customers
operating in the high value fragrance and make-up industry, due in
part to lower sales following the events of 11 September. Undoubtedly
there has been a reduction in demand from the travelling public, who
buy luxury and duty free products in airport lounges. There has also
been an understandable caution from Rexam's customers who supply the
luxury sector of the industry, where there has been a degree of
destocking and deferral of new launches. This has been most apparent
in Europe with sales in the other parts of the world largely
unaffected. In fact, the newly acquired beauty pumps business has
performed well and in line with expectations. As confidence returns to
the industry it is expected that there will be some recovery in sales
in the coming months and in both profits and margins.
The other Sectors within Plastic Packaging, serving the healthcare
and food industries, have reported further progress this year.
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Retirement benefits
6 months to 6 months to 6 months to
30.6.02 31.12.01 30.6.01
(pound)m (pound)m (pound)m
------------- ------------- --------------
Interest and amortisation
of variations:
Pension schemes 25 27 25
Retirement medical schemes (8) (9) (10)
------------- ------------- --------------
------------- ------------- --------------
17 18 15
------------- ------------- --------------
Based upon the 2000 triennial actuarial valuations and
consistently applying accounting standard SSAP 24, the full year
credit to the profit and loss account for 2002 will be (pound)35m, of
which (pound)17m arises in the first half of the year. Further
information on retirement benefits is detailed in the Appendix to the
Operating and Financial Review on pages 16 and 17.
Businesses sold, held for disposal and discontinued
6 months to 6 months to 6 months to
30.6.02 31.12.01 30.6.01
------------- ------------- -----------
Sales (pound)120m (pound)203m (pound)341m
Operating profit (pound)6m (pound)9m (pound)29m
Return on sales 5.0% 4.4% 8.5%
In recent years the Group has sold virtually all its non-packaging
businesses. The results from these operations are shown in the above
table although clearly it is not practical to make meaningful
comparisons between different reporting periods.
The remaining non core business is TBS Engineering, the battery
equipment manufacturer. The business is performing well in a difficult
market and has been withdrawn from the disposal programme. It
continues to provide Rexam with excellent profits and cash flow.
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EXCEPTIONAL ITEMS
Although there were a number of exceptional items during the
period, there were no trading exceptional charges.
(pound)m
-----------------
Sale of businesses:
Loss on businesses sold (18)
Goodwill capitalised (2)
-----------------
-----------------
(20)
Goodwill previously eliminated (188)
Taxation (3)
-----------------
(211)
Loss on disposal of fixed assets (3)
Financing item - Russia (36)
-----------------
-----------------
Total exceptional items (250)
-----------------
Disposal of businesses
During the period Image Products, a part of the original Coated
Films and Papers Sector, was sold for (pound)39m, of which (pound)17m
was received in cash with the remainder deferred for up to three
years. A number of smaller peripheral packaging businesses have also
been divested. The loss on tangible assets and capitalised goodwill
from all of these disposals was (pound)20m. In addition it has been
necessary, in accordance with UK accounting practice, to write off
(pound)188m of goodwill previously eliminated. As already announced,
(pound)167m of this goodwill (as adjusted for currency fluctuations)
related to the Image Products division. This goodwill write off has no
impact on equity or cash flow.
Financing item - Russia
The recent success of the beverage can plant in Russia will
require Rexam to settle a financing item with the bank syndicates that
provided the initial loan funding. Further information is detailed in
the Appendix to the Operating and Financial Review on page 18.
INTEREST
Interest charged in the period was (pound)43m, which was a
substantial reduction from the previous six months when the charge was
(pound)62m. This results from lower borrowings following the success
of the disposal programme and lower short term interest rates.
Currently around 56% of net borrowings are at fixed rates and 44% at
floating rates. The average interest rate during the first half year
was 5.6%. This will increase in the full year to a little over 6%
after taking into account the full effect of the first issues of
Medium Term Notes discussed below in "Balance sheet and borrowings".
Interest cover improved sharply to 4.1 times operating profit
(before goodwill amortisation and exceptional items) and is now within
the Group's long term parameters, which is to maintain interest cover
above 4 times.
TAXATION
The charge for taxation for the six months to 30.6.02 was
(pound)38m (28%) on profit before goodwill amortisation and
exceptional items (six months to 30.6.01 (pound)31m (30%); year to
31.12.01 (pound)65m (30%)) and represents the directors' best estimate
of the 2002 annual tax rate.
The Group has adopted the new accounting standard FRS 19 "Deferred
tax" in preparing the Interim Accounts as described in Note 1 to the
Accounts `Basis of preparation and accounting policies' on page 26.
Overall, the impact of FRS 19 on reported profit and net assets is not
significant.
ACQUISITIONS
The only business acquisition made during the period was the
purchase of a beauty pumps business for (pound)75m in January 2002. In
2001 the business reported sales of (pound)36m and an operating profit
of (pound)8m. This operation complements perfectly Rexam's existing
businesses in Europe and therefore the two companies have been merged
as Rexam Dispensing Systems under one global management team. Although
it is early days, initial indications suggest that this acquisition
will meet our longer term expectations.
The Rexam Employee Share Trust invested (pound)13m in Rexam shares
in order to hedge liabilities under share based incentive schemes.
This is further described in the Appendix to the Operating and
Financial Review on page 16.
DISPOSALS
When ANC was acquired in 2000 for (pound)1.5bn, Rexam undertook to
sell all non core businesses and realise (pound)0.8bn in order to pay
down borrowings raised to finance the acquisition. This programme is
now virtually complete and proceeds are very close to our original
expectations at (pound)794m, with only TBS Engineering remaining
unsold. The total proceeds include (pound)68m of deferred
consideration (net of costs), which will be collected over the next
seven years, with a substantial proportion being within four years.
-0-
(pound)m
----------
2000 163
2001 517
Six months to 30.6.02 46
-----------
Total consideration
received to 30.6.02 726
Future proceeds 68
------------
------------
794
------------
The remainder of the Coated Films and Papers Sector has been sold.
Image Products was sold in the period and in August the sale of
Weatherable Films was completed. Other disposals completed in 2002
include: Rexam Combibloc, the liquid cartons joint venture; Rexam
Containers and Rexam Dumex, closures and containers businesses; High
Performance Flexibles and Metallising Australia, flexible packaging
businesses and the Danish blow moulding businesses.
CASHFLOW
6 months to 6 months to Year to
30.6.02 30.6.01 31.12.01
(pound)m (pound)m (pound)m
----------------- -------------- ------------
Cash flow from
operations
after taxation,
interest and non
equity dividends 169 150 252
Change in trading
working capital (131) (59) 93
Capital
expenditure (net) (74) (93) (166)
--------------- -------------- ------------
--------------- -------------- ------------
(36) (2) 179
Proceeds from
securitisation of
debtors (2) 39 21
--------------- -------------- ------------
--------------- -------------- ------------
Free cash flow (38) 37 200
Equity dividends(a) (39) - (60)
--------------- -------------- ------------
--------------- -------------- ------------
Business cash flow (77) 37 140
Acquisitions (91) (6) (55)
Disposals 46 185 517
--------------- -------------- ------------
--------------- -------------- ------------
Cash flow (122) 216 602
Currency
fluctuations (19) (28) (19)
Share capital
changes 9 1 116
Net borrowings at
the beginning of
the year (1,361) (2,060) (2,060)
--------------- -------------- ------------
--------------- -------------- ------------
Net borrowings at
the end of the
period (1,493) (1,871) (1,361)
--------------- -------------- ------------
(a) The final dividend for 2000 amounting to(pound)34m was paid in July
2001
Working capital movements, as usual, show a significant outflow
during the first half of the season as inventory is produced for the
summer season. It is expected that this outflow will largely reverse
by the end of the year, although the wholly exceptional performance
achieved last year, following the integration of ANC, cannot be
repeated in 2002. Generally, working capital remains under good
control.
Rexam has produced, on an annual basis, strong free cash flow for
many years and expects this situation to continue in the foreseeable
future.
CAPITAL EXPENDITURE
6 months to 6 months to Year to
30.6.02 30.6.01 31.12.01
------------------ ---------------- --------------
Capital
expenditure (gross) (pound)76m (pound)97m (pound)180m
Depreciation (pound)75m (pound)82m (pound)164m
Ratio 1.01 1.18 1.10
Capital expenditure at (pound)76m was in line with depreciation
and therefore a little below long term expectations of about 110% of
depreciation. Capital expenditure for the year is expected to be about
(pound)165m although timing of certain projects makes the figure
somewhat difficult to forecast precisely.
As mentioned earlier in this report, the Rexam Board has approved
the installation of two new beverage can lines, one in Russia and the
other in Spain, to meet rising demand in those markets.
BALANCE SHEET AND BORROWINGS
As at As at As at
30.6.02 30.6.01(a) 31.12.01(a)
(pound)m (pound)m (pound)m
------------ ------------- --------------
Intangible fixed
assets 1,217 1,236 1,196
Other net assets 1,242 1,394 1,172
------------ ------------- --------------
2,459 2,630 2,368
------------ ------------- --------------
Equity including
minority interests 966 759 1,007
Net borrowings 1,493 1,871 1,361
------------ ------------- --------------
2,459 2,630 2,368
------------ ------------- --------------
Gearing 155% 247% 135%
Interest cover
(times)(b) 4.1 2.7 2.9
(a) As restated for FRS 19
(b) Excluding goodwill amortisation and exceptional items
Borrowings have increased to (pound)1,493m since the end of 2001
and are broadly in line with expectations for the mid summer season.
They are expected to drop as working capital needs decrease. Although
the disposal programme is complete, Rexam is due to receive (pound)68m
of deferred consideration from a number of purchasers. This amount
will reduce borrowings over the next seven years as it is received.
In March 2002 Rexam issued its first public bonds for many years,
under a Medium Term Note programme. As there was a good demand from
investors for these securities, two series of Notes were issued.
- (pound)250m Notes with a coupon of 7.125% repayable in March
2009.
- Euro 550m Notes with a coupon of 6.625% repayable in March
2007.
In addition the Group has a revolving Euro 2bn facility with a
syndicate of banks, which matures in July 2005 and long term finance
leases of (pound)57m. The proceeds of the Note issues were used to
repay the remaining part of the $1.6bn facility, arranged to finance
the acquisition of ANC, which was due for repayment in October 2002.
The structure and maturity profile of the Group's borrowing
facilities has improved greatly during the past six months and is
adequate to meet all current requirements while leaving sufficient
headroom for smaller acquisition opportunities.
Summary
Rexam has had an excellent first six months led by a strong
performance from the Beverage Can operations and achievement of the
restructuring of the Group's borrowing facilities.
Rolf Borjesson
Chief Executive
Michael Hartnall
Finance Director
29 August 2002
APPENDIX TO THE OPERATING AND FINANCIAL REVIEW
SHARE INCENTIVE SCHEMES
The liability for the various share based incentive schemes
operated by the Group varies with the Rexam share price. The share
price at June 2002 was (pound)4.25 compared with (pound)3.09 a year
earlier. The liability is partly hedged through the Rexam Employee
Share Trust which buys and holds Rexam shares to satisfy certain
options as and when they vest. At 30 June 2002 the Trust held 7.2m
shares, acquired at an average cost of (pound)3.16. The liability,
which excludes any options that can be satisfied from issues of new
shares, is charged to profit over the related performance measurement
periods.
RETIREMENT BENEFITS
Economic background
Rexam operates a number of funded defined benefit pension schemes,
principally in the United Kingdom and the United States. At the time
of the last triennial valuations in 2000 there was a net surplus of
(pound)516m within these funds, represented by assets of (pound)2,759m
and liabilities of (pound)2,243m. Rexam also operates retiree medical
schemes in the United States. The present value of these unfunded
liabilities at the end of 2001 amounted to (pound)253m. Further
details of all these schemes can be found in the 2001 Annual Accounts.
A valuation of the funded defined benefit pension schemes was
undertaken by the Group's actuaries at 1 January 2002 (the "January
2002 valuation") to provide information for the FRS 17 transitional
disclosures in the 2001 Annual Accounts. The January 2002 valuation
showed that the net surplus had reduced to (pound)139m. A high level
review by the Group's actuaries at 30 June 2002 (the "June 2002
review") indicated a further reduction to (pound)15m. These reductions
reflect the decline in financial markets in the two years since the
schemes were formally valued. In the context of the current depressed
level of financial markets the funding position of the schemes remains
reasonably satisfactory.
Rexam is currently benefiting from an annual cash pension
contribution holiday amounting to (pound)20m. When the funds are
formally valued in 2003, the Group's actuaries will make
recommendations on future cash contribution levels. Depending on
market conditions it is possible that the contribution holiday may
reduce in the foreseeable future.
Accounting
The 2002 profit and loss account in respect of retirement benefits
will continue to apply accounting standard SSAP 24, based on the 2000
triennial valuations. The regular cost of providing retirement
benefits is charged to the relevant business segments. The interest on
pension fund surpluses and retirement medical liabilities is credited
or charged to operating profit together with the amortisation of
surpluses and liabilities over the service lives of current employees.
The net credit in 2002 will be about (pound)35m, of which (pound)17m
has arisen in the first half.
In 2003 Rexam will probably adopt the new accounting standard FRS
17, although the Accounting Standards Board has recently granted some
flexibility concerning its implementation having regard for its
probable replacement by IAS 19. As previously stated, the adoption of
FRS 17 is likely to have a significant impact on reported profits and
it is possible that the interest account will show greater volatility
from year to year as market values of the various scheme assets and
liabilities change.
How would FRS 17 impact on Rexam's profit and loss account?. There
would be little difference between the regular cost calculated under
SSAP 24 and the service cost arising under FRS 17. However, the credit
to operating profit arising under SSAP 24, which the Group has
benefited from in previous years, will disappear. It will be replaced
under FRS 17 by a credit or charge to the interest account. Based on
the January 2002 valuation, the full year charge for 2002 would be
(pound)12m, a substantial change from the (pound)35m credit under SSAP
24 or a (pound)20m credit if the accounting treatment reflected the
cash pension contribution holiday.
The interest charge for 2003 is, of course, unknown at present, as
it will be based on the value of the various scheme assets and
liabilities on 1 January 2003. Assuming that there is no recovery from
the low levels reflected in the June 2002 review, the charge is
expected to be in the range (pound)25m to (pound)30m. However, much
depends upon financial markets over the next few months.
FINANCING ITEM - RUSSIA
PLM, acquired by Rexam in 1999, opened a two line beverage can
plant near Moscow in the autumn of 1998 following substantial growth
in the Russian market in the 1990's. The demand had earlier been
satisfied by imports from Western Europe. The original investment in
the Russian venture was about $145m and was financed by a consortium
of equity investors through a separate Swedish holding company, with
PLM holding 52%, and by two bank syndicates providing a total of $80m
of secured loans to the Russian plant in a highly structured financing
package.
Around the time of the plant opening there was a major devaluation
of the rouble and the Russian economy suffered a sharp decline. In
1999 and 2000 the new plant operated at only a fraction of capacity
and sustained sizeable losses. The business faced the risk of
insolvency and there was an urgent need for it to be refinanced. The
Swedish company holding the investment in Russia was compulsorily
wound up pursuant to Swedish law with the effect that all the original
equity investments were lost. Rexam reinvested in the business and
became the 100% equity holder. The bank loans were purchased by Rexam
at a discount with an additional payment being due to the banks should
the value of the business improve sharply in the future. In the 2000
Annual Accounts Rexam credited the (pound)26m arising from the initial
settlement with the bank syndicates to goodwill representing an
adjustment to the fair value of liabilities acquired with PLM.
Trading in Russia showed a modest improvement in 2001 and the
business returned to profit. In the 2001 Annual Accounts the potential
payments were disclosed as a contingent liability. However, in recent
months, as discussed above, the whole outlook for the business has
dramatically improved. It now seems highly likely that Rexam will be
obliged to pay the additional amount due to the bank syndicates. Under
the terms of the agreement the amount is not payable until 2005 or
later but Rexam has the right to make an early settlement. As the
eventual cost of settlement escalates with time Rexam intends, in the
near future, to settle this liability, which is currently about
(pound)36m. Under UK accounting practice it is not now possible to
charge this settlement to goodwill and it is therefore being taken as
an exceptional financing item. Due to its financial nature it has been
shown after operating profit.
Overall it is very satisfying that the Russian venture has made an
excellent recovery and that it is well positioned for this fast
growing market.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited 6 months to 30.6.02
Operations
before
goodwill
amortisation
and exceptional Exceptional
items Goodwill items
amortisation (Note 4) Total
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------
Turnover (Note 2)
Continuing
operations 1,580 - - 1,580
Discontinued
operations 88 - - 88
----------------------------------------------------
1,668 - - 1,668
Turnover of
associates (Note 3) (40) - - (40)
----------------------------------------------------
1,628 - - 1,628
Operating expenses
----------------------------------------------------
Continuing
operations (1,366) (34) - (1,400)
Discontinued
operations (85) - - (85)
----------------------------------------------------
(1,451) (34) - (1,485)
Operating profit (Note 2)
----------------------------------------------------
----------------------------------------------------
Continuing
operations 175 (34) - 141
Discontinued
operations 2 - - 2
----------------------------------------------------
177 (34) - 143
Loss on fixed
assets - - (3) (3)
Disposals of
businesses - - (208) (208)
----------------------------------------------------
Loss on ordinary
activities before
interest and
financing item 177 (34) (211) (68)
Interest (43) - - (43)
Financing item - - (36) (36)
----------------------------------------------------
Loss on ordinary
activities before
taxation 134 (34) (247) (147)
Taxation on
ordinary
activities (Note 1) (38) - (3) (41)
----------------------------------------------------
Loss on ordinary
activities after
taxation 96 (34) (250) (188)
----------------------------------------------------
Equity minority
interests (2)
----------
Loss for the
financial period (190)
Preference
dividend on non
equity shares (3)
----------
----------
Loss attributable
to ordinary
shareholders (193)
Ordinary dividend
on equity shares
(Note 6) (30)
Retained loss for
the financial
period (223)
Earnings/(loss)
per ordinary share
(pence) (Note 5)
Basic 21.3 (45.1)
Diluted 20.5 (45.1)
-------------- ----------
-------------- ----------
Dividend per
ordinary share
(pence) (Note 6) 7.0
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited 6 months to 30.6.01 restated
Operations
before
goodwill
amortisation Exceptional
and exceptional Goodwill items
items amortisation (Note 4) Total
(pound)m (pound)m (pound)m (pound)m
----------------------------------------------------
----------------------------------------------------
Turnover (Note 2)
Continuing
operations 1,556 - - 1,556
Discontinued
operations 248 - - 248
----------------------------------------------------
----------------------------------------------------
1,804 - - 1,804
Turnover of
associates (Note 3) (48) - - (48)
----------------------------------------------------
----------------------------------------------------
1,756 - - 1,756
Operating expenses
----------------------------------------------------
----------------------------------------------------
Continuing
operations (1,364) (32) - (1,396)
Discontinued
operations (227) (1) - (228)
----------------------------------------------------
----------------------------------------------------
(1,591) (33) - (1,624)
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Audited year to 31.12.01 restated
Operations
before
goodwill
amortisation Goodwill Exceptional
and exceptional amortis- items
items ation (Note 4) Total
(pound)m (pound)m (pound)m (pound)m
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Turnover (Note 2)
Continuing operations 3,113 - - 3,113
Discontinued operations 375 - - 375
---------------- --------- --------- ---------
---------------- --------- --------- ---------
3,488 - - 3,488
Turnover of
associates (Note 3) (101) - - (101)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
3,387 - - 3,387
Operating expenses
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Continuing operations (2,701) (66) (35) (2,802)
Discontinued operations (353) (1) (67) (421)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
(3,054) (67) (102) (3,223)
Operating profit
(Note 2)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Continuing operations 312 (66) (35) 211
Discontinued operations 21 (1) (67) (47)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
333 (67) (102) 164
Disposals of businesses - - 180 180
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Profit on ordinary
activities before
interest 333 (67) 78 344
Interest (115) - - (115)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Profit on ordinary
activities before
taxation 218 (67) 78 229
Taxation on ordinary
activities (Note 1) (65) - - (65)
---------------- --------- --------- ---------
---------------- --------- --------- ---------
Profit on ordinary
activities after
taxation 153 (67) 78 164
---------------- --------- ---------
---------------- --------- ---------
Equity minority
interests (3)
---------
---------
Profit for the financial
year 161
Preference dividend on
non equity shares (5)
---------
---------
Profit attributable to
ordinary shareholders 156
Ordinary dividends on
equity shares (Note 6) (65)
---------
---------
Retained profit for the
financial year 91
---------
---------
Earnings per ordinary
share (pence) (Note 5)
Basic 36.9 39.7
Diluted 35.5 38.1
---------------- ---------
---------------- ---------
Dividends per ordinary
share (pence) (Note 6) 15.9
---------
CONSOLIDATED BALANCE SHEET
Unaudited Audited
Unaudited as at as at
as at 30.6.01 31.12.01
30.6.02 restated restated
(pound)m (pound)m (pound)m
---------- ---------- ---------
Fixed assets
Intangible assets 1,217 1,236 1,196
Tangible assets 1,065 1,244 1,118
Investments 76 113 76
---------- ---------- ---------
---------- ---------- ---------
2,358 2,593 2,390
---------- ---------- ---------
---------- ---------- ---------
Current assets
Properties surplus to requirements 9 6 9
Businesses acquired for resale - 56 -
Stocks 329 381 333
---------- ---------- ---------
---------- ---------- ---------
Debtors receivable within one year 461 569 472
Less: proceeds from
securitised debtors (18) (39) (21)
---------- ---------- ---------
---------- ---------- ---------
443 530 451
Pensions receivable after
more than one year 374 350 365
Other debtors receivable after
more than one year 193 134 138
Marketable securities and money
market deposits 17 39 23
Cash at bank and in hand 44 75 56
---------- ---------- ---------
---------- ---------- ---------
1,409 1,571 1,375
Creditors: amounts falling due
within one year
Borrowings (57) (118) (697)
Other creditors (663) (789) (734)
---------- ---------- ---------
---------- ---------- ---------
Net current assets/(liabilities) 689 664 (56)
---------- ---------- ---------
---------- ---------- ---------
Total assets less current liabilities 3,047 3,257 2,334
Creditors: amounts falling due
after more than one year
Borrowings (1,497) (1,867) (743)
Other creditors (95) (27) (79)
Provisions for liabilities and charges (489) (604) (505)
---------- ---------- ---------
---------- ---------- ---------
966 759 1,007
---------- ---------- ---------
Capital and reserves
Ordinary equity share capital 279 255 277
Non equity share capital 89 90 89
---------- ---------- ---------
---------- ---------- ---------
Called up share capital 368 345 366
Equity reserves:
Share premium account 498 397 490
Capital redemption reserve 279 279 279
Profit and loss reserve (194) (286) (153)
------------ ------------- -------------
------------ ------------- -------------
951 735 982
Equity minority interests 15 24 25
------------ ------------- -------------
------------ ------------- -------------
966 759 1,007
------------ ------------- -------------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
------------ ------------ -------------
Cash flow from operating
activities 92 213 528
Returns on investments and
servicing of finance:
------------ ------------ -------------
------------ ------------ -------------
Net interest paid (31) (63) (119)
Dividends paid to non equity
shareholders (3) (3) (5)
------------ ------------ -------------
(34) (66) (124)
Taxation paid (22) (17) (38)
Capital expenditure and
financial investment:
------------ ------------ -------------
------------ ------------ -------------
Purchase of tangible
fixed assets (76) (97) (180)
Purchase of fixed asset
investments (13) (1) (4)
Sale of tangible fixed assets 2 4 12
Sale of fixed asset investments - - 1
Sale of properties surplus
to requirements - - 2
Sale of businesses held
for resale - - 13
------------ ------------ -------------
------------ ------------ -------------
(87) (94) (156)
Acquisitions and disposals:
------------ ------------ -------------
------------ ------------ -------------
Purchase of subsidiary
undertakings and businesses (78) (5) (37)
Sale of subsidiary undertakings
and businesses 36 171 458
Sale of associates - - 33
------------ ------------ -------------
------------ ------------ -------------
(42) 166 454
Equity dividends paid to
ordinary shareholders (39) - (60)
------------ ------------ -------------
------------ ------------ -------------
Cash flow before management of
liquid resources and financing
(132) 202 604
Management of liquid resources:
Marketable securities and money
market deposits 6 (18) (2)
Financing:
------------ ------------ -------------
------------ ------------ -------------
Issue of ordinary equity share
capital 9 1 116
Issue of Medium Term Notes 583 - -
Net decrease in loans (462) (234) (741)
Capital element of finance
leases - (3) (10)
------------ ------------ -------------
------------ ------------ -------------
130 (236) (635)
------------ ------------ -------------
------------ ------------ -------------
Increase/(decrease) in cash 4 (52) (33)
------------ ------------ -------------
-0-
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Audited
Unaudited 6 months Year
6 months to 30.6.01 to 31.12.01
to 30.6.02 restated restated
(pound)m (pound)m (pound)m
----------------------------------------
(Loss)/profit for the
financial period (190) 19 161
Currency fluctuations:
-
Intangible fixed assets - 6 (9)
Tangible fixed assets 7 17 5
Net borrowings (19) (28) (19)
Other net assets 8 (6) (1)
-
-
(4) (11) (24)
Related taxation on
currency fluctuations (2) - 3
-------- -------- -------
(6) (11) (21)
-------- -------- -------
Total recognised gains and losses -------- -------- -------
for the financial period (196) 8 140
-------- -------
Prior year adjustment (Note 1) 21
Total gains and losses recognised --------
since last Annual Report (175)
--------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Unaudited Audited
Unaudited 6 months Year
6 months to 30.6.01 to 31.12.01
to 30.6.02 restated restated
(pound)m (pound)m (pound)m
---------------------------------------
Balance at the beginning of
the year as originally
reported 961 661 661
Prior year adjustment (Note 1) 21 18 18
-----------------------------------
Balance at the beginning of the
year as restated 982 679 679
(Loss)/profit for the financial
period (190) 19 161
Dividends (33) (29) (70)
Retained (loss)/profit for
the financial period (223) (10) 91
Currency fluctuations
(net of taxation) (6) (11) (21)
Issue of ordinary share
capital under placing - - 107
Issue of ordinary share
capital under share option schemes 10 1 8
Goodwill written off on
business disposals 188 76 118
-----------------------------------
Balance at the end of the period 951 735 982
-----------------------------------
RECONCILIATION OF OPERATING PROFIT TO CASH FLOW
FROM OPERATING ACTIVITIES
Unaudited Unaudited Audited
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
---------------------------------------
Continuing operations:
Operating profit 141 112 211
Depreciation 72 69 142
Impairment of fixed assets - - 73
Goodwill amortisation 34 32 66
Movement in working
capital: trading (125) (52) 91
Movement in working
capital: restructuring (13) (4) (10)
Movement in working
capital: securitised debtors (2) 39 21
Non cash element of
retirement benefits (18) (16) (36)
Share of profits less
losses of associates (3) (1) (10)
Other movements 7 6 3
------------------------------------
93 185 551
Discontinued operations:
Operating profit/(loss) 2 20 (47)
Depreciation 3 13 22
Goodwill amortisation - 1 1
Movement in working
capital: trading (6) (7) 2
Other movements - 1 (1)
-------------------------------------
(1) 28 (23)
Cash flow from operating -------------------------------------
activities 92 213 528
-------------------------------------
ANALYSIS OF CHANGES IN NET BORROWINGS
Marketable
securities Loan capital Medium
and
money market and currency term
deposits swaps notes
(pound)m (pound)m (pound)m
---------------------------------------------
At 1.1.01 21 (2,048) -
Currency fluctuations - (31) -
Acquired/disposed - 14 -
Cash flow movements 18 234 -
-------------------------------------
At 30.6.01 39 (1,831) -
-------------------------------------
At 1.1.01 21 (2,048) -
Currency fluctuations - (11) -
Acquired/disposed - (2) -
Cash flow movements 2 741 -
-------------------------------------
At 31.12.01 23 (1,320) -
Currency fluctuations - (1) (19)
Disposed - 10 -
Cash flow movements (6) 462 (583)
-------------------------------------
At 30.6.02 17 (849) (602)
-------------------------------------
Capital Cash at bank
element of and in hand
finance and bank Net
leases overdrafts borrowings
(pound)m (pound)m (pound)m
-----------------------------------------
At 1.1.01 (67) 34 (2,060)
Currency fluctuations (3) 6 (28)
Acquired/disposed - - 14
Cash flow movements 3 (52) 203
-------------------------------------
At 30.6.01 (67) (12) (1,871)
-------------------------------------
At 1.1.01 (67) 34 (2,060)
Currency fluctuations (2) (6) (19)
Acquired/disposed - - (2)
Cash flow movements 10 (33) 720
-------------------------------------
At 31.12.01 (59) (5) (1,361)
Currency fluctuations 2 (1) (19)
Disposed - - 10
Cash flow movements - 4 (123)
-------------------------------------
At 30.6.02 (57) (2) (1,493)
-------------------------------------
NOTES TO THE INTERIM ACCOUNTS
1 Basis of preparation and accounting policies
The Interim Accounts, which are unaudited, have been prepared in
accordance with the accounting policies set out in the Rexam PLC 2001
Annual Report and Accounts, except that during 2002 the Group has
implemented FRS 19 "Deferred tax". This FRS requires deferred tax to
be accounted for on a full provision basis rather than on a partial
provision basis as in prior periods. Prior periods have consequently
been restated and the effects of these restatements were as follows:
profits for the year to 31.12.01 were increased by (pound)1m and net
assets were increased by (pound)18m at 30.6.01 and (pound)21m at
31.12.01. FRS 19 requires deferred tax assets and liabilities to be
shown on a gross basis on the balance sheet. At 30.6.02 included in
`Other debtors receivable after more than one year' is a deferred tax
asset of (pound)107m (June 2001: (pound)82m; December 2001:
(pound)115m) and within `Provisions for liabilities and charges' a
deferred tax liability of (pound)92m (June 2001: (pound)87m; December
2001: (pound)87m).
The tax charge on ordinary activities before exceptional items is
calculated by reference to the estimated effective tax rate for the
full year 2002. Taxation on exceptional items is based on the expected
taxation impact of each transaction.
The Interim Accounts for the six months to 30.6.01 and the Annual
Accounts for the year to 31.12.01 have been restated to reflect the
discontinuance of Image Products, Combibloc, High Performance
Flexibles and Metallising Australia.
The segment analysis for the six months to 30.6.01 has been
restated to reflect the movement into "Disposals and businesses for
sale" of Flexibles Lakeville, Closures Mexico, Holmia and Langeskov
from "Plastic Packaging" and Rexam Japan from "Beverage Packaging".
The segment analysis for the year to 31.12.01 has been restated to
reflect the movement into "Disposals and businesses for sale" of
Containers Portsmouth, Closures Mexico, Holmia and Langeskov from
"Plastic Packaging".
The consolidated profit and loss account, statement of total
recognised gains and losses and consolidated cash flow statement for
the year to 31.12.01 and the consolidated balance sheet at 31.12.01
are an abridged statement, after adjusting for the effects of
implementing FRS 19, of the full Annual Accounts for that year which
have been delivered to the Registrar of Companies. The independent
auditors' report on the Annual Accounts for the year to 31.12.01 was
unqualified and did not contain a statement under either section 237
(2) or section 237 (3) of the Companies Act 1985.
-0-
2 Segment analysis
Operating profit
before goodwill
amortisation and
exceptional Operating
Turnover items profit
(pound)m (pound)m (pound)m
------------ -------------- --------------
------------ -------------- --------------
Six months to 30.6.02
Beverage Packaging 1,210 129 98
Plastic Packaging 338 25 22
------------ -------------- --------------
------------ -------------- --------------
Consumer Packaging 1,548 154 120
Retirement benefits - 17 17
------------ -------------- --------------
------------ -------------- --------------
1,548 171 137
Taxation and dividends - - -
------------ -------------- --------------
------------ -------------- --------------
Ongoing operations 1,548 171 137
Disposals and businesses
for sale 32 4 4
------------ -------------- --------------
------------ -------------- --------------
Continuing operations 1,580 175 141
Discontinued operations 88 2 2
------------ -------------- --------------
------------ -------------- --------------
1,668 177 143
------------ -------------- --------------
------------ -------------- --------------
United Kingdom and Ireland 205 14 8
Continental Europe 584 65 53
The Americas 732 77 62
Rest of the world 59 2 1
Retirement benefits - 17 17
Taxation and dividends - - -
------------ -------------- --------------
------------ -------------- --------------
Continuing operations 1,580 175 141
Discontinued operations 88 2 2
------------ -------------- --------------
------------ -------------- --------------
1,668 177 143
------------ -------------- --------------
Net assets
Return on before Net
sales goodwill assets
% (pound)m (pound)m
------------ ------------- -----------
------------ ------------- -----------
Six months to 30.6.02
Beverage Packaging 10.7 884 1,996
Plastic Packaging 7.4 395 500
------------ ------------- -----------
------------ ------------- -----------
Consumer Packaging 9.9 1,279 2,496
Retirement benefits - 55 55
------------ ------------- -----------
------------ ------------- -----------
11.0 1,334 2,551
Taxation and dividends - (108) (108)
------------ ------------- -----------
------------ ------------- -----------
Ongoing operations 11.0 1,226 2,443
Disposals and businesses
for sale 12.5 9 9
------------ ------------- -----------
------------ ------------- -----------
Continuing operations 11.1 1,235 2,452
Discontinued operations 2.3 7 7
------------ ------------- -----------
------------ ------------- -----------
10.6 1,242 2,459
------------ ------------- -----------
------------ ------------- -----------
United Kingdom and Ireland 6.8 197 425
Continental Europe 11.1 566 982
The Americas 10.5 442 969
Rest of the world 3.4 83 129
Retirement benefits - 55 55
Taxation and dividends - (108) (108)
------------ ------------- -----------
------------ ------------- -----------
Continuing operations 11.1 1,235 2,452
Discontinued operations 2.3 7 7
------------ ------------- -----------
------------ ------------- -----------
10.6 1,242 2,459
------------ ------------- -----------
2 Segment analysis (continued)
Operating profit
before goodwill
amortisation and
exceptional Operating
Turnover items profit
(pound)m (pound)m (pound)m
---------- -------------- --------------
Six months to 30.6.01
Beverage Packaging 1,136 99 68
Plastic Packaging 327 22 21
---------- -------------- --------------
---------- -------------- --------------
Consumer Packaging 1,463 121 89
Retirement benefits - 15 15
---------- -------------- --------------
---------- -------------- --------------
1,463 136 104
Taxation and dividends - - -
---------- -------------- --------------
---------- -------------- --------------
Ongoing operations 1,463 136 104
Disposals and businesses
for sale 93 8 8
---------- -------------- --------------
---------- -------------- --------------
Continuing operations 1,556 144 112
Discontinued operations 248 21 20
---------- -------------- --------------
---------- -------------- --------------
1,804 165 132
---------- -------------- --------------
---------- -------------- --------------
United Kingdom and Ireland 226 20 14
Continental Europe 546 59 48
The Americas 713 46 32
Rest of the world 71 4 3
Retirement benefits - 15 15
Taxation and dividends - - -
---------- -------------- --------------
---------- -------------- --------------
Continuing operations 1,556 144 112
Discontinued operations 248 21 20
---------- -------------- --------------
---------- -------------- --------------
1,804 165 132
---------- -------------- --------------
Net assets
Return on before Net
sales goodwill assets
% (pound)m (pound)m
------------ ------------- ------------
Six months to 30.6.01
Beverage Packaging 8.7 933 2,099
Plastic Packaging 6.7 397 448
------------ ------------- ------------
------------ ------------- ------------
Consumer Packaging 8.3 1,330 2,547
Retirement benefits - (40) (40)
------------ ------------- ------------
------------ ------------- ------------
9.3 1,290 2,507
Taxation and dividends - (146) (146)
------------ ------------- ------------
------------ ------------- ------------
Ongoing operations 9.3 1,144 2,361
Disposals and businesses
for sale 8.6 77 79
------------ ------------- ------------
------------ ------------- ------------
Continuing operations 9.3 1,221 2,440
Discontinued operations 8.5 173 190
------------ ------------- ------------
------------ ------------- ------------
9.1 1,394 2,630
------------ ------------- ------------
------------ ------------- ------------
United Kingdom and Ireland 8.8 301 542
Continental Europe 10.8 588 986
The Americas 6.5 416 945
Rest of the world 5.6 102 153
Retirement benefits - (40) (40)
Taxation and dividends - (146) (146)
------------ ------------- ------------
------------ ------------- ------------
Continuing operations 9.3 1,221 2,440
Discontinued operations 8.5 173 190
------------ ------------- ------------
------------ ------------- ------------
9.1 1,394 2,630
------------ ------------- ------------
2 segment analysis (continued)
Operating profit
before goodwill
amortisation and
exceptional Operating
Turnover items profit
(pound)m (pound)m (pound)m
---------- ------------ --------------
Year to 31.12.01
Beverage Packaging 2,306 214 133
Plastic Packaging 638 48 28
---------- ------------ --------------
---------- ------------ --------------
Consumer Packaging 2,944 262 161
Retirement benefits - 33 33
---------- ------------ --------------
---------- ------------ --------------
2,944 295 194
Taxation and dividends - - -
---------- ------------ --------------
---------- ------------ --------------
Ongoing operations 2,944 295 194
Disposals and businesses for
sale 169 17 17
---------- ------------ --------------
---------- ------------ --------------
Continuing operations 3,113 312 211
Discontinued operations 375 21 (47)
---------- ------------ --------------
---------- ------------ --------------
3,488 333 164
---------- ------------ --------------
---------- ------------ --------------
United Kingdom and Ireland 459 49 20
Continental Europe 1,086 120 84
The Americas 1,427 102 69
Rest of the world 141 8 5
Retirement benefits - 33 33
Taxation and dividends - - -
---------- ------------ --------------
---------- ------------ --------------
Continuing operations 3,113 312 211
Discontinued operations 375 21 (47)
---------- ------------ --------------
---------- ------------ --------------
3,488 333 164
---------- ------------ --------------
Net assets
Return on before Net
sales goodwill assets
% (pound)m (pound)m
------------- -------------- ------------
Year to 31.12.01
Beverage Packaging 9.3 795 1,933
Plastic Packaging 7.5 335 391
------------- -------------- ------------
------------- -------------- ------------
Consumer Packaging 8.9 1,130 2,324
Retirement benefits - 35 35
------------- -------------- ------------
------------- -------------- ------------
10.0 1,165 2,359
Taxation and dividends - (93) (93)
------------- -------------- ------------
------------- -------------- ------------
Ongoing operations 10.0 1,072 2,266
Disposals and businesses for
sale 10.1 22 24
------------- -------------- ------------
------------- -------------- ------------
Continuing operations 10.0 1,094 2,290
Discontinued operations 5.6 78 78
------------- -------------- ------------
------------- -------------- ------------
9.5 1,172 2,368
------------- -------------- ------------
------------- -------------- ------------
United Kingdom and Ireland 10.7 180 410
Continental Europe 11.0 510 915
The Americas 7.1 382 895
Rest of the world 5.7 80 128
Retirement benefits - 35 35
Taxation and dividends - (93) (93)
------------- -------------- ------------
------------- -------------- ------------
Continuing operations 10.0 1,094 2,290
Discontinued operations 5.6 78 78
------------- -------------- ------------
------------- -------------- ------------
9.5 1,172 2,368
------------- -------------- ------------
Return on sales is based upon operating profit before goodwill
amortisation and exceptional items divided by turnover. Net assets
comprise total assets less current liabilities, creditors falling due
after more than one year and provisions for liabilities and charges,
excluding net borrowings. The Group's share of turnover and operating
profits less losses of associated undertakings, proportionate to its
equity holdings, has been included where appropriate. There is no
significant trading between business sectors or geographical regions.
-0-
3 Turnover of associates
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
------------ ------------ --------------
Continuing operations 39 48 100
Discontinued operations 1 - 1
------------ ------------ --------------
------------ ------------ --------------
40 48 101
------------ ------------ --------------
4 Exceptional items
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
------------ ----------- ------------
Exceptional items included
in operating profit:
ANC integration costs - - (8)
Reorganisation costs - - (21)
Fixed assets impaired - - (73)
------------ ----------- ------------
------------ ----------- ------------
- - (102)
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
Loss on fixed assets (3) - -
------------ ----------- ------------
------------ ----------- ------------
Disposals of businesses:
(Loss)/profit before
attributable goodwill written
off (18) 84 330
Attributable capitalised
goodwill written off (2) (11) (32)
Attributable goodwill in
reserves written off (188) (76) (118)
------------ ----------- ------------
------------ ----------- ------------
(208) (3) 180
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
Exceptional financing item(a) (36) -
------------ ----------- ------------
------------ ----------- ------------
Taxation arising on exceptional
items:
Disposals of businesses (3) (15) 4
Reorganisation costs - - (4)
------------ ----------- ------------
------------ ----------- ------------
(3) (15) -
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
------------ ----------- ------------
Total exceptional items (250) (18) 78
------------ ----------- ------------
------------ ----------- ------------
Continuing operations (57) 1 (38)
Discontinued operations (193) (19) 116
------------ ----------- ------------
------------ ----------- ------------
(250) (18) 78
------------ ----------- ------------
(a) The exceptional financing item relates to an anticipated payment
to certain banks in connection with the purchase from them of
loans made to Rexam's Russian beverage can plant and arises as a
result of the improved results of that business. Further details
can be found in the Appendix to the Operating and Financial Review
on page 18.
5 Earnings per share
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
pence pence pence
------------ ----------- ------------
Earnings/(loss) per ordinary
share (basic):
Before goodwill amortisation
and exceptional items 21.3 17.1 36.9
Including goodwill amortisation
and exceptional items (45.1) 4.1 39.7
------------ ----------- ------------
------------ ----------- ------------
Earnings/(loss) per ordinary
share (diluted):
Before goodwill amortisation and
exceptional items 20.5 16.7 35.5
Including goodwill amortisation
and exceptional items(b) (45.1) 4.1 38.1
------------ ----------- ------------
------------ ----------- ------------
(b) There was no dilution in the 6 months to 30.6.02 or the 6 months
to 30.6.01 arising from the conversion of preference shares or the
exercise of outstanding share options
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
------------ ----------- ------------
------------ ----------- ------------
Profit attributable to ordinary
shareholders before
exceptional items
and goodwill amortisation 91 67 145
Dilution on conversion of
preference shares 3 3 5
------------ ----------- ------------
------------ ----------- ------------
Earnings before exceptional
items and goodwill
amortisation on a diluted basis 94 70 150
------------ ----------- ------------
------------ ----------- ------------
(Loss)/profit attributable to
ordinary shareholders (193) 16 156
Dilution on conversion of
preference shares 3 3 5
------------ ----------- ------------
------------ ----------- ------------
Earnings on a diluted basis (190) 19 161
------------ ----------- ------------
------------ ----------- ------------
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
Number Number Number
millions millions millions
----------- ----------- -------------
----------- ----------- -------------
Average number of
shares in issue for the period 428.2 391.3 393.1
Dilution on conversion
of preference shares 24.4 24.4 24.4
Dilution on exercise of
outstanding share options 5.3 3.6 4.6
----------- ----------- -------------
----------- ----------- -------------
On a diluted basis 457.9 419.3 422.1
----------- ----------- -------------
----------- ----------- -------------
The number of shares in issue
at the end of the period 434.8 397.0 430.5
----------- ----------- -------------
6 Ordinary dividends on equity shares
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
----------- ----------- ------------
2002 interim dividend
of 7.0p payable 6 November 2002 30 - -
2001 final dividend
of 9.2p paid 5 June 2002 - - 39
2001 interim dividend
of 6.7p paid 5 November 2001 - 26 26
----------- ----------- ------------
----------- ----------- ------------
30 26 65
----------- ----------- ------------
7 Exchange rates
6 months 6 months Year
to 30.6.02 to 30.6.01 to 31.12.01
(pound)m (pound)m (pound)m
-------------- ------------ --------------
Average:
United States dollar 1.44 1.44 1.44
Euro 1.61 1.60 1.61
------------ ------------ --------------
Closing:
United States dollar 1.52 1.42 1.45
Euro 1.54 1.64 1.64
------------ ------------ --------------
8 Financial information
A copy of the information to be provided to financial analysts is
available on request from the Company Secretary, Rexam PLC at 4
Millbank, London, SW1P 3XR.
INDEPENDENT REVIEW REPORT TO REXAM PLC
Introduction
We have been instructed by the Company to review the financial
information for the six months to 30 June 2002 which comprises the
consolidated profit and loss account, consolidated balance sheet,
consolidated cash flow statement, statement of total recognised gains
and losses, reconciliation of movements in Shareholders' funds and the
related notes 1 to 7. We have read the other information contained in
the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The Interim Report, including the financial information contained
therein, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Interim
Report in accordance with the Listing Rules of the Financial Services
Authority which require that the accounting policies and presentation
applied to the interim figures should be consistent with those applied
in preparing the preceding Annual Accounts except where any changes,
and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in
Bulletin 1999/4 `Review of interim financial information' issued by
the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and
applying analytical procedures to the financial information and
underlying financial data, and based thereon, assessing whether the
accounting policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit procedures such as
tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review, we are not aware of any material
modifications that should be made to the financial information as
presented for the six months to 30 June 2002.
Ernst & Young LLP
29 August 2002
MORE TABLES TO FOLLOW
--30--mh/uk* sm/uk fm/uk fg/uk
CONTACT: Rexam PLC
Rolf Borjesson, Chief Executive
Michael Hartnall, Finance Director
Per Erlandsson, Director of Corporate Communications
+44-20-7227-4100
or
Taylor Rafferty
Brian Rafferty
+1-212-889-4350
KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: FOREST PRODUCTS EARNINGS
SOURCE: Rexam PLC
COPYRIGHT 2002 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
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