Rexam Delivers Further Strong Profit Growth.LONDON London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. -- Rexam Rexam PLC (LSE: REX) is a PLC listed on the LSE with headquarters in the UK. Their main businesses are the provision of packaging solutions and the manufacturing of beverage cans. PLC (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : REXMY), the global consumer packaging group and the world's No 1 beverage can A beverage can is most often an aluminium can manufactured to hold a single serving of a beverage. Overview The early metal beverage can was made out of steel (similar to a tin can) and had no pull-tab. maker, announces its results for the full year to 31 December December: see month. 2004.
Underlying performance(1)
2004 2003(2) Increase
------------ -------------- --------
Sales from ongoing operations(3) GBP 3,124m GBP 2,999m +4%
Underlying operating profit GBP 391m GBP 344m +14%
Underlying profit before tax GBP 300m GBP 239m +26%
Underlying earnings per share 38.2p 33.8p +13%
Highlights --Underlying profit before tax(1) up 26% to GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 300m (GBP 326m before retirement benefits net finance cost) --Underlying EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. (1) up 13% --Excellent free cash flow at GBP 226m, up 7% --Consumer Packaging margins increase to 12.5% from 11% --Beverage Packaging underlying operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. GBP 318m, up 12%(4) --Plastic Packaging underlying operating profit GBP 71m, up 29%(4) --Integration of Latasa ahead of plan - synergies of GBP 11m ($20m) Rolf Rolf See Rollo. Noun 1. Rolf - Norse chieftain who became the first duke of Normandy (860-931) Hrolf, Rollo Borjesson, Chairman, commented: "Rexam made further strong progress in 2004, with creditable cred·it·a·ble adj. 1. Deserving of often limited praise or commendation: The student made a creditable effort on the essay. 2. Worthy of belief: a creditable story. increases in sales, profits and margins. We continue to see excellent prospects for further organic growth and acquisitions, both of which will reinforce re·in·force v. 1. To give more force or effectiveness to something; strengthen. 2. To reward an individual, especially an experimental subject, with a reinforcer subsequent to a desired response or performance. 3. our leadership positions and create value for shareholders. I am confident that we are well positioned for further progress in 2005."
Statutory results(5)
2004 2003(2)
---------------- -----------------
Sales GBP 3,081m GBP 3,112m
Operating profit GBP 300m GBP 215m
Profit before tax GBP 195m GBP 3m
Basic earnings/(loss) per share 21.0p (9.5)p
Dividends per share 17.25p 16.4p
1. For underlying performance, sales include sales of associates and
profit and earnings are before goodwill amortisation and exceptional
items
2. Restated for UITF38 "Accounting for ESOP Trusts"
3. Sales including sales of associates but excluding sales of
businesses that have been discontinued, disposed or are held for sale
4. Based on 2003 underlying operating profit adjusted for full year
effect of 2003 acquisitions and constant currency
5. For statutory results, sales exclude sales of associates and profit
and earnings include goodwill amortisation and exceptional items
See also explanatory notes on next page
Explanatory ex·plan·a·to·ry adj. Serving or intended to explain: an explanatory paragraph. ex·plan notes Underlying: profit and earnings before goodwill amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptional items and sales includes sales of associates (Note 1 above). Ongoing operations: underlying performance excluding businesses that have been discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: , disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. or are held for sale in either 2003 or 2004 (Note 3 above). Adjusted underlying performance: ongoing operations for 2003 adjusted to include the pre-acquisition impact of 2003 acquisitions (the "full year effect") and to reflect the impact of re-translating at the 2004 average exchange rates ("constant currency") (Note 4 above). The change between adjusted underlying performance and ongoing operations 2004 represents a combination of the result of 2004 acquisitions and organic growth. Organic growth is the year on year change arising on businesses owned since the beginning of 2004. 25 February February: see month. 2005 Editors' notes: Rexam is one of the world's top five consumer packaging groups and the world's leading beverage can maker. Its global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. focus on beverage packaging in metal, glass and plastic, as well as plastic packaging solutions for the beauty, pharmaceutical, and food industries around the world. The Group employs more than 22,000 people in 24 countries worldwide and has an ongoing turnover of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. GBP 3.1 billion. Rexam is a member of the FTSE FTSE A company that specializes in index calculation. Although not part of a stock exchange, co-owners include the London Stock Exchange and the Financial Times. Notes: The FTSE is similar to Standard & Poor's in the United States. 100. Its ordinary shares are listed with the UK Listing Authority and trade on the market for listed securities Listed Security Securities that have been accepted for trading purposes by a recognized and regulated exchange. Notes: Listed securities have the advantage of higher liquidity within a regulated environment. on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. under the symbol REX REX - The original name for Restructured EXtended eXecutor. . For further information, visit Rexam's website at www.rexam.com. CHAIRMAN'S LETTER This is my first letter to you since becoming Chairman of the Company at the Annual General Meeting in May 2004. It has been an interesting and eventful e·vent·ful adj. 1. Full of events: an eventful week. 2. Important; momentous: an eventful decision. period. When it comes to our overall financial performance, 2004 was another successful, if challenging, year and I am pleased to report that we made further good progress. Summarising our underlying results, sales from ongoing operations advanced 4% to GBP 3.1bn and our underlying profit before tax rose 26% to GBP 300m. Free cash flow generation was again particularly strong at GBP 226m. These results are testament to the strength of our business and the drive for performance by everyone in Rexam. They have been achieved despite there being no resolution to the deposit system on one-way one-way adj. 1. Moving or permitting movement in one direction only: a one-way street. 2. Providing for travel in one direction only: a one-way ticket. packaging in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and despite the continued weakness of the US dollar, which impacted our results particularly from the Americas A·mer·i·cas , the See America. on translation into sterling. Executing our strategy Our successful strategy over recent years has transformed Rexam into a focused global consumer packaging group. Now, having achieved strong leadership positions and a solid base of operational excellence combined with positive long term customer relationships with many of the most famous brands in the world, we are taking Rexam to the next stage of its development. We are doing this by growing organically and by acquisition, as well as by extending our consumer packaging activities and moving into new geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. markets. The implementation of our strategy progressed effectively during 2004. We continued to drive organic growth through our focus on a number of important areas. These included our commitment to providing customer satisfaction, innovation in areas such as marketing, supply chain and information management and the unstinting pursuit of operational efficiency. The highly successful integration of the Latasa beverage can plants in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , which we acquired in November November: see month. 2003, has reaped even greater benefits than we first hoped for. One of the advantages of acquiring the Latasa operations is that we now, for the first time, have a substantial presence in the southern hemisphere hemisphere /hemi·sphere/ (hem´i-sfer) half of a spherical or roughly spherical structure or organ. cerebellar hemisphere either of two lobes of the cerebellum lateral to the vermis. . In line with our strategy to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the northern European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. glass container (1) Software that acts as a parent program to hold and execute a set of commands or to run other software routines. (2) A data structure that holds one or more different types of data. See metafile and OLE. market, we strengthened our position during the year with the acquisition of two glassworks glass·work n. 1. a. The manufacture of glassware or glass. b. The cutting and fitting of glass panes; glaziery. 2. See glassware. 3. glassworks (used with a sing. , one in the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. and one in Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, . This not only created opportunities for operational improvement but also reinforced re·in·force also re-en·force or re·en·force tr.v. re·in·forced, re·in·forc·ing, re·in·forc·es 1. To give more force or effectiveness to; strengthen: The news reinforced her hopes. our long term relationship with one of our major customers. We also continued our strategy of investing in attractive growth sectors within consumer packaging. Following on from the acquisition of Risdon Pharma Pharma may be an abbreviation for:
provision of drugs or medicines as set out properly on a lawful prescription. A prescription can only be filled, the drugs supplied, by a registered pharmacist, veterinarian, dentist or member of the medical profession. systems. This represented a significant step forward in establishing a leading position in the fast growing pharmaceutical packaging market and in further cementing our relationships with a number of global industry players. Nearly 15% of our sales are now in what are frequently referred to as emerging markets, including countries such as Brazil, Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and China. During 2004, we strengthened our presence in these markets, acquiring full ownership and control of our beverage can plants in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and China. These investments, together with our recent agreement to provide technical support to a beverage can plant start-up Start-up The earliest stage of a new business venture. in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , were all made with our long term future in mind. We anticipate that they will contribute strongly to the future success of Rexam. We continue to see numerous acquisition opportunities, some of which we seek to take advantage of, to build on our position in consumer packaging through acquisition. The discipline of our acquisition process remains firmly in place and we will pursue only the deals which we are convinced con·vince tr.v. con·vinced, con·vinc·ing, con·vinc·es 1. To bring by the use of argument or evidence to firm belief or a course of action. See Synonyms at persuade. 2. will add value for shareholders. Changes to the Board At the Annual General Meeting in May 2004, Jeremy Jeremy (jĕr`ĭmē), English form of Jeremiah. The Epistle of Jeremy is a title given to the sixth chapter of Baruch. Lancaster Lancaster, city, England Lancaster (lăng`kəstər), city (1991 pop. 43,902) and district, county seat of Lancashire, NW England, on the Lune River. stepped down after eight successful years overseeing the transformation of this Company. His experience, wisdom and integrity were an invaluable part of that transformation and it was a pleasure and privilege A permission or right. In information security, it refers to the modes of operation that a user or a process is granted. Examples include user-level privilege, operator privilege and supervisory privilege. to work alongside him. At the same time, Stefan Angwald took over as Chief Executive. However, it became apparent to the Board that he was not the appropriate individual to lead the Company and we asked him to step down. I feel reassured re·as·sure tr.v. re·as·sured, re·as·sur·ing, re·as·sures 1. To restore confidence to. 2. To assure again. 3. To reinsure. by the fact that the Board acted resolutely res·o·lute adj. Firm or determined; unwavering. [Middle English, dissolved, dissolute, from Latin resol and swiftly swift adj. swift·er, swift·est 1. Moving or capable of moving with great speed; fast. See Synonyms at fast1. 2. to avoid any long term effect. The Board was delighted that Lars Emilson, who has had previous experience as a Chief Executive at PLM (Product Life cycle Management) A comprehensive information system that coordinates all aspects of a product from initial concept to its eventual retirement. Sometimes called the "digital backbone" of a product, it includes the requirements phase, analysis and design during the 1990s and has been an executive director of Rexam since 1999, agreed to step up from the position of Group Director Beverage Cans to take on the role of Chief Executive. Lars played a key role in the integration of the ANC ANC abbr. African National Congress ANC African National Congress: South African political movement instrumental in bringing an end to apartheid ANC n abbr (= and Latasa acquisitions and his knowledge and experience are invaluable. I am sure that he will provide the Group with strong leadership as Chief Executive. Bill Barker barker a term for an animal that does not usually bark which makes a violent respiratory effort, often during a convulsion, accompanied by a sound which roughly resembles a dog's bark. , who succeeded Lars as Group Director Beverage Cans, was appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. to the Board as an executive director in January January: see month. 2005. Dividend The Board is proposing a final dividend payment of 10.09p per ordinary share. This will mean 17.25p for 2004, which is an increase of 5.2% on last year in line with our dividend policy. Subject to shareholder approval at the Annual General Meeting in May 2005, the dividend will be paid on 1 June June: see month. 2005 to holders of ordinary shares registered on 13 May 2005. Outlook There is great talent throughout Rexam and I would like to thank everyone for their dedication to delivering success during 2004. Looking forward, we are continuing to invest in our business to achieve growth. The European beverage can market continues to expand, despite the difficulties in Germany, and grew some 5% in 2004. We expect the market to grow at a similar level this year. The traditional beverage can market in the US is currently flat but we see numerous opportunities to expand through the introduction of faster growth products, such as non-standard can sizes, and we shall continue the conversion of capacity at some of our plants to exploit this. We anticipate that Rexam will deliver its usual levels of efficiencies. Good volume and mix improvements, along with some price increases, are expected to largely offset cost inflation. With a sound and proven strategy, committed employees and a strong management team led by our Chief Executive, Lars Emilson, we look forward to further progress in 2005. Rolf Borjesson Chairman 25 February 2005 OPERATING AND FINANCIAL REVIEW 2004 PERFORMANCE The summary Group profit and loss accounts for 2004 and 2003 are set out below:
Underlying Goodwill Exceptional Total
business amortisation items statutory
performance+ GBP m GBP m GBP m
GBP m
------------ ------------ ----------- ---------
2004
Sales including
associates 3,145 3,145
Sales of associates - (64)
------------ ---------
Sales 3,145 3,081
------------ ---------
Operating profit
including associates 391 (75) (16) 300
Disposal of businesses - - (14) (14)
Interest (65) - - (65)
------------ ------------ ----------- ---------
Profit before tax and
retirement benefits
net finance cost 326 (75) (30) 221
Retirement benefits
net finance cost (26) - - (26)
------------ ------------ ----------- ---------
Profit before tax 300 (75) (30) 195
------------ ------------ ----------- ---------
Profit after tax 215 (75) (19) 121
------------ ------------ ----------- ---------
Basic earnings per
share (p) 21.0
Diluted earnings per
share (p) 20.8
Underlying earnings
per share (p):
- Before retirement
benefits net finance
cost 41.1
- Including retirement
benefits
net finance cost 38.2
Dividends per share
(p) 17.25
2003 - restated*
Sales including
associates 3,186 3,186
Sales of associates - (74)
------------ ---------
Sales 3,186 3,112
------------ ---------
Operating profit
including associates 344 (70) (59) 215
Disposal of businesses - - (107) (107)
Interest (73) - - (73)
------------ ------------ ----------- ---------
Profit before tax and
retirement benefits
net finance cost 271 (70) (166) 35
Retirement benefits
net finance cost (32) - - (32)
------------ ------------ ----------- ---------
Profit before tax 239 (70) (166) 3
------------ ------------ ----------- ---------
Profit/(loss) after
tax 174 (70) (145) (41)
------------ ------------ ----------- ---------
Basic earnings per
share (p) (9.5)
Diluted earnings per
share (p) (9.5)
Underlying earnings
per share (p):
- Before retirement
benefits net finance
cost 38.1
- Including retirement
benefits
net finance cost 33.8
Dividends per share
(p) 16.4
* The results for 2003 have been restated following the adoption of
UITF38 "Accounting for ESOP Trusts". The background to, and impact
of this restatement is set out in the Notes to the preliminary
statement.
+ Underlying business performance is the primary performance measure
used by management. Management believes that exclusion of goodwill
amortisation and exceptional items aids comparison of underlying
performance.
Highlights of the Group performance over the last four years are shown in the Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. . The discussion of the results set out in the sections of this review of 2004 Performance, Sector Performance, Retirement Benefits, Interest and Tax is based on the first column of the above tables, "Underlying business performance". It is felt that by adjusting for exceptional items and goodwill amortisation, the underlying figures provide a better indication of the Group's performance. During the period of transition from SSAP SSAP Source Service Access Point SSAP Statistical Signal and Array Processing SSAP Session Service Access Point SSAP sequential structure alignment program (for protein structure comparison) SSAP Simple Spectral Access Protocol 24 to FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. 17, underlying profit also excluded the retirement benefits net finance cost. Although this distinction is no longer considered necessary, it is shown below for comparison purposes. It is also considered for comparison that sales should include sales of associates. A summary of underlying business performance is set out below.
2004 2003
GBP m restated* Change
GBP m %
------ --------- -------
Ongoing operations 3,124 2,999 +4
Disposals and discontinued 21 187
------ ---------
Sales including associates 3,145 3,186 -1
------ ---------
Ongoing operations 389 329 +18
Disposals and discontinued 2 15
------ ---------
Underlying operating profit 391 344 +14
Interest (65) (73) +11
------ ---------
Underlying profit before tax and retirement
benefits net finance cost 326 271 +20
Retirement benefits net finance cost (26) (32) +19
------ ---------
Underlying profit before tax 300 239 +26
------ ---------
Underlying profit after tax 215 174 +24
------ ---------
Underlying earnings per share (p):
- Before retirement benefits net finance cost 41.1 38.1 +8
- Including retirement benefits net finance
cost 38.2 33.8 +13
* Restated for UITF38 "Accounting for ESOP Trusts"
Sales including associates and underlying operating profit benefited from acquisitions, mainly in Beverage Packaging, completed in 2003 and 2004. Synergies following integration as well as the improved performance of existing businesses also had a positive effect. These benefits were offset by the impact of currency fluctuations, predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. due to the weaker US dollar, and the disposal of businesses, primarily the Healthcare Flexibles Sector in October October: see month. 2003. The following tables, showing sales and underlying operating profit, compare on a consistent basis the ongoing Consumer Packaging segments. This basis excludes disposals and discontinued businesses but includes prior year acquisitions as if acquired on 1 January 2003, by adding their pre-acquisition results (shown as "Acquisitions 2003"). It also highlights currency fluctuations arising on translation. Analysis of sales movement
Consumer
Packaging
----------------
Total Beverage Plastic
GBP m GBP m GBP m
------ -------- -------
Sales including associates reported 2003 3,186
Disposals 2003 and 2004 (187)
------
Consumer Packaging 2003 reported in 2004 2,999 2,503 496
Acquisitions 2003 235 203 32
Currency fluctuations (198) (168) (30)
------ -------- -------
Consumer Packaging 2003 pro forma basis 3,036 2,538 498
Acquisitions 2004 39 28 11
Organic sales growth 49 31 18
------ -------- -------
Consumer Packaging reported 2004 3,124 2,597 527
-------- -------
Disposals 2004 21
------
Sales including associates reported 2004 3,145
------
Organic sales growth was GBP 49m, an increase of just under 2%. This includes sales from associates but excludes the effect of currency fluctuations and the impact of acquisitions and disposals. This growth was achieved through a combination of price increases, favourable mix and volume improvements. The impact of the German deposit legislation on sales was approximately GBP 40m year on year. Adjusting for this, organic sales growth was about 3%, which is slightly below long term expectations, due largely to the poor summer in parts of Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .Analysis of underlying operating profit movement
Consumer
Packaging
----------------
Total Beverage Plastic
GBP m GBP m GBP m
----- -------- -------
Underlying operating profit 2003 - restated 344
Disposals 2003 and 2004 (15)
------
Consumer Packaging 2003 reported in 2004 329 275 54
Acquisitions 2003 37 32 5
Currency fluctuations (26) (22) (4)
----- -------- -------
Consumer Packaging 2003 pro forma basis 340 285 55
Acquisitions 2004 5 3 2
Organic operating profit growth 44 30 14
----- -------- -------
Consumer Packaging reported 2004 389 318 71
-------- -------
Disposals 2004 2
-----
Underlying operating profit reported 2004 391
-----
Analysis of the improvement in operating profit:
Price changes 15 20 (5)
Cost changes (16) (15) (1)
----- -------- -------
Price and cost changes (1) 5 (6)
Volume/mix changes (1) (11) 10
Efficiency and other savings 46 36 10
----- -------- -------
44 30 14
----- -------- -------
The organic growth in underlying operating profit, after taking into account acquisitions, disposals and currency movements, was GBP 44m (13%), primarily as a result of efficiency savings, with price rises largely offsetting inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. cost increases. The efficiency savings include GBP 11m (US $20m) of synergies realised on the integration of the South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of beverage can operations. The principal volume reduction was GBP 5m in respect of the German beverage businesses and the remainder due mainly to softer volumes in some parts of Europe including the UK flavoured adj. 1. same as flavored; - of foods. alcoholic beverage alcoholic beverage Any fermented liquor, such as wine, beer, or distilled liquor, that contains ethyl alcohol, or ethanol, as an intoxicating agent. When an alcoholic beverage is ingested, the alcohol is rapidly absorbed in the stomach and intestines because it does not market for glass. In respect of Latasa, the "Acquisitions 2003" adjustment includes the benefit derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from fair value adjustments made on acquisition. That benefit was GBP 10m and related mainly to lower depreciation. Managing input costs The annual expenditure on aluminium, by far the largest raw material cost incurred by the Group, is approximately GBP 950m. In the US, Rexam's major customers agree the cost of aluminium in advance with their suppliers and therefore Rexam is largely unaffected by changes in the cost of this commodity. In Europe, both aluminium and the associated US dollar/euro currency requirements are hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. , such that input costs are fixed in euros, Rexam's principal transaction currency in Europe. The three year hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. profile is such that the Group will not be significantly affected by changes in aluminium prices or the US dollar/euro exchange rates over the next two years. The European beverage can business also spends about GBP 75m per annum Per annum Yearly. on steel. This expenditure is largely covered by long term contracts, of which about 20% are renegotiated each year. The annual expenditure on resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. by Rexam's Plastic Packaging businesses amounts to GBP 75m. On a large number of sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. , any resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing price changes are passed on to customers, although there may be a short time lag before they are implemented. The Group also spends about GBP 100m each year on energy, the largest part of which is by the glass business. Historically, Rexam has been able to obtain price increases at regular intervals to compensate for increases in energy prices and other costs. EXCHANGE RATES The principal exchange rates used in the preparation of the accounts are:
2004 2004 2003 2003
Average Closing Average Closing
---------------------- --------------------
US dollar 1.83 1.93 1.63 1.77
Euro 1.47 1.42 1.45 1.42
Profit and loss account The principal currencies that affect Rexam's results are the US dollar, which weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. significantly against sterling during the
year, and the euro, which was marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. weaker. The net effect of currency caused sales including associates and underlying operating profits to be reduced by GBP 198m and GBP 26m respectively, compared with the previous year. The effect of purchasing aluminium which is denominated in US dollars, for products sold in Europe, was minimal as much of the exposure is hedged. The movement in exchange rates had the following impact on the translation into sterling for reporting sales, underlying operating profit and profit before tax in 2004:
Sales Underlying Underlying
including operating profit
associates profit before tax
GBP m GBP m GBP m
---------- ---------- ----------
US dollar (170) (22) (17)
Euro (13) (2) (1)
Other currencies (15) (2) (2)
---------- ---------- ----------
(198) (26) (20)
---------- ---------- ----------
Looking forward into 2005, it has been assumed that the US dollar will remain weak. Because of the hedging policies adopted by the Group for aluminium purchases and interest payments, the impact of recent movements in the US dollar exchange rate is not likely to have a material transaction impact on profit in 2005. The proportion of the Group's sales and profit earned by subsidiaries reporting in US dollars has increased with the acquisition of Latasa. The precise impact of changing exchange rates on translation into sterling cannot be ascertained as·cer·tain tr.v. as·cer·tained, as·cer·tain·ing, as·cer·tains 1. To discover with certainty, as through examination or experimentation. See Synonyms at discover. 2. until the average exchange rates for 2005 have been calculated. However, based on the 2004 results, it is estimated, for example, that a 10 cent change in the principal currencies would have the following impact:
Sales Underlying Underlying
including operating profit
associates profit before tax
GBP m GBP m GBP m
---------- ---------- ----------
US dollar 80 12 10
Euro 65 9 7
Balance sheet Most of the Group's borrowings are denominated in US dollars and euros. Currency movements in the year have reduced net borrowings by GBP 46m; this is almost entirely due to the weakness of the US dollar. Changes in exchange rates have also reduced net equity by a modest GBP 8m, as shown in the statement of total recognised gains and losses. SECTOR PERFORMANCE Segment analysis All the disposals, businesses for sale and discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. are grouped together under disposals.
Sales Underlying Return Profit
including operating on before
associates profit sales interest
GBP m GBP m % and
retirement
benefits
net finance
cost
2004 GBP m
---------- ---------- ------ -----------
Beverage Packaging 2,597 318 12.2 250
Plastic Packaging 527 71 13.5 48
---------- ---------- -----------
Consumer Packaging 3,124 389 12.5 298
Disposals 21 2 (12)
---------- ---------- -----------
3,145 391 12.4 286
---------- ---------- -----------
2003
Beverage Packaging 2,503 275 11.0 165
Plastic Packaging 496 54 10.9 35
---------- ---------- -----------
Consumer Packaging 2,999 329 11.0 200
Disposals 187 15 (92)
---------- ---------- -----------
3,186 344 10.8 108
---------- ---------- -----------
The improvement in margins to 12.5% for Consumer Packaging in 2004, up from 11.0% in 2003, represents another excellent performance by the Group this year. The following table shows the sustained progress achieved over the last four half years for Consumer Packaging.
Sales Underlying Return
including operating on
associates profit sales
GBP m GBP m %
---------- ---------- ------
First half 2003 1,478 156 10.6
Second half 2003 1,521 173 11.4
First half 2004 1,555 181 11.6
Second half 2004 1,569 208 13.3
The fair value adjustments in respect of Latasa, as discussed previously, were finalised and recorded in the second half of 2004. Consequently, the reported profit for the first half should be increased, on an underlying basis, by GBP 4m and that for the second half year reduced by the same amount. Reflecting this adjustment the return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. for the first half of 2004 was 11.9% and for the second half, 13.0%. Beverage Packaging
2004 2003
------ ------
Sales including associates (GBP m) 2,597 2,503
Underlying operating profit (GBP m) 318 275
Return on sales (%) 12.2 11.0
Overall, Beverage Packaging turned in a solid performance. The beverage can business in the Americas improved on the prior year, although the benefits were somewhat diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. by currency translation. In the US beverage can business, volumes were just below last year, due to weaker demand in the latter part of the year. However, sales revenues, at constant currency, were 6% up, largely due to the pass through of raw material costs and a positive mix effect. The integration of the South American beverage can operations has progressed well and indications are that, by the end of 2006, total annual synergies will exceed US$30m, at least US$10m higher than anticipated when the deal was announced. On a combined basis and at constant currency, the operating profit of the whole South American can business is approximately GBP 28m (65%) ahead of last year on sales that were GBP 25m (10%) higher. This profit improvement includes GBP 7m of cost reductions, following plant closures in 2003 and 2004, and GBP 11m of synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. savings. The European beverage can business grew by approximately 4% excluding Germany. There was solid growth in soft drinks across most major markets as well as an increase in slim cans. This helped compensate for Germany where there was no recovery. Additional capacity for slim cans has been added and will be available in the latter part of 2005. The glass business performed well and benefited from the two acquisitions made in early 2004. The closure of a furnace furnace, enclosed space for the burning of fuel. There are many kinds of furnaces, the type depending upon the fuel and the use to which the heat produced within it is put. Most familiar are the furnaces used in the heating of buildings. and associated production lines in Germany together with a production line closure in Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. have balanced capacity in the Northern European market. The one-off (1) One at a time. CD-ROM recorders (CD-R drives) are commonly called one-off machines because they write one CD-ROM at a time. (2) Only once. Software that is written to solve a specific problem only one time is sometimes called a one-off. cash costs, recorded in exceptional items, associated with these closures and that of the Brazilian plant in 2004, discussed above, were GBP 5m. Plastic Packaging
2004 2003
--------- ----------
Sales including associates (GBP m) 527 496
Underlying operating profit (GBP m) 71 54
Return on sales (%) 13.5 10.9
Plastic Packaging sustained the improvement reported in 2003, with substantial increases in sales including associates, underlying operating profit and margins. The general buoyancy buoyancy (boi`ənsē, b  `yən–), upward force exerted by a fluid on any body immersed in it. Buoyant force can be explained in terms of Archimedes' principle. in the beauty
businesses was complemented by the addition of the higher margin
pharmaceutical packaging businesses, Risdon Pharma in 2003 and Plastic
Omnium Medical in 2004. In June 2004, it was decided to close the plant
in Torrington Torrington, city (1990 pop. 33,687), Litchfield co., NW Conn., on the Naugatuck River; inc. 1740. It is the industrial and commercial hub of NW Connecticut and is known for its metal (especially brass) and machinery manufactures. , US, to maintain competitiveness in the make-up Make-upThe amount of deficiency when a cash flow or capital item is deficient. For example, an interest make-up relates to the interest amount above a ceiling percentage. business. Also, in October 2004 the closure of the plastic containers plant in Ystad Ystad (ü`städ), city (1990 pop. 15,670), Malmöhus co., S Sweden, a seaport on the Baltic Sea. It is a commercial and industrial center and a popular summer resort. Iron, steel, and dairy products are produced. , Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. was implemented in response to declining volumes in the Nordic food market. The cash cost of these closures is GBP 4m and is included in exceptional items. The Petainer refillable plastic bottles business continued to benefit from the demand for its products following the implementation of the German deposit system on one-way packaging. RETIREMENT BENEFITS The movement in provisions for retirement benefits is set out in Note 3 on page 32. The analysis of the retirement benefits net finance cost is as follows:
2004 2003
GBP m GBP m
---------- ---------
Defined benefit pension schemes:
Expected return on scheme assets 124 125
Interest on scheme liabilities (135) (138)
---------- ---------
(11) (13)
Retiree medical interest on liabilities (15) (19)
---------- ---------
Net finance cost (26) (32)
---------- ---------
Changes to the actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin value of retirement benefits at the balance sheet date are shown in the statement of total recognised gains and losses. These changes reduced shareholders' funds by GBP 61m as follows:
GBP m GBP m
------------ -----------
Defined benefit schemes:
Scheme assets - returns higher than expected 60
Scheme liabilities - experience gains 9
Scheme liabilities - lower discount rates (146)
------------
(77)
Retiree medical:
Scheme liabilities - experience losses (6)
Scheme liabilities - lower discount rates (7)
------------
(13)
-----------
Actuarial changes before tax (90)
Tax 29
-----------
Actuarial changes after tax (61)
-----------
The total cash payments in respect of retirement benefits are as follows:
2004 2003
GBP m GBP m
-------------- --------------
Defined benefit pension schemes 23 16
Other pension schemes 4 4
Retiree medical 20 23
-------------- --------------
47 43
Exceptional payment - 10
-------------- --------------
Total cash payments 47 53
-------------- --------------
Cash payments to defined benefit pension schemes increased as a result of a higher rate of contribution to the UK scheme. The exceptional payment in 2003 was in respect of a defined benefit arrangement, which requires assets to be maintained at a fixed percentage of liabilities. Based on current actuarial projections, we expect cash contributions to defined benefit pension schemes to continue to increase, rising by approximately GBP 5m in 2005 and again by a similar amount in 2006. INTEREST Interest charged in the year was GBP 65m, which was a substantial reduction from 2003 when the charge was GBP 73m. This results from lower borrowings, following the success of the disposal programme, as well as lower short term interest rates following the refinancing Refinancing An extension and/or increase in amount of existing debt. arranged in April 2004. Currently around 54% of net borrowings are at fixed rates and 46% at floating rates. The average interest rate during the year was 5.3% (2003: 5.8%). Interest cover improved sharply to 6 times operating profit (before goodwill amortisation and exceptional items) which is comfortably above the Group's long term parameter (1) Any value passed to a program by the user or by another program in order to customize the program for a particular purpose. A parameter may be anything; for example, a file name, a coordinate, a range of values, a money amount or a code of some kind. to maintain interest cover above 4 times. TAX The tax charge for the year was GBP 85m (28%) on profit after retirement benefits net finance cost before goodwill amortisation and exceptional items (2003 restated: GBP 65m (27%)). It is currently anticipated that the percentage charge will be around 30% in 2005 following adoption of International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). . In subsequent years it is likely to continue to rise in line with tax rates in the regions in which the Group operates. Tax payments in the year were GBP 54m (64% of the profit and loss account tax charge) compared with GBP 39m (60%) last year. Payments in 2003 and 2004 were reduced by repayments received, following settlement of prior year tax assessments, and by the utilisation of tax losses. It is expected that the cash tax paid in future years will rise to between 75% and 80% of the profit and loss account tax charge as tax losses are used up. EARNINGS/(LOSS) PER SHARE The basic earnings per share for the Group was 21.0p per share (2003: loss of 9.5p). This includes goodwill amortisation and the exceptional profits and losses arising from restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and the sale of businesses. Underlying earnings per share before retirement benefits net finance cost increased from 38.1p to 41.1p, an increase of 8%. Including the retirement benefits net finance cost, earnings per share is up from 33.8p in 2003 to 38.2p in 2004, an increase of 13%. These increases in underlying earnings per share were achieved even though the tax rate has increased and the average number of shares in issue is higher by 10%, following the 2003 Rights Issue made in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the acquisition of Latasa.
2004 2003
pence pence Change %
----- ----- --------
Basic earnings/(loss) per share 21.0 (9.5)
Underlying earnings per share:
- Before retirement benefits net finance cost 41.1 38.1 +8
- Including retirement benefits net finance cost 38.2 33.8 +13
Average number of shares (millions) 547 496 +10
EXCEPTIONAL ITEMS There were a number of exceptional items during 2004.
GBP m GBP m
--------- ----------
Restructuring costs (18)
Fixed asset impairments (5)
Retiree medical and other 7
---------
Charged to operating profit (16)
Loss on businesses sold (3)
Attributable goodwill in reserves written off (11)
---------
Disposal of businesses (14)
----------
Total exceptional items before tax (30)
Tax 11
----------
Total exceptional items after tax (19)
----------
The principal restructuring cost related to the closure of the US make-up facility in Torrington. Included in fixed asset impairments is GBP 8m of attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk goodwill arising on its acquisition in 1996. Further costs were incurred on the closure of the Swedish plastic container facility at Ystad. In addition, reorganisation Noun 1. reorganisation - the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet costs arose in Beverage Packaging following the integration of recent acquisitions together with capacity reductions in the German beverage can and northern European glass businesses. These costs were offset by the write back of GBP 5m in respect of goodwill impairment, recorded in 2003, arising on the acquisition of Nacanco GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) . This write back was a consequence of the utilisation of assets to support the investment in slim can capacity, which has underpinned the value of the assets acquired for the related business at Gelsenkirchen Gelsenkirchen (gĕl'zənkĭrkh`ən), city (1994 pop. 295,040), North Rhine–Westphalia, W Germany, a port on the Rhine-Herne Canal. It is a major industrial and coal-mining center of the Ruhr district. , and revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to the provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. fair value adjustments. During the year the Group negotiated revisions to its obligations in respect of retiree medical benefits for certain current employees, which reduced liabilities by GBP 11m. The loss on disposal of businesses relates primarily to the sale of four European non-core thin wall plastics businesses, including GBP 11m of attributable goodwill arising on their acquisition in 1992. DIVIDEND AND DIVIDEND POLICY This year the Board is recommending a final dividend of 10.09p per share bringing the total dividend for the year to 17.25p per share, an improvement of 5.2%. This is in line with Rexam's ongoing policy to increase the dividend payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. by about 5% per annum on the assumption that the financial resources are available and that earnings growth continues as expected. CASH FLOW Free cash flow was an inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. of GBP 226m compared with GBP 212m in 2003. This 7% increase is largely due to an improvement in working capital, particularly on receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed .
2004 2003
GBP m restated*
GBP m
------- ---------
Cash flow from operating activities before change
in working capital 526 517
Change in working capital (7) (26)
------- ---------
Cash flow from operating activities 519 491
Capital expenditure (net) (175) (159)
Purchase of fixed asset investments - (10)
Interest, non equity and associate dividends and tax (118) (110)
------- ---------
Free cash flow 226 212
Equity dividends (92) (76)
------- ---------
Business cash flow 134 136
Acquisitions** (100) (428)
Disposals*** 13 192
------- ---------
Cash flow including borrowings acquired and disposed 47 (100)
Exchange fluctuations 46 (15)
Amortisation and payment of financing fees (1) (3)
Share capital changes (net of costs) 8 307
Purchase of Rexam shares by ESOP trust - (3)
Net borrowings at the beginning of the year (1,169) (1,355)
------- ---------
Net borrowings at the end of the year (1,069) (1,169)
------- ---------
* Restated for UITF38 "Accounting for ESOP Trusts"
** Includes net borrowings acquired of GBP 42m (2003: GBP 176m)
*** Includes net borrowings disposed of GBP 3m (2003: GBP 36m) and
repayment of loan to associate of GBP 1m in 2003.
CAPITAL EXPENDITURE Capital expenditure was GBP 183m, just above depreciation. It is anticipated that capital expenditure in 2005 will be within the range 1.00 to 1.20 times depreciation, depending on the timing of projects. This follows two years of relative restraint RESTRAINT. Something which prevents us from doing what we would desire to do. 2. Restraint is lawful and unlawful. It is lawful when its object is to prevent the violation of the law, or the rights of others. in response to the need to balance capacity with demand in a number of business areas and reflects an increased number of growth opportunities.
2004 2003
--------- ---------
Capital expenditure (gross) (GBP m) 183 165
Depreciation (GBP m) 178 171
Ratio (times) 1.03 0.96
Acquisitions and disposals Expenditure on acquisitions, including borrowings assumed, totalled GBP 100m as set out below:
GBP m
----------------
Glas Moerdijk 29
Latasa minority interest 21
Plastic Omnium Medical 21
VanCan 14
Polglass 11
Other, including investment in joint venture 4
----------------
100
----------------
The principal transactions were in Beverage Packaging. They include the completion of the tender offer for the 11% minority interest in Latasa in May 2004, the purchase in the first quarter of two European glass businesses in the Netherlands and Poland and the acquisition in October 2004 of the remaining 50% of the Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum joint venture, VanCan. The acquisition in April 2004 of Plastic Omnium Medical, based in France, strengthened Rexam's position in the plastic pharmaceutical packaging market. The main disposal was four European non-core thin wall plastics businesses for GBP 15m, including borrowings disposed. BALANCE SHEET AND BORROWINGS
2004 2003
GBP m restated*
GBP m
------------- ---------------
Intangible fixed assets 1,185 1,195
Retirement benefits net of deferred tax (532) (496)
Other net assets 1,202 1,293
------------- ---------------
1,855 1,992
------------- ---------------
Shareholders' funds 786 804
Minority interests - 19
Net borrowings 1,069 1,169
------------- ---------------
1,855 1,992
------------- ---------------
Return on invested capital (%) ** 15 13
Interest cover (times) *** 6.0 4.7
Gearing (%) 136 142
* Restated for UITF38 "Accounting for ESOP Trusts"
** Underlying operating profit divided by the average of opening and
closing of each of net borrowings, shareholders' funds and minority
interests after adding back retirement benefits (net of deferred tax)
and goodwill previously written off against reserves.
*** Based on underlying operating profit
Net borrowings have reduced by GBP 100m since 31 December 2003 to GBP 1,069m. This reflects strong business cash flows and favourable currency movements, offset by expenditure on acquisitions. Shareholders' funds have reduced by GBP 18m, due mainly to unfavourable changes in actuarial values of retirement benefits discussed above. The return on invested capital continues to exceed the 12% per annum weighted average cost of capital Weighted average cost of capital (WACC) Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity that the Group is currently using internally. In April 2004 a GBP 875m five-year revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility was signed, replacing a EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1.4bn facility that was due to mature in April 2005. The new facility reduced borrowing margins and enhanced the maturity profile of the Group's debt. INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ) The Group will be adopting IFRS with effect from 1 January 2005 and consequently will restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its UK GAAP UK GAAP United Kingdom Generally Accepted Accounting Principles financial statements for 2004. The detailed programme to effect a smooth transition to IFRS is well advanced. It has addressed not only the financial effect but also the impact on systems, people and processes. A detailed presentation on the impact of IFRS on the Group was made to institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. and financial analysts in December 2004. A copy of this presentation is available on the website, www.rexam.com. The most significant factors impacting the Group's financial statements include the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of goodwill amortisation, deferred tax asset recognition, share based payment, the valuation of retirement benefits, the treatment of convertible preference shares and the valuation of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments. The underlying profit and earnings per share for 2004 under IFRS are not expected to be significantly different to those reported under UK GAAP. The Group expects to publish its 2004 half year and full year results restated under IFRS early in the second quarter of 2005. SUMMARY The 26% increase in underlying profit before tax and 13% increase in underlying EPS, supported by a 7% increase in free cash flow, demonstrates Rexam's ability to continue delivering improved results. The integration of Latasa, as well as the other acquisitions made in the year, is progressing well and the improvement in Plastic Packaging margins reflects the increased focus on the more value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. businesses in this segment. Lars Emilson Chief Executive Graham Chipchase Finance Director 25 February 2005 APPENDIX HISTORIC PERFORMANCE The following table shows the Group's historic performance before goodwill amortisation and exceptional items.
2004 2003* 2002 2001
------ ------ ------ ------
Sales including associates (GBP m) 3,145 3,186 3,160 3,488
Underlying operating profit (GBP m) 391 344 320 333
Underlying profit before tax (GBP m) 300 239 226 218
Underlying earnings per share (p) 38.2 33.8 34.3 33.8**
* Restated for UITF38 "Accounting for ESOP Trusts"
** Restated for the 2003 Rights Issue
Much of the increased profitability has resulted from acquisitions, principally PLM, ANC and Latasa, price rises in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. beverage can business and from efficiency programmes that have been implemented throughout the Sectors. Over the past five years the Group has achieved strong cash flows, reduced net borrowings and has returned substantial funds to shareholders by way of dividends.
Free Ordinary Business Dividends
cash flow dividends cash per share
GBP m GBP m flow* pence
GBP m
----------- --------- -------- ---------
2000 105 (59) 46 14.1
2001 200 (60) 140 14.9
2002 176 (70) 106 15.6
2003** 212 (76) 136 16.4
2004 226 (92) 134 17.25
----------- --------- --------
919 (357) 562
----------- --------- --------
* Before acquisitions and disposals
** Restated for UITF38 "Accounting for ESOP Trusts"
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
Underlying Goodwill Exceptional Total
business amortisation items statutory
performance GBP m (Note 4) GBP m
GBP m GBP m
----------- ------------- ----------- ---------
Turnover (Note 2)
Continuing operations
excluding
acquisitions 3,106 - - 3,106
Acquisitions 39 - - 39
----------- ------------- ----------- ---------
Turnover including
associates 3,145 - - 3,145
Turnover of associates
- continuing
operations (64) - - (64)
----------- ------------- ----------- ---------
Group turnover 3,081 - - 3,081
Operating expenses
----------- ------------- ----------- ---------
Continuing operations (2,662) (75) (16) (2,753)
Acquisitions (34) - - (34)
----------- ------------- ----------- ---------
(2,696) (75) (16) (2,787)
Operating profit (Note
2)
----------- ------------- ----------- ---------
Continuing operations
excluding
acquisitions 380 (75) (16) 289
Acquisitions 5 - - 5
----------- ------------- ----------- ---------
Operating profit
before share of
profits of associates 385 (75) (16) 294
Share of profits of
associates 6 - - 6
----------- ------------- ----------- ---------
Operating profit
including share of
profits of associates 391 (75) (16) 300
Disposal of businesses - - (14) (14)
----------- ------------- ----------- ---------
Profit on ordinary
activities before
interest and
retirement benefits
net finance cost 391 (75) (30) 286
Interest (65) - - (65)
----------- ------------- ----------- ---------
Profit on ordinary
activities before
retirement benefits
net finance cost 326 (75) (30) 221
Retirement benefits
net finance cost
(Note 3) (26) - - (26)
----------- ------------- ----------- ---------
Profit on ordinary
activities before tax 300 (75) (30) 195
Tax on ordinary
activities (95) - 15 (80)
Tax on retirement
benefits net finance
cost and retirement
benefits exceptional
item 10 - (4) 6
----------- ------------- ----------- ---------
Profit on ordinary
activities after tax 215 (75) (19) 121
----------- ------------- -----------
Equity minority
interests (1)
---------
Profit for the
financial year 120
Preference dividends
on non equity shares (5)
---------
Profit attributable to
ordinary shareholders 115
Ordinary dividends on
equity shares (95)
---------
Retained profit for
the financial year 20
---------
Earnings per ordinary
share (pence) (Note
6)
Basic 21.0
Diluted 20.8
Underlying:
- Before retirement
benefits net finance
cost 41.1
- Including retirement
benefits net finance
cost 38.2
Dividends per ordinary
share (pence) (Note
5) 17.25
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2003 - Restated
Underlying Goodwill Exceptional Total
business amortisation items statutory
performance GBP m (Note 4) GBP m
GBP m GBP m
----------- ------------- ----------- ---------
Turnover (Note 2)
Continuing operations 3,052 - - 3,052
Discontinued
operations 134 - - 134
----------- ------------- ----------- ---------
Turnover including
associates 3,186 - - 3,186
Turnover of associates
- continuing
operations (74) - - (74)
----------- ------------- ----------- ---------
Group turnover 3,112 - - 3,112
Operating expenses
----------- ------------- ----------- ---------
Continuing operations (2,652) (70) (59) (2,781)
Discontinued
operations (122) - - (122)
----------- ------------- ----------- ---------
(2,774) (70) (59) (2,903)
Operating profit (Note
2)
----------- ------------- ----------- ---------
Continuing operations 326 (70) (59) 197
Discontinued
operations 12 - - 12
----------- ------------- ----------- ---------
Operating profit
before share of
profits of associates 338 (70) (59) 209
Share of profits of
associates 6 - - 6
----------- ------------- ----------- ---------
Operating profit
including share of
profits of associates 344 (70) (59) 215
Disposal of businesses - - (107) (107)
----------- ------------- ----------- ---------
Profit on ordinary
activities before
interest and
retirement benefits
net finance cost 344 (70) (166) 108
Interest (73) - - (73)
----------- ------------- ----------- ---------
Profit on ordinary
activities before
retirement benefits
net finance cost 271 (70) (166) 35
Retirement benefits
net finance cost (32) - - (32)
----------- ------------- ----------- ---------
Profit on ordinary
activities before tax 239 (70) (166) 3
Tax on ordinary
activities (76) - 21 (55)
Tax on retirement
benefits net finance
cost 11 - - 11
----------- ------------- ----------- ---------
Profit/(loss) on
ordinary activities
after tax 174 (70) (145) (41)
----------- ------------- -----------
Equity minority
interests (1)
---------
Loss for the financial
year (42)
Preference dividends
on non equity shares (5)
---------
Loss attributable to
ordinary shareholders (47)
Ordinary dividends on
equity shares (84)
---------
Retained loss for the
financial year (131)
---------
Earnings/(loss)
per ordinary share
(pence) (Note 6)
Basic (9.5)
Diluted (9.5)
Underlying:
- Before retirement
benefits net finance
cost 38.1
- Including retirement
benefits net finance
cost 33.8
Dividends per ordinary
share (pence) (Note
5) 16.4
CONSOLIDATED BALANCE SHEET
As at 31 December
2004 2003
GBP m Restated
GBP m
------- --------
Fixed assets
Intangible assets 1,185 1,195
Tangible assets 1,196 1,262
Investments in associates and joint ventures 28 31
Other investments 30 33
------- --------
2,439 2,521
------- --------
Current assets
Stocks 353 339
Debtors receivable within one year 448 441
Debtors receivable after more than one year 65 99
Marketable securities and money market deposits 65 29
Cash at bank and in hand 29 41
------- --------
960 949
------- --------
Creditors: amounts falling due within one year
Borrowings (136) (218)
Other creditors (668) (694)
------- --------
(804) (912)
------- --------
Net current assets 156 37
------- --------
Total assets less current liabilities 2,595 2,558
------- --------
Creditors: amounts falling due after more than one
year
Borrowings (1,027) (1,021)
Other creditors (140) (108)
------- --------
(1,167) (1,129)
------- --------
Provisions for liabilities and charges (110) (110)
------- --------
Net assets before retirement benefits 1,318 1,319
Retirement benefits (net of deferred tax) (Note 3) (532) (496)
------- --------
Net assets including retirement benefits 786 823
------- --------
Capital and reserves
Ordinary equity called up share capital 354 352
Non equity called up share capital 89 89
Share premium account 741 735
Capital redemption reserve 279 279
Profit and loss reserve (677) (651)
------- --------
Shareholders' funds 786 804
Equity minority interests - 19
------- --------
Total capital and reserves 786 823
------- --------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December
2004 2003
GBP m Restated
GBP m
---------- --------
Cash flow from operating activities 519 491
Dividends received from associates - 2
Returns on investments and servicing of finance:
---------- --------
Interest received 10 11
Interest paid (66) (76)
Interest element of finance leases (3) (3)
Dividends paid to non equity shareholders (5) (5)
---------- --------
(64) (73)
Tax paid (54) (39)
Capital expenditure and financial investment:
---------- --------
Purchase of tangible fixed assets (183) (165)
Purchase of fixed asset investments - (10)
Sale of tangible fixed assets 3 2
Sale of properties surplus to requirements 5 4
---------- --------
(175) (169)
Acquisitions and disposals:
---------- --------
Purchase of businesses (55) (252)
Sale of businesses 10 155
Investment in joint venture (3) -
Loan to associate - 1
---------- --------
(48) (96)
Equity dividends paid to ordinary shareholders (92) (76)
---------- --------
Cash flow before management of liquid resources
and financing 86 40
Management of liquid resources:
(Purchase)/repayment of marketable securities and
money market deposits (34) 13
Financing:
---------- --------
Issue of ordinary equity share capital 8 314
Expenses on issue of ordinary equity share
capital - (7)
Purchase of Rexam PLC shares by ESOP trust - (3)
(Repayment)/issue of medium term notes (29) 172
Repayment of loans (44) (532)
Capital element of finance leases (1) (10)
---------- --------
(66) (66)
---------- --------
Decrease in cash (14) (13)
---------- --------
RECONCILIATION OF OPERATING PROFIT TO CASH FLOW FROM OPERATING
ACTIVITIES
For the year ended 31 December
2004 2003 2003 2003
Continuing Continuing Discontinued Total
operations operations operations Restated
GBP m Restated GBP m GBP m
GBP m
---------- ---------- ------------ --------
Operating profit before
share of profits of
associates 294 197 12 209
Depreciation 178 165 6 171
Impairment 6 50 - 50
Loss on disposal of
tangible fixed assets 2 6 - 6
Goodwill amortisation 75 70 - 70
Movement in provisions (7) 8 - 8
Movement in retirement
benefits (27) (8) - (8)
Non cash element of
incentive schemes 6 11 - 11
Income from fixed asset
investment (1) - - -
Movement in working
capital:
---------- ---------- ------------ --------
Stocks (24) 16 (2) 14
Debtors 9 (24) (3) (27)
Securitised debtors - (13) - (13)
Creditors 8 3 (3) -
---------- ---------- ------------ --------
(7) (18) (8) (26)
---------- ---------- ------------ --------
Cash flow from operating
activities 519 481 10 491
---------- ---------- ------------ --------
ANALYSIS OF CHANGES IN NET BORROWINGS
2004 2003
GBP m GBP m
------- -------
At 1 January (1,169) (1,355)
Currency fluctuations 46 (15)
Net borrowings acquired/disposed (39) (140)
Cash flow movements 94 344
Amortisation of discount and financing fees (1) (3)
------- -------
At 31 December (1,069) (1,169)
------- -------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December
2004 2003
GBP m Restated
GBP m
--------- --------
Profit/(loss) for the financial year 120 (42)
Currency fluctuations:
--------- --------
Intangible fixed assets (45) (11)
Tangible fixed assets (35) 6
Retirement benefits (net of deferred tax) 23 23
Net borrowings 46 (15)
Other net tangible assets 4 (1)
Current tax on currency fluctuations (1) 3
--------- --------
(8) 5
Changes in actuarial values of retirement benefits
(net of tax) (61) (79)
Changes in market value of fixed asset investment 1 (4)
--------- --------
Total recognised gains and losses for the financial
year 52 (120)
--------- --------
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December
2004 2003
GBP m Restated
GBP m
---------- ----------
At 1 January as originally reported 803 544
Prior year adjustment 1 (11)
---------- ----------
At 1 January as restated 804 533
---------- ----------
Profit/(loss) for the financial year 120 (42)
Dividends (100) (89)
---------- ----------
Retained profit/(loss) for the financial year 20 (131)
Currency fluctuations (net of tax) (8) 5
Share option schemes 5 12
Changes in actuarial values of retirement
benefits (net of tax) (61) (79)
Changes in market value of fixed asset
investment 1 (4)
Transfer on conversion of an associate to a
subsidiary (2) -
Issue of ordinary share capital for share option
schemes 8 5
Issue of ordinary share capital by placing - 84
Issue of ordinary share capital by rights issue - 218
Goodwill in reserves written off 19 161
---------- ----------
At 31 December 786 804
---------- ----------
NOTES 1 Basis of preparation The Accounts are prepared under the historical cost convention and in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Companies Act 1985 and applicable accounting standards. In preparing the Accounts, the following restatements have been made to the corresponding amounts: a To reflect the movement from "Plastic Packaging" to "Disposals and businesses for sale" of the European thin wall container businesses sold during the year. b To reflect the adoption of UITF UITF Unit Investment Trust Fund UITF Urgent Issue Task Force 38 "Accounting for ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). Trusts" as described below. c To reflect an GBP 11m reduction in interest receivable debtors and interest payable creditors on interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. previously reported on a gross basis. In accordance with UITF38 "Accounting for ESOP Trusts", own shares held by the Rexam Employee Share Trust are treated as a reduction in shareholders' funds. They are held at cost until disposed. Any profit or loss on disposal is treated as a movement in reserves. A charge is recognised in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: profit and loss account for awards of share options over the period to which the performance criteria criteria (krītēr´ē  ),n. relates on a straight line basis. The charge is determined as the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. of the option, being the difference between its fair value at the date of grant and the amount that the employee is required to pay for the shares. Inland Revenue Inland Revenue Noun (in Britain and New Zealand) a government department that collects major direct taxes, such as income tax Noun 1. approved Save As You Earn schemes are exempt from the requirements of UITF17 (revised) "Employee Share Schemes". As a result of implementation of UITF38, 2003 has been restated. The effect of this restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. on the consolidated profit and net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. for 2003 is set out below:
GBP m
--------
Profit before tax (2)
Tax 2
--------
Profit after tax -
--------
Net assets 1
--------
The impact on profit in 2004 would not have been material if UITF38 had not been adopted. The consolidated profit and loss account and consolidated cash flow statement for the year ended 31 December 2004 and the consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. at 31 December 2004 do not constitute statutory accounts as defined by section 240 of the Companies Act 1985. They are extracted from the full statutory accounts for the year ended 31 December 2004 which have been approved by a duly constituted Committee of the Board of Directors on 25 February 2005, but which have not been delivered to the Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. . The report of the auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together on those accounts is unqualified and does not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 2 Segment analysis
Sales Under- Under- Profit Under- Under-
including lying lying before lying lying
asso- operating return interest net net
ciates profit on and assets assets
GBP m GBP m sales retire- before GBP m
% ment goodwill
benefits GBP m
net
finance
cost
GBP m
--------- --------- ------ --------- --------- -------
2004:
Beverage
Packaging 2,597 318 12.2 250 1,091 2,128
Plastic
Packaging 527 71 13.5 48 243 391
--------- --------- ------ --------- --------- -------
Consumer
Packaging 3,124 389 12.5 298 1,334 2,519
Retirement
benefits, tax
and dividends - - - - (669) (669)
--------- --------- ------ --------- --------- -------
Ongoing
operations 3,124 389 12.5 298 665 1,850
Disposals and
businesses for
sale 21 2 9.5 (10) 5 5
--------- --------- ------ --------- --------- -------
Continuing
operations 3,145 391 12.4 288 670 1,855
Discontinued
operations - - - (2) - -
--------- --------- ------ --------- --------- -------
3,145 391 12.4 286 670 1,855
--------- --------- ------ --------- --------- -------
United Kingdom
and Ireland 286 45 15.7 21 154 353
Continental
Europe 1,391 140 10.1 105 760 1,224
The Americas 1,365 199 14.6 157 370 855
Rest of the
world 103 7 6.8 5 55 92
Retirement
benefits, tax
and dividends - - - - (669) (669)
--------- --------- ------ --------- --------- -------
Continuing
operations 3,145 391 12.4 288 670 1,855
Discontinued
operations - - - (2) - -
--------- --------- ------ --------- --------- -------
3,145 391 12.4 286 670 1,855
--------- --------- ------ --------- --------- -------
2003 Restated:
Beverage
Packaging 2,503 275 11.0 165 1,133 2,177
Plastic
Packaging 496 54 10.9 35 243 394
--------- --------- ------ --------- --------- -------
Consumer
Packaging 2,999 329 11.0 200 1,376 2,571
Retirement
benefits, tax
and dividends - - - - (607) (607)
--------- --------- ------ --------- --------- -------
Ongoing
operations 2,999 329 11.0 200 769 1,964
Disposals and
businesses for
sale 53 3 5.7 3 28 28
--------- --------- ------ --------- --------- -------
Continuing
operations 3,052 332 10.9 203 797 1,992
Discontinued
operations 134 12 9.0 (95) - -
--------- --------- ------ --------- --------- -------
3,186 344 10.8 108 797 1,992
--------- --------- ------ --------- --------- -------
United Kingdom
and Ireland 315 35 11.1 22 150 362
Continental
Europe 1,385 154 11.1 77 704 1,186
The Americas 1,243 135 10.9 99 487 948
Rest of the
world 109 8 7.3 5 63 103
Retirement
benefits, tax
and dividends - - - - (607) (607)
--------- --------- ------ --------- --------- -------
Continuing
operations 3,052 332 10.9 203 797 1,992
Discontinued
operations 134 12 9.0 (95) - -
--------- --------- ------ --------- --------- -------
3,186 344 10.8 108 797 1,992
--------- --------- ------ --------- --------- -------
Underlying operating profit comprises operating profit, including share of profits of associates, before goodwill amortisation and exceptional items. Underlying net assets comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise net assets in the consolidated balance sheet, excluding net borrowings of GBP 1,069m (2003: GBP 1,169m). Underlying return on sales is based upon underlying operating profit divided by sales including associates. There is no significant trading between business segments or geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge regions. Interest and other finance costs and net borrowings are managed centrally and are not directly attributable to individual business segments or regions. Of the total sales of associates, GBP 48m relates to Beverage Packaging (2003: GBP 58m) and GBP 16m relates to disposals and businesses for sale (2003: GBP 16m). 3 Summary of movements in retirement benefits
Defined Other Total Retiree Gross Deferred Net
benefit pension pension medical retire- tax retire-
pension schemes schemes GBP m ment GBP m ment
schemes GBP m GBP m bene- bene-
GBP m fits fits
GBP m GBP m
------- ------- ------- ------- ------- -------- -------
At 1 January
2004 (383) (18) (401) (293) (694) 207 (487)
Currency
fluctu-
ations 12 - 12 24 36 (13) 23
Acquisition
of
businesses - (1) (1) - (1) - (1)
------- ------- ------- ------- ------- -------- -------
Current
service cost (25) (3) (28) (3) (31) 9 (22)
Exceptional
item: past
service
credit - - - 11 11 (4) 7
------- ------- ------- ------- ------- -------- -------
Total
operating
profit
charge (25) (3) (28) 8 (20) 5 (15)
Net finance
cost (11) - (11) (15) (26) 10 (16)
Actuarial
changes (77) - (77) (13) (90) 29 (61)
Cash contri-
butions 23 4 27 20 47 (15) 32
Transfers 2 (1) 1 - 1 - 1
------- ------- ------- ------- ------- -------- -------
At 31
December
2004 (459) (19) (478) (269) (747) 223 (524)
------- ------- ------- ------- ------- -------- -------
Debtors
receivable
after one
year - - - 8 8 - 8
Retirement
benefits (459) (19) (478) (277) (755) 223 (532)
------- ------- ------- ------- ------- -------- -------
At 31
December
2004 (459) (19) (478) (269) (747) 223 (524)
------- ------- ------- ------- ------- -------- -------
Debtors
receivable
after one
year - - - 9 9 - 9
Retirement
benefits (383) (18) (401) (302) (703) 207 (496)
------- ------- ------- ------- ------- -------- -------
At 31
December
2003 (383) (18) (401) (293) (694) 207 (487)
------- ------- ------- ------- ------- -------- -------
The exceptional past service credit in 2004 relates to negotiated revisions to the Group's obligations in respect of retiree medical benefits. Rexam pays the retiree medical costs on behalf of certain businesses disposed in the prior year. These costs are subsequently reimbursed by the disposed businesses. The GBP 8m (2003: GBP 9m) included in debtors receivable after more than one year represents the actuarial value of the total amount that is reimbursable re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. . 4 Exceptional items
2004 2003
GBP m GBP m
--------- ---------
Exceptional items included in operating profit:
Retiree medical (Note 3) 11 -
Restructuring costs (18) (15)
Impairment (5) (50)
Other (4) 6
--------- ---------
(16) (59)
--------- ---------
Disposal of businesses:
(Loss)/profit before attributable goodwill written
off (3) 55
Attributable capitalised goodwill written off - (1)
Attributable goodwill in reserves written off (11) (161)
--------- ---------
(14) (107)
--------- ---------
Tax arising on exceptional items:
Retiree medical (Note 3) (4) -
Restructuring and other items 6 14
Disposal of businesses 9 7
--------- ---------
11 21
--------- ---------
Total exceptional items (19) (145)
--------- ---------
Of the total exceptional items, discontinued
operations comprise the following:
Disposals of businesses (2) (107)
Tax arising on exceptional items 8 7
--------- ---------
6 (100)
--------- ---------
5 Ordinary dividends on equity shares
2004 2003
GBP m GBP m
--------- --------
2004 proposed final dividend of 10.09p payable 1
June 2005 55 -
2004 interim dividend of 7.16p paid 3 November 2004 40 -
2003 final dividend of 9.58p paid 1 June 2004 - 52
2003 interim dividend of 6.82p paid 4 November 2003 - 33
2002 final dividend over accrual - (1)
--------- --------
95 84
--------- --------
6 Earnings/(loss) per ordinary share
2004 2003
pence pence
-------- ---------
Basic earnings/(loss) per ordinary share 21.0 (9.5)
Diluted earnings/(loss) per ordinary share * 20.8 (9.5)
-------- ---------
Underlying earnings per ordinary share:
Before retirement benefits net finance cost,
goodwill amortisation
and exceptional items 41.1 38.1
Before goodwill amortisation and exceptional items 38.2 33.8
-------- ---------
* There was no dilution arising from the conversion of preference
shares or the exercise of outstanding share options in 2003.
Underlying earnings per share is included on the face of the profit and loss account as it is felt that by adjusting basic earnings per share for exceptional items and goodwill amortisation, underlying earnings per share provides a better indication of the Group's performance.
2004 2003
GBP m GBP m
-------- --------
Profit on ordinary activities after tax before
retirement benefits net finance cost, goodwill
amortisation and exceptional items 231 195
Equity minority interests (1) (1)
Preference dividends on non equity shares (5) (5)
-------- --------
Profit attributable to ordinary shareholders before
retirement benefits net finance cost, goodwill
amortisation and exceptional items 225 189
Retirement benefits net finance cost (16) (21)
-------- --------
Profit attributable to ordinary shareholders before
goodwill amortisation and exceptional items 209 168
Goodwill amortisation (75) (70)
Exceptional items (19) (145)
-------- --------
Profit/(loss) attributable to ordinary shareholders 115 (47)
Dilution on conversion of preference shares 5 5
-------- --------
Profit/(loss) on a diluted basis 120 (42)
-------- --------
2004 2003
Number Number
millions millions
-------- --------
Average number of shares:
Average number of shares in issue for the year 546.8 496.5
Dilution on conversion of preference shares 24.4 24.4
Dilution on exercise of outstanding share options 5.0 7.6
-------- --------
On a diluted basis 576.2 528.5
-------- --------
Shares owned by the Rexam Employee Share Trust have been excluded from
the average number of shares in the basic, diluted and underlying
earnings per share calculations.
7 Exchange rates The principal exchange rates against sterling were:
2004 2003
--------- ---------
Average:
United States dollar 1.83 1.63
Euro 1.47 1.45
--------- ---------
Closing:
United States dollar 1.93 1.77
Euro 1.42 1.42
--------- ---------
8 A copy of the information to be provided to financial analysts is available on request from the Company Secretary, Rexam PLC, 4 Millbank For other places called Millbank, see Millbank (disambiguation) Coordinates: Millbank is an area of central London in the City of Westminster. Millbank is located by the Thames, east of Pimlico and south of Westminster. , London SW1P 3XR. |
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