Rexam Delivers Record Profits; Part 2 of 2.Business Editors LONDON--(BUSINESS WIRE)--March 6, 2003 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): 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. A HISTORIC PERFORMANCE The following table shows the Group's historic performance before goodwill amortization and exceptional items.
2002 2001 2000 1999 1998
------ ------ ------ ------ ------
Sales (GBPm) 3,160 3,488 2,784 2,389 1,923
Operating profit(a)(GBPm) 357 333 278 236 195
Profit before tax(a)(GBPm) 274 218 202 196 186
Basic earnings per share(a)(p) 44.1 36.1 (b) 33.9 32.2 25.1
(a) Before goodwill amortization and exceptional items
(b) Restated for FRS 19 "Deferred Tax"
Much of the increased profitability has resulted from acquisitions, principally 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 and 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 from efficiency programs that have been implemented throughout the Sectors. Over the past five years the Group has achieved strong cash flows and has returned substantial funds to shareholders by way of dividends and, in 1998, by a 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. 255m return of capital.
Free Ordinary Business Dividends
cash flow dividends cash per share
GBPm GBPm flow(a) pence
GBPm
---------- --------- ------------------------
1998 92 (64)(b) 28 14.1 (b)
1999 110 (56)(b) 54 14.8
2000 105 (59) 46 15.1
2001 200 (60) 140 15.9
2002 177 (70) 107 16.7
---------- --------- ----------
684 (309) 375
---------- --------- ----------
(a) Before acquisitions and disposals
(b) Adjusted for delayed dividend payments
APPENDIX B RETIREMENT BENEFITS Economics Funded defined benefit pension schemes Historically these schemes were valued by their actuaries on a "smoothed" basis using the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. discounted value of dividend income as the principal valuation technique. Therefore, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. movements in the market value of the assets and liabilities had relatively little impact on the Group's Accounts. Since 2000, when the Rexam UK schemes last received formal triennial tri·en·ni·al adj. 1. Occurring every third year. 2. Lasting three years. n. 1. A third anniversary. 2. A ceremony or celebration occurring every three years. valuations, the "market value" method has been used to assess the assets and liabilities of the schemes rather than the smoothed method. Market value is now the preferred approach recommended by the actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin and accounting professions, albeit that this method can, and will, produce volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. results in the short term. The table below shows recent valuations for all of the Group's funded defined benefit pension schemes valued on the market value method.
Triennial
valuation
2000 2001 2002
GBPm GBPm GBPm
------------ ----------- -----------
Assets 2,759 2,442 2,093
Liabilities (2,243) (2,341) (2,286)
------------ ----------- -----------
Surplus/(deficit) 516 101 (193)
------------ ----------- -----------
The Board is conscious of the risks involved in managing these long-term schemes, and in co-operation with UK Trustees and the US Pensions and Benefits Committee, the overall asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. has been modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. . At December December: see month. 2002, equities and property represented 41% of the funds while the remaining 59% was made up of bonds and cash. This allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as is driven by the maturity of the schemes, which have less than 10% of the membership in active service. Bearing in mind the recent volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in equity markets, these are reasonably funded schemes, and when viewed from a long term prospective do not represent a significant funding risk Funding risk The risk associated with the impact on a project's cash flow from higher funding costs or lack of availability of funds. See: interest rate risk. to the Group. Nonetheless, the deficit of GBP193m, or 8% of the schemes' liabilities based upon market values, is unwelcome. However, it does not compromise the ability to pay benefits when they fall due. For a number of years the Group has been enjoying a partial cash pension contribution holiday reflecting the benefit of sizeable surpluses then existing. However, given current investment conditions, the Board considers it prudent to recommence Re`com`mence´ v. i. 1. To commence or begin again. 2. To begin anew to be; to act again as. He seems desirous enough of recommencing courtier. - Johnson. v. t. 1. To commence again or anew. payment of contributions to most of its funds. The cash position is set out below:
2003
2001 2002 estimate
GBPm GBPm GBPm
------- ------ --------
Regular or service cost of providing pensions
24 22 24
Cash contributions to the funds (7) (5) (22)
------- ------ --------
Pension contribution "holiday" 17 17 2
------- ------ --------
Unfunded defined benefit pension schemes In common with most companies operating in 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). , Rexam is
responsible for a number of unfunded defined benefit pension schemes and
promises.The liabilities have increased as a result of the acquisitions in 2002 as follows:
2001 2002
GBPm GBPm
------- -------
Liabilities - existing businesses 31 33
Liabilities - acquisitions - 11
------- -------
Total liabilities 31 44
------- -------
The annual cash payments to pensioners are expected to be about GBP3m in 2003 compared with a service cost of GBP1m. Unfunded retiree healthcare benefit schemes The Group provides, on an unfunded basis, healthcare benefits to employees in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. at retirement. Following the acquisition of ANC in 2000, Rexam also became responsible for the healthcare benefits of about 8,000 former employees of that company. The actuarially assessed value of the long-term liabilities Long-Term Liabilities Recorded on the balance sheet, a company's liabilities for leases, bond repayments and other items due in more than one year. Notes: A company's long-term liabilities are accounted for by its debt obligations to other parties which last longer than for all employees is set out below.
Triennial
valuation
2000 2001 2002
--------- ------ ------
Liabilities (GBPm) 270 253 301
The amount of the liabilities decreased in 2001 following benefit changes to the schemes that were implemented following the acquisition of ANC. Although benefit entitlements have not changed materially since then, the actuarially assessed value of the liabilities has increased at the end of 2002 for two reasons. Firstly, the reduction of long-term interest rates has increased the notional value Notional Value The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets because in them a very little amount of invested money can control a large position (have a large consequence for the trader). of those liabilities. Secondly, concerns about medical cost inflation in the United States suggest that the long-term cost of providing healthcare benefits is likely to increase. The Group is currently examining how best these long-term liabilities can be managed to ensure that no further unwelcome increases occur in the future. The regular cost and cash flows connected with retiree healthcare benefit schemes are as follows:
2003
2001 2002 estimate
GBPm GBPm GBPm
---- ---- --------
Regular or service cost of providing benefits
2 3 3
Benefit payments (23) (23) (25)
Accounting - 2002 For many years Rexam has used accounting standard 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 for reporting the impact of retirement benefits in its Accounts. 2002 will be the last year on which this standard will be used by Rexam. In 2003 Rexam intends to adopt Financial Reporting Standard 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, which will have a significant effect on both the profit and loss account and on the balance sheet. Using SSAP 24, the regular cost (the consistent ongoing cost of providing retirement benefits arising as a result of the actuarial method used) is charged to the relevant business segments as a normal operating cost. The notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. interest on retirement benefit assets and liabilities is credited or charged to 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. together with the amortization of any surpluses and deficits over the service lives of current employees. The net credit from interest and amortization of variations for 2002 was GBP37m (2001: GBP33m). The basis for these calculations is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from the last formal valuations undertaken in 2000. For the last two years the net credit has been shown as a separate item in the Segmental segmental /seg·men·tal/ (seg-men´t'l) 1. pertaining to or forming a segment or a product of division, especially into serially arranged or nearly equal parts. 2. undergoing segmentation. Analysis. This method of presentation was used to assist readers of the Accounts by ensuring that the performance of the packaging operations was not unduly flattered by the credit arising on the Group's pension funds. In presenting the 2002 Accounts the directors have chosen to show the retirement benefits credit in a separate column on the face of the profit and loss account. The Board believes that this form of presentation will assist shareholders and other readers in appreciating the real performance of the Consumer Packaging operations unsullied by the complexities of accounting for the retirement benefit schemes. The following table shows the impact of the accounting changes on the profit and loss account for 2002 as presented under the present accounting standard, SSAP 24 and under the new standard, FRS17.
2002 under SSAP24 2002 under FRS17
--------------------------- ---------------------------
Retirement Retirement
Operations benefits Total Operations benefits Total
GBPm GBPm GBPm GBPm GBPm GBPm
Operating
profit 320 37 357 320 - 320
Interest (83) - (83) (83) (9) (92)
---------- ---------- ----- ---------- ---------- -----
Profit before
tax 237 37 274 237 (9) 228
---------- ---------- ----- ---------- ---------- -----
Accounting - 2003 It is the Board's current intention to adopt FRS17 in 2003, although the Accounting Standards Board The role of the Accounting Standards Board (ASB) is to issue accounting standards in the United Kingdom. It is recognised for that purpose under the Companies Act 1985. It took over the task of setting accounting standards from the Accounting Standards Committee (ASC) in 1990. has granted some flexibility concerning its implementation having regard for its probable PROBABLE. That which has the appearance of truth; that which appears to be founded in reason. replacement by International Accounting Standard, IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 19 in 2005. The Rexam profit and loss account will change in two ways when FRS17 is adopted. The credit to operating profit will disappear, to be replaced by a new charge or credit to interest. Rexam's actuaries calculate, based upon market values of the assets and liabilities of the various schemes at December 31, 2002, that the interest charge for 2003 under FRS17 will be GBP32m. This compares with a FRS17 charge of GBP9m for 2002. The increase of GBP23m between 2002 and 2003 is essentially due to weak global equity markets, which reduced the value of the assets, and the reduction of interest rates, which increased the value of the liabilities. Going forward shareholders may expect significant year on year volatility in this annual charge or credit. There will also be significant changes to the balance sheet in 2003 when FRS17 is adopted. The impact of retirement benefits, net of deferred tax, will result in a reduction of Group equity of GBP424m as shown below. This will be reflected as a prior year adjustment in the 2003 Accounts.
2002 Restatement 2002
reported for FRS17 restated
GBPm GBPm GBPm
-------- ----------- --------
Funded defined benefit pensions 370 (563) (193)
Unfunded defined benefit pensions (47) 3 (44)
Unfunded retiree healthcare (242) (59) (301)
-------- ----------- --------
81 (619) (538)
Attributable deferred tax (26) 195 169
-------- ----------- --------
Impact on group equity 55 (424) (369)
-------- ----------- --------
APPENDIX C FINANCING ITEM - 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). The recent success of the 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. plant in Russia has required Rexam to settle a financing item with the bank syndicates that provided the original loan funding. PLM, acquired by Rexam in 1999, opened a two line beverage can plant near Moscow Moscow, city, Russia Moscow (mŏs`kou, –kō), Rus. Moskva, city (1991 est. pop. 8,802,000), capital of Russia and of Moscow region and the administrative center of the Central district, W central European Russia, on the in the autumn Autumn Autumnus personification; portrayed as mature and manly. [Rom. Myth.: LLEI, I: 322] Bacchus god of this season. [Rom. Myth.: Hall, 130] Carpo goddess of autumn and corn season. [Gk. Myth. of 1998 following substantial growth in the Russian Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. market in the 1990's. The demand had previously been satisfied by imports from Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). . The original investment in the Russian venture was about US$145m. It 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 US$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 devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the rouble ROUBLE. The name of a coin. The rouble of Russia, as money of account, is deemed and taken at the custom-house, to be of the value of seventy-five cents. Act March 3, 1843. 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 insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet and there was an urgent need for it to be refinanced. The Swedish company holding the investment in Russia was compulsorily com·pul·so·ry adj. 1. Obligatory; required: a compulsory examination. 2. Employing or exerting compulsion; coercive. n. pl. 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 in 2000 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, the GBP26m arising from the initial settlement with the bank syndicates was credited 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 dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). as a contingent liability Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. . However, in 2002, as discussed above, the whole outlook for the business dramatically improved. Under the terms of the agreement the amount due was not payable until 2005 or later but Rexam had the right to make an early settlement. As the eventual cost of settlement escalated with time, Rexam opted to settle this liability for GBP35m in September September: see month. 2002. Under UK accounting practice it is not 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 now well positioned for this fast growing market.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2002
Opera- Opera-
tions tions
before Retire- after Excep-
retirement ment retirement Goodwill tional To-
benefits benefits benefits amorti- items tal
credit credit credit zation (Note GBPm
GBPm GBPm GBPm GBPm 3)
GBPm
---------------------------------------------------
Turnover (Note 2)
Continuing opera-
tions 3,072 - 3,072 - - 3,072
Discontinued
operations 88 - 88 - - 88
---------------------------------------------------
3,160 - 3,160 - - 3,160
Turnover of
associates (74) - (74) - - (74)
---------------------------------------------------
3,086 - 3,086 - - 3,086
Operating expenses
---------------------------------------------------
Continuing opera-
tions (2,682) 37 (2,645) (68) - (2,713)
Discontinued
operations (84) - (84) - - (84)
---------------------------------------------------
(2,766) 37 (2,729) (68) - (2,797)
Operating profit
(Note 2)
---------------------------------------------------
Continuing opera-
tions 318 37 355 (68) - 287
Discontinued
operations 2 - 2 - - 2
---------------------------------------------------
320 37 357 (68) - 289
Loss on fixed
assets - - - - (2) (2)
Disposals of
businesses - - - - (208) (208)
---------------------------------------------------
Profit on
ordinary
activities
before
interest 320 37 357 (68) (210) 79
Interest (83) - (83) - - (83)
Financing item - - - - (35) (35)
---------------------------------------------------
Profit/(loss) on
ordinary
activities
before tax 237 37 274 (68) (245) (39)
Tax on ordinary
activities (67) (11) (78) - (2) (80)
---------------------------------------------------
Profit/(loss)
on ordinary
activities
after tax 170 26 196 (68) (247) (119)
------------------------------------------
Equity minority
interests (2)
-------
Loss for the
financial year (121)
Preference
dividend
on non equity
shares (5)
-------
Loss attributable
to ordinary
shareholders (126)
Ordinary dividends
on equity shares
(Note 4) (74)
-------
Retained loss
for the
financial year (200)
-------
Earnings/(loss)
per
ordinary share
(pence) (Note 5)
Basic 38.1 44.1 (29.4)
Diluted 36.4 42.0 (29.4)
---------- ---------- -------
Dividends per
ordinary share
(pence) (Note 4) 16.7
-------
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2001 restated
Opera- Opera-
tions tions
before Retire- after Excep-
retirement ment retirement Goodwill tional To-
benefits benefits benefits amorti- items tal
credit credit credit zation (Note GBPm
GBPm GBPm GBPm GBPm 3)
GBPm
---------------------------------------------------
Turnover (Note 2)
Continuing opera-
tions 3,113 - 3,113 - - 3,113
Discontinued
operations 375 - 375 - - 375
---------------------------------------------------
3,488 - 3,488 - - 3,488
Turnover of
associates (101) - (101) - - (101)
---------------------------------------------------
3,387 - 3,387 - - 3,387
Operating
expenses
---------------------------------------------------
Continuing
operations (2,734) 33 (2,701) (66) (35) (2,802)
Discontinued
operations (353) - (353) (1) (67) (421)
---------------------------------------------------
(3,087) 33 (3,054) (67) (102) (3,223)
Operating profit
(Note 2)
---------------------------------------------------
Continuing
operations 279 33 312 (66) (35) 211
Discontinued
operations 21 - 21 (1) (67) (47)
---------------------------------------------------
300 33 333 (67) (102) 164
Disposals of
businesses - - - - 180 180
---------------------------------------------------
Profit on ordinary
activities before
interest 300 33 333 (67) 78 344
Interest (115) - (115) - - (115)
---------------------------------------------------
Profit on ordinary
activities before
tax 185 33 218 (67) 78 229
Tax on ordinary
activities (58) (10) (68) - - (68)
---------------------------------------------------
Profit on ordinary
activities after
tax 127 23 150 (67) 78 161
---------------------------------------------------
Equity minority
interests (3)
-------
Profit for the
financial year 158
Preference dividend
on non equity
shares (5)
-------
Profit attributable
to ordinary
shareholders 153
Ordinary dividends on
equity shares (Note
4) (65)
-------
Retained profit for
the financial year 88
-------
Earnings per
ordinary
share (pence)
(Note 5)
Basic 30.3 36.1 38.9
Diluted 29.4 34.8 37.4
---------- ---------- -------
Dividends per
ordinary share
(pence) (Note 4) 15.9
-------
CONSOLIDATED BALANCE SHEET
As at December 31
2001
2002 restated
GBPm GBPm
------- --------
Fixed assets:
Intangible assets 1,154 1,196
Tangible assets 1,122 1,118
Investments 73 76
------- --------
2,349 2,390
------- --------
Current assets:
Properties surplus to requirements 5 9
Stocks 315 333
------- --------
Debtors receivable within one year 387 472
Less: proceeds from securitised debtors (13) (21)
------- --------
374 451
Pensions receivable after more than one year 385 365
Other debtors receivable after more than one year 160 176
Marketable securities and money market deposits 20 23
Cash at bank and in hand 54 56
------- --------
1,313 1,413
Creditors: amounts falling due within one year:
Borrowings (100) (697)
Other creditors (649) (734)
------- --------
Net current assets/(liabilities) 564 (18)
------- --------
Total assets less current liabilities 2,913 2,372
Creditors: amounts falling due after more than one
year:
Borrowings (1,329) (743)
Other creditors (98) (79)
Provisions for liabilities and charges (509) (512)
------- --------
977 1,038
------- --------
Capital and reserves:
Ordinary equity share capital 280 277
Non equity share capital 89 89
------- --------
Called up share capital 369 366
Equity reserves:
Share premium account 500 490
Capital redemption reserve 279 279
Profit and loss reserve (180) (122)
------- --------
968 1,013
Equity minority interests 9 25
------- --------
977 1,038
------- --------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended December 31
2002 2001
GBPm GBPm
-------- --------
Cash flow from operating activities 451 528
Returns on investments and servicing of finance:
-------- --------
Interest received 22 20
Interest paid (86) (139)
Financing item (35) -
Dividends paid to non equity shareholders (5) (5)
-------- --------
(104) (124)
Tax paid (28) (38)
Capital expenditure and financial investment:
-------- --------
Purchase of tangible fixed assets (173) (180)
Purchase of fixed asset investments (14) (4)
Sale of tangible fixed assets 4 12
Sale of fixed asset investments - 1
Sale of properties surplus to requirements 5 2
Sale of businesses acquired for resale - 13
-------- --------
(178) (156)
Acquisitions and disposals:
-------- --------
Purchase of subsidiary undertakings (110) (37)
Sale of subsidiary undertakings 45 458
Loan to associate (1) -
Sale of associates - 33
-------- --------
(66) 454
Equity dividends paid to ordinary shareholders (70) (60)
-------- --------
Cash flow before management of liquid resources and
financing 5 604
Management of liquid resources:
Marketable securities and money market deposits 2 (2)
Financing:
-------- --------
Issue of ordinary share capital 12 116
Issue of medium term notes 583 -
Repayment of loans (639) (741)
Capital element of finance leases - (10)
-------- --------
(44) (635)
-------- --------
Decrease in cash (37) (33)
-------- --------
RECONCILIATION OF OPERATING PROFIT TO CASH FLOW FROM OPERATING
ACTIVITIES
For the year ended December 31
2001 2001
2002 2002 Con- Dis- 2001
Con- Dis- 2002 tinuing continued Total
tinuing continued Total opera- opera- restated
opera- opera- GBPm tions tions GBPm
tions tions restated restated
GBPm GBPm GBPm GBPm
------- --------- ----- -------- --------- --------
Operating profit 287 2 289 211 (47) 164
Depreciation 144 4 148 142 22 164
Impairment of fixed
assets 1 - 1 10 63 73
Fixed assets
written off 1 - 1 1 - 1
Goodwill
amortization 68 - 68 66 1 67
Movement in
provisions (6) - (6) - - -
Non cash element of
retirement
benefits (41) - (41) (36) 2 (34)
Non cash element of
incentive schemes 10 - 10 - - -
------- --------- ----- -------- --------- --------
Stocks 5 1 6 (6) 14 8
Debtors 74 - 74 15 2 17
Movement in
securitised
debtors (6) - (6) 21 - 21
Creditors (80) (7) (87) 68 (13) 55
------- --------- ----- -------- --------- --------
Movement in working
capital (7) (6) (13) 98 3 101
------- --------- ----- -------- --------- --------
Share of profits
less losses (6) - (6) (10) - (10)
Dividends received - - - 2 - 2
------- --------- ----- -------- --------- --------
Associates (6) - (6) (8) - (8)
------- --------- ----- -------- --------- --------
Cash flow from
operating
activities 451 - 451 484 44 528
------- --------- ----- -------- --------- --------
ANALYSIS OF CHANGES IN NET BORROWINGS
For the year ended December 31
2002 2001
GBPm GBPm
------- -------
At January 1 (1,361) (2,060)
Currency fluctuations 15 (19)
Decrease in cash (37) (33)
Movement in liquid resources (2) 2
Movement in financing excluding share capital changes 56 751
Net borrowings acquired/disposed (19) (2)
Amortization of financing fees (7) -
------- -------
At December 31 (1,355) (1,361)
------- -------
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended December 31
2001
2002 restated
GBPm GBPm
----- --------
(Loss)/profit for the financial year (121) 158
Currency fluctuations:
----- --------
Intangible fixed assets (33) (9)
Tangible fixed assets (21) 5
Net borrowings 15 (19)
Other net assets - 2
----- --------
(39) (21)
Current tax on currency fluctuations (3) 3
----- --------
(42) (18)
----- --------
----- --------
Total recognized gains and losses for the financial year(163) 140
--------
Prior year adjustment (see Note 1) 52
-----
Total gains and losses recognized since last Annual
Report (111)
-----
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended December 31
2001
2002 restated
GBPm GBPm
------ --------
At January 1 as originally reported 961 661
Prior year adjustment (see Note 1) 52 49
------ --------
At January 1 as restated 1,013 710
------ --------
(Loss)/profit for the financial year (121) 158
Dividends (79) (70)
------ --------
Retained (loss)/profit for the financial year (200) 88
Currency fluctuations (net of tax) (42) (18)
Issue of ordinary share capital under placing - 107
Issue of ordinary share capital under share option
schemes 13 8
Goodwill from reserves written off on business
disposals 184 118
------ --------
At December 31 968 1,013
------ --------
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 applicable accounting standards. In preparing the Accounts, the following restatements have been made to the corresponding amounts: a The Accounts have been restated to reflect the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of Image Products, Combibloc, High Performance Flexibles and Metallising Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . b The segmental analysis and exceptional items have been restated to reflect the movement into "Disposals and businesses for sale" of Containers Portsmouth Portsmouth, city, England Portsmouth, city (1991 pop. 174,218) and district, Hampshire, S England, on Spithead Channel. The district includes Portsea (naval station), Southsea (residential district and resort), and the old town of Portsmouth proper. , Closures 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. , Holmia Hol´mi`a n. 1. (Chem.) An oxide of holmium. and Langeskov Langeskov is a town in central Denmark, located in Kerteminde municipality in Region Syddanmark on the island of Funen. The town of Langeskov is primarily located in Rønninge parish and was established following the construction of the railway line between Odense and Nyborg from Plastic Packaging. FRS19 "Deferred Tax" has been adopted for the first time in these Accounts. FRS19 requires full provision, subject to certain exceptions, for deferred tax assets and liabilities arising from timing differences between the recognition of gains and losses in the Accounts and their recognition for tax purposes. Previously, SSAP 15 "Accounting for deferred tax" required recognition of deferred tax assets and liabilities to the extent it was probable that timing differences would reverse in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. This change in accounting policy has been accounted for as a prior year adjustment and previously reported figures have been restated accordingly. The effect of these restatements on the Group was to reduce profit after tax for 2002 by GBP10m (2001: GBP2m) and increase 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. at December 31, 2001 by GBP52m. In applying FRS19, deferred tax has not been calculated on a discounted basis. FRS19 has no impact on cash flows. 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 and consolidated cash flow statement for the year ended December 31, 2002 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 December 31, 2002 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 December 31, 2002 which have been approved by a duly constituted Committee of the Board of Directors on March 6, 2003, 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 Segmental analysis In the following segmental analysis, 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. is based upon operating profit before goodwill amortization and exceptional items divided by turnover. 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 total assets less current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. , creditors falling due after more than one year and provisions for liabilities and charges, excluding net borrowings.
Segment Operating
analysis profit
before
goodwill
amortization Net
2002 and Operating Return assets Net
Turnover exceptional profit on before assets
GBPm items GBPm sales goodwill GBPm
GBPm % GBPm
-------- ------------ --------- ------ -------- -------
Beverage
Packaging 2,375 262 209 11.0 908 1,964
Plastic
Packaging 652 50 35 7.7 339 437
-------- ------------ --------- ------ -------- -------
Consumer
Packaging 3,027 312 244 10.3 1,247 2,401
Retirement
benefits - 37 37 - 68 68
Taxation and
dividends - - - - (142) (142)
-------- ------------ --------- ------ -------- -------
Ongoing
operations 3,027 349 281 11.5 1,173 2,327
Disposals and
businesses for
sale 45 6 6 13.3 5 5
-------- ------------ --------- ------ -------- -------
Continuing
operations 3,072 355 287 11.6 1,178 2,332
Discontinued
operations 88 2 2 2.3 - -
-------- ------------ --------- ------ -------- -------
3,160 357 289 11.3 1,178 2,332
-------- ------------ --------- ------ -------- -------
2001 - restated
Beverage
Packaging 2,306 214 133 9.3 795 1,933
Plastic
Packaging 638 48 28 7.5 335 391
-------- ------------ --------- ------ -------- -------
Consumer
Packaging 2,944 262 161 8.9 1,130 2,324
Retirement
benefits - 33 33 - 35 35
Taxation and
dividends - - - - (62) (62)
-------- ------------ --------- ------ -------- -------
Ongoing
operations 2,944 295 194 10.0 1,103 2,297
Disposals and
businesses for
sale 169 17 17 10.1 22 24
-------- ------------ --------- ------ -------- -------
Continuing
operations 3,113 312 211 10.0 1,125 2,321
Discontinued
operations 375 21 (47) 5.6 78 78
-------- ------------ --------- ------ -------- -------
3,488 333 164 9.5 1,203 2,399
-------- ------------ --------- ------ -------- -------
The interest and amortization of variations with respect to the retirement benefits credit included in operating profit have not been allocated to business segments because the directors consider it more meaningful to show them separately. Had they been allocated, the allocation would have been based on net assets before goodwill and would have resulted in the following allocations: Beverage Packaging GBP27m (2001: GBP23m) and Plastic Packaging GBP10m (2001: GBP10m).
Geographic analysis
Operating
profit
before
goodwill
amortization Net
2002 and Operating Return assets Net
Turnover exceptional profit on before assets
GBPm items GBPm sales goodwill GBPm
GBPm % GBPm
-------- ------------ --------- ------ -------- -------
United Kingdom
and Ireland 399 42 29 10.5 190 410
Continental
Europe 1,159 127 100 11.0 590 994
The Americas 1,400 138 116 9.9 393 880
Rest of the
world 114 11 5 9.6 79 122
-------- ------------ --------- ------ -------- -------
3,072 318 250 10.4 1,252 2,406
Retirement
benefits - 37 37 - 68 68
Taxation and
dividends - - - - (142) (142)
-------- ------------ --------- ------ -------- -------
Continuing
operations 3,072 355 287 11.6 1,178 2,332
Discontinued
operations 88 2 2 2.3 - -
-------- ------------ --------- ------ -------- -------
3,160 357 289 11.3 1,178 2,332
-------- ------------ --------- ------ -------- -------
2001 - restated
United Kingdom
and Ireland 459 49 20 10.7 180 410
Continental
Europe 1,086 120 84 11.0 510 915
The Americas 1,427 102 69 7.1 382 895
Rest of the
world 141 8 5 5.7 80 128
-------- ------------ --------- ------ -------- -------
3,113 279 178 9.0 1,152 2,348
Retirement
benefits - 33 33 - 35 35
Taxation and
dividends - - - - (62) (62)
-------- ------------ --------- ------ -------- -------
Continuing
operations 3,113 312 211 10.0 1,125 2,321
Discontinued
operations 375 21 (47) 5.6 78 78
-------- ------------ --------- ------ -------- -------
3,488 333 164 9.5 1,203 2,399
-------- ------------ --------- ------ -------- -------
The interest and amortization of variations with respect to the retirement benefits credit included in operating profit have not been allocated to 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. regions because the directors consider it more meaningful to show them separately. Had they been allocated, the allocation would have been based on net assets before goodwill and would have resulted in the following allocations: United Kingdom and Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. GBP6m (2001: GBP5m), Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. GBP17m (2001: GBP15m), the Americas A·mer·i·cas , the See America. GBP12m (2001: GBP11m) and the rest of the world GBP2m (2001: GBP2m).
3 Exceptional items
2002 2001
GBPm GBPm
---- -----
Exceptional items included in operating profit:
Reorganization costs (7) (21)
Fixed asset impairment (1) (73)
Fixed assets written off (1) -
Recovery of debtor previously written off 9 -
ANC integration costs - (8)
---- -----
- (102)
---- -----
Loss on fixed assets - continuing operations (2) -
---- -----
Disposal of businesses:
(Loss)/profit before attributable goodwill (22) 330
Attributable capitalized goodwill written off (2) (32)
Attributable goodwill in reserves written off (184) (118)
----- -----
(208) 180
----- -----
Exceptional financing item - continuing operations (35) -
----- ---
Taxation arising on exceptional items:
Restructuring - continuing operations 1 -
Disposals of businesses - continuing operations - (4)
Disposals of businesses - discontinued operations (2) 4
Other - continuing operations (1) -
----- ---
(2) -
----- ---
Total exceptional items (247) 78
----- ---
Of the loss on disposals of businesses, GBP17m (2001: GBPnil) is
attributable to continuing operations and GBP191m (2001: profit of
GBP180m) is attributable to discontinued operations.
4 Ordinary dividends on equity shares
2002 2001
GBPm GBPm
---- ----
2002 proposed final dividend of 9.7p payable June 4, 2003 44 -
2002 interim dividend of 7.0p paid November 6, 2002 30 -
2001 final dividend of 9.2p paid June 5, 2002 - 39
2001 interim dividend of 6.7p paid November 5, 2001 - 26
---- ----
74 65
---- ----
5 Earnings per share
2001
2002 restated
pence pence
------ --------
Earnings per ordinary share (basic):
Before retirement benefits, goodwill amortization and
exceptional items 38.1 30.3
Before total goodwill amortization and exceptional
items 44.1 36.1
Including retirement benefits, goodwill amortization
and exceptional items (29.4) 38.9
------ --------
Earnings per ordinary share (diluted):
Before retirement benefits, goodwill amortization and
exceptional items 36.4 29.4
Before total goodwill amortization and exceptional
items 42.0 34.8
Including retirement benefits, goodwill amortization
and exceptional items (a) (29.4) 37.4
------ --------
(a) There was no dilution arising from the conversion of preference
shares or the exercise of outstanding options in 2002
2001
Earnings: 2002 restated
GBPm GBPm
------ --------
Profit attributable to ordinary shareholders before
retirement benefits credit, goodwill amortization and
exceptional items 163 119
Dilution on conversion of preference shares 5 5
------ --------
On a diluted basis 168 124
------ --------
Profit attributable to ordinary shareholders before
goodwill amortization and
exceptional items 189 142
Dilution on conversion of preference shares 5 5
------ --------
On a diluted basis 194 147
------ --------
Profit attributable to ordinary shareholders (126) 153
Dilution on conversion of preference shares 5 5
------ --------
On a diluted basis (121) 158
------ --------
2002 2001
Number Number
millions millions
-------- --------
Average number of shares:
Average number of shares in issue for the year 428.1 393.1
Dilution on conversion of preference shares 24.4 24.4
Dilution on exercise of outstanding share options 9.1 4.6
-------- --------
On a diluted basis 461.6 422.1
-------- --------
Number of shares in issue at December 31 435.9 430.5
-------- --------
6 A copy of the information to be provided to financial analysts is
available on request from the Company Secretary, Rexam PLC, 4
Millbank, London SW1P 3XR.
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