RPC GROUP PLC 2018 / 19 INTERIM RESULTS

Transcription

1 RPC THE ESSENTIAL INGREDIENT RPC GROUP PLC 2018 / 19 INTERIM RESULTS 28 November RPC Group Plc. All Rights Reserved.

2 First half year highlights 2018 / 19 Adjusted operating profit and statutory profit (after tax) ahead of last year with good organic profit growth Healthy innovation pipeline with sustainability and e-commerce trends providing opportunities Robust cash flow performance with significant investment in growth projects Bolt-on acquisitions of PLASgran and Nordfolien completed; Letica Foodservice (paper) sold Continued underlying organic growth at 3.2% with significant growth again in China Returned 99m to shareholders through share buyback and dividend (26 th consecutive year of growth) 2 Good overall progress made on Vision 2020 strategy

3 AGENDA 1. Business overview Organic growth Sustainability Product development M&A 2. Financial Review 3. Summary and Outlook 3

4 4 Business overview: Organic growth

5 Organic growth In the first six months of 2018 / 19 Overall organic growth of 3.2% reflecting improved activity levels in both the packaging and non-packaging markets Significant growth in China and US with more moderate growth in Europe Ongoing investment in innovation capabilities and manufacturing footprint driving a healthy pipeline going forward 5 Continuing to deliver GDP+ growth

6 Organic growth Segmental development Food Non-food Technical Components 553m H1 18 / % Organic growth 501m H1 18 / % Organic growth 315m H1 18 / % Organic growth Key developments Key developments Key developments 6 RPC: good overall growth moderated by the hot summer impacting agricultural film sales Market: important growth drivers are minimising food waste with sustainable designs gaining importance Outlook: ongoing growth with sustainability trends creating higher added value opportunities RPC: strong growth in tobacco sector partially offset by weaker agrochemical sales Market: growth driven by innovation in product design in the various market segments Outlook: continued growth in innovative product areas whilst focusing on margin enhancement in more mature market segments RPC: strong tool sales accompanied by growth in roto moulded products, waste management and specialist automotive products (China) Market: good growth markets for specialist automotive components and waste management systems Outlook: good growth in the various higher added value platforms, particularly with the focus on new waste management systems in Europe

7 Organic growth Segmental development (continued) Personal Care Beverage Healthcare 246m H1 18 / % Organic growth 191m H1 18 / 19 (0.3)% Organic growth 86m H1 18 / % Organic growth 7 Key developments RPC: increased activity levels in both US and China driving good growth Market: key to growth are excellence in design & engineering and globalisation Outlook: well positioned for further growth through the leveraging of RPC s global platform and innovative product portfolio Key developments RPC: coffee capsules back to growth tempered by weaker vending sales and customer delays in the roll-out of the sport caps and CSD lite closures Market: growing demand for higher added value closures and single serve beverage capsules Outlook: good growth in single serve beverage systems, Wave Grip and higher added value closures Key developments RPC: increased growth as new products sales start to accelerate Market: dry powder inhalant devices set for longer term growth particularly in Western markets Outlook: good growth prospects due to the enhanced healthcare platform following the Plastiape acquisition

8 8 Business Overview: Sustainability

9 Sustainability Regulatory update October 2018 UK Government announced a consultation to introduce a tax on any plastic packaging with less than 30% recycled content October 2018 EU Parliament approves a directive on single use plastics. Targets a reduction in marine litter through better control of and charges on single use plastics August 2018 UK Treasury publishes responses to its call for evidence; use tax to increase demand of recycled plastics, encourage design led sustainability, consult on the banning of plastic-stemmed cotton buds, plastic coffee stirrers and plastic straws April 2018 UK Government announced a consultation on the ban of plastic straws and cotton buds in the UK March 2018, UK Government announced a consultation on a deposit return scheme for England RPC works proactively with the relevant policy makers, authorities and industry bodies. Through the British Plastics Federation, RPC is involved with the UK Plastics Pact which has set ambitious targets for increased recycling Although we await the final directive RPC does not manufacture any of the items that are expected to be banned 9 Sustainability focus is an opportunity for RPC

10 Sustainability An opportunity for RPC 10 Innovative design solutions Recycled content, recyclability, reuse are fast becoming a prerequisite as the legislative landscape moves towards these things being a legal requirement RPC uniquely placed to help customers given its design and engineering capabilities Anticipate more sustainable designs but not a move back to other materials given plastics unique advantages On-site recycling facilities Acquired PLASgran, a best-inclass UK based plastic waste recycler, in August 2018 RPC bpi is a leading recycler of flexible plastics closing the end of life loop in agricultural, commercial and industrial solutions ESE growing through the need to enhance waste management to increase recycling as well as avoid litter and plastic leakage into the environment Recycled and sustainable input polymers Making products incorporating recycled materials and products made from biopolymers Working with major material suppliers to incorporate more recycled content in our products Continuing to develop ideas such as coffee capsules made from compostable polymer

11 11 Business overview: Product development

12 Product development: investment in innovation A suite of new sustainable products 12 Commercialising new products with high sustainability profiles

13 Selected product development Nano fibers Development of next generation plastics with a wide range of benefits suitable for many applications CSD Lite Patented development of ultra-light CSD caps. 20% lighter without any reduction in performance 13 Award winning sports caps 1 Combines functionality and reusability with product safety. 180 degree hinge that is easy to open with integrated tamper evidence which also reduces plastic waste WaveGrip Multi-packing solution for the global beverage market. Available for both aluminium cans and PET bottles with advanced, state of the art automation solutions 1 Sustainable Plastic Packaging Awards November 2018: PackTheFuture

14 Selected product development (continued) Roll-on ball Development of bestin-class component supported by in-house technology innovation PET Conversion Disruptive technology enabling conversion to plastic for niche applications across consumer and industrial markets 14 Booster S Next generation trigger spray with patented pump system, applicable for foams and fluids. Compatible with many existing ranges Vessel Potential disruptive innovation for active ingredients that preserves active ingredients until the moment of consumption

15 Product development Circular economy trends in Europe driving opportunities for ESE ESE has more than 25 years experience in the use of recycled materials ESE has targeted products manufactured with 100% recycled material Markets growth driven by the need to enhance waste management to avoid litter and plastic leakage into the environment Enhanced product range through having roto moulding capabilities within the Group 15 Growth of recycled content

16 Product development Capital expenditure supporting future growth Examples of capital expenditure in period Greenfield extension of China manufacturing footprint currently at near full capacity Global project supporting products for Johnson & Johnson s baby brand Launch of patented innovative trigger spray: Booster S Expansion of high added value film capacity in Western Europe Expansion of capacity in North America for personal care products Continued global roll-out of sports cap closures and CSD Lite 16 Growing our customer proposition and increasing manufacturing capacity

17 17 M&A: A disciplined approach

18 M&A: A disciplined approach PLASgran acquisition: sustainability focused Fast growing and leading UK plastic waste recycler, specialising in compounding of rigid plastics Focused on added value solutions enabling lower grade feedstock to be compounded and upcycled to displace virgin quality materials Enables RPC to offer customers the option to incorporate recycled materials into products Synergies available through capturing and processing RPC s own rigid scrap volumes Closing the recycling loop at an attractive price 18 RPC is a leading recycler in Europe with sales of > 100m* * Includes existing sales of recycled plastic films

19 M&A: A disciplined approach Nordfolien acquisition: geographic expansion for flexibles Specialist in flexible industrial packaging serving the construction, chemicals, horticultural and industrial food sectors Two well invested manufacturing locations, in Germany and Poland Strategic extension of bpi indupac SBU into both Western and Eastern Europe 19 Consolidating an added value films segment in Europe

20 M&A: A disciplined approach Non core business update Businesses for sale Letica Foodservice (US) Spirits closures European IM # automotive business Key rationale for sale Primarily paper based business Primarily metal based business Sub scale market share Status Sold for $95m Process advanced Process started Packaging* Non-packaging* Existing business 3,019.0m Non-core businesses 139.6m Existing business 519.4m Non-core businesses 69.7m 20 # injection moulding *In FY 2017 / 18

21 21 Financial Overview

22 Income statement continuing operations H / 19 H / 18 FY 2017 / 18 m % m % Δ m % Revenue 1, , % 3,538.4 Adjusted operating profit % Adjusted interest charge (25.8) (15.7) (64.3)% (35.9) Adjusted profit before tax (2.4)% Adjusting items (4.5) (6.4) 29.7% (15.1) Amortisation of acquired intangible assets (25.5) (24.8) (2.8)% (49.6) Adjusting net financing costs (4.5) (0.6) (650)% (3.5) Taxation (35.3) (44.1) 20.0% (63.7) Profit after tax % Adjusted basic earnings per share 35.4p 35.0p 1.1% 69.7p Statutory earnings per share 28.9p 28.4p 1.8% 60.0p 22 Return on capital employed % 14.7% 15.3% (60)bps 14.9%

23 Continuing operations revenue bridge ( m) 3.2% (9) Impact FX translation Polymer price Net acquisitions (prior year revenue)* Organic growth 1,770 1,773 1, Revenue H / 18 Underlying revenue H / 18 Revenue H / 19 Organic growth * Includes FX translation loss of (1)m

24 Continuing operations adjusted operating profit bridge ( m) 12m profit improvement (1) (8) 2 32 (20) Adjusted operating profit H / 18 FX translation Polymer pass through variance Underlying operating profit H / 18 Net acquisitions (prior year profit) Business improvement Cost inflation Adjusted operating profit H / 19

25 Polymer price changes passed through to the customer base Adverse 10m polymer passthrough time lag in H1 PER TONNE: average of Platts / ICIS indices PER TONNE: average of Platts / ICIS indices 1,750 Mainland Europe 1,650 1,550 1,450 1,350 1,250 1,150 1,050 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 1,400 1,300 1,200 1,100 1, UK impacted by weakened sterling 800 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep $ PER TONNE: per IHS 2,400 2,200 2,000 1,800 1,600 1,400 US PP HOMO HDPE BM Polymer pass-through mechanisms in place (based on c. 65 indices) albeit with a time lag Proactive raw material stock and purchase contract management mitigating the pass through time lag effect Flexibility in purchasing various polymer grades for similar applications Purchase more than 1,000 different grades of polymer resin Pass through time lag impact 1,200 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 million FY14/15 FY 15/16 FY 16/17 FY 17/18 HY 18/19 P&L impact 9 11 (3) (9) (10)

26 Underlying cash generation - continuing businesses Interims Finals million 2018 / / / 18 Adjusted EBITDA Working capital (7) 24 (26) Net capex (100) (103) (233) Other* (2) (1) (1) Operating cash flow Net interest & tax (47) (40) (96) Free cash flow Adj. conversion** 89% 99% 76% Ongoing investment in growth; total capex to sales of 5.7% (Capex / depreciation of 1.3x) Working capital investment in period supporting added value growth Seasonal reduction in agricultural stock Working capital is at 6.5% of sales, in line with the 2017/18 year-end Cash flow conversion and working capital efficiencies remain strong Statutory conversion # 90% 99% 69% 26 * Share based payments, disposal of fixed assets and pension deficit payments **Ratio of operating cash flow shown above to adjusted operating profit # see Appendix page 46

27 Net debt bridge (1,139) Free cash flow 143m Returned 99m to shareholders (1,181) 299 (7) (100) (47) (2) 71 (91) (17) (82) (7) (45) (14) Net Debt Mar 2018 Adjusted EBITDA Working Capital Investing Activities Interest & Tax Other free cashflow items# Acquisitions (inc. debt) Disposals Share buyback Dividends Adjusting items FX movement Other* Net Debt Sep # Share based payments, disposal of fixed assets and pension deficit payments * Includes non-underlying cash provision movements: 5m, movement in provisions and financial instruments: (1)m, cashflow from discontinued items 3m, payment to Nordfolien ex-shareholders 6m

28 Financial position KPIs Sep 2018 Net debt ( m) 1,181 m 1,500 Renewal date main facilities 1,250 Headroom ( m) 827 Net debt to EBITDA ratio (pro forma)** 2.0x 1, * TERM RCF RCF Net debt to EBITDA covenant 3.5x 250 USPP USPP Calendar year *The 18 month term facility is extendable up to 2020 if required **Adjusted to include acquisitions on a pro forma basis

29 Capital allocation priorities Capital priorities and structure Profitable organic growth Acquisitions that meet strict investment criteria Progressive dividend policy with dividend cover at 2.5x through the cycle Non-core businesses identified Leverage to remain at a suitable and responsible level Investing in organic growth and returns ahead of WACC Targeting through the cycle organic growth ahead of GDP 23 acquisitions since launch of Vision 2020; demonstrating excellent returns well above WACC H1 18/19 DPS of 8.1p, up 4% and representing the 26 th consecutive year of growth Letica Foodservice disposed in period and processes for the other businesses underway H1 18/19 net debt to EBITDA ratio remains at target levels of 2.0x (pro forma) Covenant 3.5x EBITDA 29

30 30 Summary and Outlook

31 Summary and Outlook A good trading performance over the last six months leading to good profitable organic growth A robust cash flow performance whilst investing for future higher value growth Remain excited by the many opportunities to further develop both organically and through acquisitions The Group is well placed to benefit from the development opportunities driven by globalisation and recent sustainability and e-commerce trends We continue to target through the cycle profitable underlying organic growth ahead of GDP 31

32 32 Supplementary Material

33 33 Appendices Polymer passthrough mechanism Polymer capacity expected to increase Benefits of plastic Circular grading tool Technical guidance Continuing operations restated results Segmental and geographical analysis Consolidated balance sheet Adjusting items Employee benefits Statutory cash flow Adjusted earning reconciliation Alternative performance measures Definitions

34 Polymer pass-through mechanism Illustrative example Polymer headwind Polymer tailwind Time Purchase price Sales price Contracts with a pass-through clause provide for the regular re-set of sales prices according to movements in polymer prices Good track record of pass-through to customers Sales prices will catch up with polymer price movements, but with a time lag In times of rising prices, there will be a profit headwind due to the purchase price being current but revenue being based on prices from previous periods In times of falling prices, there will be a profit tailwind Contractual pass-through clauses in place with re-set taking place typically every 3-4 months 34

35 Polymer capacity expected to increase Global capacity utilisation polymer industry PP and PE TONNES (M) OPERATING RATE % % 95% 90% 85% 80% 75% 70% Capacity continues to grow and outpace demand Ability to source from outside Europe will become a key competitive advantage RPC s scale, extensive network and flexibility provide a leading position from which to access global markets Key capacity additions are North America and Middle East, both targeting exports as markets globalise. China will look to become selfsufficient in PP, freeing capacity for other geographies Operating rate Actual demand Free capacity Forecast demand 35 Source: IHS Markit RPC s European operations are well placed to take advantage of global markets

36 Sustainability Continued benefits of plastic vs. other packaging materials The attractions of rigid and flexible plastic packaging versus alternative packaging materials continue to include: Substitution examples 36 Light weight: Reducing transport costs of packaged goods Strength and durability: Ideal for effective product protection Versatility: Can be moulded or formed into just about any shape enhanced marketing opportunities and transport efficiency Low carbon: Less energy used and less carbon emitted during the production process Recyclability: Over 90% of plastic based products currently on the UK market are recyclable those that are not are where plastics are combined with other materials e.g. foil laminates Sustainability: Ability to reduce food waste through extending the shelf-life of both fresh and processed food Speed-to-market: Rapid prototyping; standard moulds and premium decoration Convenience: Easy to handle, safe handling, portion control, re-closable, microwavable Special T: Replacement of aluminium to extend the retail platform NordiVent: Paper replacement; superior solution for packaging powders Overmoulded components: Integrating plastics with electronics through a single process, reducing metal components Empress jar: Glass replacement; premium design and decoration, lightweight and shatterproof LongLife : Customised packaging solutions with oxygen barrier

37 Sustainability Trends The RPC Circular grading tool The feather symbol shows that the pack is light-weighted and has been designed to incorporate the minimum amount of material The arrow symbol shows the pack contains a % of recycled plastic The circle symbol shows that the pack has an obvious reuse 37 Rating system based on the RecyClass categories. A is the highest rating which indicates perfect for recycling and F means no part of the pack can be recycled. A B B C D E F The blue indicator shows the rating that the concept has achieved as measured against the RecyClass definitions The tool is applied to new designs and is used to rate and improve existing products

38 Sustainability Circular Grading Tool in Action: Redesign of Westland lawn spreader Before Number of parts: 9 After Number of parts: 3 38 Redesigned by RPC 40% lighter pack Easier to recycle Increase in RecyClass grading from D to C No change in functionality Easier to manufacture Cross-divisional collaboration (Promens and M&H) Oct 17 Product launched ready for the spring season in 2018

39 Technical guidance FY 2018 / 19 Profit & loss charge Cash charge Underlying items Tangible fixed assets Depreciation: c. 175m Capex: c. 250m IFRS 16 In the process of a formal impact assessment of IFRS 16 which we expect will be material Net contract provision utilisation c. 10m N/a Underlying tax rate c. 23% Below P&L charge Net finance costs c. 52m c. 52m FX sensitivity: Dividends 1c move changes EBIT by c. 2.0m $1c move changes EBIT by c. 0.5m N/a Progressive dividend policy with cover targeted to be 2.5x across the cycle 39 Adjusting items Acquisition related expenditure External cost on acquisition activity Net integration and adjusting items Not material Not material Amortisation acquired intangibles c. 50m N/a Other adjusting items Not material Not material Adjusting net finance costs Pension scheme interest c. 4m N/a

40 Continuing operations restated results million 2017 / / / /15 Revenue 3,538 2,648 1,586 1,216 EBITDA Finals EBIT Finals Free cash flow Adjusted operating cash conversion 75.8% 97.4% 86.7% 60.4% 2017 / / / /15 Revenue 1,770 1, EBITDA Interims EBIT Free cash flow Interims Adjusted operating cash conversion 99.0% 109.3% 80.7% 52.5%

41 Segmental and geographical analysis 41 Interims % Finals million 2018 / / 18 Variance At constant exchange 2017 / 18 Revenue Packaging 1,620 1, ,019 Non-packaging Total 1,892 1, ,538 Operating profit Packaging Non-packaging Total Return on sales Packaging 10.8% 11.3% (50)bps (50)bps 11.2% Non-packaging 14.2% 14.8% (60)bps (50)bps 14.7% Total 11.3% 11.8% (50)bps (50)bps 11.7% Both packaging and non-packaging continue to grow with sales mix and polymer price passthrough lag affecting return on sales

42 Segmental and geographical analysis (continued) 42 Interims % Finals million 2018 / / 18 Variance At constant exchange 2017 / 18 Revenue Europe 1,471 1, ,802 Rest of the world Total 1,892 1, ,835 Operating profit Europe (0.1) (0.1) Rest of the world Total Return on sales Europe 10.8% 11.3% (50)bps (50)bps 11.4% Rest of the world 13.3% 13.7% (40)bps (40)bps 12.8% Total 11.3% 11.8% (50)bps (40)bps 11.7% Strong revenue growth by region

43 Consolidated balance sheet million SEP 2018 SEP 2017 MAR 2018 Property, plant and equipment 1, , ,357.1 Goodwill 1, , ,575.7 Other non-current assets Working capital Employee benefit liabilities (LT) (166.6) (240.7) (196.9) Provisions, including deferred consideration (78.7) (131.0) (90.6) Other assets & liabilities (312.3) (315.7) (276.7) Assets held for sale Net debt (1,180.6) (1,070.4) (1,139.2) Total equity 1, , ,

44 Adjusting items (see Appendix page 49 for definitions) Interims Finals million 2018 / / / / 17 Acquisition related expenditure Deferred consideration on earn-outs (11.5) (11.2) Promens / GCS / BPI integration costs Other integration and adjusting items 3.1 (7.6) Acquisition and restructuring items Amortisation acquired intangible assets Other adjusting items Total adjusting operating items Adjusting finance costs Total adjusting items before tax

45 Employee benefits million SEP 2018 SEP 2017 MAR 2018 Retirement benefit liability UK DBs Other retirement benefit obligations Termination benefits Other employee benefit liabilities Total employee benefit liability Improving discount rates plus deficit reduction payments have reduced the pension liability since the year end H1 Key assumptions: 2018/19 H1 2017/18 FY 2017/18 Discount rate 2.9% 2.7% 2.6% Inflation rate 2.1% 2.1% 2.0% 45

46 Statutory cash flow Interims Finals million 2018 / / / 18 Adjusted EBITDA Movement in working capital (7) 24 (22) Payment in respect of non-underlying items (13) (9) (36) Movement in provisions and financial liabilities (13) (23) (43) Cash generated by operations Net capex (100) (103) (233) Cash flow Statutory operating profit Statutory conversion* 90% 99% 69% 46 Reconciliation Cash generated by operations continuing operations Cash generated by operations discontinued operations (3) 7 11 Cash generated by operations total group * Ratio of cash flow to statutory operating profit

47 Adjusted earnings reconciliation continuing business Earnings ( m) Adjusted earnings attributable to equity shareholders & EPS p Acquisition and integration costs (0.9) (0.2)p Deferred consideration on earn-outs (0.1) (0.1)p Amortisation acquired intangibles (25.5) Other adjusting items (8.0) Total adjusting taxation 8.1 Total adjusting items (26.4) (6.2)p (2.0)p 2.0p (6.5)p 47 Basic earnings attributable to equity shareholders & EPS p

48 Alternative performance measures 48 In the reporting of financial information, the directors have adopted various Alternative Performance Measures (APMs), previously termed Non-GAAP measures as those not defined or specified under International Financial Reporting Standards (IFRS). These measures are not defined by IFRS and therefore may not be directly comparable with other companies APMs, including those in the Group s industry. The principal alternative performance measures used in this presentation are: adjusted operating profit; adjusted earnings before interest, tax, depreciation and amortisation ( EBITDA ); return on sales; adjusted profit before tax; adjusted basic earnings per share; organic sales growth; free cash flow; adjusted operating cash conversion; return on net operating assets; return on capital employed; working capital as a % of sales; net debt; and net debt to EBITDA. These measures exclude the charge for customer relationships amortisation, acquisition related items and any associated tax, where relevant. Acquisition related items comprise deferred consideration payments relating to the retention of former owners of businesses acquired, transaction costs and expenses and adjustments to previously estimated earn outs. Customer relationships amortisation, acquisition related items and any associated tax are items which are not taken into account by management when assessing the results of the business as they are considered by management to form part of the total spend on acquisitions or are non-cash items resulting from acquisitions and therefore do not relate to the underlying operating performance and distort comparability between businesses and reporting periods. Accordingly, these items are removed in calculating the profitability measures by which management assess the performance of the Group. Many of the measures include proforma adjustments for both acquisitions and disposals to allow comparability between accounting periods. Other non-gaap measures are based on or derived from the non-gaap measures noted above. All alternative performance measures in this presentation have been calculated consistently with the methods applied and disclosed in the 2017/18 Annual Report.

49 Definitions Expense Acquisition related expenditure Contingent consideration on earn-outs Integration costs Other integration and adjusting items Amortisation acquired intangible assets Other adjusting items Adjusting finance costs Description The advisors fees and other expenses directly relating to the Group s completed acquisitions. The remuneration earned by the shareholders of Ace, Letica and other acquisitions who must remain as employees of the Group for the duration of the earn-out period to qualify for the remuneration. It also includes adjustments related to the current expectation of the final payment. Costs relate to the integration of the Promens, GCS and BPI businesses into the RPC organisation, including related restructuring, redundancy, closure costs and impairment charges. The scheme was largely completed by the end of the 2017 / 18 financial year. Includes other items such as start up costs. It also includes restructuring, redundancy and closure costs of other business optimisation programmes not directly affected by the Promens, GCS and BPI integration and advisors fees directly relating to the Group s aborted acquisition processes. Relates to amortisation of intangible assets such as brands and customer relationships related to acquired business (amortised to the income statement on a straight-line basis over their estimated useful life). Other immaterial non underlying costs including the pension admin costs on closed DB schemes. Includes finance charges related to the defined benefit pension schemes and the Ace contingent consideration finance cost and the associated foreign exchange impact on the US dollar liability. 49

50 Definitions (continued) Category Organic growth ROCE RONOA Description Period-on-period revenue change for continuing operations adjusted for constant exchange rates and polymer prices, pro forma for acquisitions completed in the both periods (with the equivalent periods in both years under comparison) and adjusted for disposals. ROCE is measured over the relevant period (annualised for half year results) and normalised for the effect of acquisitions, is adjusted operating profit for continuing operations, divided by the average of opening and closing shareholders equity, after adjusting for net retirement benefit obligations, assets held for sale, acquisition intangibles and net borrowings for the year concerned. RONOA is measured over the relevant period (annualised for half year results) and normalised for the effect of acquisitions, is adjusted operating profit for continuing operations divided by the average of opening and closing property plant and equipment and working capital for the year concerned. Comparatives are restated to include acquisitions on a pro forma basis. 50

51 Forward looking statements This presentation contains forward-looking statements, which: have been made by the directors in good faith based on the information available to them up to the time of the approval of this presentation and such information should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. The Group undertakes no obligation to update these forward-looking statements and nothing in this presentation should be construed as a profit forecast. Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor. 51 Nothing in this presentation shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.