RPC GROUP PLC 2017 / 18 RESULTS

Transcription

1 RPC THE ESSENTIAL INGREDIENT RPC GROUP PLC 2017 / 18 RESULTS 06 June RPC Group Plc. All Rights Reserved.

2 AGENDA Vision 2020 Financial Review Business Overview Summary and Outlook 2

3 Chairman s overview Compelling opportunities for continued growth both organically and via accretive acquisitions Remaining disciplined in capital deployment Identified non-core businesses for disposal RPC uniquely placed to drive the sustainability agenda 3 RPC has the scale, innovation capabilities and ambition to continue to exploit market opportunities and is committed to contributing to an environmentally sustainable future for plastic

4 Progress of Vision 2020 strategy in 2017 / 18 Focus on organic growth Continued organic revenue growth ahead of GDP at 2.8% Healthy innovation pipeline creating future opportunities for growth RPC well positioned vis-à-vis sustainability and e-commerce trends FOCUSED GROWTH Selective consolidation in Europe Creating a meaningful presence outside Europe Strengthened market position in flexibles with announcement of Nordfolien acquisition Major European synergy programme substantially completed Good pipeline for further acquisition opportunities Significant growth realised in China with further opportunities going forward Full year contribution from US business Letica with synergies being realised Integration of Astrapak and Letica progressing to plan Pursuing added value opportunities in non packaging markets Strong revenue growth in Chinese automotive sector ESE (temporary waste storage solutions) performed well in first full year of ownership Circular economy initiative providing good growth opportunities for ESE going forward 4

5 Continued active portfolio management Businesses for sale European IM # automotive business Letica Foodservice (US) Spirits closures Packaging Key rationale for sale Sub scale market share Primarily paper based business Primarily metal based business Non-packaging Existing business 3,019.0m Non-core businesses 139.6m Existing business 519.4m Non-core businesses 69.7m 5 Business for sale equating to c. 209m of turnover and 11m EBIT* # injection moulding *In FY 2017 / 18

6 # = including Nordfolien and assuming no significant changes in currency rates and polymer price variation * = adjusted items see 49 for definitions Core business FY 2017 / 18 Targeting at least 50m # EBIT growth for the core businesses by the financial year ending March 2021 Organic revenue growth ahead of GDP Enhancing sales mix Run rate effect from synergies of the major European integration programme Continuous cost improvements (without incurring material adjusting items) Contribution from Nordfolien (including synergies) 6 Reported Non-core businesses Core businesses Revenue ( m) 3,748 (209) 3,539 EBIT ( m)* 425 (11) 414 EBIT (%) 11.3% 5.3% 11.7% RONOA (%) 27.2% 19.3% 27.5% ROCE (%) 14.8% 7.6% 15.2% Adjusted basic EPS (p) 72.0 (1.9) 70.1

7 7 Financial Overview

8 Income statement FY 2017 / 18 FY 2016 / 17 m % m % Δ Revenue 3, , % Raw materials (1,884.6) 50.3 (1,359.8) 49.5 (38.6)% Wages and salaries (810.6) 21.6 (624.9) 22.7 (29.7)% Other expenses (627.5) 16.7 (454.3) 16.5 (38.1)% Adjusted operating profit % Adjusted interest charge (36.3) (22.8) (59.2)% Adjusted profit before tax % Adjusting items (22.1) (100.4) 78.0% Amortisation of acquired intangible assets (50.7) (31.0) (63.5)% Taxation (62.8) (22.7) (176.7)% Profit after tax % Adjusted basic earnings per share 72.0p 62.2p 15.8% 8 Statutory basic earnings per share 61.6p 37.1p 66.0% Return on capital employed % 14.8% 15.2% (40)bps

9 Returns driven by capital allocation Average capital employed ( m) Return on capital employed 2, % 2,398 Capital employed 13.9% ROCE 14.8% / 13 RPC Group pre Vision years Acquisitions & organic investments 2017 / 18 RPC Group March Disciplined capital allocation driving returns

10 Revenue bridge ( m) 2.8% Revenue 2016 / 17 Impact FX translation Polymer price 797 3, , ,852 Revenue 2016 / 17 Impact FX translation Polymer price Underlying revenue 2016 / 17 Net acquisitions (prior year revenue) Organic growth Revenue 2017 / Organic growth

11 Adjusted operating profit bridge ( m) Includes synergies* of 26m 78 2 (1) 78 (44) Adjusted operating profit 2016 / 17 FX translation Polymer pass-through variance (5) Adjusted operating profit 2016 / 17 FX translation Polymer pass-through variance Underlying operating profit 2016 / 17 Net acquisitions (prior year profit) Business improvement Cost inflation Adjusted operating profit 2017 / 18 Note: Business improvement includes a central cost increase of (6)m * From Promens / GCS / BPI / Letica

12 Polymer price changes passed through to the customer base 12 PER TONNE: average of Platts / ICIS indices 1,750 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 $ PER TONNE: per IHS 2,400 2,200 2,000 1,800 1,600 1,400 Mainland Europe US impacted by hurricanes PP HOMO 1,200 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 PER TONNE: average of Platts / ICIS indices 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 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 million FY14 / 15 FY 15 / 16 FY 16 / 17 FY 17 / 18 P&L impact 9 11 (3) (9)

13 Adjusting items (see Appendix page 49 for definitions) million 2017 / / / / 15 Fitter for the Future Acquisition related expenditure Contingent consideration on earn-outs (11.5) (11.2) (11.5) 5.8 Promens / GCS / BPI integration costs Other integration and adjusting items Acquisition and restructuring items Amortisation acquired intangible assets Other adjusting items Total adjusting operating items Adjusting finance costs Total adjusting items before tax

14 Promens, GCS and BPI related synergy realisation costs Spend completed with cash costs lower than forecast Total P&L charge is 187m The associated cash is 100m, 10m better than the 110m previously announced with steady state benefits remaining at least 105m per annum as proceeds from assets sales were higher than expected Synergies represent 6% of revenue acquired Synergy realisation m (cumulative) By year /15 15/16 16/17 17/18 18/ (187)m 57m (100)m P&L costs m /15 15/16 16/17 17/18 18/19 30m 14 P&L charge Asset write downs Proceeds, working capital & asset sales Cash costs Cash costs m /15 15/16 16/17 17/18 18/19

15 Underlying cash generation million 2017 / / / / 15 m Adjusted EBITDA Working capital (22) 29 - (2) Net capex (242) (176) (101) (95) Other* (1) - 2 (1) Cash flow / / / / % 80% 60% 40% 20% 0% Net interest & tax (96) (55) (29) (29) Free cash flow Adj. conversion** 77% 95% 87% 68% Statutory conversion # 68% 82% 85% 33% Adjusted operating profit Free cash flow Conversion (%) Continued investment in growth; total capex to sales ratio of 6.4% Capex / depreciation of 1.5x (2016 / x) Statutory cash flow conversion and underlying conversion remain robust Convergence between adjusted and statutory measures 15 Working capital outflow reflects stock building for growth including within the bpi division ahead of the start to the 2018 agriculture growing season * Share based payments, disposal of fixed assets and pension deficit payments **Ratio of cash flow shown above to adjusted operating profit # see supplemental slides

16 Booster S Capex case study: patented innovative trigger spray 13 parts; each requires a separate manufacturing process All plastic components; 100% recyclable Compatible with many existing containers Formerly exclusive to one customer Average product lifecycle greater than 10 years Investment of circa 9m 16 Investment for growth with cash out in year 1 and expected IRR > 20%

17 Debt bridge Free cash flow 229m (22) Maintenance capex (1,049) 590 (242) Growth capex (1,139) (96) (1) (80) (83) (36) 17 Net Debt Mar 2017 Adjusted EBITDA Working Capital Maintenance capex 114m Growth capex - 128m Investing Activities Interest & Tax Other free cash flow items# Acquisitions (inc. debt) Share buyback Adjusting items (106) (14) Dividends Other* Net Debt Mar 2018 # Share based payments, disposal of fixed assets and pension deficit payments * Includes exchange rate movements: ( 26m), non-underlying cash provision movements (net contract utilisation): 27m, movement in provisions and other liabilities: 20m other share based transactions ( 7m)

18 Financial position KPIs Mar 2018 m Renewal date main facilities Net debt ( m) 1,139 1,500 Headroom ( m) 1,004 1,250 1,000 * TERM Net debt to EBITDA ratio (pro forma)** 2.0x Net debt to EBITDA covenant 3.5x Investment grade rating from Moody s Investor Service of Baa3 (Stable outlook); and, S&P Global Ratings rating BB+ (Positive outlook) Intention remains to extend the $750m term loan No restricted cash balances USPP RCF RCF USPP Calendar year *The 18 month term facility is extendable up to 2020 if required **Adjusted to include acquisitions on a pro forma basis

19 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 contact provision utilisation c. 10m N/a Underlying tax rate c. 23% Below P&L charge Net finance costs c. 42m c. 42m 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 19 Adjusting items Acquisition related expenditure External cost on acquisition activity Contingent consideration on earn-outs Letica: c. 20% N/a 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. 6m N/a

20 Capital allocation priorities Capital priorities and structure Investment for organic growth Acquisitions that meet strict investment criteria Progressive dividend policy Share buyback programmes Leverage to remain at a suitable and responsible level medium term Investing in organic growth and IRRs > 20% Targeting organic revenue growth ahead of GDP through the cycle Financial acquisition criteria (see appendix slide 39) Target dividend cover: 2.5x through the cycle A flexible approach to be considered relative to availability of alternative options typically if net debt to EBITDA persists below 2.0x Targeting medium term range of 2.0x to 2.5x net debt to EBITDA 20 * 94.7m shares bought back to date at an average price of 853.2p

21 Capital is allocated to maximise long term shareholder returns 2017 / m 128m 80m 106m 83m Nearly 190m has been returned to shareholders in the year 83m 62m 2016 / 17 93m 1,082m 49m 41m 2015 / 16 52m 525m 45m 30m 2014 / m 50m 38m 107m 2013 / 14 25m 21 33m Maintenance capex Growth capex M&A Dividends Share buy-backs

22 22 Business Overview

23 Business performance FY 2017 / 18 Record overall profitability levels with robust cash generation and solid underlying organic revenue growth Rationalisation of the European manufacturing footprint substantially complete Significant capital investment in the year underpinning further organic revenue growth going forward Achieved synergy targets but cost inefficiencies remain in the current footprint following move of > 300 machines Some impact from significant start-up costs in growing the automotive business, particularly in Europe Polymer price variations continue to be successfully passed through to the customer base 23

24 Organic growth in FY 2017 / 18 Global plastic packaging markets over the next five years anticipated to grow by 3.7%*, 2.1% anticipated in Western Europe Achieved overall underlying organic revenue growth for the year of 2.8% with H2 at 4.0% as H1 was impacted by adverse natural events and fewer trading days Continued to grow patented CSD Lite and Sport caps closures albeit with some customer delays Substantial revenue growth achieved in China (in total + 26%) in both packaging and automotive sectors with new production facilities started up Continued investment in sustainable capabilities driving a healthy pipeline going forward 24 Group targeting through the cycle growth ahead of GDP * Compound annual growth rates to 2022 (Source: Smithers Pira)

25 Growth in China Group sales manufactured in China 26% CAGR Growth 99m 133m 155m 197m Established a manufacturing footprint in China since the launch of the Vision 2020 strategy Growth driven by higher added value products Pipeline looking very promising but current manufacturing footprint close to full utilisation Future investment in footprint with new facility in Shanghai phase 1 investment of circa 35m 0m 0m 2012 / / / / / / 18 25

26 Recent successful product launches DEFI A new sterile airless pump combined with our patented AirFree bottle, enabling packaging additive free hypoallergenic cosmetics CSD Lite Patented development of ultra-light CSD caps. 20% lighter without any reduction in performance 26 Sports caps 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

27 End market revenue development Food Non-Food Technical Components 1, / % Organic growth 790m 2017 / % Organic growth 732m 2017 / % Organic growth Key developments Key developments Key developments RPC: Good growth in agricultural films, confectionary products and dairy products. RPC: Strong demand for nicotine delivery systems and trigger pumps while surface coatings remain soft. RPC: Strong growth in higher-added value automotive components and moulds. 27 Market: Growth drivers to minimise food waste e.g. shelf-life enhancing solutions. Sustainable designs gaining in importance. Outlook: Continued growth with plastic having attractive characteristics as a packaging material. Market: Overall growth driven by innovation in product design in various market segments. Outlook: Resumed growth driven by nicotine delivery systems and introduction of next generation trigger pumps. Market: Driven by demand for complex automotive products and increasing importance of circular waste management solutions. Outlook: Healthy sales pipeline in the automotive sector while the circular economy initiative will drive growth for ESE.

28 End market revenue development (continued) Personal Care Beverage Healthcare 476m 2017 / m 2017 / m 2017 / % Organic growth -1.1% Organic growth +0.7% Organic growth Key developments Key developments Key developments 28 RPC: Strong performance in the US and China following investment for growth. Market: Globalisation, demand for higher end products and substitution from glass to plastic are key drivers. Outlook: Further growth opportunities leveraging global platform and patented, innovative solutions e.g. development of the AirFree DEFI system (production of new system has started). RPC: Growth in sports caps and CSD Lite offset by softness in coffee capsule customers and in the Letica food service business. Market: Strong demand for innovative closure systems in Asia; demand for single-serve beverage capsules driven by emerging markets demand and innovation. Sustainable designs gaining in importance. Outlook: Continued growth in innovative closure systems with singleserve beverage sales set to recover. RPC: Good growth in standard inhaler products; delays in new product launches. Market: Dry powder inhalant devices set for longer term growth; increasing demand from developing economies for wider product range. Outlook: Enhanced medium to longer term growth prospects following the formation of larger healthcare platform post Plastiape acquisition.

29 Sustainability Trends Plastics in the spotlight update May 2018 EU publishes draft directive on single use plastics. Targets a reduction in marine litter through better control of and charges on single use plastics April 2018 UK Government announced a consultation on the ban of plastic straws and cotton buds in the UK March 2018 UK Treasury launched a call for evidence around single use plastics and potential charges on some items 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 RPC does not manufacture any of the items that will be restricted under the proposed directive 29 Little immediate impact anticipated given RPC s product range

30 Sustainability Trends An opportunity for RPC 30 Innovative design solutions Recyclability, recycled content and reusability are increasingly a sought after design consideration 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 RPC bpi is a leading recycler of flexible plastics closing the end of life loop in agricultural, commercial and industrial solutions Currently extending our recycling expertise across the Group s product ranges 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

31 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 31 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

32 32 Summary and Outlook

33 Summary and Outlook Record profitability levels achieved this year on a significantly enlarged business Active portfolio management, noncore businesses identified with revenue of 209m Continue to drive through the cycle organic growth ahead of GDP Acquisition opportunities continue to be evaluated against strict acquisition criteria Targeting at least 50m operating profit improvement by the financial year ending March 2021* The new year has started in line with management s expectations 33 * See slide 6 for details

34 34 Appendices Strong performance since Vision 2020 strategy launch (in 2013) Strong customer relationships remain key Disciplined and selective approach to acquisitions Decentralised organisation enhances integration capability Commitment to our people Remuneration Policy Commitment to sustainability Sustainability Trends: Circular Grading Tool in Action Sustainability Trends Polymer capacity expected to increase Polymer passthrough mechanism Continued deployment of capital for organic growth Alternative performance measures Definitions

35 Strong performance since Vision 2020 strategy launch (in 2013) Organic growth Scale in polymer buying Growth outside Europe 1,100 1, % % Kt tonnes (annualised) Revenue* m (actual) GDP 5 year CAGR (weighted according to RPC s destination of sales) RPC 5 year CAGR (like-for-like sales) FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/ FY 12/13FY 13/14FY 14/15FY 15/16FY 16/17FY 17/ year organic growth > GDP ~ Enhanced strategic buying position Enhanced geographic coverage ~ 2013/14 growth based on volumes only * Revenue by destination

36 Strong performance since Vision 2020 strategy launch (in 2013) Expected returns on acquisitions m Enterprise value of acquisitions # 2,419 Associated acquisition costs 41 Cash costs of realising cost synergies 88 Invested amount 2,548 EBIT year prior to acquisition 222 Cost synergies realised 90 Cost synergies anticipated 11 Increase in central costs (15) Post synergy EBIT* 308 Return on acquisitions 12.1% Post tax returns 9.3% Manufacturing countries Countries we sell to 34 countries countries Good cost based returns * Excludes commercial synergies and subsequent organic growth # Acquisitions generally done at below market average EBITDA multiples see Appendix page 39 An increasingly global Group

37 Strong performance since Vision 2020 strategy launch (in 2013) P&L improvements versus 2012 / 13 million 2017 / / 13 CAGR % Revenue 3, EBITDA* EBITDA % 15.7% 14.0% 170bps EBIT* Strategic performance to date Expanding innovation capabilities and leveraging scale benefits Value adding acquisitions in a consolidating market: Strengthening existing market positions and diversifying into attractive adjacent niche markets Entering new geographies to enhance offering to multinational customers EBIT % 11.3% 9.3% 200bps RONOA % 27.2% 20.6% 660bps Adding new products, technologies and recycling facilities Delivering attractive synergies (re-investment in the business) 37 ROCE % 14.8% 19.4% (460)bps Basic EPS Adjusted 72.0p 28.4p 21 Basic EPS Statutory 61.6p 15.8p 31 Enhancing the Group s strategic polymer buying position through building scale & flexibility Improvement in operational return profile with EBIT % up 200 bps compared to 2012 / 13 ROCE maintained at a high level Vision 2020 strategy has delivered attractive growth and returns through disciplined allocation of capital * = adjusted items see 49 for definitions

38 Strong customer relationships remain key Why customers choose RPC Focus on large customers and smaller accounts Innovative solutions Breadth of conversion technologies Diversified customer base with +10,000 customers Scale and global footprint Providing security of supply Ability to manage turn-key projects Sector focused management teams Others 38 Top 20 customers = 21% of revenue

39 Disciplined and selective approach to acquisitions Core acquisition criteria Strategic fit Strength of incumbent management Financial track record Financial criteria: ROCE > WACC of RPC Quantifiable cost and cash synergies Impact on Group KPIs (ROS & RONOA) Earnings accretion Acquisitions generally concluded at below market average EBITDA multiples Overview (EV / EBITDA LTM) 14x 12x 10x 8x 6x Transaction multiples Sector trading multiples RPC major transactions = Adding value Improving RPC s overall commercial position Improving RPC s strategic buying position Realising cost synergies (including procurement) Enhancing performance and innovation focus of acquired businesses Average 8.0x Average 9.7x 4x Oct-11 May-12 Jan-13 Sep-13 Apr-14 Dec-14 Aug-15 Apr-16 Nov-16 Jul-17 Mar-18 Source: Mergermarket, company information 39

40 Decentralised organisation enhances integration capability Quality businesses acquired with key management retained Multiple growth platforms with strong divisional leadership teams - larger acquisitions spread in time and in different parts of the organisation Central back office and procurement functions strengthened and scalable 40 Proven track record of quickly integrating businesses and realising associated synergies Mini RPC sector management approach matching industry structure RPC divisions Strategic business units

41 Commitment to our people Health & Safety RPC commitment to its employees 1, Reportable accident frequency rate (RAFR)* 2015 / / / 18 Health & safety: Number 1 priority for RPC; further reduction in RAFR Firmly believe that we can continue to reduce accidents Sharesave: New annual schemes launched across 23 countries Take up of 4,468 employees (23%) 41 Future skills: Apprentice training schemes established across many sites International Graduate Development Programme Succession plans in place across the organisation Gold and silver training programmes to develop key talent and realise full potential Range of talent development training programmes * number of accidents resulting in more than three days off work, excluding accidents where an employee is travelling to or from work, divided by average number of employees x 100k

42 Remuneration Policy Changes for 2018/19 Annual Bonus Plan 2017/18 Adjusted Group PBIT (100%) (12.5%) (12.5%) Bonus can be reduced by FCF and/or ROCE 2018/19 Adjusted Group PBIT (60%) Free Cash Flow (30%) Profits still important, but reduced emphasis weighting on PBIT reduced from 100% to 60% Return measure in the bonus RONOA used as a key KPI of the business, important to retain it within the incentive structure (following its removal from the PSP, see below) RONOA (10%) PSP Awards Adjusted Basic EPS (2/3) TSR (1/3) (20%) PSP can be reduced by RONOA Adj. Basic EPS (40%) TSR (40%) ROCE (20%) Reduced emphasis on profits weighting on EPS reduced from 67% to 40% Increased weighting on TSR weighting on external measure increased from 33% to 40% (now equal weighting with EPS) ROCE introduced as a primary measure well understood and accepted return based measure for the PSP

43 Sustainability Trends: Circular Grading Tool in Action Redesign of Westland lawn spreader Redesigned by RPC 40% lighter pack Easier to recycle increase in RecyClass grading from D to C No change in functionality Reduction in parts from nine to three Easier to manufacture 43

44 Sustainability Trends Plastic will remain an attractive packaging material Its benefits: 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 Ability to reduce food waste through extended the shelf-life of both fresh and processed food 44 Expect a move from plastic to plastic as opposed to other materials

45 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 45

46 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 46 Source: IHS Markit RPC s European operations are well placed to take advantage of global markets

47 Continued deployment of capital for organic growth m s Depreciation Maintenance related capex Growth related capex 1.3x 1.5x x 1.4x 1.7x Capex / depreciation: 1.6x circa 175 circa / / / / / / Revenue 1,047 1,222 1,642 2,747 3,748 Capex to revenue 6.5% 7.6% 6.2% 6.4% 6.4% Technical guidance

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 2016/17 Annual Report.

49 Definitions Expense Description Fitter for the Future All expenditure related to a business improvement programme announced before the Vision 2020 Focused Growth Strategy, which was centred on rationalising RPC s European manufacturing footprint, optimising its business portfolio and realised value for the Group by disposing of its noncore businesses and redundant properties. This scheme was largely completed by the end of the 2014/15 financial year. Acquisition related expenditure The advisors fees and other expenses directly relating to the Group s completed acquisitions. 49 Contingent consideration on earn-outs Integration costs Other integration and adjusting items Amortisation acquired intangible assets Other adjusting items Adjusting finance costs The remuneration earned by the shareholders of Ace 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. 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.

50 Definitions (continued) Category Organic growth ROCE RONOA Description Period-on-period revenue change 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.