Rpc Group Regulatory News (RPC)

19 July 2017

RPC Group Plc

Annual General Meeting Statement and Trading Update

At the Annual General Meeting later today, the Chairman of RPC Group Plc ("the Group" or "RPC"), a leading international plastic products design and engineering company for both packaging and non-packaging markets, will say:

Q1 trading performance

Revenues for the quarter ending 30 June 2017 were approximately £960m which is well ahead of the corresponding period last year due to continued organic growth, the contribution from acquisitions and positive foreign exchange movements. Group margins and profitability levels (before and after exceptional items) were ahead of management expectations, with the negative time lag impact from passing through higher polymer prices offset by a favourable currency translation effect. Cash flow development (before and after exceptional items) remains on track. Letica continued its good start under RPC's management and the realisation of the Group's cost synergies is progressing in line with expectations.

Implementation of the Vision 2020 strategy

Since Vision 2020 was launched in 2013, the overall performance of the Group has improved considerably with achievement of underlying organic growth of 3%. The strategic buying position of the Group has been strengthened by increasing its scale in polymer purchasing from 310kt (2013/14) to 1,100kt (annualised). The anticipated return on acquisitions made since the launch of Vision 2020 is well ahead of the Group's cost of capital. Overall market positions have been strengthened and diversified, resulting in better cross-selling opportunities.

The scale of the opportunity to consolidate European markets remains significant and participation in this industry consolidation is a core part of RPC's long term strategy. Given the pace of recent acquisition activity, in the near term RPC is focused on delivering the announced synergy realisation programme; demonstrating the contribution of the newly acquired businesses; whilst continuing to drive organic growth, margin improvement, return on capital and strong cash flow generation. Consequently, RPC does not anticipate making any significant acquisitions, or incurring further acquisition-related exceptional costs, for the current financial year over and above those it has already announced.

To further align with strategy the Remuneration Committee will be carrying out a review of the performance measures and targets used under both the annual bonus and long-term incentive plan. This will include further emphasis on returns on capital and cash flow generation. The Committee will continue to consult with shareholders as part of this process.

Capital allocation framework

To drive shareholder value, RPC has a capital allocation framework that takes account of investment in product innovation, organic growth initiatives, selective strategic/bolt-on acquisitions and returns to shareholders underpinned by a strong balance sheet. The Group has a progressive dividend policy and has delivered 24 consecutive years of dividend growth including a 50% increase in the 2017 dividend and today is seeking to refresh its ability to buy-back shares in accordance with its rolling AGM authority. RPC continually assesses any share buy-back in the context of the Group's overall financial position and leverage guidance, and other available opportunities to deploy capital.

In light of the current valuation and the Board's confidence in the long term prospects of the business, the Board of RPC believes the current share price significantly undervalues the performance to date and the Group's future prospects. Accordingly, RPC intends to commence an inaugural share buyback programme of up to £100 million. The programme will be conducted over a period of up to 12 months and will be kept continually under review.

Commenting on the performance, Pim Vervaat, RPC's Chief Executive, said:

"I am pleased with the Group's trading performance in the first quarter. The implementation of the Vision 2020 growth strategy is progressing well with continued organic growth, good profitability levels and robust cash generation. The Board is confident that the Group's performance going forward will continue to deliver value to its shareholders."

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