Press information
Pilkington
plc: Philip
Webb
Reference:
PR/039/03
Tel: 01744 692184
Finsbury Limited: Rupert Younger Date: 29/05/03
Charlotte Hepburne-Scott
Tel: 020 7251 3801
YEAR TO 31 MARCH 2003
Pilkington plc today announces its results for the year to 31 March 2003.
Highlights:
· Robust results, in challenging markets
· Operating profit of £217 million (2002 £238 million)
· Profit before goodwill amortisation, exceptional items and taxation of £153 million (2002 £183 million)
· Cash inflow before dividends of £138 million (2002 £5 million outflow); strongest cash performance for a decade
· North American Step Change programme showing through in results; efficiency and productivity improvements on track to deliver $35 million in annual benefits by March 2004
· Earnings per share before exceptional items of 5.8 pence (2002 - 6.8 pence), basic earnings per share 5.4 pence (2002 - 6.0 pence)
· Final dividend 3.25 pence, maintaining 5.0 pence in total for the full year
Chairman, Sir Nigel Rudd, commented:
“These results, achieved in some of the toughest trading conditions for many years, demonstrate the Group’s resilience and provide further evidence of the transformation of Pilkington into one of the most efficient, as well as the most innovative, glass producers in the world. The emphasis on cash generation has enabled the Group to generate cash flow before dividends of £138 million; Pilkington’s strongest cash performance for a decade.”
GROUP RESULTS FOR THE YEAR TO 31 MARCH 2003
Statement by the Chairman, Sir Nigel Rudd
I am pleased to report a robust set of results from Pilkington, produced against the backdrop of continuing depressed trading conditions in most of the Group’s major markets. Pressure on selling prices in Europe and North America pulled operating profits, including joint ventures and associates, down to £217 million (2002 £238 million). Despite the lower operating profits, our emphasis on cash generation enabled Pilkington to generate cash inflow before dividends of £138 million (2002 £5 million outflow); the Group’s strongest cash performance for a decade.
These results demonstrate Pilkington’s resilience and provide further evidence of the transformation of the Group into one of the most efficient and innovative glass producers in the world. The step change in performance achieved over the past few years has enabled Pilkington to regain its position as an industry leader in operational performance, through its focus on improving efficiency and minimising overheads, to match its continuing technological leadership.
Further progress has been made in improving the Group’s productivity levels and in reducing overhead costs. Trading performance in the UK has been strong, helped by rising sales of Pilkington ‘K’ glass resulting from legislative changes requiring the use of energy-saving glass. The automotive business continues to consolidate its position as supplier of choice of glass and glazing systems for the world’s carmakers and has won profitable new business. Furthermore, the restructuring “Step Change” programme in North America is continuing to provide positive results, and is on track to deliver annual benefits of $35 million by March 2004.
Dr. Hans-Peter Keitel will retire as a non-executive director after the annual general meeting in July. Hans-Peter has been a non-executive director since September 1995 and the Board has benefited greatly from his experience particularly in matters relating to the German market, emerging markets, capital expenditure projects and the construction industry. I take this opportunity to thank him for his contribution and support.
Andrew Robb will also retire as an executive director after the annual general meeting in July. Andrew joined the Board in December 1989, and since then has made a significant contribution to the Group. He was finance director until the end of December 2001 and subsequently has been active in continuing to develop the Group’s strategic relationships whilst remaining responsible for the legal, secretarial, corporate affairs and information systems functions. I wish him every happiness in retirement.
I am pleased to announce that Christine Morin-Postel has accepted the Board’s invitation to become a non-executive director and will take up this appointment on 1 August 2003. Christine recently retired as executive vice-president in charge of group human resources at Suez, a major French company, and prior to undertaking such role was chief executive officer of Société Générale de Belgique. The Board believes that it will benefit greatly from her knowledge of continental European markets and from her experience in general management and human resources.
As announced at the presentation of the Group's annual results for the year to 31 March 2002, Pilkington has changed its treatment of redundancy and restructuring costs such that these items are no longer disclosed separately as an exceptional component of operating profit. Given the regular nature and amounts of redundancy and restructuring costs, the Board considers the revised disclosures set out in the profit and loss account and in the notes to the financial statements to be more appropriate. Further details of the restatement are included in note 1 to the financial statements.
Turnover from continuing operations, including joint ventures and associates, was
unchanged at £2.8 billion. Operating profit, including joint ventures and associates, was £217 million (2002 £238 million).
Profit before goodwill amortisation, exceptional items and taxation was £153 million (2002 £183 million), a decrease of 16 per cent.
After deducting goodwill amortisation of £9 million (2002 £10 million), and exceptional losses arising from the disposal of businesses and investments of £4 million, profit before tax was £140 million (2002 £161 million).
Following the collapse of the Argentinean peso in 2002, hyperinflationary conditions prevail in Argentina and, as a result, Pilkington has adopted the indexation rules set out under UITF 9 in preparing the Group's results. This has had the effect of reducing the Group's operating profit in 2003 by £6 million, compared to that computed under historical accounting rules.
Earnings per share before exceptional items decreased from 6.8 pence to 5.8 pence. Basic earnings per share have decreased from 6.0 pence to 5.4 pence, a reduction of 10 per cent. The Board is recommending a final dividend of 3.25 pence per share, bringing the total for the year to 5.0 pence per share, the same as last year. The dividend is more than twice covered by cash flow. Subject to the approval of shareholders at the annual general meeting, the final dividend will be paid on 1 August 2003 to shareholders on the register at 13 June 2003.
Operating cash flow has improved significantly from £262 million to £367 million, an increase of 40 per cent, demonstrating our success in focusing attention on the generation of cash. Cash flow before dividends also improved, from an outflow of £5 million in 2002 to an inflow of £138 million in 2003. After payment of £58 million for dividends, the net cash inflow before financing for the year was £80 million.
Net borrowings at 31 March 2003 were £861 million, increased from £704 million at 31 March 2002, principally because of the scheduled redemption of £216 million of minority preference shares and their replacement with bank borrowings. Taking into account the preference shares with net borrowings at 31 March 2002, debt has reduced by £59 million over the course of the year.
Strategy
Competitiveness in the manufacture of flat glass remains central to our strategy and we will continue to seek every opportunity to reduce overheads and improve manufacturing efficiency, whilst maintaining the highest levels of safety and quality in everything we do. The North American restructuring programme, which is now drawing to a close, is a good example of this. Generating increased cash as a basis for future profitable growth remains a key objective.
The Group continues to benefit from a progressive shift toward higher value-added products in both building products and automotive markets.
In Building Products, usage of energy-saving Pilkington ‘K’ glass has increased significantly in the UK, following changes in building regulations. Sales of advanced fire protection products continue to grow. The uptake of Pilkington Activ™ self-cleaning glass, now available in all our principal markets, is rising steadily, despite its launch in an economic downturn. We intend to make this revolutionary product a platform for the launch of a range of multi-functional glasses combining dual-action self-cleaning with other properties.
During the year Pilkington began the supply of the first enhanced intruder resistant laminated sideglazing on the BMW 7 series, and began to supply Chrysler in North America after a gap of ten years.
Review of Operations
Building Products
Building Products sales, including joint ventures and associates, were £1,452 million, down one per cent on the previous year. Operating profits decreased by 22per cent to £163 million, due to lower selling prices in continental Europe and North America.
The Group’s Building Products business continues to be a world leader. This year, however, Pilkington has faced downward pressure on prices in the weak continental European market and in North America. In the UK government legislation requiring the use of energy efficient glass in homes and offices helped keep demand buoyant. In Australia strong demand for new housing underpinned a good result for the year. Increased efficiencies and improved productivity helped the business to offset in part the worst effect of the downturn in continental Europe and North America.
Europe
Primary Products Europe is Pilkington's largest single business and represents the "upstream" segment of Building Products’ European operations. Sales in this business were lower than the record levels achieved last year. This was due to a slowdown in continental European economies coupled with scheduled cold repairs of two float lines during the year. European float glass prices fell by an average of ten per cent. Despite the tough market conditions, the business again made significant progress, further reducing costs.
One of the two float glass lines at Gladbeck, Germany was repaired and upgraded during the first quarter. Due to low levels of demand, the plant start-up was delayed until July 2002. The float plant at Porto Marghera (Venice), Italy was also repaired and recommenced production in August 2002.
Production of the Group’s high value-added clear fire protection range, the market-leading Pilkington Pyrostop™, was again increased in Germany during the year to meet continued strong growth in demand for this product.
Growth for low emissivity Pilkington K Glass™ was boosted in the UK as a result of revised building regulations introduced by the British government in April 2002. These regulations, designed to reduce heat loss and thus improve energy consumption, effectively require the use of low emissivity glass for windows for both new build and refurbishment. This brings the UK in line with building requirements which have applied in Germany and Scandinavia for some years. To meet the increase in demand for Pilkington K Glass™, investment was made to upgrade and increase the output from the Cowley Hill coating line in St Helens.
The new innovative self-cleaning glass, Pilkington Activ™, has now been fully launched throughout Europe and was a major attraction at the 2002 Glasstec Exhibition in Düsseldorf. A marketing campaign is now in place in all European markets to expand the sales of this exciting product, with some progress already achieved.
Although the European downstream processing and merchanting business was also affected by the poor economic conditions in continental Europe, it was still able to deliver a fifth consecutive year of profitable growth. This business represents nearly 30 per cent of total Building Products sales.
A steady improvement in productivity during the year, through the use of better working practices, together with the introduction of new information systems, resulted in lower overhead costs. Improved quality and service remain key drivers in the business strategy.
During the year, a small acquisition was made in Finland and certain branches within the European network were expanded and productivity increased.
All processing and merchanting customers in Europe can now place orders on-line. Twenty per cent of all orders are now processed electronically and this is expected to grow substantially.
The North American Building Products business, which accounts for about 15 per cent of Building Products global sales, was affected by a decline in the US economy. The commercial building market in particular felt the impact of the slowing economy.
Despite the gloomy backdrop, sales volumes still exceeded the previous year. Nevertheless, the volatility of energy prices, additional restructuring costs, and the absence of a key float line due to repair during the year combined to lower profits.
A reorganisation of this business was completed in January 2003 which has reduced costs significantly, and improvement in manufacturing performance is already coming through. The outlook, should the economy turn more positive following the Iraq war, is more encouraging.
In Mexico, Vitro Plan SA de CV (VVP), in which Pilkington has a 35 per cent interest, increased its sales by five per cent, although operating profits were reduced, due to increased competitive pressure in Mexico, and to the slowdown in North American construction.
The Brazilian economy was flat during the year, although the Brazilian Real suffered a major depreciation. Despite this, the Brazilian float glass market grew by three per cent in the year with Cebrace, the joint venture between Pilkington and Saint Gobain, increasing its market share. Downstream operations in Brazil suffered pressure on price due to the currency depreciation, and experienced strong competition from small, local producers. The start-up of the fourth float line in Brazil, to be operated by Cebrace, our joint venture with Saint Gobain, has been postponed because of economic conditions in Brazil and the plant is now planned to begin production next year.
In Chile, the building products market grew only slightly during the year. However, exports grew strongly to compensate. Turnover decreased by three per cent and operating profits declined by 17 per cent, as a result of the decline in the value of the peso.
Pilkington’s Asia Pacific Building Products business accounts for about ten per cent of Building Products sales worldwide. In Australia and New Zealand, the strong residential housing market provided high demand for glass throughout the year. Coupled with ongoing manufacturing efficiency improvements, this enabled the Australasia Building Products business to return good profits for the year.
In Australia, changes to building regulations to improve energy efficiency (solar control) resulted in a substantial increase in demand for the Pilkington ComfortPlus range of products. Demand for “low-iron” rolled glass, used in solar energy collectors, continued to grow and will provide an important market opportunity in coming years.
In New Zealand, the refocused Building Products business reported record profits, with the economy growing by four per cent, on the back of strong household spending, new house construction and increased exports.
Most Asian economies returned to growth during 2002/03, led by an eight per cent increase in gross domestic product in China. As these economies continue to grow, high performance glass products are proving increasingly popular at the high end of the construction market. As a result, record sales of high value-added architectural glass products, imported into China from other Group operations, were achieved during the year.
Demand in China for both float glass and processed architectural products remain strong, although prices weakened as competitors’ new float lines came on-line. Despite this, the Group’s associated manufacturing company in China, Shanghai Yaohua Pilkington Glass Co Ltd (SYP), in which Pilkington holds a 19 per cent share, performed well. SYP now operates three float lines and a growing glass processing business. In February 2003, SYP began construction of a new architectural glass-processing factory in Shanghai.
Automotive Products
Automotive Products sales, including joint ventures and associates, were £1,287 million, an increase of one per cent on the previous year. Operating profits improved by 57 per cent to £74 million, due to higher sales volume, improved operating efficiency and lower overheads in North America, and to lower restructuring charges.
Automotive operations have been combined into an integrated worldwide business unit, across all regions and distribution channels. Coupled with the restructuring activities in North America which are now largely complete, this will stimulate the on-going drive for improved operating efficiencies, reduced overheads and higher profitability. By integrating the entire supply chain, the business is better able to serve global and regional customers, reduce stock levels and facilitate the sharing of best practice, significantly improving operating performance and cash generation.
The economic downturn in continental Europe continued to affect the business, as light vehicle production remained at the reduced level of 2002. However, sales in the European Automotive business, which accounts for approximately 50 per cent of the Group’s automotive sales, increased by eight per cent. This was due to gains on new model introductions and increased demand for specialised applications from the bus, coach and truck markets.
Increased product complexity is an important factor in the Original Equipment (OE) market as sales of solar reflective windshield glass, intruder-resistant side glazing and heated, wired products continued to rise. This trend will continue as vehicle manufacturers emphasise the advantages of increased security and noise reduction. Designs for future vehicles show increases in glass content, through panoramic windshields and all-glass sunroofs.
In the Automotive Glass Replacement (AGR) business, demand held up well, except in Germany where general economic conditions reduced market activity.
The value of the aftermarket continues to grow in line with the growth in the adoption of high value-added windscreens such as infrared reflective and wire-heated, together with those containing extra components such as rain sensors and extruded profiles. As a major OE supplier with access to all these technologies, the Group’s manufacturing plants benefit accordingly. Operations in Germany and France are benefiting from the reconfiguration of warehouse and logistic operations, improved service levels and extended range availability.
The North American Automotive business, which accounts for 40 per cent of the total business, showed significant operational improvements during the year as a result of the completion of the restructuring programme, and the incorporation of benefits from sharing best practice across all businesses.
OE sales in North America declined from the previous year, despite light vehicle production increasing by six per cent, due to the completion of a large short-term contract with Ford. Sales in the AGR business also declined from the previous year as the overall market fell by over five per cent.
However, profitability of both businesses improved as increased efficiencies, improved quality levels and the greater use of e-business, largely driven by the recent restructuring programmes, continued to lower costs. The North American business infrastructure is now much stronger and it is well positioned to take advantage of any improvements in economic conditions.
In Mexico VVP's turnover in its automotive operations declined about four per cent, though operating profits increased by more than 30 per cent.
Pilkington’s South American Automotive business represents five per cent of the Group’s Automotive operations worldwide. South American vehicle production fell by eight per cent as economic uncertainty weakened both the OE and AGR markets. Despite this, high productivity and improved plant performance provided results in line with last year. Production yields were also improved at all sites, particularly Caçapava, in Brazil.
Results in Australia showed an improvement over last year, reflecting efficiency gains and a more favourable trading environment.
The new Australian-built Toyota Camry is being exported to the Middle East. Mitsubishi export sales to North America tapered off during the year but the Group was able to win the contract to supply the all-new Mitsubishi replacement model for 2005/06, despite aggressive competition from suppliers in Indonesia and Thailand. Profitability continued to rise, driven by strong automotive sales volumes and improved manufacturing performance and efficiencies.
The Chinese automotive market grew by 35 per cent in 2002 and is set to continue this pace of growth in 2003. The Group is well positioned to service this growing market with our automotive glass subsidiaries and associates providing wide geographical coverage across China. Sales and profits increased over the previous year and the businesses are benefiting from increased integration into the Group global automotive organisation. Pilkington retains its position as the number one international automotive glass manufacturer in China.
Pilkington Aerospace
Pilkington Aerospace increased its market share of military aircraft transparencies during the year. This increase helped offset the continuing sales decline in the civil sector, as the commercial aircraft industry remained depressed following the aftermath of the 11 September 2001 terrorist attacks and the lead up to the war in Iraq.
Operating profits improved by approximately 40 per cent despite lower sales. The improvement was due to continuing efficiency improvements and further overhead cost reductions.
Pilkington is operating in tough trading conditions for a third consecutive year and we currently expect little change in the near term.
Pilkington will continue to concentrate on reducing overhead and further improving manufacturing performance so as to deliver robust profits, even in difficult markets. Furthermore, we will remain focused on the need to generate net free cash flow to secure the future.
|
PILKINGTON PLC: GROUP PROFIT AND LOSS ACCOUNT |
|
|
2003 |
|
2002 |
|
|
|
Note |
£m |
|
£m |
|
|
|
|
|
|
Turnover – continuing operations |
|
|
|
|
|
Group turnover |
3 |
2,414 |
|
2,471 |
|
Share of joint ventures’ and associates’ turnover |
5 |
340 |
|
334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover including joint ventures and associates |
|
2,754 |
|
2,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
Group – continuing operations |
3 |
175 |
|
189 |
|
Share of joint ventures and associates |
5 |
42 |
|
49 |
|
|
|
|
|
|
|
Operating profit including joint ventures and associates |
|
217 |
|
238 |
|
Exceptional items: |
6 |
|
|
|
|
Loss on disposal/termination of continuing operations |
|
(2) |
|
(9) |
|
Loss on disposal of fixed assets and investments in continuing operations |
|
|
|
|
|
continuing operations |
|
(2) |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before investment income and interest |
|
213 |
|
226 |
|
|
|
|
|
|
|
Investment income |
|
1 |
|
1 |
|
Net interest payable and similar charges |
7 |
(74) |
|
(66) |
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before taxation |
|
140 |
|
161 |
|
Taxation |
8 |
(49) |
|
(61) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after taxation |
|
91 |
|
100 |
|
Minority interests (including non-equity) |
|
(23) |
|
(26) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to shareholders |
|
68 |
|
74 |
|
Dividends |
|
(63) |
|
(62) |
|
|
|
|
|
|
|
|
|
|
|
|
Retained profit of the Group |
|
5 |
|
12 |
|
|
|
|
|
|
Earnings per share (basic) |
|
5.4p |
|
6.0p |
|
Fully diluted earnings per share (basic) |
|
5.4p |
|
5.9p |
Dividends per share |
13 |
5.0p |
|
5.0p |
SUMMARY GROUP BALANCE SHEET
|
|
|||
|
|
31st March |
|
31st March |
|
|
|||
|
|
|
|
|
|
Assets employed |
|
|
|
Fixed assets |
|
|
|
|
Intangible fixed assets |
158 |
|
163 |
|
Tangible fixed assets |
1,520 |
|
1,498 |
|
Joint ventures, associates and trade investments |
181 |
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
1,859 |
|
1,900 |
|
|
|
|
|
|
Current assets |
|
|
|
|
Stocks |
383 |
|
412 |
|
Debtors |
464 |
|
457 |
|
Investments - marketable |
33 |
|
13 |
|
Cash at bank and in hand |
42 |
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
922 |
|
926 |
|
|
|
|
|
|
Creditors - amounts falling due within one year |
(670) |
|
(652) |
|
|
|
|
|
|
|
|
|
|
|
Net current assets |
252 |
|
274 |
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities |
2,111 |
|
2,174 |
|
|
|
|
|
|
|
|
|
|
|
FINANCED BY |
|
|
|
Creditors - amounts falling due after more than one year |
793 |
|
626 |
|
Provisions for liabilities and charges |
516 |
|
520 |
|
|
|
|
|
|
|
|
|
|
|
|
1,309 |
|
1,146 |
|
Deferred income |
21 |
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
1,330 |
|
1,166 |
|
Capital and reserves |
|
|
|
|
Called up share capital |
630 |
|
627 |
|
Reserves |
54 |
|
80 |
|
|
|
|
|
|
|
|
|
|
|
Total equity shareholders' funds |
684 |
|
707 |
|
Minority interests (including non-equity) |
97 |
|
301 |
|
|
|
|
|
|
|
|
|
|
|
|
2,111 |
|
2,174 |
|
|
|
|
|
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
|
|
|||
|
|
Year
to |
|
Year to 2002 £m |
|
|
|||
|
|
|
|
|
|
|
68 |
|
74 |
|
Other recognised losses: |
|
|
|
|
Exchange rate movements on foreign currency net investments |
(33) |
|
(47) |
|
|
|
|
|
|
|
|
|
|
|
Total recognised gains |
35 |
|
27 |
|
|
|
|
|
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
|
|
|||
|
|
Year
to |
|
Year to |
|
|
|||
|
|
|
|
|
|
Profit attributable to shareholders of Pilkington plc |
68 |
|
74 |
|
Dividends |
(63) |
|
(62) |
|
Exchange rate movements on foreign currency net investments |
(33) |
|
(47) |
|
Shares issued |
3 |
|
10 |
|
Premium on shares issued |
2 |
|
10 |
|
|
|
|
|
|
|
|
|
|
|
Net decrease in shareholders' funds for the year |
(23) |
|
(15) |
|
Shareholders' funds at beginning of the year |
707 |
|
722 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders' funds at end of the year |
684 |
|
707 |
|
|
|
|
|
SUMMARY GROUP CASH FLOW STATEMENT
|
|
|||
|
|
Year
to |
|
Year to |
|
|
|||
|
|
|
|
|
|
Net cash inflow from operating activities (note 11) |
367 |
|
262 |
|
|
|
|
|
|
Dividends received from joint ventures and associates |
24 |
|
9 |
|
|
|
|
|
|
Net cash outflow from returns on investments and |
(73) |
|
(73) |
|
|
|
|
|
|
Taxation paid |
(22) |
|
(44) |
|
|
|
|
|
|
Net cash outflow from capital expenditure |
(161) |
|
(154) |
|
|
|
|
|
|
Net cash inflow/(outflow) from acquisitions and disposals |
3 |
|
(5) |
|
|
|
|
|
|
Net cash inflow/(outflow) before dividends, |
138 |
|
(5) |
|
|
|
|
|
|
Equity dividends paid by parent company |
(58) |
|
(45) |
|
|
|
|
|
|
Net cash inflow/(outflow) before use of liquid resources and financing |
80 |
|
(50) |
|
|
|
|
|
|
Management of liquid resources |
(20) |
|
21 |
|
|
|
|
|
|
Net cash (outflow)/inflow from financing* |
(74) |
|
45 |
|
|
|
|
|
|
|
|
|
|
(Decrease)/increase in cash |
(14) |
|
16 |
|
|
|
|
|
* The net cash outflow from financing in 2003 includes the repayment of £200 million of minority preference shares in Pilkington Channel Islands Limited.
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
|
|
|||
|
|
Year
to |
|
Year to |
|
|
|||
|
Net debt at beginning of the year |
(704) |
|
(656) |
|
(Decrease)/increase in cash in the year |
(14) |
|
16 |
|
Cash outflow/(inflow) from management of liquid resources |
20 |
|
(21) |
|
Net increase in loans |
(144) |
|
(42) |
|
Net decrease/(increase) in obligations under finance leases |
19 |
|
(1) |
|
Exchange rate adjustments |
(38) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net debt at end of the year (note 12) |
(861) |
|
(704) |
|
|
|
|
|
NOTES ON GROUP RESULTS
1 Accounting policies and re-presentation of comparative amounts
These results have been prepared on the basis of the accounting policies, which have been consistently applied, except for the details set out below, as disclosed in the Directors’ Report and Accounts for the year ended 31st March 2003.
The comparative results have been re-presented in 2003 to simplify the
disclosures of exceptional costs.
In the financial statements to 31st March 2002 and in preceding periods, the Group treated all redundancy and restructuring costs, including those incurred in the ordinary course of business, as exceptional items charged against operating profit in the profit and loss account. In the notes, operating profit before such charges was analysed in the business line and geographical segmental disclosures. Additionally, separate disclosures were made on the exceptional items in the notes.
As the large (“Step Change”) restructuring programmes, which have been a central feature of Pilkington strategy in recent years are drawing to a close, the Directors have concluded that redundancy and restructuring costs incurred in the ordinary course of business should now be charged against operating profit.
As a result of the above change, certain comparative figures have been re-presented as follows:
a) The Group’s operating profit in the profit and loss account was disclosed at £231 million before exceptional items of £42 million. It has been re-presented as £189 million. The share of joint ventures’ and associates’ operating profit is now shown as £49 million. In the prior year it was disclosed as £52 million before exceptional items of £3 million.
b) The Group tax charge was disclosed as £75 million before the impact of exceptional items of £14 million. It is re-presented as £61 million.
c) The reconciliation of operating profit to net cash inflow from operating activities in note 11 has been re-presented. In prior years exceptional items included both redundancy and restructuring items and those relating to the disposal and termination of operations. The former items have been adjusted over the normal cash flow headings (as set out in note 11) and the latter remain treated as exceptional items.
Depreciation and amortisation was disclosed as £175 million before exceptional depreciation of £11 million. It has been re-presented as £186 million. Provisions were disclosed as £36 million before exceptional provisions of £16 million. They have been re-presented as £52 million.
Exceptional cash spent was disclosed as £54 million, which included £47 million relating to redundancy and restructuring spend. This has been re-presented as £7 million and now relates exclusively to the termination of operations.
d) The segmental analysis of the Group’s continuing operations and the segmental analysis of the joint ventures and associates, set out in notes 3 and 5 respectively, have been re-presented. The operating profit/(loss) is now disclosed after redundancy and restructuring costs. In the 2002 financial statements these redundancy and restructuring costs were fully disclosed in the exceptional items note.
|
2 Profit and loss account and cash flow – reconciliation of statutory and non-statutory adjusted disclosures |
2003 |
|
2002 |
|
|
|||
|
Profit before tax |
140 |
|
161 |
|
Goodwill amortisation |
9 |
|
10 |
|
Non-operating exceptional items |
4 |
|
12 |
|
Profit before goodwill amortisation, exceptional items and taxation |
153 |
|
183 |
|
Year
to |
|
Year to |
|||||
|
3 Group’s continuing operations before exceptional items |
Turnover |
|
Operating
profit/ |
|
Turnover |
|
Operating
profit/ |
|
Building products |
1,216 |
|
137 |
|
1,236 |
|
178 |
|
Automotive products |
1,183 |
|
67 |
|
1,169 |
|
40 |
|
Group operations and technology management |
15 |
|
(20) |
|
66 |
|
(19) |
|
Goodwill amortisation |
- |
|
(9) |
|
- |
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,414 |
|
175 |
|
2,471 |
|
189 |
|
|
|
|
|
|
|
|
|
|
Europe |
1,458 |
|
134 |
|
1,414 |
|
162 |
|
North America |
651 |
|
25 |
|
695 |
|
16 |
|
Rest of the world |
290 |
|
36 |
|
296 |
|
30 |
|
Group operations and management |
15 |
|
(20) |
|
66 |
|
(19) |
|
|
|
|
|
|
|
|
|
|
|
2,414 |
|
175 |
|
2,471 |
|
189 |
|
|
|
|
|
|
|
|
|
|
Segmental analysis with goodwill amortisation analysed to business lines: |
|
|
|
|
|
|
|
|
Building products |
1,216 |
|
132 |
|
1,236 |
|
172 |
|
Automotive products |
1,183 |
|
63 |
|
1,169 |
|
36 |
|
Group operations and technology management |
15 |
|
(20) |
|
66 |
|
(19) |
|
|
|
|
|
|
|
|
|
|
|
2,414 |
|
175 |
|
2,471 |
|
189 |
|
|
|
|
|
|
|
|
|
(a)
(b)
The 2002 profit/(loss) figures noted above have been re-presented, as described in note 1,
as follows:
|
|
|
Year to 31st March 2002 |
||
|
|
|
Group pre-exceptional profit/(loss) previously reported £m |
Re-presentation of redundancy and restructuring costs £m |
Group operating profit/(loss) as re-presented £m |
|
Building products |
|
193 |
(15) |
178 |
|
Automotive products |
|
66 |
(26) |
40 |
|
Group Operations & technology management |
|
(18) |
(1) |
(19) |
|
Goodwill |
|
(10) |
- |
(10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231 |
(42) |
189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
194 |
(32) |
162 |
|
North America |
|
21 |
(5) |
16 |
|
Rest of the world |
|
34 |
(4) |
30 |
|
Group operations and technology management |
|
(18) |
(1) |
(19) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231 |
(42) |
189 |
|
|
|
|
|
|
|
Segmental analysis with goodwill amortisation analysed to business lines: |
|
|
|
|
|
Building products |
|
187 |
(15) |
172 |
|
Automotive products |
|
62 |
(26) |
36 |
|
Group operations and technology management |
|
(18) |
(1) |
(19) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
231 |
(42) |
189 |
(c)
|
Net operating assets of the Group’s continuing operations |
Year to |
|
Year to |
|
|
|||
|
Building products |
822 |
|
805 |
|
Automotive products |
638 |
|
625 |
|
Group operations and |
(2) |
|
(3) |
|
Goodwill |
158 |
|
163 |
|
|
|
|
|
|
|
1,616 |
|
1,590 |
|
|
|
|
|
|
Europe |
1,065 |
|
1,001 |
|
North America |
286 |
|
331 |
|
Rest of the world |
267 |
|
261 |
|
Group
operations and technology management |
(2) |
|
(3) |
|
|
|
|
|
|
|
1,616 |
|
1,590 |
|
|
|
|
|
|
Segmental analysis with goodwill amortisation analysed to business lines: |
|
|
|
|
Building products |
920 |
|
910 |
|
Automotive products |
698 |
|
683 |
|
Group operations and technology management |
(2) |
|
(3) |
|
|
|
|
|
|
|
1,616 |
|
1,590 |
|
|
|
|
|
(d)
(e)
|
|
Year
to |
|
Year
to |
|||||
|
5 Segmental analysis of the Group’s share of jointventures and associates |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Joint ventures |
|
|
|
|
|
|
|
|
|
Building products |
49 |
|
18 |
|
48 |
|
14 |
|
|
Automotive products |
9 |
|
1 |
|
7 |
|
- |
|
|
|
58 |
|
19 |
|
55 |
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
13 |
|
2 |
|
7 |
|
(3) |
|
|
North America |
4 |
|
- |
|
3 |
|
- |
|
|
41 |
|
17 |
|
45 |
|
17 |
||
|
|
58 |
|
19 |
|
55 |
|
14 |
|
|
Associates |
|
|
|
|
|
|
|
|
|
Building products |
187 |
|
13 |
|
180 |
|
24 |
|
|
Automotive products |
95 |
|
10 |
|
99 |
|
11 |
|
|
|
282 |
|
23 |
|
279 |
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
259 |
|
20 |
|
255 |
|
28 |
|
|
Rest of the world |
23 |
|
3 |
|
24 |
|
7 |
|
|
|
282 |
|
23 |
|
279 |
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
Total joint ventures and associates |
340 |
|
42 |
|
334 |
|
49 |
|
The 2002 segmental analysis, set out above, has been re-presented from that reported last year, as a result of the change disclosed in note 1. Associates’ profit in Building Products has reduced by £1 million and that in Automotive Products has reduced by £2 million. The associates’ profit in North America has reduced from £31 million to £28 million.
(h)
6 Exceptional items
These comprise losses on the sale and termination of operations of £2 million (2002 £9 million) and losses on the disposal of fixed assets and investments of £2 million (2002 £3 million).
As described in note 1, there are no operating exceptional items in the year to 31st March 2003. The exceptional items in Group subsidiaries shown in the accounts for the year to 31st March 2002 comprise redundancy and restructuring costs of £42 million and additionally there were restructuring costs in an associate of £3 million. The latter have been re-presented as described in note 1.
Net interest payable and similar charges |
|
Year to |
|
Year to |
|
|
||||
|
Interest payable on loans, overdrafts and finance leases |
|
49 |
|
51 |
|
Less interest receivable |
|
(4) |
|
(4) |
|
|
|
45 |
|
47 |
|
Other interest and similar charges |
|
8 |
|
10 |
|
Share of joint ventures’ interest and similar charges |
|
1 |
|
- |
|
Share of associates’ interest and similar charges |
|
20 |
|
9 |
|
|
|
74 |
|
66 |
|
Year to |
|
Year to |
|
|
|||
|
Current tax |
|
|
|
|
UK current tax |
|
|
|
|
Corporation tax at 30% (2002 – 30%) |
42 |
|
2 |
|
Double tax relief |
(32) |
|
- |
|
Over provision in respect of prior years |
(1) |
|
(1) |
|
Overseas current tax |
|
|
|
|
Corporate taxation |
19 |
|
43 |
|
Share of joint ventures’ tax |
6 |
|
7 |
|
Share of associates’ tax |
5 |
|
6 |
|
Under/(over) provision in respect of prior years |
12 |
|
(5) |
|
Total current tax |
51 |
|
52 |
|
|
|
|
|
|
Deferred tax |
|
|
|
|
Origination and reversal of timing differences |
6 |
|
11 |
|
Share of joint ventures’ deferred tax |
- |
|
(1) |
|
Share of associates’ deferred tax |
(8) |
|
(1) |
|
Total deferred tax |
(2) |
|
9 |
|
|
|
|
|
|
Tax on profit on ordinary activities |
49 |
|
61 |
|
|
|
|
|
9
Earnings per share
The average number of shares for the purpose of
calculating earnings per share was 1,248 million (31st March 2002 - 1,234
million). The average number of shares for the purpose of calculating
fully diluted earnings per share was 1,250 million (31st March 2002 -
1,251 million).
|
Year to |
|
Year to |
|
Profit for the financial year attributable to shareholders of Pilkington plc |
68 |
|
|
|
Add exceptional items before tax |
4 |
|
12 |
|
Less tax on exceptional items |
- |
|
(2) |
|
|
72 |
|
84 |
|
|
|
|
|
|
|
million |
|
million |
|
|
|
|
|
|
Average number of shares for calculating earnings per share |
1,248 |
|
1,234 |
|
Average number of shares for calculating fully diluted earnings per share |
1,250 |
|
|
|
|
|
|
|
|
|
pence |
|
pence |
|
|
|
|
|
|
Earnings per share before exceptional items |
5.8 |
|
6.8 |