Step #2
British Polythene Industries
Annual Report Links for:
Background information on British
Polythene Industries
British Polythene Industries PLC (BPI) is the leading
manufacturer of polythene film, bags and sacks in Europe. The company and its subsidiaries produce, market and sell polythene packaging products. British merchandises its products to retail and industrial sectors throughout the United Kingdom and Europe with manufacturing capacity in excess of 300,000 tonnes per annum for a diverse range of everyday applications. In addition, BPI is also Europe's largest recycler of polythene waste recycling around 65,000 tonnes each year with 3,500 staffs.
The Greenock, UK-based company, which operates from sites across the UK, Europe, North America and China, has received its Centenary Certificate from Companies House to commemorate the 100th anniversary of the company's registration. During its remarkable history the Group has seen changes not only to its name but in its areas of expertise as it has evolved.
Incorporated on the 16th March 1910, the business which exists today has a strong, industrious heritage through the merger of two enterprising Scottish companies during the 20th Century; James Scott & Sons Ltd and J F Robertson Limited.
Although their roots in spinning and weaving sacks stretched as far back as 1797, these businesses recognised the changing industrial landscape and had the foresight to adopt new technologies and advancing raw materials. As such they laid the foundations which enabled the BPI Group to become the leading global supplier of polyethylene films it is today as well as Europe's largest recycler of polythene film waste with the ability to reprocess over 64,000 tonnes of post-use material annually.
In late 2009, the BPI Group achieved 40th place out of 236 companies in its inaugural entry into the "Britain's Most Admired Companies" Survey. It was also recently shortlisted for both a Global Reach and Innovation Award in the annual Scotland plc Awards
Major Markets:
- Fresh Produce
- Bakery
- Nuts & Dried Fruits
- Mail Orders & Courier
- Frozen, Speciality & Fast Foods
- Printed Collation Shrinkwrap
Major Products:
- Wicketted Polythene Bags
- Lamination Solutions
- Self Seal Polythene Bags
- Printed Polythene & Polypropylene Reels
- Modified Atmosphere Packaging
Clear concise, well structure and professional are my first
impression of the BPI's Annual reports.
- Profit for the year increased from 13.0£’m in 2013 to 16.4£’m in 2014
- Share price increased slightly from 6.7£’m in 2013 to 6.8£’m in 2014.
- Sales of £499 million ( increased from 2013:
£508million)
The challenges
- Poor
Economic Conditions: Reduced demand leads to lost contribution, but can also put
pressure on margins as competitors fight for remaining volumes
- Credit
Risk: As the economic climate remains challenging, there is always a risk of
customer insolvency.
- Raw
Material Prices: Main raw material, polymer, subject to volatility on a month by month basis due to fluctuating prices for ethylene and, to a lesser extent naphtha and oil. Supplier actions can also influence prices due to maintenance periods and breakdowns at their production plants creating a risk of erosion in margins if price increases cannot be passed through immediately to customers. Recent years have seen exceptional levels of volatility and unprecedented price levels. Falling raw material prices on the realisable value of finished goods stocks also can be risks.
- Energy
Costs: As a process business and a significant user of energy, our results can
be affected by major price movements.
Strategies meeting these challenges
- Poor Economic Conditions: The Group has a
diverse business portfolio with a large number of customers operating in a
range of market sectors and locations such as European ( Belgium and Holland,
France, Benelux, Germany and Scandinavia, Greece, Italy, Spain) as well as major
geographical markets are the UK, Ireland and North America. In the event of
adverse trading conditions steps can be taken to restructure the business and
reduce costs. Most recently this was undertaken in the UK Consumer Packaging
operations during 2013. The cost base of all operations is continually reviewed
and significant capital expenditure targets cost savings in combination with
efficiency and productivity improvements.
- Credit Risk: Continued focus on credit
assessment and prompt action on overdue accounts. Some accounts are credit
insured, particularly in Europe and in the agricultural sector. The Group’s
largest customer accounts for less than 3% of Group turnover.
- Raw Material Prices: Centralised Group purchasing
arrangements to ensure the best purchase price. Coordinated instructions to
sales teams on forward pricing. Some linkage of customer pricing to polymer
price indices. Management of stock levels depending on anticipated price
movements.
- Energy Costs: Monitor energy prices and buy
forward when advantageous. Group energy saving programme implemented on each
manufacturing site. Ongoing engagement with Government and User Groups to
ensure policy makers understand the impact of high energy costs on manufacturing
industry.
My KCQ’s on the 2014 Annual Report
Areas I have
difficulty understanding:
1. KC: In
Chairman's Statement he determined that they have made a good start to 2015,
orderbooks are similar to the same time last year and expect good demand from
the agricultural sector in the coming months. BUT reported results can be
influenced by US dollar and euro translation rates.
Q: Why do US dollar and euro
translation rates can effect to reported results? That is good, bad, or
indifferent for the process of BPI and other organisations? What they can do to
protect themselves from currency fluctuations?
2.
Q: When I look at annual report I would like to know if BPI has created
any value for a year? How do I determine if any value has been created, is it
from profit, assets increase
After taken a
careful look at Consolidated income statement I realized that the value of a
year is the total of these profit.
3. KC: In their
Business Model, Recycle is the most engaging sector with me, they stated that
BPI is one of the largest recyclers of waste polythene film in Europe. Also,
retaining this waste for
reprocessing in
one of our UK recycling factories is not only good business sense, but also
supports national and regional Government policy.
Q: I wonder that is whether there any real
value they can create from Recycling areas or just because of the reputation or
a good marketing step?
Links to articles for BPI polythene industries
Am I happy with my firm?
Yes, I am. I definitely happy with the firm given. Initially I felt a little bit bored with BPI because they are a producer of polythene films which seems to be somewhat not attractive and engaging like other areas such as entertainment, hotel or technology. But step by step I find it so good for me. Firstly, I was impressed of the size of the firm, BPI is not only a leading global manufacturer of polythene films, but also Europe's largest recycler of polythene waste recycling. Secondly, their annual reports are so professional- represented and engaging supporting me to follow easily. Last but not least, it just because I want to have knowledge about the organisations producing things I use every day- plastic bags
Through Martin’s book was the way he used words to emphasize
the importance of numbers, by not using numbers. He believes in accounting
power, he insists the fact that, accounting, is not simply a word, but it shows
the reality and the relevance between accounting and business, the way “this
relevance” concerns to all of us. As myself, I totally agree with this opinion.
Moreover, I just do like the way he expresses his viewpoint, but he still
respects our viewpoints. For example, all of readers who read through his book,
might be conscious that he always uses rhetorical questions such as: “Can
accounting makes economic and business easier or difficult? After reading this
book, this is a question you can ask yourself”. He does not want to force
anyone to think, or be aware like him, but he provides the facts, his research,
his discovery about the concepts, for us.
I like the way he connected different businesses into “one
group” that can help each other in gaining profits by serving different demands
of customers. For example, as for me, I support that it might be so much easier
to buy different products in one store, firstly the businesses can share the
investments on infrastructures, secondly they can also provide customers all
kind of products they need which leads to the situation that, customers want to
come back again. The improvement of number of customers results in the
progression of interests for businesses groups, and shows the incorporations
between businesses and economic and accounting staff. All in all, his viewpoint
about the diversity of businesses can be connected makes me overwhelming by its
truth.
The part I liked most that make some real senses is part 1.2
“Keeping records” which shows clearly the perceptions about accounting and its
history, its two-sided perspectives that can make difficulties for managing
“journals” and “pledgers”. As a matter of fact, this two kind of concepts are
essential and familiar with any accountants. However in this part, I do not
really understand the concept: “Proprietorship”. When I looked up the
dictionary, it showed kind of thing like possession of a business. Nonetheless,
when read through the content, that seemed so much confused about Thus I think
the session could be the hardest, to understand the real rights of the owners,
of the proprietors who can make any changes of the business staff.
Finishing this chapter, I can conclude that, this chapter
provides me a wide range of new knowledge, new concepts, new provision as well.
There are also some parts, that I found difficulties in making senses, however,
the overall ideas are clearly for readers. I respect author’s perception, but I
also have my own thoughts. Anyway, I have not yet had any questions so far, as
I want to find out through my curriculum.
Chapter 3
Like any others feedback for this
chapter, I saw the chapter had been incredible in both content and the way
author expressed his perceptions in terms of financial statement. He mentioned
to a number of new concepts such as: financing activities, Balance Sheet,
income statement that can help me have deep understanding about finance
situation in contemporary life. He also emphasized that over the past 100 years
so far, the financial situation in the whole circumstance has been changed that
much through the development of trade, banking statement, globalisation.
The most understandable part is
“The value of anything” which stated that anything has its own value, “Price is
what you pay, value is what you get”. Whether all of us can have a broad perspective
about anything’s value seemed a hard question. The great example author gave us
for this session was almost people chose receiving $20 right now instead of
after five years later. This example showed that people will always think about
present value. That is awesome. I realize how the businesses can use this
perception to start their work: put themselves into customers’s role, and think
whether they will choose low price or high value. That should be the main point
that I realised after this session.
In short, there are, of course, a
number of new concepts have been introduced in this reading materials. To be
honest, I’m not the kind of people who can spend a lot of myself-time just to
read through all the concepts about the thing I like, and try to remember. But
this chapter, author used skilfully the facts, the examples, to show that what
he was taking about mostly based on reality. Again, accounting, financial
statements, they are all built by the facts, and facts create more concepts.
Finance seems like a harder thing more than accounting. But I made some senses,
so I think the next time, I will be able to read more financial materials
without wasting-time to translate the key concepts.
