6-K 1 six-k.txt 6-K -------------------------------------------------------------------------------- FORM 6K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington DC 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of March 2003 CLONDALKIN INDUSTRIES PLC (Translation of Registrant's Name Into English) Monastery Road, Clondalkin Dublin 22 Ireland (Address of Principal Executive Offices) (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F) Form 20-F X Form 40-F --- --- (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934) Yes No X --- --- (If "Yes" is marked indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ) CLONDALKIN INDUSTRIES PLC ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002 ANNOUNCEMENT DATE : MARCH 11, 2003 1 CLONDALKIN INDUSTRIES PLC ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED DECEMBER 31, 2002 TABLE OF CONTENTS

2 CLONDALKIN INDUSTRIES PLC INTRODUCTION Announcement of Results for the Year ended December 31, 2002 The accompanying unaudited condensed consolidated financial statements have been prepared to show the results of Clondalkin Industries PLC ("the Company") and its subsidiaries (collectively referred to as "the Group" or "Clondalkin") for the year ended December 31, 2002, compared to the year ended December 31, 2002 and to show the financial condition of the Group as at December 31, 2002 compared to December 31, 2001. Basis of Preparation The financial information presented in this Announcement of Results is prepared in accordance with generally accepted accounting practice in Ireland ("Irish GAAP") and, in the opinion of management, includes all adjustments necessary for the fair presentation of results for the periods reported. Forward-Looking Statements Clondalkin and its affiliates and representatives may from time to time make written or verbal statements which, to the extent they are not historical fact, constitute "forward-looking statements". The Private Securities Litigation Reform Act of 1995 (the "Reform Act") provides safe harbor for such forward-looking statements made by or on behalf of Clondalkin Industries PLC, and any such statements are intended to be subject to the safe harbor protection provided by the Reform Act. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: o consolidation in the industries and markets in which Clondalkin operates may affect demand and supply conditions; o changing technology may impact on the functionality of Clondalkin's products and production processes; o raw material availability and cost volatility may affect normal supply terms; o economic downturns may constrain demand and pricing; o competitor actions may impact customer relationships, pricing and margins; o changes in laws and regulations may affect production processes and product delivery methods; and o future currency exchange rates, interest rates and tax rates may have a significant impact on the results of Clondalkin. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Announcement of Results might not occur. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. 3 CLONDALKIN INDUSTRIES PLC COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 The following comparison of results for the years ended December 31, 2002 and December 31, 2001 and the following discussion and analysis should be read in conjunction with the consolidated financial information, included in this Announcement of Results. The consolidated financial information included in this Announcement of Results has been extracted from the unaudited financial statements of Clondalkin Industries PLC for the year ended December 31, 2002 and the audited financial statements of Clondalkin Industries PLC for the prior periods reported. All of these financial statements have been prepared in accordance with accounting principles generally accepted in Ireland, consistently applied. Profit and Loss Account Summary In the following table, we present the consolidated trading results of Clondalkin Industries PLC and its subsidiaries for the years ended December 31, 2002 and December 31, 2001. Clondalkin Industries PLC Consolidated Profit and Loss Account Summary

The restatement of the 2001 results relates to the implementation of Financial Reporting Standard 19 "Deferred Tax". This has caused the 2001 taxation charge to be restated from (euro)2.8 million to (euro)2.0 million. Our sales for the year ended December 31, 2002 at (euro)710.5 million are in line with the sales of the previous year of (euro)710.8 million. Our 2002 operating profit, after goodwill amortization increased by (euro)12.6 million or 28.9% from (euro)43.4 million in 2001 to (euro)56 million in 2002. Excluding the effect of the goodwill amortization, operating profit increased by (euro)13.0 million or 22.7% from (euro)57.1 million in 2001 to (euro)70.1 million in 2002. 4 CLONDALKIN INDUSTRIES PLC COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 - continued Raw Material Costs The raw material cost environment that our operations dealt with in 2002 was one of mainly moderate increases and decreases. Polymer resin costs rose sharply in the first half of the year and declined over the second half of the year. Resin costs ended the year up compared to the start position. Over the full year, the average resin costs was lower than the prevailing 2001 costs. Aluminium foil costs decreased during the first half of the year and remained stable for the second half. Paperboard costs increased moderately during 2002. Paper costs declined moderately in 2002 across the grades of paper we use. As reported in prior period reports, a raw material cost scenario of moderately changing raw material costs, upwards or downwards, presents a benign environment for our businesses. Erratic and dramatic raw material cost movements are more difficult to deal with in the short term, as they can cause abrupt short-term adjustments to established trading patterns. Demand Conditions Demand conditions were satisfactory in all our businesses throughout the year and we observed solid advances across our entire business range. The strongest volume activity advances were achieved in the coatings and laminate businesses. We also recorded gains in our polymer and plastics businesses and in our cartons and labels businesses. In 2002, we benefited from additional capacity installed in recent years. Our coatings and laminate and cartons and labels operation, as we anticipated last year, also benefited from the continuing integration benefits due to the acquisition of the EPH businesses in April 2001. EBiTDA Our earnings before interest, tax, depreciation and amortization ("EBiTDA") result for the year ended December 31, 2002 at (euro)93.8 million was up 14.8% compared to (euro)81.7 million in the year ended December 31, 2001. The 2002 EBiTDA split between flexible and specialist packaging compared to 2001 is as follows:

In 2002, the flexible packaging businesses represented 72.8% of the Group's operating EBiTDA (2001: 71.2%) and the specialist packaging businesses represented 27.2% of operating EBiTDA (2001: 28.8%). 5 CLONDALKIN INDUSTRIES PLC COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 - continued EBiTDA - continued The following table shows the quarterly EBiTDA development in the three years ended December 31, 2002.

The above table shows the Group's consistent quarter upon quarter development over the last three years. o EBiTDA for the year ended December 31, 2002 was(euro)12.1 million or 14.8% up on the corresponding EBiTDA of (euro)81.7 million for 2001. o The 2001 EBiTDA was(euro)8.9 million or 12.2% up on the prior year EBiTDA of(euro)72.8 million. Until December 31, 2002, we used the period end exchange rate to translate year to date and full year results. Commencing in 2002 and with its first effect being in the quarter ended December 31, 2002, we have amended our translation policy to present the results of our non-Euro denominated operating companies at the average exchange rates for the periods reported. This moves our accounting policy into line with that used by most companies. As this accounting policy change does not have a material impact on the prior year results, we have not restated the prior year results. The average rates of exchange used to translate the profit and loss in 2002 for our non Euro denominated operations were (euro)1 = USD 0.9514, (euro)1 = GBP 0.6297 and (euro)1 = CHF 1.4660. The currency translation rates used in 2001 were (euro)1 = USD 0.8813, (euro)1 = GBP 0.6085 and (euro)1 = CHF 1.4829. The US dollar and sterling depreciation against the Euro in 2002 has caused the reported EBiTDA in 2002 to decrease by (euro)1.8 million. Cash Flow Cash flow from operations, that is, EBiTDA excluding profit on asset disposals and including changes in working capital, increased by (euro)9.7 million from (euro)82.4 million in 2001 to (euro)92.1 million in 2002. The increase in cash flow from operations is due to the increase in EBiTDA of (euro)12.0 million, offset by a net increase in working capital of (euro)2.3 million, as working capital increased in 2002 by (euro)0.8 million compared to a decrease in working capital of (euro)1.5 million in 2001. 6 CLONDALKIN INDUSTRIES PLC COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECEMBER 31, 2001 - continued In the following management discussion and analysis commentary section of this announcement, we present a summary of our cash flow since the Group was privatized in November 1999. The important milestones and achievements to draw to your attention are as follows: o The Group's operating cash inflow since it was privatized just over three years ago is (euro)279.5 million. o The operating cash inflow includes EBiTDA inflows of (euro)249.5 million and a reduction of funds tied up in working capital in the period of (euro)30.0 million. o We realized proceeds on surplus asset disposals of (euro)24.6 million. o We invested (euro)51.4 million in our existing operations to add new technologies and additional capacities. o We invested (euro)51.9 million in acquiring new businesses to complement our existing Product Market Combinations in our preferred operating segments. o We repaid debt and debt equivalents of (euro)111.7 million. o We paid (euro)9.1 million of deferred payments due in respect of acquisitions completed before the privatization. o Our cash balances increased by (euro)43.6 million since the privatization. o The net debt improvement achieved in the period of (euro)164.3 million compares with scheduled debt repayments in the period since the privatization of (euro)59.2 million. At December 31, our gross senior bank debt was (euro)206.1 million and our net senior bank debt was (euro)163.4 million. This compares with gross bank facilities provided by our bank syndicate of (euro)330 million to fund the acquisition of Clondalkin Group Limited and the subsequent acquisition of the EPH Group of companies. Credit Statistics The credit statistics for the year ended December 31, 2002 are as follows: o The EBiTDA times cash interest payable cover for the year ended December 31, 2002 was 3.17 and is improved from 2.34 in 2001; o The year end bank debt net of cash balances and senior notes times EBiTDA ratio was 3.11 for the year ended December 31, 2002 and is improved from 4.35 in 2001; and o The EBiTDA minus net capital expenditures times cash interest expense returned at 2.63 compared to 1.81 in 2001. For the year ended December 31, 2002, we met our bank covenant conditions with EBiTDA headroom clearances ranging from (euro)26.9 million to (euro)35.7 million. 7 CLONDALKIN INDUSTRIES PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales Flexible Packaging Flexible packaging sales increased by (euro)10.1 million, or by 2.2%, from (euro)463.9 million in the year ended December 31, 2001 compared to sales of (euro)474.0 million in the year ended December 31, 2002. The increase is primarily attributable to: o The acquisition of the EPH flexible packaging businesses in April 2001 contributed an extra (euro)13.6 million to sales in the year ended December 31, 2002; and o Increases in activity and increased value added also contributed to increased sales. o These increases were offset by the depreciation of the U.S. dollar and sterling against the euro at December 31, 2002 compared to the corresponding exchange rates at December 31, 2001 and this caused reported sales to decrease by (euro)6.9 million; and o Lower selling prices in the year caused by lower average raw material costs for the year ended December 31, 2002 compared to the average costs in 2001 caused sales to decrease. The price and volume increase effects caused sales to increase by (euro)3.4 million. We observed increased activity in our flexible packaging operations, with the biggest increases reported in our foils and laminating businesses, reflecting increased capacity as well as successful product and customer developments. Operating profit reported by the flexible packaging businesses increased by 23.7%, from (euro)44.2 million in the year ended December 31, 2001 to (euro)54.6 million in the year ended December 31, 2002, equivalent to an increase of (euro)10.5 million. The composition of this increase is as follows: o The EPH businesses acquisition effect, including the additional three months consolidated in 2002 was (euro)1.7 million. o The translation effects of the weaker U.S. dollar and sterling against the euro at December 31, 2002 compared to the exchange rates at December 31, 2001 caused reported operating profits to decrease by (euro)0.9 million; and o Existing businesses reported increased operating profits of (euro)9.7 million. Specialist Packaging Specialist packaging sales decreased by (euro)10.4 million or by 4.2% from (euro)246.9 million in the year ended December 31, 2001 to (euro)236.5 million in the year ended December 31, 2002. The decrease is primarily attributable to: o The depreciation of the U.S. dollar and sterling against the euro at December 31, 2002 compared to the corresponding exchange rates at December 31, 2001 caused reported sales to decrease by (euro)9.0 million; and o Reported sales also declined due to lower selling prices caused by lower average raw material costs in the year ended December 31, 2002 compared to 2001. These decreases were partly compensated by volume increases achieved in our folding cartons businesses. The net effect of the price and volume effects caused sales to decrease by (euro)7.3 million. o These decreases were partly offset by the acquisition of the EPH specialist packaging businesses in April 2001, which contributed an extra (euro)5.9 million to sales in the year ended December 31, 2002. 8 CLONDALKIN INDUSTRIES PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued Specialist Packaging - continued The strongest advances compared to the prior year were recorded in our folding cartons businesses due primarily to new business gains. The printing operations recorded improved results, notwithstanding lower levels of activity due to planned withdrawals from lower profitability work. The operating profit reported by the specialist packaging businesses increased by 18.0%, from (euro)14.6 million in the year ended December 31, 2001 to (euro)17.2 million in the year ended December 31, 2002, equivalent to an increase of (euro)2.6 million. The composition of this increase is as follows: o The EPH businesses acquisition effect, including the additional three months consolidated in 2002 was (euro)0.4 million; o The translation effects of the weaker U.S. dollar and sterling against the euro at December 31, 2002 compared to the corresponding exchange rates at December 31, 2001 and caused reported operating profits to decrease by (euro)0.6 million; and o Existing businesses reported increased operating profits of (euro)2.8 million. Cost of Sales Our cost of sales decreased by (euro)14.1 million, or by 2.4%, to (euro)565.3 million which represents 79.6% of sales for 2002 compared to (euro)579.3 million representing 81.5% of sales in 2001. The decrease in cost of sales is primarily attributable to: o The depreciation of the U.S. dollar and sterling against the euro at December 31, 2002 compared to the corresponding exchange rates at December 31, 2001 caused reported cost of sales to decrease by (euro)12.3 million; and o Lower raw material costs obtaining in the year ended December 31, 2002 compared to 2001, across most of the materials we use also caused reported cost of sales to decrease. Increased activity in our businesses, mainly in our coating and laminating and folding cartons and resin converting businesses reflecting additional production throughput caused cost of sales to increase. The net effect of these price volume effects is that cost of sales decreased by (euro)17.5 million. o These decreases were offset by increases due to the acquisition of the EPH companies in April 2001 that resulted in an additional (euro)15.7 million in cost of sales in the year ended December 31, 2002. At December 31, 2002, plastic resins, paper and paperboard materials were at a higher cost level than at December 31, 2001 whereas the foil materials used in our coating and laminating businesses were at a lower cost level. Flexible Packaging Our flexible packaging cost of sales decreased from (euro)380.9 million, equivalent to 82.1% of sales, in 2001, to (euro)379.1 million, or 80.0% of sales, in 2002. The increase in gross profit as a percentage of sales, up from 17.9% of sales to 20.0% of sales reflects many factors, mainly cost efficiency gains and improved value added content in our mix of products. Gross profit increased in the year ended December 31, 2002 by (euro)11.8 million or by 14.3%, to (euro)94.9 million, compared to (euro)83.0 million for the year ended December 31, 2001. 9 CLONDALKIN INDUSTRIES PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued Specialist Packaging Our specialist packaging cost of sales decreased from (euro)198.5 million, equivalent to 80.4% of sales in 2001, to (euro)186.2 million, or 78.7% of sales in 2002. This represents an improvement in the gross profit margin from 19.6% of sales in 2001 to 21.3% of sales in 2002. The gross profit improvement is mainly due to cost efficiency gains and the higher value added content in our product mix. Gross profit increased in the year ended December 31, 2002 by (euro)1.9 million or by 3.9%, to (euro)50.3 million, compared to (euro)48.4 million for the year ended December 31, 2001. Net Operating Costs The following table provides a breakdown of our net operating costs in the year ended December 31, 2002 compared to the year ended December 31, 2001.

Our 2002 net operating costs were (euro)89.1 million compared to (euro)88.0 million in 2001. Operating costs before goodwill amortization were (euro)75.0 million and (euro)74.3 million in 2002 and 2001 respectively. As a percentage of sales, excluding goodwill amortized, our net operating costs increased from 10.5% to 10.6% of sales. In aggregate terms, our net operating costs before goodwill amortization increased by (euro)0.7 million in 2002 compared to 2001. This increase is primarily attributable to: o The acquisition of the EPH companies in April 2001 contributed an additional (euro)1.6 million to net operating costs in 2002 compared to 2001; and o Inflationary and higher activity effects caused operating costs to increase by (euro)1.2 million. o These net cost increases were offset by profits realized on the disposal of tangible fixed assets increased by (euro)0.1 million; and o The depreciation of the U.S. dollar and sterling against the euro at December 31, 2002 compared to the corresponding exchange rates at December 31, 2001 which caused reported operating costs to decrease by (euro)2.2 million. 10 CLONDALKIN INDUSTRIES PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued Operating profit and Earnings before interest, tax, depreciation and amortization (EBiTDA) The net effect of the above revenue and cost developments caused operating profits to increase by (euro)13.0 million, or by 22.7%, to (euro)70.1 million in the year ended December 31, 2002 compared to (euro)57.1 million in the year ended December 31, 2001. EBiTDA in the year ended December 31, 2002 was (euro)93.8 million, up (euro)12.1 million, equivalent to an increase of 14.8%, compared to the prior year EBiTDA of (euro)81.7 million. Amortization of Goodwill Clondalkin Industries PLC recorded goodwill of (euro)254.4 million on the acquisition by its subsidiary, Edgemead Limited, of Clondalkin Group Limited in November 1999. In April 2001, an additional goodwill amount of (euro)31.2 million was recorded mainly related to the acquisition of the EPH group businesses. Subject to impairment reviews, goodwill is amortized over 20 years. In 2002, the Group acquired Spiralkote, a U.S. based foil and laminate packaging business and recorded a discount on this acquisition of (euro)2.5 million. The goodwill amortization charge for 2002 was (euro)14.1 million compared to (euro)13.7 million charged in 2001. The increase of (euro)0.4 million in the charge relates mainly an additional three months amortization charge in 2002 in respect of the EPH goodwill on acquisition. Net Interest Payable The following table shows the composition of our interest payable for the year ended December 31, 2002 compared to the prior year.

The net cash interest payable decreased by (euro)5.3 million to (euro)29.6 million for the year ended December 31, 2002, compared to (euro)34.9 million for 2001. The decrease in the cash interest payable charge is mainly due to lower interest rates and reflects the repayment of term borrowing of (euro)47.6 million in 2002 and (euro)27.8 million in 2001. The interest charge payable on the senior notes did not change in 2002 compared to 2001 as the loan amount of (euro)125 million and interest coupon of 10.625% are both fixed for the borrowing period. The (euro)1.9 million increase in non cash payable interest on the subordinated shareholders' loans is due mainly to the roll-up effects of adding 1999, 2000 and 2001 non cash interest payable accrued on shareholders' loan at December 31, 2001. This roll-up effect caused the interest charge to increase by (euro)1.4 million. Also, the draw down of non cash payable 10% interest coupon parent company loans of (euro)20 million to part finance the EPH businesses acquired in April 2001, caused the interest expense to increase by (euro)0.5 million in 2002 compared to 2001. 11 CLONDALKIN INDUSTRIES PLC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued Provision for Income Taxes The provision for income taxes recorded for the year ended December 31, 2002 was (euro)8.0 million compared to (euro)2.0 million for the prior year 2001. Excluding the effect of non-tax deductible goodwill amortization and other non-deductible charges, mainly non-cash interest, the effective tax rate for 2002 was 33.4% compared to 33.7% in 2001 before the deferred taxation restatement effect. The restatement of the 2001 tax charge, prompted by the adoption of Financial Reporting Standard 19 "Deferred Tax" caused the prior year tax charge to be restated from (euro)2.8 million to (euro)2.0 million. Profit (Loss) on Ordinary Activities after Taxation The profit after taxation for the year ended December 31, 2002 was (euro)1.8 million compared to a loss after taxation of (euro)8.2 million for 2001. 12 CLONDALKIN INDUSTRIES PLC LIQUIDITY AND CAPITAL RESOURCES The following table provides a summary of our cash flows since the Group was privatized in November 1999:

We commented in the Comparison of Results section of this Announcement on the important milestones achieved in the last three years. We comment as follows on the cash flow developments in 2002 compared to 2001. Our principal source of liquidity is operating cash flow, that is, operating profit plus depreciation and amortization (EBiTDA) plus changes in working capital financing requirements. Our operating cash flow increased from (euro)82.4 million in the year ended December 31, 2001 to (euro)92.1 million in the year ended December 31, 2002, due to the increase in EBiTDA as explained in the Management Discussion and Analysis section of this Announcement. Our other main cash inflows in 2002 were: o Proceeds from the disposal of tangible fixed assets arising in the ordinary course of asset replacement and retirement were (euro)1.7 million (2001: (euro)1.5 million). o We also sold surplus assets during the year and realized(euro)6.5 million (2001: nil). o In 2001, the shareholders provided additional loans of(euro)20 million to part fund the acquisition of the EPH group in April 2001. There was no corresponding funding requirement in 2002. 13 CLONDALKIN INDUSTRIES PLC LIQUIDITY AND CAPITAL RESOURCES - continued The total cash inflows, described above, from operating activities, from shareholder financing and from asset sales amounted to (euro)100.3 million in the year ended December 31, 2002 compared with (euro)103.9 million in the year ended December 31, 2001. The main cash outflows in the period were as follows: o Interest costs paid in 2002 were (euro)29.9 million compared to (euro)35.9 million in 2001. The decrease in interest payments of (euro)6.0 million is mainly due to the decrease in the cash interest charge as already explained. o Taxation paid in 2002 was (euro)4.0 million compared to (euro)3.1 million in 2001. o Payments in respect of tangible fixed asset additions were (euro)17.6 million in 2002 compared to (euro)20.0 million paid in 2001. The investments in tangible fixed assets in both years were mainly production capacity additions. o Payments for subsidiaries acquired, at (euro)2.1 million, relates to the Spiralkote acquisition in December 2002. o Deferred acquisition consideration payments in respect of acquisitions completed by Clondalkin Group Limited before December 31, 1999 were (euro)0.3 million in 2002, compared to (euro)0.6 million in 2001. At December 31, 2002, there are no further deferred consideration entitlements due. The above cash inflows and outflows produced a net cash inflow surplus of (euro)46.4 million. We used this surplus to repay bank borrowings, including (euro)23.2 million prepaid early on a voluntary basis. Gross indebtedness under the senior bank facilities decreased from (euro)277.0 million at December 31, 2001 to (euro)206.1 million at December 31, 2002. The decrease of (euro)70.9 million comprises loans repaid of (euro)47.5 million and currency translation effects of (euro)23.4 million which caused our debt to decrease, due to the depreciation of the U.S. dollar and sterling against the euro at December 31, 2002 compared to the exchange rates at December 31, 2001. Our senior credit bank facility debt is denominated in U.S. dollars, sterling, Swiss francs and euro to align the debt servicing requirements with underlying cash flows in these currencies. Cash balances decreased from (euro)46.5 million at December 31, 2001 to (euro)42.6 million at December 31, 2002, a decrease of (euro)3.9 million. Of this decrease, (euro)2.8 million represents currency translation effects. The remaining decrease of (euro)1.1 million represents cash balances we used, in addition to cash generated by our businesses, to repay debt. We believe the facilities available and our cash flows are sufficient to meet our short term and long term requirements. 14 CLONDALKIN INDUSTRIES PLC LEGAL PROCEEDINGS We are, from time to time, involved in contractual disputes, administrative and legal proceedings and investigations of various types arising in the normal course of business. While any litigation, proceeding or investigation has an element of uncertainty, we believe that the outcome of any proceeding, lawsuit or claim that is pending or threatened, or all of them combined, will not have a material adverse effect on our consolidated financial position or results of operations. CHANGES IN SECURITIES AND USE OF PROCEEDS None DEFAULTS UPON SENIOR SECURITIES None APPOINTMENT OF DEUTSCHE BANK TO ADVISE THE COMPANY'S SHAREHOLDERS Our parent company and its shareholders recently appointed Deutsche Bank to advise them on the alternatives available to them in respect of their share holdings in Clondalkin. It is not possible at this time, to anticipate the likely outcome of this review, which may or may not lead to a change to the existing share ownership position. FINANCIAL REVIEW AND PROSPECTS The growth strategy pursued and implemented successfully over many years is not affected by the Deutsche Bank review. Management's mission continues as heretofore, namely to build and grow the Group successfully. 15 CLONDALKIN INDUSTRIES PLC CONSOLIDATED PROFIT AND LOSS ACCOUNTS

16 CLONDALKIN INDUSTRIES PLC CONSOLIDATED STATEMENTS OF TOTAL RECOGNIZED GAINS AND LOSSES

17 CLONDALKIN INDUSTRIES PLC CONSOLIDATED BALANCE SHEET (UNAUDITED)

18 CLONDALKIN INDUSTRIES PLC CONSOLIDATED CASH FLOW STATEMENTS

19 CLONDALKIN INDUSTRIES PLC 1. Basis of preparation and Accounting Policies These consolidated financial statements of the Company have been prepared in accordance with accounting standards generally accepted in Ireland and Irish statute comprising the Companies Acts, 1963 to 2001 and the European Communities (Companies: Group Accounts) Regulations, 1992 to show the performance of the Company and its subsidiaries for the year ended December 31, 2002. After making inquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Accounting Policies Basis of accounting The financial statements are prepared under the historical cost convention. Consolidation The consolidated financial statements consolidate those of the Company and all its subsidiaries made up to each period end. The results of companies acquired during each period are dealt with in the profit and loss account from the date of acquisition. Revenue recognition Revenue is derived from product sales to customers and services rendered on these products. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; vendor's fee is fixed or determinable and collectibility is reasonably assured. Revenue is recognized where a binding purchase order exists and title has passed to the customer, net of allowances for estimated future returns, rebates and discounts. Goodwill Goodwill represents the difference between the fair value attributable to the net separable assets of undertakings acquired and the fair value of the acquisition consideration. Goodwill is recognized and classified as an asset on the balance sheet. Goodwill is amortized on a straight line basis over its useful economic life, not exceeding twenty years, which is determined by reference to the periods over which the value of the underlying businesses are expected to exceed the value of their identifiable net assets. Reviews are performed regularly to determine whether facts or circumstances exist which indicate that the carrying value of goodwill is impaired. The Group assesses the recoverability of goodwill by comparing the projected undiscounted cash flows of the entity acquired against the respective carrying amount of goodwill. Impairment, if any, is based on the fair value of goodwill and will result in the carrying value of the goodwill being reduced by the estimated shortfall of cash flows. 20 CLONDALKIN INDUSTRIES PLC 1. Basis of preparation and Accounting Policies - continued Translation of foreign currencies The financial statements are presented in euro. Transactions denominated in foreign currencies are translated into euro at the rates of exchange ruling at the date of the transaction or at forward contract rates where appropriate. Assets and liabilities denominated in foreign currencies are translated into euro at the balance sheet date at the following rates: Monetary assets and liabilities are translated at the rates ruling at the balance sheet date, or forward contract rates where applicable. From January 1, 2002, the results of non Euro denominated subsidiaries are translated at the average of the monthly exchange rates for the year and the assets and liabilities are translated at the exchange rates ruling at the balance sheet date. Prior to January 1, 2002, the results of non Euro denominated subsidiaries were translated at the rates ruling at the balance sheet date. The effect of this change has been to increase the reported profit after tax in 2002 by (euro)490,000 compared to what the profit after tax would have been had the balance sheet exchange rate been used. The 2001 and prior year comparatives have not been restated to reflect this change, because the effect on the financial statements is not material. Exchange differences arising from retranslating of the opening net investment in foreign subsidiaries are dealt with through reserves. Exchange gains or losses on foreign currency borrowings and long term inter-company loans used to finance or provide a hedge against the Group's equity investments in foreign subsidiaries are offset against revenue reserves to the extent of the exchange differences arising on the net investments. All other translation differences are included in arriving at trading profit. Fixed assets and depreciation Fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write-off the cost of individual tangible assets, by equal annual installments, over their estimated normal lives, as follows Freehold and long leasehold buildings 50 years Short leasehold buildings Period of lease Plant and machinery 5 - 10 years Fixtures and fittings 1 - 5 years Freehold and long leasehold land is not depreciated. Leased assets Assets held under operating leases are not recognized and the related charges are charged to the profit and loss account as incurred. The Company and its subsidiaries do not have assets held under finance leases. Stocks Stocks are stated at the lower of cost and net realizable value. Cost includes direct costs and applicable production and other relevant overheads. Net realizable value is actual or estimated selling price less trade discounts, all further costs to completion and all costs to be incurred in marketing, selling and distribution. 21 CLONDALKIN INDUSTRIES PLC 1. Basis of preparation and Accounting Policies - continued Deferred taxation The Group adopted Financial Reporting Standard 19 "Deferred Tax" (FRS 19) during the year. Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at the balance sheet date that result in an obligation to pay more tax or a right to pay less tax in the future. Timing differences are differences between profit as computed for taxation purposes and profit as stated in the financial statements which arise between certain items of income and expenditure in the financial statements which are dealt with in different periods for taxation purposes. A net deferred tax asset is regarded as recoverable and therefore recognized only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the tax rates that are expected to reverse based on tax rates and laws enacted or substantially enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis. On adoption of FRS 19, the Group has changed its accounting policy in respect of deferred taxation and restated prior year results accordingly. Advertising and promotion expenses All costs associated with advertising are expensed as incurred. Product development costs All costs associated with product development are expensed as incurred. Finance costs Costs arising on the issue of fixed term debt are recognized and amortized at a constant rate over the period of the debt. Financial instruments Interest rate swaps are used to manage finance risk. Interest rate swaps are treated as hedges and the net interest payable is reflected in the profit and loss account. Forward currency contracts are recognized in the profit and loss account with the related expense being hedged. Where raw materials are produced under forward price agreements to hedge against price movements, the gain or loss on the forward contract is deferred and included in the value of the related purchased raw materials. Financial assets Financial assets are carried at cost less provision for impairment. Pensions Contributions to defined benefit pension schemes are based on the advice of independent professional actuaries and are charged to the profit and loss account so as to spread the cost of pensions over the employees' working lives as a level percentage of pensionable pay. Contributions to defined contribution pension schemes are charged on an accruals basis. 22 CLONDALKIN INDUSTRIES PLC 1. Basis of preparation and Accounting Policies - continued Pensions continued The Group has complied with the transitional disclosure requirements of Financial Reporting Standard 17 "Retirement Benefits" (FRS 17). This standard replaces the use of actuarial values for assets in a pension scheme in favour of a market-based approach. In order to cope with the volatility inherent in this measurement basis, the standard requires that the profit and loss account shows the relatively stable ongoing service cost, interest cost, and expected return on assets. Fluctuations in market values are reflected in the statement of total recognized gains and losses. Compliance with the above new standards has not given rise to any restatement of figures reported for prior periods, though a restatement in respect of FRS 17 is expected when full compliance is required. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 2. Segmental Analysis

23 CLONDALKIN INDUSTRIES PLC

24 SIGNATURES Pursuant to the requirements of the U.S. Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised. CLONDALKIN INDUSTRIES PLC By: /s/ Colman O'Neill ------------------------------------------- Name: Colman O'Neill Title: Finance Director Date: March 11, 2003

CLONDALKIN INDUSTRIES PLC 6-K