TIDMSKG
Smurfit Kappa Group plc
2012 First Quarter Results
4 May 2012: Smurfit Kappa Group plc ("SKG" or the "Group"), one
of the world's largest integrated manufacturers of paper-based
packaging products, with operations in Europe and Latin America,
today announced results for the three months ending 31 March
2012.
2012 First Quarter
| Key Financial
Performance Measures
EUR m Q1 2012 Q1 2011 Change Q4 2011 Change
Revenue EUR1,823 EUR1,803 1% EUR1,819 0%
EBITDA before EUR246 EUR243 1% EUR245 1%
Exceptional
Items andShare-based
Payment Expense (1)
EBITDA Margin 13.5% 13.5% - 13.4% -
Operating Profit EUR177 EUR147 20% EUR149 19%
Basic EPS (cent) 27.1 15.6 74% 39.4 (31%)
Pre-exceptional 15.3 16.0 (4%) 30.4 (50%)
EPS (cent)
Free Cash Flow(2) (EUR16) EUR12 - EUR199 -
Net Debt EUR2,775 EUR3,061 (9%) EUR2,752 1%
Net Debt to EBITDA 2.7x 3.2x - 2.7x -
(LTM)
(1) EBITDA before exceptional items and share-based payment expense is denoted by EBITDA throughout the remainder of themanagement commentary for ease of reference. A reconciliation of profit for the period to EBITDA before exceptional items andshare-based payment expense is set out on page 25.
(2) Free cash flow is set out on page 8. The IFRS cash flow is set out on page 15.
Highlights
-- Strong EBITDA of EUR246 million despite significant cost pressures
during the quarter
-- Performance reflects the strength and efficiency of SKG's integrated
system
-- Net debt/EBITDA of 2.7x stable versus year-end 2011 despite increased
working capital
-- High input costs and positive supply environment underpin continued
pricing progress
-- Expect full year 2012 EBITDA performance broadly similar to that
achieved in 2011
Performance Review and Outlook
Gary McGann, Smurfit Kappa Group CEO, commented: "We are pleased
to report a relatively strong EBITDA of EUR246 million for the
first quarter. Despite significant increases in input costs and
downward pressure on box prices in the period, our EBITDA margin of
13.5% reflects the efficiency of our integrated system in Europe.
Our Latin American businesses also continued to perform well,
contributing to 23% of the Group's overall EBITDA in the
quarter.
Basic EPS is 74% up compared to last year, primarily as a result
of exceptional gains. Sequentially, both our basic and
pre-exceptional EPS declined, largely as a result of a tax credit
in the fourth quarter of 2011.
Notwithstanding increased working capital levels in the quarter,
our net debt to EBITDA ratio was unchanged at 2.7x at the end of
March, and well within our objective of remaining below 3.0x
through the cycle. In the first quarter, we successfully completed
amendments to our Senior Credit Facility, providing us with
increased financial flexibility and extended debt maturities to
2016 and 2017.
During quarter one, 2012, box demand in Europe was stable
compared to the fourth quarter, 2011 levels, and industry
inventories reduced. This market backdrop combined with rising
input costs allowed SKG to implement price increases for testliner
and kraftliner during the first quarter and into April 2012 which
should underpin some box price recovery during the second half of
the year.
For the full year 2012, subject to macro-economic volatility and
normal business risk, we expect to deliver an EBITDA performance
broadly similar to that achieved in 2011. This will in turn support
good free cash flow generation and further de-leveraging, thereby
continuing to expand our available range of strategic and financial
options.
This strong performance expectation is underpinned by our
leadership position in packaging innovation and sustainability, our
efficient integrated operating system, and our continued financial
discipline at all levels of the company."
About Smurfit Kappa Group
Smurfit Kappa Group is a world leader in paper-based packaging
with operations in Europe and Latin America. Smurfit Kappa Group
operates in 21 countries in Europe and is the European leader in
containerboard, solidboard, corrugated and solidboard packaging and
has a key position in several other packaging and paper segments.
Smurfit Kappa Group also has a growing base in Eastern Europe and
operates in 9 countries in Latin America where it is the only
pan-regional operator.
Forward Looking Statements
Some statements in this announcement are forward-looking. They
represent expectations for the Group's business, and involve risks
and uncertainties. These forward-looking statements are based on
current expectations and projections about future events. The Group
believes that current expectations and assumptions with respect to
these forward-looking statements are reasonable. However, because
they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond the Group's control, actual
results or performance may differ materially from those expressed
or implied by such forward-looking statements.
Contacts
Smurfit Kappa GroupBertrand Paulet, +353 1 202 71
80ir@smurfitkappa.comorFTI Consulting+353 1 663 36
80smurfitkappa@fticonsulting.com
2012 First Quarter | Performance Overview
Compared to the fourth quarter of 2011, demand for SKG's
packaging solutions in the first quarter was 3% higher on an
absolute basis. However, when adjusted for a lower number of
working days in the fourth quarter, demand in the first quarter was
flat. Compared to the first quarter of 2011, SKG's total corrugated
volumes were approximately 1% lower.
Despite a sequential increase in input costs and a 2% average
reduction in box prices in the first quarter, SKG's EBITDA margin
of 13.5% was in line with the fourth quarter 2011. In a challenging
operating environment, this outcome highlights SKG's particular
ability to generate consistently strong margins and returns through
the cycle, underpinned by a differentiated commercial offering, and
a cost competitive, well invested, integrated system.
SKG's relatively strong first quarter performance also reflects
an ongoing focus on cost efficiency, with a further EUR30 million
of cost take-out benefits delivered across its system in the
period. SKG is benefiting from the increasing efficiency of its
paper mills, as returns from the ongoing capital investment
programme are being achieved. Recent investments included
significant rebuilds in its Swedish kraftliner mill and in two of
its German recycled mills, together with the closure of a higher
cost recycled mill in France.
From an industry perspective, following widespread downtime at
the end of 2011 and into 2012, inventories progressively reduced
during the first quarter, despite the start-up of a new recycled
machine by a competitor in the UK. The medium term supply outlook
remains favourable, as limited availability and higher cost of
fibre are increasing barriers to entry for new capacity. Currently,
only one new machine is expected to be built in Europe over the
next two years.
The supply outlook for kraftliner is also expected to remain
tight in the near to medium term, reflecting the reduction in US
imports since the end of 2011 and the recent bankruptcy of a
European producer, which will remove approximately 7% of the
relevant industry capacity. As the clear kraftliner market leader
in Europe, and a net seller of approximately 500,000 tonnes per
annum, SKG should strongly benefit from the resulting more
consolidated market for that grade.
The sudden rise in input costs since the beginning of 2012,
combined with a satisfactory market balance, has generated
broad-based support for paper price increases in Europe. Overall,
between February and April 2012, SKG has implemented price
increases of EUR80 per tonne for recycled containerboard and EUR30
per tonne for kraftliner. Further kraftliner pricing progress is
expected in quarter two. In line with the usual three to six months
lag, higher paper prices should underpin in some box price recovery
in the second half of 2012.
The Group's Latin American EBITDA of EUR55 million in the first
quarter was 11% higher year-on-year, primarily reflecting the
absence of the maintenance downtime in SKG's Colombian mill system
that occurred in March 2011. While EBITDA in Colombia was higher
year-on-year, Venezuela was broadly stable and Mexico and Argentina
were lower.
Working capital increased by EUR88 million in the first quarter
of 2012, broadly in line with the prior year outflow. Despite
higher working capital levels, the Group's net debt increased by
only EUR23 million in the period. Compared with the end of March
2011, SKG's net debt has reduced by EUR286 million, which
demonstrates the strong cash flow generation capability of the
business.
The marginal increase in net debt in the first quarter, combined
with a strong EBITDA performance contributed to an unchanged net
debt to EBITDA ratio of 2.7x at the end of March compared to the
year-end 2011 level. The Group expects good cash flow generation
and further de-leveraging in 2012.
2012 First Quarter | Financial Performance
At EUR1,823 million for the first quarter of 2012, sales revenue
was EUR20 million higher than in the first quarter of 2011, the
equivalent of 1%. However, allowing for the positive impact of
currency and hyperinflation accounting of EUR10 million, and for
the positive impact of acquisitions net of disposals of EUR8
million, the underlying sales revenue was broadly stable
year-on-year. Compared to the fourth quarter of 2011, sales revenue
in the first quarter of 2012 was marginally higher.
At EUR246 million, EBITDA in the first quarter of 2012 was EUR3
million higher than the first quarter of 2011. Currency,
acquisitions and disposals had a marginally positive impact.
Compared to the fourth quarter of 2011, EBITDA increased by EUR1
million.
Exceptional gains of EUR28 million were included in the first
quarter's 2012 operating profit. This included EUR10 million
primarily relating to the sale of land at SKG's former Valladolid
mill in Spain (operation closed in 2008), together with EUR18
million relating to the disposal of a company in Slovakia. The gain
primarily relates to the reclassification (under IFRS) of the
cumulative translation differences within equity from reserves to
retained earnings through the Income Statement. In the first
quarter of 2011, exceptional charges of EUR1 million related to the
on-going rationalisation of the European corrugated operations.
SKG's basic EPS increased from 15.6 cent in the first quarter of
2011 to 27.1 cent in the first quarter of 2012, primarily as a
result of the exceptional gains. On a pre-exceptional basis, EPS
was slightly lower year on year at 15.3 cent compared to 16.0 cent.
Compared with the fourth quarter of 2011 both SKG's basic and
pre-exceptional EPS declined, largely driven by a tax credit in the
fourth quarter of 2011 (as a result of the recognition of deferred
tax assets) compared to a tax expense in the first quarter of
2012.
2012 First Quarter | Free Cash Flow
Compared to a net inflow of EUR12 million in the first quarter
of 2011, the Group reported a net outflow of EUR16 million in the
first quarter of 2012. While EBITDA was 1% higher, the lower free
cash flow primarily resulted from higher capital expenditure and
cash tax outflows year-on-year.
Capital expenditure of EUR63 million in the first quarter of
2012 equated to 74% of depreciation, compared to 62% in the first
quarter of 2011. For the full year 2012, SKG expects to maintain
its capital expenditure at its normalised level of around 90% of
depreciation.
Compared to an EUR86 million increase in the first quarter of
2011, working capital increased by EUR88 million in the first
quarter of 2012. Higher absolute levels of working capital at the
end of the first quarter primarily resulted from a rise in debtors
and somewhat higher inventory values.
However, at 8.7% of annualised sales revenue, SKG's working
capital to sales ratio at the end of March 2012 actually improved
compared to the 9.2% reported at March 2011, thereby demonstrating
the Group's continuing focus on tight working capital
management.
Cash interest of EUR61 million in the first quarter of 2012 was
the same as the first quarter of 2011. Following on from the
successful amendments to its Senior Credit Facility in the first
quarter of 2012, and subsequent use of cash on balance sheet to
make early debt repayments of EUR330 million by the end of the
second quarter, SKG expects its cash interest in 2012 to be
slightly lower than in 2011.
Tax payments of EUR14 million in the first quarter of 2012 were
EUR4 million higher than in 2011.
In 2012, subject to normal economic and business risks, the
Group expects to deliver good free cash flow generation and further
de-leveraging, supported by an anticipated strong EBITDA
performance, continued discipline in capital expenditure and
slightly lower cash interest year-on-year, somewhat offset by
higher cash tax payments.
2012 First Quarter | Capital Structure
The Group's net debt increased by EUR23 million to EUR2,775
million during the first quarter, primarily reflecting the negative
free cash flow of EUR16 million, combined with a EUR13 million
outflow in respect of the purchase of own shares for the Group's
Deferred Annual Bonus Plan, and a EUR6 million outlay for the
acquisition of a bag-in-box operation in Argentina. These were
somewhat offset by positive currency impacts of EUR11 million,
mainly reflecting the relative strengthening of the euro against
the US dollar towards the end of the first quarter.
Despite a slightly higher net debt, the Group's net debt to
EBITDA ratio of 2.7x at the end of March 2012 was unchanged
compared to the 2011 year-end level. Through the cycle, the Group's
clear objective is to maintain its net debt to EBITDA ratio below
3.0x.
Compared with March 2011, SKG's net debt at the end of March
2012 was EUR286 million lower, the equivalent of a 9% reduction.
This positive outcome re-confirms SKG's track record of delivering
strong free cash flow generation through the cycle.
In line with its proactive approach to capital structure
management, in the first quarter the Group successfully completed
amendments to its Senior Credit Facility ('SCF'), providing it with
extended debt maturities and significantly enhanced financial
flexibility.
Lenders comprising 98% of the SCF consented to the proposed
amendments, while lenders holding 90% of Term Loans B & C and
77% of the Revolving Credit Facilities elected to extend their
commitments to 2016 and 2017. The amendments became effective on 1
March 2012.
By the end of the second quarter of 2012, SKG will have prepaid
EUR330 million of its SCF debt at par, funded from cash on balance
sheet. This prepayment will effectively remove all of the Group's
remaining SCF maturities in 2012, 2013 and 2014.
As a result of the amendment and subsequent cash prepayment, the
Group has no SCF maturities before 2016, and has increased
flexibility to raise longer-dated capital, at a time of its
choosing, to refinance its SCF in the future and/or its Senior
Subordinated Notes due in 2015.
The Group's average debt maturity profile at the end of March
2012 has increased from 4.4 years to 5.1 years (5.4 years pro-forma
the cash prepayment). The Group's liquidity remains strong, with
EUR820 million of cash on its balance sheet at the end of March
2012, together with committed undrawn credit facilities of
approximately EUR525 million.
2012 First Quarter | Operating efficiency
Commercial offering and innovation
In the first quarter of 2012, SKG's business with pan-European
customers continued to outperform, growing by 4.9% year-on-year in
a generally flat market. This demonstrates the attractiveness of
SKG's offering in an increasingly international customer world.
With approximately 90% of its pan-European business contracted from
one to six years, SKG is building long-term sustainable
partnerships with its customers.
Using the skills and experience acquired in servicing the
increasing demands of international customers, SKG has continued to
pay special attention to the recruitment and retention of local
customers who benefit from the best international standards of the
Group's businesses.
SKG's continuing commercial success is underpinned by its
long-standing business positioning as a paper packaging
"one-stop-shop", characterised by a broad and expanding geographic
footprint, a diversified product range, and unrivalled design and
innovation capabilities.
During the first quarter, SKG showcased its "one-stop-shop" and
extensive range of sustainable and innovative packaging offerings
at its third innovation and sustainability conference held in the
Netherlands. Approximately 150 of SKG's key customers attended the
event, recognising SKG's critical role in adding value to their
supply chain in an increasingly demanding market place.
A selection of these customers participated as part of the
judging panel to choose the projects, products and employees to be
awarded for producing SKG's most innovative packaging solutions and
sustainability ideas for the past year, among 200 pre-selected
initiatives. A similar event will be organised in Latin America in
the near future.
As witnessed at the awards ceremony, an increasing competitive
advantage for SKG is its drive in the area of sustainability, with
a stated objective to be the first European company to guarantee
that all of its packaging solutions are coming from sustainable
sources. The Group's fourth annual sustainable development report
will be published in June 2012 and will elaborate extensively on
progress against SKG's stated targets and on its work in the wider
area of Corporate Social Responsibility.
Since the beginning of 2012, SKG received further independent
testimony of its leadership position in innovation, sustainability
and design. These included the development, for Philips, of an
environmentally friendly paper-based packaging solution to replace
the historical plastic package for the transport and handling of
delicate electronic devices through its supply chain.
In February SKG was chosen by Danone Spain as its "Best Supplier
for 2011" in the Raw Materials & Packaging Category. This award
reflects SKG's strong performance in all of the appraised areas,
including "product quality and service", "most innovative idea" and
"best sustainable development idea". For more than 11 years, Danone
has placed its trust in SKG to develop innovative solutions to
package its products.
In April 2012, one of SKG's innovative designs, called "Care
bottle packaging" won a Gold award in Germany. The Care bottle
packaging is a patent protected design, and has been approved by
DHL for shipping wine bottles, amongst other products.
Cost take-out programme
In 2011, SKG commenced a new two year cost take-out initiative,
with a target to generate EUR150 million of savings by the end of
2012. This programme is based on a detailed bottom-up approach and
is subject to a formal reporting system. SKG generated EUR100
million of cost take-out benefits in 2011.
A further EUR30 million of cost take-out was delivered in the
first quarter of 2012, partially mitigating the impact of
significant increases in input costs during the period, thereby
contributing to the delivery of the Group's relatively strong
EBITDA margin of 13.5%.
Having reviewed its cost base, SKG is satisfied that it can
upscale its original two year (2011/12) cost take-out target from
EUR150 million to over EUR200 million, implying an upscaled 2012
cost take-out objective of over EUR100 million.
2012 First Quarter | Performance Review
Europe
SKG's total corrugated shipments in the first quarter of 2012
were 1% lower than in the first quarter of 2011. Within that
number, SKG's box volumes were generally flat, while sheet volumes,
a more commoditised product offering, reduced by 8% as a result of
SKG's strong stance on pricing.
Following the decline in paper prices in the second half of
2011, renewed input cost pressure in December and into the new year
generated significant margin compression for non-integrated
producers. As a result, sizeable amounts of market-related downtime
were announced at 2011 year-end and into 2012 which, combined with
higher paper exports overseas, led to a progressive reduction in
industry inventories during the first quarter.
On the cost side, OCC prices increased by approximately EUR35
per tonne through the first quarter, reflecting renewed Chinese
demand. Energy and distribution costs also increased. Lower
inventories combined with a steep rise in input costs generated
broad-based support for paper price increases.
As a result, European recycled containerboard prices have
increased by approximately EUR80 per tonne between February and
April, the equivalent of a 20% increase. Despite that increase, in
April the spread between OCC and testliner prices remained
approximately EUR60 per tonne lower than at the 2007 peak, thereby
clearly highlighting the challenges faced by less efficient
capacity in the industry. In that context, the closure of three
small recycled containerboard mills was announced in Europe since
the beginning of 2012 (representing a combined 185,000 tonnes of
capacity).
In the case of SKG, following the permanent closure of 10 less
efficient containerboard mills since 2005, and in light of the
significant ongoing investments in its "champion" mills, the Group
is equipped with an efficient and fully integrated recycled
containerboard system. As can be seen from the relatively strong
EBITDA margin delivered in the quarter by the European operations,
SKG's system should deliver a strong performance in any operating
environment.
On the kraftliner side, US imports into Europe were 22% lower
year-on-year in the fourth quarter of 2011. Imports remained
measured into 2012, which contributed to maintain an appropriate
balance in the market through the first quarter. In April, one of
the Group's long-standing competitors announced the permanent
closure of its 290,000 tonnes kraftliner mill in Norway,
representing approximately 7% of the relevant industry capacity.
This event is expected to further tighten the supply for that grade
over the near to medium term, with SKG well positioned to benefit
from it.
In the quarter SKG announced a kraftliner price increase of
EUR60 per tonne, of which EUR30 per tonne has been implemented to
the end of April. The Group currently expects to implement the
remainder of this necessary kraftliner price increase during the
second quarter.
On the corrugated side, as expected, prices came under downward
pressure in the first quarter, reflecting the weaker paper prices
that prevailed in the second half of 2011. On average, SKG's
European corrugated prices were 2% lower in the first quarter than
in the fourth quarter of 2011. Into the second quarter, corrugated
prices are expected to remain generally stable.
Latin America
In the first quarter, Latin American EBITDA of EUR55 million was
11% higher year-on-year, and represented 23% of the Group's total
EBITDA. The region delivered an EBITDA margin of 16.6% in the
quarter, broadly in line with the prior year performance.
While SKG's corrugated volumes in Colombia were 2% higher
year-on-year, pricing was relatively stable, highlighting moderate
inflation in the country. The country's EBITDA was significantly
higher year-on-year, primarily reflecting the absence of the
planned maintenance downtime of its Cali mill that occurred in
March 2011, combined with the benefits of SKG's ongoing cost
take-out efforts.
In the challenging Venezuelan market, demand declined in the
first quarter of 2012. Continuing high inflation in the country was
offset by the Group's operating efficiency actions, as well as some
necessary price recovery. SKG is planning downtime in its
Venezuelan mill system during the second quarter of 2012.
Higher demand and 3% higher box prices in Mexico were not
sufficient to fully offset the significant fibre and energy cost
inflation, resulting in lower EBITDA in the first quarter on a
year-on-year basis. The first quarter result was also negatively
impacted by the planned downtime to upgrade the Group's main
containerboard machine in Mexico city.
The volumes and profitability of the Argentinian operation in
the first quarter were negatively impacted by a prolonged strike in
one of its packaging plants. Negotiations are continuing in an
effort to resolve the dispute. Paper and box prices were
significantly higher year-on-year, somewhat compensating for the
high inflation level prevailing in the country.
Despite some country-specific challenges from time to time, the
Group believes that the geographic diversity of its business in the
Latin American region, together with the proven ability of its
local management to drive the business forward, will allow it to
continue to deliver a strong performance through the cycle. Latin
America remains a key target region for SKG's future growth.
Summary Cash Flow(1)
Summary cash flows for the first quarter are set out in the following table.
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Pre-exceptional EBITDA 246 243
Cash interest expense (61) (61)
Working capital change (88) (86)
Current provisions (4) (3)
Capital expenditure (63) (54)
Change in capital creditors (27) (6)
Tax paid (14) (10)
Sale of fixed assets 8 1
Other (13) (12)
Free cash flow (16) 12
Share issues 4 7
Ordinary shares purchased - own shares (13) -
Sale of businesses and investments 1 4
Purchase of investments (6) (1)
Dividends (1) -
Derivative termination receipts 1 -
Net cash (outflow)/inflow (30) 22
Deferred debt issue costs amortised (4) (4)
Currency translation adjustments 11 31
(Increase)/decrease in net debt (23) 49
(1) The summary cash flow is prepared on a different basis to the
cash flow statement under IFRS. The principal difference
is that thesummary cash flow details movements in net debt
while the IFRS cash flow details movements in cash and
cash equivalents. Inaddition, the IFRS cash flow has different
sub-headings to those used in the summary cash flow.
A reconciliation of the free cashflow to cash generated
from operations in the IFRS cash flow is set out below.
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Free cash flow (16) 12
Add back: Cash interest 61 61
Capital expenditure (net of change in capital creditors) 90 60
Tax payments 14 10
Less: Sale of fixed assets (8) (1)
Profit on sale of assets and businesses - non exceptional (3) (5)
Non-cash financing activities (5) -
Cash generated from operations 133 137
Capital Resources
The Group's primary sources of liquidity are cash flow from
operations and borrowings under the revolving credit facility. The
Group's primary uses of cash are for debt service and capital
expenditure.
At 31 March 2012 Smurfit Kappa Funding plc had outstanding
EUR217.5 million 7.75% senior subordinated notes due 2015 and
US$200 million 7.75% senior subordinated notes due 2015. In
addition Smurfit Kappa Treasury Funding Limited had outstanding
US$292.3 million 7.50% senior debentures due 2025 and the Group had
outstanding EUR207 million variable funding notes issued under the
new EUR250 million accounts receivable securitisation program
maturing in November 2015.
Smurfit Kappa Acquisitions had outstanding EUR500 million 7.25%
senior secured notes due 2017 and EUR500 million 7.75% senior
secured notes due 2019. Smurfit Kappa Acquisitions and certain
subsidiaries are also party to a senior credit facility. The senior
credit facility comprises a EUR94 million amortising Tranche A
maturing in 2012, a EUR95 million Tranche B maturing in 2013, a
EUR719 million Tranche B4 maturing in 2016, a EUR77 million Tranche
C maturing in 2014 and a EUR727 million Tranche C4 maturing in
2017. In addition, as at 31 March 2012, the facility includes a
EUR525 million revolving credit facility of which there were no
drawings under facilities supported by letters of credit.
The following table provides the range of interest rates as of
31 March 2012 for each of the drawings under the various senior
credit facility term loans.
BORROWING ARRANGEMENT CURRENCY INTEREST RATE
Term Loan A EUR 3.049%
Term Loan B EUR 3.551% - 4.444%
USD 3.708%
Term Loan B4 EUR 4.051% - 4.944%
USD 4.208%
Term Loan C EUR 3.801% - 4.694%
USD 3.958%
Term Loan C4 EUR 4.301% - 5.194%
USD 4.458%
Borrowings under the revolving credit facility are available to
fund the Group's working capital requirements, capital expenditures
and other general corporate purposes.
Market Risk and Risk Management Policies
The Group is exposed to the impact of interest rate changes and
foreign currency fluctuations due to its investing and funding
activities and its operations in different foreign currencies.
Interest rate risk exposure is managed by achieving an appropriate
balance of fixed and variable rate funding. At 31 March 2012 the
Group had fixed an average of 72% of its interest cost on
borrowings over the following twelve months.
Our fixed rate debt comprised mainly EUR500 million 7.25% senior
secured notes due 2017, EUR500 million 7.75% senior secured notes
due 2019, EUR217.5 million 7.75% senior subordinated notes due
2015, US$200 million 7.75% senior subordinated notes due 2015 and
US$292.3 million 7.50% senior debentures due 2025. In addition the
Group also has EUR1,110 million in interest rate swaps with
maturity dates ranging from April 2012 to July 2014.
Our earnings are affected by changes in short-term interest
rates as a result of our floating rate borrowings. If LIBOR
interest rates for these borrowings increase by one percent, our
interest expense would increase, and income before taxes would
decrease, by approximately EUR11 million over the following twelve
months. Interest income on our cash balances would increase by
approximately EUR8 million assuming a one percent increase in
interest rates earned on such balances over the following twelve
months.
The Group uses foreign currency borrowings, currency swaps,
options and forward contracts in the management of its foreign
currency exposures.
Group Income
Statement
- First Quarter
Unaudited Unaudited
3 months to 31-Mar-12 3 months to 31-Mar-11
Pre-exceptional2012 Exceptional2012 Total2012 Pre-exceptional2011 Exceptional2011 Total2011
EURm EURm EURm EURm EURm EURm
Revenue 1,823 - 1,823 1,803 - 1,803
Cost of sales (1,296) - (1,296) (1,296) - (1,296)
Gross profit 527 - 527 507 - 507
Distribution costs (143) - (143) (139) - (139)
Administrative (235) - (235) (220) - (220)
expenses
Other operating - 28 28 - - -
income
Other operating - - - - (1) (1)
expenses
Operating profit 149 28 177 148 (1) 147
Finance costs (106) - (106) (114) - (114)
Finance income 34 - 34 43 - 43
Profit on disposal - - - 2 - 2
ofassociate
Profit before 77 28 105 79 (1) 78
income tax
Income tax expense (42) (49)
Profit for the 63 29
financial
period
Attributable to:
Owners of the Parent 60 34
Non-controlling 3 (5)
interests
Profit for the 63 29
financial
period
Earnings per share
Basic earnings per 27.1 15.6
share - cent
Diluted earnings 26.5 15.3
per share - cent
Group Statement
of
Comprehensive
Income
Unaudited Unaudited
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Profit for the 63 29
financial
period
Other
comprehensive
income:
Foreign 35 (47)
currency
translation
adjustments
Defined benefit
pension plans
including
payroll
tax:
- Actuarial (31) (24)
loss
- Movement in 3 3
deferred tax
Effective portion
of
changes in fair
value of cash
flow hedges:
- Movement out 6 6
of reserve
- New fair (4) 21
value
adjustments
into reserve
- Movement in - (3)
deferred tax
Total 9 (44)
other
comprehensive
income/(expense)
Total 72 (15)
comprehensive
income/(expense)
for
the financial
period
Attributable
to:
Owners of the 64 (2)
Parent
Non-controlling 8 (13)
interests
72 (15)
Group Balance Sheet
Unaudited Unaudited Audited
31-Mar-12 31-Mar-11 31-Dec-11
EURm EURm EURm
ASSETS
Non-current assets
Property, plant 2,976 2,956 2,973
and equipment
Goodwill and 2,231 2,193 2,210
intangible
assets
Available-for-sale 32 32 32
financial assets
Investment in 14 14 14
associates
Biological assets 120 85 114
Trade and other 4 4 5
receivables
Derivative financial 3 - 6
instruments
Deferred income 164 125 177
tax assets
5,544 5,409 5,531
Current assets
Inventories 704 685 690
Biological assets 9 7 10
Trade and other 1,430 1,399 1,326
receivables
Derivative financial 4 5 7
instruments
Restricted cash 9 12 12
Cash and cash 811 541 845
equivalents
2,967 2,649 2,890
Total assets 8,511 8,058 8,421
EQUITY
Capital and reserves
attributable
to the owners of
the Parent
Equity share capital - - -
Capital and other 2,350 2,308 2,336
reserves
Retained earnings (296) (524) (341)
Total equity 2,054 1,784 1,995
attributable
to
the owners of
the Parent
Non-controlling 200 162 191
interests
Total equity 2,254 1,946 2,186
LIABILITIES
Non-current
liabilities
Borrowings 3,410 3,459 3,450
Employee benefits 680 606 655
Derivative financial 55 104 54
instruments
Deferred income tax 209 198 210
liabilities
Non-current income 13 9 10
tax liabilities
Provisions for 60 47 55
liabilities
and charges
Capital grants 13 14 13
Other payables 7 7 10
4,447 4,444 4,457
Current liabilities
Borrowings 185 155 159
Trade and other 1,502 1,427 1,504
payables
Current income tax 47 42 36
liabilities
Derivative financial 60 18 59
instruments
Provisions for 16 26 20
liabilities
and charges
1,810 1,668 1,778
Total liabilities 6,257 6,112 6,235
Total equity and 8,511 8,058 8,421
liabilities
Group Statement of Changes in Equity
Capital and other reserves
Equitysharecapital Sharepremium Ownshares Reverseacquisitionreserve Cash flowhedgingreserve Foreigncurrencytranslationreserve Share-basedpaymentreserve Retainedearnings Totalequityattributableto theowners ofthe Parent Non-controllinginterests Totalequity
Unaudited EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
At 1 January 2012 - 1,945 - 575 (35) (228) 79 (341) 1,995 191 2,186
Profit for the financial period - - - - - - - 60 60 3 63
Other comprehensive income:
Foreign currency translationadjustments - - - - - 30 - - 30 5 35
Defined benefit pension plansincluding - - - - - - - (28) (28) - (28)
payroll tax
Effective portion of changes in - - - - 2 - - - 2 - 2
fairvalue of cash flow hedges
Total comprehensive income forthe period - - - - 2 30 - 32 64 8 72
Shares issued - 4 - - - - - - 4 - 4
Shares acquired by DeferredShare Awards Trust - - (13) - - - - - (13) - (13)
Hyperinflation adjustment - - - - - - - 13 13 2 15
Dividends paid to non-controllinginterests - - - - - - - - - (1) (1)
Recycling of cumulative foreignexchange - - - - - (17) - - (17) - (17)
reserve on disposal
Share-based payment - - - - - - 8 - 8 - 8
At 31 March 2012 - 1,949 (13) 575 (33) (215) 87 (296) 2,054 200 2,254
Group Statement of Changes
in Equity (continued)
Capital and other reserves
Equitysharecapital Sharepremium Reverseacquisitionreserve Cash flowhedgingreserve Foreigncurrencytranslation reserve Share-basedpaymentreserve Retainedearnings Total equityattributableto theowners ofthe Parent Non-controllinginterests Totalequity
Unaudited EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
At 1 January 2011 - 1,937 575 (45) (216) 64 (552) 1,763 173 1,936
Profit for the financial period - - - - - - 34 34 (5) 29
Other comprehensive income:
Foreign currency translationadjustments - - - - (39) - - (39) (8) (47)
Defined benefit pension plansincluding - - - - - - (21) (21) - (21)
payroll tax
Effective portion of changes in - - - 24 - - - 24 - 24
fairvalue of cash flow hedges
Total comprehensiveincome/(expense) - - - 24 (39) - 13 (2) (13) (15)
for the period
Shares issued - 7 - - - - - 7 - 7
Hyperinflation adjustment - - - - - - 15 15 2 17
Share-based payment - - - - - 1 - 1 - 1
At 31 March 2011 - 1,944 575 (21) (255) 65 (524) 1,784 162 1,946
Group Cash Flow
Statement
Unaudited Unaudited
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Cash flows from
operating
activities
Profit for the 63 29
financial
period
Adjustment for
Income tax expense 42 49
Profit on sale (28) (2)
of assets
and businesses
Amortisation of (1) -
capital grants
Equity settled 8 1
share-based
payment expense
Amortisation of 5 7
intangible
assets
Profit on disposal - (2)
of associates
Depreciation charge 80 82
Net finance costs 72 71
Change in inventories (8) (55)
Change in biological 4 5
assets
Change in trade and (92) (131)
other receivables
Change in trade and 8 97
other payables
Change in provisions (9) (3)
Change in employee (12) (14)
benefits
Foreign currency - 1
translation
adjustments
Other 1 2
Cash generated from 133 137
operations
Interest paid (47) (46)
Income taxes paid:
Overseas corporation (14) (10)
tax (net
of tax refunds) paid
Net cash inflow from 72 81
operating activities
Cash flows from
investing
activities
Interest received 2 1
Purchase of property, (88) (60)
plant and equipment
and biological assets
Purchase of intangible (2) -
assets
Decrease/(increase) 3 (5)
in restricted cash
Disposal of property, 11 6
plant and equipment
Disposal of associates - 4
Purchase of subsidiaries (11) -
and
non-controlling
interests
Deferred consideration 6 (1)
Net cash outflow from (79) (55)
investing activities
Cash flows from
financing
activities
Proceeds from issue of 4 7
new ordinary shares
Ordinary shares (13) -
purchased
- own shares
(Decrease)/increase in (10) 20
interest-bearing
borrowings
Repayment of finance (2) (2)
lease liabilities
Derivative termination 1 -
receipts
Deferred debt (10) -
issue costs
Dividends paid to (1) -
non-controlling
interests
Net (31) 25
cash (outflow)/inflow
from
financing activities
(Decrease)/increase (38) 51
in cash
and cash equivalents
Reconciliation
of opening
to closing
cash and cash
equivalents
Cash and cash 825 481
equivalents
at 1 January
Currency translation 2 (4)
adjustment
(Decrease)/increase (38) 51
in cash
and cash equivalents
Cash and cash 789 528
equivalents
at 31 March
1.General Information
Smurfit Kappa Group plc ('SKG plc') ('the Company') ('the
Parent') and its subsidiaries (together the 'Group') manufacture,
distribute and sell containerboard, corrugated containers and other
paper-based packaging products such as solidboard and graphicboard.
The Company is a public limited company whose shares are publicly
traded. It is incorporated and tax resident in Ireland. The address
of its registered office is Beech Hill, Clonskeagh, Dublin 4,
Ireland.
2.Basis of Preparation
The annual consolidated financial statements of SKG plc are
prepared in accordance with International Financial Reporting
Standards ('IFRS') issued by the International Accounting Standards
Board ('IASB') and adopted by the European Union ('EU'); and, in
accordance with Irish law.
The financial information presented in this report has been
prepared to comply with the requirement to publish an 'Interim
management statement' for the first quarter, in accordance with the
Transparency Regulations. The Transparency Regulations do not
require Interim management statements to be prepared in accordance
with International Accounting Standard 34 - 'Interim Financial
Information' ('IAS 34'). Accordingly the Group has not prepared
this financial information in accordance with IAS 34.
The financial information has been prepared in accordance with
the Group's accounting policies. Full details of the accounting
policies adopted by the Group are contained in the financial
statements included in the Group's Annual Report for the year ended
31 December 2011 which is available on the Group's website
www.smurfitkappa.com. The accounting policies and methods of
computation and presentation adopted in the preparation of the
Group financial information are consistent with those described and
applied in the Annual Report for the financial year ended 31
December 2011. No new standards, amendments or interpretations
which became effective in 2012 will have an effect on the Group
financial statements.
The condensed interim Group financial information includes all
adjustments that management considers necessary for a fair
presentation of such financial information. All such adjustments
are of a normal recurring nature. Some tables in this interim
statement may not add correctly due to rounding.
The condensed interim Group financial information presented does
not constitute full group accounts within the meaning of Regulation
40(1) of the European Communities (Companies: Group Accounts)
Regulations, 1992 of Ireland insofar as such group accounts would
have to comply with all of the disclosure and other requirements of
those Regulations. Full Group accounts for the year ended 31
December 2011 will be filed with the Irish Registrar of Companies
in due course. The audit report on those Group accounts was
unqualified.
3.Segmental Analyses
With effect from 1 September, 2011 the Group reorganised the way
in which its European businesses are managed. As part of this
reorganisation for commercial reasons, the businesses which
previously formed part of the Specialties segment were
operationally merged with the Europe segment (formally known as
Packaging Europe) and are now managed on a combined basis to make
decisions about the allocation of resources and in assessing
performance. After this date, the Group ceased to produce financial
information for Specialties as the financial information of all of
its plants is now combined with the other Europe segment
plants.
As a result, the Group has now two segments on the basis of
which performance is assessed and resources are allocated: 1)
Europe and 2) Latin America and segmental information is presented
below on this basis. Prior year segmental information has been
restated to conform to the current year segment presentation.
The Europe segment is highly integrated. It includes a system of
mills and plants that produces a full line of containerboard that
is converted into corrugated containers. It also includes the
bag-in-box and solidboard businesses. The Latin America segment
comprises all forestry, paper, corrugated and folding carton
activities in a number of Latin American countries. Inter segment
revenue is not material. No operating segments have been aggregated
for disclosure purposes.
Segment disclosures are based on operating segments identified
under IFRS 8. Segment profit is measured based on earnings before
interest, tax, depreciation, amortisation, exceptional items and
share-based payment expense ('EBITDA before exceptional items').
Segmental assets consist primarily of property, plant and
equipment, biological assets, goodwill and intangible assets,
inventories, trade and other receivables, deferred income tax
assets and cash and cash equivalents.
3 months to 31-Mar-12 3 months to 31-Mar-11
Europe LatinAmerica Total Europe LatinAmerica Total
EURm EURm EURm EURm EURm EURm
Revenue
and
Results
Revenue 1,490 333 1,823 1,507 296 1,803
EBITDA 200 55 255 201 50 251
before
exceptional
items
Segment 28 - 28 (1) - (1)
exceptional
items
EBITDA 228 55 283 200 50 250
after
exceptional
items
Unallocated (9) (8)
centre
costs
Share-based (8) (1)
payment
expense
Depreciation (84) (87)
and
depletion
(net)
Amortisation (5) (7)
Finance (106) (114)
costs
Finance 34 43
income
Profit - 2
on
disposal
of
associate
Profit 105 78
before
income
tax
Income (42) (49)
tax
expense
Profit 63 29
for
the
financial
period
Assets
Segment 6,209 1,554 7,763 6,280 1,264 7,544
assets
Investment 1 13 14 1 13 14
in
associates
Group 734 500
centre
assets
Total 8,511 8,058
assets
4.Exceptional Items
The following items 3 months to31-Mar-12 3 months to31-Mar-11
are regarded
as exceptional
in nature:
EURm EURm
Reorganisation and - (1)
restructuring
costs
Disposal of assets 28 -
and operations
Exceptional items 28 (1)
included
in operating profit
Exceptional gains of EUR28 million were included in the first
quarter's 2012 operating profit.
This included EUR10 million primarily relating to the sale of
land at SKG's former Valladolid mill in Spain (operation closed in
2008), together with EUR18 million relating to the disposal of a
company in Slovakia. The gain primarily relates to the
reclassification (under IFRS) of the cumulative translation
differences within equity from reserves to retained earnings
through the Income Statement.
In the first quarter of 2011, exceptional charges of EUR1
million related to the on-going rationalisation of the European
corrugated operations.
5.Finance Costs
and Income
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Finance costs:
Interest 33 33
payable
on bank
loans
and overdrafts
Interest payable - 1
on
finance leases
and hire
purchase
contracts
Interest payable 33 33
on
other
borrowings
Foreign 2 3
currency
translation
loss on debt
Fair value loss 10 18
on derivatives
not designated
as hedges
Interest cost 25 25
on employee
benefit plan
liabilities
Net monetary 3 1
loss
-
hyperinflation
Total finance 106 114
costs
Finance income:
Other interest (2) (1)
receivable
Foreign (11) (19)
currency
translation
gain on debt
Fair value gain (2) (4)
on derivatives
not designated
as hedges
Expected return (19) (19)
on employee
benefit plan
assets
Total finance (34) (43)
income
Net finance 72 71
costs
6. Income Tax
Expense
Income tax
expense
recognised in
the Group
Income
Statement
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Current
taxation:
Europe 17 15
Latin America 11 32
28 47
Deferred 14 2
taxation
Income tax 42 49
expense
Current tax is
analysed
as follows:
Ireland 1 1
Foreign 27 46
28 47
Income tax
recognised
in the Group
Statement
of
Comprehensive
Income
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Arising on (3) (3)
actuarial
gains/losses
on defined
benefit plans
including
payroll tax
Arising on - 3
qualifying
derivative
cash flow
hedges
(3) -
7. Employee
Post
Retirement
Schemes
- Defined
Benefit
Expense
The table below
sets out
the components
of the
defined benefit
expense
for
the quarter:
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Current service 7 7
cost
Expected return (19) (19)
on plan assets
Interest 25 25
cost on
plan
liabilities
Net financial 6 6
expense
Defined benefit 13 13
expense
Included in cost of sales, distribution costs and administrative
expenses is a defined benefit expense of EUR7 million for the
quarter (2011: EUR7 million). Expected return on plan assets of
EUR19 million (2011: EUR19 million) is included in finance income
and interest cost on plan liabilities of EUR25 million (2011: EUR25
million) is included in finance costs in the Group Income
Statement.
The amounts recognised in the Group Balance Sheet were as
follows:
31-Mar-12 31-Dec-11
EURm EURm
Present value of funded or partially (1,751) (1,715)
funded obligations
Fair value of plan assets 1,518 1,486
Deficit in funded or partially (233) (229)
funded plans
Present value of wholly (447) (426)
unfunded obligations
Net employee benefit liabilities (680) (655)
The employee benefits provision has increased from EUR655
million at 31 December 2011 to EUR680 million at March 2012. The
main reason for this is the increase in liabilities due to the
lower Eurozone AA Corporate bond yields was not fully offset by
plan assets return.
8.Earnings Per Share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the Parent by the weighted average
number of ordinary shares in issue during the period.
3 months to31-Mar-12 3 months to31-Mar-11
Profit attributable 60 34
to the owners
of the Parent
(EUR million)
Weighted average 222 221
number
of ordinary
shares in issue
(million)
Basic earnings per 27.1 15.6
share - cent
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares which comprise
convertible shares issued under the management equity plans and
matching shares issued under the Deferred Annual Bonus Plan.
3 months to31-Mar-12 3 months to31-Mar-11
Profit attributable 60 34
to the owners
of the Parent
(EUR million)
Weighted average 222 221
number
of ordinary
shares in issue
(million)
Potential dilutive 5 5
ordinary
shares assumed
(million)
Diluted weighted 227 226
average ordinary
shares (million)
Diluted earnings 26.5 15.3
per share - cent
9.Property, Plant and Equipment
Land andbuildings Plant andequipment Total
EURm EURm EURm
Three months
ended
31 March 2012
Opening net 1,115 1,858 2,973
book
amount
Reclassification 2 (3) (1)
Additions 10 47 57
Acquisitions 1 1 2
Depreciation (12) (68) (80)
charge
for the
period
Hyperinflation 3 3 6
adjustment
Foreign 7 12 19
currency
translation
adjustment
At 31 March 1,126 1,850 2,976
2012
Year ended 31
December
2011
Opening net 1,128 1,880 3,008
book
amount
Reclassification 19 (25) (6)
Additions 4 282 286
Acquisitions 2 7 9
Depreciation (50) (296) (346)
charge
for the year
Impairments (5) (10) (15)
Retirements (2) (1) (3)
and
disposals
Hyperinflation 21 23 44
adjustment
Foreign (2) (2) (4)
currency
translation
adjustment
At 1,115 1,858 2,973
31 December
2011
10.Analysis of Net Debt
31-Mar-12 31-Dec-11
EURm EURm
Senior credit facility
Revolving credit facility(1) - interest (9) (6)
at relevant interbank
rate + 2.5% on RCF1,+2.75% on
RCF2 and +3.25% on RCF3(8)
Tranche A term loan(2a)- interest at 94 94
relevant interbank rate + 2.5%(8)
Tranche B term loan(2b)- interest at 95 822
relevant interbank rate + 3.125%(8)
Tranche B4 term loan(2c)- interest at 719 -
relevant interbank rate + 3.625%(8)
Tranche C term loan(2d)- interest at 77 819
relevant interbank rate + 3.375%(8)
Tranche C4 term loan(2e)- interest at 727 -
relevant interbank rate + 3.875%(8)
US Yankee bonds (including accrued interest)(3) 223 226
Bank loans and overdrafts 78 71
Cash (820) (857)
2015 receivables securitisation 204 206
variable funding notes(4)
2015 cash pay subordinated notes 364 376
(including accrued interest)(5)
2017 senior secured notes (including 500 490
accrued interest)(6)
2019 senior secured notes (including 502 492
accrued interest)(7)
Net debt before finance leases 2,754 2,733
Finance leases 12 13
Net debt including leases 2,766 2,746
Balance of revolving credit facility 9 6
reclassified to debtors
Net debt after reclassification 2,775 2,752
(1) Revolving credit facility ('RCF') of EUR525 million split into RCF1, RCF2 and RCF3 of EUR60 million, EUR62 million and EUR403 million(available under the senior credit facility) to be repaid in full in 2012, 2013 and 2016 respectively. (Revolver loans - nil, drawnunder ancillary facilities and facilities supported by letters of credit - nil)
(2a) Tranche A term loan due to be repaid in certain instalments in 2012
(2b) Tranche B term loan due to be repaid in full in 2013
(2c) Tranche B4 term loan due to be repaid in full in 2016
(2d) Tranche C term loan due to be repaid in full in 2014
(2e) Tranche C4 term loan due to be repaid in full in 2017
(3) US$292.3 million 7.50% senior debentures due 2025
(4) Receivables securitisation variable funding notes due 2015
(5) EUR217.5 million 7.75% senior subordinated notes due 2015 and US$200 million 7.75% senior subordinated notes due 2015
(6) EUR500 million 7.25% senior secured notes due 2017
(7) EUR500 million 7.75% senior secured notes due 2019
(8) The margins applicable to the senior credit facility are determined as follows:
Net debt/EBITDA ratio Tranche Aand RCF1 Tranche B Tranche C RCF2 RCF3 Tranche B4 Tranche C4
Greater than 4.0 : 1 3.250% 3.375% 3.625% 3.500% 4.000% 3.875% 4.125%
4.0 : 1 or less but morethan 3.5 : 1 3.000% 3.125% 3.375% 3.250% 3.750% 3.625% 3.875%
3.5 : 1 or less but morethan 3.0 : 1 2.750% 3.125% 3.375% 3.000% 3.500% 3.625% 3.875%
3.0 : 1 or less but morethan 2.5 : 1 2.500% 3.125% 3.375% 2.750% 3.250% 3.625% 3.875%
2.5 : 1 or less 2.500% 3.125% 3.375% 2.750% 3.125% 3.500% 3.750%
11.Venezuela
Hyperinflation
As discussed more fully in the 2011 annual report, Venezuela
became hyperinflationary during 2009 when its cumulative inflation
rate for the past three years exceeded 100%. As a result, the Group
applied the hyperinflationary accounting requirements of IAS 29 to
its Venezuelan operations at 31 December 2009 and for all
subsequent accounting periods.
The index used to reflect current values is derived from a
combination of Banco Central de Venezuela's National Consumer Price
Index from its initial publication in December 2007 and the
Consumer Price Index for the metropolitan area of Caracas for
earlier periods. The level of and movement in the price index at
March 2012 and 2011 are as follows:
31-Mar-12 31-Mar-11
Index at period end 275.0 220.7
Movement in period 3.5% 6.0%
As a result of the entries recorded in respect of
hyperinflationary accounting under IFRS, the Group Income Statement
is impacted as follows: Revenue EUR1 million decrease (2011: EUR2
million decrease), pre-exceptional EBITDA EUR2 million decrease
(2011: EUR2 million decrease) and profit after taxation EUR10
million decrease (2011: EUR8 million decrease). In 2012, a net
monetary loss of EUR3 million (2011: EUR1 million loss) was
recorded in the Group Income Statement. The impact on our net
assets and our total equity is an increase of EUR5 million (2011:
EUR9 million increase).
Supplemental Financial Information
EBITDA before exceptional items and share-based payment expense
is denoted by EBITDA in the following schedules for ease of
reference.
Reconciliation of
Profit to EBITDA
3 months to31-Mar-12 3 months to31-Mar-11
EURm EURm
Profit for the 63 29
financial
period
Income tax 42 49
expense
Reorganisation - 1
and
restructuring
costs
Disposal of (28) -
assets
and operations
Profit on - (2)
disposal
of associate
Net finance costs 72 71
Share-based 8 1
payment
expense
Depreciation, 89 94
depletion
(net)
and amortisation
EBITDA 246 243
Supplemental
Historical
Financial
Information
EURm Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 FY, 2011 Q1, 2012
Group 2,956 3,124 3,109 2,919 12,108 2,950
and
third
party
revenue
Third 1,803 1,867 1,868 1,819 7,357 1,823
party
revenue
EBITDA 243 264 264 245 1,015 246
EBITDA 13.5% 14.2% 14.1% 13.4% 13.8% 13.5%
margin
Operating 147 132 162 149 590 177
profit
Profit 78 58 85 77 299 105
before
tax
Free 12 66 117 199 394 (16)
cash
flow
Basic 15.6 15.7 22.2 39.4 93.0 27.1
earnings
per
share -
cent
Weighted 221 222 222 222 222 222
average
number
of
sharesused
in
EPS
calculation
(million)
Net 3,061 3,003 2,921 2,752 2,752 2,775
debt
Net 3.18 2.98 2.84 2.71 2.70 2.73
debt
to
EBITDA
(LTM)
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