TIDMSKG
29 July 2015: Smurfit Kappa Group plc ('SKG' or 'the Group')
today announced results for the 3 months and 6 months ending 30
June 2015.
2015 Second Quarter & First Half | Key Financial Performance
Measures
EURm H1 2015 H1 2014 Change Q2 2015 Q2 2014 Change Q1 2015 Change
Revenue EUR3,996 EUR3,947 1% EUR2,034 EUR2,015 1% EUR1,962 4%
EBITDA EUR551 EUR564 (2%) EUR285 EUR295 (3%) EUR266 7%
before
Exceptional
Items
and
Share-based
Payment(1)
EBITDA 13.8% 14.3% 14.0% 14.6% 13.5%
Margin
Operating EUR348 EUR363 (4%) EUR183 EUR194 (5%) EUR166 11%
Profit
before
Exceptional
Items
Profit EUR243 EUR228 7% EUR145 EUR124 17% EUR98 48%
before
Income Tax
Basic EPS 73.2 62.3 17% 42.3 33.6 26% 30.9 37%
(cent)
Pre-exceptional 88.7 64.1 38% 44.6 33.3 34% 44.2 1%
Basic
EPS
(cent)(2)
Return on 14.6% 14.3% 15.3%
Capital
Employed(3)
Free Cash EUR74 EUR135 (45%) EUR49 EUR76 (35%) EUR25 102%
Flow(4)
Net Debt EUR3,100 EUR2,676 (16%) EUR2,930 (6%)
Net Debt 2.7x 2.3x 2.5x
to
EBITDA
(LTM)
1) EBITDA before exceptional items and share-based payment
expense is denoted by EBITDA throughout the remainder of the
management commentary for ease of reference. A reconciliation of
profit for the period to EBITDA before exceptional items and
share-based payment expense is set out on page 37.2) EPS before
exceptional items is denoted by EPS throughout the remainder of the
management commentary for ease of reference.3) LTM pre-exceptional
operating profit plus share of associates' profit/average capital
employed.4) Free cash flow is set out on page 10. The IFRS cash
flow is set out on page 20.
Second Quarter & Half Year Key Points
-- Pre-exceptional EPS growth of 38% in the first half of the year
-- EBITDA margin of 14% expected to improve sequentially through the
second half of 2015
-- Interim dividend increased by 30% to 20 cent, bringing full year 2015
payment to 60 cent per share
-- EUR189 million of acquisitions completed in the year to date
-- Group corrugated packaging growth of over 6% year to date with
underlying growth at over 4% in Europe
-- Good progress on containerboard pricing and strong packaging demand
providing underpin to corrugated price increases towards the
latter
part of 2015 and into 2016
Performance Review and Outlook
Gary McGann, Smurfit Kappa CEO, commented: "In the first half of
the year the Group delivered EPS growth of 38%, underpinned by good
underlying business conditions, significantly reduced long-term
funding costs and the earnings impact of capital investments,
acquisitions and efficiency programmes completed within the last
twelve months. The EBITDA result of EUR551 million in the year to
date also reflects the negative impact of the Group's adoption of
the variable Sistema Marginal de Divisas ('Simadi') rate for the
consolidation of our Venezuelan operations, somewhat offset by
recent acquisitions. The Group Return on Capital Employed ('ROCE')
is 14.6%. As underlying EBITDA margins improve through the second
half of the year and acquisitions begin to contribute to earnings,
the ROCE is expected to revert back to 15% by the year end.
"European corrugated packaging volumes have remained strong,
delivering volume growth of over 4% in the first half of 2015. As a
consequence of this consistently good growth, a balanced
supply/demand environment and upward pressure in recovered paper
prices, the European containerboard market has continued to
tighten. As a result the Group has sought and is achieving virgin
and recycled containerboard price increases and these increases are
expected to support higher corrugated pricing at the backend of the
year and into 2016.
"The Group's operations in the Americas are performing well and
the integration of the recently acquired corrugated packaging
businesses in the US, Central America, Colombia and Dominican
Republic is progressing as planned. The Group will continue to seek
to expand its strong position across this region through accretive
acquisitions and organic business growth, and expects EBITDA
margins to continue to improve through the second half as
corrugated price increases are implemented, particularly in the
major markets of Colombia and Mexico.
"The Group's leverage increased to 2.7 times net debt to EBITDA
due to the completion of a number of acquisitions during the
quarter, 2.6 times on a pro forma basis adjusting for the earnings
from acquisitions less disposals. The leverage ratio is expected to
further reduce through the historically cash generative second half
of the year, while the Group maintains significant financial
flexibility through its strong free cash flow, cash balances and a
EUR625 million revolving credit facility.
"The Group is pleased to confirm an increase in the interim
dividend to 20 cent, bringing the total payment in 2015 to 60 cent
per share, an increase of 30% year-on-year. The material increases
in the dividend in recent years reflect the Board's continued
confidence in the business' capacity to support a strong and
progressive dividend.
"The Group is a significantly stronger business today than at
any other time in its recent history, and its effective capital
structure, well invested asset base and increasingly differentiated
customer offering provide a strong platform to drive the business
forward. We continue to expect to deliver earnings growth
year-on-year, and we remain focused on accelerating returns to
shareholders through delivery against our capital allocation
commitments, maintaining a progressive dividend, sustaining
high-return capital expenditure and delivering opportunistic growth
through accretive acquisitions."
About Smurfit Kappa
Smurfit Kappa is one of the leading providers of paper-based
packaging solutions in the world, with around 43,000 employees in
approximately 350 production sites across 33 countries and with
revenue of EUR8.1 billion in 2014. We are located in 21 countries
in Europe, and 12 in the Americas. We are the only large-scale
pan-regional player in Latin America.
With our pro-active team we relentlessly use our extensive
experience and expertise, supported by our scale, to open up
opportunities for our customers. We collaborate with forward
thinking customers by sharing superior product knowledge, market
understanding and insights in packaging trends to ensure business
success in their markets. We have an unrivalled portfolio of
paper-packaging solutions, which is constantly updated with our
market-leading innovations. This is enhanced through the benefits
of our integration, with optimal paper design, logistics,
timeliness of service, and our packaging plants sourcing most of
their raw materials from our own paper mills. Our products, which
are 100% renewable and produced sustainably, improve the
environmental footprint of our customers.
Check out our microsite: openthefuture.infosmurfitkappa.com
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
Seamus Murphy FTI Consulting
Smurfit Kappa
T: +353 1 202 71 80 T: +353 1 663 36 80
E: ir@smurfitkappa.com E: smurfitkappa@fticonsulting.com
2015 Second Quarter & First Half | Performance Overview
The Group's strong underlying earnings performance in the first
half reflects the quality of our operations despite some short term
volatility in European markets. Through the delivery of
increasingly value focused packaging solutions to its customers,
internal and acquisitive investment across its markets and
consistent cost take-out, SKG has fundamentally improved its
business model in recent years. As a result the business is
increasingly well positioned in each of its markets to drive its
earnings through organic and acquisition led growth.
European corrugated packaging volumes have grown by over 4% in
the year to date with good momentum through the second quarter. The
Group's operations in the Southern European countries of Spain and
Italy have continued to recover strongly, while volumes in Eastern
Europe were almost 10% higher year-on-year. Average corrugated
pricing increased by 1% in the quarter but this was driven
predominantly by strengthening currencies outside the Eurozone such
as Sterling. Underlying corrugated price momentum will come from
the effective pass through of the current containerboard price
increases being implemented in the second half of the year.
Due to the evolving nature of shopper marketing, shelf retail
ready packaging is becoming increasingly important as part of our
overall marketing proposition. Recognising this, the launch of our
"ShelfSmart" tools aims to deliver measurable business success for
our customers through packaging innovation, supported by our
Customer Experience Centres ('CEC') in each of our major markets
around the world.
Inventory levels in the European recycled containerboard market
are very low and the market is becoming increasingly tight as a
result of strong demand and a relatively stable supply environment
in 2015. These pressures, further supported by EUR20 per tonne cost
increases in Old Corrugated Containers ('OCC') since March 2015,
have positioned the Group to implement price increases in the third
quarter, with price increases of at least EUR30 to EUR40 per tonne
confirmed on recycled grades in July. The Group is the largest
producer of recycled containerboard in Europe with approximately
3.1 million tonnes of production, but due to its forward
integration into corrugated packaging maintains a net short
position in the grade of approximately 500,000 tonnes. This
position provides the Group with significant operational benefits
through the supply chain whilst maintaining a reasonable level of
flexibility.
The European kraftliner market has reported good demand growth
in the first half of the year, and Smurfit Kappa's shipments in the
year to June were 6% higher than the previous year. Against this
backdrop, the Group implemented a EUR40 per tonne price increase in
the Southern European markets in the first quarter and a EUR20 per
tonne price increase in the remainder of Europe in June. The Group
will immediately benefit from higher prices in the grade due to its
net long position of approximately 500,000 tonnes. Over the longer
term the Group's market leading position in kraftliner in Europe
provides it with a significant strategic advantage.
The continued development of the Group's Americas business
remains a central strategic goal, and the acquisition of CYBSA's
corrugated packaging business provides the Group with a market
leading position in the higher growth countries of Central America.
The business in the region continues to grow well, with 20% EBITDA
growth year-on-year in the first six months excluding Venezuela and
good volume progression supported by acquisitions across the US,
Central America, Colombia and the Dominican Republic. EBITDA
margins at almost 16% are expected to improve through the remainder
of the year as corrugated pricing recovers, particularly in our
major markets of Mexico and Colombia.
The Group's market leading product offering, geographic
diversification and integrated business model have enabled the
business to deliver consistently strong operational results through
the cycle. Supported by good debt metrics the Group is now focused
on further strengthening its business through accretive
acquisitions and continued high return capital investment which
will drive profitable growth and build sustainable returns for our
shareholders.
2015 Second Quarter | Financial Performance
Revenue for the second quarter increased by EUR19 million from
EUR2,015 million in 2014 to EUR2,034 million in 2015 with higher
revenue in Europe partly offset by a reduction in the Americas,
primarily as result of the impact of our adoption of the Simadi
exchange rate for the translation of the Group's Venezuelan
operations. However, the underlying year-on-year increase in
revenue was EUR62 million, the equivalent of 3%.
EBITDA for the second quarter of 2015 was EUR285 million, EUR10
million lower year-on-year primarily due to significantly lower
earnings in Venezuela following the adoption of the Simadi exchange
rate for the Bolivar.
At EUR183 million, operating profit before exceptional items for
the second quarter of 2015 was EUR11 million lower year-on-year,
with a higher gross profit more than offset by higher net operating
expenses during the quarter.
Exceptional items charged within operating profit in the second
quarter amounted to EUR7 million, with EUR4 million relating to the
loss incurred on the disposal of the solidboard operations in the
Netherlands, Belgium and the United Kingdom and the remaining EUR3
million representing the adjustment for hyperinflation to the
currency trading loss in the first quarter. There were no
exceptional items in the second quarter of 2014.
Net finance costs of EUR32 million in the second quarter of 2015
were EUR39 million lower than in the second quarter of 2014,
reflecting cash interest savings of EUR10 million complemented by a
year-on-year reduction of almost EUR26 million in the non-cash net
monetary loss from hyperinflation in Venezuela.
Including the Group's share of associates' profit, the profit
before income tax was EUR145 million in the second quarter of 2015
reflecting a EUR21 million (17%) increase on the same period in
2014.
Basic earnings per share was 42.3 cent for the quarter to June
2015 (2014: 33.6 cent), an increase of 26% year-on-year.
Pre-exceptional basic EPS was 44.6 cent in the quarter (2014: 33.3
cent), an increase of 34% year-on-year.
2015 First Half | Financial Performance
Revenue for the half year grew by EUR49 million from EUR3,947
million in 2014 to EUR3,996 million in 2015 with higher revenue in
Europe partly offset by a reduction in the Americas, reflecting the
impact of adopting the Simadi exchange rate. Allowing for net
negative currency movements of EUR114 million (principally in
respect of the Bolivar) and the contribution from acquisitions net
of disposals, the underlying year-on-year move in revenue was an
increase of EUR89 million, the equivalent of 2%.
EBITDA for the first half of 2015 decreased by EUR13 million to
EUR551 million with a decrease in the Americas, partly offset by
higher earnings in Europe. Allowing for currency movements and net
acquisitions, the underlying year-on-year move in EBITDA was an
increase of EUR8 million with a gain of EUR10 million in Europe
partly offset by lower earnings in the Americas and slightly higher
Group Centre costs.
The adoption of the Simadi rate for the consolidation of the
Group's Venezuelan earnings in 2015 has resulted in a change in the
exchange rate from approximately US$ / VEF 12.0 used in 2014 to a
variable rate which stood at US$ / VEF 193 at 31 March 2015 and US$
/ VEF 197 at 30 June 2015. Consequently, the Group's EBITDA has
been negatively impacted by EUR16 million in the second quarter and
EUR30 million in the year to date, and Venezuelan earnings
contributed less than 1% of the Group's EBITDA in the first six
months of the year.
Operating profit before exceptional items for the half year was
EUR348 million, compared to EUR363 million for the same period in
2014, a decrease of 4%.
Exceptional items charged within operating profit in the first
half of 2015 amounted to EUR46 million, EUR36 million of which
represented the higher cost to the Venezuelan operations of
discharging their non-Bolivar denominated payables following our
adoption of the Simadi rate in March 2015. The remaining EUR10
million charge represented the further impairment of the solidboard
operations held for sale of EUR6 million reported within cost of
sales in the first quarter, and a loss of EUR4 million booked in
the second quarter on their disposal. In 2014, the Group reported a
charge of EUR9 million, in respect of the impact of the adoption of
the Sicad I rate in March 2014 on non-Bolivar denominated
payables.
Net finance costs of EUR61 million in 2015 were EUR66 million
lower than the prior year primarily as a result of cash interest
savings of EUR20 million, complemented by a year-on-year reduction
of EUR34 million in the non-cash net monetary loss from
hyperinflation.
Including the Group's share of associates' profit of EUR2
million, profit before income tax was EUR243 million for the half
year 2015 compared to EUR228 million in 2014.
The Group reported an income tax expense of EUR73 million for
the first half of 2015 compared to EUR84 million for the same
period in 2014. The effective tax rate for the full year is
expected to be 29%.
Basic earnings per share was 73.2 cent for the half year 2015
(2014: 62.3 cent), an increase of 17% year-on-year. Pre-exceptional
basic EPS was 88.7 cent (2014: 64.1 cent), an increase of 38% year
on year.
2015 Second Quarter & First Half | Free Cash Flow
Free cash flow amounted to EUR74 million in the first half of
2015 compared to EUR135 million in 2014. The decrease of EUR61
million resulted mainly from lower EBITDA, higher outflows for
exceptional items, capital expenditure and tax, with a partial
offsetting saving in cash interest. At EUR49 million for the second
quarter, the Group's free cash flow was EUR27 million lower than in
2014 with lower EBITDA, higher capital expenditure, higher tax
payments and a higher working capital outflow somewhat offset by a
lower cash interest expense.
Working capital increased by EUR120 million in the first six
months, broadly in line with 2014 levels. As in the previous year
this outflow, which arose primarily in Europe, resulted from an
increase in debtors and stocks partly offset by an increase in
creditors. At June 2015 working capital amounted to EUR655 million,
representing 8.0% of annualised revenue, unchanged on the June 2014
level.
Capital expenditure amounted to EUR169 million in the first half
of 2015, compared to EUR152 million in the same period in 2014.
Capital expenditure for the full year is expected to increase in
the second half of the year supported by the stronger free cash
flow typically generated in that period.
Cash interest at EUR59 million in the first six months to June
2015 was EUR20 million lower than in 2014, reflecting the benefit
of the Group's refinancing activities in recent years.
Tax payments in the first half of the year were EUR64 million,
EUR21 million higher than the previous year due to a combination of
timing and higher profitability year-on-year.
2015 Second Quarter & First Half | Capital Structure
The Group's net debt increased by EUR170 million during the
quarter to EUR3,100 million at June 2015 mainly as a result of the
completion of over EUR160 million in acquisitions, higher dividends
paid during the quarter offset slightly by the positive impact of
foreign exchange movements on the Group's foreign currency
denominated debt. Net debt to EBITDA at 2.7 times at the end of the
period was well within the stated guidance of 2.0 to 3.0 times and
strong cash generation in the second half of the year is expected
to reduce the leverage position. The Group remains committed to the
preservation of its Ba1 / BB+ / BB+ credit rating.
During the first quarter the Group undertook two transactions,
which combined have further reduced our annual cash interest by
EUR3 million and extended our average maturity profile to 5.2
years. In February, the Group issued a EUR250 million ten-year bond
at a coupon of 2.75%, the proceeds of which were used to prepay
term debt under its senior credit facility. This successful bond
financing enabled the Group to amend and extend its senior credit
facility in March at a reduced level of EUR1.1 billion, extend the
maturity date to March 2020 and reduce the margin by 0.65%.
Following a significant period of debt reduction and
refinancing, the Group's average maturity profile at the end of
June was 5.2 years with an average interest rate of 3.7%. This long
dated, lower cost debt position provides SKG with a real
flexibility to deliver on its stated strategic agenda, which is
further enhanced by an undrawn balance of EUR470 million on the
Group's EUR625 million revolver to supplement the cash on the
balance sheet of EUR166 million at the end of the second
quarter.
Dividends
The Board will increase the 2015 interim dividend by 30% to 20
cent per share. It is proposed to pay the interim dividend on 30
October 2015 to shareholders registered at the close of business on
2 October 2015.
2015 Second Quarter & First Half | Operating Efficiency
Commercial Offering and Innovation
The differentiation initiative has continued to develop and has
progressed in a number of areas. The Group is continuing its
Insights and Value Selling training programmes in Europe and the
Americas with the ultimate aim to continue to embed the customer
value proposition into the DNA of Smurfit Kappa. By seeking to
define itself by the customer problems it solves or the customer
opportunity it addresses, rather than by the product it sells, the
Group increasingly expects to deliver tangible differentiated value
for its customers, and in doing so capture more value for its other
stakeholders. The ShelfSmart approach launched at the Group's
Innovation Event in April is a clear example of this process, and
feedback from its initial trials with customers has exceeded
expectations.
A series of marketing pilots, with targeted B2B marketing
strategies were developed and launched in the first quarter of 2015
and they will each target individual market sectors across a range
of countries with a view to increasing market share, and driving
incremental returns through smarter processes and focused selling.
In addition, the Group has opened nine Customer Experience Centres
around the world including the Global Experience Centre at
Amsterdam airport, the largest paper-based packaging one in the
world, which opened in April.
Sustainability
As one of the world's largest paper-based packaging businesses,
Smurfit Kappa maintains a relentless commitment to a sustainable
approach to business that underlies everything we do. We strive to
promote the sustainable use of renewable raw materials wherever
possible, and maintain a consistent focus on designing for a
circular economy which will apply the concept of closed loop
systems to maximise productivity, whilst reducing emissions and
waste. Outside our own supply chain our innovative, right-weighted,
recyclable packaging delivers real savings in cost and carbon for
our customers and for consumers, and it is this approach which has
delivered consistent business growth and long-term partnerships
with some of the world's most respected brands.
The Group published its eighth annual Sustainable Development
report in June 2015, which provides a comprehensive review of our
development goals and achievements. Amongst these, the Group's
inclusion in the FTSE4Good index for the second consecutive year
was confirmed in July 2015, and during the year the Group achieved
its target of using only fibre from sustainable sources in its
production process. By completing the certification of our
operational system the Group will now be able to label all
packaging solutions delivered to customers accordingly.
Cost Take-out Programme
The Group has committed to delivering on its cost take-out
target of EUR75 million in 2015 and is progressing well against
this target, with EUR30 million achieved in the year to date. This
continuous focus on cost take-out to mitigate underlying inflation
has underpinned the Group's capacity to deliver consistently high
EBITDA margins through the cycle.
Enhanced Capital Expenditure Programme
The Group is also continuing to invest in its 'Quick Win'
programme of capital projects which is in line with expectations.
The programme will feature over 100 projects and a total
expenditure of EUR150 million over the three-year period from 2014
to 2016, by which time the assets are expected to generate an
incremental EBITDA of EUR75 million. As the associated returns of
these investments will come from operational efficiencies we expect
them to remain relatively insulated from volume or market
pressures. As some assets become operational during the year, the
programme is expected to deliver EUR18 million in additional EBITDA
in 2015, with a further step up in 2016 before reaching the full
run rate of EUR75 million in 2017.
2015 Second Quarter & Half Year | Performance Review
Europe
The Group's European operations delivered an improved sequential
EBITDA margin of 14.1% in the second quarter, with strong volumes
in the period supporting higher rates of absorption for relatively
flat fixed costs, the resolution of a number of one-off operational
issues in the first quarter and some currency tailwinds. The
Group's integrated business model and diversified federation of
packaging operations across Europe provides a solid support to
earnings through the cycle. The prevailing positive demand dynamics
in Europe and our increasingly differentiated packaging offering
will underpin continued margin progression through the second half
of the year.
Total packaging volumes increased by over 4% in the six months
to June, on both an absolute and days adjusted basis, and by almost
4% when adjusted for acquisitions during the period. This was
underpinned by strong demand for boxes, which grew by 4% in the
first half of the year and made up 87% of corrugated packaging
volumes. There was good demand in the second quarter, and total
volumes increased by almost 5% year-on-year with a 4% underlying
increase when adjusted for acquisitions.
Corrugated packaging prices recovered somewhat in the quarter,
primarily as a result of some currency tailwinds, resulting in a 1%
sequential increase and a flat performance year-on-year. Following
the implementation of containerboard price increases, the Group
expects to implement corrugated packaging price increases subject
to the usual three to six month time lag.
Recovered paper prices have continued to edge upwards throughout
the second quarter, with a EUR20 per tonne increase reported by
some market indices. This increase, from an already high level, has
been driven by strong domestic demand levels in Europe and good
overseas demand, with Chinese imports from Europe up 5% in the year
to May.
As a result of the strong end market demand in corrugated,
demand for recycled containerboard has been good in 2015. This has
created an increasingly tight inventory situation in Europe due to
the slow introduction of new capacity through the year, which
combined with the upward pressure in recovered paper prices, has
supported a broad based industry drive for higher containerboard
prices. These increases, once implemented, will support higher
corrugated pricing at the backend of the year and into 2016.
The Group's kraftliner operations have performed well in the
first six months, with a 6% increase in shipments in the period.
This performance is set against a fundamentally good European
market which has implemented a EUR40 per tonne price increase in
Southern Europe in April and a EUR20 per tonne price increase in
Northern Europe in June. Due to the Group's net 500,000 tonne long
position in the grade, these increases will provide an immediate
boost to earnings through the second half of the year.
In May 2015, the Group's bag-in-box operations produced its
three billionth vitop tap. The tap has revolutionised the way wine
is brought to market both within the bag-in-box sector and the
wider market, and its unique valve technology has created a new
standard for bag-in-box packaging solutions. The Group's bag-in-box
operations cater to a range of market segments outside the wine
market, and the business is continuing to grow strongly with double
digit volume and EBITDA progression year-on-year in the six months
to June.
The Americas
The Group's Americas segment has reported EBITDA in the six
months of EUR139 million, a 10% reduction year-on-year primarily as
a result of the adoption of the Simadi rate for the consolidation
of our Venezuelan operations during the year. Excluding Venezuela,
the segment's EBITDA increased by 20% year-on-year reflecting the
impact of acquisitions completed in the region since 2014, and on
this basis the Americas EBITDA margin would have been 16.4%. The
delivery of organic and acquisitive growth in this region remains a
key strategic objective of the Group, and this continued
diversification will further strengthen the Group's overall risk
profile whilst providing attractive growth opportunities in
emerging markets.
During the quarter, the Group completed the previously announced
acquisition of CYBSA, a predominantly corrugated packaging business
located in El Salvador and Costa Rica for US$105 million. The
business will contribute a post-synergy EBITDA of US$19 million in
year one and has established the Group as the market leading
corrugated producer in Central America and the Caribbean, building
on its existing business in the Dominican Republic. Acquisitions
for a total consideration of EUR160 million were completed in the
region in 2014 in the US, Colombia and the Dominican Republic and
these businesses are expected to deliver incremental EBITDA of
EUR23 million in 2015.
The operating environment in Colombia has been bolstered in
recent months by improved international competitiveness following
the depreciation in the currency during the year. While this
currency move has supported good underlying levels of volume growth
in the country, the Group has seen some EBITDA margin erosion. As a
result SKG is focused on increasing local prices to compensate for
the loss on consolidated earnings whilst maintaining its strict
cost controls through continued delivery on cost take-out
targets.
Following its US packaging acquisitions in 2014, SK Orange
County ('SKOC') now has a more diversified exposure to the US
market with corrugated facilities in California and Texas. While
the underlying business in California remains pressured by
continuing poor weather conditions, the Texan business is
performing strongly with good market conditions and a progressively
seamless integration with the Group's 350,000 tonne recycled
containerboard mill in Forney, Texas. The Mexican packaging
volumes, which make up almost half of the operations corrugated
volumes, increased by 6% during the first half of the year from an
already high level in 2014. EBITDA margins for the SKOC business
increased by 1.2 percentage points year-on-year reflecting the
Group's steady focus on price before volume whilst driving
efficiencies through the system.
The Group's Mexican operations are performing well with an
improved EBITDA margin and a 2% increase in corrugated volumes
year-on-year in the first six months. The Group's operations in the
country are successfully passing through higher corrugated prices
to customers to offset currency pressures, whilst also benefitting
from lower energy costs. The previously announced EUR55 million
project to increase capacity at the Los Reyes mill near Mexico City
by 100,000 tonnes per annum commenced in February and is expected
to be completed in the second half of 2016. As part of the project,
the Group is utilising equipment from its 80,000 tonne Viersen mill
in Germany which it shut in February of this year.
The political and macroeconomic environment in Venezuela remains
difficult in 2015, and the Group's decision to adopt the Simadi
rate for the consolidation of its Venezuelan earnings has
significantly lowered its overall contribution to Group EBITDA to
less than 1% of earnings. Against this backdrop the Group's
operations in the country continue to operate well.
The Group's operations in Argentina are continuing to perform
well in a challenging environment and reported an 8% increase in
corrugated volumes in the six months to June. However, EBITDA
margins deteriorated in spite of lower material costs and tight
waste management, primarily as a result of currency movements in
the quarter and the Group will seek to offset this through higher
corrugated pricing in the second half of the year.
Summary Cash Flow
Summary cash flows(1) for the second quarter and six months are
set out in the following table.
3 months to 3 months to 6 months to 6 months to
30-Jun-15 30-Jun-14 30-Jun-15 30-Jun-14
EURm EURm EURm EURm
Pre-exceptional EBITDA 285 295 551 564
Exceptional items (3) - (35) (9)
Cash interest expense (29) (39) (59) (79)
Working capital change (68) (59) (120) (117)
Current provisions (4) (1) (10) (2)
Capital expenditure (96) (86) (169) (152)
Change in capital (8) (12) (6) (11)
creditors
Tax paid (27) (17) (64) (43)
Sale of fixed assets 3 1 5 4
Other (4) (6) (19) (20)
Free cash flow 49 76 74 135
Share issues - - 1 2
Purchase of own shares (1) - (15) (13)
Sale of businesses 30 1 30 1
and investments
Purchase of businesses (163) (19) (163) (19)
and investments
Dividends (96) (73) (96) (74)
Derivative termination (2) - (2) -
payments
Net (183) (15) (171) 32
cash (outflow)/inflow
Net (13) - (13) -
debt acquired/disposed
Deferred debt issue (2) (2) (6) (5)
costs amortised
Currency translation 28 (19) (151) (82)
adjustments
Increase in net debt (170) (36) (341) (55)
(1) The summary cash flow is prepared on a different basis to
the Condensed Consolidated Statement of Cash Flows under IFRS
('IFRS cash flow'). The principal differences are as follows:(a)
The summary cash flow details movements in net debt. The IFRS cash
flow details movements in cash and cash equivalents.(b) Free cash
flow reconciles to cash generated from operations in the IFRS cash
flow as shown below.(c) The IFRS cash flow has different
sub-headings to those used in the summary cash flow.
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Free cash 74 135
flow
Add Cash interest 59 79
back:
Capital expenditure (net of change in capital creditors) 175 163
Tax payments 64 43
Less: Sale of fixed assets (5) (4)
Profit on sale of assets and businesses - non exceptional (2) (2)
Receipt of capital grants (1) -
Dividends received from associates (1) (1)
Non-cash financing activities (2) (1)
Cash generated from 361 412
operations
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 funding day to day operations,
capital expenditure, debt service, dividends and other investment
activity including acquisitions.
At 30 June 2015, Smurfit Kappa Treasury Funding Limited had
outstanding US$292.3 million 7.50% senior debentures due 2025. The
Group had outstanding EUR158.8 million and STGGBP57.9 million
variable funding notes issued under the EUR240 million accounts
receivable securitisation programme maturing in June 2019, together
with EUR175 million variable funding notes issued under the EUR175
million accounts receivable securitisation programme maturing in
April 2018.
Smurfit Kappa Acquisitions had outstanding EUR200 million 5.125%
senior notes due 2018, US$300 million 4.875% senior notes due 2018,
EUR400 million 4.125% senior notes due 2020, EUR250 million senior
floating rate notes due 2020, EUR500 million 3.25% senior notes due
2021 and EUR250 million 2.75% senior notes due 2025. Smurfit Kappa
Acquisitions and certain subsidiaries are also party to a senior
credit facility. At 30 June 2015, the Group's senior credit
facility comprised term drawings of EUR450.9 million and US$56.1
million under the amortising Term A facility maturing in 2020. In
addition, as at 30 June 2015, the facility included a EUR625
million revolving credit facility of which EUR135 million was drawn
in revolver loans, with a further EUR20 million in operational
facilities including letters of credit drawn under various
ancillary facilities.
The following table provides the range of interest rates as of
30 June 2015 for each of the drawings under the various senior
credit facility loans.
Borrowing arrangement Currency Interest Rate
Term A Facility EUR 1.284% - 1.368%
USD 1.537%
Revolving Credit Facility EUR 1.038% - 1.039%
Borrowings under the revolving credit facility are available to
fund the Group's working capital requirements, capital expenditures
and other general corporate purposes.
In February 2015 the Group issued EUR250 million of ten-year
euro denominated senior notes at a coupon of 2.75%, the proceeds of
which were used to prepay term debt under the senior credit
facility.
Following the bond financing in March 2015 the Group completed a
transaction to amend and extend the reduced senior credit facility
which incorporated an extension of the maturity date to March 2020,
together with a significant margin reduction. Under the new terms
the amortising Term A facility is repayable EUR83.3 million on 13
March 2018 (previously EUR125 million on 24 July 2016), EUR83.3
million on 13 March 2019 (previously EUR125 million on 24 July
2017) and EUR333.4 million on 13 March 2020 (previously EUR500
million on 24 July 2018). The maturity of the EUR625 million
revolving credit facility was extended to 13 March 2020 from 24
July 2018.
Effective on the date of the amendment, the margins applicable
to the senior credit facility were reduced by 0.65% to the
following:
Net debt/EBITDA ratio Revolving Credit Facility Term A Facility
Greater than 3.00 : 1 1.85% 2.10%
3.00 : 1 or less but 1.35% 1.60%
more than 2.50 : 1
2.50 : 1 or less but 1.10% 1.35%
more than 2.00 : 1
2.00 : 1 or less 0.85% 1.10%
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. As at 30 June 2015, the
Group had fixed an average of 69% of its interest cost on
borrowings over the following twelve months.
The Group's fixed rate debt comprised EUR200 million 5.125%
senior notes due 2018, US$300 million 4.875% senior notes due 2018
(US$50 million swapped to floating), EUR400 million 4.125% senior
notes due 2020, EUR500 million 3.25% senior notes due 2021, EUR250
million 2.75% senior notes due 2025 and US$292.3 million 7.50%
senior debentures due 2025. In addition the Group had EUR349
million in interest rate swaps with maturity dates ranging from
October 2018 to January 2021.
The Group's earnings are affected by changes in short-term
interest rates as a result of its floating rate borrowings. If
LIBOR/EURIBOR interest rates for these borrowings increase by one
percent, the Group's interest expense would increase, and income
before taxes would decrease, by approximately EUR11 million over
the following twelve months. Interest income on the Group's cash
balances would increase by approximately EUR2 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.
Principal Risks and Uncertainties
Risk assessment and evaluation is an integral part of the
management process throughout the Group. Risks are identified,
evaluated and appropriate risk management strategies are
implemented at each level.
The key business risks are identified by the senior management
team. The Board in conjunction with senior management identifies
major business risks faced by the Group and determines the
appropriate course of action to manage these risks.
The principal risks and uncertainties faced by the Group were
outlined in our 2014 annual report on pages 43-44. The annual
report is available on our website smurfitkappa.com. The principal
risks and uncertainties for the remaining six months of the
financial year are summarised below.
-- If the current economic climate were to deteriorate and result in an
increased economic slowdown which was sustained over any
significant
length of time, or the sovereign debt crisis (including its
impact on
the euro) were to intensify, it could adversely affect the
Group's
financial position and results of operations.
-- The cyclical nature of the packaging industry could result in
overcapacity and consequently threaten the Group's pricing
structure.
-- If operations at any of the Group's facilities (in particular its key
mills) were interrupted for any significant length of time it
could
adversely affect the Group's financial position and results
of
operations.
-- Price fluctuations in raw materials and energy costs could adversely
affect the Group's manufacturing costs.
-- The Group is exposed to currency exchange rate fluctuations and, in
addition, currency exchange controls in Venezuela and
Argentina.
-- The Group may not be able to attract and retain suitably qualified
employees as required for its business.
-- The Group is subject to a growing number of environmental laws and
regulations, and the cost of compliance or the failure to comply
with
current and future laws and regulations may negatively affect
the
Group's business.
-- The Group is subject to anti-trust and similar legislation in the
jurisdictions in which it operates.
The Board regularly monitors all of the above risks and
appropriate actions are taken to mitigate those risks or address
their potential adverse consequences.
Condensed Consolidated Income Statement - Six Months
6 months to 6 months to 30-Jun-14
30-Jun-15
Unaudited Unaudited
Pre-exceptional Exceptional 2015 Total 2015 Pre-exceptional 2014 Exceptional 2014 Total 2014
2015
EURm EURm EURm EURm EURm EURm
Revenue 3,996 - 3,996 3,947 - 3,947
Cost of sales (2,803) (6) (2,809) (2,768) - (2,768)
Gross profit 1,193 (6) 1,187 1,179 - 1,179
Distribution (321) - (321) (307) - (307)
costs
Administrative (525) - (525) (510) - (510)
expenses
Other operating 1 - 1 1 - 1
income
Other operating - (40) (40) - (9) (9)
expenses
Operating 348 (46) 302 363 (9) 354
profit
Finance costs (86) (2) (88) (140) - (140)
Finance income 16 11 27 8 5 13
Share 2 - 2 1 - 1
of associates'
profit (after
tax)
Profit before 280 (37) 243 232 (4) 228
income tax
Income tax (73) (84)
expense
Profit for the 170 144
financial
period
Attributable
to:
Owners of the 169 142
parent
Non-controlling 1 2
interests
Profit for the 170 144
financial
period
Earnings per
share
Basic earnings 73.2 62.3
per
share - cent
Diluted 72.4 61.9
earnings
per share
- cent
Condensed Consolidated Income Statement - Second Quarter
3 months to 3 months to
30-Jun-15 30-Jun-14
Unaudited Unaudited
Pre-exceptional Exceptional 2015 Total 2015 Pre-exceptional Exceptional 2014 Total 2014
2015 2014
EURm EURm EURm EURm EURm EURm
Revenue 2,034 - 2,034 2,015 - 2,015
Cost of sales (1,421) - (1,421) (1,408) - (1,408)
Gross profit 613 - 613 607 - 607
Distribution (162) - (162) (156) - (156)
costs
Administrative (268) - (268) (258) - (258)
expenses
Other operating - - - 1 - 1
income
Other operating - (7) (7) - - -
expenses
Operating 183 (7) 176 194 - 194
profit
Finance costs (34) - (34) (77) - (77)
Finance income 1 1 2 6 - 6
Share 1 - 1 1 - 1
of associates'
profit (after
tax)
Profit before 151 (6) 145 124 - 124
income tax
Income tax (44) (46)
expense
Profit for the 101 78
financial
period
Attributable
to:
Owners of the 98 77
parent
Non-controlling 3 1
interests
Profit for the 101 78
financial
period
Earnings per
share
Basic earnings 42.3 33.6
per
share - cent
Diluted 41.8 33.4
earnings
per share
- cent
Condensed Consolidated Statement of Comprehensive Income - Six
Months
6 months to 6 months to
30-Jun-15 30-Jun-14
Unaudited Unaudited
EURm EURm
Profit for the financial period 170 144
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss
Foreign currency translation adjustments:
- Arising in the period (388) (210)
Effective portion of changes in fair
value of cash flow hedges:
- Movement out of reserve 5 10
- New fair value adjustments into reserve 5 (24)
(378) (224)
Items which will not be subsequently
reclassified to profit or loss
Defined benefit pension plans:
- Actuarial gain/(loss) 90 (47)
- Movement in deferred tax (14) 7
76 (40)
Total other comprehensive expense (302) (264)
Total comprehensive expense (132) (120)
for the financial period
Attributable to:
Owners of the parent (88) (104)
Non-controlling interests (44) (16)
Total comprehensive expense (132) (120)
for the financial period
Condensed Consolidated Statement of Comprehensive Income -
Second Quarter
3 months to 3 months to
30-Jun-15 30-Jun-14
Unaudited Unaudited
EURm EURm
Profit for the financial period 101 78
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss
Foreign currency translation adjustments:
- Arising in the period (46) 24
Effective portion of changes in fair
value of cash flow hedges:
- Movement out of reserve 1 6
- New fair value adjustments into reserve 2 (15)
Net change in fair value of available-for-sale (1) -
financial assets
(44) 15
Items which will not be subsequently
reclassified to profit or loss
Defined benefit pension plans:
- Actuarial gain/(loss) 122 (26)
- Movement in deferred tax (18) 4
104 (22)
Total other comprehensive income/(expense) 60 (7)
Total comprehensive income 161 71
for the financial period
Attributable to:
Owners of the parent 164 62
Non-controlling interests (3) 9
Total comprehensive income 161 71
for the financial period
Condensed Consolidated Balance Sheet
30-Jun-15 30-Jun-14 31-Dec-14
Unaudited Unaudited Audited
EURm EURm EURm
ASSETS
Non-current assets
Property, plant and equipment 2,954 2,957 3,033
Goodwill and intangible assets 2,428 2,297 2,407
Available-for-sale financial assets 21 27 21
Investment in associates 18 16 17
Biological assets 97 96 130
Trade and other receivables 26 4 12
Derivative financial instruments 34 - 2
Deferred income tax assets 220 191 237
5,798 5,588 5,859
Current assets
Inventories 716 712 701
Biological assets 8 10 9
Trade and other receivables 1,598 1,503 1,422
Derivative financial instruments 2 1 3
Restricted cash 8 18 12
Cash and cash equivalents 158 897 387
2,490 3,141 2,534
Assets classified as held for sale - - 92
2,490 3,141 2,626
Total assets 8,288 8,729 8,485
EQUITY
Capital and reserves attributable
to the owners of the parent
Equity share capital - - -
Share premium 1,982 1,981 1,981
Other reserves (357) (4) (30)
Retained earnings 432 234 271
Total equity attributable to 2,057 2,211 2,222
the owners of the parent
Non-controlling interests 153 192 197
Total equity 2,210 2,403 2,419
LIABILITIES
Non-current liabilities
Borrowings 3,173 3,032 3,093
Employee benefits 794 743 893
Derivative financial instruments 16 69 23
Deferred income tax liabilities 145 189 183
Non-current income tax liabilities 18 22 28
Provisions for liabilities and charges 46 41 47
Capital grants 13 11 12
Other payables 6 8 10
4,211 4,115 4,289
Current liabilities
Borrowings 93 559 65
Trade and other payables 1,685 1,573 1,573
Current income tax liabilities 29 31 12
Derivative financial instruments 11 36 27
Provisions for liabilities and charges 49 12 57
1,867 2,211 1,734
Liabilities associated with assets - - 43
classified as held for sale
1,867 2,211 1,777
Total liabilities 6,078 6,326 6,066
Total equity and liabilities 8,288 8,729 8,485
Condensed Consolidated Statement of Changes in Equity
Attributable to owners
of the parent
Equity share Share premium Other reserves Retained earnings Total Non-controlling Total equity
capital interests
EURm EURm EURm EURm EURm EURm EURm
Unaudited
At 1 January 2015 - 1,981 (30) 271 2,222 197 2,419
Profit for the - - - 169 169 1 170
financial
period
Other comprehensive
income
Foreign currency - - (343) - (343) (45) (388)
translation
adjustments
Defined benefit - - - 76 76 - 76
pension plans
Effective portion - - 10 - 10 - 10
of changes in
fair value of cash
flow hedges
Total comprehensive - - (333) 245 (88) (44) (132)
(expense)/income
for the financial
period
Shares issued - 1 - - 1 - 1
Hyperinflation - - - 10 10 1 11
adjustment
Dividends paid - - - (94) (94) (2) (96)
Share-based payment - - 21 - 21 - 21
Shares acquired by - - (15) - (15) - (15)
SKG Employee Trust
Acquired - - - - - 1 1
non-controlling
interest
At 30 June 2015 - 1,982 (357) 432 2,057 153 2,210
At 1 January 2014 - 1,979 208 121 2,308 199 2,507
Profit for the - - - 142 142 2 144
financial
period
Other comprehensive
income
Foreign currency - - (192) - (192) (18) (210)
translation
adjustments
Defined benefit - - - (40) (40) - (40)
pension plans
Effective portion - - (14) - (14) - (14)
of changes in
fair value of cash
flow hedges
Total comprehensive - - (206) 102 (104) (16) (120)
(expense)/income
for the financial
period
Shares issued - 2 - - 2 - 2
Hyperinflation - - - 82 82 10 92
adjustment
Dividends paid - - - (71) (71) (3) (74)
Share-based payment - - 7 - 7 - 7
Shares acquired by - - (13) - (13) - (13)
SKG Employee Trust
Acquired - - - - - 2 2
non-controlling
interest
At 30 June 2014 - 1,981 (4) 234 2,211 192 2,403
An analysis of the movements in Other reserves is provided in
Note 13.
Condensed Consolidated Statement of Cash Flows
6 months to 6 months to
30-Jun-15 30-Jun-14
Unaudited Unaudited
EURm EURm
Cash flows from operating activities
Profit before income tax 243 228
Net finance costs 61 127
Depreciation charge 162 163
Impairment of assets 6 -
Amortisation of intangible assets 16 14
Amortisation of capital grants (1) (1)
Equity settled share-based payment expense 21 7
Loss/(profit) on sale of assets and businesses 2 (2)
Share of associates' profit (after tax) (2) (1)
Net movement in working capital (117) (117)
Change in biological assets - 17
Change in employee benefits and other provisions (36) (26)
Other 6 3
Cash generated from operations 361 412
Interest paid (62) (79)
Income taxes paid:
Overseas corporation tax (net (64) (43)
of tax refunds) paid
Net cash inflow from operating activities 235 290
Cash flows from investing activities
Interest received 3 2
Business disposals 31 -
Additions to property, plant and (171) (157)
equipment and biological assets
Additions to intangible assets (4) (6)
Receipt of capital grants 1 -
Disposal of available-for-sale financial assets - 1
Increase in restricted cash (1) (10)
Disposal of property, plant and equipment 6 5
Dividends received from associates 1 1
Purchase of subsidiaries and (155) (18)
non-controlling interests
Deferred consideration paid (8) (1)
Net cash outflow from investing activities (297) (183)
Cash flows from financing activities
Proceeds from issue of new ordinary shares 1 2
Proceeds from bond issue 250 500
Purchase of own shares (15) (13)
Increase in other interest-bearing borrowings 55 20
Payment of finance leases (2) (1)
Repayment of borrowings (256) -
Derivative termination payments (2) -
Deferred debt issue costs paid (7) (7)
Dividends paid to shareholders (94) (71)
Dividends paid to non-controlling interests (2) (3)
Net cash (outflow)/inflow from (72) 427
financing activities
(Decrease)/increase in cash and cash equivalents (134) 534
Reconciliation of opening to closing
cash and cash equivalents
Cash and cash equivalents at 1 January 361 424
Currency translation adjustment (91) (75)
(Decrease)/increase in cash and cash equivalents (134) 534
Cash and cash equivalents at 30 June 136 883
An analysis of the Net movement in working capital is provided
in Note 11.
Notes to the Condensed Consolidated Interim Financial
Statements
1.General Information
Smurfit Kappa Group plc ('SKG plc' or 'the Company') and its
subsidiaries (together 'SKG' or '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 condensed consolidated interim financial statements included
in this report have been prepared in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007, the related
Transparency Rules of the Irish Financial Services Regulatory
Authority and with International Accounting Standard 34, Interim
Financial Reporting ('IAS 34') as adopted by the European Union.
Certain quarterly information and the balance sheet as at 30 June
2014 have been included in this report; this information is
supplementary and not required by IAS 34. This report should be
read in conjunction with the consolidated financial statements for
the year ended 31 December 2014 included in the Group's 2014 annual
report which is available on the Group's website;
smurfitkappa.com.
The accounting policies and methods of computation and
presentation adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those
described and applied in the annual report for the financial year
ended 31 December 2014. There are no new IFRS standards effective
from 1 January 2015 which have a material effect on the condensed
consolidated interim financial information included in this
report.
The Group is a highly integrated paper and paperboard
manufacturer with leading market positions, quality assets and
broad geographic reach. The financial position of the Group, its
cash generation, capital resources and liquidity continue to
provide a stable financing platform. Having made enquiries, the
Directors have a reasonable expectation that the Company, and the
Group as a whole, have 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
condensed consolidated interim financial statements.
The condensed consolidated interim financial statements include
all adjustments that management considers necessary for a fair
presentation of such financial information. All such adjustments
are of a normal recurring nature. Certain tables in this interim
statement may not add precisely due to rounding.
The Group's auditors have not audited or reviewed the condensed
consolidated interim financial statements contained in this
report.
The condensed consolidated interim financial statements
presented do not constitute full statutory accounts. Full statutory
accounts for the year ended 31 December 2014 will be filed with the
Irish Registrar of Companies in due course. The audit report on
those statutory accounts was unqualified.
3.Segmental Analyses
The Group has determined reportable operating segments based on
the manner in which reports are reviewed by the chief operating
decision maker ('CODM'). The CODM is determined to be the executive
management team responsible for assessing performance, allocating
resources and making strategic decisions. The Group has identified
two reportable operating segments: 1) Europe and 2) The
Americas.
The Europe segment is highly integrated. It includes a system of
mills and plants that primarily produces a full line of
containerboard that is converted into corrugated containers. The
Americas segment comprises all forestry, paper, corrugated and
folding carton activities in a number of Latin American countries
and the United States. Inter-segment revenue is not material. No
operating segments have been aggregated for disclosure
purposes.
Segment profit is measured based on earnings before interest,
tax, depreciation, amortisation, exceptional items and share-based
payment expense ('EBITDA before exceptional items').
6 months to 30-Jun-15 6 months to 30-Jun-14
Europe The Americas Total Europe The Americas Total
EURm EURm EURm EURm EURm EURm
Revenue and
results
Revenue 3,129 867 3,996 3,058 889 3,947
EBITDA before 425 139 564 421 155 576
exceptional
items
Segment (4) (35) (39) - (9) (9)
exceptional
items
EBITDA after 421 104 525 421 146 567
exceptional
items
Unallocated (13) (12)
centre
costs
Share-based (26) (7)
payment
expense
Depreciation (162) (180)
and
depletion (net)
Amortisation (16) (14)
Impairment (6) -
of assets
Finance costs (88) (140)
Finance income 27 13
Share 2 1
of associates'
profit (after
tax)
Profit before 243 228
income tax
Income tax (73) (84)
expense
Profit for the 170 144
financial
period
3 months to 30-Jun-15 3 months to 30-Jun-14
Europe The Americas Total Europe The Americas Total
EURm EURm EURm EURm EURm EURm
Revenue and
results
Revenue 1,584 450 2,034 1,550 465 2,015
EBITDA before 223 72 295 222 80 302
exceptional
items
Segment (4) (2) (6) - - -
exceptional
items
EBITDA after 219 70 289 222 80 302
exceptional
items
Unallocated (10) (7)
centre
costs
Share-based (15) -
payment
expense
Depreciation (80) (94)
and
depletion (net)
Amortisation (8) (7)
Finance costs (34) (77)
Finance income 2 6
Share 1 1
of associates'
profit (after
tax)
Profit before 145 124
income tax
Income tax (44) (46)
expense
Profit for the 101 78
financial
period
4.Exceptional Items
6 months to 6 months to
The following items are regarded 30-Jun-15 30-Jun-14
as exceptional in nature:
EURm EURm
Impairment of assets 6 -
Loss on the disposal of the 4 -
solidboard operations
Currency trading loss on change 36 9
in Venezuelan translation rate
Exceptional items included 46 9
in operating profit
Exceptional finance costs 2 -
Exceptional finance income (11) (5)
Exceptional items included (9) (5)
in net finance costs
Exceptional items charged within operating profit in the first
six months of 2015 amounted to EUR46 million, EUR36 million of
which represented the higher cost to the Venezuelan operations of
discharging their non-Bolivar denominated payables following our
adoption of the Simadi rate. At the time, the Simadi rate was VEF
193 per US dollar compared to the Sicad rate of VEF 12 per US
dollar with the large loss reflecting the very different rates. The
remaining EUR10 million related to the solidboard operations in
Europe, comprising an impairment of EUR6 million booked within cost
of sales in the first quarter and a loss of EUR4 million booked in
the second quarter on their disposal.
Exceptional finance income of EUR11 million in the first six
months of 2015 represented the gain in Venezuela on their US dollar
denominated intra-group loans as a result of our adoption of the
Simadi rate. This gain was partly offset by an exceptional finance
cost of EUR2 million, which was booked in the first quarter. This
represented the accelerated amortisation of the issue costs
relating to the debt within our Senior Credit Facility which was
paid down with the proceeds of February's EUR250 million bond
issue.
Exceptional items charged within operating profit in the six
months to June 2014 amounted to EUR9 million and related to losses
on the translation of non-Bolivar denominated payables following
the Group's decision to translate its Venezuelan operations at the
Sicad I rate. The translation loss reflected the higher cost to its
Venezuelan operations of discharging these payables.
Exceptional finance income in the six months to June 2014
comprised a gain of EUR5 million in Venezuela on the retranslation
of the US dollar denominated intra-group loans to the Sicad I
rate.
5.Finance Costs and Income
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Finance costs:
Interest payable on bank loans and overdrafts 17 26
Interest payable on other borrowings 49 60
Exceptional finance costs associated 2 -
with debt restructuring
Foreign currency translation loss on debt 9 5
Fair value loss on derivatives 1 2
not designated as hedges
Net interest cost on net pension liability 10 13
Net monetary loss - hyperinflation - 34
Total finance costs 88 140
Finance income:
Other interest receivable (3) (2)
Gain on sale of financial asset - (1)
Foreign currency translation gain on debt (4) (3)
Exceptional foreign currency translation gain (11) (5)
Fair value gain on derivatives (9) (2)
not designated as hedges
Total finance income (27) (13)
Net finance costs 61 127
6.Income Tax Expense
Income tax expense recognised in the Condensed Consolidated
Income Statement
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Current tax:
Europe 41 43
The Americas 26 29
67 72
Deferred tax 6 12
Income tax expense 73 84
Current tax is analysed as follows:
Ireland 7 2
Foreign 60 70
67 72
Income tax credit recognised in the Condensed Consolidated
Statement of Comprehensive Income
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Arising on actuarial gain/loss 14 (7)
on defined benefit plans
The tax expense in 2015 is EUR11 million lower than in the
comparable period due to lower taxable earnings. The tax expense in
Europe is lower by EUR11 million. In the Americas, the tax expense
includes an increase from the reintroduction of a temporary tax in
Colombia and a reduction in Venezuela from the move to the Simadi
exchange rate for reporting purposes. The EUR6 million movement in
deferred tax arises largely in Europe from timing differences. The
tax expense includes a EUR1 million tax credit on exceptional items
in 2015 only.
7.Employee Benefits - Defined Benefit Plans
The table below sets out the components of the defined benefit
cost for the period:
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Current service cost 22 25
Past service cost - 1
Gain on curtailment (1) -
Gain on settlement (1) -
Net interest cost on net pension liability 10 13
Defined benefit cost 30 39
Included in cost of sales, distribution costs and administrative
expenses is a defined benefit cost of EUR20 million (2014: EUR26
million). Net interest cost on net pension liability of EUR10
million (2014: EUR13 million) is included in finance costs in the
Condensed Consolidated Income Statement.
The amounts recognised in the Condensed Consolidated Balance
Sheet were as follows:
30-Jun-15 31-Dec-14
EURm EURm
Present value of funded or partially (2,242) (2,226)
funded obligations
Fair value of plan assets 1,956 1,889
Deficit in funded or partially funded plans (286) (337)
Present value of wholly unfunded obligations (508) (556)
Net pension liability (794) (893)
The employee benefits provision has decreased from EUR893
million at 31 December 2014 to EUR794 million at 30 June 2015,
mainly as a result of higher Eurozone and Sterling corporate bond
yields which increased the discount rates in the Eurozone and
Sterling area.
8.Earnings Per Share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to owners of the parent by the weighted average number
of ordinary shares in issue during the period less own shares.
6 months to 6 months to
30-Jun-15 30-Jun-14
Profit attributable to owners 169 142
of the parent (EUR million)
Weighted average number of ordinary 231 228
shares in issue (million)
Basic earnings per share (cent) 73.2 62.3
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 plan and
deferred shares held in trust.
6 months to 6 months to
30-Jun-15 30-Jun-14
Profit attributable to owners 169 142
of the parent (EUR million)
Weighted average number of ordinary 231 228
shares in issue (million)
Potential dilutive ordinary 3 1
shares assumed (million)
Diluted weighted average ordinary 234 229
shares (million)
Diluted earnings per share (cent) 72.4 61.9
Pre-exceptional
6 months to 6 months to
30-Jun-15 30-Jun-14
Profit attributable to owners 169 142
of the parent (EUR million)
Exceptional items included in profit before 37 4
income tax (Note 4) (EUR million)
Income tax on exceptional items (EUR million) (1) -
Pre-exceptional profit attributable to 205 146
owners of the parent (EUR million)
Weighted average number of ordinary 231 228
shares in issue (million)
Pre-exceptional basic earnings 88.7 64.1
per share (cent)
Diluted weighted average ordinary 234 229
shares (million)
Pre-exceptional diluted earnings 87.7 63.6
per share (cent)
9.Dividends
During the period, the final dividend for 2014 of 40 cent per
share was paid to the holders of ordinary shares. The Board has
decided to pay an interim dividend of 20 cent per share for 2015
and it is proposed to pay this dividend on 30 October 2015 to all
ordinary shareholders on the share register at the close of
business on 2 October 2015.
10.Property, Plant and Equipment
Land and buildings Plant and equipment Total
EURm EURm EURm
Six months ended
30 June 2015
Opening net book amount 1,079 1,954 3,033
Reclassifications 4 (5) (1)
Additions - 159 159
Acquisitions 9 48 57
Depreciation charge (23) (139) (162)
for the period
Retirements and (4) (1) (5)
disposals
Hyperinflation 3 2 5
adjustment
Foreign currency (96) (36) (132)
translation
adjustment
At 30 June 2015 972 1,982 2,954
Year ended 31 December
2014
Opening net book amount 1,107 1,915 3,022
Reclassifications 44 (49) (5)
Assets classified (20) (19) (39)
as held for sale
Additions 9 391 400
Acquisitions 1 49 50
Depreciation charge (48) (292) (340)
for the year
Impairments (5) (34) (39)
Retirements and (3) (1) (4)
disposals
Hyperinflation 45 39 84
adjustment
Foreign currency (51) (45) (96)
translation
adjustment
At 31 December 2014 1,079 1,954 3,033
11.Net Movement in Working Capital
6 months to 6 months to
30-Jun-15 30-Jun-14
EURm EURm
Change in inventories (47) (20)
Change in trade and other receivables (180) (189)
Change in trade and other payables 110 92
Net movement in working capital (117) (117)
12. Analysis of Net Debt
30-June-15 31-Dec-14
EURm EURm
Senior credit facility:
Revolving credit facility(1)- interest at 128 100
relevant interbank rate + 1.10%(6)
Facility A term loan(2)- interest at 496 745
relevant interbank rate + 1.35%(6)
US$292.3 million 7.50% senior debentures 262 242
due 2025 (including accrued interest)
Bank loans and overdrafts 97 65
Cash (166) (399)
2018 receivables securitisation 174 173
variable funding notes
2019 receivables securitisation 238 236
variable funding notes
2018 senior notes (including accrued interest)(3) 469 446
EUR400 million 4.125% senior notes due 402 402
2020 (including accrued interest)
EUR250 million senior floating rate notes due 248 248
2020 (including accrued interest)(4)
EUR500 million 3.25% senior notes due 494 494
2021 (including accrued interest)
EUR250 million 2.75% senior notes due 2025 248 -
(including accrued interest)(5)
Net debt before finance leases 3,090 2,752
Finance leases 10 7
Net debt including leases 3,100 2,759
(1) Revolving credit facility ('RCF') of EUR625 million
(available under the senior credit facility) to be repaid in 2020
(maturity dates extended from 2018 effective 13March 2015).(a)
Revolver loans - EUR135 million (b) drawn under ancillary
facilities and facilities supported by letters of credit - nil and
(c) other operational facilities including letters of credit -
EUR20 million.
(2) Facility A term loan ('Facility A') due to be repaid in
certain instalments from 2018 to 2020 (maturity dates extended from
2016 to 2018 effective 13 March 2015).
(3) EUR200 million 5.125% senior notes due 2018 and US$300
million 4.875% senior notes due 2018.
(4) Interest at EURIBOR + 3.5%.
(5) On 11 February 2015 the Group priced EUR250 million of
ten-year euro denominated senior notes at a coupon of 2.75%. The
proceeds of the offering were used to reduce term loan borrowings
under the senior credit facility.
(6) Following a reduction in the margins applicable to the
senior credit facility of 0.65% as part of the amendment and
extension of that facility effective 13 March 2015, the margins are
determined as follows:
Net debt/EBITDA ratio RCF Facility A
Greater than 3.00 : 1 1.85% 2.10%
3.00 : 1 or less but more than 2.50 : 1 1.35% 1.60%
2.50 : 1 or less but more than 2.00 : 1 1.10% 1.35%
2.00 : 1 or less 0.85% 1.10%
13.Other Reserves
Other reserves included in the Condensed Consolidated Statement
of Changes in Equity are comprised of the following:
Reverse Cash flow Foreign Share- Own shares Available-for-sale
acquisition hedging reserve currency based reserve Total
reserve translation payment
reserve reserve
EURm EURm EURm EURm EURm EURm EURm
At 1 January 575 (33) (689) 156 (40) 1 (30)
2015
Other
comprehensive
income
Foreign - - (343) - - - (343)
currency
translation
adjustments
Effective - 10 - - - - 10
portion
of changes in
fair value
of cash
flow hedges
Total - 10 (343) - - - (333)
other
comprehensive
income/(expense)
Share-based - - - 21 - - 21
payment
Shares acquired - - - - (15) - (15)
by
SKG Employee
Trust
Shares - - - (14) 14 - -
distributed
by the
SKG Employee
Trust
At 30 June 575 (23) (1,032) 163 (41) 1 (357)
2015
At 1 January 575 (15) (456) 131 (28) 1 208
2014
Other
comprehensive
income
Foreign - - (192) - - - (192)
currency
translation
adjustments
Effective - (14) - - - - (14)
portion
of changes in
fair value
of cash
flow hedges
Total - (14) (192) - - - (206)
other
comprehensive
expense
Share-based - - - 7 - - 7
payment
Shares acquired - - - - (13) - (13)
by
SKG Employee
Trust
Shares - - - (1) 1 - -
distributed
by the
SKG Employee
Trust
At 30 June 575 (29) (648) 137 (40) 1 (4)
2014
14.Fair Value Hierarchy
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 30 June 2015:
Level 1 Level 2 Level 3 Total
EURm EURm EURm EURm
Available-for-sale financial assets:
Listed 1 - - 1
Unlisted - 7 13 20
Derivative financial instruments:
Assets at fair value through Condensed - 3 - 3
Consolidated Income Statement
Derivatives used for hedging - 33 - 33
Derivative financial instruments:
Liabilities at fair value - (6) - (6)
through Condensed
Consolidated Income Statement
Derivatives used for hedging - (21) - (21)
1 16 13 30
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 December
2014:
Level 1 Level 2 Level 3 Total
EURm EURm EURm EURm
Available-for-sale financial assets:
Listed 1 - - 1
Unlisted - 7 13 20
Derivative financial instruments:
Assets at fair value through Condensed - 3 - 3
Consolidated Income Statement
Derivatives used for hedging - 2 - 2
Derivative financial instruments:
Liabilities at fair value - (21) - (21)
through Condensed
Consolidated Income Statement
Derivatives used for hedging - (29) - (29)
1 (38) 13 (24)
The fair value of the level 2 derivative financial instruments
set out above has been measured using observable market inputs as
defined under IFRS 13, Fair Value Measurement. All are plain
derivative instruments, valued with reference to observable foreign
exchange rates, interest rates or broker prices. The Group uses
discounted cash flow analysis for various available-for-sale
financial assets that are not traded in active markets. There has
been no movement to the level 3 financial instruments from 31
December 2014 to 30 June 2015.
There have been no transfers between level 1 and level 2 during
the period.
15.Fair Value
The following table sets out the fair value of the Group's
principal financial assets and liabilities. The determination of
these fair values is based on the descriptions set out within Note
2 to the consolidated financial statements of the Group's 2014
annual report.
30-Jun-15 31-Dec-14
Carrying value Fair value Carrying value Fair value
EURm EURm EURm EURm
Trade and other 1,520 1,520 1,341 1,341
receivables(1)
Available-for-sale 21 21 21 21
financial
assets(2)
Cash 158 158 387 387
and
cash
equivalents(3)
Derivative 36 36 5 5
assets(4)
Restricted cash 8 8 12 12
1,743 1,743 1,766 1,766
Trade and other 1,372 1,372 1,268 1,268
payables(1)
Senior credit 624 624 845 862
facility(5)
(7)
2018 174 174 173 173
receivables
securitisation(3)
2019 238 238 236 236
receivables
securitisation(3)
Bank 97 97 65 65
overdrafts(3)
2025 262 328 242 286
debentures(6)
2018 notes(6) 469 505 446 478
2020 fixed rate 402 433 402 437
notes(6)
2020 floating 248 270 248 265
rate
notes(6)
2021 notes(6) 494 507 494 520
2025 notes(6) 248 234 - -
(7)
4,628 4,782 4,419 4,590
Finance leases 10 10 7 7
4,638 4,792 4,426 4,597
Derivative 27 27 50 50
liabilities(4)
4,665 4,819 4,476 4,647
Total net (2,922) (3,076) (2,710) (2,881)
position
(1) The fair value of trade and other receivables and
payables is estimated as the present value
of future cash flows, discounted at the market
rate of interest at the reporting date.
(2) The fair value of listed available-for-sale financial
assets is determined by reference
to their bid price at the reporting date.
Unlisted available-for-sale financial
assets are valued using recognised valuation
techniques for the underlying security
including discounted cash flows and similar
unlisted equity valuation models.
(3) The carrying amount reported in the Condensed
Consolidated Balance Sheet
is estimated to approximate to fair value because of the short-term
maturity of these instruments and, in the case
of the receivables securitisation,
the variable nature of the facility and repricing dates.
(4) The fair value of forward foreign currency
and energy contracts is based on their
listed market price if available. If a listed
market price is not available,
then fair value is estimated by discounting
the difference between the contractual
forward price and the current forward
price for the residual maturity
of the contract using a risk-free interest
rate (based on government bonds). The
fair value of interest rate swaps is
based on discounting estimated future
cash flows based on the terms and maturity
of each contract and using market
interest rates for a similar instrument at the measurement date.
(5) The fair value of the senior credit facility is based
on the present value of its estimated future
cash flows discounted at an appropriate market
discount rate at the balance sheet date.
(6) Fair value is based on broker prices at the balance sheet date.
(7) In February 2015 the Group issued EUR250 million of ten-year
euro denominated senior notes at a coupon
of 2.75%, the proceeds of which were used to prepay
term debt under the senior credit facility.
16.Venezuela
Hyperinflation
As discussed more fully in the 2014 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 -
Financial Reporting in Hyperinflationary Economies to its
Venezuelan operations at 31 December 2009 and for all subsequent
accounting periods.
The index used to reflect current values is an estimate derived
from the most recent published Banco Central de Venezuela's
National Consumer Price Index. The most recent index published
relates to December 2014. The level of and movement in the price
index at June 2015 and 2014 are as follows:
30-Jun-15 30-Jun-14
Index at period end 1,142.34 647.5
Movement in period 36.1% 30.0%
As a result of the entries recorded in respect of
hyperinflationary accounting under IFRS, the Condensed Consolidated
Income Statement is impacted as follows: Revenue EUR92 million
decrease (2014: EUR14 million decrease), pre-exceptional EBITDA
EUR9 million decrease (2014: EUR7 million decrease) and profit
after taxation EUR6 million decrease (2014: EUR55 million
decrease). In 2015, a net monetary loss of less than EUR1 million
(2014: EUR34 million loss) was recorded in the Condensed
Consolidated Income Statement. The impact on our net assets and our
total equity is an increase of EUR30 million (2014: EUR47 million
increase).
Exchange Control and Devaluation
In quarter one of 2015, the Venezuelan government announced
changes to its system of multiple exchange rates for the Venezuelan
Bolivar Fuerte ('VEF') as follows:
-- Sicad I and Sicad II rates were unified into a single variable Sicad
rate, which was 12.8 VEF per US dollar at 30 June 2015;
-- A new rate, ('Simadi'), was created to allow individuals and
businesses to buy and sell foreign currency more easily and to
offset
the parallel market rate. The Simadi rate was VEF 197 per US
dollar at
30 June 2015; and
-- The existing 'official rate' continues to be fixed at VEF 6.3 per US
dollar.
The Group changed the rate at which it consolidates its
Venezuelan operations from the Sicad rate to the Simadi rate as at
31 March 2015. The Group believes that Simadi is the most
appropriate rate for accounting and consolidation, as it believes
that this is the rate at which the Group extracts economic benefit.
The change from the Sicad rate to the Simadi rate reduced the
Group's cash by approximately EUR96 million and its net assets by
EUR573 million. Following this change, the Group's operations in
Venezuela now accounts for less than 1% of its EBITDA.
Control
The nationalisation of foreign owned companies or assets by the
Venezuelan government remains a risk. Market value compensation is
either negotiated or arbitrated under applicable laws or treaties
in these cases. However, the amount and timing of such compensation
is necessarily uncertain.
The Group continues to control operations in Venezuela and, as a
result, continues to consolidate all of the results and net assets
of these operations at the period end in accordance with the
requirement of IFRS 10.
In 2015, the Group's operations in Venezuela represented
approximately 1% (2014: 5%) of its total assets and 2% (2014: 13%)
of its net assets. Cumulative foreign translation losses arising on
its net investment in these operations amounting to EUR928 million
(2014: EUR534 million) are included in the foreign exchange
translation reserve.
17.Related Party Transactions
Details of related party transactions in respect of the year
ended 31 December 2014 are contained in Note 31 to the consolidated
financial statements of the Group's 2014 annual report. The Group
continued to enter into transactions in the normal course of
business with its associates and other related parties during the
period. There were no transactions with related parties in the
first half of 2015 or changes to transactions with related parties
disclosed in the 2014 consolidated financial statements that had a
material effect on the financial position or the performance of the
Group.
18.Contingent Liabilities
During 2013, the Spanish Competition Authority ('CNMC') launched
an investigation into several corrugated manufacturers based in
Spain including SKG and the Spanish Association of Corrugated
Cardboard Containers and Packaging Manufacturers ('AFCO'). On 23
June 2015, SKG received notification from the CNMC of a fine for
alleged anticompetitive conduct.
The Group considers that the fine is unjustified and that there
is no basis upon which a fine can be levied. The Group is appealing
the decision of the CNMC and is confident of a successful outcome.
Accordingly no provision has been made in respect of this fine in
the condensed consolidated interim financial statements. In the
event that the Group was unsuccessful in the appeal, the potential
liability amounts to EUR8.1 million.
19.Board Approval
The interim report was approved by the Board of Directors on 28
July 2015.
20.Distribution of the Interim Report
The 2015 interim report is available on the Group's website
smurfitkappa.com.
Responsibility Statement in Respect of the Six Months Ended 30
June 2015
The Directors, whose names and functions are listed on pages 34
and 35 in the Group's 2014 annual report, are responsible for
preparing this interim management report and the condensed
consolidated interim financial statements in accordance with the
Transparency (Directive 2004/109/EC) Regulations 2007, the related
Transparency Rules of the Irish Financial Services Regulatory
Authority and with IAS 34, Interim Financial Reporting as adopted
by the European Union.
The Directors confirm that, to the best of their knowledge:
-- the condensed consolidated interim financial statements for the half
year ended 30 June 2015 have been prepared in accordance with
the
international accounting standard applicable to interim
financial
reporting, IAS 34, adopted pursuant to the procedure provided
for
under Article 6 of the Regulation (EC) No. 1606/2002 of the
European
Parliament and of the Council of 19 July 2002;
-- the interim management report includes a fair review of the important
events that have occurred during the first six months of the
financial
year, and their impact on the condensed consolidated interim
financial
statements for the half year ended 30 June 2015, and a
description of
the principal risks and uncertainties for the remaining six
months;
-- the interim management report includes a fair review of related party
transactions that have occurred during the first six months of
the
current financial year and that have materially affected the
financial
position or the performance of the Group during that period, and
any
changes in the related party transactions described in the last
annual
report that could have a material effect on the financial
position or
performance of the Group in the first six months of the
current
financial year.
Signed on behalf of the Board
G.W. McGann, Director and Chief Executive Officer
I.J. Curley, Director and Chief Financial Officer
28 July 2015
Supplementary 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 to 3 months to 6 months to 6 months to
30-Jun-15 30-Jun-14 30-Jun-15 30-Jun-14
EURm EURm EURm EURm
Profit for the 101 78 170 144
financial
period
Income tax expense 44 46 73 84
Exceptional items 7 - 46 9
charged
in operating profit
Share of associates' (1) (1) (2) (1)
profit (after tax)
Net finance costs 32 71 61 127
(after
exceptional items)
Share-based payment 14 - 25 7
expense
Depreciation, 88 101 178 194
depletion
(net)
and amortisation
EBITDA 285 295 551 564
Supplementary
Historical
Financial
Information
EURm Q2, 2014 Q3, 2014 Q4, 2014 FY, 2014 Q1, 2015 Q2, 2015
Group and 3,289 3,341 3,459 13,306 3,235 3,305
third
party
revenue
Third 2,015 2,027 2,108 8,083 1,962 2,034
party
revenue
EBITDA 295 302 295 1,161 266 285
EBITDA 14.6% 14.9% 14.0% 14.4% 13.5% 14.0%
margin
Operating 194 182 126 661 127 176
profit
Profit 124 93 58 378 98 145
before
income tax
Free cash 76 208 19 362 25 49
flow
Basic 33.6 31.9 11.6 105.8 30.9 42.3
earnings
per
share -
cent
Weighted 228 228 228 228 230 231
average
number
of shares
used
in
EPS
calculation
(million)
Net debt 2,676 2,578 2,759 2,759 2,930 3,100
Net debt 2.31 2.23 2.38 2.38 2.53 2.70
to
EBITDA
(LTM)
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