1st Quarter Results

1st Quarter Results

Smurfit Kappa Group PLC

2011 First Quarter Results

6 May 2011: 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 3 months ending 31 March 2011.

2011 First Quarter | Key Financial Performance Measures

€ m   Q1 2011   Q1 2010   Change   Q4 2010   Change
         
Revenue €1,803 €1,530 18% €1,749 3%
 
EBITDA before Exceptional Items and
Share-based Payment ExpenseShare-based Payment Expense(1) 		€243 €184 32% €257 (5%)
 
EBITDA Margin 13.5% 12.0% - 14.7% -
 
Operating Profit before Exceptional Items €148 €87 69% €140 5%
 
Basic Earnings/(Loss) Per Share (€ cent) 15.6 (7.0) - 23.3 (33%)
 
Free Cash Flow (2) €12 €(58) - €23 (48%)
                     
                     
Net Debt €3,061 €3,162 (3%) €3,110 (2%)
 
Net Debt to EBITDA (LTM)   3.2x   4.2x   -   3.4x   -
 

(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/(loss) for the period to EBITDA before exceptional items and share-based payment expense is set out on page 24.

(2) Free cash flow is set out on page 7. The IFRS cash flow is set out on page 13.

Highlights

  • Sustained progressive volume and pricing recovery delivering 18% revenue growth year-on-year
  • 32% year-on-year increase in EBITDA to €243 million despite sharply higher input costs
  • Net debt reduced €49 million in the quarter. Further meaningful deleveraging expected through 2011
  • Ongoing input cost increases underpin continued pricing momentum

Performance Review and Outlook

Gary McGann, Smurfit Kappa Group CEO, commented: “In the first quarter of 2011 the Group reported continued performance recovery with revenue growth of 18% and EBITDA growth of 32% year-on-year. The Group also reported a relatively strong cash flow performance and a €49 million reduction in net debt in the period, bringing its net debt to EBITDA ratio to 3.2x.

SKG experienced good demand growth in the first quarter, and price recovery in our end markets continued to be achieved at a satisfactory level. However, the increase in raw materials, energy and other costs has proven sharper and more sustained than previously expected, thereby causing some near-term margin pressure. This resulted in two additional recycled containerboard price increases being implemented to date in 2011, which will require continued corrugated price recovery in the remainder of the year.

Entering the second quarter, while demand remains good, input costs have risen further, which if sustained will require additional price increases. Higher end-product prices, together with SKG’s continuing focus on operating efficiency and strong financial discipline should deliver earnings growth and meaningful debt paydown in 2011. The Group’s continued de-leveraging will expand its available range of strategic and financial options.”

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 market segments, including graphicboard and sack paper. Smurfit Kappa Group also has a good 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  

Bertrand Paulet

Smurfit Kappa Group

 

Tel: +353 1 202 71 80

E-mail: ir@smurfitkappa.com

FD K Capital Source

 

 

Tel: +353 1 663 36 80

E-mail: smurfitkappa@kcapitalsource.com

 

2011 First Quarter | Performance Overview

Demand for the Group’s products remained strong in the first quarter of 2011. As a result, compared to the first quarter of 2010, SKG’s corrugated volumes were 4% higher when excluding the acquisition of Mondi’s UK corrugated operations in 2010 (or 7% higher in total). Compared to the fourth quarter of 2010, SKG’s European corrugated volumes were 1% higher.

Despite significantly higher input costs across all headings year-on-year, SKG’s EBITDA margin of 13.5% in quarter one 2011 improved by 1.5% compared to quarter one 2010. This primarily reflects the benefits of increased corrugated prices in Europe, a continued focus on operating efficiency with a further €17 million of cost take-out delivered in the quarter, and a good improvement in SKG’s Specialties business.

As expected, rising input costs continue to be successfully recovered through corrugated pricing, in line with the usual six months time lag. At the end of March 2011, SKG’s European corrugated prices were 19% higher than at the 2009 low point. However, the Group’s first quarter 2011 EBITDA margin was lower than in the fourth quarter of 2010, reflecting a significantly higher than expected rise in raw materials and other costs since the beginning of the year.

Compared to quarter four 2010, raw materials costs were 10% higher in quarter one, while energy costs were 5% higher. The upward cost pressure continued into April. While generating near-term margin pressure, a rising input cost environment combined with sustained demand growth and low inventory levels provides a clear platform for the necessary higher product pricing.

In that context, and in viewing the supply demand balance in the European containerboard market, it is worth noting that only one new recycled containerboard machine is currently expected to be built in Europe in 2012, with one more in 2013. Furthermore, the lower availability and higher cost of fibre has raised the barriers to entry for new capacity, which could prove to be beneficial for the medium term supply outlook of the industry.

Since the beginning of 2011, two new recycled containerboard price increases have been implemented in Europe, totalling €70 per tonne (approximately 16% increase). Consequently, SKG’s priority through 2011 remains one of offsetting higher input costs through box price increases.

The Group’s Latin American EBITDA margin of 16.7% in the first quarter was slightly lower year-on-year, primarily reflecting planned maintenance downtime in SKG’s main Colombian paper mill complex in March 2011. In the first quarter of 2011, SKG’s corrugated volumes in the Latin American region were 3% higher year-on-year, and 6% higher than in the fourth quarter of 2010.

Against a backdrop of increasing working capital requirements, the Group’s positive free cash flow together with favourable currency movements contributed to reduce net debt by €49 million in the first quarter. Compared to March 2010 levels, the Group’s net debt reduced by €101 million, which combined with improved earnings supported a reduction of its net debt to EBITDA ratio from 4.2x to 3.2x in March 2011.

Through the cycle, SKG’s focus is to generate superior returns, underpinned by a strong set of operating and financial disciplines. These include an unrelenting focus on cost efficiency, efficient capacity management and maximising cash flow generation.

2011 First Quarter | Financial Performance

At €1,803 million for the first quarter of 2011, sales revenue was 18% higher than in the first quarter of 2010. However, allowing for the positive impact of currency and hyperinflation accounting of €23 million, offset by the net impact of acquisitions and disposals of €9 million, the underlying increase in revenue was €259 million, the equivalent of approximately 17%.

Compared to the fourth quarter of 2010, sales revenue in the first quarter of 2011 was €54 million higher. Allowing for the negative impact of currency and hyperinflation accounting of €13 million and for €4 million in respect of disposals, the underlying increase was €71 million, the equivalent of 4%.

At €243 million, EBITDA in the first quarter of 2011 was €59 million higher than the first quarter of 2010. Allowing for the positive impact of currency and for the disposal of loss making operations, underlying EBITDA increased by €53 million year-on-year, the equivalent of 29%. Compared to the fourth quarter of 2010, EBITDA decreased by €14 million. With currency and disposals having a modest impact quarter-on-quarter, the underlying decrease was €13 million, the equivalent of 5%.

Exceptional items charged within operating profit of €1 million in the first quarter of 2011 related to the ongoing rationalisation in the European corrugated operations. Exceptional items charged within operating profit of €14 million in 2010 related to the loss on US dollar denominated net trading balances in SKG’s Venezuelan operation as a result of the devaluation of the Venezuelan currency.

Despite a higher level of profit before tax, EPS of 15.6 cent in the first quarter was lower than in the fourth quarter of 2010. This primarily reflects a €23 million tax charge arising from the implementation of additional temporary taxes in Colombia on 1 January, which although payable over the next four years is required to be fully expensed in quarter one 2011 under IFRS.

2011 First Quarter | Free Cash Flow

Compared to a net outflow of €58 million reported in the first quarter of 2010, the Group reported a positive free cash flow generation of €12 million in the first quarter of 2011. This primarily reflected the 32% increase in SKG’s EBITDA and lower interest costs year-on-year, somewhat offset by higher working capital outflows.

The Group’s absolute working capital level increased by €86 million in quarter one 2011, primarily reflecting improved volumes and higher raw material and end-product prices. However, at 9.2% of annualised sales revenue, SKG’s working capital ratio at the end of March 2011 was stable compared to the March 2010 level.

Capital expenditure of €54 million in the first quarter of 2011 equated to 62% of depreciation, compared to 40% in the first quarter of 2010. As previously advised, in 2011 SKG expects to increase its capital expenditure back towards its normalised level of approximately 90% of depreciation, which will result in increasing capital expenditure as the year progresses.

Cash interest of €61 million in the first quarter of 2011 was €5 million lower than in the first quarter of 2010, primarily reflecting a lower average interest cost year-on-year.

Tax payments of €10 million in the first quarter of 2011 were €3 million higher than in 2010.

In 2011, the Group currently expects to deliver materially stronger free cash flow generation than in 2010, supported by higher earnings and lower cash interest, somewhat offset by higher capital expenditure.

2011 First Quarter | Capital Structure

The Group’s net debt reduced by €49 million to €3,061 million in the first quarter, mainly reflecting SKG’s positive free cash flow performance of €12 million, combined with €31 million of favourable currency movements and €4 million in proceeds from the divestment of an associate shareholding. The positive currency movement in the quarter reflects the relative strength of the euro against the US dollar.

Compared to March 2010, net debt at the end of March 2011 was €101 million lower, the equivalent of a 3% reduction. It is worth bearing in mind that the year-on-year reduction in net debt was achieved after a €56 million cash outflow relating to the asset swap with Mondi in 2010. This positive outcome demonstrates SKG’s continuing focus on delivering positive cash flow generation through the cycle.

The Group continues to benefit from its average debt maturity profile of 5 years, with no material maturities before December 2013. In addition, SKG currently has €553 million of cash on its balance sheet, with committed undrawn credit facilities of approximately €525 million.

At the end of March 2011, the Group’s net debt to EBITDA ratio reduced to 3.2x from 4.2x at the end of March 2010 and 3.4x at the end of December 2010. A reducing leverage, combined with a strong liquidity position, a good maturity profile and diversified funding sources, provide SKG with improving financial flexibility. The Group’s strategic priority for 2011 remains one of maximising free cash flow generation for further debt paydown.

2011 First Quarter | Operating efficiency

The Group’s previous 3-year cost take-out programme was successfully completed in 2010 and generated €306 million of cost savings, which significantly strengthened the competitiveness of SKG’s operating system. The Group’s increasingly efficient cost base is a material contributor to its continuing relatively strong margin performance, and should allow it to continue to deliver higher returns.

In 2011, the Group has introduced a new 2-year initiative, with a target to generate €150 million of cost savings by the end of 2012. This new programme generated €17 million of cost savings benefits in the first quarter of 2011, which partially mitigated the significant rise in input costs experienced in the period.

In addition to its continued focus on operating excellence, SKG’s sustained performance through the cycle also reflects its strong commitment to provide customers with innovative, sustainable and cost efficient paper-based packaging solutions. The Group is uniquely equipped to provide industry leading customer service, supported by its unrivalled geographical footprint, its state of the art design capabilities and its broad-based product offering. SKG is committed to continue investing to meet and exceed customers’ requirements.

2011 First Quarter | Performance Review

Packaging: Europe

Following the 4% underlying demand growth experienced in the full year 2010, demand for SKG’s corrugated packaging solutions remained strong through the first quarter of 2011. Despite much tougher comparators, SKG’s underlying corrugated volumes in quarter one were also 4% higher than in the first quarter of 2010. SKG’s businesses in Germany, France and Spain in particular experienced strong demand growth in the period. Including the acquisition of Mondi’s operations in the UK in May 2010, first quarter corrugated volumes were 7% higher year-on-year.

Corrugated prices continued to recover at a steady pace into 2011. As a result, the Group’s European corrugated prices in the first quarter were on average 3% higher compared to the fourth quarter of 2010. Higher prices however were not sufficient to fully offset the greater than expected increase in all input costs since the beginning of the year. This resulted in European Packaging EBITDA margins contracting from 15.2% in quarter four 2010 to 14.0% in quarter one 2011.

The Group’s margin in the first quarter of 2011 was also affected by a strike in its kraftliner mill in France, and by the large maintenance downtime relating to the successful re-build of its Hoya recycled mill in Germany. This re-build further enhances the cost efficiency of SKG’s integrated mill system, and increases its level of self-sufficiency in lightweight recycled containerboard.

Recovered fibre prices in the first quarter increased by approximately 15% compared to the fourth quarter of 2010, reaching an all time high level of €150 per tonne in March. In April, European recovered fibre prices have increased further and now exceed €160 per tonne primarily driven by strong incremental demand from Eastern European countries. Demand from Chinese buyers was slightly lower year-on-year in quarter one.

In the first quarter of 2011, SKG also experienced sequential increases of 4% in wood costs, 18% in starch costs and 6% in energy costs compared to the fourth quarter of 2010.

While generating some near term margin compression within SKG’s system, higher input costs, combined with good demand in the European market provide a strong platform for continued pricing recovery. As a result, following recycled containerboard price increases of €195 per tonne reported through 2010, a further €40 per tonne price increase was successfully implemented in the first quarter of 2011, and an additional €30 per tonne was implemented in April.

Those recently implemented containerboard price increases generate significant pressure on corrugated producers’ earnings, which will result in the Group pursuing additional corrugated pricing through the remainder of 2011. As is normal, it takes up to six months to fully offset higher containerboard prices through corrugated price recovery.

In that context, having achieved a 19% price recovery from the low point in 2009 to the end of March 2011, a further 7% corrugated price increase will be required in order to recover the containerboard price increases which were implemented in February and April this year.

On the kraftliner side, public market indices reported a €250 per tonne cumulative price increase from the low point in 2009 to the end of 2010. Higher US imports in quarter four 2010 generated some downward pressure on European kraftliner prices however, which led to a €20 per tonne price decline in public market indices in January 2011. Lower prices combined with higher wood costs negatively impacted profitability of the Group’s external sales of kraftliner in the first quarter of 2011. In April 2011 however, SKG successfully implemented a white-top kraftliner price increase.

SKG will be taking 70,000 tonnes of maintenance-related downtime at its Swedish kraftliner mill in August 2011, which will significantly reduce European kraftliner production during the summer.

In April 2011 demand has remained strong but cost headwinds, if sustained, will require further pricing initiatives.

Packaging: Latin America

In the first quarter, Latin American EBITDA of €50 million was 20% higher year-on-year, and represented 20% of the Group’s total EBITDA. While higher than the Group’s other businesses, SKG’s Latin American EBITDA margin of 16.7% in the period was slightly lower than the 17.0% delivered in the first quarter of 2010. This year-on-year reduction primarily reflected lower margins in Colombia and Venezuela, somewhat offset by improved performances in Mexico and Argentina.

While SKG’s corrugated volumes in Colombia were 8% higher year-on-year in the first quarter, pricing was relatively stable, highlighting moderate inflation in the country and aggressive price action from competitors. SKG’s first quarter Colombian performance was also negatively impacted by planned maintenance downtime at its large paper mill complex in Cali. The mill restarted successfully at the end of March and higher margins are expected to be restored in the second quarter.

In the challenging Venezuelan market, following a 7% demand decline in 2010, SKG experienced a positive year-on-year corrugated volume growth of 4% in the first quarter of 2011. Continuing high inflation in the country was partly offset by SKG’s ongoing efforts to enhance its operating efficiency.

SKG’s Mexican EBITDA was materially higher year-on-year in the first quarter. Corrugated volumes were 1% lower, largely as a result of a poor 2011 agricultural season (due to severe weather). However, prices were materially higher, which combined with SKG’s continuing focus on operating efficiency more than offset the rise in input costs.

Cost pressures, especially for recovered paper, continued to prevail in Argentina in the first quarter, although at a somewhat slower pace than in 2010. After a 14% demand growth in 2010, the Group’s corrugated volumes in the country continued to increase in the year to date. Materially higher prices year-on-year supported strong EBITDA growth in the quarter.

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 management team to drive the business and grow its earnings, will continue to deliver a strong performance through the cycle.

Specialties: Europe

Following an unsustainably low performance in the first quarter of 2010, SKG’s Specialties EBITDA of

€15 million in the first quarter of 2011 was 66% higher. The year-on-year progress primarily reflects higher volumes across all Specialties’ businesses, improved margins for solidboard as a result of increased prices, and the absence of the loss making sack converting operations which were divested in May 2010. The Group’s bag-in-box division continued to perform in the first quarter.

As a result of the successful board price increases of €100 per tonne in 2010, as expected prices for SKG’s solidboard packaging products increased significantly at the beginning of 2011, thereby contributing to somewhat offset higher input costs. Further increases in recovered paper and energy in the first quarter of 2011 have caused the Group to announce further board price increases in quarter two.

Summary Cash Flows
 
Summary cash flows for the first quarter are set out in the following table.
  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m
Pre-exceptional EBITDA 243 184
Exceptional items - (14)
Cash interest expense (61) (66)
Working capital change (86) (64)
Current provisions (3) (6)
Capital expenditure (54) (34)
Change in capital creditors (6) (33)
Sale of fixed assets 1 1
Tax paid (10) (7)
Other (12) (19)
     
Free cash flow 12 (58)
 
Share issues 7 2
Sale of businesses and investments 4 -
Purchase of investments (1) (1)
Derivative termination receipts - 1
     
Net cash inflow/(outflow) 22 (56)
 
Deferred debt issue costs amortised (4) (5)
Currency translation adjustments 31 (49)
     
Decrease/(increase) in net debt 49   (110)

(1)    The summary cash flow is prepared on a different basis to the cash flow statement under IFRS.

The principal difference is that the summary cash flow details movements in net debt while the IFRS cash flow details movement in cash and cash equivalents. In addition, the IFRS cash flow has different sub-headings to those used in the summary cash flow. A reconciliation of the free cash flow to cash generated from operations in the IFRS cash flow is set out below.

    3 months to   3 months to
31-Mar-11 31-Mar-10
        €m   €m
Free cash flow 12 (58)
 
Add back: Cash interest 61 66
Capital expenditure (net of change in capital creditors) 60 67
Tax payments 10 7
Less: Sale of fixed assets (1) (1)
Profit on sale of assets and businesses – non exceptional (5)   (4)
Cash generated from operations 137   77
 

Capital Resources

The Group's primary sources of liquidity are cash flows 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 2011 Smurfit Kappa Funding plc had outstanding €217.5 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 €168.5 million variable funding notes issued under the new €250 million accounts receivable securitisation program maturing in November 2015.

Smurfit Kappa Acquisitions had outstanding €500 million 7.25% senior secured notes due 2017 and €500 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 €164 million amortising Tranche A maturing in 2012, an €815 million Tranche B maturing in 2013 and an €813 million Tranche C maturing in 2014. In addition, as at 31 March 2011, the facility included a €525 million revolving credit facility, none of which was drawn.

The following table provides the range of interest rates as of 31 March 2011 for each of the drawings under the various senior credit facility term loans.

    BORROWING ARRANGEMENT   CURRENCY   INTEREST RATE
 
Term Loan A EUR 3.655% - 3.662%
Term Loan B EUR 3.99% - 4.295%
USD 3.428%
Term Loan C EUR 4.244% - 4.545%
USD 3.678%
 

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 2011 the Group had fixed an average of 77% of its interest cost on borrowings over the following twelve months.

The Group’s fixed rate debt comprised mainly €500 million 7.25% senior secured notes due 2017, €500 million 7.75% senior secured notes due 2019, €217.5 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 €1,110 million in interest rate swaps with maturity dates ranging from April 2012 to July 2014.

The Group’s earnings are affected by changes in short-term interest rates as a result of its floating rate borrowings. If LIBOR interest rates for these borrowings increase by one percent, the Group’s interest expense would increase, and income before taxes would decrease, by approximately €9 million over the following twelve months. Interest income on the Group’s cash balances would increase by approximately €5 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-11 3 months to 31-Mar-10
Pre-exceptional 2011   Exceptional 2011   Total 2011 Pre-exceptional 2010   Exceptional 2010   Total 2010
    €m   €m   €m   €m   €m   €m
Continuing operations
Revenue 1,803 - 1,803 1,530 - 1,530
Cost of sales (1,296)   -   (1,296) (1,106)   -   (1,106)
Gross profit 507 - 507 424 - 424
Distribution costs (139) - (139) (135) - (135)
Administrative expenses (220) - (220) (208) (14) (222)
Other operating income - - - 6 - 6
Other operating expenses -   (1)   (1) -   -   -
Operating profit 148 (1) 147 87 (14) 73
Finance costs (114) - (114) (133) - (133)
Finance income 43 - 43 57 - 57
Profit on disposal of associate 2   -   2 -   -   -
Profit/(loss) before income tax 79   (1) 78 11   (14) (3)
Income tax expense (49) (14)
 
Profit/(loss) for the financial period 29 (17)
 
Attributable to:
Owners of the Parent 34 (15)
Non-controlling interests (5) (2)
 
Profit/(loss) for the financial period 29 (17)
 
Earnings per share:
Basic earnings/(loss) per share - cent 15.6 (7.0)
Diluted earnings/(loss) per share - cent 15.3 (7.0)
 

Group Statement of Comprehensive Income

  Unaudited   Unaudited
3 months to 3 months to
31-Mar-11 31-Mar-10
    €m   €m
 
Profit/(loss) for the financial period 29 (17)
 
Other comprehensive income:
Foreign currency translation adjustments (47) (108)
Defined benefit pension plans:
- Actuarial (loss)/gain including payroll tax (24) 27
- Movement in deferred tax 3 (6)
Effective portion of changes in fair value of cash flow hedges:
- Movement out of reserve 6 7
- New fair value adjustments into reserve 21 (20)
- Movement in deferred tax (3)   2
Total other comprehensive income (44)   (98)
     
Comprehensive income and expense for the financial period (15)   (115)
 
Attributable to:
Owners of the Parent (2) (108)
Non-controlling interests (13)   (7)
(15)   (115)
 

Group Balance Sheet

  Unaudited   Unaudited   Audited
31-Mar-11 31-Mar-10 31-Dec-10
    €m   €m   €m
ASSETS
Non-current assets
Property, plant and equipment 2,956 2,970 3,008
Goodwill and intangible assets 2,193 2,201 2,209
Available-for-sale financial assets 32 32 32
Investment in associates 14 14 16
Biological assets 85 85 88
Trade and other receivables 4 4 5
Derivative financial instruments - - 2
Deferred income tax assets 125   273   134
5,409   5,579   5,494
Current assets
Inventories 685 608 638
Biological assets 7 10 7
Trade and other receivables 1,399 1,207 1,292
Derivative financial instruments 5 6 8
Restricted cash 12 46 7
Cash and cash equivalents 541   548   495
2,649 2,425 2,447
Non-current assets held for sale -   3   -
Total assets 8,058   8,007   7,941
 
EQUITY
Capital and reserves attributable to the owners of the Parent
Equity share capital - - -
Capital and other reserves 2,308 2,242 2,315
Retained earnings (524)   (658)   (552)
Total equity attributable to the owners of the Parent 1,784 1,584 1,763
Non-controlling interests 162   172   173
Total equity 1,946   1,756   1,936
 
LIABILITIES
Non-current liabilities
Borrowings 3,459 3,590 3,470
Employee benefits 606 620 595
Derivative financial instruments 104 79 101
Deferred income tax liabilities 198 312 206
Non-current income tax liabilities 9 15 9
Provisions for liabilities and charges 47 42 49
Capital grants 14 13 14
Other payables 7   6   7
4,444   4,677   4,451
Current liabilities
Borrowings 155 166 142
Trade and other payables 1,427 1,255 1,351
Current income tax liabilities 42 39 5
Derivative financial instruments 18 74 27
Provisions for liabilities and charges 26   40   29
1,668   1,574   1,554
Total liabilities 6,112   6,251   6,005
Total equity and liabilities 8,058   8,007   7,941
 

Group Statement of Changes in Equity (Unaudited)

   

Capital and other reserves

       
 
Equity share capital Share premium   Reverse acquisition reserve   Cash flow hedging reserve   Foreign currency translation reserve   Reserve for share-based payment Retained earnings Total equity attributable to the owners of the Parent Non-controlling interests Total equity
    €m   €m   €m   €m   €m   €m   €m   €m   €m   €m
At 1 January 2011 - 1,937 575 (45) (216) 64 (552) 1,763 173 1,936
Shares issued - 7 - - - - - 7 - 7
Total comprehensive income and expense - - - 24 (39) - 13 (2) (13) (15)
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
 
 
At 1 January 2010 - 1,928 575 (44) (174) 60 (669) 1,676 179 1,855
Shares issued - 2 - - - - - 2 - 2
Total comprehensive income and expense - - - (11) (103) - 6 (108) (7) (115)
Hyperinflation adjustment - - - - - - 13 13 1 14
Purchase of non-controlling interests - - - - - - - - (1) (1)
Other movements - - - - 8 - (8) - - -
Share-based payment -   -   -   -   -   1   -   1   -   1
At 31 March 2010 -   1,930   575   (55)   (269)   61   (658)   1,584   172   1,756
 

Group Cash Flow Statement

  Unaudited   Unaudited
3 months to 3 months to
31-Mar-11 31-Mar-10
    €m   €m
Cash flows from operating activities
Profit/(loss) for the financial period 29 (17)
Adjustment for
Income tax expense 49 14
Profit on sale of assets and businesses (2) (4)
Equity settled share-based payment transactions 1 1
Amortisation of intangible assets 7 12
Profit on disposal of associates (2) -
Depreciation charge 82 82
Net finance costs 71 76
Change in inventories (55) (37)
Change in biological assets 5 2
Change in trade and other receivables (131) (124)
Change in trade and other payables 97 97
Change in provisions (3) (7)
Change in employee benefits (14) (14)
Foreign currency translation adjustments 1 (3)
Other 2   (1)
Cash generated from operations 137 77
Interest paid (46) (49)
Income taxes paid:
Overseas corporation tax (net of tax refunds) paid (10)   (7)
Net cash inflow from operating activities 81   21
 
Cash flows from investing activities
Interest received 1 2
Purchase of property, plant and equipment and biological assets (60) (65)
Purchase of intangible assets - (2)
Increase in restricted cash (5) (3)
Disposal of property, plant and equipment 6 5
Disposal of associates 4 -
Purchase of non-controlling interests - (1)
Deferred consideration (1)   -
Net cash outflow from investing activities (55)   (64)
 
Cash flow from financing activities
Proceeds from issue of new ordinary shares 7 2
Increase/(decrease) in interest-bearing borrowings 20 (2)
Repayment of finance lease liabilities (2) (3)
Derivative termination receipts - 1
Deferred debt issue costs -   (1)
Net cash inflow/(outflow) from financing activities 25   (3)
Increase/(decrease) in cash and cash equivalents 51   (46)
 
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January 481 587
Currency translation adjustment (4) (11)
Increase/(decrease) in cash and cash equivalents 51   (46)
Cash and cash equivalents at 31 March 528   530
 

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 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”) as adopted by the European Union (“EU”), International Financial Reporting Interpretations Committee (“IFRIC”) interpretations as adopted by the EU, and with those parts of the Companies Acts applicable to companies reporting under IFRS. IFRS is comprised of standards and interpretations approved by the International Accounting Standards Board (“IASB”) and International Accounting Standards and interpretations approved by the predecessor International Accounting Standards Committee that have been subsequently approved by the IASB and remain in effect.

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 2010 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 2010.

In developing IFRS the IASB follows a due process handbook which allows for a fast track annual improvements process. Under this process amendments are made to existing IFRSs to clarify guidance and wording, or to correct for relatively minor unintended consequences, conflicts or oversights. These amendments do not usually have a material effect. A number of annual improvements to IFRSs are effective for 2011, however, none of these had or is expected to have a material effect on the Group Financial Statements.

In addition, the following new standards, amendments and interpretations became effective in 2011, however, they either do not have an effect on the Group financial statements or they are not currently relevant for the Group:

  • Classification of Rights Issues (Amendment to IAS 32)
  • IAS 24, Related Party Disclosure (Revised)
  • Amendments to IFRIC 14, Prepayments of a Minimum Funding Requirement
  • IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments

The following new or amended standards will become effective for the Group from 1 January 2012 or later. They do not have an effect on the financial information contained in this report.

Disclosures – Transfers of Financial Assets (Amendments to IFRS 7). Issued in October 2010, these amendments extend the existing disclosure requirements relating to transfers of financial assets, particularly those that involve securitisation of such assets. The extended disclosures are intended to help the users of financial statements to evaluate the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position. Subject to EU endorsement, the Group will adopt the amended standard for the 2012 financial year. It is not expected to have an effect on the Group Financial Statements.

Deferred tax: Recovery of Underlying Assets (Amendments to IAS 12). Issued in December 2010, these amendments provide a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model in IAS 40 Investment Property. Subject to EU endorsement, the Group will adopt the amended standard for the 2012 financial year. It is not expected to have a material effect on the Group Financial Statements.

IFRS 9, Financial Instruments. The IASB is in the process of replacing IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9, which is effective for the Group from 1 January 2013, represents the first phase of this project. It addresses classification and measurement of financial assets only. It replaces the multiple classification models in IAS 39 with two classification categories, namely amortised cost and fair value. Classification under IFRS 9 is determined by the business model for managing financial assets and the contractual characteristics of the financial assets. It removes the requirement to separate embedded derivatives from financial asset hosts. It also removes the cost exemption for unquoted equities. EU endorsement of this standard has been postponed pending the issuance of further chapters such as financial liabilities and impairment. It is likely to affect the Group’s accounting for its financial assets. Subject to EU endorsement the Group will apply IFRS 9 from 1 January 2013.

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 2010 will be filed with the Irish Registrar of Companies in due course. The audit report on those Group accounts was unqualified.

3. Segmental Analyses

The Group has identified three operating segments on the basis of which performance is assessed and resources are allocated: 1) Packaging Europe, 2) Specialties Europe and 3) Latin America.

The Packaging 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. The Specialties segment comprises activities dedicated to the needs of specific and sometimes niche markets. These include bag-in-box and solidboard. 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 (pre-exceptional EBITDA). 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-11   3 months to 31-Mar-10
Packaging

Europe

  Specialties

Europe

  Latin America   Total Packaging

Europe

  Specialties

Europe

  Latin America  

         Total

    €m   €m   €m   €m   €m   €m   €m   €m
Revenue and Results
Revenue 1,329   178   296   1,803 1,103   183   244   1,530
 
EBITDA before exceptional items 186 15 50 251 137 9 42 188
Segment exceptional items (1)   -   -   (1) -   -   (14)   (14)
EBITDA after exceptional items 185   15   50 250 137   9   28 174
 
Unallocated centre costs (8) (4)
Share-based payment expense (1) (1)
Depreciation and depletion (net) (87) (84)
Amortisation (7) (12)
Finance costs (114) (133)
Finance income 43 57
Profit on disposal of associate 2 -
Profit/(loss) before income tax 78 (3)
Income tax expense (49) (14)
Profit/(loss) for the financial period 29 (17)
 
Assets
Segment assets 5,437 701 1,254 7,392 5,222 752 1,174 7,148
Investment in associates 1   -   13 14 2   -   12 14
Group centre assets 652 845
Total assets 8,058 8,007
 

4. Exceptional Items

  3 months to   3 months to
The following items are regarded as exceptional in nature: 31-Mar-11 31-Mar-10
    €m   €m
 
Currency trading loss on Venezuelan Bolivar devaluation - (14)
Reorganisation and restructuring costs (1)   -
Total exceptional items included in operating costs (1)   (14)
 

The reorganisation and restructuring costs in 2011 relate to the continuing rationalisation of the Group’s corrugated operations in Ireland.

In the first quarter of 2010 a currency translation loss of €14 million arose from the effect of the retranslation of the U.S. dollar denominated net payables of the Venezuelan operations following the devaluation of the Bolivar Fuerte in January 2010.

5. Finance Costs and Income

  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m
Finance costs
Interest payable on bank loans and overdrafts 33 38
Interest payable on finance leases and hire purchase contracts 1 1
Interest payable on other borrowings 33 33
Foreign currency translation loss on debt 3 31
Fair value loss on derivatives not designated as hedges 18 -
Interest cost on employee benefit plan liabilities 25 25
Net monetary loss – hyperinflation 1   5
Total finance cost 114   133
 
Finance income
Other interest receivable (1) (2)
Foreign currency translation gain on debt (19) (4)
Fair value gain on derivatives not designated as hedges (4) (34)
Expected return on employee benefit plan assets (19)   (17)
Total finance income (43)   (57)
 
Net finance cost 71   76
 

6. Income Tax Expense

Income tax expense recognised in the Group Income Statement

  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m
Current taxation:
Europe 15 8
Latin America 32   13
47 21
Deferred taxation 2   (7)
Income tax expense 49   14
 
Current tax is analysed as follows:
Ireland 1 -
Foreign 46   21
47   21
 

Income tax recognised in the Group Statement of Comprehensive Income

  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m

Arising on actuarial gains/losses on defined benefit plans

 

(3) 6
Arising on qualifying derivative cash flow hedges 3   (2)
-   4
 

The current taxation expense for Latin America includes a €23 million tax charge arising from the implementation of additional temporary taxes in Colombia on 1 January, which although payable over the next four years, is required to be expensed in quarter one 2011 under IFRS.

7. Employee Post Retirement Schemes – Defined Benefit Expense

The table below sets out the components of the defined benefit expense for the period:

  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m
 
Current service cost 7 9
Gain on settlements and curtailments -   (2)
7   7
 
Expected return on plan assets (19) (17)
Interest cost on plan liabilities 25   25
Net financial expense 6   8
 
Defined benefit expense 13   15
 

Included in cost of sales, distribution costs and administrative expenses is a defined benefit expense of €7 million for the first quarter of 2011 (2010: €7 million). Expected Return on Plan Assets of €19 million (2010: €17 million) is included in Finance Income and Interest Cost on Plan Liabilities of €25 million (2010: €25 million) is included in Finance Costs in the Group Income Statement.

The amounts recognised in the Group Balance Sheet were as follows:

  31-Mar-11   31-Dec-10
    €m   €m
Present value of funded or partially funded obligations (1,537) (1,548)
Fair value of plan assets 1,334   1,357
Deficit in funded or partially funded plans (203) (191)
Present value of wholly unfunded obligations (403)   (404)
Net employee benefit liabilities (606)   (595)
 

The employee benefits provision has increased from €595 million at 31 December 2010 to €606 million at 31 March 2011. The increase in the provision is mainly as a result of assets underperforming their assumed return.

8. Earnings Per Share

Basic

Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Parent by the weighted average number of ordinary shares in issue during the period.

  3 Months to   3 Months to
31-Mar-11 31-Mar-10
    €m   €m
Profit/(loss) attributable to owners of the Parent 34 (15)
 
Weighted average number of ordinary shares in issue (million) 221 218
 
Basic earnings/(loss) per share - cent 15.6   (7.0)
 

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.

  3 Months to   3 Months to
31-Mar-11 31-Mar-10
    €m   €m
Profit/(loss) attributable to owners of the Parent 34 (15)
 
Weighted average number of ordinary shares in issue (million) 221 218
Potential dilutive ordinary shares assumed 5   -
Diluted weighted average ordinary shares 226   218
 
Diluted earnings/(loss) per share - cent 15.3   (7.0)
 

At 31 March 2010 there were 3,247,478 potential ordinary shares in issue that could have diluted EPS in the future, but these were not included in the computation of diluted EPS in the period because they would have had the effect of reducing the loss per share. Accordingly there was no difference between basic and diluted loss per share in the first quarter of 2010.

9. Property, Plant and Equipment

 

Land and

buildings

 

Plant and

equipment

  Total
    €m   €m   €m
Three months ended 31 March 2011
Opening net book amount 1,128 1,880 3,008
Reclassification 1 (2) (1)
Additions - 50 50
Depreciation charge for the period (12) (70) (82)
Retirements and disposals (1) - (1)
Hyperinflation adjustment 4 5 9
Foreign currency translation adjustment (11)   (16)   (27)
 
At 31 March 2011 1,109   1,847   2,956
 
Year ended 31 December 2010
Opening net book amount 1,151 1,915 3,066
Reclassification 25 (25) -
Additions 5 249 254
Acquisitions 10 21 31
Depreciation charge for the year (50) (293) (343)
Retirements and disposals (11) (7) (18)
Hyperinflation adjustment 16 18 34
Foreign currency translation adjustment (18)   2   (16)
 
At 31 December 2010 1,128   1,880   3,008
 

10. Share-based Payment

Share-based payment expense recognised in the Group Income Statement

  3 months to   3 months to
31-Mar-11 31-Mar-10
    €m   €m
 
Charge arising from fair value calculated at grant date 1   1
 

In March 2007 upon the IPO becoming effective, all of the then class A, E, F and H convertible shares and 80% of the class B convertible shares vested and were converted into D convertible shares. The class C, class G and 20% of the class B convertible shares did not vest and were re-designated as A1, A2 and A3 convertible shares.

The A1, A2 and A3 convertible shares vested on the first, second and third anniversaries respectively of the IPO. The D convertible shares resulting from these conversions are convertible on a one-to-one basis into ordinary shares, at the instance of the holder, upon the payment by the holder of the agreed conversion price. The life of the D convertible shares arising from the vesting of these new classes of convertible share ends on 20 March 2014.

In March 2007, SKG plc adopted the 2007 Share Incentive Plan (the “2007 SIP”). The 2007 SIP was amended in May 2009. Incentive awards under the 2007 SIP are in the form of new class B and new class C convertible shares issued in equal proportions to participants at a nominal value of €0.001 per share. On satisfaction of specified performance criteria the new class B and new class C convertible shares will automatically convert on a one-to-one basis into D convertible shares. The D convertibles may be converted by the holder into ordinary shares upon payment of the agreed conversion price. The conversion price for each D convertible share is the average market value of an ordinary share for the three dealing days immediately prior to the date that the participant was invited to subscribe less the nominal subscription price. Each award has a life of ten years from the date of issuance of the new class B and new class C convertible shares. The performance period for the new class B and new class C convertible shares is three financial years. The awards made in 2007 and 2008 lapsed in March 2010 and March 2011 respectively and ceased to be capable of conversion to D convertible shares.

The new class B and new class C convertible shares issued during and from 2009 are subject to a performance condition based on the Company’s total shareholder return over the three-year period relative to the total shareholder return of a peer group of companies (“TSR Condition”). Under that condition, 30% of the new class B and class C convertible shares will convert into D convertible shares if the Company’s total shareholder return is at the median performance level and 100% will convert if the Company’s total shareholder return is at or greater than the upper quartile of the peer group. A sliding scale will apply for performance between the median and upper quartiles. However, notwithstanding that the TSR condition applicable to any such award may have been satisfied, the Compensation Committee retains an overriding discretion to disallow the vesting of the award, in full or in part, if, in its opinion the Company's underlying financial performance or total shareholder return (or both) has been unsatisfactory during the performance period.

The plans provide for equity settlement only, no cash settlement alternative is available.

Subject to shareholder approval at the Annual General Meeting on 6 May 2011, the Compensation Committee propose to replace the existing long-term incentive plan, the 2007 SIP, as amended, with a new incentive arrangement, the Deferred Annual Bonus Plan.

A combined summary of the activity under the 2002 Plan, as amended, and the 2007 SIP, as amended for the period from 1 January 2011 to 31 March 2011 is presented below.

    Number of convertible shares

000’s

At 1 January 2011   14,947
Forfeited in the period (40)
Lapsed in the period (2,266)
Exercised in the period (1,552)
At 31 March 2011 11,089
 

At 31 March 2011, 6,111,561 shares were exercisable and were convertible to ordinary shares. The weighted average exercise price for all shares exercisable at 31 March 2011 was €4.58.

The weighted average exercise price for shares outstanding under the 2002 Plan, as amended, at 31 March 2011 was €4.58. The weighted average remaining contractual life of the awards issued under the 2002 Plan, as amended, at 31 March 2011 was 1.9 years.

The weighted average exercise price for shares outstanding under the 2007 SIP, as amended, at 31 March 2011 was €5.44. The weighted average remaining contractual life of the awards issued under the 2007 SIP, as amended, at 31 March 2011 was 8.7 years.

11. Analysis of Net Debt

  31-Mar-11   31-Dec-10
    €m   €m
Senior credit facility
Revolving credit facility (1) – interest at relevant interbank rate + 2.75% on RCF1 and +3% on RCF2 (8) (8) (8)
Tranche A term loan(2a)—interest at relevant interbank rate + 2.75%(8) 164 164
Tranche B term loan(2b)—interest at relevant interbank rate + 3.125%(8) 815 816
Tranche C term loan(2c)—interest at relevant interbank rate + 3.375%(8) 813 814
Yankee bonds (including accrued interest)(3) 210 219
Bank loans and overdrafts 72 75
Cash (553) (502)
2015 receivables securitisation variable funding notes (4) 165   149
1,678 1,727
2015 cash pay subordinated notes (including accrued interest)(5) 354 370
2017 senior secured notes (including accrued interest) (6) 497 488
2019 senior secured notes (including accrued interest) (7) 500   490
Net debt before finance leases 3,029 3,075
Finance leases 24   26
Net debt including leases 3,053 3,101
Balance of revolving credit facility reclassified to debtors 8   9
Net debt after reclassification 3,061   3,110
 
(1)   Revolving credit facility (“RCF”) of €525 million split into RCF1 and RCF2 of €152 million and €373 million (available under the senior credit facility) to be repaid in full in 2012 and 2013 respectively. (Revolver loans - nil, drawn under ancillary facilities and facilities supported by letters of credit - nil)
 
(2a) Tranche A term loan due to be repaid in certain instalments up to 2012
 
(2b) Tranche B term loan due to be repaid in full in 2013
 
(2c) Tranche C term loan due to be repaid in full in 2014
 
(3) US$292.3 million 7.50% senior debentures due 2025
 
(4) Receivables securitisation variable funding notes due November 2015
 
(5) €217.5 million 7.75% senior subordinated notes due 2015 and US$200 million 7.75% senior subordinated notes due 2015
 
(6) €500 million 7.25% senior secured notes due 2017
 
(7) €500 million 7.75% senior secured notes due 2019
 
(8) The margins applicable to the senior credit facility are determined as follows:
        Debt/EBITDA ratio   Tranche A and RCF1   Tranche B   Tranche C       RCF2
 
Greater than 4.0 : 1 3.25% 3.375% 3.625% 3.50%
 
4.0 : 1 or less but more than 3.5 : 1 3.00% 3.125% 3.375% 3.25%
 
3.5 : 1 or less but more than 3.0 : 1 2.75% 3.125% 3.375% 3.00%
 
3.0 : 1 or less 2.50% 3.125% 3.375% 2.75%
 

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/(loss) to EBITDA
   
3 months to 3 months to
31-Mar-11 31-Mar-10
    €m   €m
 
Profit/(loss) for the financial period 29 (17)
Income tax expense 49 14
Currency trading loss on Venezuelan Bolivar devaluation - 14
Reorganisation and restructuring costs 1 -
Net finance costs 71 76
Share-based payment expense 1 1
Profit on disposal of associates (2) -
Depreciation, depletion (net) and amortisation 94   96
EBITDA 243   184
 
Supplemental Historical Financial Information
€m   Q1, 2010   Q2, 2010   Q3, 2010   Q4, 2010   FY, 2010   Q1, 2011
           
Group and third party revenue 2,435 2,740 2,761 2,833 10,769 2,956
Third party revenue 1,530 1,696 1,702 1,749 6,677 1,803
EBITDA 184 221 243 257 904 243
EBITDA margin 12.0% 13.0% 14.3% 14.7% 13.5% 13.5%
Operating profit 73 77 143 115 409 147
Profit/(loss) before tax (3) (5) 63 49 103 78
Free cash flow (58) (12) 128 23 82 12
Basic earnings/(loss) per share - cent (7.0) (10.3) 16.9 23.3 22.9 15.6
Weighted average number of shares used in EPS calculation (million) 218 218 218 219 219 221
Net debt 3,162 3,291 3,123 3,110 3,110 3,061
Net debt to EBITDA (LTM) 4.2 4.2 3.7 3.4 3.4 3.2

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