Half-yearly Report

Smurfit Kappa Group PLC

31 July 2013: Smurfit Kappa Group plc (â€˜SKGâ€™ or â€˜the Groupâ€™) today announced results for the 3 months and 6 months ending 30 June 2013.

2013 Second Quarter & First Half | Key Financial Performance Measures

â‚¬m

H1
2013

H1⁽¹⁾
2012

change

Q2
2013

Q2⁽¹⁾
2012

change

Q1
2013

change

Revenue

â‚¬3,908

â‚¬3,680

â‚¬2,019

â‚¬1,857

â‚¬1,889

EBITDA before Exceptional Items and Share-based Payment ⁽²⁾

â‚¬512

â‚¬498

â‚¬271

â‚¬254

â‚¬241

13%

EBITDA Margin

13.1%

13.5%

13.4%

13.6%

12.7%

Operating Profit before Exceptional Items

â‚¬307

â‚¬303

â‚¬167

â‚¬155

â‚¬139

20%

Profit before Income Tax

â‚¬127

â‚¬184

(31%)

â‚¬70

â‚¬82

(15%)

â‚¬57

21%

Basic EPS (cent)

32.1

49.4

(35%)

17.7

23.4

(24%)

14.4

23%

Pre-exceptional Basic EPS (cent)

43.9

37.6

17%

24.1

23.4

19.8

22%

Return on Capital Employed⁽³⁾

12.0%

12.1%

11.7%

Free Cash Flow ⁽⁴⁾

â‚¬72

â‚¬47

55%

â‚¬95

â‚¬63

52%

(â‚¬23)

Net Debt

â‚¬2,817

â‚¬2,785

â‚¬2,871

(2%)

Net Debt to EBITDA (LTM)

2.7x

2.8x

(1)	Â	Â	Â	Comparative figures reflect the restatement to employee benefits under the revision of IAS 19, as set out in Note 7.
(2)				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 36.
(3)				LTM pre-exceptional operating profit plus share of associatesâ€™ profit/average capital employed.
(4)				Free cash flow is set out on page 10. The IFRS cash flow is set out on page 20.
				Â

Highlights

First half European box volume growth in excess of 2% year-on-year; Americas growth of 5% excluding SK Orange County (â€˜SKOCâ€™)
Cost take-out of â‚¬100 million re-confirmed
EBITDA margin progression from 12.7% in quarter one to 13.4% in quarter two
Capital structure successfully repositioned from leveraged to corporate
Interim dividend increased by 37% to 10.25 cent
Recycled containerboard price increase of â‚¬50 per tonne effective from 1 August

Performance Review and Outlook

Gary McGann, Smurfit Kappa Group CEO, commented: â€œSmurfit Kappa Group is pleased to report first half revenue growth of 6% and strong EBITDA of â‚¬512 million. The strong result has been achieved through improved pricing, continued cost take-out and enhanced efficiency programmes. In spite of the recessionary conditions in Europe, the Group delivered like-for-like box volume growth in Europe of over 2% year-on-year and 5% volume growth in the Americas, excluding box volumes of SKOC.

SKGâ€™s ability to win new business in the current challenging operating environment is evidence of the Groupâ€™s strong value proposition for our customers. With an integrated global network of packaging designers, trademarked software tools and technical engineers, SKG is well placed to deliver a superior total offering together with real cost efficiencies throughout its customersâ€™ supply chains. In July the Group announced the development of a unique 3D tool entitled â€˜Virtual Storeâ€™ to enhance the understanding of shopper behaviour. This will translate into real benefits for retail ready packaging design.

With the successful integration and performance of SKOC, the Group is progressing well with its strategy to expand in the higher growth markets of the Americas. Packaging volumes in the region have grown by 5% year to date and EBITDA margins are recovering to their previous relatively high levels, assisted by the absence of the significant one-off issues which affected the business in 2012. The accretive acquisition of SKOC reflects the Groupâ€™s ability to identify, acquire, and integrate complementary businesses.

The continued focus on increased geographic diversity, together with the integrated model, is underpinning the consistency of SKGâ€™s earnings irrespective of economic circumstances.

In July, the Group successfully completed a new â‚¬1,375 million refinancing of its Senior Credit Facility on a lower margin unsecured basis comprising a â‚¬750 million term loan with a margin of 2.25% and a â‚¬625 million revolving credit facility with a margin of 2.00%. This transaction represents a major milestone in the evolution of the Groupâ€™s capital structure and concludes the successful re-positioning of SKGâ€™s debt profile from leveraged to corporate, whilst reducing interest costs by approximately â‚¬13 million per annum. In addition SKG has put in place a new trade receivables securitisation programme of up to â‚¬175 million which carries a margin of 1.70%. These transactions provide the Group with greater financial flexibility, including the potential to refinance part of its more expensive bond debt at the appropriate time.

The Group confirms it will pay an interim dividend of 10.25 cent, a year-on-year increase of 37%. This improved dividend represents the Groupâ€™s commitment to provide shareholders with certainty of value and reflects the confidence of the Board in the Groupâ€™s performance and prospects.

Rising input costs and improving circumstances in the European paper industry including, low inventory levels, solid export markets and relatively high operating rates support higher recycled containerboard prices. The Group has therefore announced a price increase of â‚¬50 per tonne effective from 1 August. With this move towards more economically sustainable recycled paper pricing, the Group will recover the increased costs in its corrugated pricing with the usual three to six month lag. This in turn will support continued performance and growth into 2014â€.

About Smurfit Kappa Group

Smurfit Kappa is one of the leading producers of paper-based packaging in the world, with around 41,000 employees in approximately 350 production sites across 32 countries and with revenue of â‚¬7.3 billion in 2012.

Innovation, service and pro-activity towards customers, using sustainable resources, is our primary focus. This focus is enhanced through being an integrated producer, with our packaging plants sourcing the major part of their raw materials from our own paper mills. We are the European leader in paper-based packaging, operating in 21 countries selling products including corrugated, containerboard, bag-in-box, solidboard and solidboard packaging. We have a growing base in Eastern Europe in many of these product areas. We also have a key position in other product/market segments including graphicboard, MG paper and sack paper. We operate in 11 countries in total in North, Central and South America, and are the only large scale pan regional player in Latin America.

Forward Looking Statements

Some statements in this announcement are forward-looking. They represent expectations for the Groupâ€™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 Groupâ€™s control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

Â
Contacts
Seamus Murphy	Â	Â	Â	FTI Consulting
Smurfit Kappa Group
				Â
Tel: +353 1 202 71 80				Tel: +353 1 663 36 80
E-mail: ir@smurfitkappa.com				E-mail: smurfitkappa@fticonsulting.com
				Â

2013 Second Quarter & First Half | Performance Overview

European box volumes increased by over 2% for the first half of 2013 adjusting for two less working days year-on-year. Third party box shipments make up approximately 88% of total corrugated volumes, and are the most accurate measure of demand for SKGâ€™s core value added products. Total corrugated volumes, which were negatively affected by declining shipments in the lower margin sheet business, grew by 1% over the same period. Eastern European volumes continue to develop well, and have increased in the six months to June by 9% year-on-year.

In line with the first quarter commentary, European corrugated pricing has been underpinned by containerboard price increases implemented in the first four months of the year, and has remained broadly flat compared to the first quarter of 2013. Recycled containerboard price increases of â‚¬50 per tonne effective from 1 August will require further recovery in corrugated pricing into 2014.

Initial market concerns about the negative impact of the Chinese â€˜Green Fenceâ€™ initiative have not been realised, and demand for Old Corrugated Containers (â€˜OCCâ€™) in Europe is currently steady. As a result, pricing of OCC has remained resilient throughout the second quarter and is at a level that supports increased recycled containerboard pricing. Industry inventories have decreased throughout the quarter, reflective of tight market conditions and solid demand which will further underpin the August pricing initiative.

SKGâ€™s kraftliner operations continue to represent a significant source of differentiation and profitability for the Group given the structured market and the stable operating environment. US kraftliner imports into Europe have decreased by 2% year-on-year to April 2013, whilst demand remains at a good level for the grade despite the high spread between recycled and virgin grades. SKG is net long in kraftliner by approximately 500,000 tonnes.

The performance of the Americas segment has recovered in 2013, returning to its historic underlying EBITDA margin levels and achieving corrugated growth in the year to date of 5%, excluding the SKOC volumes. This improved year-on-year performance reflects the underlying strength of the business and is assisted by the absence of the one-off issues that occurred in 2012. SKG regards the Americas as an important region for future investment given its growth potential, and the accretive acquisition of SKOC is indicative of the Groupâ€™s ability to acquire, integrate and enhance businesses.

SKGâ€™s 250,000 tonne recycled containerboard mill in Townsend Hook in the UK was temporarily closed at the end of June, and is scheduled to re-start in the fourth quarter of 2014 with a 250,000 tonne modern lightweight machine, following a total investment of approximately â‚¬114Â million. This is the largest in a series of such projects being undertaken by SKG throughout the European paper system, all of which are delivering increased productivity, lower costs and ensuring the Group is suitably positioned to respond to increasing demand for lighter weight containerboard in its end packaging market.

The Groupâ€™s net debt decreased by â‚¬54 million to â‚¬2,817 million from 31 March to 30 June 2013, resulting in a reduction in net debt to EBITDA to 2.7 times. This is reflective of managementâ€™s continued focus on cash generation and drive to maintain leverage at a level we consider appropriate for the business.

2013 First Half | Financial Performance

Revenue for the half year grew by 6% from â‚¬3,680 million in 2012 to â‚¬3,908 million in 2013, primarily driven by strong growth in the Americas both as a result of the SKOC acquisition completed in December 2012 and improved business performance in Venezuela since the devaluation in the first quarter of 2013.

At â‚¬512 million, EBITDA for the first half of 2013 was 3% higher than in the same period in 2012 and reflected higher earnings in the Americas. This was partly offset by somewhat lower earnings in Europe, which resulted in a lower year-on-year EBITDA margin of 13.1%. Group EBITDA margins in the second quarter have improved to 13.4% from 12.7% in the first quarter.

Operating profit before exceptional items for the half year was â‚¬307 million, compared to â‚¬303 million for the same period in 2012, an increase of 1%.

Exceptional items charged within operating profit in the six months to June 2013 amounted to â‚¬32 million. Of this, â‚¬15 million related to the temporary closure of the Townsend Hook mill in June. A further â‚¬15 million related to a currency trading loss as a result of the devaluation of the Venezuelan Bolivar in February 2013. This comprised a â‚¬12 million loss recognised in the first quarter and an adjustment of â‚¬3 million in the second quarter for hyperinflation and re-translation at the quarter end exchange rate. The remaining â‚¬2Â million was in respect of SKOC related acquisition costs and the consolidation of the Groupâ€™s two plants in Juarez, Mexico into one plant.

Exceptional gains of â‚¬28 million included within operating profit in the first half of 2012, comprised â‚¬10Â million from the sale of land at SKGâ€™s former Valladolid mill in Spain and â‚¬18 million relating to the disposal of a company in Slovakia.

Operating profit after exceptional items for the half year was â‚¬275 million, compared to â‚¬331 million for the same period in 2012, a decrease of 17%.

Net finance costs of â‚¬149 million were unchanged year-on-year, with the benefit of reduced cash interest being offset by non-cash finance costs including the accelerated write-off of deferred debt issue costs.

Including the Groupâ€™s share of associatesâ€™ profit of â‚¬1 million in 2013, profit before income tax was â‚¬127Â million for the half year 2013 compared to â‚¬184 million in 2012.

The income tax expense of â‚¬50 million for the first half of 2013 represented a â‚¬21 million decrease on the prior year. The decrease was mainly due to lower taxable profits, a change in the geographical mix of profits, lower asset sales in 2013 and a number of non-recurring items.

Basic earnings per share was 32.1 cent for the half year 2013 (2012: 49.4 cent). Adjusting for exceptional items, pre-exceptional basic EPS was 43.9 cent (2012: 37.6 cent), an increase of 17%.

2013 Second Quarter & First Half | Free Cash Flow

Free cash flow amounted to â‚¬95 million in the second quarter of 2013 compared to â‚¬63 million in 2012. The increase of â‚¬32 million was driven mainly by a combination of higher EBITDA, lower tax payments and other outflows, partly offset by a higher working capital outflow and higher capital expenditure. At â‚¬72 million for the six months to June 2013, the Groupâ€™s free cash flow was â‚¬25 million higher than in 2012 as a result of higher EBITDA, lower cash interest costs, capital outflows and cash taxes, partly offset by higher working capital requirements and an exceptional outflow of â‚¬17 million.

Following an outflow of â‚¬98 million in the first quarter, working capital increased by â‚¬18 million in the second quarter. This has resulted in a total outflow in the year to date of â‚¬116 million (2012: â‚¬97 million). The outflow arose primarily in Europe and reflected corrugated volume growth and the impact of the recycled containerboard price increase in the first quarter. Working capital amounted to â‚¬719 million at June 2013, representing 8.9% of annualised revenue and remains in line with June 2012 levels. Cash management remains a consistent focus of management, and working capital levels are determined by the geographies in which we operate.

Capital expenditure amounted to â‚¬137 million in the first half of 2013 and equated to 75% of depreciation, compared to â‚¬126 million and 74% in the first six months of 2012. For the full year, SKGâ€™s capital expenditure is expected to amount to approximately 100% of depreciation, and incorporates expenditure on customer oriented and efficiency driven investments.

Cash interest at â‚¬108 million for the six months to June 2013 was â‚¬12 million lower than in 2012, reflecting reduced debt levels and the benefit of significant refinancing activity at materially reduced interest rates.

At â‚¬37 million in the first six months of 2013, SKGâ€™s tax payments were â‚¬10 million lower than in 2012. This reflected the absence of asset sales in Europe in 2013 and the lower taxable profits in the Americas segment in 2012 over the prior year.

2013 Second Quarter & First Half | Capital Structure

Successful refinancing of â‚¬1.375 billion Senior Credit Facility

In July, the Group successfully completed the refinancing of its senior secured credit facility with a new unsecured relationship bank facility. The transaction was initially launched at â‚¬1,100 million and was upsized to â‚¬1,375 million following a substantial oversubscription. It marks the unequivocal completion of the Groupâ€™s evolution from a secured leveraged structure post take-private in 2002 to an unsecured corporate profile, committed to maintaining leverage below three times through the cycle.

The new â‚¬1,375 million five-year facility comprises a â‚¬750 million term loan with a margin of 2.25% and a â‚¬625Â million revolving credit facility with a margin of 2.00%, reduced from margins of 3.75% and 3.25% respectively. The Group consequently expects annual cash interest savings from the refinancing will be approximately â‚¬13 million per annum and the transaction will be immediately earnings accretive.

In addition to the new senior facility, SKG has also put in place a â‚¬175 million five-year trade receivables securitisation programme at a margin of 1.70%, which will complement the existing â‚¬250 million programme.

The new facilities will lower SKGâ€™s overall cost of capital, materially reduce debt servicing costs, enhance earnings and provide greater financial flexibility, including the potential to refinance part of its more expensive bond debt at an appropriate time.

Capital structure overview

The Groupâ€™s net debt has decreased by â‚¬54 million in the quarter to â‚¬2,817 million at June 2013 reflecting positive cash flows in the period. Net debt to EBITDA has decreased to 2.7Â times in June 2013 from 2.8Â times at the end of March 2013, and has remained broadly flat since June 2012 despite the acquisition of SKOC for â‚¬260 million in December 2012. The broad stability in leverage year-on-year underscores SKGâ€™s commitment to maintain leverage at a level appropriate to the business whilst pursuing opportunities to grow in targeted markets.

At June 2013 the average maturity profile of the Groupâ€™s debt was 5.3 years, in line with June 2012, and when adjusted for the refinanced Senior Credit Facility the maturity profile increases to 5.6 years. The average interest rate of the Group at 30 June, when similarly adjusted for the new facility reduces from 6.0% to approximately 5.6%, a significant decrease from 6.9% at June 2012. The up-sized refinancing will further increase the liquidity position of the Group, with a largely undrawn revolving credit facility of â‚¬625Â million. In addition, the Group held cash of â‚¬471 million at 30 June 2013.

The core focus of management remains on cash generation, and SKGâ€™s integrated business model has been proven to provide resilient positive cash flows at all points in the cycle. The Group has substantially reduced cash interest costs through a number of refinancing events since the beginning of 2012 and will continue to optimise the cost of its debt.

2013 Second Quarter & First Half | Operating Efficiency

Commercial offering, innovation and sustainability

The core strengths of SKGâ€™s offering to its customers lie in its experience in understanding their packaging needs and having the necessary resources to be able to apply this knowledge to tailor its service to their exact needs through their supply chains across Europe and the Americas at an optimised cost. Harnessing a suite of constantly evolving software tools, the Group is increasingly capable of applying its global expertise to each of our 60,000 customers across the 32 countries in which we operate.

In July the Group announced the development of its â€˜Virtual Storeâ€™, which will be officially launched in September. The technology will offer a unique 3D shopping experience on one of the largest screens in Europe and will be installed in SKGâ€™s Development Centre in the Netherlands. It will be used to allow customers to experiment with packaging in a realistic retail environment, and to carry out shopper behaviour research, which will translate into tangible benefits to retail ready packaging design.

As part of the constant drive to improve our service and product offering, the Group introduced two tools which will greatly enhance our ability to effectively monitor and improve the quality of packaging provided to our customers. The first tool, â€˜ZOOMâ€™, is an online system to capture and analyse customer feedback across all its European packaging operations. Its specific structure enables the Group to monitor quality performance in unprecedented detail across its entire European customer base. The second tool, Board Referee, is an analytical device which will be deployed in all converting sites to measure the mechanical properties of packaging materials before they are shipped.

SKG will host its annual Innovations Day in September 2013 to showcase its best packaging and sustainability ideas to its customers in a European wide event. It is a unique opportunity for the Group to impress on its customers the unseen work performed throughout the business to develop customised, innovative, sustainable and product enhancing packaging for our customers. In 2012, it was attended by 155 customers.

Consistent investment in modern, market facing equipment continues to underpin SKGâ€™s quality product offering to our customers. In the second quarter the European packaging division incurred â‚¬49 million in capital expenditure across a range of such projects, examples of which include six and seven colour rotary die cutting machines in our Twincorr (the Netherlands) and Gdansk (Poland) plants and an investment in two new converting machines in our DÃ¼sseldorf (Germany) plant to increase its service capability and production flexibility. In Mexico the Group installed a seven colour offset printer to service its increasingly quality driven packaging markets.

The Group has a single minded focus on its end packaging markets, however the integrated business model remains at the core of the Groupâ€™s operating strategy and is the driving force behind SKGâ€™s quality earnings and consistent performance throughout the cycles.

To this end, the Group has committed to a number of significant projects in its recycled containerboard system to deliver increased productivity, reduce costs and provide for additional lightweight capabilities to match market demand. These projects include the substantially complete â‚¬46 million investment in our Hoya mill (Germany), the current â‚¬114 million re-build of our Townsend Hook mill (the UK) and a scheduled â‚¬39Â million upgrade to our Roermond mill (the Netherlands).

Sustainability

SKG remains fundamentally committed to sustainability and social responsibility, and regards sustainability as a key business driver providing a valuable platform for differentiation in the market. The Group is increasingly aware of a growing demand amongst a broad range of our stakeholders for sustainable growth models into the future. We firmly believe we can secure profitable growth while having a positive impact on our environment.

We will continue to promote our sustainability credentials by developing innovative packaging solutions for our customers, by optimising their supply chain, through the use of renewable and recyclable materials and by contributing to the environment and communities in which we operate. Measuring the tangible benefits of our sustainability commitments is essential, and to this end the Group has established a number of key objectives and specific targets against which we are audited annually.

The sixth annual Sustainability Report was published in June 2013 and sets out these core commitments and the Groupâ€™s progress against them to date.

Cost Take-out Programme

Continued progress in identifying and delivering material cost savings is essential to underpin the resilience of SKGâ€™s EBITDA margins, given rising input cost pressures and relatively flat corrugated pricing throughout 2013. The Group has a proven track record of driving efficiencies and process innovations to reach its programme goals. Each year the savings target is based on a bottom up cost rationalisation review which centres on the broad cost areas of raw materials, wages and salaries, energy, distribution and other miscellaneous projects.

The Group has reported a further â‚¬26 million in cost take-out during the second quarter of 2013, bringing total cost savings for the year to date to â‚¬46 million. The â‚¬100 million objective for 2013 is fully expected to be realised and will bring cumulative cost savings to â‚¬600 million since the first such programme was initiated in 2007.

Capital Market Days | London 11 September & New York 18 September

Smurfit Kappa Group is organising two Capital Market Days for institutional investors and analysts due to take place in London on 11 September and in New York on 18 September. The event will provide participants with access to senior management to ensure a better understanding of SKGâ€™s main business units through a series of small group discussions.

2013 Second Quarter & First Half | Regional Performance Review

Europe

At â‚¬1,499 million, European revenue decreased by 1% when comparing the second quarter of 2013 to the same period in 2012. European EBITDA at â‚¬371 million decreased by 11% year-on-year due to a combination of higher input costs and lower corrugated pricing, partly offset by volume growth.

Corrugated pricing, which was negatively affected by OCC and containerboard price volatility in 2012, has remained flat when comparing the first and second quarters of 2013, underpinned by positive paper momentum in the first four months of the year. The recently announced recycled containerboard price increases, when implemented, will require the Group to recover the increased costs within the usual three to six month time lag.

On the demand side, SKGâ€™s European box volumes increased by over 1% in the first six months of 2013 and by over 2% when restated for two fewer shipping days in the year to date 2013. Similarly adjusted total packaging volumes have increased year-on-year by 1%, reflecting the reduction to the Groupâ€™s sheet volumes which were foregone on the basis of unacceptable price levels.

The Group has announced a recycled containerboard price increase from 1 August as a result of the continuing uneconomic margins in the grade. The increase is supported by steady demand in both the European and export markets, low inventory levels, relatively high operating rates and resilient OCC costs. The European recycled containerboard industry also currently enjoys a generally favourable supply outlook which should underscore the pricing initiative.

In April, the Groupâ€™s SSK recycled containerboard mill was forced to temporarily cease production as a result of a fire in its recovered fibre stock yard. No injuries were sustained during the incident and due to the speedy deployment of a protective water curtain, the mill was unaffected restarting operations within 42 hours of the shut. Approximately 9,000 tonnes of recovered paper was destroyed and total costs associated with the incident are expected to be â‚¬3 million.

In kraftliner, SKG has benefited from reasonable price levels since April 2012. The capacity outlook for the market remains relatively stable and imports of kraftliner from the US have decreased by 2% year-on-year to April.

Energy costs have increased by 6% year-on-year for the six months to June 2013 as a result of price increases in most countries throughout Europe. The Group operates an active energy hedging programme and at the half year 77% of energy volumes had been fixed for the year.

The Americas

The Americas, inclusive of SKOC, reported revenue of â‚¬952 million and EBITDA of â‚¬161 million in the first half of 2013, representing 24% and 32% respectively of the Group. Excluding SKOC, EBITDA for the period was 37% higher than in 2012, reflecting the benefit of a 5% increase in corrugated demand, the absence of material one-off issues which negatively affected the segment in 2012 and improved business performance in Venezuela since the devaluation in the first quarter of 2013.

The integration of SKOC into the Group has progressed well and the business continues to deliver a strong performance. Positive pricing momentum in the US has been maintained through the industry wide implementation of a second price increase of US$50 per ton in April, and this is flowing through to box prices in the second half of 2013. Volumes in the recycled containerboard mill have also been increased by over 4% year-on-year to approximately 305,000 tons as a result of cooperation with SKGâ€™s paper technology specialists and targeted capital investment. Synergies of US$32 million are now expected to be delivered with US$13 million deliverable in 2013.

In Colombia, packaging demand has started to normalise following some weakness in the first quarter, and volumes have increased by 3% year-on-year for the first six months of the year. At the end of March the start-up of a new US$14 million lime kiln was successfully carried out in the Groupâ€™s Cali mill. The investment has a payback period of less than two and a half years and is improving fuel efficiency as well as reducing the overall cost of third party lime purchases. Currency pressures reduced during the second quarter following a 5% depreciation in the Colombian Peso against the US dollar.

The Groupâ€™s Mexican operations continue to perform well, supported by a steady economic backdrop. Packaging volumes increased by 3% year-on-year in the first half, and pricing was increased to recover the higher recycled paper prices in the box prices. A constant focus on cost take-out also continues to benefit EBITDA margins. Mill volumes were up year-on-year, despite the loss of 2.5 days production in the Cerro Gordo mill due to a fire. This reflects the current solid demand environment for containerboard.

When adjusting for the impact of a prolonged strike in one of the corrugated plants in 2012, SKGâ€™s underlying corrugated volumes in Argentina were 3% lower in the first half of 2013, reflecting the continuing economic and political pressure in the country. As a result there has been a strong focus on pricing with increases implemented in the six months to June 2013.

The political situation in Venezuela is calm but challenging. The economy continues to experience significant inflationary pressures and demand for scarce goods. As a result of the response to the shortages and the absence of one-off issues, the Groupâ€™s converting operations are experiencing good demand growth across all product lines with 9% year-on-year packaging volume growth in the first half of 2013.

The Americas continue to provide important geographic diversity to SKGâ€™s operations and deliver access to higher growth markets with fundamentally superior margins than those of the mature European region. With the successful and immediately EPS accretive addition of SKOC in 2012 at an increasingly attractive EV/EBITDA multiple, the Group remains firmly committed to future growth in this region.

Summary Cash Flow

Summary cash flows¹ for the second quarter and six months are set out in the following table.

Restated

3 months to

6 months to

30-Jun-13

30-Jun-12

30-Jun-13

30-Jun-12

â‚¬m

Pre-exceptional EBITDA

271

254

512

498

Exceptional items

(4)

(17)

Cash interest expense

(54)

(59)

(108)

(120)

Working capital change

(18)

(9)

(116)

(97)

Current provisions

(2)

(1)

(5)

(5)

Capital expenditure

(68)

(63)

(137)

(126)

Change in capital creditors

(4)

(2)

(29)

Tax paid

(21)

(33)

(37)

(47)

Sale of fixed assets

Other

(6)

(27)

(24)

(38)

Free cash flow

Share issues

Purchase of own shares

(15)

(13)

Sale of businesses and investments

Purchase of investments

(2)

(1)

(5)

(7)

Dividends

(50)

(36)

(50)

(37)

Derivative termination payments

(2)

(1)

Net cash inflow/(outflow)

(5)

Net debt/cash acquired/disposed

(1)

Deferred debt issue costs amortised

(3)

(6)

(12)

(10)

Currency translation adjustments

(29)

(18)

(18)

Decrease/(increase) in net debt

(10)

(25)

(33)

¹	Â	The summary cash flow is prepared on a different basis to the Consolidated Statement of Cash Flows under IFRS. The principal difference is that the summary cash flow details movements in net debt while the IFRS cash flow details movements 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.
		Â

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Free cash flow

Add back:

Cash interest

108

120

Capital expenditure (net of change in capital creditors)

134

155

Tax payments

Financing activities

Less:

Sale of fixed assets

(1)

(11)

Profit on sale of assets and businesses â€“ non exceptional

(3)

(3)

Receipt of capital grants

(1)

Dividends received from associates

(1)

(1)

Non-cash financing activities

(1)

(7)

Cash generated from operations

347

347

Capital Resources

The Group's primary sources of liquidity are cash flow from operations and borrowings under the revolving credit facility. The Group's primary uses of cash are for debt service and capital expenditure.

At 30 June 2013 Smurfit Kappa Treasury Funding Limited had outstanding US$292.3 million 7.50% senior debentures due 2025 and the Group had outstanding â‚¬203 million variable funding notes issued under the â‚¬250 million accounts receivable securitisation programme maturing in November 2015.

At 30 June 2013, Smurfit Kappa Acquisitions had outstanding â‚¬200 million 5.125% senior secured notes due 2018, US$300Â million 4.875% senior secured notes due 2018, â‚¬400 million 4.125% senior secured notes due 2020 and â‚¬250 million senior secured floating rate notes due 2020. In addition, Smurfit Kappa Acquisitions had outstanding â‚¬500Â million 7.25% senior secured notes due 2017 and â‚¬500Â million 7.75% senior secured notes due 2019. At 30 June 2013, the Groupâ€™s senior credit facility comprised a â‚¬360 million Tranche B maturing in 2016 and a â‚¬362 million Tranche C maturing in 2017. In addition, as at 30 June 2013, the facility included a â‚¬525 million revolving credit facility which was substantially undrawn apart from â‚¬22.3Â million drawn under various ancillary facilities and letters of credit.

The following table provides the range of interest rates as at 30 June 2013 for each of the drawings under the various senior credit facility term loans.

BORROWING ARRANGEMENT	Â	Â	Â	CURRENCY	Â	Â	Â	INTEREST RATE
Term Loan B				EUR				3.738% - 3.847%
				USD				3.905%
Term Loan C				EUR				3.988% - 4.097%
				USD				4.155%
								Â

Borrowings under the revolving credit facility are available to fund the Group's working capital requirements, capital expenditures and other general corporate purposes.

On 24 July, the Group successfully completed a new five-year unsecured â‚¬1,375 million refinancing of its senior credit facility comprising a â‚¬750 million term loan with a margin of 2.25% and a â‚¬625 million revolving credit facility with a margin of 2.00%. The term loan is repayable â‚¬125 million on 24 July 2016, â‚¬125 million 24 July 2017 with the balance of â‚¬500 million repayable on the maturity date. In connection with the refinancing, the collateral securing the obligations under the Groupâ€™s various outstanding senior notes and debentures have also been released and the senior notes and debentures are therefore now unsecured. The new unsecured senior credit facility is supported by substantially the same guarantee arrangements as the old senior credit facility. The existing senior notes and debentures likewise continue to have substantially similar guarantee arrangements as supported those instruments prior to the refinancing.

In addition, on 3 July the Group put in place a new five-year trade receivables securitisation programme of up to â‚¬175 million utilising the Groupâ€™s receivables in Austria, Belgium, Italy and the Netherlands. The programme, which has been arranged by Rabobank and carries a margin of 1.70%, will complement the Groupâ€™s existing â‚¬250 million securitisation programme.

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. The Group had fixed an average of 81% of its interest cost on borrowings over the following twelve months.

Our fixed rate debt comprised mainly â‚¬500 million 7.25% senior secured notes due 2017, â‚¬500 million 7.75% senior secured notes due 2019, â‚¬200 million 5.125% senior secured notes due 2018, US$300 million 4.875% senior secured notes due 2018 (US$50 million swapped to floating), â‚¬400 million 4.125% senior secured notes due 2020 and US$292.3 million 7.50% senior debentures due 2025. In addition, the Group also has â‚¬610 million in interest rate swaps with maturity dates ranging from January 2014 to July 2014.

Market Risk and Risk Management Policies (continued)

Our earnings are affected by changes in short-term interest rates as a result of our floating rate borrowings. If LIBOR interest rates for these borrowings increase by one percent, our interest expense would increase, and income before taxes would decrease, by approximately â‚¬8 million over the following twelve months. Interest income on our cash balances would increase by approximately â‚¬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.

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 2012 annual report on pagesÂ 45-46. The annual report is available on our website www.smurfitkappa.com.

The principal risks and uncertainties remain substantially the same for the remaining six months of the financial year and 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 Groupâ€™s financial position and results of operations
The cyclical nature of the packaging industry could result in overcapacity and consequently threaten the Groupâ€™s pricing structure
If operations at any of the Groupâ€™s facilities (in particular its key mills) were interrupted for any significant length of time it could adversely affect the Groupâ€™s financial position and results of operations
Price fluctuations in raw materials and energy costs could adversely affect the Groupâ€™s manufacturing costs
The Group is exposed to currency exchange rate fluctuations and in addition, to 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 Groupâ€™s business
The Group is exposed to potential risks in relation to its Venezuelan operations
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.

Consolidated Income Statement â€“ Six Months

Restated

6 months to 30-Jun-13

6 months to 30-Jun-12

Unaudited

Pre-
exceptional
2013

Exceptional
2013

Total
2013

Pre-
exceptional
2012

Exceptional
2012

Total
2012

â‚¬m

Revenue

3,908

3,680

Cost of sales

(2,786)

(9)

(2,795)

(2,624)

Gross profit

1,122

(9)

1,113

1,056

Distribution costs

(311)

(290)

Administrative expenses

(505)

(464)

Other operating income

Other operating expenses

(23)

Operating profit

307

(32)

275

303

331

Finance costs

(158)

(6)

(164)

(169)

Finance income

Share of associatesâ€™ profit (after tax)

Profit before income tax

159

(32)

127

156

184

Income tax expense

(50)

(71)

Profit for the financial period

113

Attributable to:

Owners of the parent

110

Non-controlling interests

Profit for the financial period

113

Earnings per share

Basic earnings per share - cent

32.1

49.4

Diluted earnings per share - cent

31.8

48.5

The notes to the condensed Group interim financial statements form an integral part of this report.

Consolidated Income Statement â€“ Second Quarter

Restated

3 months to 30-Jun-13

3 months to 30-Jun-12

Unaudited

Pre-
exceptional
2013

Exceptional
2013

Total
2013

Pre-
exceptional
2012

Exceptional
2012

Total
2012

â‚¬m

Revenue

2,019

1,857

Cost of sales

(1,423)

(9)

(1,432)

(1,327)

Gross profit

596

(9)

587

530

Distribution costs

(159)

(147)

Administrative expenses

(270)

(229)

Other operating income

Other operating expenses

(10)

Operating profit

167

(19)

148

155

Finance costs

(88)

(80)

Finance income

Share of associatesâ€™ profit (after tax)

Profit before income tax

(18)

Income tax expense

(26)

(30)

Profit for the financial period

Attributable to:

Owners of the parent

Non-controlling interests

Profit for the financial period

Earnings per share

Basic earnings per share - cent

17.7

23.4

Diluted earnings per share - cent

17.5

23.0

Consolidated Statement of Comprehensive Income â€“ Six Months

Restated

6 months to

30-Jun-13

30-Jun-12

Unaudited

â‚¬m

Profit for the financial period

113

Other comprehensive income:

Items that may subsequently be reclassified to profit or loss

Foreign currency translation adjustments:

- Arising in the period

(212)

- Recycled to Consolidated Income Statement on disposal of subsidiary

(17)

Effective portion of changes in fair value of cash flow hedges:

- Movement out of reserve

- New fair value adjustments into reserve

(4)

(5)

- Movement in deferred tax

(1)

(1)

(203)

Items which will not be subsequently reclassified to profit or loss

Defined benefit pension plans:

- Actuarial loss

(8)

(68)

- Movement in deferred tax

(6)

(59)

Total other comprehensive (expense)/income

(209)

Total comprehensive (expense)/income for the financial period

(132)

130

Attributable to:

Owners of the parent

(109)

110

Non-controlling interests

(23)

Total comprehensive (expense)/income for the financial period

(132)

130

The notes to the condensed Group interim financial statements form an integral part of this report.

Consolidated Statement of Comprehensive Income â€“ Second Quarter

Restated

3 months to

30-Jun-13

30-Jun-12

Unaudited

â‚¬m

Profit for the financial period

Other comprehensive income:

Items that may subsequently be reclassified to profit or loss

Foreign currency translation adjustments:

- Arising in the period

(98)

Effective portion of changes in fair value of cash flow hedges:

- Movement out of reserve

- New fair value adjustments into reserve

(12)

(1)

- Movement in deferred tax

(1)

(101)

Items which will not be subsequently reclassified to profit or loss

Defined benefit pension plans:

- Actuarial loss

(50)

(40)

- Movement in deferred tax

(39)

(33)

Total other comprehensive (expense)/income

(140)

Total comprehensive (expense)/income for the financial period

(96)

Attributable to:

Owners of the parent

(89)

Non-controlling interests

(7)

Total comprehensive (expense)/income for the financial period

(96)

Consolidated Balance Sheet

Restated

30-Jun-13

30-Jun-12

31-Dec-12

Unaudited

â‚¬m

ASSETS

Non-current assets

Property, plant and equipment

2,946

2,984

3,076

Goodwill and intangible assets

2,302

2,249

2,336

Available-for-sale financial assets

Investment in associates

Biological assets

111

127

Trade and other receivables

Derivative financial instruments

Deferred income tax assets

199

162

191

5,612

5,586

5,784

Current assets

Inventories

744

708

745

Biological assets

Trade and other receivables

1,548

1,480

1,422

Derivative financial instruments

Restricted cash

Cash and cash equivalents

462

502

447

2,780

2,720

2,645

Total assets

8,392

8,306

8,429

EQUITY

Capital and reserves attributable to the owners of the parent

Equity share capital

Share premium

1,976

1,950

1,972

Other reserves

265

451

444

Retained earnings

(56)

(294)

(159)

Total equity attributable to the owners of the parent

2,185

2,107

2,257

Non-controlling interests

196

211

212

Total equity

2,381

2,318

2,469

LIABILITIES

Non-current liabilities

Borrowings

3,211

3,228

3,188

Employee benefits

724

712

738

Derivative financial instruments

Deferred income tax liabilities

217

211

Non-current income tax liabilities

Provisions for liabilities and charges

Capital grants

Other payables

4,283

4,283

4,295

Current liabilities

Borrowings

Trade and other payables

1,578

1,531

1,534

Current income tax liabilities

Derivative financial instruments

Provisions for liabilities and charges

1,728

1,705

1,665

Total liabilities

6,011

5,988

5,960

Total equity and liabilities

8,392

8,306

8,429

The notes to the condensed Group interim financial statements form an integral part of this report.

Consolidated Statement of Changes in Equity

Restated

Attributable to the owners of the parent

Non-
controlling
interests

Total
equity

Equity
share
capital

Share
premium

Other
reserves

Retained
earnings

Total

â‚¬m

Unaudited

At 1 January 2013

1,972

444

(159)

2,257

212

2,469

Profit for the financial period

Other comprehensive income

Foreign currency translation adjustments

(185)

(27)

(212)

Defined benefit pension plans

(6)

Effective portion of changes in fair value of cash flow hedges

Total comprehensive (expense)/income for the financial period

(176)

(109)

(23)

(132)

Shares issued

Hyperinflation adjustment

Dividends paid

(47)

(3)

(50)

Share-based payment

Shares acquired by SKG Employee Trust

(15)

At 30 June 2013

1,976

265

(56)

2,185

196

2,381

At 1 January 2012

1,945

391

(340)

1,996

191

2,187

Profit for the financial period

110

113

Other comprehensive income

Foreign currency translation adjustments

Defined benefit pension plans

(59)

Effective portion of changes in fair value of cash flow hedges

Total comprehensive income for the financial period

110

130

Shares issued

Hyperinflation adjustment

Dividends paid

(33)

(4)

(37)

Share-based payment

Shares acquired by SKG Employee Trust

(13)

At 30 June 2012

1,950

451

(294)

2,107

211

2,318

An analysis of the movements in Other Reserves is provided in Note 15.

The notes to the condensed Group interim financial statements form an integral part of this report.

Consolidated Statement of Cash Flows

Restated

6 months to

30-Jun-13

30-Jun-12

Unaudited

â‚¬m

Cash flows from operating activities

Profit before income tax

127

184

Net finance costs

149

149

Depreciation charge

170

163

Impairment of assets

Amortisation of intangible assets

Amortisation of capital grants

(1)

(1)

Share-based payment expense

Profit on purchase/sale of assets and businesses

(3)

(29)

Share of associatesâ€™ profit (after tax)

(1)

(2)

Net movement in working capital

(114)

(104)

Change in biological assets

Change in employee benefits and other provisions

(28)

(48)

Other

Cash generated from operations

347

347

Interest paid

(105)

(125)

Income taxes paid:

Overseas corporation tax (net of tax refunds) paid

(37)

(47)

Net cash inflow from operating activities

205

175

Cash flows from investing activities

Interest received

Additions to property, plant and equipment and biological assets

(131)

(151)

Additions to intangible assets

(3)

(3)

Receipt of capital grants

Decrease in restricted cash

Disposal of property, plant and equipment

Dividends received from associates

Purchase of subsidiaries and non-controlling interests

(3)

(5)

Deferred consideration paid

(3)

(1)

Net cash outflow from investing activities

(127)

(140)

Cash flows from financing activities

Proceeds from issue of new ordinary shares

Proceeds from bond issuance

400

Purchase of own shares

(15)

(13)

Increase in interest-bearing borrowings

Payment of finance leases

(3)

(4)

Repayment of borrowings

(391)

(330)

Derivative termination payments

(1)

Deferred debt issue costs

(9)

(12)

Dividends paid to shareholders

(47)

(33)

Dividends paid to non-controlling interests

(3)

(4)

Net cash outflow from financing activities

(36)

(385)

Increase/(decrease) in cash and cash equivalents

(350)

Reconciliation of opening to closing cash and cash equivalents

Cash and cash equivalents at 1 January

423

825

Currency translation adjustment

(22)

Increase/(decrease) in cash and cash equivalents

(350)

Cash and cash equivalents at 30 June

443

483

An analysis of the Net Movement in Working Capital is provided in Note 11.

The notes to the condensed Group interim financial statements form an integral part of this report.

Notes to the condensed Group interim financial statements

1. General Information

Smurfit Kappa Group plc (â€˜SKG plcâ€™ or â€˜theÂ Companyâ€™) and its subsidiaries (together â€˜SKGâ€™ or â€˜the Groupâ€™) 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,Â Ireland.

2. Basis of Preparation

The condensed Group 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 StandardÂ 34, Interim Financial Reporting (â€˜IASÂ 34â€™) as adopted by the European Union. Certain quarterly information and the balance sheet as at 30Â JuneÂ 2012 have been included in this report; this information is supplementary and not required by IASÂ 34. This report should be read in conjunction with the consolidated financial statements for the year ended 31Â December 2012 included in the Groupâ€™s 2012 annual report which is available on the Group website www.smurfitkappa.com. The accounting policies and methods of computation and presentation adopted in the preparation of the condensed Group interim financial statements are consistent with those described and applied in the annual report for the financial year ended 31Â December 2012 with the exception of the standards described below.

IAS 19 Revised

The IASB has issued a number of amendments to IAS 19, Employee Benefits, which became effective for the Group from 1Â January 2013. The main effect on the Group financial statements stems from the removal of the concept of expected return on plan assets. As a result the expected return on plan assets is now calculated using the same discount rate as that used to determine the present value of plan liabilities. The difference between the implied return and the actual return on assets is recognised in other comprehensive income. The amendments have been applied retrospectively in accordance with the transitional provisions of the standard, resulting in the adjustment of prior year financial information. The effect of these adjustments is shown in Note 7.

Amendments to IAS 1

The amended IAS 1, Presentation of Financial Statements, requires the grouping of items of other comprehensive income that may be reclassified to profit or loss at a future point in time separately from those items which will never be reclassified. The revised standard, which has been adopted by the Group with effect from 1 January 2013, affects presentation only and does not impact the Groupâ€™s financial position or performance.

There are a number of other changes to IFRS issued and effective from 1 January 2013 which include IFRS 10, Consolidated Financial Statements, IFRS 11, Joint Arrangements, IFRS 12, Disclosure of Interests in Other Entities, IFRS 13, Fair Value Measurement, IAS 27, Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. They either do not have an effect on the consolidated financial statements or they are not currently relevant for the Group.

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 half year financial statements.

The condensed Group 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 Groupâ€™s auditors have not audited or reviewed the condensed Group interim financial statements contained in this report.

2. Basis of Preparation (continued)

The condensed Group interim financial statements presented do 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 31Â December 2012 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 determined reportable operating segments based on the manner in which reports are reviewed by the chief operating decision maker (â€˜CODMâ€™). The CODM is determined to be the executive management team in assessing performance, allocating resources and making strategic decisions. Prior to the acquisition of Orange County Container Group (â€˜OCCGâ€™), the two business segments identified were Europe and Latin America. Because of the high level of integration between OCCG and our existing operations in Mexico, OCCG was included with our existing Latin American operations which were renamed as the Americas. OCCG has been renamed as Smurfit Kappa Orange County (â€˜SKOCâ€™).

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 operations of SKOC. 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 (â€˜EBITDA before exceptional itemsâ€™). Segment 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. Group centre assets are comprised primarily of available-for-sale financial assets, derivative financial assets, deferred income tax assets, cash and cash equivalents and restricted cash.

Restated

6 months to 30-Jun-13

6 months to 30-Jun-12

Europe

The
Americas

Total

Europe

The
Americas

Total

â‚¬m

Revenue and Results

Revenue

2,956

952

3,908

3,005

675

3,680

EBITDA before exceptional items

371

161

532

416

513

Segment exceptional items

(6)

(17)

(23)

EBITDA after exceptional items

365

144

509

444

541

Unallocated centre costs

(20)

(15)

Share-based payment expense

(12)

(14)

Depreciation and depletion (net)

(181)

(171)

Amortisation

(12)

(10)

Impairment of assets

(9)

Finance costs

(164)

(169)

Finance income

Share of associatesâ€™ profit (after tax)

Profit before income tax

127

184

Income tax expense

(50)

(71)

Profit for the financial period

113

Assets

Segment assets

6,183

1,860

8,043

6,249

1,625

7,874

Investment in associates

Group centre assets

333

416

Total assets

8,392

8,306

3. Segmental Analyses (continued)

Restated

3 months to 30-Jun-13

3 months to 30-Jun-12

Europe

The
Americas

Total

Europe

The
Americas

Total

â‚¬m

Revenue and Results

Revenue

1,499

520

2,019

1,515

342

1,857

EBITDA before exceptional items

193

289

217

259

Segment exceptional items

(6)

(4)

(10)

EBITDA after exceptional items

187

279

217

259

Unallocated centre costs

(18)

(5)

Share-based payment expense

(7)

(6)

Depreciation and depletion (net)

(91)

(87)

Amortisation

(6)

(6)

Impairment of assets

(9)

Finance costs

(88)

(80)

Finance income

Share of associatesâ€™ profit (after tax)

Profit before income tax

Income tax expense

(26)

(30)

Profit for the financial period

4. Exceptional Items

6 months to

The following items are regarded as exceptional in nature:

30-Jun-13

30-Jun-12

â‚¬m

Gain on disposal of assets and operations

Currency trading loss on Venezuelan Bolivar devaluation

(15)

Impairment loss on property, plant and equipment

(9)

Reorganisation and restructuring costs

(7)

Business acquisition costs

(1)

Exceptional items included in operating profit

(32)

Exceptional finance cost

(6)

Exceptional finance income

Exceptional items included in net finance costs

Exceptional items charged within operating profit in the six months to June 2013 amounted to â‚¬32Â million, â‚¬15 million of which related to the temporary closure of the Townsend Hook mill in the UK (comprising an impairment charge of â‚¬9 million and reorganisation and restructuring costs of â‚¬6Â million). A further â‚¬1 million of reorganisation costs related to the consolidation of the Groupâ€™s two plants in Juarez, Mexico, into one plant. A currency trading loss of â‚¬15 million was recorded as a result of the devaluation of the Venezuelan Bolivar in February 2013, comprising â‚¬12Â million booked in the first quarter and an adjustment of â‚¬3 million in the second quarter for hyperinflation and re-translation. The original loss reflected the higher cost to the Venezuelan operations of discharging its non-Bolivar denominated net payables following the devaluation. Business acquisition costs of â‚¬1 million related to the acquisition of SKOC.

4. Exceptional Items (continued)

Exceptional finance costs in the six months to June 2013 comprised an offsetting charge of â‚¬6 million in respect of the accelerated amortisation of debt issue costs and a gain of â‚¬6 million in Venezuela on the value of US dollar denominated intra-group loans, following the devaluation of the Bolivar. The accelerated amortisation of debt issue costs arose from the repayment of part of the senior credit facility from the proceeds of Januaryâ€™s â‚¬400 million bond issue.

In 2012, we reported an exceptional gain of â‚¬28 million in relation to the disposal of assets and operations. This comprised â‚¬10 million in respect of the sale of land at SKGâ€™s former Valladolid mill in Spain (operation closed in 2008), together with â‚¬18 million relating to the disposal of a company in Slovakia. This gain primarily related to the reclassification (under IFRS) of the cumulative translation differences from the Consolidated Statement of Comprehensive Income to the Consolidated Income Statement.

5. Finance Cost and Income

Restated

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Finance cost:

Interest payable on bank loans and overdrafts

Interest payable on other borrowings

Exceptional finance costs associated with debt restructuring

Foreign currency translation loss on debt

Fair value loss on derivatives not designated as hedges

Net interest cost on net pension liability

Net monetary loss - hyperinflation

Total finance cost

164

169

Finance income:

Other interest receivable

(2)

(4)

Foreign currency translation gain on debt

(3)

(3)

Exceptional foreign currency translation gain

(6)

Fair value gain on derivatives not designated as hedges

(4)

(13)

Total finance income

(15)

(20)

Net finance cost

149

149

6. Income Tax Expense

Income tax expense recognised in the Consolidated Income Statement

Restated

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Current tax:

Europe

The Americas

Deferred tax

Income tax expense

Current tax is analysed as follows:

Ireland

Foreign

Income tax recognised in the Consolidated Statement of Comprehensive Income

Restated

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Arising on actuarial loss on defined benefit plans

(2)

(9)

Arising on qualifying derivative cash flow hedges

(1)

(8)

The reduction in income tax expense compared to 2012 is largely explained by lower taxable profits, a change in the geographical mix of profits, lower asset sales in 2013 and a number of non-recurring items including a deferred tax credit for accumulated tax losses. The income tax expense also includes the effects in 2013 of the acquisition of SKOC in the US which was completed in the fourth quarter of 2012. The tax expense is recognised based on an estimate of the weighted average annual tax rate expected for the full financial year.

There is a tax credit associated with exceptional items in 2013 of â‚¬5 million compared to a â‚¬2 million tax expense in 2012.

7. Employee Benefits â€“ Defined Benefit Plans

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

Restated

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Current service cost

Recognition of net loss

Gain on curtailment

(12)

Net interest cost on net pension liability

Defined benefit cost

Included in cost of sales, distribution costs and administrative expenses is a defined benefit cost of â‚¬26Â million (2012: â‚¬5 million). Net interest cost on net pension liability of â‚¬13Â million (2012:Â â‚¬15Â million) is included in finance costs in the Consolidated Income Statement

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

Restated

30-Jun-13

31-Dec-12

â‚¬m

Present value of funded or partially funded obligations

(1,807)

(1,832)

Fair value of plan assets

1,579

1,598

Deficit in funded or partially funded plans

(228)

(234)

Present value of wholly unfunded obligations

(496)

(504)

Net pension liability

(724)

(738)

The employee benefits provision has decreased from â‚¬738 million at 31 December 2012 to â‚¬724 million at 30 June 2013. The main reason for this is favourable exchange rate movements over the period.

Restatement of prior periods in accordance with IAS 19

The Group adopted IAS 19 (as revised) from 1Â January 2013. In accordance with the previous version of IAS 19, the Consolidated Income Statement included an interest cost based on present value calculations of projected pension payments and finance income based on the expected rates of income generated by plan assets. Generally the rate of expected income on plan assets exceeded the discount rate used in calculating the interest cost. Under the revised standard the interest cost and expected return on plan assets have been replaced with a net interest amount and the rate of return on plan assets is calculated using the same discount rate as that used to determine the present value of plan liabilities. The difference between the lower rate of return on plan assets and the actual return on assets is recognised in other comprehensive income, largely offsetting the higher net interest cost in the income statement. There are other minor changes which we have allowed for but they do not have a material effect on the financial statements.

The revised standard has been applied retrospectively in accordance with the transitional provisions of the standard, resulting in the adjustment of prior year financial information. The effects of adoption on previously reported financial information are shown in the following table.

7. Employee Benefits â€“ Defined Benefit Plans (continued)

Previously
reported

Adjustments

Restated

â‚¬m

As at 1 January 2012

Employee benefits - non-current liabilities

655

656

Provisions for liabilities and charges - non-current liabilities

(2)

Deferred income tax assets

177

Retained earnings

(341)

(340)

As at and for the year ended 31 December 2012

Employee benefits - non-current liabilities

737

738

Provisions for liabilities and charges - non-current liabilities

(2)

Deferred income tax assets

191

Retained earnings

(160)

(159)

Cost of sales

(5,238)

(2)

(5,240)

Administrative expenses

(938)

(2)

(940)

Finance costs

(399)

(328)

Finance income

(79)

Profit before income tax

331

(12)

319

Income tax expense

(71)

(68)

Profit for the financial year

260

(9)

251

Attributable to owners of the parent

249

(9)

240

Basic earnings per share - cent

111.2

(4.3)

106.9

Diluted earnings per share - cent

108.3

(4.1)

104.2

Other comprehensive income

Defined benefit pension plans:

- Actuarial loss

(108)

(96)

- Movement in deferred tax

(3)

As at and for the six months ended 30 June 2012

Employee benefits - non-current liabilities

711

712

Provisions for liabilities and charges - non-current liabilities

(2)

Deferred income tax assets

162

Retained earnings

(295)

(294)

Cost of sales

(2,623)

(1)

(2,624)

Administrative expenses

(463)

(1)

(464)

Finance costs

(204)

(169)

Finance income

(39)

Profit before income tax

190

(6)

184

Income tax expense

(72)

(71)

Profit for the financial period

118

(5)

113

Attributable to owners of the parent

115

(5)

110

Basic earnings per share - cent

51.6

(2.2)

49.4

Diluted earnings per share - cent

50.6

(2.1)

48.5

Other comprehensive income

Defined benefit pension plans:

- Actuarial loss

(74)

(68)

- Movement in deferred tax

(1)

8. Earnings Per Share

Basic

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

Restated

6 months to

30-Jun-13

30-Jun-12

Profit attributable to the owners of the parent (â‚¬ million)

110

Weighted average number of ordinary shares in issue (million)

228

223

Basic earnings per share (cent)

32.1

49.4

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.

Restated

6 months to

30-Jun-13

30-Jun-12

Profit attributable to the owners of the parent (â‚¬ million)

110

Weighted average number of ordinary shares in issue (million)

228

223

Potential dilutive ordinary shares assumed (million)

Diluted weighted average ordinary shares (million)

230

227

Diluted earnings per share (cent)

31.8

48.5

Pre-exceptional

Restated

6 months to

30-Jun-13

30-Jun-12

Profit attributable to the owners of the parent (â‚¬ million)

110

Exceptional items included in profit before income tax (Note 4) (â‚¬ million)

(28)

Income tax on exceptional items (â‚¬ million)

(5)

Pre-exceptional profit attributable to the owners of the parent (â‚¬ million)

100

Weighted average number of ordinary shares in issue (million)

228

223

Pre-exceptional basic earnings per share (cent)

43.9

37.6

Diluted weighted average ordinary shares (million)

230

227

Pre-exceptional diluted earnings per share (cent)

43.5

36.9

9. Dividends

During the period, the final dividend for 2012 of 20.5 cent per share was paid to the holders of ordinary shares.

10. Property, Plant and Equipment

Land and
buildings

Plant and
equipment

Total

â‚¬m

Six months ended 30 June 2013

Opening net book amount

1,119

1,957

3,076

Reclassifications

(34)

(8)

Additions

122

123

Acquisitions

Depreciation charge for the period

(25)

(145)

(170)

Impairments

(9)

Retirements and disposals

(1)

Hyperinflation adjustment

Foreign currency translation adjustment

(48)

(60)

(108)

At 30 June 2013

1,093

1,853

2,946

Year ended 31 December 2012

Opening net book amount

1,115

1,858

2,973

Reclassifications

(15)

(5)

Additions

247

260

Acquisitions

118

119

Depreciation charge for the year

(44)

(288)

(332)

Retirements and disposals

(5)

(2)

(7)

Hyperinflation adjustment

Foreign currency translation adjustment

At 31 December 2012

1,119

1,957

3,076

11. Net Movement in Working Capital

6 months to

30-Jun-13

30-Jun-12

â‚¬m

Change in inventories

(28)

(5)

Change in trade and other receivables

(178)

(132)

Change in trade and other payables

Net movement in working capital

(114)

(104)

12. Analysis of Net Debt

30-Jun-13

31-Dec-12

â‚¬m

Senior credit facility:

Revolving credit facility⁽¹⁾â€“ interest at relevant interbank rate +3.25% on RCF⁽¹⁰⁾

(6)

(7)

Tranche B term loan^(2a)â€“ interest at relevant interbank rate + 3.625%⁽¹⁰⁾

360

550

Tranche C term loan^(2b)â€“ interest at relevant interbank rate + 3.875%⁽¹⁰⁾

362

556

US Yankee bonds (including accrued interest)⁽³⁾

224

222

Bank loans and overdrafts

Cash

(471)

(462)

2015 receivables securitisation variable funding notes⁽⁴⁾

201

197

2017 senior secured notes (including accrued interest)⁽⁵⁾

494

492

2018 senior secured notes (including accrued interest)⁽⁶⁾

425

423

2019 senior secured notes (including accrued interest)⁽⁷⁾

494

494

2020 senior secured notes (including accrued interest)⁽⁸⁾

400

2020 senior secured floating rate notes (including accrued interest)⁽⁹⁾

247

247

Net debt before finance leases

2,806

2,777

Finance leases

Net debt including leases

2,811

2,785

Balance of revolving credit facility reclassified to debtors

Net debt after reclassification

2,817

2,792

(1)	Â	Â	Â	Revolving credit facility (â€˜RCFâ€™) of â‚¬525 million (available under the senior credit facility) to be repaid in full in 2016. (a) Revolver loans - nil, (b) drawn under ancillary facilities and facilities supported by letters of credit â€“ nil and (c) other operational letters of credit â‚¬22.3 million.
(2a)				Tranche B term loan due to be repaid in 2016. â‚¬168.4 million prepaid January â€“ March 2013, â‚¬25.5 million prepaid April 2013.
(2b)				Tranche C term loan due to be repaid in 2017. â‚¬149.2 million prepaid January â€“ March 2013, â‚¬47.9 million prepaid April 2013.
(3)				US$292.3 million 7.50% senior debentures due 2025.
(4)				Receivables securitisation variable funding notes due 2015.
(5)				â‚¬500 million 7.25% senior secured notes due 2017.
(6)				â‚¬200 million 5.125% senior secured notes due 2018 and US$300 million 4.875% senior secured notes due 2018.
(7)				â‚¬500 million 7.75% senior secured notes due 2019.
(8)				â‚¬400 million 4.125% senior secured notes due 2020, issued in January 2013.
(9)				â‚¬250 million senior secured floating rate notes due 2020. Interest at EURIBOR +3.5%.
(10)				The margins applicable to the senior credit facility are determined as follows:
				Â

Net debt/EBITDA ratio

RCF

Tranche B

Tranche C

Greater than 4.0 : 1

4.000%

3.875%

4.125%

4.0 : 1 or less but more than 3.5 : 1

3.750%

3.625%

3.875%

3.5 : 1 or less but more than 3.0 : 1

3.500%

3.625%

3.875%

3.0 : 1 or less but more than 2.5 : 1

3.250%

3.625%

3.875%

2.5 : 1 or less

3.125%

3.500%

3.750%

13. Fair Value Hierarchy

Fair value measurement at 30 June 2013

Level 1

Level 2

Level 3

Total

â‚¬m

Available-for-sale financial assets:

Listed

Unlisted

Derivative financial instruments:

Assets at fair value through Consolidated Income

Statement

Derivatives used for hedging

Derivative financial instruments:

Liabilities at fair value through Consolidated Income

Statement

(59)

(59)

Derivatives used for hedging

(34)

(34)

(79)

(53)

The fair value of the 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 2012 to 30 June 2013.

14. 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 Groupâ€™s 2012 annual report.

June 2013

Carrying value

Fair value

â‚¬m

Trade and other receivables⁽¹⁾

1,420

Available-for-sale financial assets ⁽²⁾

Cash and cash equivalents ⁽³⁾

462

Derivative assets ⁽⁴⁾

Restricted cash

1,931

Trade and other payables⁽¹⁾

1,273

Senior credit facility⁽⁵⁾

716

720

Receivables securitisation⁽³⁾

201

Bank overdrafts⁽³⁾

US Yankee bonds⁽⁵⁾

224

249

2017 secured fixed rate notes⁽⁵⁾

494

519

2018 secured fixed rate notes⁽⁵⁾

425

430

2019 secured fixed rate notes⁽⁵⁾

494

535

2020 secured floating rate notes⁽⁵⁾

247

250

2020 secured fixed rate notes⁽⁵⁾

400

385

4,550

4,638

Finance leases

4,555

4,643

Derivative liabilities⁽⁴⁾

4,648

4,736

Total net position

(2,717)

(2,805)

(1)	Â	Â	Â	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 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 re-pricing 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)				Fair value is based on broker prices at the balance sheet date.
				Â

15. Other Reserves

Other reserves included in the Consolidated Statement of Changes in Equity are comprised of the following:

Reverse
acquisition
reserve

Cash
flow

hedging
reserve

Foreign
currency
translation
reserve

Share-
based
payment
reserve

Own
shares

Available-
for-sale
reserve

Total

â‚¬m

At 1 January 2013

575

(26)

(198)

105

(13)

444

Other comprehensive income

Foreign currency translation adjustments

(185)

Effective portion of changes in fair value of cash flow hedges

Total other comprehensive income/(expense)

(185)

(176)

Share-based payment

Shares acquired by SKG Employee Trust

(15)

At 30 June 2013

575

(17)

(383)

117

(28)

265

At 1 January 2012

575

(35)

(228)

391

Other comprehensive income

Foreign currency translation adjustments

Effective portion of changes in fair value of cash flow hedges

Total other comprehensive income

Share-based payment

Shares acquired by SKG Employee Trust

(13)

At 30 June 2012

575

(29)

(175)

(13)

451

16. Venezuela

Hyperinflation

As discussed more fully in the Groupâ€™s 2012 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 â€“ 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 derived from a combination of Banco Central de Venezuelaâ€™s National Consumer Price Index from its initial publication in December 2007 and the Consumer Price Index for the metropolitan area of Caracas for earlier periods. The level of and movement in the price index at JuneÂ 2013 and 2012 are as follows:

30-Jun-13

30-Jun-12

Index at period end

398.6

285.5

Movement in period

25.0%

7.5%

16. Venezuela (continued)

As a result of the entries recorded in respect of hyperinflationary accounting under IFRS, the Consolidated Income Statement is impacted as follows: Revenue â‚¬14 million increase (2012: â‚¬12Â million increase), pre-exceptional EBITDA â‚¬2 million decrease (2012: â‚¬2 million decrease) and profit after taxation â‚¬44 million decrease (2012:Â â‚¬20 million decrease). In 2013, a net monetary loss of â‚¬23 million (2012: â‚¬6 million loss) was recorded in the Consolidated Income Statement. The impact on our net assets and our total equity is an increase of â‚¬52 million (2012: â‚¬12 million increase).

Devaluation

On 8 February 2013, the Venezuelan government announced the devaluation of its currency, the Bolivar Fuerte and the termination of the SITME transaction system. The official exchange rate was changed from VEF 4.3 per US dollar to VEF 6.3 per US dollar. As a result of the devaluation the Group recorded a reduction in net assets of approximately â‚¬142 million in relation to these operations and a reduction in the euro value of the Groupâ€™s cash balances of â‚¬28 million.

17. Related Party Transactions

Details of related party transactions in respect of the year ended 31 December 2012 are contained in NoteÂ 30 to the consolidated financial statements of the Groupâ€™s 2012 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 2013 or changes to transactions with related parties disclosed in the 2012 consolidated financial statements that had a material effect on the financial position or the performance of the Group.

18. Post Balance Sheet Events

On 24 July 2013, the Group successfully completed the refinancing of its existing senior secured credit facility with a new five-year unsecured relationship bank facility. In connection with the refinancing, the collateral securing the obligations under the Groupâ€™s various outstanding senior notes and debentures was also released and the senior notes and debentures are therefore now unsecured.

The new â‚¬1,375 million five-year facility comprises a â‚¬750 million term loan with a margin of 2.25% and a â‚¬625 million revolving credit facility with a margin of 2.00%, reduced from margins of 3.75% and 3.25% respectively. The Group consequently expects annual cash interest savings from the refinancing will be approximately â‚¬13 million per annum and the transaction will be immediately earnings accretive. There will be a one-off exceptional cost of approximately â‚¬16 million arising from the accelerated amortisation of unamortised deferred debt issue costs related to the existing facility.

In addition to the new senior facility, on 3 July 2013 SKG put in place a new five-year trade receivables securitisation programme of up to â‚¬175 million utilising the Groupâ€™s receivables in Austria, Belgium, Italy and the Netherlands. The programme carries a margin of 1.70% and will complement the Groupâ€™s existing â‚¬250Â million securitisation programme.

19. Board Approval

The interim report was approved by the Board of Directors on 30 July 2013.

20. Distribution of the Interim Report

The 2013 interim report is available on the Groupâ€™s website (www.smurfitkappa.com). A printed copy will be posted to shareholders and will also be available to the public at the Companyâ€™s registered office.

Responsibility Statement in Respect of the Six Months Ended 30 June 2013

The Directors, whose names and functions are listed on pages 34 and 35 in the Groupâ€™s 2012 annual report, are responsible for preparing this interim management report and the condensed Group interim financial statements in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Central Bank of Ireland 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 Group interim financial statements for the half year ended 30 June 2013 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 Group interim financial statements for the half year ended 30 June 2013, 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
30 July 2013

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

Restated

3 months to

6 months to

30-Jun-13

30-Jun-12

30-Jun-13

30-Jun-12

â‚¬m

Profit for the financial period

113

Income tax expense

Gain on disposal of assets and operations

(28)

Currency trading loss on Venezuelan Bolivar devaluation

Impairment loss on property, plant and equipment

Reorganisation and restructuring costs

Business acquisition costs

Share of associatesâ€™ profit (after tax)

(1)

(2)

(1)

(2)

Net finance costs

149

149

Share-based payment expense

Depreciation, depletion (net) and amortisation

193

181

EBITDA

271

254

512

498

Supplementary Historical Financial Information

Restated

â‚¬m

Q2, 2012

Q3, 2012

Q4, 2012

FY, 2012

Q1, 2013

Q2, 2013

Group and third party revenue

3,050

2,944

2,951

11,896

3,080

3,285

Third party revenue

1,857

1,830

1,824

7,335

1,889

2,019

EBITDA

254

279

239

1,016

241

271

EBITDA margin

13.6%

15.2%

13.1%

13.8%

12.7%

13.4%

Operating profit

155

180

119

630

126

148

Profit before income tax

102

319

Free cash flow

118

282

(23)

Basic earnings per share - cent

23.4

32.3

25.2

106.9

14.4

17.7

Weighted average number of shares used in EPS calculation (million)

223

226

224

228

229

Net debt

2,785

2,640

2,792

2,871

2,817

Net debt to EBITDA (LTM)

2.78

2.59

2.75

2.84

2.74

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