Ardagh Packaging Holdings Limited
Report to Bondholders For the three month period ended 31 March 2013
one brandone vision
TABLE OF CONTENTS Page Selected Financial Information ..............................................................................................................................................
2
Operating and Financial Review ...........................................................................................................................................
3
UNAUDITED CONDENSED CONSOLIDATED INTERIM GROUP FINANCIAL INFORMATION Consolidated interim statement of financial position at 31 March 2013 .................................................................................
14
Consolidated interim income statement for the three month period ended 31 March 2013 ..................................................
16
Consolidated interim statement of comprehensive income for the three month period…………...………………………........
17
Consolidated interim statement of changes in equity for the three month period ended 31 March 2013 ..............................
18
Consolidated interim statement of cashflows for the three month period ended 31 March 2013……………………………....
19
Notes to the unaudited condensed consolidated interim Group financial information……………………………………………
20
ARD Finance S.A. – interim statement of financial position at 31 March 2013.......................................................................
37
ARD Finance S.A. – selected note .........................................................................................................................................
38
Forward-Looking Statements The Company and its representatives may from time to time make written or verbal statements which, to the extent that they are not historical fact, constitute “forward-looking statements”. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any statements regarding past trends or activities should not be taken as a representation that such activities or trends will continue in the future. The Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written or verbal forward-looking statements attributable to the Company or to persons acting on the Company’s behalf are expressly qualified by the cautionary statements referred to above.
Ardagh Packaging Holdings Limited
1
SELECTED FINANCIAL INFORMATION The following discussion should be read in conjunction with, and is qualified in its entirety by reference to the unaudited condensed consolidated interim Group financial information and the related notes thereto included in this document. The following table sets forth Ardagh’s summary unaudited consolidated financial information for the Group for the three month period ended 31 March 2013 and as at 31 March 2012 and 31 December 2012. All footnotes are on page 12 of this document. Unaudited (in € millions, except ratios and where indicated)
Three months ended Group
Group
31 March 2013
31 March 2012 Restated
961.4
788.5
142.2
130.3
(72.5) (40.4) (103.8) 0.1
(49.3) (11.9) (44.7) 0.1
Profit/(loss) before tax Income tax expense
(74.4) (5.9)
24.5 (5.5)
Profit/(loss) for the period
(80.3)
19.0
14.8% 92.3 49.1
16.5% 66.7 35.2
1.5x
2.0x
Income Statement Data Revenue (1)
EBITDA
Depreciation and amortisation (3) Exceptional items Net finance expense Share of profit of joint venture
(2)
Other data (1)
EBITDA margin (4) Net interest cost Capital expenditure Ratio of EBITDA to net interest (1)(4) cost
Unaudited (in € millions, except ratios and where indicated) As at
As at
As at
31 March 2013
31 Dec 2012 Restated
31 March 2012 Restated
203.1 6,380.4 5,039.8 (440.7)
231.8 5,161.9 3,830.5 (365.9)
262.1 4,392.4
3,595.6
3,511.2
2,770.1
Balance sheet data (5)
Cash Total assets (6) Total borrowings Total equity Net borrowings
(7)
3,114.8 (117.0)
Ardagh Packaging Holdings Limited
2
OPERATING AND FINANCIAL REVIEW Pro Forma Operating Results Three month period ended 31 March 2013 and 2012. As both the aluminium packaging business acquired from Exal Corporation on 1 March 2012 (Boxal), and the glass packaging business acquired on March 23, 2012 (Leone) were acquired in March 2012, and the acquisition of the US glass packaging business Anchor which occurred on August 20, 2012, the consolidated results for the three months ended 31 March 2012 include one month of results relating to Boxal and seven days relating to Leone. Thus, we believe it is more useful to review Revenue and EBITDA for the Glass Packaging and Metal Packaging divisions on a pro forma basis, as if the acquisitions had occurred on 1 January 2012.
Twelve months ended
Three months ended Pro forma Group 31 March 2013 Restated
31 March 2012 Restated
31 March 2013 Restated
(in € millions, except ratios and where indicated) Revenue Metal Packaging Glass Packaging
480.8 480.6
497.1 466.8
2,073.8 2,068.0
Total Revenue
961.4
963.9
4,141.8
48.7 93.5
67.1 95.1
247.6 410.2
142.2
162.2
657.8
EBITDA Margin Metal Packaging Glass Packaging
10.1% 19.5%
13.5% 20.4%
11.9% 19.8%
-
14.8%
16.8%
15.9%
Capital Expenditure Metal Packaging Glass Packaging
15.2 33.9
12.6 31.0
78.1 153.5
-
49.1
43.6
231.6
-
-
5.5
(1)
EBITDA Metal Packaging Glass Packaging Total EBITDA Other data (1)
Group
Group (1)(7)
Ratio of Net Borrowings to EBITDA
All footnotes are on page 12 of this document.
Ardagh Packaging Holdings Limited
3
Financial Review Three month period ended 31 March 2013
Revenue Bridge of 2013 pro forma Revenue to 2012 Revenue
Pro forma
Three months ended as at 31 March Metal
Glass
Group
€’m
€’m
€’m
475.2
313.3
788.5
21.9
153.5
175.4
Pro forma Revenue 2012
497.1
466.8
963.9
Selling Price
(11.8)
10.1
(1.7)
(3.5)
5.8
2.3
-
(1.4)
(1.4)
(1.0)
(0.7)
(1.7)
480.8
480.6
961.4
Revenue 2012 Acquisitions
Volume/Mix changes Engineering FX Translation effect Pro forma Revenue 2013
EBITDA Bridge of 2013 pro forma EBITDA to 2012 EBITDA
Pro forma
Three months ended as at 31 March Metal
Glass
Group
€’m
€’m
€’m
66.0
64.3
130.3
1.1
30.8
31.9
67.1
95.1
162.2
(11.8)
10.1
(1.7)
2.2
(15.0)
(12.8)
Inflation Gap
(9.6)
(4.9)
(14.5)
Sales Volume/Mix
(1.9)
1.8
(0.1)
-
0.2
0.2
Operating and Other Cost Savings
(6.8)
1.7
(5.1)
FX Translation effect
(0.1)
(0.4)
(0.5)
Pro forma EBITDA 2013
48.7
93.5
142.2
Actual EBITDA 2012 Acquisitions Pro forma EBITDA 2012 Selling Price Input costs
Engineering
Ardagh Packaging Holdings Limited
4
Set out below are Revenue and EBITDA bridges for our Glass Packaging division showing Europe and North America separately.
Glass Revenue
Pro forma
Three months ended as at 31 March Europe
North America
Total
€’m
€’m
€’m
311.5
1.8
313.3
-
153.5
153.5
311.5
155.3
466.8
Selling Price
4.9
5.2
10.1
Volume/Mix changes
6.4
(0.6)
5.8
(1.4)
-
(1.4)
0.8
(1.5)
(0.7)
322.2
158.4
480.6
Revenue 2012 Acquisitions Pro forma Revenue 2012
Engineering FX Translation effect Pro forma Revenue 2013
Glass EBITDA
Pro forma
Actual EBITDA 2012 Acquisitions
Three months ended as at 31 March Europe
North America
Total
€’m
€’m
€’m
63.8
0.5
64.3
-
30.8
30.8
63.8
31.3
95.1
4.9
5.2
10.1
(12.4)
(2.6)
(15.0)
(7.5)
2.6
(4.9)
Sales Volume/Mix
3.8
(2.0)
1.8
Engineering
0.2
-
0.2
Pro forma EBITDA 2012 Selling Price Input costs Inflation Gap
Operating and Other Cost Savings FX Translation effect Pro forma EBITDA 2013
EBITDA Margin
(1.1)
2.8
1.7
0.2
(0.6)
(0.4)
59.4
34.1
93.5
18.4%
21.5%
19.5%
Ardagh Packaging Holdings Limited
5
Set out below are Revenue and EBITDA bridges for our Metal Packaging division showing Europe and Other separately.
Metal Revenue
Three months ended as at 31 March
Pro forma
Revenue 2012
Europe
Other
Total
€’m
€’m
€’m
384.9
90.3
475.2
21.9
-
21.9
406.8
90.3
497.1
Selling Price
(7.5)
(4.3)
(11.8)
Volume/Mix changes
(7.1)
3.6
(3.5)
FX Translation effect
0.2
(1.2)
(1.0)
392.4
88.4
480.8
Acquisitions Pro forma Revenue 2012
Pro forma Revenue 2013
Metal EBITDA
Three months ended as at 31 March
Pro forma
Actual EBITDA 2012
Europe
Other
Total
€’m
€’m
€’m
54.8
11.2
66.0
1.1
-
1.1
Pro forma EBITDA 2012
55.9
11.2
67.1
Selling Price
(7.5)
(4.3)
(11.8)
0.5
1.7
2.2
Inflation Gap
(7.0)
(2.6)
(9.6)
Sales Volume/Mix
(2.8)
0.9
(1.9)
Operating and Other Cost Savings
(6.9)
0.1
(6.8)
FX Translation effect
(0.2)
0.1
(0.1)
Pro forma EBITDA 2013
39.0
9.7
48.7
9.9%
11.0%
10.1%
Acquisitions
Input costs
EBITDA Margin
Ardagh Packaging Holdings Limited
6
The information below refers to actual results as shown on page 16 for the three months to 31 March 2013.
Depreciation and amortisation Depreciation and amortisation charges were €72.5 million in the three months ended 31 March 2013. Depreciation and amortisation charges increased by €23.2 million from €49.3 million for the three months ended 31 March 2012. The increase was driven by acquisitions and movements in foreign exchange rates.
Exceptional Items Exceptional items of €1.8 million were included in cost of sales for the three months ended 31 March 2013. These were comprised of: -
€1.3 million of exceptional restructuring costs in relation to the final planned exceptional expense relating to our metal footprint reorganisation programme €0.5 million of exceptional costs associated with new site start-up costs
Exceptional items of €35.7 million related to directly attributable acquisition costs were included in sales, general and administration expenses for the three months ended 31 March 2013. Exceptional items of €2.9 million were included in net finance expense for the three months ended 31 March 2013. These related to costs associated with early settlement of the ANZ BOSI debt facility.
Net Finance Expense Net finance expense before exceptional items for the three months ended 31 March 2013 was €103.8 million compared to €44.7 million in 2012, an increase of €59.1 million. The significant components of this difference were: Three Months
LTM
€’m
€’m
Net Finance Expense period ended 31 March 2012 Restated
(44.7)
(277.6)
Interest on new debt
(25.8)
(75.6)
Net change in other interest
0.9
0.2
Change in Interest Expense
(24.9)
(75.4)
Non cash foreign exchange translation
(33.8)
(53.8)
(0.4)
(9.7)
(103.8)
(416.5)
Non cash movement in pension financing costs Net Finance Expense period ended 31 March 2013
Income Tax The charge for income tax was €5.9 million for the three months ended 31 March 2013 and compared to a charge of €5.5 million for the three months ended 31 March 2012. Further details on the tax charge for the three months ended 31 March 2013 are included in Note 10 “Income Tax”.
Liquidity and Capital Resources The Group’s principal sources of cash are cash generated from operations and external financings, including borrowings, securitisation and revolving credit facilities. The Group’s principal funding arrangements include borrowings available under the HSBC Securitisation programme, the GE Commercial Finance Facility, the Bank of America Merrill Lynch Facility and the Unicredit Working Capital and Performance Guarantee Credit Lines. The Glass Packaging and Metal Packaging divisions’ sales and cash flows are subject to seasonal fluctuations. Demand for our glass products is typically strongest during the summer months and in the period prior to December because of the seasonal nature of beverage consumption and demand for our metal products is largely related to agricultural harvest periods. The investment in working capital for Glass Packaging typically peaks in the first quarter. The investment in working capital for Metal Packaging generally builds over the first three quarters of the year, in line with the seasonal pattern, and then unwinds in the fourth quarter, with the calendar year-end being the low point. The Group manages the seasonality of working capital by supplementing operating cash flows with drawings under our securitisation and revolving credit facilities. Ardagh Packaging Holdings Limited
7
Cash Generated from Operations Three Months
Twelve months ended 31-Mar
31-Mar
31-Mar
2013
2012
2013
€’m
€’m
€’m
Actual EBITDA
142.2
130.3
601.9
Inventories
(62.2)
(54.4)
(21.1)
Trade and other receivables
(59.0)
(43.8)
(11.8)
GE Facto Receivables Trade and other payable Provisions (8)
Increase in working capital
-
-
(54.8)
9.4
(13.2)
(21.9)
(1.5)
(5.2)
(10.2)
(113.3)
(116.6)
(119.8)
Capital expenditure
(49.1)
(35.2)
(222.1)
Restructuring spend
(4.6)
(6.3)
(21.2)
Operating cash flow
(24.8)
(27.8)
238.8
Cash interest paid
(26.2)
(24.4)
(286.0)
Income tax paid
(2.3)
(6.4)
(13.2)
Free Cash Flow
(53.3)
(58.6)
(60.4)
The information above has been derived from the cash flow statement and related notes on page 19 and 32
Increase in Working Capital Working capital increased by €113.3 million in the quarter ended 31 March 2013. Inventory increased by €62.2 million, receivables increased by €59.0 million and payables and provisions increased by €7.9 million, all in line with our normal seasonal pattern.
Taxation Paid During the first quarter of 2013 the Group paid €2.3 million (2012: €6.4 million) of corporation tax.
Capital Expenditure Capital expenditure paid in the first quarter of 2013 was €49.1 million compared to €35.2 million in 2012. Pro forma capital expenditure increased by €5.5 million in the current period, from €43.6 million in 2012 to €49.1 million. In Glass Packaging pro forma capital expenditure for the three months ended 31 March 2013 was €33.9 million compared to €31.0 million for the same period in 2012. Pro forma capital expenditure in Metal Packaging in the first quarter was €15.2 million in 2013 compared with €12.6 million for the same period of 2012.
Ardagh Packaging Holdings Limited
8
Review of the Quarter Pro forma revenues in the seasonally quiet first quarter to 31 March 2013 were flat compared with the prior year at €961.4 million. This was a reasonable performance given continued challenging economic conditions in our markets. A harsh and prolonged winter in both of our main regions had some impact on volumes, while the timing of the Easter holiday impacted March trading, in Europe in particular. In our Glass business, revenues grew by 3.0% to €480.6 million on a pro forma basis, reflecting volume/mix gains and higher selling prices. In Europe, we remain predominantly focused on Northern markets and revenues in our major sectors were up year on year, despite generally poor weather. Revenues in North America were up 2% year on year. The Metal division experienced a revenue decline of 3.3% to €480.8 million for the quarter. In Europe, which represents over 80% of our Metal revenues, economic conditions led to continued subdued demand in most sectors and turnover declined by 3.5%. Constant currency turnover in our Other Metal businesses, comprising North America and Asia Pacific, was little changed. Group EBITDA was €142.2 million in the quarter, compared with €162.2 million on a pro forma basis. In our Glass business, EBITDA was broadly stable year on year. Europe was in part impacted by higher costs, chiefly energy and labour, some of which will be recovered later this year. It was also compared with a particularly strong first quarter of 2012, when EBITDA rose by 23%. Our North American Glass business grew pro forma EBITDA, reflecting solid underlying trading and further efficiencies arising from integration into the Group. Metal EBITDA was impacted by generally slow European markets, where pricing remained down year on year. Costs included approximately €5 million due to the impairment of receivables in our Southern Italian operations, which have been reduced in size. In line with established patterns our first quarter saw a seasonal cash outflow. Reported EBITDA for the quarter to March 2013 of €142.2 million compared with €130.3 million in 2012. The working capital outflow of €113.3 million was lower than last year’s €116.6 million, despite the increased size of the Group. Capital expenditure increased from €35.2 million in 2012 to €49.1 million this year reflecting growth in the Group’s operations. Resulting operating cash flow for the quarter was a reduced seasonal outflow of €24.8 million compared with €27.8 million in 2012. On 17 January 2013, we agreed to acquire Verallia North America (“VNA”) from Compagnie de Saint-Gobain for USD1.7 billion. We expect to complete this transaction later this year, following which North America will represent over 40% of Group sales and over 60% of our Glass Packaging business. Our end-market mix in the US will also be broadened. In connection with this acquisition, the Group issued €250.0 million and $420.0 million in senior secured notes and $850.0 million in senior notes in January 2013.
Prospective Financing Arrangements In order to support continued business growth and value-creation for our stakeholders, we are currently evaluating the possible private sale of a minority stake in the form of an equity or equity-linked instrument. If we were to conclude such a transaction, we would expect to raise in excess of $500 million, and the investment would be made in ARD Finance or one of its parent entities. There can be no assurance that any such sale will be completed.
Ardagh Packaging Holdings Limited
9
External Financings The following table outlines Ardagh’s principal financing arrangements as at 31 March 2013:
Facility
Maximum amount Final Currency drawable maturity date Local currency (millions)
Facility type
Amount drawn as at 31 March 2013
Undrawn Amount
Local currency € € (millions) (millions) (millions)
9.25% First Priority Senior Secured Notes due 2016
EUR
300.0
01-Jul-16
Bullet
298.3
298.3
-
7.375% First Priority Senior Secured Notes due 2017
EUR
1,085.0
15-Oct-17
Bullet
1,093.6
1,093.6
-
7.375% First Priority Senior Secured Notes due 2017
USD
860.0
15-Oct-17
Bullet
874.8
683.2
-
7.125% Senior Notes due 2017
EUR
310.0
15-Jun-17
Bullet
310.0
310.0
-
8¾% Senior Notes due 2020
EUR
180.0
01-Feb-20
Bullet
180.0
180.0
-
9.250% Senior Notes due 2020
EUR
475.0
15-Oct-20
Bullet
484.2
484.2
-
9.125% Senior Notes due 2020
USD
920.0
15-Oct-20
Bullet
919.7
718.3
-
5% Senior Secured Notes due 2022
EUR
250.0
15-Oct-22
Bullet
250.0
250.0
-
4.875% Senior Secured Notes due 2022
USD
420.0
15-Oct-22
Bullet
420.0
328.0
-
7% Senior Notes due 2020
USD
850.0
15-Oct-20
Bullet
850.0
663.8
-
GE Commercial Finance Facility
GBP
35.0
30-Sep-13
Revolving
-
-
41.4
HSBC Securitisation Program
EUR
136.9
31-Dec-14
Revolving
-
-
136.9
BAML Facility
USD
82.0
15-Feb-17
Revolving
-
-
63.8
US Equipment Financing Facility
USD
13.0
01-Sep-17
Amortising
12.6
9.8
-
US Real Estate Financing Facility
USD
6.0
01-Sep-21
Amortising
6.4
5.0
-
HVB Working Capital and Performance Guarantee Credit Lines
EUR
1.0
Revolving
-
-
1.0
Amortising
6.6
7.0
-
Amortising
9.1
8.6
0.5
Total borrowings / Undrawn facilities
5,039.8
243.6
Deferred debt issue costs
(116.6)
-
Borrowings less deferred debt issue costs
4,923.2
243.6
Cash, cash equivalents and restricted cash
(203.1)
203.1
Net borrowings / Available liquidity before restricted cash held in escrow
4,720.1
446.7
Finance Lease Obligations Other borrowings
Restricted cash held in escrow Net borrowings
GBP/EUR EUR
9.1
(1,124.5) 3,595.6
As at 31 March 2013, the Group had undrawn credit lines of up to €243.6 million at its disposal together with cash resources, excluding restricted cash held in escrow, of €203.1 million giving rise to available liquidity of €446.7 million.
Ardagh Packaging Holdings Limited
10
Debt Repayment Schedule The following table outlines the minimum debt repayments Ardagh is obliged to make for the remainder of 2013 and for the year ended 31 December 2014. This table assumes that the minimum net principal repayment will be made as provided for under each credit facility. It further assumes that revolving credit lines will be renewed or replaced with similar facilities as they mature.
Facility
Currency
Local currency
Final maturity date
Facility type
Minimum net repayment 2013 2014 € € (millions)
(millions)
US Equipment Financing Facility
USD
1.9
01-Sep-17
Amortising
1.5
2.1
US Real Estate Financing Facility
USD
0.1
01-Sep-21
Amortising
0.1
0.2
GBP/EUR/PLN
Amortising
0.7
0.9
EUR
Amortising
1.8
1.0
4.1
4.2
Finance Lease Obligations Other Term Debt Minimum net repayment
Financing Activity in 2013 Issue of $420.0 million 4.875% First Priority Senior Secured Notes due 2022, $850.0 million 7.000% Senior Notes due 2020 and €250.0 million 5.000% First Priority Senior Secured Notes due 2022 On 17 January 2013, Ardagh announced that it has successfully raised a total of US$1,270.0 million, through the issue of US$420.0 million 4.875% First Priority Senior Secured Notes, due 2022, and US$850.0 million 7.000% Senior Notes, due 2020, and €250.0 million, through the issue of Euro denominated 5.000% First Priority Senior Secured Notes, due 2022. The proceeds from the issue and sale of the Notes will be used to pay the cash consideration for the acquisition of the entire issued share capital of VNA, and for general corporate purposes, including repayment of existing debt. The proceeds to be used to purchase the entire issued share capital of VNA will remain in escrow until completion of the acquisition occurs. BOSI Australasian Senior Banking Facility Agreement On 22 February 2013, the Group repaid the senior bank debt and revolving credit facilities with Bank of Scotland International. This facility was originally established to finance the acquisition by Impress of Amcor Limited’s Food and Aerosol business in Australia and New Zealand on 31 October 2007. As of 31 December 2012, there was €72.7 million outstanding on and €11.8 million available under, the Australasian Senior Bank Facility. Bank of America Merrill Lynch Asset Based Facility Upon acquisition, Anchor had in place a revolving credit facility with Bank of America N.A. which was modified and taken over by Ardagh Glass Inc. The facility was primarily designed to secure stand-by letters of credit and other forms of bank guarantees which were outstanding in favour of suppliers and energy hedges. In addition the facility provided for a limited amount of liquidity support. The Amended Revolving Credit Facility contained customary affirmative and negative covenants and restrictions for transactions, including without limitation, restrictions on indebtedness, liens, investments, and asset dispositions outside of the ordinary course of business, restricted payments, and transactions with affiliates, change of control, prepayments and cancellation of indebtedness and fundamental business changes and requires maintenance of a minimum fixed charge coverage ratio. On February 15, 2013, it was replaced by a $100.0 million amended and restated loan and security agreement. The new facility which matures on February 15, 2017 also includes a $40.0 million letter of credit sub limit and is secured by a first priority lien over inventory and accounts receivable for Ardagh Glass Inc. The new facility was put in place to support the working capital needs of the Glass North America business. While the new facility contains affirmative and negative covenants and restrictions on transactions it is much more in tune with the needs of the business, provides a great degree of flexibility and doesn’t contain any maintenance covenants.
Ardagh Packaging Holdings Limited
11
Footnotes to the Selected Financial Information
(1)
EBITDA is operating profit/ (loss) before depreciation, amortisation and exceptional items. EBITDA margin is calculated as EBITDA divided by revenues. EBITDA and EBITDA margin are presented because we believe that they are frequently used by securities analysts, investors and other interested parties in evaluating companies in the packaging industry. However, other companies may calculate EBITDA and EBITDA margin in a manner different from ours. EBITDA and EBITDA margin are not measurements of financial performance under IFRS and should not be considered an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to profit/(loss) on ordinary activities as indicators of operating performance or any other measures of performance derived in accordance with IFRS.
(2)
Depreciation and amortisation less capital grant amortisation.
(3)
The exceptional items referred to in the preceding tables are shown on a number of different lines in the Income Statement presented in subsequent pages in this report.
(4)
Net interest costs represent net finance expense excluding net interest cost on net pension plan liabilities, foreign exchange gains and losses, expected return on pension plan assets, gains and losses on derivatives not designated as hedges, gains and losses on extinguishment of borrowings, exceptional finance items and other finance expenses.
(5)
Cash includes restricted cash with the exception of restricted cash held in escrow.
(6)
Total borrowings include all bank borrowings as well as vendor loan notes, subordinated loan notes before deduction of any unamortised debt issuance costs or premium on debt issuance above par.
(7)
Net borrowings equal total borrowings, plus premium on debt issuance above par, less cash and deferred debt issuance costs.
(8)
Working capital is comprised of inventories, trade and other receivables, trade and other payables and provisions per the consolidated statement of financial position.
Ardagh Packaging Holdings Limited
12
Reconciliation of Reported Metal Results to pro forma Metal Packaging Results
Pro forma Restated 31-Mar
Pro forma Restated 31-Mar
2013
2012
Revenue Reported Metal
480.8
475.2
-
21.9
480.8
497.1
48.7
66.0
-
1.1
48.7
67.1
15.2
11.4
-
1.2
15.2
12.6
Acquisitions Pro Forma Metal EBITDA Reported Metal - Restated Acquisitions Pro Forma Metal Capital Expenditure Reported Metal Acquisitions Pro Forma Metal
Reconciliation of Reported Glass Results to pro forma Glass Packaging Results
Pro forma Restated 31-Mar
Pro forma Restated 31-Mar
2013
2012
Revenue Reported Glass Acquisitions Pro Forma Glass
480.6
313.3
-
153.5
480.6
466.8
93.5
64.3
-
30.8
93.5
95.1
33.9
23.8
-
7.2
33.9
31.0
EBITDA Reported Glass - Restated Acquisitions Pro Forma Glass Capital Expenditure Reported Glass Acquisitions Pro Forma Glass
Ardagh Packaging Holdings Limited
13
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2013
31 March 2013 Note
€m
31 December 2012 Restated €m
Unaudited
Unaudited
Non-current assets Goodwill
3
729.4
729.1
Intangible assets
3
370.3
374.1
Property, plant and equipment
4
2,197.8
2,215.0
Other financial assets
32.9
11.3
Other non-current assets
11.4
5.9
-
-
206.4
213.8
3,548.2
3,549.2
Inventories
760.2
694.1
Trade and other receivables
736.8
686.7
0.6
-
Derivative financial instruments Deferred tax assets
Current assets
Receivables from the parent company Derivative financial instruments
7.0
0.1 222.5
Cash and cash equivalents
5
193.9
Restricted cash
5
1,133.7
9.3
2,832.2
1,612.7
6,380.4
5,161.9
TOTAL ASSETS
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
14
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2013 (CONTINUED)
31 March 2013 Note
€m
31 December 2012 Restated €m
Unaudited
Unaudited
-
-
101.2
101.2
24.5
19.2
(569.0)
(488.6)
(443.3)
(368.2)
2.6
2.3
(440.7)
(365.9)
4,918.9
3,664.7
Equity attributable to owners of the parent Ordinary shares Capital contribution Other reserves Retained earnings
Non-controlling interests Total equity
Non-current liabilities Borrowings
6
Deferred income
5.6
5.8
Employee benefit obligations
434.6
440.0
Deferred tax liability
448.5
452.7
39.9
40.3
-
0.3
5,847.5
4,603.8
4.3
78.3
Interest payable
139.4
72.1
Deferred income
1.8
1.7
693.7
694.1
65.4
10.4
-
0.9
0.2
4.4
Provisions for other liabilities and charges
26.2
25.6
Current income tax payable
42.6
36.5
973.6
924.0
6,380.4
5,161.9
Provisions for other liabilities and charges Derivative financial instruments
Current liabilities Borrowings
Trade and other payables Exceptional payables Payables to the parent company Derivative financial instruments
TOTAL EQUITY and LIABILITIES
6
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
15
CONSOLIDATED INTERIM INCOME STATEMENTFOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013 (Unaudited)
Note Revenue
7
Cost of sales
Exceptional items 31 March 2013 €m Note 8
Total 31 March 2013 €m
Before exceptional items 31 March 2012 Restated €m
961.4
-
961.4
(825.5)
(1.8)
(827.3)
Before exceptional items 31 March 2013 €m
Exceptional items 31 March 2012 €m Note 8
Total 31 March 2012 Restated €m
788.5
-
788.5
(654.6)
(6.1)
(660.7)
Gross profit
135.9
(1.8)
134.1
133.9
(6.1)
127.8
Sales, general and administration expenses
(66.2)
(35.7)
(101.9)
(52.9)
(2.5)
(55.4)
69.7
(37.5)
32.2
81.0
(8.6)
72.4
Operating profit Finance expense
9
(104.3)
(2.9)
(107.2)
(45.0)
(3.3)
(48.3)
Finance income
9
0.5
-
0.5
0.3
-
0.3
Share of profit of joint venture
7
0.1
-
0.1
0.1
-
0.1
(34.0)
(40.4)
(74.4)
36.4
(11.9)
24.5
(Loss)/profit before tax Income tax charge
10
(5.9)
(5.5)
Loss)/profit for the period
7
(80.3)
19.0
(80.4)
18.9
0.1
0.1
(80.3)
19.0
(Loss)/profit attributable to: Owners of the parent Non-controlling interests
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
16
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013 (Unaudited)
Note
Three months ended 31 March 31 March 2013 2012 Restated €m €m (80.3)
19.0
11.3
0.9
(26.3)
4.1
(15.0)
5.0
0.5
(0.3)
-New fair value adjustments into reserve
10.6
0.2
-Movement in deferred tax
(1.1)
(0.1)
10.0
(0.2)
(Loss)/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 -Net Investment hedge of foreign operations
Effective portion of changes in fair value of cash flow hedges: -Movement out of reserve
Available for sale financial assets: -Gains arising during the period
11.7
-
-Movement in deferred tax
(1.2)
-
10.5
-
-
(13.6)
-
3.9
-
(9.7)
Other Comprehensive Income for the period
5.5
(4.9)
Total Comprehensive Income for the period
(74.8)
14.1
(75.0)
14.0
0.2
0.1
(74.8)
14.1
Items that will not be reclassified to profit or loss Re-measurements of retirement benefit obligations Deferred taxation on re-measurements
13
Attributable to: Owners of the parent Non-controlling interests Total Comprehensive Income for the period
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
17
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013 (Unaudited) Attributable to owners of the parent
Capital contribution
Retained earnings Restated
Available for sale financial assets
Foreign currency translation adjustment
Cash flow hedges
Total Restated
Noncontrolling interests
Total Equity
€m
€m
€m
€m
€m
€m
€m
€m
101.2
(199.2)
-
(30.9)
(4.5)
(133.4)
2.2
(131.2)
-
18.9
-
-
-
18.9
0.1
19.0
Foreign currency translation adjustments
-
-
-
5.0
-
5.0
-
5.0
Re-measurements of employee benefit obligations
-
(13.6)
-
-
-
(13.6)
-
(13.6)
Deferred tax on remeasurements
-
3.9
-
-
-
3.9
-
3.9
Cash flow hedges
-
-
-
-
(0.1)
(0.1)
-
(0.1)
Deferred tax on cash flow hedges
-
-
-
-
(0.1)
(0.1)
-
(0.1)
Total other comprehensive income
-
(9.7)
-
5.0
(0.2)
(4.9)
-
(4.9)
Total comprehensive income
-
9.2
-
5.0
(0.2)
14.0
0.1
14.1
Balance as at 31 March 2012
101.2
(190.0)
-
(25.9)
(4.7)
(119.4)
2.3
(117.1)
Balance as at 1 January 2013
101.2
(488.6)
-
24.4
(5.2)
(368.2)
2.3
(365.9)
Loss for the period
-
(80.4)
-
-
-
(80.4)
0.1
(80.3)
Other comprehensive income:
-
-
-
-
-
-
-
-
Foreign currency translation adjustments
-
-
-
(15.2)
-
(15.2)
0.2
(15.0)
Available for sale financial assets
-
-
11.7
-
-
11.7
-
11.7
Deferred tax on AFS financial assets
-
-
(1.2)
-
-
(1.2)
-
(1.2)
Re-measurements of employee benefit obligations
-
-
-
-
-
-
-
Deferred tax on remeasurements
-
-
-
-
-
-
-
Cash flow hedges
-
-
-
-
11.1
11.1
-
11.1
Deferred tax on cash flow hedges
-
-
-
-
(1.1)
(1.1)
-
(1.1)
Total other comprehensive income
-
-
10.5
(15.2)
10.0
5.3
0.2
5.5
Total comprehensive income
-
(80.4)
10.5
(15.2)
10.0
(75.1)
0.3
(74.8)
101.2
(569.0)
10.5
9.2
4.8
(443.3)
2.6
(440.7)
Balance as at 1 January 2012 Comprehensive income Profit for the period Other comprehensive income:
Comprehensive income
Balance as at 31 March 2013
-
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
18
CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2013 (Unaudited)
Note
Three months ended 31 March 31 March 2013 2012 €m
€m
13.2
10.8
(26.5)
(24.5)
0.3
0.1
(2.3)
(6.4)
(15.3)
(20.0)
Business combinations
-
(218.8)
Cash in acquired subsidiary
-
4.8
Purchase of property, plant and equipment
(49.4)
(35.1)
Purchase of software and other intangibles
(2.7)
(2.1)
3.0
2.0
(49.1)
(249.2)
Proceeds from borrowings
112.4
315.0
Repayment of borrowings
(74.5)
(39.2)
(7.3)
(8.2)
Cash flows from operating activities Cash generated from operations
11
Interest paid Interest received Income tax paid Net cash used in operating activities Cash flows from investing activities
Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities
Deferred debt issue costs paid
1.7
(23.1)
(0.2)
(0.6)
-
(0.2)
32.1
243.7
Net decrease in cash and cash equivalents
(32.3)
(25.5)
Cash and cash equivalents at beginning of the period
231.8
290.7
3.6
(3.1)
203.1
262.1
Other short term debt Other financial expenses paid Capital element of finance lease payments Proceeds from financing activities
Exchange gains on cash and bank overdrafts Cash and cash equivalents at the end of the period
5
The notes to the condensed interim Group Financial Statements on pages 20 to 35 form an integral part of this financial information
Ardagh Packaging Holdings Limited
19
NOTES TO THE UNAUDITEDCONDENSED CONSOLIDATEDINTERIM GROUP FINANCIAL INFORMATION 1. General information Ardagh Packaging Holdings Limited (“APHL”, “the Group”) was incorporated and registered in the Republic of Ireland as a private company on 5 August 2005. Its ultimate parent company is Ardagh Group S.A. The Company is a holding company for the Group’s Glass Packaging and Metal Packaging businesses and is the Parent Guarantor for all the senior secured and secured notes listed in note 6. The Company’s Registered Office is: 4 Richview Office Park Clonskeagh Dublin 14 Republic of Ireland Statement of Directors’ Responsibilities The directors are responsible for preparing the condensed consolidated interim financial information for the bondholders. The directors are required to prepare financial information for each financial period of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing the financial information, the directors are required to: -
Select suitable accounting policies and then apply them consistently; Make judgements and estimates that are reasonable and prudent; and to Prepare the financial information on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors confirm that they have complied with the above requirements in preparing the condensed consolidated interim financial information for the bondholders. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website at: www.ardaghgroup.com. The condensed consolidated interim financial information for the bondholders has been approved for issue by the Board of Directors on 20 May 2013.
Ardagh Packaging Holdings Limited
20
2. Summary of significant accounting policies Basis of preparation This condensed consolidated interim financial information for the quarter ended 31 March 2013, has been prepared in accordance with IAS 34, ‘Interim financial reporting’. The condensed consolidated interim financial information should be read in conjunction with the annual report for the year ended 31 December 2012, which has been prepared in accordance with IFRS's as adopted by the European Union. The condensed consolidated financial information presented in this interim report does not represent statutory accounts within the meaning of Section 19 of the Companies (Amendment Act), 1986. Statutory accounts for Ardagh Packaging Holdings Limited for the year ended 31 December 2011, upon which the auditors have given an unqualified audit report, have been filed with the Registrar of Companies in Ireland. Statutory accounts for Ardagh Packaging Holdings Limited for the year ended 31 December 2012 will be filed in due course with the Registrar of Companies in Ireland. The accounting policies adopted within this condensed consolidated interim financial information are consistent with those set out in the Ardagh Packaging Holdings Limited annual report for the year to 31 December 2012, except as described below; •
Taxes on income in the interim periods are accrued using the effective tax rate that would be applicable to expected annual earnings.
New standards, amendments and interpretations which are effective for the financial year beginning 1 January 2013 The following new standards, amendments and interpretations became effective in 2013: •
The Group has applied the amendments to IAS 19, ‘Employee Benefits’ from 1 January 2013. The revised standard requires that the interest cost be determined by reference to the net pension liability (or asset) and the year-end discount rate and that the costs of administering the pension schemes in the year be charged to the income statement directly rather than as an addition to service cost or a reduction of the expected return on assets. The application of the revised standard has resulted in a restatement of the period ended 31 March 2012 comparative amounts in the consolidated income statement as follows: an increase in cost of sales of €0.4 million; a decrease in finance expense of €2.6 million; a decrease in finance income of €3.7 million; an overall decrease in reported net profit of €1.5 million. In addition, the re-measurement of employee benefit obligations for the period ended 31 March 2012 in the consolidated statement of comprehensive income is €1.5 million lower as a result of the restatement. The net impact on equity is nil.
•
The Group has applied IFRS 13, ‘Fair value measurement’. IFRS 13 does not result in material changes to the group’s results or net assets rather the standard sought to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements of the standard did not extend the use of fair value accounting but provided guidance on how it should be applied where its use is already required or permitted by other standards within IFRS.
•
The Group has applied the amendments to IAS 1, Presentation of Financial Statements. The revised standard which 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 affects presentation only and does not impact the Group’s financial position or performance. The group has adopted the revised standard with effect from 1 January 2013.
There are no other accounting standards or IFRIC's that are not yet effective that would be expected to have a material impact on the Group. IFRS 3R Business Combinations - measurement window fair value adjustments In accordance with IFRS 3R Business Combinations, fair value adjustments in relation to the provisional purchase price allocation have occurred during the measurement window as a result of accounting policy alignments. Consequently, goodwill has increased by approximately €0.5 million since 31 December 2012. The increase in goodwill has arisen due to the following: increases in property, plant and equipment of €3.9 million, deferred tax assets of €0.3 million, and trade and other payables of €0.3 million and a decrease in inventory of €4.4 million. Reclassification of prior year comparative figures The group has performed a reassessment of the income statement classification relating to certain labour costs which has resulted in a change in classification being applied to the previously disclosed income statement. This change in classification has resulted in the reclassification between cost of sales and sales, general and administration expenses of €2.6 million. This reclassification has no impact on the consolidated statement of financial position or profits as previously reported.
Ardagh Packaging Holdings Limited
21
3. Goodwill and Intangible assets
Goodwill €m
Software €m
Technology & Other €m
Customer Related €m
Total €m
729.1
37.1
70.1
350.3
1,186.6
Additions
-
1.1
1.1
-
2.2
Disposals
-
-
-
-
-
0.3
-
-
4.7
5.0
729.4
38.2
71.2
355.0
1,193.8
(19.0)
(12.3)
(52.1)
(83.4)
(0.9)
(1.2)
(8.8)
(10.9)
-
-
-
-
Exchange movement
-
0.1
(0.1)
0.2
0.2
At 31 March 2013
-
(19.8)
(13.6)
(60.7)
(94.1)
729.1
18.1
57.8
298.2
1,103.2
729.4
18.4
57.6
294.3
1,099.7
Cost At 1 January 2013 (Restated)
Exchange movement At 31 March 2013
Amortisation At 1 January 2013 Charge for the period Disposals
Net book value At 1 January 2013 (Restated)
At 31 March 2013
The useful lives of intangible assets other than goodwill are finite and range from three to fifteen years. Amortisation expense of €9.1 million (2012: €4.1 million) has been charged in cost of sales and €1.8 million (2012: €1.5 million) in sales, general and administration expenses.
Ardagh Packaging Holdings Limited
22
4. Property, plant and equipment
Total
€m
Office equipment and vehicles €m
2,364.3
53.1
65.9
3,126.0
0.1
36.6
3.6
0.7
41.0
(2.3)
(7.6)
(4.6)
(2.1)
(16.6)
0.3
(1.9)
0.3
-
(1.3)
(1.7)
0.2
(0.2)
0.4
(1.3)
639.1
2,391.6
52.2
64.9
3,147.8
(119.0)
(731.3)
(24.6)
(36.1)
(911.0)
(4.8)
(48.2)
(6.9)
(1.9)
(61.8)
0.6
6.6
4.6
1.8
13.6
-
-
0.1
-
0.1
0.9
8.2
0.2
(0.2)
9.1
(122.3)
(764.7)
(26.6)
(36.4)
(950.0)
At 1 January 2013 (Restated)
523.7
1,633.0
28.5
29.8
2,215.0
At 31 March 2013
516.8
1,626.9
25.6
28.5
2,197.8
Land and buildings
Plant and machinery
Moulds
€m
€m
642.7
Additions Disposals
€m
Cost At 1 January 2013 (Restated)
Reclassifications/Transfers Exchange movement At 31 March 2013 Depreciation At 1 January 2013 Charge for the period Disposals Reclassifications/Transfers Exchange movement At 31 March 2013 Net book value
Depreciation expense of €60.6 million (2012: €42.9 million) has been charged in cost of sales and €1.2 million (2012: €1.0 million) in sales, general and administration expenses. Reclassifications and transfers relate to the reclassification of moulds between property, plant and equipment and inventories. 5.
Cash, cash equivalents and restricted cash 31 March 2013 €m
31 December 2012 €m
Cash at bank and in hand
190.4
212.6
Short term bank deposits
3.5
9.9
193.9
222.5
In addition to cash and cash equivalents, the Group had €1,133.7 million (2012: €9.3 million) of restricted cash at the periodend, which primarily relates to €1,124.5 million held in escrow, subject to completion of the purchase of VNA with the remainder relating to bank guarantees in the United States and early retirement plans in Germany. 31 March 2013 €m
31 December 2012 €m
9.2
9.3
Restricted cash held in escrow
1,124.5
-
Total restricted cash
1,133.7
9.3
Restricted cash
For the purposes of the cash flow statement, Cash and cash equivalents includes restricted cash of €9.2 million in relation to the bank guarantees in the United States and early retirement plans in Germany. Ardagh Packaging Holdings Limited
23
6. Borrowings At the quarter end, 31 March 2013, the Group’s rolling liquidity reserve (which comprises cash and undrawn committed facilities and which represents the amount of available liquidity in the Group’s funding structure) was as follows:
Facility
Maximum amount Final Currency drawable maturity date Local currency (millions)
Facility type
Amount drawn as at 31 March 2013
Undrawn Amount
Local currency € € (millions) (millions) (millions)
9.25% First Priority Senior Secured Notes due 2016
EUR
300.0
01-Jul-16
Bullet
298.3
298.3
-
7.375% First Priority Senior Secured Notes due 2017
EUR
1,085.0
15-Oct-17
Bullet
1,093.6
1,093.6
-
7.375% First Priority Senior Secured Notes due 2017
USD
860.0
15-Oct-17
Bullet
874.8
683.2
-
7.125% Senior Notes due 2017
EUR
310.0
15-Jun-17
Bullet
310.0
310.0
-
8¾% Senior Notes due 2020
EUR
180.0
01-Feb-20
Bullet
180.0
180.0
-
9.250% Senior Notes due 2020
EUR
475.0
15-Oct-20
Bullet
484.2
484.2
-
9.125% Senior Notes due 2020
USD
920.0
15-Oct-20
Bullet
919.7
718.3
-
5% Senior Secured Notes due 2022
EUR
250.0
15-Oct-22
Bullet
250.0
250.0
-
4.875% Senior Secured Notes due 2022
USD
420.0
15-Oct-22
Bullet
420.0
328.0
-
7% Senior Notes due 2020
USD
850.0
15-Oct-20
Bullet
850.0
663.8
-
GE Commercial Finance Facility
GBP
35.0
30-Sep-13
Revolving
-
-
41.4
HSBC Securitisation Program
EUR
136.9
31-Dec-14
Revolving
-
-
136.9
BAML Facility
USD
82.0
15-Feb-17
Revolving
-
-
63.8
US Equipment Financing Facility
USD
13.0
01-Sep-17
Amortising
12.6
9.8
-
US Real Estate Financing Facility
USD
6.0
01-Sep-21
Amortising
6.4
5.0
-
HVB Working Capital and Performance Guarantee Credit Lines
EUR
1.0
Revolving
-
-
1.0
Amortising
6.6
7.0
-
Amortising
9.1
8.6
0.5
Total borrowings / Undrawn facilities
5,039.8
243.6
Deferred debt issue costs
(116.6)
-
Borrowings less deferred debt issue costs
4,923.2
243.6
Cash, cash equivalents and restricted cash
(203.1)
203.1
Net borrowings / Available liquidity before restricted cash held in escrow
4,720.1
446.7
Finance Lease Obligations Other borrowings
Restricted cash held in escrow Net borrowings
GBP/EUR EUR
9.1
(1,124.5) 3,595.6
As at 31 March 2013, the Group had undrawn credit lines of up to €243.6 million at its disposal together with cash resources, excluding restricted cash held in escrow, of €203.1 million giving rise to available liquidity of €446.7 million.
Ardagh Packaging Holdings Limited
24
The carrying amount of the Group’s borrowings are as follows:
At 31 March 2013 Senior Secured and Senior Notes Bank loans, overdrafts and revolving credit facilities Finance leases
At 31 December 2012 Senior Secured and Senior Notes Bank loans, overdrafts and revolving credit facilities Finance leases
Carrying Value Deferred debt issue Amount drawn costs €m €m
Total €m
Fair Value €m
5,009.4
(116.6)
4,892.8
5,319.5
23.4
-
23.4
23.4
7.0
-
7.0
7.0
5,039.8
(116.6)
4,923.2
5,349.9
Carrying Value Deferred debt issue Amount drawn costs €m €m
Total €m
Fair Value €m
3,728.0
(87.5)
3,640.5
4,006.6
94.9
-
94.9
94.9
7.6
-
7.6
7.6
3,830.5
(87.5)
3,743.0
4,109.1
There have been no changes in the classification of financial instruments as level 1, 2 or 3 or in respect of the valuation techniques used in determining fair value since year end. As indicated in note 2, the condensed consolidated interim financial information should be read in conjunction with the annual report for the year ended 31 December 2012. Issue of $420.0 million 4.875% First Priority Senior Secured Notes due 2022, $850.0 million 7.000% Senior Notes due 2020 and €250.0 million 5.000% First Priority Senior Secured Notes due 2022 On 17 January 2013, Ardagh announced that it has successfully raised a total of US$1,270.0 million, through the issue of US$420.0 million 4.875% First Priority Senior Secured Notes, due 2022, and US$850.0 million 7.000% Senior Notes, due 2020, and €250.0 million, through the issue of Euro denominated 5.000% First Priority Senior Secured Notes, due 2022. The proceeds from the issue and sale of the Notes will be used to pay the cash consideration for the acquisition of the entire issued share capital of VNA, and for general corporate purposes, including repayment of existing debt. The proceeds to be used to purchase the entire issued share capital of VNA will remain in escrow until completion of the acquisition occurs. BOSI Australasian Senior Banking Facility Agreement On 22 February 2013, the Group repaid the senior bank debt and revolving credit facilities with Bank of Scotland International. This facility was originally established to finance the acquisition by Impress of Amcor Limited’s Food and Aerosol business in Australia and New Zealand on 31 October 2007. As of 31 December 2012, there was €72.7 million outstanding on and €11.8 million available under, the Australasian Senior Bank Facility. Bank of America Merrill Lynch Asset Based Facility Upon acquisition, Anchor had in place a revolving credit facility with Bank of America N.A. which was modified and taken over by Ardagh Glass Inc. The facility was primarily designed to secure stand-by letters of credit and other forms of bank guarantees which were outstanding in favour of suppliers and energy hedges. In addition the facility provided for a limited amount of liquidity support. The Amended Revolving Credit Facility contained customary affirmative and negative covenants and restrictions for transactions, including without limitation, restrictions on indebtedness, liens, investments, and asset dispositions outside of the ordinary course of business, restricted payments, and transactions with affiliates, change of control, prepayments and cancellation of indebtedness and fundamental business changes and requires maintenance of a minimum fixed charge coverage ratio. On February 15, 2013, it was replaced by a $100.0 million amended and restated loan and security agreement. The new facility which matures on February 15, 2017 also includes a $40.0 million letter of credit sub limit and is secured by a first priority lien over inventory and accounts receivable for Ardagh Glass Inc. The new facility was put in place to support the working capital needs of the Glass North America business. While the new facility contains affirmative and negative covenants and restrictions on transactions it is much more in tune with the needs of the business, provides a great degree of flexibility and doesn’t contain any maintenance covenants.
Ardagh Packaging Holdings Limited
25
7. Segmental analysis Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision-Maker (CODM) that are used to make strategic decisions. Based on the reports reviewed by the CODM, management has determined that the group has five operating segments. Management reviewed the organisation of its Metal Packaging business at 31 December 2012, and based on changes to how the CODM reviews the Metal Packaging business to assess performance and make strategic decisions, determined that there are three operating segments in Metal Packaging being Metal Packaging Europe, Metal Packaging Asia Pacific and Metal Packaging North America. The latter two operating segments do not meet the thresholds for separate disclosure as reportable segments and therefore, in accordance with IFRS8, are combined and disclosed in an all others segments category labelled as Metal Packaging Other. The three reportable segments are Metal Packaging Europe, Glass Packaging Europe and Glass Packaging North America for the period ending 31 March 2013. Finance income and expense are not allocated to segments as these are reviewed by the CODM on a Group wide basis. The CODM assesses the performance of the operating segments based on EBITDA. EBITDA is defined as operating profit before depreciation, amortisation and exceptional items (“EBITDA”).
Reconciliation of operating profit to EBITDA
Group operating profit Add back depreciation and amortisation Add back exceptional items
(1)
(2)
EBITDA
31 March 2013 Restated €m
31 March 2012 Restated €m
32.2
72.4
72.5
49.3
37.5
8.6
142.2
130.3
(1)
Depreciation and amortisation less capital grant amortisation.
(2)
Exceptional items for the three months ended 31 March 2013 and 31 March 2012 do not include the exceptional finance expense.
Ardagh Packaging Holdings Limited
26
The segment results for the year ended 31 March 2013 are as follows:
Glass Packaging North America €m
Glass Packaging Europe €m
Metal Packaging Europe €m
Metal Packaging Other €m
Total €m
Revenue
158.4
322.2
392.4
88.4
961.4
EBITDA
34.1
59.4
39.0
9.7
142.2
Depreciation (Note 4)
(61.8)
Amortisation – intangible assets (Note 3)
(10.9)
Amortisation – government grants
0.2
Exceptional items – COS (Note 8)
(1.8)
Exceptional items – SG&A (Note 8)
(35.7)
Exceptional items – finance expense (Note 8)
(2.9)
Finance expense (Note 9)
(104.3)
Finance income (Note 9)
0.5
Share of profit of joint venture
0.1
Loss before income tax
(74.4)
Income tax charge (Note 10)
(5.9) (80.3)
Loss after income tax Inter-segment sales are not material. The segment assets at 31 March 2013 and capital expenditure for the period then ended are as follows:
Segment assets Investment in joint venture
Glass Packaging North America €m
Glass Packaging Europe €m
Metal Packaging Europe €m
Metal Packaging Other €m
Total €m
1,057.8
1,759.3
2,087.1
344.5
5,248.7
-
4.5
2.7
-
7.2
1,057.8
1,763.8
2,089.8
344.5
5,255.9
Restricted cash held in escrow
1,124.5
Total assets
6,380.4
Capital expenditure*
9.9
21.4
10.7
1.2
43.2
*Capital expenditure comprises additions to intangible assets (Note 3) and property, plant and equipment (Note 4). There are no differences from the last annual financial statements in the basis of segmentation or in the basis of measurements of segment profit or loss.
Ardagh Packaging Holdings Limited
27
The restated segment results for the three month period ended 31 March 2012 are as follows:
Glass Packaging North America €m
Glass Packaging Europe €m
Metal Packaging Europe €m
Metal Packaging Other €m
Total €m
Revenue
1.8
311.5
384.9
90.3
788.5
EBITDA
0.5
63.8
54.8
11.2
130.3
Depreciation (Note 4)
(43.9)
Amortisation – intangible assets (Note 3)
(5.6)
Amortisation – government grants
0.2
Exceptional items – COS (Note 8)
(6.1)
Exceptional items – SG&A (Note 8)
(2.5)
Exceptional items – finance expense (Note 8)
(3.3)
Finance expense (Note 9)
(45.0)
Finance income (Note 9)
0.3
Share of profit of joint venture
0.1
Profit before income tax
24.5
Income tax charge (Note 10)
(5.5)
Profit after income tax
19.0
Inter-segment sales are not material. The segment assets at 31 December 2012 and capital expenditure for the year then ended are as follows:
Segment assets Investment in joint venture Total assets
Capital expenditure*
Glass Packaging North America €m
Glass Packaging Europe €m
Metal Packaging Europe €m
Metal Packaging Other €m
Total Restated €m
1,101.6
1,506.1
2,198.7
348.3
5,154.7
-
4.5
2.7
-
7.2
1,101.6
1,510.6
2,201.4
348.3
5,161.9
26.1
103.8
66.8
18.7
215.4
*Capital expenditure comprises additions to intangible assets (Note 3) and property, plant and equipment (Note 4).
Ardagh Packaging Holdings Limited
28
8.
Exceptional items
The Group’s income statement and segmental analysis separately identify results before specific items. Specific items are those that in our judgement need to be disclosed by virtue of their size, nature or incidence. The Group believe that this presentation provides additional analysis as it highlights exceptional items. Such items include, where significant, restructuring, redundancy and other costs relating to permanent capacity realignment or footprint reorganisation, directly attributable acquisition costs, profit or loss on disposal or termination of operations, start-up costs incurred in relation to new furnace or plant builds, major litigation costs and settlements, profit or loss on disposal of assets and impairment of assets. In this regard the determination of ‘significant’ as included in our definition uses qualitative and quantitative factors. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, are disclosed in the Group income statement and related notes as exceptional items. We consider columnar presentation to be appropriate in our income statement as it improves the clarity of the presentation and is consistent with the way that financial performance is measured by management and presented to the Board and the CODM. Exceptional restructuring costs are classified as restructuring provisions and all other exceptional costs outstanding at 31 March 2013 are classified as exceptional items payable. Three months ended 31 March 2013 €m
31 March 2012 €m
Exceptional restructuring costs
(1.3)
(6.1)
Plant start-up costs
(0.5)
-
Total exceptional items – cost of sales (Note 7)
(1.8)
(6.1)
(35.7)
(1.9)
-
(0.6)
(35.7)
(2.5)
(0.3)
(3.3)
(2.6)
-
(2.9)
(3.3)
Acquisition related costs Exceptional restructuring costs Total exceptional items - sales, general and administration expenses (Note 7) Unamortised debt issue costs written off (Note 9) Debt Extinguishment Costs for ANZ BOSI facility Exceptional items - finance expense (Note 7)
Total exceptional items
(40.4)
(11.9)
Exceptional items of €1.8 million were included in cost of sales for the three months ended 31 March 2013. These were comprised of: -
€1.3 million of exceptional restructuring costs are the final planned exceptional expense relating to our metal footprint reorganisation programme €0.5 million of exceptional costs associated with new site start-up costs
Exceptional items of €35.7 million related to directly attributable acquisition costs were included in sales, general and administration expenses for the three months ended 31 March 2013. Exceptional items of €2.9 million were included in net finance expense for the three months ended 31 March 2013. These related to costs associated with early settlement of the ANZ BOSI debt facility (Note 6).
Ardagh Packaging Holdings Limited
29
Exceptional items of €6.1 million were included in cost of sales for the three months ended 31 March 2012. These were comprised of: -
€6.1 million of exceptional restructuring costs relating to our metal footprint reorganisation programme.
Exceptional items of €2.5 million were included in sales, general and administration expenses for the three months ended 31 March 2012. These were comprised of:
-
€1.9 million of acquisition related costs €0.6 million exceptional redundancy costs were incurred in the period. These related to synergies arising from the integration of the Metal Packaging and Glass Packaging divisions.
Exceptional items of €3.3 million were included in net finance expense for the three months ended 31 March 2012. These related to debt issues costs and other associated financing costs written off, primarily relating to the cancellation of the revolving credit facility.
Ardagh Packaging Holdings Limited
30
9. Finance income and expense Three months ended (Unaudited) 31 March 31 March 2013 2012 Restated €m €m Finance expense: €300 million 9.25% First Priority Senior Notes due 2016
(7.8)
(7.5)
€1,085million 7.375% EUR First Priority Senior Secured Notes due 2017
(20.8)
(16.3)
$860 million 7.375% First Priority Senior Secured Notes due 2017
(12.1)
(6.9)
€310 million 7.125% EUR Senior Notes due 2017
(6.0)
(5.9)
€180 million 8¾% EUR Senior Notes due 2020
(4.0)
(4.1)
€475 million 9.250% EUR Senior Notes due 2020
(11.1)
(11.2)
$920 million 9.1250% Senior Notes due 2020
(15.6)
(11.3)
€250m 5.000% EUR First Priority Senior Secured Notes due 2022
(2.4)
-
$450m 4.875% EUR First Priority Senior Secured Notes due 2022
(2.9)
-
€850m 7.000% EUR First Priority Senior Notes due 2022
(8.7)
-
Bank loans, overdrafts and revolving credit facilities
(1.2)
(3.4)
Invoice discounting facilities
(0.1)
(0.2)
Finance leases
(0.1)
(0.2)
(92.8)
(67.0)
Net interest cost on net pension plan liabilities
(3.8)
(3.4)
Foreign currency translation (losses)/gains
(7.7)
26.1
-
(0.7)
Interest expense
Other finance expense Other finance expense
(11.5)
22.0
(104.3)
(45.0)
Unamortised debt issue costs written off
(0.3)
(3.3)
Borrowing extinguishment costs
(2.6)
-
Exceptional items- finance expenses (Note 8)
(2.9)
(3.3)
(107.2)
(48.3)
Interest income
0.5
0.3
Total finance income
0.5
0.3
Net finance expense
(106.7)
(48.0)
Finance expense before exceptional items
Total finance expense
Finance income:
Ardagh Packaging Holdings Limited
31
10. Income tax Three months ended (Unaudited) 31 31 March March 2013 2012 €m €m Current taxation Deferred taxation Income tax charge
9.8
7.5
(3.9)
(2.0)
5.9
5.5
The income tax charge for the three month period ended 31 March has been impacted as a result of the following factors: -
Additional bond finance raised during January as indicated in Note 6. In certain instances, the interest expense arising as a result of debt issuances gives rise to the non-recognition of deferred tax assets following an assessment in respect of the future realisation of deferred tax assets.
-
Non-deductible / non-taxable foreign currency translation (losses) / gains which have arisen during the period.
-
Discrete period events such as legislative changes and tax rulings related to jurisdictions in which the group operates.
11. Cash generated from operations Three months ended (Unaudited) 31 March 31 March 2013 2012 Restated €m €m (Loss) / profit before tax
(74.4)
24.5
Depreciation (Note 7)
61.8
43.9
Amortisation (Note 7)
10.9
5.6
Amortisation of capital grants (Note 7)
(0.2)
(0.2)
103.8
44.7
Share of profit of joint venture (Note 7)
(0.1)
(0.1)
Exceptional items cash
40.1
8.6
0.3
3.3
142.2
130.3
Inventories
(62.2)
(54.4)
Trade and other receivables
(59.0)
(43.8)
9.4
(13.2)
Movement on non-working capital payables
(1.1)
4.1
Movement on provisions
(1.5)
(5.2)
(10.0)
(0.7)
Exceptional restructuring paid
(4.6)
(6.3)
Cash generated from operations
13.2
10.8
Adjustments:
Net finance expense pre-exceptional (Note 9)
Exceptional items non-cash EBITDA
Changes in working capital:
Trade and other payables
Movement in investing payables including for acquisition related costs
Ardagh Packaging Holdings Limited
32
12. Business combinations Anchor Acquisition On 20 August 2012, Ardagh Group completed the purchase of 100% of the equity of US-based Anchor Glass Container Corporation (since renamed Ardagh Glass Inc. “AGI”) from private investment funds managed by Wayzata Investment Partners LLC. AGI, which is headquartered in Tampa, Florida, is a technologically advanced manufacturer of glass containers serving the North American food and beverage industries. AGI is the third largest glass container manufacturer in the US. It produces approximately 5.6 billion containers annually from its eight facilities located in the United States and employs approximately 2,700 people. AGI has annual revenues of approximately US$800.0 million (€656.0 million). The acquisition represented a strategic investment and a very significant step in, developing the Group’s operations in the US and increased the size of the Group’s global Glass Packaging division by almost 50%. It resulted in some 21% of group sales revenue being generated from the US, and also places the group in a leading position in the US glass industry with approximately 23% market share. The total disbursement for the Anchor acquisition was as follows: $m
€m
Consideration paid for the purchase of the equity interest
440.0
357.7
Repayment of indebtedness
452.7
368.0
Initial purchase consideration*
892.7
725.7
*initial purchase consideration is subject to completion of closing statement procedures.
The purchase price has been allocated to assets acquired and liabilities assumed based on fair values. The purchase price allocation is still subject to any final fair value adjustments that may occur during the remainder of the measurement window that are necessary to account for the acquisition in accordance with IFRS 3R Business Combinations and, on that basis, is therefore considered provisional at 31 March 2013. €m Consideration paid for the purchase of the equity interest
357.7 357.7
The assets and liabilities recognised as a result of the acquisition have been provisionally determined as at 1 March 2013 as follows: €m Cash and cash equivalents
5.8
Property, plant and equipment
358.5
Intangible assets
138.9
Deferred tax asset
56.8
Inventories
79.1
Trade and other receivables
45.8
Trade and other payables
(66.1)
Borrowings
(359.3)
Deferred tax liability
(170.1)
Other provisions and other charges
(8.9)
Employee benefit obligations
(11.0)
Employee end of service obligations
(0.2)
Total identifiable net assets
69.3
Add Goodwill
288.4
Net assets acquired
357.7
Ardagh Packaging Holdings Limited
33
The allocations set forth above are based on management’s estimate of the fair values. The detailed reviews of the fair values of plant and equipment and intangible assets involving outside specialists are substantially complete. The values in the table above are based on all information available to the Group at the present time and are subject to change due to the finalisation of fair value adjustments and review of trade working capital. Such changes could be material. The goodwill arising on the acquisition is disclosed within the Glass packaging-North America segment (Note 7); however, management expects that the finalisation of the process to determine fair value of the assets and liabilities acquired may have an impact on goodwill. The goodwill arising from the acquisition is attributable to acquired workforce, manufacturing and process know-how and market position. The goodwill recognised is not expected to be deductible for income tax purposes. The fair value of trade and other receivables is €45.8 million and includes trade receivables with a fair value of €43.0 million. Acquisition related costs of €1.0 million were recognised as an expense during the financial period and are classified as exceptional items in the consolidated income statement for the period ended 31 March 2013.
13. Employee benefit obligations Management has assessed, in conjunction with the Group’s external actuarial experts, the effects on the Group's main pension schemes of changes in asset valuations and economic and demographic assumptions in order to assess the Group’s net retirement benefit obligations as at 31 March 2013. This has resulted in the Group not recording a remeasurement during the three month period ended 31 March 2013.
14. Related party transactions (a) Yeoman group of companies As at 31 March 2013, Yeoman Capital S.A. owned 39.31% of the ordinary shares of Ardagh Group S.A. One of APHL’s directors, Mr. Paul Coulson, also serves as a director of companies within the Yeoman Group of companies.
(b) Key management compensation The key management compensation will be disclosed in the annual report for the year ended 31 December 2013.
(c) Joint ventures As at 31 March 2013, the Group owed €0.7 million to EuraGlass Recycling GmbH and owed €1.2 million to Copal.
(d) Ardagh Packaging Holdings Limited and its parent undertakings Ardagh Packaging Group Ltd (“APG Ltd”) At the period-end, APHL owed €1.3 million to its intermediate parent company APG Ltd. Ardagh Group S.A. (“ASA”) At the period-end, APHL was due €1.9 million from its ultimate parent company ASA.
(e) Pension schemes The pension schemes are related parties. Other than as noted above, there were no related party transactions in the three month period or changes to transactions with related parties as disclosed in the 2012 financial statements that had a material effect on the financial position or the performance of the Group.
15. Contingencies and commitments There have been no significant changes in any of the Group’s contingent assets or liabilities and commitments (including purchase commitments) requiring additional separate disclosure as at 31 March 2013.
16. Events after the reporting period There have been no material events subsequent to 31 March 2013 which would require disclosure in this report. Ardagh Packaging Holdings Limited
34
17. Seasonality of operations Both our Glass Packaging and Metal Packaging divisions’ sales and cash flows are subject to seasonal fluctuations. Demand for our glass products is typically strongest during the summer months and in the period prior to December because of the seasonal nature of beverage consumption. Demand for our metal products is largely related to agricultural harvest periods. The investment in working capital for Glass Packaging typically peaks in the first quarter. The investment in working capital for Metal Packaging generally builds over the first three quarters of the year, in line with the seasonal pattern, and then unwinds in the fourth quarter, with the calendar year-end being the low point.
Ardagh Packaging Holdings Limited
35
ARD Finance S.A.
one brandone vision
ARD FINANCE S.A. STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2013
31 March 2013 €m
31 December 2012 €m
Unaudited
Audited
Other financial asset
400.0
400.0
Receivable from subsidiary
287.7
287.7
687.7
687.7
Cash and cash equivalents
1.2
1.2
Receivable from subsidiary
11.1
2.7
12.3
3.9
700.0
691.6
Ordinary shares
0.1
0.1
Share Premium
229.8
229.8
Retained earnings
(78.2)
(61.8)
Total equity
151.7
168.1
528.6
518.8
528.6
518.8
Note
Non-current assets
Current assets
TOTAL ASSETS
Equity attributable to owners of the parent
Non-current liabilities Borrowings
1
Current liabilities Borrowings
1
-
-
Interest payable
19.7
4.7
Other Payables
-
-
19.7
4.7
700.0
691.6
TOTAL EQUITY and LIABILITIES
ARD Finance S.A.
37
ARD FINANCE S.A. SELECTED NOTE 1. Borrowings
At 31 March 2013
Carrying Value Deferred Amount debt issue drawn costs €m €m
Total €m
Fair Value €m
€185.0 million 11.125% Secured PIK Notes due 2018
218.4
(3.2)
215.2
201.7
$345.0 million 11.125% Secured PIK Notes due 2018
318.1
(4.7)
313.4
297.7
536.5
(7.9)
528.6
499.4
Carrying Value Deferred Amount debt issue drawn costs €m €m
Total €m
Fair Value €m
At 31 December 2012 €185.0 million 11.125% Secured PIK Notes due 2018
218.4
(3.5)
214.9
193.8
$345.0 million 11.125% Secured PIK Notes due 2018
308.8
(4.9)
303.9
279.8
527.2
(8.4)
518.8
473.6
ARD Finance S.A.
38
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