Ardagh Packaging Holdings Limited Report to Bondholders for the three month period ended one brandone vision
TABLE OF CONTENTS Selected Financial Information... 2 Operating and Financial Review... 3 Page UNAUDITED CONDENSED CONSOLIDATED INTERIM GROUP FINANCIAL INFORMATION Consolidated interim statement of financial position at... 12 Consolidated interim income statement for the three month period ended... 14 Consolidated interim statement of comprehensive income for the three month period ended... 15 Consolidated interim statement of changes in equity for the three month period ended... 16 Consolidated interim statement of cash flows for the three month period ended... 17 Notes to the unaudited condensed consolidated interim Group financial information... 18 ARD Finance S.A. interim statement of financial position at... 34 ARD Finance S.A. selected note... 35 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 periods ended, and 2011 and as at, and 31 December 2011. All footnotes are on page 11 of this document. Actual Three months ended Group Group 2011 (in millions, except ratios and where indicated) Income Statement Data Revenue 788.5 751.2 EBITDA (1) 130.7 124.0 Depreciation and amortisation (2) (49.3) (47.1) Exceptional items (3) (11.9) (7.5) Net finance expense (43.6) (32.2) Share of profit of joint venture 0.1 0.1 Profit before tax 26.0 37.3 Income tax expense (5.5) (10.0) Profit for the period 20.5 27.3 Other data EBITDA margin (1) 16.6% 16.5% Net interest cost (4) 66.7 57.9 Capital expenditure 35.2 34.6 Ratio of EBITDA to net interest cost (1)(4) 2.0x 2.1x As at As at As at 31 December 2011 2011 (in millions, except ratios and where indicated) Balance sheet data Cash (5) 262.1 290.7 333.7 Total assets 4,375.5 4.024.9 3,918.9 Total borrowings (6) 3,114.8 2,849.5 2,767.9 Total equity (117.0) (131.2) (67.5) Net borrowings (7) 2,771.1 2,484.2 2,349.8 Ardagh Packaging Holdings Limited 2
OPERATING AND FINANCIAL REVIEW Operating Results Three month periods ended and 2011. As both Boxal and Leone were acquired in March, the consolidated results for the quarter ended include only 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 2011. In addition, the results of Fipar (acquired in April 2011) are also included on a pro forma basis as if that acquisition had occurred on 1 January 2011. A reconciliation showing the pro forma impact of Boxal and Fipar within the Metal division and Leone within the Glass division on and 2011 is included on page five. Pro forma Three months Twelve months Group Group Group 2011 (in millions, except ratios and where indicated) Revenue - Metal Packaging 497.1 505.2 2,129.4 - Glass Packaging 335.4 323.6 1,368.5 Total Revenue 832.5 828.8 3,497.9 EBITDA - Metal Packaging 67.4 76.2 298.5 - Glass Packaging 70.5 57.1 288.4 Total EBITDA 137.9 133.3 586.9 Other data EBITDA Margin (1) - Metal Packaging 13.6% 15.1% 14.0% - Glass Packaging 21.0% 17.6% 21.1% - Group 16.6% 16.1% 16.8% Capital Expenditure - Metal Packaging 12.6 16.2 80.1 - Glass Packaging 24.9 24.0 124.5 37.5 40.2 204.6 Ratio of Net Borrowings to EBITDA (1)(7) - - 4.7x All other footnotes are on page 11 of this document. Ardagh Packaging Holdings Limited 3
Financial Review Three month period ended Revenue Reconciliation of pro forma Revenue to 2011 pro forma Revenue Pro forma Three months Metal Glass Group m m m Revenue 2011 450.7 300.5 751.2 Acquisitions 54.5 23.1 77.6 FX Translation effect 7.3 0.1 7.4 Constant Revenue 2011 512.5 323.7 836.2 Selling Price 9.2 9.2 18.4 Volume/Mix changes (24.6) 2.9 (21.7) Engineering Volumes - (0.4) (0.4) Pro Forma Revenue 497.1 335.4 832.5 EBITDA Reconciliation of pro forma EBITDA to 2011 pro forma EBITDA Pro forma Three months Metal Glass Group m m m Actual EBITDA 2011 72.5 51.5 124.0 Acquisitions 3.7 5.6 9.3 FX Translation effect 0.9-0.9 Constant EBITDA 2011 77.1 57.1 134.2 Selling Price 9.2 9.2 18.4 Input costs (25.3) (5.1) (30.4) Inflation Gap (16.1) 4.1 (12.0) Sales Volume / Mix (4.7) (2.5) (7.2) Productivity/Efficiencies/Synergies 10.7 11.5 22.2 Other 0.4 0.3 0.7 Pro forma EBITDA 67.4 70.5 137.9 Ardagh Packaging Holdings Limited 4
Reconciliation of Reported Metal results to pro forma Metal results Pro forma 2011 Revenue Reported Metal 475.2 450.7 Boxal Pre acquisition 21.9 30.9 Fipar - 23.6 Pro Forma Metal 497.1 505.2 EBITDA Reported Metal 66.3 72.5 Boxal Pre acquisition 1.1 1.6 Fipar - 2.1 Pro Forma Metal 67.4 76.2 Capital Expenditure Reported Metal 11.4 15.2 Boxal Pre acquisition 1.2 1.0 Fipar - - Pro Forma Metal 12.6 16.2 Reconciliation of Reported Glass Results to pro forma Glass Results Pro forma 2011 Revenue Reported Glass 313.3 300.5 Leone Pre acquisition 22.1 23.1 Pro Forma Glass 335.4 323.6 EBITDA Reported Glass 64.4 51.5 Leone Pre acquisition 6.1 5.6 Pro Forma Glass 70.5 57.1 Capital Expenditure Reported Glass 23.8 19.4 Leone Pre acquisition 1.1 4.6 Pro Forma Glass 24.9 24.0 Ardagh Packaging Holdings Limited 5
The information below refers to actual results as shown on page 14 for the three months to Exceptional Items Exceptional items of 11.9 million were incurred for the three months ended. They comprised of 6.7 million of exceptional restructuring costs, 1.9 million of exceptional acquisition costs and 3.3 million of exceptional finance costs relating to the replacement of our revolving credit facility with a new securitisation facility. Further details on these costs are included in Note 8 Exceptional Items in the F-pages. Net Finance Expense Net finance expense before exceptional items for the three months ended was 43.6 million compared to 32.2 million in 2011, an increase of 11.4 million. The significant components of this difference were: m Net Finance Expense three months ended 2011 (32.2) Interest on new debt (8.0) Interest on other financing arrangements (0.4) Non-cash foreign exchange translation (4.1) Movement in pension financing costs 1.1 Net Finance Expense three months ended (43.6) Income Tax Expense The charge for Income tax was 5.5 million for the three months ended and 10.0 million for the three months ended 2011. The decrease in the period-on-period tax charge related primarily to a reduction in the overall taxable profits. The period-on-period increase in net finance expense, arising from additional debt issuances, was the most significant driver of the reduction in taxable profits. Ardagh Packaging Holdings Limited 6
Liquidity and Capital Resources The Group s principal sources of cash are cash generated from operations and external financings, including borrowings and revolving credit facilities. The Group s principal funding arrangements include borrowings available under the HSBC Securitisation programme, the GE Commercial Finance Facility, the Australasian Senior Bank Facility and the UniCredit Working Capital and Performance Guarantee Credit Lines. 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 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. Cash Generated from Operations The following table sets out certain information reflecting the Group s ability to make principal and interest payments in respect of its existing debt ( repayment capacity ). Three Months 2011 m m Actual EBITDA 130.7 124.0 (Increase) in working capital (111.4) (105.2) Capital expenditure (35.2) (34.6) Restructuring spend (6.3) (8.5) Operating cash flow (22.2) (24.3) Cash interest paid (24.4) (24.4) Taxation paid (6.4) (6.1) Free Cash Flow (53.0) (54.8) The information above has been derived from the cash flow statement and related notes in the F-pages. Ardagh Packaging Holdings Limited 7
Increase in Working Capital Working capital increased by 111.4 million in the three months ended. Inventory increased by 54.4 million, receivables increased by 43.8 million and payables decreased by 13.2 million, all of which are considered normal in the context of our seasonal working capital build in the first quarter. Taxation Paid During the first quarter of the Group paid 6.4 million (2011: 6.1 million) of corporation tax. Capital Expenditure Capital expenditure in the first quarter of was 35.2 million compared to 34.6 million in 2011. Capital expenditure in Glass Packaging for the three months ended was 23.8 million compared to 19.4 million for the same period in 2011. Capital expenditure in Metal Packaging in the first quarter was 11.4 million in compared with 15.2 million for the same period in 2011. Our previous guidance on capital expenditure for still holds. Review of the Quarter On a pro forma basis, revenues for the first quarter of were flat compared with the prior year. Contract negotiations with Metal customers are progressing well and glass customer contract negotiations are substantially complete and in line with expectations. Group EBITDA and EBITDA margin for the three month period were higher than 2011, driven by a strong first quarter performance in Glass. Operating cash outflow of 22.2 million for the three month period was in line with our seasonal pattern. Working capital management remains a key focus during. Our Metal footprint reorganisation programme is well underway and we recorded a 6.7 million charge in the period. Control over capex remains tight and our previous guidance on restructuring and capex spend remains valid. On 1 March, we completed the purchase of Boxal from Exal Corporation. Boxal is a technically advanced aluminium container manufacturer supplying aerosols and bottles to a wide variety of industries including cosmetics, pharmaceutical, food and beverages. It is a recognised world leader in packaging solutions with manufacturing plants in France, the Netherlands and Hungary with a total annual production capacity of nine hundred million containers. Boxal s state-of-the-art facilities serve a suite of global brands including L'Oreal, Coca-Cola, Heineken, Dove, Pantene and Nivea. This acquisition is strategically important and it enables us to broaden our product offering to customers. On 23 March, we completed the purchase of Leone Industries. The acquisition of Leone has increased the size of Ardagh s glass division by approximately 10%. Leone was founded in 1966 and is a technologically advanced manufacturer of glass containers serving the US food and beverage markets. It produces more than five hundred million containers per annum from its state of the art facility in Bridgeton, New Jersey. This acquisition will assist us in expanding our US activities into the glass container market and is an important step in developing our international glass franchise. Ardagh Packaging Holdings Limited 8
External Financings The following table outlines Ardagh s principal financing arrangements as at : Facility Currency Maximum amount drawable Local currency Final maturity date Facility type Amount drawn as at Undrawn Amount Local currency (millions) (millions) (millions) (million) 9.25% First Priority Senior Secured Notes due 2016 EUR 300.0 01-Jul-16 Bullet 296.6 296.6-7.375% First Priority Senior Secured Notes due 2017 EUR 825.0 15-Oct-17 Bullet 825.0 825.0-7.375% First Priority Senior Secured Notes due 2017 USD 510.0 15-Oct-17 Bullet 510.8 382.3-7.125% 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 485.2 485.2-9.125% Senior Notes due 2020 USD 450.0 15-Oct-20 Bullet 450.0 336.9-9.125% Senior Notes due 2020 USD 260.0 15-Oct-20 Bullet 250.7 187.7 - Ardagh Glass Limited GE Commercial Finance Facility GBP 35.0 30-Sep-12 Revolving - - 42.0 HSBC Securitisation Programme EUR 150.0 01-Jan-14 Revolving - - 38.7 BOSI Australasian Senior Banking Facility Agreement AUD 91.9 21-Dec-13 Bullet 91.9 71.6 - BOSI Australasian Senior Banking Facility Agreement AUD 2.0 21-Dec-13 Amortising 2.0 1.6 - BOSI Australasian Senior Banking Facility Agreement AUD 15.0 21-Dec-13 Revolving - - 11.7 US Equipment Financing Facility USD 15.1 01-Sep-17 Amortising 15.1 11.3 - US Real Estate Financing Facility USD 6.6 01-Sep-21 Amortising 6.6 4.9 - BNL Receivable Discounting Facility EUR 25.0 31-May-12 Revolving 2.3 2.3 - Italian Receivable Discounting Facility EUR 25.5 31-May-12 Revolving 0.1 0.1 - Unicredit Heye International Working Capital and Performance Guarantee Credit Lines EUR 1.0 Rolling Revolving - - 1.0 ING Banking Facility EUR 5.0 Revolving - - - Other Long Term Debt EUR 13.9 Amortising 3.0 3.0 - Finance Lease Obligations GBP/EUR/ PLN Amortising 10.4 10.4 - Other borrowings Various 6.5 Amortising/ Revolving 5.6 5.9 0.5 Total borrowings / Undrawn facilities 3,114.8 93.9 Deferred debt issue costs (81.6) - Borrowings less deferred debt issue costs 3,033.2 93.9 Cash, cash equivalents and restricted cash (262.1) 262.1 Net borrowings / Available liquidity 2,771.1 356.0 As at, the Group had undrawn credit lines of up to 93.9 million at its disposal together with cash resources of 262.1 million giving rise to available liquidity of 356.0 million. Ardagh Packaging Holdings Limited 9
Debt Repayment Schedule The following table outlines the minimum debt repayments Ardagh will be obligated to make for the year ending 31 December and 2013. This table assumes that the minimum net principal repayment will be made as provided for under each credit facility. It further assumes that the revolving credit lines will be renewed or replaced with similar facilities as they mature. Facility Currency Final maturity date Facility type Minimum net repayment Local currency 2013 (millions) (millions) (millions) BOSI Australasian Senior Banking Facility Agreement AUD 1.9 21-Dec-13 Amortising 1.5 70.7 US Equipment Financing Facility USD 2.2 01-Sep-17 Amortising 1.7 1.8 US Real Estate Financing Facility USD 0.2 01-Sep-21 Amortising 0.1 0.1 Finance Lease Obligations GBP/EUR/PLN Amortising 3.0 2.9 Other Term Debt EUR Amortising 3.0 3.2 Minimum net repayment 9.3 78.7 Other Financing Arrangements Limited Recourse Receivables Discounting Arrangement As a result of the Metal Packaging acquisition, the Group has a limited recourse receivables discounting arrangement with GE Factofrance, whereby it may sell in aggregate up to 100.0 million (at any one time) of its receivables at 100 per cent of their face value, less certain reserves and commissions. This arrangement has the effect of reducing the total investment in receivables. As at, there was 46.9 million (31 December 2011: 54.8 million) of funding outstanding on the facility. This facility expires on 15 December. As a result of the Boxal acquisition the Group has a receivables discounting facility with ING which has the effect of reducing the total amount of receivables. As at, the amount of funding outstanding under the facility was 8.4 million. Ardagh Packaging Holdings Limited 10
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 interest cost on 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 and cash equivalents include restricted cash. (6) Total borrowings include all bank borrowings as well as vendor loan notes, subordinated loan notes and deferred consideration 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. Ardagh Packaging Holdings Limited 11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT Non-current assets Note Unaudited 31 December 2011 Audited Goodwill 3 501.1 358.0 Intangible assets 3 229.1 232.3 Property, plant and equipment 4 1,949.5 1,867.7 Other financial assets 11.5 8.6 Other non-current assets 6.0 5.1 Derivative financial instruments - 0.9 Deferred tax assets 129.7 127.0 2,826.9 2,599.6 Current assets Inventories 655.9 570.8 Trade and other receivables 628.5 561.2 Derivative financial instruments 2.1 2.6 Cash and cash equivalents 5 252.4 284.1 Restricted cash 5 9.7 6.6 1,548.6 1,425.3 TOTAL ASSETS 4,375.5 4,024.9 The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 12
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH (CONTINUED) Equity attributable to owners of the parent Note Unaudited 31 December 2011 Audited Ordinary shares - - Capital contribution 101.2 101.2 Other reserves (30.6) (35.4) Retained earnings (189.9) (199.2) (119.3) (133.4) Non-controlling interests 2.3 2.2 Total equity (117.0) (131.2) Non-current liabilities Borrowings 6 3,021.6 2,751.2 Deferred income 6.2 6.4 Employee benefit obligations 305.5 284.9 Deferred tax liability 306.9 301.4 Provisions for other liabilities and charges 25.2 26.4 Derivative financial instruments 4.5 3.9 3,669.9 3,374.2 Current Liabilities Borrowings 6 11.6 23.7 Interest payable 96.0 55.7 Deferred income 2.4 2.8 Trade and other payables 629.2 618.8 Exceptional payables 9.3 13.6 Payables to the parent company 0.9 0.9 Derivative financial instruments 1.5 2.3 Provisions for other liabilities and charges 34.4 29.5 Current income tax payable 37.3 34.6 822.6 781.9 TOTAL EQUITY and LIABILITIES 4,375.5 4,024.9 The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 13
CONSOLIDATED INTERIM INCOME STATEMENTFOR THE THREE MONTH PERIOD ENDED (Unaudited) Note Before exceptional items Exceptional items Total Before exceptional items 2011 Exceptional items 2011 Note 8 Note 8 Total 2011 Revenue 7 788.5-788.5 751.2-751.2 Cost of sales (651.6) (6.1) (657.7) (626.2) - (626.2) Gross profit 136.9 (6.1) 130.8 125.0-125.0 Sales, general and administration expenses (55.5) (2.5) (58.0) (48.1) (7.5) (55.6) Operating profit 81.4 (8.6) 72.8 76.9 (7.5) 69.4 Finance expense 9 (73.7) (3.3) (77.0) (66.4) - (66.4) Finance income 9 30.1-30.1 34.2-34.2 Share of profit of joint venture 7 0.1-0.1 0.1-0.1 Profit before tax 37.9 (11.9) 26.0 44.8 (7.5) 37.3 Income tax charge (5.5) (10.0) Profit for the period 7 20.5 27.3 Profit attributable to: Owners of the parent 20.4 27.2 Non-controlling interests 0.1 0.1 20.5 27.3 The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 14
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTH PERIOD ENDED 31 MARCH (Unaudited) Note Three months ended 2011 Profit for the financial period 20.5 27.3 Other comprehensive income: Foreign currency translation adjustments 5.0 (0.1) Actuarial (loss) / gain on employee benefit obligations 12 (15.0) 0.8 Deferred taxation on actuarial loss 3.9 - Cash flow hedges (0.1) (0.1) Deferred taxation on cash flow hedges (0.1) - Other comprehensive income for the period (6.3) 0.6 Total comprehensive income for the period 14.2 27.9 Attributable to: Owners of the parent 14.1 28.0 Non-controlling interests 0.1 (0.1) Total comprehensive income for the period 14.2 27.9 The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 15
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTH PERIOD ENDED 31 MARCH (Unaudited) Capital contribution Attributable to owners of the parent Retained earnings Foreign currency translation adjustment Cash flow hedges Total Noncontrolling interests Total Equity Balance as at 1 January 2011 101.2 (172.7) (26.4) 0.4 (97.5) 2.1 (95.4) Comprehensive income Profit for the period - 27.2 - - 27.2 0.1 27.3 Other comprehensive income: Foreign currency translation adjustments - - 0.1-0.1 (0.2) (0.1) Actuarial gain on employee benefit obligations - 0.8 - - 0.8-0.8 Deferred tax on actuarial gain - - - - - - - Cash flow hedges - - - (0.1) (0.1) - (0.1) Deferred tax on cash flow hedges - - - - - - - Total other comprehensive income - 0.8 0.1 (0.1) 0.8 (0.2) 0.6 Total comprehensive income - 28.0 0.1 (0.1) 28.0 (0.1) 27.9 Balance as at 31 March 2011 101.2 (144.7) (26.3) 0.3 (69.5) 2.0 (67.5) Balance as at 1 January 101.2 (199.2) (30.9) (4.5) (133.4) 2.2 (131.2) Comprehensive income Profit for the period - 20.4 - - 20.4 0.1 20.5 Other comprehensive income: Foreign currency translation adjustments - - 5.0-5.0-5.0 Actuarial (loss) on employee benefit obligations - (15.0) - - (15.0) - (15.0) Deferred tax on actuarial (loss) - 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 - (11.1) 5.0 (0.2) (6.3) - (6.3) Total comprehensive income - 9.3 5.0 (0.2) 14.1 0.1 14.2 Balance as at 31 March 101.2 (189.9) (25.9) (4.7) (119.3) 2.3 (117.0) The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 16
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE THREE MONTH PERIOD ENDED 31 MARCH (Unaudited) Note Three months ended 2011 Cash flows from operating activities Cash generated from /(used in) from operations 10 10.8 (11.9) Interest paid (24.5) (24.8) Interest received 0.1 0.4 Income tax paid (6.4) (6.1) Net cash used in operating activities (20.0) (42.4) Cash flows from investing activities Business combinations 11 (218.8) (20.8) Cash in acquired subsidiary 4.8 - Proceeds from sale of financial asset - 2.9 Acquisition of non-controlling interest - (2.9) Purchase of property, plant and equipment (35.1) (33.7) Purchase of software and other intangibles 3 (2.1) (1.2) Proceeds from disposal of property, plant and equipment 2.0 0.3 Net cash used in investing activities (249.2) (55.4) Cash flows from financing activities Proceeds from borrowings 315.0 218.3 Repayment of borrowings (39.2) (12.5) Settlement of C participation interests - (86.3) Other short term debt (23.1) - Deferred debt issue costs paid (8.2) (8.0) Other financial expenses paid (0.6) (0.3) Capital element of finance lease payments (0.2) (2.7) Net proceeds from financing activities 243.7 108.5 Net (decrease)/increase in cash and cash equivalents (25.5) 10.7 Cash and cash equivalents at beginning of the period 290.7 324.8 Exchange losses on cash and bank overdrafts (3.1) (1.8) Cash and cash equivalents at the end of the period 5 262.1 333.7 The notes to the condensed interim Group Financial Statements on pages 18 to 32 form an integral part of this financial information Ardagh Packaging Holdings Limited 17
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM GROUP FINANCIAL INFORMATION 1. General information Ardagh Packaging Holdings Limited 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. It is the Parent Guarantor for 300,000,000 9.25% First Priority Senior Secured Notes due 2016, the 310,000,000 7.125% Senior Notes due 2017 and the 180,000,000 8¾% Senior Notes due 2020, all issued by Ardagh Glass Finance plc. It is also the Parent Guarantor for the 475,000,000 9.250% Senior Notes and the $450,000,000 9.125% Senior Notes both due 2020, along with the $350,000,000 and 825,000,000 7.375% First Priority Senior Secured Notes due 2017 all issued by Ardagh Packaging Finance plc in October 2010 and February 2011. Additionally it is also the Parent Guarantor for the $260,000,000 9.125% Senior Notes issued jointly and severally with Ardagh MP Holdings USA Inc due 2020, along with the $160,000,000 7.375% First Priority Senior Secured Notes due 2017 issued by Ardagh Packaging Finance plc in January. Therefore, Ardagh Packaging Holdings Limited is the reporting entity to present the consolidated financial statements to satisfy the reporting requirements of the Indentures. The Company s Registered Office is: 4 Richview Office Park Clonskeagh Dublin 14 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 financial information. 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 directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The unaudited condensed consolidated interim financial information has been approved for issue by the Board of Directors on 30 April. Ardagh Packaging Holdings Limited 18
2. Basis of preparation This condensed consolidated interim financial information for the quarter ended, 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 2011, which have been prepared in accordance with IFRSs as adopted by the European Union. The accounting policies adopted in this report are consistent with those set out in the annual financial statements for the year to 31 December 2011, 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. The following new standards, amendments and interpretations became effective in, however, they either do not have an effect on the Group financial statements or they are not currently relevant for the Group: Amendments to IFRS 7, financial instruments: Disclosures on de-recognition relating to off balance sheet obligations. IAS 28 (revised 2011), Associates and joint ventures. The Group is currently assessing the full impact of the amendments to IAS 19, Employee benefits, which was amended in June 2011, this standard will become effective on 1 January 2013. The amendments to this standard impact entities as follows: elimination of the corridor approach and recognition of all actuarial gains and losses in OCI as they occur; immediate recognition of all past service costs; replacement of the interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability/(asset). There are no other accounting standards or IFRICs that are not yet effective that would be expected to have a material impact on the Group. The 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 2010, upon which the auditors have given an unqualified audit report, have been filed with the Registrar of Companies. Ardagh Packaging Holdings Limited 19
3. Goodwill and Intangible assets Goodwill Software Technology &Other Customer Related Total Cost At 1 January 358.0 23.3 66.2 193.0 640.5 Acquisitions 143.8 - - - 143.8 Additions - 1.0 1.1-2.1 Disposals - - - - - Exchange movement (0.7) 0.2 - - (0.5) At 501.1 24.5 67.3 193.0 785.9 Amortisation At 1 January - (15.6) (7.4) (27.2) (50.2) Charge for the period - (0.8) (1.0) (3.8) (5.6) Disposals - - - - - Exchange movement - 0.1 - - 0.1 At - (16.3) (8.4) (31.0) (55.7) Net book value At 1 January 358.0 7.7 58.8 165.8 590.3 At 501.1 8.2 58.9 162.0 730.2 The useful lives of intangible assets other than goodwill are finite and range from three to fifteen years. Amortisation expense of 4.1million (2011: 1.0 million) has been charged in cost of sales and 1.5 million (2011: 5.4 million) in sales, general and administration expenses. The acquired goodwill set forth above is based on management s initial estimate of the fair values on the Leone and Boxal acquisitions. The values in the table above are based on all information available to the Group at the present time and are subject to change as a result of the finalisation of purchase price allocations. Such changes could be material. Ardagh Packaging Holdings Limited 20
4. Property, plant and equipment Land and buildings Plant and machinery Moulds Office equipment and vehicles Total Cost At 1 January 587.6 1,917.8 35.9 63.2 2,604.5 Acquisitions 15.3 78.6 - - 93.9 Additions 1.2 24.3 3.7 0.4 29.6 Disposals (1.5) (4.3) (2.6) (0.1) (8.5) Transfers 0.2 (1.3) 0.6 0.5 - Exchange movement 2.6 8.9 0.4 0.5 12.4 At 605.4 2,024.0 38.0 64.5 2,731.9 Depreciation At 1 January (98.9) (595.8) (14.9) (27.2) (736.8) Charge for the period (4.0) (33.2) (4.4) (2.3) (43.9) Disposals - 3.8 2.6-6.4 Transfers - - - - - Exchange movement (1.1) (6.4) (0.3) (0.3) (8.1) At (104.0) (631.6) (17.0) (29.8) (782.4) Net book value At 1 January 488.7 1,322.0 21.0 36.0 1,867.7 At 501.4 1,392.4 21.0 34.7 1,949.5 Depreciation expense of 42.9 million (2011: 39.7 million) has been charged in cost of sales and 1.0 million (2011: 1.3 million) in sales, general and administration expenses. Ardagh Packaging Holdings Limited 21
5. Cash and cash equivalents Cash and cash equivalents include the following for the purposes of the cash flow statement: 31 December 2011 Cash at bank and in hand 141.4 206.6 Short term bank deposits 111.0 77.5 252.4 284.1 Restricted cash 9.7 6.6 Total cash and cash equivalents 262.1 290.7 The Group had 9.7 million (2011: 6.6 million) of restricted cash at the period-end, which relates to bank guarantees in the United States and early retirement plans in Germany. 6. Borrowings At Amount drawn Carrying Value Deferred debt issue costs 9.25% First Priority Senior Secured Notes due 2016 296.6 (6.5) 290.1 7.375% First Priority Senior Secured Notes due 2017 825.0 (19.3) 805.7 7.375% First Priority Senior Secured Notes due 2017 382.3 (9.1) 373.2 7.125% Senior Notes due 2017 310.0 (7.5) 302.5 8¾% Senior Notes due 2020 180.0 (3.9) 176.1 9.250% Senior Notes due 2020 485.2 (13.9) 471.3 9.125% Senior Notes due 2020 336.9 (12.5) 324.4 9.125% Senior Notes due 2020 187.7 (4.8) 182.9 Bank loans, overdrafts and revolving credit facilities 98.3 (4.1) 94.2 Invoice discounting facilities 2.4-2.4 Finance leases 10.4-10.4 Total 3,114.8 (81.6) 3,033.2 Issue of $160,000,000 7.375% First Priority Senior Secured Notes due 2017 and $260,000,000 9.125% Senior Notes due 2020 On 26 January, Ardagh Packaging Finance plc, a subsidiary of Ardagh Packaging Holdings Limited, issued $160,000,000 7.375% First Priority Senior Secured Notes due 2017 (the "Senior Secured Notes") and, jointly and severally with Ardagh MP Holdings USA Inc., issued $260,000,000 9.125% Senior Notes due 2020 (the "Senior Notes"). The Senior Secured Notes constitute a single class of notes with the $350,000,000 7.375% senior secured notes issued on 8 October 2010 (the "Existing Senior Secured Notes"). The Senior Secured Notes are guaranteed on a senior basis by Ardagh Packaging Holdings Limited and certain of its wholly owned subsidiaries and benefit from the same security as the Existing Senior Secured Notes. The Senior Notes are guaranteed on a senior basis by Ardagh Packaging Holdings Limited and on a senior subordinated basis by certain of its wholly owned subsidiaries. Ardagh Packaging Holdings Limited 22
Revolving Credit Facility On 7 December 2010, Ardagh Packaging Holdings Limited and other subsidiaries entered into a senior revolving credit facility agreement with Citibank, N.A., London Branch, Credit Suisse AG, London Branch and J.P. Morgan Chase Bank N.A., London Branch as the original lenders, Citigroup Global Markets Limited, Credit Suisse AG, London Branch and J.P. Morgan plc as mandated lead arrangers, Citibank International plc as facility agent and Citibank, N.A., London Branch as security agent, providing for revolving credit loans in an aggregate principal amount of 100.0 million. This facility was replaced by the Securitisation Programme described below and was cancelled with an effective date of 30 March. Securitisation Programme On 1 March, Ardagh Packaging Holdings Ltd (APHL) concluded agreements with Regency Assets Limited, an issuer of asset-backed commercial paper that is sponsored by HSBC Bank plc. for a trade receivables securitisation programme (the Securitisation Programme) of up to 150.0 million pursuant to a Secured Facility Agreement. The maximum advance rate under this facility is adjusted each day to reflect the actual performance of the receivables portfolio according to standard Rating Agency methodology for calculating loss and dilution reserves. Under the programme, all trade receivables originated by certain operating subsidiaries of Ardagh Packaging Holdings Ltd (the Sellers) who have acceded to the Securitisation Programme, are sold by the sellers to a special purpose vehicle, Ardagh Receivables Finance Ltd (ARFL). ARFL is a wholly owned subsidiary of APHL. ARFL finances these purchases from borrowings, funded through any drawings that ARFL chooses to make under the Securitisation Programme and with the balance of ARFL s funding requirements being provided by Ardagh Treasury Ltd (ATL) through a subordinated loan facility. ARFL is not required to maintain any minimum amount of funding under the Securitisation Programme and may repay and borrow under the Securitisation Programme from time to time in accordance with its terms. ARFL acquires title, on a non-recourse basis, to new receivables as they arise and settles its purchases with the Sellers on a daily basis. Cash received from customers is paid into segregated bank accounts in the name of ARFL. Responsibility for the administration of the receivables, including adherence to established credit and collection policies, lies with APHL as Master Servicer acting on behalf of ARFL which delegates the day to day servicing functions to the Sellers. ARFL has granted security under the Securitisation Programme over all of its receivables and collection accounts. The Securitisation Programme contains customary terms and conditions applicable to trade receivables securitisation facilities of this nature. The Securitisation Programme is intended to be used as the primary committed revolving credit facility for the Group and over time the intention is to increase the size of the facility as additional sellers are added. As noted above it replaced the existing Revolving Credit Facility which was cancelled. At 31 December 2011 Amount drawn Carrying Value Deferred debt issue costs 9.25% First Priority Senior Secured Notes due 2016 296.4 (6.9) 289.5 7.375% First Priority Senior Secured Notes due 2017 825.0 (20.8) 804.2 7.375% First Priority Senior Secured Notes due 2017 270.5 (6.7) 263.8 7.125% Senior Notes due 2017 310.0 (7.9) 302.1 8¾% Senior Notes due 2020 180.0 (4.0) 176.0 9.250% Senior Notes due 2020 485.3 (14.4) 470.9 9.125% Senior Notes due 2020 347.8 (13.2) 334.6 Bank loans, overdrafts and revolving credit facilities 100.5 (0.7) 99.8 Invoice discounting facilities 25.3-25.3 Finance leases 8.7-8.7 Total 2,849.5 (74.6) 2,774.9 The Group s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The unaudited condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group s annual financial statements as at 31 December 2011. There have been no changes in the Group s financial risks or financial risk management policies since year-end. Ardagh Packaging Holdings Limited 23
7. Segmental analysis Management has determined the operating segments based on the reports reviewed by the CODM ( Chief Operating Decision Maker ) that are used to make strategic decisions. The CODM considers the business from a product perspective; Glass Packaging and Metal Packaging. 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 a defined measure of adjusted earnings before interest, taxation, depreciation, amortisation and exceptional items ( EBITDA ). EBITDA is defined as operating profit before depreciation, amortisation and exceptional items. The segment results for the three month period ended are as follows: Metal Packaging Glass Packaging Total Revenue 475.2 313.3 788.5 EBITDA 66.3 64.4 130.7 Depreciation (Note 4) (43.9) Amortisation intangible assets (Note 3) (5.6) Amortisation capital 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) (73.7) Finance income (Note 9) 30.1 Share of profit of joint venture 0.1 Profit before income tax (Note 10) 26.0 Income tax charge (5.5) Profit after income tax 20.5 The segment results for the three month period ended 2011 are as follows: Metal Packaging Glass Packaging Total Revenue 450.7 300.5 751.2 EBITDA 72.5 51.5 124.0 Depreciation (Note 4) (41.0) Amortisation intangible assets (Note 3) (6.4) Amortisation capital grants 0.3 Exceptional items SG&A (Note 8) (7.5) Finance expense (Note 9) (66.4) Finance income (Note 9) 34.2 Share of profit of joint venture 0.1 Profit before income tax (Note 10) 37.3 Income tax charge (10.0) Profit after income tax 27.3 Ardagh Packaging Holdings Limited 24
Inter-segment sales are not material. The segment assets at and capital expenditure for the three months ended are as follows: Metal Packaging Glass Packaging Total Segment assets 2,625.1 1,743.6 4,368.7 Investment in Joint Venture 2.8 4.0 6.8 Total assets 2,627.9 1,747.6 4,375.5 Capital expenditure 14.9 16.8 31.7 The segment assets at 31 December 2011 are as follows: Metal Packaging Glass Packaging Total Segment assets 2,637.7 1,383.4 4,021.1 Investment in Joint Venture - 3.8 3.8 Total assets 2,637.7 1,387.2 4,024.9 Capital expenditure for the three months ended 2011 is as follows: Metal Packaging Glass Packaging Capital expenditure 15.2 19.4 34.6 Total Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, trade and other receivables, operating cash and deferred tax. Capital expenditure comprises additions to intangible assets (Note 3) and property, plant and equipment (Note 4). Ardagh Packaging Holdings Limited 25
8. Exceptional items Three months ended 2011 Exceptional restructuring costs (6.1) - Total exceptional items cost of sales (Note 7) (6.1) - Profit on sale of financial asset - 0.3 Acquisition related costs (1.9) (3.6) Exceptional restructuring costs (0.6) (3.4) Exceptional insurance costs - (0.8) Total exceptional items - sales, general and administration expenses (Note 7) (2.5) (7.5) Unamortised debt issue costs written off (Note 9) Exceptional items - finance expense (Note 7) (3.3) - (3.3) - Total exceptional items (11.9) (7.5) Exceptional items of 6.1 million were included in cost of sales expenses for the three months ended. These were comprised of: - 6.1 million of exceptional plant restructuring costs relating to the Metal division. Exceptional items of 2.5 million were included in sales, general and administration expenses for the three months ended 31 March. These were comprised of: - 0.4 million relating to acquisitions that did not proceed. - 1.5 million relating to successful acquisitions. - 0.6 million of exceptional restructuring costs primarily within the Metal division. Exceptional items of 3.3 million were included in finance expenses for the three months ended. These were comprised of: - 3.3 million relating to debt issue costs and other associated financing costs written off, primarily relating to the cancellation of the revolving credit facility. Exceptional items of 7.5 million were included in sales, general and administration expenses for the three months ended 31 March 2011. These were comprised of: - 3.6 million incurred in relation to the acquisition costs accrued to the end of March 2011, associated with the Fipar acquisition. - 3.4 million of costs incurred in relation to restructuring costs arising from the integration programme for the Metal Packaging division. - 0.8 million of costs incurred as a result of the natural disasters in Australia and Japan, these were limited to the amount of excess on the respective insurance policies. - An exceptional gain of 0.3 million was realised on the sale of a financial asset. Ardagh Packaging Holdings Limited 26
9. Finance income and expense Three months ended 2011 Finance expense: 300 million 9.25% First Priority Senior Notes due 2016 (7.5) (7.5) 825 million 7.375% First Priority Senior Secured Notes due 2017 (16.3) (15.8) $510 million 7.375% First Priority Senior Secured Notes due 2017 (6.9) (4.9) 475 million 9.250% Senior Notes due 2020 (11.2) (9.1) $450 million 9.1250% Senior Notes due 2020 (8.1) (7.9) 310 million 7.125% Senior Notes due 2017 (5.9) (5.9) 180 million 8¾% Senior Notes due 2020 (4.1) (4.1) $260 million 9.125% Senior Notes due 2020 (3.2) - Bank loans, overdrafts and revolving credit facilities (3.4) (2.6) Invoice discounting facilities (0.2) (0.3) Finance leases (0.2) (0.2) Interest expense (67.0) (58.3) Finance expense on pension plan liabilities (6.0) (7.0) Other finance expense (0.7) (1.1) Other finance expense (6.7) (8.1) Finance expense before exceptional items (73.7) (66.4) Unamortised debt issue costs written off (3.3) - Exceptional items - finance expense (Note 8) (3.3) - Total finance expense (77.0) (66.4) Finance income: Interest Income 0.3 0.4 Foreign currency translation gains 26.1 30.2 Expected return on pension plan assets 3.7 3.6 Total finance income 30.1 34.2 Net finance expense (46.9) (32.2) Ardagh Packaging Holdings Limited 27
10. Cash generated from operations Three months ended 2011 Profit before tax 26.0 37.3 Adjustments: Depreciation (Note 7) 43.9 41.0 Amortisation (Note 7) 5.6 6.4 Amortisation of capital grants (Note 7) (0.2) (0.3) Net finance expenses (Note 9) pre exceptional 43.6 32.2 Share of profit of joint venture (Note 7) (0.1) (0.1) Exceptional items cash (Note 8) 8.6 7.5 Exceptional items non cash (Note 8) 3.3 - EBITDA 130.7 124.0 Changes in working capital: Inventories (54.4) (38.1) Trade and other receivables (43.8) (70.8) Trade and other payables (13.2) 3.7 Movement on non-working capital payables 4.1 0.4 Movement on provisions (5.6) (2.0) Movement in investing payables including for acquisition related costs (0.7) (20.6) Exceptional restructuring paid (6.3) (8.5) Cash generated from / (used in) operations 10.8 (11.9) Ardagh Packaging Holdings Limited 28
11. Business combinations Leone Acquisition On 23 March, Ardagh Group completed the purchase of 100% of the equity of US based Leone Industries from the Leone family. The acquisition of Leone Industries has increased the size of Ardagh s glass division by approximately 10%. Leone Industries was founded in 1966 and is a technologically advanced manufacturer of glass containers serving the US food and beverage markets. It produces more than five hundred million containers per annum from its state of the art facility in Bridgeton, New Jersey. This acquisition will assist us in expanding our US activities into the glass container market and is an important step in developing our international glass franchise. The total disbursement for the Leone acquisition was 166.2 million (including settlement on closing of net debt of 37.8 million). The initial purchase price has been allocated to assets acquired and liabilities assumed based on initial estimated fair values. The purchase price allocation is preliminary pending a valuation of the assets and liabilities, including a valuation of property, plant and equipment, intangible assets and the impact on taxes of any adjustment to such valuations, all necessary to account for the acquisition in accordance with IFRS 3R Business Combinations. Consideration paid 128.4 128.4 The assets and liabilities recognised as a result of the acquisition have been provisionally determined as at as follows: Cash and cash equivalents - Property, plant and equipment 42.7 Inventories 15.0 Trade and other receivables 8.3 Trade and other payables (9.6) Borrowings (37.8) Employee benefit obligations (4.4) Total identifiable net assets 14.2 Add Goodwill 114.2 Net assets acquired 128.4 The allocations set forth above are based on management s initial estimate of the fair values. In particular, the detailed reviews of the fair values of land and buildings, plant and equipment and intangible assets involving outside specialists are not yet 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 finalisation of fair value calculations. Such changes could be material. The goodwill arising on the acquisition is disclosed within the Glass Packaging 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 recognised is expected to be deductible for income tax purpose. The fair value of trade and other receivables is 8.3 million and includes trade receivables with a fair value of 7.7 million. Acquisition-related costs of 0.8 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. The revenue included in the consolidated statement of comprehensive income for the quarter ended contributed by the Acquired Business, was 1.8 million. Leone also contributed EBITDA of 0.5 million for the same period. Had Leone been consolidated using consistent accounting policies, from 1 January, the consolidated statement of comprehensive income would include revenue of 23.9 million and EBITDA of 6.6 million. Ardagh Packaging Holdings Limited 29
Boxal Acquisition On 1 March, Ardagh Group completed the purchase of 100% of the equity of Boxal France SAS, Boxal Netherlands BV and the assets of Szenna Pack Kft. from Exal Corporation. Boxal is a technically advanced aluminium container manufacturer supplying aerosols and bottles to a wide variety of industries including cosmetics, pharmaceutical, food and beverages. It is a recognised world leader in packaging solutions with manufacturing plants principally in France and the Netherlands and a total annual capacity of nine hundred million containers. Boxal s state-of-the-art facilities serve a suite of global brands including L'Oreal, Coca-Cola, Heineken, Dove, Pantene and Nivea. Szenna Pack has a single facility also making aluminium containers and is located in Hungary. This acquisition will assist us in further diversifying into the aluminium can market, enhance our product offering and add value to our current activities. Since closing of the acquisition on 1 March, we have commenced the integration of Boxal with our existing metal operations in France, the Netherlands and Hungary. These integration initiatives relate to, among other things, the manufacturing, sales and marketing, distribution, finance, information technology systems, and administration operations of Boxal. The initial purchase price has been allocated to assets acquired and liabilities assumed based on initial estimated fair values. The purchase price allocation is preliminary pending a valuation of the assets and liabilities, including a valuation of property, plant and equipment, intangible assets and the impact on taxes of any adjustment to such valuations, all necessary to account for the acquisition in accordance with IFRS 3R Business Combinations. Consideration paid 85.4 85.4 The assets and liabilities recognised as a result of the acquisition have been provisionally determined as at as follows: Cash and cash equivalents 4.8 Property, plant and equipment 51.2 Deferred tax assets 0.8 Other non-current assets 0.5 Investment in joint ventures 2.7 Inventories 18.6 Trade and other receivables 23.2 Trade and other payables (32.1) Employee benefit obligations (2.9) Employee end of service obligations (0.6) Borrowings (1.2) Deferred tax liabilities (9.2) Total identifiable net assets 55.8 Add Goodwill 29.6 Net assets acquired 85.4 The allocations set forth above are based on management s initial estimate of the fair values. In particular, the detailed reviews of the fair values of land and buildings, plant and equipment and intangible assets involving outside specialists are not yet 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 finalisation of fair value calculations. Such changes could be material. The goodwill arising on the acquisition is disclosed within the Metal Packaging 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 recognised is not expected to be deductible for income tax purpose. The fair value of trade and other receivables is 23.2 million and includes trade receivables with a fair value of 16.3 million. Acquisition-related costs of 0.7 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. Ardagh Packaging Holdings Limited 30
The revenue included in the consolidated statement of comprehensive income for the quarter ended contributed by the Acquired Business, was 10.5 million. Boxal also contributed EBITDA of 0.9 million for the same period. Had the Acquired Business been consolidated using consistent accounting policies, from 1 January, the consolidated statement of comprehensive income would include revenue of 32.4 million and EBITDA of 2.0 million. Had Leone and Boxal been consolidated using consistent accounting policies on a pro forma basis, from 1 January, the Consolidated Statement of Comprehensive Income would include pro forma revenue of 832.5 million and pro forma EBITDA of 137.9 million. 12. 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 liability economic and demographic assumptions in order to assess the scheme liability as at. This has resulted in the Group recording an actuarial loss of 15.0 million during the three month period ended. 13. Related party transactions (a) Yeoman group of companies As at Yeoman Capital S.A. owned 39.31% of the ordinary shares of Ardagh Group S.A. Two of APHL s directors, Messrs. Coulson and Dowling also serve as directors 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. (c) Joint ventures As at, the Group owed 0.3 million to EuraGlasrecycling GmbH. (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 0.4million from its ultimate parent company ASA. 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 2011 financial statements that had a material effect on the financial position or the performance of the Group. (e) Pension scheme The pension schemes are related parties. (f) Contingent bonus scheme As part of the Metal Packaging acquisition, Ardagh assumed a liability of 78.3 million relating to the contingent bonus scheme. As at 31 December 2011, 71.0 million had been paid, with a further 2.0 million paid in the three month period ended. Ardagh Packaging Holdings Limited 31
14. 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. 15. Events after the reporting period There have been no material events subsequent to which would require disclosure in this report. 16. 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 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. Ardagh Packaging Holdings Limited 32
Q1 - Bond Covers _Q3 2011 27/04/ 15:36 Page 2 ARD Finance S.A. one brandone vision
ARD FINANCE S.A. STATEMENT OF FINANCIAL POSITION AT 31 MARCH Non-current assets Unaudited 31 December 2011 Audited Other financial asset 400.0 400.0 Receivable from subsidiary 266.8 259.3 666.8 659.3 Current assets Cash and cash equivalents 1.3 1.3 1.3 1.3 TOTAL ASSETS 668.1 660.6 Equity attributable to owners of the parent Ordinary shares 0.1 0.1 Share Premium 229.8 229.8 Retained earnings (39.0) (42.0) Total equity 190.9 187.9 Non-current liabilities Borrowings 459.8 468.3 459.8 468.3 Current liabilities Borrowings - - Interest payable 17.3 4.3 Other Payables 0.1 0.1 17.4 4.4 TOTAL EQUITY and LIABILITIES 668.1 660.6 ARD Finance S.A. 34
ARD FINANCE S.A. SELECTED NOTE 1. Borrowings At Amount drawn Carrying Value Deferred debt issue costs 185.0 million 11.125% Secured PIK Notes due 2018 196.1 (4.3) 191.8 $345.0 million 11.125% Secured PIK Notes due 2018 273.7 (5.7) 268.0 Total 469.8 (10.0) 459.8 At 31 December 2011 Amount drawn Carrying Value Deferred debt issue costs 185.0 million 11.125% Secured PIK Notes due 2018 196.0 (4.5) 191.5 $345.0 million 11.125% Secured PIK Notes due 2018 282.6 (5.8) 276.8 Total 478.6 (10.3) 468.3 ARD Finance S.A. 35
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