PR Newswire | Jul 23, 2020 07:01AM EDT

07/23 06:00 CDT

Ardagh Group S.A. - Second Quarter 2020 Results LUXEMBOURG, July 23, 2020

LUXEMBOURG, July 23, 2020 /PRNewswire/ -- Ardagh Group S.A. (NYSE: ARD) today announced its results for the second quarter ended June 30, 2020.

June 30, 2020June 30, 2019ChangeConstant Currency

($'m except per share data)

Revenue ^(1) 1,606 1,712 (6%) (5%)

Adjusted EBITDA^ (1) 271 310 (13%) (11%)

Adjusted EBITDA margin ^(1) 16.9% 18.1%

(Loss)/earnings per share - Group (0.27) 0.29

Adjusted earnings per share - Group ^(2)0.37 0.48

(Loss)/profit for the period - Group (64) 69



Dividend per share declared ^(3) 0.15 0.14

Paul Coulson, Chairman and Chief Executive, said, "The Group performed well in the quarter, reflecting strong execution and the defensive end markets we serve. Earnings grew in Metal Beverage Packaging, while Glass Packaging's performance was very resilient. Demand for sustainable packaging remains strong and we continue to progress our growth investment projects. We also availed of favourable markets to improve our capital structure and ended the quarter with total liquidity of $1.6 billion. Overall trading trends in June were positive and we are well-positioned to benefit from further improvements in market demand."

* Revenue for the quarter of $1,606 million was 5% lower than the prior year at constant currency, with growth of 3% in Metal Beverage Packaging offset by a 7% reduction in Glass Packaging. * Volume/mix for the Group declined by 3%, as growth of 1% in Metal Beverage Packaging was offset by an 8% reduction in Glass Packaging. * Adjusted EBITDA of $271 million for the quarter, a reduction of 11% at constant currency on the prior year. * Global beverage can shipments increased by 3% in the quarter, led by strength in Europe. Total beverage can shipments increased by 2% in the year to date, with specialty can shipment growth of 7%. * Metal Beverage Packaging performed strongly, reflecting continued strong demand and good operational execution. Adjusted EBITDA of $139 million, representing 51% of Group Adjusted EBITDA, increased by 2% at constant currency, with growth of 5% in the Americas and a stable outturn in Europe. * Resilient performance in Glass Packaging, with strength in food end markets mitigating the impact of on-premise closures. Adjusted EBITDA of $132 million, a margin of 17.0%, reflected lower volume/mix and under absorption of fixed overheads. * Business Growth Investment projects continued to progress during the period, to support growth in demand for sustainable packaging. * Total liquidity of $1.6 billion at June 30, 2020, including $1.45 billion in cash. * Capital structure further improved during the quarter, with an average debt maturity of six years and no bond maturities before 2025.

Summary Financial Information



Three months ended Six months ended June 30, June 30,

2020 2019 2020 2019

(in $ millions, except EPS, ratios and percentages)

Revenue ^(4) 1,606 1,712 3,228 3,351

Adjusted EBITDA ^(4) 271 310 544 586

Adjusted EBITDA margin ^(4) 16.9% 18.1% 16.9% 17.5%

Operating cash flow ^(4) 183 107 (102) 34



(Loss)/profit for the period - Group (64) 69 19 82

Adjusted profit for the period - Group ^(5) 87 114 160 197

(Loss)/earnings per share - Group (0.27) 0.29 0.08 0.35

Adjusted earnings per share - Group ^(5) 0.37 0.48 0.68 0.83





At June 30,At December 31,

2020 2019

$'m $'m

Net debt ^(6) 5,690 5,328

Cash and available liquidity 1,590 1,278

Net debt to LTM Adjusted EBITDA ^(7) 5.0x 4.5x

Financial Performance Review Bridge of 2019 to 2020 Revenue and Adjusted EBITDA Three months ended June 30, 2020



Metal Metal Glass Glass Revenue Beverage Beverage PackagingPackagingGroup PackagingPackagingEurope North Europe Americas America

$'m $'m $'m $'m $'m

Revenue 2019 411 456 412 433 1,712

Organic (3) (21) (32) (25) (81)

FX translation (13) - (12) - (25)

Revenue 2020 395 435 368 408 1,606



Metal Metal Glass Glass Adjusted EBITDA Beverage Beverage PackagingPackagingGroup PackagingPackagingEurope North Europe Americas America

$'m $'m $'m $'m $'m

Adjusted EBITDA 201972 66 99 73 310

Organic - 3 (20) (17) (34)

FX translation (2) - (3) - (5)

Adjusted EBITDA 202070 69 76 56 271



2020 margin 17.7% 15.9% 20.7% 13.7% 16.9%

2019 margin 17.5% 14.5% 24.0% 16.9% 18.1%

Six months ended June 30, 2020



Metal Metal Glass Glass Revenue Beverage Beverage PackagingPackagingGroup PackagingPackagingEurope North Europe Americas America

$'m $'m $'m $'m $'m

Revenue 2019 803 895 804 849 3,351

Organic - (16) (30) (32) (78)

FX translation (23) - (22) - (45)

Revenue 2020 780 879 752 817 3,228



Metal Metal Glass Glass Adjusted EBITDA Beverage Beverage PackagingPackagingGroup PackagingPackagingEurope North Europe Americas America

$'m $'m $'m $'m $'m

Adjusted EBITDA 2019141 117 184 144 586

Organic (13) 13 (14) (19) (33)

FX translation (4) - (5) - (9)

Adjusted EBITDA 2020124 130 165 125 544



2020 margin 15.9% 14.8% 21.9% 15.3% 16.9%

2019 margin 17.6% 13.1% 22.9% 17.0% 17.5%

Group Performance

Revenue of $1,606 million decreased by 6% in the three-months ended June 30, 2020, compared with the same period last year. On a constant currency basis, revenue decreased by 5%, due to lower COVID-19 impacted demand, primarily in Glass Packaging, as well as the pass through of lower input costs in Metal Beverage Packaging, partly offset by favourable volume/mix effects in Metal Beverage Packaging.

Second quarter Adjusted EBITDA of $271 million decreased by 13% at actual exchange rates, compared with the same period last year. On a constant currency basis, Adjusted EBITDA decreased by 11%, as unfavourable volume/mix effects and lower production resulting in unfavourable fixed cost absorption, primarily in Glass Packaging, was partly offset by favourable volume/mix effects in Metal Beverage Packaging and other operating cost savings.

Metal Beverage Packaging Europe

Revenue decreased by $16 million, or 4%, to $395 million in the three months ended June 30, 2020, compared with $411 million in the three months ended June 30, 2019. Excluding unfavourable foreign currency translation effects of $13 million, revenue decreased by $3 million principally reflecting the pass through of lower input costs, partly offset by volume/mix growth of 2%.

Adjusted EBITDA decreased by $2 million, or 3%, to $70 million in the three months ended June 30, 2020, compared with $72 million in the three months ended June 30, 2019. Excluding unfavourable foreign currency translation effects of $2 million, Adjusted EBITDA was in line with the prior year, as favourable volume/mix effects were offset by lower selling prices.

Metal Beverage Packaging Americas

Revenue decreased by $21 million, or 5%, to $435 million in the three months ended June 30, 2020, compared with $456 million in the three months ended June 30, 2019. The decrease in revenue principally reflected the pass through of lower input costs, partly offset by favorable volume/mix effects of 1%.

Adjusted EBITDA increased by $3 million, or 5%, to $69 million in the three months ended June 30, 2020, compared with $66 million in the three-month period ended June 30, 2019. The increase was mainly driven by favourable volume/mix effects and operating cost savings.

Glass Packaging Europe

Revenue decreased by $44 million, or 11%, to $368 million in the three months ended June 30, 2020, compared with $412 million in the three months ended June 30, 2019. Excluding unfavourable foreign currency translation effects of $12 million, revenue decreased by $32 million, or 8%, mainly due to unfavourable volume/mix effects of 10%, primarily as a result of COVID-19 impacted demand, partly offset by contracted price increases.

Adjusted EBITDA decreased by $23 million, or 23%, to $76 million in the three months ended June 30, 2020, compared with $99 million in the three months ended June 30, 2019. The decrease primarily reflected unfavourable volume/mix effects and lower production resulting in unfavourable fixed cost absorption, partly offset by contracted price increases and other operating cost savings.

Glass Packaging North America

Revenue decreased by $25 million, or 6%, to $408 million in the three months ended June 30, 2020, compared with $433 million in the three months ended June 30, 2019. The decrease in revenue reflected unfavourable volume/mix effects of 6%, principally due to the impact of COVID-19 on demand.

Adjusted EBITDA decreased by $17 million, or 23%, to $56 million in the three months ended June 30, 2020, compared with $73 million in the three months ended June 30, 2019. The decrease was mainly as a result of unfavourable volume/mix effects and lower production resulting in unfavourable fixed cost absorption and increased costs.

Financing Activity

On April 7, 2020, the Group issued $500 million 5.250% Senior Secured Notes due 2025 and on April 8, 2020, the Group issued $200 million add-on 5.250% Senior Secured Notes due 2025. Net proceeds from the issuance of the notes were used to redeem in full a $300 million term loan credit facility on April 8, 2020 and for general corporate purposes.

On June 2, 2020, the Group issued $1,000 million 5.250% Senior Notes due 2027. The net proceeds from the issuance of the notes were used to repurchase, by means of a tender and consent offer, approximately $900 million of the $1,700 million 6.000% Senior Notes due 2025, together with applicable redemption premium and accrued interest.

On June 4, 2020, the Group issued $715 million add-on 4.125% Senior Secured Notes due 2026. Proceeds from the issuance of the notes, net of expenses, were used to redeem in full the $695 million 4.250% Senior Secured Notes due 2022, together with applicable redemption premium and accrued interest.

On June 10, 2020, the Group issued (euro)790 million 2.125% Senior Secured Notes due 2026. Proceeds from the issuance of the notes, net of expenses, were used to redeem in full the (euro)741 million 2.750% Senior Secured Notes due 2024, together with applicable redemption premium and accrued interest.

COVID-19

The outbreak of the COVID-19 pandemic and measures to prevent its spread, including restrictions on travel, imposition of quarantines and prolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation of events, has impacted our business in a number of ways. This has included an adverse effect from reduced global economic activity and resulting demand for our customers' products and, therefore, the products we manufacture. It may also adversely affect our ability to operate our business, including potential disruptions to our supply chain and workforce. The COVID-19 impact on capital markets could also impact our cost of borrowing.

The ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be determined by the length of time that such disruptions continue which will, in turn, depend on the duration of the COVID-19 pandemic, the impact of governmental and other regulations in response to the pandemic and the resulting effect on macroeconomic activity and consumer behavior.

During the three months ended June 30, 2020, our Glass business, in particular, was affected, and experienced reductions in customer demand and therefore revenue as a direct consequence of the various global lockdowns and the related impact to "on-premise" sales. The aforementioned reduction in customer demand caused loss of margin in addition to excess capacity costs as a result of lower production volumes. In addition, throughout the Group, incremental COVID-19 related costs, including increased safety and cleaning costs were incurred.

Our response to the COVID-19 across our business operations can be summarized as follows:

Business Continuity:We are a leading supplier of consumer packaging solutions, comprising metal beverage cans and glass containers, primarily for the beverage and food end markets in Europe, North America and Brazil. In the markets we operate in, Ardagh is an essential provider of packaging to the beverage and food supply chain. Our people are deemed "Essential Critical Infrastructure Workers" under the guidance of the U.S. Department of Homeland Security, as are our customers. Where other governments issued guidance, we received equivalent designations in all other countries where we operate. We will continue to manage our capacity in response to the evolution of demand.

Employee health and safety: The health and safety of our 16,000 employees and their families and communities, as well as our contractors, suppliers and customers has been our highest priority since the outbreak of the crisis. We established a Group-wide task force to ensure an effective and consistent response across our business. Regular updates have been issued and a dedicated intranet site established to facilitate effective communication of recommendations, policies and procedures. Communication with all stakeholders has been a core element in our response.

Measures continue to evolve in line with best practice and with recommendations by national health authorities and the World Health Organization. Initiatives introduced to date have included: enhanced hygiene procedures in all locations, including increased cleaning in our production facilities; increased investment in personal protective equipment; adapting work practices and routines to ensure social distancing; establishing procedures for self-isolation; travel advisories including restrictions on all non-essential travel, prior to broader restrictions on any travel; restrictions on visitors to our production facilities or by our employees to external facilities; actively encouraging and ultimately requiring remote working for non-operational personnel, and enhancing our IT capability to facilitate increased remote working.

Strong liquidity:As a precautionary measure in response to the increased macroeconomic uncertainty related to COVID-19, we increased our cash on hand and total available liquidity, by drawing on our Global Asset Based Loan facility. As outlined above in financing activities, cash and cash equivalents was increased further during the second quarter and the Group also enhanced its capital structure by refinancing certain debt obligations, resulting in the Group having no Senior Secured or Senior Notes maturing before 2025.

The Group had $1,448 million in cash and cash equivalents and restricted cash as of June 30, 2020, as well as available but undrawn liquidity of $142 million under its credit facilities.

Earnings Webcast and Conference Call Details

Ardagh Group S.A. (NYSE: ARD) will hold its second quarter 2020 earnings webcast and conference call for investors at 3 p.m. BST (10 a.m. ET) on July 23, 2020. Please use the following webcast link to register for this call:

Webcast registration and access:

https://onlinexperiences.com/Launch/QReg/ShowUUID=486C6C81-CB84-42E7-AFC3-125342375BA9

Conference call dial in:

United States: +1855 85 70686International: +44 (0) 3333 000 804Participant pin code: 16916966#

Slides and quarterly report

Supplemental slides to accompany this release are available at http://www.ardaghgroup.com/investors.

The second quarter 2020 interim report for ARD Finance S.A., issuer of the Senior Secured Toggle Notes due 2027, will be published in due course and available at http://www.ardholdings-sa.com/.

About Ardagh Group

Ardagh Group is a global supplier of infinitely recyclable, metal and glass packaging for the world's leading brands. Ardagh operates more than 50 metal and glass production facilities in 12 countries across three continents, employing over 16,000 people with sales of $6.7bn.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Non-GAAP Financial Measures

This press release may contain certain consolidated financial measures such as Adjusted EBITDA, working capital, operating cash flow, Adjusted free cash flow, net debt, Adjusted profit/(loss), Adjusted earnings/(loss) per share, and ratios relating thereto that are not calculated in accordance with IFRS or US GAAP. Non-GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for the corresponding GAAP measures. The non-GAAP financial measures used by Ardagh may differ from, and not be comparable to, similarly titled measures used by other companies.

Consolidated Interim Financial Statements Consolidated Interim Income Statement for the three months ended June 30, 2020



Unaudited Unaudited

Three months ended June 30, 2020 Three months ended June 30, 2019

Before Before

exceptionalExceptional exceptionalExceptional

items items Total items items Total

$'m $'m $'m $'m $'m $'m

Revenue 1,606 - 1,606 1,712 - 1,712

Cost of sales (1,371) (2) (1,373)(1,432) 16 (1,416)

Gross profit 235 (2) 233 280 16 296

Sales, general and administration expenses (75) (3) (78) (73) (12) (85)

Intangible amortization (58) - (58) (59) - (59)

Operating profit 102 (5) 97 148 4 152

Net finance expense (71) (74) (145) (108) - (108)

Share of post-tax loss in equity accounted joint venture (13) (4) (17) - - -

(Loss)/profit before tax 18 (83) (65) 40 4 44

Income tax credit/(charge) (8) 14 6 (16) 9 (7)

(Loss)/profit from continuing operations 10 (69) (59) 24 13 37

(Loss)/profit from discontinued operation, net of tax - (5) (5) 39 (7) 32

(Loss)/profit for the period 10 (74) (64) 63 6 69



(Loss)/profit attributable to:

Equity holders (64) 69

Non-controlling interests - -

(Loss)/profit for the period (64) 69



(Loss)/earnings per share:

Basic and diluted (loss)/earnings per share attributable to equity ($0.27) $0.29 holders



(Loss)/earnings per share from continuing operations:

Basic and diluted (loss)/earnings per share from continuing ($0.25) $0.16 operations attributable to equity holders

Consolidated Interim Income Statement for the six months ended June 30, 2020



Unaudited Unaudited

Six months ended June 30, 2020 Six months ended June 30, 2019

Before Before

exceptionalExceptional exceptionalExceptional

items items Total items items Total

$'m $'m $'m $'m $'m $'m

Revenue 3,228 - 3,228 3,351 - 3,351

Cost of sales (2,731) (2) (2,733)(2,818) 7 (2,811)

Gross profit 497 (2) 495 533 7 540

Sales, general and administration expenses (173) (6) (179) (154) (14) (168)

Intangible amortization (116) - (116) (117) - (117)

Operating profit 208 (8) 200 262 (7) 255

Net finance expense (105) (74) (179) (240) - (240)

Share of post-tax loss in equity accounted joint venture (12) (8) (20) - - -

Profit before tax 91 (90) 1 22 (7) 15

Income tax (charge)/credit (32) 28 (4) (10) 11 1

(Loss)/profit from continuing operations 59 (62) (3) 12 4 16

Profit from discontinued operation, net of tax - 22 22 74 (8) 66

Profit for the period 59 (40) 19 86 (4) 82



Profit attributable to:

Equity holders 19 82

Non-controlling interests - -

Profit for the period 19 82



Earnings per share:

Basic and diluted earnings per share attributable to equity holders $0.08 $0.35



(Loss)/earnings per share from continuing operations:

Basic and diluted (loss)/earnings per share from continuing ($0.01) $0.07 operations attributable to equity holders

Consolidated Interim Statement of Financial Position



Unaudited As Reported

At June 30,At December 31,

2020 2019

$'m $'m



Non-current assets

Intangible assets 2,760 2,884

Property, plant and equipment 2,645 2,677

Derivative financial instruments 50 4

Deferred tax assets 248 204

Investment in material joint venture 368 375

Other non-current assets 66 68

6,137 6,212

Current assets

Inventories 995 964

Trade and other receivables 869 734

Contract assets 154 151

Derivative financial instruments 6 3

Cash and cash equivalents 1,448 614

3,472 2,466

TOTAL ASSETS 9,609 8,678

Equity attributable to owners of the parent

Issued capital 23 23

Share premium 1,292 1,292

Capital contribution 485 485

Other reserves 180 165

Retained earnings (2,348) (2,181)

(368) (216)

Non-controlling interests 1 1

TOTAL EQUITY (367) (215)

Non-current liabilities

Borrowings 6,296 5,524

Lease obligations 277 291

Employee benefit obligations 852 716

Derivative financial instruments 15 44

Deferred tax liabilities 319 344

Provisions 36 29

7,795 6,948

Current liabilities

Borrowings 521 22

Lease obligations 79 73

Interest payable 41 60

Derivative financial instruments 32 17

Trade and other payables 1,357 1,628

Income tax payable 105 97

Provisions 46 48

2,181 1,945

TOTAL LIABILITIES 9,976 8,893

TOTAL EQUITY and LIABILITIES 9,609 8,678

Consolidated Interim Statement of Cash Flows



Unaudited

Three months endedSix months ended June 30, June 30,

2020 2019 2020 2019

$'m $'m $'m $'m

Cash flows from operating activities

Cash generated from continuing operations 295 241 104 331

Interest paid (73) (128) (157) (208)

Income tax paid (11) (18) (23) (33)

Net cash generated from/(used in) operating activities - continuing 211 95 (76) 90 operations

Net cash generated from operating activities - discontinued operation ^(8)- 22 - 20

Net cash generated from/(used in) operating activities 211 117 (76) 110



Cash flows from investing activities

Purchase of property, plant and equipment (102) (125) (226) (274)

Purchase of software and other intangibles (3) (1) (5) (6)

Proceeds from disposal of property, plant and equipment 1 - 1 -

Investing cash flows used in continuing operations (104) (126) (230) (280)

Proceeds from disposal of discontinued operation 32 - 32 -

Investing cash flows used in discontinued operation - (28) - (68)

Net cash used in investing activities (72) (154) (198) (348)

- -

Cash flows from financing activities

Proceeds from borrowings 3,236 50 4,068 219

Repayment of borrowings (2,735) - (2,753) (2)

Early redemption premium paid (61) - (61) -

Deferred debt issue costs paid (17) - (22) (2)

Lease payments (23) (18) (45) (36)

Dividends paid (69) (33) (69) (66)

Consideration paid on extinguishment of derivative financial instruments - - - (14)

Financing cash flows from continuing operations 331 (1) 1,118 99

Financing cash flows from discontinued operation - (11) - (13)

Net cash inflow/(outflow) from financing activities 331 (12) 1,118 86



Net increase/(decrease) in cash and cash equivalents 470 (49) 844 (152)

Cash and cash equivalents at the beginning of the period 962 416 614 530

Foreign exchange gains/(losses) on cash and cash equivalents 16 7 (10) (4)

Cash and cash equivalents at the end of the period 1,448 374 1,448 374

Financial assets and liabilities



At June 30, 2020, the Group's net debt and available liquidity was as follows:



Maximum Final

amount maturity Facility Undrawn

Facility Currencydrawabledate type Amount drawn amount

Local Local

currency currency$'m $'m

m m

5.250% Senior Secured Notes USD 700 30-Apr-25Bullet 700 700 -

4.125% Senior Secured Notes USD 1,215 15-Aug-26Bullet 1,215 1,215 -

2.125% Senior Secured Notes EUR 439 15-Aug-26Bullet 439 492 -

2.125% Senior Secured Notes EUR 790 15-Aug-26Bullet 790 885 -

6.000% Senior Notes USD 800 15-Feb-25Bullet 800 829 -

4.750% Senior Notes GBP 400 15-Jul-27Bullet 400 491 -

5.250% Senior Notes USD 800 15-Aug-27Bullet 800 800 -

5.250% Senior Notes USD 1,000 15-Aug-27Bullet 1,000 1,000 -

Global Asset Based Loan Facility USD 660 07-Dec-22Revolving 519 519 141

Lease obligations Various - - Amortizing- 356 -

Other borrowings/credit lines EUR/USD - Rolling Amortizing- 2 1

Total borrowings / undrawn facilities 7,289 142

Deferred debt issue costs, bond (116) - discounts and bond premium

Net borrowings / undrawn facilities 7,173 142

Cash and cash equivalents (1,448)1,448

Derivative financial instruments used to hedge foreign currency and interest rate (35) - risk

Net debt / available liquidity 5,690 1,590

The Group refinanced certain debt obligations in the quarter, following which the Group has no bond maturities before 2025. The maturity profile of the Group's Senior Secured Notes and Senior Notes is as follows:



At June 30,At December 31,

2020 2019

$'m $'m

Within one year or on demand - -

Between one and three years - 695

Between three and five years 1,529 832

Greater than five years 4,883 4,029

Total Senior Secured Notes and Senior Notes6,412 5,556

Reconciliation of Group (loss)/profit for the period to Adjusted profit



Three months ended June 30,Six months ended June 30,

2020 2019 2020 2019

$'m $'m $'m $'m

(Loss)/profit for the period - Group (64) 69 19 82

Share of post-tax loss in equity accounted joint venture 17 - 20 -

(47) 69 39 82

Exceptional items ^(9) 84 4 60 17

Tax credits associated with exceptional items ^(9) (14) (10) (28) (13)

Intangible amortization 58 66 116 131

Tax credit associated with intangible amortization (13) (13) (27) (27)

(Gains)/losses on derivative financial instruments and non- recurring Trivium transaction related foreign currency (1) (2) (21) 7 impact in net finance expense

67 114 139 197

Share of Adjusted profit in equity accounted joint venture 20 - 21 -

Adjusted profit for the period - Group ^(10) 87 114 160 197



Weighted average common shares 236.36 236.36 236.36 236.36



(Loss)/earnings per share (0.27) 0.29 0.08 0.35



Adjusted earnings per share - Group ^(10) 0.37 0.48 0.68 0.83

Reconciliation of (loss)/profit for the period to Adjusted EBITDA, cash generated from operations, operating cash flow and Adjusted free cash flow



Three months ended June 30,Six months ended June 30,

2020 2019 2020 2019

$'m $'m $'m $'m

(Loss)/profit from continuing operations (59) 37 (3) 16

Income tax (credit)/charge (6) 7 4 (1)

Net finance expense 145 108 179 240

Depreciation and amortization 169 162 336 324

Exceptional operating items 5 (4) 8 7

Share of post-tax loss in equity accounted joint venture 17 - 20 -

Adjusted EBITDA from continuing operations 271 310 544 586

Movement in working capital 37 (53) (372) (230)

Transaction-related, start-up and other exceptional costs paid(13) (10) (67) (17)

Exceptional restructuring paid - (6) (1) (8)

Cash generated from continuing operations 295 241 104 331

Transaction-related, start-up and other exceptional costs paid13 10 67 17

Capital expenditure ^(11) (104) (126) (230) (280)

Lease payments (21) (18) (43) (34)

Operating cash flow from continuing operations 183 107 (102) 34

Operating cash flow from discontinued operation - (6) - (49)

Operating cashflow - Group ^(12) 183 101 (102) (15)

Interest paid (73) (129) (157) (210)

Income tax paid (11) (22) (23) (38)

Adjusted free cash flow - Group ^(12) 99 (50) (282) (263)

(1) Continuing Operations results unless stated otherwise. A reconciliation tothe most comparable GAAP measures can be found at the back of this release.

(2) Adjusted earnings per share and Adjusted profit for the three and sixmonths ended June 30, 2020 includes the Group's share of the Adjusted profit ofits material equity accounted joint venture, Trivium Packaging B.V. which isfurther set out on the reconciliation at the back of this release. Thecomparative periods include the results of the divested Food & Specialtybusiness which have been presented as a Discontinued Operation.

(3) Payable on October 1, 2020 to shareholders of record on September 17, 2020.

(4) Continuing Operations results for the three and six months ended June 30,2019 unless stated otherwise. A reconciliation to the most comparable GAAPmeasures can be found at the back of this release.

(5) Adjusted earnings per share and Adjusted profit for the three and sixmonths ended June 30, 2020 includes the Group's share of the Adjusted profit ofits material equity accounted joint venture, Trivium Packaging B.V. which isfurther set out on the reconciliation at the back of this release. Thecomparative periods include the results of the divested Food & Specialtybusiness which have been presented as a Discontinued Operation.

(6) Net debt is comprised of net borrowings and derivative financialinstruments used to hedge foreign currency and interest rate risk, net of cashand cash equivalents. Net borrowings includes IFRS 16 lease obligations.

(7) Net debt to LTM Adjusted EBITDA, at December 31, 2019, reflects the LTMAdjusted EBITDA for Continuing Operations.

(8) Operating cash flows from the discontinued operation for the three and sixmonths ended June 30, 2019 include include interest and income tax payments of$1 million and $4 million, and $2 million and $5 million respectively.

(9) Exceptional items, before tax for the six months ended June 30, 2020,include $74 million debt refinancing and settlement costs related to theredemption of notes in May and June, $6 million transaction-related and othercosts, $2 million start-up related costs, $22 million gain arising from thefinalization of the completion accounts relating to the disposal of Food &Specialty and $28 million tax credits, primarily relating to recent U.S. taxreform and debt refinancing and settlement costs.

Total exceptional items for the six months ended June 30, 2019 include $15million related to the Group's capacity realignment programs, including $7million restructuring costs, $4 million property, plant and equipmentimpairment charges and $4 million start-up related costs, $15 million relatedto a provision for a court award and related interest, net of the tax adjustedindemnity receivable in respect of the Group's U.S. glass business legalmatter, $14 million in transaction-related costs and $8 million of exceptionalitems from the discontinued operation, net of tax, partly offset by a $37million pension service credit recognized in Glass Packaging North Americafollowing amendments to the pension scheme and $11 million from tax creditsprimarily related to the provision for a court award and related interest inrespect of the Group's U.S glass business legal matter.

(10) Adjusted earnings per share and Adjusted profit for the three and sixmonths ended June 30, 2020 include the Group's share of the Adjusted profit ofits material equity accounted joint venture, Trivium Packaging B.V.. TheGroup's share of the results of Trivium Packaging B.V. has been accounted forin accordance with the Group's accounting policies. The Adjusted profit ofTrivium Packaging B.V. included in the Group's Adjusted profit has beencalculated in conformity with the Group's definition and presentation ofAdjusted profit, namely that the result for the period has been adjusted forthe joint venture's exceptional items, net of tax and amortization, net of taxin order to derive Adjusted profit. The comparative periods include the resultsof the divested Food & Specialty business which have been presented as aDiscontinued Operation.

(11) Capital expenditure for the three and six months ended June 30, 2020,includes $35 million and $76 million relating to Business Growth Investmentprojects respectively.

(12) Operating cash flow - Group and Adjusted free cash flow - Group resultsfor the three and six months ended June 30, 2019 reflect that the Groupdivested the Food & Specialty business as of October 31, 2019. As a result, theoperating cash flow that was previously presented as part of the Group'soperating cash flow in prior periods is now presented as the DiscontinuedOperation.

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SOURCE Ardagh Group S.A.