2005 Fourth Quarter and Full Year Results.DUBLIN Dublin, city, Republic of Ireland Dublin, Irish Baile Átha Cliath, county borough (1991 pop. 915,516), Leinster, capital of the Republic of Ireland, on Dublin Bay at the mouth of the Liffey River. , Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. -- JSG JSG Joint Study Group (India and Pakistan) JSG Jain Social Group Funding plc, incorporating Smurfit Kappa Group The Smurfit Kappa Group is Europe's leading corrugated packaging company, following the merger of Jefferson Smurfit Group and Kappa Packaging. This merger was finalized by the end of 2005. ('SKG'), today announced results for the 3 months and year ended December December: see month. 31, 2005. Smurfit Kappa Group was formed on December 1, 2005 with the merger of the operations of Jefferson Jefferson, uninc. city (1990 pop. 25,782), Fairfax co., N Va. It is a residential suburb of Washington, D.C. Smurfit Group (JSG) and Kappa Packaging (Kappa). SKG SKG Stichting Kwaliteit Gevelbouw (Dutch) SKG Spielberg, Katzenberg,and Geffen (DreamWorks Studios) SKG Thessaloniki, Greece - Thessaloniki (Airport Code) SKG Smith and Kraus Global is a world leader in corrugated cor·ru·gate v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates v.tr. To shape into folds or parallel and alternating ridges and grooves. v.intr. , combining JSG's previous strong positions particularly in Western and Southern Europe Southern Europe or sometimes Mediterranean Europe is a region of the European continent. There is no clear definition of the term which can vary depending on whether geographic, cultural, linguistic or historical factors are taken into account. with those of Kappa who were particularly strong in Northern and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . SKG is a European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. leader in containerboard con·tain·er·board n. A corrugated or solid cardboard used to make containers. and also has market leading positions, in both containerboard and corrugated in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . SKG's operations span over 30 countries, with total capacity of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 6 million tonnes of both containerboard and corrugated. The Group also has strong positions in solid board, sacks and bag in box. 2005 fourth quarter results represent the first reporting period for SKG following the merger of JSG and Kappa. SKG's 2005 actual fourth quarter results include 3 months of JSG and 1 month of Kappa combined. Similarly, results for the full year to December 31, 2005 include JSG's results for 12 months and results of Kappa for the month of December only. As part of the process of accounting for the merger, Kappa's results for the month of December have been restated to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" Irish GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and these alignments are subject to audit, which may lead to an adjustment. However, no material adjustment is anticipated. In addition, the taxation charge for 2005 has yet to be finalized See finalization. . The assets and liabilities acquired from Kappa will be fair valued under Irish GAAP and this exercise is ongoing and will result in changes principally to fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → , goodwill, pension liabilities Pension liabilities Future liabilities resulting from pension commitments made by a corporation. Accounting for pension liabilities varies widely by country. and taxation. For the purposes of comparison of performance year-on-year, however, the financial performance of the operations of the Group, excluding the operations of Kappa Packaging and other disposals (primarily Munksjo) are summarised in the table below. In addition, results for the fourth quarter and full year 2004 have been re-stated to allow 'like-for-like' comparisons.
Note: 4Q '05 4Q '04Change4Q '05 3Q '05Change Full Full Change
Excludes Year Year
impact of 2005 2004
Kappa,
Munksjo and
The K Club
operations
year-on-
year.
EUR m EUR m % EUR m EUR m % EUR m EUR m %
----------------------------------------------------------------------
Re- Re- Re-
Stated Stated Stated
Net sales -
Exc.
Disp/Acq. 1,044 1,069 (2%)1,044 1,045 (0%) 4,213 4,278 (2%)
EBITDA - Exc.
Disp/Acq. (a) 131 143 (9%) 131 113 16% 481 527 (9%)
EBITDA Margin
- Exc.
Disp/Acq. (a) 12.6% 13.4% (6%) 12.6% 10.8% 17% 11.4% 12.3% (7%)
(a) Pre-exceptional EBITDA of subsidiaries only.
----------------------------------------------------------------------
The reported financial performance of SKG, which includes the operations of Kappa for the month of December 2005, and also includes the impact of the sale of Munksjo and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. during 2005, are set out below.
Note: Includes 4Q '054Q '04Change4Q '053Q '05Change Full Full Change
impact Year Year
of Kappa, 2005 2004
Munksjo and
The K Club
operations
year-on-year.
EUR m EUR m % EURm EUR m % EURm EUR m %
----------------------------------------------------------------------
Net Sales 1,244 1,193 4% 1,244 1,045 19% 4,437 4,805 (8%)
EBITDA (b) 143 160 (11%) 143 113 27% 493 606 (19%)
.
EBITDA Margin (b)11.5% 13.4% (14%) 11.5% 10.8% 7% 11.1% 12.6% (12%)
(b) Pre-exceptional
EBITDA of
subsidiaries
only
----------------------------------------------------------------------
Free cash flow 31 22 (42%) 31 55 (43%) 66 187 (65%)
Net debt at
period end
(including
capital leases) 4,530 2,913 56% 4,530 2,440 86% 4,530 2,913 56%
----------------------------------------------------------------------
2005 Review - Operating Environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. 2005 was a difficult year for the paper-based packaging industry in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Demand was weak in most of the major economies within the
region. A combination of weak demand and excess new capacity led to a
progressive reduction of paper prices which was most notable in the
third quarter. This, in turn, led to pressure on corrugated prices.
These declining product prices, combined with rising input costs,
particularly in energy, characterised a tough operating environment and
led to an underlying reduction in profitability.However, during the fourth quarter of 2005, the European economic environment showed some early indications of improvement. Demand showed a positive trend and a containerboard price increase, to recover some of the rising input costs, was announced and partially implemented during the quarter. The impact was greatest in the kraftliner market, with the grade being globally stronger. A number of recycled containerboard capacity closures in Europe were announced within the industry as a result of an increasing uneconomic cost base, which served to improve the outlook for the grade. SKG benefited from its balanced geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. exposure during 2005 with another good performance from its operations in Latin America, with strong volume growth in Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. , Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. and Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. . 2005 Fourth Quarter & Full Year Financial Performance - excluding acquisitions and disposals Excluding the impact of acquisitions and disposals, in 2004 and 2005 results, fourth quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight declined 2% on the fourth quarter of 2004. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , in the fourth quarter, before exceptional items, on the same basis, declined 9% to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 131 million. For the 2005 full year, excluding the impact of acquisitions and disposals, net sales and EBITDA, before exceptional items, also declined by 2% and 9% respectively. EBITDA, before exceptional items, was approximately EUR 131 million, compared with EUR 143 million in the fourth quarter of 2004 representing a margin on net sales of 12.6% compared to 13.4% respectively. This performance reflects generally lower paper prices year-on-year due to weak market conditions in Europe. Net sales were unchanged in the fourth quarter, compared to the third quarter of 2005, however, EBITDA, before exceptional items, of EUR 131 million increased 16%. This performance reflects the impact of rising paper prices, a modest improvement in European demand during the quarter and benefits from the normal annual review and adjustment of accounting provisions. 2005 Fourth Quarter & Full Year Financial Performance - including acquisitions and disposals Net sales, including the impact of acquisitions and disposals, increased modestly in the fourth quarter but show a decline for the full year, due to lower paper prices year-on-year and the sale of the Munksjo specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. operations during 2005. Fourth quarter net sales of EUR 1,244 million increased 4% on the fourth quarter of 2004 levels, reflecting the consolidation of the Kappa results in December. EBITDA, before exceptional items, for the fourth quarter of 2005, at EUR 143 million was EUR 17 million lower than in the same period of 2004. This decline reflects weak market conditions in Europe and asset disposals (principally JSG's sale of Munksjo's specialty businesses) during 2005. Full year EBITDA, before exceptional items, of EUR 493 million, declined 19% against EUR 606 million in the same period of 2004 representing a margin on net sales of 11.1% and 12.6% respectively. Again, this performance reflects both the difficult operating environment and corporate activity during 2005, particularly the sale of the Munksjo specialty operations. Corporate Activity Smurfit Kappa Merger On December 1, 2005, Smurfit Kappa Group was formed through the merger of JSG and Kappa. The merger was completed through the issue of shares by JSG and the payment of consideration comprising cash of approximately EUR 238 million and a EUR 89 million subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. primarily to Kappa's former shareholders. The ownership structure of SKG is such that JSG's former shareholders now own 58.3% of the SKG while Kappa's former shareholders now own 41.7%. As part of the merger agreement, the 10.625% Senior Subordinated Notes due 2009 and the 12.5% Senior Subordinated Discount Notes due 2009 issued by Kappa Beheer B.V. were redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. and both JSG's and Kappa's Senior Credit Facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities refinanced. SKG financed the cash consideration and the refinancing Refinancing An extension and/or increase in amount of existing debt. of the JSG and Kappa Senior Credit Facilities and the redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of the Kappa 10.625% Senior Subordinated Notes due 2009 and the 12.5% Senior Subordinated Discount Notes due 2009, together with related costs and expenses, by way of a new Senior Credit Facility. The new Senior Credit Facility when fully drawn will amount to approximately EUR 2,862 million. This facility is made up of a EUR 485 million amortising A Tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. maturing 2012, a EUR 1,188 million B Tranche maturing 2013 and a EUR 1,189 million C Tranche maturing 2014. In addition, Smurfit Kappa Group has committed facilities Committed Facility A credit facility whereby terms and conditions are clearly defined by the lending institution and imposed upon the borrowing company. Notes: In committed facilities, the borrowing companies must meet specific requirements set forth by the lending of EUR 875 million, including a EUR 600 million Revolving Credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. Facility, of which EUR 9 million was drawn at December 31, 2005. Product Market Overview Europe European market conditions remained difficult during 2005. Many of the larger European economies reported relatively low corrugated growth, with a decline in the UK, and less than 1% growth in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. and Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. . Against that backdrop Backdrop may refer to:
On a comparable 12 month basis, incorporating only JSG, kraftliner volumes declined 2% on 2004 levels. This decline in volumes, coupled with lower prices and rising input costs, negatively impacted the financial performance of kraftliner operations. Recycled containerboard volumes (excluding mills closed or sold) were unchanged in 2005 on 2004 levels, however, paper prices declined year-on-year. In particular, the French recycled market was weak in 2005 with volumes declining 1% on 2004 levels. SKG has recently announced the closure of a number of French recycled containerboard mills. Paper price increases, of EUR 50 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. on kraftliner and between EUR 30 and EUR 50 per tonne on recycled, were announced in the fourth quarter of 2005 in an attempt to commence the recovery of rising input costs; specifically energy prices. These price increases were partially implemented during the fourth quarter but did not materially impact performance during the quarter due to the phasing of their introduction and the continued rise in input costs. The closure of European containerboard capacity and the improvement in demand in some of the larger European economies started to contribute to a better market environment in the first quarter of 2006. This improvement in demand has enabled producers to implement a further price increase, announced for February/March. Corrugated volumes in Europe in 2005 were unchanged on 2004 levels. Excluding the UK, where JSG closed a facility in late 2004, volumes increased 1%. This modest increase better reflects general market conditions in Europe in 2005 and the avoidance of price chasing. Product prices declined marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. on 2004 levels reflecting the weakness in paper prices throughout the year. Market conditions varied across Europe in 2005 with reasonable volume growth in countries such as Ireland, Holland, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. offset by lower growth in the larger European markets of Spain and Italy and declines in the UK and France. In Eastern Europe, corrugated volumes continued to grow throughout 2005. These markets are becoming increasingly competitive. The combined Group should benefit going forward from a stronger presence in these markets overall. Paper price increases are now creating the conditions for a justifiable jus·ti·fi·a·ble adj. Having sufficient grounds for justification; possible to justify: justifiable resentment. jus increase in European corrugated prices. Sack kraft had a difficult fourth quarter and year. Volumes declined 2% on 2004 levels while product prices were up 2% year on year. In sack converting, volumes declined 3% year-on-year. Difficult market conditions were aggravated ag·gra·vate tr.v. ag·gra·vat·ed, ag·gra·vat·ing, ag·gra·vates 1. To make worse or more troublesome. 2. To rouse to exasperation or anger; provoke. See Synonyms at annoy. by a labour strike in one of our Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. plants during 2005. This has now been resolved. In graphic board, volumes increased 1% year-on-year and prices were up 2%. Efficient Capacity Management Following the merger of JSG's and Kappa's kraftliner and recycled containerboard mill systems, SKG has reviewed its production capabilities, cost base and the industry environment to assess the future of its paper needs and capabilities. Excess European capacity, consistent paper price pressure and rising input costs have contributed to SKG's decision to rationalise Verb 1. rationalise - structure and run according to rational or scientific principles in order to achieve desired results; "We rationalized the factory's production and raised profits" rationalize some of its higher cost, smaller paper mills. SKG is currently working on the closure of 5 mills in Europe (4 in France and 1 in Germany) comprising 270,000 tonnes of recycled containerboard capacity. These closures follow the closure, by JSG, of two recycled containerboard mills in Spain and Ireland, in 2004 and 2005 respectively, with a combined capacity of approximately 100,000 tonnes, and the sale of a mill in Italy in early 2005 with a capacity of 75,000 tonnes. In addition to these mill closures, SKG is in the process of closing 5 high cost corrugated facilities in Europe (2 in France, 2 in the UK & 1 in Spain). SKG also announced the closure of a research facility in France. SKG will continue to review its production capacity, the cost effectiveness of its mill base and the capital expenditure required to maintain standards within its facilities in the context of a market with historically low paper pricing in order to ensure its cost and quality leadership and to achieve acceptable economic returns. Disposals European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community approval of the merger of the operations of JSG and Kappa was given subject to the disposal of 8 facilities in Europe. These include: --2 graphic board mills in Holland; --1 Solidpack solid board mill and converting operation in Holland; --2 corrugated facilities in Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. ; --2 corrugated facilities in Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. ; --1 partition A reserved part of disk or memory that is set aside for some purpose. On a PC, new hard disks must be partitioned before they can be formatted for the operating system, and the Fdisk utility is used for this task. facility in Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. . SKG is currently engaged in the process of selling these facilities. SKG expects to complete the disposal of these facilities in a satisfactory manner by the end of May, 2006. Latin America SKG's Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of operations reported another strong quarter and record results for 2005. These results continue to highlight the benefit of SKG's geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge balanced exposure and the strength of its management team in the region. Containerboard and corrugated volumes increased 4% and 8% on 2004 levels. Colombia, Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. and the Dominican Republic Dominican Republic (dəmĭn`ĭkən), republic (2005 est. pop. 8,950,000), 18,700 sq mi (48,442 sq km), West Indies, on the eastern two thirds of the island of Hispaniola. The capital and largest city is Santo Domingo. showed strongest growth during 2005. Excluding the impact of SKG's new corrugated facility in Chile, full year corrugated volumes increased 7% on 2004 levels. SKG's Colombian operations reported a strong performance in 2005. This performance reflects the strength of the Colombian economy and also SKG's new sack operations in Ecuador Ecuador (ĕk`wədôr) [Span., = equator], officially Republic of Ecuador, republic (2005 est. pop. 13,364,000), 109,483 sq mi (283,561 sq km), W South America. and Costa Rica Costa Rica (kŏs`tə rē`kə), officially Republic of Costa Rica, republic (2005 est. pop. 4,016,000), 19,575 sq mi (50,700 sq km), Central America. which form part of the Colombian system. Containerboard and corrugated volumes increased 4% and 9% on 2005 levels while sack volumes increased 28%. Market conditions for printing and writing papers were in marked contrast to the paper-based packaging grades. This market became increasingly competitive in 2005 with domestic and international competitiveness impacted by the appreciation of the peso. Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. is SKG's largest market in the region. The Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum manufacturing sector remains weak and containerboard and corrugated volumes were similar to 2004 levels in 2005. Product prices fluctuated and on average were 1% down on 2004 levels. SKG also produces folding cartons The folding carton created the packaging industry as it is known today, beginning in the late 19th century. Basically, a folding carton is made of paperboard, and is cut, folded, laminated and printed for transport to manufacturers. in Mexico. This business negatively impacted Mexico's performance in 2005 due to a weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. in the beverage and tobacco
business during the year.In Venezuela, with the socio-political challenges, the economic environment continues to remain uncertain. The Containerboard mill was at full capacity during the year. Relative to 2004, Venezuela's 2005 financial performance was impacted by the increasing openness of the economy (and consequently increasing imports) and the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Bolivar. SKG's facility in the Dominican Republic, which forms part of the Venezuelan operations, reported strong growth in 2005. This performance is primarily due to an improving economy and positive industry conditions. In Argentina, while the economy remains relatively strong, the inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. environment is contributing to rising input and paper prices which were not fully recovered in corrugated prices in 2005. Volumes continue to grow, however, and 2005 containerboard and corrugated volumes increased 17% and 9% on 2004 levels respectively. Containerboard volume increases represented a higher level of internal integration in the year. Fourth Quarter, 2005: Cash Flows & Capital Structure SKG is reporting free cash flow for the fourth quarter of 2005 of EUR 31 million compared to EUR 22 million for the same period in 2004. Although our loss before taxation was higher in the fourth quarter of 2005, the increase was partly the result of charges, such as the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of fixed assets, which are added back in arriving at free cash flow. In addition, our cash flow in 2005 benefited from a considerably higher working capital inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. than in 2004 and reduced other outflows. The fourth quarter depreciation charge, at EUR 67 million was higher than in the same period in 2004, primarily due to the presence in 2005 of the former Kappa operations, which more than compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for the absence of the Munksjo specialty operations. The depreciation charge in respect of the former Kappa operations amounted to approximately EUR 16 million for the month of December compared to a charge of over EUR 5 million in respect of the Munksjo specialty operations in the fourth quarter of 2004. Capital expenditure at EUR 76 million in the fourth quarter of 2005 represented 113% of depreciation. The phasing of capital expenditure in 2005 was similar to 2004 with a relatively high level of expenditure in the fourth quarter compared to the prior three quarters. Tax payments were lower in the fourth quarter than the same period of 2004 primarily because of the absence of the Munksjo specialty operations and partly as a result of the phasing of payments. Working capital decreased by EUR 39 million in the fourth quarter with lower debtors and to a lesser extent stocks offset by lower creditors. Cash flow from financing was modest in the fourth quarter of 2005 other than cash flow management in respect of the merger. Of the total of EUR 238 million payable in respect of the merger, primarily to Kappa's former shareholders, SKG paid approximately EUR 204 million in December. The merger financing resulted in debt issuance costs of EUR 88 million and transaction fees and expenses of EUR 4 million. In the fourth quarter of 2004, cash flows from financing and investment activity amounted to EUR 3 million. SKG's free cash flow of EUR 31 million for the fourth quarter was more than offset by the financing and investment outlay of EUR 298 million resulting in an overall net cash outflow for the quarter of EUR 267 million. This compares with a net cash inflow of EUR 19 million in 2004. A negative currency adjustment of almost EUR 9 million arose in the quarter primarily because of a weakening of the euro against the US dollar from US$1.2042 at the end of September September: see month. 2005 to US$1.180 at the end of December 2005. As a result of the increased net borrowing of EUR 1,805 million from the former Kappa operations together with the deficit for the quarter and negative currency adjustments, net borrowing for SKG increased by EUR 2,081 million in the fourth quarter of 2005. In total, net borrowing of approximately EUR 4,507 million (EUR 4,530 million including capital leases of over EUR 23 million) at December 2005 compared to EUR 2,425 million (EUR 2,440 million including leases) at September 2005. If the new PIK PIK See: Payment-in-kind bond PIK See payment-in-kind security (PIK). notes in JSG Holdings are included together with net cash in the companies above JSG Funding, the total net borrowing at the level of JSG Packaging is EUR 4,890 million at December 2005. This does not include the subordinated promissory note of EUR 89 million payable to Kappa shareholders which was issued subsequent to the year end. Summary cash flows for the three months and twelve months to December 2005 and 2004 are set out in the following table:
JSG Funding plc
Unaudited Unaudited Unaudited Audited
3 months 3 months 12 months 12
to to to months
to
Dec 31, Dec 31, Dec 31, Dec 31,
2005 2004 2005 2004
EUR EUR EUR EUR
Million Million Million Million
------------------------------ --------- --------- --------- --------
(Loss) before tax -
subsidiaries (50) (10) (116) (3)
Exceptional items - 16 (44) 1
Impairment of fixed assets 19 - 19 -
Depreciation and depletion 67 61 242 263
Goodwill amortization 10 7 29 38
Non cash interest expense 27 22 70 68
Refinancing costs - - 53 -
Working capital change 39 11 46 42
Capital expenditure (76) (65) (192) (206)
Change in capital creditors 6 14 (5) 7
Sales of fixed assets 8 11 18 34
Tax paid (10) (17) (43) (37)
Dividends from associates - - 3 3
Other (9) (28) (14) (23)
------------------------------ --------- --------- --------- --------
Free cash flow 31 22 66 187
Investments (205) (1) (207) (6)
Sale of businesses and
investments 1 3 326 3
Dividends paid to minorities (1) (1) (6) (6)
Deferred debt issue costs (88) (3) (98) (6)
Transaction fees (4) (1) (4) (3)
Transfer of cash (to)/from
affiliates (1) - 10 13
Refinancing costs - - (53) -
------------------------------ --------- --------- --------- --------
Net cash (outflow)/inflow (267) 19 34 182
Net (debt) acquired/disposed (1,805) - (1,809) -
Munksjo inter-company debt
repaid - - 157 -
K Club inter-company debt
repaid - - 92 -
Non-cash interest accrued - (12) (12) (45)
Currency translation
adjustments (9) 60 (73) 40
------------------------------ --------- --------- --------- --------
(Increase)/decrease in net EUR EUR 67 EUR EUR 177
borrowing (excluding leases) (2,081) (1,611)
------------------------------ --------- --------- --------- --------
Performance Review and Outlook Gary Gary, city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city. McGann McGann is a surname, and may refer to
This page or section lists people with the surname , Chief Executive Officer, commented, "This financial performance reflects difficult market conditions, particularly in Europe, and is not at a level where we want or expect it to be. Weak demand, excess capacity growth and rising input costs characterised the European operating environment, while our Latin American operations reported another strong performance in 2005. Overall, we continue to benefit from our geographic balance. In our last review, we pointed to signs of potentially improving industry conditions in Europe. Initial indicators of recovery have continued into Q1 2006. This together with, what now appears to be, increasingly rational capacity management decisions should, if sustained, deliver economic returns for the industry's shareholders if there is clear determination on the industry's part to achieve adequate pricing levels through the value chain. In our view, there is no choice! We also identified a need for structural change in the European industry. The combination of Jefferson Smurfit Group with Kappa Packaging BV to form Smurfit Kappa Group is a first step towards addressing that need. With a well invested base and a commitment to rational capacity management, we will continue to exercise restraint RESTRAINT. Something which prevents us from doing what we would desire to do. 2. Restraint is lawful and unlawful. It is lawful when its object is to prevent the violation of the law, or the rights of others. in our capital programmes while improving the quality of our offering and service. An increasingly efficient asset base and an extensive geographic presence will enhance our ability to better serve current and prospective customers." Website access to reports The Registrant's annual report on Form 20-F, current reports on Form 6-K and all amendments to those reports are made available free of charge through the Registrant's website (www.smurfitkappa.com) as soon as practicable practicable adj. when something can be done or performed. after such material is electronically filed with or furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to the Securities and Exchange Commission.
JSG Funding plc
Summary Group Profit and
Loss Accounts
Unaudited Unaudited Unaudited Audited
3 months 3 months 12 months 12 months
to to to to
Dec 31, Dec 31, Dec 31
Dec 31, 2005 2004 2005 2004
EUR 000 EUR 000 EUR 000 EUR 000
------------------------- ---------- ---------- ---------- ----------
Turnover
Continuing
operations 1,044,112 1,068,829 4,212,514 4,278,439
Acquisitions 199,611 - 199,611 -
Discontinued
operations - 123,747 25,204 526,643
------------------------- ---------- ---------- ---------- ----------
1,243,723 1,192,576 4,437,329 4,805,082
Cost of sales 907,054 861,489 3,224,703 3,473,299
Impairment of fixed
assets 18,781 - 18,781 -
------------------------- ---------- ---------- ---------- ----------
Gross profit 317,888 331,087 1,193,845 1,331,783
Net operating expenses 268,115 235,513 977,276 1,010,564
Reorganization and
restructuring costs 11,973 30,750 25,540 39,430
------------------------- ---------- ---------- ---------- ----------
Operating profit
subsidiaries
Continuing
operations 45,562 54,144 200,547 226,029
Acquisitions (7,762) - (7,762) -
Discontinued
operations - 10,680 (1,756) 55,760
------------------------- ---------- ---------- ---------- ----------
37,800 64,824 191,029 281,789
Share of associates'
operating profit 2,389 3,571 7,287 12,611
------------------------- ---------- ---------- ---------- ----------
Total operating profit 40,189 68,395 198,316 294,400
------------------------- ---------- ---------- ---------- ----------
Profit on sale of assets
and operations 6,090 7,101 52,587 22,173
------------------------- ---------- ---------- ---------- ----------
Interest income 4,449 3,211 10,730 8,335
Interest expense (70,986) (75,088) (252,438) (293,641)
Loss from early
extinguishment of debt (24,224) (5,697) (104,658) (5,697)
Share of associates' net
interest (506) (331) (1,336) (1,301)
------------------------- ---------- ---------- ---------- ----------
(91,267) (77,905) (347,702) (292,304)
------------------------- ---------- ---------- ---------- ----------
Other financial expense (3,514) (4,008) (13,259) (15,718)
------------------------- ---------- ---------- ---------- ----------
(Loss) / profit before
taxation (48,502) (6,417) (110,058) 8,551
Taxation
Group (4,023) (2,697) 22,695 24,375
Share of
associates 770 878 1,912 2,598
------------------------- ---------- ---------- ---------- ----------
(3,253) (1,819) 24,607 26,973
------------------------- ---------- ---------- ---------- ----------
(Loss) after taxation (45,249) (4,598) (134,665) (18,422)
Equity minority
interests 1,509 4,952 10,892 16,067
------------------------- ---------- ---------- ---------- ----------
(Net loss) EUR EUR EUR EUR
(46,758) (9,550) (145,557) (34,489)
------------------------- ---------- ---------- ---------- ----------
Companies (Amendment) Act, 1986 The financial statements included in this report do not comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise 'full group accounts' within the meaning of Regulation 40(1) of the European Communities European Community: see European Union. European Community (EC) Organization formed in 1967 with the merger of the European Economic Community, European Coal and Steel Community, and European Atomic Energy Community. (Companies: Group Accounts) Regulations, 1992 of Ireland insofar in·so·far adv. To such an extent. Adv. 1. insofar - to the degree or extent that; "insofar as it can be ascertained, the horse lung is comparable to that of man"; "so far as it is reasonably practical he should practice as such group accounts would have to comply with the disclosure and other requirements of those Regulations. Full group accounts for the year ended December 31, 2004 have received an unqualified audit report and have been filed with the Irish Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. .
JSG Funding plc
Segmental Analyses
Sales - third party
Unaudited Unaudited Unaudited Audited
3 months 3 months 12 months 12 months
to to to to
Dec 31, Dec 31, Dec 31, Dec 31,
2005 2004 2005 2004
EUR 000 EUR 000 EUR 000 EUR 000
------------------------- ---------- ---------- ---------- ----------
Packaging 885,636 771,931 3,117,403 3,093,484
Specialties 151,699 237,868 530,629 1,009,038
------------------------- ---------- ---------- ---------- ----------
Europe 1,037,335 1,009,799 3,648,032 4,102,522
Latin America 206,388 182,777 789,297 702,560
------------------------- ---------- ---------- ---------- ----------
EUR EUR EUR EUR
1,243,723 1,192,576 4,437,329 4,805,082
------------------------- ---------- ---------- ---------- ----------
(Loss) / profit before
taxation
3 months 3 months 12 months 12 months
to to to to
Dec 31, Dec 31, Dec 31, Dec 31,
2005 2004 2005 2004
EUR 000 EUR 000 EUR 000 EUR 000
----------------------------- --------- -------- ---------- ---------
Packaging 24,998 51,523 109,475 152,000
Specialties 5,432 21,945 32,447 98,256
Associates 1,877 3,007 6,420 10,064
----------------------------- --------- -------- ---------- ---------
Europe 32,307 76,475 148,342 260,320
----------------------------- --------- -------- ---------- ---------
Packaging 28,559 28,809 113,996 118,443
Associates 512 564 867 2,546
----------------------------- --------- -------- ---------- ---------
Latin America 29,071 29,373 114,863 120,989
----------------------------- --------- -------- ---------- ---------
Centre costs (2,450) (3,537) (23,405) (25,272)
----------------------------- --------- -------- ---------- ---------
Profit before goodwill
amortization,
interest and exceptional
items 58,928 102,311 239,800 356,037
Goodwill amortization (10,280) (7,174) (29,203) (37,925)
Group net interest (66,537) (71,877) (241,708) (285,306)
Loss from early
extinguishment of debt (24,224) (5,697) (104,658) (5,697)
Share of associates' net
interest (506) (331) (1,336) (1,301)
----------------------------- --------- -------- ---------- ---------
(Loss) / profit before
exceptional items (42,619) 17,232 (137,105) 25,808
Reorganization and
restructuring costs (11,973) (30,750) (25,540) (39,430)
Profit on the sale of assets
and businesses 6,090 7,101 52,587 22,173
----------------------------- --------- -------- ---------- ---------
(Loss) / profit before EUR EUR EUR EUR
taxation (48,502) (6,417) (110,058) 8,551
----------------------------- --------- -------- ---------- ---------
JSG Funding plc
Summary Group Balance Sheets
Unaudited Audited
Dec 31, Dec 31,
2005 2004
EUR 000 EUR 000
------------------------------------------- - ---------- - ----------
Assets Employed
Fixed Assets
Intangible assets 2,238,738 1,455,130
Tangible assets 3,491,687 2,334,858
Financial assets 87,746 81,895
------------------------------------------- - ---------- - ----------
5,818,171 3,871,883
------------------------------------------- - ---------- - ----------
Current Assets
Stocks 660,515 452,166
Debtors 1,321,943 925,048
Kappa Graphic Board assets held for sale and
inter-company balances 65,226 -
Amounts due by affiliates 107 395
Amounts due by affiliates after more than
one year 262,936 270,552
Restricted cash 755,575 -
Cash at bank and in hand 247,821 248,033
------------------------------------------- - ---------- - ----------
3,314,123 1,896,194
Creditors (amounts falling due within one
year) 2,398,367 1,169,672
------------------------------------------- - ---------- - ----------
Net current assets 915,756 726,522
------------------------------------------- - ---------- - ----------
Total assets less current liabilities EUR EUR
6,733,927 4,598,405
------------------------------------------- - ---------- - ----------
Financed by
Creditors (amounts falling due after more
than one year) 4,548,863 2,967,212
Government grants 14,460 14,260
Provisions for liabilities and charges 289,633 221,403
Pension liabilities (net of deferred tax) 655,368 411,237
------------------------------------------- - ---------- - ----------
5,508,324 3,614,112
------------------------------------------- - ---------- - ----------
Capital and Reserves
Called up share capital 40 40
Other reserves 1,334,052 946,002
Profit and loss account (239,873) (76,941)
------------------------------------------- - ---------- - ----------
Group shareholders' funds (equity
interests) 1,094,219 869,101
Minority interests (equity interests) 131,384 115,192
------------------------------------------- - ---------- - ----------
1,225,603 984,293
------------------------------------------- - ---------- - ----------
EUR EUR
6,733,927 4,598,405
------------------------------------------- - ---------- - ----------
JSG Funding plc
Statement of Total Recognized Gains and
Losses
Unaudited Audited
12 months 12 months
to to
Dec 31, Dec 31,
2005 2004
EUR 000 EUR 000
-------------------------------------------- - ---------- - ---------
(Loss) for the year
- Group (147,726) (38,433)
- Associates 2,169 3,944
-------------------------------------------- - ---------- - ---------
(145,557) (34,489)
-------------------------------------------- - ---------- - ---------
Translation adjustments on foreign currency
net investments
- Group (763) 15,222
-------------------------------------------- - ---------- - ---------
Actuarial (loss) recognized in retirement
benefits schemes (17,281) (6,988)
Minority share of actuarial (loss) (94) -
-------------------------------------------- - ---------- - ---------
(17,375) (6,988)
Total recognized gains and losses relating
to the year
- Group (165,864) (30,199)
- Associates 2,169 3,944
-------------------------------------------- - ---------- - ---------
EUR EUR
(163,695) (26,255)
-------------------------------------------- - ---------- - ---------
Reconciliation of Movements in Shareholders'
Funds
Unaudited Audited
12 months 12 Months
to to
Dec 31, Dec 31,
2005 2004
EUR 000 EUR 000
-------------------------------------------- - ---------- - ---------
At beginning of year 869,101 895,356
Capital contribution 388,813 -
(Loss) for the year (145,557) (34,489)
Actuarial (loss) recognized in retirement
benefit schemes (17,281) (6,988)
Minority share of actuarial (loss) (94) -
Translation adjustments on foreign currency
net investments (763) 15,222
-------------------------------------------- - ---------- - ---------
At end of year EUR EUR
1,094,219 869,101
-------------------------------------------- - ---------- - ---------
JSG Funding plc
Reconciliation of net losses to EBITDA, before
exceptional items
Unaudited Unaudited Unaudited Audited
3 months 3 months 12 months 12
to to to months
to
Dec 31, Dec 31, Dec 31, Dec 31,
2005 2004 2005 2004
EUR 000 EUR 000 EUR 000 EUR 000
---------------------------- --------- - --------- --------- --------
Net losses (46,758) (9,550) (145,557) (34,489)
Equity minority interests 1,509 4,952 10,892 16,067
Taxation (3,253) (1,819) 24,607 26,973
Share of associates'
operating profit (2,389) (3,571) (7,287) (12,611)
Profit on sale of assets and
operations (6,090) (7,101) (52,587) (22,173)
Reorganization and
restructuring costs 11,973 30,750 25,540 39,430
Total net interest 91,267 77,905 347,702 292,304
Impairment of fixed assets 18,781 - 18,781 -
Depreciation, depletion and
amortization 77,834 68,141 271,291 300,540
---------------------------- --------- - --------- --------- --------
EBITDA before exceptional EUR EUR EUR EUR
items 142,874 159,707 493,382 606,041
---------------------------- --------- - --------- --------- --------
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