DS Smith plc : DS Smith Pre Close Statement
04/25/2012| 02:43am US/Eastern
25 April 2012
DS Smith Plc - Pre-close statement
Continued positive performance from DS Smith
DS Smith Plc, the international supplier of recycled
packaging for consumer goods, today issues its pre-close
statement for the full-year to 30 April 2012.
DS Smith Group
The positive performance reported in our IMS on 17 January
2012 has continued in line with our expectations, with
like-for-like volume growth in corrugated packaging for the
financial year to date in line with our target of GDP+1%,
driven by a consistent performance among our FMCG customer
base, with a particularly strong contribution from our
business in Continental Europe.
We have been successful in our continued focus on reducing
working capital and anticipate achieving the previously
announced target of average working capital / revenue of 5%
at this year-end (2010/11: 6.4%). The return on average
capital employed for the year is expected to be within our
target range of 12 - 15% (2010/11: 11.5%), representing a
substantial improvement on the prior year.
Paper prices have been volatile in the second half of this
financial year. DS Smith remains structurally long in fibre
collection, and a net buyer of paper, therefore the impact of
this headwind in paper has been mitigated by an improved
performance in corrugated packaging. The UK business has been
restructured to further improve our competitive position.
Performance of Plastic Packaging, particularly liquid
packaging and dispensing, has enjoyed strong growth as
customers expand their use of bag-in-box for the
transportation of liquids.
On 30 December 2011, DS Smith announced the completion of the
sale of Spicers for £200 million, a significant premium to
On 9 January 2012, DS Smith announced that it now recognises
its 49.6% stake in a Ukrainian associate, Rubezhansk, as that
company has completed the signing of a revised loan
with its lending banks.
The Rights Issue to fund the acquisition of SCA Packaging
completed on 22 February 2012 and the proceeds were received
at that time.
SCA Packaging acquisition
Save as disclosed above, there has been no significant change
in the financial position of the
The proposed acquisition of SCA Packaging, as announced on 17
January 2012, is proceeding on track. Application was made to
the European Commission for competition clearance, on 28
March 2012. In addition, consultation has been completed with
all the relevant works councils, including those in France
which were required prior to SCA accepting the offer for the
French Business. Accordingly on 24 April 2012 DS Smith and
SCA signed the agreement for DS Smith to acquire the French
Business of SCA. The acquisition of the French Business is
therefore expected to follow the same timetable as for the
remainder of SCA Packaging. Completion of this acquisition
will normally take place at the end of the month in which the
last of the conditions is met. As previously announced, this
is expected to occur by the end of June 2012 following
satisfaction of remaining conditions.
In relation to the coming financial year, the key drivers
will be the completion and subsequent integration of the SCA
Packaging acquisition and associated cost synergies we have
previously identified, along with the underlying performance
of the enlarged Group.
Miles Roberts, Group Chief Executive, said
In relation to the proposed acquisition of SCA Packaging, as
previously announced, we continue to expect that in the first
12 months of ownership the acquired business (inclusive of
synergies) will deliver a return above the Group's pre-tax
cost of capital of 10%. Accordingly, the Board continues to
view the coming year with confidence.
"2012 has been an important year for DS Smith with the
announcement in January of the proposed acquisition of SCA
Packaging. We are delighted with the support for the
transaction given to us by our shareholders and I am pleased
to report that the process towards completion is on track. We
will update shareholders as appropriate as the regulatory
We continue to make encouraging progress towards the delivery
of the financial and operational targets we have set
A conference call for analysts and investors, hosted by Miles
Roberts and Steve Dryden, will take place today, 25 April
2012 at 07:45 BST. The dial-in number is:
+44 (0) 20 3003 2666
A play-back facility of this call will be available until 2
May 2012. The dial-in number is: 44 (0)
20 8196 1998 (access pin: 2182030).
A recording and transcript of the call will also be available
through the Investor Relations section of our website: www.dssmith.uk.com
Results for the full-year to 30 April 2012 28 June 2012
DS Smith Plc +44 (0)1628 583 400
Miles Roberts, Group Chief Executive Steve Dryden, Group
Finance Director Rachel Stevens, Head of Investor Relations
Tulchan +44 (0)20 7353 4200
John Sunnucks David Allchurch James Macey White
Technical note for analysts and investors
Following the Rights Issue, the average number of shares in
issue for this financial year (2011/12) is calculated as a
weighted number of shares in issue pre and post rights issue.
The number of shares in issue pre rights issue is adjusted
with reference to the bonus factor (based on the share price
immediately prior to the shares trading ex-rights versus the
theoretical ex-rights price). We estimate that the average
number of shares in issue (excluding shares in trust that are
not included in the EPS calculation) will be approximately
681m for the current financial year (2011/12). For next year
(2012/13) the average number of shares is expected to be
920m, before taking account of any shares issued as a result
of option exercise in the coming year.
Footnote: where relevant, all numbers given exclude Spicers.