Investor Presentaiton
26
Financial Notes: Sources of information and bases of calculation
Unless otherwise stated: financial information relating to Smurfit Kappa Group has been extracted or derived from the audited results for the twelve months ended 31 December 2022 and unaudited results for the six months ended 30 June 2023 and financial information
relating to WestRock has been extracted or derived from the audited results for the twelve months ended 30 September 2022, and the unaudited results up until the third quarter ended 30 June 2023.
WestRock financials are prepared under U.S. GAAP. Smurfit Kappa Group financials are prepared under IFRS as adopted by the EU and certain adjustments have been made to prepare the estimated adjusted EBITDA for Smurfit WestRock. This, and certain other
statements, are based on non-IFRS and non-US GAAP financial information on Smurfit Kappa Group and WestRock. These statements may be subject to amendment in the Circular and Prospectus.
Sources of information and bases of calculation
Where figures such as adjusted Revenue and adjusted EBITDA are referenced in this presentation, these figures are approximate and represent estimates that are rounded to the nearest billion and/or hundred million and/or million, where applicable.
Unless otherwise stated in this presentation:
1.
Any references to Smurfit WestRock adjusted revenue are based on the following estimates and adjustments:
2.
a)
b)
Smurfit Kappa reported revenue of €12,267 million for the last twelve months, as of 30 June 2023, and converted to U.S. Dollars using an exchange rate of 1.047x implying an adjusted revenue of $12,849 million; and
WestRock adjusted revenue of $21,044 million for the last twelve months, as of 30 June 2023, which is based on the following pro forma adjustments: WestRock revenue of $20,724 million, subtracting the estimated revenue contribution from RTS Packaging of
$229 million, adding back estimated revenue contribution from Gondi of $549 million.
The Smurfit WestRock adjusted revenue is calculated as the sum of Smurfit Kappa adjusted revenue (as noted above in paragraph a)) and WestRock adjusted revenue (as noted above in paragraph b)).
Any references to Smurfit WestRock adjusted EBITDA are based on the following estimates and adjustments:
a)
b)
c)
Smurfit Kappa EBITDA of €2,294 million for the last twelve months, as of 30 June 2023, subtracting operating lease expenses of €108 million, and converted to U.S. Dollars using an exchange rate of 1.047x, being the average exchange rate over the last twelve
months ended 30 June 2023, implying a Smurfit Kappa adjusted EBITDA of $2,289 million;
WestRock adjusted EBITDA of $3,188 million for the last twelve months, as of 30 June 2023, which is based on the following adjustments: WestRock consolidated adjusted EBITDA of $3,162 million, subtracting the estimated EBITDA contribution from RTS
Packaging of $37 million, and adding back estimated EBITDA contribution from Gondi of $63 million; and
WestRock adjusted EBITDA of $3,202 million for the last twelve months, as of 30 June 2023, which is based on the following adjustments: WestRock adjusted EBITDA of $3,188 million, subtracting the estimated EBITDA contribution from Joint Ventures and
Associates of $30 million, subtracting certain pension and postretirement pension income of $31 million, and adding back share-based compensation of $75 million.
The Smurfit WestRock adjusted EBITDA is calculated as the sum of Smurfit Kappa adjusted EBITDA (as noted above in paragraph a)) and WestRock adjusted EBITDA (as noted above in paragraph c)).
Any references to Smurfit WestRock adjusted free cash flow are based on the following estimates and adjustments:
3.
a)
b)
4.
5.
6.
c)
Smurfit Kappa adjusted reported free cash flow of €1,581 million for the last twelve months, as of 30 June 2023, which is based on reported free cash flow of €692 million, adding back capital expenditures (excluding additions to right-of-use assets) of €938 million
and subtracting changes in capital creditors of €49 million;
Smurfit Kappa adjusted free cash flow of €1,560 million for the last twelve months, as of 30 June 2023, which is based on Smurfit Kappa adjusted reported free cash flow of €1,581 million, subtracting operating lease adjustments of €21 million, and converted to
U.S. Dollars using an exchange rate of 1.047x, being the average exchange rate over the last twelve months ended 30 June 2023, implying a Smurfit Kappa adjusted free cash flow of $1,634 million; and
WestRock adjusted free cash flow of $1,808 million for the last twelve months, as of 30 June 2023, which is based on net cash provided by operating activities of $1,784 million (which is before capital expenditure of $1,111 million) and adding back proceeds from
sale of property, plant and equipment of $24 million.
The Smurfit WestRock adjusted free cash flow is calculated as the sum of Smurfit Kappa adjusted free cash flow (as noted above in paragraph b)) and WestRock adjusted free cash flow (as noted above in paragraph c)).
The issued and to be issued ordinary share capital of Smurfit Kappa is based on a fully diluted share count of 264,733,319 reflecting 260,149,162 shares in issue as at the date of this announcement and 4,584,157 of dilutive share awards. The issued and to be issued
ordinary share capital of WestRock is based on a fully diluted share count of 260,365,377 reflecting 256,305,252 basic shares outstanding in issue and 4,060,125 of dilutive share awards which may be issued on or after the date of this announcement to satisfy the
exercise of stock options and restricted and performance stock awards outstanding under the WestRock Share Plans, estimated based on the total consideration per WestRock share and calculated in accordance with the Treasury Stock Method.
The enterprise value for WestRock is based on (i) the value placed by the Transaction on the entire issued and to be issued ordinary share capital of WestRock (as set out in the paragraph above) (ii) plus WestRock reported net debt of $8,712 million subtracting
estimated proceeds of $259 million resulting from the sale of RTS Packaging and the Chattanooga mill and (iii) adding the non-redeemable minority interests of $17 million.
Pro forma net debt for Smurfit WestRock based on (i) WestRock reported net debt of $8,712 million subtracting estimated proceeds of $259 million resulting from the sale of RTS Packaging and the Chattanooga mill (ii) plus Smurfit Kappa reported net debt of €3,175
million subtracting leases of €353 million converted to U.S. Dollars using an exchange rate of 1.087x, being the end of period exchange rate as of 30 June 2023, and (iii) adding estimated total cash consideration of $1,302 million.
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