The Lemon Fool

Strong financial performance

• Record like-for-like corrugated box volume growth of +5.4%(4) vs FY 2020/21
- Adjusted operating profit of £616m up 29%
- Positive profit momentum through the period: H2 EBITA £340m (H1 £276m)
• Price recovery successfully offsetting increased input costs
• Strong operational and financial performance from Europac (12% ROACE in FY21/22)
• Continued US progress with EBITA growth of +31% and RoS 13.4%
• ROACE +260bps to 10.8% (H2 12.1%)
• Return on Sales +10bps to 8.5% (H2 8.8%)
• Strong cash flow generation driving leverage reduction
- FCF(8) £519m (+7%)
- Net debt reduction to £1,484m; 1.6x net debt/EBITDA(6) (2.2x at 30 April 21)
• Statutory profit before tax for year £378m (+71%)

Good strategic and operational progress

• Supporting our customers in a challenging environment
- Excellent service levels and security of supply
• Investment in growth projects on track with new greenfield site in Italy now operational and Poland currently being commissioned
- 80% pre-sold and expected 15-20% ROACE in year 3
• Demand from resilient FMCG focussed customer base supports continued disciplined capital investment for growth

Leading in Sustainability

• Working with our customers to deliver their sustainability goals
- Circular design metrics gaining traction with 2,000 live projects
- 313m units of plastic replaced since 2020
• Industry leading CO2 reduction targets
- Science Based Targets initiative approved plan in line with 1.5°C trajectory
- Commitment to Net Zero carbon emissions by 2050
• 29% reduction in CO2 per tonne of production vs 2015
• 100 biodiversity projects launched in the year
• Achieved target for producing 100% reusable or recyclable packaging

Positive outlook

• Despite a more challenging backdrop, the structural growth drivers together with a resilient FMCG customer base and our compelling offering underpin our confidence for FY22/23:
- Corrugated box volume growth currently expected to be 2-4%
- Capital expenditure increased to approximately £500 million to invest in customer led growth opportunities, including sustainability, at attractive financial returns
• Continued price recovery and cost management offsetting inflationary costs
• Good early momentum in the current financial year 2022/23

Dividend

The Board considers the dividend to be a very important component of shareholder returns. Our policy is that dividends will be progressive and that, in the medium term, dividend cover should be on average 2.0 to 2.5 times (relative to adjusted earnings per share), through the cycle. Accordingly, and reflecting the strong growth in the business and our confidence in the outlook, we are announcing a final dividend for this year of 10.2 pence, taking the total dividend for the year to 15.0 pence per share (2020/21: 12.1 pence), in line with our policy and an increase of 24 per cent over the prior period.

Subject to approval of shareholders at AGM to be held on 6 September 2022, the final dividend will be paid on 1 November 2022 to shareholders on the register at the close of business on 7 October 2022.