& accounts 2017/media/files/i/ipl-plastics-plc/...ipl plastics plc (“the company”), formerly...

IPL Plastics plc Annual Report & Accounts 2017

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Annual Report& Accounts2017

IPL Plastics plc(formerly One Fifty One plc)

Contents

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IPL Plastics at a Glance – Who we are

IPL Plastics plc History

Geographic Footprint

Key Financial Performance

Strategic Report

Chairman’s Statement

Chief Executive’s Review

Financial Review

Risk Management

Responsible Business

Directors’ Report

Board of Directors

Directors’ Report

Directors’ Statement on Corporate Governance

Report of the Nominations Committee

Report of the Audit Committee

Report of the Remuneration Committee on Directors’ Remuneration

Financial Statements

Statement of Directors’ Responsibilities in respect of the Directors’ Report and the Financial Statements

Independent Auditor’s Report

Group Income Statement

Group Statement of Other Comprehensive Income

Consolidated Statement of Financial Position

Group Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Company Statement of Financial Position

Company Statement of Changes in Equity

Company Statement of Cash Flows

Notes to the Company Financial Statements

Directors and Other Information

Information for Shareholders

IPL Plastics plc (“the Company”), formerly One Fifty One plc, and its subsidiaries (together, “IPL Plastics” or “the Group”) is a leading rigid plastics manufacturer for the packaging, environmental containers, industrial products and returnable packaging sectors. The Group’s strategic vision is to become a leading global player in the rigid plastics market. IPL Plastics employs circa 1,900 people across Ireland, the United Kingdom (“UK”), Canada, the United States of America (“USA”), Mexico and China. The Group is headquartered in Dublin, Ireland.

IPL Plastics at a Glance – Who we are

OUR BUSINESS

IPL Plastics is a focused plastics business consisting of two divisions, one being OnePlastics Group (“OPG”) and the other being IPL Inc. (“IPL”), the North American based business acquired in July 2015. IPL has two separately managed business units following the expansion of its North American footprint through the acquisition of Macro Plastics Inc. (“Macro”) in the United States in June 2017.

The Group supplies products to a broad range of customers across end markets primarily in Ireland, the UK, USA, Canada, Mexico, Chile and China from fourteen production facilities (three in the UK; one in Ireland; one in China; and nine in North America). IPL Plastics organises its operations across three primary lines of market facing activities:

• Large Format Packaging and Environmental Solutions – production of bulk rigid plastic packaging containers for a wide variety of end markets together with wheeled bins, containers, caddies, etc. for the waste management and recycling industries. In addition, we act as a manufacturing partner for a wide diversified customer base in the construction, furniture and material handling industry sectors;

• Consumer Packaging – manufacture of high quality rigid plastic packaging products for a large blue-chip customer base, consisting of containers, caps and closures primarily for the dairy, food service and food to go markets; and

• Returnable Packaging Solutions – manufacture of rigid plastic bins, pallet boxes and totes primarily for the agricultural and automotive industries.

The Group continues to own a Metals recycling business based in the UK. The results of this business are presented within continuing operations under Other reconciling items.


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IPL Plastics plc History

2005 – 2010

Investment Company

One Fifty One plc was created. Capital was raised and a wide portfolio of controlling and non-controlling interests accumulated in multiple sectors. Trading on the unlisted grey market commences.

2011 – 2014

Restructuring & Transformation

A period of restructuring sees the wide portfolio rationalised. Operating divisions are restructured which alongside a rationalisation of Group costs, results in a reduction of net debt. The balance sheet is restructured and a long-term strategy is formulated for the Group.

2015 Return to Growth & Transformational Acquisition

With more focused operating divisions and investment portfolio, the Group returns to growth. The key acquisition of 66.67% of IPL transforms the Group into a leading global player in the plastics market.

2016 New HQ and further additions to the Plastics Division

After many years at Thomas Street, the Company moved head office to St. Stephen’s Green. Encore Industries Inc. (“Encore”) in North America was acquired through our subsidiary IPL in November 2016.

2017 Further growth Marked a key year in the evolution of the Group with the disposal of the Specialist Environmental Services (“SES”) division and the acquisition of Macro, which increased the Group’s global presence and scale. The Group’s shareholders gave the Board the authority to enable the Company to proceed with an IPO and Listing in 2018. Shareholders also approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders’ equity interests in IPL Inc. for shares in the Company. Authority was also received from shareholders to change the name of the Company to IPL Plastics plc.

2018 The present, the future and beyond…

The minority shareholders’ equity interests in IPL Inc. were exchanged for shares in IPL Plastics plc, under the authority given by the shareholders.

Now operating manufacturing plants at 14 different locations across three continents and with a clear long term strategy developed, IPL Plastics plc is a transformed Group with the structure and appetite for further growth and development.

2

c.2.2 Million Square Feet of Manufacturing and Storage Space

270+ Machines

9 Warehousing Units

Warehousing units

14 ManufacturingFacilities

Returnable Packaging Solutions

Large Format Packaging and Environmental Solutions

Consumer Packaging

2 R&D Facilities in Ireland and Canada

R&D Centre

6 Of�cesWorldwide

Of�ce

Geographic Footprint


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Key Financial Performance

The Group uses a number of key performance metrics to assess its financial performance for the year ended 31 December 2017.

2017 2016 2015€’m €’m €’m

Group revenue(1) 474.4 348.2 251.4

EBITDA(1,2) 70.9 48.5 31.3

EBIT(1,3) 41.6 28.3 19.6

Profit for the year before exceptional and non-recurring items and share of equity-accounted investees profits(1) 19.6 17.9 11.4

Profit for the year(4) 17.6 16.1 18.4

Adjusted diluted Earnings per Share (cent)(5) 12.01 11.04 6.98

EBITDA interest cover (times)(6) 5.2 6.2 6.3

Total assets 621.9 511.4 443.1

Shareholders’ equity (excluding IPL Put Liability)(7) 202.5 190.9 184.9

Shareholders’ equity 82.7 118.6 152.6

Net debt (excluding convertible loan notes) 233.0 152.5 120.3

Three Year Summary – Financial Information

(1) The results for the year ended 31 December 2017 and prior years exclude amounts related to discontinued operations, which comprise the ClearCircle Specialist Environmental Services (“SES”) businesses (disposed of in April 2017 with an effective date of 1 January 2017). The results for the year ended 31 December 2017 exclude the effect of discontinued operations, which in 2016 and 2015 also comprised the Metals Ireland recycling businesses (disposed of in September and October 2016). A full reconciliation of continuing operations is presented in note 3 while discontinued operations results are reconciled in note 11. Assets and liabilities held-for-sale (including those relating to the SES businesses) are set out in note 21.

(2) EBITDA represents earnings before interest, taxation, depreciation, amortisation, exceptional items, non-recurring items and the Group’s share of profits from its equity-accounted investees. Management believes that EBITDA, while not defined under IFRSs, provides a fair reflection of the underlying trading performance of the Group. EBITDA is reconciled to the Income Statement in note 3 to the financial statements.

(3) EBIT is EBITDA less depreciation and amortisation. EBIT is reconciled to the Income Statement in note 3 to the financial statements.

(4) Profit for the year includes €1.8 million (2016: €3.9 million), being the Group’s share of profits from its equity-accounted investees. Charges in respect of exceptional items net of tax included in the profit for the year amounted to €8.5 million (2016: €7.1 million). Further detail in relation to exceptional and non-recurring items is contained in note 7 and note 4 respectively.

(5) Adjusted diluted Earnings per Share is calculated by dividing the adjusted profit attributable to ordinary shareholders (which excludes exceptional and non-recurring items and the Group’s share of after tax profits of its equity-accounted investees) by the weighted average number of Ordinary Shares outstanding, as adjusted for the effects of all Ordinary Shares and options with a dilutive effect (see reconciliation to IAS 33 Earnings per share calculation in note 12).

(6) EBITDA interest cover based on the full year results (see reconciliation to Income Statement in note 3).

(7) Shareholders’ equity is stated prior to deduction being made for the IPL Put Liability. The Put Liability amounted to €119.8 million at year end (2016: €72.2 million; 2015: €32.4 million), is measured at fair value and represents the anticipated consideration required to acquire the IPL minority interests’ shareholdings in July 2021 (date from when the Put becomes exercisable), discounted to present value.

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2017 Revenueby Business Unit

IPL

OnePlastics Group

Macro

Other

62%

24%

10%

4%

2017 EBITDAby Business Unit

IPL

OnePlastics Group

Macro

Other

65%

18%

18%

(1%)

€474.4m €474.4m €70.9m

Revenue €’m

2015

2016

2017

251.4

474.4

348.2

+36.2% from 2016

Adjusted diluted EPS € cents

2015

2016

2017

6.98

12.01

11.04

+8.8% from 2016

Total Equity* €’m

2015

2016

2017

184.9

202.5

190.9

+6.1% from 2016

EBITDA €’m

2015

2016

2017

31.3

70.9

48.5

+46.0% from 2016

2017 Revenueby Geography

North America

UK

Ireland

Rest of World

72%

21%

6%

1%

* Total equity excludes the Put Liability relating to the 33.33% of IPL not owned by the Group, which amounted to €119.8 million at year end (2016: €72.2 million; 2015: €32.4 million).

All amounts are accounted for under IFRS.


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Strategic Report



Financial Review

Risk Management


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Hugh McCutcheon Interim Chairman


I am pleased to report that 2017 was another year of significant progress for IPL Plastics in achieving its strategic goals for the Group, which culminated in delivering a strong set of results for the year ended 31 December 2017. The Group’s IPL business, which accounts for over 70% of the Group’s revenues, had another positive year driven by continued organic growth and demand for its products in the US and Canadian markets. In June 2017, the Group acquired Macro Plastics Inc., which produces rigid plastic bulk bins and bulk packaging solutions primarily for the North American agricultural and automotive sectors.


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Chairman’s Statement (continued)

FINANCIAL PERFORMANCE

The financial performance of the Group was ahead of expectations during 2017.

Group revenue for the year was €474.4 million (2016: €348.2 million), with our IPL division (inclusive of Macro) accounting for €341.3 million (2016: €204.3 million), 71.9% (2016: 58.7%) of the Group’s total, positively impacted by a full year’s contribution from Encore, acquired in November 2016, and contribution from Macro since its acquisition on 9 June 2017.

EBITDA (excluding discontinued operations) for the year was €70.9 million (2016: €48.5 million), representing a 46.0% increase year on year. Adjusted diluted Earnings per Share was 12.01 cents for the year (2016: 11.04 cents), which represents a 8.8% increase year on year.

Net debt (excluding Convertible Loan Notes) was €233.0 million at 31 December 2017 (2016: €152.5 million). The increase was primarily driven by the drawdown of borrowings to fund the acquisition of Macro and significant development capital expenditure programmes.

A detailed review of the Group’s performance in the year is provided in the Chief Executive’s and Financial Review Reports.

DIVIDENDS

The Board is not currently contemplating the payment of a dividend to shareholders in respect of the 2017 financial year but continues to keep this matter under review in line with our strategic goals.

BOARD AND GOVERNANCE

IPL Plastics remains committed to high standards in corporate governance. The Board has undertaken to continue to comply with appropriate corporate governance arrangements having regard

to best practice and taking into account the size of the Group and the nature of its activities. The Directors’ Statement on Corporate Governance describes the corporate governance arrangements in place.

Following the acquisition by CDP Investissements Inc. (“CDPQ”) of IIU Nominees Limited’s (“IIU”) shareholding in the Group on 18 May 2017, Mr. Pat Gilroy resigned as a Non-Independent Non-Executive Director. Mr. Gilroy was a nominee of IIU on the Board. On 5 July 2017, Mr. Denis Cregan informed the Board of his retirement as Chairman and Non-Executive Director. Mr. Cregan held the position of Chairman since 31 December 2012. Mr. Dalton Philips also resigned as Non-Executive Director on 29 September 2017 following his appointment as Chief Executive Officer of Dublin Airport Authority. The contribution of our former Chairman Denis and Non-Executive Directors Pat and Dalton during their tenures has been much appreciated by myself and all the Board.

On 2 January 2018, Mr. Alain Tremblay was appointed to the Board. Alain joins as a Non-Independent Non-Executive Director representing CDPQ, the Group’s largest shareholder. Alain is an Investment Director in the Private Equity Division of CDPQ.

OUR PEOPLE

IPL Plastics has circa 1,900 employees in its global operations and I want to thank them for their continued support, loyalty, hard work and commitment to the development of the Group. On behalf of the Board and all shareholders, I would like to take this opportunity to note their significant contribution to IPL Plastics’ performance.

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STRATEGY

The Group’s strategic vision is to become a leading global player in the rigid plastics market.

The disposal of the non-core UK and Irish SES businesses in April 2017 has ensured clarity of purpose and enables the Company to focus on its strategic vision.

Rigid plastic packaging is the largest component of the global plastic packaging market. The rigid plastic packaging market is driven by innovation, the substitution effect versus traditional forms of packaging (e.g. glass, paper, metals), population growth and urbanisation. Growth in these factors leads to growth opportunities for rigid plastic packaging manufacturers, including IPL Plastics. It is a consolidating marketplace as evidenced by a number of significant recent merger and acquisition transactions.

The Group’s strategy is focused on the development and growth of the plastics business, through both organic and acquisition-led initiatives. The acquisition of Encore and Macro, along with the Group’s development capital expenditure programmes in North America, in particular, and the disposal of the non-core SES UK and Irish businesses, support this strategic objective.

In August 2017, the Board announced that it had agreed to recommence exploring a possible IPO and stock-market listing for the Group in the next 12 to 18 months, subject to market conditions. This strategy has the full support of the Group’s largest shareholder, CDPQ. A stock-market listing would provide shareholders with a liquid market for their shares and would facilitate raising further equity, if necessary to support future growth. The Board continues to explore all options, including a possible IPO, with the objective of maximising shareholder value and delivering a liquidity event for our shareholders.

In December 2017, the Board took initial steps to facilitate a possible liquidity event for our shareholders by convening an Extraordinary General Meeting (“EGM”) at which shareholders gave the Board the authority to enable the Company to proceed with an IPO and Listing in 2018 should market and other conditions permit. Shareholders also approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders’ equity interests in IPL Inc. for shares in the Company. Authority was also received from shareholders to change the name of the Company from One Fifty One plc to IPL Plastics plc, which became effective on 7 December 2017.

On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by the shareholders at the EGM on 6 December 2017.


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OUTLOOK

The Group continues to experience strong demand for its products and its operations are underpinned by favourable market dynamics, particularly in North America. US-based customers account for more than 50% of the Group’s end market plastic sales. Given the strong growth experienced by IPL and the Group’s recently acquired businesses, we continue to invest heavily in development capital expenditure projects both to respond to customer demand, including through broadening the product range, and to drive improvements in operating margins. We are focused on maximising synergies and leveraging our expertise across our international locations. In tandem with these organic initiatives, we will continue to consider complementary acquisitions that make sound strategic sense.

As we move forward into 2018, the Group is cognisant of elevated levels of global risk, including stock market, currency and interest rate volatility, an uncertain global economic climate, the outlook for the UK economy depending on the final agreed terms of Britain’s proposed exit from the EU. Despite these challenges, we are confident in the robustness of the business strategy and the ability of the Group to develop profitably and increase shareholder value into the future.

The results in the second half of 2017 were adversely impacted by increased resin prices and transportation costs together with the decline in the value of the Canadian and US Dollars against the euro. These trends have continued into 2018.

Chairman’s Statement (continued)

IPL Plastics now has a global platform comprising rigid plastic packaging products, a segment of the overall plastics marketplace generally characterised by attractive margins and significant barriers to entry. The business is subject to low demand volatility, due to the globalised defensive end-markets served, providing stability to the business and greater visibility on future revenue flows, as well as the potential for continued market expansion.

Given the many options available to us to grow and develop the business, both organically and through acquisition, we are confident in the ability of the business to continue to grow profitability in the future and to create shareholder value. In line with the authority given by our shareholders at the 6 December 2017 EGM, we continue to progress planning for a possible IPO and stock market listing, subject to market conditions, which would allow us to access further equity capital to finance these exciting growth opportunities and provide our shareholders with a liquid market for their shares.

Hugh McCutcheonInterim Chairman8 March 2018

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The year to 31 December 2017 was another year of further significant progress, continued growth, capital investment and refined strategic focus for IPL Plastics. This was evidenced in particular by strong organic growth, primarily in our IPL business in Canada and the United States, the acquisition of Macro, and the disposal of the Group’s non-core SES businesses.

Alan Walsh Chief Executive Officer


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BUSINESS AND OPERATIONAL HIGHLIGHTS:

• Earnings in 2017 (EBITDA, excluding discontinued operations) increased by 46.0% to €70.9 million on revenue which increased by 36.2% to €474.4 million;

• IPL successfully completed the integration of Encore into its North America business;

• The Group acquired 100% of the share capital of Macro on 9 June 2017 through IPL. Macro offers a significant footprint for IPL’s expansion in the strategically important US market and the growing South American market;

• Macro delivered results for 2017 which were ahead of our expectations announced at the time of acquisition. The integration of Macro has been completed successfully with growth anticipated for 2018 driven by a significant new contract with a global automotive customer;

• In April 2017, the Group disposed of a 75% interest in ClearCircle Environmental’s Island of Ireland SES businesses (“ClearCircle Ireland”) for an upfront cash consideration of €22.25 million and retained a minority shareholding under a put and call option agreement;

• In April 2017, the Group disposed of ClearCircle Environmental’s SES businesses in the United Kingdom (“ClearCircle UK”) for a cash consideration of STG£16.0 million;

• The North America market has contributed strong organic growth driven by continued increased demand in both the Consumer Packaging and Large Format Packaging and Environmental Solutions sub-divisions;

• Significant development capital investment programmes continue in our North American operations providing the Group with an enhanced ability and capacity to serve an expanding business. A number of these projects began to contribute to EBITDA in 2017;

• Following the successful reconfiguration of the operations at one of the UK sites, OPG now has an improved and broader product offering to a wider range of customers in the UK rigid plastic packaging market;

• OPG’s Ireland and China business has been negatively impacted by reduced demand from its largest customer, following the merger of that customer with another industry participant in the second half of 2016;

• Working capital increased by €22.2 million since December 2016 driven by the acquisitions of Macro and Encore, increased levels of inventory as a result of two large contracts with customers in North America and the significant organic growth in the business;

• Renegotiated and extended (in June 2017) the IPL syndicated loan facility to finance the acquisition of Macro and to provide further bank facilities to the IPL group with a revised expiry date of July 2021;

• Continuing to position IPL Plastics for future growth by identifying appropriate organic and acquisition opportunities which can drive growth in shareholder value;

• The hurricanes in the US in Quarter 3, 2017 drove reduced capacity in both the resin and freight markets resulting in significant cost increases in Quarter 4, 2017, trends which have continued into Quarter 1, 2018;

• In December 2017, the shareholders approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders’ equity interests in IPL Inc. for shares in the Company; and

• On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017.

Chief Executive’s Review (continued)

12

Throughout 2017, the management team has continued to build on the positive momentum of recent years. Our strategy is clear and focused which is to grow our core plastics business both organically and through acquisition where appropriate, and to increase shareholder value.

TRADING RESULTS

The 2017 trading performance was ahead of management expectations, largely driven by another year of strong growth from our IPL division, including a full year contribution from Encore (acquired in November 2016) and Macro results that exceeded expectations. The IPL growth was partially offset by a decrease in the year on year OPG performance, due to a number of factors, but primarily due to reduced demand from its largest customer. The Metals South recycling business (our only remaining non-plastics trading operation) in the UK performed ahead of expectations driven by increased commodity prices.

Revenue (excluding discontinued operations) for the year was €474.4 million (2016: €348.2 million). EBITDA (excluding discontinued operations) was €70.9 million (2016: €48.5 million). The profit for the year before exceptional and non-recurring items and the Group’s share of equity-accounted investees profits amounted to €19.6 million (2016: €17.9 million). The profit for the year for 2017 amounted to €17.6 million (2016: €16.1 million). Net debt (excluding Convertible Loan Notes) was €233.0 million at 31 December 2017 (2016: €152.5 million).

We made further strides towards achieving our strategic goal to grow our rigid plastics packaging business, both organically and through acquisition, with the acquisition of Macro and continued growth in the US and Canadian markets.


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GROUP OVERVIEW AND STRUCTURE

In July 2015, IPL Plastics acquired a majority shareholding of 66.67% in IPL Inc. with the minority shareholding of 33.33% acquired by CDPQ and Fonds de Solidarité des Travailleurs du Québec (“FSTQ”). In December 2017, the Board took initial steps to facilitate a possible liquidity event for our shareholders by convening an EGM at which shareholders gave the Board the authority to enable the Company to proceed with an IPO and Listing in 2018, should market and other conditions permit. Shareholders also approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders’ equity interests in IPL Inc. for shares in the Company. Authority was also received from shareholders to change the name of the Company from One Fifty One plc to IPL Plastics plc, which became effective on 7 December 2017.

On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017, which results in the cancellation of the associated Put Liability as is outlined in the Financial Review on pages 32 and 33. This post reorganisation structure will enable the full integration of IPL Inc. into the IPL Plastics Group and the refinancing of IPL acquisition debt and working capital financing into more appropriate group-wide facilities. An illustration of the 2017 and the post corporate reorganisation group structure is included overleaf.

In 2017, IPL Plastics consisted of two divisions, one being IPL and the other being OPG, and three distinct business units; IPL, Macro and OPG. The Group supplies products to a broad range of customers across end markets primarily in Ireland, the UK, USA, Canada, Mexico, Chile and China from fourteen production facilities (three in the UK; one in Ireland; one in China; and nine in North America). IPL Plastics organises its operations across three primary lines of market facing activities:

• Large Format Packaging and Environmental Solutions – production of bulk rigid plastic packaging containers for a wide variety of end markets together with wheeled bins, containers, caddies, etc. for the waste management and recycling industries. In addition, we act as a manufacturing partner for a wide diversified customer base in the construction, furniture and material handling industry sectors;

• Consumer Packaging – manufacture of high quality rigid plastic packaging products for a large blue-chip customer base, consisting of containers, caps and closures primarily for the dairy, food service and food to go markets; and

• Returnable Packaging Solutions – manufacture of rigid plastic bins, pallet boxes and totes primarily for the agricultural and automotive industries.


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2017 GROUP STRUCTURE

CURRENT GROUP STRUCTURE (POST CORPORATE REORGANISATION)

IPL Plastics plc CDPQ

CDPQ

CDPQ

CDPQ

FSTQ

FSTQ

FSTQ

OnePlastics Group IPL Inc.

Encore Industries

Encore Industries

Macro Plastics

Macro Plastics

IPL Inc.OnePlastics Group

IPL Plastics plc

Ring-fenced Structure

66.67%100%

100%

100%

22.22%

33.86%**

26.43%*

11.11%

7.46%**

Swap-up of IPL Inc. Shareholding to IPL

Plastics equity

* Percentage calculated based on the number of IPL Plastics shares in issue at 31 December 2017 (158.6 million shares).

** Percentage calculated based on total fully diluted number of shares of 216.8 million at 31 December 2017 (inclusive of 47,238,242 shares issued as part of reorganisation).


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IPL Plastics Group

IPL

Consumer Packaging

Large Format Packaging and Environmental

Solutions

Consumer Packaging



Solutions

Macro IPL OPG

OPG

Divisions

Business Units / Segments

Sub Divisions / Market Facing Activities

IPL Plastics has a portfolio of injection moulding businesses which, as well as developing and designing its own products, offers a full contract manufacturing service. The strategy is to strengthen the position of the Company as a leading provider of quality plastics products to a variety of end users across a global market while enhancing margins through innovation and operational excellence.

Overall, the Group continued on its growth trajectory in 2017 which was boosted significantly by the full year impact of Encore and the acquisition of Macro.

The Group has a strong and profitable product portfolio across consumer packaging, industrial products, bulk packaging, environmental containers and material handling for the agriculture and automotive industries. The products range from food containers, bowls, lids and tubs, to wheeled bins and other waste disposal containers, to crates, trays and paint containers, amongst others.

Customers, many of whom are blue-chip organisations, are loyal, diversified and profitable. The current footprint of operations and customers presents an opportunity to expand into new markets to both sell to new and cross sell to existing customers, many of whom have global operations.


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IPL Plastics Group

North America

North America Europe North

America Europe


Consumer Packaging


Solutions

• Fairfield, CA

• Shelbyville, KY

• Union Gap, WAPlants

• Edmundston, NB

• Lee’s Summit, MO

• Cork

• China

• St Damien, QC

• Cambridge, OH

• Forsyth, GA

• Remer, MN

• Hull

• Rotherham

• Tamworth

The key strategic objective is to continue to grow the business globally, expanding the range of customers and end markets served, through:

• Organic growth – including investing in enhanced operational capabilities, expanded geographic coverage and new technologies and product ranges;

• Optimising synergies – arising from the further integration of IPL, Macro and OPG – including sales, operations, R&D, finance, IT and procurement; and

• Acquiring companies – in complementary market sectors with a European and North American presence.

IPL and OPG both have dedicated product focused Innovation Centres of Excellence to foster innovation, new product development and provide customers with an opportunity to review the technologies the Group are offering. The acquisition of IPL brought with it advanced

product research and development capabilities. The Group operates in a growing and consolidating rigid plastic packaging marketplace and works closely with customers in designing, prototyping and testing a number of exciting new products. During the year, the Group launched a range of new products and these, together with ongoing research and development activities and close interaction with customers, provide the Group with considerable competitive advantage in its key markets.

Management have made a number of organisational changes effective 1 January 2018 which underpin the Group’s strategy of focused growth and development through organic and acquisition led initiatives, and to support the efforts to achieve synergies and leverage expertise across our business, by structuring the Group across our three primary market facing activities; Large Format Packaging and Environmental Solutions, Consumer Packaging and Returnable Packaging Solutions.


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2017 EBITDA by Business Unit

◼ IPL 65%

◼ Macro 18%

◼ OnePlastics Group 18%

◼ Other (1%)

€70.9m

Revenue

€293.7m (2016*: €204.3m)

EBITDA

€45.9m (2016*: €31.6m)

EBTIDA Margin**

15.6% (2016*: 15.5%)

* Encore was acquired in November 2016 and the 2016 results represent the period from acquisition to 31 December 2016.

** EBITDA Margin is before the allocation of any IPL Plastics central overhead costs.

IPL is a leading North American manufacturer of injected moulded plastic products. IPL occupies approximately 1,300,000 square feet of manufacturing and warehousing space and employs approximately 1,100 people across six operating sites. IPL operates a modern and extensive suite of approximately 140 moulding machines across its sites.

The underlying business is well diversified from a geographical, product offering and customer base perspective and in addition has a high-quality asset base. These factors taken together have contributed to the continued strong performance in the period.

The original acquisition of IPL by the Group in July 2015, followed by the acquisition of Encore in 2016, have provided IPL Plastics plc with a strong platform for future growth across North America thereby providing the Group with access to significant new markets for existing products. The acquisitions also enable the Group to bring a wide range of exciting new products, especially in food packaging and bulk containers, to existing OPG customers. The financial and operational performance of IPL has been a key driver of the success and transformation of the Group in recent years.

BUSINESS UNITS

During 2017, the Group was organised into three strategic business units; IPL, Macro and OnePlastics Group.

IPL


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The company originally comprised three manufacturing plants in Saint Damien (Canada), Edmundston (Canada) and Lee’s Summit (US). Following the Encore acquisition in November 2016, the company added three manufacturing plants in Cambridge (Ohio), Forsyth (Georgia) and Remer (Minnesota).

2017 has seen continued strong performance from IPL where the Large Format Packaging and Environmental Solutions sub-division performed ahead of expectations. Large Format Packaging and Environmental Solutions has also successfully integrated Encore into its business. Revenue for the year was €293.7 million (2016: €204.3 million) and EBITDA was €45.9 million (2016: €31.6 million). EBITDA includes €5.0 million from the acquired Encore business with the remaining €40.9 million being generated from the original IPL business and organic growth facilitated in part by a capital investment programme, reflective of a strong underlying performance during the year.

The acquisition of Encore and the capital investment plan being undertaken will enable IPL to expand its geographic footprint and broaden its product offering further across the growing North American rigid plastic packaging market, a key growth area for the Group.

IPL comprised two sub-divisions, namely Consumer Packaging (“IPL Consumer Packaging”) and Large Format Packaging and Environmental Solutions (“IPL Large Format Packaging and Environmental Solutions”).

IPL CONSUMER PACKAGING

Consumer Packaging has two production facilities, Edmundston in New Brunswick, Canada which manufactures thin-wall containers primarily for the US market and regional Canadian market; and Lee’s Summit, Missouri, which services a national market primarily for retail lids and over-caps. These sites occupy c.300,000 square feet of manufacturing and warehousing space and the sub-division employs c.400 people in the US and Canada.

In November 2016, IPL announced a significant expansion (“Phase 1”) of the Edmundston plant operations. The project was completed during the

year and provides that plant with the operating infrastructure to service some significant new business wins during the period. The Edmundston facility has expanded its operations from a niche product producer into the strategically important Canadian dairy market with success achieved in penetrating global customers in this market sector during 2017. A further expansion of the Edmundston facility was approved (“Phase 2”) in the second half of 2017 to support the growing business wins in the Canadian dairy market. In total CAD$15.2million of capital spend was committed in respect of the Phase 1 and Phase 2 expansions of the Edmundston facility.

Lee’s Summit is geographically well positioned to service the US market and optimise logistical efficiencies. The site has traditionally been a large volume producer of overcaps with Management now focusing on diversifying the plant’s product capabilities and offerings into other technologies and sectors such as In Mould Labelling (“IML”) rigid containers for the U.S. dairy market.

The Consumer Packaging business is underpinned by a solid customer base of blue chip companies and strong brands as the division continues to embed our product offerings in sustainable market sectors including the food and dairy sector in Canada and the United States. The business also has a strong asset base with 38 presses at our Edmundston facility and 27 presses in Lee’s Summit. In addition, the IML printing investment in Edmundston provides Consumer Packaging with a market offering that none of our competitors can currently provide. We also have further printing capability across the business with seven presses at our Edmundston facility and nine presses at our Lee’s Summit facility.


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Consumer Packaging is at a point in its evolution as a business where 2018 will primarily be a year where the key focus is delivering on the significant capital spend invested in the business in the past year, while concurrently identifying further growth opportunities to maintain the positive momentum. Part of delivering on this capital expenditure will be through providing a market leading IML offering in the Canadian marketplace by the delivery of a value add IML solution in place of the traditional offset print solution.

IPL LARGE FORMAT PACKAGING AND ENVIRONMENTAL SOLUTIONS

IPL Large Format Packaging and Environmental Solutions is engaged in the production and supply of rigid plastic bulk packaging containers, environmental carts and material handling crates from four manufacturing and warehousing facilities across the US and Canada. These sites occupy c.750,000 square feet of manufacturing space and the sub-division employs c.730 people across the region. The Large Format Packaging and Environmental Solutions sub-division has its largest production facility in Saint Damien, Canada, which produces waste carts, bulk packaging and material handling containers.

The IPL Large Format Packaging and Environmental Solutions management team are focused on core strategic pillars to drive their business namely:

• Expand the business geographically by leveraging the Encore acquisition and capital investment in Forsyth, Georgia – the “IPL South” platform in the US;

• Focus on organic growth through the continued leveraging of the operational management teams, products and processes and the development of operational efficiencies; and

• Emphasis on innovation to advance products that differentiate Large Format Packaging and Environmental Solutions with a capability to standardise and produce to a global scale.

The acquisition of Encore provided IPL Large Format Packaging and Environmental Solutions with a manufacturing presence in the United States with its three facilities. In November 2016, the Group approved a capital expenditure expansion project for the IPL South facility amounting to CAD$23.3 million. That project is well advanced with the majority of new machines being commissioned in the second half of 2017. Management’s objective during 2018 with regards to IPL South is to improve the utilisation and efficiency of the newly installed injection moulding machines.

IPL Large Format Packaging and Environmental Solutions continues to experience growing demand for its products in Canada and the United States. The capacity challenge facing the business around continually satisfying customer demand requirements is being addressed on an ongoing basis by subcontracting and by capital expenditure projects.


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MACRO

Revenue

€47.5mEBITDA

€12.6mEBTIDA Margin**

26.5%* The results represent the period from acquisition on 9 June 2017 to 31

December 2017.

** EBITDA Margin is before the allocation of any IPL Plastics central overhead costs.

On 9 June 2017, the Group acquired the entire share capital of Macro Plastics Inc., through IPL, for a total enterprise value of USD$150.0 million. Macro is one of the largest manufacturers of rigid plastic bulk bins worldwide and is a market leader in providing value added rigid plastic bulk packaging solutions to the agricultural and automotive sectors, and operates some of the largest bulk machines in North America. Headquartered in Fairfield, California, Macro operates three manufacturing facilities in California, Washington and Kentucky with dedicated design and testing capabilities together with an established international sales network.

Macro offers a significant footprint for the Group’s expansion in the strategically important US market and the growing South and Central American markets. Macro’s product portfolio is complementary to IPL’s existing business and is a significant step in IPL Plastics’ strategy to become a leading global player in the rigid plastics market. In particular, Macro provides the Group with a significant presence on the US West Coast, a key growth target of the Group.

Management together with the core Macro team has been focused on the integration of the business into the IPL Group during the second half of 2017. The integration is complete with a clear strategic focus outlined in the business unit’s newly developed five-year plan. Trading since the acquisition of Macro has been solid and the business has delivered full year results for 2017 ahead of our expectations announced at the time of acquisition. Macro also received the first tranche of orders from a very significant automotive related contract at the end of 2017 which was anticipated at the time of acquisition.

The three Macro manufacturing plants in Shelbyville (Kentucky), Union Gap (Washington) and Fairfield (California) occupy approximately 800,000 square feet of manufacturing and storage space and employs approximately 135 people. Macro operates 18 moulding machines across its 3 sites. It has performed ahead of expectations since acquisition delivering €47.5 million in revenue and €12.6 million in EBITDA in the period since acquisition to 31 December 2017.

Macro’s traditional and largest revenue generating sector is its core agricultural business where it sells bulk bins directly to large farms and food producers. Macro has diversified into other sectors including into the automotive market with industrial bins for supply chain logistics, and also into the temporary flooring market. These new product lines, while accounting for a smaller proportion of revenue presently, are expected to be a significant driver of Macro’s future revenue growth.

Macro’s key strategic priority is to grow the business organically through the introduction of innovative products and by expanding into new markets within North America, South America and Europe. Management is cognisant of the opportunities and potential efficiencies that can be achieved by leveraging synergies around innovation, customer relationships and procurement activities.


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OPG

Revenue

€114.1m (2016: €126.9m)

EBITDA

€13.1m (2016: €17.2m)

EBTIDA Margin*

11.5% (2016: 13.5%)

* The EBITDA Margin is before the allocation of any IPL Plastics central overhead costs.

OPG operates from five sites across Ireland, the UK and China occupying approximately 400,000 square feet of manufacturing and warehousing space and employing over 500 people. OPG operates a modern and extensive suite of approximately 135 moulding machines across its sites.

Revenue for the year in OPG was €114.1 million (2016: €126.9 million) and EBITDA was €13.1 million (2016: €17.2 million). The reduction in OPG revenue and EBITDA was driven by reduced demand from its largest customer, following the merger of that customer with another industry participant in the second half of 2016, and adverse currency movements from a weakening Pound Sterling.

OPG comprised of two sub-divisions in 2017; Consumer Packaging (“Consumer Packaging Europe & China”) and Large Format Packaging and Environmental Solutions (“Large Format Packaging and Environmental Solutions Europe”). These sub-divisions are explained below.

CONSUMER PACKAGING EUROPE & CHINA

Consumer Packaging Europe & China operates from two manufacturing sites in Ireland and China occupying c. 150,000 square feet of manufacturing and warehousing space and employing c.190 people. It operates a modern and extensive suite of 56 injection moulding machines across its Cork

and China sites, focused on electromechanical assemblies, food packaging and agri-retail products.

Consumer Packaging Europe & China maintains leading market positions in the following market sectors:

• Packaging – rigid plastic packaging, including IML offerings, for the retail food, food service, adhesive coating, agricultural, pharmaceutical, material handling and other industrial markets in the UK and Ireland; and

• Electromechanical Assemblies – manufacturing and supply chain partner to blue chip customers in the electronics industry.

Consumer Packaging Europe & China financial performance in 2017 was impacted by reduced demand from its largest customer, following the merger of that customer with another industry participant in the second half of 2016 and the slower than anticipated ramp up in the food grade plastics packaging offering.

Consumer Packaging Europe & China has continued to develop its product offering in the food grade packaging sector targeting the large retail food packaging market in the UK and Ireland. While the pipeline of potential contracts in the market is healthy, traction following the commissioning of the new food grade plastics packaging manufacturing facility has been slower than expected. There continues to be significant capacity for growth and the expected improvement in volumes and product mix through 2018 will help boost margins.

The key strategic and tactical actions identified by Management which will underpin the current business and drive growth are aligned with the overall Group objectives and include:

• The delivery of organic growth through increased focus on opportunities within existing key customer relationships and utilising and building the pipeline to fill the existing capacity in the state of the art food packaging facility;

• The optimisation of synergies through leveraging the IPL Consumer Packaging brand, contacts and processes with existing blue chip global companies; and


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• The Identification of acquisition opportunities to grow the Group’s European presence.

Consumer Packaging Europe & China opened their Innovation Centre of Excellence (“ICE”) in Cork in April 2015. ICE has strong links with the already established North American innovation centre and together they will focus on bringing cutting edge products to market. These dedicated innovation centres will provide the basis upon which Consumer Packaging Europe & China will bring products from their initial concept phase, through design, stress testing and simulation to full production.

In Ireland, the Cork site supplies a range of containers to the agricultural and decorative coatings industries, and also manufactures bespoke products for multinational companies serving the food packaging, nutrition, pharmaceutical and computer storage sectors. The manufacturing plant in China supports the Irish operation by producing bespoke electromechanical assemblies for the computer storage sector which allows it to support the global supply chain of its customers.

LARGE FORMAT PACKAGING AND ENVIRONMENTAL SOLUTIONS EUROPE

Large Format Packaging and Environmental Solutions Europe operates from three manufacturing sites across the UK occupying c. 290,000 square feet of manufacturing and warehousing space and employing c.290 people. Large Format Packaging and Environmental Solutions Europe operates a modern and extensive suite of over 81 machines across its sites. Large Format Packaging and Environmental Solutions Europe has enjoyed growth driven by an increased market share in its Environmental Containers business and the acquisition of Straight plc in 2014.

Large Format Packaging and Environmental Solutions Europe maintains leading market positions in the following market sectors:

• Environmental Containers – wheeled bins, boxes and caddies for the waste management and recycling industries;

• Packaging – rigid plastic packaging, including IML offerings, for the industrial and food market sectors; and

• Industrial Products – manufacturing partner to blue chip customers in the construction, furniture and material handling sectors in the UK.

Financial performance in 2017 was significantly improved on 2016 with EBITDA growth of 9% (prior to the allocation of OPG central overheads) even though revenue only increased by 1%. Performance in 2017 was driven by growth in the packaging and industrial products business combined with management’s successful implementation of cost saving initiatives including process automation and tighter material margin management at the sites throughout the year. Overall sales growth has been tempered by an increasingly competitive market, reduced public tenders and a general slowdown of the UK economy. The results of the Large Format Packaging and Environmental Solutions Europe sub-division when translated into euro have been impacted by the weakening Pound Sterling. Large Format Packaging and Environmental Solutions Europe will now look to expand its presence in the industrial and packaging sectors of the UK, building on the capital investment in the packaging business carried out in 2016 and an expansion into the material handling sector.

2017 has seen positive developments on the back of the investment in 2016 with the return of a significant customer to the business under a medium-term supply agreement. The year also saw the successful launch of new proprietary product offerings in the packaging and material handling sector and continued strong market penetration of our innovative recycling solutions.

Large Format Packaging and Environmental Solutions Europe’s organic growth strategy is to strengthen its market position in the three sectors in which it operates and focus on operational efficiencies through innovation and operational excellence. This strategy can be further developed through appropriate and timely acquisitions, which will grow Large Format Packaging and Environmental Solutions Europe’s market presence, product offering and earnings profile.


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GROUP STRATEGY

The Group’s strategy is focused on the development and growth of our core operations, through both organic and acquisition led initiatives.

The rationale for pursuing this strategy is clear. The rigid plastic packaging market is the largest component of the plastics packaging market. The rigid plastic packaging segment is driven by innovation, the substitution effect (from traditional forms of packaging), increasing population growth and urbanisation. This growth has primarily come as a result of growing demand in emerging markets, but also at the expense of traditional pack types such as glass bottles and jars, liquid cartons and metal cans. Plastic is commonly preferable due to its lightweight construction, shatter resistance and the flexibility to mould into various shapes. Demographic trends including aging populations, urbanisation and emergence of smaller households have all altered the market. We believe that IPL Plastics is well positioned in terms of scale, size, technological capabilities, geographic footprint and management expertise to exploit these market opportunities.

The acquisition of Macro during the year, along with the development capital expenditure programmes in North America, Ireland and the UK, and the disposal of the SES UK and Irish businesses supports the strategic objectives of the IPL Plastics Group. Development and growth of our plastics business will be achieved through focusing on higher margin opportunities with good growth characteristics and clear competitive advantages and by implementing our lean operating processes and financial management experience, leveraging cross-selling opportunities and exploiting cost synergies from acquired businesses.

The operating model for the coming years is focused on:

• Fully realising the synergy potential across our business units, including sharing of technical expertise, leveraging collective intellectual property and customer relationships, and procurement efficiencies;

• The pursuit and realisation of higher margin sales opportunities, focusing on customers with value-add requirements;

• A more systematic targeting of the European and US markets (from an IPL Plastics perspective) for consumer packaging, waste carts and bulk packaging through a stronger and more coordinated sales effort and through acquisition; and

• The realisation of cost efficiencies in production including, but not limited to, a more stringent commercial evaluation of capital investments and the increased automation of production.

Given the strong organic growth experienced by the IPL division, including the recent acquisitions, we are investing heavily in development capital investment projects to facilitate an expansion of the product range and to drive continued improvements in operating margins.

MANAGEMENT AND EMPLOYEES

I would like to thank management and employees, both long serving and more recent members of the Group, for their continued hard work, support, commitment and dedication. All that has been achieved in recent years would not have been possible without the significant efforts of all our people.

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The acquisitions of IPL, Encore and Macro together with a number of significant development capital expenditure programmes across the business, has greatly increased the geographic footprint, market offering and product range and puts the business on a strong footing for future growth.

CONCLUSION

As we move forward into 2018, the Group is cognisant of elevated levels of global risk factors, including stock market, currency and interest rate volatility, an uncertain global economic climate and the outlook for the UK economy depending on the final agreed terms of Britain’s proposed exit from the EU. Despite these challenges, we are confident in the robustness of the business strategy and the ability of the Group to develop profitably and increase shareholder value into the future.

2017 was a year characterised by a strong performance for the Group, with our businesses delivering overall growth in key performance metrics despite facing and overcoming various challenges in their end markets. In addition, the acquisitions of Encore and Macro, together with a number of significant development capital expenditure programmes across the business, have significantly increased the Group’s geographic footprint, market offering and product range and puts the business on a strong footing for future growth.

The results in the second half of 2017 were adversely impacted by increased resin prices and transportation costs, together with the decline in the value of the Canadian and US Dollars. These trends have continued into 2018. The Group’s overall 2018 results should start to see the full year earnings impact of some of the capital expenditure programmes commissioned in the latter half of 2017, coupled with a full year’s contribution from Macro, which was acquired in June 2017.

The Group has now reached considerable scale on an international level in the rigid plastics packaging sector with growth platforms in place providing income streams in multiple geographies and end markets. Having the appropriate capital structure, having access to alternative forms of capital and enhancing liquidity in the Company’s shares are continuing key areas of focus for the Group.

I am excited about the future growth prospects for the business as we continue to identify and explore a number of significant development opportunities, both organic and acquisition led. With the authorities provided by our shareholders at the 6 December 2017 EGM, together with the recent reorganisation of the IPL Inc. structure, our plans, including identifying the optimal listing structure, are now advanced for an IPO and stock market listing during 2018, subject to market conditions. A stock market listing would provide, in due course, our shareholders with a liquid market for their shares. Having access to an equity market would provide the Group with access to equity capital to finance the available development and growth opportunities to continue to strengthen the position of the business and drive future increases in shareholder value.

Alan WalshChief Executive Officer8 March 2018


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Financial Review

The trading performance of the Group in 2017 was ahead of expectations and the Group ended the year in a solid financial position.

Overall EBITDA Margins (12.7% in 2016 to 14.9% in 2017) and the Adjusted Earnings per Share metrics improved as a consequence of the strong performance of IPL driven by the organic growth in North America (both Canada and the United States) and the contribution in the period from the acquisition of Macro in June 2017. We invested heavily in development capital expenditure projects in 2016 and 2017, the benefit of which should flow to earnings in future years.

Pat Dalton Chief Financial Officer

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HIGHLIGHTS

The operating financial highlights for 2017 were as follows:

• Revenue (excluding discontinued operations) increased by 36.2% year on year to €474.4 million (2016: €348.2 million), due primarily to a strong performance from IPL, the full year contribution of Encore and results from Macro since its acquisition;

• Group EBITDA (excluding discontinued operations before exceptional items, non-recurring items and the Group’s share of equity-accounted investees profits) showed an increase from €48.5 million in 2016 to €70.9 million in 2017;

• Group profit for the year from continuing operations before tax and before exceptional items amounted to €26.3 million (2016: €25.4 million). Included in this number is a credit of €1.8 million (2016: €3.9 million), being the Group’s share of Altas Investments plc’s (“Altas”) profit for the year;

• Group profit for the year before exceptional and non-recurring items and the Group’s share of equity-accounted investee profits amounted to €19.6 million (2016: €17.9 million);

• Group profit for the year was €17.6 million compared with €16.1 million in 2016;

• Total equity at 31 December 2017 amounted to €82.7 million compared with €118.6 million at 31 December 2016, the €47.5 million increase in the fair value of the Put Liability (as described on pages 32 and 33) relating to the IPL 33.3% shareholding not owned by the Group, being the key driver. Total equity was also negatively impacted by unfavourable foreign currency translation movements of €16.4 million. Excluding the effect of the Put Liability, there was a 6.1% increase in total equity year on year, from €190.9 million to €202.5 million at 31 December 2017; and

• Net debt (excluding Convertible Loan Notes) increased during the year by €80.5 million to €233.0 million at year end (2016: €152.5 million), the increase caused primarily by the drawdown of bank borrowings to fund the Macro acquisition and capital expenditure projects.

Group profit was impacted favourably by €1.8 million (2016: €3.9 million), being the Group’s share of after tax profits of its equity-accounted investee, Altas. It was impacted unfavourably by a net €3.8 million charge (post-tax) relating to exceptional and non-recurring items (2016: €5.8 million). These items are summarised below in this review, and in notes 4 and 7 to the financial statements.

Amounts included in the Group Income Statement relating to discontinued operations in the current and prior year, include those of the Metals Ireland recycling businesses and the Irish and UK SES businesses. A full segmental analysis including continuing and discontinued operations results is set out in note 3.


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KEY PERFORMANCE METRICS

The Group uses a number of key performance metrics to assess its financial performance.

2017 2016 2015

Revenue growth (continuing operations) 36.2% 18.6% 32.4%

EBITDA growth (continuing operations) 46.0% 53.1% 67.1%

EBITDA margin1 – overall 14.9% 12.7% 9.9%

Adjusted diluted EPS growth 8.8% 58.2% 30.5%

Total equity growth (excluding Put Liability) 6.1% 3.2% 37.8%

Operating cash flow2 €47.8m €55.5m €33.7m

Free cash flow3 €28.8m €36.9m €18.4m

Net debt increase (€80.5m) (€32.2m) (€112.9m)

EBITDA Interest cover (times) 5.2x 6.2x 6.3x

Net Debt: EBITDA (times) 3.3x 2.8x 3.3x

1. EBITDA margin represents EBITDA as a percentage of revenue.

2. Operating cash flow reflects the cash generated by operations excluding the impact of investing and financing activities. Further detail on the calculation is included in Note 32 to the financial statements.

3. Free cash flow represents the net cash inflow from operating activities adjusted to include finance costs, income tax and maintenance capital expenditure amounts paid.

ACCOUNTING POLICIES AND BASIS OF PREPARATION OF THE 2017 FINANCIAL STATEMENTS

The Group’s financial statements are prepared in accordance with International Financial Reporting Standards (‘IFRSs’) and their interpretations issued by the International Accounting Standards Board (‘IASB’) as adopted by the EU and in accordance with IFRSs as issued by the IASB. Details of the basis of preparation and the significant accounting policies of the Group are included in note 1 on page 91.

REVENUE

Group revenue (excluding discontinued operations) increased in 2017 to €474.4 million from €348.2 million in 2016. Revenue can be analysed as follows:

2017 2016€’m €’m

IPL 293.7 204.3

OnePlastics Group 114.1 126.9

Macro 47.5 -

Other reconciling items* 19.1 17.0

474.4 348.2

Discontinued operations - 85.7

474.4 433.9

* Other reconciling items represents the Revenue from the Metals South UK business.

Revenue grew significantly in the year, primarily due to the impact of continued organic growth in the US and Canadian markets, the full year’s revenue from Encore acquired in November 2016 and the impact of Macro acquired in June 2017.

A detailed commentary on the trading performance for the year is included in the Chief Executive’s review on pages 11 to 25.

Financial Review (continued)

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EBITDA

Management believes that EBITDA, while not defined under IFRSs, provides a fair reflection of the underlying trading performance of the Group. The Group believes that this measure provides useful historical financial information to help investors evaluate the performance of the underlying business and is a measure commonly used by certain investors and securities analysts for evaluating the performance of the Group. EBITDA represents earnings before interest, tax, depreciation, amortisation, exceptional items, non-recurring items and the Group’s share of profit from its equity-accounted investees. EBITDA is reconciled to the income statement in note 3 to the financial statements.

Total EBITDA (excluding discontinued operations) increased by 46.0% to €70.9 million in 2017 (2016: €48.5 million). This is analysed as follows:

2017 2016€’m €’m

IPL 45.9 31.6

OnePlastics Group 13.1 17.2

Macro 12.6 -

Other reconciling items* (0.7) (0.3)

70.9 48.5

Discontinued operations - 6.7

70.9 55.2

* Other reconciling items represents the Group’s central costs and the contribution from the Metals South UK business.

The overall EBITDA result was positively impacted by the inclusion of Encore’s results for the full year 2017 and the contribution of €12.6 million from Macro since its acquisition in June 2017. IPL contributed €45.9 million (2016: €31.6 million) to EBITDA in the year. The performance of the OnePlastics business was mixed with an overall decrease in OPG’s EBITDA to €13.1 million (2016: €17.2 million). The UK business continues to perform solidly delivering improved results when compared to 2016, despite ongoing political and economic uncertainties in the UK. OPG EBITDA was negatively impacted in the amount of €0.8 million year on year due to a weakening Pound Sterling. The Irish business has been negatively affected by reduced demand from the Group’s largest customer and delays in embedding new customers into the new food grade facility in Cork which was commissioned for full production in 2017.


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EXCEPTIONAL & NON-RECURRING ITEMS – CONTINUING AND DISCONTINUED OPERATIONS

The table below summarises the exceptional and non-recurring items which have impacted on the 2017 financial results.

2017 2016€’m €’m

Non-recurring items expense/(credit) 3.3 (1.3)

Non-recurring income tax credit (8.0) -

Total non-recurring items (4.7) (1.3)

Gain on settlement of loan with third party (0.1) (4.0)

Transaction related costs 1.7 2.1

Acquisition, aborted acquisition and post acquisition integration costs 2.7 2.4

Restructuring costs 2.7 -

Other items (0.6) 1.2

Loss on disposal of subsidiary/discontinuation of operations 3.2 5.7

Exceptional income tax credit (1.1) (0.3)

Total exceptional items 8.5 7.1

Total net charge to income statement 3.8 5.8

Of the net charge of €3.8 million (2016: €5.8 million), a net charge of €0.6 million (2016: net credit of €0.6 million) relates to continuing operations and a net charge of €3.2 million (2016: €6.8 million) relates to discontinued operations.

Non-recurring items in the current year include income of €1.4 million (2016: €3.0 million) relating to the Group’s investment in Pioneer Green Energy LLC offset by a related tax charge of €0.2 million. This has been included in other operating income. A once off non-cash income tax credit of €8.2 million has been recognised arising from the recently enacted Tax Cuts and Jobs Act in the US, which will reduce the federal corporate income tax rate from 35% to 21% from 1 January 2018.

Non-recurring items for 2017 also include charges related to redundancy payments and significant start-up costs on expansion projects in the USA and Canada. The prior year non-recurring credit is made up of an amount related to continuing operations of €2.1 million offset by a charge related to discontinued operations of €0.9 million. Note 4 to the financial statements outlines the non-recurring items in further detail.

Exceptional items incurred include costs in respect of the acquisition of Macro, disposal of the SES businesses, significant management restructuring and fees in relation to corporate transactions in the year. Further details on the nature and background of these exceptional costs are set out in note 7 to the financial statements.


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NET FINANCE COSTS

Net interest payable increased by €4.9 million to €13.8 million in 2017 (2016: €8.9 million) due primarily to the full year effect of the drawdown of bank borrowings for the purposes of acquiring Encore in November 2016, and the drawdown of funds in respect of the acquisition of Macro in June 2017. The average interest rate paid by the Group in 2017 was 4.73% (2016: 4.29%).

Included in the 2017 charge is an amount of €0.1 million for convertible loan note interest (2016: €0.1 million).

The EBITDA to interest cover ratio at 31 December 2017 was 5.2 times (2016: 6.2 times).

TAXATION

The tax credit for the year was €0.9 million (2016: €3.5 million charge). The income tax expense (excluding exceptional and non-recurring amounts) increased by €4.4 million which is primarily due to continued growth in the IPL business in 2017 and the acquisition of Macro. The 2017 charge is offset by a once off non-cash tax credit of €8.2 million arising from the recently enacted Tax Cuts and Jobs Act in the US, which will reduce the federal corporate income tax rate from 35% to 21%, from 1 January 2018.

PROFIT FOR THE YEAR

Profit for the year was €17.6 million compared to €16.1 million for the prior year.

ADJUSTED EARNINGS PER SHARE

Management believe that Adjusted Earnings per Share provides a fair reflection of the underlying trading performance of the Group before taking into account the impact of exceptional and non-recurring items and the Group’s share of after tax equity-accounted investees profits.

Adjusted Earnings per Share and adjusted fully diluted Earnings per Share is calculated by dividing the adjusted profit attributable to ordinary shareholders (which excludes exceptional and non-recurring items and the Group’s share of after tax equity-accounted investees profits) by the weighted average number of Ordinary Shares outstanding. In the case of adjusted fully diluted Earnings per Share, the number of outstanding Ordinary Shares is adjusted for the effects of all Ordinary Shares and options with a dilutive effect.

In the current year, the adjusted basic Earnings per Share is 12.45 cent (2016: 11.46 cent). The adjusted diluted Earnings per Share is 12.01 cent (2016: 11.04 cent).

Further details on earnings per share are included in note 12.


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GROUP STATEMENT OF OTHER COMPREHENSIVE INCOME

The table below summarises the movements in the Group’s Statement of Other Comprehensive Income (excluding the profit for the year).

2017 2016 €’m €’m

Foreign currency translation differences1 (16.4) (10.2)

Share of Altas Investments plc’s other comprehensive income (0.3) (1.2)

Available-for-sale financial assets – net change in fair value2 (2.1) 0.8

Tax impact on foreign currency translation differences 1.3 -

Translation reserve on disposal of subsidiary 1.6 -

Total other comprehensive income (15.9) (10.6)

1. The statement of other comprehensive income on page 86 contains a €16.4 million net accounting loss on the retranslation of the net investment in foreign operations (2016: net loss of €10.2 million). This is a non-cash adjustment in the Group financial statements and represents an accounting adjustment for the impact of translating non-euro assets and liabilities into euro from the end of the previous financial year to the end of the current financial year for assets/liabilities held throughout the year, and for the impact of the movement in exchange rates from the date of acquisition to the end of the current financial year for those assets/liabilities acquired during the year. The most significant exchange rate movements which impacted on the Group were the euro/US Dollar rate which moved from USD$1.0541 at 31 December 2016 to USD$1.1993 at 31 December 2017 and the euro/Canadian dollar rate which moved from CAD$1.4188 at 31 December 2016 to CAD$1.5039 at 31 December 2017. Euro to Sterling rate strengthened by 3.62% from 31 December 2016 to 31 December 2017.

2. Included in the statement of other comprehensive income are the fair value movements on the Group’s available-for-sale financial assets. In the current year, the Group recognised a loss of €2.1 million (2016: gain of €0.8 million) in the statement of other comprehensive income, arising on a decrease in the fair value of the shares held by the Group in Aryzta AG and a reduction of the fair value of the investment in Pioneer Green Energy LLC to €Nil.

PUT LIABILITY IN RESPECT OF IPL 33.33% MINORITY SHAREHOLDING

The Group’s liability in respect of the 33.33% shareholding in IPL that it did not own at 31 December 2017 amounted to €119.8 million at year end (2016: €72.2 million).

When the Group acquired its 66.67% controlling interest in IPL in July 2015, it applied a basis of accounting called the “anticipated-acquisition” methodology on the basis of there being a Put and Call option in the Shareholders’ Agreement. This effectively meant that the Group anticipated acquiring the remaining 33.33% in July 2021, the date from which the Put and Call option becomes exercisable.

The effect of this is that instead of attributing a share of profit or loss, other comprehensive income and net assets to the minority shareholders, the Group carries a Put Liability, measured at fair value, representing the anticipated consideration required to acquire the minority interests’ shareholdings in July 2021, discounted to present value.

An anomaly from an accounting perspective is that the Group carries its 66.67% shareholding in IPL on a historic cost book value basis whereas the Put Liability is carried at fair value, taking into account future profitability, growth and indebtedness.


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The net asset value of IPL in the Group’s financial statements on a historic cost book value basis is €134.9 million at 31 December 2017, which would imply the minority shareholders’ share of these being €45.0 million. Due to the fair value accounting methodology being applied, the Put Liability in respect of the minority shareholdings is carried at €119.8 million at year end.

The reason for the significant increase in the Put Liability from 31 December 2016 is primarily due to increases in IPL’s actual trading performance, change in capital structure, budgeted future earnings performance due to growth in its existing business and also the effect of the Macro acquisition in June 2017. These projections are based on the Board approved IPL Budget for 2018 and the plan for 2019 and 2020, applying a steady growth rate to earnings after that period and then discounting these to present value.

On 6 December 2017, shareholders approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the minority shareholders’ equity interests in IPL Inc. for shares in the Company. On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017. The completion of this transaction has the effect of settling the Put Liability from 28 February 2018. There was no significant difference between the fair value of the Put Liability at the exchange date and as at 31 December 2017.

Note 28 to the financial statements outlines in more detail the assumptions and judgements used in the Put Liability calculation and also the effect of the key sensitivities on the calculation.

TOTAL EQUITY

Total equity, excluding the IPL Put Liability, has increased from €190.9 million in the prior year to €202.5 million at the end of 2017. Including the Put Liability, total equity has decreased from €118.6 million to €82.7 million. The table below explains the main drivers of the increase in the total equity of the Group:

2017 2016€’m €’m

Total equity at the beginning of the year 118.6 152.6

Profit for year 17.6 16.1

Movement in Put Liability relating to IPL (including translation movement) (38.6) (39.9)

Foreign currency translation differences (16.4) (10.2)

Tax impact on foreign currency translation movements 1.3 -

Other amounts included in other comprehensive income 0.2 -

Total equity at the end of the year 82.7 118.6

Put Liability at 31 December relating to IPL 119.8 72.2

Total equity at year end (excluding Put Liability) 202.5 190.9


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NET DEBT

2017 2016€’m €’m

Cash1 39.7 39.9

Bank loans relating to IPL (202.3) (104.6)

Bank loans non-IPL (39.6) (55.3)

Other loans relating to IPL (includes subordinated term borrowings) (30.5) (32.5)

Finance leases (0.3) -

Net debt (233.0) (152.5)

1. €22.5 million of the cash balances are held by IPL (2016: €23.3 million).

The definition of net debt is defined by the Group as cash at hand and in bank less bank overdrafts and loans, less finance lease obligations. The definition of net debt excludes Convertible Loan Notes (see note 25).

Bank and subordinated term loans included above are different by €4.4 million (2016: €4.5 million) from those amounts included in the statement of financial position as the above amounts reflect the actual balances due to the lenders at the year end. The amounts included within the statement of financial position are calculated under the effective interest rate method as prescribed by IAS 39.

CAPITAL STRUCTURE

The Group is financed principally through a combination of equity, bank borrowings, subordinated debt and free cash flow generated from operations.

At 31 December 2017, the Group had net debt of €233.0 million (2016: €152.5 million). Bank facilities are provided by separate Irish and Canadian banking syndicates. The Irish banking syndicate has provided €92.0 million of committed funding facilities which is due to mature in December 2020. On the acquisition of IPL in July 2015, the Group entered into a credit agreement with a syndicate of Canadian banks. During 2016, prior to the acquisition of Encore and again in May 2017 as part of the acquisition of Macro, this facility was further renegotiated and increased. The amended credit agreement provides for committed facilities of CAD$344.1 million (€228.8 million), with CAD$289.1 million (€192.2 million) provided by way of term loan (including two USD denominated term loans of USD$125.0 million and USD$32.9 million each) and CAD$55.0 million (€36.6 million) provided under a revolving facility. This credit agreement expires in July 2021, with an extension negotiated during the year from the original maturity date of July 2020. The Canadian facility is separate to the Group’s other facility and is “ring-fenced” to the IPL business.

The subordinated loans, which amounted to €29.9 million at 31 December 2017 (2016: €31.7 million) are provided by the Canadian minority shareholders in IPL and Investissement Quebec.

The Group’s bank debt facilities provide the Group with the flexibility to take advantage of opportunities to develop the business, focusing on organic growth and strategic acquisitions which enhance shareholder value.


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TRANSLATION OF FOREIGN CURRENCIES

The presentation currency of the Group is euro which is the functional currency of the parent.

IPL Plastics has significant investments in non-euro denominated operations. The Group seeks to manage the resultant foreign currency translation risk through borrowings, where possible, denominated in the relevant currency. To the extent that such borrowings are not sufficient to fully hedge the investment in non-euro denominated operations, the Group has a net foreign exchange exposure to non-euro net assets.

Adjustments arising on the translation of the results of the foreign currency denominated operations at the average rates, and on the restatement of the opening net assets at closing rates, are accounted for within a separate translation reserve within equity (i.e. within the statement of other comprehensive income), net of differences on related foreign currency borrowings to the extent they are effective. The total movement in the year through other comprehensive income was a charge of €14.8 million (excluding movements relating to the Put liability), which includes €1.6 million of a credit being the reclassification of existing translation reserve to the income statement on disposal of the SES businesses.

Results and cash flows of the foreign currency denominated operations have been translated into euro at the average monthly exchange rates for the year and the related statements of financial position have been translated at the rates of exchange prevailing at the statement of financial position date. The reported revenues in 2017 were adversely impacted by foreign currency exchange rate movements, primarily Pound Sterling in the amount of €6.9 million, when compared with 2016.

All other translation differences are recorded in the income statement. The principal rates used in the translation of the results and statements of financial position into euro were as follows:

Average rate Closing rate

2017 2016 % Change 2017 2016 % Change

Canadian Dollar 1.4647 1.4669 (0.15) 1.5039 1.4188 6.00

Chinese Renminbi 7.6290 7.3494 3.80 7.8044 7.3202 6.61

Pound Sterling 0.8767 0.8187 7.08 0.8872 0.8562 3.62

US Dollar 1.1297 1.1068 2.07 1.1993 1.0541 13.77

Greater than 95% of the Group’s EBITDA for the year ended 31 December 2017 was denominated in currencies other than euro, primarily Canadian Dollar, US Dollar and Pound Sterling. IPL Plastics hedged a significant amount of its translation exposure on the profits of these non-euro subsidiaries during the year. This was done in accordance with the Group’s internal Treasury Management policy, overseen by the Group’s Treasury function, which reports regularly to Group management and the Group’s Audit Committee.

The Group has ongoing operational trading exposures to multiple currencies, principally euro, Pound Sterling, Canadian Dollar and US Dollar. Management requires all Group operations to manage their foreign exchange risk against their functional currency. There are also non-trading exposures related to intra-Group relationships. The translation gain on these foreign exchange exposures throughout the Group are included in other operating income (note 4) and amounted to €0.1 million (2016: €1.9 million) in respect of continuing operations.


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The Group also manages the foreign exchange risk (through the utilisation of forward foreign currency contracts) as it pertains to foreign currency exchange rate movements versus the euro budget for the year and in addition, the Group manages the foreign currency exchange rate movements where there are significant amounts of sales or purchases invoiced in currencies other than the local operating business unit currency. The Group had a gain of €2.0 million (2016: €0.7 million) in 2017 related to the settlement and mark to market adjustments of forward foreign currency contracts. FREE CASH FLOW

Free cash flow represents cash generated by Group activities and available for reinvestment elsewhere, including the early repayment of debt. Free cash flow for 2017 was an inflow of €28.8 million (2016: €36.9 million) analysed as follows:

2017 2016€’m €’m

EBITDA before exceptional and non-recurring items and Group’s share of equity-accounted investee after tax profits 70.9 55.2

Foreign exchange gains (0.1) (1.9)

Exceptional and non-recurring items with a cash effect (excluding acquisition and disposal related exceptional costs) (6.7) (2.0)

Working capital movements1 (13.7) 9.9

Other (1.0) (0.5)

Net cash inflow from operating activities (before tax) 49.4 60.7

Maintenance capital expenditure2 (5.6) (10.2)

Finance costs paid (net) (13.4) (9.2)

Income tax paid (1.6) (4.4)

Free cash flow 28.8 36.9

Development capital expenditure (37.9) (21.5)

Acquisitions (including related costs) (124.2) (22.2)

Disposal of subsidiary undertakings and other property, plant and equipment (including disposal costs) 40.6 3.4

Distributions received 6.8 3.2

Net debt acquired on purchase of subsidiary (10.4) (21.1)

Other – including effect of movements in exchange rates3 15.8 (10.9)

Movement in net debt in the year (80.5) (32.2)

1. Excludes €Nil (2016: €0.9 million) of working capital funding post acquisitions.

2. Maintenance capital expenditure is the minimum capital expenditure that a business must spend to maintain current output and continue to exist in its current state. Maintenance capital expenditure in respect of continuing operations amounted to €5.6 million in the year (2016: €7.7 million).

3. The most significant amount included in this balance is foreign exchange movement arising on foreign currency borrowings.


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CAPITAL EXPENDITURE

Cash outflows in respect of capital expenditure amounts to €43.5 million in 2017 (2016: €31.7 million) inclusive of development capital expenditure of €37.9 million (2016: €21.5 million).

2017 2016

Development Maintenance Total Development Maintenance Total€’m €’m €’m €’m €’m €’m

IPL 25.7 4.1 29.8 9.5 2.6 12.1

Macro 3.4 0.2 3.6 - - -

OPG 8.8 0.8 9.6 9.6 4.0 13.6

Other - 0.5 0.5 - 1.1 1.1

37.9 5.6 43.5 19.1 7.7 26.8

Discontinued Operations - - - 2.4 2.5 4.9

Total 37.9 5.6 43.5 21.5 10.2 31.7

The Group invested heavily in capital expenditure in 2016 and 2017 as new customer led organic growth opportunities were identified. These investments will enable the Group to accelerate its geographic expansion and customer reach to meet significant and growing market demand for its products.

The intensive capital investment in the Group has contributed to a significant increase in our overall carrying amount of property, plant and equipment, which has increased from €160.8 million at 31 December 2016 to €214.6 million at 31 December 2017. Capital additions during the year amounted to €50.0 million, an increase of €16.4 million on the prior year. The acquisition of Macro in June 2017 increased the carrying value of fixed assets by a further €42.0 million. The carrying amount of property, plant and equipment that relate to assets under construction was €25.8 million at 31 December 2017 (2016: €9.8 million).


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INVESTMENTS

IPL Plastics continues to hold a 23.6% interest in Altas Investments plc (‘Altas’) and a 13.7% stake in Pioneer Green Energy LLC (“Pioneer) and also holds a 25% stake in Rilta Environmental Limited (“Rilta”). Rilta is part of the ClearCircle Ireland SES business that was disposed of in April 2017 (with an effective date of 1 January 2017). The Group’s share of Altas’ profits in the year amounted to €1.8 million (2016: €3.9 million). The Group’s interest in Altas is carried at €0.2 million at 31 December 2017 (31 December 2016: €4.0 million).

During 2017, the Group received €1.4 million of dividend income (2016: €3.0 million) from Pioneer. The carrying value of our investment as at 31 December 2017 is €Nil (2016: €1.2 million).

The Group’s 25% shareholding interest in Rilta is carried at €2.7 million as at 31 December 2017. The Group has also provided Rilta with a €5 million secured loan note with a coupon of 6%, which is included as a non-current receivable on the statement of financial position.

CONCLUSION

The results for 2017 were ahead of the expectations set at the start of the year. The strong organic growth experienced by the business in North America in particular in recent years led to a requirement for significant development capital expenditure investment, the scale of which very much depends on the utilisation levels and the structure of existing production facilities. The servicing of existing and new customer requirements has also required IPL Large Format Packaging and Environmental Solutions to engage in substantial subcontract arrangements during the year. The scale of the organic growth opportunities has placed increased operational and cost pressures on the business as new capital programmes are progressed and as the existing operations absorb and transition these projects. We will continue to add new capacity to existing production plants where the investment is underpinned by customer contracts and where we


believe the increased organic growth opportunities are sustainable into the future.

Following the impact of the hurricanes in the US, the Group’s results for the second half of 2017 were adversely impacted by increasing resin and transportation costs. The results were also negatively impacted by a decline in the value of the US and Canadian Dollars against the euro. While the business does have substantial pass through arrangements in place with customers, there are in many cases contractual lags between the dates when resin prices actually increase and when such increases get passed on to customers. In a time of constant rising resin prices (which has been the situation since the start of the second half of 2017), that lag can continue for a number of months. The trading performance at the start of 2018 continues to be impacted by the adverse resin pricing, transport costs and foreign exchange rate movements. Our overall 2018 results should start to see the full year earnings impact of some of the new capital expenditure programmes commissioned in the latter half of 2017, coupled with a full year’s contribution from Macro, which was acquired in June 2017.

Pat DaltonChief Financial Officer8 March 2018

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1st Line of Defence

• Management Controls

• Internal Control Measures

2nd Line of Defence

• Financial Control• Compliance

Monitoring Functions

3rd Line of Defence

• Internal Audit

Board of Directors / Audit Committee

Senior / Executive Risk Committee

The Board is responsible for the overall risk management of the Company and recognises that managing risk through an effective Risk Management Cycle (“RMC”) is critical to the success of the business. Risk management is integral to the strategy of the Group and to ensuring the success of the business. The Group’s risk management framework is designed to ensure that a robust process exists to assist management with risk identification, assessment, reporting and management. The Audit Committee supports the Board through the ongoing monitoring and review of the risk identification and assessment. The Chairman of the Audit Committee reports to the Board after each meeting on its activities in terms of risk management.

Risk Management

Risk Management Framework

The Executive Risk Committee is mandated by the Board and is responsible for developing the organisational risk structure for maintaining effective risk management systems throughout the Group. The Executive Risk Committee reviews and assesses on a continuous basis the principal risks faced by the Group, the controls in place to manage those risks and the related monitoring procedures.

The risk management framework and system of internal controls are designed to provide reasonable, but not absolute assurance, that the key risks facing the business have been identified and mitigated, thereby safeguarding the assets of the Group. This approved framework consists of:

• The Group’s Risk Policy Statement which outlines the Group’s guiding principles in relation to risk management;

• The Group’s Risk Management Strategy which outlines the roles and responsibilities in relation to Risk Management; and

• The Group’s policies and procedures for risk management which are based on the Three Lines of Defence model:

◾ First line – functions that own and manage risk;

◾ Second line – functions that oversee and monitor risk; and

◾ Third line – function that provides independent assurance.

As mentioned above, the Group has a suite of Board approved policies and an internal control framework that are applicable across the Group. Compliance with the Company’s risk management and internal controls framework is monitored through various means such as periodic divisional certifications of compliance and the work undertaken by the Group’s internal audit function. The Group’s internal audit function provides an independent and objective assessment of the effectiveness of the risk management and internal control process.


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Monitor & Report

• Key Reporting Indicators• Loss data• Issue Management• Risk Appetite

Identify

• External events• New products• Acquisitions• Changes to business

Mitigate

• Avoid• Transfer• Mitigate by controls• Accept residual risk

Assess

• Likelihood• Impact• Inherent• Residual

The objectives of the Group’s RMC are to:

• Ensure risk management is a mandated and an integral part of all the Group’s systems and decision-making processes;

• Create a robust control environment that reduces negative impacts to our business performance;

• Ensure a systematic, structured and timely approach to risk through continuous and consistent processes of risk identification, assessment, mitigation, monitoring and reporting, that are linked to the achievement and safeguarding of the Company’s objectives;

• Support informed risk-taking that promotes business growth and success while recognising the risks associated with key decisions;

• Manage risk in accordance with best practice and legislative requirements;

• Prevent possible injury, damage or losses and reduce the cost of risk; and

• Raise awareness of the need for risk management with all employees across the Group.

The objectives of the RMC are delivered through the Group’s Risk Management Framework, which outlines the roles and responsibilities for managing risk and defines how risk management will be applied across the organisation.

Risk Management Cycle

Risk Management (continued)

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(I) THE BOARD OF DIRECTORS

The Board of the Company is responsible for the overall risk management policy of the Group. The Board has delegated responsibility for the monitoring of the effectiveness of the Group’s risk management system to the Audit Committee of the Group. Furthermore, the Board has delegated the day to day operational management of risk to the Executive Risk Committee who analyse the principal risks facing the Group. The Board receives an update at each board meeting on the principal risks facing the Group and on the risk mitigation activities in place, along with any planned actions. The Board also receives a briefing from the Chairman of the Audit Committee on the effectiveness of the risk management and internal control systems. The duties of the Board under the risk management framework include:

• Define the Group’s Code of Conduct and Culture;

• Set the risk appetite and tolerance of the Group in achieving its strategic objectives based on the recommendations of the Board Committees;

• Monitor the nature and extent of the Group’s principal risk exposures versus the defined risk appetite and tolerance; and

• Required annually to report to shareholders on their review of the effectiveness of the risk management and internal control systems in operation throughout the Group.

(II) THE AUDIT COMMITTEE

Under delegation from the Board, the Audit Committee is responsible for assessing and evaluating the overall effectiveness of the Risk Management Cycle of the Group. This cycle involves a continuous review of the process in place to identify, evaluate and mitigate the principal risks facing the Group. The Audit Committee receives risk management updates from the Head of Risk and Assurance on a regular basis, along with internal audit reports from the Group Internal Audit function on the effectiveness of risk management activities and internal controls. A detailed description of the activities of the Audit Committee is set out on pages 70 to 73.

Roles and responsibilities in relation to Risk Management

The duties of the Audit Committee under the risk management framework include:

• Delegated responsibility from the Board for reviewing the adequacy and effectiveness of the Group’s system of internal controls and risk management activities;

• Advises the Board on current risk exposure versus risk appetite and future risk strategy;

• Keep under review the Company’s overall risk assessment processes that inform the Board’s decision making, ensuring both qualitative and quantitative metrics are used;

• Review regularly and approve the parameters used in these measures and the methodology adopted;

• The preparation of reports concerning internal controls and risk management activities; and

• Review and approve the statements to be included in the Annual Report of the Company.

(III) THE EXECUTIVE RISK COMMITTEE

The Executive Risk Committee is chaired by the Chief Executive Officer and includes the Chief Financial Officer, Company Secretary, Head of Risk and Assurance and the Group Financial Controller. Under delegation from the Board, the Executive Risk Committee meets at a minimum on a quarterly basis and in 2017 met four times. The Executive Risk Committee is responsible for the implementation of the risk management cycle and for maintaining the Group Risk Register. The Executive Risk Committee supports the Audit Committee under the risk management framework through continuous monitoring and assessment of the principal risks facing the Group and reviewing the adequacy of risk mitigation activities. The duties of the Executive Risk Committee under the risk management framework include:

• Developing the organisational structure and maintaining effective risk management systems including risk management policy and frameworks;

• Assist management in developing processes and controls to manage risk and provides guidance and training on risk management processes;


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• Facilitate and monitor implementation of effective risk management practices by Operational Management;

• Analyse on a continual basis the principal risks faced by the Group, the controls in place to manage those risks and the related monitoring procedures;

• Maintain the Group risk register of principal risks facing the Group;

• Support divisional and business management in identifying, assessing and monitoring their respective risks and controls;

• Monitor business performance, risk exposure, mitigation and internal controls;

• Consider any changes to business strategy which impact on the Group’s risk environment and material risks and controls;

• Give due consideration to laws and regulations, the provisions of the Code and the requirements of any relevant listing authority and associated guidance; and

• At least annually, review its terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The Group’s Risk Management Cycle facilitates the identification, evaluation and assessment of risks, as well as a process for continuously monitoring the effectiveness of the mitigation activities.

The RMC involves a bottom-up and top-down approach to ensure a comprehensive evaluation of risk is performed which is continuously monitored and reviewed. In assessing the potential impact and likelihood of each risk identified, management assess the controls in place and in turn evaluate the residual risk. A standard scoring matrix is applied across the Group to ensure consistency in scoring. The divisional and corporate risk registers are consolidated into a Group risk register. These principal risks of the Group are set out on pages 44 to 51.

(IV) DIVISIONAL MANAGEMENT (OPERATIONAL MANAGEMENT)

Divisional management are responsible for ensuring that risk management is embedded in their day to day operations, for continuously monitoring the risks facing their division and for updating their risk register monthly. The divisional management teams work closely with the Head of Risk and Assurance and the Head of Environmental, Health, Safety & Sustainability (“EHS&S”) to ensure a robust risk management process is in place throughout their division, which ensures that new risks are identified early, comprehensively assessed, escalated and mitigated appropriately. The duties of Divisional Management under the risk management framework include:

• Responsible for risk identification, measurement, mitigation and assignment of risk management responsibilities at operational level (ownership and management of risk);

• Ensure risk management processes and internal controls are embedded throughout the divisions and that such processes and controls are consistent with risk management goals and objectives;

• Maintain and update the divisional risk registers;

• Implement corrective actions to address process and/or control deficiencies;

• Monitor business performance and uses risk management to support decision making; and

• Encourage open communication on risk matters.


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(V) GROUP INTERNAL AUDIT

Group Internal Audit is responsible for reviewing the risk management activities and internal control processes of the Group. The internal audit function of the Group was outsourced to Deloitte in 2017. Deloitte report to the Chairman of the Audit Committee and work closely with the Head of Risk and Assurance on a regular basis in the performance of their duties. The Group Internal Auditor prepares an annual risk based internal audit plan which is agreed with the Audit Committee. The duties of Group Internal Audit under the risk management framework include:

• Responsible for reviewing the risk management and internal control processes throughout the Group;

• Identifying areas of improvement and providing independent and objective assurance and reporting on risk matters to the Audit Committee; and

• Develop a risk based internal audit programme, which is approved by the Audit Committee.

(VI) ENVIRONMENTAL, HEALTH, SAFETY AND SUSTAINABILITY

The Head of EHS&S is responsible for the overall Environment, Health, Safety & Sustainability framework across the Group. The Group is committed to conducting business in a safe and environmentally sustainable manner that promotes the health of our employees, customers, community and the environment. Safety is a key focus for the Board and management of the Company, considering there are circa 1,900 employees at all production facilities, warehouses and administrative offices. To maintain a safe workplace, we are focused on:

• eliminating serious injuries by managing critical risk areas;

• determining which operating sites may require specific attention to improve safety;

• strengthening processes and knowledge sharing about all aspects of safety;

• adopting best practices across all business groups; and

• Prevent and minimise adverse environmental impacts, including waste, emissions and discharges from our operations.

Co-ordinated by the Head of EHS&S, our Health & Safety committees monitor safety performance and actively responds to safety trends in our business. We conduct internal audits and facilitate external customer audits at all our plants on an ongoing basis. Using findings from these audits, our professional safety leaders plan and carry out actions for continuous improvement. All divisions provide monthly reports to the Head of EHS&S on safety performance and compliance with Company policies and local legislation.


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Risk management is the responsibility of the Board and is under continuous review and assessment given its significance to the Group’s ongoing performance and the achievement of the Group’s overall strategic objectives. The Board is responsible for establishing and ensuring that appropriate systems and controls are in place and maintained throughout the Group to ensure that compliance is maintained.

Principal risks and uncertainties

Risk area Risk description Mitigating actions Other comments/changes

ECONOMIC, STRATEGIC AND OPERATIONAL

Customer demand and end market geopolitical environment

Demand for goods and services in the Group’s businesses is influenced by global and national economic circumstances. The geopolitical environment in those markets can be an influencer of customer demand.

The Group maintains ongoing communication with customers to understand key market impacting factors and to gauge the future impact of key events that have taken place or other events foreseen. The Group also aims to ensure that it can maintain a flexibility to an ever evolving geopolitical marketplace.

To a large extent, this is outside of the Group’s control, but the Group’s aim is to be in a position whereby it can react in a fast and an efficient manner to market changes caused by key geopolitical events.

Key customer relationships and competitor activity

The Group operates in a competitive marketplace and has a number of key customer relationships. There is a risk that customers may be lost or move to a competitor.

Part of the Group’s ongoing communication channels with its customers is to understand customer requirements, expectations, key performance indicators and other operational and customer service requirements. The Group has two product focused Innovation Centres of Excellence and works continually with a significant number of customers in designing, prototyping and testing of new products. On that basis, there is a mutual dependency in terms of delivering a high quality product offering.

The trend towards “partnering” with customers in terms of product design and testing is a key strengthening factor in the ongoing relationship with those customers and in increasing the Group’s competitive advantage.

Under delegation from the Board, the Audit Committee is responsible for assessing and evaluating the overall effectiveness of the risk management cycle of the Group. The risk management framework in place is designed to ensure that a robust process exists to assist management with risk identification, assessment, reporting and management throughout the Group. The Board acknowledges that there are a variety of risks facing the Group, and set out below the principal risks identified through the process described above.

The principal risks and uncertainties are set out below, including risk description and what mitigating actions the Group has in place in respect of these risks:


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Environmental or health and safety incident

The Group operates in production and processing environments where there is a risk of an environmental or other health and safety incident occurring.

The Group Head of EHS&S is responsible for the overall EHS&S framework across the Group and reports to Executive Management on a monthly basis.

Co-ordinated by the Head of EHS&S, our Health & Safety committees monitor safety performance and actively respond to safety trends in our business. We conduct internal audits and facilitate external customer audits at all our plants on an ongoing basis. Using findings from these audits, our professional safety leaders plan and carry out actions for continuous improvement.

Incident logs are maintained by the Group’s operations and maintained as a key performance indicator.

The Group’s acquisition due diligence processes involve a detailed environmental due diligence programme.

Notwithstanding the Group’s divestment of the majority of its Environmental Services businesses, Environmental, Health & Safety is at the forefront of the Group’s risk assessment across each of its operations.

Significant product failure due to a failure in the Group’s quality assurance processes

A failure of a quality assurance system in any of the Group’s manufacturing operations which results in a sub-standard product being released into the marketplace could expose the Group to legal liability and negatively impact the Group’s financial performance and reputation.

The Group has in place quality assurance processes across each of its operations including having the appropriate quality accreditations in place. Monitoring and testing of product quality and specification is an ongoing process in the Group’s operations and forms part of individual plant key performance indicators. Where issues are encountered, swift responsive action is taken to understand the issue and to ensure that customer satisfaction is maintained.

Consistent approach with prior year.


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Inability to complete acquisitions, identification of a poor acquisition target and failure to successfully integrate recently acquired businesses

Should the funding not be available to the Group, it would be unable to complete target acquisitions.

Should an inappropriate acquisition be completed, this could negatively impact the Group’s financial performance.

On the basis that acquisitions are completed, there is a risk that these are not successfully integrated into the Group’s existing operations.

Prior to pursuing a potential acquisition, the Group engages with its funders to ensure that funding will be in place.

Prior to any acquisition being made, the Group undertakes detailed due diligence procedures including financial, taxation, commercial, legal and environmental. Formal Board approval is required for all acquisitions and the Board is regularly updated on due diligence projects in progress.

For each significant acquisition made, the Group implements an integration plan, a “100 day” plan so as to ensure the integration process is monitored, measurable and delivered within a reasonable timeframe.

To date, the “100 day” plan mechanism has been successful in respect of the acquisitions of IPL, Encore and Macro.

Maintaining the Group’s strategic growth plan

As the Group continues to grow rapidly in relatively new marketplaces (e.g. North America and South America), there is a risk that the appropriate infrastructure will not be in place to support the expanding business.

The Group has in place experienced management teams across its businesses, in particular, in new market environments.

Three year plans are in place for each division and this includes an assessment of capital expenditure and funding requirements.

Furthermore, there is ongoing communication between Executive and Divisional/Operations management teams to understand local requirements from both a financing and resource perspective.



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Input cost inflation The Group’s businesses are dependent on commodity inputs (e.g. resin). There is a risk that fluctuating raw material costs, fluctuating selling prices, unusual competitor actions and the resultant difficulties in adjusting prices appropriately, could have a negative impact on operating margins and overall financial performance.

The Group maintains ongoing communication with customers and suppliers with regard to planning its production requirements.

The Group aims to maintain a number of suppliers of key materials and equipment so as not to become overly dependent on any one supplier. During the year, the Group appointed a Group Head of Procurement who reports to executive management. Through the combined efforts of the central and divisional procurement teams, the Group aims to achieve security of supply, minimise price risk, optimise supplier discounts/rebates, deliver improved purchasing terms and conditions, and facilitate operational and purchasing efficiencies.

The Group also endeavours to maintain flexibility in its relationships with its key plastics customers whereby material price input changes can be passed through to the customer on an agreed, “no surprises” basis.

The geopolitical uncertainties currently being experienced, result in the management of this process being more challenging. During the second half of 2017, resin prices increased significantly and price increases continued during the first two months of 2018 putting pressure on the margins of the Group. Management continue to monitor this risk closely and work with customers and suppliers to mitigate the exposure of price fluctuations.

Recruitment and retention of key personnel

As the Group continues to evolve and expand into new marketplaces, it becomes of increasing importance that the Group is able to attract and retain high quality management and employees across its operations. If the Group is unable to achieve this, the achievement of the Group’s strategic objectives could become jeopardised.

The Group maintains an ongoing assessment of its succession planning and resource requirements, including consideration by the Nominations Committee. It maintains competitive remuneration incentives by reference to the external market environment.



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IT related – Disaster Recovery and Cyber Security

The Group operates across a multi-jurisdictional operational platform. Were there to be a significant disaster recovery issue from an IT perspective or a breach of the Group’s IT security systems from a cyber-crime perspective, this could significantly impact the Group’s operational and financial performance.

The Group has an IT disaster recovery plan in place across its operations and this is monitored by Group IT management, who report to the Group CFO. The Group has cyber security controls in place and these are monitored by Group IT management. The Group circulates awareness updates to employees periodically on cyber security risks. The Group has data protection controls in place and monitors emerging regulatory requirements in this area to ensure compliance with current data protection legislation.

The Group has experienced an increased level of cyber security fraud attempts during the year. This has led to the requirement for more frequent alerts to employees to remain cognisant and vigilant in this regard and to ensure that the Group’s internal controls are complied with in respect of payments.

COMPLIANCE AND REGULATORY

Compliance with laws and regulations

The Group operates in jurisdictions where there are stringent legal and compliance obligations including statutory, taxation, financial, employment, health and safety and environmental regulation. Non-compliance could lead to reputational damage to the Group along with a potential significant impact on financial performance.

The Group has experienced management teams across its operations who understand the requirements in this regard. There is also a support mechanism in place from the Group’s central management function. The Group engages with external advisers in relation to matters whereby the technical expertise is not available internally. In addition, the Group’s Risk Management Framework is in place to identify any potential shortfalls in relation to any of these matters.


FINANCIAL AND REPORTING

Financial and reporting, including foreign exchange rates

The principal foreign exchange risk to which the consolidated financial statements are exposed to is the risk of adverse movements in reported results from Pound Sterling, Canadian Dollar, US Dollar and Chinese Renminbi when translated into euro, the Group’s reporting currency.

This risk is actively managed by the Group’s Treasury management team. The Group Treasury Policy is Board approved and provides the Treasury management team with a framework which it can operate within. Where appropriate and possible, the Group enters into hedging arrangements to manage these risks.

The impact of the Brexit decision continues to have a significant negative impact on the translation of the Group’s Pound Sterling denominated operations. In addition, the Canadian Dollar and US Dollar both weakened against the euro towards the end of 2017 and into the start of 2018. This uncertainty is ongoing and is likely to continue throughout 2018.


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FINANCIAL AND REPORTING

Financial risk management

The Group’s operations expose it to different financial risks that include currency risk, credit risk, liquidity risk, interest rate risk and market risk.

These risks are actively managed by the Group’s Treasury management team. The Group Treasury Policy is Board approved and provides the Treasury management team with a framework which it can operate within. The Group utilises appropriate hedging arrangements with commercial banks such as forward currency purchase and sales contracts.

Significant underperformance of any of the Group’s cash generating units

This could give rise to a material impairment of goodwill, intangible assets and property, plant and equipment which would have a negative impact on the Group’s financial performance, net assets and banking covenants.

A difficult risk to mitigate apart from ongoing assessment of the performance of the Group’s cash generating units and appropriate challenge of the financial information by reference to the future/forecasted operating targets.

If impairment is indicated, it is assessed in line with the Group’s accounting policies and the relevant asset written down accordingly.

FUNDING AND VALUATION OF IPL PUT LIABILITY

Ability to obtain appropriate funding

The Group may not be able to achieve its strategic growth objectives were the required capital resources not available to fund the Group’s organic and inorganic growth strategy.

The Irish banking syndicate has provided €92 million of committed funding, which is due to mature in December 2020. On the acquisition of IPL in July 2015, the Group entered into a credit agreement with a syndicate of Canadian banks. During 2016, following the acquisition of Encore, and again in May 2017 as part of the acquisition of Macro, this facility was further renegotiated and increased. The credit agreement provides for committed facilities at year end 2017 of CAD$344.1 million (€228.8 million), with CAD$289.1 million (€192.2 million) provided by way of term loan (including two USD denominated term loans of USD$125.0m and USD$32.9m each) and CAD$55 million (€36.6 million) provided under a revolving facility. This credit agreement expires in July 2021.

During the year, the Group extended its Canadian banking facility from an expiry date of July 2020 to July 2021.


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FUNDING AND VALUATION OF IPL PUT LIABILITY

Inability to fund IPL minority shareholding buy-out in July 2021 when the Put Option becomes exercisable. This liability has grown significantly since July 2015 in line with IPL’s trading performance and was measured at €119.8 million at 31 December 2017. This liability will increase if IPL continues to trade in accordance with expectations.

On 23 July 2015, the Group acquired its 66.67% controlling interest in IPL Inc. The Group acquired the shareholding on the basis of there being a Put Option in the Shareholders’ Agreement which gives the minority shareholders the option to Put their shares on the Group for acquisition commencing six years after the date of acquisition i.e. the Put Option is exercisable from 23 July 2021. There are other events in which the Group has a Call right which becomes exercisable prior to that date and these events include, inter alia, an initial public offering resulting in a recognised stock exchange listing of the equity of the Company. The Group anticipates that it will acquire the 33.33% of IPL that it does not own before the Group’s Put Option becomes exercisable in July 2021.

On 6 December 2017, the Company held an Extraordinary General Meeting (“EGM”) of the Company, at which the shareholders approved a number of resolutions. Shareholder approval was received for a reorganisation of the capital structure of the Company’s majority owned subsidiary IPL Inc., whereby CDPQ and FSTQ would exchange their equity investments in IPL Inc. for shares in IPL Plastics plc. Shareholder approval was also received to enable the Company to proceed with an IPO and Listing in 2018 and for a change of the Company’s name to IPL Plastics plc.

On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017.

Completion of the reorganisation on 28 February 2018 removes the need for IPL Plastics to recognise this Put Liability in its financial statements in the future.

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SHAREHOLDER RELATED

The shares are traded on the grey market

The Group may not be able to manage shareholder expectations in terms of share price performance due to a lack of liquidity.

The Group maintains an active Investor Relations calendar including investor and broker engagement.

On 6 December 2017 the Company held an EGM, at which the shareholders approved a number of resolutions, including resolutions approving the Company proceeding with an IPO and Listing in 2018. A stock-market listing would provide shareholders with a liquid market for their shares and would facilitate raising further equity if necessary to support future growth.


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BEING RESPONSIBLE IN A GLOBAL MARKET

Plastics form an integral part of our everyday lives. It has become the material of choice for products ranging from simple food packaging to collapsible plastic containers for worldwide transport logistics. The business case for sustainability in the rigid plastics sector is increasingly accepted, as evidenced by consumers wishing to buy more responsible products. At IPL Plastics, we believe in responsible products that are better both for our people and the world around us. Sustainability and innovation are key principles which influence how we do business in a responsible manner.

Working with colleagues, customers, suppliers, industry groups, investors and non-governmental organisations, the Group identifies, assesses, prioritises, and manages emerging sustainability risks and opportunities under four pillars:

• Marketplace – innovation and collaboration advancing the sustainability of our products by ensuring that we continue to meet the evolving needs of the marketplace in a sustainable and responsible way;

• Workplace – attraction, retention and development of our people in a safe workplace;

• Environment – protecting the environment and reducing the impact of our operations on the world around us; and

• Community – Actively engaging with and making positive contributions to the communities we belong to.

MARKETPLACE – INNOVATION AND COLLABORATION

InnovationAt our dedicated centres for innovation and excellence in Europe and Canada, we are advancing our commitment to deliver sustainable product solutions for our customers by integrating environmental aspects into product designs (shorter cycle times, reduced energy and raw material inputs). Using this approach, our business continues to make progress in the development of more responsible products for our customers.The Group’s efforts to innovate and reduce the environmental impact of our products are further demonstrated by:

• The installation of a digital printer system for IML printing, which reduced our shipping footprint between Europe and North America, and increased productivity and efficiency for the Group. This project was supported by Opportunities New Brunswick and the Canadian Government; and

• The acquisition of additional robots and moulds to manufacture thin-wall containers for the dairy food market, delivering a more responsible container by significantly reducing energy and raw materials used in the manufacturing process, as supported by the Atlantic Canada Opportunities Agency (“ACOA”).

Recyclable and reusable productsMacroBin products are designed to reduce any negative impacts on the environment as they are reusable, returnable, and made of plastic that is fully recyclable. This dramatically decreases supply chain waste by reducing, or eliminating, the use of single-use packaging materials by our customers. Our products are also optimised for space efficiency and are designed to work with the most progressive transport solutions available. Using MacroBins contributes to the reduction of our customers’ carbon footprint and greatly improves customer sustainability practices.


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In addition, to meet the principles of the circular economy, we incentivise our customers to return used MacroBin products, which are then upcycled into new product.

IPL Inc. has also developed a wide range of reusable plastic containers for industrial conditions, which are designed to perform well in harsh conditions, and are also made from 100% recyclable plastic. Products in this range include the “EuroBin” and “MacroBin”.

Supply chain collaborationWe encourage more responsible products throughout our industry, and work closely with our customers to create a supply chain that is responsible, transparent and sustainable. We regularly contribute to supply chain assessments on behalf of our customers, where questionnaire platforms evaluate our social and environmental performance in an independent manner.

Recycled polymersOur OPG business processed over 50% recycled polymers in 2017, making the business a net user of recycled plastics. Other achievements with recycled polymers include the reclaim and re-use project with a multinational technology firm, which achieved over 25% reduction of virgin polycarbonate resin in their product line. We will continue to work with this technology partner and others in 2018 to increase the amount of recycled polycarbonate resin in their products.

Our sustainability partnershipsThrough our various collaborative partnerships with non-governmental organisations and industry associations, we aim to influence the worldwide rigid plastics industry.

Examples of what we achieved through these sustainability partnerships include:

• Participation with the Rigid Plastic Packaging Group (RPPG) Executive Committee, which is part of the Plastics Industry Association in the USA. Group employees sit at committee level and address key challenges facing the plastics industry;

• The Group is a significant contributor to the efforts of the Canadian Plastics Industry Association (“CPIA”), with a presence on the CPIA Board of Directors and Chair of the Sustainability Committee. The CPIA provides leadership on pivotal issues and policies throughout the plastics lifecycle, promoting and defending the sustainable use of plastic products;

• Colleagues from our Centre for Innovation and Excellence in Canada are active contributors to the Institut de Développement De Produits; and

• Continued involvement with the Recycling Partnership, an industry-funded public/private programme in the U.S. to improve residential recycling rates.

EuroBin MacroBin


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Summary of achievements Across the Company, there has been recognition of our innovation and collaboration through the following achievements:

• Diamond Award winner (programme’s highest honour) from the DuPont Awards for Packaging Innovation for ‘SkinnyPack’ technology;

• Silver Award winner from the In-Mould Decorating Association (“IMDA”) for a new high clarity frozen food container – the SealPack Pint, which is 100% recyclable;

• Silver recognition in the Corporate Social Responsibility assessment conducted by EcoVadis, a global platform for evaluating corporate social and environmental practices;

• Placed in the top 30% of best companies evaluated by EcoVadis, a supply chain environmental audit tool;

• Development of EcoSmartTM product range, made from 100% recycled plastic;

• Increased use of recycled polymers for the production of our products in 2017;

• Development of returnable trip packaging (“RTP”) to optimise shipping efficiency and product reuse; and

• Achieved ‘zero to landfill’ status at our Rotherham, UK facility, as certified by The Carbon Trust.

These sustainability milestones have benefited our stakeholders and the overall rigid plastics sector, while at the same time strengthening our business and creating competitive advantage for IPL Plastics.

Recent developments in plastics industryEU plastics strategyThe Group recognises the importance of recent announcements to reduce plastic waste and promote the recycling of plastics across Europe. The development of recyclable and reusable products, and the increase of recycled polymers across the Group clearly demonstrates our strong commitment to meeting EU Circular Economy Policies and the recent Plastics Strategy.

The Group will continue to work with our customers in product innovation and design to meet the principles of the Plastics Strategy. Through our numerous innovation centres we are strategically placed to design and develop products that are more easily recyclable and reusable in the future.

BioplasticsThe Group will endeavour to remain up to date on emerging bioplastics and work in collaboration with customers and suppliers where such materials are deemed suitable for a product. Consideration will be given to how products, made from or containing bioplastics, will be disposed of at end-of-life in order to remain compatible with current recycling systems, or to take into account the specific conditions that may be required for disposal.

WORKPLACE

SafetyA key priority is the safety of our employees, contractors, customers and other persons who may be affected by our business activities. Safety is a key focus for Board and management, and in particular with regard to our 1,900 employees at all production facilities, warehouses and administrative offices.

To maintain a safe workplace, we are focused on:

• eliminating serious injuries by managing critical risk areas;

• determining which operating sites may require specific attention to improve safety;

• strengthening processes and knowledge sharing about all aspects of safety; and

• adopting best practices across all business groups.

Management, in conjunction with our Health and Safety committees, monitor safety performance and actively responds to safety trends in our business. We conduct internal audits and facilitate external customer audits at all our plants on an

Responsible Business (continued)

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ongoing basis. Using findings from these audits, our professional safety leaders plan and carry out actions for continuous improvement.

All our businesses provide monthly reports on safety performance, and compliance with Group standards and local legislation.

In 2017, we commenced a project to develop a Group-wide safety management intelligence system, which will facilitate the recording of all safety related events that occur within the Group, including incidents, injuries and near misses. Marshalling the data for the whole Group into one system will ensure that the data is consistent and can be shared. We can then use the information to analyse risk, predict trends and focus activities on major areas of safety concern.

Safety performanceThe Company monitor and track safety performance using two industry-standard indicator criteria (as recommended by the Occupation Safety Health Administration in the USA): Total Recordable Injury and Illness cases, and Days Away Rate. Trends in the last financial year have shown significant improvements in both indicators across all divisions.

Talent and succession planningWe are proud of our investment in people, we bring talent to work. Our businesses are run by dedicated management teams that deliver quick, flexible and high-quality customer service. The Group actively supports its employees in their training and development needs and has an ongoing apprenticeship programme.

By way of example, we currently have 17 apprentices in training across our UK sites, with recruitment of 5+ in 2018. We have an overall training co-ordinator, and mentors on every site alongside a formal training and development programme for each apprenticeship. The programme has been very successful, as demonstrated by one of our apprentices, who was awarded ‘2017 UK Apprentice Of The Year’ by the British Plastics Federation (“BPF”).

Code of ConductThe conduct of our people is crucially important for the Group. Our reputation depends upon it. The Group wants employees to be proud of where they work, for suppliers to be happy to partner with us, for customers to know that they are in safe hands and for our communities and society as a whole to trust our business and the products we make.

The Group has in place clear guidelines on business conduct and appropriate behaviour. Our corporate culture is firmly based on the belief that local management, with a real understanding of their business and culture, can best serve the needs of all our stakeholders. This creates the commitment to a dual citizenship concept of both IPL Plastics and the local business unit. This philosophy requires employees to operate to the highest levels of integrity, honesty, legality, and responsible behaviour.

Anti-bribery and corruptionThe Group has a detailed Anti-Bribery and Corruption Policy (the “Policy”) in place, which states that no employee or representative of any Group business is to offer or accept any bribe, including small facilitation payments, or engage in any other form of corrupt practice. The Policy is provided to employees in the Group and training on the key provisions of the Policy is also provided to relevant employees. In addition to prohibiting involvement in bribery or other forms of corruption, the Policy requires that every business in the Group maintains suitable procedures and records in relation to the provision and acceptance of gifts, hospitality and sponsorship.


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Responsible Business (continued)

COMMUNITY

Group businesses support local communities and non-profit organisations across our Global Operations, both financially and practically with volunteer days, sponsorship, fund raising and hands-on food and water donation programmes.

LOOKING AHEAD

All businesses have a responsibility to conduct their operations in a manner which meets societal expectations and industry best practice. The Company believes that by continuously improving our non-financial performance, this will support our strategic objective of becoming a leading and responsible global player in the rigid plastics market.

IPL Plastics is committed to providing industry leading solutions as well as driving technological advances for the plastics industry, through innovative and exciting product design and development. The Group aims to be the leading provider in each segment of our business offerings.

Building on our sustainability achievements, we believe one of the biggest impacts we can have on our industry is leading the way with product reusability, and recycling of products that have reached end-of life. This will continue to be a key focus in 2018. By building a responsible and sustainable business, we can deliver long term value to all our stakeholders.

ENVIRONMENT

Greenhouse gas (“GHG”) emissionsThe Group tracks energy inputs on a monthly basis at a business unit level. In 2018, the Group will track carbon emissions data following the GHG Protocol, and use the reporting process to identify opportunities for improvement and best practice.

Energy data will be collated and reported by all businesses into a central IT platform which will calculate carbon emissions using nationally published conversion factors. The Group plans to use our energy and carbon data to identify energy savings, respond to customer requests for information and to enhance carbon emissions reporting in line with the GHG Protocol.

Waste Waste reduction is significantly beneficial as it reduces environmental impacts and cost implications. The Group is continuously looking at new and innovative ways to reduce the generation of waste. During the year, the OPG business at Rotherham was awarded ‘zero to landfill’ certification from the Carbon Trust. The OPG business at Tamworth is also awaiting ‘zero to landfill’ status from the Carbon Trust.

Increasingly the business offers life-cycle solutions under which products such as bins and containers that have reached their end-of-life, are reclaimed, ground and replenished as part of our service, both in Europe and North America.

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Directors’ Report

Board of Directors

Directors’ Report





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Hugh McCutcheon* Interim Group Chairman

Hugh McCutcheon (64) was co-opted to the Board on 19 January 2015. He has extensive capital markets experience and M&A advisory experience for public and private companies across a broad range of industries including manufacturing, financial services, construction, pharma, food, oil and gas mining and government. He has a degree in Economics from Trinity College, Dublin. He is Chairman of the Remuneration Committee and Nominations Committee and a member of the Audit Committee. Hugh is a Chartered Accountant and was formerly head of corporate finance at Davy. He joined Davy in 1989 from PwC, where he qualified as a Chartered Accountant in 1979. Hugh is the Senior Independent Director of Origin Enterprises plc. Hugh is also an Alternate Director at the Irish Takeover Panel.

Alan WalshChief Executive Officer

Alan Walsh (41) (FCA, AITI) was appointed to the Board on 16 September 2009. In November 2011, Alan was appointed as Chief Executive Officer, having served since 1 July 2011 as interim Chief Executive Officer. Prior to that he was the Chief Financial Officer of the IPL Plastics Group from July 2009. Alan qualified as a Chartered Accountant with KPMG and subsequently worked with Matheson and AXIS Capital. He graduated from University College Dublin with a degree in International Commerce. Alan is a member of the Nominations Committee and is also a Non-Executive Director of Altas Investments plc and Pioneer Green Energy LLC.

Pat DaltonChief Financial Officer

Pat Dalton (52) (FCA, AITI) joined the Group in 2012 as Chief Financial Officer, and was appointed as an Executive Director to the Board on 31 December 2012. Pat worked for GPA Group plc from 1992 and was appointed CFO of debis AirFinance B.V, which acquired GPA Group plc in 2000. He was then CFO of Bord Gáis Éireann from 2002, before joining Menolly Property as CFO in 2006. Pat is a graduate of University College Dublin.

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Rose Hynes*

Rose Hynes (60) was appointed Senior Independent Director of IPL Plastics with effect from 31 December 2012. Rose was co-opted to the Board on 26 April 2012 and is a member of the Audit Committee, Nominations Committee and Remuneration Committee. She is currently Chairman of Origin Enterprises plc and also chairs Shannon Group plc and is the Senior Independent Director of Total Produce plc. Rose previously held a number of senior management positions with GPA Group plc and is a former Board member of a number of companies including Fyffes plc, Aer Lingus Group plc, Bank of Ireland and a former Chairman of Ervia. Rose is a lawyer and is also an Associate of the Irish Institute of Taxation and the Chartered Institute of Arbitrators.

Geoff Meagher*

Geoff Meagher (68) was co-opted to the Board on 20 February 2013. He is Chairman of the Audit Committee and is a member of the Remuneration Committee. He is a Certified Public Accountant. Geoff worked with PwC and Kilkenny Engineering Products, and served with Glanbia plc from 1992 to 2009, where he was Group Finance Director, and latterly Deputy Group Managing Director. Since 2009, Geoff has operated his own consultancy business. He is currently Chair of Bórd na Mona and also serves on the Board of Enterprise Ireland and Bon Secours Health System Limited.

Alain Tremblay*

Alain Tremblay (55) was co-opted to the Board on 2 January 2018 and is a Non-Independent Non-Executive Director representing La Casse de dépôt et placement du Québec (“CDPQ”), the Group’s largest shareholder. Alain is currently Investment Manager, Private Equity at CDPQ since 1998, specialising in distribution, manufacturing and services. He manages a portfolio of over CAD$5Bn and is a seasoned investor who has realised many investments in equity and mezzanine debt in mid to large cap companies across North America and Europe. Alain has previously served on several Boards, including Groupe Canam, Camso, Laureate Education, Rexel and St-Georges University. Alain brings over 30 years of experience in financial institutions such as the Bank of Montreal, Toronto Dominion Bank, Fonds de solidarité FTQ and Crédit industriel Desjardins. He has completed a Bachelor’s and Master’s degree in Business Administration at HEC Montreal and is a member de l’orde des Comptables Professionnels Agréés du Québec (CPA, CGA).

* Non-Executive


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The Directors present the annual report and audited consolidated financial statements of the Group for the year ended 31 December 2017.

CHANGE OF NAME

On 7 December 2017, the Company changed its name from One Fifty One plc to IPL Plastics plc.

PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The principal area of activity of IPL Plastics plc (“the Group” or “IPL Plastics”) is rigid plastics manufacturing.

Key operating subsidiary companies are listed in note 33.

The information to be included with respect to the review of the business and future developments as required by Section 327 of the Companies Act 2014 is contained in the Chief Executive’s Review on pages 11 to 25.

Directors’ Report

RESULTS

Revenue at €474.4 million was 36.2% higher than 2016 (2016: €348.2 million). EBITDA before exceptional items, non-recurring items and the Group’s share of equity-accounted investee profits amounted to €70.9 million (2016: €48.5 million), an increase of 46.0% on the prior year. The Group made a profit for the year of €17.6 million after accounting for exceptional items, giving rise to a basic earnings per share from continuing operations of 13.16 cent and diluted earnings per share of 12.69 cent compared with a basic and diluted earnings per share in 2016 from continuing operations of 13.02 cent and 12.55 cent, respectively.

The financial statements for the year ended 31 December 2017 are set out on pages 82 to 166.

DIVIDENDS

The Directors do not recommend the payment of a dividend (2016: €Nil).

BOARD OF DIRECTORS

Full details regarding Directors required to retire by rotation in accordance with the Articles of Association and their decision to offer themselves for re-election, where eligible, can be found in the Directors’ Statement on Corporate Governance on pages 63 to 68.

DIRECTORS, SECRETARY AND THEIR INTERESTS

Information in relation to the beneficial and non-beneficial interests in the share capital of Group companies held by the Directors and Secretary who held office at 31 December 2017 is contained within the Report of the Remuneration Committee on Directors’ Remuneration on pages 74 to 80.

PRINCIPAL RISKS AND UNCERTAINTIES

The Group is required under Irish Company Law to give a description of the principal risks and uncertainties that it faces. The principal risks and uncertainties are set out in the Risk Management Framework section on pages 44 to 51.

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ACCOUNTING RECORDS

The Directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act 2014 with regard to adequate accounting records by employing accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The accounting records of the Company are maintained at Huguenot House, 35 – 38 St. Stephen’s Green, Dublin 2.

POST BALANCE SHEET EVENTS

On 6 December 2017, shareholders approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders’ equity interests in IPL Inc. for shares in the Company. On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017.

Since the year-end, the Aryzta AG share price has lost approximately 40% of its value, with the share price decreasing from €33.10 at 31 December 2017 to €19.82 at 7 March 2018. This would result in a reduction of the investment in Aryzta AG by €1.3 million and result in an equivalent negative equity reserve. There is no change to the current year financial statements as this is a non-adjusting event after the reporting period under IAS 10 Events after the reporting period.

POLITICAL DONATIONS

No political donations were made by the Group during the year (2016: €Nil).

CORPORATE GOVERNANCE

The Company presents a corporate governance statement within the Directors’ Statement on Corporate Governance on pages 63 to 68.

DIRECTORS’ REMUNERATION

The Report of the Remuneration Committee on Directors’ Remuneration is set out on pages 74 to 80.

SUBSTANTIAL HOLDINGS

As at 31 December 2017, the following shareholders are interested in 3% or more of the issued share capital of the Company.

Company Name %

La Caisse de dépôt et placement du Québec (‘CPDQ’) 26.43

Kerry Co-operative Creameries Limited 4.65

Vevan 4.38

Dairygold Co-operative Society Limited 3.11

Lakelands Securities Limited 3.02

As far as the Company is aware, other than as stated above, no other person or company has an interest in 3% or more of the issued share capital of the Company.

DIRECTORS’ COMPLIANCE STATEMENT

The Directors acknowledge that they are responsible for securing compliance by the Company with its relevant obligations as defined in the Companies Act 2014 (hereinafter called the Relevant Obligations).

The Directors confirm that they have drawn up and adopted a compliance policy statement setting out the Company’s policies that, in the Directors’ opinion, are appropriate to the Company in respect of its compliance with its Relevant Obligations.

The Directors further confirm that the Company has put in place appropriate arrangements or structures that are, in the Directors’ opinion, designed to secure material compliance with its Relevant Obligations and that they have reviewed the effectiveness of these arrangements or structures during the financial period to which this Annual Report relates.

DISCLOSURE OF INFORMATION TO AUDITORS

The Directors in office at the date of this report have each confirmed that:

• As far as he/she is aware, there is no relevant audit information of which the Company’s statutory auditors are unaware; and


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• He/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company’s statutory auditors are aware of that information.

SHARE PRICE

The Company’s shares are traded on a ‘grey market’. The share price at 31 December 2017 was €2.05 (2016: €1.35). The price of the Company’s Ordinary Shares ranged between €1.35 and €2.40 during the year.

AUDITOR

Pursuant to Section 383(2) of the Companies Act, 2014, the auditor, KPMG, Chartered Accountants, will continue in office.

ISSUE OF SHARES AND PURCHASE OF OWN SHARES

At the Company’s Annual General Meeting held on 28 April 2017, shareholders passed a resolution that the Directors be generally and unconditionally authorised to exercise all the powers of the Company to allot and issue relevant securities, as defined by Section 1021 of the Companies Act 2014 up to an amount equal to the authorised but unissued share capital of the Company.

The authority conferred shall expire at the next Annual General Meeting of the Company after the passing of this resolution and the date which is 15 calendar months after the passing of this resolution, unless previously renewed, varied or revoked by the Company in accordance with the provisions of the Companies Act 2014 save that the Company may make an offer or agreement before the expiry of this authority which would or might require relevant securities to be allotted or issued after this authority has expired and the Directors may allot and issue relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.

At the Company’s Extraordinary General Meeting held on 6 December 2017, shareholders passed a resolution that the Directors be generally and unconditionally authorised to exercise all the powers of the Company to allot and issue relevant securities, as defined by Section 1021

Directors’ Report (continued)

of the Companies Act 2014, up to the aggregate nominal amount of €1,000,000, in connection with an IPO. This general authority to allot shares may be used only in connection with an IPO and not for any other purpose and is supplemental to, and does not replace, the share allotment authority obtained at the 2017 annual general meeting and any replacement of such authority obtained at the Company’s next annual general meeting. Unless previously renewed, revoked or varied by shareholders, the authority will remain in force until it expires on 31 December 2018, unless before such expiry, the Company makes an offer or agreement which would or might require relevant securities to be allotted after such expiry, in which case the Directors may allot relevant securities in pursuance of such offer or agreement notwithstanding that the authority has expired.

At the Company’s Extraordinary General Meeting held on 6 December 2017, shareholders also passed a resolution that the Directors be generally and unconditionally authorised to exercise all the powers of the Company to allot and issue relevant securities, as defined by Section 1021 of the Companies Act 2014, up to the aggregate nominal amount of €472,383, in connection with a reorganisation of the IPL Inc. shareholding. On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in the Company and this authority is, accordingly, no longer in force.

Details of the Company’s capital structure can be found in Note 22 to the financial statements on pages 132 to 134. Details of the rights attaching to shares and the deadlines for exercising voting rights are set out in the Directors’ Statement on Corporate Governance. Details of Employee Share Schemes, and the rights attaching to shares held in these schemes, can be found in Note 31 to the financial statements and the Report of the Remuneration Committee on Directors’ Remuneration.

On behalf of the Board

Hugh McCutcheon Alan Walsh

Director Director

8 March 2018 8 March 2018

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CORPORATE GOVERNANCE

The Board of IPL Plastics plc is firmly committed to business integrity, strong ethical values and professionalism in all of its activities and operations. It is therefore committed to maintaining the highest standards of corporate governance. As an unlisted Company, IPL Plastics plc is not required to report on its application of the UK Corporate Governance Code (the UK Code) as issued by the Financial Reporting Council in September 2014. However, the Directors are committed to maintaining high standards and have undertaken to continue to apply appropriate corporate governance arrangements having regard to best practice, taking into account the size of the Group and the nature of its activities. This Directors’ Statement on Corporate Governance describes the corporate governance arrangements in place.

BOARD OF DIRECTORS

RoleThe Board is responsible for the overall leadership and control of the Group and for determining the nature and extent of the significant risks it is willing to take in achieving the Group’s strategic objectives. A formal policy in respect of matters reserved to the Board for decision remains in place and includes the approval of:

• Group strategic plans;

• annual budgets;

• financial statements;

• significant capital expenditure items;

• major acquisitions and disposals;

• Executive and Director remuneration;

• changes to capital structure;

• Board appointments; and

• the review of the Group’s corporate governance arrangements and system of internal control.

The roles of Chairman and Chief Executive are separate with a clear division of responsibility between them. Formal documentation in respect of this division of responsibility is in place. The Board oversees and delegates responsibility for the management of the Group through the Chief Executive to executive management. The Board also delegates some of its responsibilities to Board Committees, details of which are set out below.

Individual Directors may seek independent professional advice at the Company’s expense, where they determine it necessary to discharge their responsibilities as Directors. The Group has an insurance policy in place which indemnifies the Directors in respect of legal action taken against them.

There is a Board approved policy in place in respect of Executive Directors and Senior Management occupying any position in a non-associated and unrelated company to the IPL Plastics Group. Neither of the Executive Directors is a Non-Executive Director or Chairman of a listed company.

MembershipAt 31 December 2017, the Board comprised of five Directors; two Executive and three Non-Executive (including the Interim Chairman). Mr Pat Gilroy retired as a Non-Executive Director on 18 May 2017. Mr Denis Cregan retired as Chairman and a Non-Executive Director on 5 July 2017. Mr Dalton Philips retired as a Non-Executive Director on 29 September 2017. Mr Alain Tremblay was co-opted to the Board as a Non-Executive Director with effect from 2 January 2018.

The biographical details of the current Directors are set out on pages 58 to 59.

During the year half of the Board, excluding the Chairman, consisted of independent Non-Executive Directors. All of the Directors bring independent judgement to bear on issues of strategy, performance, resources, key appointments and standards.



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Each of the Non-Executive Directors who served during the year was deemed to be independent except for Mr. Gilroy who was deemed to be non-independent as he represented a significant shareholder. A policy remains in place which was approved by the Board in respect of the assessment of Non-Executive Directors’ independence. This policy is based on the principles relating to independence set out in the UK Code including:

If the Director:

1. has been an employee of the Company or Group within the last five years;

2. has, or has had within the last three years, a material business relationship with the Company either directly, or as a partner, shareholder, Director or senior employee of a body that has such a relationship with the Company;

3. has received or receives additional remuneration from the Company apart from a Director’s fee, participates in the Company’s share option or a performance-related pay scheme, or is a member of the Company’s pension scheme;

4. has close family ties with any of the Company’s advisers, Directors or senior employees;

5. holds cross-directorships or has significant links with other Directors through involvement in other companies or bodies;

6. represents a significant shareholder; or

7. has served on the Board for more than nine years from the date of their first election.

ChairmanMr. Denis Cregan retired as Chairman and a Non-Executive Director on 5 July 2017. Mr Hugh McCutcheon was appointed as Interim Chairman on 5 July 2017. The Chairman is responsible for the efficient and effective working of the Board and for ensuring that the Board considers the key strategic issues facing the Group and that the Directors receive accurate, timely, relevant and clear information.

Senior Independent DirectorMs. Rose Hynes has held the position of Senior Independent Director of the Company since 31 December 2012. Ms. Hynes is available to shareholders if they have concerns that contact through the Chairman, Chief Executive or the other Executive Director has failed to resolve and is available to meet shareholders on request. Ms. Hynes is also available to act as a sounding board and intermediary for the Chairman and the other Directors, if necessary.

Company SecretaryThe appointment and removal of the Company Secretary is a matter for the Board. All Directors have access to the Company Secretary who is responsible to the Board for ensuring that Board procedures are complied with and ensuring good governance and compliance by the Company of its legal and regulatory requirements. The Company Secretary is Susan Holburn (FCIS, BA) who has held the position since the incorporation of the Company in 2004.

Terms of appointmentAll Non-Executive Directors were issued with formal letters of appointment setting out the terms and conditions on which they are appointed to the Board and to each Committee of the Board as appropriate. The standard terms of the letter of appointment for Non-Executive Directors, which states that they are generally expected to serve two terms of three years, are available for inspection at the Company’s registered office and at the Annual General Meeting (“AGM”). A Non-Executive Director’s term of office is subject to his/her re-election by shareholders at least every three years and the letter of appointment does not provide for any compensation for loss of office. Letters of appointment set out the time commitment of the role. Other time commitments of Non-Executive Directors are disclosed to the Board prior to appointment.

Retirement and re-election Under the Company’s Constitution, at least one-third of Directors must retire at each AGM and all Directors must submit themselves for re-election at least every three years. Directors appointed by the Board must submit themselves for election

Directors’ Statement on Corporate Governance (continued)

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at the first AGM following their appointment. Mr. Hugh McCutcheon and Mr. Pat Dalton retire and offer themselves for re-election at the forthcoming AGM. The Company can confirm that each of the Directors seeking re-election continue to perform effectively and demonstrate commitment to the role. The Board recommends the re-election of the Directors who are standing for re-election.

Induction and developmentAll new Directors, on appointment, receive briefing material in addition to briefings from management in relation to Group operations, management and structures. Ongoing briefings for Directors are also held on a regular basis with management and the opportunity is afforded to Directors to visit Group operations. An assessment of the Board’s requirements for additional training and/or professional development was conducted in respect of the year to 31 December 2017 in line with the internal Board performance evaluation process. In addition, the Chairman is available to Directors to review their training and development needs on an ongoing basis.

MeetingsMeetings of the Board normally take place on a monthly basis but may take place at other times as the Board considers appropriate. In addition, the Board continually reviews the Group’s strategy on an ongoing basis, while also dedicating two days per year for a full formal review. During the year under review, there were 18 scheduled meetings of the Board. Details of Directors’ attendance at these scheduled meetings are set out in the table on page 68. In addition, at least one meeting per year provides an opportunity for Non-Executive Directors and the Chairman to meet without the Executive Directors present.

The Chairman sets the agenda for each meeting in consultation with the Chief Executive and Company Secretary. The agenda and Board papers, which provide the Directors with relevant information to enable them fully consider the agenda items in advance, are circulated via BoardPad prior to each meeting. Directors are encouraged to participate in debate and engage in constructive challenge.

Activities during the yearThe activities of the Board and its Committees during the year are outlined in the sections of this report to which they relate.

Performance evaluationAn internal performance evaluation of the Board and its Committees was carried out in respect of the year to 31 December 2017. The evaluations of the Board and its Committees were formally documented.

RemunerationDetails of remuneration paid to Directors (Executive and Non-Executive) are set out in the Report of the Remuneration Committee on pages 74 to 80.

Share ownership and dealingDetails of Directors’ shareholdings are set out on pages 77 to 80.

A policy remains in place in respect of dealing in Company shares for Directors, senior managers and those employees who may, from time to time, be considered to have insider information. This policy sets out the clearance required prior to dealing.

CommitteesThe Board has established three permanent Committees to assist in the execution of its responsibilities. These are the Audit Committee, the Nominations Committee and the Remuneration Committee. Ad-hoc committees are formed from time to time to deal with specific matters. Each of the permanent Board Committees has terms of reference under which authority is delegated to them by the Board.

These terms of reference are available on the Company’s website and on request from the Company Secretary. The Chairman of each Committee regularly updates the Board as to its activities. The Committees have access to sufficient resources in order to carry out their duties, including access to the Company Secretary for assistance as required.


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The membership of each Committee as at 31 December 2017 is set out on page 167. Attendance at meetings held is set out in the table on page 68. The Chairman of each Committee attends the Annual General Meeting and is available to answer questions from shareholders.

INTERNAL CONTROL AND RISK MANAGEMENT

The Board of Directors has overall responsibility for the system of internal control, for monitoring its effectiveness and for confirming that there is a process for identifying, evaluating and managing the significant risks to the achievement of the Group’s strategic objectives. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.

The consolidated financial statements are prepared subject to the oversight and control of the Chief Financial Officer, ensuring correct data is captured from Group locations and all required information for disclosure in the consolidated financial statements is provided. A control framework has been put in place around the recording of appropriate eliminations and other adjustments. The consolidated financial statements are reviewed by the Audit Committee and approved by the Board of Directors.

The Board confirms that the Group’s ongoing process for identifying, evaluating and managing its significant risks and uncertainties has been in place for the year under review and up to the date of approval of the financial statements.

Group management has responsibility for major strategic development and financing decisions. Responsibility for operational issues is devolved, subject to limits of authority, to operating business management. Management at all levels is responsible for internal controls over the business functions that have been delegated. This embedding of the system of internal control throughout the Group’s operations ensures that the organisation is capable of responding quickly to

evolving business risks and that significant internal controls issues, should they arise, are reported promptly to appropriate levels of management.

The key risk management and internal control procedures, which are supported by detailed controls and processes, include:

• A clearly defined organisational structure with clearly defined lines of authority and responsibility;

• Skilled and experienced Group, divisional, and business unit management;

• A comprehensive system of financial reporting involving budgeting, monthly reporting and variance analysis to the Board;

• A comprehensive system of management reporting encompassing trading activities, operational issues, financial performance, working capital, cash flow and asset management;

• The operation of Board approved internal control, treasury and risk management policies;

• Group Internal Audit and Group Risk functions; and

• A formally constituted Audit Committee which approves audit plans and deals with significant control issues raised by the Group Internal Audit and Risk functions or external audit.

During the year, the Board and the Audit Committee received, on a regular basis, reports from management on the key risks to the business and the steps being taken to manage such risks and considered whether the significant risks faced by the Group were being identified, evaluated and appropriately managed having regard to the balance of risk, cost and opportunity.

During the year, the Audit Committee met with the Group Internal Auditors on a regular basis to review reports of the activities conducted by this function and any significant control issues identified in these reports. Deloitte were appointed as Internal Auditors for the Group during the year.The Board has reviewed the results of the


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Audit Committee’s annual assessment of the effectiveness of the Group’s system of risk management and internal controls. Where areas for improvement have been identified the necessary actions in respect of the relevant control procedures have been or are being taken.

The Directors, through the use of appropriate procedures, systems and the employment of competent persons, have ensured that measures are in place to secure compliance with the Company’s obligation to keep adequate accounting records. The accounting records are maintained at the registered office of the Company.

COMMUNICATIONS WITH SHAREHOLDERS

The Group attaches considerable importance to shareholder communications and has an established investor relations programme whereby periodic updates are circulated to all shareholders via the Company’s website. In addition, the Chairman and the Senior Independent Director are available to meet with shareholders. The Chairman of the Board and of each Committee attends the Company’s Annual General Meeting and are available to answer questions from shareholders. The Group’s website www.iplplastics.com provides the full text of the annual report and financial statements and other releases. Presentations given to shareholders are also made available on the website.

During 2017, Executive Directors met with significant shareholders on a number of occasions and briefed the Board on the views, and any concerns, raised at these meetings.

GENERAL MEETINGS

The Company’s AGM affords shareholders the opportunity to question the Chairman and the Board. The Notice of AGM, the Form of Proxy and the annual report are issued to shareholders at least 21 days before the meeting. At the meeting, resolutions are voted on by a show of hands of those shareholders attending, in person or by proxy. After each resolution has been dealt with, details are given of the level of proxy votes cast on each resolution and the number of votes

for, against and withheld. If validly requested, resolutions can be voted by way of a poll whereby the votes of shareholders present and voting at the meeting are added to the proxy votes received in advance of the meeting and the total number of votes for, against and withheld for each resolution are announced.

All other general meetings are called Extraordinary General Meetings (EGMs). An EGM called for the passing of a special resolution must be called by providing at least 21 days notice.

A quorum for a general meeting of the Company is constituted by three or more members present in person or by proxy and entitled to vote.

The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. To be passed, a special resolution requires a majority of at least 75% of the votes cast.

Shareholders have the right to attend, speak, ask questions and vote at general meetings. In accordance with Irish company law, the Company specifies record dates for general meetings, by which date shareholders must be registered in the Register of Members of the Company to be entitled to attend. Record dates are specified in the Notice of AGM. Shareholders may exercise their right to vote by attending the meeting or by appointing a proxy in writing. The requirements for the receipt of valid proxy forms are set out in the Notice of AGM. A shareholder, or a group of shareholders, holding at least one tenth of the issued paid up share capital of the Company has the right to request a general meeting.

At the AGM, presentations are given by the Chief Executive and the Chief Financial Officer in relation to the performance of the Group throughout the year and the plans for the year ahead.

CONSTITUTION

A copy of the Company’s Constitution may be inspected at the registered office of the Company.


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GOING CONCERN

The Group has considerable financial resources and operates in established business sectors across different geographical areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current challenging economic environment.

After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that the Company and the Group as a whole have adequate resources to continue in operational existence for the foreseeable future. In forming their view, the Directors have taken into consideration the future financial requirements of the Group and Company and the existing Irish bank facilities which mature in December 2020. In addition, the “ring-fenced” IPL Canadian bank facility was renegotiated with the maturity date extended to July 2021. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The Directors’ responsibility for preparing the financial statements is explained on page 82 and the reporting responsibilities of the auditor are set out in their report on pages 83 and 84.

ATTENDANCE AT MEETINGS

Attendance at scheduled Board meetings and Board Committee meetings during the year was as follows:

Board Audit Remuneration Nominations

A B A B A B A B

D Cregan¹ 7 6 - - - - 3 3

P Dalton 18 18 - - - - - -

P Gilroy² 5 3 - - - - - -

R Hynes5 18 18 7 7 2 2 1 1

G Meagher 18 17 7 7 7 7 - -

H McCutcheon4 18 18 7 7 7 7 1 1

D Philips³ 13 13 - - 3 3 1 1

A Walsh 18 18 - - - - 4 4

Column A – indicates the number of meetings held during the period the Director was a member of the Board and/or Committee

Column B – indicates the number of meetings attended during the period the Director was a member of the Board and/or Committee

Changes in the composition of Board or Board Committees during the year were as follows:

1. D. Cregan retired from the Board on 5 July 2017.

2. P. Gilroy retired from the Board on 18 May 2017.

3. D. Philips was appointed to the Remuneration Committee and the Nominations Committee on 16 March 2017. D. Philips retired from the Board on 29 September 2017.

4. H. McCutcheon was appointed as Interim Chairman on 5 July 2017. H. McCutcheon was appointed to the Nominations Committee on 5 July 2017.

5. R. Hynes was appointed to the Nominations Committee on 29 September 2017 and to the Remuneration Committee on 12 October 2017.


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The Nominations Committee is currently comprised of Mr. McCutcheon (Chair), Mr. Alan Walsh and Ms. Hynes. At 1 January 2017, the Committee comprised of Mr. Cregan and Mr. Walsh. Mr. Cregan retired from the Board on 5 July 2017. Mr. Philips was appointed to the Committee on 16 March 2017 and retired from the Board on 29 September 2017. Mr. McCutcheon was appointed to the Committee on 5 July 2017. Ms. Hynes was appointed to the Committee on 29 September 2017.

The Committee has defined terms of reference under which authority is delegated to it by the Board. The Committee’s terms of reference were reviewed and updated during the year and were formally approved by the Board at its meeting on 15 December 2017. These terms are available on the Company’s website and on request from the Company Secretary. The Committee regularly updates the Board as to its activities. It meets a minimum of twice a year and during the year under review met on four occasions. Attendance at meetings held is set out in the table on page 68.


The Committee’s responsibilities include:

• Reviewing the structure, size and composition (including the skills, knowledge and experience) required of the Board and making recommendations regarding any changes in order to ensure that the composition of the Board and its Committees is appropriate to the Group’s needs;

• Overseeing succession planning for the Board and senior management;

• establishing processes for the identification of suitable candidates for appointment to the Board; and

• Making recommendations to the Board on membership of Board Committees.

During 2017, the Committee:

• Considered the re-election of Directors in respect of those Directors who were due to retire by rotation at the Annual General Meeting during the year;

• Considered the composition of the Board of IPL Plastics and Sub-Committees of the Board;

• Considered and recommended to the Board the co-option of Mr. Alain Tremblay to the Board of IPL Plastics with effect from 2 January 2018;

• Considered and issued a formal letter of appointment to Mr. Alain Tremblay in respect of his appointment to the Board; and

• Considered and issued letters of appointment in respect of the membership of Sub-Committees of the Board to those directors who were appointed as members of Sub-Committees of the Board during the year.


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COMPOSITION AND TERMS OF REFERENCE

The Audit Committee is comprised of independent Non-Executive Directors, Mr. Meagher (Chair), Ms. Hynes and Mr. McCutcheon. The Committee has defined terms of reference under which authority is delegated to it by the Board. The Committee’s terms of reference were reviewed and updated by the Audit Committee at its meeting on 4 December 2017. The updated terms of reference were formally approved by the Board at its meeting on 15 December 2017. The terms of reference are available on the Company’s website and on request from the Company Secretary. The Committee Chairman regularly updates the Board as to its activities. The Audit Committee meets a minimum of four times a year and, during the year under review, met on seven occasions. Attendance at meetings held is set out in the table on page 68.

The Committee has determined that Mr. Geoff Meagher is the Audit Committee’s financial expert. The Group Chief Executive, the Group Chief Financial Officer, the Group Financial Controller, the Group Head of Risk and Assurance and the Internal Auditors attend Committee meetings as appropriate, while the external auditor attends as required and has direct access to the Committee Chairman.

The Committee’s responsibilities include:

• Monitoring the integrity of the financial statements of the Group and any formal announcements relating to financial performance including reviewing any significant financial reporting issues and judgements contained therein before submission to the Board and reviewing and monitoring of all material information presented within the financial statements, such as business review/financial review and the corporate governance statement (insofar as it relates to the audit and risk management) prior to approval by the Board;

• Reviewing the consistency of, and any changes to, accounting policies on an ongoing basis;

• Monitoring and reviewing the adequacy and effectiveness of the Group’s internal financial controls, internal controls and risk management systems;

• Monitoring and reviewing the effectiveness of the Group’s internal audit function in the context of the Group’s overall risk management system;

• Approving the appointment and/or the removal of the head of the internal audit function;

• Making recommendations to the Board in relation to the appointment and removal of the Group’s external auditor;

• Evaluating the performance of the external auditor including their independence and objectivity;

• Reviewing the annual internal and external audit plans;

• Ensuring compliance with the Group’s policy on the provision of non-audit services by the external auditor;

• Reviewing arrangements by which staff of the Group and contractors may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and periodically reviewing the methods by which “whistleblowing” can take place;

• Advising the Board on the current risk exposures of the Group and future risk strategy;

• Keeping under review the Group’s overall risk assessment processes that inform the Board’s decision making, ensuring both qualitative and quantitative metrics are used;


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• Recommending to the Board the appointment and/or removal of the Group Head of Risk and Assurance; and

• Reviewing and monitoring management’s responsiveness to the findings and recommendations of the Group Head of Risk and Assurance.

COMMITTEE MEETINGS IN 2017

As noted above, the Audit Committee schedules four routine meetings annually. There is a formal agenda for all meetings, which follows the financial reporting cycle of the Group. Meetings are attended as appropriate by the Group Chief Executive, the Group Chief Financial Officer, the Group Financial Controller, the Head of Internal Audit, the Group Head of Risk and Assurance and representatives of the external auditor. The main items addressed at the seven audit committee meetings held during 2017 were as follows:

6 March meeting

• An assessment questionnaire in respect of the performance appraisal of the Audit Committee in respect of the year ended 31 December 2016 had been completed by each member in advance of the meeting. Collation of findings and assessment in respect of this process were considered;

• Review the status of the 2016 financial statements audit with the external auditor.

• Update from the external auditor as to any significant issues arising at individual operating sites during the external audit process in respect of the 2016 financial statements.

• Consideration of the items included in the external auditor’s summary of adjusted and unadjusted audit difference schedule and the potential impact of these on the draft financial statements.

• Re-assessment of the independence of the external auditor was made and no issues noted.

• Consideration of key areas of judgement raised by the external auditor in their Audit Plan including accounting for the carrying value of the IPL Plastics Group’s SES Division due to Heads of Terms being signed in respect of the disposal of the businesses (the transactions

completed in 2017), acquisition accounting in respect of Encore Industries Inc., Bale Group Ltd and H&T Labour and Vacuumation Services Ltd, the review of the final fair value assessment of IPL Inc., the basis of accounting in respect of the IPL Inc Put Liability and the fair value thereof, the treatment of non GAAP measures, inventory valuation, asset impairment considerations, judgemental provisions and accruals, presentation of exceptional and non-recurring items of income and expense, and accounting for discontinued operations.

• Review of the draft Annual Report and financial statements for 2016, including the relevant notes and disclosures.

• Review and consideration of the Group Risk Presentation. The IPL Plastics Risk Management Framework, including the Group Risk Registers as outlined in the Group Risk Presentation, was reviewed.

• Review of the Internal Audit Assessment of the adequacy and effectiveness of the IPL Plastics Group’s processes for controlling its activities and managing its risks for the financial year ended 31 December 2016;

• Review of Internal Audit Reports with the Group Head of Internal Audit.

14 March meeting

• Consideration of the items included in the external auditor’s summary of adjusted and unadjusted audit difference schedule and the potential impact of these on the draft financial statements.

• Review of the draft Annual Report and financial statements for 2016, including the relevant notes and disclosures, and recommendation to the Board for approval.

• Review of the draft representation letter from the external auditor including specific representations requested and recommendation to the Board for approval.

• Review of the IPL Plastics Group’s 2016 Results Announcement and recommendation to the Board for approval;

• During this meeting, the Committee met with the external auditor with no members of the management team present.


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23 May meeting

• Review of forecast trading results in respect of the six month period ended 30 June 2017;

• Review of KPMG draft engagement letter in respect of the Half Year Review Process;

• Review of the 2017 Internal Audit Plan with the Group Head of Internal Audit;

• Review of Internal Audit Reports with the Group Head of Internal Audit;

• Review of Group Risk Presentation including updated Risk Registers and the minutes of the Executive Risk Committee Meeting held in April;

• Consideration of the functional currency of IPL Plastics plc;

• Review of updates made to the Group’s Treasury Policy and recommendation to the Board for approval.

25 August meeting

• Review of the draft Interim Financial Information documentation in respect of the six month period ended 30 June 2017;

• Review of the external auditor’s Presentation and Independent Review Report in respect of the six month period ended 30 June 2017;

• Recommendation of the draft interim financial statements to the Board;

• Review of the IPL Plastics Group’s Interim Results Announcement and recommendation to the Board for approval;

• Consideration and discussion with Deloitte, as newly appointed Internal Audit Service Providers, of the following which had been prepared by Deloitte: (i) Internal Audit Support Presentation, (ii) Deloitte Internal Audit Transition Report, and (iii) Internal Audit Plan for the period to 31 December 2017;

• Consideration of the IPL Plastics I.T. Strategy Document and recommendation to the Board for approval;

• Review of the updated Risk Registers.

16 November meeting

• Receipt and approval of the external auditor’s Audit Plan for the year ended 31 December 2017;

• Consideration of key areas of judgement raised by the external auditor in their Audit Plan including acquisition accounting in respect of Macro Plastics Inc., Encore Industries Inc., valuation of goodwill and intangible assets, accounting for the disposal of the Group’s SES Division, the basis of accounting in respect of the IPL Inc Put Liability and the fair value thereof, management override of controls and fraud risk;

• Review of the proposed external audit fees for 2017;

• Consideration of the independence and objectivity of the external auditor, including assessment of the impact, in this regard, of any non-audit services provided.

• Review of IPL Plastics Internal Audit Progress Update Presentation with Deloitte, as Internal Audit Service Providers;

• Consideration and approval of IPL Plastics Strategic Internal Audit Plan Presentation for 2018 with Deloitte, as Internal Audit Service Providers;

• Consideration of the financial information in respect of the Forecast Outturn to 31 December 2017;

• Review and approval of the Group’s Foreign Exchange Hedging Strategy.

4 December meeting

• Review and recommendation to the Board of an updated Internal Control Framework across the Group, including Delegation of Authority Guidelines, updated company policies, updated Matters Reserved for the Board and updated Board Committees Terms of Reference;

• Review of Internal Audit reports and Internal Audit Progress Update Presentation with Deloitte, as Internal Audit Service Providers;

• Review and approval of IPL Plastics Year End Trading Update Press Release.

Report of the Audit Committee (continued)

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15 December meeting

• An assessment questionnaire in respect of the performance appraisal of the Audit Committee in respect of the year ended 31 December 2017 had been completed by each member in advance of the meeting. Collation of findings and assessment in respect of this process were considered.

INDEPENDENCE OF EXTERNAL AUDITOR

As part of its annual review of the independence of the external auditor, the Audit Committee seeks confirmation from the external auditor that they are, in their professional judgement, independent of IPL Plastics plc. The Group has a policy in place governing the conduct of non-audit work by the external auditor. Under this policy, the auditor is prohibited from performing services where the auditor would participate in activities that would normally be undertaken by management; be remunerated through a “success fee” structure; or would act in an advocacy role for the Group.

The engagement of the external auditor in non-audit work must be pre-approved in certain circumstances by the Audit Committee, in particular when the level of fees involved could be considered to impact on external auditor independence. There is a policy in place in respect of Auditor Independence Services to be provided by the external auditor which was approved by the Audit Committee.

The amounts paid to the external auditor during the year, for audit and non-audit services, are disclosed on page 108. The tax advisory and other non-audit services fees includes costs incurred by the Group in relation to the provision by KPMG of taxation advisory, due diligence services in relation to Corporate acquisitions and disposals, advice connected with the Corporate Reorganisation and other corporate transactions. The directors believed that, given KPMG’s extensive knowledge of the Group’s history and operations, KPMG

was best placed to provide these services at the competitive commercial terms offered. The Group also engages a number of other professional services firms (other than KPMG) to undertake non-audit services, as and when required.

Four key principles underpin the provision of non-audit services by the external auditor, namely that the auditor shall not:

• audit its own firm’s work;

• make management decisions for the Group;

• have a mutuality of financial interest with the Group; or

• be put in the role of advocate for the Group.

The Committee also reviewed the Group’s practices in respect of the hiring of former employees of the external auditor in order to assess whether such appointments might affect, or appear to affect, the external auditor’s independence. The Committee is advised in advance of any such proposed appointments.

The Audit Committee does, from time to time, consider whether it would be appropriate to put the audit out to tender but it is currently satisfied that the existing external auditor is effective in the conduct of the audit. This matter is kept under annual review.


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COMPOSITION AND TERMS OF REFERENCE

The Remuneration Committee of the Board, whose membership is set out on page 167, consists solely of Non-Executive Directors. The Committee’s terms of reference include, amongst other matters, the following:

• determine and agree with the Board the framework or broad policy for the remuneration of the Company’s Chairman, Chief Executive, the Executive Directors, the Company Secretary and such other members of the Executive Management as it is designated to consider;

• in determining such policy, take into account all factors which it deems necessary including relevant legal and regulatory requirements. The objective of such policy shall be to ensure that members of the Executive Management of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Company;

• when setting remuneration policy for Directors, review and have regard to the remuneration trends across the Company;

• review the ongoing appropriateness and relevance of the remuneration policy;

• within the terms of the agreed policy and in consultation with the Chairman and/or Chief Executive, as appropriate, determine the total individual remuneration package of the Chairman, each Executive Director, Company Secretary and other designated senior executives including bonuses, incentive payments and share options or other share awards.

The Remuneration Committee, as it considers appropriate, obtains external advice from benefit and compensation consultants and other independent firms on current market trends with regard to remuneration policy and philosophy, market remuneration data, as well as incentive arrangements.


REMUNERATION POLICY

The Remuneration Committee is committed to ensuring that the Group has in place a remuneration structure that incentivises and retains highly skilled and motivated individuals, while at the same time aligning individual rewards with key corporate metrics which drive shareholder value creation.

The Company has two Executive Directors, Messrs. Walsh and Dalton at 31 December 2017.

During the year, the Remuneration Committee as advised by external independent advisors, carried out a review of the remuneration and contractual arrangements of the Executive Directors. Arising out of this review, it was decided to update the service agreements of the Executive Directors including for the purpose of aligning them to market standard for a company planning an Initial Public Offering and listing of its securities in Canada. Accordingly, each service contract now contains a change of control clause which provides that should the Executive Director terminate his employment within a 12 month period following a change of control, Mr Walsh and Mr Dalton would be entitled to 24 months remuneration if the change in control occurred after an IPO in Canada and otherwise 12 months remuneration. The service contracts for Mr Walsh and Mr Dalton do not contain a notice period of more than 12 months. The external independent advisors also benchmarked the remuneration of the Executive Directors to market peers.

The main elements of the remuneration package for senior management are basic salary and benefits, performance related annual bonus, long term incentive arrangements (i.e. share schemes) and pension benefits.

Bonus awards are made under the IPL Plastics Short Term Incentive Programme, or similar short term incentive arrangements. Bonuses are paid in respect of the attainment of targets agreed with employees for 2017.

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PENSIONS

During the year, pension contributions made to a Defined Contribution Scheme on behalf of Executive Directors were made in respect of Mr Walsh. No pension contributions were made in respect of Non-Executive Directors during 2017.

During the year, €42,000 of Mr. Dalton’s annual pension entitlement was paid by way of taxable non-pensionable cash allowance in lieu of pension benefits forgone.

Members of senior management accrue benefits under defined contribution schemes, as applicable. Payments in respect of pensions are calculated on basic salary only and no incentive or benefit elements are included.

SHARE SCHEMES

The Group currently has two long term equity-settled share schemes that are active. The purpose of the Group Share Schemes is to incentivise executives to deliver shareholder value and the achievement of financial targets. Details of each of the schemes are outlined in note 31 to the financial statements.

These active schemes are:

The One Fifty One plc 2014 Share Option SchemeDetails of the interests of the Directors and Company Secretary in share options granted under The One Fifty One plc 2014 Share Option Scheme are set out on page 77. The estimated cost of the vesting of the awards is included in the financial statements over the vesting periods which range from October 2017 to September 2020. There are 8,469,250 options outstanding under this scheme at the year end (1,355,000 of which relate to grants under the scheme in September 2017).

One51 Group Share Option Scheme 2006Details of the interests of the Directors and Company Secretary in share options granted under the One51 Group Share Option Scheme 2006 are set out on page 77. The cost of the vesting of the original awards was included in the financial statements for the year ended 31 December 2007. In the 2012 and 2013 financial years, further options were granted under this scheme with the cost of these awards included in the financial statements over the vesting periods, 2012 and 2013. There are 2,500,920 options outstanding under this scheme at the year end.

OTHER SCHEMES

The Group operates a short term incentive plan (“STIP”) and other incentive arrangements which award cash bonuses on the attainment of certain financial and other pre-agreed targets. The long term cash settled bonus scheme which provides for cash awards to certain employees on the satisfaction of both a share price performance condition and an earnings per share performance condition over a three year period from the date of the awards, vested in 2017 and was fully paid.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

The remuneration of the Non-Executive Directors is determined by the Board, in the absence of the relevant Non-Executive Director. The remuneration of the Chairman is determined by the Remuneration Committee and the Board of IPL Plastics, in the absence of the Chairman. The fees paid to Non-Executive Directors are set at a level which aims to attract individuals with the necessary experience and ability to make a significant contribution to the Group.


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DIRECTORS’ REMUNERATION AND INTEREST IN SHARE CAPITAL

Details of the overall Directors’ remuneration charged to the Income Statement are shown in note 36 on page 158. Individual Director remuneration and pension benefits for the year ended 31 December 2017 are set out below.

Remuneration – Executive Directors

Executive Director

Basic salary Bonus (1)

Benefits in kind (3) (4)

Pension contributions (3)

Total2017

Total2016

€ € € € € €

Alan Walsh 480,000 403,200 41,928 86,400 1,011,528 777,202

Pat Dalton 350,000 294,000 72,777 - 716,777 525,400

Total 830,000 697,200 114,705 86,400 1,728,305 1,302,602

Notes:

1. The Executive Directors’ annual bonuses are recommended by the Remuneration Committee and approved by the Board, with the creation of shareholder value and realising the Group’s strategic vision being the primary aims when setting performance targets.

2. The bonuses are based on both financial and personal objectives. Actual EBITDA (as defined in note 3 to the financial statements) versus budget is the key financial benchmark upon which bonuses are calculated.

3. The BIK amounts represent car allowances and health insurance paid on behalf of Messrs. Walsh and Dalton.

4. For the reason outlined on page 74, Mr. Dalton’s annual pension entitlement was paid by way of taxable non-pensionable cash allowance in lieu of pension benefits foregone.

5. During the year, Mr. Walsh served as a Director of Altas Investments plc. The fee that he received in fulfillment of his duties €30,000 (2016: €32,500) was paid to the IPL Plastics Group.

6. During the year, Mr. Walsh served as a director of Pioneer Green Energy LLC. The fee earned in fulfillment of his duties US$4,647 (2016: €17,172) was paid to the IPL Plastics Group.

7. During the year, amounts of €207,402 and €136,052 were charged to the Income Statement for equity settled share based payment schemes, for Messrs. Walsh and Dalton respectively (2016: €134,822 and €95,328 respectively). This charge to the Income Statement represents the fair value of each option granted, spread over the vesting period of the awards. Details of share options granted to Executive Directors during the year are set out on page 77.

Report of the Remuneration Committee on Directors’ Remuneration (continued)

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Remuneration – Non-Executive Directors

Non-ExecutiveDirector

BasicFees

OtherFees (1)

Total2017

Total2016

€ € € €

Denis Cregan (2) 20,973 21,485 42,458 83,000

Pat Gilroy (4) 15,874 - 15,874 13,667

Rose Hynes 41,000 13,000 54,000 54,000

Hugh McCutcheon (3) 41,000 26,182 67,182 52,000

Geoff Meagher 41,000 21,000 62,000 62,000

Dalton Philips (5) 30,750 - 30,750 13,667

Total 190,597 81,667 272,264 278,334

Notes:

1. Other fees are additional fees paid to the Chairman of the Company, Senior Independent Director and the Chair of the Sub-Committees of the Board for these activities.

2. Mr Cregan retired from the Board on 5 July 2017.

3. Mr McCutcheon was appointed as Interim Chairman on 5 July 2017.

4. Mr Gilroy retired from the Board on 18 May 2017.

5. Mr Philips retired from the Board on 29 September 2017.

Share Options Details as at 31 December 2017 of the Directors’ and Company Secretary’s holdings of options to subscribe for shares under the One51 Group Share Option Scheme 2006 and The One Fifty One plc 2014 Share Option Scheme are set out in the table below.

No. of options at 31 December

2016

No. of options granted during

the year

No. of options exercised during

the year

No. of options at 31 December

2017Exercise price

€ Exercise dates

Executive Directors

Alan Walsh 750,000 - - 750,000 0.20 2013 – 2020

1,525,000 - - 1,525,000 0.90 2017 – 2021

705,500 - - 705,500 1.68 2019 – 2023

- 785,000 - 785,000 1.86 2020 – 2024

Pat Dalton 625,000 - 250,000 375,000 0.20 2013 – 2020

1,150,000 - - 1,150,000 0.90 2017 – 2021

428,750 - - 428,750 1.68 2019 – 2023

- 460,000 - 460,000 1.86 2020 – 2024

Company Secretary

Susan Holburn 258,970 - - 258,970 0.20 2013 – 2020

175,000 - - 175,000 0.90 2017 – 2021

118,000 - - 118,000 1.68 2019 – 2023

- 110,000 - 110,000 1.86 2020 – 2024

The market price of shares in IPL Plastics plc was €2.05 at 31 December 2017 and the range during the year was €1.35 to €2.40. The share price on 8 March 2018 was €2.00.


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2012 grants under the One51 Group Share Option Scheme 2006In 2012, the Group granted the Executive Directors and the Company Secretary options over Ordinary Shares in IPL Plastics plc under the One51 Group Share Option Scheme 2006 which may be exercisable upon the attainment of specified share price targets. The term of expiry of these options is seven years from date of grant. The share price growth target was attained in 2013 and consequently the options are exercisable.

2014 grants under The One Fifty One plc 2014 Share Option SchemeIn 2014, the Group granted the Executive Directors and the Company Secretary options over Ordinary Shares in IPL Plastics plc under The One Fifty One plc 2014 Share Option Scheme which may be exercisable upon the attainment of specified performance targets and service criteria. Regarding specified performance targets, the options granted in 2014 are exercisable on the satisfaction of both a share price performance condition and an earnings per share (“EPS”) performance condition.

Up to 50% of the shares subject to an option shall vest according to the share price Performance Condition. The extent to which the share price Performance Condition is satisfied shall be determined by reference to the cumulative compound growth in the price of a share over the Performance Period in accordance with the following table:

Cumulative compound share price growth

Proportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the share price growth Condition)

Below 7.5 percentage points

0%

7.5 percentage points 25%

Between 7.5 and 11.25 percentage points

25% – 37.5% pro rata

Between 11.25 and 15 percentage points

37.5% – 50% pro rata

15 percentage points or more

50%

The growth in a share’s price shall be calculated by reference to the average price of a share over the 30 day period following the announcement date prior to vesting against the price of €0.90 per share.

Up to 50% of the shares subject to an option shall vest according to the EPS Performance Condition. The extent to which the EPS Performance Condition is satisfied shall be determined by reference to the cumulative compound growth in the Company’s EPS during the Performance Period in accordance with the following table:

Company’s cumulative compound EPS growth

Proportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the EPS Performance Condition)

Below 5 percentage points

0%

5 percentage points 25%

Between 5 and 7.5 percentage points

25% – 37.5% pro rata


37.5% – 50% pro rata


50%

The growth in the Company’s EPS shall be calculated by reference to the EPS of the accounting period immediately preceding the start of the Performance Period and the EPS of the three accounting periods of the Performance Period.

The Share Price Performance Condition and the EPS Performance Condition was attained in 2017 and consequently the options are exercisable.

2016 grants under The One Fifty One plc 2014 Share Option SchemeIn 2016, the Group granted the Executive Directors and the Company Secretary options over Ordinary Shares in IPL Plastics plc under The One Fifty One plc 2014 Share Option Scheme which may be exercisable upon the attainment of specified performance targets and service criteria. Regarding specified performance targets, the options granted in 2016 are exercisable on the satisfaction of both a Free Cash Flow Ratio (“FCFR”) performance


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condition and an EPS performance condition. FCFR in this context means Free Cash Flow before Growth Capital Expenditure as a percentage of EBITDA. Free Cash Flow before Growth Capital Expenditure means EBITDA adjusted to take account of interest, tax, maintenance capital expenditure, working capital cash-flows and dividends received.

Up to 50% of the shares subject to an option shall vest according to the FCFR Performance Condition. The extent to which the FCFR Performance Condition is satisfied shall be determined by reference to the Group’s FCFR over a three year Performance Period starting on the first day of the Accounting Period (1 January) in which the award date occurs, determined in accordance with the table below:

Average Annual FCFR

Proportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the FCFR Performance Condition)

Below 40% 0%

40% 25%

Between 40% and 75% 25% – 50% pro rata

75% and above 50%




Below 5 percentage points

0%


Between 5 and 7.5 percentage points

25% – 37.5% pro rata


37.5% – 50% pro rata


50%


2017 grants under The One Fifty One plc 2014 Share Option SchemeIn 2017, the Group granted the Executive Directors and the Company Secretary options over Ordinary Shares in IPL Plastics plc under The One Fifty One plc 2014 Share Option Scheme which may be exercisable upon the attainment of specified performance targets and service criteria. Regarding specified performance targets, the options granted in 2017 are exercisable on the satisfaction of both a Free Cash Flow Ratio (“FCFR”) performance condition and an EPS performance condition. FCFR in this context means Free Cash Flow before Growth Capital Expenditure as a percentage of EBITDA. Free Cash Flow before Growth Capital Expenditure means EBITDA adjusted to take account of interest, tax, maintenance capital expenditure, working capital cash-flows and dividends received.


Average Annual FCFR

Proportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the FCFR Performance Condition)

Below 40% 0%

40% 25%


75% and above 50%


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Below 5 percentage points 0%


Between 5 and 7.5 percentage points 25% – 37.5% pro rata

Between 7.5 and 10 percentage points 37.5% – 50% pro rata

10 percentage points or more 50%


Other information relevant to share option schemesOptions will not vest unless the minimum vesting target is met under each condition. Options will normally vest no earlier than the third anniversary of the grant date. The options must be exercised within seven years of the grant date.

The fair value of each option granted is charged to the Income Statement over the vesting period of the award. Further details regarding the One51 Group Share Option Scheme 2006 and The One Fifty One plc 2014 Share Option Scheme are outlined in note 31.

Interests in Ordinary Shares The interests of the Directors and Company Secretary in office at 31 December 2017 in the ordinary share capital of IPL Plastics plc, together with their interests at 31 December 2016 are as follows:

Name Type of Stock Held As at

31 December 2017As at

31 December 2016

Directors

Alan Walsh Ordinary Shares of €0.01 each 425,032 425,032

Pat Dalton Ordinary Shares of €0.01 each 361,112 111,112

Rose Hynes Ordinary Shares of €0.01 each 7,500 7,500

Hugh McCutcheon Ordinary Shares of €0.01 each 170,000 170,000

Secretary

Susan Holburn Ordinary Shares of €0.01 each 71,031 71,031

Apart from the interests disclosed above, the Directors and the Company Secretary had no other interests in the share capital of the Company or any other Group undertaking at 31 December 2017.

The Company’s Register of Directors’ Interests (which is open to inspection) contains full details of Directors’ shareholdings and share options.

No other transactions occurred impacting the disclosures above between 31 December 2017 and the date of signing the annual report.


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Financial Statements

Statement of Directors’ Responsibilities in respect of the Directors’ Report and the Financial Statements

Independent Auditor’s Report

Group Income Statement

Group Statement of Other Comprehensive Income

Consolidated Statement of Financial Position

Group Statement of Changes in Equity

Consolidated Statement of Cash Flows


Company Statement of Financial Position

Company Statement of Changes in Equity

Company Statement of Cash Flows


82

83

85

86

87

88

90

91

160

161

162

163


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The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and applicable law. In preparing these financial statements, the Directors have also elected to comply with IFRSs issued by the International Accounting Standards Board (IASB).

Under company law the Directors must not approve the Group and Company Financial Statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the Group’s profit or loss for that year. In preparing each of the Group and Company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with IFRSs as adopted by the EU and IFRSs issued by the IASB; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial position and profit or loss of the Company and which enable them to ensure that the financial statements of the Group are prepared in accordance with applicable IFRSs, as adopted by the EU and with IFRSs as issued by the IASB, and comply with the provisions of the Companies Act 2014. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements of the Companies Act 2014.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.



Director Director


Statement of Directors’ Responsibilitiesin respect of the Directors’ report and the financial statements

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Independent Auditor’s report to the members of IPL Plastics plc

1 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OpinionWe have audited the Group and Company financial statements (“financial statements”) of IPL Plastics plc for the year ended 31 December 2017, which comprise the Group Income Statement, the Group Statement of Other Comprehensive Income, the Consolidated and Company Statement of Financial Position, the Group and Company Statement of Changes in Equity, the Consolidated and Company Statement of Cash Flows and the related notes, including the summary of significant accounting policies set out in note 1. The financial reporting framework that has been applied in their preparation is Irish Law and International Financial Reporting Standards (IFRS) as adopted by the European Union, International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014.

In our opinion:

• the Group financial statements give a true and fair view of the assets, liabilities and financial position of the Group as at 31 December 2017 and of its profit for the year then ended;

• the Company statement of financial position gives a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2017;

• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

• the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014; and

• the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014.

Separate opinion in relation to IFRSs as issued by the IASBAs explained in the Basis of Preparation on page 91 of the Group financial statements, the Group, in addition to applying IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

In our opinion, the Group financial statements comply with IFRSs as issued by the IASB.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We have nothing to report on going concernWe are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects.

Other informationThe directors are responsible for the other information presented in the Annual Report together with the financial statements. The other information comprises the information included in the strategic report and the directors’ report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.


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Independent Auditor’s report to the members of IPL Plastics plc (continued)

Based solely on our work on the other information:

• we have not identified material misstatements in the directors’ report;

• in our opinion, the information given in the directors’ report is consistent with the financial statements; and

• in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.

Opinions on other matters prescribed by the Companies Act 2014We have obtained all the information and explanations which we consider necessary for the purposes of our audit.

In our opinion the accounting records of the Group were sufficient to permit the financial statements to be readily and properly audited and the financial statements are in agreement with the accounting records.

Matters on which we are required to report by exceptionThe Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made. We have nothing to report in this regard.

2 RESPECTIVE RESPONSIBILITIES AND RESTRICTIONS ON USE

Responsibilities of directors for the financial statementsAs explained more fully in the directors’ responsibilities statement set on page 82, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A fuller description of our responsibilities is provided on IAASA’s website at https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsiblities_for_audit.pdf

The purpose of our audit work and to whom we owe our responsibilitiesOur report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Tom McEvoy for and on behalf of KPMG Chartered Accountants, Statutory Audit Firm 1 Stokes Place St. Stephen’s Green Dublin 2 8 March 2018

84

Group Income StatementFor the year ended 31 December 2017

2017

Exceptional items

(note 7) Total 2016

Exceptional items

(note 7) TotalNote €’000 €’000 €’000 €’000 €’000 €’000

Continuing operations

Revenue 3 474,370 - 474,370 348,214 - 348,214

Cost of sales (368,262) - (368,262) (266,096) - (266,096)

Gross profit 106,108 - 106,108 82,118 - 82,118

Operating expenses (including non-recurring items) 4 (70,944) (7,099) (78,043) (57,567) (5,595) (63,162)

Other operating income (including non-recurring items) 4 3,167 624 3,791 5,836 4,069 9,905

Operating profit 38,331 (6,475) 31,856 30,387 (1,526) 28,861

Finance costs 9 (13,762) - (13,762) (8,875) - (8,875)

Share of profit of equity-accounted investees 8 1,763 - 1,763 3,933 - 3,933

Profit before taxation 26,332 (6,475) 19,857 25,445 (1,526) 23,919

Non-recurring income tax credit 10 8,036 - 8,036 - - -

Income tax (expense)/credit 10 (8,277) 1,101 (7,176) (3,850) 330 (3,520)

Total income tax (expense)/credit (net) 10 (241) 1,101 860 (3,850) 330 (3,520)

Profit from continuing operations 26,091 (5,374) 20,717 21,595 (1,196) 20,399

Discontinued operations

Profit/(loss) from discontinued operations, net of tax 11 - (3,160) (3,160) 1,539 (5,881) (4,342)

Profit for year: all attributable to equity holders of the parent 26,091 (8,534) 17,557 23,134 (7,077) 16,057

Earnings per share

Basic earnings per share (cents) 12 - - 11.15 - - 10.25

Diluted earnings per share (cents) 12 - - 10.75 - - 9.88

Earnings per share – continuing operations

Basic earnings per share (cents) 12 - - 13.16 - - 13.02

Diluted earnings per share (cents) 12 - - 12.69 - - 12.55



Director Director



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85

2017 2016*Note €’000 €’000

Other comprehensive income

Profit for the year 17,557 16,057

Items that are or may be reclassified to profit or loss

Foreign operations – foreign currency translation differences from non-euro entities 22 (16,383) (10,189)

Tax impact on foreign currency translation differences 29 1,302 -

Share of equity-accounted investees’ other comprehensive income 8 (297) (1,237)

Available-for-sale financial assets – net change in fair value 16 (2,095) 841

Translation reserve reclassification to Income Statement on disposal of subsidiary 22 1,608 -

Other comprehensive income (15,865) (10,585)

Total other comprehensive income (15,865) (10,585)

Total comprehensive income: all attributable to equity holders of the parent 1,692 5,472

* The 2016 Group Statement of Other Comprehensive Income has been presented to reflect the transfer of the movement in the fair value of the Put Liability (and the associated foreign currency translation movement) directly in equity in line with the Group’s accounting policy. This is included on the Group Statement of Changes in Equity on pages 88 and 89.

Group Statement of Other Comprehensive IncomeFor the year ended 31 December 2017

86

Consolidated Statement of Financial Position As at 31 December 2017

20172016

(restated – see note 1)Note €’000 €’000

Assets

Property, plant and equipment 13 214,643 160,774

Goodwill and intangible assets 14 206,916 140,101

Equity-accounted investees 8 2,934 4,046

Investment property 15 1,382 1,401

Available-for-sale financial assets 16 3,422 5,519

Trade and other receivables 19 11,619 5,983

Deferred tax assets 29 5,194 5,243

Non-current assets 446,110 323,067

Inventories 18 69,070 39,102


Cash and cash equivalents 20 39,697 39,350

Assets held for sale 21 - 57,718

Current assets 175,815 188,374

Total assets 621,925 511,441

Equity

Share capital 22 1,586 1,571

Share premium 22 89,079 88,587

Reserves 22 (97,267) (43,435)

Retained earnings 89,317 71,916

Total equity 82,715 118,639

Liabilities

Loans and borrowings 23 244,234 175,397

Trade and other payables 24 2,608 2,930

Deferred contingent consideration 28 119,755 72,288

Government grants 26 2,513 1,918

Provisions 27 2,534 5,970

Deferred tax liabilities 29 37,108 32,303

Non-current liabilities 408,752 290,806

Loans and borrowings 23 24,048 12,497


Deferred contingent consideration 28 51 350

Government grants 26 438 333

Provisions 27 2,788 349

Corporation tax payable 4,641 2,370

Liabilities held for sale 21 - 11,138

Current liabilities 130,458 101,996

Total liabilities 539,210 392,802

Total equity and liabilities 621,925 511,441



Director Director



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87

Group Statement of Changes in Equity For the year ended 31 December 2017

S

hare

ca

pita

l S

hare

pr

emiu

m T

rans

latio

n re

seve

Shar

e ba

sed

paym

ent

rese

rve

Ava

ilabl

e -f

or-s

ale

rese

rve

Tre

asur

y sh

are

rese

rve

Con

vert

ible

lo

an n

ote

rese

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er e

quity

re

serv

eRe

tain

ed

earn

ings

Tot

al€’

000

€’00

0€’

000

€’00

0€’

000

€’00

0€’

000

€’00

0€’

000

€’00

0

Bal

ance

at

1 Ja

nu

ary

2017

1,57

188

,587

(5,7

59)

1,15

72,

081

(1,3

03)

78(3

9,68

9)71

,916

118,

639

Tota

l co

mp

reh

ensi

ve in

com

e

Pro

fit fo

r th

e ye

ar-

--

--

--

-17

,557

17,5

57

Oth

er c

om

pre

hen

sive

inco

me

Sha

re o

f eq

uity

-acc

ount

ed in

vest

ees’

oth

er

com

pre

hens

ive

inco

me

--

--

--

--

(297

)(2

97)

Rev

alua

tion

loss

es o

n av

aila

ble

-for

sal

e fin

anci

al

asse

ts-

--

-(2

,095

)-

--

-(2

,095

)

Tran

slat

ion

diff

eren

ces

--

(16,

383)

--

--

--

(16,

383)

Tax

imp

act o

n fo

reig

n cu

rren

cy t

rans

latio

n d

iffer

ence

s-

-1,

302

--

--

--

1,30

2

Tran

slat

ion

rese

rve

recl

assi

ficat

ion

to in

com

e st

atem

ent

on d

isco

ntin

ued

op

erat

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--

1,60

8-

--

--

-1,

608

Oth

er c

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pre

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me

--

(13,

473)

-(2

,095

)-

--

(297

)(1

5,86

5)

Tota

l co

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reh

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ve in

com

e-

-(1

3,47

3)-

(2,0

95)

--

-17

,260

1,69

2

Co

ntr

ibu

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ns

and

dis

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on

s

Rec

lass

ifica

tion

from

sha

re b

ased

pay

men

t re

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ret

aine

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arni

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– fo

rfei

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tions

--

-(9

)-

--

-9

-

Eq

uity

-set

tled

sha

re b

ased

pay

men

ts –

cha

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for

year

--

-48

7-

--

--

487

Issu

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s –

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of s

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1549

2-

(132

)-

--

-13

250

7

Tota

l co

ntr

ibu

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and

dis

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s 15

492

-34

6-

--

-14

199

4

Incr

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in fa

ir va

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of P

ut L

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rel

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g to

su

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ry u

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--

--

--

(42,

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mov

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t in

resp

ect o

f Put

Lia

bili

ty

rela

ting

to s

ubsi

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ry u

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-4,

196

--

--

--

4,19

6

Fair

val

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and

tra

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men

t in

re

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Pu

t L

iab

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--

4,19

6-

--

-(4

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(38,

610)

Tota

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ers

of

the

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any

1549

24,

196

346

--

-(4

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1(3

7,61

6)

Bal

ance

at

31 D

ecem

ber

201

71,

586

89,0

79(1

5,03

6)1,

503

(14)

(1,3

03)

78(8

2,49

5)89

,317

82,7

1588

S

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Bal

ance

at

1 Ja

nu

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2017

1,57

188

,587

(5,7

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1,15

72,

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(1,3

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78(3

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,916

118,

639

Tota

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Pro

fit fo

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ar-

--

--

--

-17

,557

17,5

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Oth

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Sha

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-acc

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--

--

--

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(297

)(2

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Rev

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asse

ts-

--

-(2

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--

-(2

,095

)

Tran

slat

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diff

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--

(16,

383)

--

--

--

(16,

383)

Tax

imp

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latio

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ence

s-

-1,

302

--

--

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1,30

2

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to in

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--

1,60

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--

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608

Oth

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(13,

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(297

)(1

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5)

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(2,0

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--

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1,69

2

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sha

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-(9

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-

Eq

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--

-48

7-

--

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487

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of s

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7

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and

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492

-34

6-

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199

4

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in fa

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rel

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su

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--

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(42,

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6)

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t in

resp

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f Put

Lia

bili

ty

rela

ting

to s

ubsi

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-4,

196

--

--

--

4,19

6

Fair

val

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and

tra

nsl

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n m

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men

t in

re

spec

t to

Pu

t L

iab

ility

--

4,19

6-

--

-(4

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(38,

610)

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l tra

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ns

wit

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wn

ers

of

the

Co

mp

any

1549

24,

196

346

--

-(4

2,80

6)14

1(3

7,61

6)

Bal

ance

at

31 D

ecem

ber

201

71,

586

89,0

79(1

5,03

6)1,

503

(14)

(1,3

03)

78(8

2,49

5)89

,317

82,7

15

Group Statement of Changes in Equity For the year ended 31 December 2016

Shar

e ca

pita

l S

hare

pr

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m T

rans

latio

n re

serv

e

Shar

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Conv

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le

loan

not

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ther

equ

ity

rese

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Ret

aine

dea

rnin

gs T

otal

€’00

0€’

000

€’00

0€’

000

€’00

0€’

000

€’00

0€’

000

€’00

0€’

000

Bal

ance

at

1 Ja

nu

ary

2016

1,57

088

,577

6,54

670

81,

240

(1,3

03)

78(1

,925

)57

,089

152,

580

Tota

l co

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ve in

com

e

Pro

fit fo

r th

e ye

ar-

--

--

--

-16

,057

16,0

57

Oth

er c

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pre

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inco

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Sha

re o

f eq

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-acc

ount

ed in

vest

ees’

oth

er

com

pre

hens

ive

inco

me

--

--

--

--

(1,2

37)

(1,2

37)

Rev

alua

tion

gain

s on

ava

ilab

le-f

or s

ale

finan

cial

as

sets

--

--

841

--

--

841

Tran

slat

ion

diff

eren

ces

--

(10,

189)

--

--

--

(10,

189)

Oth

er c

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pre

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inco

me

--

(10,

189)

-84

1-

--

(1,2

37)

(10,

585)

Tota

l co

mp

reh

ensi

ve in

com

e-

-(1

0,18

9)-

841

--

-14

,820

5,47

2

Co

ntr

ibu

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ns

and

dis

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on

s

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lass

ifica

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sha

re b

ased

pay

men

t re

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--

-(3

)-

--

-3

-

Eq

uity

-set

tled

sha

re b

ased

pay

men

ts –

cha

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for

year

--

-45

6-

--

--

456

Issu

e of

Ord

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s –

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of s

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110

-(4

)-

--

-4

11

Tota

l co

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and

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10-

449

--

--

746

7

Incr

ease

in fa

ir va

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of P

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iab

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rel

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g to

sub

sid

iary

und

erta

king

--

--

--

-(3

7,76

4)-

(37,

764)

Tran

slat

ion

mov

emen

t in

resp

ect o

f Put

Lia

bili

ty

rela

ting

to s

ubsi

dia

ry u

nder

taki

ng-

-(2

,116

)-

--

--

-(2

,116

)

Fair

val

ue

and

tra

nsl

atio

n m

ove

men

t in

re

spec

t to

Pu

t L

iab

ility

--

(2,1

16)

--

--

(37,

764)

-(3

9,88

0)

Tota

l tra

nsa

ctio

ns

wit

h o

wn

ers

of

the

Co

mp

any

110

(2,1

16)

449

--

-(3

7,76

4)7

(39,

413)

Bal

ance

at

31 D

ecem

ber

201

61,

571

88,5

87(5

,759

)1,

157

2,08

1(1

,303

)78

(39,

689)

71,9

1611

8,63

9


Info

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89

Consolidated Statement of Cash Flows For the year ended 31 December 2017

2017 2016Note €’000 €’000

Net cash flows from operating activities before working capital movements 32 65,214 48,299

Movements in working capital 32 (13,690) 9,064

Net cash flows from operating activities pre-exceptional items 51,524 57,363

Exceptional items paid (3,731) (1,846)

Net cash flows from operating activities 47,793 55,517

Cash flows from investing activities

Proceeds from sale of property, plant and equipment and intangible assets 1,425 288

Disposal/discontinuation of subsidiary undertakings, net of cash disposed 38,783 501

Dividend received from equity-accounted investee 8 5,293 177

Disposal of investment property and property held-for-sale 400 2,564

Acquisition of property, plant and equipment and intangible assets (43,525) (32,264)

Acquisition of subsidiaries, including associated costs and net of cash acquired (134,535) (21,297)

Deferred consideration paid 28 (385) (366)

Grants received 26 1,162 723

Net cash used in investing activities (131,382) (49,674)

Cash flows from financing activities

Finance costs paid (13,384) (9,183)

Net proceeds from equity issued 507 11

Drawdowns of bank borrowings 32 176,568 58,990

Repayment of bank borrowings 32 (78,751) (41,551)

Net cash from financing activities 84,940 8,267

Net increase in cash and cash equivalents 1,351 14,110

Cash and cash equivalents at 1 January 39,350 25,499

Effect of movements in exchange rates on cash held (1,004) (259)

Cash and cash equivalents at 31 December 39,697 39,350

90


1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

Reporting EntityIPL Plastics plc (the ‘Company’) is incorporated in Ireland. The financial statements for the year ended 31 December 2017 consolidate the individual financial statements of the Company and its subsidiaries (together referred to as the ‘Group’ or ‘IPL Plastics’) and show the Group’s interest in its equity-accounted investees under the equity method of accounting. During the year, the Company changed its name from One Fifty One plc to IPL Plastics plc.

The individual and Group financial statements of the Company were approved for issue by the Directors on 8 March 2018.

The Statement of Financial Position as at 31 December 2016 has been restated so as to reflect final fair value adjustments in respect of the Encore Industries Inc. acquisition. See note 17 for details of these adjustments.

The following accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

Statement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and their interpretations issued by the International Accounting Standards Board (IASB) as adopted by the EU, and in accordance with International Financial Reporting Standards (IFRSs) and their interpretations issued by the International Accounting Standards Board (IASB).

The individual financial statements of the Company (‘Company financial statements’) have been prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the Companies Act 2014 which permits a company that publishes its Company and Group financial statements together to take advantage of the exemption in Section 304 of the Companies Act 2014 from presenting to its members its Company income statement and related notes that form part of the approved Company financial statements.

The IFRSs adopted by the EU and applied by the Company and Group and the IFRSs issued by the IASB and applied by the Group, in the preparation of these financial statements are those that were effective for the year ending 31 December 2017.

Basis of PreparationThe consolidated financial statements, which are presented in euro, the Company’s functional currency, rounded to the nearest thousand (except where stated), have been prepared under the historical cost convention, except for the following material items:

Items Measurement basis

Derivative financial instruments Fair value

Available-for-sale financial assets Fair value

Investment property Fair value

Share-based payment arrangements Fair value at date of grant for equity settled

Deferred contingent consideration – Put Liability Fair value

The methods used to measure fair values are discussed further within the relevant notes.

The key estimates and assumptions used in applying the Group’s accounting policies and in measuring its assets and liabilities are set out in note 2.


Info

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ion

Dire

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rs’ R

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1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Going ConcernThe directors believe that sufficient financial resources are available to enable the Group to meet its obligations as they fall due, covering a period of not less than twelve months from the date of approval of the financial statements. In forming their view, the directors have taken into consideration the future financial requirements of the Group and Company and the existing Irish bank facilities which have a maturity in December 2020. In addition, a “ring-fenced” facility related to the IPL Inc. structure, which had a further draw down during the year to part fund the Macro acquisition, matures in July 2021. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.

Basis of consolidation(a) Business combinationsThe Group accounts for business combinations using the acquisition method when control is transferred to the Group (see (b) below). The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see below). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. Where there is a Put Option held by a non-controlling interest (“NCI”) in a subsidiary undertaking whereby that party can require the Group to acquire the NCI’s shareholding in the subsidiary at a future date, the Group applies the anticipated-acquisition method of accounting to this arrangement by recognising a contingent consideration liability at fair value, being the Group’s estimate of the amount required to settle that liability. Discounting is applied where the settlement of the liability is not anticipated within a 12 month period from the Statement of Financial Position date. Any remeasurements required due to changes in fair value of the Put Liability estimation, are recognised in equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in fair value or the contingent consideration are recognised in profit or loss.

The assets and liabilities of a subsidiary are measured at their fair value at the date of acquisition. Where the initial accounting for a business combination is determined provisionally, adjustments may be made to the provisional values allocated to the identifiable assets and liabilities for a period of 12 months from the date of acquisition.

The acquisition method of accounting is applied in the same manner as detailed above to the proportionate share of net identifiable assets acquired in an equity-accounted investee. Goodwill arising on the acquisition of subsidiaries is shown separately in the statement of financial position while goodwill arising on the acquisition of equity-accounted investees is recognised as part of the carrying amount of such investments.

(b) SubsidiariesSubsidiary undertakings are those entities controlled by the Group when it is exposed, or has rights to variable returns from its involvement with a subsidiary and has the ability to effect returns through its power over the subsidiary. The amounts included in these financial statements in respect of subsidiaries are taken from their latest financial statements prepared up to the year end. Where necessary, the accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

The results of subsidiary undertakings are included in the consolidated income statement from the date on which control commences until the date on which control ceases. Upon the acquisition of a business, fair values are attributed to the identifiable net assets acquired. Transaction costs are expensed as incurred.

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Goodwill arising on acquisitions is dealt with as set out below.

(c) Loss of controlWhen the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

(d) Interest in equity-accounted investeesThe Group’s interest in its equity-accounted investees comprises interests in associate undertakings.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

The Group’s interests in its associate undertakings are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of its equity-accounted investees, until the date on which significant influence ceases.

(e) Transactions eliminated on consolidation and equity accounting Intra-Group balances and income and expenses arising from intra-Group transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses arising from transactions with an associate are eliminated to the extent of the Group’s interest in the entity.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not provide evidence of impairment.

Company financial statementsInvestments in subsidiaries and equity-accounted investees are carried at cost less impairment. Dividend income is recognised when the right to receive payment is established.

GoodwillGoodwill represents amounts arising on the acquisition of subsidiaries and equity-accounted investees as a result of the fair value of consideration transferred exceeding the fair value of the identifiable net assets acquired. Goodwill arising on business combinations is capitalised in the statement of financial position. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment at a consistent time each financial year. Goodwill is stated at cost less any accumulated impairment losses.

Goodwill arising on the acquisition of equity-accounted investees is included in the carrying amount of the investments; other goodwill is shown separately in the statement of financial position.

Intangible Assets(a) Research and development expenditureResearch and development costs are expensed in the income statement as incurred as the Group’s development costs do not meet the criteria for recognition under IAS 38 Intangible Assets.

(b) Other intangiblesIntangible assets, including customer relationships, patents and trademarks acquired as part of a business combination and with finite useful lives, are capitalised at their acquisition date fair value where this can be measured reliably. They are amortised to the income statement on a straight line basis over the period of their expected useful lives.


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Other intangible assets purchased separately from a business are capitalised at their cost and amortised. Useful lives are as follows:

Customer relationships – 8 to 15 years

Licences and computer software – 5 to 8 years

Brand names – 4 to 5 years

Order backlog – 2 years

Property, Plant and EquipmentBuildings and non-freehold land are carried at cost less accumulated depreciation. Freehold land is carried at cost as no depreciation is provided for. All other items of property, plant and equipment are stated at cost less accumulated depreciation. The charge for depreciation is calculated to write down the cost or valuation of items of property, plant and equipment to their estimated residual values by equal annual instalments over their expected useful lives which are as follows:

Freehold buildings – 25 to 50 years

Leasehold land and buildings – shorter of the term of each lease and the useful life of the asset

Plant and machinery – 5 to 18 years

Fixtures and fittings – 5 to 15 years

Transportation assets - 3 to 5 years

Assets under construction – Not depreciated until commissioned and ready for use

Expected useful lives and estimated residual values are assessed annually. Provision is also made for any impairment of items of property, plant and equipment.

Gains and losses on disposals of property, plant and equipment are recognised on the completion of sale. Gains and losses on disposals are determined by comparing the proceeds received with the carrying amount and are included in profit or loss.

Where deposits are paid to manufacturers for assets which are specified to the Group’s uses and requirements, these amounts are included within assets under construction in property, plant and equipment, but not depreciated until the asset has been received, installed, commissioned and ready for use.

Property, plant and equipment held for sale are disclosed separately and are measured at the lower of their carrying amount and fair value less costs to sell.

Investment propertiesInvestment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.



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Available-for-sale financial assetsCertain of the Group’s investments are classified as available-for-sale financial assets and are stated at fair value. Investments in this type of equity instrument comprise investments in listed entities (i.e. entities quoted on a recognised Stock Exchange), and unquoted financial instruments.

Any dividends received from available-for-sale investments are recognised in other operating income in the income statement.

When an investment is disposed of the cumulative gain or loss in equity is transferred to the income statement as part of the profit or loss on sale. Any difference between the carrying value of an investment and the proceeds realised on disposal is recognised in the income statement.

Declines in fair value below cost which are significant and prolonged are regarded as impairment losses. All impairment losses are recognised in the income statement while other changes in fair value are recognised in equity.

Foreign currency(a) Foreign currency transactionsTransactions in foreign currencies are translated into the functional currency of the entity at the foreign exchange rate ruling at the date of the transaction. Non-monetary assets carried at historic cost are not subsequently retranslated. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated into the functional currency at the foreign exchange rate ruling at that date. Foreign exchange movements arising on translation are recognised in the income statement, within other operating income/(expense).

(b) Foreign operationsThe assets and liabilities of foreign currency denominated operations, including goodwill and fair value adjustments arising on acquisition, are translated into euro at the foreign exchange rates ruling at the reporting date. The income and expenses of foreign currency denominated operations are translated into euro at monthly average rates for the year on the basis that it is representative of the rates applicable to individual transactions. Foreign exchange movements arising on translation of the net investment in a foreign operation, including those arising on long term intra-Group loans deemed to be quasi equity in nature, are recognised directly in other comprehensive income, in the currency translation reserve. To the extent the hedge is effective, the portion of exchange gains or losses on foreign currency borrowings used to provide a hedge against a net investment in a foreign operation is recognised directly in other comprehensive income. When a foreign subsidiary is disposed of the cumulative amount recognised in the currency translation reserve forms part of the gain or loss on disposal.

The principal non-euro currencies applicable to the Group are Pound Sterling, Canadian Dollar, Chinese Renminbi and US Dollar. The average and closing rates for the euro for these currencies were:

Average Closing

2017 2016 2017 2016

Pound Sterling 0.8767 0.8187 0.8872 0.8562

Canadian Dollar 1.4647 1.4669 1.5039 1.4188

Chinese Renminbi 7.6290 7.3494 7.8044 7.3202

US Dollar 1.1297 1.1068 1.1993 1.0541


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Impairment of Non-Financial AssetsThe carrying amount of the Group’s non-financial assets other than inventories (which are carried at the lower of cost and net realisable value), investment property (which are carried at fair value) and deferred tax assets (which are recognised based on recoverability), are tested for impairment when an event or transaction indicates that an impairment may have occurred. If any such indication exists, an impairment test is carried out and the asset is written down to its recoverable amount as appropriate. Goodwill is tested annually for impairment.

The recoverable amount of an asset is the greater of its net recoverable amount and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which it belongs.

Goodwill is tested for impairment at 31 December each year or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amounts of the other assets in the unit on a pro-rata basis.

An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Government GrantsCapital grants for the acquisition of assets are recognised at their fair value when there is reasonable assurance that the grant will be received and any conditions attaching will be fulfilled. Capital grants are held on the statement of financial position as deferred credits and released to the income statement by instalments over the estimated useful lives of the assets to which they relate.

Other grants are credited to the income statement to offset the matching expenditure.

ProvisionsA provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the outflow can be measured reliably. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the statement of financial position date. If the effect is material, provisions are measured by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Finance LeasesLeases of property, plant and equipment where substantially all the risks and rewards of ownership transfer to the Group are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased item and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant interest charge on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in interest-bearing loans and borrowings, allocated between current and non-current as appropriate. The interest element of the finance cost is charged to the income statement over the lease period. Assets held under finance leases are depreciated over the shorter of their expected useful lives or the lease term.



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Operating LeasesLeases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, net of incentives received from the lessor, are charged to the income statement on a straight-line basis over the period of the lease. Income earned from operating leases is credited to the income statement when earned.

Employee Benefits(a) Short term employee benefitsShort term employee benefits are recognised as an expense as the related employee service is received.

(b) Retirement benefit obligationsDefined contribution pension schemesThe Group operates defined contribution pension schemes. The assets of these schemes are held separately from those of the Group in independently administered funds. The amount charged to the income statement represents the contributions payable to the scheme in respect of the accounting period. Under such schemes, the Group has no obligation to make further contributions to these schemes beyond the contracted amount.

Share based paymentsThe Group operates a number of equity and cash settled incentive and retention plans.

Equity settled plansThe grant date fair value of equity instruments granted is generally recognised as an employee expense with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the equity instrument. The fair value of the equity instruments granted is either the market price at the date of grant or is measured using an option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of equity instruments expected to vest as a result of failure to meet service or non-market based performance conditions.

Cash settled plansThe Group operates an Annual Bonus plan for employees and also a long term cash settled bonus scheme. The plan operates on an individual basis by providing contingent entitlements to a lump sum award. Awards are applied through the issuance of shares in the Company (at the discretion of the Remuneration Committee) or the cash equivalent. The fair value of the amount payable to employees in respect of cash settled awards is recognised as an expense in the income statement with the corresponding increase in liabilities over the period that the employees become unconditionally entitled to the payment. The liability is re-measured at each reporting date and at settlement date based on fair value. Any changes are recognised as an employee benefit expense / credit in the income statement. The long-term cash settled bonus scheme vested in 2017 and was fully paid.

InventoriesInventories are stated at the lower of cost and net realisable value. In determining the cost of raw materials, consumables and goods purchased for resale, the weighted average purchase price method is used. In the case of finished goods and work in progress, cost is defined as the aggregate cost of raw material, direct labour and the attributable proportion of direct production overheads based on normal operating capacity. Net realisable value is based on normal selling price, less further costs expected to be incurred to completion and disposal.

Provision is made, where necessary, for slow moving, obsolete and defective inventory.

Income taxationIncome tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.


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(a) Current taxCurrent tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty relating to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.

(b) Deferred taxDeferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

• temporary differences related to investments in subsidiaries and associates to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

Deferred tax assets and liabilities are offset only if certain criteria are met.

Classification of Financial Instruments issued by the CompanyFinancial instruments issued by the Company are treated as equity (i.e. forming part of shareholders’ equity) only to the extent that they meet the following two conditions:

(a) They include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or Group); and

(b) Where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.


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To the extent that this definition is not met, the proceeds of issue are classified as a financial liability measured at amortised cost.

Where the instrument so classified takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called-up share capital and share premium accounts exclude amounts in relation to those shares.

Where a financial instrument that contains both equity and financial liability components exists, these components are separated and accounted for individually under the above policy. The finance cost on the financial liability component is correspondingly higher over the life of the instrument.

Finance payments associated with financial liabilities are dealt with as part of finance charges in the income statement. Finance payments associated with financial instruments that are classified as part of shareholders’ equity are dealt with as appropriate in equity.

Cash and Cash EquivalentsCash and cash equivalents comprise cash balances and deposits, including bank deposits of less than three months maturity on acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Treasury SharesWhere the Group purchases the Company’s equity share capital, the consideration paid is deducted from total shareholders’ equity and classified as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in total shareholders’ equity.

Ordinary Shares and Deferred Convertible Ordinary Shares purchased by the One Fifty One Group EBT Trustees Limited on behalf of the Company under the terms of the Group equity settled plans are recorded as Treasury Shares in the consolidated statement of financial position.

Share Capital and Share PremiumOrdinary Shares and share premium are classified as equity.

Share capital represents the nominal value of equity shares. Share premium represents the excess over nominal value of the fair value of consideration received. Incremental costs attributable to the issuance of new shares or options are shown in equity as a deduction from retained earnings.

Trade and Other ReceivablesTrade and other receivables are initially measured at fair value and are thereafter measured at amortised cost using the effective interest method less any provision for impairment. A provision for impairment of trade and other receivables is recognised when there is objective evidence that the Group will not be able to collect all amounts due, according to the original terms of the receivables.

Trade and Other PayablesTrade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Derivative Financial InstrumentsForeign currency derivatives are entered into only when they match an existing foreign currency asset or liability or are used to hedge a forecasted transaction. While the Group does not enter into speculative transactions, it has not applied the hedge accounting requirements of IAS 39. Derivative financial instruments are measured at fair value at each reporting date and the movement in fair value is recognised in the income statement.


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Loans and BorrowingsInterest-bearing bank borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of borrowings on an effective interest basis.

RevenueGoods soldRevenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts, volume rebates and sales taxes. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. This is normally deemed to occur either on despatch or, in the case of the metals business, delivery of goods.

ServicesRevenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed with reference to surveys of work performed and agreed with the customer.

Finance CostsFinance costs comprise finance income and finance expense.

Finance expense comprises interest expense on borrowings, unwinding of the discount on provisions, finance lease interest, derivative mark to market adjustments, borrowing extinguishment costs and arrangement and other bank related fees. Interest expense on borrowings (including arrangement and other related fees) and finance lease interest expense are recognised in the income statement using the effective interest method.

Finance income comprises interest income on cash invested. Interest income is recognised as it accrues using the effective interest method. Finance costs paid are included in the statement of cash flows within financing activities.

Segmental ReportingOperating segments, defined as components of the Group that engage in business activities from which they may earn revenues and incur expenses, are identified in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker (‘CODM’). The CODM, who is responsible for allocating resources and assessing the performance of the operating segments, has been identified as the Board of Directors of IPL Plastics plc. The Group has determined that it has three reportable operating segments at 31 December 2017.

Exceptional ItemsThe Group has adopted an income statement format which seeks to highlight significant items within the Group’s results for the year. The Group believes this presentation is a more meaningful and helpful analysis as it highlights non-trading items. Such items may include significant restructuring (including redundancy costs associated with a disposed/divested/discontinued operations), transaction and integration costs related to acquisition activity, profits or losses on disposal or termination of assets, operations and investments including associated transaction costs, impairment of assets, together with items that are, by their nature, non-trading. Judgement is used by the Group in assessing the particular items which by virtue of their size or incidence, should be disclosed in the income statement and related notes as exceptional items.

Non-Recurring ItemsNon-recurring items are those items of financial performance that the Group considers should be disclosed to assist in understanding trading and financial performance achieved by the Group, so as to facilitate comparison with prior periods and to help assessment of trends in financial performance. Judgement is used by the Group in assessing the particular items that should be classified as non-recurring items.



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Non-Current Assets Held-For-SaleNon-current assets and disposal groups are classified as held-for-sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. The assets held-for-sale are stated at the lower of their carrying amount and fair value less costs to sell.

Discontinued OperationsA discontinued operation is a component of the Group’s business that represents a separate major line of business, geographical area of operations or is material to revenue or operating profit and has been disposed of or is held for sale. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation had been discontinued from the start of the earliest period presented. Cash flows relating to discontinued operations are treated as operating cash flows.

New Standards and Interpretations There were no changes to IFRS which became effective for the Group during the financial year which resulted in material changes to the Group’s financial statements, other than the disclosure required by IAS 7.11, set out in note 32.

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018 and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group.

IFRS 9 Financial Instruments (effective 1 January 2018) addresses the classification, measurement and recognition of financial assets and liabilities. The Standard includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. The IASB completed its project to replace IAS 39 in phases, adding to the Standard as it completed each phase. The Group is currently evaluating the impact of IFRS 9 and as such the impact on the 2018 financial statements is not fully determined.

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018) specifies how and when an IFRS reporter will recognise revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The Standard provides a single, principles based five-step model to be applied to all contracts with customers. The Group will apply IFRS 15 from its effective date. The standard is not expected to have a significant impact on the Group’s financial statements.

IFRS 16 Leases (effective 1 January 2019) sets out the principle for the recognition, measurement, presentation and disclosure of leases for both lessee and lessor. It eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model where the lessee is required to recognise assets and liabilities for all material leases that have a term of greater than a year. The Group is currently evaluating the impact that IFRS 16 will have on its financial statements.

There are no other IFRS standards or interpretations that are not yet effective that would be expected to have a material impact on the Group.

2. USE OF JUDGEMENTS AND ESTIMATES

The preparation of financial statements in conformity with IFRSs as adopted by the EU and IFRSs as issued by the IASB, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.


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The areas involving a high degree of judgement, complexity or areas where assumptions and estimates are significant to the Group financial statements relate primarily to:

• Note 14 – impairment testing of goodwill and other intangible assets requires assumptions in calculating underlying recoverable amounts including cash flows generated by operating units and discount rates used to discount future cash flows.

• Notes 15 and 16 – the valuation of equity investments classified as available-for-sale and investment properties requires a determination of fair value.

• Note 17 – acquisition of subsidiary; fair value measured on a provisional basis.

• Note 28 – the value of the Put Liability in respect of the shareholding in IPL Inc. not owned by the Group at the statement of financial position date requires determining at its fair value. Determination of appropriate accounting policy in light of absence of guidance in IFRS.

• Note 28 – the measurement of deferred contingent consideration requires assumptions around future cash flows, growth assumptions and discount rates.

• Note 29 – the recognition of deferred tax assets requires assessment of availability of future taxable profit against which carried forward tax losses can be used.

Measurement of fair valueA number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or liability are categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group measures transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair value is included in the following notes:

• Note 14 – Goodwill and intangible assets

• Note 15 – Investment property

• Note 16 – Available-for-sale financial assets

• Note 17 – Business combinations

• Note 28 – Deferred contingent consideration

• Note 31 – Share-based payment arrangements


2. USE OF JUDGEMENTS AND ESTIMATES (CONTINUED)

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3. OPERATING SEGMENTS

(a) Basis for segmentationThe Board of IPL Plastics plc is deemed the chief operating decision maker (“CODM”) within the Group. For management purposes, the continuing operations of the Group was organised into three strategic divisions at year end, which are its reportable segments. These divisions offer different products and services, and are managed separately. The Board reviews internal management reports of each division at least monthly. The Group’s disposal of its Irish Metals recycling businesses during the prior year and the decision to dispose of its Irish and UK Specialist Environmental Services (“SES”) businesses resulted in the ClearCircle Environmental segment been classified as discontinued in 2016. The only continuing operation within that division is the Metals South recycling business in the UK and this has been included under “other reconciling items” on the basis that it is continuing, but does not meet the requirements under IFRS 8 for being a separately disclosable segment. The following are the Group’s reportable segments:

• IPL

• Macro

• OnePlastics Group

• Discontinued operations

The following summary describes the operations of each reportable segment:

Reportable segments Operations

IPL This reporting segment is involved in the manufacture and sale of plastic components and instruments in Canada and the USA. There are 2 operating segments which have been aggregated within this reporting segment due to their similar production processes and geographical location.

Macro This reporting segment is involved in manufacture and sale of plastic components and instruments to the Agriculture and Automotive sectors primarily in the USA. This comprises of one operating segment.

OnePlastics Group This reporting segment is involved in the manufacture and sale of plastic components and instruments in Ireland, the UK and China. There are 2 operating segments which have been aggregated within this reporting segment due to their similar production processes and geographical location.

Discontinued operations

Discontinued operations comprise the Metals Ireland recycling business (disposed of in September and October 2016) and the ClearCircle Specialist Environment Services (“SES”) businesses (disposed of in April 2017 with an effective date of 1 January 2017).

Each of the reportable segments consist of a number of operating segments which have been aggregated together due to the similar nature of the segments’ products, production process types and nature of the regulatory environment.

The CODM monitors the results of the divisions separately in order to allocate resources between them and assess performance. Divisional performance is predominantly evaluated based on EBITDA and EBIT (before exceptional items).

(i) Revenue

2017 2016*€’000 €’000

Ireland 29,849 90,920

UK 100,932 136,418

North America 341,277 204,293

Rest of world 2,312 2,274

474,370 433,905

* The amounts for 2016 include revenues from discontinued operations of €85.7 million, relating to Ireland and the United Kingdom.


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Revenue is disclosed geographically by country of origin.

Continuing operationsDiscontinued operations

(see note 11) Total

2017 2016 2017 2016 2017 2016€’000 €’000 €’000 €’000 €’000 €’000

Sales of goods 469,064 345,107 - 61,620 469,064 406,727

Rendering of services 5,306 3,107 - 24,071 5,306 27,178

474,370 348,214 - 85,691 474,370 433,905

No one customer accounts for more than 10% of the Group’s revenue.

(b) Information about reportable segmentsInformation related to each reportable segment is set out below. Segmental performance is evaluated based on Revenue, EBITDA and EBIT. The Board believes that EBITDA and EBIT, while not defined under IFRSs, provides a fair reflection of the underlying trading performance of the Group. EBITDA represents earnings before interest, tax, depreciation, amortisation, exceptional and non-recurring items and the Group’s share of profits of its equity-accounted investees. EBIT represents earnings before interest, tax, exceptional and non-recurring items and the Group’s share of profits of its equity-accounted investees. EBITDA and EBIT are therefore measured differently from operating profit in the Group financial statements as explained and reconciled in detail in the analysis that follows.

2017 2016€’000 €’000

Operating profit from continuing operations before exceptional items 38,331 30,387

Non-recurring items (note 4) 3,312 (1,256)*

Profit from discontinued operations, pre-tax (note 11) - 1,784

EBIT (before exceptional items) 41,643 30,915

Depreciation and amortisation (note 5) 29,238 24,295*

EBITDA (before exceptional items) 70,881 55,210

* The amounts above include continuing and discontinued operations whereas in notes 4 and 5 the numbers presented are in respect of continuing operations only.


3. OPERATING SEGMENTS (CONTINUED)

104

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(ii) Non-current assets

20172016

(restated)€’000 €’000

Ireland 24,999 20,799

UK 62,063 62,367

North America 349,645 228,078

Rest of world 787 1,061

437,494 312,305

Non-current assets exclude available-for-sale financial assets, deferred tax assets and non-current assets relating to disposal groups.

4. OPERATING EXPENSES AND OTHER OPERATING INCOME

Exceptional items (note 7) Exceptional items (note 7)

2017 2017 Total 2016 2016 Total€’000 €’000 €’000 €’000 €’000 €’000

Distribution expenses (7,011) - (7,011) (7,958) - (7,958)

Sales and marketing expenses (14,260) - (14,260) (6,141) - (6,141)

Administrative expenses (44,890) - (44,890) (42,554) - (42,554)

Other operating expenses (4,783) (7,099) (11,882) (914) (5,595) (6,509)

Total Operating Expenses (70,944) (7,099) (78,043) (57,567) (5,595) (63,162)

Other operating income 3,167 624 3,791 5,836 4,069 9,905

Total (67,777) (6,475) (74,252) (51,731) (1,526) (53,257)

Included in other operating income and expenses in the current year are non-recurring items relating to continuing operations totalling a charge of €3.3 million (2016: net credit of €2.1 million). These relate to redundancy costs and significant start-up costs on expansion projects in the USA and Canada as outlined in the table on page 107.

The Group has also recognised a net non-recurring tax credit of €8.0 million primarily driven by a once off non-cash income tax credit of €8.2 million arising from the recently enacted Tax Cuts and Jobs Act in the US, which will reduce the federal corporate income tax rate from 35% to 21% from 1 January 2018 (2016: €Nil). Non-recurring items are those items of financial performance that the Group considers should be disclosed to assist in understanding trading and financial performance achieved by the Group, so as to facilitate comparison with prior periods and to help assessment of trends in financial performance.


3. OPERATING SEGMENTS (CONTINUED)

106

Operating expenses and other operating income comprise the following (charges)/credits:

Operating expenses

2017 2016€’000 €’000

Non-recurring items in other operating expenses

Redundancy and reorganisation costs (1,529) (494)

Start-up costs (2,024) -

Manufacturing profit in inventory adjustment from business combination (398) (259)

Other (832) (161)

(4,783)1 (914)1

Exceptional items in other operating expenses (note 7)

Acquisition related costs (2,675) (2,393)

Transaction related costs (1,703) (2,060)

Restructuring costs (2,721) -

Other - (1,142)

(7,099) (5,595)

Total (11,882) (6,509)

Non-recurring income tax credits 8,2432 -

Exceptional income tax credit 1,101 330

Total after tax (2,538) (6,179)

Other operating income

2017 2016€’000 €’000

Foreign currency gains 114 1,992

Other 1,582 810

1,696 2,802

Non-recurring items in other operating income

Income received from available-for-sale 1,471 3,034

1,4711 3,0341

Exceptional items in other operating income (note 7)

Gain on settlement of third party loan 100 4,004

Revaluation of investment properties 406 -

Other 118 65

624 4,069

Total 3,791 9,905

Tax charge on non-recurring items (207)2 -

Total after tax 3,584 9,905

1 These items are classified as non-recurring items by the Group and relate to continuing operations. They amount to a net charge in the year of €3.3 million (2016: net credit of €2.1 million).

2 These items are classified as non-recurring income tax credit by the Group and relate to continuing operations. They amount to a net credit of €8.0 million in the year (2016: €nil).


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5. GROUP OPERATING PROFIT

Operating profit has been arrived at after charging the following amounts:

2017 2016 €’000 €’000

Depreciation of property, plant & equipment:

– Owned assets 24,474 17,290

Amortisation of intangible fixed assets 4,764 2,981

Operating lease rentals:

– Plant and machinery 56 273

– Other 3,582 3,195

Auditor’s remuneration*:

– Audit services 340 335

– Other assurance services 167 632

– Tax advisory services 531 610

– Other non-audit services 60 406

* In addition to the fees paid to KPMG Ireland as set out above, fees paid to other KPMG firms outside of Ireland are as follows:

2017 2016€’000 €’000

Audit services 162 193

Tax advisory services 326 166

488 359

6. EMPLOYEE BENEFIT EXPENSES

Note 2017 2016 €’000 €’000

Wages and salaries 77,824 60,568

Social security contributions 12,345 9,929

Pension costs – defined contribution schemes 30 1,823 832

Termination benefits * 1,131 494

Termination benefits** 2,721 -

Equity-settled and cash settled share based payments 882 697

Equity-settled and cash settled share based payments** 770 -

Total recognised in income statement 97,496 72,520

Employee numbers – Group

Management/administration 325 261

Operations 1,453 1,084

Total 1,778 1,345

* Classified as a non-recurring item.** Classified within exceptional costs.

The primary reason for the increase in payroll costs and employee numbers is due to the acquisition of Macro Plastics Inc. in June 2017. The employee numbers stated above are average numbers for the year relating to continuing operations. The actual employee numbers at year end were 1,885 (2016: 1,896, which included discontinued operations).


108

7. EXCEPTIONAL ITEMS

In accordance with the Group’s accounting policy, the following items have been presented as exceptional items for the year ended 31 December 2017:

2017 2016€’000 €’000

Gain on settlement of third party loan (i) 100 4,004

Gain on revaluation of investment properties (ii) 406 -

Other 118 65

Total exceptional gains from continuing operations 624 4,069

Acquisition related costs (iii) (2,675) (2,393)

Transaction related costs (iv) (1,703) (2,060)

Restructuring costs (v) (2,721) -

Other - (1,142)

Total exceptional losses from continuing operations (7,099) (5,595)

Net exceptional loss within operating profit from continuing operations (6,475) (1,526)

Exceptional loss from discontinued operations (vi) (3,160) (5,881)

Net tax credit on exceptional items 1,101 330

Total net exceptional losses (8,534) (7,077)

(i) Gain on settlement of third party loan – €0.1 million:During the prior year, the Group settled historic loan amounts owed by a third party to the Group. The amounts receivable had been fully provided by the Group for several years. In 2017, the amounts recognised represented full and final settlement of amounts outstanding. The total settlement included the receipt of 102,400 shares in Aryzta AG, and cash amounts.

(ii) Gain on revaluation of investment properties – €0.4 million:During the year, independent third-party valuations were obtained for all investment properties held and there was an uplift in the fair value of €0.4 million.

(iii) Acquisition related costs – (€2.7 million):During the year, the Group pursued several acquisition opportunities in other companies that would complement the current Group structure. The largest acquisition made by the Group was the acquisition of Macro Plastics Inc. in the USA. The transaction costs incurred in respect of this acquisition were €2.7 million.

(iv) Transaction related costs – (€1.7 million): During the year, the Group incurred costs associated with the reorganisation of the existing IPL Inc. shareholding structure, exploring the potential IPO and stock market listing process and other transaction related costs amounting to €1.7 million.

(v) Restructuring costs – (€2.7 million):During the year, the Group undertook a programme of significant restructuring to simplify the corporate management structure and align the divisions more effectively. Costs included redundancy related costs and other consultancy fees amounting to €2.7 million.

(vi) Exceptional loss from discontinued operations – (€3.2 million):During the year, the loss on disposal amounted to €3.4 million, including costs associated with redundancies within those businesses, classified as discontinued.

Following the divestment of the Metals North UK recycling business in 2015, certain items of income have been recognised in the current year, including profit on disposal of a property of €0.2 million.


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(vii) Prior-year exceptional items principally relate to:

• Gain on settlement of third party loan of €4.0 million (see (i) above)

• Acquisition related costs of €2.4 million

• Transaction related costs of €2.1 million

• Exceptional loss from discontinued operations of €5.9 million

8. EQUITY-ACCOUNTED INVESTEES

The Group has two associate undertakings Altas Investments plc (“Altas”) and Rilta Environmental Limited (“Rilta”). The Group’s interests in Altas and Rilta, both of which are unlisted, are set out below.

The Group holds a 23.6% shareholding in Altas, an Irish company whose principal activity is that of an investment holding company in the road and energy sectors. The Group CEO, Alan Walsh, is a Board member of Altas and has been since June 2012. On the basis of Alan Walsh’s Board membership and the Group’s 23.6% shareholding in Altas, the Group is deemed to have significant influence over the relevant activities of Altas and therefore Altas is an associate undertaking of the Group. The numbers set out below for Altas are based on Altas’ period to date, 31 December 2017 financial information.

The Group also holds a 25% interest in Rilta following the disposal of 75% of the Group’s 100% shareholding effective 1 January 2017. Rilta is a Specialist Environmental Services (“SES”) business that was part of the Group’s discontinued ClearCircle operating segment in prior years. The 25% shareholding is retained by the Group under a five year put and call option agreement. The Group CEO, Alan Walsh, is a Board member of Rilta since the date of disposal.

Under the terms of the put and call option agreement, the current holders of the other 75% shareholding in Rilta have the option to purchase the remaining shares and the Group can compel them to purchase the shareholding after five years. The Group has no entitlement to a share of the profits or losses of Rilta during this five year agreement. The carrying value of Rilta at 31 December 2017 is €2.7 million, which is the discounted present value of the investment under the terms of the agreement.

Associate Total€’000 €’000

Balance at 1 January 2016 1,527 1,527

Share of profit, after tax 3,933 3,933

Distribution received (177) (177)

Share of other comprehensive income (1,237) (1,237)

Balance at 31 December 2016 4,046 4,046

Interest arising on new associate undertaking on 1 January 2017 2,715 2,715

Share of profit, after tax 1,763 1,763

Distribution received (5,293) (5,293)

Share of other comprehensive income (297) (297)

Balance at 31 December 2017 2,934 2,934

(i) AltasThe investment in Altas comprises entirely of equity investment with no loans outstanding.

The share of associate profit per the income statement is €1.8 million (2016: €3.9 million) and the Group’s share of other comprehensive income is a charge of €0.3 million (2016: €1.2 million).


7. EXCEPTIONAL ITEMS (CONTINUED)

110

The following additional disclosures are set out in respect of the Group’s 23.6% share of its associate:

2017 2016€’000 €’000

Non-current assets 13 16

Cash and cash equivalents 21,354 46,492

Other current assets 3,926 3,517

Non-current liabilities (15,595) (22,196)

Current liabilities (7,534) (9,382)

Net assets of Altas (100%) 2,164 18,447

Group’s share of Altas’ net assets (23.6%) 511 4,353

Adjust for:

Other adjustments (292) (307)

Carrying value at 31 December 219 4,046

The Group has given due consideration to all the relevant facts and circumstances associated with Altas in the context of whether the Group has control of this undertaking under IFRS 10 Consolidated Financial Statements as at 31 December 2017 and 2016. The conclusion reached, based on these assessments, is that the Group does not have control of this undertaking and that it is appropriate to account for it as an associated undertaking.

Altas’ principal place of business is in Ireland and the United Kingdom.

(ii) RiltaThe investment in Rilta comprises a 25% equity investment retained by the Group under a five year put and call option agreement as set out on page 110.

The share of associate profit per the income statement is €Nil and the Group’s share of other comprehensive income is €Nil.

The following additional disclosures are set out in respect of the Group’s 25% share of its associate:

2017€’000

Non-current assets 18,833

Cash and cash equivalents 3,276

Other current assets 8,261

Non-current liabilities (221)

Current liabilities (8,102)

Net assets of Rilta (100%) 22,047

Group’s share of Rilta’ net assets (25%) 5,512

Adjust for:

Other adjustments (2,797)

Carrying value at 31 December 2,715

Rilta’s principal place of business is in Ireland and Northern Ireland.


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9. FINANCE COSTS

2017 2016€’000 €’000

Financial liabilities measured at amortised cost – interest expense 13,445 8,201

Convertible loan note interest (note 25) 133 133

Interest on deferred consideration (note 28) 44 47

Other interest 140 494

Finance costs recognised in income statement 13,762 8,875

10. INCOME TAXES

(a) Income tax (credit)/expense recognised in Income Statement

2017 2016€’000 €’000

Current tax expense

Corporation tax 5,520 2,445

Total income tax credit on exceptional items (1,101) (330)

Adjustment in respect of prior years (382) (216)

Total current taxation 4,037 1,899

Deferred tax (credit)/expense

Deferred tax expense relating to the origination and reversal of temporary differences 3,346 2,087

Deferred tax resulting from change in tax rates (8,243) (466)

Total deferred taxation (4,897) 1,621

Total income tax (credit)/expense (860) 3,520

Corporation tax – discontinued operations - 4

Deferred tax expense relating to the origination and reversal of temporary differences – discontinued operations - 241

Total income tax (credit)/expense in income statement (860) 3,765

The Group is subject to income tax in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially estimated, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. The Group estimates the most probable amount of future taxable profits, using assumptions consistent with those employed in impairment calculations, and taking into consideration applicable tax legislation in the relevant jurisdiction. These calculations also require the use of estimates. A once off non-cash tax credit of €8.2 million has been recognised arising from the recently enacted Tax Cuts and Jobs Act in the US, which will reduce the federal corporate income tax rate from 35% to 21% from 1 January 2018. This has been presented as a non-recurring income tax credit in the income statement.


112

(b) Reconciliation of effective tax rate

2017 2016€’000 €’000

Profit before tax from continuing operations 19,857 23,919

Profit before tax multiplied by the standard rate of tax of 12.5% 2,482 2,990

Effects of:

Expenses not deductible for tax purposes 1,404 405

Share of profits of equity-accounted investees (220) (492)

Differences in effective tax rates on overseas earnings 2,105 853

Losses for which no deferred tax asset was recognised 254 257

Effect of change in tax rates (8,243) -

Adjustments in respect of prior years (648) (681)

Other differences 2,006 188

(860) 3,520

At 31 December 2017, the Group recognised deferred tax assets of €3.0 million (2016: €1.4 million) on tax losses carried forward. The tax losses arose in the Canadian, US and UK tax jurisdictions and their utilisation is dependent on future profits. These deferred tax assets can be carried forward for a period of at least 20 years, depending on the jurisdiction. The directors have concluded however that a forecast period of five years is the appropriate timescale over which to consider whether it is more likely than not that these entities will earn sufficient future profits to utilise the losses carried forward.

Deferred income tax liabilities have not been recognised for any taxes that would be payable on the unremitted earnings of certain subsidiaries as it is probable that any temporary differences will not reverse in the foreseeable future.

At 31 December 2017, the Group had unrecognised deferred tax assets in respect of trading losses of €2.3 million (2016: €3.3 million) and on capital losses, tangible assets and share based payments of €21.7 million (2016: €19.7 million).


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11. DISCONTINUED OPERATIONS

On 1 January 2017, the Group disposed of Rilta Environmental Limited, ClearCircle Environmental (NI) Limited and Future Industrial Services Limited (together, “SES”). These businesses were classified as discontinued operations in the 31 December 2016 Annual Report with the entities’ assets and liabilities held for sale.

The Group disposed of its Irish Metals recycling businesses during the prior year and these were also presented as discontinued operations.

The results from discontinued operations presented below include both the results of the SES and Irish Metals businesses.

(a) Results of discontinued operations

2017 2016€’000 €’000

Revenue - 85,691

Expenses - (83,907)

Results from operating activities - 1,784

Income tax (note 10) - (245)

Results from operating activities, net of tax - 1,539

Exceptional loss on disposal of trades (3,388) (4,054)

Other exceptionals 228 (1,827)

Total exceptional items (note 7) (3,160) (5,881)

Tax effect of exceptional items - -

Loss for the year from discontinued operations (note 3) (3,160) (4,342)

Basic loss per share (cents) (note 12) (2.01) (2.77)

Diluted loss per share (cents) (note 12) (2.01) (2.77)

The loss from discontinued operations of €3.2 million (2016: €4.3 million) is attributable entirely to the owners of the Company.

2017 2016€’000 €’000

Wages and Salaries - 18,823

Social security contributions - 1,783

Pension costs – defined contribution schemes - 368

- 20,974

Exceptional and non-recurring items in employee benefit expenses

Termination benefits – exceptional 770 755

Termination benefits – non-recurring - 97

Total 770 21,826

Employee Numbers

Management/Administration - 111

Operations - 351

Total - 462


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(b) Cash flows (used in)/from discontinued operations

2017 2016€’000 €’000

Net cash from operating activities - (1,895)

Net cash from investing activities 38,783 (13,544)

Net cash flow for the year 38,783 (15,439)

(c) Effect of disposal on the financial position of the Group

2017 2016€’000 €’000

Property, plant and equipment (29,133) (7,622)

Goodwill and intangible assets (13,577) -

Cash and cash equivalents (566) -

Inventory (334) (1,185)

Trade and other receivables (14,108) (3,662)

Deferred tax liabilities 823 -

Trade, other payables and provisions 10,315 6,267

Net assets disposed of (46,580) (6,202)

Net consideration receivable1 43,192 2,148

Loss on disposal (3,388) (4,054)

1. Consideration receivable net of costs incurred in disposal

12. EARNINGS PER SHARE

(a) Basic earnings per shareThe calculation of basic earnings per share has been based on the profit attributable to ordinary shareholders and weighted-average number of Ordinary Shares outstanding.

2017 2016


Discontinued operations Total



€’000 €’000 €’000 €’000 €’000 €’000

Profit/(loss) attributable to ordinary shareholders 20,717 (3,160) 17,557 20,399 (4,342) 16,057

€’000 €’000 €’000 €’000 €’000 €’000

Issued Ordinary Shares at 1 January 157,088 - 157,088 157,038 - 157,038

Effect of treasury shares held (434) - (434) (434) - (434)

Weighted-average number of shares issued 807 - 807 36 - 36

Weighted-average number of Ordinary Shares at 31 December 157,461 - 157,461 156,640 - 156,640

Basic earnings per share – cents 13.16 (2.01) 11.15 13.02 (2.77) 10.25


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12. EARNINGS PER SHARE (CONTINUED)

(b) Diluted earnings per shareThe calculation of diluted earnings per share has been based on the profit attributable to ordinary shareholders noted in (a) above and the weighted-average number of Ordinary Shares outstanding after adjustment for the effects of all dilutive potential Ordinary Shares noted below.

2017 2016’000 ’000

Profit attributable to ordinary shareholders 17,557 16,057

Weighted-average number of Ordinary Shares (basic) 157,461 156,640

Equity instruments with a dilutive effect – share options 5,837 5,956

Weighted-average number of Ordinary Shares (diluted) at 31 December 163,298 162,596

Diluted earnings per share – cents 10.75 9.88

Diluted earnings per share – cents (continuing operations) 12.69 12.55

Diluted loss per share – cents (discontinued operations) (2.01) (2.77)

No adjustment has been made to basic earnings per share from discontinued operations as the effect of all potential Ordinary Shares were anti-dilutive for the years ended 31 December 2017 and 31 December 2016.

At 31 December 2017, the 3,334,991 convertible loan notes (2016: 3,334,991) were excluded from the caption ‘equity items with a dilutive effect’ as their option price was at a value greater than that of the average share price during the year.

The average market value of the Company’s shares for the purpose of calculating the dilutive effect of share options and Convertible Loan Notes was based on market prices for the year during which the options and loan notes were outstanding.

(c) Adjusted Basic and Fully Diluted Earnings per ShareManagement believe that adjusted Earnings per Share as set out below provides a fair reflection of the underlying trading performance of the Group after eliminating the impact of exceptional and non-recurring items, and their tax effects, and the Group’s share of after tax profits from its equity-accounted investee.

Adjusted earnings per share and adjusted fully diluted earnings per share is calculated by dividing the adjusted profit attributable to ordinary shareholders (as calculated below) by the weighted average number of Ordinary Shares outstanding. In the case of adjusted fully diluted earnings per share the number of outstanding Ordinary Shares is adjusted for the effects of all Ordinary Shares and options with a dilutive effect.


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Adjusted basic and diluted earnings per share pre-exceptional and non-recurring items and the Group’s share of profit from its equity-accounted investees

2017 2016





€’000 €’000 €’000 €’000 €’000 €’000

Profit/(loss) attributable to ordinary shareholders (basic) 20,717 (3,160) 17,557 20,399 (4,342) 16,057

Exceptional items (note 7) 6,475 3,160 9,635 1,526 5,881 7,407

Non-recurring items (note 4) 3,312 - 3,312 (2,120) 864 (1,256)

Share of profits of equity-accounted investees’ (note 8) (1,763) - (1,763) (3,933) - (3,933)

Non-recurring income tax credit and tax effect of exceptionals (9,137) - (9,137) (330) - (330)

Adjusted earnings attributable to ordinary shareholders 19,604 - 19,604 15,542 2,403 17,945

Weighted-average number of Ordinary Shares at 31 December - - 157,461 - - 156,640

Basic earnings per share – cents (adjusted for exceptional and non-recurring items and share of equity-accounted investee profits) - - 12.45 - - 11.46

Equity instruments with a dilutive effect – share options - - 5,837 - - 5,956

Weighted-average number of Ordinary Shares (diluted) at 31 December - - 163,298 - - 162,596

Diluted earnings per share – cents (adjusted for exceptional items, non-recurring items and share of equity-accounted investee profits) - - 12.01 - - 11.04


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13. PROPERTY, PLANT AND EQUIPMENT

Land and buildings

Plant, machinery,

fixtures and fittings

Transport vehicles

Assets under construction Total

€’000 €’000 €’000 €’000 €’000

Cost

Balance at 1 January 2016 87,328 182,191 12,030 11,733 293,282

Acquisitions through business combinations (note 17) 7,336 15,202 1,303 1,057 24,898

Additions 1,389 9,589 514 22,067 33,559

Reclassified from assets under construction 586 24,495 - (25,081) -

Disposals - (1,818) (755) - (2,573)

Disposal of subsidiaries (7,244) (21,906) (5,897) - (35,047)

Reclassified to assets held for sale (39,730) (26,506) (5,133) (384) (71,753)

Currency translation adjustments (845) (11,585) (995) 385 (13,040)

Balance as at 31 December 2016 (restated) 48,820 169,662 1,067 9,777 229,326

Acquisitions through business combinations (note 17) 15,648 24,263 - 2,040 41,951

Additions 148 7,238 300 42,305 49,991

Reclassified from assets under construction 1,339 26,147 - (27,486) -

Disposals - (2,129) (254) - (2,383)

Currency translation adjustments (5,512) (8,825) (34) (801) (15,172)

Balance at 31 December 2017 60,443 216,356 1,079 25,835 303,713

Accumulated depreciation and impairment losses

Balance at 1 January 2016 (35,903) (85,901) (9,548) - (131,352)

Charge for the year (1,943) (18,578) (626) - (21,147)

Disposals - 1,551 734 - 2,285

Disposal of subsidiaries 3,369 19,118 4,938 - 27,425

Impairment loss (113) (44) - - (157)

Reclassified to assets held for sale 27,978 11,814 3,063 - 42,855

Currency translation adjustments 2,220 8,599 720 - 11,539

Balance at 31 December 2016 (restated) (4,392) (63,441) (719) - (68,552)

Charge for the year (2,272) (22,099) (103) - (24,474)

Disposals - 961 254 - 1,215

Currency translation adjustments 337 2,381 23 - 2,741

Balance at 31 December 2017 (6,327) (82,198) (545) - (89,070)

Carrying amounts

At 31 December 2016 (restated) 44,428 106,221 348 9,777 160,774

At 31 December 2017 54,116 134,158 534 25,835 214,643

All property, plant and equipment of the Group are stated at depreciated historic cost, notwithstanding that upon acquisition through business combinations, an initial assessment of fair value is undertaken and adjustments made accordingly.


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The amount included in the carrying amount of property, plant and equipment at 31 December 2017 that relate to assets under construction was €25.8 million (2016: €9.8 million). This amount relates to various capital projects ongoing across the Group and includes €8.7 million (2016: €5.8 million) in respect of deposits paid to manufacturers for equipment under construction to the exact specifications required by the Group.

Included in the total net book value of Plant and Machinery is €0.3 million (2016: €Nil) in respect of assets held under finance leases and similar hire purchase contracts. Depreciation for the year on these assets was €0.0 million (2016: €Nil).

The process for identifying impairments of property, plant and equipment is the same as the process as outlined in note 14 for identifying the impairments to the carrying amount of Goodwill. During the year, there were no items that the Group identified where the recoverable amounts had fallen below the carrying values and as a result, no impairment charges were booked (2016: €0.2 million).

14. GOODWILL AND INTANGIBLE ASSETS

GoodwillCustomer

relationships

Brand assets, computer

software and licences Total

€’000 €’000 €’000 €’000

Cost

Balance at 1 January 2016 289,419 33,138 6,922 329,479

Acquisitions through business combinations (note 17) 9,964 6,686 - 16,650

Additions - - 527 527

Disposals (105,360) - - (105,360)

Reclassified to assets held-for-sale (25,138) (2,327) (391) (27,856)

Effect of movements in exchange rates (14,389) 2,098 1,034 (11,257)

Balance at 31 December 2016 154,496 39,595 8,092 202,183

Acquisitions through business combinations (note 17) 54,854 30,555 - 85,409

Additions - - 251 251

Disposals - - (3,002) (3,002)

Effect of movements in exchange rates (9,600) (3,275) (1,166) (14,041)

Balance at 31 December 2017 199,750 66,875 4,175 270,800

Accumulated amortisation and impairment losses

Balance at 1 January 2016 (185,812) (944) (2,011) (188,767)

Amortisation - (2,496) (652) (3,148)

Disposals 105,360 - - 105,360

Reclassified to assets held-for-sale 12,506 125 240 12,871

Effect of movements in exchange rates 13,001 (134) (1,265) 11,602

Balance at 31 December 2016 (54,945) (3,449) (3,688) (62,082)

Amortisation - (4,091) (673) (4,764)

Disposals - - 3,002 3,002

Effect of movements in exchange rates 254 260 (554) (40)

Balance at 31 December 2017 (54,691) (7,280) (1,913) (63,884)

Carrying amounts

At 31 December 2016 99,551 36,146 4,404 140,101

At 31 December 2017 145,059 59,595 2,262 206,916


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14. GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

Goodwill and intangible assets associated with discontinued operations have been reclassified as assets held for sale on the face of the statement of financial position.

The acquisition of Encore in November 2016 was the principal driver behind the increase in goodwill and intangible assets during the prior year, while the current year’s most significant amount relates to the Macro acquisition.

Customer relationships, brands and computer software and licences are amortised in accordance with the Group’s accounting policy. Amortisation is included in administration expenses.

Goodwill acquired on business combinations is allocated to cash generating units (“CGUs”) for the purpose of impairment testing. The CGUs represent the lowest level within the Group at which the associated goodwill is monitored for management purposes, and are not larger than the reportable operating segments. The CGUs identified by the Group are as follows:

• Metals Recycling UK

• Plastics (Ireland and China)

• Plastics (UK)

• IPL (North America)

• Macro

A summary of the goodwill held by CGU is presented below:

2017 2016

€’000(restated)

€’000

Metals UK South Recycling 10,433 10,811

Plastics Ireland & China 4,263 4,263

Plastics UK 17,391 18,022

IPL North America 60,771 66,455

Macro 52,201 -

Total 145,059 99,551

The cash flow forecasts employed for this computation are extracted from the three-year plan approved by the Board. Cash flows for a further two years and for the terminal value period, which is applied to the year five cash flows, are based on growth assumptions of 1.5% – 2% (2016: 2%). A present value of the future cash flows is also calculated using a pre-tax discount rate representing the Group’s estimated pre-tax average cost of capital ranging from 10.16% to 13.55% (2016: 10.03% to 10.57%).

Projected cash flows are most sensitive to assumptions regarding future profitability, replacement capital expenditure requirements and working capital investment and tax considerations. The values applied to these key assumptions are derived from a combination of external and internal factors, based on past experience together with management’s future expectations about business performance.

Discount rates reflect the current market assessment of the risks specific to each CGU. The discount rates were estimated by applying the Group’s weighted average cost of capital as adjusted to reflect the market assessment of risks and for which the cash flow projections have not been adjusted.

The Group’s earnings are significantly dependent on the selling prices and margins obtained for products sold. These, in turn, are largely determined by market supply and demand. There is a range of factors that affect this supply and demand: competing products, the availability of source material and other general conditions in the market place.


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The carrying value for the net assets of the CGUs identified above, including the attributable goodwill for that division, is calculated based on the sum of the net assets of the entity comprising the CGU. The carrying value is compared to the expected recoverable value. The value-in-use calculations are sensitive to changes in assumptions, particularly relating to assumptions on cash flows generated by the individual CGUs, growth rates and discount rates applied to these cash flows.

As a result of this exercise, no impairment charge was recognised in the current or prior year.

An increase of 10% in the discount rate at the reporting date would have resulted in an impairment charge for the year of €Nil (2016: €Nil). A 10% (2016: 10%) reduction in the cash flow projections would have resulted in an impairment charge for the year of €Nil (2016: €Nil).

15. INVESTMENT PROPERTY

2017 2016€’000 €’000

Balance at 1 January 1,401 1,500

Uplift in fair value in the year 406 -

Disposal in the year (400) -

Effects of currency translation (25) (99)

Balance at 31 December 1,382 1,401

The Group holds a number of properties, comprising land and buildings held for rental income or capital appreciation and not occupied by the Group, which are classified as investment properties. These properties are located in the Republic of Ireland and the United Kingdom.

Rental income on investment properties of €0.03 million was earned during the year (2016: €0.03 million).

Measurement of fair valueFair value hierarchyThe carrying amount of the Group’s investment properties is the fair value of the property as determined by the directors. In preparing the property valuations in prior years, the directors consulted with registered independent appraisers having an appropriate recognised professional qualification and with recent experience in the location and category being valued. In general, valuations have been supported by either market rental yields or estimated disposal prices. All properties were valued by professionally qualified external valuers during 2017. All sets of valuations were subsequently updated by the directors at 31 December 2017.

The fair value measurement for investment property of €1.4 million (2016: €1.4 million) has been categorised as Level 3 fair value based on the inputs to the valuation techniques used.

Valuation Technique and Significant Unobservable InputsThe following table shows the valuation techniques used in measuring the fair value of investment properties, as well as the significant unobservable inputs used. The estimated disposal prices method is used for land held for sale or capital appreciation.


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Analysis of Carrying Value by Valuation Technique

2017 2016€’000 €’000

Estimated disposal price 1,382 1,401

Valuation technique Significant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurement

Estimated disposal prices: This method of valuation is used for land held for sale or capital appreciation. The value determined by the directors is based on comparable market transactions after correspondence with independent registered property appraisers in the year.

Ireland

• Comparable market prices

UK

• Comparable market prices

The estimated fair value would increase/(decrease) if:

• Comparable market prices were higher/(lower)

16. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Listed

investmentsUnlisted

investments Total €’000 €’000 €’000

Balance at 1 January 2016 - 1,279 1,279

Additions 3,403 - 3,403

Currency translation adjustments - (4) (4)

Fair value movements 841 - 841

Balance at 31 December 2016 4,244 1,275 5,519

Currency translation adjustments - (2) (2)

Fair value movements (855) (1,240) (2,095)

Balance at 31 December 2017 3,389 33 3,422

The investments included above represent investments in listed and unlisted equity securities. While these investments are classified as available-for-sale financial assets in accordance with IFRSs, it is not currently the intention of management to sell these assets.

Measurement of fair value(i) Listed investmentsThe carrying amount of listed investments held by the Group is its fair value as determined by the directors and as explained below.

Aryzta AGDuring the prior year, as part of a loan settlement with a third party, the Group received 102,400 shares in the capital of Aryzta AG with a par value of CHF0.02 per share. The fair value movement in respect of this shareholding resulted in a loss of €0.9 million in the year, recognised in Other Comprehensive Income.

Aryzta AG is listed on the Irish Stock Exchange and the Aryzta AG share price at 29 December 2017 was used for valuation purposes. This is therefore classified as a level 1 fair value and the decrease of €0.9 million in the year was debited to the available-for-sale reserve.

15. INVESTMENT PROPERTY (CONTINUED)


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Since the year-end, the Aryzta AG share price has lost approximately 40% of its value, with the share price decreasing from €33.10 at 31 December 2017 to €19.82 at 7 March 2018. This would result in a reduction of the investment in Aryzta AG by €1.3 million and result in an equivalent negative equity reserve. There is no change to the current year financial statements as this is a non-adjusting event after the reporting period under IAS 10 Events after the reporting period.

(ii) Unlisted investmentsUnlisted investments include investments in shares and are carried at fair value. There was a Fair Value movement recognised in the year in respect of Pioneer Green Energy LLC to bring the residual value to €Nil at 31 December 2017 (2016: €1.2 million).

Valuation Technique and Significant Unobservable InputsThe following table shows the valuation techniques used in measuring the fair value of unlisted investments (fair value Level 3), as well as the significant unobservable inputs used. A market valuation approach and discounted cash flow approach was used in valuing the Group’s unlisted investments.

Analysis of Carrying Value by Valuation Technique

Valuation technique Significant unobservable inputsInter-relationship between key unobservable inputs and fair value measurement

Market valuation approach:The approach is based on market-based evidence based on proposed/executed transactions

Value of proposed/executed transactions

Timing of payment of returns to investors

Estimated cash flows discounted by 30%

The estimated fair value would increase/(decrease) if value per share of proposed/executed transactions was higher/(lower)

The estimated fair value would increase/(decrease) if timing of payment returns was sooner/(later)

Discounted cash flows: This valuation model considers the present value of net cash flows to be generated from the investment based on management information provided

The estimated fair value would increase/(decrease) if the expected cash flows from the investment were higher/(lower)

The estimated fair value would increase/(decrease) if the discount rate used was (higher)/lower

During the year, the Group reassessed the fair value of its investment in Pioneer Green Energy LLC and this has resulted in a decrease in the asset value of €1.2 million which was charged to the available-for-sale reserve. The reassessment in the year had no impact in the Group Income Statement and the available-for-sale reserve in respect of Pioneer is now at €Nil.

The following is a reconciliation from the opening balance to the closing balance for Level 3 fair values:

Level 3 fair values €’000

Balance at 1 January 2016 1,279

Exchange adjustments (4)

Balance at 31 December 2016 1,275

Fair Value movement (1,240)

Exchange adjustments (2)

Balance at 31 December 2017 33


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17. BUSINESS COMBINATIONS

Business combinations – 2017(i) Macro Plastics, Inc.On 9 June 2017, the Group acquired 100% of the ordinary share capital of Macro Plastics, Inc. (“Macro”), a US based business which is one of the largest manufacturers of rigid bulk bins worldwide and is a market leader in providing value added rigid plastic bulk packaging solutions to the agricultural and automotive sectors, and operates some of the largest bulk machines in North America. Macro is headquartered in Fairfield, California with manufacturing operations in California, Kentucky and Washington.

In the post acquisition period to 31 December 2017, Macro contributed revenue of €47.5 million and EBITDA of €12.6 million to the Group’s results. If the acquisition had occurred on 1 January 2017, management estimate that consolidated revenue would have been €507.1 million and consolidated EBITDA for the year would have been €76.1 million. This estimate is based on the full year results for Macro based on the management accounts for the pre-acquisition period.

The acquisition date fair value of the consideration transferred, which was funded by both cash reserves and bank borrowings was €134.6 million (US$151.3 million).

The Group incurred acquisition-related costs of €2.7 million, primarily related to various professional fees incurred. These have been included in exceptional items (note 7).

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition. The fair value of the assets and liabilities acquired were provisional at 31 December 2017.

At 9 June 2017

€’000

Property, plant and equipment 41,951

Intangible assets 30,555

Inventories 13,938

Trade and other receivables 13,772

Cash and cash equivalents 10,495

Prepayments 396

Trade and other payables and provisions (19,234)

Income tax asset (net) 319

Net deferred tax liability (12,420)

Total identifiable net assets acquired 79,772

Consideration transferred at date of acquisition – cash 113,747

Loans and borrowings acquired 20,879

Total consideration transferred 134,626

Goodwill at date of acquisition 54,854


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The valuation used for measuring the fair value of materials assets acquired were as follows:

Assets acquired Valuation technique

Property, plant and equipment

Land Market approach: The valuation model considers the market value of the land at the date of acquisition. The value of the asset was calculated based on the market price of an asset of comparable features like location and size. The value of the land was assessed by analysing asking prices and sales prices paid in comparable transactions in the respective areas adjusting the derived values for differences between comparable property and subject property like location, zoning, size, market condition, etc and applied the adjusted unit price to the property.

Buildings Income approach: The principle behind the income approach is that the value of the asset is equal to the earnings potential of this asset i.e. the present value of rental savings attributable to owning the asset. The direct capitalisation method was applied as it is a widely used and simple approach to apply. Market rents per unit of space and yields were utilised for each building taking into consideration its specific usage, type of construction and condition. The derivation of market rents was based on local real estate market research and experiences in the market of industrial properties. The overall condition of the buildings was also taken into account.

Machinery and equipment, fixtures and fittings, computer equipment and motor vehicles

Depreciated replacement cost (“DRC”) approach (Trending method): The principle behind the DRC approach is that a prudent investor will not purchase an asset for more than it will cost him/her to replace this asset with an asset of comparable utility. The valuation process involved a number of steps being; determining the replacement cost followed by an adjustment for additional functional/economic obsolescence. The useful life and effective age was then calculated and depreciated over its new economic life to reflect obsolescence related to effective age. The estimate of the minimum value was then calculated, based on quotation prices or experience from past project costs.

Intangible Assets

Customer relationships

Excess earnings approach: This is a form of the income approach which is described in detail above at buildings. An estimate of Revenue and EBITDA margins are forecasted and discounted over the assumed life of the relationships.

Inventories

Market comparison technique: The fair value is determined based on estimated selling price in the ordinary course of business less the estimated cost of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

An assessment of the provisional fair values of liabilities acquired was undertaken. The fair value adjustments related to the deferred tax liability arising on the property, plant and equipment and certain intangible assets acquired.

The goodwill is attributable mainly to supply chain and labour efficiency, the Macro workforce, management knowledge and the market footprint expansion. None of the goodwill recognised is expected to be deductible for tax purposes.

Business combination – 2016(i) Encore Industries IncOn 3 November 2016, the Group acquired 100% of the ordinary share capital of Encore Industries Inc., a US injection moulding and thermoforming business headquartered in Ohio, with manufacturing operations in Ohio, Georgia and Minnesota.

The acquisition date fair value of the consideration transferred, which was funded by both cash reserves and bank borrowings was €31.6 million (US$35.0 million).


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The Group incurred acquisition-related costs of €1.0 million, primarily related to various professional fees incurred. These have been included in exceptional items in the prior year (note 7).

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition. The fair value of the assets and liabilities acquired were provisional at 31 December 2016. The finalisation of these fair values was completed during the year. The outcome of this process was that goodwill increased by €2.7 million, property, plant and equipment increased by €1.0 million, deferred tax liabilities decreased by €1.4 million, trade and other payables increased by €1.0 million and provisions increased by €4.1 million. The audited Statement of Financial Position as at 31 December 2016 has been amended to reflect these adjustments.

At 3 November

2016€’000



Inventories 6,574


Other assets 901

Trade and other payables (3,763)

Provisions (5,631)

Other liabilities (342)

Deferred tax liability (3,188)






17. BUSINESS COMBINATIONS (CONTINUED)


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The valuation used for measuring the fair value of materials assets acquired were as follows:



Land Market approach: The valuation model considers the market value of the land at the date of acquisition. The value of the asset was calculated based on the market price of an asset of comparable features like location and size. The value of the land was assessed by analysing asking prices and sales prices paid in comparable transactions in the respective areas adjusting the derived values for differences between comparable property and subject property like location, zoning, size, market condition, etc and applied the adjusted unit price to the property.

Buildings Income approach: The principle behind the income approach is that the value of the asset is equal to the earnings potential of this asset i.e. the present value of rental savings attributable to owning the asset. The direct capitalisation method was applied as it is a widely used and simple approach to apply. Market rents per unit of space and yields were utilised for each building taking into consideration its specific usage, type of construction and condition. The derivation of market rents was based on local real estate market research and experiences in the market of industrial properties. The overall condition of the buildings was also taken into account.

Machinery and equipment, fixtures and fittings, computer equipment and motor vehicles

Depreciated replacement cost (“DRC”) approach (Trending method): The principle behind the DRC approach is that a prudent investor will not purchase an asset for more than it will cost him/her to replace this asset with an asset of comparable utility. The valuation process involved a number of steps being; determining the replacement cost followed by an adjustment for additional functional/economic obsolescence. The useful life and effective age was then calculated and depreciated over its new economic life to reflect obsolescence related to effective age. The estimate of the minimum value was then calculated, based on quotation prices or experience from past project costs.

Intangible Assets

Customer relationships

Excess earnings approach: This is a form of the income approach which is described in detail above at buildings. An estimate of Revenue and EBITDA margins are forecasted and discounted over the assumed life of the relationships.

Inventories

Market comparison technique: The fair value is determined based on estimated selling price in the ordinary course of business less the estimated cost of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

The goodwill is attributable mainly to supply chain and labour efficiency, the Encore workforce, management knowledge and the market footprint expansion. None of the goodwill recognised is expected to be deductible for tax purposes.


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(ii) H&T Labour and Vacuumation Services Limited (“H&T”)On 31 January 2016, the Group acquired 100% of the share capital of H&T Labour and Vacuumation Services Limited (“H&T”), a UK based operator in the Hazardous Waste and Specialist Industrial Services sector. H&T is part of the SES business that were disposed of in 2017.

H&T provides a range of specialist industrial cleaning and waste management services to UK industry.

The acquisition date fair value of the consideration transferred, which was funded by cash reserves was €3.5 million (Stg£2.7 million).

The Group incurred acquisition-related costs of €0.1 million primarily related to professional fees incurred in relation to the acquisition. These have been included in exceptional items in the prior year (see note 7). The following table summarises the amounts of assets acquired and liabilities assumed at the date of acquisition:

At 31 January

2016€’000



Inventories 75


Trade and other payables (910)

Deferred tax liability (478)






The valuation techniques used for measuring the fair value of material assets acquired were as follows:



Market comparison technique and cost technique: The valuation model considers quoted market prices for similar items when they are available and directors’ estimate of the potential disposal proceeds.

Intangible assets – customer relationships

Excess earning approach: The principle behind the income approach is that the value of the asset is equal to the earning potential of this asset. An estimate of Revenue and EBITDA margins are forecasted and discounted over the assumed life of the customer relationships.

The goodwill was attributable mainly to the skills and technical talent of H&T’s work-force and the buyer specific synergies to be achieved from integrating the business into the Group’s existing hazardous waste business. None of the goodwill recognised was deductible for tax purposes.


17. BUSINESS COMBINATIONS (CONTINUED)

128

(iii) Bale Group Limited (“Bale”)On 20 May 2016, the Group acquired 100% of the business and assets of Bale Group Limited (“Bale”), a UK based operator in the Hazardous Waste and Specialist Industrial Services sector. The business was acquired out of administration. Bale is part of the SES business that were disposed of in 2017.

Bale is a specialist industrial services operator providing a range of transport, waste management and industrial cleaning solutions to customers in the UK.

The acquisition date fair value of the consideration transferred, which was funded by cash reserves was €2.8 million (Stg£2.1 million).

The Group incurred acquisition-related costs of €0.1 million primarily related to professional fees incurred in relation to the acquisition. These have been included in exceptional items in the prior year (note 7). The following table summarises the amounts of assets acquired and liabilities assumed at the date of acquisition.

At 20 May

2016€’000



Trade and other payables (391)

Provision for liabilities (700)

Deferred tax liability (211)





Goodwill at date of acquisition -

The valuation techniques used for measuring the fair value of material assets acquired were as follows:



Market comparison technique and cost technique: The valuation model considers quoted market prices for similar items when they are available and directors’ estimate of the potential disposal proceeds.

Intangible assets – customer relationships

Excess earning approach: The principle behind the income approach is that the value of the asset is equal to the earning potential of this asset. An estimate of Revenue and EBITDA margins are forecasted and discounted over the assumed life of the customer relationships.


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18. INVENTORIES

2017 2016€’000 €’000

Raw materials and consumables 34,728 16,978

Work in progress 424 143

Finished goods 33,918 21,981

Inventories 69,070 39,102

All inventories are valued at the lower of cost or net realisable value.

A total of €229.5 million (2016: €174.8 million) of inventories was included in the Group Income Statement as an expense in cost of sales. This includes a net income statement charge of €Nil arising on the inventory impairment allowance (2016: charge of €Nil). Inventory impairment allowance levels are continuously reviewed by management and revised where appropriate, taking account of the latest available information on the recoverability of carrying amounts.

19. TRADE AND OTHER RECEIVABLES

2017 2016€’000 €’000

Non-current

Tax credit receivable (i) 5,522 4,879

Deferred consideration receivable (ii) 4,766 -

Other receivables 1,331 1,104

11,619 5,983

Current

Trade receivables 58,028 42,549

Other receivables 550 2,347

Prepayments 6,265 6,218

Derivative financial instruments 1,104 17

VAT – Ireland 24 1,073

VAT – Overseas 1,077 -

67,048 52,204

(i) Tax credit receivableThe Group has a receivable in Canada related to Research and Development and Investment related to federal and state tax credits earned since 2008. These tax credits can be utilised against income tax payments in future years.

(ii) Deferred consideration receivableAs explained in note 8, the Group continues to hold a 25% investment in Rilta Environmental Limited under a five year put and call option agreement. Under the terms of this agreement, the current holders of the other 75% shareholding in Rilta have the option to purchase the remaining shares. The Group has no entitlement to a share of the profits or losses of Rilta during this five year agreement and the Group’s return is limited to the agreed option price plus a 10% compound interest charge over the life of the retained equity investment. The carrying value of this shareholding is €2.7 million at 31 December 2017 which represents the discounted fair value of the investment under the terms of the agreement.

In addition to the put and call option, a portion of the disposal consideration takes the form of a €5.0 million, 6% vendor loan note with a term of 5 years.

Details of impairment provisions netted against the carrying value of trade and other receivables above are set out in note 35.

See note 35 for an analysis of credit risk on trade and other receivables to understand how the Group manages and measures credit quality of trade and other receivables.


130

20. CASH AND CASH EQUIVALENTS

2017 2016€’000 €’000

Cash and cash equivalents in the statement of financial position and in the statement of cash flows 39,697 39,350

21. DISPOSAL GROUP HELD FOR SALE

On 1 January 2017, the Group disposed of Rilta Environmental Limited, ClearCircle Environmental (NI) Limited and Future Industrial Services Limited (together, “SES”). These businesses were classified as discontinued operations in the 31 December 2016 Annual Report with the entities’ assets and liabilities held for sale.

As explained in note 8, the Group continues to hold a 25% investment in Rilta Environmental Limited under a five year put and call option agreement. Under the terms of this agreement, the current holders of the other 75% shareholding in Rilta have the option to purchase the remaining shares. The Group has no entitlement to a share of the profits or losses of Rilta during this five year agreement and the Group’s return is limited to the agreed option price plus a 10% compound interest charge over the life of the retained equity investment. The carrying value of this shareholding is €2.7 million at 31 December 2017 which represents the discounted fair value of the investment under the terms of the agreement.

In addition to the put and call option, a portion of the disposal consideration takes the form of a €5.0 million, 6% vendor loan note with a term of 5 years (see note 19).

(a) Impairment loss relating to the disposal groupOn classification as held-for-sale, a disposal group is measured at the lower of its carrying amount and fair value less costs to sell. Arising from this, an impairment loss of €2.0 million was recognised in respect of one of the SES businesses held for disposal and this has been included within exceptional items in the prior year (see note 7).

(b) Assets and liabilities of disposal group held for saleAt 31 December 2017, the following assets and liabilities were classified as held-for-sale:

2017 2016€’000 €’000

Property, plant and equipment - 29,133

Goodwill and intangible assets - 13,577

Cash and cash equivalents - 566

Inventories - 334

Trade and other receivables - 14,108

Assets held for sale - 57,718

Finance lease obligations - 21

Trade and other payables - 10,294

Deferred tax liabilities (net) - 823*

Liabilities directly associated with the assets held for sale - 11,138

*Includes a deferred tax asset of €255,000 (see note 29).

(c) Cumulative income or expense included in other comprehensive incomeIncluded in Other Comprehensive Income at year end is €1.6 million credit (2016: €0.8 million charge) related to discontinued operations.


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(d) Measurement of fair value In the prior year, one component of the disposal group was measured at its fair value less cost to sell, as this was less than its carrying value. The impairment loss of €2.0 million was calculated as the difference between the fair value less costs to sell and the carrying value of the net assets of this component in the prior year.

(e) Fair value hierarchyFair value less costs to sell are based on estimated disposal prices (fair value Level 3), which is based on discussions with independent external advisers and potential purchasers.

(f) Valuation technique and significant unobservable inputs The following table shows the valuation techniques used in measuring the fair value of the disposal group classified as held-for-sale, as well as the significant unobservable inputs used.

Valuation technique Significant unobservable inputsInter-relationship between key unobservable inputs and fair value measurements

Estimated disposal prices: This method of valuation has been used for the disposal group as a whole that is held-for-sale. The value is based on indicative bids received and after discussion with independent external advisers.

United Kingdom

• Comparable market prices.

The estimated fair value would increase/(decrease) if:

• Comparable market prices were higher/(lower).

22. CAPITAL AND RESERVES

2017 2016€’000 €’000

Authorised

Ordinary Shares of €0.01 each 4,000 2,000

Allotted, called up and fully paid


Ordinary shares issued during the year – 1,505,200 of €0.01 each (2016: 50,375 of €0.01 each) 15 1


The Company’s authorised share capital was increased from €2,000,000 to €4,000,000 by the creation of 200,000,000 new Ordinary Shares of €0.01 each during the year. The increase was approved at the EGM held in December 2017, by way of resolution by the shareholders. The increase in the Company’s authorised but unissued share capital was sought in order to create sufficient authorised share capital to enable the issues of shares pursuant to an IPO and/or the reorganisation and for general corporate purposes.

As at 31 December 2017, 158,593,356 Ordinary Shares (2016: 157,088,156) were in issue.

The nominal value of each of the existing Ordinary Shares at 31 December 2017 is €0.01 (2016: €0.01).

Ordinary SharesAll Ordinary Shares rank equal regarding any dividends declared on a return of capital in the event of liquidation, dissolution, winding up or other return of capital to shareholders. The holders of Ordinary Shares are entitled to receive notice of, attend, speak and vote at all General Meetings of the Company.


21. DISPOSAL GROUP HELD FOR SALE (CONTINUED)

132

Share premium and reserves

2017 2016€’000 €’000

Share Premium


Premium on issued shares 492 10


Reserves

Translation reserve (15,036) (5,759)

Share based payment reserve 1,503 1,157

Available-for-sale reserve (14) 2,081

Treasury share reserve (1,303) (1,303)

Convertible loan notes reserve 78 78

Other reserves (82,495) (39,689)

Total (97,267) (43,435)

Translation reserveThe translation reserve comprises all foreign exchange differences arising from the translation of the net assets of the Group’s non-euro denominated operations, including the translation of the profits and losses of such operations from the average exchange rate for the year to the exchange rate at the reporting date, as well as from the translation of borrowings designated as a hedge of those net assets.

Share based payment reserveThis reserve comprises amounts credited to reserves in connection with equity awards less the effect of any exercises of such awards.

Available-for-sale reserveThe available-for-sale reserve arises on revaluations of available-for-sale financial assets. This reserve is not distributable to shareholders under Irish company law.

Treasury share reserveThis reserve comprises amounts debited to reserves in connection with the Group purchasing the Company’s equity share capital. The number of Ordinary Shares held as treasury shares at 31 December 2017 is 434,286 (2016: 434,286).

Convertible Loan Notes reserve This reserve comprises the equity element of those Convertible Loan Notes issued on 13 January 2006 that have not yet converted at year end. At 31 December 2017, unconverted CLNs amount to 149,991 (2016: 149,991). At 31 December 2017, the balance on the reserve is €78,000 (2016: €78,000).


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Other reservesThis reserve relates to fair value movements in the Put Liability relating to the 33.33% of IPL Inc. not owned by the Group. The basis for this accounting is set out in note 28. The increase in fair value of the Put Liability during the year amounted to €42.8 million (2016: €37.8 million).

Translation reserve

Shared based

payment reserve

Available-for-sale reserve

Treasury share

reserve

Convertible loan note

reserveOther

reserves Total€’000 €’000 €’000 €’000 €’000 €’000 €’000

Balance at 1 January 2017 (5,759) 1,157 2,081 (1,303) 78 (39,689) (43,435)

Equity-settled share based payments – charge for year - 487 - - - - 487

Translation differences (16,383) - - - - - (16,383)

Tax impact on foreign currency translation differences 1,302 - - - - - 1,302

Increase in fair value of Put Liability relating to subsidiary undertaking - - - - - (42,806) (42,806)

Translation movement in respect of Put Liability relating to subsidiary undertaking 4,196 - - - - - 4,196

Revaluation losses on available-for-sale assets - - (2,095) - - - (2,095)

Translation reserve reclassification to income statement on discontinued operation 1,608 - - - - - 1,608

Reclassification to retained earnings – exercise of share options - (132) - - - - (132)

Reclassification to retained earnings – forfeited options - (9) - - - - (9)

Balance at 31 December 2017 (15,036) 1,503 (14) (1,303) 78 (82,495) (97,267)

Balance at 1 January 2016 6,546 708 1,240 (1,303) 78 (1,925) 5,344

Equity-settled share based payments – charge for year - 456 - - - - 456

Translation differences (10,189) - - - - - (10,189)

Increase in fair value of Put Liability relating to subsidiary undertaking - - - - - (37,764) (37,764)

Increase in fair value of available-for-sale assets - - 841 - - - 841

Translation movement in respect of Put Liability related to acquired subsidiary undertaking (2,116) - - - - - (2,116)

Reclassification from share based payment reserve to retained earnings – lapsed options - (3) - - - - (3)

Reclassification to retained earnings – exercise of share options - (4) - - - - (4)

Balance at 31 December 2016 (5,759) 1,157 2,081 (1,303) 78 (39,689) (43,435)

22. CAPITAL AND RESERVES (CONTINUED)


134

23. LOANS AND BORROWINGS

2017 2016€’000 €’000

Non current

Bank loans 215,073 145,373

Subordinated term borrowings from NCI’s (note 36) 28,962 30,024

Finance lease liabilities 199 -

Total non-current loans and borrowings 244,234 175,397

Current

Bank loans 23,498 11,422

Subordinated term borrowings from NCI’s (note 36) 455 1,075

Finance lease liabilities 95 -

Total current loans and borrowings 24,048 12,497

The Group is primarily funded by committed bank facilities and free cash flow generated from operations. At 31 December 2017, the Group had net debt of €233.0 million. Net debt is defined by the Group as cash in hand and in bank, less overdrafts, bank loans, subordinated loans and finance lease obligations.

Bank facilities are provided by separate Irish and Canadian banking syndicates. The Irish banking syndicate has provided €92 million of committed funding which is due to mature in December 2020.

On the acquisition of IPL in July 2015, the Group entered into a credit agreement with a syndicate of Canadian banks. During 2016, following the acquisition of Encore, and again in May 2017, following the acquisition of Macro, this facility was further renegotiated and increased. The credit agreement provides for committed facilities of CAD$344.1 million (€228.8 million) with CAD$289.1 million (€192.2 million) provided by way of a term loan (including two US$ denominated term loans of US$125.0 million and US$32.9 million) and CAD$55 million (€36.6 million) provided under a revolving credit facility. The credit agreement expires in July 2021. The Canadian facility is “ring-fenced” to the IPL business. At 31 December 2017, the total balance drawn down on the Irish and Canadian bank facilities amounted to €39.6 million and €201.8 million respectively.

In addition, there are subordinated loans which amounted to €29.9 million at 31 December 2017 (2016: €31.7 million) which are provided by the Canadian minority shareholders of IPL Inc. and Investissement Quebec. The subordinated term borrowings from non-controlling interests are explained in note 36.

The Group’s Irish bank facilities are secured by fixed and floating charges on the assets of Group companies and by cross guarantees between the Company and all subsidiary companies that are borrowers under the facility. These charges exclude any charges over IPL Inc. related assets.

The Group’s Canadian bank facilities are secured by charges on the assets of IPL Inc. and its subsidiary undertakings.

The Group’s bank borrowings are denominated in euro, Pound Sterling, US dollar and Canadian dollar. Interest rates for Euro, Pound Sterling and US dollar denominated loans are variable and the Group’s Canadian dollar loans are a mix of fixed and variable which are all set at commercial rates and spread over EURIBOR interest rates, US dollar LIBOR, US Dollar Base Rate, Canadian Prime Rate or Canadian Bankers Acceptance for periods between one and three months.


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24. TRADE AND OTHER PAYABLES

2017 2016€’000 €’000

Non-current

Convertible loan note classed as a financial liability (note 25) 1,622 1,622

Accruals 12 338

Other payables 974 970

2,608 2,930

Current

Trade payables 69,194 46,086

Tax and social welfare 6,671 4,798

Convertible loan note accrued interest (note 25) 212 212

Accruals 21,801 23,186

VAT – overseas 614 677

98,492 74,959

For information on the Group’s contractual maturity analysis of all liabilities, including trade and other payables, see note 35.

25. CONVERTIBLE LOAN NOTE LIABILITIES

Principal classed as equity

Principal classed as debt

Accrued interest – debt Total

€’000 €’000 €’000 €’000

Balance at 1 January 2016 78 1,622 212 1,912

Interest charged during the year - - 133 133

Interest paid during the year - - (133) (133)

Balance at 31 December 2016 78 1,622 212 1,912

Interest charged during the year - - 133 133

Interest paid during the year - - (133) (133)

Balance at 31 December 2017 78 1,622 212 1,912

The main terms of the CLNs issued on 13 January 2006 and on 20 July 2006 by the Company are as follows:

1. Convertible Loan Notes issued on 13 January 2006The CLNs issued on 13 January 2006 are convertible into Ordinary Shares at a fixed share price of €3.37.

The Company shall never be required to redeem the CLNs unless a specified event of default has occurred in relation to the Company. Payment of any principal and interest in respect of the CLNs is subordinated to all monies owing in respect of bank debt. Interest accrues on the principal amount outstanding on the CLNs at a rate of 4.0% per annum and is payable on an annual basis in arrears.

Following the fifth anniversary of the issue of the CLNs each noteholder is now entitled to convert not less than 50% of the CLNs (including accrued but unpaid interest) into Ordinary Shares during the following periods:

(a) A period of 14 working days following notification by the Company that it intends to redeem the CLNs.

(b) On an annual basis, a period of 10 working days following the earlier of (i) the announcement of the annual results or (ii) the publication of the audited accounts of the Company.

If a noteholder did not elect to convert a minimum of 50% of his CLNs into Ordinary Shares within 60 days of the fifth anniversary of the issue of the CLNs, which has now passed, the Company is entitled to redeem the CLNs held by that noteholder at any time thereafter.


136

As at 31 December 2017, 149,991 (2016: 149,991) of the 13 January 2006 CLNs have not been converted. During the year, and under the terms of the offer made to the holders of CLNs, the Group repurchased Nil (2016: Nil) CLNs.

2. Convertible Loan Notes issued on 20 July 2006 The CLNs issued on 20 July 2006 were convertible into Ordinary Shares in the Company at a fixed share price of €4.00 until 30 April 2011. To the extent that a noteholder has not converted all his CLNs, then from 20 April 2011 onward the Company will have the option to redeem the CLNs for cash at its absolute discretion. In 2011, €6.3 million that was held in equity relating to the CLNs issued on 20 July 2006 were reclassified to the retained earnings as the conversion date for these instruments had passed.

The Company shall never be required to redeem the CLNs unless a specified event of default has occurred in relation to the Company. Payment of any principal and interest in respect of the CLNs is subordinated to all monies owing in respect of bank debt. Interest accrues on the principal amount outstanding on the CLNs at a rate of 4.0% per annum and is payable on an annual basis in arrears.

As at 31 December 2017, 3,185,000 (2016: 3,185,000) of the 20 July 2006 CLNs have not been converted.

26. GOVERNMENT GRANTS DEFERRED

2017 2016€’000 €’000


Additions 1,162 723

Amortisation in the year (335) (529)

Currency translation adjustments (127) 107


Classified as non-current liabilities 2,513 1,918

Classified as current liabilities 438 333

27. PROVISIONS

2017 2016

€’000(restated)

€’000


Utilised during the year (500) (579)

Disposal of subsidiary undertakings - (297)

Provision acquired as part of business combination - 5,631

Currency translation adjustments (497) (202)



Classified as current liabilities 2,788 349

The Group’s provisions in the current and prior year primarily relate to environmental provisions.

An environmental provision of €5.0 million (2016: €5.5 million), recognised as part of the Encore Industries Inc. business combination accounting in accordance with IFRS 3, relates primarily to contingent environmental remediation costs associated with certain of that company’s production facilities.


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28. DEFERRED CONTINGENT CONSIDERATION

2017 2016€’000 €’000


Put Liability arising on equity investment by non-controlling interests 8,915 -

Movement in Put Liability arising from fair value increase and accretion of interest 42,806 37,764

Interest charged to income statement (note 9) 44 47

Paid during the year (385) (366)

Currency translation adjustments (4,212) 2,010



Classified as current liabilities 51 350

The liability for deferred consideration at year end comprises €119.8 million (2016: €72.2 million) included within non-current liabilities in respect of IPL Inc. and €0.1 million (2016: €0.4 million) relating to Straight plc, €0.1 million (2016: €0.3 million) of which is included in current liabilities and €Nil (2016: €0.1 million) included in non-current liabilities.

IPL Inc.On 23 July 2015, the Group acquired its 66.67% controlling interest in IPL Inc.

While the Group acquired a 66.67% shareholding, the anticipated acquisition method of accounting was applied in respect of the acquisition on the basis of there being a Put Option in the Shareholders’ Agreement which gives the non-controlling interests (“NCI’s”) the option to Put their shares on the Group for acquisition commencing six years after the date of acquisition, i.e. put option is exercisable from 23 July 2021. There are other events in which the Group has a Call right which becomes exercisable prior to that date and these events include an initial public offering, whether on a treasury or secondary basis, resulting in a recognised stock exchange listing of equity of IPL Plastics plc, directly or indirectly, and includes an amalgamation, securities exchange take-over bid or other transaction having a similar result, and an offering of units of an income trust or similar offering where the trust, directly or indirectly owns equity of IPL Plastics plc, or any transaction resulting in a change of control of IPL Plastics plc. This is referred to in the Shareholders’ Agreement as a “One51 Liquidity Event”.

In the event of a One51 Liquidity Event prior to the sixth anniversary (i.e. 23 July 2021), the Group shall have the right to exercise its Call Right for the aggregate purchase price set out below:

(a) from 23 July 2016 to 22 July 2017, at the Fair Market Value of the Call Shares plus a 10% premium;

(b) from 23 July 2017 to 22 July 2018, at the Fair Market Value of the Call Shares plus a 7.5% premium;

(c) from 23 July 2018 to 22 July 2019, at the Fair Market Value of the Call Shares plus a 5% premium; and

(d) from 23 July 2019 to 22 July 2021, at the Fair Market Value of the Call Shares plus a 2.5% premium.

The reassessment of fair value at 31 December 2017 valued the Put Liability at CAD$180.1 million / €119.8 million (2016: CAD$102.5 million/€72.2 million).

Due to the application of the anticipated-acquisition method of accounting, a Put Liability is recognised by the Group in non-current liabilities instead of the Group showing the NCI’s share of retained profits/losses or share of equity.

The valuation method applied for the purposes of the reassessment at 31 December 2017, was that of a discounted cash flow model using the Board approved IPL Inc. Budget for 2018 and the plan for 2019 and 2020 and then applying a steady growth rate of 2% to earnings after that period (i.e. to 2022). The discount rate applied was 9.96% (2016: 10.03%).


138

On 6 December 2017, shareholders approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the minority shareholders’ equity interests in IPL Inc. for shares in the Company. On 28 February 2018, the minority shareholders’ equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc, under the authority given by shareholders at the EGM on 6 December 2017. The completion of this transaction has the effect of settling the Put Liability from 28 February 2018. There was no significant difference between the fair value of the Put Liability at the exchange date and as at 31 December 2017.

Sensitivity analysis The valuation is subject to specific assumptions, some of which are judgemental in nature. Due to the judgements applied, a number of sensitivities have been applied to these assumptions, the results of which are set out in the table below:

Sensitivity

Actual Put Liability at 31

December 2017

Sensitised Put Liability at 31

December 2017 Movement Movement

€’m €’m €’m %

1 (a) Discount rate increased by 10% 119.8 98.4 (21.4) (17.8%)

1 (b) Discount rate decreased by 10% 119.8 147.2 27.4 22.9%

2 (a) Net debt increased by 10% 119.8 112.8 (7.0) (5.8%)

2 (b) Net debt decreased by 10% 119.8 126.7 6.9 5.8%

3 (a) EBITDA in terminal value increased by 10% 119.8 139.6 19.8 16.6%

3 (b) EBITDA in terminal value decreased by 10% 119.8 99.9 (19.9) (16.6%)

4 (a) Growth rate in terminal value increased by 1% to 3% 119.8 141.0 21.2 17.7%

4 (b) Growth rate in terminal value decreased by 1% to 1% 119.8 103.3 (16.5) (13.7%)

5 (a) As terminal value Revenue increases by 2%, working capital increases by 10% of the 2% growth 119.8 119.7 (0.1) (0.0%)

5 (b) As terminal value Revenue decrease by 2%, working capital decreases by 10% of the 2% growth 119.8 119.9 0.1 0.1%

Straight plcThe liability for deferred consideration represents the present value of the monthly payment plan pursuant to an agreement that the Group’s acquired entity, Straight plc, entered into with the vendors of Dyro Holdings Limited in February 2013. The total net present value at 31 December 2017 is €0.1 million (2016: €0.4 million) split €0.1 million (2016: €0.3 million) due within one year and €Nil (2016: €0.1 million) due in greater than one year, respectively. Payments are due to continue until February 2018.


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29. DEFERRED TAX

Assets2017

Liabilities 2017

Net2017

Assets2016

Liabilities2016

Net2016

€’000 €’000 €’000 €’000(restated)

€’000(restated)

€’000

Property, plant and equipment 16 (21,831) (21,815) 27 (21,721) (21,694)

Losses forward 3,259 (301) 2,958 1,370 - 1,370

Other timing differences 1,919 - 1,919 3,846 (60) 3,786

Intangible assets - (14,976) (14,976) - (10,522) (10,522)

Total 5,194 (37,108) (31,914) 5,243 (32,303) (27,060)

Prior year amounts shown above exclude amounts relating to disposal groups.

At 31 December 2017, the Group had unrecognised deferred tax assets in respect of trading losses of €2.3 million (2016: €3.3 million) and on capital losses, tangible assets and share based payments of €21.7 million (2016: €19.7 million).

Movement in deferred tax balances

Continuing operations 2017

Net balance at 1 January

Recognised in profit or

lossForeign

exchangeRecognised

in OCI Other

Acquired in business

combinations Net Deferred

tax assetsDeferred tax

liabilities(restated)

€’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000

Property, plant and equipment (21,694) 6,376 2,382 - - (8,879) (21,815) 16 (21,831)

Losses forward 1,370 (4,334) (400) - - 6,322 2,958 3,259 (301)

Other timing differences 3,786 (1,877) (2,496) 1,302 - 1,204 1,919 1,919 -

Intangible assets (10,522) 4,732 1,881 - - (11,067) (14,976) - (14,976)

Tax assets/(liabilities) (27,060) 4,897 1,367 1,302 - (12,420) (31,914) 5,194 (37,108)

Discontinued operations 2017


Recognised in profit or

lossForeign

exchangeRecognised

in OCI Other


combinations Net Deferred

tax assetsDeferred tax

liabilities(restated)

€’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000 €’000

Property, plant and equipment (642) - - - 642 - - - -

Losses forward 255 - - - (255) - - - -

Other timing differences (66) - - - 66 - - - -

Intangible assets (370) - - - 370 - - - -

Tax assets/(liabilities) (823) - - - 823 - - - -

Total assets/(liabilities) (27,833) 4,897 1,367 1,302 823 (12,420) (31,914) 5,194 (37,108)


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Continuing operations 2016


Recognised in profit or loss

Foreign exchange


combinations (restated)

Net (restated)

Deferred tax assets

Deferred tax liabilities

(restated)€’000 €’000 €’000 €’000 €’000 €’000 €’000

Property plant and equipment (16,696) (319) (609) (4,070) (21,694) 27 (21,721)

Losses forward 4,887 (2,423) (1,159) 65 1,370 1,370 -

Other timing differences (578) 787 1,162 2,415 3,786 3,846 (60)

Intangible assets (8,486) 334 (772) (1,598) (10,522) - (10,522)

Tax assets/(liabilities) (20,873) (1,621) (1,378) (3,188) (27,060) 5,243 (32,303)

Discontinued operations2016


Recognised in profit or loss

Foreign exchange


combinations(restated)

Net(restated)

Deferred tax assets

Deferred tax liabilities

(restated)€’000 €’000 €’000 €’000 €’000 €’000 €’000

Property plant and equipment - (487) (155) - (642) - (642)

Losses forward - 266 (11) - 255 255 -

Other timing differences - (20) (46) - (66) - (66)

Intangible assets - - 319 (689) (370) - (370)

Tax assets/(liabilities) - (241) 107 (689) (823) 255 (1,078)

Total assets/(liabilities) (20,873) (1,862) (1,271) (3,877) (27,883) 5,498 (33,381)

30. EMPLOYEE BENEFITS

Defined contribution pension schemesThe Group operates a number of defined contribution pension schemes in the jurisdictions in which it operates. The pension cost charge for the year represents contributions payable by the Group to the schemes and amounted to €1.8 million (2016: €1.2 million). All charges in the current year relate to continuing operations (2016: €0.8 million).

At 31 December 2017, contributions amounting to €0.3 million (2016: €0.09 million) were payable to the scheme, and are included in accruals.


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31. SHARE-BASED PAYMENT ARRANGEMENTS

At 31 December 2017, the Group had the following active equity-settled share-based payment arrangements:

• One51 Group Share Option Scheme 2006

• The One Fifty One plc 2014 Share Option Scheme

The general terms and conditions applicable to the payment arrangements listed above that were active in the current or prior years are addressed below. In October 2014, the One Fifty One plc 2014 Share Option Scheme was implemented following shareholder approval at the EGM of the Company held on 17 September 2014. The maximum percentage of share capital which could be issued under the scheme is limited, so that, over a period of 10 years, the aggregate number of shares issuable under options granted under the scheme (and any other share scheme operated by the Company) could not exceed 10% of the issued ordinary share capital of the Company.

The equity instruments granted to the Group’s employees under the equity settled schemes are equity settled share based payments as defined in IFRS 2 Share Based Payments. IFRS 2 requires that a recognised valuation methodology be employed to determine the fair value of equity instruments granted and stipulates that this methodology should be consistent with the methodologies used for the pricing of financial instruments.

Details of the options granted under these schemes are as follows:

One51 Group Share Option Scheme 2006 and the One Fifty One plc 2014 Share Option Scheme

Date of grantNumber of

options Vesting periodWeighted grant

price Average fair value

Income statement expense

2017

Income statementexpense

2016

December 2012 4,995,994 0.7 years €0.20 €0.072 - -

January 2013 247,000 0.7 years €0.20 €0.072 - -

October 2014 6,075,000 3 years €0.90 €0.18 €0.29m €0.37m

July 2016 1,477,250 3 years €1.68 €0.41 €0.18m €0.1m

September 2017 1,355,000 3 years €1.86 €0.45 €0.06m -

2017 and 2016 grants under The One Fifty One plc 2014 Share Option SchemeIn 2017 and 2016, the Group granted employees options over Ordinary Shares in IPL Plastics plc under The One Fifty One plc 2014 Share Option Scheme which may be exercisable upon the attainment of specified performance targets and service criteria. Regarding specified performance targets, the options granted in 2017 and 2016 are exercisable on the satisfaction of both a Free Cash Flow Ratio (“FCFR”) performance condition and an EPS performance condition. FCFR in this context means Free Cash Flow before Growth Capital Expenditure as a percentage of EBITDA. Free Cash Flow before Growth Capital Expenditure means EBITDA adjusted to take account of interest, tax, maintenance capital expenditure, working capital cash-flows and dividends received. The performance targets for the 2016 grant are also based on these measures.


Average Annual FCFRProportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the FCFR Performance Condition)

Below 40% 0%

40% 25%


75% and above 50%

Up to 50% of the shares subject to an option shall vest according to the EPS Performance Condition. The extent


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to which the EPS Performance Condition is satisfied shall be determined by reference to the cumulative compound growth in the Company’s EPS during the Performance Period in accordance with the following table:

Company’s cumulative compound EPS growthProportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the EPS Performance Condition)







2014 grants under the One Fifty One plc 2014 Share Option SchemeUp to 50% of the shares subject to an Option shall vest according to the share price Performance Condition. The extent to which the share price Performance Condition is satisfied shall be determined by reference to the cumulative compound growth in the price of a share over the Performance Period in accordance with the following table:

Cumulative compound share price growthProportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the share price Performance Condition)

Below 7.5 percentage points 0%

7.5 percentage points 25%

Between 7.5 and 11.25 percentage points 25% – 37.5% pro rata



The growth in a share’s price shall be calculated by reference to the average price of a share over the 30 day period following the announcement date prior to vesting against the price of €0.90 per share.

Up to 50% of the shares subject to an option shall vest according to the earnings per share (“EPS”) Performance Condition. The extent to which the EPS Performance Condition is satisfied shall be determined by reference to the cumulative compound growth in the Company’s EPS during the Performance Period in accordance with the following table:

Company’s cumulative compound EPS growthProportion of the total option award vesting (subject to satisfaction of the minimum Vesting target under the EPS Performance Condition)







2012/2013 grants under the One Fifty One Group Share Option Scheme 2006


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The options granted prior to 2014 were exercisable upon the attainment of specified share price targets which was a 10% increase on the headline share price at the date of grant. There was no time period by which this 10% increase had to be met. The share price targets were attained in 2013 in respect of the 2012 and 2013 grants. The options must be exercised within seven years of the grant date.

Other information relevant to share option schemes Options will not vest unless the minimum vesting target is met under each condition. Options will normally vest no earlier than the third anniversary of the grant date. The options must be exercised within seven years of the grant date.

The charge relating to the Group’s Directors is €0.34 million (2016: €0.23 million).

The measurement requirements of IFRS 2 have been applied to options granted under this scheme. The fair value of the options granted under the scheme was determined using the following assumptions:

2017 issue 2016 issue 2014 issue 2012 / 2013 issue

Weighted average exercise price €1.86 €1.68 €0.90 €0.20

Expected volatility 25% 25% 25% 40%

Contractual life 7 years 7 years 7 years 7 years

Expected dividend yield 0% 0% 0% 0%

Risk free interest rate 0% 0.3% 0.3% 0.3%

Expected rate of forfeitures 10% 10% 10% 10%

Minimum gain for voluntary early exercise 100% 100% 100% 100%

Rate of voluntary early exercise at minimum gain 50% 50% 50% 50%

At 31 December 2017, 10,970,170 (2016: 11,263,370) options over Ordinary Shares were outstanding. Subsequent to the year end, no options over Ordinary Shares were forfeited. At 31 December 2017, 6,075,000 options have vested (2016: 3,711,120).

Options outstanding at 1 January 2016 9,878,745

Issued – 20 July 2016 1,477,250

Share options exercised (50,375)

Share options forfeited (42,250)

Options outstanding at 31 December 2016 11,263,370

Issued – 8 September 2017 1,355,000

Share options forfeited (143,000)

Share options exercised (1,505,200)

Options outstanding at 31 December 2017 10,970,170


31. SHARE-BASED PAYMENT ARRANGEMENTS

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Of the total outstanding options, 2,500,920 relate to the 2012/2013 issue, exercisable at a price of €0.20 (2016: 3,711,120 related to 2012/2013 issue exercisable at a price of €0.20), 5,780,000 relate to the 2014 issue exercisable at a price of €0.90 (2016: 6,075,000 related to 2014 issue exercisable at a price of €0.90), 1,334,250 relate to the 2016 issue exercisable at a price of €1.68 (2016: 1,477,250 related to 2016 issue exercisable at a price of €1.68) and 1,355,000 relate to the 2017 issue exercisable at a price of €1.86.

The One Fifty One Long Term Cash Settled Bonus SchemeThe Group also operated a long term cash settled bonus scheme, which is accounted for as a cash-settled scheme under IFRS 2. The scheme provided for cash awards on the satisfaction of both a share price performance condition and an earnings per share performance condition, with vesting of up 50% of the award determined by reference to the cumulative compound growth in the price of a share over a minimum of a three year performance period, and up to 50% of the award determined by reference to the cumulative compound growth in the Company’s earnings per share during that period. 1,195,000 awards were issued in October 2014 at a base price of €0.90. These awards are subject to the same performance conditions as those awarded under the One51 Group Share Option Scheme 2014.

Awards will not vest unless the minimum vesting target is met under each condition. Awards will normally vest no earlier than the third anniversary of the grant date. Awards lapse if not exercised within ninety days of the vesting date. These awards vested in October 2017 in accordance with the rules of the scheme. All 945,000 awards were exercised and fully paid in November 2017. The number of awards outstanding at 31 December 2017 was Nil (2016: 945,000).

The Group has taken a total charge of €0.86 million (2016: €0.27 million) in the financial year in relation to this scheme.


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32. CASH GENERATED FROM OPERATIONS

Note 2017 2016€’000 €’000

Profit for the year 17,557 16,057

Adjustments for:

– Depreciation 13 24,474 21,147

– Exchange differences (114) (1,850)

– Amortisation of intangibles 14 4,764 3,148

– Amortisation of government grants 26 (335) (529)

– Impairment losses on property, plant and equipment 13 - 157

– Fair value movements on investment property 15 (406) -

– Finance costs 9 13,762 8,875

– Share of profit of equity-accounted investees 8 (1,763) (3,933)

– Gain/loss on sale of property, plant and equipment (118) (2)

– Gain on settlement of third party loan 7 (100) (4,004)

– Loss on disposal/discontinued subsidiary undertakings 3,160 5,251

– Movement on derivative financial instruments (1,087) (483)

– Equity-settled share-based payment transactions 487 456

– Tax (credit)/expense 10 (860) 3,765

– Tax paid (1,647) (4,354)

– Onerous lease adjustments (57) (114)

– Manufacturing profit in inventory acquired adjustment 4 398 259

– Acquisition, aborted acquisition and related costs 7 2,675 2,393

– Other transaction costs 7 1,703 2,060

– Restructuring costs 7 2,721 -

Net cash flows from operating activities before working capital movements 65,214 48,299

Changes in:

– Inventories (16,543) (5,020)

– Trade and other receivables 254 6,697

– Trade and other payables and provisions 2,599 7,387

Total movements in working capital (13,690) 9,064

Net cash flows from operating activities pre exceptional items 51,524 57,363

Exceptional items paid (3,731) (1,846)

Net cash flows from operating activities after exceptional items 47,793 55,517


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Reconciliation of net cash flows from financing activities to loans, borrowings and capital

Subordinated debt

Other loans and borrowings

Share capital &share premium Total

€’000 €’000 €’000 €’000

Balance as at 1 January 31,099 156,795 90,158 278,052

Issue of share capital - - 507 507

Drawdowns of borrowings - 176,568 - 176,568

Repayment of borrowings - (78,751) - (78,751)

Changes from financing flows - 97,817 507 98,324

Other movements

Interest paid (3,072) (10,312) - (13,384)

Interest expense 3,185 10,577 - 13,762

Other movements - (216) - (216)

Changes in foreign exchange rates (1,795) (15,796) - (17,591)

Balance as at 31 December 29,417 238,865 90,665 358,947


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33. KEY OPERATING SUBSIDIARIES

Below is the list of significant subsidiaries. The principal areas of operations are the countries of incorporation.

Name Registered office Country of incorporation

Proportion held by: Company/subsidiary Principal activity

One Fifty One Capital Ltd * i Ireland 100% Investment Company

One51 Holdings Ltd* i Ireland 100% Intermediate Holding Company

One51 ES Plastics Ltd i Ireland 100% Manufacturer of Plastic Products

One51 ES Plastics (UK) Ltd ii United Kingdom 100% Manufacturer of Plastic Products

Straight Ltd iii United Kingdom 100% Manufacturer of Plastic Products

Protech Performance Plastics iv China 100% Manufacturer of Plastic Products

IPL Inc. v Canada 66.67% Manufacturer of Plastic Products

Encore Industries, Inc. vi United States 66.67% Manufacturer of Plastic Products

IPL USA, Inc. vii United States 66.67% Manufacturer of Plastic Products

Macro Plastics, Inc. viii United States 66.67% Manufacturer of Plastic Products

Ampthill Metal Company Ltd ix United Kingdom 100% Metal Recycling

(i) Registered Office is Huguenot House, 35-38 St. Stephen’s Green, Dublin 2.

(ii) Registered Office is Denis House, Mariner, Lichfield Road Industrial Estate, Tamworth, Staffordshire, B79 7UL, United Kingdom.

(iii) Registered Office is Somerdon Road, Hull, HU9 5PE, United Kingdom.

(iv) Registered Office is Building K, No. 1688 Zhuan Xing Road, Xin Zhuang Industry Park, Minhang District, Shanghai, China.

(v) Registered Office is 4100-1155 boul, René-Lévesque O, Montréal (Québec), H3B 3V2, Canada.

(vi) Registered Office is 319 Howard Drive, Sandusky, Ohio 44870, United States.

(vii) Registered Office is 221 Bolivar Street, Jefferson City, MO 65101.

(viii) Registered Office is 2250 Huntington Drive, Fairfield, California, United States.

(ix) Registered Office is Ampthill Metal Company Ltd, Station Road Industrial Estate, Ampthill, Bedford, MK45 2QY, United Kingdom.

* Held directly by Company. All other subsidiaries included in the table above are held indirectly.

A full list of subsidiaries will be filed with the relevant Registrar of Companies.


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34. COMMITMENTS

(a) Capital commitments Future capital expenditure approved by the directors but not provided for in these financial statements is as follows:

2017 2016€’000 €’000

Contracted 21,005 16,732

Authorised but not contracted 24,973 34,878

Total 45,978 51,610

The total amount of authorised capital expenditure represents the budgeted capital expenditure for 2018 as approved by IPL Plastics plc Board of Directors.

The prior year amounts above include amounts for disposal groups classified as held-for-sale. At 31 December 2016, contracted future capital expenditure includes an amount of €0.5 million attributable to discontinued operations. At 31 December 2016, authorised but not contracted capital expenditure includes €1.3 million attributable to discontinued operations.

(b) Leases as lessee The Group has entered into a number of leases in respect of properties from which certain businesses operate. The expiry dates of these leases range from 1 year to 13 years.

Annual commitments exist under non cancellable operating leases as follows:

(i) Future minimum lease paymentsAt 31 December, the future minimum lease payments under non-cancellable leases were payable as follows:

2017 2016€’000 €’000

Less than one year 3,164 4,694

Between one and five years 9,126 11,193

More than five years 7,633 7,358

Total 19,923 23,245

The prior year amounts above include amounts for disposal groups classified as held-for-sale. At 31 December 2016, €6.2 million of the total future minimum lease payments is attributable to discontinued operations.

(ii) Amounts recognised in profit or loss

2017 2016€’000 €’000

Lease expense 3,638 4,913

Lease expense for the year ended 31 December 2016 includes €1.4 million attributable to discontinued operations.

(c) Leases as lessor(i) Future minimum lease paymentsAt 31 December, the future minimum lease payments under non-cancellable leases were receivable as follows:

2017 2016€’000 €’000

Less than one year 139 122

Between one and five years 520 480

More than five years 390 503

Total 1,049 1,105


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(ii) Amounts recognised in profit or loss

2017 2016€’000 €’000

Income-generating property 141 30

(d) Contingent liabilities – Funding arrangementsAt 31 December 2017, the Group had Letters of Credit in place amounting to €0.9 million (2016: €2.3 million).

(e) Subsidiary undertakingsAs permitted by Section 357 (1) (6) of the Companies Act 2014, the Company has irrevocably guaranteed the liabilities of certain of its subsidiary undertakings incorporated in the Republic of Ireland.

The Company has also guaranteed the performance of certain contracts entered into by subsidiary companies and certain associated investment undertakings and has also guaranteed the payment of certain leases entered into by subsidiary companies.

35. FINANCIAL RISK MANAGEMENT

The following table shows the carrying amounts and fair values of financial assets and liabilities.

2017

Fair value through profit

or lossLoans and

receivables Available-for-

saleLiabilities at

amortised costTotal carrying

amount Fair value€’000 €’000 €’000 €’000 €’000 €’000

Available-for-sale financial assets (note 16) - - 3,422 - 3,422 3,422*

Trade and other receivables (note 19) - 70,197 - - 70,197 70,197

Derivative financial instruments (note 19) 1,104 - - - 1,104 1,104*

Cash and cash equivalents (note 20) - 39,697 - - 39,697 39,697*

1,104 109,894 3,422 - 114,420 114,420

Trade and other payables (note 24) - - - (76,839) (76,839) (76,839)*

Bank borrowings (note 23) - - - (238,571) (238,571) (238,571)

Subordinated term borrowings (note 23) - - - (29,417) (29,417) (29,417)

Finance lease liabilities (note 23) - - - (294) (294) (294)

Deferred contingent consideration (note 28) (119,755)** - - (51) (119,806) (119,806)*

Convertible loan note (note 25) - - - (1,622) (1,622) (300)

(119,755) - - (346,794) (466,549) (465,227)


34. COMMITMENTS (CONTINUED)

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2016

Fair value through profit

or loss Loans and

receivables Available-for-

saleLiabilities at

amortised cost Total carrying

amount Fair value€’000 €’000 €’000 €’000 €’000 €’000

Available-for-sale financial assets (note 16) - - 5,519 - 5,519 5,519*

Trade and other receivables (note 19) - 50,879 - - 50,879 50,879*

Derivative financial instruments (note 19) 17 - - - 17 17*

Cash and cash equivalents (note 20) - 39,350 - - 39,350 39,350*

17 90,229 5,519 - 95,765 95,765

Trade and other payables (note 24) - - - (51,854) (51,854) (51,854)*

Bank borrowings (note 23) - - - (156,795) (156,795) (156,795)

Subordinated term borrowings (note 23) - - - (31,099) (31,099) (31,099)

Deferred contingent consideration (note 28) (72,230)** - - (408) (72,638) (72,638)*

Convertible loan note (note 25) - - - (1,622) (1,622) (300)

(72,230) - - (241,778) (314,008) (312,686)

* These are valued at fair value or deemed to be carried at an amount equivalent to fair value.** This is the liability in respect of the Put Option arising from the IPL acquisition. All movements in fair value are accounted for through Equity.

The Group has availed of the exemption under IFRS 7 Financial Instruments: Disclosure for additional disclosures where fair value closely approximates carrying value.

Measurement of Fair ValuesSet out below are the major methods and assumptions used in estimating the fair values of the financial assets and liabilities disclosed in the preceding table.

Available-for-sale financial assetsDetails of fair values are provided in greater detail in note 16.

Cash and cash equivalentsFor cash and cash equivalents, which have a maturity of less than three months, the carrying amount is deemed to reflect fair value.

Trade and other receivables/trade and other payablesFor receivables and payables with a remaining life of less than six months or demand balances, the carrying value less impairment provision, where appropriate, is deemed to reflect fair value.

Derivative financial assets (forward contracts)Forward currency contracts are valued using quotes from third parties on forward exchange rates at the statement of financial position date.

Interest-bearing loans and borrowings including bank overdraftsVariable interest rates are applied on interest-bearing loans and borrowings and accordingly the carrying value is deemed to reflect fair value.

Finance lease liabilities and deferred contingent consideration Fair value is based on the present value of future cash flows discounted at market rates.


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35. FINANCIAL RISK MANAGEMENT (CONTINUED)

Fair Value HierarchyThe Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

At 31 December 2017 and 31 December 2016, the Group recognised and measured the following financial instruments at fair value:

2017

Level 1 Level 2 Level 3 TotalAssets measured at fair value €’000 €’000 €’000 €’000

Available-for-sale

Available-for-sale financial assets 3,389 - 33 3,422

At fair value through profit or loss

Foreign exchange contracts - 1,104 - 1,104

Liabilities measured at fair value

At fair value through equity

Deferred contingent consideration – Put Liability - - (119,755) (119,755)

2016

Assets measured at fair valueLevel 1 Level 2 Level 3 Total

€’000 €’000 €’000 €’000

Available-for-sale

Available-for-sale financial assets 4,244 - 1,275 5,519

At fair value through profit or loss

Foreign exchange contracts - 17 - 17

Liabilities measured at fair value

At fair value through equity

Deferred contingent consideration Put Liability - - (72,230) (72,230)

Level 2 fair values (items at fair value through profit or loss)

Type Valuation technique Significant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurement

Forward exchange contracts

Market comparison techniques: The fair values are based on third party quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments.

Not applicable Not applicable

Details regarding level 1 to 3 fair values for available-for-sale financial assets are included in note 16.


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Risk ExposuresThe Group’s operations expose it to various financial risks. The Group has a risk management programme in place which seeks to limit the impact of these risks on the financial performance of the Group and it is the policy to manage these risks in a non-speculative manner.

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

• Equity price risk

This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies and processes for measuring and managing the risk. Further quantitative disclosures are included throughout this note.

Credit riskCredit risk arises from credit to customers arising on outstanding receivables and outstanding transactions as well as cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Group has detailed procedures for monitoring and managing the credit risk related to its trade receivables based on experience, customers’ track record and historic default rates and the Group uses credit insurance where available on reasonable commercial terms. Individual risk limits are generally set by customer and risk is only accepted above such limits in defined circumstances. The utilisation of credit limits is regularly monitored.

Cash and short term bank deposits are invested with institutions having considered their credit rating, with limits on amounts held with individual banks or institutions at any one time.

Regarding the Group’s cash and cash equivalents, the credit ratings of the institutions in which cash is deposited was BBB- or above at year end based on Standard & Poor’s ratings (2016: BBB or above).

The carrying amount of financial assets, net of impairment provisions represents the Group’s maximum credit exposure. The maximum exposure to credit risk at year end was as follows:

Carrying amount

2017

Carrying amount

2016€’000 €’000

Cash and cash equivalents (note 20) 39,697 39,350

Trade and other receivables 70,197 50,879

109,894 90,229


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Trade and other receivablesThe Group has detailed procedures for monitoring and managing the credit risk related to its trade and other receivables. Trade and other receivables are monitored by geographic region and by largest customers/counterparties. The maximum exposure to credit risk for trade and other receivables (net of provisions) at the reporting date by geographic region was as follows:

2017 2016€’000 €’000

Ireland 9,666 2,785

UK 10,508 13,152

Canada 19,714 11,847

USA 27,123 19,249

Rest of Europe 151 66

Rest of World 3,035 3,780

Total 70,197 50,879

Included in the Group’s trade and other receivables are balances of €14.7 million (2016: €5.4 million) which are past due at the reporting date but not impaired. The aged analysis of the Group’s trade and other receivables are as follows:

2017 2016€’000 €’000

Within credit terms 55,522 45,488

Outside of credit terms within 3 months 16,334 8,939

Outside of credit terms greater than 3 months 2,363 644

Total 74,219 55,071

Trade and other receivables which are not past due nor impaired at the reporting date are expected to be fully recoverable.

The movement in the provision for impairment of trade and other receivables during the year is as follows:

2017 2016€’000 €’000

Trade and other receivables provision at the start of the year (4,192) (6,084)

Movement

Amounts (written back)/written off during the year (1) 1,259

Decrease in provision 171 633

Trade and other receivables provision at the end of the year (4,022) (4,192)

Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting its obligations with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Compliance with the Group’s quarterly (IPL facility) and bi-annual (Irish facility) debt covenants is monitored continuously based on the management accounts. Sensitivity analysis using various scenarios is applied to forecasts to assess their impact on covenants and net debt.



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The following are the contractual maturities of the financial liabilities:

2017

Carrying amount

Contractual cash flows

6 months or less 6-12 months 1-2 years 2-5 years >5 years

€’000 €’000 €’000 €’000 €’000 €’000 €’000

Bank borrowings (238,571) (273,041) (10,259) (12,850) (25,562) (224,309) (61)

Subordinated term borrowings (29,417) (40,932) (2,604) (2,548) (5,297) (30,483) -

CLN principal (1,622) (2,287) (133) - (133) (399) (1,622)

Finance lease liabilities (294) (294) (48) (48) (91) (107) -

Deferred contingent consideration (119,806) (167,917) (51) - - (167,866) -

Trade and other payables (76,839) (76,839) (76,237) (381) (221) - -

Total (466,549) (561,310) (89,332) (15,827) (31,304) (423,164) (1,683)

2016

Carrying amount

Contractual cash flows

6 months or less 6-12 months 1-2 years 2-5 years >5 years

€’000 €’000 €’000 €’000 €’000 €’000 €’000

Bank borrowings (156,795) (184,148) (15,906) (7,114) (15,914) (145,149) (65)

Subordinated term borrowings (31,099) (46,009) (1,586) (2,760) (5,342) (16,359) (19,962)

CLN principal (1,622) (2,287) (133) - (133) (399) (1,622)

Deferred contingent consideration (72,638) (112,079) (153) (153) (102) (111,671) -

Trade and other payables (51,854) (51,854) (50,880) (292) (682) - -

Total (314,008) (396,377) (68,658) (10,319) (22,173) (273,578) (21,649)

Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of the Group’s risk management strategy is to manage and control market risk exposures within acceptable parameters.

Currency riskForeign exchange risk arises from foreign currency transactions, assets and liabilities. These currency risks are monitored by management on a regular basis. The Group is mainly exposed to the foreign currency exchange rate differences between euro and the Canadian Dollar, US Dollar and Pound Sterling.

The Group is also exposed to foreign currency risk on retranslation of its foreign currency operations in the US, Canada, China and the UK from their functional currencies of US Dollar, Canadian Dollar, Chinese Renminbi and Pound Sterling into the euro presentation currency.


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Exposure to currency riskThe Group’s exposure to transactional (excludes non-current balances) foreign currency risk is as follows:

EUR GBP USD RMB CAD Total€’000 €’000 €’000 €’000 €’000 €’000

2017

Trade and other receivables 310 10,723 32,026 152 12,834 56,045

Cash and cash equivalents 297 12,090 24,037 504 1,346 38,274

Bank borrowings - (10,595) (1,600) - (10,033) (22,228)

Trade and other payables (4,287) (10,877) (42,307) (2,272) (28,207) (87,950)

Total (3,680) 1,341 12,156 (1,616) (24,060) (15,859)

2016

Trade and other receivables 521 12,470 22,870 301 6,724 42,886

Cash and cash equivalents 581 7,212 19,295 1,348 2,630 31,066

Bank borrowings - (10,975) - - - (10,975)

Trade and other payables (1,310) (9,884) (20,355) (3,441) (14,995) (49,985)

Total (208) (1,177) 21,810 (1,792) (5,641) 12,992

Sensitivity AnalysisA 5% strengthening or weakening in the euro against Sterling, the Canadian Dollar, the US Dollar or Chinese Renminbi, based on outstanding financial assets and liabilities at 31 December 2017 and 31 December 2016, would have increased/(decreased) other comprehensive income and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

2017

5% strengthening 5% strengthening 5% weakening 5% weakeningIncome

statementOther comprehensive

incomeIncome


income€’000 €’000 €’000 €’000

Sterling (127) 228 121 (239)

US Dollar (608) (563) 579 579

CAD Dollar 1,203 (5,751) (1,146) 6,052

Renminbi 81 (171) (77) 180

2016

5% strengthening 5% strengthening 5% weakening 5% weakeningIncome


incomeIncome


income€’000 €’000 €’000 €’000

Sterling 59 (432) (56) 453

US Dollar (1,091) (326) 1,039 341

CAD Dollar 282 (4,690) (269) 4,926

Renminbi 90 (269) (85) 282



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Interest Rate RiskThe Group holds both interest bearing assets and interest bearing liabilities. In general, the approach employed by the Group to manage its interest exposure is to maintain the majority of its cash, short term bank deposits and interest bearing borrowings on fixed and floating rates. Rates are generally fixed for relatively short periods in order to match funding requirements while being able to benefit from opportunities due to movement in longer term rates.

At year end, the interest rate profile of interest-bearing financial instruments was:

Carrying amount 2017

Carrying amount 2016

€’000 €’000

Fixed rate instruments

Convertible Loan Notes (1,622) (1,622)

Bank borrowings (32,164) (36,263)

Subordinated term debt (29,417) (31,099)

Finance lease liabilities (294) -

Total fixed rate instruments (63,497) (68,984)

Variable rate instruments

Cash and cash equivalents 39,697 39,350

Bank borrowings (206,407) (120,532)

Total variable rate instruments (166,710) (81,182)

Total (230,207) (150,166)

Cash flow sensitivity analysis for variable rate instrumentsAt 31 December 2017, the average interest rate being earned on the Group’s cash and cash equivalents was nil% (2016: nil%). At 31 December 2017, the average interest rate being paid on the Group’s borrowings was 4.73% (2016: 4.29%). The effects of an increase or decrease of 50 basis points in interest rates at the reporting date would have had the following effect on the income statement and other comprehensive income as can be seen from the table below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

2017

50 basis point increase 50 basis point increase 50 basis point decrease 50 basis point decreaseIncome statement

€’000Other comprehensive income

€’000Income statement


€’000

(834) - 834 -

2016

50 basis point increase 50 basis point increase 50 basis point decrease 50 basis point decreaseIncome statement


€’000Income statement


€’000

(406) - 406 -


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Accounting for derivativesDerivative financial instruments are measured at fair value at inception and at each reporting date, with the movement recognised in the income statement. The fair value of derivatives at the statement of financial position date is set out in the following table:

Assets 2017

Liabilities2017

Assets 2016

Liabilities2016

Derivatives classified at fair value through the income statement €’000 €’000 €’000 €’000

Forward currency contracts 1,104 - 17 -

36. RELATED PARTIES

The consolidated financial statements include the financial statements of the Company and subsidiaries as documented in the accounting policies in note 1. A listing of the principal subsidiaries is provided in note 33.

All transactions are entered into under the normal course of business on an arm’s length basis. Sales to and purchases from, together with outstanding payables and receivables to and from subsidiaries are eliminated in the preparation of the consolidated financial statements. IAS 24 Related Party Disclosures requires the disclosure of compensation paid to the Group’s key management personnel (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the Group). This comprises its Board of Directors which manages the business and affairs of the Group. Details of the Directors of the Company are given on pages 58 to 59. Director remuneration amounted to:

2017 2016€’000 €’000

Remuneration (including basic salary and benefits in kind) 955 786

Bonus amounts to Executive Directors 697 428

Other remuneration including pension contributions 86 89

Fees to Non-Executive Directors 272 278

Share based payment expense 343 230

Total 2,353 1,811

The Report of the Remuneration Committee on Directors’ Remuneration on pages 74 to 80 outlines the remuneration entitlements of the Board of Directors in more detail and also includes details of transactions in relation to share based payments. Their beneficial interests, including family interests, are also given in this report together with Directors’ share options.

During the year, 250,000 shares were exercised by an Executive Director which related to the 2012/2013 grants under the One Fifty One Group Share Option Scheme 2006. The grant price of these shares was €0.20 and the market value of the shares at the date of exercise was €1.85 which resulted in a gain of €412,500 for the Director at the date of exercise.

Transactions with equity-accounted investees Under IAS 24, the Group had a related party relationship with its associate undertaking, Altas Investments plc during the current and prior year.

The following transactions took place during the year between the Group and Altas Investments plc:

• Amounts totalling €30,000 (2016: €32,500) were paid to the Group by Altas for fees relating to Alan Walsh’s membership of that company’s Board of Directors. No amounts were owing at year end (2016: €Nil).

• During the year, the Group received a dividend of €5.3 million (2016: €0.2 million) from Altas.



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Transactions with non-controlling shareholders of subsidiary undertakingsIPL Inc., the Canadian subsidiary undertaking in which the Group has a 66.67% controlling shareholding has drawn down subordinated term debt from its two non-controlling interest parties, Caisse de dépôt et placement du Québec (“CDPQ”) and Fonds de solidarité des travailleurs du Québec (“FSTQ”). CDPQ, a 22.2% shareholder in IPL Inc., has advanced subordinated term debt of CAD$20 million to IPL Inc., while FSTQ, an 11.1% shareholder, has advanced subordinated term debt of CAD$15 million to IPL Inc. The loans accrue interest at 10% per annum and interest is repayable on a monthly basis to each lender in proportion to their lending. The interest charge in the year to 31 December 2017 was €2.4 million (2016: €2.4 million). At year end, principal amounts owing to CDPQ was €13.3 million (2016: €14.1 million) while the principal amount owing to FSTQ was €10.0 million (2016: €10.6 million). No interest amounts were outstanding at year end (2016: €Nil). The debentures were to be repaid in equal quarterly instalments, starting 30 September 2017. No amounts were repaid during 2017 as conditions necessary for repayment were not met. Starting from 30 September 2017 and ending at 30 June 2019, there is a repayment of 7.5% of the principal amount annually. Starting at the 30 September 2019 fiscal quarter and ending at the 30 June 2022 fiscal quarter, there is a repayment of 10% the principal amount annually. The unpaid balance of the debentures shall be repayable in full on the earliest of the following: (i) the 84th month after the issuance date (23 July 2022); (ii) upon acceleration of the debenture in the event of a default; and (iii) the date in which the debenture holder ceases to be a shareholder of the Company.

Both CDPQ and FSTQ have equity investments in IPL Inc. of CAD$29 million and CAD$19.5 million respectively. As explained in note 28, the anticipated acquisition method has been applied by the Group in respect of the IPL Inc. acquisition meaning that no non-controlling interests are recognised in the Income Statement or Statement of Financial Position. Instead, due to the presence of a Put option in the Shareholders’ Agreement between IPL Plastics plc and the non-controlling interest parties, a Put Liability is recognised in non-current liabilities in the statement of financial position. At year end, the fair value of this Put Liability was €119.8 million (2016: €72.2 million), with €79.8 million (2016: €48.2 million) ascribed to CDPQ and €39.9 million (2016: €24.1 million) ascribed to FSTQ. On 6 December 2017, shareholders approved a reorganisation of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders equity interests in IPL Inc. for shares in the Company. On 28 February 2018, the minority shareholders equity interests in IPL Inc. were exchanged for 47,238,242 shares in IPL Plastics plc. This was in accordance with the resolutions approved by the shareholders on 6 December 2017 and results in the cancellation of the Put Liability.

37. COMPARATIVE AMOUNTS

Comparative amounts have been regrouped, where necessary, on the same basis as in the current year.

38. POST BALANCE SHEET EVENTS


Since the year-end, the Aryzta AG share price has lost approximately 40% of its value, with the share price decreasing from €33.10 at 31 December 2017 to €19.82 at 7 March 2018. This would result in a reduction of the investment in Aryzta AG by €1.3 million and result in an equivalent negative equity reserve. There is no change to the current year financial statements as this is a non-adjusting event after the reporting period under IAS 10 Events after the Reporting Period.


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Company Statement of Financial Position As at 31 December 2017

2017 2016Note €’000 €’000

Assets

Financial fixed assets 39 127,806 127,835

Non-current assets 127,806 127,835


Cash and cash equivalents 41 66 1,256

Current assets 46,574 19,513

Total assets 174,380 147,348

Equity

Share capital 1,586 1,571

Share premium 89,079 88,587

Reserves 278 (68)

Retained earnings 63,548 43,035

Total equity 154,491 133,125

Liabilities


Non-current liabilities 13,648 7,864


Current liabilities 6,241 6,359

Total liabilities 19,889 14,223

Total equity and liabilities 174,380 147,348



Interim Chairman Director


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Company Statement of Changes in EquityFor the years ended 31 December 2017 and 2016

Share capitalShare

premium

Share based payment reserve

Treasury shares


reserveRetained earnings Total

€’000 €’000 €’000 €’000 €’000 €’000 €’000

Balance at 1 January 2017 1,571 88,587 1,157 (1,303) 78 43,035 133,125

Total comprehensive income

Profit for the year - - - - - 20,372 20,372

Total comprehensive income - - - - - 20,372 20,372

Contributions and distributions

Reclassification from share based payment reserve to retained earnings – forfeited options - - (9) - - 9 -

Equity settled share based payments – movement in year - - 487 - - - 487

Issue of Ordinary Shares – exercise of share options 15 492 (132) - - 132 507

Total contributions and distributions 15 492 346 - - 141 994

Balance at 31 December 2017 1,586 89,079 1,503 (1,303) 78 63,548 154,491

Share capitalShare

premium

Share based payment reserve

Treasury shares


reserveRetained earnings Total

€’000 €’000 €’000 €’000 €’000 €’000 €’000

Balance at 1 January 2016 1,570 88,577 708 (1,303) 78 42,376 132,006

Total comprehensive income

Profit for the year - - - - - 652 652

Total comprehensive income - - - - - 652 652

Contributions and distributions

Equity settled share based payments – options lapsed - - (3) - - 3 -

Equity settled share based payments – movement in year - - 456 - - - 456

Issue of Ordinary Shares – exercise of share options 1 10 (4) - - 4 11

Total contributions and distributions 1 10 449 - - 7 467

Balance at 31 December 2016 1,571 88,587 1,157 (1,303) 78 43,035 133,125


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2017 2016€’000 €’000

Profit for the year 20,372 652

Adjustments for:

– Exchange differences (152) (710)

– Net finance costs 133 133

– Tax paid (11) (11)

– Decrease in long term provisions (1,791) -

– Loss on sale of subsidiaries 130 -

– Increase in receivable from subsidiary undertaking - (78)

– Reversal of impairment (18,708) -

– Cash dividend received (1) -

Net cash flows from operating activities before working capital movements (28) (14)

Changes in:

– Trade and other receivables (1,573) 496

– Trade and other payables 36 767

Net cash flows from operating activities (1,565) 1,249

Cash flows from investing activities

– Dividends received from subsidiaries 1 -

Net cash flows used in investing activities 1 -

Cash flows from financing activities

Finance costs paid (133) (133)

Issuance of new shares 507 11

Net cash used in financing activities 374 (122)

Net (decrease)/increase from in cash and cash equivalents (1,190) 1,127

Cash and cash equivalents at 1 January 1,256 129

Cash and cash equivalents at 31 December 66 1,256

Company Statement of cash flows For the year ended 31 December 2017

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39. FINANCIAL FIXED ASSETS

Investments in subsidiaries

Unlisted investments Total

2017 €’000 €’000 €’000

Opening balance at 1 January 2017 127,830 5 127,835

Additional investment in subsidiaries 101 - 101

Disposal of investment in subsidiaries (130) - (130)

Closing balance at 31 December 2017 127,801 5 127,806

Investments in subsidiaries

Unlisted investments Total

2016 €’000 €’000 €’000

Balance at 1 January and 31 December 2016 127,830 5 127,835

The investments included above represent investments in subsidiaries and unlisted equity securities. The principal subsidiaries are set out in note 33.

Unlisted investments include investments in shares and are carried at fair value. The valuation technique used to value the fair value of the unlisted investments is set out in note 16.

40. TRADE AND OTHER RECEIVABLES

2017 2016 €’000 €’000

Current

Amounts due from subsidiary undertakings 46,484 18,257

Other debtors and prepayments 24 -

46,508 18,257

During the year, as part of a Group restructuring process, a loan amount due from a subsidiary undertaking which had been impaired in a prior period, was settled and as a result a credit of €18.7 million was recognised in the profit for the year (2016: €Nil).

41. CASH AND CASH EQUIVALENTS

2017 2016 €’000 €’000

Cash on hand 66 1,256


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42. TRADE AND OTHER PAYABLES

2017 2016 €’000 €’000

Non current

Deferred dividends 12,026 6,242

Convertible loan note principal classed as debt (i) 1,622 1,622

13,648 7,864

2017 2016 €’000 €’000

Current

Amounts due to subsidiary undertakings 6,014 6,104

Convertible loan note accrued interest (i) 212 212

Other payables 15 43

6,241 6,359

(i) The convertible loan note amounts are unchanged from the consolidated amounts shown in note 25.

43. RELATED PARTY TRANSACTIONS

The Company has a related party relationship with its subsidiaries and with the Board of Directors. Details of the remuneration of the Company’s individual Directors, together with their shareholdings and outstanding share options are set out in the Report of the Remuneration Committee on Directors’ Remuneration on pages 74 to 80.

The Company is availing of the exemption in IAS 24 Related Party Disclosures not to disclose transactions with fellow Group companies.

44. CAPITAL COMMITMENTS AND CONTINGENCIES

The Company has no capital commitments as at 31 December 2017 (2016: €Nil).

As permitted by Section 357 (1) (6) of the Companies Act 2014, the Company has irrevocably guaranteed the liabilities of certain of its subsidiary undertakings incorporated in the Republic of Ireland.

The Company has guaranteed the performance of certain contracts entered into by subsidiary companies and certain associated investment undertakings and has also guaranteed the payment of certain leases entered into by subsidiary companies.

The Company has also provided a fixed and floating charge over its assets related to certain bank borrowings of subsidiary undertakings.

45. STATUTORY AND OTHER INFORMATION

Auditor’s remuneration

2017 2016 €’000 €’000

Audit 10 10

Tax advisory work 1 1

Directors’ remuneration - -

The Directors’ remuneration is paid by another Group entity (2016: same).

Notes to the Company Financial Statements (continued)

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46. FINANCIAL INSTRUMENTS AND FINANCIAL RISK

2017

Loans and receivables

2017

Liabilities at amortised cost

2017 Total Fair value€’000 €’000 €’000 €’000

Amounts due from subsidiary undertakings 46,484 - 46,484 46,484

Other debtors and prepayments 24 - 24 24

Cash and cash equivalents 66 - 66 66

46,574 - 46,574 46,574

Non current

Trade and other payables - 13,648 13,648 13,648

Current


- 19,889 19,889 19,889

2016

Loans and receivables

2016

Liabilities at amortised cost

2016 Total Fair value€’000 €’000 €’000 €’000

Amounts due from subsidiary undertakings 18,257 - 18,257 18,257

Cash and cash equivalents 1,256 - 1,256 1,256

19,513 - 19,513 19,513

Non current


Current


- 14,223 14,223 14,223

The Company has the same risk exposures as those of the Group as outlined in note 35.

The Group has availed of the exemption under IFRS 13 Fair Value Measurement for additional disclosures where fair value closely approximates carrying value.

Credit riskThe €46,484,000 (2016: €18,257,000) within trade and other receivables on page 163 relates entirely to amounts due from subsidiary undertakings. All amounts are repayable on demand. The €66,000 (2016: €1,256,000) of cash and cash equivalents is managed in accordance with the overall Group credit risk policy as outlined in note 35.

Liquidity riskThe €6,241,000 (2016: €6,359,000) within current trade and other payables are all due for payment within 6 months of the statement of financial position date or on demand in the case of amounts due to subsidiary undertakings.

Currency riskThe majority of financial assets and liabilities are denominated in euro (the functional currency of the Company) and hence there is minimal currency risk present at year end.


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Notes to the Company Financial Statements(continued)

47. POST BALANCE SHEET EVENTS


48. APPROVAL OF FINANCIAL STATEMENTS

The Directors approved these financial statements on 8 March 2018.

166

Directors and Other Information

NON-EXECUTIVE INTERIM CHAIRMAN

Hugh McCutcheon

EXECUTIVE DIRECTORS

Alan Walsh (Chief Executive)Pat Dalton (Chief Financial Officer)

NON-EXECUTIVE DIRECTORS

Rose HynesGeoff MeagherAlain Tremblay COMPANY SECRETARY

Susan Holburn

BOARD COMMITTEES AS AT 31 DECEMBER 2017

Audit CommitteeGeoff Meagher (Chair)Rose HynesHugh McCutcheon

Nominations CommitteeHugh McCutcheon (Chair)Alan Walsh (Executive)Rose Hynes

Remuneration CommitteeHugh McCutcheon (Chair)Geoff MeagherRose Hynes

PRINCIPAL BANKERS

Allied Irish Banks plcBank of Ireland Group HSBC Bank plcUlster Bank Ireland LimitedNational Bank of CanadaBank of MontrealCaisse Centrale DesjardinsRoyal Bank of CanadaLaurentian Bank of CanadaExport Development Canada

SOLICITORS

LK Shields40 Upper Mount StreetDublin 2

McCann FitzGerald Riverside OneSir John Rogerson’s QuayDublin 2

Stikeman Elliott LLP1155 Boulevard René-Lévesque Ouest Montreal, QC H3B 3V2 Canada

AUDITOR

KPMGChartered Accountants1 Stokes PlaceSt. Stephen’s GreenDublin 2

REGISTERED OFFICE

Huguenot House35-38 St. Stephen’s GreenDublin 2


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Information for Shareholders

INVESTOR RELATIONS ENQUIRIES

For investor relations enquiries, please contact Pat Dalton or Joe McNabb:

Pat DaltonChief Financial OfficerT: +353 (0)1 612 1377

Joe McNabbGroup Head of Treasury & Business PlanningT: +353 (0)1 612 1377

Alternatively write to:Investor Relations IPL Plastics plcHuguenot House35-38 St Stephen’s GreenDublin 2Ireland

SHARE PRICE AND RELATED SERVICES

In October 2007, a ‘grey’ market was established to allow shareholders to trade their investment in IPL Plastics. This market allows existing shareholders to realise value and provides prospective investors with an opportunity to share in IPL Plastics’ future success.

The market price of the shares at 31 December 2017 was €2.05 and the range during the year was €1.35 to €2.40.

The following stockbrokers currently administer IPL Plastics plc’s ‘grey’ market:

DavyDavy House49 Dawson StreetDublin 2Ireland+353 (0)1 679 7788Email: [email protected]

InvestecThe Harcourt Building Harcourt StreetDublin 2Ireland+353 (0)1 421 0000Email: [email protected] GoodbodyBallsbridge ParkBallsbridgeDublin 4Ireland1850 64 74 84/+353 (0) 1 641 0432Email: [email protected]

Merrion Capital Group (Dublin)Heritage House23 St Stephen’s GreenDublin 2Ireland+353 (0)1 240 4100Email: [email protected]

Cantor Fitzgerald75 St. Stephen’s GreenDublin 2Ireland+353 (0)1 6333 633Email: [email protected]

168

SHAREHOLDING ENQUIRY SERVICES

IPL Plastics plc in connection with its Registrars, Computershare, offers a shareholding enquiry service to its shareholders. This allows shareholders to:

• Check details of their IPL Plastics plc shareholdings; and

• Receive forms in order to notify the Registrar of a change in personal details, for example, address, amalgamation of separate accounts etc.

As a security measure you will be asked for your “Shareholder Reference” number. This is your shareholder account number and may be found on:

• Your IPL Plastics plc Share Certificate(s); and

• Other personalised correspondence sent to you by the Registrar.

Computershare may be contacted online at www.computershare.com. Computershare also provides information by telephone. The dedicated enquiry line for IPL Plastics plc investors is: +353 (0)1 447 5526.

Please note that IPL Plastics plc is not responsible for the information provided by Computershare or any third party.

Annual Report& Accounts2017

IPL Plastics plc(formerly One Fifty One plc)

IPL Plastics plcHuguenot House35-38 St Stephen’s GreenDublin 2Ireland

T: +353 (0) 1 612 1151F: +353 (0) 1 612 1210E: [email protected]

www.iplplastics.com

& accounts 2017/media/files/i/ipl-plastics-plc/...ipl plastics plc (“the company”), formerly...

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