ardagh group s.a. equity research

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

10 April 2017Europe/Luxembourg

Equity ResearchMetal & Glass Containers

Ardagh Group S.A. (ARD.N)

INITIATION Rating OUTPERFORMPrice (07 Apr 17, US$) 21.86Target price (US$) 26.00Market Cap (US$ m) 5,166.1Enterprise value (US$ m) 12,444.7Target price is for 12 months.[V] = Stock Considered Volatile (see Disclosure Appendix)

Research AnalystsLars Kjellberg

46 8 5450 [email protected]

Specialist Sales: James Brady44 20 7888 4267

[email protected]

Stable, Predictable and Cash Generative; Initiate Coverage with Outperform Rating■ We initiate coverage of Ardagh Group with an Outperform rating and a $26

target price. ■ Ardagh is focused on consumer-driven end markets (Food & Beverage: 92%

of revenue). Of its revenues, 93% is derived from Europe and North America, mature markets characterized by stable supply and demand and consolidated industry structures where the top three producers' market share average 80%. Of revenue, over two-thirds is under multi-year contracts, mainly with cost pass-through arrangements with the remainder largely pursuant to annual arrangements. We believe these characteristics form the basis of a stable and predictable revenue, earnings, and cash flow outlook.

■ Annual organic growth in Ardagh's end markets is expected to be <1%. We believe the company is positioned for organic growth 100bps ahead of the market due to an advantaged product mix and favorable geographic exposure and support from its engineering and innovation capabilities.

■ Ardagh has among the highest EBITDA cash conversions among its peers. We believe the combination of strong cash flow and management's stated priority to delever the balance sheet by 0.4x per year creates the possibility of 29% debt-to-equity accretion through 2019. To this should be added annual dividends yielding ~2.5% for a total 2017-19 TSR exceeding 35%, assuming unchanged valuation multiples. We believe this is attractive. Key risks to our thesis are raw material price and FX volatility.

■ Valuation: Our $26 target price is based on the average of three valuation methodologies: (1) applying an EV/EBITDA multiple of 8.6x on our estimate for 2017 EBITDA (25%), (2) applying a P/E multiple of 14.7x on our 2017 EPS (25%), and (3) our discounted cash flow analysis (50%).

Share price performance

A RD .N S& P 5 0 0 IN D EX

M ar - 1 7 M ar - 1 7 A p r - 1 72 1 .0

2 1 .5

2 2 .0

2 2 .5

2 3 .0

The price relative chart measures performance against the S&P 500 INDEX which closed at 2358.1 on 07/04/17On 07/04/17 the spot exchange rate was US$1.06/Eu 1.- Eu.94/US$1

Performance 1M 3M 12MAbsolute (%)Relative (%)

Financial and valuation metricsYear 12/16A 12/17E 12/18E 12/19ERevenue (€ m) 6,345.0 7,848.4 7,998.0 8,126.9EBITDA (€ m) 1,158.0 1,396.8 1,450.6 1,492.7Adjusted net income (€ m) 288.72 377.60 453.32 498.78CS EPS (adj.) (€) 1.23 1.61 1.94 2.13Prev. EPS (€)ROIC (%) 8.1 9.9 11.4 12.8P/E (adj.) (x) 16.6 12.7 10.6 9.6P/E rel. (%) 81.6 68.5 64.1 64.2EV/EBITDA (x) 10.5 8.3 7.8 7.2

Dividend (12/17E, €) 0.67 Net debt/equity (12/17E,%) -384.7Dividend yield (12/17E,%) 3.3 Net debt (12/17E, € m) 6,741.0BV/share (12/17E, €) -7.5 IC (12/17E, € m) 4,988.6Free float (%) 6.9 EV/IC (12/17E, (x) 2.3Source: Company data, Thomson Reuters, Credit Suisse estimates

10 April 2017

Ardagh Group S.A. (ARD.N) 2

Ardagh Group S.A. (ARD.N)Price (07 Apr 2017): US$21.86; Rating: OUTPERFORM; Target Price: US$26.00; Analyst: Lars KjellbergIncome statement (€ m) 12/16A 12/17E 12/18E 12/19ERevenue 6,345 7,848 7,998 8,127EBITDA 1,158 1,397 1,451 1,493Depr. & amort. (495) (616) (618) (621)EBIT 663 781 833 872Net interest exp. (402) (451) (399) (380)Associates - - - -PBT 261 330 433 492Income taxes (96) (121) (149) (162)Profit after tax 165 209 284 330Minorities -0 -0 -0 -0Preferred dividends - - - -Associates & other 124 169 169 169Net profit 289 378 453 499Other NPAT adjustments 0 0 0 0Reported net income 289 378 453 499Cash flow (€ m) 12/16A 12/17E 12/18E 12/19EEBIT 663 781 833 872Net interest (402) (451) (399) (380)Cash taxes paid - - - -Change in working capital 120 66 5 (9)Other cash and non-cash items 88 572 497 479Cash flow from operations 469 968 935 961CAPEX (318) (455) (450) (400)Free cashflow to the firm 151 513 485 561Acquisitions (2,685) 0 0 0Divestments 0 0 0 0Other investment/(outflows) 0 (40) (3) 0Cash flow from investments (3,003) (495) (453) (400)Net share issue/(repurchase) - - - -Dividends paid (270) (157) (126) (126)Issuance (retirement) of debt - - - -Cashflow from financing 2,704 (618) (612) (618)Changes in net cash/debt (1,403) 513 350 433

Net debt at start 5,851 7,254 6,741 6,391Change in net debt 1,403 (513) (350) (433)Net debt at end 7,254 6,741 6,391 5,958Balance sheet (€ m) 12/16A 12/17E 12/18E 12/19EAssetsTotal current assets 3,044 2,845 2,821 2,794Total assets 10,261 9,971 9,788 9,542LiabilitiesTotal current liabilities 1,845 1,857 1,968 1,989Total liabilities 12,319 11,724 11,382 10,932Total equity and liabilities 10,261 9,971 9,788 9,542Per share 12/16A 12/17E 12/18E 12/19ENo. of shares (wtd avg.) (mn) 234 234 234 234CS EPS (adj.) (€) 1.23 1.61 1.94 2.13Dividend (€) 1.15 0.67 0.54 0.54Free cash flow per share (€) 0.65 2.19 2.07 2.40Key ratios and valuation 12/16A 12/17E 12/18E 12/19EGrowth/Margin (%)Sales growth (%) 22.0 23.7 1.9 1.6EBIT growth (%) 24.9 17.8 6.6 4.7Net income growth (%) 16060.4 30.8 20.1 10.0EPS growth (%) 16060.4 30.8 20.1 10.0EBITDA margin (%) 18.3 17.8 18.1 18.4EBIT margin (%) 10.4 9.9 10.4 10.7Pretax profit margin (%) 4.1 4.2 5.4 6.0Net income margin (%) 4.6 4.8 5.7 6.1Valuation 12/16A 12/17E 12/18E 12/19EEV/Sales (x) 1.9 1.5 1.4 1.3EV/EBITDA (x) 10.5 8.3 7.8 7.2EV/EBIT (x) 18.3 14.8 13.5 12.4Dividend yield (%) 5.62 3.27 2.62 2.62P/E (x) 16.6 12.7 10.6 9.6Credit ratios (%) 12/16A 12/17E 12/18E 12/19ENet debt/equity (%) (352.5) (384.7) (400.9) (428.5)Net debt to EBITDA (x) 6.3 4.8 4.4 4.0Interest coverage ratio (x) 1.6 1.7 2.1 2.3

Company BackgroundArdagh Group is a leading global provider of value-added rigid packaging solutions. The company's products include metal and glass containers primarily for food and beverage markets.

Blue/Grey Sky Scenario

Our Blue Sky Scenario (US$) 31.00We run a blue sky scenario based on three variables coming together: (1) more bullish volume growth, up 300bps over the next 3 years; (2) a decline in long term operating expense growth rate driven by CAPEX projects that delivers structural cost improvements and margin expansion; (3) 100bps higher long term revenue growth.

Our Grey Sky Scenario (US$) 18.00For our grey sky scenario, we: (1) reduce near term volume growth by 400bps over the next 3 years and assume (2) increase in long term operating expense growth rate: assuming increasing cost inflation, leading to lower margins, and (3) 100bps lower long term revenue growth.

Share price performance

ARD.N S&P 500 INDEX

Mar- 17 Mar- 17 Apr- 1721.0

21.5

22.0

22.5

23.0

The price relative chart measures performance against the S&P 500 INDEX which closed at 2358.1 on 07/04/17On 07/04/17 the spot exchange rate was US$1.06/Eu 1.- Eu.94/US$1

Source: FTI, Company data, Thomson Reuters, Credit Suisse Securities (EUROPE) LTD. Estimates

10 April 2017


Six Key ChartsFigure 1: Predictable and Stable Revenue Base Focused on Consumer-Driven End Markets in Consolidated Glass & Metal Industries in Stable Geographies

Source: Company data.

Figure 2: Successful Track Record of Acquisitions Driving Superior Revenue and…

Figure 3: …EBITDA Growth and Margin Expansion from Synergies and Cost/Efficiency Initiatives

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Figure 4: Strong Cash Conversion* and…Figure 5: …Debt Reduction / Deleveraging Capacity and Possible Debt-to-Equity Accretion

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*(EBITDA-Capex)/Capex: 2014-2019E AverageSource: Company data, IBES, Credit Suisse research.

Source: Company data, Credit Suisse estimates

10 April 2017


ContentsSix Key Charts 3

Contents 4

Executive Summary 5

Packaging Industry 6

Organic Growth Drivers for Packaging 7

Ardagh and Its Markets 9

The BevCan Acquisition 23

Benchmarking Ardagh 25

Capital Allocation 30

Valuation 33

Financial Estimates 36

Financial Statements 38

Company Profile and Overview 41

IPO Structure and Ownership 48

Management Profile 49

Appendix 1: Credit Suisse PEERs 50

10 April 2017


Executive SummaryInitiating Coverage with an Outperform Rating and a $26 Target PriceArdagh Group is a leading global provider of value-added rigid packaging solutions. The company's products include metal and glass containers primarily for food and beverage markets. In 2016, pro forma for the BevCan acquisition, revenues were €7.6bn and EBITDA €1.3bn.

Stable & Predictable Ardagh is focused on consumer-driven end markets (Food & Beverage: 92% of revenue). Of its revenues, 93% is derived from Europe and North America, mature markets characterized by stable supply and demand and consolidated industry structures where the top three producers' market share average 80%. Ardagh generates 95% of its revenues in markets in which it is the #1, #2, or #3 player. Of revenue, over two-thirds is under multi-year contracts, mainly with cost pass-through arrangements and with the remainder largely pursuant to annual arrangements. We believe these characteristics form the basis of a stable and predictable revenue, earnings, and cash flow outlook.

Track Record of Successful AcquisitionsArdagh has been created through 23 acquisitions over the past 17 years. The acquisition strategy have been successful delivering superior revenue and EBITDA growth and margin expansion from synergies, capex-driven cost take-out, and efficiency improvements.

Capability to Exceed Market GrowthWhile underlying market growth in Ardagh's end markets is expected to be <1%, we believe the company is well positioned for organic growth 100bps ahead of the market. In beverage cans, we see growth ahead the market from Ardagh's strong presence (34% of volumes) in faster-growth specialty can markets and a dominant presence in the German market where the can is making a strong comeback. In food cans, Ardagh is well positioned from light-weighting trends and a potential food can technology shift in North America. In glass, we see possibility for market share gains supported by the company's light-weighting expertise, glass innovation capabilities, and comparatively large exposure to premium segments and smaller exposure to beer, where a long-term pack mix-change toward cans weighs on the volume outlook. The BevCan acquisition reduces the risk for Ardagh from possible beer pack mix-changes.

Potential for Debt-to-Equity Accretion and a DividendThe metal and glass packaging industries are generally highly cash generative, while Ardagh has among the highest cash conversions among its peers. We believe the combination of strong cash flow and management's stated priority to delever the balance sheet by 0.4x per year creates the possibility of significant debt-to-equity accretion. Through 2019, we see debt reduction in excess of €1.5bn, equal to 29% of the company's market capitalization. To this should be added annual dividends, yielding ~2.5% for a total 2017-19 TSR exceeding 35%, assuming unchanged valuation multiples. We believe this is highly attractive.

10 April 2017


Packaging IndustrySteady, Predictable, and Above Cost of Capital ReturnsThe global packaging industry is estimated by Smithers Pira to have reached a value of $839bn in 2015, up 3.3% on 2014. It is characterized by steady, relatively predictable growth with above cost of capital returns across the various packaging substrates. Smithers Pira forecasts the global packaging industry to grow by $186bn between 2014 and 2020 to reach $1,000bn.

Innovation is a significant driver and a key differentiator for success in the packaging market. Innovation is about finding new solutions that, for example, improve the protection of the packaged product, extend shelf-life, protect brands, and add attractive design features that catch customers' attention. Packaging design and innovation are also about improving the environmental footprint of packaging through the development of lighter-weight packaging (less raw material and lower transport costs), increased reuse and recycling, and the development of resalable packaging solutions to reduce food waste.

Metal packaging accounts for 14% of total packaging industry revenue and is forecast to be the third-fastest growing packaging material with a CAGR of 3.5% over 2015-2020 according to Smithers Pira. (Rigid plastics is #1 with a CAGR of 4.4%.) While glass packaging (7% of total packaging industry revenue) is forecast to have the lowest CAGR over 2015-2020 (1.7%). Emerging markets are expected to register a 2015-2020 CAGR of 5.5%, while Europe (Ardagh's main market) is expected to grow by around 3.6% p.a. over the same period.

Figure 6: Value Share of Global Packaging by Packaging Material, 2014

Figure 7: Global Packaging Revenue Growth by Packaging Material

Board30%

Flexible22%

Rigid plastic22%

Metal 14%

Glass7%

Other5%

0%

1%

2%

3%

4%

5%

Glass Other Board Metal Flexible Rigid plastic

2015-2020 average global CAGR 3.5%

Source: Smithers Pira, Credit Suisse research. Source: Smithers Pira, Credit Suisse research

10 April 2017


Organic Growth Drivers for PackagingOrganic growth opportunities are significant in emerging markets and still material in developed markets driven by demographic changes. Demographic changes that drive increased packaging demand are a rising and aging population, an increasing disposable incomes in developing countries, a growing number of small households, and urbanization trends. Packaging customers are looking for more sophisticated and distinctive packaging designs to stand out on the shelf and attract consumers to purchase the product. In emerging markets, increasing disposable incomes are driving demand for consumer products and the packaging solutions for these goods.

Other major drivers affecting growth and choices of packaging materials are sustainability and environmental issues and efficiency in the value chain. Figure 8 summarizes the drivers and trends in the global packaging market.

Figure 8: Trends and Drivers in Global Packaging Markets

Driver Trend ImpactDemography and Lifestyle Polarization of the consumers

- Emerging vs. mature market Emerging: need for basic packaging. Mature market: focus on packaging design to sell product

- Aging population vs. "on-the-go" generation Traditional and easy-open vs. flexible and light

Health and convenience New regulatory requirements and strong drive for innovation

Smaller Households Smaller packages = bigger pack material consumption

Urbanization of population Increased need for packaging with shift from local produce to packaged food and increased requirement for longer shelf-life

Sustainability and Environmental Issues

Sustainability, traceability, safety New demands on materials procurement (from where plantation OK vs. rain forest not OK), renewable (wood) vs. non-renewable (oil-based plastics). Emergence of bio-plastics.

Regulations on packaging recycling Requires collection and sorting organization. Materials that lack recyclability can lose share.

Less packaging materials, light-weighting Promoting changes in pack mix from glass and metal to paperboard and flexible packaging

Material battle, New materials All of the above creates new challenges and opportunities for all packaging materials

Efficiency in the Value Chain Combination of secondary and primary packaging New opportunities - less pack materials, ready-shelf packaging, display packaging

E-commerce and retail globalization Increase need for packaging materials to protect and transport goods

Polarization on cost and quality driven segments Low value basic vs. branded and marketingSource: Pöyry, Credit Suisse research.

10 April 2017


We expect the global packaging industry to record a CAGR of 3.5% in 2015-2020 from a CAGR of 2.5% in 2008-2014.

The acceleration should be driven by demographic factors, an improving macro, and a directional shift in Chinese economic growth from capital investments and exports to domestic consumption, which we expect to boost growth in packaging demand despite China possibly having entered a period of slower economic growth.

Figure 9: Global Packaging Industry Revenue*US$ in billions

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2008-14 CAGR: 2.5%

2015-20 CAGR: 3.5%

*Current prices and exchange rates to 2014, constant (2014) prices and exchange rates 2015-20Source: Smithers Pira, Credit Suisse estimates 2016-2020.

10 April 2017


Ardagh and Its MarketsArdagh is a leading supplier of metal and glass containers primarily for the use in food and beverage markets.

Metal packaging makes up 60% of revenues and glass packaging 40%. End-use categories include beer, wine, spirits, carbonated soft drinks, energy drinks, juices, and flavored waters as well as food, seafood, and nutrition. Ardagh also supplies the paints & coatings, chemicals, personal care, pharmaceutical, and general household end-use categories.

Ardagh's primary geographic focus is in Europe and North America. Combined revenues from these two regions represent 93% of group revenues.

The group has grown from an Irish glass manufacturer through a string of transformative acquisitions that has seen revenues and EBITDA expanding at 1998-2016 CAGR of 33% and 32%, respectively, transforming the company from a small glass manufacturer to one of the leading global suppliers of metal and glass packaging in the world.

In 1998, revenues were €51m and EBITDA €10m. In 2016, pro forma for the beverage can acquisition, revenues were €7.6bn and EBITDA €1.3bn.

Figure 10: Predictable and Stable Revenue Base Focused on Consumer-Driven End Markets in Consolidated Glass & Metal Industries in Stable Geographies


10 April 2017


Metal PackagingThe global metal can packaging market represents a $100bn market of which consumer metal cans represent c.60% and metal cans for non-consumer end-use c.40%. Ardagh is exposed to consumer metal cans. The Consumer metal can market is divided in the following three principal areas (shares from Smithers Pira):

■ Beverage cans (50% of the market);

■ Food (including seafood) cans (33%); and

■ Specialty cans (17%), of which we estimate aerosols are 7% and 10% other consumer cans.

Ardagh is slightly more exposed toward the stable food and beverage segments in comparison with the global market.

Figure 11: Global Metal Packaging Revenues by End Use

Figure 12: Ardagh's Metal Can Revenue Split by End Use

Food33%

Beverage50%

Aerosol7%

Other consumer10%

Food31%

Beverage57%

Aerosol5%

Specialties7%

Source: Smithers Pira, Credit Suisse estimates. Source: Company data.

In the global context, Smithers Pira expects Aerosol to be the fastest growth segment with expected CAGR 2014-19 unit growth of 3.9%, followed by beverage cans 3.1%, other consumer 1.7%, and food 1.3%.

10 April 2017


Beverage CansSnap Shot: Consolidated industry with top three producers controlling 86% of the market in the geographies Ardagh operates: Europe (ARD is #2), North America and Brazil (both #3). Global industry revenues of $30bn.

Steady low-single-digit unit growth with industry returns above the cost of capital underpinned by significant barriers to entry. Pass-through of metal costs (~65% of the cost of the can) is the norm, greatly reducing the inflationary risk to absolute profitability. Some but limited opportunities for further growth through acquisitions in North America and Europe.

Ardagh is well positioned to participate in industry growth from a 34% exposure to the faster-growing specialty can market and a strong presence in the German market where the can is making a strong comeback.

Consolidated IndustryUnit volumes in the global beverage can market is estimated by Smithers Pira to be c323bn cans in 2014, registering a five-year CAGR of 4.8%. It is a consolidated industry with two major global companies: Ball and Crown Holdings and the large multi-regional player in Ardagh. Smithers Pira expects global beverage can unit volumes to grow at a 2014-19 CAGR of 3.1% for a total unit volume growth of ~50bn cans. Global Beverage Can revenues are estimated by Smithers Pira at $30bn in 2015.

In 2015 (pro forma), Ardagh's global can volumes were ~34bn for a global market share of 10%. The global market leader, Ball Corporation, has a global market share of ~30% followed by Crown Holdings at ~19%, on our estimates.

Ardagh's main operations are in Europe (51% of 2016 pro forma revenue), North America (38%), and Brazil (11%). In 2015, total industry production in these three markets amounted to ~183bn cans, or 57% of global volumes.

In Ardagh's three operational geographies, the market share of the three leading producers is 86%. We believe the market leader Ball has limited options to further its leading market position in these markets, while we believe Crown and Ardagh have potential to further their respective company's position in Europe and in North America, if given the opportunity.

Figure 13: Global Beverage Can Market ShareFigure 14: Beverage Can Market Share in Ardagh's Geographies

Ball30%

Crown19%Ardagh

10%

Other41%

Ball46%

Crown19%

Ardagh20%

Other14%

Source: Company data, Credit Suisse estimates. Source: Company data, Credit Suisse estimates.

10 April 2017


Limited but Some M&A OpportunityIn North America, there are two operators outside the top three: Rocky Mountain Metal Container (RMMC) and Metal Can Corporation (MCC). RMMC (4% market share) is a JV between Ball and brewer Coors, a relationship we believe is likely to continue for the mutual benefit of both companies.

MCC (15% market share) is Anheuser-Busch's in-house beverage can company that could come up for sale if AB decides to outsource all its packaging needs.

In Europe, there is one operator outside the top three, Can-Pack, with a European market share of 13%. Can-Pack is also active in Brazil, the Middle East, and India with capacity to produce c10bn units globally. In addition to beverage cans, Can-Pack also has a small presence in metal food and specialty cans (1.2bn units and glass packaging [219 tons]).

Steady Moderate GrowthGrowth in beverage can volumes in Ardagh's geographies are driven by strong growth in specialty cans, a long-term shift away from returnable glass in the beer sector, growth in craft beer, and other end-use areas such as energy drinks, health drinks, fruit juices, and iced teas. Growth in new end-use areas have primarily materialized in the specialty can segment. Decline in mega beer and carbonated soft drinks are partial offsets.

Across the three geographies in which Ardagh operates, we expect unit growth of 1.5-2.0% through 2020, with the strongest growth in Brazil (~3-4%) followed by Europe (~2-3%) and stable volumes in North America.

The Brazilian beverage can market has in recent years been challenged by weak macro conditions. Prior to weak economic conditions, the Brazilian market was growing in high-single digits. We expect growth to resume as economic conditions improve to around 3-4% in our 2019 forecast.

In North America, we expect stable volumes as growth in craft beer and energy drinks offsets modest declines in CSD unit volumes.

Growth in the European beverage can market has ticked in around 3% per year since the end of the financial crisis. We expect this rate of growth to remain broadly through our 2019 forecast with potential upside from a possible strong growth in the German market as the can returns to German retail shelves.

The German Case—Could Add 60bps to European GrowthIn 2002, Germany consumed 6.1bn beverage cans. Following an introduction of a mandatory deposit law in 2003, beverage can volumes collapsed to 0.2bn cans. The reason for the collapse was that the infrastructure to return cans was non-existent. As a result, the German market shifted to pack formats that had functional return systems and infrastructure to refund deposits and take care of returned containers. Some retailers, beverage producers, and beverage can producers came together in 2005 to establish DPG (Deutsche Pfandsystem GmbH), which created a nationwide deposits and return system for non-refillable beverage containers. However, fillers, consumers, and retailers had adapted to other pack substrates, and the return of the can was slow.

By 2009, beverage can consumption in Germany was 0.6bn, still down 90% from the consumption level in 2002. Between 2009 and 2015, German can consumption grew by 1.6bn cans to 2.2bn, according to BCME. Perhaps the most significant impact to the beverage can market in Germany was the 2014 decision of hard-discounter Lidl to embrace DPG (deposit-bearing) beverage cans.

The European beverage can industry expects the resurgence of the can in Germany to continue and reach 4.3bn cans in 2020, which equates to a 2015-2020E CAGR of ~14%. If this growth materializes, consumption growth in Germany alone would add 60bps to annual growth in the European beverage can market.

10 April 2017


Ardagh is well positioned to benefit from potential strong growth in Germany from its ownership of 10 out of the 13 can lines that will operate in the country in the second half of 2017, as Ball is closing the three lines it operates at the Recklinghausen plant in July 2017.

Adding Value to Cans with Shapes and FeaturesThe beverage can is increasingly treated by brand owners as a promotional tool. New shapes and features, including new surface finishes and use of sophisticated print and thermochromatic inks that makes the can stand out on the retail shelf and attract customer demand, are drivers for drivers for innovation. Self-chilling and self-heating cans are other recent metal can packaging innovations.

Figure 15: Specialty Cans—Size and Shape Differentiation

Figure 16: Specialty Cans—Print and Functionality Differentiation. Self-Chilling and Self-Heating Cans

Source: Ardagh, Ball. Source: Ardagh, Ball, West Coast Chill Inc, gizmag.com.

In Ardagh's relevant markets, we estimate a 2006-2015 CAGR of 22% in unit volumes of specialty beverage cans increasing specialty can market penetration from 4% in 2006 to our estimate of 25% in 2015. We expect the trend toward greater can differentiation to continue, adding increased demands on the industry to deliver differentiated design and capability to produce differentiated packaging solutions that add value to customers and growth opportunity for the beverage packaging industry.

Ardagh is well positioned to benefit from continued growth in specialty cans. In 2015, specialty cans made up 34% of Ardagh's beverage can revenue, materially ahead of the overall market penetration.

Beverage Cans—Holding Its Own in the Pack MixWe do not see a material threat of pack mix-changes that could lessen demand for beverage cans. The non-fragility and good product convenience provided by beverage cans complement improved designs and added features that should enable the beverage cans to defend its market position against other packaging substrates, in our view.

While beverage can markets are regional, the beverage can industry serves an increasingly consolidating customer base. This offers both challenges and opportunities. The benefit for the global producers is that large customers are moving toward global procurement, which only the two globally present companies can accommodate. The trend toward global procurement is making it more difficult for new suppliers to enter the market. The challenge resides in that global customers focus on reducing cost puts, which grow pressures on the industry to lower prices and innovate to attract further business and maintain the cans share of the pack mix.

10 April 2017


Returns are typically high and relatively steady and cash-generation strong. We expect industry returns to remain well above the cost of capital for the foreseeable future, a view that is supported by the highly consolidated industry structures in Ardagh's core markets. Beyond the consolidated industry structure, we see the following three main factors that should preserve the industry's return profile.

Economies of Scale and High Capital Intensity: High capital intensity drives economies of scale advantages of the larger producers through internal benchmarking and transfer of best practice among plants. To achieve acceptable profitability, plants typically need to operate in excess of 80%. With current technology, capacity cannot generally be added in small incremental units, limiting the ability for new entrants to gradually grow in operations in existing markets.

High Transportation Cost Is a Geographic Barrier to Entry: Shipping empty cans is expensive. As a rule of thumb, shipping cans more than 350 kilometres (200 miles) from a filling location is typically uneconomical, providing a strong geographic barrier to entry into another producer's geographic reach.

Pass-Through of Metal Costs: With slight variations among markets, most beverage can supply contracts include the pass-through of metal costs, typically 65% of the cost of the beverage can, greatly reducing the inflationary risk to absolute profitability. In addition, in North America, contracts typically also have PPI escalators to cover wage and other inflation.

10 April 2017


Food CansSnap Shot: Consolidated industry with top three producers controlling ~74% of the market in the geographies Ardagh operates: (Europe (ARD is #2) and North America (#3). Global fooc can industry revenues is approximately low-single-digit unit growth and in developed markets flat to moderately declining volumes. Competition from other substrates limits growth. Innovation is key to stay relevant and not lose share in the food can market and/or to other substrates. Pass-through of metal costs is the norm, greatly reducing the inflationary risk to absolute profitability. We see some opportunity for growth through acquisitions in North America and Europe. Ardagh is well positioned to benefit from light-weighting trends and potential food can technology shift in North America supported by its dedicated R&D center in Crosmiere, France.

The food can sector, which includes cans for a variety of food, pet food, and seafood end uses, is a stable market.

Unit volumes in the global food market are estimated by Smithers Pira to be c121bn cans in 2014, registering a five-year CAGR of 2.5%. Smithers Pira expects global food can unit volumes to grow at a 2014-19 CAGR of 1.3% for a total unit volume growth of ~8bn cans. Unit growth is expected to be flat to slightly negative in developed markets with an offset from continued growth in low per capita consumption areas in developing markets. There's no significant global player in the food can business, while regional consolidation has improved in recent years.

In 2016, we estimate Ardagh's global food can volumes were ~13bn for a global market share of ~10%. We estimate the global market leader, Crown, has a global market share of ~15% followed by Silgan at ~13%.

Ardagh's main operations are in Europe (~80%) and North America (~20%). In 2015, total industry production in these two markets amounted to ~68bn cans, or 57% of global volumes.

In Ardagh's two operational geographies, we estimate the market share of the three leading producers is ~74%. We believe the market structure and potential changes in leading metal packaging companies' portfolios could offer opportunities for further consolidation in both North America and Europe.

Figure 17: Europe Food* Can Market Share Figure 18: North America Food* Can Market Share

Crown33%

Ardagh26%

Silgan4%

Other37%

Crown17%

Ardagh15%

Silgan48%

Ball12%

Other8%

*Food and SeadfoodSource: Company data.

*Food and SeadfoodSource: Company data.

10 April 2017


Differing Market Offerings in Europe and North America In Europe, the market is characterized by lightweight three-piece and two-piece cans with easy-open or peelable ends that are decorated with high-quality printed graphics and other innovative designs. In the US, food cans are typically heavier and the market is dominated by three-piece cans, with more modest levels of decoration.

Figure 19: Two-Piece Can (DWI) Figure 20: Three-Piece Can

Source: Company data. Source: Company data.

Investment Opportunity in the USThe different characteristic of the US can market offered Ardagh a growth opportunity for the company's European lighter-weight cans and advanced coating solutions. The company identified a 10bn volume segment in the North American market that was a suitable can universe to be converted from three-piece cans to two-piece cans DWI (Drawn and Wall Ironed). The DWI can is particularly well suited for large-volume customers and offers significant metal and labor cost savings in comparison with three-piece cans for large volume customers. To capture this opportunity, Ardagh invested $220m in two new greenfield DWI plants with a total capacity of 3.4bn cans. The plants were the first two new food can plants built in the US in over 20 years, offering the first fully BPA NIA (Bisphenol-A Not Intentionally Added) inside and outside compliant facilities in the US. The project was supported by a 12-year contract with Conagra covering 1.8bn, or 53% of the newly installed capacity. Ardagh's strategy is to target customers with annual volumes of 200+ million that are looking for product differentiation, continuous innovation, and a focus on cost. We see incremental volumes from the two can plants adding to revenue growth and support margin expansion in the North American Metal Packaging segment through our 2019 forecast. Competition from Other Substrates—Innovation Is keyFood cans are facing growing competition from flexible pouches, liquid cartons, and microwavable polymer cups, bowls, and trays in microwave food applications. It is also giving up ground to aluminium foil trays in key end-use markets. In part, we see the threat of substitution accelerating driven by improving barrier properties in alternative packaging formats that consumers may find more convenient.

The food can industry is meeting the challenges from other pack formats by adding convenience features such as easy-opening can ends and distinguishing features such as innovative shapes, color, and decorations to attract customers and maintain a package of choice for brand owners. We believe this is key to staying relevant for customers and not losing share in the food can market and/or to other substrates. We believe Ardagh is well positioned to defend and expand its position from the dedicated R&D center in Crosmieres, France, and the company's expanded capabilities in North America.

10 April 2017


Figure 21: Food and Specialty Can Innovation Examples—Functionality (Easy-Open Lid), Shapes, and New Features (Beer Keg with an Integrated Pressure System)


According to Smithers Pira consumer studies suggest canned food is perceived as inferior although a more affordable, alternative to fresh food. However, canned food offers the significant benefit of preserving food (long shelf-life at ambient temperatures) and reduces food waste at an affordable cost.

Other strengths of the food can that should support demand is the strong position in sustainable terms (sourcing of raw material, recyclability, and high recycling rate) and that the metal can is seen as one of the safest and most reliable forms of packaging.

10 April 2017


Specialty CansSnap Shot: The specialty can sector is characterized by a number of different products and applications, including paints & coatings, aerosol, nutrition, and other cans. Global revenues in the consumer specialty metal can industry are estimated by Smithers Pira to be ~$10bn. The overall the market is fragmented.

Ardagh is only active in the European market, with exposure to segments expected to see flat to low-single-digit growth. Ardagh is the leading European producer of Aerosols, the fastest-growing segment in specialty cans, with a market share of 25%

Aerosol Aerosol unit volume is estimated by Smithers Pira to have grown at a 2009-2014 CAGR of 5.3% (to 15.4bn). Europe is the largest market for aerosol, representing c40% of the global market. The Aerosol market is comparatively fragmented with a large number of small producers. Ardagh is only active in the European market and is the largest producer with a market share of 25% followed by Ball (12%) and Crown (11%).

Aerosol remains a niche product but is widely used in personal care, cosmetics, and household care and paints/car care products. Cosmetics and household care represent approximately 80% of aerosol consumptions. Smithers Pira forecast aerosol unit volumes to grow grow at a 2014-19 CAGR of 3.9% for a total unit volume growth of ~3.3bn cans

The primary driver for aerosol demand is consumers' relentless pursuit of convenience. Aerosol mid-single-digit global growth is mostly driven by strong growth in developing markets, while growth in Europe and North America is expected in a 1-2% range through 2019. Within aerosol, there are some ongoing changes in the material of choice. The dominating material is steel, while aluminium aerosols have been gaining market share over the past five years. Plastic and glass aerosol remains marginal.

Other Metal Cans

Other metal cans unit volume is estimated by Smithers Pira to have grown at a 2009-2014 CAGR of 2.5% (to $5.8bn). Other metal cans are used in a variety of fields including chemicals, cleaners, cosmetics and personal care products, paints and lacquers, tobacco, and a range of automotive products (e.g., oil, brake fluids etc.).

The market for other metal cans faces the largest threat from improving barrier qualities in plastic packaging formats. The major strength of the other can packaging remains good recyclability and barrier protection.

Smithers Pira forecast other metal cans unit volumes to grow at a 2014-19 CAGR of 1.7% for a total unit volume growth of ~2bn cans.

Asia is the largest market for other cans with a 60% share of volumes. Ardagh is active only in the European market (10% of global unit volumes), which is expected by Smithers Pira to experience flat to marginally declining volumes through 2019. In Ardagh's chosen areas of business (Nutrition & Custom and Paints & Coatings) in the diverse other metal cans industry, the company is the leading producer with a market share of 19% and 17%, respectively. Crown is also active in the N&C segment with a market share of 15%. The balance of the market if made up by a large number of small niche metal packaging companies.

10 April 2017


HOLT®: Metal Can Industry ScorecardWithin the packaging industry, the metal cans segment has generated the most consistent CFROI® in the past decade at levels substantially above the cost of capital. Stable operating margins, a steady underlying asset growth, and lower tax rates have offset slightly declining asset turns. The decline in asset turns is in part caused by weak demand in the large US market, and while the industry has gradually reduced capacity in-line with declining demand, this action has been reactive rather than proactive, resulting in somewhat lower operating rates.

Acquisitions and later disposals on non-metal can operations (including plastics packaging at Ball and Rexam, glass packaging at Rexam and corrugated operations at Nampak) masks a stable underlying growth in assets. M&A has been and remains a prominent feature of the industry. Last year witnessed an acquisition by beverage can market leader Ball of Rexam, the world's second largest producer, contributing to increased margins driving returns upwards. Consensus forecasts are for returns to remain resilient as these new levels.

Note the analysis is weighted by assets. Companies included are: Ball, Crown Holdings, Silgan and Nampak.

Figure 22: Metal Can Industry CFROI and Discount Rate Figure 23: Metal Can Industry Asset Growth

0

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Source: Credit Suisse HOLT LensTM Source: Credit Suisse HOLT LensTM

Figure 24: Metal Can Industry Margins Figure 25: Metal Can Industry Asset Turns

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10 April 2017


Glass PackagingSnap Shot: Globally fragmented. Highly concentrated in North America and room for further consolidation in Europe. Globally low-single-digit demand growth, and in developed markets, flat to moderately increasing volumes. Glass is maintaining its share in the premium segment, while competition from other substrates affects other segments of the glass packaging industry. The heavy weight of glass is the largest challenge for glass to maintain its share in the packaging market. Input costs are managed through pass-through clauses and hedging. Ardagh is well positioned to maintain or modestly advance its share in the two regional market it operates supported by the company's light-weighting expertise and glass innovation capabilities and comparatively larger exposure to premium segments and smaller exposure to beer, where the pack mix-change (to cans) is most notable. The recent BevCan acquisition reduces the risk to Ardagh as a whole from such possible pack mix-changes.

The glass packaging market represents a $60 billion market that is comprised of bottles, jars, and other products. Glass packaging is utilized in a wide range of end-use categories mainly in the food and beverage market as well as in applications such as pharmaceuticals, cosmetics, and personal care.

According to Smithers Pira, glass packaging is typically valued by customers for its health attributes, long shelf-life, and ability to preserve flavors. In the alcoholic drinks industry, glass remains a popular type of packaging due to its premium quality feel, sophisticated image, and consumer perception that things taste better in glass. There is no evidence of this changing in the medium term. Given its intrinsic technical qualities, glass offers high protection and safety to food and beverage products.

Glass retains a strong grip in the pack mix in premium segments such as spirits, wine (in part), and cosmetics. These segments offer potential for higher margins due to the increasing demand on design to stand out on the shelf and project premium product characteristics.

Figure 26: Global Glass End-Market Exposure Figure 27: Ardagh Glass End-Market Exposure

Beer48%

Food11%

Wine8%

Spirits10%

Other Beverages

19%

Other 4%

Beer32%

Food27%

Wine17%

Spirits14%

Other Beverages

6%

Other 4%


Only one global market leader, Owens-Illinois, operates in all major markets but with only a modest presence in Asia. We estimate O-I's value share in the global market to be 11% and Ardagh at global #2 with a value share of ~6%. Ardagh operates in Europe and North America, where demand is projected to grow around 0.5% per annum through 2020.

10 April 2017


In Ardagh's two operational geographies, Europe and North America, the market share of the top three leading producers are 57% and 96%, respectively.

Figure 28: Europe Glass Market Share Figure 29: North America Glass Market Share

Verallia21%

Ardagh15%

O-I21%

Vidrala9%

Others34%

O-I43%

Ardagh40%

Anchor13%

Others4%


While the glass industry has made significant progress in reducing the weight of glass bottles, glass remains the heaviest packaging material and requires greater handling than other, less fragile packaging formats. Outside premium products, we believe weight and handling are the largest challenges for glass in terms of retaining its share of the pack mix.

We expect slow demand growth in mature markets due to ongoing substitution from glass to other packaging substrates with an offset from growth in craft beer and premium packaged food and spirits. We believe substitution will be most notable in mega beer where we expect cans to benefit.

Ardagh is well positioned to deal with the weight challenge through its light-weighting expertise. One example is the iconic 330ml Coca Cola bottle that weighed in at 240g in 2005 where Ardagh reduced the bottle to its current weight of 190g while retaining the bottle's trademark dimensions, quality, and strength.

To stay relevant and to develop the presence in the premium spirit segment, Ardagh operates the largest in-house glass container decoration facilities in Europe. An example of product development is the iconic Absolut Vodka bottle with its multiple varieties of decorations.

Figure 30: Differentiation and Light Weighting

Source: Company data

10 April 2017


HOLT: Glass Industry ScorecardWhile the glass industry has grown globally, this growth has been concentrated to emerging markets and mainly through private companies. Major publicly traded glass companies have a significant exposure to mature markets such as North America and West Europe, where glass as a substrate has lost share in the pack mix.

After years of resizing asset base and shrinking asset turns, glass industry saw consolidation in 2015 with Owens Illinois acquiring the Vitro food and beverage glass containers business from Vitro SAB (asset growth spike in 2015 is attributed to this transaction). A revival in both asset turns and margins marks the beginning of the forecasted uptrend the return levels – above cost of capital for the first time in eight years..

Industry consolidation, major restructuring efforts and an increasing presence in faster growing markets (of the major glass companies) is expected to improve industry returns and the spread to cost of capital in the near term future (depicted by consensus expectations – pink bars.

The market is pricing in a more pessimistic decline in returns to cost of capital levels of 6.0% with zero growth.

Note that the data does not include, Ardagh, whose market leading margins, and significant size would have a material positive impact on overall industry returns.

Note the analysis is weighted by assets. Companies included are: Owens Illinois, Vitro, Zignago Vetro, Vetropack and Vidrala.

Figure 31: Glass Industry CFROI and Discount Rate Figure 32: Glass Industry Asset Growth

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Figure 33: Glass Industry Margins Figure 34: Glass Industry Asset Turns

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10 April 2017


The BevCan AcquisitionArdagh's leading glass and metal can position has been established through a string of acquisitions. Over the past 18 years, the company has made 23 acquisitions.

On June 30, 2016, Ardagh completed the Beverage Can Acquisition, expanding the company's packaging offering to the metal beverage packaging industry, complementing the already existing exposure to the beverage industry in its glass packaging operations.

The assets were acquired for an enterprise value of $3.42bn including assumed liabilities of $210m with the balance paid in cash. The acquired assets had 2015 sales of $3bn and stand-alone EBITDA of approximately $400m. The total enterprise value represents a 2015 EV/EBITDA multiple of 7.6x, including $50m in anticipated cost synergies.

The acquisition comprised 22 beverage can production facilities (19 can plants and three end plants) in Europe, North America, and Brazil with a total capacity to produce 34bn cans, which makes Ardagh the third largest producer globally. The assets acquired came up for sale as part of the regulatory approval process in Ball's acquisition of Rexam.

The revenues have a high share of value added specialty cans and operates in highly consolidated markets where the market share of top three producers, Ball, Crown, and Ardagh, average 86%. Ardagh's 34% specialty can exposure should be beneficial to margins and growth. The consolidated industry structure should promote margin stability, in our view.

Figure 35: Revenue by Can Type Figure 36: Revenue by Geography

Standard66%

Specialty34%

Europe51%

United States38%

Brazil11%

Source: Company data, Credit Suisse estimates. Source: Company data, Credit Suisse estimates.

BevCan Cost SynergiesArdagh is targeting $50m cost synergies by December 2018 with projected costs of $20m to achieve the savings. The company expects synergies to materialize from the following:

Procurement savings from more cost-efficient purchases of raw material (supplier overlap with Food/Specialty metal can business),

Logistics optimization across the entire enlarged metal/glass network, and,

Savings from duplicative support functions.

Management sees potential additional upside from best practice sharing and improved operating efficiencies across the enlarged metal network.

10 April 2017


The timing of expected costs savings and the costs to achieve the same are outlined in Figure 37.

Figure 37: Cost Savings Overview2016A 2017E 2018E

Cost Saving Realization $0 $30 $50Costs to Achieve $5 $15 $0


One-Time Capex OpportunitiesArdagh has also identified three one-time projects (expected to be completed by H1 2018) to improve profitability. The company will invest in an end plant in Manaus, Brazil, in a move to insource ends supply that is currently externally purchase. In Europe, Ardagh will expand existing ends capacity to match can production and upgrade ends to CDL ends from B64 ends (less raw materials and customer preference) and convert an existing facility to aluminum from two steel lines.

Figure 38: CDL vs. B64 Ends

Source: Company data

The investment for these three projects is estimated at €100m. Ardagh expects a four-year payback from these investments.

10 April 2017


Benchmarking ArdaghArdagh's margins compare favorably vs. its main competitors across the company's product mix and geographies. In three out of four operating segments, Ardagh operates with industry-leading margins in comparison with its major peers, with potential for further margin improvement from its own initiatives, synergies, and one-time investments related to the BevCan acquisition. In 2016, EBITDA margins for Ardagh exceeded the peer average but were short of Vidrala and O-I due to product mix differences. Glass generally operates with higher EBITDA margins due to the substrates' high capital intensity and reinvestment needs from recurring furnace rebuilds. Taking into consideration, capex into the margin calculation further improves Ardagh's relative position vs. peers.

Figure 39: 2016 EBITDA Margins Figure 40: 2016 EBITDA—Capex Margin

22%

19% 18%

16%15%

13%

0%

5%

10%

15%

20%

25%

VID OI ARD CCK BLL SLGN

peer average

15%

13%12%

10%

8%8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

VID ARD OI CCK BLL SLGN

peer average


Metal Packaging Europe—Industry-Leading MarginsThe platform has significantly grown following the beverage can acquisition in 2016 with a product mix-change from 100% food, aerosol, and specialty food to a revenue mix where beverage cans made up c.46% based on 2015 pro forma accounts.

Reported margins gained 270bps to 15.9% between 2014 and 2015 on improving costs and improved efficiency. Pro forma for the beverage can acquisition margins improved by 190bps to 15.1%, suggesting the acquired beverage can operations had EBITDA margins of 14.1%. Margins improved further in 2016 to 16.4% as reported and 16.1% pro forma.

Ardagh has a program to deliver further cost saving by shifting component production to lower-cost regions, optimization of the manufacturing footprint in Food and Specialty cans, and by increasing the capacity to produce lower-cost DWI cans by 0.6bn to 2.8bn.

In 2016, pro forma for the beverage can acquisition, Ardagh Metal Packaging Europe delivered industry-leading margins. We expect margins to continue improve from the aforementioned initiatives as well as synergies and a one-time capex opportunity related to the beverage can transaction.

10 April 2017


Figure 41: Margin Comparison Metal Packaging Europe

Figure 42: Margin Expansion to Continue Driven by Synergies and Shift to Lower Cost Production

16.1%

13.5%

15.7%

11.6%

16.0%

6%

8%

10%

12%

14%

16%

18%

Ardagh Ball(Beverage Europe

(1))

Crown(Europe)

Ball(Food & Household

(2))

13.2%

15.1%

16.1%16.5%

17.1% 17.4%

6%

8%

10%

12%

14%

16%

18%

2014 2015 2016 2017E 2018E 2019E

Note: Peer segment margins reflect corporate allocations distr. as % of sales(1) Ball Europe 2015 13.5%, Rexam Europe 16.0%(2) 2015 financials. Ball Food and Household is globalSource: Company data, Credit Suisse estimates.

Source: Company data, Credit Suisse estimates.

Metal Packaging Americas—Room for ImprovementThe investment in the two new DWI plants in the US and the beverage can acquisition significantly increased the metal can revenue base in North America. The $220m DWI investment is still ramping and remains underutilized, which weighs on margins, but is also one of the factors behind the material margin improvement between 2014 and 2015.

Reported margins gained 170bps to 10.5% between 2014 and 2015 on the back of rising volumes, better operating performance, and other cost savings. Pro forma for the beverage can acquisition, margins improved by 270bps to 11.5%, suggesting the acquired beverage can operations had EBITDA margins of 11.8%. Margins improved further in 2016 to 13.1% as reported and 12.5% pro forma.

The continued ramp-up of the DWI plants, the conversion of a beverage can line in Chicago to specialty cans, and the construction of an in-house end plant in Brazil should support further margin expansion in our forecast period.

In 2016, pro forma for the beverage can acquisition, Ardagh Metal Packaging Americas delivered below-average margins weighed down by still low utilization rates at the newly installed DWI can plants and what seem to be comparatively low margins from the acquired beverage can plants. We expect margins to continue improving from the aforementioned initiatives as well as synergies and a one-time capex related to the beverage can transaction.

10 April 2017


Figure 43: Margin Comparison Metal Packaging Americas

Figure 44: Margin Upside from Improved DWI Utilization, Synergies, and Brazil Capex

16.7%

13.5%12.6% 12.5%

11.6%

6%

8%

10%

12%

14%

16%

18%

Crown(America (1))

Ball(Beverage

Americas (2))

Silgan(Metal)

Ardagh Ball(Food &

Household (3))

8.8%

11.5%12.5% 13.0% 13.4% 13.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2014 2015 2016 2017E 2018E 2019E

Note: Peer segment margins reflect corporate allocations distr. as % of sales(1) Includes Mexico(2) 2015 Financials, Includes Asia and South America(3) 2015 financials. Ball Food and Household is global Source: Company data, Credit Suisse estimates.


Glass Packaging Europe—Industry-Leading MarginsArdagh has operated its European Glass Packaging operations with five-year average margins of ~20%. Under the leadership of Johan Gorter, the division has developed a strong continuous improvement culture, delivering margin stability as well as industry-leading margins every year starting in 2011, with the strongest margins yet delivered in 2016 at 21.3%, likely affected by pass-through of lower energy costs. In the prior five years, margins varied from a high of 20% (2011) to a low of 19.6% (2015). In the same period, market leader O-I's margins varied between 16.8% (2012) and 13.0% (2015).

We believe Ardagh Glass Packaging Europe's leading margin performance is supported by the company's strong market position in Northern Europe, where competition is less fierce; there is a strong strategic partnership with key customers and dedicated investments to service these accounts; and, in particular, the company's standardized input model with core KPI monitored across the whole system in combination with a best practice central sharing system. A greater than market average share of premium product in the mix (Spirits in particular) and a lesser exposure to the more volatile southern European wine markets also support absolute margins and reduce margin volatility vs. peers.

The continued focus on efficiencies should enable modest further EBITDA expansion through our forecast period.

10 April 2017


Figure 45: Margin Comparison Glass Packaging Europe

Figure 46: Continuous Improvement to Drive Moderate Further Margin Expansion

21.3%20.1%

17.8%

14.0%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

Ardagh Vidrala Verallia(Europe (1))

OI(Europe)

19.7% 19.6%

21.3%22.0% 22.3% 22.4%

10%

12%

14%

16%

18%

20%

22%

24%

2014 2015 2016 2017E 2018E 2019E

(1) Veralia revenue and EBITDA for the LTM period through 30 Sep 2016Source: Company data, Credit Suisse estimates.


Glass Packaging Americas—Well Ahead of Major CompetitorGlass Packaging Americas has materially improved margins since the acquisition of Verallia North America in 2014. Between 2014 (pro forma for VNA acquisition) and 2016, Ardagh's margins expanded 300bps vs. market leader O-I's margin expansion of 130bps.

We believe the significant margin improvement since the VNA acquisition has been achieved by the realization of synergies ($60m announced in conjunction with the acquisition) and by adopting the same structured approach to running operations as in Europe. The strong sharing of best practice and continuous improvement has resulted in materially improved operating efficiency. This in combination with a drive to reduce SG&A and positive mix-change with a lower exposure to mass beer and increased exposure to craft beer/spirits have also supported the strong margin expansion.

Continuous improvement and leveraging the knowledge from European Glass should further improve margins, albeit moderately, through our 2019 forecast.

10 April 2017


Figure 47: Margin Comparison Glass Packaging Americas

Figure 48: Continuous Improvement to Drive Moderate Further Margin Expansion

23.3%

21.5%

18.3%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

Anchor Glass(Container)

Ardagh OI(North America)

18.5%

20.3%

21.5% 21.6% 21.7% 21.7%

10%

12%

14%

16%

18%

20%

22%

24%

2014 2015 2016 2017E 2018E 2019E

Note: Peer segment margins reflect corporate allocations distr. as % of salesSource: Company data, Credit Suisse estimates.


10 April 2017


Capital AllocationFigure 49: 2017–19E Capital Allocation by Use

Debt reduction47%

Capex40%

Dividends13%


De-Leveraging—A PriorityWe expect Ardagh to prioritize debt deleveraging to drive equity value. The group target to delever by an average of 0.4x annually for a projected 2017 net debt/EBITDA of 4.6x at the end of 2017. The company believes the optimal leverage range is in a 4.0x to 4.25x EBITDA range.

Ardagh has a good track record of deleveraging after acquisitions. It was able to reduce net debt/EBITDA from 6.1x as of June 2014 (after the VNA acquisition) to 5.0x as of March 2016 (before BevCan acquisition), implying a 1.1x reduction in leverage in 21 months.

On our estimates, we see leverage falling from a pro forma post-IPO level of 5.0x to 4.0x by the end of 2019. We see net debt declining from €7.4bn (Q117 post-IPO) to €5.9bn by year-end 2019 for a total debt reduction in excess of €1.5bn.

Based on the current market cap and our estimates, we see potential for debt-to-equity accretion, at unchanged valuation multiples, of 29% through year-end 2019.

10 April 2017


Figure 50: Net Debt (€ millions) and Net Debt/EBITDA

Figure 51: Debt Maturity Profile (€m): No Significant Debt Maturities Until 2021

6.0x6.3x 6.3x

4.8x

4.4x

4.0x

3.0x

3.5x

4.0x

4.5x

5.0x

5.5x

6.0x

6.5x

7.0x

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

2014 2015 2016 2017E 2018E 2019E

Net debt Net Debt/EBITDA

€ 237

€ 1,044 € 1,155€ 1,336

€ 2,228

€ 896

€ 766

0

500

1000

1500

2000

2500

2017 2018 2019 2020 2021 2022 2023 2024 2025

Secured debt Unsecured debt

Source: Company data, Credit Suisse estimates. Source: Company data.

Capital Expenditure—Developing the OperationsArdagh has a consistent track record of investment in its asset base with a three-year average capex as percent of revenue close to 6%, about 100bps ahead of what we consider sustainable levels.

Capex has been above what we deem as sustainable capex due to a couple of discreet projects such as the construction of two new DWI food can plants in the US ($220m, supported by a 12-year contract) and a new UK glass furnace for a leading global spirits provider (€50m, 10-year contract).

One-time capex related to the BevCan acquisition should total c€100m in the next two years keeping annual capex to around €450m averaging c.5.7% of revenues. Absent other discreet investment opportunities, we expect capex to reduce to €400m in 2019, equal to c5% or revenues, a level we believe to be sustainable.

Figure 52: 2014-19E Capex to Sales Figure 53: (EBITDA-Capex)/EBITDA 2014-19E

7.9%

6.5%

5.6%5.2% 5.2%

4.7%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

VID OI ARD SLGN BLL CCK

peer average

70%

68%

67%66%

65%

61%

60%

62%

64%

66%

68%

70%

72%

CCK ARD O-I BLL VID.MC SLGN

peer average

Source: Company data, IBES, Credit Suisse estimates. Source: Company data, IBES, Credit Suisse estimates.

Dividend—Yield Around 2.5%Ardagh plans to pay a dividend. In 2017, the total dividend payment is expected to be €157, with an elevated pre-IPO dividend of €64m followed by quarterly dividends of €31m. The company plans to pay total dividends of €126m in 2018 and 2019, with a yield of approximately 2.5% at the current share price.

10 April 2017


Targeted Acquisitions—Possible, Nothing in PipelineArdagh has been created through a number of acquisitions over the past 18 years, and the company is likely to continue to target acquisitions in current or adjacent markets and geographies.

As aforementioned, opportunities are somewhat limited in parts of the markets/products Ardagh operates considering already highly concentrated markets and/or ownership situations (e.g., AB's in-house bev can manufacturing) that would require a strategic review of the long-term ownership of non-core assets to come to the market.

That said, we believe there are areas of potential possibilities for bolt-on acquisitions. We have not assumed any acquisitions in our estimates, and Ardagh says it has at present nothing in the pipeline.

10 April 2017


ValuationOur $26 target price is based on the average of four valuation methodologies: (1) applying an EV/EBITDA multiple of 8.6x on our estimate for 2017 EBITDA (25%); (2) applying a P/E multiple of 14.7x on our 2017 EPS estimate (25%), and (3) our discounted cash flow analysis. In our DCF analysis (50%), we assume a 6.9% cost of capital and 1.0% terminal growth rate of FCF.

We have selected a group of companies that Hecombined provides a representative comp group, in our view. We appreciate that significant differences exist on leverage and asset intensity but think the common end markets, substrates, and service offering have a decent overlap with our chosen comp group. We include three metal packaging companies in the mix, Ball corporation, Crown Holdings, and Silgan Holdings, together with two glass packaging companies Owens-Illinois and Vidrala. Those companies are providing competing packaging solutions in all end markets (food and beverage).

Figure 54: Comparative ValuationsPrice ND/EBITDA EBITDA margin

4/7/2017 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2018E 2017E 2017EBall Corporation $72.23 10.0x 9.3x 17.1x 14.5x 6.3% 7.2% 5.2% 5.7% 2.8x 16.4%Crown Holdings Inc. $52.90 8.6x 8.2x 13.5x 12.1x 5.3% 6.9% 4.7% 5.4% 3.2x 16.1%Silgan Hldg $57.81 9.2x 8.8x 17.9x 16.6x 6.5% 7.0% 5.5% 5.9% 2.8x 13.6%Metal Packaging Average (60%) 9.3x 8.8x 16.2x 14.4x 6.0% 7.0% 5.1% 5.7% 2.9x 15.4%

Owens Illinois $20.24 6.6x 6.1x 8.4x 7.7x 7.5% 9.4% 5.3% 6.1% 4.0x 19.4%Vidrala € 51.00 8.7x 8.0x 16.7x 15.2x 6.4% 6.5% 5.4% 5.4% 1.5x 22.4%Glass Packaging Average (40%) 7.6x 7.0x 12.5x 11.4x 6.9% 7.9% 5.3% 5.7% 2.8x 20.9%

Average 8.6x 8.1x 14.7x 13.2x 6.4% 7.4% 5.2% 5.7% 2.9x 17.6%Ardagh $21.86 8.1x 7.5x 12.7x 10.6x 11.3% 10.6% 7.1% 6.8% 4.8x 17.8%disc./prem. -6% -7% -14% -20% -43% -30% -26% -17%

EV/EBITDA P/E FCF-yield unlev. FCF-yield

Source: Credit Suisse estimates, IBES

Our Target Multiple used in our peer group valuation of Ardagh is the average multiple of the peers for 2017. We believe EV/EBITDA is the most relevant valuation metrics to use as it takes into consideration the full capitalization and removes differences in accounting treatments of goodwill. The discount on EV/EBITDA in Figure 54 reflect the discount to the entire enterprise which translates to an equity discount of ~14%

Figure 55: Ardagh—Valuation MethodologyMethodology Target Multiple Valuation2017 P/E 14.7x $252017 EV/EBITDA 8.6x $24DCF $27Credit Suisse 12-month price target $26

Source: Credit Suisse estimates.

10 April 2017


DCF Valuation

Figure 56: DCF Valuation 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E

Revenue 7,848 7,998 8,127 8,208 8,290 8,373 8,457 8,541 8,627 8,713Y/Y Growth 23.7% 1.9% 1.6% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Operating Expenses (6,452) (6,547) (6,634) (6,701) (6,768) (6,835) (6,904) (6,973) (7,042) (7,113)EBITDA Margin 17.8% 18.1% 18.4% 18.4% 18.4% 18.4% 18.4% 18.4% 18.4% 18.4%

EBITDA 1,397 1,451 1,493 1,508 1,523 1,538 1,553 1,569 1,585 1,600

Less: Depreciation & Amortization (616) (618) (621) (622) (622) (622) (623) (623) (623) (623)Operating Income 781 833 872 886 901 916 931 946 961 977

Tax Rate (unlevered) 36.8% 34.4% 32.9% 31.4% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%Less: Unlevered Taxes (287) (286) (287) (278) (270) (275) (279) (284) (288) (293)Plus: Depreciation & Amortization 616 618 621 622 622 622 623 623 623 623

EBIDA 1,109 1,164 1,206 1,229 1,253 1,263 1,274 1,285 1,296 1,307Less:

Working Capital 66 5 (9) (11) (11) (12) (12) (12) (12) (12)Capex (455) (450) (400) (410) (415) (419) (423) (427) (431) (436)

Unlevered Free Cash Flow 720 719 797 808 827 833 840 846 853 860Present Value of UFCF 674 629 652 618 591 557 525 495 467 440

Sum of PV of UFCF 5,646 DCF Sensitivity AnalysisPV of Residual Value 7,470 FCF Terminal Growth RateValue of Unconsolidated Investments 0Total Value 13,116 26.68 -1.0% 0.0% 1.0% 2.0%Net debt (as of 31 December 2016) (7,254) 5.9% 26 31 39 50

6.9% 18 22 27 34Net Value - € 5,862 7.9% 12 15 18 22Less Minority stake 0.0 8.9% 7 9 12 15Net Value to majority 5,862 Matrix Avg. 22

# Shares 233.9Net Value per Share EUR 25Net Value per Share USD 27EUR USD exchange rate as of 07 April 2017 1.06

WAC

C

Source: Credit Suisse estimates.

Blue Sky Scenario (Valuation of $31): We run a blue sky scenario based on three variables coming together:

An increase of near-term volume growth of 300bps in 2017-19;

A decline in long-term operating expense growth rate: assuming capital expenditures lead to a continuation of margin expansion, thanks to lower costs; and,

100bps higher long-term revenue growth.

Grey Sky Scenario (Valuation of $18): Similarly, we run a grey sky scenario in which we include:

A lower near-term volume growth of 400bps in 2017-19;

An increase in long-term operating expense growth rate assuming increasing cost inflation outside raw materials. Ardagh will not be able to pass through all the higher costs to price. This will lead to lower margins; and,

100bps lower long-term revenue growth.

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Key Downside Risks■ Raw Material Price Volatility: Steel (in tinplate and tin-free forms) and aluminum ingot

are the key raw material used in metal plastic packaging. Steel is obtained under one-year contracts with prices that are usually fixed in advance, while aluminum ingot is traded daily as a commodity (priced in U.S. dollars) on the London Metal Exchange, Because aluminum is priced in U.S. dollars, fluctuations in the USD/EUR rate also affect the euro cost of aluminum ingot. Cullet, sand, soda ash, and limestone are the key raw material used in metal glass packaging. Ardagh may not be able to pass on all or substantially all raw material price increases.

■ Pricing Pressure and Industry Consolidation: The metal and glass packaging market is competitive. Competitors and end customers have consolidated, a trend that is likely to continue. Customers' increasing focus on pricing puts pressure on Ardagh and might lead to a potential loss of customers.

■ Risk of Substitutes: Metal Packaging is subject to competition from producers of packaging made from plastic, carton, and composites, while Glass Packaging is subject to competition from rigid packaging, principally plastic packaging and aluminum cans, and non-rigid packaging alternatives, including flexible pouches and aseptic cartons, particularly in serving the packaging needs of nonalcoholic beverage customers. Changes in consumer preferences in terms of food processing or in terms of packaging materials, style, and product presentation can influence sales.

■ Business Performance Is Subject to Currency Risks: Of Ardagh's EBITDA, only 38% is earned in euro (the group's accounting currency), and the company's results are thus subject to fluctuations in foreign currency exchange rates, especially to the USD and GBP. A stronger euro or weaker pound would lower earnings mainly through translation effects.

■ Acquisition Execution: To expand the company's global footprint and create value through M&A remains an important component of Ardagh's business strategy. Therefore, there are inherent risks of poor execution and integration of acquisitions.

■ Macro Risks: Ardagh is exposed mainly to the Eurozone, US, and UK (~93% of group sales). As a result, the environment and cyclical patterns in these areas could affect the company's performance negatively.

■ Dependence on Key Customers: Ardagh's top 10 customers accounted for ~39% of pro forma sales in 2016. A loss of any one of these customers would affect the business adversely.

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Financial EstimatesWe forecast a 9% revenue CAGR in 2016-19, and our 2017 estimate assumes 24% revenue growth. The step-up in revenues in 2017 is driven by the Beverage Can acquisition that closed on June 30, 2016. Pro forma for the Beverage Can acquisitions, our 2017 forecast assumes revenue growth of 3%.Ardagh's financials are affected by foreign exchange rate movements. While accounts are denominated in euros, only 38% of sales are in euro.

Part of the European sales is earned in GBP. Other currencies affecting Ardagh are USD and BRL. The BRL exposure is mostly pegged to the US$ through metal prices set in US$. Ardagh broadly balances the P&L currency exposure through its debt exposure. EBITDA currency exposure is displayed in Figure 57.

Figure 57: EBITDA FX Exposure

USD44%

EUR38%

GBP13%

Other5%


FX Rate Assumptions/SensitivityFor our forecasts, we use £/€ fx rate of 1.16, €/$ of 1.06, and €/BRL of 3.40.

We estimate a 10% stronger US$ vs. euro would add approximately 7% to Ardagh's 2017 EPS, or around €55m to EBITDA. A similar move in the GBP would add 3% to 2017 EPS and €25m to EBITDA.

Segment sales are expected to deliver CAGR organic growth of 2.7% in Metal packaging and 0.7% in Glass packaging during our forecast period. In our estimates, we have assumed stable raw material costs. We have not assumed any non-raw material linked price increases.

We expect a contribution to sales from acquisitions of €1.3bn (24%) in H1 2017, as the full-year impact of the June 30, 2016, BevCan acquisition is reflected in the accounts. Currency tailwinds, helped by a weak euro vs. US$, should support FY2017 revenues by €134m (3%), leaving 2% growth from organic revenue. We estimate EBITDA margin to be 50bps lower vs. 2016 at 17.8% in our forecasts, affected by lower margins in the acquired Beverage Can operations. Pro forma for the beverage can acquisitions, we expect EBITDA margins to expand by 40bps.

We expect EBITDA to grow at a 9% CAGR from 2016 through 2019, supported by M&A, related synergies, organic growth, and continuous improvement. We expect EBITDA to continue to grow by low-single digits over the long term.

10 April 2017


We expect FCF to grow by a 55% CAGR between 2016 and 2019. We forecast FCF to be €513m in 2017E, €485m in 2018E, and €561m in 2019E. We model capital expenditure close to 6% of revenues in 2017-18 and a decline to 5% of revenues in 2019.

We see working capital as being a modest source of cash in 2017-18.

We have assumed Ardagh will use the majority of FCF, after payment of dividends, for debt deleveraging purposes and model net debt to EBITDA declining to 4.0x by fiscal year-end 2019 and a total reduction of the net debt by $1.5bn.

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Financial Statements

Figure 58: Income Statement€ in millions, unless otherwise stated

2014A 2015A 2016A 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019E

Revenues 4,733 5,199 6,345 1,813 2,076 2,117 1,843 7,848 7,998 8,127Y/Y Growth 0.0% 9.8% 22.0% 48.8% 62.0% 4.8% 0.9% 23.7% 1.9% 1.6%

Cost of Sales -3,970 -4,285 -5,205 -1,531 -1,697 -1,706 -1,529 -6,464 -6,554 -6,637Gross Profit 763 914 1,140 282 378 412 313 1,385 1,444 1,490

Gross Margin 16.1% 17.6% 18.0% 15.5% 18.2% 19.4% 17.0% 17.6% 18.0% 18.3%SG&A -246 -274 -300 -88 -95 -97 -86 -366 -373 -380Other inc/exp -88 -109 -177 -61 -59 -59 -59 -238 -238 -238Net Operating Profit (EBIT) 429 531 663 133 224 256 168 781 833 872

Operating Margin 9.1% 10.2% 10.4% 7.3% 10.8% 12.1% 9.1% 9.9% 10.4% 10.7%Interest Expense -477 -514 -402 -119 -112 -112 -108 -451 -399 -380Other inc/exp -88 -109 -177 -61 -59 -59 -59 -238 -238 -238Pretax Income -47 17 261 13 113 144 60 330 433 492

Provision for Income Taxes -64 -95 -96 -5 -41 -53 -22 -121 -149 -162Tax rate n.a. 558.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 34.4% 32.9%

Net income -111 -2 289 52 113 133 80 378 453 499

After-tax Extraordinary items -397 -138 -296 -43 -42 -42 -42 -169 -169 -169Non-recurring/Discontinued Ops 0 0 0 0 0 0 0 0 0 0GAAP net income -508 -140 -7 8 71 91 38 209 284 330

Shares Outstanding - Basic 234 234 234 234 234 234 234 234 234Shares Outstanding - Diluted 234 234 234 234 234 234 234 234 234

Basic EPS € 0.22 € 0.48 € 0.57 € 0.34 € 1.61 € 1.94 € 2.13Diluted EPS € 1.23 € 0.22 € 0.48 € 0.57 € 0.34 € 1.61 € 1.94 € 2.13

Y/Y EPS Growth (diluted) 0.0% 79.2% 74.3% 17.1% -2.0% 30.8% 20.1% 10.0%GAAP Basic EPS €(0.03) € 0.04 € 0.30 € 0.39 € 0.16 € 0.89 € 1.22 € 1.41GAAP Diluted EPS €(0.03) € 0.04 € 0.30 € 0.39 € 0.16 € 0.89 € 1.22 € 1.41

EBITDA 792 934 1,158 285 380 412 320 1,397 1,451 1,493EBITDA margin 16.7% 18.0% 18.3% 15.7% 18.3% 19.4% 17.4% 17.8% 18.1% 18.4%Y/Y % change 0.0% 17.9% 24.0% 31.1% 48.6% 8.6% 4.7% 20.6% 3.9% 2.9%

Segment Analysis

RevenueMetal Europe 1,651 2,235 671 790 815 668 2,943 3,017 3,077Metal Americas 389 1,059 404 460 480 451 1,796 1,841 1,887Metal Packaging 1,974 2,040 3,294 1,075 1,250 1,295 1,119 4,739 4,857 4,964Glass Europe 1,406 1,452 1,392 314 364 361 320 1,359 1,373 1,386Glass North America 1,353 1,707 1,659 424 461 461 404 1,750 1,768 1,777Glass Packaging 2,759 3,159 3,051 738 826 822 724 3,109 3,141 3,163Total Revenue 4,733 5,199 6,345 1,813 2,076 2,117 1,843 7,848 7,998 8,127

EBITDAMetal Europe 263 366 100 134 149 104 487 515 536Metal Americas 41 139 43 62 67 60 233 247 262Metal Packaging 250 304 505 143 197 216 164 720 761 797Glass Europe 277 284 296 63 79 90 67 299 306 310Glass North America 265 346 357 79 105 105 89 378 384 385Glass Packaging 542 630 653 142 184 195 156 677 689 695Consolidated EBIT 792 934 1,158 285 380 412 320 1,397 1,451 1,493

EBITDA MarginMetal Europe 15.9% 16.4% 14.8% 17.0% 18.3% 15.6% 16.5% 17.1% 17.4%Metal Americas 10.5% 13.1% 10.7% 13.6% 14.0% 13.3% 13.0% 13.4% 13.9%Metal Packaging 12.7% 14.9% 15.3% 13.3% 15.8% 16.7% 14.7% 15.2% 15.7% 16.1%Glass Europe 19.7% 19.6% 21.3% 20.0% 21.6% 25.0% 21.0% 22.0% 22.3% 22.4%Glass North America 19.6% 20.3% 21.5% 18.6% 22.7% 22.8% 22.0% 21.6% 21.7% 21.7%Glass Packaging 19.6% 19.9% 21.4% 19.2% 22.2% 23.8% 21.6% 21.8% 21.9% 22.0%Consolidated EBIT Margin 16.7% 18.0% 18.3% 15.7% 18.3% 19.4% 17.4% 17.8% 18.1% 18.4%


10 April 2017


Figure 59: Balance Sheet€ in millions, unless otherwise stated

2014A 2015A 2016A 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019ECash and cash equivalents 403 542 745 706 587 766 600 600 470 413Accounts receivable 692 608 920 705 1,038 1,023 884 884 933 948Net Inventories 770 825 1,126 1,327 1,405 1,402 1,108 1,108 1,165 1,180Prepayments & Other 2 447 226 226 226 226 226 226 226 226Restricted cash/Other 9 11 27 27 27 27 27 27 27 27Total Current Assets 1,876 2,433 3,044 2,991 3,283 3,445 2,845 2,845 2,821 2,794

Net Property Plant & Equipment 2,223 2,307 2,925 2,979 3,054 3,089 3,142 3,142 3,357 3,519Goodwill & Other Intangibles 1,762 1,810 3,889 3,798 3,701 3,604 3,511 3,511 3,131 2,748Other Assets 234 192 403 443 453 471 473 473 479 481Total Assets 6,095 6,742 10,261 10,211 10,491 10,609 9,971 9,971 9,788 9,542

Short-term Debt 4 7 8 8 8 8 8 8 8 8Accounts payable 803 879 1,534 1,327 1,716 1,724 1,546 1,546 1,657 1,678Provisions 50 48 69 69 69 69 69 69 69 69Other 154 162 234 234 234 234 234 234 234 234Total Current Liabilities 1,011 1,096 1,845 1,638 2,027 2,035 1,857 1,857 1,968 1,989

Long-term debt 5,181 6,397 8,142 8,301 7,907 7,905 7,457 7,457 6,977 6,487Def. taxes and other 1,211 1,229 2,330 2,384 2,375 2,426 2,407 2,407 2,436 2,455Minority interest 2 2 2 2 2 2 2 2 2 2Total Liabilities 7,405 8,724 12,319 12,325 12,311 12,368 11,724 11,724 11,382 10,932

Shareholder's Equity 6,095 6,742 10,261 10,211 10,491 10,609 9,971 9,971 9,788 9,542

Total Liabilities & Equity 6,095 6,742 10,261 10,211 10,491 10,609 9,971 9,971 9,788 9,542


10 April 2017


Figure 60: Cash Flow Statement€ in millions, unless otherwise stated

2014A 2015A 2016A 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019EAdjusted net income -111 -2 289 8 71 91 38 209 284 330Depreciation and amortization 363 403 495 152 156 156 152 616 618 621Deferred income taxes 35 59 84 1 8 10 4 22 19 14Minority interest/equity income 0 0 0 0 0 0 0 0 0 0Working Capital 8 90 120 -193 -22 26 255 66 5 -9Other 55 18 -519 53 -17 42 -23 55 9 5Cash Flow from Operations 350 568 469 21 196 324 426 968 935 961

Capital expenditures -314 -304 -318 -115 -134 -94 -112 -455 -450 -400Business/asset acquisitions -1,038 0 -2,685 0 0 0 0 0 0 0Dispositions 397 8 0 0 0 0 0 0 0 0Other, net 0 -8 0 -19 -10 -9 -2 -40 -3 0Cash Flow from Investments -955 -304 -3,003 -134 -144 -103 -114 -495 -453 -400

Dividends 0 0 -270 -64 -31 -31 -31 -157 -126 -126Net new debt 1,640 -198 3,136 159 -394 -2 -448 -685 -480 -490Net new equity 0 0 6 0 254 0 0 254 0 0Other -914 72 -168 -21 0 -9 0 -30 -6 -2Cash Flow from Financing 726 -126 2,704 74 -171 -42 -479 -618 -612 -618

FX translation -1 1 49 0 0 0 0 0 0 0

Net change in cash and equivalents 120 139 219 -39 -119 179 -167 -145 -130 -57

Beginning cash and equivalents 0 403 526 745 706 587 766 745 600 470Ending cash and equivalents 403 542 745 706 587 766 600 600 470 413

FCF ANALYSISCash Flow from Operations 350 568 469 21 196 324 426 968 935 961Capex -314 -304 -318 -115 -134 -94 -112 -455 -450 -400FCF 36 264 151 -94 62 230 314 513 485 561


10 April 2017


Company Profile and OverviewArdagh Group is a global leader in glass and metal packaging solutions for food and beverage markets, which are characterized by stable, consumer-driven demand.

The company has an international footprint with 109 facilities in 22 countries (mainly North America and Europe), employing approximately 23,500 people, and had pro forma global sales of approximately €7.7 bn in 2016.

The manufacturing base has significant scale and, following a €1.6bn investment in the plant network in 2011-16 (~6% of revenues), can be considered well invested, in our view. Ardagh's North American and European metal and glass manufacturing footprint is shown in Figure 61.

Figure 61: Ardagh's North American and European Metal and Glass Manufacturing Footprint

(1) Includes 2 plants in Brazil. (2) Includes 2 plants in South Korea and the SeychellesSource: Company data

Ardagh services a broad mix of end-use markets:

■ Food (29% pro forma 2016 sales),

■ Beer (29%),

■ Carbonated soft drinks (CSDs) and other beverages (21%),

■ Wine (7%),

■ Spirits (6%), and,

■ Other (8%).

In addition, included in the Other category, Ardagh supplies the paints & coatings, chemicals, personal care, pharmaceuticals and general household end-use categories.

Europe is the largest revenue base with 53% of 2016 revenues generated in the region. Of sales, around 38% were earned in euro zone countries and about 13% in the UK. Of

10 April 2017


revenues, 40% were generated in North America, while the remaining 7% was earned in other regions including Brazil, meaning Ardagh is most exposed to the US dollar, euro, and Brazilian real.

Figure 62: End-Market Revenue PF FY 2016 Figure 63: Geographic Revenue PF FY 2016

Food29%

Beer29%

CSD& other beverages

21%

Wine7%

Spirits6%

Other8%

North America40%

Europe53%

RoW7%


Ardagh customers include a wide variety of leading food, beverage, and consumer product companies. The company serves more than 2,000 customers across over 80 countries that comprise multi-national companies, large national and regional companies, and small local businesses.

Ardagh has built a stable customer base with longstanding relationships, with an average tenure of over 30 years with the 10 largest customers. Of the company's sales, around two-thirds are generated under multi-year contracts.

Figure 64: Selection of Ardagh’s Blue-Chip Customers


10 April 2017


SegmentsArdagh operates its business along two operating segments, Metal Packaging and Glass Packaging, which are grouped on the basis of geography: Europe and North America

Figure 65: Segment Revenue PF FY 2016 Figure 66: Segment EBITDA PF FY 2016

Metal Europe38%

Metal Americas

22%

Glass Europe18%

Glass North America

22%

Metal Europe35%

Metal Americas

16%

Glass Europe22%

Glass North America

27%


Metal PackagingMetal Packaging revenues represented 52% of 2016 revenues and 60% on pro forma basis including Beverage Can acquisition from Ball/Rexam. In 2016, on a pro forma basis, Ardagh manufactured approximately 50 billion metal cans, of which more than 90% was for the food and beverage end-use categories.

Figure 67: Metal Packaging Sample Products


Ardagh Metal Packaging operates 74 production facilities in 21 countries: in 15 European countries (44 plants); the United States (14 facilities); and additional plants in Brazil, Canada, Morocco, the Seychelles, and South Korea. In the Metal Packaging segment, the company employs approximately 11,500 people.

The company produces a range of value-added metal packaging products including aluminum and steel beverage cans; two-piece aluminum; two-piece tinplate and three-piece tinplate food and specialty cans; and a wide range of can ends, including easy-open and peelable ends. Many of the products feature high-quality printed graphics, customized sizes and shapes, or other innovative designs, providing functionality and differentiation.

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Figure 68: End-Market Exposure (2016 PF)


According to Ardagh, after the Beverage Can acquisition on June 30, 2016, the company is now:■ The #2 supplier of metal cans by value in the European beverage can and food can

categories;■ The #1 supplier of metal cans by value in the European seafood, nutrition, paints &

coatings and aerosols categories;■ The #1 supplier of metal cans by value in the North American seafood category; and,■ The #3 supplier of metal beverage cans by value in the United States and Brazil.Glass PackagingGlass Packaging revenues represented 48% of 2016 revenues and 40% pro forma for the BevCan acquisition. In 2016, Ardagh manufactured approximately 5.9 million tons of glass, of which more than 95% was for the food and beverage end-use categories.

Figure 69: Glass Packaging Sample Products


Ardagh operates 35 glass plants with 73 glass furnaces in Germany (eight facilities), the United Kingdom (four), Poland (three), the Netherlands (two), Italy, Sweden, Denmark, and the United States (15 production facilities). All of the manufacturing facilities are owned by Ardagh, while some of the warehousing facilities are leased from third parties. The Glass Packaging segment of the company employs approximately 12,000 people.

The company manufactures proprietary and nonproprietary glass containers for a variety of end-use categories, mainly food and beverage. The proprietary products are customized in-line with the customers' specifications, playing an important role in their branding strategies, while nonproprietary products deliver consistent performance and product differentiation through value-added decoration, including embossing, coating, printing and pressure-sensitive labeling.

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In addition, Glass Packaging includes the glass engineering business, Heye International, and the mold manufacturing and repair operations. For the 2016 fiscal year, these activities represented approximately 2% of Glass Packaging's revenues. Heye International is responsible for the design and supply of glass packaging machinery and spare parts for existing glass packaging machinery. It also provides technical assistance to third-party users of Ardagh's equipment and licensees of the technology.

According to Ardagh, the company is now:

■ The #1 supplier of glass packaging in Northern Europe by market share,

■ The #3 supplier in Europe overall by market share, and,

■ The #2 supplier in the U.S. market by market share.

Figure 70: End-Market Exposure (2016 PF)


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Acquisition HistoryArdagh Group was formed in 1932 as the Irish Glass Bottle Company. The company operated a single glass plant in Dublin, serving a domestic beverage and food customer base until 1998, when Yeoman International, led by the current chairman and major shareholder, Paul Coulson, took an initial stake in Ardagh Group. Since 1999, Ardagh has completed 23 acquisitions leading to a significantly increased scope, scale, and geographic presence. Major acquisitions over the past 17 years include:

■ 1999, the acquisition of Rockware Glass Limited from Owens-Illinois, Inc. for £247m, which established the company as the leading glass packaging producer in the UK and Ireland;

■ 2003, the acquisition of Herman Heye in Germany, a leading supplier of engineering solutions to the glass packaging industry globally, as well as owner of two glass packaging plants in Germany;

■ 2005, the acquisition of Rexam PLC's UK, a glass packaging business for approximately £50m, strengthening the leading position in the UK glass industry

■ 2007, the acquisition of the European glass packaging business of Rexam PLC for €657m, enabling it to expand its glass packaging business and broaden its presence in Continental Europe;

■ 2010, the acquisition of Impress Group for €1.7bn, portfolio expansion, first entry into metal packaging;

■ 2012, the acquisition of Leone Industries Inc., a single plant glass packaging business in New Jersey, United States for $220m, first entry into the U.S. glass packaging market;

■ 2012, the acquisition of Anchor Glass for $880m, the third-largest producer of glass packaging in the US, operating eight glass packaging plants;

■ 2014, the acquisition of Verallia North America (VNA) for €1.0bn, the second-largest glass packaging producer in North America with 15 manufacturing plants in the US, which expanded Ardagh's geographic and end-use footprint in North America;

■ 2014, the disposal of six former Anchor Glass plants and ancillary assets as a condition of gaining approval for the VNA acquisition for €319m, recognizing a €124m loss on disposal; and,

■ 2016, the acquisition of 22 plants required to be divested by Ball Corporation and Rexam PLC as a condition of Ball Corporation's acquisition of Rexam PLC. This acquisition, of a total consideration of €2.7bn, broadened Ardagh's metal packaging portfolio into the beverage can segment.

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Figure 71: Revenue Growth and Acquisition History and Strategic Evolution of Product Mix and Geographic Exposure

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Reve

nue (

€in m

)

Anchor & Leone (US

Glass) Boxal (Europe Metal)

$1.2bn

Rockware Glass (UK)

£247m

Huta Szkla Ujscie (Poland)

€11m

Hermann Heye (Germany)

€35.5m

Consumers Glass (Italy)

€16.2m

Rexam Glass (UK) £50m

Rexam Glass (Europe) €657m

Impress Group €1.7bn – Dec

2010

Huta Szkla Ujscie (Poland)

€11mFiPar (Italy)

€130m

VNA (US) $1.4bn

BevCan $3.0bn

Anchor & Leone (US

Glass) Boxal (Europe Metal)

$1.2bn

Rockware Glass (UK)

£247m

Hermann Heye (Germany)

€35.5m

Consumers Glass (Italy)

€16.2m

Rexam Glass (UK) £50m

Rexam Glass (Europe) €657m

Impress Group €1.7bn – Dec

2010

FiPar (Italy) €130m

BevCan $3.0bn

Stra

tegi

c Be

nefit

s Broadened Mix and

footprint in Beverage Cans

Broadened Mix and

footprint in NA Glass

Established NA Glass Presence

Entry into Metal

Containers

Pan European Presence

UK bolt-on acquisition

Technology, Germany Entry

Establishes UK Presence


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IPO Structure and OwnershipArdagh Group closed its initial public offering of 16,200,000 Class A common shares at $19 per share as well as the sale of an additional 2,430,000 Class A common shares pursuant to the exercise in full of the option granted to the underwriters to purchase additional Class A common shares. Net proceeds from the share issue are to be used for debt repayment.

Following the completion of the offering, Ardagh has 236,326,000 shares in issue, comprising 18,630,000 Class A common shares and 217,696,000 Class B common shares, meaning 6.9% on free float.

The rights of the holders of Class A common shares and Class B common shares are identical except for par value, voting, and conversion rights. The Class A common shares and Class B common shares are entitled to participate equally in economic and dividend rights proportionate to the number of shares held. Each Class A common share will be entitled to one vote per share. Each Class B common share will be entitled to 10 votes per share.

Figure 72: Ownership Structure After IPO (Class B Common Shares) Figure 73: IPO Structure

ARD Finance S.A.

77.7%

ARD Group Finance

Holdings S.A.15.3%

Other7.0%


Of Class B shares, 100% are owned by Ardagh Finance SA, a private holding company. It is controlled by Paul Coulson who intends to maintain his current ownership stake.

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Management ProfilePaul Coulson, chairman and director, established Yeoman International in 1980 and developed it into a significant leasing and structured finance business. In 1998, he became chairman of the Group and initiated the transformation of Ardagh from a small, single plant operation into a leading global packaging company. Over the past 30 years, he has been involved in the creation and development of a number of businesses apart from Yeoman and Ardagh. These include Fanad Fisheries, a leading Irish salmon farming company, and Sterile Technologies. Prior to its sale to Stericycle, Inc. in 2006, Sterile Technologies had been developed into the leading medical waste management company in the United Kingdom and Ireland. Mr. Coulson qualified as a chartered accountant in 1978.

Ian Curley, group chief executive officer, designated in June 2016 and became group chief executive officer in September 2016. Prior to joining the Group, he was group chief financial officer of Smurfit Kappa Group plc from 2000 until March 2016, prior to which he served as CFO of Smurfit Europe. He is a fellow of the Institute of Chartered Management Accountants (Ireland).

David Matthews, group chief financial officer, appointed in March 2014. Prior to joining Ardagh, he held various senior finance positions at DS Smith plc and Bunzl plc. Mr. Matthews qualified as a chartered accountant in 1989 with Price Waterhouse in London and holds an engineering degree from the University of Southampton.

Figure 74: Executive Board Members Figure 75: Divisional CEOs

Name Designation Years at Ardagh

Paul Coulson Chairman 19

Ian Curley CEO 1

David Matthews CFO 3

Name Designation Years at Ardagh

David Wall Metal Packaging 9

Oliver Graham Glass Packaging Europe 4

Johan Gorter Beverage Can 19

John Riordan Glass Packaging NA 18


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Appendix 1: Credit Suisse PEERsPEERs is a global database that captures unique information about companies with the Credit Suisse coverage universe based on their relationships with other companies – their customers, suppliers, and competitors. The database is built from our research analysts' insight regarding these relationships. Credit Suisse covers over 3,000 companies globally. These companies form the core of the PEERs database, but it also includes relationships on stocks that are not under coverage.

Figure 76: Ardagh PEERs Map

Source: Credit Suisse PEERS.

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Companies Mentioned (Price as of 07-Apr-2017)Ardagh Group S.A. (ARD.N, $21.86, OUTPERFORM[V], TP $26.0)Ball Corporation (BLL.N, $72.23)Crown Holdings Inc. (CCK.N, $52.9)Owens Illinois (OI.N, $20.24)Silgan Holdings (SLGN.OQ, $57.81)Vidrala (VID.MC, €51.0)

Disclosure AppendixAnalyst Certification I, Lars Kjellberg, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Ardagh Group S.A. (ARD.N)

ARD.N Closing Price Target Price Date (US$) (US$) Rating 20-Mar-17 21.53 R * Asterisk signifies initiation or assumption of coverage.

Closing Price ARD.N

21- Mar- 2017 28- Mar- 2017 04- Apr- 201721.0

21.5

22.0

22.5

23.0

REST RIC T ED

3-Year Price and Rating History for Ball Corporation (BLL.N)

BLL.N Closing Price Target Price Date (US$) (US$) Rating 08-Apr-14 54.80 59.00 N * 07-Aug-14 62.26 61.00 31-Oct-14 64.43 60.00 26-Jan-15 64.16 63.00 05-Feb-15 72.03 R * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price BLL.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201750

60

70

80

90

N EU T RA LREST RIC T ED

3-Year Price and Rating History for Crown Holdings Inc. (CCK.N)

CCK.N Closing Price Target Price Date (US$) (US$) Rating 08-Apr-14 44.83 50.00 N * 02-Sep-14 50.12 52.00 20-Oct-14 46.72 50.00 26-Jan-15 45.91 54.00 20-Apr-15 54.33 58.00 22-Jul-15 52.21 60.00 14-Sep-15 48.39 57.00 18-Jan-16 45.28 55.00 05-Feb-16 45.81 54.00 19-Apr-16 52.03 58.00 22-Jul-16 52.99 60.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price CCK.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201740

45

50

55

60

N EU T RA L

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3-Year Price and Rating History for Owens Illinois (OI.N)

OI.N Closing Price Target Price Date (US$) (US$) Rating 08-Apr-14 33.19 40.00 N * 17-Sep-14 28.58 35.00 30-Oct-14 24.96 29.00 26-Jan-15 23.45 26.00 04-May-15 24.92 32.00 O 14-May-15 25.84 34.00 17-Aug-15 22.22 32.00 14-Sep-15 20.08 30.00 18-Jan-16 13.09 24.00 02-Mar-16 14.68 21.00 22-Apr-16 18.33 23.00 04-May-16 19.16 25.00 29-Jul-16 18.79 27.00 27-Oct-16 19.46 28.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price OI.N

01- Jan- 2015 01- Jan- 2016 01- Jan- 201710

20

30

40

N EU T RA LO U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

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Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 45% (64% banking clients)Neutral/Hold* 39% (61% banking clients)Underperform/Sell* 14% (54% banking clients)Restricted 2%*For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Ardagh Group S.A. (ARD.N)

Method: Our target price for Ardagh of $26 is the weighted average of 1) 14.6x P/E on our 2017EPS estimate (weight 25%), 2) 8.6x EV/EBITDA on our 2017 estimates (25%), and 3) our discounted cash (DCF) analysis (50%). In our DCF analysis we assume a 6.9% cost of capital and 1.0% terminal growth rate of FCF. Our cost of capital assumption assumes a normalized risk free rate of 3%, 6% cost of debt and an equity beta of 1.2. Given the potential upside to our price target we rate the stock Outperform.

Risk: Risks for Ardagh achieving our $26 price target and Outperform rating are: 1) rising cost inflation, 2) competitive pressure, 3) FX volatility, and 4) inherent risks of poor acquisition execution and integration.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures/view/selectArchive for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (ARD.N, BLL.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (ARD.N, BLL.N) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject company (ARD.N, BLL.N) within the past 12 monthsCredit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ARD.N, BLL.N, CCK.N, OI.N) within the next 3 months.A member of the Credit Suisse Group is party to an agreement with, or may have provided services set out in sections A and B of Annex I of Directive 2014/65/EU of the European Parliament and Council ("MiFID Services") to, the subject issuer (OI.N) within the past 12 months.For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=292856&v=2eftzeqddyzy424rpwu66f7xq . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (OI.N) within the past 3 years.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.This research report is authored by:Credit Suisse Securities (Europe) Limited..........................................................................................................................................Lars KjellbergTo the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the FINRA 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.Credit Suisse Securities (Europe) Limited..........................................................................................................................................Lars Kjellberg

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