ALBÉA BEAUTY HOLDINGS S.A. volume toothpaste market, which requires long run, economical packaging. Albéa sells its laminate tubes Albéa Beauty Holdings S.A. Annual Report for year

Albéa Beauty Holdings S.A. Annual Report for year ended December 31, 2017

1

ALBÉA BEAUTY

HOLDINGS S.A. ANNUAL REPORT 2017


2


3

I. GENERAL INFORMATION AND PRESENTATION OF FINANCIAL STATEMENTS

General information

Albéa Beauty Holdings S.A. (“Albéa”) is domiciled in Luxembourg and registered in the Luxembourg Trade and

Companies Registry (Registre du Commerce et des Sociétés de Luxembourg) under number B 162 078 and is

an affiliate of Sun Capital Partners V LP. Albéa and the subsidiaries included in the scope of consolidation

constitute Albéa Group (“Albéa” or “the Group”).

The Group was created by Sun Capital after the acquisition of the Beauty Packaging business from Rio Tinto

Alcan on July 2, 2010. Albéa is one of the world’s leading producers of plastic packaging products for the

beauty and cosmetics industry, providing a wide range of solutions for the make-up, fragrance, skincare,

personal and oral care markets. The operational headquarters of Albéa are located in Gennevilliers, France.

Albéa employs about 15 000 people and operates 39 manufacturing facilities in 16 different countries across

Europe, America and Asia.

Albéa Beauty Holdings S.A., which holds a significant part of the financing of the group, is held by Albéa S.A.

via another holding company. These three entities except financing and holding activities did not carry out any

operating activities in the year ended December 31, 2017.

Historical Financial Information

Albéa Beauty Holdings S.A. consolidated financial statements for the year ended December 31, 2017 were

prepared in accordance with the international accounting standards as adopted for use in the European Union.

These international accounting standards include International Financial Reporting Standards (IFRS) and

International Accounting Standards (IAS) and the related interpretations as prepared by the International

Financial Reporting Interpretations Committee (IFRIC).

The principal accounting policies applied in the preparation of these consolidated financial statements are set

out below. These policies have been consistently applied to all the periods and balances presented, unless

otherwise stated.

The standards and interpretations applied to prepare Consolidated financial statements as on December 31,

2017 are those published by the Official Journal of the European Union applicable as on December 31, 2017.


4

Non-IFRS Financial and Operating Information

While considering the financial performance of our business and use it as a management tool in decision

making, our management analyzes the financial performance measures of EBITDA and Adjusted EBITDA at a

company and operating segment level. We believe EBITDA and Adjusted EBITDA are useful metrics for

investors to understand our results of operations and profitability because they permit investors to evaluate

our recurring profitability from underlying operating activities. We also use these measures internally to

establish forecasts, budgets and operational goals to manage and monitor our business, as well as

evaluating our underlying historical performance. We believe EBITDA facilitates operating performance

comparisons between periods and among other companies in industries similar to ours because it removes

the effect of variation in capital structures, taxation, and non-cash depreciation, amortization and

impairment charges, which may differ between companies for reasons unrelated to operating performance.

We believe Adjusted EBITDA better reflects our underlying operating performance because it excludes the

impact of items which are not related to our core results of operations. EBITDA and Adjusted EBITDA

measures are frequently used by securities analysts, investors and other interested parties in their evaluation

of companies comparable to us, many of which present EBITDA related performance measures when

reporting their results.

EBITDA (Non-IFRS Financial Measure)

We define EBITDA as profit / (loss) from continuing operations before financial result, income taxes, share of

income from associates and depreciation and amortization.

Adjusted EBITDA (Non-IFRS Financial Measure)

We define Adjusted EBITDA as EBITDA adjusted to exclude restructuring costs and severance costs, non-

recurring fees, shareholders’ management fees, separation costs, acquisitions costs, integration and

transformation costs, other compensation and termination benefits, unrealized foreign exchange gains (losses),

gains (losses) on disposals, impairment, bargain purchase gain.


5

II. BUSINESS OVERVIEW

Key Historical Steps

Albéa business was formed in 2004 when the Alcan group acquired Pechiney S.A. (“Pechiney”) and

consolidated two of its packaging businesses, Cébal Tube Europe and Techpack, to form Alcan Beauty

Packaging. In 2004, Alcan Beauty Packaging’s management identified non-core businesses for disposal and

optimized its manufacturing footprint and operations in order to create a more integrated and efficient

business. Rio Tinto acquired Alcan Beauty Packaging in 2007 as part of the wider acquisition of the Alcan

group to form Rio Tinto Alcan (RTA) Beauty Packaging. In July 2010, our subsidiary Twist Beauty Packaging S.à

r.l. and certain of its subsidiaries acquired Rio Tinto’s beauty packaging business and renamed it “Albéa.” On

December 31, 2012, we and certain of our subsidiaries acquired the Rexam Cosmetics Business from Rexam

PLC and several other Rexam entities to reinforce Rigid offering and Dispensing solutions. On August 9, 2016,

Albéa acquired 100% of Scandolara Tub-Est, s.r.o. This acquisition help us to extend our industrial footprint in

Slovakia to better serve our customers.

COVIT acquisition

In February 2018, Albéa acquired 100% of Covit S.L., a leading manufacturer of metal parts, from PHI private

equity fund. Covit S.L is a leader in the drawing, anodizing, assembly and decoration of metal parts for

packaging products, based in Torello, Spain. Covit owns an extensive know-how in stamping, anodizing and

color matching as well as years of experience primarily in dispensing systems. The company was founded in

1979. It employs 200 people and achieved sales of appr. €20 million in 2017. This acquisition will provide Albéa


6

with global Metal capabilities and expertise while building a strong, global supplier of metal parts. Metal is a

critical asset in the fragrance & cosmetics market where packaging often combines metal and plastic parts.

Albéa At glance

We have long-standing relationships with a number of blue-chip beauty packaging companies such as Avon,

Chanel, Coty, Estee Lauder, GlaxoSmithKline, L’Oréal, LVMH, Natura, Procter & Gamble and Unilever, and we

estimate that these relationships average more than 20 years. Our customers also include more than 2,000

regional and local beauty and personal care companies. We have been able to grow and maintain long-term

relationships with our customers due to the strength and global footprint of our manufacturing operations, our

strong customer focus, new product development capabilities and the critical position that our packaging

occupies within our customers’ supply chain. New product development is at the core of our and our

customers’ success. Our new product development teams collaborate with our customers to develop

packaging, enabling them to successfully market their products to consumers. This collaboration also enables

us to retain customers by efficiently addressing requests from existing customers for new packaging,

particularly for products with high renewal rates (such as rigid packaging).

Furthermore, we have advanced integrated printing, decorating, surface treatment (such as anodizing and

electro-plating) and metallization capabilities. The design and presentation of our packaging communicates

our customers’ distinct values and style, which are of particular importance in the end-markets that we serve.

Many are specialty items designed to provide a convenient and often unique means of storing, dispensing and

applying our customers’ products. Although our packaging often constitutes only a small portion of our

customers’ cost of production, it is an integral part of our customers’ successful marketing strategy and,

ultimately, an element of consumers’ satisfaction. We have a global manufacturing platform of 39 plants,

operating in 16 countries across Europe, the Americas and Asia. Our global manufacturing network is closely

aligned with our customers’ plants. We serve both large, developed markets such as Europe and North

America and faster-growing, developing markets such as Brazil, Mexico, China, Indonesia, Russia and India. We

believe that we are well positioned relative to our largely regional peers to take advantage of anticipated

growth in those emerging markets, in particular for affordable beauty and personal care products, since our

global footprint and broad product offering enables us to serve our developed market customers as they

expand globally as well as penetrate new regional and local customers in developing markets.

Our global exposure is enhanced by the use of our packaging for high-end beauty and personal care products

which are sold around the world. For example, several luxury brands we serve have their primary filling

locations in France, but sell their products globally. The global distribution of our customers’ products allows

us to more efficiently utilize our developed market manufacturing footprint while participating in global

growth trends.


7

Wider range of services and decoration expertise

Albéa serves the complete value chain, from new products development to conversion of raw materials,

decoration, assembly, and logistics, as reflected by the chart below. In some instances, through our beauty

solutions business, Albéa organizes a full service solutions with filling through subcontracting.


8

Our products

Albéa has two product segments: (i) our “tubes” segment, which encompasses laminate and plastic tubes for

the oral care and cosmetics industry; and (ii) our “cosmetic rigid packaging” segment, through which we

manufacture products for color make-up, skincare and fragrance caps, dispensing systems and beauty

solutions. We believe we have one of the broadest product portfolios in our industry, which allows us to

provide comprehensive product solutions, serve as a “one-stop-shop” for our customers and cross-sell a total

packaging solution to our customers, giving us the potential to increase our share of our existing customers’

packaging spend and to attract new customers.


9

Albéa ranks best in Plastic and Laminated Tubes as well, being top of class in global footprint and breadth of

product offer, with an continuous improving potential on reliability. Albéa Tubes business combines a global

reach with local presence through 20 sites and operates on regional basis with presence mainly in Europe,

North and South America and to a lesser extent in Asia. Our sites are located less than 1,000 km from filling

sites of customers.

Our principal tubes product categories are:

Laminate tubes.

Laminate tubes are made from several film layers assembled by heat, pressure or adhesives, in order for the

composite material to achieve improved oxygen, water or light resistance, or a better appearance. Albéa

manufactures laminate tubes with plastic and aluminum layers. Albéa carefully selects the combination of

layers to minimize costs and maximize the qualities of the film. Albéa manufactures laminate tubes in two

steps: the first part of the process consists of manufacturing and printing the laminate film (or “web”) using a

laminator and a printer and the second part consists of cutting, shaping and welding together the tube from a

printed laminate film and adding a tube head and a cap. Albéa owns and operates one laminator in Canada

and buys laminate films from third party suppliers. A large portion of our laminate tubes are produced for the

high volume toothpaste market, which requires long run, economical packaging. Albéa sells its laminate tubes


10

to most major toothpaste manufacturers, including Procter &

Gamble (“Crest,”Oral B”), Unilever (“Signal,” “Close up,”

“Pepsodent”) and Arm & Hammer

In 2014, We launched a premium laminate tube: Reflexion™. It is a

plastic Barrier Laminate Tube with brilliant metallic effects and

bounce back properties similar to conventional plastic Tubes.

Thanks to a specific process developed by Albéa, the Reflexion

Tube offers a vast range of metallic effects. The tubes can be

printed in 8 colors. In addition, thanks to a new seaming process

and 360° printing, the side seam is virtually invisible and almost

imperceptible to the touch.

With such new technology, Albéa aims to capture laminate

premiumization and should benefit from opportunity to offer

cosmetic laminate instead of plastic tubes mainly in emerging

market. Indeed, Albéa could provide more complex decorations and metallic effects and therefore, it will allow

Albéa to complement the existing portofolio of plastic tubes and target additional growth in mass and

masstige skin care markets.

Over the past few years, Albéa has engaged in a major development project with our main customer to start

producing since November 2015 the first laminate tubes for hair coloration: the Hair Dye project. Albéa

innovative patented technology offers an effective alternative to aluminium tubes preserving formulation from

reaction with oxygen as well as the environment.

More recently Tubes has launched a digital printing process in

order to answer very specific and value added customer request

with very short delivery time and small order size.

Plastic tubes.

Plastic tubes are made from plastic resin colored and shaped

into the desired form. The tube is then printed, decorated and

fitted with an injected tube head. Printing change overs are

relatively short, which allows us to customize printing and

appearance for comparatively small production batches.

The extrusion process produces a seamless tube allowing 360°

printing and high quality decoration. Plastic tubes are as a result

more versatile and more refined than laminate tubes.

Compared to laminate tubes, plastic tubes are less oxygen , water and light resistant and not suitable for

certain products. A large portion of our plastic tubes are produced for the skincare and personal care markets,


11

which require distinctive and branded packaging. In recent years we have increased the production speed of

our manufacturing lines, added manufacturing capabilities (such as for tubes with an oval shaped section) and

eliminated sources of waste (such as production line change over times and scrap). Our plastic tubes come in a

variety of shapes and sizes, and can be fitted with various applicators, providing our customers with a range of

products to fit their brand’s needs.

Tube caps.

Albéa produces a variety of screw caps and flip top caps for plastic tubes with diameters ranging from 13.5 mm

to 60 mm. Albéa sells most of its tubes fitted with cap produced internally, including certain caps with our

proprietary designs such as our “slender caps” and our tamper resistant “access denied” lines. Albéa also buys

plastic caps from suppliers.


12

Our cosmetic rigid packaging segment encompasses the following sub-groups:

• Rigid packaging. These are products we manufacture through injection-molding, assembly and decoration

such as lipstick containers, mascara packs, fragrance and skincare caps and other similar packaging for

color make-up, skincare and fragrance products.

• Dispensing system. These products include spray pump engines and decorating parts we manufacture

through injection molding, high speed assembly and decoration, and which are typically used to spray

fragrance (“fine mist”), skin cream (“lotion”) , soap or conditioning products (“foam”) , spray product

samples (“samplers”) and Mini fragrance and facial care pumps.

• Beauty solutions. These are full service solutions where we design, develop & deliver tailor-made turnkey

projects, leveraging a global ecosystem with reliable partners and Albéa’s resources. We go far beyond

pack & formulas. We draw our inspiration from a deep understanding of market trends, leveraging social

network and data analytics, then we build a customized offering, with our full service approach and our

expertise in combining packs, formulas and accessories for an optimal time to market with innovations

and a wide library of stock items to be customized.


13

Albéa principal cosmetic rigid packaging products are:

Mascara and lip gloss.

Albéa sells a complete range of mascara bottles and brushes. Our

products include an innovative set of high volume brushes and

combing brushes that we developed, including our two in one

applicator for loading formula and combing lashes. Albéa’s

customers work with us to design products which meet their

appearance and functional requirements. Albéa uses packaging

materials that adequately store our customers’ product and provides

spill free and accurate dosage through brushes and wipers designed

to obtain the desired lash effect and emphasizes the visual impact of

the product.

Fragrance and skincare caps.

Fragrance and skincare caps are closures that fit on the ends of fragrance bottles and skincare jars.

They are designed to emphasize the status of the consumer and the exclusivity of the product.

They are comparatively thick pieces demanding a deep knowledge of mold design and injection

molding techniques. The challenges they present, range from delivering a strong visual impact at

minimal cost to achieve a unique appearance for exclusive brands through a combination of highly

skilled injection and decoration techniques. Albéa primarily sells our caps and jars in Brazil and in

Europe, where a large portion of worldwide production of exclusive fragrances is concentrated.

Lipstick containers.

Albéa offers lipstick packaging in various styles and

fashions to address all packaging needs. The core of a

lipstick container is the injected, assembled

components which together help to raise and retract

the lipstick paste. Albéa offers customers a choice of

mechanism with different value-propositions,

including a lubricant-free mechanism often

considered by exclusive brands as one of the best

options for sensitive formulas and for ease of use. We

also offer a wide array of decoration options.


14

Compact powder-cases.

Compact powder-cases are designed to convey the status of the

consumer and the exclusivity of the brand and product. They also

offer long-lasting use, shock resistance and, most of the time, an

applicator for the product and a mirror for convenience. Compact

powder-cases are made from injected pieces and then are

decorated and assembled. Albéa’s compact powder-cases

production center in Indonesia has specialized in developing

distinctive, high-end compact powder-cases. Albéa’s product

development teams in Europe and the United States work

together with both our Indonesian and customers’ product

development teams to design the best product possible.

Dispensing systems.

Albéa’s dispensing systems include fragrance, lotion, foam and sampler pumps. Pumps are a highly

technical business given the miniaturization of the engines. Manufacturing the small components

and the valves requires sophisticated design, precise injection-molding and high-speed assembly.

Albéa offers a broad variety of pump engines and decoration for our fragrance pumps. In lotion

pumps, Albéa proposes both neutral and airless pumps which can dispense a variety of viscosities

and may include a lockable design or a protective cap. Albéa lotion pump business line includes our

Nea platform which offers high suction power suited for high viscosity products. Albéa also

produces foam pumps to dispense foam from a liquid solution without using propellants or

chemicals. Albéa adapts its pumps to specific formulations and offers a wide choice of bottle

customization, dosage and foam quality options. Albéa produce also a foam dispenser, its EZ’R line,

which is used by inverting the bottle and squeezing it with one hand, thereby providing high quality

foam and convenience.

Beauty solutions.

These are full service solutions were we design, develop & deliver tailor-made turnkey projects,

leveraging a global ecosystem with reliable partners and Albéa’s resources. We go far beyond pack

& formulas. We draw our inspiration from a deep understanding of market trends, leveraging social

network and data analytics, then we build a customized offering to (i) “reveal your formulas” with a

wide range of applicators and dispensing solutions (ii) “boost your sales” and transform the

customer experience with promotional items and pouches (iii) “ease your life” with our full service

approach and our expertise in combining packs, formulas and accessories for an optimal time to


15

market with innovations and a wide library of stock items to be customized. In addition we also

develop business verticals as with Travel Designer brand supplying business and first class travel

kits to major airlines.

Albéa ranks the best in Rigid Packaging for mascaras and Lipsticks, being top of the class in

innovation, quality and breadth of product offer. We offer a comprehensive global footprint with 15

sites worldwide, being able to address local demands in almost every region of the world as well as

offer lower capital intensive solutions from East-Asia. Our production is organized among regional

production sites specialized by products or technology. Albéa’s mascara and lipstick centers of

excellence are located in Europe, America and Asia, while fragrance cap business is located in

Europe and Brazil.

Dispensing Systems follow a very complex manufacturing process where Albéa has developed a

unique expertise. Our production is organized around several centers of excellence worldwide with

a strong presence in Europe, North and South America and China.


16

Albéa’s market

We believe we are one of the world’s leading

producers of plastic packaging for the beauty

and personal care market, which we believe is

one of the fastest growing end-markets for

consumer packaged goods. Our packaging is

primarily used in the skincare, color cosmetics,

fragrance, bodycare and oral care segments of

the beauty and personal care industry and

consists of laminate tubes and plastic tubes,

mascaras, lip gloss and lipstick containers,

compact powder-cases, jars, fragrance caps

and dispensing systems such as fragrance

pumps and samplers, lotion pumps and foam

pumps, as well as promotional items. We

believe that our product offering addresses a

$9 billion sub-segment of the global market for

beauty and personal care packaging, which

according to a 2016 Smithers Pira report, is

estimated to be approximately $22 billion.

We are a global market leader across the majority of our product portfolio with over 70% of our

sales in product categories in which we believe we hold the number one or two market positions.

We believe that we have one of the broadest portfolios of packaging in our industry, enabling us to

provide comprehensive solutions which simplify and optimize our customers’ supply chain.

According to the Smithers Pira Report, the global beauty and personal care packaging market is

expected to grow at 4.1% per year between 2015 and projected 2021, while the annual market

growth in Western Europe and North America is expected to be 2.8% and 3.3%, respectively,

between 2015 and 2021. We expect growth in developed markets to continue to be influenced by

an aging population, consumer interest in beauty and personal care trends and growing demand

for more convenient and effective packaging solutions. We expect consumer demand for beauty

and personal care products in emerging markets to continue to be driven by a growing middle

class, a rapid increase in demand for branded and upscale products and improved retail

infrastructure. Our revenue will be impacted from period to period by our ability to penetrate, and

the continued growth in, these emerging markets.


17

Our packaging is primarily used in the skincare, color cosmetics, fragrance, body care and oral care

segments of the beauty and personal care industry and consists of laminate tubes and plastic

tubes, mascaras, lip gloss and lipstick containers, compact powder cases, jars, fragrance caps and

dispensing systems such as fragrance pumps and samplers, lotion pumps and foam pumps, as well

as promotional items.

*Management data unaudited

Skin Care: creams, masks, This market is led by a strong demand for facial care products (e.g. anti-

ageing cream, high-end facial creams) and increasing life expectancy.

Color Cosmetics: mascara, lipstick,…This market is also led by a strong demand widening consumer

base towards young people and highly linked to fashion trends.


18

Hair Care: Albéa is not holding a strong position in market for Hair Care because Albéa does not

produce bottles used for shampoo neither aerosols used for lacquers nor aluminium tubes. Albéa

has entered the market through the Hair Dye project launched in November 2015, which is the first

laminate Tubes for hair coloration. This project represents significant adjacent market development

opportunity for the coming years and demonstrates Albéas leadership in laminated tube

technology.

Oral Care: mainly tooth paste. Its a stable market with limited potential for further differentiation

justifying people to trade up for more expensive products.

Fragrance: perfume... It’s also a stable market in mature market in developed counties (Europe,

North America) while increasing incomes and the rising attention to personal image in emerging

markets will drive growth in these regions.


19

Geography

Our business is diversified among numerous regions around the world, with a broad manufacturing footprint in

16 different countries across Europe, North America, South America and Asia, allowing us to provide customer

satisfaction in a variety of major markets. Our customers are increasingly expanding their global presence and

rely on us to provide regional or local supply solutions, allowing us to reinforce our position as a key global

supplier to them. Our ability to manufacture products in various regions allows us to serve markets where

delivery times and transportation and other costs such as import duties may be prohibitive.

We have leading positions and a strong manufacturing base in both mature and stable markets such as Europe

and North America, as well as developing and faster growing markets such as Brazil, Mexico, China, Indonesia,

Russia and India. We mostly produce high volume and affordable beauty and personal care products for the

emerging markets, whereas we have a higher proportion of both higher value added and high end beauty and

personal care products for the mature markets.

Our geographic diversification allows us to take advantage of regions with historically stable growth rates of

the beauty and personal care end market, such as Western Europe and North America, while building our

positions in faster growing emerging markets, such as Latin America, Asia Pacific and Eastern Europe. Its

important to underline that we sell to filling locations that might differ from the end market consumption.


20

Production

We have a global manufacturing platform of 39 plants, operating with a global footprint which allows us to be

closely aligned with our customers’ plants and to serve them as they expand globally.

We are permanently improving our global footprint. Since 2010, we have closed several plants (France, Mexico,

Brazil, China and Italy). We have completed the Rexam footprint integration.

We are now working on leveraging huge investments, restructuring and project cost done to develop further

operational excellence.


21

Albéa have done major footprint projects since 2010 in Mexico and Brazil. More recently we achieved the

following projects:

Footprint optimization

France: In 2013, we merged two separate tubes manufacturing sites in France into one new location to better

satisfy our customers. The move started during the summer and was completed earlier during winter 2013

with minimal impact on delivery.

China North: On October 2013, we relocated our Suzhou site in China to a new location, where we also moved

part of the Shanghai operations of Rexam Cosmetics following the requirement of the government to move.

The transfer was completed in June 2014. However, the ramp up phase of this facility has taken several months

to reach break-even in November 2015 and impacted revenues unfavourably.

The plant was opened in June 2014, in Suzhou, China. This brand new 30,000 m2 Center of Excellence with our

core industrial expertise in tubes, cosmetic packaging, and dispensing systems. Built to world-class operating

standards, with integrated decoration and assembly capabilities, Albea Suzhou draws on our 25-year legacy in

China to serve our prestigious local and global customers.


22

Italy: In September 2014, we opened Albéa Bottanuco, a European Center of Excellence for mascara, lip-gloss

and eyeliner packaging thanks to its integrated injection, assembly surface treatment and decoration

capabilities. We merged two plants into a new one as Albéa has been operating in Italy since 1979 and opened

the 18,000m2 Bottanuco facility in September 2014. In particular, this Center of Excellence provides customers

with a dedicated applicator development and production area as well as a comprehensive plastic and fiber

brush library.

Plouhinec/Simandre: The target is to reduce complexity by having each site dedicated to similar process,

technology. The project consists in transferring production of assets between Plouhinec and Simandre to

create respectively, two excellence center in lipstick for Plouhinec and Skincare/perfume for Simandre. Assets

transfers already took place in 2016, but this significant project is planned to be completed by end of 2018 and

Albéa will have fully restructured its industrial footprint in Europe.

Shenzhen (China South): In December 2015, we signed an agreement for the sale of our Shenzhen facility. We

transferred the existing production assets to two other existing plants (Nanglang and Tex) in China. This self-

funded operation allows Albéa to optimize our production sites in China South: leverage available space,

increase operational efficiency, refocus sites as expert centers. The administrative disposal of Shenzhen site is

planned to be completed in March 2017, although assets were transfered in the last quarter of 2016.

Portfolio Optimization

On October 1, 2013, we sold our Albéa Annecy business and on October 4, 2013, we sold a former cap making

facilities plant based in Albertville, France which had been closed since 2011.

In February 2014, we sold Cotuplas S.A.S., an equipment manufacturer for the productions of tubes, to

Automation Industrielle S.A., a larger equipment producer also specialized in equipment for tube

manufacturing and from whom we have been buying equipment in recent years. We intend to continue

cooperating with Cotuplas S.A.S. in developing innovative tube manufacturing equipment.

Continuous improvement of our profitability

Since the acquisition by affiliates of Sun Capital in 2010, Albéa has been transformed into one of the world’s

leading producers of plastic packaging for the beauty and personal care industry through a series of strategic

acquisitions and divestitures and capital investment and operational improvement programs. Albéa

established its global leadership position in the laminate tubes market through our merger with Betts, and

expanded into dispensing systems through the Rexam Cosmetics Acquisition. We have also completed several

bolt-on acquisitions to broaden our geographic exposure and to solidify our supply chain, such as the

purchases of Eyelematic in the U.S., Tex China and Albea Slovakia in Europe.


23

Albéa’s continuous focus on operational efficiency and acquisition integration has reduced costs and improved

our Adjusted EBITDA Margin. Albéa has invested significantly in new plants and equipment, and rationalized its

production capacity in France, Italy, Mexico, China and Brazil. Our strategic initiatives, in particular our

acquisitions and cost reduction measures, have resulted in significant Adjusted EBITDA growth and Adjusted

EBITDA Margin expansion.

Our Adjusted EBITDA has grown from $86.2 million in 2011 to $190.5 million for the twelve months ended

December 31, 2017. At same rates, the Adjusted EBITDA has increased by 6.4% versus 2016. The EBITDA

margin is at 12.8% at the end of 2017.


24

IV. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Profit and Loss statement Twelve Months Ended December 31, 2017 as Compared to Twelve Months Ended December 31, 2016

Revenue

Reported revenue increase by $86.8 million, or +6.2%, from $1,402.4 million for the twelve months ended

December 31, 2016 to $1,489.2 million for the twelve months ended December 31, 2017. Organic sales, at same

rates and perimeter, grow by 3.7% versus 2016.

This increase was primarily due to an increase in volumes of tubes in Europe and emerging countries and to an

increase in sales in our cosmetic rigid packaging segment. Albéa’s sales growth in 2017 vs 2016 is lead by Global

accounts +6.9% along with Small and medium accounts +5.4% while few key accounts suffered especially in

Brazil.

In $ million

Consolidated Income Statement Data : 2017 2016

Revenue 1 489,2 1 402,4

Cost of sales (1 190,0) (1 126,4)

Gross profit 299,2 276,0

Selling and administrative expenses (183,4) (176,0)

Restructuring and project costs (15,9) (33,2)

Other income / (expense) (9,2) (12,5)

Operating profit 90,7 54,4

Financial result (9,1) (122,1)

Share of profit of associates (0,1) 0,1

Profit / (loss) from continuing operations before income taxes 81,5 (67,6)

Income tax expense (12,7) (11,1)

Profit / (loss) from continuing operations 68,8 (78,7)

Other comprehensive (loss) / income (74,4) 6,2

Total comprehensive income / (loss) (5,6) (72,5)

Attributable to:

— Owners of the Group (5,6) (72,5)

— Non‑controlling interests

Year ended December 31,


25

Seasonality

Our business, on a consolidated basis, is generally not subject to seasonal fluctuations. However, each product

segment and geographical region, experiences seasonality independently, as a result of consumer buying

patterns, as well as local holidays and their impact on our customers’ manufacturing activity. In Europe, some

of our customers reduce manufacturing activity during August and December. This, in some cases, can be the

reason of lower sales in August and December.

In $ million Q4 2017 YTD Q4 2016 YTD Delta

Organic sales (*) 1 475,1 1 422,1 3,7%

Europe 748,1 705,0 6,1%

America 559,9 553,0 1,2%

North america 473,8 462,2 2,5%

South America 86,1 90,8 -5,2%

Asia 218,8 214,8 1,8%

China & Hong Kong 132,2 130,7 1,2%

Southeast Asia 86,5 84,2 2,8%

Africa 0,0 0,0

Corporate 0,0 0,0

Intercompany sales -51,7 -50,7

Perimeter effect (Albea Slovakia) 14,0 12,4

FX translation effects 19,7

Organic Sales by segment (*) 1 475,1 1 422,1 3,7%

Tubes 618,0 599,3 3,1%

CRP 857,2 822,8 4,2%

Reported sales 1 489,2 1 402,4 6,2%

Organic Adjusted Ebitda (*) 187,3 176,5 6,1%

Europe 91,5 84,2 8,7%

America 81,7 80,6 1,3%

North america 66,4 65,8 1,0%

South America 15,3 14,9 2,7%

Asia 29,3 27,5 6,4%

China & Hong Kong 14,8 12,5 18,4%

Southeast Asia 14,5 15,1 -3,6%

Africa 0,0 0,0

Corporate -15,1 -15,8 -4,4%

Perimeter effect (Albea Slovakia) 3,2 2,5

FX translation effects 2,4

Organic Adjusted Ebitda by segment 187,3 176,5 6,1%

Tubes 88,3 86,8 1,7%

CRP 114,1 105,5 8,2%

Reported Adjusted Ebitda 190,5 174,1 9,4%

(*) 2016 Sales/Adjusted EBITDA at 2017 rates

2017 Sales/Adjusted EBITDA restated with perimeter effect


26

Revenue by Geographic Region (at same rates)

The table shows a breakdown of our revenue and Adjusted EBITDA by regions for the twelve months ended

December 31, 2017 and December 31, 2016 and as a percentage of revenue (for revenue by region) and as

percentage of Adjusted EBITDA (for Adjusted EBITDA by region).

Europe: Sales in Europe increased by $43.1 million, or +6.1% from $705.0 million for the twelve months ended

December 31, 2016 at constant rates and perimeter to $748.1 million for the twelve months ended December 31,

2017. Sales increased in all product lines.

America: Sales in America increased by $6.9 million, or 1.2%, from $553.0 million for the twelve months ended

December 31, 2016 at constant rates to $559.9 million for the twelve months ended December 31, 2017. The

growth is driven mainly by our Rigid business in North America.

Asia: Sales in Asia increased by $4 million, or +1.8%, from $214.8 million for the twelve months ended December

31, 2016 at constant exchange rates to $218.8 million for the twelve months ended December 31, 2017. The

growth is coming from China and India while Indonesia is slightly down last year.

EBITDA / Adjusted EBITDA

The following table reconciles our profit / (loss) from continuing operations, our most directly comparable

measure under IFRS, to EBITDA and Adjusted EBITDA :

In $ million

2017 2016

Profit/(loss) from continuing operations 68,8 (78,7)

Income Tax 12,7 11,1

Financial result 9,1 122,1

Share of profit of associates 0,1 (0,1)

Depreciation and amortization 89,1 87,9

EBITDA 179,8 142,3

Impairment 0,2 0,3

Restructuring costs and separation costs * 16,6 33,2

Sun Capital management fees ** 4,5 4,1

Other items *** (10,6) (5,7)

Adjusted EBITDA 190,5 174,1

(*) Represents restructuring expenses relating to severance, relocation cost, transformation and ramp up cost link to new footprint optimization,

advisory costs related to strategic and operational consulting in relation to Albéa operational improvement plan, legal advice and audit costs in

relation to capital structure evolution program or debt issuance. These costs are deemed to be not in the ordinary course of business. For more

information, see note Restructuring and projects costs for more details.

(**) Represents management and transaction advisory fees paid to affiliates of Sun Capital. See “Related Party Transactions-Consulting Agreements."

(***) Represents in 2017 mainly gains on disposal of assets for $ 16,6 million due to the sale of Albéa Plastic Packaging Shenzhen and unrealized

foreign exchange losses on working capital for $(5) million. In 2016, it include mainly unrealized foreign exchange gains on working capital for

$6.3 million In Mexico, China and Brazil.



27

Adjusted EBITDA

Adjusted EBITDA increase by $16.4 million, or 9.4%, from $174.1 million for the twelve months ended

December 31, 2016 to $190.5 million for the twelve months ended December 31, 2017.

At constant rates and perimeter, Adjusted EBITDA increased by $11.5 million (+6.4%) compared to last year. At

same perimeter, the increase is still significant at +6.1%

The increase was primarily due to cost savings and volume increases in Europe and China and was partially

offset by lower performance in North America, India and Indonesia due to lower volumes for the twelve

months ended December 31, 2017. This good performance is also the result of a better revenue management

and the positive return of our high capex done in previous years to bring our competitiveness to market level.

8 out of 11 clusters representing 80.7% of sales delivered EBITDA growth of 8.7% in 2017 vs 2016 at constant

rate. 7 out of 11 clusters representing 70% of sales in 2016, posted a EBITDA margin of 15% or above.

Adjusted EBITDA by Geographic Region (at same rates and perimeter)

Europe: Adjusted EBITDA in Europe increased by $7.3 million, or 8.7%, from $84.2 million for the twelve months

ended December 31, 2016 at constant rates to $91.5 million for the twelve months ended December 31, 2017.

This great performance is due to higher volume and all continuous improvement initiatives launched over the

past years especially in Rigid Europe which increased its Adjusted EBITDA significantly.

Americas: Adjusted EBITDA in Americas slightly increased by $1.1 million, or 1.3%, from $80.6 million for the

twelve months ended December 31, 2016 at constant rates to $81.7 million for the twelve months ended

December 31, 2017. The increase in Adjusted EBITDA in Americas was primarily due to volume growth and

costs improvements in the North American cosmetic rigid packaging business. This increase was partially

offset by lower sales in tubes and dispensing systems in North America.

Asia: Adjusted EBITDA in Asia increased by $1.8 million, or 6.4%, from $27.5 million for the twelve months

ended December 31, 2016 at constant rates to $29.3 million for the twelve months ended December 31, 2017.

This increase was mainly due to China North with the return on the transformation and automation program

launched few years ago.

Cost of Sales

Cost of sales increased by $63.6 million, or 5.6%, from $1 126.4 million for the twelve months ended December

31, 2016 to $1190.0 million for the twelve months ended December 31, 2017 .

The cost of sales to revenue ratio between the twelve months ended December 31, 2016 and the twelve

months ended December 31, 2017 slightly decreased from 80.3% to 79.9%.


28

Excluding depreciation, at constant rate our cost base continue to decrease in 2017, costs of sales excluding

depreciation to revenue is 75.5% in 2016 compared to 75.2% in 2017. This performance comes from especially

purchasing savings and revenue management results.

Employee benefit expenses related to cost of sales (including temporary staff) for the twelve months ended

December 31, 2016, and 2017 are slightly decreased i.e. 21.3% to 20.6% of our revenue respectively.

Selling and Administrative Expenses

Selling and administrative expenses increased by $7.4 million, or 4.2%, from $176 million for the twelve months

ended December 31, 2016 to $183.4 million for the twelve months ended December 31, 2017. The increase is

mainly due to new recruitment to re-inforce the management team in 2017.

R&D

Albéa spent $12.1 million in research and development projects for the twelve months ended December 31,

2017 versus $13.3 million at same rates for the twelve months ended December 31, 2016. Albéa is the top 50

patent fillers in France and has around 200 people dedicated to Innovation, Development and Designing.

Restructuring and Project Costs

Restructuring and project costs decreased by $17.3 million from $33.2 million for the twelve months ended

December 31, 2016 to $15.9 million for the twelve months ended December 31, 2017.

At December 31, 2017, the main components of restructuring and projects costs are as follows:

- USD (5.8) million, severance costs and restructuring expenses

- USD (4.5) million, transformation project cost (footprint optimization in Europe, other industrial

optimization costs,..)

- USD (2.9) million, non-core business fees (corporate and shareholders projects)

- USD (0.6) million integration cost linked to Albéa Slovakia and merger acquisitions project costs

- USD (2.0) million, other

At December 31, 2016, the main components of restructuring and projects costs are as follows:

- USD (2.9) million, severance costs and restructuring expenses

- USD (10.3) million, transformation project cost (footprint optimization in Europe, lay out costs, other

industrial optimization costs,..)

- USD (11,5) million, projects costs linked to footprint optimization (completion of China South)

- USD (4.7) million, non-core business fees (fees incurred for shareholders projects)

- USD (1.3) million integration cost linked to Albéa Slovakia and merger acquisitions project costs

- USD (2.4) million, other


29

Other Income / (Expense)

Other expenses decreased by $3,3 million from an expense of $12.5 million for the twelve months ended

December 31, 2016 to an expense of $9,2 million for the twelve months ended December 31, 2017. The other

expenses include mainly the depreciation of intangible assets (recognized for the purchase price allocation of

Rexam PC and Albéa Slovakia) for $13.3 million, $4.5 million of Sun Capital management fees (See “Related

Party Transactions – Consulting Agreements” ), gain on disposals for $16,3 million due to the sale of Albéa

plastic packaging Shenzhen and unrealized foreign exchange losses on working capital for $(5) million.

Financial Result

The following table shows a breakdown of our financial result for the twelve months ended December 31, 2017

and December 31, 2016:

Financial result increased by $112.1 million from a loss of $122,1 million for the twelve months ended December

31, 2016 to a loss of $9.1 million for the twelve months ended December 31, 2017. This variance is mainly due to

foreign exchange unrealized impact on the Bond and Term loan B, form a loss of $(13,2) at December 2016 for

the Bond, to a gain of $47 million for the Term loan B at December 2017. Last year figures includes costs linked

to the refinancing process, for $36.6 million which include the Bonds premium redemption costs for $26.3

million and the impact of 2012’ issuance costs acceleration depreciation for $10.3 million.

In $ million

Financial Result 2017 2016

Interest on the Bond (16,5) (56,1)

Interest on Term Loan B (27,5) -

Interest on other financial debt (2,4) (6,6)

Amortized costs (Bond/Term loan B capitalized fees) (3,9) (13,8)

Unrealized foreign exchange (losses)/gains 47,0 (13,2)

Bonds Premium redemption costs (1,3) (26,3)

Other (4,5) (6,1)

Net finance costs (9,1) (122,1)



30

Income Tax Expense

Income tax expense increase by $1.6 million, from an expense of $11 million for the twelve months ended

December 31, 2016 to an expense of $12,6million for the twelve months ended December 31, 2017. We are

paying income tax in several regions (Germany, Mexico, Poland, China, US and Indonesia) due to our

profitability as per Local regulation. In addition, the group incurs others taxes like French CVAE for $(3.9)

million and withholding tax for $(2.7) million mainly in Brazil, which are classified in income tax in accordance

with IFRS but are not calculated on the net income before taxes.

Profit/(loss) from Continuing Operations

The result from continuing operations improved significantly from a loss of $(78.7) million in 2016 to a gain of

$68.8 million in 2017. The improvement is the result of :

- the increase of the Adjusted EBITDA

- the decrease of the restructuring and projects costs

- the significant variance of the financial results

Cash flow

The following table shows a summary of our free cash flows for the years ended December 31, 2017 and 2016 at

various rate.

In $ million

Cash flow 2017 2016

Cash flow from operating activities 166,1 135,4

o/w Adjusted Ebitda 190,5 174,1

o/w Change in working capital 11,2 18,7

o/w Income tax paid (14,6) (16,0)

o/w other (21,0) (41,4)

Cash flow for investing activities excluding acquisitions

(67,7) (60,0)

o/w capital expenditures net of disposals (69,9) (57,5)

Finance lease additions (capital expenditures) (0,2) (1,4)

Interest paid (including Forex cash on net debt) (57,8) (67,1)

Other (0,6) (3,0)

Free Cash Flow 39,1 3,1

Silgan asset deal - (33,4)

Albea Slovakia (199,5) -

Free Cash Flow (160,5) (30,3)



31

Cash from Operating Activities

Cash from operating activities for the twelve months ended December 31, 2017 was $166.1 million compared to

$135.4 million of cash used in operating activities for the twelve months ended December 31, 2016. The

improvement is due to:

- the increase of the profitability with a good control of the working capital.

- and the decrease of the cash out of “other” items which include mainly restructuring/severance costs

cash out $6.8 million, and transformation projects cost cash out for $13,7 million (Europe, China and Brazil)

and Sun management fees for $4.4 million.

Cash used in Investing Activities

Cash used in investing activities for the twelve months ended December 31, 2017 was $(60.0) million – which

includes for $30.4 million the proceed on Shenzhen disposal - compared to $(67.7) million for the twelve

months ended December 31, 2016.

Cash used in investing activities includes mainly capital expenditures. We continuously undertake capital

expenditure projects in order to increase our efficiency and production capacity and capability. Many of our

capital expenditures have been made to rationalize our manufacturing footprint in order to optimize our

resources in each geographic region in which we operate.

In 2017, we spent 4.7% of our revenue, or $69.6 million, on capital expenditures including finance lease. In 2016,

we spent 5.8% of our revenue, or $82.4 million, on capital expenditures including finance lease (excluding

impact of China South and Silgan asset deal).

Interest paid

Interest paid (including Forex cash on net debt) for the twelve months ended December 31, 2017 was

$57.8 million compared to $67.1 million for the twelve months ended December 31, 2016. The interest are

decreasing due to the benefit of the refinancing done in April 2017.

Free cash flow

Before acquisition and refinancing effects, the Free cash flow is positive at $39.1 million versus $3.1 million for

the twelve months ended December 31, 2016. We did a refinancing in April 2017 in order to reduce our

financing costs. The operation generated extra refinancing cash out of $(121.8) million due mainly to realized

forex losses after the repayment of the Bonds and breakup and issuance fees. The proceed from the financing

was used also to pay a dividend recap of $(77.7) million.


32

Balance sheet for the year ended December 31, 2017 and December 31, 2016

Refinancing process

On April 20, 2017, Albéa has completed the refinancing which has been mandated by BNP Paribas S.A. and

Goldman Sachs International as Joint Global Coordinators and, together with Credit Agricole Corporate ,

Investment Bank, HSBC Bank PLC and ING Bank N.V. mandated Lead Arrangers and Joint Book runners to

arrange USD 924 million senior secured credit facilities comprising :

- a USD 818 million 7-year covenant-lite term loan B facility divided in two tranches

o the 408 million USD tranche at Libor US + 375 bps, with a 1% floor; repayment of 0.25% of the

principal on a quarterly basis starting at the end of September 2017

o the 385 million EUR tranche at Euribor + 400bps, with a 0% floor, repayment at maturity date

- a USD 105 million 6-year revolving credit facility, not yet used at the end of June 2017

According to this refinancing, the group extended the debt maturities from 2019 to 2024, and change the

financing term and condition with a biannual interest payment (last day of May and last day of November) .

In $ million

Consolidated Financial Position Data: 2017 2016

Total assets 1179,5 1101,9

Cash and cash equivalents 119,1 87,0

Inventories 162,1 144,9

Trade and other receivables 179,9 170,5

Property, plant and equipment 467,5 444,8

Goodwill 117,3 116,0

Assets held for sale 0,3 16,2

Other financial assets 36,9 14,4

Other assets 96,3 108,2

Total liabilities 1384,3 1222,5

Trade and other payables 331,1 286,3

Pensions and other LT employee benefit obligations 78,9 66,9

Other liabilities 52,2 89,4

Total borrowings 922,0 779,3

Liabilities held for sale 0,0 0,6

Total equity (204,9) (120,6)

Capital stock 0,4 0,4

Additional paid‑in capital 12,2 12,2

Equity excluding non‑controlling interests (217,4) (133,2)

Total equity and liabilities 1179,4 1101,9



33

The term loan B tranche are measured at amortized costs, the Term Loan B net in the financial statement

include USD 23.1 million of capitalized fees linked to the refinancing process.

On June 13, 2017, the USD tranche of Luxembourg Term loan B have been covered by a CAP of 2% with a

maturity debt of May 2020. The CAP premium Fair value is recognized in Other financial assets for USD 2.7

million (see note 6.3).

The proceeds from the Financing was used mainly to repay the Bonds including redemption costs , to pay a

dividend recap to shareholder and to fund the transaction expenses which are capitalized in accordance with

IFRS. This gives us additional liquidity to operate our business, while increase our flexibility to address strategic

actions that will allow Albéa to grow in future.

Net debt (non-Gaap measure)

Net debt for the year ended December 31, 2017 was $780.6 million compared to $689.9 million for the year

ended December 31, 2016.

Our leverage is stable around 4x.

Liquidity and Capital Resources

Our principal uses of cash have been to finance working capital, capital expenditures, restructuring expenses,

debt service and repayments. Our principal sources of liquidity since the Rexam Cosmetics Acquisition have

been provided by operating activities and borrowings under our European Receivables Facility and our North

American ABL Facility. We have also entered into local working capital facilities in some of the jurisdictions in

which we operate. After taking into account our current cash and cash equivalents and our anticipated cash

flow from operating and financing activities, we believe that we have sufficient liquidity for our present

requirements.

In $ million

Other Financial Data 2017 2016

Gross profit 299,2 276,0

EBITDA (1) 179,8 142,3

EBITDA Margin 12,1% 10,1%

Adjusted EBITDA (2) 190,5 174,1

Adjusted EBITDA Margin 12,8% 12,4%

Net debt 780,2 689,4

Ratio of net debt to Adjusted EBITDA 4,10x 3.96x

(*) Operating profit excluding depreciation and amortization.

(**) We define Adjusted EBITDA as EBITDA adjusted to exclude impairment, restructuring costs separation and transformation costs, Sun Capital

management fees, bargain purchase gain, non operating advisory and acquisition fees, inventory step up release due to purchase price allocation

and other items which are not related to our core results of operations.



34

Financing Arrangements

As of December 31, 2017, we had $118.6 million of net cash and cash equivalents, $5.4 million of positive

balance under the North American ABL Facility and under the European Receivables Facility. As of December

31, 2017, we also had €385.0 million aggregate principal amount of Euro Term Loan B and $406 million

aggregate principal amount of Dollar Notes outstanding, $24.7 million of lease financings and $39,6 millions of

other local facilities (included accrued interest and overdraft less finance lease receivable of $3,4 million and

Term loan B cap Fair value for $2.7). We also have $105 million equivalent multicurrency revolving credit facility

maturity April 2023, from which we have no outstanding drawing as on 31, December 2017.

European Receivables Facility

Certain of our subsidiaries in France, Italy, Germany, Poland, the Netherlands and the United Kingdom are

parties to a framework agreement, which includes a committed receivables facility and a non recourse

committed receivables facility, dated June 23, 2014 with Credit Agricole Leasing & Factoring (“CALF”) as the

actor. The European Receivables Facility took effect on July 6, 2014.

This factoring facility was signed in June 2014 by Albea’s European entities, including a syndication program

with BNPP and Natixis covering half of the line.

The European Receivables Facility Agreement provides for a three year period factoring facility and allows us

to draw funding of up to the lesser of: (i) €115 million (or the foreign currency equivalent); and (ii) the value of

the eligible trade receivables sold to CALF by us net of a“reserve” portion amounting to a minimum of 5% of

the outstanding receivables which may give rise to financing.

On 20 July, 2017 Cost of funding related to Pan-European Factoring was decreased from 0.8% to 0.6% margin.

On 28 December 2017, pan-European factoring line with Eurofactor was renewed to €115 million, until October

2019.

North American ABL Facility

On December 17, 2010, our U.S. and Canadian operating companies, Albéa Americas, Inc., Albéa Mexicana, L.P.,

Albéa Cosmetics America, Inc., Albéa Beauty Solutions USA, LLC and Albéa Canada Inc., entered into the North

American Facility Agreement with PNC Bank and General Electric Capital Corporation (collectively, the“ABL

Lenders”). The North American ABL Facility allows us to draw funding of up to $60.0 million in the aggregate,

subject to the borrowing base described below. Up to $3.0 million of the North American ABL Facility can be

utilized for borrowings in Canada and up to $10.0 million of the revolver facility can be utilized for letters of

credit. In May 2016, we increased the level of the borrowing base (mainly increase of financing quotity).

The term of the North American ABL Facility will expire on October 2019. Outstanding borrowings under the

North American ABL Facility are due and payable in full on the last day of the term. Amounts borrowed under

the North American Facility bear interest at a rate per year equal to a base rate plus an applicable margin,

which varies (from 1.25% to 1.75% in the case of loans bearing interest at the alternate base rate or the Canadian


35

prime rate and from 2.25% to 2.75% in case of loans bearing interest at the Eurodollar rate or the CDOR rate)

based on monthly average undrawn availability. Interest is payable monthly in arrears.

An unused line fee is payable monthly in an amount equal to 0.50% per year on the average daily unused

portion of the revolver facility subject to a step down to 0.375% based upon average daily unpaid balance of

revolver utilization.

The North American ABL Facility allows us to draw funding against a borrowing base, which includes eligible

trade receivables and eligible inventory, adjusted for the agreed advance rate and net of applicable funding

blocks and reserves. Only trade receivables and inventory owned by U.S. borrowers are included in the

borrowing base for the U.S. borrowings and only trade receivables and inventory owned by the Canadian

borrower are included in the borrowing base for Canadian borrowings.

Multi-currency Revolving Credit Facility (RCF)

A $105 million multicurrency revolving facility which may be utilized by each of the borrowers and any other

subsidiary of the Parent that accedes to the Senior Facilities Agreement. The revolving facility is available to be

drawn in USD, GBP, EUR or CAD and other currencies as may be agreed from time to time by the original

revolving facility lenders, maturing on 20 April 2023 (6 years). Cost of funding is Libor 6 months + 3.25%

(subject to leverage ratchet and zero rate Euribor / Libor floors). The multicurrency revolving facility is

available for general corporate purposes of the Group (including and without limitation, the financing or

refinancing of capital expenditure, any permitted acquisitions, investments and joint ventures, operational

restructurings and reorganization requirements of the Group, any fees and any related fees, costs and

expenses).

Local Facilities and Financial Leases

We have a variety of other local facilities, including revolving facilities, lease financing arrangements, term

loans, cash management and invoice discounting facilities in the countries in which we operate to fund

working capital and other requirements in those countries, as well as finance leases. These facilities are

generally in amounts between $1.0 million and $10.0 million (with $12.8 million finance lease for the plant of

Sainte Menehould in France) and are guaranteed or secured by a pledge of sum of all of our assets in the

applicable country.

As of December 31, 2017, our financial leases represented $24.7 million and our other local lending facilities

represented $39,6 million of indebtedness (included accrued interests and overdraft less finance lease

receivable of $3.4 million). In 2017, we signed term loan in Le Treport for $0.8 million for four years ending on

31, October 2021 to finance our operations.

Term Loan B

On 20 April 2017, €385 million term loan Facility B was utilized by Albéa Beauty Holdings S.A., Société

Française de Galvanoplastie S.A.S., Betts Limited and Albéa Alkmaar B.V.. (Facility B (EUR)) maturing on 20


36

April 2024 (7 years). Cost of funding is Euribor 6 months + 4.00% (subject to leverage ratchet and zero rate

Euribor floor).

Along with the above a $408 million term loan Facility B was also utilized by Albéa Beauty Holdings S.A. and

Twist Beauty Packaging Holding Corp (Facility B (USD)) on 20 April 2017, maturing 20 April 2024 (7 years). This

term loan facility is with 1% annual amortization. Cost of funding is Libor 6 months + 3.75% (subject to leverage

ratchet and 1% Libor floor) Both term loan Facility B, discharging existing group debt, payment of the

Recapitalisation Payments and other costs and expenses in connection with the Transaction.

Shareholder Funding Instruments

We also have shareholder funding instruments in the form of yield-free convertible preferred equity

certificates (“CPECs”) in an aggregate of USD 29,0 million of CPECs classified in equity in compliance with IFRS.

Pension Plans

We currently operate a number of pension plans. Some of the plans in which our employees participate are

defined contribution plans and some are defined benefit plans. Valuations of these plans are produced and

updated annually as on December 31 by qualified actuaries. The majority of our pension obligations relate to

unfunded defined benefit pension plans mostly in France and Germany, and lump sum indemnities payable

upon retirement to employees in France. Pension benefits are generally based on the employee’s service and

highest average eligible compensation before retirement, on expected future inflation rates for the respective

country and are periodically adjusted for cost of living increases, either by our practice, collective agreement

or statutory requirement.

As of December 31, 2017, we had pension liabilities, termination benefits and other long term employee benefit

obligations of $79 million, most of which are unfunded. The increase of the liabilities compared to 2016 is

mainly due to the variation in Foreign Exchange rate.

The present value of our defined benefit obligations depend on a number of factors that are determined on an

actuarial basis using a number of assumptions. The main assumption used in determining the defined benefit

obligations and net pension costs is the discount rate. Any change in this assumption may impact the amounts

recorded in our consolidated financial statements. The sensitivity analysis regarding the discount rate for

pensions and other long term employee’s benefits obligations is set forth in note 6.11 of our consolidated

financial statements for the years ended December 31, 2017 and 2016.

Quantitative and Qualitative Information Regarding Market and Operating Risks

Foreign Exchange Risk

We currently have operations in 16 different countries across Europe, North America, South America and Asia.

As a result, our businesses are subject to currency fluctuation risks. Our results of operations may be affected

by both the transaction effects and the translation effects of foreign currency exchange rate fluctuations.

Since we present our consolidated financial statements in U.S. dollars, we must translate the assets, liabilities,


37

revenue and expenses of all of our operations with a functional currency other than the U.S. dollar into

U.S. dollars at the applicable exchange rates. We are consequently subject to translation risk. As a result of our

operations in various countries, we generate a significant portion of our sales and incur a significant portion of

our expenses in currencies other than the U.S. dollar.

We are consequently subject to transaction risk. The primary currencies in which we generated revenue in

2017 were the euro, the U.S. dollar, the Brazilian real, the British pound sterling, the Mexican peso, the

Indonesian rupiah, the Indian rupee, the Chinese renminbi, the Polish złoty and the Russian ruble. In 2017, we

earned 42% of our revenue in euro, 31% in U.S. dollars, 6% in Brazilian real, 5% in Chinese Yuan and 16% in Others.

Interest Rate Risk

Interest rate risk relates to a negative impact on our profit and loan covenants arising from changes in interest

rates. Our income and operating cash flow are also dependent on changes in market interest rates. Some

balance sheet items, such as cash and bank balances, interest bearing investments and borrowings, are

exposed to interest rate risk. Borrowings under our North American ABL Facility and European Receivables

Facility, Term lona B and our main finance lease bear interest at variable rates. Mid-June 2017, the USD tranche

of Albéa Beauty Holdings SA term loan B was hedged via a 2% CAP (vs. Libor 6 months) for USD 388 million

(effective date November 30th 2017 and maturing May 31st 2020). Cap cost was USD 1.9 million. No

instrument taken to hedge floating interest rate on the EUR 385 million term loan B, mainly with Albéa Beauty

Holdings SA for EUR 380 million (remaining EUR 5 million between 3 European entities)

Taken into account the USD tranche of Albéa Beauty Holdings SA term loan B already hedged, an increase in

the variable rate of 100 basis points would have a negative impact of about USD 5 million on financial income.

Counterparty Risk

Counterparty risk is the risk that a counterparty will not meet its obligations under a financial instrument or

customer contract, leading to a financial loss. We are exposed to counterparty risk from our operating

activities (primarily from customer receivables) and from our financing activities, including deposits with banks

and financial institutions, foreign exchange transactions and other financial instruments. We do not generally

hold any collateral as security. With respect to trade receivables, the customer credit rating of our largest trade

debtors is carefully monitored by our credit management organization.


38

V. MANAGEMENT AND EMPLOYEES

Board of Directors

Albéa Beauty Holdings S.A. is a holding company that is a wholly owned subsidiary of Albéa S.A, which is

indirectly held and controlled by funds affiliated and/or advised by Sun Capital. Albéa Beauty Holdings S.A

registered office is 5, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg.

The members of the board of directors of Albéa Beauty Holdings S.A, and their respective ages, are as follows:

Set forth below is a short biography of each of the directors of Albéa.

François Luscan has served as a director of Albéa since October 2012 and as Albéa’s President, Chief Executive

Officer, acting Executive VP Europe, since July 2010 and has been principally employed by Albéa (and its

predecessors) since 1985. He was Chief Executive Officer of Alcan Beauty Packaging Beauty from December

2005 to July 2010. In 2010, he led Albéa’s acquisition of the Betts group. Mr. Luscan holds a degree in

engineering in Centrale, France.

Xavier Leclerc de Hauteclocque has served as a director of Albéa since October 2012 and as Albéa’s Group

Executive VP, Chief Financial Officer of Albéa since June 2012. Prior to that, he was Chief Financial Officer of

Brakes France (the Brakes Group) from October 2007 to May 2012. Mr. Leclerc de Hauteclocque holds an MBA

from INSEAD, France and Singapore.

Timothy Stubbs has served as a director of Albéa since October 2012. Since October 2011, he has served as a

Managing Director of Sun European Partners, LLP, the European advisor to Sun Capital. Prior to that, he was

President and Chief Executive Officer of Sapa AB Group from September 2010 to September 2011. Prior to that,

he was President of Sapa Inc. from August 2009 to September 2011. Prior to that, he was Chief Executive

Officer of Indalex Inc, a former Sun Capital affiliated portfolio company, from April 2004 to August 2009. On

March 20, 2009, Indalex Inc filed chapter 11 petitions for bankruptcy in the United States. He holds an MBA

from the London Business School and a B.A. from St. Anne’s College, Oxford University.

Alexis Hennebault has served as a director of Albéa Beauty Holdings S.A. since November 2016. He is currently

a manager at Alter Domus, a leading provider of outsourced administration services for alternative investment

funds and underlying companies. Mr Alexis Hennebaut joined Alter Domus in 2012, and has over the years

worked with some of the world’s largest private equity and hedge funds, and developed extensive expertise in

Name Age Position

François Luscan 57 Director

Xavier Leclerc de Hauteclocque 44 Director

Timothy Stubbs 50 Director

Alexis Hennebault 29 Director

Laura Spitoni 48 Director

Anita Lyse 41 Director


39

the management, financial reporting, tax and legal aspects of funds and SPVs set up by such investors. He

holds an MSc in International Management from ESADE Business School, Barcelona.

Laura Spitoni has served as a director of Albéa since March 2014. She has served as legal counsel and IP

manager of Neuheim Lux Group Holding V S.à r.l., an affiliate of Sun Capital, since January 2014. Prior to that,

she served as a chief counsel EMEA at SCA (formerly Georgia Pacific) from 1999 to December 2013. She holds a

degree in law from La Sapienza University, Rome.

Anita Lyse has served as a director of Albéa Beauty Holdings S.A. since June 2011. She has been employed

principally by Alter Domus, a service provider to alternative investment funds, since 2001, and currently serves

as a Director in the Luxembourg office. She has significant experience working with Luxembourg companies in

a wide range of sectors. She holds an MSc in Business and Economics from the Université des Sciences

Sociales de Toulouse, France.


40

Executive Officers and Key Employee

The following table sets forth information regarding the persons who are the Group’s executive officers. The

business address of our executive officers is 1, Avenue du Général de Gaulle, 92230 Gennevilliers, France.


41

Set forth below is a short biography of each of the executive officers of Albéa who have not been described

above.

Axel Moreau has served as Albéa’s Executive VP Human Resources since July 2010. Prior to that, he served as

Global Human Resources Director of Alcan Beauty Packaging from March 2004 to July 2010. He holds a master

degree in social law from Angers University, France.

François Tassart has served as Albéa’s Executive VP Sales & Beauty Solutions since January 2013. Prior to that,

he was Vice President of Sales, Marketing & Innovation from September 2009 to December 2012. Prior to that,

he was Vice President of Sales & Marketing of Albéa’s worldwide tubes business from April 2009 to August

2009. Prior to that, he was Director of Sales & Marketing of Albéa’s European tubes business from October

2005 to March 2009. He holds a master’s degree in engineering from the École Centrale in Paris.

Charles-Antoine Roucayrol has served as Albéa’s General Counsel since October 2010 and was appointed

Executive VP in January 2013. From 2007 to October 2010, he served as global general counsel at the Alten

Group, a French listed company. Prior to that, from 2001 to 2007, he worked with the Safran Group as general

counsel of Labinal, specialized in the manufacture and supply of electrical systems and engineering services.

Prior to that, he worked at Siemens and the Valéo group. He holds an Executive MBA from École des Hautes

Études Commerciales (HEC) and a degree in business law from University Panthéon-Assas and from University

René Descartes.

Guillaume de Demandolx has served as Albéa’s Executive VP Cosmetic Rigid Packaging Product line since

September 2013. Prior to that, from July 2010 to June 2013, he served as VP Global Sales of MWV Beauty and

Personal Care business. Prior to that, from 2006 to July 2010, while based in Shanghai he served as VP and GM

of the Asia Pacific region for MeadWestaco for their personal and home care division. He holds a MBA from

Harvard Business School and graduated from École Nationale des Ponts et Chaussées.

Jose Filipe has served as Albéa’s Executive VP Americas since January 2013. Prior to that, from 2006 to

October 2013, he served as Albéa’s head of operations, Brazil, and from 2006 to January 2013, he served as

Albéa’s general manager of the global beauty solutions division. He holds a mechanical engineering degree

and a master in production systems from Porto University, Portugal.

Luc Rousselet has served as Albéa’s Executive VP Transformation since August 2016. Prior to that, he was

successively R&D Engineer (Alcatel-Lucent), Production Manager, Plant Manager, Lean Six Sigma

Transformation Leader (3M) as well as Chief Operating Officer (3M and Ahlstrom). He has worked in the

Pharmaceutical, Medical, Food Packaging, Automotive and Aerospace industries and brings a broad

international experience in both global and local roles. Luc holds a degree in Chemical Engineering and an

MBA and is a certified Lean Six Sigma Master Black Belt.

Arnaud Schuh joined Albéa in July 2017 as Executive VP, Tubes bringing a strong expertise in strategy,

manufacturing and global account management. Prior to that, he worked at Amcor from March 2009 to June

2017 where he headed Amcor’s snacks and confectionery business. Prior to that, he was Associate Principal at

McKinsey from 2000 to 2011. He holds a MBA from HEC Paris.


42

Board Structure

Through control of a majority of the shares of Albéa S.A. (which controls 100% of Albéa’s shares), Sun Capital

and its affiliates have the power to control Albéa and our affairs and policies, including the election of our

directors and the appointment of our management team. Pursuant to the Security holders’ Deed, Sun Capital

indirectly has, effectively, the power to appoint and remove all of the members of the board of directors of

Albéa. For more information, see “Risk Factors—Risks Related to the Notes—The interests of our principal

shareholders may conflict with your interests.”

Board Committees

Currently, Albéa does not have any board committees.

Executive Compensation

For the year ended December 31, 2017, Albéa paid an aggregate of approximately $5.6 million to our executive

officers named in the table of executive officers of the Group set forth above, including cash compensation for

salary and bonuses, employer social contributions and car allowances.

In June 2011, our Management Participation Program, (the “MPP”), was created to align interests among our

key managers, our principal shareholders and the Albéa group by allowing managers to participate in our

economic success.


43

Employees

For the year ended December 31, 2017, our year-end number of employees were 14,846 (including temporary

staff). Of our total employees, approximately 70% and 30% of our employees work in production and

non-production functions, respectively. The following table sets forth the number of employees (excluding

internships) we have on a geographical basis.

We have good relationships with our employees

and union representatives. In Europe, our

employees in France, Germany, Italy and the

Netherlands are represented by trade unions or

works councils. Our employees in the United

States are not unionized. In Mexico, Brazil and

Canada, our employees are represented by trade

unions. Our Asian employees are represented by

mandatory trade unions in China, Indonesia and

India. We take a constructive approach to union

relationships where there are unionized plants, and

have been able to secure the cooperation of our

unions and our workforce with regard to significant

changes and those plants. We experienced several

brief work stoppages but other than that there

have been no major work stoppages or strikes at

any of our plants during the past five years.

Our remuneration and benefits policy is designed

to reward employees in line with good market

practice. Accordingly, our salary system for certain

employees includes a variable bonus component in

the form of incentives directly related to efficiency,

which are determined on a local basis.

Total employee benefit expenses represented 28.74% of our revenue in 2017, slightly decreased compared to

last year. In certain countries where we operate, particularly in China and Indonesia, labor costs have recently

risen and are driven, to a certain extent, by government-mandated minimum wage increases. Additionally, in

certain other countries where we operate, particularly India, we are experiencing some margin pressure due to

increased labor costs which have not been passed through to the customer. We seek to revise prices based on

costs as new customer agreements are negotiated or purchase orders are placed.


44

VI. SHAREHOLDERS

Sun Capital indirectly holds 93.5% of Albéa S.A. and members of our management hold 6.5% of Albéa S.A. We

have entered into management services agreements with Sun Capital. See “Related Party Transactions—

Consulting Agreements.”

On March 23, 2018, PAI Partners, a leading pan-European private equity firm, completed the acquisition of

Albéa. With PAI Partners, Albéa will continue to grow - in size and in strength, leveraging our assets and

market position, winning the talent war, bringing in new customers, joining forces with other players, rolling

out our strategic and operational priorities for the short- and the long-term. This is the start of a new era for

Albéa.

VII. RELATED PARTY TRANSACTIONS

Shareholder Funding Instruments

Convertible Preferred Equity Certificates

On June 30, 2010, we issued 19,090,147 yield-free convertible preferred equity certificates (“CPECs”) with an

initial par value of €1 and an aggregate par value of €19.1 million. These CPECs were held by an affiliate of Sun

Capital. We must redeem the CPECs for cash equal to the par value of the CPECs on the 49th anniversary of

the issue date of these CPECs.

On June 23, 2011, Twist Beauty Packaging S.à r.l. issued CPECs with an initial par value of €1 and an aggregate

par value of €9.3 million. These CPECs were held by an affiliate of Sun Capital. The repayment of these CPECs

was payable on the 49th anniversary of the issue date of these CPECs.

On October 29, 2012, the CPECs issued by us and by Twist Beauty Packaging S.à r.l. were cancelled and

replaced by the issuance, on November 26, 2012, of 28,497,971 new CPECs at a par value of €1 each. These

CPECs are held by an affiliate of Sun Capital, are not interest bearing and carry no voting rights.

At any time, upon the approval of a majority of shareholders representing at least two thirds of our share

capital, the holder of the CPECs is entitled to convert any or all of its CPECs into ordinary shares at a value

equal to the conversion price (one share for one CPEC). At any time, we are entitled to repurchase any or all of

the CPECs at the redemption price. The redemption price shall be (i) upon maturity date or liquidation, the par

value or, (ii) upon optional redemption, the greater of the par value for such outstanding CPECs and the fair

value of one share.

On December 31, 2012, 1,356,566 CPECs were redeemed for an amount of $27,299,000. On July 17, 2015,

1,482,787 CPECs were redeemed for €1,482,787 and reduce the equity accordingly. On January 6, 2016,

786 000 CPECs were redeemed for €786 000 and on November 22, 2016, 502 000 CPECs were redeemed for

€502 000 and reduce the equity accordingly.

On November 27, 2017 80,000 CPECs were redeemed for €80 000 and reduce the equity accordingly.


45

At the end of December 2017 the remaining 24 208 674 CPECs are classified in equity for USD 29 033 million.

Consulting Agreements

We entered into (in aggregate) three consulting agreements (each, a “Consulting Agreement” and together,

the “Consulting Agreements”) in 2011 (as amended from time to time) with Sun Capital Partners Management

V, LLC (the “Sun Manager”), an affiliate of Sun Capital. The three Consulting Agreements were entered into by

Betts (effective as of January 1, 2011), North American Albéa entities and certain other Albéa entities (each

effective as of July 2, 2010). Each Consulting Agreement will expire on the tenth anniversary of its effective

date, with automatic one-year extensions thereafter. The Sun Manager has the right to terminate the

Consulting Agreements at any time. Pursuant to the Consulting Agreements, the Sun Manager provides us

with consulting and advisory services, including services relating to financial reporting, accounting and

management information systems.

In consideration for its services under the Consulting Agreement with Betts, the North American Albéa entities

and certain other Albéa entities, the Sun Manager receives an aggregate annualized consulting fee, payable

quarterly in advance and calculated as a percentage of our EBITDA. The aggregate minimum fee payable is

$4.3 million and the aggregate annual fee cap is $5.0 million. Additionally, we reimburse the Sun Manager for

reasonable out of pocket expenses incurred in connection with its performance of the services under the

Consulting Agreements. Upon the occurrence of certain corporate events such as refinancings, restructurings,

equity or debt offerings, acquisitions, mergers, consolidations, business combinations and sales and

divestitures, we are required to pay the Sun Manager a transaction advisory fee in an amount equal to 1.0% of

the aggregate value of any such transaction. In the years ended December 31, 2017 and 2016, we paid

$4.3 million and $4.5 million.


46

VIII. RISK FACTORS

Below is an overview of what we believe to be the principal risks to Albéa


47


48

Our management is responsible for establishing and maintainadequate internal control over financial reporting

and business processes to mitigate our risks.

Our internal control program covers not only the financial reporting but also the key business processes. Albea

Internal control is organized around :

The Enterprise Risk Management framework (ERM). The framework of controls, defined by Albea

management, covers our core processes (selling/marketing, production, procurement, logistic,

development), support processes (IT, RH, Finance) and management processes (performance evaluation,

capex, budget).

We defined around 450 controls of which about 150 are keys controls. Each year, each site has to do a self-

evaluation of its internal control in “BWISE” which is a specific tool used to monitor all the ERM program.

The self-assessment is validated by the head of each site.

Based on a dashboard, each site can set-up appropriate action plans to improve the level of controls on

the key processes and mitigate major risks.

- A program of internal audits performed by a dedicated team : the team audits about 15 sites per year to

review the sincerity of the internal-control self-assessment and to review specific risks.

A Code of Conduct including ethics rules, anti-bribery policies, gift policy,…which is communicated and

applicable to all employees.


49

VIII CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is a long-term strategy driver and a strong business differentiator. CSR is

an everyday business priority.


50


51


52

We intend to capitalize on our strengths in the beauty and personal care packaging market in order to grow

revenue and improve our Adjusted EBITDA Margin to the level of peers and become cash flow positive. We

seek to achieve these objectives by executing the following strategies.


53

Leverage our capabilities to increase our market share

We believe that our new product development capabilities, our ability to cross sell our broad product offering

to customers and our global manufacturing platform will enable us to increase our share of the global beauty

and personal care packaging market. Our new product development capabilities have enabled us to penetrate

new geographic markets and new customers as well as support our cross selling initiatives. Additionally, our

ability to cross sell a total packaging solution to customers gives us the potential to increase our share of our

existing customersell a total packaging solution to customers gives us the potential to increase our share o the

benefits that we offer as a one stop shop. We also believe that we can increase the size of our addressable

market through our ability to replace aluminum and other packaging material with plastic. For example, our

laminate tube offering taking market share from aluminum tubes.

Continue to pursue acquisition opportunities

Given our global presence, scale and broad product offering, we believe that we have a large opportunity for

acquisitions globally within our industry. We believe that we can create significant value through strategic

acquisitions given our track record of integration and cost reduction, and our ability to leverage new products,

technologies and geographies across our global customer base to drive significant incremental revenue. We

will continue to have a disciplined acquisition strategy focused on increasing penetration in high growth

emerging markets and consolidating in our existing core markets while driving revenue growth and synergies.

Continue to penetrate regional and local customer base

We will continue to develop long term customer relationships and pursue business arrangements with small

and medium sized customers. Further development of our sales to regional and local customers globally

willenable us to increase our market share, leveraging our broad product portfolio and global footprint to serve

them whatever and wherever their needs and opportunities may be.

Improve profitability and cash flow generation through operational excellence and value adding business

solutions

We will continue to focus on operational excellence. We intend to improve productivity and asset utilization,

drive margins and lower costs by investing capital efficiently in cash generative projects and new production

equipment, by implementing purchasing process improvement initiatives. Additionally, we continue to pursue

production efficiencies through automation initiatives.

Build on existing positions to increase sales in attractive emerging markets

We believe that we have significant growth opportunities in emerging markets, which in recent years have

grown faster than the demand for beauty and personal care products in developed markets. We will continue

to leverage and build out our global footprint to both support existing global customers as they expand their

operations into emerging markets and service rapidly growing, regional and local customers, thus further

expanding and diversifying our customer base.


54

XI. SUBSEQUENTS EVENTS

Change in Shareholder

On March 23, 2018, PAI Partners, a leading pan-European private equity firm, completed the acquisition of

Albéa. With PAI Partners, Albéa will continue to grow - in size and in strength, leveraging our assets and

market position, winning the talent war, bringing in new customers, joining forces with other players, rolling

out our strategic and operational priorities for the short- and the long-term. This is the start of a new era for

Albéa.

COVIT acquisition

In February 2018, Albéa acquired 100% of Covit S.L., a leading manufacturer of metal parts, from PHI private

equity fund. Covit S.L is a leader in the drawing, anodizing, assembly and decoration of metal parts for

packaging products, based in Torello, Spain.

Albéa Beauty Holdings S.A. Consolidated financial statements for the year ended December 31, 2017

In thousands of USD

ALBÉA BEAUTY

HOLDINGS S.A. CONSOLIDATED FINANCIAL STATEMENTS

FOR THE

YEAR ENDED

DECEMBER 31, 2017


In thousands of USD

Consolidated financial statements Consolidated balance sheet

Consolidated income statement Note 6 Notes to the balance sheet

Consolidated statement of comprehensive income Note 6.1 Goodwill

Consolidated balance sheet – assets Note 6.2 Intangible assets and

Consolidated balance sheet – equity and liabilities Property, plant and equipment

Consolidated cash flows statement Note 6.3 Other financial assets

Consolidated statement of changes in equity Note 6.4 Inventories

Note 6.5 Trade and other receivables

Note 6.6 Cash and cash equivalents

Consolidated general information Note 6.7 Assets / Liabilities held for sale

Note 6.8 Capital stock

Note 1 General information Note 6.9

Borrowings and other financial

liabilities

Note 2 Accounting Policies

Note 6.10 Pension and other long-term

employee benefits obligations

Note 3 Other information Note 6.11 Provisions

Note 4 Segment reporting Note 6.12 Other Financial Liabilities

Note 6.13 Trade and other payables

Note 6.14 Financial instruments

Consolidated income statement Additional Disclosures

Note 5 Notes to the income statement Note 7 Additional information

Note 5.1 Revenue Note 7.1 Financial risks management

Note 5.2 Cost of sales Note 7.2 Commercial risks

Note 5.3 Selling and Administrative

expenses Note 7.3 Contingencies and commitments

Note 5.4 Restructuring and project costs Note 7.4 Lease commitments

Note 5.5 Other income / (expense) Note 7.5 Related parties

Note 5.6 Net finance costs

Note 7.6 Executive Committee Total

Remuneration

Note 5.7 Share of profit of associates Note 7.7 Auditors’ fees

Note 5.8 Income tax Note 7.8 Subsequent Events

Note 5.9 Employee Benefit Expenses and

personnel expenses

Note 5.10 Earnings per share

Note 8 Companies included in the

consolidation scope

Note 9 Audit Report on the consolidated

financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


In thousands of USD

57

CONSOLIDATED INCOME STATEMENT

The notes are an integral part of the consolidated financial statements.



Note 2017 2016

Continuing operations:

Revenue 5.1 1 489 151 1 402 424

Cost of sales 5.2 (1 189 961) (1 126 383)

Gross profit 299 190 276 041

Selling and administrative expenses 5.3 (183 409) (176 010)

Restructuring and project costs 5.4 (15 859) (33 198)

Other income / (expense) 5.5 (9 175) (12 469)

Operating profit 90 747 54 364

Financial income 52 573 1 877

Financial expense (61 720) (123 954)

Financial result 5.6 (9 147) (122 077)

Share of profit of associates 5.7 (75) 83

Profit (loss) from continuing operations before income taxes 81 525 (67 630)

Income tax expense 5.8 (12 683) (11 063)

Profit (loss) from continuing operations 68 842 (78 693)

Profit (loss) for the period attributable to owners of the parent 68 842 (78 693)

Earnings per share -in USD (Basic) 5.10 242,26 (276,93)

Earnings per share -in USD (Diluted) 5.10 2,81 --


In thousands of USD

58

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME




2017 2016Profit/(Loss) for the period 68 842 (78 693)

Other comprehensive income:

Items that will not be reclassified to profit or loss (262) (3 587) Actuarial gains/(losses) on post-employment benefit plans 381 (4 475)

Tax effects (643) 888

Items that may be reclassified to profit or loss (75 757) 9 775 Net change in foreign currency translation adjustmentsMark to market variance for hedge instrument 1 626 -

Items that may be reclassified to profit or loss (74 131) 9 775

Total other comprehensive income for the period, net of tax (74 393) 6 188

Total comprehensive income for the period (5 551) (72 505)

Attributable to: i) Owners of the parent (5 551) (72 505)

ii) Non-controlling interests - -


In thousands of USD

59

CONSOLIDATED BALANCE SHEET – ASSETS


At December 31, At December 31,

Note 2017 2016

Non-current assetsGoodwill 6.1 117 329 116 026

Intangible assets 6.2 80 963 90 843

Property, plant and equipment 6.2 467 501 444 772

Deferred tax assets 5.8 14 343 16 242

Investments in associates 1 037 1 119

Other financial assets 6.3 20 220 14 352

Total non-current assets 701 393 683 354

Current assetsInventories 6.4 162 080 144 900

Trade and other receivables 6.5 179 935 170 461

Other financial assets 6.3 16 694 -

Cash and cash equivalents 6.6 119 085 86 978

Assets held for sale 6.7 318 16 218

Total current assets 478 112 418 557 Total assets 1 179 501 1 101 911


In thousands of USD

60

CONSOLIDATED BALANCE SHEET - EQUITY AND LIABILITIES


At December 31, At December 31,2017 2016

EquityShare capital 6.8 373 373

Additional paid-in capital 12 218 12 218

Retained earnings and other components of equity (183 133) (173 276)

Other comprehensive income (34 302) 40 090

Equity excluding non-controlling interests (204 844) (120 595)Total equity (204 844) (120 595)

Non-current liabilitiesBorrowings 6.9 887 151 717 245

Deferred tax liabilities 5.8 33 320 42 315

Pensions and other post-employment benefit obligations 6.10 70 935 59 815

Other long-term employee benefit obligations 6.10 6 229 5 526

Termination benefits 6.10 1 818 1 545

Non-current provisions 6.11 1 632 3 252

Total non-current liabilities 1 001 085 829 698

Current liabilitiesBorrowings 6.9 34 859 62 100

Other current financial liabilities 6.12 3 28 774

Trade and other payables 6.13 331 110 286 318

Income taxes payable 8 162 6 283

Current provisions 6.11 9 126 8 709

Liabilities held for sale 6.7 - 624

Total current liabilities 383 260 392 808 Total liabilities 1 384 345 1 222 506 Total equity and liabilities 1 179 501 1 101 911


In thousands of USD

61

CONSOLIDATED CASH FLOW STATEMENT

(1) Use of government grant is related to the Chinese government grant and reflects the portion recorded through the income statement as an income to offset

expenses incurred during the period. This income is non-cash flow item and therefore excluded from the cash flows from operating activities.

(2) At the end of December 2016 : Albéa received in March 2016 USD 30.4 million after the transfer of 90% of Shenzhen shares. It includes also the cash balance

difference of Shenzhen, for USD 0.8 million, which is classified in assets held for sale in accordance with IFRS5. This amount also includes the price paid for the

shares for Albéa Slovakia for USD 19.6 million and USD 4.2 million for the net debt (Excluding finance lease on the building). At the end of December 2017 : Albéa

received in march 2017 the last cash settlement for USD 3.2 million which is the last step of Shenzhen sales. It includes also the cash balance variance since

December 2016 which was classified in assets held for sale in accordance with IFRS5 (see note 3-2)

(3) Loans issued : Albéa refinancing has been completed on April 20, 2017 with the issuance of a Term Loan B of USD 818 million (split into USD 408 million US

tranche and EUR 385 million euro tranche and paid bank fees capitalized and CAP premium for USD 23.7 million (see note 3.1)

(4) Repayment of loans : At the end of December 2017, this flow mainly includes the Bonds repayment for USD 646 million ( for USD 345 million and EUR 245 million)

,on April 20, 2017 following the completion of the refinancing.

(5) Interests paid at the end of December 2017 includes Bond redemption costs for USD 27.6 million.

(6) Dividend recapitalization paid to shareholders for USD 77.8 million and USD 1 million additional payment in Q3.

Period ended December 31,


2 017 2 016

Loss for the period 68 842 (78 693)

Adjustments for :

Share of profit of associates 75 (83)

Income tax expense recognized in profit or loss 12 683 11 063

Net finance costs 9 147 122 077

Depreciation and amortization 88 879 87 006

Use of government grant (1) (89) (1 205)

Net (gain)/loss on disposal of assets (2) (16 252) 700

Unrealized foreing exchange gains (losses) on working capital 5 005 (6 290)

Movements in working capital 11 153 18 674

Movements in working capital - inventories (174) (6 390)

Movements in working capital - receivables (4 037) 11 988

Movements in working capital - payables 15 364 13 076

Change in provisions 1 265 (1 859)

Income taxes paid (14 583) (15 961)

Cash flow from operating activities 166 125 135 429

Acquisitions of assets (71 467) (100 965)

Loans (advances)/repayments (183) 163

Disposal of assets 1 781 2 015

Acquisition / Disposal of subsidiary, net of cash acquired (2) 4 246 8 446

Shenzhen 4 246 32 405

Albéa Slovakia - (23 959)

Other (2 028) (3 114)

Cash flow used in investing activities (67 650) (93 455)

Cash flow from operating and investing activities 98 475 41 974

Loans issued (3) 797 403 36 638

Factoring (35 464) 7 984

Repayment of loans (4) (668 029) (31 475)

Interest paid (5) (85 426) (63 664)

PECS/ CPECS redemption - (1 423)

Dividends paid (6) (78 699) -

Cash flow from (used in) financing activities (70 214) (51 941)

Net increase / (decrease) in cash and cash equivalents 28 260 (9 967)

Cash and cash equivalents at beginning of the period 84 551 96 796

Exchange gains/(losses) 5 777 (2 278)

Cash and cash equivalents at end of the period 118 588 84 551


In thousands of USD

62

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The Dividend recapitalization has been paid to shareholder for USD 77.8 million and USD 1 million additional payment in Q3 (see note 3.1). The notes are an integral part of the consolidated financial statements.

Share

capital

Additional

paid-in

capital

Retained

earnings

Unrealized

gains

(losses)

Cumulative

translation

adjustment

s

Total Non

controlling

interest

Total equity

At December 31, 2015 373 13 641 (94 583) (9 008) 42 910 (46 667) - (46 667)

Loss for the period - - (78 693) - - (78 693) - (78 693)

Other comprehensive income - - - (3 587) 9 775 6 188 - 6 188

Total comprehensive income - - (78 693) (3 587) 9 775 (72 505) - (72 505)

Proceeds from shares issued - - - - - - - -

PECS and CPEC redemption - (1 423) - - - (1 423) - (1 423)

At December 31, 2016 373 12 218 (173 276) (12 595) 52 685 (120 595) - (120 595)

Profit (Loss) for the period - - 68 842 - - 68 842 - 68 842

Other comprehensive income - - - (262) (74 130) (74 392) - (74 392)

Total comprehensive income - - 68 842 (262) (74 130) (5 550) - (5 550)

Proceeds of share issue - - - - - - - -

Dividend to shareholder - - (78 699) - - (78 699) (78 699)

At December 31, 2017 373 12 218 (183 133) (12 857) (21 445) (204 844) - (204 844)

Attributable to owners of the parent


In thousands of USD

63

NOTE 1-GENERAL INFORMATION

General information

Albéa Beauty Holdings S.A. (the “Company”) is

domiciled in Luxembourg and registered in the

Luxembourg Trade and Companies Registry

(Registre du Commerce et des Sociétés de

Luxembourg) under number B 162 078 and is an

affiliate of Sun Capital Partners V LP. Albéa and

the subsidiaries included in the scope of

consolidation constitute Albéa Group (“Albéa” or

“the Group”).

The Group was created by Sun Capital after the

acquisition of the Beauty Packaging business from

Rio Tinto Alcan on July 2, 2010. On December 31,

2012, Albéa completed the acquisition 100% of

Rexam Personal Care, a leading producer of

dispensing systems and make-up packaging for

the Cosmetics and Personal Care markets.

Albéa Beauty Holdings S.A. funding holder , is held

by Albéa S.A. via another holding company. These

three entities except financing and holding

activities did not carry out any operating activities

in the year ended December 31, 2017.

Albéa is one of the world’s leading producers of

plastic packaging products for the beauty and

cosmetics industry, providing a wide range of

solutions for the make-up, fragrance, skincare,

personal and oral care markets. The operational

headquarters of Albéa are located in Gennevilliers,

France. Albéa employs about 15 000 people and

operates 39 manufacturing facilities in 16 different

countries across Europe, the Americas and Asia.

The consolidated financial statements are

presented in thousands of US dollars and all values

are rounded to the nearest thousand (‘000) except

where otherwise indicated.

Albéa's consolidated financial statements for the

period ended December 31, 2017 were authorized

for issue by the Board of directors on March 13,

2017


In thousands of USD

64

NOTE 2 ACCOUNTING POLICIES

2.1. STATEMENT OF COMPLIANCE

Albéa’s consolidated financial statements for the

year ended December 31, 2017 were prepared in

accordance with the international accounting

standards as adopted for use in the European

Union. These international accounting standards

include International Financial Reporting

Standards (IFRS) and International Accounting

Standards (IAS) and the related interpretations as

prepared by the International Financial Reporting

Interpretations Committee (IFRIC).

The principal accounting policies applied in the

preparation of these consolidated financial

statements are set out below. These policies have

been consistently applied to all the periods and

balances presented, unless otherwise stated.

The standards and interpretations applied to

prepare the December 31, 2017 consolidated

financial statements are those published by the

Official Journal of the European Union at

December 31, 2017, and applicable as of that date.

2.2. BASIS OF PREPARATION

2.2.1. General principle

The preparation of financial statements in

compliance with IFRS requires the use of certain

critical accounting estimates. It also requires

management to exercise its judgment in the

process of applying Albéa’s accounting policies.

The areas involving a higher degree of judgment

or complexity or areas where assumptions and

estimates are significant to the consolidated

financial statements are disclosed in Note 2.3.4.

The consolidated financial statements have been

prepared under the historical cost convention as

modified by revaluation at fair value of the

underlying assets and liabilities of acquired

subsidiaries at the date when the control was

achieved.


In thousands of USD

65

2.2. BASIS OF PREPARATION (CONTINUED)

2.2.2. Accounting standards and interpretations issued by the IASB and not yet endorsed by the European

Union

IFRS 16 'Leases' deals with principles for the

recognition, measurement, presentation and

disclosures of leases.

The standard provides an accounting model,

requiring lessee to recognize assets and liabilities

for all leases unless the lease term is 12 months or

less or the underlying asset has a low value. The

lessor accounting approach remains unchanged.

The standard will replace IAS 17, 'Lease' and will be

effective for accounting periods beginning on or

after January 1, 2019.

In 2017, the Group initiated the identification of its

leases across segments and regions. The analyzes

of these contracts was with regard to the criteria

of the new IFRS-16, as well as the estimation of

the impacts on the consolidated financial

statements, are in progress.

Moreover, a software for dealing with the impacts

of the standard for these contracts will be

acquired and being put into place.

2.2.3. Accounting standards and interpretations issued by the IASB and endorsed by the European Union and

applicable for financial years beginning on or after January 1, 2017

IFRS 9 “Financial Instruments”

On July 24, 2014, the International Accounting

Standards Board (IASB) completed the final

element of its comprehensive response to the

financial crisis by issuing IFRS 9 Financial

Instruments. The package of improvements

introduced by IFRS 9 includes a logical model for

classification and measurement, a single, forward-

looking expected loss impairment model and a

substantially-reformed approach to hedge

accounting. The new Standard will come into

effect as of January 1, 2018 with early application

permitted.

IFRS 15 “Revenue from Contracts with Customers”

This new standard supersedes IAS 11 “Construction

contracts” and IAS 18 “Revenues” on revenue

recognition. Revenue will be recognized to depict

the transfer of goods or services to customers in

amounts that reflect the payment to which the

company expects to be entitled in exchange for

those goods or services. The new Standard will

come into effect as of January 1, 2018 with early

application permitted.

These improvements or new standards are not

expected to have any material impact on the

Group’s financial statements.


In thousands of USD

66

2.3. SIGNIFICANT ACCOUNTING POLICIES

2.3.1. Consolidation

Basis of consolidation

The consolidated financial statements include all

of the assets, liabilities, revenue, expenses and

cash flows of Albéa Beauty Holdings S.A. and its

subsidiaries (collectively “Albéa”). For majority-

owned and controlled subsidiaries included in

Albéa, equity and net earnings attributable to

outside shareholders are presented under Non-

controlling interests in the consolidated balance

sheet and income statement, respectively. As of

December 31, 2017, there are no more non-

controlling interests.

Subsidiaries

Subsidiaries constitute all entities (including

special purposes entities) over which Albéa has

control, where control is defined as the power to

govern the entities’ financial and operating

policies in order to obtain benefits from their

activities. Control is presumed to exist when Albéa

owns more than fifty percent of the voting rights

(which does not always equate to percentage

ownership) unless it can be demonstrated that

ownership does not constitute control. Generally,

the Company has a shareholding of more than one

half of the voting rights in its subsidiaries. The

impact of potential voting rights that are currently

exercisable is considered when assessing whether

control exists. Subsidiaries are fully consolidated

from the date control is transferred to the

Company, and are de-consolidated from the date

control ceases.

Business combinations Albéa uses the acquisition method to account for

business combinations. The consideration

transferred for the acquisition of a subsidiary

corresponds to the fair value of the assets

transferred and the equity interests issued by

Albéa. Acquisition-related costs are expensed as

incurred. Identifiable assets acquired and liabilities

and contingent liabilities assumed in a business

combination are measured initially at fair value at

the acquisition date.

On an acquisition-by-acquisition basis, Albéa

recognizes any non-controlling interests in the

acquiree either at fair value or based on the non-

controlling interest’s proportionate share of the

acquiree’s net assets.

Investments in subsidiaries are accounted for

based on cost less impairment. Cost is adjusted to

reflect changes in consideration arising from

contingent consideration amendments. Cost also

includes directly attributable costs of investment.

The excess of the consideration transferred

corresponds to the amount of any non-controlling

interest in the acquiree and the acquisition-date

fair value of any previous equity interest in the

acquiree over the fair value of Albéa’s share of the

identifiable net assets acquired, is recorded as

goodwill. In the case of a bargain purchase, if this

is less than the fair value of the net assets of the

subsidiary acquired, the difference is recognized

directly in the income statement.


In thousands of USD

67

2.3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3.1. Consolidation (continued)

Inter-company transactions between subsidiaries

Inter-company transactions, balances and

unrealized gains on transactions between Group

companies are eliminated. Unrealized losses are

also eliminated.

Joint ventures

Joint ventures are entities over which the

Company has joint control with one or more

unaffiliated entities. Albéa accounts for its joint

ventures using the equity method .

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each

of Albéa’s entities are measured using the

currency of the primary economic environment in

which the entity operates (the functional

currency). The consolidated financial statements

are presented in US dollars, which is Albéa’s

presentation currency.

Transactions and balances

The recognition and measurement of foreign

currency transactions are defined by IAS 21 – The

Effects of Changes in Foreign Exchange Rates.

Foreign currency transactions are translated into

the functional currency using the exchange rates

prevailing at the date of the transaction or

valuation in the case of items that are remeasured.

Foreign exchange gains and losses resulting from

the settlement of such transactions and from the

translation at year-end exchange rates of

monetary assets and liabilities denominated in

foreign currencies are recognized in the income

statement, except when deferred in other

comprehensive income as qualifying cash flow

hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to

borrowings and cash and cash equivalents are

presented in the income statement within

Financial income or Financial expense. All other

foreign exchange gains and losses are presented

in the income statement within Other

income/(expense). Changes in the fair value of

monetary securities denominated in foreign

currencies classified as available for sale are

allocate either to translation differences resulting

from changes in the amortized cost of the security

and other changes in the carrying amount of the

security. Translation differences related to

changes in amortized cost are recognized in profit

or loss, and other changes in carrying amount are

recognized in other comprehensive income.

As an exception to the rule described above,

translation differences arising on long-term intra-

group financing transactions that can be

considered to form part of the net investment in a

foreign subsidiary are recognized under

transaction differences as a separate component

of equity until the net investment is

deconsolidated


In thousands of USD

68


2.3.1. Consolidation (continued)

Group companies

The results and financial position of all Albéa

entities (none of which has the currency of a

hyper-inflationary economy) whose functional

currency differs from the presentation currency

are translated into the presentation currency as

follows:

� assets and liabilities for each balance sheet

presented are translated at the closing rate at

the date of that balance sheet;

� income and expenses for each income

statement are translated at average exchange

rates (unless this average is not a reasonable

approximation of the cumulative effect of the

rates prevailing on the transaction dates, in

which case income and expenses are

translated at the rate on the dates of the

transactions); and

� all resulting exchange differences are

recognized in other comprehensive income.

On consolidation, exchange differences

arising from the translation of net investments

in foreign operations, and of borrowings and

other currency instruments designated as

hedges of such investments, are taken to

other comprehensive income. Goodwill and

fair value adjustments arising on the

acquisition of a foreign entity are treated as

assets and liabilities of the foreign entity and

translated at the closing rate.

2.3.2. Income statement items

Revenue recognition

Revenue from product sales comprises sales to

third parties at invoiced amounts. Amounts billed

to customers in respect of shipping and handling

are classified as sales revenue where Albéa is

responsible for carriage, insurance and freight. All

shipping and handling costs incurred by Albéa are

recognized as operating costs within cost of sales.

If Albéa is acting solely as an agent, amounts

billed to customers are offset against the relevant

costs. Delivery is considered to have occurred

when title and risk of loss have transferred to the

customer.

Revenue from product sales, net of trade

discounts, allowances and volume-based

incentives, is recognized once delivery has

occurred provided that persuasive evidence exists

that all of the following criteria are met:

� the significant risks and rewards of ownership

of the product have been transferred to the

buyer;

� neither continuing managerial involvement to

the degree usually associated with

ownership, nor effective control over the

goods sold, has been retained by Albéa;

� the amount of revenue can be measured

reliably;

� it is probable that the economic benefits

associated with the sale will flow to Albéa;

and costs incurred or to be incurred in

respect of the sale can be measured reliably.


In thousands of USD

69


2.3.2. Income statement items (Continued)

Cost of sales

Cost of sales correspond to the amount paid for

the direct costs of running the business including

direct costs of materials, appropriate salaries and

the amount due to external third parties for

services directly related to revenue.

Government grant

A government grant is recognized when there is

reasonable assurance that the group will comply

with the conditions attaching to it, and that the

grant will be received.

When government grants relate to capital

expenditures in Property, Plant and Equipment,

they are recognized as a reduction in the

depreciation charge over the useful life of the

depreciable asset.

When they relate to operating expenditures, they

are recognized in profit up to the related costs

incurred for which the grant is intended to

compensate.

Restructuring and project costs

Restructuring and project costs include non-

recurring incomes and expenses as restructuring

costs and severance costs, non-recurring fees,

acquisitions, integration and separation costs,

moving costs.

Interest income and expenses

Financial expenses comprise mainly interest

payable on borrowings and interest expense

component of finance lease payments. These

financial expenses are recognized in profit or loss

using the effective interest rate method.

Financial income comprises mainly interest on

loans receivable from related parties and on the

interest bearing components of its cash and cash

equivalents.

Interest income is recognized using the effective

interest method. When loans and receivables are

impaired, Albéa reduces the carrying amount to

its recoverable amount, corresponding to the

estimated future cash flow discounted at the

original effective interest rate of the instrument,

and continues unwinding the discount as interest

income. Interest income on impaired loans and

receivables are recognized using the original

effective interest rate.


In thousands of USD

70


2.3.2. Income statement items (Continued) Income tax

Income tax on the profit or loss for the periods

presented comprises current and deferred tax.

Income tax is recognized in profit or loss except to

the extent that it relates to items recognized

directly in equity.

The current income tax charge is the expected tax

payable on the taxable income for the year and

calculated on the basis of the tax laws enacted or

substantively enacted at the reporting date in the

countries where Albéa subsidiaries and associates

operate and generate taxable income

Deferred tax is provided using the balance sheet

liability method, providing for temporary

differences between the carrying amounts of

assets and liabilities for financial reporting

purposes and the amounts used for taxation

purposes

The impact on deferred tax assets and liabilities of

a change in tax rates and laws is recognized in

income in the period that the rate change is

substantively enacted except to the extent that

the tax arises from a transaction or event which is

recognized, in the same or a different period,

outside profit or loss (other comprehensive

income or directly in equity) or a business

combination.

Deferred tax assets and liabilities are measured

using tax rates that are expected to apply in the

period when the asset is realized or the liability is

settled, based on the tax rates and laws that have

been enacted or substantively enacted at the

reporting date.

A deferred tax asset is recognized only to the

extent that it is probable that future taxable

profits will be available to recover this asset.

Deferred tax assets are reduced to the extent that

it is no longer probable that the related tax benefit

will be realized and reflected through a valuation

allowance recognized against deferred tax assets.

Deferred tax assets and liabilities are offset when

there is a legally enforceable right to offset

current tax assets and liabilities and when they

relate to income tax levied by the same tax

jurisdiction and the Group intends to settle its

current tax assets and liabilities on a net basis.

Significant judgment is required in determining

the worldwide provision for income taxes and

recording the related assets and liabilities. Group

management establishes tax reserves and accrues

interest thereon in expectation that some of

Albéa’s positions may be challenged.

Management believes that Albéa’s accruals for tax

liabilities are sufficient to settle the probable

outcome of all material tax litigations.


In thousands of USD

71


2.3.3. Balance sheet items

Goodwill

Goodwill, which corresponds to the excess of

consideration transferred over Albéa’s share in the

fair value of the acquired company’s assets,

liabilities and contingent liabilities on the

acquisition date, is recognized as an asset.

Goodwill comprises non-identifiable items such as

the know-how and business expertise of staff.

Goodwill is recorded in the functional currency of

the acquired entity. For the purpose of

impairment testing, goodwill acquired in a

business combination is allocated to each of the

cash-generating units (CGUs) or groups of CGUs

that is expected to benefit from the synergies of

the combination. Each CGU or group of CGUs to

which the goodwill is allocated represents the

lowest level within the entity at which the

goodwill is monitored for internal management

purposes. Goodwill impairment tests are

undertaken annually or more frequently if events

or changes in circumstances indicate a potential

impairment. The carrying amount of goodwill is

compared to the recoverable amount, which is the

higher of value in use and the fair value less costs

to sell. Any impairment is recognized immediately

as an expense and is not subsequently reversed.

When goodwill is allocated to a cash-generating

unit (or group of cash-generating units) and part

of the operation within that unit is disposed of,

the goodwill associated with the operation

disposed of is included in the carrying amount of

the operation when determining the gain or loss

on disposal of the operation. Goodwill disposed of,

in this circumstance, is measured based on the

relative values of the operation disposed of and

the portion of the cash-generating unit retained.

Intangible assets

Intangible assets other than goodwill are carried

at cost less accumulated amortization and

impairment losses recognized. They are

depreciated over the estimated useful life of the

related assets using the straight-line method. The

main intangible assets are Customer relationships

and existing technologies which are depreciated

over 10 years.

Albéa incurs certain development costs in

connection with producing and delivering

products for specific customer needs.

Development costs that are directly attributable

to these specific products are recognized as

intangible assets when the following criteria are

met:

� it is technically feasible to complete the

product so that it will be available for use;

� management intends to complete the product

and use or sell it;

� there is an ability to use or sell the product;

� it can be demonstrated how the product will

generate probable future economic benefits;

� adequate technical, financial and other

resources to complete the development and to

use or sell the product are available; and

� the expenditure attributable to the product

during its development can be reliably

measured.

Research costs, and development costs that do

not meet the above criteria, are expensed as

incurred.


In thousands of USD

72


Property, plant and equipment

Property, plant and equipment are carried at cost

less any depreciation and impairment losses

recognized.

The cost of property, plant and equipment is

composed of its purchase price, any costs directly

attributable to bringing the asset to the location

and condition necessary for it to be capable of

operating in the manner intended by

management.

Major improvements that extend the useful life of

an asset are capitalized and depreciated. On-

going regular maintenance costs related to

property, plant and equipment are expensed as

incurred.

Property, plant and equipment are depreciated

over the estimated useful lives of the related

assets using the straight-line method. The

principal annual depreciation rates used by Albéa

range from 2% to 10% for buildings, from 6% to 10%

for plant machinery and equipment and from

12.5% to 20% for vehicles, office and computer

equipment and software (included within

machinery and equipment).

Impairment of non-current assets

When a test for impairment is conducted, the

recoverable amount is assessed by reference to

the higher of “value in use” (corresponding to the

net present value of the expected future cash

flows of the relevant cash-generating unit) and

“fair value less costs to sell”. Where there is no

binding sale agreement or active market, fair

value less costs to sell is based on the best

information available to reflect the amount Albéa

could receive for the cash-generating unit in an

arm's length transaction. The estimates of future

cash flows used for impairment tests are based on

management’s estimate of the present value of

expected future revenue, costs and costs to sell.

As a result of impairment tests, an impairment

loss would be recognized in the amount of any

excess of the carrying amount over the fair value

less costs to sell of a non-current asset or disposal

group held for sale.

The expected future cash flows of cash-

generating units reflect long-term plans which are

based on detailed research, analysis and iterative

modeling to optimize the level of return from

investment. Cost levels incorporated in the cash

flow forecasts are based on the current long-term

plan for the cash-generating unit. For impairment

tests, recent cost levels are considered, together

with expected changes in costs that are

compatible with the current condition of the

business and which meet the requirements of IAS

36 – Impairment of Assets. IAS 36 includes a

number of restrictions on the future cash flows

that can be recognized in value in use

assessments in respect of future restructurings

and improvement-related capital expenditures.

Cash flows are based on Albéa’s budget process

and strategic plan for the first three years, and an

extrapolation calculated for the last two years.

The discount rate applied in determining the net

present value is based upon the expected market

rate of return for a similar investment, regardless

of the sources of financing.


In thousands of USD

73


Leases

Albéa leases various buildings, machinery and

equipment from third parties under operating

lease agreements. Under such operating lease

agreements, total rent expense for each lease is

recognized on a straight-line basis over the

primary term of the lease agreement, and is

included in Albéa consolidated financial statement

(Cost of sales or Selling and administrative

expenses), depending on the nature of the leased

assets, in Albéa’s consolidated income statement.

Albéa also leases various buildings, machinery,

and equipment from third parties under finance

lease agreements. Under such capital lease

agreements, upon inception of the lease, assets

are stated at an amount equal to the fair value of

the leased property or, if this is lower, the present

value of the minimum lease payments at

inception of the lease, less accumulated

depreciation (see below) and impairment losses.

Minimum lease payments are apportioned

between the finance expense and the reduction of

the outstanding liability. Assets under capital

leases are amortized on a straight line basis over

the shorter of the useful lives of the assets or the

primary lease term. Each lease payment is

allocated between liabilities and financial expense.

The corresponding rental obligations, net of

financial expense, are included in other long-term

payables. The interest element of the finance cost

is recognized in the income statement over the

lease period in order to produce a constant

periodic rate of interest on the remaining balance

of the liability for each period.

Inventories

Inventories are valued at the lower of cost or net

realizable value, primarily on a weighted average

cost basis. The weighted average cost of raw

materials, work in progress and finished goods is

calculated using the costs incurred in the current

period (including purchase price of materials;

freight, duties and customs; the cost of

production, which includes labor costs, materials

and other expenses which are directly attributable

to the production process; and production

overheads) and similar costs in opening inventory.

If the carrying amount of inventories is higher than

their realizable value at year-end, an impairment

loss is booked.

Trade receivables

Trade receivables are initially recognized at fair

value and are subsequently reduced by provisions

for impairment. A provision for impairment of

trade receivables is established when there is

objective evidence that Albéa will not be able to

collect all amounts due. Indications of impairment

would include financial difficulties of the debtor,

likelihood of the debtor's insolvency, default in

payment or a significant deterioration in credit

worthiness. Any impairment is recognized in the

consolidated income statement within selling and

administrative expenses. When a trade receivable

is deemed uncollectible, it is written off against

the provision for impairment account. Subsequent

recoveries of amounts previously written off are

credited against selling and administrative

expenses in the consolidated income statement.


In thousands of USD

74


Cash and cash equivalents

Cash and cash equivalents (with original

maturities at inception of less than three months)

comprise cash in hand and demand deposits as

well as other short-term highly liquid investments

that are readily convertible to a known amount of

cash and are subject to an insignificant risk of

changes in value.

For the purpose of the cash flow statement, cash

and cash equivalents comprise cash at bank, cash

in hand, short-term deposits with an original

maturity of three months or less held for the

purpose of meeting short-term cash

commitments and bank overdrafts.

Post-employment benefits

Amounts recognized as defined benefit liabilities

correspond to the difference between the present

value of defined benefit obligations and the fair

value at the end of the reporting period of plan

assets (if any) on the consolidated balance sheet.

Any recognized assets are restricted, where

applicable, to the present value of any amounts

Albéa expects to recover by way of refunds from

the plan or reductions in future contributions.

Actuarial gains and losses arising in the year are

charged or credited to other comprehensive

income. For this purpose, actuarial gains and

losses comprise both the impact of changes in

actuarial assumptions and experience

adjustments arising due to differences between

previous actuarial assumptions and what has

actually occurred.

Other movements in the net surplus or deficit are

recognized in the consolidated income statement,

including current service costs, past service costs

and the impact of any curtailments or

settlements. The net interest expenses (income)

relating to the discounting of the net funded

position (defined benefit obligation less plan

assets) is presented in net financial expenses in

the income statement.

The most significant assumptions used in

accounting for pension plans are the long-term

rate of return on plan assets, the discount rate and

mortality assumptions. The actual return on plan

assets is used to calculate interest income on

pension assets. The discount rate is used to

determine the net present value of future

liabilities. Each year, the unwinding of the

discount on these liabilities is charged to interest

expense, included in Net finance costs. The

mortality assumption is used to project the future

stream of benefit payments, which is then

discounted to arrive at a net present value of

liabilities.

The values attributed to plan liabilities are

assessed in accordance with the advice of

qualified actuaries.

Albéa’s contributions related to defined

contribution pension plans are charged to the

consolidated income statement in the period to

which the contributions are made.

Long-term employee benefits

Provisions for jubilee and other long-service

benefits paid during the employees’ service period

are valued based on similar actuarial calculations

to those used for post-employment benefits.

Actuarial gains and losses are recognized in the

other comprehensive income.


In thousands of USD

75


Trade payables

Trade payables are obligations to pay for goods or

services that have been acquired in the ordinary

course of business from suppliers. Accounts

payable are classified as current liabilities if

payment is due within one year or less (or in the

normal operating cycle of the business if longer). If

not, they are presented as non-current liabilities.

Provisions

Albéa records provisions for the estimated present

value of liabilities, as defined in IAS 37 – Provisions,

Contingent Liabilities and Contingent Assets. The

ultimate cost to settle these liabilities is uncertain

and cost estimates can vary in response to many

factors. In addition, the expected timing of

expenditure can also change. As a result, there

could be significant adjustments to Albéa’s

provisions, which could result in additional

expenses or recoveries affecting future financial

results. The types of liabilities for which Albéa

establishes provisions and the related accounting

policies for each type are as follows:

Site closure and restoration costs

Site closure and restoration costs include the

dismantling and demolition of infrastructure and

the removal of residual material from disturbed

areas. Estimated site closure and restoration costs

are provided for in the accounting period when

the legal or constructive obligation arising from

the related disturbance occurs and it is probable

that an outflow of resource will be required to

settle the obligation. These costs are based on the

net present value of estimated future costs.

Provisions for site closure and restoration costs do

not include any additional obligations which are

expected to arise from future disturbance.

The costs are estimated on the basis of a closure

plan, are updated annually during the life of the

operation to reflect known developments

(e.g. revisions to cost estimates and to the

estimated lives of operations) and are subject to

formal review at regular intervals throughout each

year.

The initial closure provision together with other

movements in provisions for site closure and

restoration costs, including those resulting from

new disturbance, updated cost estimates,

changes to the estimated lives of operations and

revisions to discount rates, are capitalized within

Property, Plant and Equipment. These costs are

then depreciated over the remaining useful lives

of the related assets.

Restructuring

Provisions for restructuring are recorded when

Albéa’s management is demonstrably committed

to the restructuring plan and where such liabilities

can be reasonably estimated. These costs are

charged to restructuring costs in the consolidated

income statement.

Other litigation and potential claims

Provisions for other litigation and potential claims

are made when it is probable that liabilities will be

incurred and where such liabilities can be

reasonably estimated. Depending on their nature,

these costs may be charged to Cost of sales or

Other income/(expense) in the consolidated

income statement.


In thousands of USD

76


Financial assets and liabilities

Financial assets

Albéa classifies its financial assets in the following

categories: (a) at fair value through profit or loss,

(b) as loans and receivables, and (c) as available-

for-sale securities. The classification depends on

the purpose for which the financial assets were

acquired. Management determines the

classification of financial assets at initial

recognition.

(a) Financial assets at fair value through profit or

loss: Derivatives are included in this category.

Generally, Albéa does not acquire financial

assets for the purpose of selling in the short-

term. Financial assets carried at fair value

through profit or loss are initially recognized

at fair value and transaction costs are

expensed in the consolidated income

statement.

(b) Loans and receivables: Loans and receivables

are non-derivative financial assets with fixed

or determinable payments that are not

quoted in an active market. They are

classified as current or non-current assets

based on their maturity date. Loans and

receivables are included in Trade receivables

and other, or Other financial assets or Cash

and cash equivalents in the consolidated

balance sheet. Loans and receivables are

carried at amortized cost using the effective

interest method, less any impairment.

(c) Available-for-sale securities: Investments not

held for trading are measured and recognized

in the consolidated balance sheet at fair

value, with any gains or losses arising from

the change in fair value being recognized in

other comprehensive income, except for

impairment losses and foreign exchange

gains and losses. Upon disposal and de-

recognition of available-for-sale securities,

any cumulative gains or losses from the

change in fair value are removed from other

comprehensive income and recognized as

gains or losses in the consolidated income

statement.

Financial liabilities

Borrowings and other financial liabilities are

recognized initially at fair value, net of

transaction costs incurred, and are subsequently

carried at amortized cost using the effective

interest method. Any difference between the

amounts originally received (net of transaction

costs) and the redemption value is recorded to

the consolidated balance sheet and subsequently

amortized or accreted into income over the

period to maturity using the effective interest

method.

The effective interest rate is the rate that exactly

discounts the expected stream of future cash

flows through to maturity to the current net

carrying amount of the liability on initial

recognition. When calculating the effective

interest rate of a financial liability, future cash

flows are determined on the basis of contractual

commitments.


In thousands of USD

77


Financial assets and liabilities (Continued)

Transaction costs are incremental costs that are

directly attributable to the issue of the credit line.

They include fees and commissions paid to

agents and advisers, levies by regulatory

agencies and securities exchanges, and transfer

taxes and duties. Transaction costs do not

include debt premiums, or allocations of internal

administrative or overhead expenses. For

financial liabilities that are carried at amortized

cost, transaction costs are included in the

calculation of amortized cost using the effective

interest rate method and, in effect, amortized

through the income statement over the life of

the instrument.

Derivative financial instruments

Albéa enters into derivative contracts designed to

reduce exposure related to assets and liabilities or

firm commitments. Albéa's policy with regard to

financial risk management is set out in Note 7.1 –

Financial Risk Management.

All derivatives are initially recognized at their fair

value on the date at which the derivative contract

is entered into and are subsequently re-measured

to fair value at each reporting date. Changes in the

fair value of derivatives, which are not designated

as a hedging instrument, are included in financial

result. Albéa had no significant derivatives

designated for hedge accounting treatment

during the periods presented.

Compound instruments

The component parts of compound instruments

issued by Albéa are classified separately as

financial liabilities and equity, in accordance with

the substance of the contractual arrangement.

In the case of a bond that may be converted into a

fixed number of equity shares, the fair value of the

liability component is estimated at the date of

issue using the prevailing market interest rate for

a similar non-convertible instrument.

This amount is recorded on an amortized cost

basis using the effective interest method until

extinguished upon conversion or at the

instrument's maturity date. The equity component

is determined by deducting the amount of the

liability component upon issue from the fair value

of the compound instrument as a whole. This is

recognized and included in equity and is not

subsequently re-measured. Issue costs are

apportioned between the liability and equity

components of the convertible loan notes based

on their relative carrying amounts at the date of

issue. The portion relating to the equity

component is charged directly against equity.

Albéa sells some of its trade accounts receivable

under various programs. Where trade accounts

receivable are sold without recourse, the amounts

are de-recognized under the provisions of IAS 39 –

Financial Instruments: Recognition and

Measurement from the consolidated balance

sheet, as substantially all the risks and rewards

associated with these receivables have been

transferred. Where trade accounts receivable are

sold with limited recourse, the amounts do not

qualify for de-recognition, as Albéa has not

transferred substantially all the risks and rewards

associated with these receivables. Albéa accounts

for limited recourse sales of trade accounts

receivable as secured financing transactions, and

such trade receivables continue to be recognized

in Trade receivables and other.


In thousands of USD

78


Derivative financial instruments (Continued)

Fair value

Fair value is the amount for which an asset could

be exchanged, or a liability settled, between

knowledgeable, willing parties in an arm’s length

transaction.

These instruments are presented in Level 2 of the

fair value measurement hierarchy, unless their

valuation depends significantly on non-observable

parameters. In this case, they are presented at

Level 3 of the fair value measurement hierarchy.

2.3.4. Judgments in applying accounting policies and key sources of estimation uncertainty

Many of the amounts included in the consolidated

financial statements involve the use of judgment

and/or estimation. These judgments and

estimates are based on management's best

knowledge of the relevant facts and

circumstances, taking into account previous

experience, but actual results may differ from the

amounts included in the consolidated financial

statements.

The preparation of financial statements in

compliance with IFRS requires management to

make judgments, estimates and assumptions that

affect the application of policies and the carrying

amounts of assets and liabilities that are not

readily apparent from other sources. The

estimates and associated assumptions are based

on historical experience and other factors

including expectations of future events that are

considered to be reasonable and relevant under

the circumstances. Actual results may differ from

these estimates.

The key assumptions concerning the future and

other key sources of estimation uncertainty at the

reporting date, that have a significant risk of

causing a material adjustment to the carrying

amounts of assets and liabilities within the next

financial year, are described below and directly

disclosed in the notes of the financial statements.

Impairment of non-current assets

Assets are subject to impairment tests whenever

changes in events or circumstances indicate that

impairment may have occurred. Assets are written

down to the higher of (a) fair value less costs to

sell or (b) value in use. Value in use is calculated by

discounting the expected cash flows from the

asset at an appropriate discount rate which uses

management’s assumptions and estimates of the

future performance of the asset. Differences

between expectations and actual cash flows could

result in differences in the amount of impairment

charges required.


In thousands of USD

79

NOTE 3 OTHER INFORMATION

3.1. REFINANCING PROCESS

On April 20, 2017, Albéa has completed a debt

refinancing with BNP Paribas S.A. and Goldman

Sachs International as Joint Global Coordinators

and, together with Credit Agricole Corporate,

Investment Bank, HSBC Bank PLC and ING Bank

N.V. mandated Lead Arrangers and Joint Book

runners to arrange a USD 923 million senior

secured credit facilities comprising :

� USD 818 million 7-year covenant-lite term loan

B facility divided in two tranches

� the 408 million USD tranche at Libor US +

375 bps, with a 1% floor; repayment of

0.25% of the principal on a quarterly basis

starting at the end of September 2017

� the 385 million EUR tranche at Euribor +

400bps, with a 0% floor, repayment at

maturity date

� USD 105 million 6-year revolving credit

facility, not yet used at the end of December

2017

As a result of this refinancing, the group

extended the debt maturity from 2019 to 2024,

and changed the financing terms and conditions

with a biannual interest payment (last day of May

and last day of November). The Term loan B

tranches are measured at amortized costs, the

Term Loan B net in the financial statement

include USD 21.7 million of capitalized issuance

cost linked to the refinancing process.

The proceeds from the Financing were used

mainly to repay the Bonds including redemption

costs, to pay a dividend recapitalization to

shareholder and to fund the transaction

expenses which are capitalized in accordance

with IFRS.

Mid-June 2017 , the USD tranche of Luxembourg

Term loan B has been hedged by an interest rate

CAP of 2% with a maturity date of May 2020. The

CAP premium Fair value is recognized in Other

financial assets for USD 2.7 million at the end of

December 2017 (see note 6.3).

Albéa Beauty Holdings SA undertakes to comply

with the specific covenant. According to the

Term loan B agreement signed with the lenders

on April 20, 2017, the Net Debt ratio to EBITDA

should remain below 7.97. starting of December

2018.


In thousands of USD

80

3.2. SHENZHEN TRANSFER AGREEMENT

Albéa Plastic Packaging Hong Kong signed on

December 8, 2015 an “Agreement for the transfer

of equity interest” related to its subsidiary Albéa

Plastic Packaging Shenzhen (Albéa Shenzhen). As

of December 31, 2015, the assets and liabilities of

Albéa Shenzhen had been classified as held for

sales according to IFRS 5.

Based on the agreement, the disposal of the

shares has been realized in two steps:

� Step 1: Albéa will dispose 90% of the shares.

The Board of Albéa Shenzhen will still be in

the hand of Albéa.

� Step 2: the disposal of 10% remaining shares

has been signed on January 24 2017 and the

financial transaction has been concluded in

the end of March 17.

In March 2016, Albéa Plastic Packaging Hong

Kong Ltd received in advance 90% of the proceed

(USD 30.4 million) related to the sale of Albéa

Plastic Packaging Shenzhen.

On March 24 , 2017 Albéa Plastic Packaging

Hong Kong completed the transfer of its

subsidiary Albéa Plastic Packaging Shenzhen and

received the last cash settlement for USD 3.2

million generating a USD 17.7 million non-cash

profit recognized in financial statements for the

year ended December 31, 2017, in accordance

with IFRS 5.


In thousands of USD

81

NOTE 4 SEGMENT REPORTING

As described below, Albéa has two operating

segments, and reports the corporate costs not

allocated to either of these two segments in the

“Corporate” segment:

- Tubes: laminate and plastic tubes for the oral

care and cosmetics industry and dispensing

system for Tubes

- Cosmetic Rigid Plastic (CRP): skincare caps,

lipstick, compacts, mascara, trading activities

and dispensing system for Fragrance and

cosmetic

- Corporate: “Holding & Corporate” costs not

allocated to the two operating segments

Albéa also presents data based on three

geographical market, consisting of its three main

geographic markets: Europe, Americas (of which

North America - includes US and Mexican

activities - and South America) and Asian

countries (of which China and South Asia).

The Adjusted EBITDA- non GAAP Measure- is

defined as operating profit before depreciation &

amortization, restructuring costs and severance

costs, non-recurring fees, shareholders’

management fees, separation costs, acquisitions,

integration and transformation costs, other

compensation and termination benefits,

unrealized foreign exchange gains [losses], gains

[losses] on disposals, impairment, bargain

purchase gain.

Operating segments figures in this section are the

same as the figures included in the internal

reporting provided to Chief Operating Decision

Maker. The Chief Operating Decision Maker, who

is responsible for allocating resources and

assessing the performance of the operating

segments, has been identified as the executive

committee that assess performance and allocates

resources.

Adjusted EBITDA BRIDGE

The detail of the others is the following :

(*) Unrealized forex gain (non-cash) on working capital recorded mainly in China, Brazil and Mexico.



Note 2017 2016

Operating Profit 90 747 54 364

Depreciation/amortization 89 085 87 883

Restructuring & project costs 5.4 15 859 33 198

Others (5 208) (1 367)

Adjusted EBITDA 190 483 174 078



Note 2017 2016

SUN management fees 7.5 4 451 4 066

Impairment 6.2 200 261

(Gains)/losses on disposals 3.2 (16 252) 700

Unrealized foreign exchange (Gains)/losses on working capital (*) 5 005 (6 290)

Other 1 388 (104)

Others (5 208) (1 367)


In thousands of USD

83 82

4.1. SEGMENT REPORTING

As at December 31, 2017

(1) See Adjusted EBITDA Bridge.: The “Others” for the corporate includes mainly management fees

recharged to the other segments.

(2) Segment assets are reconciled with the balance sheet as follows:

(*) Intangibles & tangibles assets, net and goodwill, Rexam PC Goodwill has been allocated to CRP

segment

At December 31,2017 Notes TUBES CRP Corporate Consolidated

Segment revenue 631 993 857 159 - 1 489 151

Adjusted EBITDA 91 477 114 138 (15 132) 190 483

Depreciation/amortization (30 857) (55 964) (2 264) (89 085)

Restructuring and projects costs (3 471) (4 391) (7 997) (15 859)

Others (1) (17 077) 63 22 222 5 208

Operating Profit 40 072 53 846 (3 171) 90 747

Segment assets (2) 229 722 410 578 36 397 676 697

Capital expenditure of the period Cash flow (29 898) (39 662) (1 907) (71 467)

At December 31, 2017 (Segment assets) Notes TUBES CRP Corporate Consolidated

Non current assets (*) 227 119 420 049 18 625 665 793

Inventories, net 6.4 57 936 104 143 - 162 079

WC - Receivables 6.5 64 111 72 448 43 376 179 935

WC - Payables 6.13 (119 444) (186 062) (25 604) (331 110)

Segment assets 229 722 410 578 36 397 676 697


In thousands of USD

83 83

4.1. SEGMENT REPORTING (CONTINUED)


At the end of December 2016, Capital expenditure of Tube segment included the Silgan asset deal of USD

(11,1) million.

(1) See Adjusted EBITDA Bridge . The “Others” for the corporate includes mainly management fees

recharged to the other segments.

(2) Segment assets are reconciled with the balance sheet as follows:

(*) Intangibles & tangibles assets, net and goodwill, Rexam PC Goodwill has been allocated to CRP segment

At December 31, 2016 Notes TUBES CRP Corporate Consolidated

Segment revenue 591 461 810 963 - 1 402 424

Adjusted EBITDA 85 269 104 207 (15 395) 174 081

Depreciation/amortization (27 633) (56 901) (3 349) (87 883)

Restructuring and projects costs (3 154) (18 365) (11 679) (33 198)

Others (1) (11 896) (6 912) 20 173 1 365

Operating Profit 42 586 22 029 (10 250) 54 365

Segment assets (2) 219 398 425 200 36 086 680 684

Capital expenditure of the period Cash flow (42 630) (55 383) (2 952) (100 965)

At December 31, 2016 (Segment assets) Notes TUBES CRP Corporate Consolidated

Non current assets (*) 210 406 423 812 17 423 651 641

Inventories, net 6.4 50 361 94 539 - 144 900

WC - Receivables 6.5 58 879 73 953 37 629 170 461

WC - Payables 6.13 (100 247) (167 105) (18 966) (286 318)

Segment assets 219 398 425 200 36 086 680 684


In thousands of USD

83 84

4.2. GEOGRAPHICAL INFORMATION


Of which :

(1) See Adjusted EBITDA Bridge

(2) Geographical assets are reconciled with the balance sheet as follows

(*) Intangibles & tangibles assets, net and goodwill, Rexam PC Goodwill has been allocated to Corporate Geographical

area.

Notes Europe America Asia Corporate Consolidated

Revenue 737 236 546 078 205 837 1 489 151

Adjusted EBITDA 94 653 81 693 29 269 (15 132) 190 483

Depreciation/amortization (37 759) (23 512) (13 468) (14 346) (89 085)

Restructuring and projects costs (4 421) (2 879) (563) (7 996) (15 859)

Others (1) (12 755) (13 202) 8 942 22 223 5 208

Operating Profit 39 718 42 100 24 180 (15 251) 90 747 Geographical assets (2) 213 232 186 627 76 159 200 680 676 697

Capital expenditure of the period Cash flow (37 595) (23 149) (8 815) (1 908) (71 467)

AmericaNorth

AmericaSouth

AmericaTotal

AmericaAsia China

South Asia

Total Asia

SALES 459 984 86 094 546 078 SALES 119 502 86 335 205 837

Adjusted EBITDA 66 441 15 251 81 692 Adjusted EBITDA 14 757 14 513 29 270

At December 31, 2017 Notes Europe America Asia Corporate Consolidated

Non current assets (*) 250 085 156 538 76 261 182 909 665 793

Inventories, net 6.4 91 433 45 438 25 209 - 162 079

WC - Receivables 6.5 48 943 63 176 24 441 43 375 179 935

WC - Payables 6.13 (177 229) (78 525) (49 752) (25 604) (331 110)

Geographical assets 213 232 186 627 76 159 200 680 676 697


In thousands of USD

83 85

4.2. GEOGRAPHICAL INFORMATION (CONTINUED)


Of which :

(1) See Adjusted EBITDA Bridge

(2) Geographical assets are reconciled with the balance sheet as follows

(*) Intangibles & tangibles assets, net and goodwill, Rexam PC Goodwill has been allocated to Corporate Geographical

area.

Notes Europe America Asia Corporate Consolidated

Revenue 663 824 532 703 205 897 - 1 402 424

Adjusted EBITDA 82 629 79 320 27 526 (15 393) 174 082

Depreciation/amortization (38 785) (22 242) (11 426) (15 430) (87 883)

Restructuring and projects costs (6 725) (2 673) (12 121) (11 679) (33 199)

Others (1) (9 246) (4 528) (5 033) 20 171 1 364

Operating Profit 27 873 49 877 (1 054) (22 331) 54 365

Geographical assets (2) 203 399 182 374 82 460 212 451 680 684

Capital expenditure of the period Cash flow (40 792) (39 032) (18 189) (2 952) (100 965)

AmericaNorth

AmericaSouth

AmericaTotal

AmericaAsia China

South Asia

Total Asia

SALES 449 557 83 146 532 703 SALES 122 434 83 463 205 897

Adjusted EBITDA 65 645 13 675 79 320 Adjusted EBITDA 12 585 14 941 27 526

At December 31, 2016 Europe America Asia Corporate Consolidated

Non current assets (*) 222 777 157 550 77 525 193 789 651 641

Inventories, net 70 465 47 741 26 694 - 144 900

WC - Receivables 49 584 54 980 28 268 37 629 170 461

WC - Payables (139 427) (77 897) (50 027) (18 967) (286 318)

Geographical assets 203 399 182 374 82 460 212 451 680 684


In thousands of USD

83 86

NOTE 5- NOTES TO THE INCOME STATEMENT

5.1. REVENUE

Revenue represents sales of goods deriving from Albéa’s main activities, net of value added tax (VAT).

The breakdown of revenue by segment and by geographic segment is presented in the Note 4.

5.2. COST OF SALES

Changes in the cost of sales are directly linked to changes in revenue.

Other expenses can be broken down as follows:

NoteYear ended

December 31,Year ended

December 31,2017 2016

Employee benefit expenses - COGS 5.9 (307 473) (298 570)

Depreciation production assets - COGS 6.2 (69 756) (68 215)

Other expenses (812 732) (759 598)

Total cost of sales (1 189 961) (1 126 383)



2017 2016

Raw materials and components (resins, film, inks, purchase for resale, etc.) (565 408) (524 038)

Other production consumables, energy and utilities (55 213) (49 404)

Freight out costs (30 333) (28 168)

Other costs (repairs, maintenance, services, etc.) (161 778) (157 988)

Total other expenses (from Costs of sales) (812 732) (759 598)


In thousands of USD

83 87

5.3. SELLING AND ADMINISTRATIVE EXPENSES

Other expenses for the year ended December 31,

2017 include mainly:

� External costs (mainly operational consulting

and advisory fees): IT (USD 11,4 million),

Finance (USD 6.4 million) and Human

resources (USD 4.8 million)

� Selling costs: USD 6.3 million

� Rental costs: USD 4.5 million

Other expenses for the year ended December 31,

2016 include mainly:

� External costs (mainly operational consulting

and advisory fees): IT (USD 9 million), Finance

(USD 6.4 million) and Human resources (USD

4.9 million)

� Selling costs: USD 7.0 million

� Rental costs: USD 4.6 million

5.4. RESTRUCTURING AND PROJECT COSTS

Restructuring and project costs include non-recurring incomes and expenses as restructuring costs and

severance costs, non-recurring fees, acquisitions, integration and separation costs, moving costs (footprint

optimization) .

At December 31, 2017, the main components of

restructuring and projects costs are as follows:

� USD (5.8) million, severance costs and

restructuring expenses

� USD (4.5) million, transformation project cost

(footprint optimization in Europe, other

industrial optimization costs,..)

� USD (2.9) million, non-core business fees

(corporate and shareholders projects)

� USD (0.6) million integration cost linked to

Albéa Slovakia and merger acquisitions

project costs

� USD (2.0) million, other

At December 31, 2016, the main components of

restructuring and projects costs are as follows:

� USD (2.9) million, severance costs and

restructuring expenses

� USD (10.3) million, transformation project cost

(footprint optimization in Europe, lay out

costs, other industrial optimization costs,..)

� USD (11,5) million, projects costs linked to

footprint optimization (completion of China

South)

� USD (4.7) million, non-core business fees (fees

incurred for shareholders projects)

� USD (1.3) million integration cost linked to

Albéa Slovakia and merger acquisitions

project costs

� USD (2.4) million, other

Note Year ended

December 31,Year ended

December 31,2017 2016

Employee benefit expenses - SAE 5.9 (120 538) (111 229)

Depreciation and amortization - SAE (5 574) (5 792)

Other expenses - SAE (57 297) (58 989)

Total selling and administrative expenses (183 409) (176 010)



2017 2016Allowances / reversal of Restructuring provisions (non cash) (2 589) (1 227)

Other costs for the year - Restructuring (13 270) (31 971)

Total restructuring and project costs (15 859) (33 198)


In thousands of USD

88

5.5. OTHER INCOME (EXPENSE)

At the end of December 2017,

� Intangible assets amortization includes customer relationships recognized as part of the Purchase

Price Allocation for the Rexam PC and Albéa Slovakia acquisition.

� Gain on disposal for USD 16.3 million is mainly related to Shenzhen Disposal (see Note 3.2)

� Retirement plan amendment for USD (1.1) million is linked to French legal assumption change in

accordance to IAS19 (See note 6.10)



2017 2016

Sun management fees 7.5 (4 451) (4 066)

Intangible assets depreciation (*) (13 348) (12 737)

Gains (losses) on disposals 3.2 16 252 (700)

Unrealized forex gains (losses) on working capital (5 005) 6 290

Impairment charges (200) (261)

Retirement Plan Amendment 6.10 (1 107) -

Other - OIE (1 316) (995)

Total other income/(expense) (9 175) (12 469)

Note


In thousands of USD

83 89

5.6. NET FINANCE COSTS

Some subsidiaries of Albéa group hedge the

exposure to volatility in foreign currency when

they subscribe loans or perform business

transactions expressed in a currency that is not

their functional currency. Changes in the fair

value of these derivatives are recognized within

finance income in the consolidated income

statement. Unrealized income related to the

underlying financial assets / liabilities is offset

within finance income.

Interest cost on net debt are mainly due to the

high yield Bonds USD (16.6) million and Term loan

B interest for the period for USD (27.6) million.

Unrealized foreign exchange losses on the net

debt as of December 31, 2017 is also linked to the

Term Loan B for USD 45.6 million. This is a non-

cash item linked to the translation of Bonds USD

held by the company whose functional and

reporting currency is euro.

5.7. SHARE OF PROFIT ASSOCIATES

Share of profit of associates are linked to Cosmetech Mably International (HK) Ltd.



2017 2016

Cost of net debt (57 747) (119 036)Interest costs on net debt (51 920) (62 694)

Amortized costs (3 943) (13 893)

Realized foreign exchange losses on net debt (499) (3 054)

Unrealized foreign exchange losses on net debt - (13 102)

Bonds break up fees (1 385) (26 293)

Other financial expense (3 973) (4 916)

Interest costs on pensions (1 744) (2 549)

Actuarial losses on other benefit obligations - (152)

Other financial expense (2 229) (2 215)

Financial expense (61 720) (123 952)

Other financial income 52 573 1 874 Actuarial gains on other benefit obligations 342 -

Realized foreign exchange gains on net debt 4 589 -

Unrealized foreign exchange gains on net debt 47 614 - Other financial income 29 1 874

Financial income 52 573 1 874

Net finance costs (9 147) (122 078)

Cost of net debt


In thousands of USD

83 90

5.8. INCOME TAX

Analysis of the income tax expense

Albéa is subject to income tax in a number of

jurisdictions. Significant judgment is required in

determining the provision for income tax as there

are many transactions and calculations for which

the ultimate tax determination is uncertain during

the ordinary course of business.

Albéa recognizes liabilities based on estimates of

whether additional taxes will be due. Where the

final tax outcome of these matters is different

from the amounts that were recorded, such

differences will impact the current and deferred

income tax provisions and results of operations in

the period in which such ultimate tax

determination is made.

Reconciliation between the statutory tax rate in Luxembourg and Albéa’s effective tax rate

The unused tax losses for USD (2.6) million as at

December 2017 are mainly linked to losses

making in entities where no taxable profit is

expected in the foreseeable future (mainly

Luxembourg) and interest expenses which are

not deductible in some countries.

The Utilization of unused tax losses related to

prior period for USD 19.6 million are mainly linked

to profit made in entities where no taxable profit

are expected in the foreseeable future.



2017 2016

Current income tax charge (20 410) (16 986)

Deferred income tax benefit / (charge), net 7 727 5 923

Income tax benefit / (expense) (12 683) (11 063)



2017 2016

Income before taxes 81 525 (67 631)

Standard tax rate applicable in Luxembourg (in %) 27,08% 27,08%

Theoretical income tax benefit / (expense) (22 077) 18 315

Effect of:

- Differences in current tax rates of foreign countries (1 303) 1 185

- Income not subject to tax or taxed at a reduced rate (192) -

- Income/(expenses) arising from tax losses and other deductible

temporary differences due to changes in caps on tax rates during the period 3 178 (258)

- Unused tax losses and other deductible temporary differences for the period

not recognized as deferred tax assets (2 583) (47 184)

- Utilization during the period of unused tax losses and other deductible

temporary differences not previously recognized as deferred tax assets 19 631 18 134

- Deferred tax assets impairment (127) -

- Prior year adjustments 203 1 343

- Expenses not deductible for tax purposes (1 813) (493)

- Other permanent differences (1 001) 1 929

- Withholding tax (2 688) (1 033)

- Impacts of others Tax (French CVAE, Italian IRAP,… ) (3 909) (3 002)

Actual income tax benefit / (expense) (12 683) (11 063)

Effective tax rate (in %) 15,72% N/A


In thousands of USD

91

5.8. INCOME TAX (CONTINUED)

Deferred taxes recorded in the balance sheet

The carrying amount of deferred tax assets is

reviewed at each reporting date and increased or

reduced as appropriate to reflect changes in the

likelihood that a taxable profit will become

available against which the deferred tax asset can

be utilized. To assess the likelihood that a taxable

profit will become available, the following factors

are taken into account: results in previous years,

forecasts of future results, non-recurring items

that are unlikely to arise again in the future and

the tax planning strategy. As a result, a substantial

amount of judgment is involved in assessing

Albéa’s ability to utilize its tax loss carry forwards.

If future results were substantially different from

those expected, Albéa would have to increase or

decrease the carrying amount of its deferred tax

assets, which could have a material impact on its

balance sheet and income statements.

Deferred taxes break down as follows by type of temporary difference. Most of these deferred taxes are

long term.

Changes in net balance of deferred tax :

At 31 December 2017

At 31 December 2016

Deferred tax assets 14 343 16 242

Deferred tax liabilities 33 320 42 315

Net balance of deferred tax (18 977) (26 073)

Deferred tax on :

Pension provisions 6 934 5 553

Fixed assets (29 634) (39 173)

CPEC/PEC (7 552) (6 931)

Provisions (27) 176

Tax losses carried forward 6 026 7 565

Other timing differences (accruals) 5 275 6 737

Net balance of deferred tax (18 977) (26 073)

Net balance of deferred tax at december 31, 2016 (26 073)

Deferred tax income/(expense) recognized in income statement 7 726

Deferred tax income/(expense) recognized in equity (1 260)

Scope change -

Exchange differences 648

Other (19)

Net balance of deferred tax at December 31, 2017 (18 977)


In thousands of USD

83 92

5.8. INCOME TAX (CONTINUED)

As of December 31, 2017, Albéa recognized a USD

6 million deferred tax asset on tax losses carry

forwards amounting to USD 29 million. The main

tax entities to which these tax losses related

were as follows:

- Polish subsidiaries in an amount of USD 4

million

- UK subsidiaries in an amount of USD 11.2 million

- US subsidiaries in an amount of USD 5.3 million

- Italian subsidiaries in an amount of USD 6.7

million

- Subsidiaries from other countries in an amount

of USD 1.8 million

Additionally, Albéa holds unused tax losses carry

forwards on operating entities amounting to USD

192.7 million for which no deferred tax assets

have been recognized due to uncertainty

regarding their utilization. The main tax entities

to which these tax losses related were as follows:

- UK subsidiaries in an amount of USD 17.2 million

- French subsidiaries in an amount of USD 119.3

million

- Brazil subsidiaries in an amount of USD

25.2million

- Chinese subsidiaries in an amount of USD 10.7

million

- Italian subsidiaries in an amount of USD 3.8

million

- Russian subsidiary in an amount of USD 2.3

million

5.9. EMPLOYEE BENEFIT EXPENSES AND PERSONNEL EXPENSES

5.10. EARNINGS PER SHARE



2017 2016

Wages, salaries, social security costs and pension costs - defined contribution plans (423 727) (406 710)

Pension costs - defined benefit plans and other post-retirement benefits (4 285) (3 089)

Total employee benefit expenses (428 012) (409 799)

Number of employees (Full Time Equivalent ) 14 846 15 011



Note 2017 2016

Number of shares:

Weighted average number of ordinary shares in issue (Basic) 6.8 284 161 284 161

Effect of share option issue (CPEC) 6.9 24 208 674 24 288 674

Weighted average number of ordinary shares in issue (Diluted) 24 492 835 24 572 835

Net profit:

Net profit attribuable to owners of the group (in thousands of USD) 68 842 (78 694)

Earnings per share -in USD (Basic) 242,26 (276,93)

Earnings per share -in USD (Diluted) 2,81 --


In thousands of USD

83 93

NOTE 6 NOTES TO THE BALANCE SHEET

6.1. GOODWILL

(1) For the purpose of impairment testing, the goodwill related to the

acquisition of Betts Gro up has been allocated to groups of cash-

generating units, which belong to Tubes segment reporting. The

variance between 2017 and 2016 is due to foreign exchange rate as

Betts goodwill is in GBP.

(2) Rexam PC goodwill has been allocated to a group of CGUs which

uses the dispensing technology.

(3) Albéa Slovakia goodwill has been allocated to the group CGUs “Tube

Europe” The variance between August 2016 (detail in note 3.4) and

December 2017 is due to foreign exchange rate as Albéa Slovakia

goodwill is recorded in EUR.

Goodwill impairment tests

The recoverable amount of this group of cash-

generating units was determined based on value

in use. The calculation of the value in use is based

on discounted cash flow method arising from

financial budgets approved by management

covering a five-year period. The valuation done

with discounted cash flow method includes a

terminal value based of the last flows of the plan.

Assumptions used to establish financial budgets

reflect past experience. Cash flows are

extrapolated using a perpetuity growth rate that

is consistent with long-term average growth rate

for the business in which the CGU operates.

The assumptions used for value-in-use

calculations in 2017 are as follows:

- Perpetuity growth rate: 2.5%

- Discount rates after tax group : 8.9 %

(adjusted by region between 8.9 % and 10.7%)




- Discount rates after tax group : 9.5 %

(adjusted by region between 9.5% and 12.8%)

With regards to the assessment of value-in-use

of goodwill and other intangible and fixed assets,

the Group believes that possibly changes in the

key assumptions (including discount rate or

perpetuity growth rate) would not cause the

carrying value of the above cash-generating units

to exceed its recoverable amount.

No impairment has been recorded in 2017.

Further, no impairment charge would have been

recognized in 2017 if :

- discounted projected cash flows were 5% lower

- the discount rate was increased by 50 basis

points

- the perpetuity growth rate was decreased by

50 basis points


Note 2 017 2 016

Betts (1) 10 401 9 467

Rexam PC (2) 103 892 103 892

Albéa Slovakia (3) 3 035 2 667

Goodwill 117 328 116 026


In thousands of USD

83

94

6.2. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

At December 31, 2017

The following table shows the opening and closing balances and the activity of property, plant and

equipment and intangible assets for the year ended December 31, 2017.

Construction in progress represents the value of capitalized equipment under construction and/or not yet

commissioned as of December 31, 2017.


(1) Business combinations: Albéa Slovakia acquisition in August 2016.

Depreciation, impairment and amortization expense

Total depreciation, impairment and amortization expense related to intangible assets and property, plant

and equipment was charged to the consolidated income statement as follows:

Intangible assets

Land Buildings Machinery and

Equipment

Other tangible

assets

Construction in progress

Property, Plant and

Equipment

At December 31, 2016 90 843 16 401 92 462 278 471 3 391 54 045 444 770

Additions under finance lease - - - 183 - (6) 177 Other additions 2 100 - 574 23 985 930 42 527 68 016 Disposals and write-offs - - (81) (2 925) (7) (72) (3 085)Depreciation and amortization (17 324) (528) (4 902) (63 449) (2 387) (127) (71 393)Impairment charges - (736) - 245 - 291 (200)Transfers in(out) from contructions in progress 3 875 736 916 29 385 655 (35 665) (3 973)Foreign exchange difference and other 1 468 1 245 8 708 19 700 284 3 253 33 190 Other reclassifications - - - - - - -

At December 31, 2017 80 963 17 118 97 677 285 595 2 866 64 247 467 503

Intangible assets

Land Buildings Machinery and

Equipment

Other tangible

assets

Construction in

progress

Property, Plant and

Equipment

At December 31, 2015 96 071 16 323 89 976 264 469 4 354 42 915 418 037

Additions under finance lease - - - 1 264 176 - 1 440

Other additions 5 106 - 1 289 38 237 614 55 339 95 479

Disposals and write-offs (49) (90) (244) (1 860) (251) (155) (2 600)

Depreciation and amortization (16 018) (552) (1 285) (66 726) (2 221) 87 (70 697)

Impairment charges - - - (812) 527 23 (262)

Transfers in(out) from contructions in progress - 26 346 43 552 162 (44 086) -

Business combinations (1) 6 166 1 099 4 469 5 528 46 291 11 433

Foreign exchange difference and other (433) (565) (3 232) (4 961) (31) (1 027) (9 816)

Reclassified as assets held for sale - 160 1 145 (220) 15 658 1 758

At December 31, 2016 90 843 16 401 92 464 278 471 3 391 54 045 444 772


2017

Cost of sales - Depreciation (69 756)

Selling and administrative expenses - Depreciation (5 574)

Other income and expenses - Amortization (13 348)

Impairment of intangible and tangible fixed assets (200)

Total depreciation, impairment and amortization expense (88 878)


In thousands of USD

83 95

6.2. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Impairment tests for property, plant and equipment

Albéa has organized its management operation

and reporting structure into ten clusters which

represents the CGUs : Tubes Europe, Tube

Americas, CRP North America, China, Indonesia,

India, Brazil, Beauty Solutions, Dispensing

systems and CRP Europe. These clusters have a

dedicated management (cluster manager,

finance, HR, sales). Operating measurement and

resource allocation are carried out by

management on this structure.

At the end of each period, Albéa assesses

whether there is an indication that an asset

(other than a financial asset) or a cash generating

unit (CGU) may be impaired.

The recoverable amount of property, plant and

equipment is based primarily on calculations

using value in use. These calculations use post-

tax cash flow projections based on financial

budgets approved by management covering a

five-year period. Cash flows beyond the five-year

period are extrapolated using the estimated

growth rates presented below. The key

assumptions used for value-in-use calculations

for each CGU are as follows:




- Discount rate after tax: 8.9 % (adjusted by

region between 8.9% and 10.7%)


calculations in 2016 were as follows:


- Discount rate after tax: 9.5% (adjusted by

region between 9.5% and 12.8%)

Management determined average gross margins

based on past performance and its expectations

of market development. The weighted average

growth rates used are consistent with the

forecasts included in industry reports. The

discount rate is the rate used by comparable

companies.

No impairment has been recorded neither in

2017, or in 2016. Further, no impairment charge

would have been recognized in 2017 if :

- discounted projected cash flows were 5%

lower

- the discount rate was increased by 50 basis

points

- the perpetuity growth rate was decreased by

50 basis points


In thousands of USD

83

96

6.3. OTHER FINANCIAL ASSETS

As at December 31, 2017, Other non-current financial assets mainly contains long term receivable of USD

3.2 million linked to the acquisition of Albéa Slovakia to be received at the end of the lease on land and

buildings, when Albéa will execute the buy-back option. It also includes USD 2.6 million for 2% Cap

Premium concluded on USD 388 million Term Loan B Tranche in Luxembourg (see note 3.1 and note 6.9).

Other Financial assets includes mainly deposits and employee loans.

6.4. INVENTORIES

Inventories are carried at the lower of cost or net realizable value, which requires the estimation of the future

sales price of goods. Any differences between the expected and actual sales price achieved will be

recognized in the income statement in the period in which the sale is made.

The amounts shown above include provisions and the elimination of the intercompany margin in finished

goods inventory for Albéa entities.


2017 2016

Factoring - Financial Assets 16 694 -

Deposits 10 143 7 562

Employee loans (from French "1% logement") 3 165 2 672

Term Loan B Cap Premium Fair value 2 667 -

Other non-current financial assets 4 244 4 118

Total other financial assets 36 914 14 352

Of which current 16 694 -

Of which non current 20 220 14 352


2017 2016Work in Progress 34 566 32 487

Finished goods 64 277 63 850

Raw Materials 78 033 64 587

Provision / Impairment on Inventories (14 796) (16 024)

Total inventories 162 080 144 900


In thousands of USD

83 97

6.5. TRADE AND OTHER RECEIVABLES

Due to their short-term maturities, the fair value of Trade receivables and other is close to its carrying

amount. None of Albéa’s trade receivables is interest bearing.

The ageing of Albéa’s past due trade receivables is as follows:

Additions to and reversals of provisions for bad debt have been included in selling and administrative

expenses in the consolidated income statement. When a trade receivable is deemed uncollectible, it is

written off against the provision for bad debt account. Subsequent recoveries of amounts previously

written off are credited against selling and administrative expenses in the consolidated income statement.


Trade receivables, gross 126 087 116 946

Less : impairment (1 978) (2 167)

Trade receivables, net 124 109 114 779

Operating Working Capital - assets 43 990 28 820

Non-operating Working Capital - assets 11 837 26 862

Other debtors 55 826 55 682

Total Trade receivables and other debtors 179 935 170 461

Ageing of Albéa's past due trade receivables At December 31, At December 31,2017 2016

Not Due - Receivables 115 499 106 333

0 day - Receivables 2 185 1 631

Less than 1 month - Receivables 5 557 5 788

Between 31 days and 60 days - Receivables 812 1 027

Between 61 days and 90 days - Receivables 56 -

Total past due trade receivables 124 109 114 779


In thousands of USD

83

98

6.6. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in bank accounts and on hand, short-term deposits held on call

with banks and highly liquid investments that are readily convertible into known amounts of cash and

which are subject to insignificant risk of changes in value, less bank overdrafts that are repayable on

demand.

Bank overdrafts are included in current borrowings (See note 6.9). Net cash and cash equivalents include USD 48.3 million of cash from some Asian subsidiaries which is not

immediately available at group level.

6.7. ASSETS/LIABILITIES HELD FOR SALE

Non-current assets (or disposal groups) held for sale

Non-current assets (or disposal groups) are

classified as assets held for sale when their

carrying amount is to be recovered principally

through a sale transaction which is considered

highly probable by Albéa's management. They are

stated at the lower of carrying amount and fair

value less costs to sell.

As at December 31, 2017, they include :

- Albéa Tube France : Assets for USD 0.3

million for Building in Sainte Ménéhould.

As at December 31, 2016, they include :

- Shenzhen: Assets for USD 15.2 million and

Liabilities for USD (0.6) million of liability

related to Albéa Plastic Packaging

(Shenzhen) CO, limited in accordance with

IFRS 5 (See note 3.2)

- Albéa Tube France : Assets for USD 0.9

million for Building in Sainte Ménéhould.

6.8. CAPITAL STOCK

The capital of Albéa Beauty Holdings S.A. amounts to EUR 284 161.


Cash in bank accounts and on hand 104 566 79 455

Short-term bank deposits and investments 14 519 7 523

Cash and cash equivalents 119 085 86 978

Less: Bank overdrafts repayable on demand (497) (2 427)

Net Cash and cash equivalents 118 588 84 551


In thousands of USD

83 99

6.9. BORROWINGS AND OTHER FINANCIAL LIABILITIES

Changes in borrowings during the year:

(1) Bonds, net at the end of December 2016 includes :gross debt USD 643.1 million, Bonds Premium Redemption cost (break-up

fees) for USD 26.3 million and Bonds amortized fees for USD (1.4) million.

(2) Term Loan B, net at December 31, 2017: include gross debt for US 867.6 million, Term loan B amortized fees for USD (21.7) (see

note 3.1) and non-cash unrealized forex for USD 48.9 million.

Asset Based Lending / Factoring : Transferred

assets under these factoring arrangements are

Trade receivables for the Credit Agricole Leasing

Factoring / Eurofactor European arrangement

and Hong-Kong arrangement, and Trade

receivables and Inventories for the ABL US

arrangement.

In accordance with IAS 39.30, these transferred

assets are not derecognized in the financial

statements as Albéa is still considered as

"continuing involved" in the recoverability of

these assets. When risk and rewards attached to

receivables are transferred, the assets are not

anymore recognized (USD 90.3 million as at

December 31, 2017 net of deposit).

The main components of the other borrowings

are as follows:

- Brazil :USD 9.1 million

- France : USD 12.3 million

- Slovakia USD 13.8 million

- Accrued interest on Term Loan B: USD 3.7

million

- Bank overdrafts: USD 0.5 million

Asset Based Lending / Factoring

Bonds, net

(1)

Term Loan B, Net(2)

Finance lease

liabilities

Other borrowings Total

At December 31, 2016 29 077 668 041 - 29 188 53 039 779 345

New finance lease obligations - - - 179 - 179

Proceeds from loans other than lease obligations - - 818 450 - 3 050 821 500

Repayment of loans - (646 195) (2 264) (8 127) (11 403) (667 989)

Factoring (17 828) - - - (963) (18 791)

Bonds Premium Redemption cost (26 293) - - - (26 293)

Accrued interests - - - - (5 889) (5 889)

Amortization of arrangement fees - 1 365 (19 204) - 19 (17 820)

Proceeds from / (repayment of) bank overdrafts - - - - (2 042) (2 042)

Exchange differences 6 3 082 48 972 3 414 4 336 59 810

At December 31, 2017 11 255 - 845 954 24 654 40 147 922 010


In thousands of USD

83 100

6.9. BORROWINGS AND OTHER FINANCIAL LIABILITIES (CONTINUED)

Net debt

Net debt is a non IFRS GAAP measure which include interest bearing debt less cash and cash equivalents and finance lease receivable.

Bonds, net at the end of December 2016 includes :gross debt USD 643.1 million, Bonds Premium Redemption cost

(break-up fees) for USD 26.3 million and Bonds amortized fees for USD (1.4) million.

Term Loan B net as at December 31, 2017: include gross debt for US 867.6 million, Term loan B amortized fees for USD

(21.7) million (see note 3.1)

The maturity schedule of the borrowings is as follows:

At December 31, At December 31,Note 2017 2016

Asset Based Lending / Factoring 11 255 29 077

Bonds, net - 668 041

Term Loan B, net 845 954 -

Finance lease liabilities 24 654 29 188 Other (excluding bank facilities and bank overdraft) 39 649 50 612

Borrowings excluding bank facilities and bank overdraft ( A ) 921 512 776 918

Other current financial assets 16 694 -

Other non-current financial assets 6 072 2 951

Other financial assets ( B ) 6.3 22 766 2 951

Short-term bank deposits and investments 14 519 7 523

Cash in bank accounts and on hand 104 566 79 455Bank facilities and bank overdraft (497) (2 427)

Net Cash and cash equivalents ( C ) 6.6 118 588 84 551

Net Debt ( A ) - ( B ) - ( C ) 780 158 689 416

At December 31, 2017Less than one year

Between 1 and 4 years

5 years and more

Total

Asset Base Landing / Factoring 11 255 - - 11 255

Term Loan B 1 148 3 448 863 052 867 648

Finance lease liabilities 7 533 10 184 6 938 24 655

Others 17 996 13 845 8 305 40 146

Gross borrowings 37 932 27 477 878 295 943 704

Less: Amortized financing fees (3 073) (10 004) (8 618) (21 695)

Borrowings 34 859 17 473 869 677 922 009


In thousands of USD

83 101


Convertible Preferred Equity Certificates

The component parts of compound instruments

issued by Albéa are classified separately as

financial liabilities and equity, in accordance with

the substance of the contractual arrangement. In

the case of a bond that may be converted into a

fixed number of equity shares, the fair value of the

liability component is estimated at the date of

issue using the prevailing market interest rate for

a similar non-convertible instrument.

In accordance with IFRS, the nominal value of this

liability has been discounted to determine its

carrying amount as at the reporting date, using an

estimated fair value cost of debt discount rate of

11.0% over a 49-year maturity period. The explicit

interest rate within the CPECS is 0%. A 11.0% rate

has been obtained by looking at the market rate

of debt available on similar borrowings at the date

of issue. Had a different cost of debt been

calculated, and interest charged annually, the

amount recognized in the consolidated financial

statements on initial recognition, and in

subsequent years, may have differed from the

values presented here.

At any time, upon the approval of a majority of

shareholders representing at least two thirds of

the share capital, the holder is entitled to convert

any or all of its CPECS into ordinary shares with a

value equal to the conversion price (one share for

one CPEC). At any time, the issuer shall be

entitled to repurchase any of all of the CPECS at

the redemption price.

The redemption price shall be:

� upon maturity date or liquidation, the par

value or,

- upon optional redemption, the greater of (a)

the par value for such outstanding CPECS

and (b) the fair value of one share

The CPECS are non-interest bearing and carry no

voting rights.

Issued in 2010

On June 30, 2010, the Company issued 19,090,147

Convertible Preferred Equity Certificates (CPECS)

with an initial par value of EUR 1 and an

aggregate par value of EUR 19.1 million. They are

held by an affiliate of Sun Capital Partners. The

repayment of the nominal value is payable on the

49th anniversary of the issue date of the CEPCS

which are yield free.

Issued in 2011

On June 23, 2011, the Company issued CPECS for

EUR 9.3 million which are held by an affiliate of

Sun Capital Partners. The repayment of the

nominal value is payable on the 49th anniversary

of the issue date of the CEPCS which are yield

free.

CPECS restructuring in 2012

On October 29, 2012, the above-mentioned

CPECS which were issued by the Company and

by Twist Beauty Packaging S.à r.l. were cancelled

and replaced by the issuance on November 26 of

28,497,971 new CPECS held by an affiliate of Sun

Capital Partners. On December 31, 2012, 1,356,566

CPECs were redeemed for an amount of USD

27,299,000. To remove from Albéa the share of

rose HPC holding L.L.C, which is currently an

affiliate of Sun Capital.


In thousands of USD

83 102


Convertible Preferred Equity Certificates (continued)

On July 17, 2015, 1,482,787 CPECs were redeemed

for EUR 1,482,787 and reduce the equity

accordingly. On January 6, 2016, 786 000 CPECs

were redeemed for EUR 786 000 and on

November 22, 2016, 502 000 CPECs were

redeemed for EUR 502 000 and reduce the

equity accordingly.

On November 27, 2017 80,000 CPECs were

redeemed for EUR 80 000 and reduce the equity

accordingly.

At the end of December 2017 the remaining

24 208 674 CPECs are classified in equity for USD

29 033 million.

6.10. PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS OBLIGATIONS

The present value of Albéa’s defined benefit

obligations depends on a number of factors that

are determined on an actuarial basis using a

number of assumptions. The assumptions used in

determining the defined benefit obligations and

net pension costs include the expected long-term

rate of return on the relevant plan assets and the

discount rate. Any changes in these assumptions

may impact the amounts recorded in Albéa’s

consolidated financial statements.

Description of plans

Albéa operates a number of pension plans. Some

of these plans are defined contribution plans and

some are defined benefit plans (France,

Germany, Indonesia, and Italy). Valuations of

these plans are produced and updated annually

at December 31, 2017 by qualified actuaries.

Termination

Termination plan concerns only German early

retirement program.

Pension plans

The majority of Albéa's pension obligations relate

to unfunded defined benefit pension plans

mostly in France and Germany, and lump-sum

indemnities payable upon retirement to

employees in France. Pension benefits are

generally based on the employee’s service and

highest average eligible compensation before

retirement, and are periodically adjusted for

increases in the cost of living, either by Albéa

practices, collective agreements or statutory

requirements.

Pensions Other long-term employee

benefit obligations

Termination benefits Total

At December 31, 2016 59 815 5 526 1 545 66 886

Current service costs 3 579 318 388 4 285

Interest costs 1 488 256 - 1 744

Benefits paid (1 629) (310) (321) (2 260)

Change in exchange variation 6 970 781 205 7 956

Actuarial gains and losses on benefit obligations (381) (342) 1 (722)

Plan amendement (Past service cost) 1 107 - - 1 107

At December 31, 2017 70 935 6 229 1 818 78 982


In thousands of USD

103

6.10. PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS OBLIGATIONS (CONTINUED)

Main Assumptions (rates per annum)

The main assumptions used in the valuations of the plans are set out below:

The Iboxx AA rate has been used as reference to determine the discount rate of the euro zone.

Total expense and Income recognized in the consolidated income statement

France Germany


Rate of increase in salaries 2.0% + nominal rate between 0.25% to 3,50% 0,00%

Rate of increase in pensions N/A 2,00%

Discount rate 1,30% 1,50%

Inflation 2,00% 0,00%

Duration 14 years 18.9 years


Rate of increase in salaries 2.0% + nominal rate between 0.25% to 3,50% 0,00%

Rate of increase in pensions N/A 2,00%

Discount rate 1,31% 1,50%

Inflation 2,00% 0,00%

Duration 15.7 years 18.2 years



2017 2016

(4 285) (3 089)

Pension interest costs (Other than normal service costs) (1 744) (2 549)

Retirement Plan Amendment (1 107) -

Actuarial Gain / (Losses) on other benefit obligations 342 (152)

Total expenses (6 794) (5 790)

Current employer service cost for defined benefit plans


In thousands of USD

83 104


Reconciliation between the provisions and present values of the defined benefit obligation/fair value of

plans assets



Pensions

At December 31, 2017 France Germany Other Total

Present value of obligation 38 593 20 382 15 362 74 337

Fair Value of plan assets - (3 402) - (3 402)

Net provision recognized 38 593 16 980 15 362 70 935

Other long-term employee benefit obligations


Present value of obligation 6 229 - - 6 229

Fair Value of plan assets - - - -

Net provision recognized 6 229 - - 6 229

Termination benefits


Present value of obligation - 1 818 (0) 1 818


Net provision recognized - 1 818 (0) 1 818

Pensions


Present value of obligation 32 346 18 212 12 246 62 804

Fair Value of plan assets - (2 989) - (2 989)

Net provision recognized 32 346 15 223 12 246 59 815



Present value of obligation 5 525 - - 5 525


Net provision recognized 5 525 - 1 5 525

Termination benefits


Present value of obligation - 1 545 (0) 1 545

Fair Value of plan assets - - -

Net provision recognized - 1 545 (0) 1 545


In thousands of USD

83 105


Sensitivity analyses

The present value of Albéa’s obligation for

pensions and other post-employment benefits is

sensitive to changes in discount rates

An decrease of 25 basis points in the discount

rate would have the following impacts on the

present value of Albéa‘s defined benefit

obligation (DBO):

6.11. PROVISIONS

The amounts of provisions recognized represent management’s best estimates of the liabilities at the

reporting date. Expectations will be revised each period until the actual liability is settled, with any difference

accounted for in the period in which the revision is made.

The other provisions for risks and contingencies are related to commercial, employees, tax litigations and

building dilapidation cost or commercial claims.

Pensions

At December 31, 2017In thousands of

USDIn % of DBO

France 1 468 3,94%

Germany 824 4,06%

Other countries N/A

Total 2 292


At December 31, 2017In thousands of

USDIn % of DBO

France 157 2,52%

Germany N/A

Other countries N/A

Total 157

(Excluding pension and OPEB)


Allowances Reversals of provisions

used

Reversals of provisions

not used

Foreign exchange

impactOther


Restructuring 5 506 3 264 (3 514) (676) 506 36 5 120

Other provisions for risks and contingencies 6 454 1 444 (262) (2 359) 491 (129) 5 638

Total Provisions 11 960 4 708 (3 776) (3 035) 997 (93) 10 758

of which current - Provision 8 709 9 126

of which non current - Provision 3 252 1 632


In thousands of USD

83 106

6.12. OTHER FINANCIAL LIABILITIES

At the end of December 31, 2016, the main components of the other financial liabilities are mainly USD 28.8

million (translated value as at end of 2016 of the USD 30.4 million received in march 2016) of cash received

in advance according to the step 1 of Shenzhen project assets transaction (see note 3.2).

At the end of December 31, 2017, Albéa Plastic Packaging Hong Kong completed the transfer of its

subsidiary Albéa Plastic Packaging Shenzhen and recognized final impact in 2017 net result (see note 3.2).

6.13. TRADE AND OTHER PAYABLES

The ageing of Albéa’s past due trade payables is as follows:


Trade payables 171 806 146 394

Other payables 76 142 69 420

Employee payables 83 162 70 504

Total Trade and other payables 331 110 286 318


2017 2016

Not Due - Payables 128 494 97 836

0 day - Payables 16 731 11 377

Less than 1 month - Payables 15 501 14 211

Between 31 days and 60 days - Payables 8 086 13 498



Total past due trade payables 171 806 146 394


In thousands of USD

83

107

6.14. FINANCIAL INSTRUMENTS

The information below relates to Albéa’s financial instruments, and excludes those of joint ventures

accounted for under the equity method of accounting. Carring amount of loan and receivable are close to

fair value.

Fair value Hierarchy

Fair value is the price that would be received to

sell an asset or paid to transfer a liability in an

orderly transaction between market participants

at the measurement date.

The fair value of financial instruments traded in

active markets is based on quoted market prices

at the balance sheet date. The quoted market

price used for financial assets held by the Group

is the current bid price; the appropriate quoted

market price for financial liabilities is the current

ask price. This valuation method is referred to as

Level 1 in the hierarchy established by IFRS 13.

The fair value of financial instruments that are

not traded in an active market is determined by

using valuation models incorporating various

inputs including the credit quality of

counterparties, foreign exchange spot and

forward rates and forward interest rate curves.

The assumptions used are observable either

directly (i.e. as prices) or indirectly (i.e. derived

from prices). This valuation method is referred to

as Level 2 in the hierarchy established by IFRS 13.

Carrying amount

Fair value hierarchy

levelFair value

Assets/Liabilities available for sale

Loans and receivables

Assets held to

maturity

Debt at amortised

cost

Derivatives instruments

Other financial assets 36 914 2 6 072 - 30 842 - - -

Trade receivables 179 935 N/A - - 179 935 - - 450

Cash and cash equivalents 119 085 N/A - - 119 085 - - -

Assets held for sale 318 N/A - 318 - - -

Assets 336 252 6 072 318 329 862 - - 450

Term Loan B 845 954 2 845 954 - - - - -

Other borrowings 76 055 N/A - - 75 769 - 286

Trade payables and other 331 110 N/A - - 331 110 - - -

Other financial liabilities 3 N/A - - 3 - - -

Liabilities held for sale - N/A - - - - - -

Liabilities 1 253 122 845 954 - 406 882 - - 286

At 31 December 2016Carrying amount

Fair value hierarchy

level

Fair value Assets/Liabilities available for sale

Loans and receivables

Assets held to

maturity

Debt at amortised

cost

Derivatives instruments

Other financial assets 14 352 2 2 951 - 11 821 - - -

Trade receivables 170 461 N/A - - 170 461 - - -

Cash and cash equivalents 86 978 N/A - - 86 978 - - -

Assets held for sale 16 218 N/A - 16 218 - - -

Assets 288 009 2 951 16 218 269 260 - - -

Bonds 668 041 1 668 041 - - - - -

Other borrowings 111 304 N/A - - 110 478 - - 826

Trade payables and other 286 318 N/A - - 286 318 - - -

Other financial liabilities 28 774 N/A - - 28 586 - - 188

Liabilities held for sale 624 N/A - 624 - - - -

Liabilities 1 095 061 668 041 624 425 382 - - 1 014


In thousands of USD

108

N

NOTE 7- ADDITIONAL INFORMATION

Albéa’s capital management objectives are to safeguard Albéa’s ability to continue as a going concern in

order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal

capital structure to reduce the cost of capital.

7.1. FINANCIAL RISK MANAGEMENT

7.1.1. Risk management objectives and policies

Albéa is exposed to various types of risk:

- Foreign exchange risk

- Interest rate risk

- Liquidity risk

- Covenants

- Counterparty risk

- Raw material price risks

Albéa’s risk management is coordinated at its

headquarters, in close cooperation with the

executive committee, and focuses on securing

Albéa’s short- to medium-term cash flows by

minimizing exposure to financial markets.

Albéa faces a number of risks, among which the

main ones are market, environmental, social as

well as financial risks. Risk management is an

issue addressed by every employee and Albéa is

committed to running its operations in a

responsible and sustainable manner. Albéa has

put in place a risk management framework.

Albéa’s approach to risk management is to

identify relevant risks affecting its strategy and

operations, report them throughout the

organization and mitigate these risks.

7.1.2. Foreign exchange risk

Operating flows

Albéa operates in 16 countries through

consolidated subsidiaries. Albéa’s net

investments, earnings and cash flows are

influenced by a wide variety of currencies due to

the geographic diversity of Albéa’s sales and the

countries in which it operates.

Albéa records its financial position and income in

the relevant local currency, and then converts

these figures into US dollar at the applicable

exchanges rates for the purpose of consolidation

in Albéa’s financial statements (see Note 2.3.1).


In thousands of USD

83 109

7.1. FINANCIAL RISK MANAGEMENT (CONTINUED)

7.1.2. Foreign exchange risk (continued)

Part of the main currencies in revenue breaks down as follows :

Operating profit is mainly influenced by the currencies of those countries in which Albéa’s operating plants

are located. The Euro and US dollar are the currencies that influence operating profit the most.

Main CurrenciesNet Sales


in % At December 31,

2016

in %

Brasilian Real BRL 86 094 5,78% 83 146 5,93%

Canadian Dollar CAD 1 015 0,07% 1 808 0,13%

Chinese Yuan CNY 69 351 4,66% 79 576 5,67%

Euro EUR 629 334 42,26% 570 398 40,67%

British Pound Sterling GBP 54 062 3,63% 53 781 3,83%

Hong Kong Dollar HKD 10 307 0,69% 6 421 0,46%

Indonesia Rupiah IDR 32 650 2,19% 33 515 2,39%

Indian Rupee INR 25 116 1,69% 21 257 1,52%

Mexican Peso MXN 25 440 1,71% 27 602 1,97%

Polish Zloty PLN 72 241 4,85% 60 770 4,33%

Russian Ruble RUR 16 074 1,08% 15 686 1,12%

US Dollar USD 467 468 31,39% 448 464 31,98%

Net Group Sales 1 489 151 100% 1 402 424 100%


In thousands of USD

83 110


Due to the low proportion of financial assets and

liabilities that are not denominated in the

subsidiaries’ functional currency, Albéa is not

significantly exposed to transactional foreign

exchange risk. However Albéa remains exposed

to foreign exchange risk through the translation

of the financial statements of its entities from

functional currencies to US dollars. Moreover

Albéa is slightly exposed to the following foreign

exchange risks:

- Albéa has chosen to manufacture products

that are sold in the euro and USD zones in low-

cost countries (Poland, Mexico, Indonesia, and

China). As a result, Albéa is exposed to the

impact of changes in the EUR/PLN, USD/MXN,

USD/IDR, USD/INR, USD/CAD and EUR/CNY

rates. The "transactional risk" part of this

exposure is not hedged since Albéa considers

that over time the cost of hedging would be

greater than the benefits derived from

smoothing out the impact of fluctuations in the

exchange rate.

- Albéa is exposed to the impact of changes in

the USD/CAD rate as a result of the production in

Canada of the webbing used to manufacture

tubes sold in the USA. Albéa also considers that

over time the cost of hedging would be greater

than the benefits derived from smoothing out

the impact of the fluctuations in the exchange

rate. Albéa is still following USD/CAD fluctuation

and ready to setup any appropriate hedging

strategy if needed.

- The trading business unit (Beauty Solutions)

imports products from Asia, purchased in USD, to

Europe and as a result is exposed to the impact

of fluctuations in the USD/EUR rate. Flows are

under monitoring and punctual foreign exchange

hedging is done.

- Brazil is hedging its hard currencies net

outflows (USD & EUR vs. BRL) form quarter to

quarter

- Poland is hedging its EUR net inflows against

PLN for the full year.

- Within Albéa, support services are mostly

provided from the European head office,

exposing Group companies outside of the

Eurozone to the impact of fluctuations in the

EUR exchange rate. Albéa’s policy is mainly to

leave exposures resulting from intercompany

cash flows unhedged.

The following table shows the trade receivables and payables for the main currencies to which Albéa is

exposed as at December 31, 2017 and 2016 (figures in thousands of USD).

At December 31, 2017 EUR USD GBP Other

WC - Receivables 74 087 39 098 11 730 55 020

WC - Payables (176 599) (58 923) (16 423) (79 165)

Net Balance Sheet position (102 512) (19 825) (4 693) (24 145)

At December 31, 2016 EUR USD GBP Other

WC - Receivables 68 103 44 947 8 536 48 874

WC - Payables (141 329) (60 127) (11 935) (72 927)

Net Balance Sheet position (73 226) (15 179) (3 399) (24 053)


In thousands of USD

83

111


Financing flows

Borrowings per currency are the followings :

On April 20, 2017, Albéa has completed a debt

refinancing , USD 818 million 7-year covenant-lite

term loan B facility divided in two tranche : 408

million USD tranche and the 385 million EUR. A

part of USD Tranche of the Term loan B is held by

a subsidiary whose functional and reporting

currency is euro.

As a result, Albéa is exposed to the impact of

changes in the EUR/USD rate. The transactional

foreign exchange risk part of this exposure is not

hedged since Albéa considers that over time the

cost of hedging would be greater than the

benefits derived from smoothing out the impact

of fluctuations in the exchange rate.

Sensitivity to changes in exchange rates for the main exposure

For Albéa the main exposure is the variation of the exchange rate USD/EUR.

As of December 31, 2017, the sensibility of consolidated revenue and operating profit to this exchange rate

is as follows:

As many of Albéa’s operating plants are located in the euro zone, the higher EUR is, the more revenues and

operating profit are positively impacted.



US Dollar 393 441 435 026

Euro 524 218 335 265

British Pound Sterling - 2 992

Other currencies 4 350 6 062

Total Borrowings 922 009 779 345

Borrowings by currencies

Year ended December 31, 2017 5% Increase 10% Increase

Impact of revenues 31 467 62 933

Impact on operating profit 1 451 2 902


In thousands of USD

83 112


7.1.3. Interest rate risk

Interest rate risk refers to the risk that the value of financial instruments that are held by Albéa and are

subject to variable rates or the cash flows associated with such instruments will fluctuate due to changes

in market interest rates.

(*) Bonds, net for December 2016 includes: gross debt USD 643.1 million Bonds Premium Redemption cost (non-interest

bearing) for USD 26.3 million and Bonds amortized fees for USD (1.3) million

Borrowings under our Asset Based Lending facility and

European Invoice Discounting facility had a weighted

average interest rate of 5.40 % and 2.60%, respectively,

as at December 31, 2017 (3.81% and 2.98% as at

December 31, 2016).

The main Finance Lease is related to the plant in Tubes

France (Sainte Ménéhould) for USD 12.8 million. The

remaining duration is 8 years. The interest rate is

Euribor 3M+2.9%.

As of December 31 2017, Albéa is exposed to interest

rate risk, mainly due to refinancing of Bonds (fixed

rates) via Term loans B (floating rates ).Mid-June 2017,

the USD tranche of Albéa Beauty Holdings SA term loan

B was hedged via a 2% CAP (vs. Libor 6 months) for USD

388 million (effective date November 30th 2017 and

maturing May 31st 2020). Cap cost was USD 1.9 million.

No instrument taken to hedge floating interest rate on

the EUR 385 million term loan B, mainly with Albéa

Beauty Holdings SA for EUR 378.5 million (remaining

EUR 6.5 million between 3 European entities)

Taken into account the USD tranche of Albéa Beauty

Holdings SA term loan B already hedged, an increase in

the variable rate of 100 basis points would have a

negative impact of about USD 5 million on financial

income.

At December 31, 2017 Carrying amountOf which fixed

rateOf which variable

rateOf non-interest

bearing

ABL Factoring 11 255 - 11 255 -

Term Loan B , net of amortized costs 845 954 - 845 954 -

Finance lease liabilities 24 654 - 24 654 -

Others 40 143 23 923 8 768 7 452

Borrowings 922 007 23 923 890 631 7 452

At December 31, 2016 Carrying amountOf which fixed

rateOf which variable

rateOf non-interest

bearing

ABL Factoring 29 077 - 29 077

Bonds, net of amortized costs (*) 668 041 641 748 - 26 293

Finance lease liabilities 29 188 - 29 188 -

Others 53 039 30 977 8 812 13 251

Borrowings 779 345 672 725 67 076 39 544


In thousands of USD

83

113


7.1.4. Liquidity risk

Risks concern Albéa’s ability to access financing and future development. Albéa’s shareholder supports the

strategy to be implemented, and Albéa has put in place a funding facility to support its current operations.

The following table shows the contractual maturity of the Group’s financial liabilities:

Albéa’s principal uses of cash have been to

finance working capital, capital expenditure,

debt service and repayments, and acquisitions.

Albéa’s principal sources of liquidity have

historically been net cash provided by operating

activities and borrowings under our European

Invoice Discounting revolving facility (European

Factoring) and Asset Based Lending facility (ABL

facility) in the USA and Canada.

As at December 31, 2017, Albéa had USD 118.6

million of net cash and USD 72.8 million of the

undrawn Asset Based Lending facility, European

Factoring facility and USD 105 million multi-

currency revolving facility.

---------- 7.1.5. Covenants Albéa Beauty Holdings SA undertakes to comply

with the specific covenant. According to the

Term loan B agreement signed with the lenders

on April 20, 2017, the Net Debt ratio to EBITDA

should remain below 7.97. starting of December

2018.

For the other borrowings, while Albéa respects

its covenants, the related amounts are not

significant enough to generate a liquidity issue

should Albéa have to immediately reimburse

them.

At December 31, 2017Less than one year

Between 1 and 4 years

5 years and more

Total

Asset Base Landing / Factoring 11 255 - - 11 255

Term Loan B 1 148 3 448 863 052 867 648

Finance lease liabilities 7 533 10 184 6 938 24 655

Others 17 996 13 845 8 305 40 146

Gross borrowings 37 932 27 477 878 295 943 704

Less: Amortized financing fees (3 073) (10 004) (8 618) (21 695)

Borrowings 34 859 17 473 869 677 922 009


In thousands of USD

83 114


7.1.6. Counterparty risk

Counterparty risk is the risk that a counterparty

will not meet its obligations under a financial

instrument or customer contract, leading to a

financial loss. Albéa is exposed to counterparty

risk from its operating activities (primarily from

customer receivables) and from its financing

activities, including deposits with banks and

financial institutions, foreign exchange

transactions and other financial instruments. The

maximum exposure to counterparty risk at the

reporting date is the carrying amount of each

class of financial assets as described in Note 6.14

“Financial instruments”. Albéa does not generally

hold any collateral as security.

Counterparty risks related to receivables

Customer credit ratings are carefully monitored

by Albéa’s credit management organization.

Other risks are monitored and addressed

carefully by the Finance Department.

Counterparty risk related to financial instruments

and cash deposits

Counterparty risk from balances with banks and

financial institutions is managed by Albéa’s

Treasury Department

7.1.7. Raw material price risk

Rises in raw material prices may affect Albéa’s

profitability. In order to minimize this risk, a large

part of Albéa sales are indexed on raw material

prices with escalation/de-escalation

mechanisms.

7.2. COMMERCIAL RISKS

Albéa’s top ten customers represent 51% of the

Group’s sales. Therefore losing one of these

customers would deeply impact Albéa’s

profitability. Only one customer represents about

16% of total sales and the other customers

represent less than 6%.


In thousands of USD

83

115

7.3. CONTINGENCIES AND COMMITMENTS

Term Loan B contingencies and commitments

As part of its ordinary course of business, Albéa

Beauty Holdings S.A. has entered into

arrangements and incurred obligations that will

impact the Company’s future operations and

liquidity, some of which are reflected as liabilities

in the consolidated financial statements at year-

end.

Albéa Beauty Holdings S.A. main commitments

are in the form of debt and interest repayments

in relation to Albéa's financing, mainly Albéa

Beauty Holdings S.A. term loan facilities B, fully

drawn, EUR 385 million at Euribor + 4% (zero rate

Euribor floor) and USD 408 million at Libor +

3.75% (1% Libor floor), maturing on April 20, 2024.

Albéa Beauty Holdings S.A. also a USD 105 million

multi-currency revolving facility (undrawn at

December 31, 2017. This facility at Euribor/Libor +

3.25% (zero rate Euribor floor / 1% Libor floor),

maturing April 20, 2023 is available for general

corporate purposes of the Group. The Company

also has operating lease commitments relating to

corporate offices, factories and machinery.

USD 818 million equivalent aggregate principal

amount of the EUR and USD term loan facilities B

and interest payments are guaranteed on a

senior secured basis by subsidiary guarantors.

The term loan facilities B are guaranteed by some

of our Company's subsidiaries operating in Brazil,

Canada, France, Germany, Italy, Luxembourg,

Poland, the United Kingdom, the Netherlands

and the United States.

The term loan facilities B are secured on a first-

priority basis by Albéa’s collateral, subject to

certain exceptions including the collateral

securing the North American senior secured

credit facility.

The Group’s collateral is made up of assets

owned by the guarantors including real estate

assets, fixed assets, equipment and other goods,

intellectual property, investment property

(including capital stock), share capital of

subsidiaries, intercompany loans, accounts

receivable, inventories and related assets, certain

deposit and securities accounts, letters of credit

rights and general intangibles. The collateral is

subject to exclusions for assets already secured,

or subject to a negative pledge, under our

European Accounts Receivable Discounting

facility or under other existing credit facilities.

The term loan facilities B are secured on a

second-priority basis by the collateral securing

indebtedness under our North American senior

secured credit facility.


In thousands of USD

116

7.3. CONTINGENCIES AND COMMITMENTS (CONTINUED)

Other contingencies and commitments

Cotuplas sale commitments

As part of the sale of Cotuplas, Albéa has

undertaken to maintain its volume of trading

with Cotuplas over the next years and to accept a

gradual increase in machine prices to improve

Cotuplas profitability.

Albéa committed to buy from Cotuplas a

minimum of EUR 4.7million of equipment and

services annually in 2014 and 2015, in line with the

average of recent years. The minimum purchase

commitment then goes to EUR 3.6 million for

year 2017 and EUR 0.7 million annually in 2017

and EUR 0.8 million 2018. Should Albéa fail to

meet its commitment, it will provide an

indemnity to Cotuplas amounting to 45% of

Cotuplas turn-over shortfall.

The equipment price increase agreed with

Cotuplas amounts to 2.5% annually in 2014 and

2015. Albéa met the commitment in 2017 also.

---------- Seller warranties

Rio Tinto Alcan

In connection with the acquisition of the beauty

packaging business of Rio Tinto Alcan in July

2010, Rio Tinto France SAS and the other Selling

Parties have agreed to indemnify Albea, subject

to certain limitations, for certain liabilities. The

Sellers warranties are subject to certain

deductibles, caps, exclusions and procedural

requirements. Most of these warranties are now

expired. The main surviving warranties are

environmental liabilities related to the

Washington, New Jersey site (including any

liability incurred in connection with the

Pohatcong Valley Superfund Site), and to the

Semarang, Indonesia, site.

Rexam plc

In connection with the Rexam Acquisition,

Rexam plc has agreed to indemnify us, subject to

certain limitations, for certain liabilities. Most of

these warranties had expired. The tax

indemnification clauses will expire gradually as

the underlying tax obligations related to year

2012 and earlier reach the statute of limitations.

Sellers warranties on the historical environmental

liabilities and related to the Annecy site (divested

since by Albea) are not bound by time limits.


Banks and corporate guarantees 41 566

Pledges 119 516

Unconditional purchase/sell obligation 11 978

Commitments given 173 060


In thousands of USD

83 117

7.3. CONTINGENCIES AND COMMITMENTS (CONTINUED)

Albéa Slovakia

In connection with the acquisition of the Levice

business of Scandolara in August 2016,

Scandolara Holding S.r.l. and Scandolara S.p.A

(the “Sellers”) agreed to indemnify Albéa, subject

to certain limitations, for certain liabilities. The

Sellers’ warranties are subject to certain

thresholds, caps, exclusions, time limitations and

procedural requirements

US environmental litigations

Our current manufacturing facility located in

Washington, New Jersey (“Washington

Facility”) has soil and groundwater

contamination which is migrating offsite from

the property and into the indoor air within the

facility. The environmental risk was estimated

at USD 27.3 million as of December 31, 2013.

Pursuant to the July 2, 2010 agreement by

which RTA Beauty Packaging Business (Old

Albea name) was acquired from Rio Tinto, they

agreed to perform all remedial action required

at the Washington Facility and to indemnify

Albéa for losses or claims Albéa may incur

associated with historical environmental

conditions at the Washington Facility and the

Pohatcong Valley Superfund Site.

In November 2014, the parties have reached an

agreement in principle to settle the United

States Department of Justice lawsuits and

have negotiated a consent decree to

document the terms of the settlement

(“Pohatcong Consent Decree”). The Pohatcong

Consent Decree has been signed and

submitted to the court by EPA. Subject to the

completion of a public review and comment

period, the Pohatcong Consent Decree is

expected to enter into force in early 2015.

Due to the indemnity, Albéa’s primary

obligation under the Pohatcong Consent

Decree should be limited to providing access

to the Washington Facility as necessary for the

remedial work and to implementing and

maintaining institutional controls placed on the

property that are required by EPA.

In November 2014, an agreement has been

signed with United States to settle definitively

the litigation with no cash issue for Albéa.


In thousands of USD

83 119

7.4. LEASE COMMITMENTS

Minimum future lease payments on non-cancellable operating leases:

7.5. RELATED PARTIES

Related-party transactions include:

• The PECS and CPECS debt component issued in 2010 and 2012 and the associated interest cost

with entities controlled by Sun Capital (see Note 6.9 “Borrowings and other financial liabilities”).

• Management fees invoiced by Sun Capital Partners Management V, LLC for an amount of USD 4.4

million in relation with consulting agreements (see “Related parties transactions”) .

• Operating purchases ( mainly resins) to Sun affiliates for USD 1 million

7.6. EXECUTIVE COMMITTEE TOTAL REMUNERATION

The amount paid in 2017 for the total remuneration of the Executive Committee is USD 5,628,176 (including

social security costs).

7.7. AUDITORS’ FEES

The aggregate fees billed by the external auditor, PricewaterhouseCoopers, for professional services

rendered for the years 2017 and 2016 were as follows:

Payments due by maturityAt December 31,

2017

Within 1 year 27 793

Between 1 and 5 years 88 696

Beyond 5 years 14 956

Operating lease 131 445

Year ended December, Year ended December,

2017 2016

Audit fees 3 418 2 950

Audit -Related fees 47 97

Tax fees 36 332

Total Auditor's fees 3 501 3 379


In thousands of USD

83

120

7.8. SUBSEQUENT EVENTS

Change in Shareholder

On March 23, 2018, PAI Partners, a leading pan-

European private equity firm, has completed the

acquisition of Albéa.

With PAI Partner , Albéa will continue to grow -

in size and in strength, leveraging our assets and

market position, winning the talent war, bringing

in new customers, joining forces with other

players, rolling out our strategic and operational

priorities for the short- and the long-term. This is

the start of a new era for Albéa.

COVIT acquisition ;

In February 2018, Albéa acquired 100% of Covit

S.L., a leading manufacturer of metal parts, from

PHI private equity fund.

Covit S.L is a leader in the drawing, anodizing,

assembly and decoration of metal parts for

packaging products, based in Torello, Spain.


In thousands of USD

83

121

NOTE 8 COMPANIES INCLUDED IN THE CONSOLIDATION SCOPE

8.1. SCOPE OF CONSOLIDATION AS AT DECEMBER 31, 2017

The following subsidiaries and joint ventures were legal entities held by Albéa at December 31, 2017.

SUBSIDIARIES DESCRIPTION OPERATING SEGMENTCOUNTRY OF

INCORPORATIONPERCENTAGE OF

CONTROLPERCENTAGE OF

INTEREST

R do Brasil Embalagens Ltda - embalagens CRP/DISPENSING/TUBES Brazil 100% 100%

Betts Brazil Participaciones LTDA CORPORATE Brazil 100% 100%

Beauty Packaging Canada Holdings Inc. CORPORATE Canada 100% 100%

Albea Canada Brampton Tubes TUBES Canada 100% 100%

Albea Dispensing Systems Shanghai Co Ltd DISPENSING China 100% 100%

Albea Plastic Metallizing Technologies Shanghai Co Ltd CRP China 100% 100%

Twist Beauty Packaging Plastic Processing Shanghai Co Ltd CRP China 100% 100%

Plastic Molds Shanghai Co Ltd CRP China 100% 100%

Twist Beauty Packaging Plastic Products Shanghai Ltd CRP China 100% 100%

Plastic Packaging Shanghai Co Ltd CRP China 100% 100%

Albea Zhongshan Co Ltd CRP/TUBES China 100% 100%

ZongShan Meiquan Plastic Products Co Ltd TEX CRP China 100% 100%

Albea Packaging (Suzhou) Co Ltd CRP/DISPENSING/TUBES China 100% 100%

Albea Deutschland GMBH - Schesslitz TUBES Germany 100% 100%

Twist Beauty Packaging Holding Germany CORPORATE Germany 100% 100%

Albea Le Treport DISPENSING France 100% 100%

Albea Dispensing Lacrost DISPENSING France 100% 100%

Albea Simandre CRP France 100% 100%

Twist beauty packaging holding France CORPORATE France 100% 100%

Albea Beauty Solutions Europe SAS CRP France 100% 100%

Albea Tubes France SAS TUBES France 100% 100%

Albea Cosmetics France CRP France 100% 100%

SFG - (Bernaville) CRP France 100% 100%

Albea Services SAS CORPORATE France 100% 100%

Twist Beauty Packaging Asia Ltd CRP Hong Kong 100% 100%

Twist Beauty Packaging Make-up (Hong kong) Ltd CORPORATE Hong Kong 100% 100%

Albea Plastic Packaging (Hong kong) Ltd CRP/DISPENSING Hong Kong 100% 100%

Albea CMI HK Beauty Solutions Hong Kong 51% 51%

Twist Beauty Packaging Holding Hong kong Ltd CORPORATE Hong Kong 100% 100%

PT Albea Rigid Packaging Surabaya CRP Indonesia 100% 100%

PT Betts Indonesia - Tubes Surabaya TUBES Indonesia 100% 100%

PT Teckpack Asia - Semarang CRP/DISPENSING Indonesia 100% 100%

Betts India Pvt Ltd - Goa TUBES India 100% 100%

Albea Tubes Italy S.R.L TUBES Italy 100% 100%

Albea Cosmetics Italy S.R.L CRP Italy 100% 100%

Twist Beauty Packaging sarl (Luxembourg Bidco) CORPORATE Luxembourg 100% 100%


In thousands of USD

83 122

8.1. SCOPE OF CONSOLIDATION AS AT DECEMBER 31, 2017 (CONTINUED)

The following subsidiaries and joint ventures were legal entities held by Albéa at December 31, 2017




INTEREST

Albea Beauty Holdings SA CORPORATE Luxembourg Holding Holding

Albea Matamoros - Local Albea Packaging de Mexico CRP/TUBES Mexico 100% 100%

Albéa Mexicana LP TUBES Mexico 100% 100%

Twist Beauty Packaging Holding Mexico S de R.L DE CV CORPORATE Mexico 100% 100%

Cebal Americas Recursos Humanos S de R.L de CV TUBES Mexico 100% 100%

Cebal Americas de Reynosa S de R.L de CV TUBES Mexico 100% 100%

Cepillos de Matamoros SA de CV CRP Mexico 100% 100%

TPI Mexicana SA de CV CRP Mexico 100% 100%

Twist Beauty Packaging Holding Netherlands B.V CORPORATE Nederland 100% 100%

Albea Alkmaar DISPENSING Nederland 100% 100%

Albea Poland SP TUBES/CRP Poland 100% 100%

Albea Noginsk TUBES Russia 100% 100%

Albea Slovakia s.r.o. TUBES Slovakia 100% 100%

Albéa Slovakia Properties, s.r.o TUBES Slovakia 100% 100%

Rexam Taiwan Co CRP Taiwan 100% 100%

UK Bidco CORPORATE United Kingdom 100% 100%

Betts Ltd CORPORATE United Kingdom 100% 100%

Twist Beauty Packaging Asia Holdings Ltd CORPORATE United Kingdom 100% 100%

Albea UK Ltd (Colchester) TUBES United Kingdom 100% 100%

Boddington IP Limited CORPORATE United Kingdom 100% 100%

Betts International Ltd CORPORATE United Kingdom 100% 100%

Twist Beauty Packaging Asia Holdings Ltd CORPORATE United Kingdom 100% 100%

Betts Central Europe Holdings Ltd CORPORATE United Kingdom 100% 100%

Twist Beauty Packaging Holding Corp. CORPORATE USA 100% 100%

Albea Thomaston DISPENSING USA 100% 100%

Albéa Metal (Consolidated) CRP USA 100% 100%

Albéa Metal Holding, Corp CRP USA 100% 100%

Albéa Metal Real Estate, Inc. CRP USA 100% 100%

Albea Americas Inc. - Tubes HQ TUBES USA 100% 100%

Albea Americas Inc. - Shelbyville Tubes TUBES USA 100% 100%

Albea Plastic Packaging Texas Inc. CORPORATE USA 100% 100%

Albea Cosmetics Americas Inc CRP USA 100% 100%

Albéa Mexicana LP TUBES USA 100% 100%

Betts USA - Florence CORPORATE USA 100% 100%

Betts USA Holdings CORPORATE USA 100% 100%

Albea Beauty Solutions USA LLC CRP USA 100% 100%


In thousands of USD

83 123

8.2. SCOPE OF CONSOLIDATION AS AT DECEMBER 31, 2016





INTEREST

Albéa do Brasil Embalagens Ltda CRP Brazil 100% 100%

Betts Brasil Tubos Laminados Ltda CORPORATE Brazil 100% 100%

Beauty Packaging Canada Holdings, Inc CORPORATE Canada 100% 100%

Albéa Canada, Inc TUBES Canada 100% 100%

Albéa Dispensing Systems Shanghai Co., Limited DISPENSING China 100% 100%

Albéa Plastic Metallizing Technology Shanghai Co. Limited CRP China 100% 100%

Twist Beauty Packaging Processing Shanghai Co., Limited CRP China 100% 100%

Albéa Plastic Molds Shanghai Co., Limited CRP China 100% 100%

Twist Beauty Packaging Plastic Products Shanghai Co., Limited CRP China 100% 100%

Twist Beauty Packaging Plastic Decoration Shanghai Co., Limited CRP China 100% 100%

Albéa Plastic Packaging Shenzen Co., Limited CRP China 100% 100%

Albéa Plastic Packaging Shanghai Co., Limited CRP China 100% 100%

Albéa (Packaging) Suzhou Co. Limited CRP China 100% 100%

Albéa Tubes (Zhongshan) Co., Limited TUBES China 100% 100%

Zhongshan Meiquan Plastic & Rubber Products Co., Limited CRP China 100% 100%

Albéa Deutschland GmbH TUBES Germany 100% 100%

Twist Beauty Packaging Holding Germany GmbH CORPORATE Germany 100% 100%

Albéa Le Treport S.A.S DISPENSING France 100% 100%

Albéa Dispensing Lacrost S.A.S DISPENSING France 100% 100%

Albéa Simandre S.A.S.U CRP France 100% 100%

Twist Beauty Packaging Holding France S.A.S CORPORATE France 100% 100%

Albéa Tubes France SAS TUBES France 100% 100%

Albéa Beauty Solutions Europe SAS CRP France 100% 100%

Albéa Cosmetics France S.A.S. CRP France 100% 100%

SFG – Société Française de Galvanoplastie S.A.S. CRP France 100% 100%

Albéa Services SAS CORPORATE France 100% 100%

Twist Beauty Packaging Asia Ltd CRP Hong Kong 100% 100%

Twist Beauty Packaging Make Up Hong kong Ltd CORPORATE Hong Kong 100% 100%

Albea Plastic Packaging Hong kong Ltd CORPORATE Hong Kong 100% 100%

Albéa Hong Kong Limited CRP Hong Kong 100% 100%

Twist Beauty Packaging Holding Hong Kong Limited CORPORATE Hong Kong 100% 100%

Cosmetech Mably International (HK) Limited CRP Hong Kong 51% 51%

PT Albéa Rigid Packaging Surabaya CRP Indonesia 100% 100%

PT Betts Indonesia TUBES Indonesia 100% 100%

PT Techpack Asia CRP Indonesia 100% 100%

Betts India Private Limited TUBES India 100% 100%

Albéa Tubes Italy S.p.A. TUBES Italy 100% 100%

Albéa Cosmetics Italy S.p.A CRP Italy 100% 100%

Twist Beauty Packaging sarl (Luxembourg Bidco) CORPORATE Luxembourg 100% 100%


In thousands of USD

83 124

8.2. SCOPE OF CONSOLIDATION AS AT DECEMBER 31, 2016 (CONTINUED)


DESCRIPTION OPERATING SEGMENTCOUNTRY OF



INTEREST

Albéa Beauty Holdings SA CORPORATE Luxembourg Holding Holding

Albéa Servicios De México SA de CV TUBES Mexico 100% 100%

Twist Beauty Packaging Holding Mexico S. De R.L. de CV CORPORATE Mexico 100% 100%

Cebal Americas Recursos Humanos S de R.L de CV TUBES Mexico 100% 100%

Cebal Americas deReynosa S. de RL De CV TUBES Mexico 100% 100%

Albéa Cepillos de Matamoros CRP Mexico 100% 100%

Albéa Packaging De México SA de CV TUBES Mexico 100% 100%

TPI Mexicana SA de CV TUBES USA 100% 100%

Twist Beauty Packaging Holdings Netherlands B.V. CORPORATE Nederland 100% 100%

Albéa Alkmaar B.V. DISPENSING Nederland 100% 100%

Albea Poland TUBES Poland 100% 100%

St Petersburg CORPORATE Russia 100% 100%

Albéa RUS LLC TUBES Russia 100% 100%

Albea Slovakia Sro TUBES Slovakia 100% 100%

Albea Slovakia Holdings Sro TUBES Slovakia 100% 100%

Albea Slovakia Properties Sro TUBES Slovakia 100% 100%

Rexam Taiwan Co. Ltd CRP Taiwan 100% 100%

Albéa UK Limited TUBES United Kingdom 100% 100%

Twist Beauty Packaging UK Limited CORPORATE United Kingdom 100% 100%

Twist Beauty Packaging Asia Holdings Limited CORPORATE United Kingdom 100% 100%

Betts Ltd CORPORATE United Kingdom 100% 100%

Betts Central Europe Holdings Ltd CORPORATE United Kingdom 100% 100%

Betts International Ltd CORPORATE United Kingdom 100% 100%

Boddington IP Limited CORPORATE United Kingdom 100% 100%

Albéa Thomaston, inc. DISPENSING USA 100% 100%

Betts USA, inc. CORPORATE USA 100% 100%

Betts USA Holdings, inc. CORPORATE USA 100% 100%

Twist Beauty Packaging Holding Corp CORPORATE USA 100% 100%

Albéa Metal Holding, Corp CRP USA 100% 100%

Albéa Metal Real Estate, Inc. CRP USA 100% 100%

Albéa Metal Americas Inc CRP USA 100% 100%

Albéa Beauty Solutions USA LLC CRP USA 100% 100%

Albéa Plastic Packaging Texas Holding, inc CORPORATE USA 100% 100%

Albéa Americas, inc TUBES USA 100% 100%

Albéa Cosmetics Americas Inc CRP USA 100% 100%

Cébal Mexicana LLC CRP USA 100% 100%

Cébal Mexicana LP CRP USA 100% 100%

SUBSIDIARIES

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg T : +352 494848 1, F : +352 494848 2900, www.pwc.lu Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256) R.C.S. Luxembourg B65 477 - TVA LU25482518

Audit report

To the Board of Directors of Albéa Beauty Holdings S.A.

Our opinion

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of Albéa Beauty Holdings S.A. (the “Company”) and its subsidiaries (the “Group”) as at 31 December 2017, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

What we have audited

The Group’s consolidated financial statements comprise:

• the consolidated statement balance sheet as at 31 December 2017;

• the consolidated income statement and consolidated statement of comprehensive income for the year then ended;

• the consolidated statement of changes in equity for the year then ended;

• the consolidated cash flow statement for the year then ended; and

• the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under those Law and standards are further described in the “Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial statements” section of our report.

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

We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements. We have fulfilled our other ethical responsibilities under those ethical requirements.

2

Other information

The Board of Directors is responsible for the other information. The other information comprises the information stated in the Annual report including the Management report but does not include the consolidated financial statements and our audit report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors for the consolidated financial statements

The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

3

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors;

• conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Group to cease to continue as a going concern;

• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

• obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. PricewaterhouseCoopers, Société coopérative Represented by

Luxembourg, 9 April 2018

Malik Lekehal


In thousands of USD

83

Documents

ALBÉA BEAUTY HOLDINGS S.A. volume toothpaste market, which requires long run, economical packaging. Albéa sells its laminate tubes Albéa Beauty Holdings S.A. Annual Report for year