8 February 2017: Smurfit Kappa Group plc (�SKG� or �the Group�) today announced results for the 3 months and 12 months ending 31 December 2016.

2016 Fourth Quarter & Full Year | Key Financial Performance Measures

1) Additional information in relation to these Alternative Performance Measures (�APMs�) is set out in Supplementary Financial Information on page 32.
2) EBITDA before exceptional items and share-based payment expense is denoted by EBITDA throughout the remainder of the management commentary for ease of reference.

Full Year Key Points

• Full year 2016 revenues on a constant currency basis up 5%
• 2016 EBITDA of �1,236 million, a new record for the Group
• Improved ROCE at 15.4%
• Continued good cash generation with free cash flow of �303 million
• Admission to FTSE 100 index effective 19 December 2016
• 7 year bond issuance of �500 million at 2.375% in January 2017
• Final dividend increased by 20% to 57.6 cent per share

Performance Review and Outlook

Tony Smurfit, Group CEO, commented:

�In 2016 SKG delivered continued earnings growth with EBITDA of �1,236 million and an EBITDA margin of 15.1%, driven by solid volume growth across our markets, resilient box pricing and the Group�s investment in high return capital projects.

�These strong results against most performance metrics were delivered despite the significant headwinds experienced by the Group in higher raw material input costs and adverse currency impacts. This once again highlights the strength of the Group�s integrated business model, our geographically diverse portfolio of businesses and our performance based culture.

�In 2016 we have invested approximately �500 million in our business, building a platform to deliver continued performance and growth. Effective capital spend will enhance operating efficiency, optimise our asset base and continuously improve our market positioning across Europe and the Americas enabling us to deliver added value to our customers. In 2017 we will continue to realise the benefits of our average annual capital spend of more than �450 million over the last three years.

�In December 2016, the Group was pleased to be admitted to the FTSE 100 index, one of the world's leading equity markets indices. Admission to the FTSE 100 is consistent with our vision of being a globally recognised and respected business delivering both secure and superior returns for all stakeholders.

�In January 2017 we issued a 7 year, �500 million bond enabling the Group to extend the maturity profile of our debt to 4.3 years and secure, at 2.375%, our lowest ever coupon for the Group.

�We are excited about the significant number of internal opportunities that exist within SKG which will continue to drive business improvement as we deliver 15% ROCE through the cycle. The Group is also well positioned to make acquisitions that deliver long term value.

�SKG has an unrivalled market offering which helps our customers succeed in their chosen markets. This is underpinned by our unique differentiation tools, market insights and innovation infrastructure, supported by our ongoing capital expenditure programmes and our leading sustainable business practices across our operations.

�From a demand perspective, the year has started well across most areas of our business and, while recently announced paper price increases should translate with the customary time lag into higher box prices, we look forward to 2017 and beyond.

�Reflecting the distinct strengths and capabilities of our business, the Board is recommending a 20% increase in the final dividend to 57.6 cent per share.�

About Smurfit Kappa

Smurfit Kappa, a FTSE 100 company, is one of the leading providers of paper-based packaging solutions in the world, with around 45,000 employees in approximately 370 production sites across 34 countries and with revenue of �8.2 billion in 2016. We are located in 21 countries in Europe, and 13 in the Americas. We are the only large-scale pan-regional player in Latin America.

With our pro-active team, we relentlessly use our extensive experience and expertise, supported by our scale, to open up opportunities for our customers. We collaborate with forward thinking customers by sharing superior product knowledge, market understanding and insights in packaging trends to ensure business success in their markets. We have an unrivalled portfolio of paper-packaging solutions, which is constantly updated with our market-leading innovations. This is enhanced through the benefits of our integration, with optimal paper design, logistics, timeliness of service, and our packaging plants sourcing most of their raw materials from our own paper mills.

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Forward Looking Statements

Some statements in this announcement are forward-looking. They represent expectations for the Group�s business, and involve risks and uncertainties. These forward-looking statements are based on current expectations and projections about future events. The Group believes that current expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the Group�s control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

2016 Fourth Quarter & Full Year | Performance Overview

In 2016 the Group reported its strongest ever result with EBITDA of �1,236 million and an EBITDA margin of 15.1% driven by solid volume growth across our markets, resilient box pricing and the Group�s investment in high return capital projects. These strong results across most metrics were delivered despite the significant headwinds experienced by the Group in higher raw material input costs and adverse currency impacts and highlight the strength of the Group�s integrated business model, the dynamism of the Group�s performance led culture and the geographically diverse portfolio of businesses.

In Europe for the year, EBITDA increased by 3% to �928 million. Box price resilience through the year, along with the benefits of our �Quick Win� programme and good corrugated volume growth were key drivers in this improvement. Total corrugated volumes for the year were up 1%, with boxes up over 2% when adjusted for the impact of our German rationalisation programme. On a constant currency basis the Group�s average corrugated pricing in Europe for the year was up 1%.

In the Americas for the year, EBITDA increased by 11% to �339 million. This result was driven by the impact of our recent acquisitions along with strong underlying EBITDA growth, up 15% for the year. Volumes in the Americas grew 20% in 2016 with growth of 18% in the fourth quarter driven by the positive impact of acquisitions and solid underlying volume growth. The integration of our Brazilian, Central American and US acquisitions is progressing well notwithstanding some of the input cost pressures in Brazil. The profile of our Americas business is primarily weighted to the US, Mexican and Colombian markets, which comprised over 70% of the Americas� EBITDA in 2016. SKG is the largest pan-regional producer of corrugated packaging in Latin America.

In 2016 the Group completed the acquisitions of four businesses, of which three were in the US and one in the UK.

The Group�s differentiation programme continues to help our customers succeed in their chosen markets and delivers tangible results with increased sales for our corrugated customers. This has been driven by our unique market insights, tools and expertise. In 2016 the Group was recognised by both peers and customers, garnering over 50 awards. The five red dot design awards won in 2016 were a highlight, with SKG the most successful corrugated packaging company.

The Group reported a free cash flow of �303 million in 2016 compared to �388 million in 2015, reflecting higher outflows mainly in respect of working capital, retirement benefits, tax and cash interest and some

one-off inflows from 2015. Following the recent bond issuance achieved at a historically low rate for SKG of 2.375%, the average maturity profile of the Group�s debt was extended from 3.7 to 4.3 years while maintaining our Net Debt to EBITDA at 2.4x. With these metrics along with an EBITDA to cash interest cover of 8.35 times at the end of 2016, the Group remains well positioned within its Ba1/BB+/BB+ rating category. The Group will continue to balance the maintenance of a strong capital structure with its growth objectives through 2017 and beyond.

2016 Fourth Quarter | Financial Performance

Revenue of �2,060 million in the fourth quarter of 2016 was down �29 million or 1% on the fourth quarter of 2015. Revenues in Europe decreased by �36 million year-on-year driven by adverse currency impacts. In the Americas revenues increased by �7 million year-on-year driven by both underlying revenue growth and the benefit of acquisitions, which were offset in part by currency. The underlying year-on-year move in Group revenue when adjusted for net negative currency movements and net acquisitions, was an increase of 2%.

EBITDA for the fourth quarter was �320 million, �6 million down on the same period in 2015 with earnings growth in the Americas offset by lower earnings in Europe and higher Group centre costs. Allowing for currency movements and net acquisitions, the underlying year-on-year move in EBITDA for the quarter was an increase of nearly 1%.

Exceptional items charged within operating profit in the fourth quarter of 2016 amounted to �15 million relating to reorganisation and restructuring costs in the Americas.

An exceptional charge of �15 million within operating profit in the fourth quarter of 2015 represented the net impact of the adjustment for hyperinflation on the currency trading loss incurred in the first quarter following the adoption of the Simadi rate, offset by a �13 million exceptional gain on the sale of the site of the Group�s former Nanterre containerboard mill, near Paris.

Pre-exceptional basic EPS was 47.4 cent for the quarter to December 2016 (2015: 59.3 cent), a decrease of 20% year-on-year.

2016 Full year | Financial Performance

Revenue for the year to December of �8,159 million was �50 million or 1% higher than 2015. Higher reported revenue in the Americas was partly offset by lower revenue in Europe predominantly due to negative currency impacts. Allowing for currency movements and the contribution from acquisitions net of disposals, the underlying increase in revenue was �188 million, the equivalent of over 2%, with higher underlying revenue in both Europe and the Americas.

EBITDA for the full year 2016 of �1,236 million compared to �1,182 million in 2015 with higher earnings in both Europe and the Americas offset by slightly higher Group Centre costs.

Allowing for currency movements and the contribution from acquisitions net of disposals, comparable earnings in Europe and the Americas were �39�million and �47 million higher respectively in 2016.

Exceptional items of �15 million charged within operating profit in the year to December 2016 related to reorganisation and restructuring costs in the Americas.

Exceptional items charged within operating profit in the year to December 2015 amounted to �69 million which included a number of offsetting balances. The higher cost to the Venezuelan operations of discharging their non-Bolivar denominated payables following our adoption of the Simadi rate resulted in a charge of �69 million. The remaining offsetting amounts primarily comprise a charge of �12 million relating to the solidboard operations less the gain of �13 million on the sale of the Nanterre site.

Operating profit after exceptional items for the year was �815 million compared to �711 million for 2015, an increase of 15% (increase of 6% before exceptional items).

Net finance costs before exceptional items at �175 million were �46 million higher year-on-year reflecting increases in both cash and non-cash interest. The increase in cash interest reflects the higher level of debt following our acquisition activity in 2015 and into early 2016 and a slight increase in our average interest rate, partly as a result of our exposure to the relatively high local interest rates in Brazil. In addition, cash interest income fell year-on-year as deposit rates progressively turned negative during the year. Non-cash interest was higher mainly due to increased hyperinflationary adjustments.

The exceptional finance income in 2016 related to the gain of �12 million on the sale of our shareholding in the Swedish company, IL Recycling.

Exceptional finance costs in the year to December 2015 amounted to �2 million relating to the accelerated amortisation of the issue costs relating to the debt within our Senior Credit Facility which was paid down with the proceeds of February�s �250 million bond issue. Exceptional finance income amounted to �16 million and represented a gain in Venezuela on US dollar denominated intra-group loans following our adoption of the Simadi rate in the first quarter of 2015.

Including the Group�s share of associates� profit of �2 million, profit before income tax was �654 million in 2016 compared to �599 million in 2015, an increase of 9% year-on-year.

Basic earnings per share was 189.4 cent for the full year 2016 (2015: 172.6 cent), an increase of 10% year-on-year. Adjusting for exceptional items, pre-exceptional basic EPS was 189.4 cent (2015:�197.3�cent), a decrease of 4% year-on-year.

2016 Fourth Quarter & Full Year | Free Cash Flow

The Group reported free cash flow of �303 million in 2016 compared to �388 million in 2015. The year-on-year decrease of �85 million reflected higher outflows mainly in respect of working capital, retirement benefits, tax and cash interest. In addition our free cash flow in the fourth quarter and full year 2015 included the proceeds of the Nanterre site sale.

The working capital move in the year to December was an outflow of �95 million compared to �24�million in 2015. The outflow in 2016 was the combination of an increase in stocks and, to a lesser extent, debtors partly offset by an increase in creditors. Working capital amounted to �573 million at December 2016 (2015: �548 million), representing 7.0% of annualised revenue compared to 7.7% at September 2016 and 6.6% at December 2015.

Capital expenditure amounted to �499 million in the year to December 2016, approximately 127% of depreciation, compared to 123% in 2015. Capital expenditure is expected to reduce to a level closer to 100% of depreciation in 2017.

Cash interest at �148 million in 2016 was �25 million higher than in 2015, reflecting our acquisition activity in 2015 and the average interest rate which was slightly higher year-on-year given our exposure now to the relatively high local interest rates in Brazil.

The Group made tax payments of �151 million in 2016, �20 million higher than 2015 reflecting the impact of higher profitability and the timing of payments.

2016 Fourth Quarter & Full Year | Capital Structure

The reported net debt was �2,941 million at the end of the year delivering a net debt to EBITDA ratio of 2.4x compared to 2.6x at the end of 2015. The Group�s net debt continues to reduce in both absolute and in multiple terms positioning the Group with considerable financial strategic flexibility subject to the stated leverage range of 2.0x to 3.0x through the cycle and SKG�s Ba1/BB+/BB+ credit rating.

At 31 December 2016 the Group�s average interest rate was 4.3%, slightly higher year-on-year primarily as a result of the local currency Brazilian debt associated with the acquisitions of INPA and Paema in December 2015. The Group�s diversified funding base and long dated maturity profile at 3.7 years provide a stable funding outlook. In terms of liquidity, the Group held cash on the balance sheet of �443 million at the end of the year which was further supplemented by available commitments under its revolving credit facility of approximately �613�million.

On 17 January 2017 the Group took the opportunity to access the bond markets taking advantage of the current low interest rate environment to further extend maturity profile, diversify funding sources and increase liquidity at a historically low coupon for the Group. The proceeds will be used to�reduce indebtedness under the Group�s senior facilities agreement and existing securitisation facilities and for general corporate purposes. The funding will significantly enhance the Group�s liquidity and position us very strongly from the perspective of our refinancing programme over the next couple of years as we replace more expensive debt.

The Group has a stable financing base with a long term and well spread maturity profile. The Group�s credit rating of Ba1/BB+/BB+ contributes to a lower cost of capital and access to the widest range of financing options available. These positions were achieved as a result of the Group�s consistent ability to generate strong free cash flows together with active management of its debt portfolio. The strength of the Group�s capital base together with consistent delivery of strong free cash flows provides a solid and cost effective support to the Group�s growth agenda over the medium term.

2016 Fourth Quarter & Full Year | Dividend

The Group views its dividend as an important component of its investment thesis and a way to directly transfer value creation within the business to shareholders. For the year 2016, the Board is recommending a final dividend of 57.6 cent per share, a 20% increase year-on-year. Combined with an interim dividend of 22 cent per share paid in October 2016, this will bring the total dividend to 79.6 cent, a 17% increase year-on-year.

It is proposed to pay the final dividend on 12 May 2017 to all ordinary shareholders on the share register at the close of business on 21 April 2017. As in previous years, the 2017 dividend will be paid in two parts, an interim dividend payable in October 2017 and a final dividend payable in May 2018.

2016 Fourth Quarter & Full Year | Operating Efficiency

Cost Take-out Programme

The Group delivered �74 million of cost take-out in 2016, with �25 million in the fourth quarter. Since the programme�s inception in 2008 the Group has achieved cost savings of over �850 million and the Group continues to view these projects as a key tool in combating cost inflation creep throughout the business.

Capital Expenditure (�Quick Win�) Programme

In 2016 the Group continued its investment stage of the current �Quick Win� capital expenditure programme. The benefits of these high return investments have been delivered since 2014 and are expected to deliver a total incremental EBITDA of �75 million by the end of 2017. Of this, �25 million was delivered in 2016 with an expected balance of approximately �30 million to be delivered in 2017.

2016 Fourth Quarter & Full Year | Regional Performance Review

Europe

The European segment delivered a 3% increase in EBITDA to �928 million in 2016. This was achieved despite increased raw material input costs, lower containerboard pricing and adverse currency impacts. The improved result was delivered through resilient box pricing, increased volumes and cost reduction programmes which delivered an improved EBITDA margin of 15.1% against 14.4% in 2015.

Our differentiation project continues to deliver profitable growth for the Group. SKG works with its customers to help them succeed in their marketplace. We are increasingly seeing the benefit of more collaborative relationships with customers as we help them at the front end of their business, helping them sell more by using our unique tools and expertise.

The scale of our unrivalled databases with supply chain data from across the globe allows us to deliver scientifically backed, cost effective solutions to our customers.

Operations in Spain, Poland and Germany contributed to the Group�s five red dot awards in 2016 and showcased the unique talent the Group has in helping our customers sell more.

In the corrugated division following rationalisations in 2015, both France and Germany saw recovery in their EBITDA results and this is expected to continue into 2017.

Strong volume growth in the Benelux, Spain and Portugal and Eastern Europe helped to drive volume growth in Europe, offsetting lower volumes in Germany which was impacted by the rationalisation programme in 2015.

In 2016, in Europe, the Group experienced significant cost headwinds in the form of higher OCC input costs. In the fourth quarter of 2016, the price of OCC was up 11% year-on-year, driven by both strong domestic demand and continued export market demand. For the full year 2016, OCC was up over 10%, with a high OCC price providing positive support to the containerboard price and, in turn, packaging business in the medium term. With the generation of mixed waste declining coupled with the continued demand both domestically and on export markets for recovered paper, the Group expects the medium term trend for OCC pricing to remain at a high level.

In recycled containerboard, prices softened through 2016, reducing by �50 per tonne after increases went through in the middle of 2015. However, on the back of significantly lower containerboard inventories year-on-year and good demand, the Group has announced an increase of �60 per tonne on brown recycled containerboard for implementation on 1 February 2017.

Following successful price increases in the second half of 2016, demand for kraftliner containerboard remains robust and as a result, the Group announced a �60 per tonne price increase on both white and brown kraftliner across Europe for implementation on 1 March 2017. Kraftliner is a vital part of today�s global supply chain requirements with its relative strengths against recycled alternatives, positioning it as a critical part of our customers� requirements in certain industries and supply chain applications.

The Americas

The Group�s Americas business continues to provide a source of geographic diversification and growth opportunities. EBITDA for the year and quarter was up 11% delivering �339 million and �98 million respectively. The EBITDA margin in the Americas increased again in the fourth quarter of 2016 to 17.8% from 16.8% in the third quarter of 2016 and from 16.2% in the fourth quarter of 2015. For the year to December the EBITDA margin increased to 16.8% from 16.4% in 2015 with both Mexico and Chile delivering a record EBITDA performance.

These results were delivered against a backdrop of adverse currency impacts of approximately �42 million year-on-year. This currency impact was offset by the positive contributions of acquisitions in the region, continued pricing initiatives in most markets, strong underlying volume growth and the benefits of our capital investment programme.

Year-on-year corrugated volumes increased by over 20% driven by our acquisitions in the region together with strong growth in the larger economies in which we operate, specifically the three major markets of the US, Mexico and Colombia. In the US, corrugated volumes were up 14% year-on-year and 12% in the fourth quarter of 2016 versus the fourth quarter of 2015. Our Mexican and Colombian businesses were both up 6% year-on-year. Overall underlying volume growth in the region, excluding the impact of Venezuela and acquisitions was 2%.

Pan American Sales (�PAS�) continues to deliver above market growth for the Group with customers enjoying the ability to partner with SKG on a regional basis. 2016 PAS volumes were up 6% excluding Venezuela. Growth in Brazil was seen in PAS on the back of SKG�s entry into the market in December 2015.

In Mexico the business delivered a record EBITDA with strong volumes throughout the country. The negative currency impact in the year was offset by volume growth and productivity gains. Box price increases are underway in the first quarter of 2017 to recover increased input cost pressures. The previously announced project to increase capacity at the Los Reyes mill near Mexico City is expected to be completed mid-2017.

In Colombia we continue to see very strong volume growth in corrugated with volumes up 6% in 2016 and 7% in the fourth quarter year-on-year. The Group�s recent capital investment programme has allowed the country to keep pace with the demand growth. Price increases for boxes are underway in the first quarter of 2017. Our recent acquisitions in Central America and the Caribbean region are performing in line with expectations.

In the US volume growth of 14% has been predominantly due to acquisitions. A successful containerboard price increase of US$40 per tonne towards the end of 2016 has been implemented with box price increases being processed in the first half of 2017. Domestic OCC prices increased throughout the year and into January against a backdrop of an improving climate for containerboard. Containerboard price increases achieved in late 2016 should be supportive going into 2017.

The Brazilian operations are successfully integrating and are ahead of expectations net of OCC input cost pressures. Volume growth in 2016 was ahead of the market albeit with a flat volume evolution year-on-year against a market which was down 2%. Recent industry publications indicate some softening of OCC prices in January.

In volume terms the Group�s Argentinean operations performed ahead of the market but remained down year-on-year as the country adjusts to local government reforms. Volume growth is expected as we enter the second quarter. The Group also implemented significant price increases in the year to December 2016, helping offset inflationary pressures.

The Group�s Venezuelan business performed well in a very challenging environment. Despite a drop in corrugated shipments of 48% in 2016, due to a stronger export performance and our ability to supply Group containerboard needs in the Americas, our operations continue to perform. In the year to December 2016 Venezuela accounted for approximately 3% of Group EBITDA. Local management and our people continue to do an outstanding job under difficult circumstances.

In Venezuela, we expect a similar EBITDA performance in 2017. However, the Group is aware that the macro situation in Venezuela remains uncertain. The effect of high inflation without a corresponding devaluation of the exchange rate would result in a net monetary loss which may distort some of the Group�s key metrics. We will continue to monitor events as they unfold. Net assets in Venezuela amounted to �91 million at year end.

(1) The summary cash flow is prepared on a different basis to the Consolidated Statement of Cash Flows under IFRS (�IFRS cash flow�) and as such the reconciling items between EBITDA and decrease/(increase) in net debt may differ to amounts presented in the IFRS cash flow. The principal differences are as follows:

(a) The summary cash flow details movements in net debt. The IFRS cash flow details movements in cash and cash equivalents.

(b) Free cash flow reconciles to cash generated from operations in the IFRS cash flow as shown in the table on the next page. The main adjustments are in respect of cash interest, capital expenditure, tax payments and the sale of fixed assets and businesses.

(c) The IFRS cash flow has different sub-headings to those used in the summary cash flow.

• Current provisions in the summary cash flow are included within change in employee benefits and other provisions in the IFRS cash flow.
• The total of capital expenditure and change in capital creditors in the summary cash flow includes additions to intangible assets which is shown separately in the IFRS cash flow. It also includes capitalised leased assets which are excluded from additions to property, plant and equipment and biological assets in the IFRS cash flow.
• Other in the summary cash flow includes changes in employee benefits and other provisions (excluding current provisions), amortisation of capital grants, receipt of capital grants and dividends received from associates which are shown separately in the IFRS cash flow.

Capital Resources

The Group's primary sources of liquidity are cash flow from operations and borrowings under the revolving credit facility. The Group's primary uses of cash are for funding day to day operations, capital expenditure, debt service, dividends and other investment activity including acquisitions.

At 31 December 2016, Smurfit Kappa Treasury Funding Designated Activity Company had outstanding US$292.3 million 7.50% senior debentures due 2025. The Group had outstanding �113.9 million and STG�59.7 million variable funding notes issued under the �240 million accounts receivable securitisation programme maturing in June 2019, together with �115 million variable funding notes issued under the �175�million accounts receivable securitisation programme maturing in April 2018.

Smurfit Kappa Acquisitions Unlimited Company had outstanding �200 million 5.125% senior notes due 2018, US$300�million 4.875% senior notes due 2018, �400 million 4.125% senior notes due 2020, �250 million senior floating rate notes due 2020, �500 million 3.25% senior notes due 2021 and �250 million 2.75% senior notes due 2025. Smurfit Kappa Acquisitions Unlimited Company and certain subsidiaries are also party to a senior credit facility. At 31 December 2016, the Group�s senior credit facility comprised term drawings of �572.6 million, US$51.3 million and STG�106.9 million under the amortising Term A facility maturing in 2020. In addition, as at 31 December 2016, the facility included a �625 million revolving credit facility of which �6 million was drawn in revolver loans, with a further �6�million in operational facilities including letters of credit drawn under various ancillary facilities.

The following table provides the range of interest rates as at 31 December 2016 for each of the drawings under the various senior credit facility loans.

Borrowings under the revolving credit facility are available to fund the Group's working capital requirements, capital expenditures and other general corporate purposes.

Following acquisitions of over �380 million in 2015, including the Brazilian acquisitions in December, the Group increased the Term Loan under its Senior Credit Facility by �250 million,�from �500 million to �750�million on 5 February 2016. The terms applicable to the increase, including margin, amortisation profile and maturity date are the same as the existing Term A loan. The proceeds were substantially applied to reduce drawings under the revolving credit facility, thereby further improving the Group�s liquidity.

Market Risk and Risk Management Policies

The Group is exposed to the impact of interest rate changes and foreign currency fluctuations due to its investing and funding activities and its operations in different foreign currencies. Interest rate risk exposure is managed by achieving an appropriate balance of fixed and variable rate funding. As at 31 December 2016, the Group had fixed an average of 68% of its interest cost on borrowings over the following twelve months.

The Group�s fixed rate debt comprised �200 million 5.125% senior notes due 2018, US$300 million 4.875% senior notes due 2018 (US$50 million swapped to floating), �400 million 4.125% senior notes due 2020, �500 million 3.25% senior notes due 2021, �250 million 2.75% senior notes due 2025 and US$292.3�million 7.50% senior debentures due 2025. In addition the Group had �349 million in interest rate swaps with maturity dates ranging from October 2018 to January 2021.

The Group�s earnings are affected by changes in short-term interest rates as a result of its floating rate borrowings. If LIBOR/EURIBOR interest rates for these borrowings increase by one percent, the Group�s interest expense would increase, and income before taxes would decrease, by approximately �12�million over the following twelve months. Interest income on the Group�s cash balances would increase by approximately �4�million assuming a one percent increase in interest rates earned on such balances over the following twelve months.

The Group uses foreign currency borrowings, currency swaps, options and forward contracts in the management of its foreign currency exposures.

Principal Risks and Uncertainties

Risk assessment and evaluation is an integral part of the management process throughout the Group. Risks are identified, evaluated and appropriate risk management strategies are implemented at each level.

The Board in conjunction with senior management identifies major business risks faced by the Group and determines the appropriate course of action to manage these risks.

The principal risks and uncertainties faced by the Group were outlined in our 2015 annual report on pages�16-17. The annual report is available on our website smurfitkappa.com. The principal risks and uncertainties for the financial year are summarised below.

• If the current economic climate were to deteriorate, for example following Brexit or changes in world trade agreements, and result in an economic slowdown which was sustained over any significant length of time, or the sovereign debt crisis (including its impact on the euro) were to re-emerge or exacerbate, it could adversely affect the Group�s financial position and results of operations.
• The cyclical nature of the packaging industry could result in overcapacity and consequently threaten the Group�s pricing structure.
• If operations at any of the Group�s facilities (in particular its key mills) were interrupted for any significant length of time it could adversely affect the Group�s financial position and results of operations.
• Price fluctuations in raw materials and energy costs could adversely affect the Group�s manufacturing costs.
• The Group is exposed to currency exchange rate fluctuations.
• The Group may not be able to attract and retain suitably qualified employees as required for its business.
• Failure to maintain good health and safety practices may have an adverse effect on our business.
• The Group is subject to a growing number of environmental laws and regulations, and the cost of compliance or the failure to comply with current and future laws and regulations may negatively affect the Group�s business.
• The Group is subject to anti-trust and similar legislation in the jurisdictions in which it operates.
• The Group, similar to other large global companies, is susceptible to cyber attacks with the threat to the confidentiality, integrity and availability of data in systems.
• The Group is exposed to potential risks in relation to the current political situation in Venezuela which are set out as follows:
  • The Venezuelan economy remains depressed and the political situation unpredictable, increasing the risk of future inflationary pressures and currency devaluations. The effect of high inflation without a corresponding devaluation of the exchange rate would result in a net monetary loss which may distort some of the Group�s key metrics. Were the exchange rate to devalue in line with inflation it would have an adverse effect on the Group�s results of operations and financial position. We will continue to monitor events as they unfold. Net assets in Venezuela amounted to �91�million at year end.
  • Our Venezuelan operations have mitigated to some extent the loss of revenue due to the drop in corrugated volumes in the country by exporting paper to our operations in other Latin American countries. This export of paper is subject to the availability of local raw materials to produce the paper, the quality of the paper being maintained to a satisfactory standard for our end markets and the renewal of an export licence by the Government every five months. There is a risk that if the quality of paper materially deteriorated due to a lack of raw materials or if we were unable to renew the export licence it would have an adverse effect on our results of operations.
  • In 2014 the Venezuelan government decreed that companies could only seek price increases if they had clearance that their margins were within certain guidelines. Our Venezuelan operations may not be able to implement price increases in a timely manner to cover the cost of its increasing raw material and labour costs as a result of inflation and the devaluation of currency, which would have an adverse effect on our results of operations in Venezuela.

The Board regularly monitors all of the above risks and appropriate actions are taken to mitigate those risks or address their potential adverse consequences.

An analysis of the movements in Other reserves is provided in Note 13.

An analysis of the net movement in working capital is provided in Note 11.

Notes to the Consolidated Financial Statements

1. General Information

Smurfit Kappa Group plc (�SKG plc� or �the Company�) and its subsidiaries (together �SKG� or �the Group�) manufacture, distribute and sell containerboard, corrugated containers and other paper-based packaging products such as solidboard, graphicboard and bag-in-box. The Company is a public limited company whose shares are publicly traded. It is incorporated and domiciled in Ireland. The address of its registered office is Beech Hill, Clonskeagh, Dublin 4, D04 N2R2, Ireland.

2. Basis of Preparation and Accounting Policies

The consolidated financial statements of the Group are prepared in accordance with International Financial Reporting Standards (�IFRS�) issued by the International Accounting Standards Board (�IASB�) as adopted by the European Union (�EU�); and those parts of the Companies Act 2014 applicable to companies reporting under IFRS.

The financial information in this report has been prepared in accordance with the Group�s accounting policies. Full details of the accounting policies adopted by the Group are contained in the consolidated financial statements included in the Group�s annual report for the year ended 31 December 2015 which is available on the Group�s website; smurfitkappa.com. The accounting policies and methods of computation and presentation adopted in the preparation of the Group financial information are consistent with those described and applied in the annual report for the year ended 31 December 2015. There are no new IFRS standards effective from 1 January 2016 which had a material effect on the financial information included in this report.

The financial information includes all adjustments that management considers necessary for a fair presentation of such financial information. All such adjustments are of a normal recurring nature. Certain tables in the financial information may not add precisely due to rounding.

The financial information presented in this preliminary release does not constitute full statutory financial statements. The preliminary release was approved by the Board of Directors. The annual report and financial statements will be approved by the Board of Directors and reported on by the auditors in due course. The annual financial statements reported on by the auditors will not contain quarterly information. Accordingly, the financial information is unaudited. Full statutory financial statements for the year ended 31 December 2015 have been filed with the Irish Registrar of Companies. The audit report on those statutory financial statements was unqualified.

3. Segmental Analyses

The Group has determined operating segments based on the manner in which reports are reviewed by the chief operating decision maker (�CODM�). The CODM is determined to be the executive management team responsible for assessing performance, allocating resources and making strategic decisions. The Group has identified two operating segments: 1) Europe and 2) The Americas.

The Europe segment is highly integrated. It includes a system of mills and plants that primarily produces a full line of containerboard that is converted into corrugated containers. The Americas segment comprises all forestry, paper, corrugated and folding carton activities in a number of Latin American countries and the United States. Inter-segment revenue is not material. No operating segments have been aggregated for disclosure purposes.

Segment profit is measured based on earnings before interest, tax, depreciation, amortisation, exceptional items, share-based payment expense and share of associates� profit (after tax) (�EBITDA before exceptional items�).

3. Segmental Analyses (continued)

4. Exceptional Items