Redefining Packaging
for a Changing World
Annual Report 2024
2023/24 Highlights
Strategic Report
1 The DS Smith difference
2 Our business – at a glance
3 Our Purpose framework
4 Chair’s statement
5 Section 172 statement
6 Group Chief Executive’s review
8 Our strategy
10 Our KPIs
12 Our market
14 Our business model
16 Partnership and collaboration
18 Efficiency and delivery
20 Sustainability and circularity
22 Stakeholder engagement
24 To delight our customers
26 To realise the potential of our people
30 To lead the way in sustainability
38 To double our size and profitability
39 Operating review
43 Financial review
49 Risk management
52 Our principal risks
57 Viability statement and Going concern
60 Task Force on Climate-related Financial
Disclosures (TCFD)
78 EU Taxonomy
80 Non-financial and sustainability
information statement
Governance
84 Board of Directors
88 Chair’s introduction to governance
90 Division of responsibilities
92 Corporate governance in context
93 Board leadership and Company Purpose
95 Nomination Committee Report
98 Audit, risk and internal control
100 Audit Committee Report
106 Remuneration Committee Report
129 Additional information
131 Statement of Directors’ responsibilities
Financial Statements
132 Independent Auditor’s report
142 Consolidated income statement
143 Consolidated statement of
comprehensive income
144 Consolidated statement of
financial position
145 Consolidated statement of
changes in equity
146 Consolidated statement of cash flows
147 Notes to the consolidated
financial statements
206 Parent Company statement of
financial position
207 Parent Company statement of
changes in equity
208 Notes to the parent Company
financial statements
216 Five-year financial summary
217 Glossary
218 Shareholder information
Financial Non-financial
19%
reduction in total GHG emissions since
2019 (5% reduction vs 2023)
10.3%
Return on sales
1
(2023: 10.5%)
18.0p
Dividend per share
(2023: 18.0p)
9%
reduction in accident
frequency rate vs 2023
£503m
Profit before tax
(2023: £661m)
(£175)m
Free cash flow
1
(2024 cash conversion: 39%)
100%
reusable or recyclable packaging
manufactured (target achieved)
£701m
Adjusted operating profit
1
(2023: £861m)
2.1x
Net debt/EBITDA
(2023: 1.3x)
>1.2bn
units of plastic replaced since 2020
(target of one billion units of plastic
replaced by 2025)
£6,822m
Revenue
(2023: £8,221m)
10.7%
ROACE
2
(2023: 14.3%)
Contents
1. Based upon continuing operations, before adjusting items and amortisation. These are all non-GAAP performance measures – see note 32 to the
consolidated financial statements.
2. Operating profit before amortisation and adjusting items as a percentage of the average monthly capital employed over the previous 12-month period.
In April 2024, the Board recommended an offer from International Paper to combine the business through an all-share transaction.
Redefining Packaging
for a Changing World
Sustainability Report 2024
ESG Databook
2024
Net Zero Transition Plan
2024
Our 2024 reporting suite
Sustainability Report 2024
ESG Databook 2024
Net Zero Transition Plan 2024
The DS Smith difference
• Strong relationships with our
predominant customer base of fast
moving consumer goods (FMCG) and
consumer brands.
• We partner with our customers to
provide innovative packaging solutions
helping drive their sustainability agenda.
• We continue to gain market share
through exceptional service, quality and
security of supply and investment in
innovation, sustainability and
packaging capacity.
See more on page 25
• We keep strong financial discipline
recognising the cyclicality of the industry
and maintain an investment grade rating.
• We continue to invest organically in our
business focusing on innovation,
environmental and operational efficiency
and growth and capacity.
See more on pages 38-48
Strong market drivers
The packaging industry faces changing
consumer behaviours, economic
challenges and an ongoing drive
towardssustainability.
• Changing retail channels and consumer
behaviour – consumers are looking for
more value and retailers are demanding
more cost efficient and sustainable
packaging solutions.
• Sustainability – we are helping our
customers respond by designing out
waste, keeping valuable materials in
use and making it easier for consumers
to reuse and recycle packaging.
• E-commerce – while growth in
e-commerce has steadied, the
opportunity remains significant.
See more on page 12
Strong customer focus Investing for a more
sustainable business
Circular business leading
in sustainability
• The only solely fibre-based major
packaging company in Europe and Europe’s
largest cardboard and paper recycler.
• We are driving the transition to the circular
economy with ambitious targets in plastic
replacement and carbon reduction,
resulting in excellent ESG ratings.
• We have already replaced over 1.2 billion
items of single-use plastic from customers’
supply chains.
See more on pages 20-21
A flexible business model
• We have a flexible business model and
continue to invest in our business to
improve operational and environmental
efficiency, add capacity and generate
higher returns.
See more on pages 14-15
DS Smith highlights
An industry leader at scale
Annual Report 2024 dssmith.com 1
Strategic Report Governance Financial Statements
Packaging
Paper Recycling
We are a leading international sustainable
packaging company, with innovative
packaging solutions made from recycled
and/or recyclable material. We deliver
innovative, fully fibre-based corrugated
products across Europe and North America
for consumer products, e-commerce,
promotion, transit and industrial packaging.
We complement our product range with
consultancy on supply chain optimisation
and creative design.
We are a leading international manufacturer
of corrugated case material (CCM), which is
the paper used for conversion into
corrugated board. We also manufacture
specialist paper grades such as plasterboard
liner. We operate 14 CCM paper mills, 12 in
Europe and two in the US. Of those, two are
kraftliner mills (virgin paper – one in the US,
one in Europe) and the remainder are
principally dedicated to the production of
recycled CCM (testliner).
We provide a full recycling and waste
management service. We are Europe’s
largest cardboard and paper recycler and are
also one of the leading full service recycling
and waste management companies in
Europe. We collect quality paper and
cardboard for recycling from a range of
sectors which provides cost efficient raw
material for the Group’s recycled paper-making
processes. We also sell used fibre to third
parties globally.
c. 25,120 employees
c. 8.5 billion m
2
corrugated
board sold in 2023/24
c. 3,200 employees
c. 4.1 million tonnes CCM
produced in 2023/24
c. 660 employees
c. 5.4 million tonnes fibre
managed in 2023/24
At a glance
DS Smith is a leading provider of sustainable fibre-based packaging
across Europe and North America which is supported by recycling
and paper-making operations. It plays a central role in the value
chain across sectors including FMCG, industrials and e-commerce.
Where we operate
Our business operates in four geographic segments.
Northern Europe
Belgium, Denmark, Finland,
Germany, Netherlands, Norway,
Sweden, Switzerland and
United Kingdom
Southern Europe
France, Italy, Portugal and Spain
Eastern Europe
Austria, Bosnia and
Herzegovina, Bulgaria, Croatia,
Czechia, Estonia, Greece,
Hungary, Latvia, Lithuania,
North Macedonia, Poland,
Romania, Serbia, Slovakia,
Slovenia and Türkiye
North America
United States
£586m
£1,106m
£2,598m
£2,532m
c. 10,640
c. 9,080
c. 7,570
c. 1,690
2023/24 revenue 2023/24 employees
2
Our business
Our Purpose and values
Redefining Packaging for a Changing World
Our Purpose to Redefine Packaging for a Changing World focuses our DS Smith team on the rapidly evolving world around us, as
consumers’ lives and shopping habits change, and digitalisation accelerates. It encourages us to look outside the confines of the
packaging industry and forward, to see how these changes will influence shopping patterns, impact on the environment, and the role
packaging can play in a more sustainable experience for all.
Our Purpose sharpens our instincts and encourages us to tackle some of the world’s biggest challenges, such as replacing plastics. It feeds
all parts of our organisation, including people, policies, R&D, design and customer interactions.
We deliver our Purpose through our strategic goals…
To delight our customers: by
delivering outstanding results
to them as we increase their
sales, reduce their costs,
manage their risk and become
circular ready
To realise the potential of our
people: by creating a safe
environment where every
colleague can develop their
skills and ideas
To lead the way in
sustainability: by bringing our
customers into the circular
economy using recyclable
materials responsibly in our
circular business
To double our size and
profitability: by driving
operational and commercial
excellence, growing our market
share and expanding into
newmarkets
See pages 8-9 for more information
And our Now & Next Sustainability Strategy…
Our focus is on:
Circularity
Designing out waste and
pollution, and keeping
materials in use
Carbon
Decarbonising our operations
and value chain
People & Communities
Creating a safe, diverse and
inclusive workplace and being
active in our communities
Nature
Protecting and regenerating
nature
See pages 32-33 for more information
Which helps us deliver our vision to be the leading supplier of sustainable
packagingsolutions
Underpinned by our values:
Be caring
We take pride in what
we do and we care
about our customers,
our people and the
world around us
Be trusted
We can always be
trusted to deliver
on our promises
Be challenging
We are not afraid to
constructively
challenge each other
and ourselves to find a
better way forward
Be tenacious
We get things done
Be responsive
We seek new ideas and
understanding and are
quick to react to
opportunities
Annual Report 2024 dssmith.com 3
Strategic Report Governance Financial Statements
Our Purpose framework
Chair’s statement
2023/24 strategic progress
In a challenging market we have delivered a resilient performance
with continued focus on customer service, cost mitigation and
efficiency gains. The macroeconomic environment, cost of living and
inflationary pressures all led to lower consumer demand, de-stocking
and our volumes remained constrained during the first half of the
year. This trend has improved in the second half in our markets and we
expect volumes to continue to improve into the next financial year.
The collaboration and partnership with our customers and continued
innovation as we work together to create sustainable packaging
solutions have resulted in new FMCG contract wins and a further
strengthening of relationships with existing customers. Our robust
performance this year would not have been possible without the
commitment and hard work of our colleagues and on behalf of the
Board, I would like to thank them all, as well as welcoming those who
joined DS Smith during the year.
The long-term structural growth drivers for corrugated packaging
remain strong and we continue to invest in our business, supporting
our customers, driving both operational and environmental efficiency
and growing our capacity and capabilities. In the year we opened a
new innovation hub, and this UK-based facility allows us, our
customers and partners to accelerate the research and development
of new packaging solutions.
As well as investing in upgrading our paper mills in Lucca, Italy and
Viana in Portugal, to increase production and efficiency, we started
construction of a new biomass-from-waste boiler in France which will
reduce greenhouse gas (GHG) emissions by 99,000 tonnes CO
2
e.
Combination with International Paper
DS Smith is a high-quality business with an excellent customer focus
and exceptional people and this has been recognised by the strong
interest we have seen in the Company.
In April, the Boards of International Paper Company and DS Smith
reached an agreement and recommended an all-share combination
of International Paper with DS Smith. The combination will bring
together complementary businesses to create a truly global
sustainable packaging solutions leader, with industry-leading
positions in two of the most attractive geographies of Europe and
North America. The combined business will enhance our global
proposition to customers, create opportunities for colleagues and
drive value for shareholders who can remain fully invested in such an
exciting business. Further details on the proposed transaction can be
found at www.dssmith.com.
Sustainability
Sustainability is central to our circular business model. We continue to
work actively with our customers to help them address their
sustainability challenges and have launched multiple new innovative
solutions and hit our target to replace one billion units of plastic for
our customers one year early.
Following the refresh of our Now & Next Sustainability Strategy
announced last summer, we continue to embed the strategy into
our business with key projects and initiatives underway to lead
the transition to a low-carbon circular economy. These include
developing our roadmap of decarbonisation projects for our
science-based target, supplier engagement programme and
human rights due diligence programme.
“Our resilient performance
reflects the strong collaboration
and partnerships with our
customers and continued
innovation as we work together
to create sustainable
packagingsolutions.”
Geoff Drabble
Chair
4
The Board
There have been several changes to the Board over the past year,
including Miles Roberts announcing his intention to step down as
Chief Executive by 30 November 2025. During Miles’ 13-year tenure,
he has transformed the Group into what it is today. There will be
plenty of time to thank Miles properly when he leaves, and he will
be much missed by both the Board and his colleagues within the
widerbusiness.
Richard Pike joined the Group in the prior financial year, replacing
Adrian Marsh on the Board in June 2023, and we also welcomed two
other new Board members: Eric Olsen who joined the Board in May
2023 and Tessa Bamford who joined the Board in January 2024.
Health and safety
Our values and priorities continue to drive the culture and operating
practices within our business. Our primary areas of focus are always
for the safety, health and wellbeing of our employees and serving
our customers in these challenging times. Once again, I am very proud
of our people, working to serve our customers in a safe operating
environment. Despite the many challenges we have faced, this is the
16
th
consecutive year we have seen an improvement in our health and
safety KPIs, an area that is a key priority for the Board.
Capital allocation and dividend
Our capital allocation priorities remain focused on disciplined
investment to support operational and environmental efficiency,
together with growth with our customers, to drive shareholder
returns while maintaining a robust balance sheet. The Board
considers the dividend to be a very important component of
shareholder returns.
Despite the reduction in profits, and reflecting our robust financial
position and confidence in the future performance and opportunities
for the business, the Board is maintaining the dividend at the same
level as last year. This means in respect of 2023/24, we paid an
interim dividend of 6.0 pence and propose a final dividend of
12.0pence, together 18.0 pence.
Our strategic direction and outlook
The positive trends in packaging volumes from the second half of last
year have continued into the current financial year and we remain
focused on pricing, operational efficiency and tight cost control. The
increasing demand is resulting in higher paper and other input costs,
including OCC. We anticipate this will be reflected in packaging price
rises, with the benefits expected to be weighted to the second half of
our current financial year and provide further momentum into FY26.
Engaging with stakeholders: Section 172 statement
The Board aims to promote the success of the Company for the benefit of its shareholders as a whole, taking into account the long-term
consequences of its decisions and looking at those decisions through a variety of lenses. This involves the Board and management considering
in detail, and discussing, the interests of the Company’s stakeholders including our customers; our people; our investors; our suppliers; local
communities and non-governmental organisations; the importance of maintaining our reputation for high standards of business conduct and
acting fairly as between shareholders; and the environment. More information about our stakeholders is set out on pages 22 and 23. More
information about the Board balancing stakeholder interests is set out on page 89. Examples of what that has looked like in practice over the
past year are summarised below. Engagement with all our stakeholders is led by our executive teams, who in turn regularly update Board
members, via presentations and briefings. In the governance section of this Annual Report we use
s172
to highlight the examples referred to
below. The table below illustrates aspects of the Board’s approach to its duties under section 172 of the Companies Act 2006:
Stakeholder Strategic Report Governance
Our customers
Pages 16 and 17 (collaboration), 22
(engagement)
Page 93 and 94 (engagement with our customers via updates from sales,
marketing and innovation functions)
Our people
Pages 22 and 27 (engagement and feedback),
27 (decisions made in consultation with
employees), 27 (engagement on health and
safety)
Pages 93 (engagement with our workforce), 93 (EWC meetings), 93 (EWC
representative attending Remuneration Committee meetings and
Remuneration Committee Chair attending EWC Executive meetings), 93
(update on diversity, equity and inclusion and active networks), 94
(Boardvisits)
Our investors
Page 22 (engagement) Pages 93 (engagement with our shareholders), 93 (briefing on views of
institutional investors)
Our suppliers
Page 22 (engagement and supplier standards) Page 93 (engagement with our suppliers via regular Board reports)
The environment
and communities
Pages 23 (engagement with stakeholders on
environmental matters and charitable giving),
31 (engagement with ESG rating agencies)
Pages 89 (briefing on development of the Net Zero Transition Plan),
94(engagement with other stakeholders including briefing on
community engagement)
Governments
and non-
governmental
organisations
Page 23 (engagement) Page 94 (briefing on engagement with other interested stakeholders
including on topics such as the new Packaging and Packaging Waste
regulations)
This statement is made in conformity with the requirement to explain how directors fulfil section 172 of the Companies Act 2006.
Annual Report 2024 dssmith.com 5
Strategic Report Governance Financial Statements
Group Chief Executive’s review
Redefining Packaging for a Changing World
Over the past ten years, DS Smith has grown significantly through
dedication to customers and a focus on innovation, quality of
packaging and high levels of service. Earlier this year, these qualities
attracted the interest of International Paper to combine two focused
and complementary businesses.
The proposed combination with International Paper is an attractive
opportunity to create a truly international sustainable packaging
solutions leader that is well positioned in attractive and growing
markets across Europe and North America. The combination will
enhance our global proposition to customers, create opportunities for
colleagues and drive value for shareholders who can remain fully
invested in such an exciting business.
Turning to 2023/24, we have delivered a resilient performance this
year despite tough economic conditions, and I am pleased with the
progress we have made. Whilst the challenging market conditions
have led to a lower demand environment and an impact on volumes,
we have seen an improving trend in the second half including some
important customer wins.
Our leadership in sustainability and the circular economy ideally
positions us to maximise growth opportunities with new and existing
customers as we partner on new innovation projects and value-added
sustainable products and services.
Central to this strategy is our global Research & Development (R&D)
and Innovation Centre, ‘R8’, based just outside Birmingham, UK. The
new facility is the innovation hub for the Company, allowing us to
accelerate radical innovation in packaging and services and run pilot
programmes with our customers.
Alongside our focus on increasing innovation and growth, we are
focusing on cost efficiencies through energy savings programmes,
and by improving operational performance and productivity across our
sites. We have invested in our operations to drive further efficiencies,
including a new fibre preparation line at Kemsley mill in the UK;
targeting improved production at our Margarethen am Moos and
Kalsdorf bei Graz sites in Austria; and minimisation of raw material
waste at our Ierapetra, Corinth and Thessaloniki Packaging sites
inGreece.
Efficiency is core to our Sustainability Strategy. We are committed to
developing our plans in line with climate science and this year we have
produced our first Net Zero Transition Plan, which describes the
actions we are taking to deliver our science-based target, which is to
reduce our Scope 1, 2 and 3 greenhouse gas (GHG) emissions by 46
per cent by 2030, compared to 2019. Since our 2019/20 base year, we
have achieved a 19 per cent reduction in total GHG emissions and in
2023 we were recognised for corporate transparency and
performance on climate change by global environment non-profit
CDP, securing a place on its annual ‘A List’.
In addition to the progress made towards our science-based target,
this year we have met an important sustainability metric for our
circular, fibre-based business. As part of our Now & Next
Sustainability Strategy, we set a target to help our customers remove
one billion pieces of plastic by 2025. I am very proud to say that we
have now exceeded this target, and done so more than a year ahead
of schedule. This is a collective achievement across the Group and I
would like to thank our customers and colleagues for their ambition
and tenacity.
“We have continued to
position the business to
maximise on opportunities
for growth by investing in
efficiency, innovation and
value-added sustainable
products and services.”
Miles Roberts
Group Chief Executive
6
Our colleagues are what drive our business forward, and in 2023/24
we have accelerated progress on our wellbeing, diversity, equity and
inclusion agendas. I am pleased to note that we achieved an increase
in perception of DS Smith as a safe employer and an inclusive place to
work by 5 per cent and 7 per cent respectively.
Critically, we made another notable advancement towards our Vision
Zero by achieving our highest level of health and safety engagement
on record, resulting in our safest year to date.
There is much of which we can be proud this year. I am sure that the
business will continue to flourish as part of a combined group with
International Paper due to the capability and continued commitment
of our colleagues. We know we can have the greatest positive impact
by meeting demand for more sustainable lifestyles and helping to
create a low-carbon, circular economy. It is a journey we have been on
with customers and colleagues for more than a decade and we will
continue on this path as we deliver our Purpose of Redefining
Packaging for a Changing World.
Q&A
How have lower paper prices and volumes affected
the business and what do you expect going forward?
I am pleased with our robust performance, set against a backdrop
of high inflation and a weak paper and consumer demand
environment. Our performance has been driven by our focus on
customers, quality, service and innovation together with the
benefit from our self-help productivity initiatives. We are seeing
momentum in packaging volumes, with the second half of the year
showing positive volume growth, and we remain focused on
pricing, operational efficiency and tight cost control. Paper prices
increased in the final quarter of the year and we expect to recover
these through higher packaging prices, with the usual lag. Our
strong customer relationships and excellent service levels have led
to a number of recent FMCG customer contract wins, underpinning
our confidence in the future.
Why have you invested in the R8 innovation and
R&D centre?
Our customers include some of the most iconic brands in the world,
and they rightly make challenging demands of us – sustainability is
high on their agenda as consumers want increasingly sustainable
lifestyles. Our investment is intended to spearhead research in
new materials and manufacturing, maximising the growing
demand for sustainable packaging, and the innovation needed
to deliver it.
Our new global Research & Development (R&D) and Innovation
Centre, ‘R8’, allows us, our customers and partners to accelerate
the research and development of radically new and sustainable
packaging fulfilment solutions and to help customers visualise the
value we can bring.
The facility includes a 4,000m
2
pilot hall, four laboratories,
conditioning chambers, an ideation and design studio, prototyping
areas and collaboration spaces. Projects will be informed by key
industry drivers rooted in sustainability, supply chains and data.
Among the leading-edge technologies at ‘R8’ is a modular Pilot
Line, inspired by the automotive industry and developed in Italy,
which uses robots to make boxes from multiple components and
fill them at high speed.
We will be partnering with customers to help them transition to the
circular economy by focusing on novel packaging solutions that
deploy new materials and technologies, and we have designed the
facility to encourage scrutiny of existing ways of working and
explore all the possibilities, especially for service-based offerings
in the packaging supply chain. ‘R8’ provides a unique opportunity to
demonstrate how we bring value to the biggest brands in
theworld.
What do recent sustainability-related changes in
regulation mean for industry?
In November 2022, the European Commission published its
proposal for Packaging and Packaging Waste Regulation (PPWR),
which is intended to support the Commission’s target of ensuring
that all plastic packaging is reusable or recyclable by 2030, with a
focus on reducing the amount of packaging placed on the EU
market and preventing the generation of packaging waste. This
introduces, for the first time, waste reduction targets for Member
States, a series of new measures on recycled content, packaging
minimisation and reuse and refill, as well as bans on certain types
of single-use packaging.
We have worked with our trade associations in Brussels to
establish a constructive dialogue with the EU institutions
throughout the process. Fibre-based packaging is exempt from
reuse targets in the new legislation, which ensures that recycling
and reuse are seen as complementary and enables industry to
innovate towards reuse solutions for the future.
We welcome the opportunity this brings for our industry to
innovate towards ever more sustainable, circular solutions and to
support the EU’s Circular Economy Action Plan. We look forward to
working with our partners and customers to innovate and lead the
way in fibre-based packaging in Europe.
Annual Report 2024 dssmith.com 7
Strategic Report Governance Financial Statements
To delight our customers
We do this by:
• Delivering on our commitment for quality and service.
• Driving innovation and value-added packaging solutions.
• Improving service levels.
• Driving circularity and continuing to deliver market-leading
sustainable solutions.
Highlights
We collaborated with Versuni, home to some of the world’s most
renowned domestic appliance brands, to produce and deliver 100 per
cent recycled and recyclable packaging solutions.
The new boxes are made with 100 per cent recycled paper with
durability for transportation and were designed using our Circular
Design Metrics. This sustainable packaging will be extended across
Versuni’s Philips home appliance global product portfolio. We are
working with Versuni to replace single-use protection buffers (EDF)
plastics inside the packaging with sustainable fibre-based packaging
alternatives. This is a step forward in fulfilling Versuni’s commitment to
deliver 100 per cent plastic-free packaging within the next four years.
Priorities for 2024/25
• Continue to accelerate our innovation agenda, producing new
sustainable packaging solutions at scale for customers across our
footprint in Europe and North America.
• Increase focus on delivering a world class experience for our customers
through quality products, excellent service and ever closer partnerships.
• Produce high performance papers to facilitate the creation of
innovative, sustainable, packaging solutions both in our business
and in a competitive global market, while delivering on our carbon
reduction programme.
See pages 24-25 for more information
Our strategy
To realise the potential of
our people
We do this by:
• Ensuring the health, safety and wellbeing of all our employees.
• Creating a working environment where they feel proud, engaged
and developed.
• Focusing on embedding diversity and inclusion by expanding
resource groups and local networks.
Highlights
As a business we are evolving and growing through innovation in
sustainability and aim to be a leader in circularity. Ensuring we have
the right skills to deliver our ambition is critical to our success. We are
actively investing in development to realise the potential of our
people. Over the last two years we have created Learning Academies
to develop critical skills in Sales, Marketing and Innovation (SMI),
Operations, Finance, Digital and Data. In 2022/23 we had 1,176
colleagues receive learning through our SMI Academy across
allregions.
Priorities for 2024/25
• Progressing toward Vision Zero.
• Maintaining a safe and inclusive workplace.
• Building critical capabilities required to deliver our business plan.
• Leading an engaged workforce to deliver customer needs.
See pages 26-29 for more information
Our strategy is based on balancing the
requirements of our core stakeholders.
8
To lead the way in sustainability
We do this by:
• Designing out waste and pollution, and keeping materials in use.
• Decarbonising our operations and value chain.
• Creating a safe, diverse and inclusive workplace and being active in
our communities.
• Protecting and regenerating nature.
Highlights
In 2023/24, we continued to embed our refreshed Now & Next
Sustainability Strategy. We introduced a new sustainability
governance framework comprising expert horizontal thematic
Steering Committees, Working Groups and Project teams to drive the
delivery of our targets forward. In addition to achieving our target to
replace one billion pieces of plastic, we furthered our projects to
protect and regenerate nature and strengthened our human rights
due diligence.
Priorities for 2024/25
• Iterate our Net Zero Transition Plan further, implementing key
projects such as the transition to biomass at Rouen paper mill.
• Respond to the legislative environment, particularly to key issues
such as the EU Deforestation Regulation (EUDR) and the Packaging
and Packaging Waste Regulation (PPWR).
• Continue to roll out our Human Rights due diligence programme.
See pages 30-37 for more information
To double our size and profitability
We do this by:
• Being well positioned in developed markets.
• Working with major FMCG brands.
• Driving market share gains.
• Investing behind fundamental growth drivers.
Highlights
Our strong customer relationships, quality and service have led to a
number of recent FMCG customer contract wins, underpinning our
confidence in the outlook for volume growth going forward. While
markets remain challenging, we continue to focus on providing
value-added solutions to our customers and on driving operational
efficiency and cost control across the Group and view the future
with confidence.
Priorities for 2024/25
• Continue to develop strong customer delivery and grow
marketshare.
• Focus on cost mitigation and efficiency.
• Continue to invest in our business.
• Drive returns for shareholders.
See pages 38-42 for more information
Annual Report 2024 dssmith.com 9
Strategic Report Governance Financial Statements
2023/24
2022/23
2021/22
96%
94%
2024 Target: 97%
96%
2023/24
2022/23
2021/22
84%
84%
83%
2023/24
2022/23
2021/22
2030 Target: 4,651,382 tonnes CO
2
e
7,391,418 tonnes CO
2
e
8,250,702 tonnes CO
2
e
6,985,269 tonnes CO
2
e
2023/24
over 1.2 billion units*
Our non-financial KPIs
Our KPIs
* Since May 2020.
Accident frequency rate
(AFR)
The number of lost time accidents (LTAs)
permillion hours worked.
Why this is a KPI
The AFR is the number of LTAs per million
hours worked. We believe all employees
contribute to a safe working environment
and culture and our focus is on individual
ownership.
Health and safety KPIs 2023/24 2022/23
Total LTAs
1
80 91
AFR
2
1.65 1.82
1. LTA: number of accidents resulting in lost time of
one shift or more.
2. AFR: number of LTAs per million hours worked.
FTSE Women Leaders
Report2023
This is an independent framework which sets
recommendations to improve the
representation of women on boards and in
leadership positions.
Why this is a KPI
We are using this as a KPI to track progress in
delivering gender balance aligned to the FTSE
350 and 50 of the largest private companies.
Overall FTSE ranking 63
Women on DS Smith Plc Board 40%
1
Senior leadership* 31.1%
2
1. Compared to FTSE 100 average of 40.5%.
2. Compared to FTSE 100 average of 34.3%.
* Senior leadership defined as our four Executive
Committees and their direct reports: Group
Operating Committee; Group Strategy
Committee; Group Health, Safety, Environment
and Sustainability Committee; and Group
M&ACommittee.
Carbon reduction
Reduce Scope 1, 2 and 3 GHG emissions
46per cent by 2030 compared to 2019
and reach Net Zero by 2050.
Why this is a KPI
It is important that we play our part in
reducing global greenhouse gas emissions,
helping prevent the worst impacts of climate
change and future-proofing business growth
in line with the goals of the Paris Agreement.
Plastic replacement
Help our customers replace one billion pieces
of plastic by 2025.
Why this is a KPI
Our customers approve of corrugated
packaging as a renewable alternative to
plastic that, when recycled, prevents
waste from entering landfills and oceans,
reducing the impact on marine life and the
naturalworld.
Our corrugated packaging
customers by volume
DS Smith has a higher proportion of FMCG and
other consumer goods customers than the
market average.
Why this is a KPI
We work with large customers in resilient
sectors such as FMCG and aim to grow share
with these customers.
On-time, in-full deliveries
(OTIF)
The proportion of our orders that are
delivered on-time, in-full across
ourbusinesses.
Why this is a KPI
Packaging is an essential part of an efficient
supply chain. Delivering as promised is a
critical component to ensuring we remain a
trusted partner to our customers.
See pages 24-25 for more information See pages 26-29 for more information See pages 30-37 for more information
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Our medium-term targets
See pages 38-42 for more information
Return on sales
Earnings before interest, tax, amortisation
and adjusting items as a percentage
ofrevenue.
Why this is a KPI
The margin we achieve reflects the value we
deliver to our customers and our ability to
charge for that value. It is also driven by our
scale. A higher return on sales makes the
profit more resilient to adverse effects.
2023/24
2022/23
2021/22
-2.2%
2024 Target: 1.8%
-5.8%
5.4%
2023/24
2022/23
2021/22
10.5%
8.5%
2024 Target: 10% – 12%
10.3%
2023/24
2022/23
2021/22
14.3%
10.8%
2024 Target: 12% – 15%
10.7%
2023/24
2022/23
2021/22
1.3x
1.6x
2024 Target: <2.0x
2.1x
2023/24
2022/23
2021/22
101%
142%
2024 Target: >100%
39%
Net debt/EBITDA
Net debt (calculated at average FX rates and
after deducting IFRS 16 lease liabilities) over
earnings before interest, tax, depreciation,
amortisation and adjusting items for the
preceding 12-month period (adjusted for
acquisitions and disposals made during the
financial year, and to remove the income
effect of IFRS 16, Leases). This definition is in
accordance with the Group’s covenants.
Why this is a KPI
Net debt/EBITDA is a key measure of balance
sheet strength and financial stability.
Cash conversion
Free cash flow before tax, net interest,
growth capex, pension payments and
adjusting items as a percentage of earnings
before interest, tax, amortisation and
adjusting items. Free cash flow is the net
movement on debt before cash outflow for
adjusting items, dividends paid, acquisition
and disposal of subsidiary businesses
(including borrowings acquired) and proceeds
from issue of share capital.
Why this is a KPI
We focus on cash conversion as part of our
wider focus on capital management and
maintaining a prudent balance sheet.
Working capital is a key focus within the
business in order that all capital is employed
where it can best deliver returns for
thebusiness.
Adjusted return on
average capital employed
Earnings before interest, tax, amortisation
and adjusting items as a percentage of
average capital employed, including goodwill,
over the prior 12-month period.
Why this is a KPI
Our target ROACE to be delivered throughout
the economic cycle is above our cost of
capital. ROACE is a key measure of financial
success and sustainability of returns and
reflects the returns available for investment
in the business and for the servicing of debt
and equity. All investments and acquisitions
are assessed with reference to this target.
Like for like corrugated
box volumegrowth
Like for like volume of corrugated box
products sold measured by area.
Why this is a KPI
We target volume growth of at least GDP +1
per cent because we expect to win market
share by delivering value to our customers.
Annual Report 2024 dssmith.com 11
Strategic Report Governance Financial Statements
How are we responding:
Collaborating with customers to find
innovative packaging solutions – drive supply
chain efficiencies, offer cost benefits and
environmental advantages.
DS Smith helps consumers replace plastic and
reduce their carbon footprint in the transition
to Net Zero through the use of renewable
and recyclable materials. We continue to
work on identifying new plastic replacement
opportunities as part of delivering our Now &
Next strategy.
How are we responding:
Growth has steadied but the opportunity in
e-commerce remains significant. High-quality
packaging is an essential element of this
supply chain, putting us in a unique position
to develop innovative, sustainable solutions.
Collaborating with our customers to design
packaging that is sustainable, durable,
protective and offers reuse solutions
forreturns.
How are we responding:
Being more sustainable through greater
resource efficiency, using fewer resources
(materials, energy and/or water) in
manufacturing through design and operating
efficiency and throughout the value chain.
As energy systems evolve, there is an
opportunity to adopt lower-emission energy
sources and energy efficiency measures.
These could be equipment-based (e.g.
e-boilers and carbon capture and storage),
fuel-based (e.g. hydrogen) or process-based
(e.g. heat recovery and optimisation through
digital and data innovation).
Read more
For more information, see our ‘LiftUp’ case
study in the Customer section on page 25 and
‘R8’ in the Innovation section of Partnership
and collaboration on page 16.
Read more
For more information, see the Customer
section on page 25.
Read more
For more information, see the PPWR spotlight
on page 13 and the ‘Rouen’ case study in the
Manufacture section of Sustainability and
circulatory on page 21.
Trends driving our market forward
There is a need for a new approach to packaging and a need for strong
leadership in our industry. We see the opportunity for packaging to play a
powerful role in a changing world.
Our market
E-commerce
Opportunities and challenges:
The way consumers shop has transformed
dramatically. An increasing preference for
online shopping, driven by convenience and
lifestyle changes, has become evident. In the
UK, internet sales now represent over 25 per
cent of retail sales, with over 80 per cent of
the population engaging in e-commerce
purchases. This shift places immense
pressure on businesses to ensure their
e-commerce packaging solutions are
innovative.
Our 2023 UK consumer study highlighted
three key focus areas for retailers in
e-commerce packaging:
• Sustainability: Consumers are increasingly
eco-conscious. Our research indicates that
one in four online shoppers would cease
ordering from a company due to excessive,
non-recyclable packaging.
• Durability and Protection: Packaging must
protect goods effectively. With 32 per cent
of consumers experiencing damaged
packaging, and 58 per cent likely to stop
ordering from a company due to repeated
damaged products, this is a critical area.
• Ease of Returns: A smooth return process
is essential as 29 per cent of consumers
find the current process frustrating.
Retail – channels
Opportunities and challenges:
The increased cost of living has driven
footfall to discount supermarkets; 65 per
cent of UK consumers say they now prefer
cheaper private label products over named
brands
1
. This shift has created growing
demand for shelf-ready packaging that
optimises costs, generating opportunity for
us to innovate in this space for our customers.
Moreover, most UK retailers have targets for
sustainable packaging with plastic reduction
and recycling as main targets. This is further
being accelerated by changes in regulation
which will mean single-use plastic is no
longer an option for many producers.
Sustainability
Opportunities and challenges:
Packaging has grown in the consciousness of
consumers, and more of it now arrives in the
home environment. Given our innovation,
sustainability credentials and the recyclability
of our products, concerns about plastic and
over-packaging create opportunities for us.
Greater focus is also placed on sustainable
supply chains and our customers are looking
for strong ESG credentials in their suppliers to
reduce their Scope 3 emissions. Growth in
demand for sustainable packaging also
necessitates greater demand for recycling
and improvement of recycling facilities to
create cleaner waste streams.
1. Capgemini Research Institute, consumer demand survey.
12
In November 2022 the European Commission
published its draft proposal for a new
Packaging and Packaging Waste Regulation
(PPWR). The Regulation sets out the practical
means by which the EU could meet the
Commission’s target of ensuring that all
plastic packaging is reusable or recyclable
by 2030, with a focus on reducing the
amount of packaging placed on the EU
market and preventing the generation of
packaging waste.
The proposal introduces, for the first time,
waste reduction targets for Member States,
and a series of new measures on recycled
content, packaging minimisation and reuse
and refill, as well as bans on certain types of
single-use packaging.
DS Smith welcomes the PPWR as a
fundamental measure to increase packaging
circularity in Europe, and an important part of
the EU’s Circular Economy Action Plan. We
have worked closely with our trade
associations in Brussels to establish a
constructive dialogue with the EU institutions
throughout the process and ensure that the
new legislation ensures that recycling and
reuse are seen as complementary parts of the
future regulatory landscape.
As we reach the end of the process, we look
forward to working with our partners and
customers in ensuring a successful
implementation of the legislation and
continue to lead the way in packaging
sustainability in Europe.
PPWR spotlight
DS Smith welcomes the Packaging and Packaging Waste Regulation (PPWR)
as a fundamental measure to increase packaging circularity in Europe.
Responding to the drivers of our market
>1.2bn
Over 1.2 billion pieces of
plastic replaced
Replacing one billion pieces of plastic with ourcustomers
As part of our Now & Next Sustainability Strategy, we set a target to help our customers
replace one billion pieces of plastic by the end of April 2025. We are proud to share the
news that we have replaced over 1.2 billion pieces of plastic, 16 months ahead of our
2025 target. This milestone was met through cross-functional working among DS Smith
teams, including Sales, Marketing & Innovation, Group Innovation, and Group Research &
Development, who have collectively been deploying the principles of circular design to
deliver fibre-based solutions as a practical and cost-effective alternative to customers’
existing plastic packaging. Volumes of the number of plastics alternatives sold have
remained consistent each year, demonstrating continued demand for our fibre-based
solutions, and reinforcing that we continue to deliver our Purpose of Redefining
Packaging for a ChangingWorld.
See 34 for more information
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To be the leader in sustainable
packaging solutions
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Our relationships
and resources
Our people and values
We employ c. 29,000 people globally
and invest in and develop them so they
can realise their potential. Our values
and management standards guide how
we operate.
Manufacturing and other
physical assets
We have an extensive network of
packaging manufacturing sites, paper
mills, recycling depots and innovation
centres, supported by the
infrastructure of the countries in which
we operate.
Our relationships
We interact in a way consistent with
our corporate values to build and
maintain trusted relationships with our
customers, suppliers and communities.
Intellectual capital
We have substantial customer
understanding, innovation and
patented designs.
Digital and data
Integration of digital and data will help
increase manufacturing capacity and
service levels to deliver best in class
customer experience.
Financial capital
We are funded by a combination of
shareholder equity, debt and
reinvested cash flow.
Natural capital
We operate a circular model through
the recycling of natural material, in
particular wood fibre.
Recycling
DS Smith
operations
Corrugated
packaging
Paper
manufacturing
3 2
4 1
Customers
Retailers
Consumers
1 2 3 4
CCM
Paper is converted
into corrugated
board and then
into packaging
Boxes
Packaging is used
by our customers,
retailers and
consumers
Used
packaging
Used packaging is
collected and
brought to our
recycling facilities
OCC and
recovered
fibre
OCC and recovered
fibre are converted
into paper again
CCM: corrugated case material, the paper used to form corrugated board.
OCC: old corrugated cases, i.e. used corrugated board, a feedstock for recycled paper.
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Our business model
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How we create value
1. Insight
Our strong relationships with our
customers in fast moving consumer goods
(FMCG), retail and industrial sectors help
us gain insights in changing consumer,
retail and regulatory trends and how they
impact the use of packaging. We use this
knowledge to inform our innovation.
2. Innovation
Innovation is at the heart of our business.
We have a significant investment
programme in research and development
(R&D) to accelerate our work in the
circular economy and plastic replacement.
We collaborate with our customers to
create sustainable packaging solutions in
our Impact Centres and are able to test
and pilot designs and then share best
practice across all regions.
We are also innovators in the use of
light-weight corrugated board. Our
proprietary technology to test the
strength of corrugated board as it is
manufactured means we can use the
optimum paper weight required.
3. Design
Our designers use our Circular Design
Principles to improve the sustainability of
packaging. Through our network of
designers and PackRight Centres, we
create packaging that fulfils our
customers’ requirements for all stages of
the primary product’s journey, whether
replacing plastic, improving protection in
transit, ease of identification in the supply
cycle, or presenting the primary product to
maximise sales.
4. Manufacturing
Our paper mills manufacture CCM and our
corrugated plants convert CCM into
corrugated board, then print, cut and
pre-glue the boxes, which are then
shipped flat on pallets, ready for assembly
and filling at our customers’ factories. We
maximise the efficiency of our
manufacturing, for example, using
light-weight papers where possible to
reduce the cost and carbon impact of the
packaging produced.
The value we
create
Satisfied customers
We develop packaging that helps our
customers appeal more to consumers,
sell more, reduce costs, manage risks
and become circular-ready.
Packaging that is
sustainable
Our packaging is usually fully recyclable
and made from largely recycled
material. We recycle more packaging
than we produce.
Replacing plastic
We have replaced over 1.2 billion units
of plastic with alternative fibre-based
solutions since 2020.
Returns to our capital
providers
Investors benefit from strong
operational and financial performance.
Safety and opportunity for
our people
We aim to create equality of
opportunity for people to grow and
develop throughout their career in a
safe working environment.
Leadership in sustainability
We are leading the transition on
packaging sustainability through our
engagement with major organisations
such as the Ellen MacArthur Foundation.
Community involvement
We have an active programme of
community involvement in addition
to satisfying a societal need for
recyclable packaging.
Our differentiators
Scale
Innovation
Sustainability and
circular economy
Market drivers
Responding to retail
channel changes/
consumer behaviour
Sustainability
E-commerce
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Partnership and collaboration
We work with world-leading
partners to advance new solutions
and accelerate the transition to
the circular economy.
Exploring alternative
fibres
We have been working with
biotechnology businesses to
explore alternative fibres such as
straw, hemp, seaweed and even
cocoa shells as alternative fibres
for paper and plastic.
In an innovative pilot programme
with The Research Institute of
Sweden (RISE), we explored how
the properties of straw and
seaweed could potentially work as
a packaging product in comparison
to more traditional materials
including recycled hardwood
andsoftwood.
“Our valued partnership with DS Smith is truly collaborative.
The DS Smith Impact Centre is impressive and enables the
exploration of new ideas on how packaging can help to
achieve Britvic’s strategic and sustainable objectives.”
Victoria Priscott
Senior Category Manager — Packaging, Britvic
Delivering value every step of the way
>50
Impact Centres & Customer
Innovation Hubs and
PackRight Centres
New state of the art
innovation facility
Innovation is at the heart of our
business and this year we have
opened a new facility dedicated to
R&D. This includes a 4,000m
2
pilot
hall, four laboratories, conditioning
chambers, an ideation and design
studio, prototyping areas and
collaboration spaces. Projects will
be informed by key industry drivers
rooted in sustainability, supply
chains and data.
Our Impact Centres
Our strong relationships with our
customers in FMCG, retail and
industrial sectors help us gain
insights in changing consumer,
retail and regulatory trends
and how they impact the
use of packaging. We use
this knowledge to inform
ourinnovation.
We collaborate with our
customers to create sustainable
packaging solutions in our Impact
Centres and are able to test and
pilot designs and share best
practice across all regions.
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Collaboration with Coca Cola HBC Austria
We collaborated with Coca Cola HBC Austria to replace plastic
shrink wrap for 1.5 litre PET soft drink multi-packs with cardboard
based outer packaging. The innovative packaging solution,
DS Smith LiftUp, is a 100 per cent recyclable corrugated handle
which improves carry functionality for consumers and reduces
around 200 tonnes of plastic each year for Coca-Cola HBC Austria.
See page 25 for more information.
Partnership with E.ON
We have partnered with E.ON at our mill in Aschaffenburg to build a
new waste-to-energy and combined heat and power plant which will
be operated by E.ON, resulting in significant energy costs and
capexsavings.
CO
2
emission reduction of
c. 50,000
tonnes
Awards won:
DS Smith received the External
Business Partners Excellence Award
from P&G. This award recognises our
consistently high performance in
serving P&G employees throughout
the supply chain.
Our teams in Spain, Finland and
Hungary have received well-deserved
recognition at the WorldStar Global
Packaging Awards for exceptional
packaging innovation.
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An innovation in
circular shelf-ready
packaging
The DD Wrap is an innovative
and sustainable shelf-ready
packaging solution.
It is circular economy ready
while also increasing supply
chain efficiency. It is created
from a single piece of cardboard
without perforation at the front
side to improve visibility and
appeal at the point of display.
The designers have been able
to minimise the amount of
material and resources used,
aswell as reduce the size of
the boxes, which eliminates
emptyspace.
Reuse pilots
Our reuse pilots will help us to understand how to
support our customers in reaching the reuse
targets proposed in the draft EU Packaging and
Packaging Waste Regulation. We will pilot reusable
packaging solutions with customers and partners as
they progress through our innovation stage gate
process. We look forward to scaling the pilots where
packaging reuse best complements recycling
systems, reduces materials and keeps them in use
for as long as possible, delivering a better outcome
for the planet.
Optimise fibre for
individual supply
chains in new
packaging solutions
Using our insights, we work
with our customers to drive
innovation in our solutions
with optimised packaging,
designing out waste and
pollution in the process.
Thisinvolves optimising
packaging for efficiency,
driving savings through
small improvements to the
packaging’s dimensions, shape
and materials that can be
multiplied over thousands of
units. This results in a lower
environmental impact and/or
financial savings across the
customer’s supply chain.
Efficiency and delivery
We are investing in production and
operational innovations, creating
efficiencies and growth. It is our way
of ensuring DS Smith is well set
up for the years ahead.
Delivering value every step of the way
64%
90%
26%
23%
23/2422/2321/2220/21
Percentage of fibre use
optimised for individual
supply chains
1
1. These figures represent c. 74 of our conventional packaging sites
for whichBSIR (Board Strength Index Rating) data is available.
Itdoes not capture allpackaging designs and specifications and
excludes board purchasedexternally and sheet board sales.
SeeDS Smith Sustainability Report 2024,page 17.
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Stackable system
display for Pepsi
We have developed a
stackable system display
for Pepsi to launch a new
flavour and also reduce
supply chain costs. The
display was delivered
prefilled, making it easy
to assemble by staff
instore.
As with all DS Smith
displays, sustainability
was at front of mind.
The display was
designed for the circular
economy and was a fully
recyclable solution,
with no plastic mop tray
or gluing required.
Moreover, as the
display was made from
corrugated board it was
easily compliant with
the supermarket’s
recycling waste streams.
There are now
more than
6,000
recyclable corrugated
packaging solutions added
to our portfolio for products
sold by our customers,
including e-commerce
andretail.
Investing for growth and efficiency
We are investing to improve operational and environmental efficiency
and increase capacity.
Castelfranco c. €80m investment completed in 2022/23
• Increased capacity of 155m sqm.
• +75 per cent labour efficiency improvement.
Lucca c. €250m net investment – replacement and upgrade of
end of life line
• 2.5x faster running.
• 40 per cent more energy efficient.
• Additional capacity of 270,000 tonnes.
Viana c. €145m investment – replacement and upgrade
• c. €45m on upgrade to paper line.
• Incremental capacity came on-line October 2023.
• Adding 30,000 tonnes of extra kraft top paper.
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“At Panvita, we strive for a
sustainable future at every
step of our production. With
our excellent collaboration
with DS Smith and the
introduction of new
packaging, we have taken an
important step forward in our
commitment to reducing
environmental impacts.”
Toni Balažič,
Director of the Panvita Group
Sustainable packaging
We align to our customers’
needs, responding with agility
and helping drive their
sustainability agenda. Our
customers remain keen to use
less plastic and improve the
sustainability of their packaging.
>1.2bn
units of plastic replaced
Circular Design Metrics
Our Circular Design Metrics
make it easy for our customers
to compare the sustainability
performance of different
packaging designs. Our customers
are using the metrics to measure
and compare the circularity of
different solutions at a glance,
helping them to select the best
solution based on their priorities.
>100,000
packaging decisions
influenced by our Circular
Design Metrics since
theirlaunch
c. 4,000
solutions presented to
customers featuring our
Circular Design Metrics
eachmonth
Please see an example
Circular Design Metric on
page 66
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Sustainability and circularity
We integrate new technologies, processes
and materials to ensure efficiency and
optimise our supply chains, reducing
pressure on natural resources
and minimising waste
to landfill.
Circular Design Principles
As over 80 per cent of a product’s
environmental impact is determined
at the design stage, enabling
circularity through design
isessential.
Our Circular Design Principles,
launched in 2020 in collaboration
with the Ellen MacArthur
Foundation, provide a framework to
stimulate circular design
innovation, ensuring that packaging
is designed to meet its purpose with
minimal environmental impact.
We protect brands and products
Designers must always ensure that
packaging successfully protects its
product. Damaged products from poor
packaging have a negative economic
and environmental impact
We use no more materials
thannecessary
Optimised use of packaging materials
saves resources and reduces waste
We design for supply
cycleefficiency
Our designers drive efficiency by
changing the layout of products within
boxes for stacking in delivery vehicles
We keep packaging materials in use
We eliminate waste by keeping
packaging products in use for as long
as possible, recycling material again
andagain
We find a better way
We empower our designers to challenge
the status quo and support customers in
the drive for a circular economy
Delivering value every step of the way
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Partnering with Bosch
We have developed a plastic-free solution for packaging for a gas
boiler for Bosch. The innovative solution has eliminated all plastic
packaging parts and has resulted in the removal of 100,000
plasticcomponents.
The DS Smith team of expert designers used the unique DS Smith
Circular Design Metrics approach in combination with DS Smith’s
Value Tool to transparently demonstrate the full lifecycle benefits
of their packaging.
Rouen paper mill investment
We are investing €90 million (including €15 million subsidy) in a new
biomass boiler in Rouen, entering a long-term biomass supply and
electricity offtake agreement. This is an environmental and efficiency
investment reducing CO
2
emissions by c. 99,000 tonnes and delivering
strong returns.
This project is one of a number of initiatives in Europe and North
America that are/will contribute to DS Smith’s goal of reducing
greenhouse gas (GHG) emissions by 46 per cent in absolute terms by
2030, compared with 2019 levels. We are also participating in the
Science Based Targets initiative (SBTi) with our 1.5°C science-based
target in line with the goals of the Paris Agreement.
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Temperature
controlled packaging
We partnered with a biotech
company to create a
sustainable, recyclable and
temperature controlled
packaging solution to replace a
current expanded polystyrene
product. Using our Circular
Design Metrics we created a
100 per cent corrugated based
solution that has a better
thermal performance than the
current EPS solution and is 100
per cent recyclable.
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2023
CLIMATE
19%
reduction in total greenhouse
gas emissions since 2019/20
CDP Climate Change
A grade
Annual Report 2024 dssmith.com 21
Strategic Report Governance Financial Statements
Why this stakeholder
is important to us Their concerns Our response
Customers
Our customers are predominantly large,
global fast moving consumer goods (FMCG)
brands that typically sell goods in
supermarkets and via e-commerce channels.
We produce corrugated recyclable
packaging for these brands and sell paper
and recycling materials to thirdparties.
Customers are concerned about
sustainability, particularly the
circularity, including recyclability, and
the carbon footprint of their packaging.
They are interested in supply chain
transparency, legal and regulatory
compliance, and competitive pricing, in
addition to product quality and meeting
their sustainability goals.
We aim to delight our customers, from
understanding their needs to providing innovative
solutions through long-term strategic partnerships.
We continue to bring new solutions to market,
increasing recyclability, and reducing the carbon
footprint using our Circular Design Metrics.
Employees
Our people are c. 29,000 employees
working across 34 countries in Europe and
North America, speaking 26 languages.
Weare working to realise the potential of
our people, which focuses on creating a
safe, diverse and inclusive workforce,
as a fundamental foundation for a
successful company.
Our people want to work for a Purpose-
led organisation that resonates, and
that they are proud to be a part of.
Theycontribute to a supportive culture,
in which they feel safe, recognised
andrewarded.
We are committed to ensuring that our workplace is
safe, diverse and inclusive. By giving everyone a
voice, we promote a meritocracy with development
opportunities for all, and recognition of achievement
regardless of gender, ethnicity, age or religion. We
encourage feedback through our Employee Works
Councils and employee pulse surveys and celebrate
successes with our Smithies awards.
Investors
Our investors buy shares in DS Smith that
are listed on the London Stock Exchange,
and we raise our debt from banks and listed
bonds. Our equity and bonds are owned by
a diverse range of investors in the UK,
Europe, USA and beyond.
Investors are interested in our financial,
operational and ESG performance,
alongside our Sustainability Strategy,
risks and opportunities. They follow
our ratings, legal compliance and
industrial relations.
We engage with investors and analysts through
regular meetings and conferences, including the
Annual General Meeting (AGM), and engage with
our banking syndicate, fixed income investors and
ratings agencies periodically. We aim to provide
long-term value creation that benefits all of
ourstakeholders.
Suppliers
Our suppliers range from large, strategic
suppliers, with whom we have deep
long-term collaborative relationships, to
small suppliers of specialist goods and
services for specific requirements. Our
diverse supplier population increases our
resilience, helping to ensure security
ofsupply.
Suppliers are concerned about legal
compliance, competitive pricing and
sustainability. They are interested in
how they can support our sustainability
agenda, as well as progressing
theirown.
We collaborate closely with our suppliers,
partnering on a range of initiatives from circularity
to carbon. This includes helping suppliers to
calculate their carbon footprint, set a science-
based target and reduce emissions. We develop
mutually cooperative, beneficial relationships that
create value for all.
Understanding our stakeholders
Our strategic goals are aligned with the expectations
of our stakeholders, so that we are delivering for all.
22
Stakeholder engagement
Why this stakeholder
is important to us Their concerns Our response
Nature
Our circular business model is dependent
on the provision of natural resources and
ecosystem services from a flourishing
natural world. For example, although we
recycle packaging, fibre is required as the
primary raw material and as a renewable
fuel, in the form of biomass. Water is a
crucial natural resource used to transport
fibres through the process and as a conduit
of energy in the form of steam.
Alongside rapid decarbonisation, the
climate must be stabilised, limiting
nature loss by preserving and
regenerating resources, such as land,
soil and water. This needs to be
achieved in accordance with scientific
research and by implementing
management practices that
regeneratenature.
We have launched biodiversity projects and
programmes in our communities. We are assessing
our dependencies on nature, and we are
investigating setting targets to regenerate nature.
This builds on our sustainable forest management
practices and paper sourcing certifications.
Communities
Our communities are spread across Europe
and North America, often in industrial areas,
as well as the towns and cities in which our
employees live. Our community
engagement aims to produce prosperity,
particularly to promote sustainable
development and ensure our activities
create positive local impacts.
Our communities want to reside
amongst a good neighbour, leveraging
our activities in a way that produces
environmental, economic and social
value that benefits the communities in
which we operate.
We engage with our communities on a range of
local issues, including in our Community
Programme on three main strategic themes:
biodiversity, design and education. The DS Smith
Charitable Foundation supports environment,
education and humanitarian causes,
amongstothers.
Governments and NGOs
Our government and NGO engagement is
both direct and indirect, through trade
associations. We aim to influence change to
create a favourable landscape for our
Company and stakeholders.
Governments and NGOs want to engage
in collaborative partnerships with the
private sector, leveraging resources and
building capacity to address systemic
issues, particularly those impacting
ourindustry.
We engage in consultations relating to our policy
priorities – decarbonisation of heat, reuse and
recycling, and extended producer responsibility. We
take a leadership role with non-governmental
organisations, such as our strategic partnership with
the Ellen MacArthur Foundation, the Science Based
Targets initiative and the 4evergreen alliance.
Annual Report 2024 dssmith.com 23
Strategic Report Governance Financial Statements
To delight our customers
Our strategy
84%
FMCG and other
consumer goods
>1.2bn
units of plastic
replaced since 2020
96%
OTIF deliveries
24
Packaging
Our Packaging customers include the world’s biggest brands and
multinational companies stretching across Europe and North America.
We serve customers predominantly producing FMCG and other
consumer goods, together with industrial sectors including
automotive and construction.
Our corrugated
packaging customers
by volume
European industry average
corrugated packaging by
volume
16%
84%
26%
74%
Industrial
FMCG and
other
consumer
goods
Source: DS Smith analysis
Our priority is to provide quality, sustainable packaging solutions that
address the challenges of a fast-changing world. We continue to
invest in our innovation strategy to ensure each new product we
create starts with in-depth research and insight before our expert
designers create solutions, using our Circular Design Principles, that
meet local requirements but also have the ability to scale across the
countries where we operate.
Reflecting our focus on innovation and increasingly close partnership
with our customers, this year saw the launch of our industry-leading
R&D and innovation centre, ‘R8’. The leading-edge facility will
spearhead research in manufacturing, maximising the growing
demand for sustainable packaging and the innovation needed to
deliver it. Crucially, the facility allows DS Smith, its customers and
partners to come together to accelerate the research and
development of radically new, sustainable packaging fulfilment
solutions, cementing our already strong relationships.
“With the DS Smith Easy Bowl, we have improved
our offering and strengthened our commitment
to innovation and sustainability.”
Samo Polanec
Director of Production, Panvita MIR d.d.
Paper
Our mills in Europe and the US produce a wide range of high-quality
finished paper products, primarily for container board products, all made
from 100 per cent recycled or chain of custody certified fibre sources.
Thehigh performing packaging papers we produce, such as recycled
corrugated case materials and kraftliners, are vital for our own packaging
division to produce fibre-based packaging solutions. Our range of
speciality papers includes plasterboard liners which are widely used in
the construction industry. Our customers benefit from our commitment
to lower our impact on the environment and increase the efficiency of
our paper-making operations. We have invested £48 million to upgrade
the fibre preparation line at our paper mill in Kemsley, UK, which will
enhance efficiency, reliability and sustainability, while improving
recycling processes and contributing to our goal of zero waste to landfill
by 2030. We announced our investment to transform the energy supply
of our Rouen paper mill in France this year, which will replace a coal-fired
boiler with a new biomass boiler that will reduce the site’s emissions by
99,000 tonnes of CO
2
per year compared to 2022/23.
Removing shrink wrap with Coca-Cola
HBCAustria
We teamed up with Coca-Cola HBC Austria to launch DS Smith
LiftUp, a pioneering cardboard-based packaging solution,
replacing plastic shrink wraps for 1.5-litre PET soft drink
multi-packs. Launched in Austria, this 100 per cent recyclable
innovation aims to remove approximately 200 tonnes of
plastic each year. Developed using our Circular Design Metrics,
DS Smith LiftUp is adaptable to various bottle sizes, showcasing a
significant move towards reducing the carbon footprint of
packaging. This collaboration marks a significant step forward in
sustainable packaging, aligning with Coca-Cola HBC’s goal to
achieve Net Zero emissions by 2040.
Supporting Campari with its
sustainabilityagenda
Focusing on the packaging lifecycle and prioritising a closed
loop approach, our innovative partnership with Campari has
facilitated the implementation of more sustainable packaging
solutions that reduce environmental impact. With this
collaboration, Campari has made further progress in sustainable
practices and reinforced its position as a responsible player in
the spirits industry.
Sole supplier in Europe to
MondelēzInternational
Demonstrating the strength of our customer relationships,
2023 saw us agree a second consecutive five-year contract
agreement to be the sole supplier of corrugated packaging in
Europe to Mondelēz International – one of the world’s largest
snacking companies and known for its iconic brands such as
Oreo, Cadbury, Milka and Philadelphia. The agreement
represents an exclusive partnership and is an extension of
existing services with a commitment to new projects.
Newfibre-based sustainable packaging solutions will be
implemented across European markets, and both companies
will work closely together to reduce the use of single-use
plastics and utilise joint efforts to hit a target of Net Zero
emissions by 2050.
Recycling
Our recycling and waste management services help our customers
waste less and recycle more. Across Europe and North America and
from municipalities to some of the best-known brands and retailers
in the world, our expertise help our customers maximise their
recyclingstrategies.
The paper and cardboard we collect for recycling feeds our own paper
mills as part of our closed loop recycling business model, while also being
sold into our global network of third-party paper mills. By working
with our customers to build recyclability into their supply chains, we
are helping to provide sustainable solutions that the wider society
demands from organisations.
Annual Report 2024 dssmith.com 25
Strategic Report Governance Financial Statements
Our strategy
To realise the
potential of our people
9%
reduction in accident
frequency rate vs 2023
216,122
safety observation tours
62,633
leadership safety talks
262
sites recorded zero LTAs
during the year
Our strategy
26
Ensuring the health, safety and wellbeing of all
Focusing on health, safety and wellbeing is critical to achieve
ourambition.
Health and safety culture
Our Company’s health and safety goal is to achieve zero harm for all
individuals impacted by our operations, including our employees,
contractors and visitors. To realise this objective we have established
Vision Zero, a strategy emphasising leadership, engagement, safe
work environments, processes and a shift towards developing a
safety-oriented culture, behaviours and mindset.
Throughout 2023/24, our primary focus has been the continuous
implementation of Vision Zero. Collaborating closely with our
leadership team, we have strived to ensure broad employee
involvement in safety discussions and to systematically mitigate
operational risks.
Furthermore, we have reviewed and reintroduced our Group Health
and Safety policy to reaffirm our dedication, clarify our vision and
define roles and obligations. This policy acts as a foundational outline
for the objectives we aim to accomplish and the conduct we anticipate
from both ourselves and each other.
Wellbeing of our people
Promoting the welfare of our workforce, we introduced a global health
and wellbeing week this year, a bi-annual initiative designed to raise
awareness and inspire individuals to achieve a harmonious work-life
equilibrium. This event encompassed a comprehensive range of over
500 activities spanning all sites and divisions worldwide. Topics covered
included nutrition, mental health, and physical exercise. The success of
the week was evident in the post-event survey, where it received an
outstanding rating. Moreover, most respondents expressed their
intention to modify their lifestyles based on the week’s activities.
Engaging our employees
Labour markets have become increasingly competitive and in
response we have refreshed our approach to listening.
During 2023/24, we continued the use of pulse surveys, providing
more frequent opportunities for colleague feedback, better manager
guidance and support and clearer reporting and action planning.
Online ideas boards were introduced for the first time this year,
enabling suggestions for improvement to be crowd sourced.
In total, over 12,000 employees were surveyed in 2023. We have
been delighted with the increased response rates which have
averaged 84 per cent versus 72 per cent in 2021.
Despite a challenging external environment, we have seen some
marked improvements in perceptions in recognition, based on our
feedback in our engagement survey, which has seen a 9 percentage
point increase due in part to our continued focus on our Smithies
programme which celebrates the fantastic achievements of our
colleagues. We have also seen a further increase in inclusion
(+5 per cent) and safety (+4 per cent).
There have also been some fantastic examples of efforts at site level,
for example in Birmingham, UK. Between 2021 and 2023,
engagement here increased from 46 per cent to 83 per cent, putting it
9 percentage points above the external norm and it is now our most
engaged site in North Europe. One colleague stated: “The site has
come on leaps and bounds. This is down to the site leadership, led by a
fantastic General Manager, who listens to the shop floor and gets
their opinions.”
We have designed and implemented improvements to our onboarding
experience to ensure colleagues who are new to DS Smith are
engaged and productive as quickly as possible. These improvements
include a redesigned onboarding process, onboarding e-learning
which is being translated into 11 core languages and an onboarding
hub in which individuals can access all the key information, processes
and tools they need as a new starter.
Our European Works Council (EWC), which includes 50 representatives
from across the business, engages twice a year with management to
provide further feedback and discuss opportunities to improve.
Regular engagement with regional leads, as well as both safety and
diversity committees, ensures we have a regular two-way dialogue on
employee matters across Europe.
In 2024/25, we will continue to run targeted pulse surveys more
frequently to give opportunities for our employees to provide regular
feedback and drive action.
Developing our employees
Our talent and learning agenda is focused on: 1) ensuring we have the
capabilities that will underpin our growth agenda, 2) ensuring the
right level of skills and performance and 3) strengthening succession.
• Management capability is central to the achievement of our people
strategy. We have created our DS Smith Management Standards,
outlining a clear and consistent set of accountabilities, embedding
these in all of our people processes and in the continued roll out of
our management development programmes.
• Each of our Operations, Sales, Marketing and Innovation, Finance
and Digital Learning Academies have delivered learning, expanding
their coverage, with our Operations Learning Academy deploying
technical training across multiple sites and our Sales, Marketing and
Innovation Academy delivering over 7,000 learning interventions.
• We continue to invest in our learning platform. We have added new
content, expanded the languages and launched conversation AI
functionality for over 70 subjects where people can practise their
skills with an AI coach. We have recorded a further increase in the
numbers of people making use of e-learning.
• Working with Oxford Saïd Business School we continue to run the
Aspire Programme designed to accelerate the development of high
potential talents. We have also added a new Compass programme
targeted at developing people earlier in career. To date we have 60
people in our Compass alumni and over 200 people have participated in
our Oxford Saïd Business School programmes. Data continues to show
a significant return on investment in terms of promotions and
retention rates from both groups.
• Graduates continue to be critical to our succession strategy and we
have seen a marked increased interest in applications this year. We
currently have over 70 graduates attending our two-year personal
development programme.
• At the British HR Awards this year, we were delighted to win
‘Manufacturing and Engineering Company of the Year’ in recognition
of the quality and impact of our graduate development programme.
Annual Report 2024 dssmith.com 27
Strategic Report Governance Financial Statements
Diversity, Equity & Inclusion (DEI)
We are committed to building the diversity of our workforce to better
reflect the communities we operate in. Together we are building an
inclusive environment where everyone can realise their potential and
thrive. This is fundamental for any successful company today and
crucial to our strategic goal ‘to realise the potential of our people’.
What do we mean by DEI?
We define diversity as the range of human characteristics within the
organisation. This includes, but is not limited to, race, ethnicity,
gender, gender identity, sexual orientation, age, social class, physical
or mental ability, religious or ethical values systems, national origin and
political beliefs. It also includes diverse thinking or ‘neurodiversity’.
Equity means providing everyone with what they need to succeed –
recognising that not everyone starts from the same place.
Inclusion describes how people feel about their experience at
DS Smith, whether they feel it promotes and sustains a sense
ofbelonging.
The impact of DEI on our leaders and our people
Being known as an inclusive organisation will help us to grow our
talent pool. We will continue to welcome people from different
backgrounds and consistently attract some of the best people from
our local communities and beyond.
To accelerate progress, our immediate focus is on investing in leaders,
supporting them with an inclusive leadership education programme.
This will provide the cultural awareness and understanding needed to
role-model inclusive behaviours and recruit and manage diverse
teams. We will take over 3,000 people managers and leaders through
a facilitated journey exploring what DEI means to them and DS Smith,
focusing on actions that will make an impact. Our approach to inclusive
leadership is two-fold. We are working with Included, a global,
impact-driven DEI consultancy, to enable our most senior leaders to
become role-models for a more diverse business. We are also rolling
out a similar internal programme, supported by in-house facilitators
who will deliver in local languages to our wider management populations
to meet the various cultural needs of our business. To date, 20 per cent
of our leaders have completed this programme.
Raising awareness through our active networks
Active networks foster a sense of belonging by creating a safe
and supportive space for employees who share a common sense
of identity. The networks offer a platform for members to openly
discuss their experiences and perspectives, which in turn can
lead to positively building wellness through greater empathy
and understanding. Active networks also promote greater
awareness through various means including building an annual
calendar to support key dates and celebrations within their
respectivecommunities.
During 2023/24, our active network membership increased, on
average, over 60 per cent, reflecting our colleagues’ commitment to
championing positive change.
• LGBTQ+ & Allies Network.
• Culture & Ethnic Diversity Network.
• Gender Diversity Network.
• Disability & Allies Network.
On behalf of the LGBTQ+ & Allies Network, DS Smith joined Workplace
Pride as a member in May 2023 to further drive LGBTQ+ inclusion at
work. The following month, we established an internal DEI Steering
Committee (Steerco) to enable alignment and knowledge-sharing
among our four active networks. Through collaboration on the DEI
Steerco, and with the support of their executive sponsors, the active
networks have written charters and co-created a schedule of coffee
breaks and webinars. The active networks have also worked alongside
the European Works Council to increase DEI engagement among
non-wired colleagues through establishing a community of
DEISiteChampions.
Lucca DEI Site Champions & International
Women’s Day
In honour of International Women’s Day, our DEI Site Champions
at Lucca paper mill organised a workshop to raise awareness
and challenge gender-based discrimination and harassment.
Participating in Scuola Superiore Sant’Anna’s Engine Project,
workshop attendees listened to an interactive presentation on
gender equality in Italy and had the opportunity to experience
gender-based micro-aggressions through virtual reality.
Neurodiversity Celebration Week
To commemorate Neurodiversity Celebration Week, the
Disability & Allies Network hosted an informative and engaging
roundtable with award-winning neurodiversity consultant
Rachel Morgan-Trimmer. In sharing her personal experiences
and explaining neurodiversity, Rachel led a conversation on
how we all play a role in creating an inclusive and accessible
workplace for people living with ADHD, Dyslexia, Autism,
Dyspraxia, Dyscalculia, as well as neurotypicals.
International Pronouns Day
The LGBTQ+ & Allies Network partnered with Workplace Pride
to deliver an interactive workshop for colleagues to learn about
the importance of using pronouns to cultivate a psychologically
safe and inclusive space for members of the LGBTQ+
community and allies. Education is a key component of the
network’s purpose, so all employees feel valued and respected
to bring their best to work.
28
To realise the potential of our people continued
To support our active networks and inclusive leadership workshops,
we have developed digital resources, including an active network
toolkit and a manager’s guide on how to lead inclusively.
Our manager’s guide deep dives into DEI, including a glossary of
key DEI terms, guidance on how to lead with inclusion during the
recruitment process, and tips for creating belonging among teams. If
we are serious about supporting our colleagues to be themselves and
to thrive, then we need our people-related processes to be fit for the
future. For example, our Equal Opportunities and Anti-Discrimination,
and Menopause policies are being embedded through training and
awareness campaigns. We ensure that we recruit diverse candidates
who can challenge us and help to drive us forward. This has enabled
our female to male hiring ratio to increase for three years in a row.
For next year our focus will be on:
• Delivering Vision Zero.
• Continuing efforts in more regular listening to give all our
colleagues opportunities to give feedback and further improve our
employee experience.
• Refreshing our employee brand and careers website to attract the
talent we need, including graduates, and provide more visibility of
the careers we have to offer.
• Internal talent and succession, in particular refreshing our talent
board structure to enable significantly greater opportunities for
internal moves.
• Further accelerating our DEI agenda, in particular increasing
manager capability in how to create a more inclusive
workingenvironment.
Diversity of our team
The overall percentage of females in DS Smith increased by 0.4 per cent
to 23.2 per cent* in the financial year 2023/24. Our total number
of employees as at 30 April 2024 was 28,978 of which 22,259
(76.8per cent) were male and 6,715 (23.2 per cent) werefemale.
As reported in November 2023 in the 2023 FTSE Women Leaders
Report, representation of women in our senior leadership (defined in
accordance with the requirements of the FTSE Women Leaders
Review as those on our four Executive Committees – Group Operating
Committee; Group Strategy Committee; Group Health, Safety,
Environment and Sustainability Committee; and Group M&A
Committee – and their direct reports) was 31.1 per cent* in the
12 months to 31 October 2023.
This year we participated in the Parker Review, a voluntary business-
led diversity framework, backed by the UK Government, and
dedicated to increasing the representation of ethnic minorities on
boards and senior leadership teams of both the FTSE 350 and the UK’s
largest private companies. We submitted data on ethnic composition
of our Board and senior leadership team (defined as those on our four
Executive Committees – Group Operating Committee; Group Strategy
Committee; Group Health, Safety, Environment and Sustainability
Committee; and Group M&A Committee – and their direct reports) as at
31 December 2023. As reported in the Parker Review in March 2024,
we met the target of having at least one ethnic minority Director on
our Board.
The Financial Conduct Authority (FCA) introduced a requirement for
listed companies to report on board diversity targets and provide data
on the gender and ethnic diversity of the board and in its executive
management. Following the FCA’s definition, executive management
for these purposes means the members of our four Executive
Committees. However, in the tables below, we have included Board
members who are also in executive management only in the board
members column, and not in the executive management column.
Weare committed to improving diversity across all protected
characteristics and will continue to make progress in line with the
FCA’srequirements.
We asked all members of the Board and executive management to
voluntarily self-disclose the data on their gender and ethnicity, using
the terminology requested by the FCA. Further information about the
diversity of our Board is set out in the Nomination Committee Report
on pages 95 to 97.
Our continued focus on female retention, development and
recruitment has led to year on year improvements in our gender pay
gap and this year we have achieved parity for the first time (see our
UK Gender pay gap report).
It continues to be a challenge to attract women into manufacturing,
however we are making progress. We have an aspiration to improve
gender diversity towards 40 per cent women in senior leadership
by2030.
FCA gender diversity reporting as at 30 April 2024:
Number of board
members
1
Percentage of
the board
Number of senior
positions on the board
(CEO, CFO, SID and Chair)
Number in executive
management
Percentage
of executive
management
Men 6 60% 4 12 85.7%
Women 4 40% – 2 14.3%
Not specified/prefer not to say – – – – –
FCA ethnic diversity reporting as at 30 April 2024:
Number of board
members
1
Percentage of
the board
Number of senior
positions on the board
(CEO, CFO, SID and Chair)
Number in executive
management
Percentage
of executive
management
White British or other White
(including minority-white groups) 9 90% 4 13 92.9%
Mixed/Multiple ethnic groups 1 10% – – –
Asian/Asian British – – – 1 7.1%
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – – –
* Deloitte have provided independent third-party limited assurance for this 2023/24 metric. See the assurance statement on page 76 for information.
1. The number of board members includes those who are members of both the Board and the executive management.
Annual Report 2024 dssmith.com 29
Strategic Report Governance Financial Statements
To lead the way
in sustainability
Our strategy
19%
reduction in total greenhouse gas
emissions since 2019/20 towards
our 1.5°C science-based target
14
of our paper mills completing
biodiversity activities
100%
reusable or recyclable
packaging manufactured
30
Delivering Now & Leading Next
Sustainability is integral to our circular business model and we can
have the greatest positive impact by helping to create a circular
economy for packaging.
When we launched our Now & Next Sustainability Strategy in 2020,
we set ambitious near and long-term targets that confirmed our
commitment to the circular economy and our Purpose of Redefining
Packaging for a Changing World. Now & Next includes aspirations for
‘Now’ and for ‘Next’, focusing on the sustainability challenges we are
facing today, as well as those that will impact on future generations.
We believe that delivering these aspirations will enable us to partner
with our customers to lead the transition to the circular economy
forpackaging.
Governance of sustainability
The Board is responsible for oversight of long-term aspects of the Group’s
operations, including sustainability matters, when reviewing and guiding
strategy, budgets and business plans.
Upon appointment to the Board, Directors undertake an induction
programme, receiving a broad range of information about the Group,
including information about sustainability, tailored to their previous
experience. Directors are given training and receive presentations to
keep their knowledge current, including on the Now & Next
Sustainability Strategy.
The Board and its Committees, members of whom have relevant
ESG and sustainability experience, are updated on sustainability at
least annually. This includes the progress against delivering the
Now& Next Sustainability Strategy and other items that involve
sustainability-related matters, such as the Corporate Plan, principal
risks and uncertainties, and remuneration. The Audit Committee is
engaged on assurance and developments in ESG reporting.
The Board takes into account sustainability-related risks and
opportunities when overseeing strategy, major transactions and risk
management by evaluating the sustainability-centric vision and
strategy of the Group, including considering any trade-offs associated
with sustainability matters.
The Board is informed about the results of the sustainability materiality
assessment, strategy development and progress, and the Remuneration
Committee considers sustainability through the use of an ESG underpin,
referring to factors that include, amongst others, continued delivery of
the updated Now & Next Sustainability Strategy and of progress
towards our science-based targets, described on page 119.
The Board of Directors includes the Group Chief Executive and Group
Finance Director as Executive Directors, both of whom are members
of the four management Committees that support the work of the
Board and its principal Committees.
Sustainability-related matters are discussed every month at the
Group Health, Safety, Environment and Sustainability (HSES)
Committee and every two months at the Group Strategy Committee
(GSC), both of which are chaired by the Group Chief Executive. Other
Committees, such as the Group Compliance Committee, maintain
oversight of sustainability-related risks and opportunities to the
extent to which they are topical.
Topics discussed this year included circular economy, including
recyclability, roadmaps to deliver the 1.5°C science-based target,
thecommunity affairs programme and nature agenda, including
deforestation and biodiversity.
Aligned to the Now & Next Sustainability Strategy, four Steering
Committees are responsible for maintaining a portfolio of projects to
coordinate delivery and resources and propose solutions to critical
trade-offs. Thematic working groups, which include subject matter
experts, provide input, interfacing with internal functions, such as
Sales, Marketing and Innovation (SMI), Procurement, and Finance.
The governance of these working groups includes formalised terms of
reference, clear objectives and regular reporting, at least quarterly, to
the Group Health, Safety, Environment and Sustainability Committee.
This structure is described in the context of climate change on
page 61 as part of our IFRS S2 Climate-related Disclosures and
Task Force on Climate-related Financial Disclosures (TCFD) reporting.
ESG ratings
We participate in a range of
ratings, demonstrating our
sustainability credentials.
CDP: A Climate Change,
A-Forests, A- Water Security
EcoVadis: Gold
MSCI: AA
S&P Global: featured in the
‘2024 Sustainability Yearbook’
Sustainalytics: ‘Low ESG Risk’
ISS: ‘Prime’ B
FTSE4Good:
Included since 2012
Latest scores as of 2023/24.
This section of the DS Smith Annual Report has been prepared with
reference to IFRS S1 ‘General Requirements for Disclosure of
Sustainability-related Financial Information’ disclosures.
Voluntary IFRS S2 ‘Climate-related Disclosures’ and selected UK
Transition Plan Taskforce disclosures can be found on pages 60-77,
enhancing our Task Force on Climate-related Financial Disclosures.
Voluntary EU Taxonomy disclosures can be found on pages 78-79.
A LIST
2023
CLIMATE
Redefining Packaging
for a Changing World
Sustainability Report 2024
Sustainability
Report 2024
DS Smith ESG Reporting Suite
Net Zero Transition Plan
2024
ESG Databook
2024
EU Taxonomy
2023/24
EU Taxonomy
supplementary
report
ESG Databook
2024
Net Zero
Transition Plan
2024
Annual Report 2024 dssmith.com 31
Strategic Report Governance Financial Statements
To lead the way in sustainability continued
Our Now & Next Sustainability Strategy helps guide us as we lead the transition to the
circular economy. It has been developed to respond to the sustainability-related risks and
opportunities identified in our double materiality assessment, described on page 35.
Circularity
Designing out waste and pollution
and keeping materials in circulation
We are designing out waste and pollution
through circular design and helping our
customers replace, reduce or avoid plastic
with alternative fibre-based solutions.
We are keeping materials in circulation by
manufacturing 100 per cent recyclable or
reusable packaging and we are working
towards launching up to five new innovative
reusable packaging pilots by 2025.
We optimise fibre for individual supply chains
so that our packaging is tailored to our
customers’ unique supply chain conditions.
Our long-term ambition is for all our
packaging to be recycled or reused and to
achieve zero waste to landfill by 2030.
Decarbonising our operations and
our value chain
We are working towards decarbonising our
business and value chain to meet our 1.5°C
science-based target, which has been
validated by the Science Based Targets
initiative (SBTi).
By 2030, reduce Scope 1, 2 and 3 greenhouse
gas (GHG) emissions 46 per cent compared to
2019 and reach Net Zero GHG emissions
by2050
1
.
We are encouraging 100 per cent of our
strategic suppliers to set their own
science-based targets by 2027
2
.
In 2023/24, we…
• Achieved our 2025 plastic replacement
target, replacing over one billion pieces,
improving recyclability for our customers
with corrugated solutions.
• Continued to optimise packaging
specifications uniquely optimised for
individual supply chains.
• Reduced waste sent to landfill by 19
per cent compared to last year.
In 2024/25, we will…
• Explore new non-fibre innovations to
ensure our fibre-composite solutions are
fully recyclable.
• Improve the availability of supply chain
data to fully optimise all packaging
solutions for all supply chains.
• Continue to use our Circular Design Metrics
to help our customers reduce the impact of
their packaging through more sustainable
design decisions, such as increased
recycled content.
In 2023/24, we…
• Announced a €90 million investment to
transition Rouen mill from coal to biomass
(saving c. 99,000 tonnes CO
2
e).
• Published our inaugural Net Zero
Transition Plan, setting out key actions to
achieve our science-based target.
• Achieved CDP ‘A-List’ status for our 2023
Climate Change response.
In 2024/25, we will…
• Progress decarbonisation initiatives, such
as the Aschaffenburg mill waste-to-energy
plant (saving c. 50,000 tonnes CO
2
e) and
roll-out of solar generation capacity.
• Set a FLAG (Forest, Land and Agriculture)
science-based target to validate our
Net Zero by 2050 commitment with
the SBTi.
• Continue to use our Circular Design Metrics
to help our customers reduce their
packaging impact.
Carbon
1. Target wording per SBTi website: ‘DS Smith commits to reduce absolute Scope 1, 2 and 3 GHG emissions 46.2% by FY 2030 from a FY 2019 base year.’
2. Target wording per SBTi website: ‘DS Smith commits that 76% of its suppliers by emissions covering purchased goods and services will have science-based
targets by FY 2027.’
Now & Next Sustainability Strategy
32
Nature
People & Communities
Protecting and regenerating
forests and biodiversity and
managing water responsibly
We are protecting nature by measuring and
improving biodiversity in our own forests, in
addition to implementing biodiversity
programmes at our paper mills.
Our ambition is to elevate our nature-related
commitments by taking a science-based
approach to regenerate nature.
We have set a new target to develop water
management and water scarcity plans for
100 per cent of our paper mills and packaging
plants by 2025
6
.
We are reducing the water withdrawal
per tonne of production for the water
used in our own process by 10 per cent
by 2030 for our paper mills located in
regions at risk of water stress.
Creating safe and inclusive
workplaces, respecting human
rights and engaging our people and
communities
We are committed to reducing the accident
frequency rate (AFR) each year and
improving the diversity of our workforce to
reflect the communities in which we operate.
This includes all leadership teams completing
inclusivity workshops for 2025 and by 2030,
increasing gender diversity to 40 per cent
female representation in senior leadership,
improving gender and ethnic diversity across
our overall workforce year-on-year and to set
an aspiration for other protected
characteristics by 2030. We continue to
strengthen our human rights due diligence.
We are playing an active role in our local
communities and are equipping our people to
lead the transition to a circular economy.
In 2023/24, we…
• Continued to develop our biodiversity
programmes, with 14 mills completing
biodiversity activities.
• Began to assess how our business interfaces
with nature to set targets to regenerate
nature, taking a science-based approach.
• Began EU Deforestation-Free Regulation
(EUDR) preparation, including assessing
our obligations and a risk analysis exercise.
In 2024/25, we will…
• Complete our impacts and dependencies
assessment to produce our Taskforce on
Nature-related Financial Disclosures (TNFD).
• Set targets to regenerate nature.
• Implement a due diligence system to fulfil
the EUDR requirements, meeting our
traceability and transparency obligations.
In 2023/24, we…
• Reduced the AFR
3
to an all-time low.
• Achieved our target for 100 per cent of our
sites to complete the Sedex SAQ
4
,
strengthening human rights due diligence.
• Maintained 100 per cent of our sites
participating in community activities
5
,
including delivering circular economy
lessons and a new biodiversity lesson plan.
In 2024/25, we will…
• Continue emphasising the role of
leadership within health and safety,
enhancing front-line capabilities, and
streamlining our systems and processes to
be more efficient and supervisor focused.
• Deliver new community initiatives that
bring all our colleagues together under a
common cause.
Alignment with international frameworks
We respect several international frameworks that are relevant to corporate responsibility and ethical business conduct, including:
• United Nations Declaration of Human
Rights and the Convention on the
Rights of the Child.
• International Labour Organization (ILO)
Eight Fundamental Conventions.
• Organisation for Economic Co-operation
and Development (OECD) Guidelines for
Multinational Enterprises.
• United Nations Global Compact (UNGC).
• United Nations (UN) Sustainable
Development Goals (SDGs).
For information on our sustainability
performance, policies and procedures,
please refer to our Sustainability Report.
3. Accident frequency rate (AFR).
4. The Sedex SAQ (Supplier Ethical Data Exchange Self-Assessment Questionnaire) is a set of questions relating to business practices, management systems,
policies and worker information. The scope includes manufacturing sites.
5. Sites in scope includes sites with >50 FTEs.
6. Sites in scope includes manufacturing sites with >5,000m
3
annual water withdrawal, identified at current or future water stress risk with the WRI Aqueduct Tool.
Annual Report 2024 dssmith.com 33
Strategic Report Governance Financial Statements
To lead the way in sustainability continued
Now & Next progress summary
We have begun the process of responding to the Science Based
Target initiative (SBTi)’s updated requirements for Net Zero
Validation, including the requirement for our industry to set a target
to decarbonise ‘FLAG’ (Forest, Land and Agriculture) emissions and set
a no deforestation commitment, which we aim to complete in 2025.
Finally, we published our first Net Zero Transition Plan alongside
DS Smith Sustainability Report 2024, describing how we are
delivering and plan to progress our science-based target.
People & Communities
In 2023/24, we achieved our target for 100 per cent of our in-scope
(manufacturing) sites to complete the Sedex Self-Assessment
Questionnaire (SAQ), enabling the identification of opportunities
to strengthen our human rights due diligence.
We engaged 76 per cent of our people on the circular economy
(2022/23: 57 per cent) and contributed to our 9.8 million cumulative
total wider engagement figure since 2020/21 (2022/23: 8.4 million),
engaging the public on the circular economy and circular lifestyles.
For the fifth year running, 100 per cent of the sites included in our
Community Programme (those with greater than 50 full time
employees) had undertaken community activities aligned to our
strategic themes of biodiversity, design and education.
The accident frequency rate reduced to a new record low of 1.65
(2022/23: 1.82) and inclusive leadership workshops were completed
by 25 per cent of our managers (new target). Our gender diversity for
women in senior leadership positions was 31.1 per cent*
(2022/23: 34.5 per cent). See pages 26 to 29 for more information
about how we are realising the potential of our people.
Nature
In 2023/24, 14 of our paper mills (2022/23: 13) continued to develop
their biodiversity programmes, which include multi-year initiatives
with actions to improve local biodiversity.
For example, Dueñas mill recently supported biodiversity and
landscape recovery in the local community through planting trees that
are native to the area, improving natural habitats for local wildlife.
We began a new project to assess our dependencies on nature
as one of the first steps to setting targets to regenerate nature,
taking a science-based approach, with reference to the Taskforce
on Nature-related Financial Disclosures (TNFD) recommendations.
This includes an assessment of our supply chain, direct operations
and a downstream product screening assessment, comprehensively
locating the interfaces with nature and prioritising sensitive locations.
Alongside this project, as part of our EU Deforestation-Free Regulation
(EUDR) preparation, we began screening exercises, a risk assessment
and the development of a deforestation policy to meet the upcoming
EUDR requirements.
In 2023/24, 10 per cent of our in-scope paper mills and packaging
plants developed water management plans (a new target), which
includes the identification of water reduction opportunities and
awareness-raising and training on water conservation. Water
abstracted for use in own process per tonne of production decreased
by 10 per cent compared to last year to 7.52m
3
/t nsp (2022/23:
8.4m
3
/t nsp), driven by the closure of Trakia mill during the period and
changes to the energy set up at Aschaffenburg mill which involves
exporting water withdrawn to a third party.
DS Smith Sustainability Report 2024 describes the progress
made towards our Now & Next targets in greater detail.
* Independent assurance obtained for the metrics marked with an asterisk ‘*’.
See the summary independent assurance statement on page 76.
Circularity
In 2023/24, we achieved our target to replace one billion pieces of
plastic with alternative fibre-based solutions 16 months in advance of
our 2025 target, with over 1.2 billion replaced, avoided or removed
since 2020/21. We maintained our target to manufacture 100
per cent recyclable or reusable packaging and we continued to
investigate corrugated packaging reuse pilots.
We continued to use our Circular Design Metrics to help our customers
to compare the sustainability performance of different packaging
designs. The metrics encourage our customers to replace plastic,
increase recycled content and optimise fibre use, combining
customer, operational and industry data to design leaner packaging
that maintains important properties, such as strength, resistance and
recyclability. We continued to explore solutions for hard-to-recycle
packaging and engage with brand owners and industry peers, through
our trade associations, on best practice in design for recyclability.
We optimised fibre for individual supply chains in 90 per cent of our
new packaging solutions (2022/23: 64 per cent) at 74 of our
packaging plants where we measure the board performance, driving
improvements to the packaging’s dimensions, shape and materials
used that can be multiplied over thousands of units.
We achieved a 19 per cent reduction in waste to landfill compared
to last year, sending 165,840 tonnes* of waste to landfill
(2022/23: 204,637 tonnes*). This was predominantly as
a result of exceptional events in the previous year.
Carbon
In 2023/24, GHG emissions across all three scopes totalled
6,985,269 tonnes CO
2
e (2022/23: 7,391,418 tonnes CO
2
e),
a 5 per cent reduction compared to last year and 19 per cent
compared to the base year (2019/20: 8,645,693 tonnes CO
2
e).
A 4 per cent reduction in Scope 1 and 2 (market-based) compared to
last year was primarily a result of changes made in preparation for the
new waste-to-energy facility at Aschaffenburg (c. 14,000 tonnes
CO
2
e), alongside other smaller projects, and a strengthened focus on
energy efficiency initiatives (c. 27,000 tonnes CO
2
e).
A 6 per cent reduction in Scope 3 was primarily the result of
methodology improvement, in particular using updated emission
factors from the CDP supply chain programme to begin capturing
supplier emissions. In contrast to last year, changes in production
volumes did not have a significant impact, other than the closure of
Pazardzhik (Trakia) mill and several other non-core operations
resulting in a reduction of c. 50,000 tonnes CO
2
e.
Our organic investment programme continued, with upgrades to
corrugators, boilers and LED lighting contributing reductions. Several
major projects progressed, including the transition from coal to
biomass at Rouen, anticipated to contribute a 99,000 tonne CO
2
e
reduction, and other new projects were announced, including
upgraded machinery at Ghimbav and Columbia packaging plants, with
energy savings created through steam optimisation and energy
recovery technologies. We continued to develop our roadmap,
assessing future projects and optimising the plan for best cost
solutions. We progressed our energy efficiency efforts and
ISO 50001:2018 certification, with the most energy-intensive plants
undertaking ‘deep dives’ to investigate savings opportunities.
We estimate that in 2023/24, c. 42 per cent of our purchased goods
and services emissions were from suppliers who have set, or are in the
process of setting, a science-based target (2022/23: 32 per cent).
34
High
High
Medium
Medium
24
25
26
23
22
21
20
19
18
16
17
11
9
5
2
1
7
8
10
6
15
14
12
3
4
3
13
DS Smith's impact on society and the environment
Impact to DS Smith
Risk management
Sustainability-related risks and opportunities are integrated with and
inform our overall risk management processes. Our processes to
identify, assess, prioritise and monitor sustainability-related risks and
opportunities are described in the Risk management section (pages
49 to 58), in particular the ‘Sustainability commitments’ principal risk.
In the context of climate-related risk management, there are
processes in place for evaluating transition and physical risks,
described on pages 74 and 75. These are embedded into the Group’s
overall risk management framework and the processes are unchanged
compared to the previous reporting period.
The processes and related policies in relation to climate-related risks
and opportunities are described in the context of climate change on
page 74 as part of our IFRS S2 Climate-related Disclosures and
Task Force on Climate-related Financial Disclosures (TCFD) reporting.
Double materiality assessment
We conduct a regular materiality assessment to identify
sustainability-related risks and opportunities, ensuring that our
Now & Next Sustainability Strategy fits with the priorities of our
stakeholders, enabling us to develop strategy and leverage our
resources in prioritised areas. The assessment is refreshed every two
years, ensuring that our strategy remains responsive to changes in
stakeholder sentiment and priorities.
In our most recent assessment, conducted in 2022/23, we adopted a
‘double materiality’ approach, capturing ‘impact’ and ‘financial’
materiality. This evaluated the impacts that the business has on
people and the environment (‘inside-out’), alongside the impacts that
people and the environment have on the business (‘outside-in’).
Our materiality assessment includes inputs and parameters such as:
• A topics long-list, informed by a range of sources, covering our
entire operations and the value chain.
• Quantitative rankings and prioritisation, by importance, determined
by surveying:
• Internal stakeholders (e.g. employees, at a range of seniority).
• External stakeholders (e.g. customers, investors, trade bodies).
• Semi-structured interviews, exploring (financial and sustainability)
material topics and:
• Key (sustainability, climate and wider) risks and opportunities.
• Expectations for how we should respond to these.
• Implications for the future strategic direction, prioritisation and
ambition for the Now & Next Sustainability Strategy.
The most recent assessment concluded that the circular economy and
climate change should remain our top priorities, being of critical
importance for the business and for people and the environment.
Biodiversity and the regeneration of nature emerged as nascent
topics that had increased in importance and health and safety,
diversity and inclusion and human rights were also identified
asimportant.
These findings informed the development of Now & Next, in addition
to the prioritisation of other activities, such as ESG reporting
considerations.
The findings are presented visually in the materiality matrix below.
Materiality matrix
List of sustainability topics:
1. Climate action
2. Energy use and efficiency
3. Product design for optimal resource use
4. Recyclability
5. Transitioning to a circular economy
6. Biodiversity and regeneration of nature
7. Business ethics, ESG governance
andtransparency
8. Post-consumer waste and
recyclinginfrastructure
9. Responsible sourcing
10. Community engagement and impact
11. Data privacy and security
12. Diversity, equity and inclusion
13. Fair wages and labour
14. Human rights in the value chain
15. Physical and mental wellbeing
16. Product health and safety
17. Public policy and advocacy
18. Sustainable consumer choices
19. Sustainable forest management
20. Waste in operations
21. Water efficiency and quality
22. Water scarcity
23. Education development and upskilling
24. Employee engagement
25. Health and safety
26. Reuse business models
Annual Report 2024 dssmith.com 35
Strategic Report Governance Financial Statements
Metrics and targets
The table below contains the metrics used to measure and monitor Now & Next Sustainability Strategy progress and capture the identified
sustainability-related risks and opportunities arising from our double materiality assessment.
1. This figure represents c. 74 of our conventional packaging sites for which
BSIR (Board Strength Index Rating) data is available. It does not capture all
packaging designs and specifications and excludes board purchased externally
and sheet board sales. See DS Smith Sustainability Report 2024, page 17.
2. In 2023/24, 99.6% (2022/23: 99.7%) of our packaging volume met our
100 per cent recyclable and reusable standard. For the remaining 0.4
per cent volume that is presently not either recyclable in practice or at scale,
such as some barrier coatings and foam, we continue to push for alternatives.
3. DS Smith commits to reduce absolute Scope 1, 2 and 3 GHG emissions 46.2%
by FY2030 from a FY2019 base year.
4. DS Smith commits that 76% of its suppliers by emissions covering purchased
goods and services will have science-based targets by FY 2027.
5. Sites with greater than 50 full time employees.
Now & Next Sustainability Strategy target 2023/24 2022/23 Status
Circularity
Design out
waste and
pollution
By 2025, optimise fibre for individual supply chains in 100 per cent
of new packaging solutions
1
Metric: Percentage of fibre use optimised for individual supply chains
90%
64%
On track
By 2030, optimise every fibre for every supply chain
Ongoing
Ongoing
On track
By 2025, help our customers to replace one billion pieces of plastic with alternative
fibre-based solutions
Metric: Number of pieces of plastic replaced, avoided or reduced
Over 1.2 billion
cumulative total
since 2020/21
Achieved
By 2030, send zero waste to landfill
Metric: Total waste landfilled (tonnes)
165,840*
tonnes
204,637
tonnes
On track
Keep
materials
in circulation
By 2025, test up to five reuse pilots and continue to manufacture 100 per cent
recyclable and reusable packaging
2
Ongoing
Ongoing On track
By 2030, aim for all our packaging to be recycled or reused
Ongoing
Ongoing
On track
Carbon
Decarbonise
our operations
and value
chain
By 2030, reduce Scope 1, 2 and 3 GHG emissions by 46 per cent compared to 2019
3
Metric: Total GHG emissions (tonnes CO
2
e)
6,985,269
tonnes CO
2
e
7,391,418
tonnes CO
2
e
On track
By 2027, encourage 100 per cent of our strategic suppliers (representing 76 per cent
of purchased goods and services emissions) to set their own science-based targets
4
Metric: Percentage of purchased goods and services emissions from suppliers with
science-based targets
42%
32%
On track
By 2050, reach Net Zero GHG emissions
Ongoing
Ongoing
On track
People &
Communities
Engage
people and
communities
By 2025, engage 100 per cent of our people on the circular economy
Metric: Percentage of our people engaged on the circular economy
76%
57%
On track
By 2030, engage 10 million people on the circular economy and circular lifestyles
Metric: Number of people engaged on the circular economy
9.8 million cumulative
total since 2020/21
Ahead
100 per cent of our sites engaged in community activities each year
5
Metric: Percentage of sites participating in community activities
100%
100%
Achieved
Provide a safe
and inclusive
workplace
Reduce the Accident frequency rate (AFR) every year
Metric: Accident frequency rate (AFR)
1.65
1.82
On track
Strive to achieve Vision Zero
Ongoing
Ongoing
On track
By 2025, inclusive leadership workshops completed by all
leadership teams across all sites
Metric: Percentage of managers who have completed inclusive leadership workshops
25%
New target
On track
By 2030, improve gender diversity towards 40 per cent women in senior leadership
and set an aspiration for other protected characteristics
6
Metric: Percentage of senior leadership, female employees
31.1%*
34.5%
On track
Respect
human rights
By 2025, complete SEDEX SAQ roll out to all sites and perform
appropriate auditing of SAQs
7
Metric: Percentage of sites completed SEDEX SAQ
100%
56%
Achieved
Continue to improve human rights due diligence each year
Ongoing
Ongoing
On track
Nature
Protect and
regenerate
forests and
biodiversity
By 2025, measure and improve biodiversity in our own forests and assess
our dependencies on nature
Ongoing
Ongoing
On track
By 2025, biodiversity programmes in place at each of our paper mills
Metric: Number of our paper mills with biodiversity programmes in place
14
13
On track
Set targets to regenerate nature taking a science-based approach
Ongoing
New target
On track
Water
management
By 2025, 100 per cent of our paper mills and packaging sites to have water
management plans
8
Metric: Percentage of sites with water management plans
10%
New target
On track
By 2030, 10 per cent reduction in water withdrawal intensity at mills
at risk of water stress compared to 2019
Metric: Water abstracted for own process (m
3
/t nsp)
9
7.52
m
3
/t nsp
8.4
m
3
/t nsp
Achieved
6. Defined in accordance with the requirements of the FTSE Women Leaders
Review as those on our four Executive Committees and their direct reports.
7. The Sedex SAQ (Supplier Ethical Data Exchange Self-Assessment
Questionnaire) is a set of questions relating to business practices,
management systems, policies and worker information. The scope includes
manufacturing sites, as defined in our Basis of Preparation and the 100 per
cent figure refers to the Sedex SAQ roll out.
8. Sites in scope includes manufacturing sites with >5,000m
3
annual water
withdrawal at current or future water stress risk (WRI Aqueduct Tool).
9. Metric updated to reflect the water that is abstracted for own process, which
is water withdrawals less water exported to a third party for their own use.
* Independent assurance obtained for the metrics marked with an asterisk ‘*’.
See the summary independent assurance statement on page 76.
36
To lead the way in sustainability continued
Industry-specific metrics
This table contains Sustainability Accounting Standards Board (SASB) Containers & Packaging industry standard disclosures. The standard
provides investors and other report users with consistent, comparable and reliable ESG information. Disclosures can be located directly in the
table, with associated information on the pages referenced. ‘AR’ refers to Annual Report 2024, ‘SR’ refers to Sustainability Report 2024,
’NZ’ refers to Net Zero Transition Plan 2024, and ‘DB’ refers to ESG Databook 2024, which can be obtained from the ESG Reporting Hub.
Industry-specific metrics (SASB Standard Index (Containers & Packaging))
Topic Accounting metric Unit Code Disclosure Ref
Greenhouse
gas emissions
Gross global Scope 1 emissions;
percentage covered under emissions-limiting regulations
Tonnes
CO
2
e: %
RT-CP-110a.1 1,340,272*; 70* AR 76-77
Discussion of long-term and short-term strategy or plan to manage
Scope 1 emissions, emissions reduction targets, and an analysis of
performance against those targets
Discussion
and analysis
RT-CP-110a.2 Narrative NZ
Air quality
Air emissions of the following pollutants:(1) NOx (excluding N
2
O), (2)
SOx, (3) volatile organic compounds (VOCs) and (4) particulate
matter (PM)
Tonnes RT-CP-120a.1 4,170; 248;
0; 0
Energy
management
(1) Total energy consumed, (2) percentage grid electricity, (3)
percentage renewable and (4) total self-generated energy
MWh; % RT-CP-130a.1 14,058,435*;
12; 29*;
5,669,066
DB 7
Water
management
1) Total water withdrawn and (2) total water consumed, percentage
of each in regions with High or Extremely High Baseline Water Stress
m
3
; % RT-CP-140a.1 52,477,496*;
15,851,351*;
29*
DB 10-11
Description of water management risks and discussion of strategies
and practices to mitigate those risks
Discussion
and analysis
RT-CP-140a.2 Narrative AR 70-71
Number of incidents of non-compliance associated with water
quality permits, standards and regulations
Number RT-CP-140a.3 3 SR 69
Waste
management
Amount of hazardous waste generated; percentage recycled Tonnes; % RT-CP-150a.1 3,958; 65 DB 12
Product
safety
Number of recalls issued; total units recalled Number RT-CP-250a.1 0; 0 SR 67
Discussion of process to identify and manage emerging materials
and chemicals of concern
Discussion
and analysis
RT-CP-250a.2 Narrative SR 67
Product
lifecycle
management
Percentage of raw materials from: (1) recycled content, (2)
renewable resources and (3) renewable and recycled content
% RT-CP-410a.1 82; 100; 100
Revenue from products that are reusable, recyclable and/or compostable £ ‘000 RT-CP-410a.2 6,797 SR 6
Discussion of strategies to reduce the environmental impact of
packaging throughout its lifecycle
Discussion
and analysis
RT-CP-410a.3 Narrative SR 14-21
Supply chain
management
Total wood fibre procured; percentage from certified sources Tonnes; % RT-CP-430a.1 4,545,648; 100
Total aluminium purchased; percentage from certified sources Tonnes; % RT-CP-430a.2 Not applicable
Corporate Sustainability Reporting Directive (CSRD)
The EU’s CSRD requires companies to disclose information about the
risks and opportunities arising from social and environmental issues
and the impact of business activities on people and the environment.
These disclosures aim to help investors, civil society, consumers and
other stakeholders to evaluate the sustainability performance of
companies as part of the European Green Deal. We have begun
preparation to report against material European Sustainability
Reporting Standards (ESRS), informed by our double materiality
assessment and Now & Next Sustainability Strategy.
International Sustainability Standards Board (ISSB)
The IFRS Foundation, through the ISSB, is developing standards
that aim to result in a high-quality, comprehensive global baseline
of sustainability disclosures focused on investor needs. Wehave
prepared pages 30 to 37 with reference to IFRS S1 ‘General
Requirements for Disclosure of Sustainability-related Financial
Information’ and pages 60 to 77 with reference to IFRS S2 Climate-
related Disclosures. These are consistent with the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations,
with some additions. We continue to monitor the development and
release of future IFRS sustainability disclosure standards.
Responding to the evolving ESG reporting landscape
We continue to monitor the evolving ESG reporting landscape, which has continued to mature over the past year. We are preparing new
disclosures and developing our existing disclosures to meet the needs of our stakeholders and regulatory requirements.
UK Transition Plan Taskforce (UK TPT)
The UK TPT has published the Transition Plan Taskforce Disclosure
Framework, which aims to provide a set of recommendations for
effective reporting on climate transition plans. We have prepared
our inaugural DS Smith Net Zero Transition Plan with reference to
the TPT disclosure recommendations and guidance. A short
summary of our transition plan is presented within the ‘strategy’
section of our climate-related disclosures, on pages 64 to 68.
Taskforce on Nature-related Financial Disclosures (TNFD)
The TNFD consists of disclosure recommendations that aim to
encourage and enable businesses to assess, report and act on their
nature-related dependencies, impacts, risks and opportunities.
As part of our commitment to assess our impacts and dependencies
on nature for 2025, we have begun to assess the interfaces our
operations and value chain have with nature, in alignment with the
TNFD ‘LEAP’ (Locate, Evaluate, Assess and Prepare) approach.
We plan to report against TNFD in DS Smith Annual Report 2025.
Alongside these developments, we maintain our GRI-aligned
Sustainability Report, SASB (Sustainability Accounting Standards
Board) standard disclosures and ESG ratings submissions.
Annual Report 2024 dssmith.com 37
Strategic Report Governance Financial Statements
Our strategy
To double our size
and profitability
Our strategy
£6,822m
Revenue
£701m
Adjusted operating profit
33.1p
EPS
38
Operating review
Resilient performance
The macro-economic environment has remained challenging with
overall market demand continuing to be weak, leading to a decline
in like for like box volumes of 2 per cent
4
compared to 2022/23.
Customers are starting to increase promotional activity and stock
levels, with like for like volumes in the second half of the year showing
positive growth. The medium-term target for box volume growth of
1.8 per cent (GDP+1 per cent) was significantly impacted by inflation
in addition to lower production volumes.
The largest decline in volume was in Northern Europe, which includes
the UK and Germany, where we have a greater weighting to industrial
and e-commerce customers, respectively. Southern Europe was
relatively resilient and our Eastern Europe and North American
divisions delivered strong volume growth for the year.
For the 12-month period, revenue was £6,822 million
(2022/23: £8,221 million), down 16 per cent on a constant currency
basis and 17 per cent on a reported basis with the decline in box
volumes (£129 million) and lower selling prices (£1,173 million).
Packaging prices were down £647 million, approximately 10 per cent,
with the balance reflecting lower external paper, recyclate and
energy sales. Packaging prices have been relatively resilient,
reflecting our strong customer relationships, ongoing innovation
and continued focus on high service levels.
Adjusted operating profit declined 18 per cent on a constant
currency basis and 19 per cent on a reported basis to £701 million
(2022/23: £861 million). The impact of box and other volume declines
led to a £35 million reduction in adjusted operating profit. The decline
in sales price was mostly offset by a reduction in raw material costs
and cost mitigation actions, which led to an overall decrease in costs,
excluding the impact of volume declines, of £1,059 million versus the
comparable period with a reduction in raw materials costs of
£661 million and cost mitigation initiatives and reduced other costs
totalling £398 million.
Group return on sales was 10.3 per cent (2022/23: 10.5 per cent), and
within our medium-term target range of 10 to 12 per cent reflecting
the robust operating profit.
Basic earnings per share from continuing operations declined 20 per
cent on a constant currency basis to 28.0 pence. Adjusted basic
earnings declined by 22 per cent on a constant currency basis to
33.1pence per share, reflecting the decline in profitability.
Return on average capital employed decreased by 360 bps to 10.7 per
cent reflecting the lower profitability and below our medium-term
target range of 12 to 15 per cent.
Cash flow and net debt
As previously announced, free cash flow
8
was impacted in the period
by a number of one-off items and led to an outflow of £175 million
versus a cash inflow of £354 million in 2022/23. Thecash outflow
included a working capital outflow of £417 million including a net
outflow of £137 million (2022/23: net benefit of £69 million) in
respect of the reversal of prior period cash collateralisation of energy
hedges which we undertook to limit our counterparty exposure. The
underlying working capital outflow was principally driven by lower
paper and energy prices reducing trade payables. In September 2023
we paid the final amount of £103 million for the remaining
outstanding shareholding in Interstate Resources, the majority of
which we acquired in August2017.
Cash generated from operations before adjusting cash items of
£566 million (2022/23: £1,092 million) was used to invest in net capex
of £506 million (2022/23: £526 million).
Cash conversion
7,8
, as defined in our financial KPIs (note 32) was
39per cent (2022/23: 101 per cent), below our target of being at or
above 100 per cent.
Net debt as at 30 April 2024 was £2,230 million (30 April 2023:
£1,636 million), principally due to the increased working capital
outflow and capital expenditure described above. Our net debt/
EBITDA
6
ratio (calculated in accordance with our banking covenant
requirements) is 2.1 times (2022/23: 1.3 times), substantially below
our banking covenant of 3.75 times and just above our medium-term
target of at or below 2.0 times. The Group remains fully committed to
maintaining its investment grade credit rating.
Annual Report 2024 dssmith.com 39
Strategic Report Governance Financial Statements
Leading the way in sustainability
Sustainability has been at the heart of our business for many years
aswe have developed and grown into a solely fibre-based corrugated
packaging business and have built our Now & Next Sustainability
Strategy around ambitious near and long-term targets that confirm
our commitment to the Circular Economy and our Purpose of
Redefining Packaging for a Changing World.
Replacing one billion units of plastic by 2025 was one of these targets
and we are proud to have achieved this target 16 months ahead of
schedule. We have replaced over 1.2 billion units of plastic with a
range of new and innovative fibre-based solutions. Everyday plastic
items that have been replaced on supermarket shelves include
ready-meal trays, fruit and vegetable punnets, plastic carriers and
shrink-wrap that is commonly found on soft drink bottles.
As well as supporting our customers’ sustainability challenges we also
continue to make good progress in delivering against our own
sustainability targets. We have reduced our total greenhouse gas
(GHG) emissions by 5 per cent in the year (19 per cent compared to
2019), strengthened our human rights due diligence having achieved
our target to roll out Sedex SAQs (Supplier Ethical Data Exchange
Self-Assessment Questionnaire) to all sites and maintained 100 per
cent of our sites engaging in community activities.
We are delighted that our progress on climate change was recently
recognised with our CDP A List position (achieving A grade for Climate
Change, alongside A- for Forests and Water Security) with continuing
high ratings from EcoVadis, MSCI, S&P Global and Sustainalytics.
Dividend
The Board considers the dividend to be an extremely important
component of shareholder returns. In June, we announced a final
dividend of 12.0p per share, taking the total dividend for this year to
18.0 pence per share, in line with 2022/23.
Subject to approval of shareholders at the AGM to be held on
3 September 2024, the final dividend will be paid on 4 October 2024
to shareholders on the register at the close of business on
6 September 2024.
Our medium-term targets and key
performanceindicators
We measure our performance according to both our financial and
non-financial medium-term targets and key performance indicators.
Performance against our financial key performance indicators and
medium-term targets has been described above.
Non-financial key performance indicators
DS Smith is committed to providing all employees with a safe and
productive working environment. We are pleased, once again,
toreport improvements in our safety record, with our accident
frequency rate (defined as the number of lost time accidents per
million hours worked) reducing by a further 9 per cent to 1.65,
reflecting our ongoing commitment to best practice in health and
safety. We are proud that 262 out of a total of 325 reporting sites
achieved our target of zero accidents this year and we continue to
strive for zero accidents for the Group as a whole.
In the year we achieved a good performance in our customer service
measure of OTIF (on-time, in-full) deliveries at 96 per cent, maintaining
the same level as the prior year (96 per cent). Management remains
fully committed to our target of 97 per cent on-time, in-full deliveries
and the highest standards of service, quality and innovation to all our
customers and we will continue to strive to meet the demanding
standards our customers expect.
Combination with International Paper
DS Smith is a high-quality business with an excellent customer focus
and exceptional people and this has been recognised by the strong
interest we have seen in the Company.
In April the boards of International Paper Company and DS Smith
recommended an all-share combination of International Paper with
DS Smith. The combination will bring together complementary
businesses to create a truly global sustainable packaging solutions
leader, with industry leading positions in two of the most attractive
geographies of Europe and North America. The combined business will
enhance our global proposition to customers, create opportunities for
colleagues and drive value for shareholders who can remain fully
invested in such an exciting business. Both parties are working
together to satisfy the offer conditions as described in the rule
2.7announcement on 16 April 2024 and bring about the successful
completion of the recommended all-share combination.
Further details on the proposed transaction can be found
at www.dssmith.com
40
Operating review continued
Operating review
Unless otherwise stated, all commentary and comparable analysis in
the Overview and Operating review relates to the continuing
operations of the Group, on a constant currency basis.
Group
Year ended
30 April 2024
Year ended
30 April 2023
Change
– reported
Change
– constant
currency
Revenue £6,822m £8,221m (17%) (16%)
Adjusted
operating profit
1
£701m £861m (19%) (18%)
Operating profit £604m £661m (18%) (17%)
Revenue declined 16 per cent due to lower box volumes and lower
selling prices for both paper and packaging as well as lower recyclate
and energy sales. Adjusted operating profit declined 18 per cent due
to the impact of revenue decline partly offset by a reduction in raw
material costs and cost mitigation actions.
Northern Europe
Year ended
30 April 2024
Year ended
30 April 2023
Change
– reported
Change
– constant
currency
Revenue £2,598m £3,132m (17%) (16%)
Adjusted
operatingprofit
1
£199m £212m (6%) (5%)
Return on sales
2
7.7% 6.8% 90bps 90bps
In Northern Europe, like for like corrugated box volumes across
the region declined more than the Group average due to a greater
weighting of industrial and e-commerce customers which have seen
the biggest sectoral declines over the year.
Revenues decreased by 16 per cent in the region due to a combination
of the decrease in box volumes, reductions in sales prices for
packaging and externally sold paper as well as volumes of recycled
fibre. Adjusted operating profit decreased less than revenue, with
return on sales increasing to 7.7 per cent, reflecting resilient pricing in
packaging, due to a higher proportion of indexed pricing, and benefits
from restructuring announced in 2022/23.
Southern Europe
Year ended
30 April 2024
Year ended
30 April 2023
Change
– reported
Change
– constant
currency
Revenue £2,532m £3,150m (20%) (19%)
Adjusted
operatingprofit
1
£373m £501m (26%) (25%)
Return on sales
2
14.7% 15.9% (120bps) (120bps)
Southern Europe saw a like for like decline in box volumes approximately
in line with the Group average with France weaker than Iberia and
Italy, reflecting the weaker overall consumer market in France.
Revenue declined 19 per cent, due to the impact of decreases in
both packaging and external paper pricing. Adjusted operating profit
declined by 25 per cent compared to the prior period, due largely
to the decrease in the volume and price of paper sold externally,
although margins continued to remain significantly above the Group’s
target range.
Eastern Europe
Year ended
30 April 2024
Year ended
30 April 2023
Change
– reported
Change
– constant
currency
Revenue £1,106m £1,275m (13%) (13%)
Adjusted
operatingprofit
1
£72m £76m (5%) (4%)
Return on sales
2
6.5% 6.0% 50bps 60bps
Like for like corrugated box volumes in Eastern Europe grew over the
period, with revenues declining 13 per cent, principally reflecting
reduced paper and packaging prices. Return on sales improved during
the period, as adjusted operating profit was down only slightly as the
lower pricing was partially offset by lower raw material costs and
efficiency improvements, together with costs of £19 million relating
to the decision to close our Trakia paper mill in Bulgaria in the prior
year comparative.
Annual Report 2024 dssmith.com 41
Strategic Report Governance Financial Statements
North America
Year ended
30 April 2024
Year ended
30 April 2023
Change
– reported
Change
– constant
currency
Revenue £586m £664m (12%) (8%)
Adjusted operating
profit
1
£57m £72m (21%) (16%)
Return on sales
2
9.7% 10.8% (110bps) (100bps)
Like for like packaging volumes grew during the period, reflecting
excellent customer traction and our recent investments in additional
capacity. However, revenue in the region declined, reflecting pricing
reductions in paper and packaging.
Adjusted operating profit declined by 16 per cent, principally
reflecting the decline in paper profitability as the region produces
more paper than it currently utilises for our own packaging production
and hence retains some exposure to the paper export market. Despite
this, return on sales margins remain attractive and the expected
continued volume growth will reduce this exposure going forward.
Outlook
The positive trends in packaging volumes from the second half of last
year have continued into the current financial year and we remain
focused on pricing, operational efficiency and tight cost control. The
increasing demand is resulting in higher paper and other input costs,
including OCC. We anticipate this will be reflected in packaging price
rises, with the benefits expected to be weighted to the second half of
our current financial year and provide further momentum into FY26.
Notes to the financial tables
Note 32 explains the use of non-GAAP performance measures. These measures
are used both internally and externally to evaluate business performance, as a
key constituent of the Group’s planning process, and they are applied in the
Group’s financial and debt covenants, as well as establishing the targets against
which compensation is determined. Reporting of non-GAAP measures alongside
reported measures is considered useful to enable investors to understand how
management evaluates performance and value creation internally, enabling
them to track the Group’s adjusted performance and the key business drivers
which underpin it over time. Reported results are presented in the Consolidated
Income Statement and reconciliations to adjusted results are presented on
the face of the Consolidated Income Statement, in note 2, note 4, note 8,
andnote32.
1. Adjusted operating profit (adjusted EBITA) is before adjusting items (as set
out in note 4) and amortisation of £98 million.
2. Operating profit before amortisation and adjusting items as percentage
ofrevenue.
3. Operating profit before amortisation and adjusting items as a percentage of
the average monthly capital employed over the previous 12-month period.
Average capital employed includes property, plant and equipment,
right-of-use assets, intangible assets (including goodwill), working capital,
provisions, capital debtors/creditors, biological assets and assets/liabilities
held for sale.
4. Corrugated box volumes on a 12-month basis (based on area (m
2
) of
corrugated box sold), adjusted for working days, on an organic basis.
5. GDP growth for rolling 12 months (year-on-year) for the countries in
which DS Smith operates, weighted by our sales by country = 0.8%.
Source: Eurostat (15 May 2024) and ONS.
6. EBITDA being operating profit before adjusting items, depreciation and
amortisation and adjusted for the full-year effect of acquisitions and
disposals in the period. Net debt is calculated at average exchange rates as
opposed to closing rates. Ratio as calculated in accordance with bank
covenants. See note 32 on non-GAAP measures for reconciliation.
7. Free cash flow before tax, net interest, growth capital expenditure, pension
payments and adjusting cash flows as a percentage of operating profit before
amortisation and adjusting items.
8. Free cash flow is the net movement on debt before cash outflow for
adjusting items, dividends paid, acquisitions and divestment of subsidiary
businesses (including borrowings acquired) and proceeds from issue of
sharecapital.
42
Operating review continued
Overview
2023/24 has seen the Group deliver robust adjusted operating profit
in the context of a challenging macroeconomic environment,
characterised by soft demand, low paper prices and higher inflation
impacting input costs. We continued to be responsive to our
customers’ needs and invested in our strong relationships, while
delivering innovative packaging solutions.
The business saw revenue decline by 17 per cent (constant currency
16 per cent) as the market price of paper and packaging reduced,
coupled with a marginal decline in packaging volumes of (2 per cent).
Adjusted operating profit reduced by 19 per cent (constant currency
18 per cent) from the record level recorded in the previous year,
reflecting the enormous effort by our colleagues across the business
to offset the external headwinds.
Whilst the above mentioned efforts ensured that the return
on sales of the business remained relatively flat at 10.3 per cent
(2022/23: 10.5 per cent) and within our target range, return on
average capital employed (ROACE) for the year was 10.7 per cent
(2022/23: 14.3 per cent), which was below the target range of 12 to
15 per cent. The headline results can be summarised as:
• Organic corrugated box volume reduced by 2 per cent (2022/23:
adecrease of 5.8 per cent).
• Revenue decreased 16 per cent on a constant currency and 17 per
cent on a reported basis to £6,822 million (2022/23: £8,221 million).
• Adjusted operating profit of £701 million, a decline of 18 per cent
on a constant currency basis and 19 per cent on a reported basis
(2022/23: £861 million).
• 18 per cent reduction in operating profit to £604 million on a
reported basis; 16 per cent decrease on a constant currency basis
(2022/23: £733 million).
• Statutory profit before tax of £503 million, a 23 per cent reduction
on a constant currency basis and 24 per cent decrease on a reported
basis (2022/23: £661 million).
• Adjusted return on sales at 10.3 per cent (2022/23: 10.5 per cent).
• Adjusted return on average capital employed of 10.7 per cent
(2022/23: 14.3 per cent).
• Net debt to EBITDA ratio of 2.1 times (2022/23: 1.3 times).
• Cash conversion 39 per cent (2022/23: 101 per cent).
Unless otherwise stated, the commentary below references the
continuing operations of the Group.
Non-GAAP performance measures
The Group presents non-GAAP measures alongside reported
measures, in order to provide a balanced and comparable view of the
Group’s overall performance and position. Non-GAAP performance
measures eliminate amortisation and unusual or non-operational
items that may obscure understanding of the key trends and
performance. These measures are used both internally and externally
to evaluate business performance, as a key constituent of the Group’s
planning process, they are applied in the Group’s financial and debt
covenants, as well as comprising targets against which compensation
is determined. Amortisation relates primarily to customer contracts
and relationships arising from business combinations. Unusual or
non-operational items include business disposals, restructuring,
acquisition related and integration costs and impairments, and are
referred to as adjusting items.
“Robust profitability in
a challenging market”.
Richard Pike
Group Finance Director
Financial review
Annual Report 2024 dssmith.com 43
Strategic Report Governance Financial Statements
Reporting of non-GAAP measures alongside statutory measures is
considered useful by investors to understand how management
evaluates performance and value creation, enabling them to track the
Group’s performance and the key business drivers which underpin it
and the basis on which to anticipate future prospects.
Note 32 explains further the use of non-GAAP performance measures
and provides reconciliations as appropriate to information derived
directly from the financial statements. Where a non-GAAP measure is
referred to in the review, the equivalent measure stemming directly
from the financial statements (if available and appropriate) is also
referred to.
Trading results
Revenue decreased by 17 per cent on a reported basis to
£6,822 million (2022/23: £8,221 million). Packaging prices continued
to fall across the year, reflecting ongoing soft demand, and paper
selling prices remained weak through the year before starting to
recover as we approached year end. Lower selling prices reduced
revenue by £1,173 million, with packaging and other volume
reductions reducing revenue by a further £142 million.
Reported revenues are subject to foreign currency translation effects.
In the year, the euro accounted for 60 per cent of Group revenue.
Assuch, the movements of the euro against sterling during the year
constituted the majority of the £84 million of adverse foreign
exchange translation impact. On a constant currency basis, revenues
decreased by 16 per cent.
Corrugated box volumes reduced by 2 per cent (2022/23: 5.8 per cent
reduction) as a result of softness in demand in our end markets.
However, there was improvement in the demand environment across
the year and in the second half we saw a marginal improvement over
the prior year comparative period as sentiment began to improve.
Adjusted operating profit of £701 million on a reported basis is a
decrease of 19 per cent (2022/23: £861 million). This is largely
attributable to reducing prices (£1,173 million) and volume reduction
of £35 million, offset by input cost reductions of £1,059 million.
Constant currency decline was 18 per cent with adverse foreign
exchange translation impact to adjusted operating profit of
£11 million. As the Group exited the year, market prices began to rise
following the price reductions experienced over the past year.
Operating profit at £604 million is a decline of 16 per cent on a
constant currency basis and 18 per cent on a reported basis
(2022/23: £733 million), as lower amortisation and adjusting items
offset the decline in adjusted operating profit.
On a reported basis, depreciation increased to £323 million
(2022/23: £312 million), reflective of the continued investments
in the Group’s operating assets.
Amortisation decreased to £98 million (2022/23: £113 million) due to
the full year effect of intangibles arising on earlier acquisitions
completing their amortisation term.
The key measure of return on average capital employed reduced by
360 basis points to 10.7 per cent (2022/23: 14.3 per cent), due to the
reduction in adjusted operating profit and higher capital employed.
This performance is below the Group’s medium-term target of 12 to
15per cent.
The Group’s adjusted return on sales was broadly comparable to the
prior year with a 20 basis points reduction to 10.3 per cent
(2022/23: 10.5 per cent), reflecting the robustness of our business
model and continued focus on costs. It remains within the medium-
term target of 10 to 12 per cent.
Income statement – from continuing operations
(unless otherwise stated)
2023/24
£m
2022/23
£m
Revenue 6,822 8,221
Adjusted operating profit
1
701 861
Operating profit 604 733
Adjusted return on sales
1
10.3% 10.5%
Adjusted net financing costs
1
(103) (74)
Share of profit of equity-accounted
investments, net of tax 2 2
Profit before income tax 503 661
Adjusted profit before income tax
1
600 789
Adjusted income tax expense
1
(145) (197)
Adjusted earnings
1
455 592
Profit from discontinued operations, net of tax 11
Adjusted basic earnings per share
1
33.1p 43.0p
Profit for the year attributable to
owners of the parent (including
discontinued operations) 385 502
Basic earnings per share from continuing and
discontinued operations 28.0p 36.6p
Basic earnings per share from
continuingoperations 28.0p 35.8p
1. Adjusted to exclude amortisation and adjusting items (see note 32).
44
Financial review continued
Adjusting items
Adjusting items before tax and financing costs were £1 million
(2022/23: £15 million loss) which relates to a gain from the disposal of
the Group’s associate in Ukraine of £10 million offset by acquisition
and other adjusting costs of £9 million.
Interest, tax and earnings per share
Net finance costs were £103 million (2022/23: £74 million). The
increase of £29 million over the prior year is a function of the higher
interest rate environment coupled with the refinancing of prior year
bonds. The employment benefit net finance expense of £1 million is in
line with the prior year.
The share of profits of equity-accounted investments remained at
£2 million (2022/23: £2 million).
Profit before tax decreased by 24 per cent on a reported basis to
£503 million (2022/23: £661 million), driven by the decrease in
operating profit and increased financing costs offset by a reduction
in amortisation. Adjusted profit before tax of £600 million
(2022/23: £789 million) decreased by 24 per cent on a reported basis,
again due to the decrease in the underlying adjusted operating profit.
The tax charge of £118 million (2022/23: £169 million) reflects the
lower profits versus the prior year. The Group’s effective tax rate on
adjusted profit, excluding amortisation, adjusting items and
associates, was 24.2 per cent (2022/23: 25.0 per cent).
Reported profit after tax, amortisation and adjusting items for
continuing and discontinued operations was £385 million
(2022/23: £503 million). The decrease in operating profit led to a
reduction of 22 per cent in basic earnings per share from continuing
operations on a reported basis to 28.0 pence (2022/23: 35.8 pence),
with adjusted earnings per share from continuing operations 23 per
cent lower at 33.1 pence (2022/23: 43.0 pence) on a reported basis,
22 per cent lower on a constant currency basis.
Acquisitions and disposals
In recent years, the Group’s strategy has focused on organic growth in
order to support growth with our major customers.
During the year the Group acquired Bosis d.o.o., a high-quality
packaging company in Serbia, for €20 million (net of cash and cash
equivalents), complementing the Group’s existing regional packaging
activity in Eastern Europe.
The acquisition of the final 10 per cent holding in Interstate Resources
was completed in the year with a final payment of $129 million.
Cash flow
Reported net debt of £2,230 million (30 April 2023: £1,636 million)
has increased from the prior year, with a reduction in EBITDA from the
record performance in the previous year and a net working capital
outflow of £417 million, due largely to the decline in energy prices and
paper raw material purchase prices during the financial year, net
capital expenditure of £506 million and higher tax payments. The
working capital outflows were mitigated by maintaining focus on cash
management, in particular cash collection and inventory
management, but these were insufficient to offset the commodity
price moves. In order to manage counterparty credit risk of the Group’s
energy derivatives, the Group agreed resets of certain derivatives
with the counterparties to reduce the risk. The unwind in the current
year of prior year resets contributed to a net working capital outflow
of £137 million, compared to an inflow of £69 million in the prior year.
Trade receivables factoring is £9 million higher than April 2023 at
£369 million. This remains a reduction of some 34 per cent from the
peak balance of £559 million in 2018. Going forward the Group
expects to continue to sell high credit quality receivables under this
programme within the range £350-400 million outstanding at any
one time. Such arrangements enable the Group to optimise its
working capital position and reduces the quantum of early payment
discounts given.
Net capital expenditure decreased by £20 million to £506 million in
the year. The Group continued to focus on growth and efficiency
capital projects, the most significant elements of which related to the
replacement paper making line in Italy, the replacement recovery
boiler in Portugal and the new biomass boiler in France. Proceeds from
the disposal of property, plant and equipment were £41 million
(2022/23: £19 million), which included assets becoming surplus as a
result of the prior year restructuring, including UK recycling sites, the
Berlin packaging site and other non-core assets.
In the year, the remaining cash payment of $129 million occurred
relating to the acquisition cost of the Interstate Resources acquisition
following the settlement of the put option, and the acquisition of
Bosis d.o.o. in Serbia was completed for €20 million.
Tax paid of £169 million is £33 million higher than the prior year,
driven by increasing levels of profit in the prior year.
Net interest payments of £66 million decreased by £10 million with
higher interest costs being offset by the timing of payments on the
Eurobond that was issued during the year.
Cash outflows associated with adjusting items decreased by
£3 million to £11 million as programmes which commenced in
previous years concluded.
Disposal proceeds of £5 million related to the first tranche of the cash
flow from the sale of the Group’s associate in Ukraine.
Annual Report 2024 dssmith.com 45
Strategic Report Governance Financial Statements
Cash generated from operations before adjusting cash items was an
inflow of £566 million (2022/23: £1,092 million inflow). Net cash flow
was an outflow of £543 million, a £592 million decrease on the prior
year. This reflects the effect of working capital outflows in the current
year, increased tax payments and the outflow relating to the payment
of the put option for the final consideration of Interstate Resources.
Cash conversion at 39 per cent was lower than the previous year
(2022/23: 101 per cent) due to the lower adjusted operating profit
and cash outflow relating to working capital.
Cash flow from continuing operations
2023/24
£m
2022/23
£m
Cash generated from operations before
adjusting cash items 566 1,092
Capital expenditure (net of disposal of
fixedassets) (506) (526)
Tax paid (169) (136)
Net interest paid (66) (76)
Free cash flow (175) 354
Cash outflow for adjusting items (11) (14)
Dividends (247) (289)
Acquisitions and disposals of businesses,
net of cash and cash equivalents (108) –
Other (2) (2)
Net cash flow (543) 49
Issue of share capital 7 4
Foreign exchange, fair value and other
movements (58) (205)
Net debt movement (594) (152)
Opening net debt (1,636) (1,484)
Closing net debt (2,230) (1,636)
Statement of financial position
At 30 April 2024, shareholder funds were £3,949 million, a decrease
from £4,084 million in the prior year. The key movements are profit
attributable to shareholders was £385 million (2022/23: £502 million,
together with an actuarial loss on employee benefits of £2 million
(2022/23: £11 million gain) and foreign currency translation loss of
£147 million (2022/23: gain of £194 million), with a net reduction in
the cash flow hedge reserve of £211 million (2022/23: £645 million
reduction) driven by the significant reduction in the underlying value
of our commodity hedge positions as energy prices fell. Dividends paid
in the year were £247 million (2022/23: £289 million).
Equity attributable to non-controlling interests was £nil
(2022/23: £3 million positive).
The Group’s banking covenants stipulate the methodology upon
which the net debt to adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA) ratio is to be calculated. The
effects of IFRS 16 Leases, adopted since 1 May 2019, are excluded by
the banks from the ratio’s determination. The ratio has increased to
2.1 times, with a reduction in adjusted EBITDA and an increase in
adjusted net debt. This represents an increase from the previous
year-end position of 1.3 times. The ratio remains well inside the
covenant requirements, which across all banking debt is 3.75 times.
The Group’s publicly traded euro and sterling bonds are not subject to
any financial covenants. The bonds are, however, subject to a coupon
step up of 125 basis points for any period the Group falls below an
investment grade credit rating.
The covenant calculations also exclude income statement items
identified as adjusting by the Group and any interest arising from the
defined benefit pension schemes. At 30 April 2024, the Group has
substantial headroom under its covenants, with the future outlook
assessed as part of the annual going concern review. The Group’s
investment grade credit rating from Standard & Poor’s remains stable
at investment grade, which takes into account all the items excluded
from covenant calculations and working capital.
Statement of financial position
30 April
2024
£m
30 April
2023
£m
Intangible assets 2,811 2,927
Property, plant and equipment 3,743 3,529
Right-of-use assets 237 224
Inventories 591 619
Trade and other receivables 1,134 1,257
Cash and cash equivalents 499 472
Derivative financial instruments 79 319
Employee benefits 50 24
Other 110 86
Total assets 9,254 9,457
Bank overdrafts (89) (104)
Borrowings (2,437) (1,816)
Trade and other payables (1,850) (2,287)
Provisions (68) (65)
Employee benefits (82) (79)
Lease liabilities (239) (224)
Derivative financial instruments (193) (368)
Other (347) (427)
Total liabilities (5,305) (5,370)
Net assets 3,949 4,087
Net debt 2,230 1,636
Net debt to EBITDA ratio 2.1x 1.3x
46
Financial review continued
At 30 April 2024, the committed borrowing facilities had a weighted
average maturity of 2.7 years (30 April 2023: 2.4 years). Additional
detail on these facilities is provided below. Total gross borrowings at
30 April 2024 were £2,437 million (30 April 2023: £1,816 million). The
committed borrowing facilities described do not include the
£427 million of committed factoring facilities, which allow the sale of
receivables without recourse. Given the committed nature of these
facilities, they fully protect the Group from any short-term liquidity
risks which may arise from volatility in financial markets.
As described above, the Group continues to sell trade receivables
without recourse, a process by which the trade receivables balance
sold is de-recognised, with proceeds then presented within operating
cash flows.
The Group maintains a €1 billion Euro Commercial Paper Programme.
There was no issued commercial paper at 30 April 2024.
Facilities Currency
Maturity
date
£m
equivalent
Syndicated RCF 2018 Various 2024-25 1,400
Euro medium-term notes EUR 2024-30 2,182
Euro RCF 2020 EUR 2025 51
Sterling bond medium-term note GBP 2029 250
Euro term loan EUR 2025 9
Committed facilities at
30 April2024 3,892
Impairment
The net book value of goodwill and other intangibles at 30 April 2024
was £2,811 million (30 April 2023: £2,927 million).
IAS 36 Impairment of Assets requires annual testing of goodwill and
other intangible assets, as well as an assessment of any other assets
for which there may be indicators of impairment. As part of this
testing, the Group compares the carrying amount of the assets
subject to testing with the higher of their net realisable value and
value-in-use to identify whether any impairment exists. The asset
or group of assets’ value-in-use is determined by discounting the
future cash flows they expect to generate from the basis of the
Group’s weighted average cost of capital (WACC) of 9.5 per cent
(2022/23: 9.5per cent), plus a blended country risk premium for each
group of assets. Asset values were tested at 30 April 2024, with no
impairment identified as a result of the testing performed.
Energy costs
Production facilities, in particular paper mills, are energy intensive
resulting in significant costs for the Group. In 2023/24, costs for gas,
electricity and other fuels, net of periodic local incentives, were
£601 million (2022/23: £669 million). The year saw significant
reductions in prices in the first half year, which eased into the second
half, with energy costs for the first half year of £309 million
decreasing to £292 million in the second half year (2022/23: H1
£400 million, H2 £269 million). The Group’s energy sales reduced
compared with the prior year. The Group continues to invest in energy
efficiency projects and limits the exposure to volatile energy pricing
by hedging energy costs with suppliers and financial institutions,
managed by the Group’s Energy Procurement team.
Capital structure and treasury management
In addition to its trading cash flow, the Group finances its operations
using a combination of borrowings, property and equipment leases,
shareholders’ equity and, where appropriate, disposals of non-core
businesses. The Group’s funding strategy is to achieve a capital
structure that provides an appropriate cost of capital whilst providing
the desired flexibility in short and medium-term funding to enable the
execution of material investments or acquisitions, as required.
The Group aims to maintain a strong balance sheet enabling
significant headroom within the financial covenants and to ensure
continuity of funding by having a range of maturities from a variety of
sources. The Group has an investment grade rating from Standard &
Poor’s of BBB–, with a positive outlook.
The Group’s overarching treasury objective is to ensure sufficient
funds are available for the Group to execute its strategy and to
manage the financial risks to which the Group is exposed.
In November 2018, the Group signed a £1.4 billion five-year
committed syndicated revolving credit facility (RCF) with its core
banks. The second extension option was exercised in November 2020.
A further extension was agreed in June 2024, such that the new
facility of £1.25 billion matures in May 2027.
In July 2023 the Group issued two inaugural Green Bonds, to a value of
€1.5 billion (€850 million due 2027 and €650 million due 27 July
2030), significantly lengthening our maturity profile and securing
long-term committed financing for the business. The net proceeds of
the issuance will be used to finance or refinance eligible activities in
accordance with DS Smith’s Green Finance Framework. The undrawn
£500 million term loan facility signed in April 2023 was cancelled upon
issuance of the Green Bonds.
Available cash and debt facilities are reviewed regularly to ensure
sufficient funds are available to support the Group’s activities. At
30 April 2024, the Group’s committed facilities totalled £3.9 billion, of
which £1.5 billion remained undrawn and £3.5 billion matures beyond
one year or more. Undrawn committed borrowing facilities are
maintained to provide protection against refinancing risk.
Annual Report 2024 dssmith.com 47
Strategic Report Governance Financial Statements
Pensions
The Group’s primary funded defined benefit pension scheme, based in
the UK, is closed to future accrual. There are a variety of other
post-retirement and employee benefit schemes operated locally for
overseas operations, and an additional unfunded scheme in the UK
relating to three former directors which is secured against assets of
the UK business. In accordance with IAS 19 Employee Benefits
(Revised 2011), the Group is required to make assumptions
surrounding rates of inflation, discount rates and current and future
life expectancies, amongst others, which could materially impact the
value of any scheme surplus or liability. A material revaluation of the
relevant assets and liabilities could result in a change to the cost to
fund the scheme liabilities.
The assumptions applied are subject to periodic review. A summary of
the balance sheet position at 30 April is as follows:
30 April
2024
£m
30 April
2023
£m
Aggregate gross assets of schemes 820 848
Aggregate gross liabilities of schemes (852) (903)
Balance sheet deficit (32) (55)
Deferred tax assets 7 14
Net balance sheet deficit (25) (41)
The net deficit has decreased versus prior year mainly due to an
increase in discount rate assumptions at 30 April 2024 partially offset
by a fall in the asset valuations.
The 2022 triennial valuation of the main UK scheme incorporated
updates to underlying scheme assumptions, including demographic
and life expectancy rates, which, along with updates surrounding
mortality and proportion married assumptions and future
improvements, resulted in a net decrease of c. 9 per cent in the
valuation of the scheme liabilities. No changes were made to the
previously approved funding plan following the triennial valuation.
Total cash contributions paid into the Group pension schemes,
reported within cash generated from operations in the cash flow,
were £24 million in 2023/24 (2022/23: £25 million), which primarily
constitute the agreed contributions under the UK defined benefit
scheme deficit recovery plan.
48
Financial review continued
Risk management:
Protecting for tomorrow
Our Group risk policy continues to provide the framework for effective
governance forums from Board and Audit Committee level down to
operational teams to ensure there is a common understanding of risk
management practices across all parts of the Group. This is fully
integrated with our annual corporate planning process and reflected
in regular management meetings and performance monitoring. We
use these practices to evaluate those risks that we believe we have
the capacity, know-how and experience to manage, or to understand
and tolerate those risks that we cannot influence. We actively target
potential opportunities for growth and development by considering
the risks and take appropriate action to ensure confidence that our
chosen strategy will deliver successful and sustainable results.
During financial year 2023/24 we continued to manage our business
by recognising the future uncertainty and sought ways to leverage
our investments in our key defences and mitigations across our
12principal risks by reinforcing our skills capabilities and resources
across our business networks. Our procedures helped to identify
and assess key emerging risk themes that have the potential to
materially disrupt our plans. These are set out in our emerging risk
summary on page 56. The result of these activities in protecting our
business for today and tomorrow is summarised in both our Chair’s
statement on pages 4 and 5 and our Group Chief Executive’s review on
pages 6 and 7.
Enterprise risk management framework, policies, standards and governance
12
PRINCIPAL
RISKS
LINES OF
ASSURANCE
Organisation
capability
Ongoing
Divisions & Regions
Ongoing
Group functions
Quarterly
Group Compliance
Committee
Ongoing
Group Risk
Monthly
Group Operating
Committee
Ongoing
Internal Audit
Ongoing
Health, Safety, Environment
and Sustainability Committee
Every 2 months
Group Strategy Committee
Quarterly
Audit Committee
Oversight of our principal risks
Shopping
habits
Substitution
of fibre
packaging
Paper/fibre
price volatility
Macroeconomic
impacts
Demand
volatility and
capacity
management
Regulation
and
governance
Security of
paper/fibre
supply
Cyber
Disruptive
market
players
Our risk perspective
The Group’s investment in business growth to
support its ambition to be the leading supplier of
sustainable packaging solutions has coincided with a
prolonged disruptive period meaning that the Group
is faced with a number of key risks from the normal
course of business that may be exacerbated by
extraordinary levels of turbulence across global,
regional and country events that could have a
noticeable impact on its reputation, operations and
financial performance.
A number of challenges we referred to in our 2023
Annual Report continued to influence our risk outlook
(such as inflation, cost of living crises, supply chain,
the competitive landscape, geopolitical tensions and
macroeconomic uncertainty). During the year we
anticipated that some risks are likely to be more
severe and more likely (such as supply chain
vulnerabilities, cyber events and increasing scrutiny
and regulation). Our Group has built a robust business
model over the years that has shown that these
familiar and more invasive risks can be managed
through both disciplined allocation of resources,
unwavering attention to meeting the needs of our
customers and ensuring that key decisions are made
at the right level of the organisation with the right
level of risk information to ensure the resilience of
the Group’s business strategy, key priorities and
delivery on our targets for today and tomorrow.
Sustainability
commitments
Digitisation
Operational
management
1
ST
Governance, Risk,
Audit & Compliance
support functions
2
ND
Policies & procedures
3
RD
Internal Audit & control
reviews
4
TH
External assurance
5
TH
TOP DOWNBOTTOM UP
RESILIENCE
Annual Report 2024 dssmith.com 49
Strategic Report Governance Financial Statements
Mitigating and/or preventing the impact of a risk affecting our Corporate Plan delivery remains a cornerstone of our executive and operational
management team efforts. Our risk heat map provides a summary of how we assess and evaluate the relationship between the likelihood and
severity of our principal risks and uncertainties, taking into account the effectiveness of current mitigations, and informs where the Group
should prioritise investments to manage them.
Annual risk reporting cycle
Board
Internal
Audit
Health, Safety,
Environment and
Sustainability
Committee
Group
Compliance
Committee
Group functions
Audit
Committee
(see pages 100-105)
Group
Risk
Group
Strategy
Committee
Divisions &
Regions
Reviews Group risks, viability
and risk management
effectiveness including go
forward actions to implement
Reviews its programme
and key control risks
Provides feedback and
guidance to divisions and
Group functions on risk
assessments in preparation
for the Corporate
Planprocess
Update risk assessments and integrate into their Corporate Plans
Update risk assessments and integrate into their Corporate Plans
Produce year-end review of principal and key business risks and
reconsider effectiveness of risk management actions
implemented
Produce year-end review of principal and key business risks and
reconsider effectiveness of risk management actions
implemented
Considers response
to specifically selected risks
Provides ongoing feedback to divisions and Group functions
on risk assessments for the Corporate Plan, principal risks
and emerging risks
Updates review of Internal
Audit programme and key
control risks
Undertakes the year-end
assessment of Internal Audit
needs and presents a plan for
the year ahead
Evaluation on principal
risks review and emerging
risks validation
Reviews the progress of risk
management in relation to
the Corporate Plan, reviews
and approves completed
Internal Audit reports and
reviews status of programme
which includes the Group
ethics report
Further updates and
approves completed Internal
Audit reports and ongoing
Internal Audit work
Oversight and review of the principal risks effectiveness and
uncertainties, risk appetite and tolerance and business viability as
part of Corporate Plan discussions which is delegated to the Audit
Committee
Reviews Group and divisional
risk reports, annual Internal
Audit needs assessment,
including audit plans and
recommendations, and the
Group ethics report
Reviews a selection of Group
function and/or divisional
risks including ‘deep dive’
compliance risk discussions
Reviews a selection of Group
function and/or divisional risks
including an update on TCFD
requirements and improvements
to due diligence on modern
slavery in the supply chain
Reviews a selection of
Group function and/or
divisional risks
Reviews a selection of
Group function and/or
divisional risks including
product safety complaints
Undertakes an assessment of the
Group’s principal and emerging risks against the Corporate Plan
Reviews sustainability performance, strategy and policies, monitorscompliance with responsibilities and commitments and approves
strategic decisions. Circularity, carbon water and waste, peopleand communities, and nature steering committees all contribute to the HSES
Committee which feeds in to the Group Strategy Committee and Audit Committee
Undertakes a review and assessment of the
Group’s principal and emerging risks six months post the
CorporatePlan review
MAY – JUL AUG – OCT NOV – JAN FEB – APR
50
Risk management continued
Climate-related risks and opportunities and principal risks
See pages 70 to 73
Climate-related risk Type Link to principal risk
Transition
Increased spend on
carbontaxes
Policy and legal • Regulation and governance
• Paper/fibre price volatility
Increased cost of raw
materials or threat to supply
Market • Security of paper/fibre supply
• Paper/fibre price volatility
Physical
Increased severity of extreme
weather events
Acute physical • Security of paper/fibre supply
• Paper/fibre price volatility
Increased likelihood
of water stress
Chronic physical • Regulation and governance
Climate-related opportunity
Growth in demand for
sustainable packaging
Products and services • Shopping habits
• Demand volatility
• Organisation capability
• Fibre substitution
Greater resource efficiency Resource efficiency • Paper/fibre price volatility
• Sustainability
Use of lower-emission
energysources
Energy source • Sustainability
We consider climate change a systemic
risk influencing both negatively and
positively on the principal risks and
uncertainties faced when executing the
Group’s Corporate Plan.
By prioritising climate change risk and
seizing opportunities we can maintain
our competitiveness and ensure
long-term sustainability objectives,
goals and outcomes.
Climate change can affect the availability
of raw materials and production
processes, while natural disasters can
disrupt supply chains and damage
infrastructure. It can also enhance the
focus and opportunities presented to
DSSmith from investment into
alternatives, innovation and focus
onregulation.
Our current view on the systemic
implications of climate change are
presented in the table below.
Principal risks heat map
Risk likelihood (with mitigation)
Risk severity (with mitigation)
Macroeconomic
Shopping habits
Paper/fibre
price
Sustainability
Organisation
capability
Digitisation
Security
of supply
Demand
volatility
and capacity
management
Fibre
substitution
Cyber
Regulation/
governance
Disruptive
market players
Bubble colour reflects risk relative priority
highest risk
second level priority
third level priority
Annual Report 2024 dssmith.com 51
Strategic Report Governance Financial Statements
3
3
2
24/25
23/24
22/23
Our principal risks
Our risk universe encompasses a wide range of potential risks that could impact our operations and performance. These are defined and
prioritised into 12 principal risks that we manage on a cyclical basis on a top down and bottom up approach. Our internal alignment and external
validation through the annual risk reporting cycle enable us to make well-informed decisions.
Macroeconomic impacts
24/25
23/24
22/23
1
1
1
Definition
Multiple political/economic factors from
foreign exchange/interest rates to
weakening major economies significantly
impact the level of consumer spend and
customer demand for the Group’s
packagingproducts.
Key defence/mitigations
A robust Corporate Plan process where
macroeconomic trends are evaluated
alongside investments to improve production
cost base, efficiency and deliver other
initiatives to capture sustainable growth
trends in sustainable packaging using
innovation priorities to strengthen resilience.
Focus remains on supplying packaging
quality, service and volume to fast moving
consumer goods (FMCG) customers with
a constant focus on quality, service and
volume growth as these customers tend
to show greatest resilience against
GDPvolatility.
Our dynamic energy hedging strategy over
five-year horizons smooths pricing volatility,
and other developments in our procurement
and logistics flows are helping to evolve our
operating model and maintain resilience.
Link to business strategy
To double our size
and profitability
Opportunity
The Group’s ability to reposition our business
model outside of traditional sources of
supply.
Key risk indicator
Eurozone GDP growth rate.
Risk tolerance
Risk outlook
Paper/fibre price volatility
2
2
3
24/25
23/24
22/23
Definition
Volatile commodity pricing for recovered
paper (including old corrugated cases (OCC))
and containerboard grades can create
significant short-term challenges to capture
appropriate returns by aligning raw material
costs to packaging sales revenues.
Key defence/mitigations
A strategy demonstrating the Group’s
commercial credentials/services in Packaging
to build up box prices regardless of raw
material cost and sell the additional value of
our products, services, innovations,
sustainability credentials and customer
brand benefits.
Strong discipline to maintain cost-efficient,
strategically located and integrated CCM
production and recovered paper sourcing
balanced with external selling strategies of
excess recovered paper (if an excess is
necessary for security of supply). Trading
position through paper sourcing to maximise
integration between internal CCM and
boxplants.
A disciplined approach in managing volume,
margin and stock keeping units through using
technology innovations, performance
packaging and striking a balance between
those contracts indexed and those which are
freely negotiated. Ultimately, supporting
greater resilience with input pricing volatility.
Link to business strategy
To double our size
and profitability
Opportunity
Strengthening our value proposition and the
fibre and efficiency programmes.
Key risk indicator
Paper/recovered fibre market price and box
selling price.
Risk tolerance
Risk outlook
Cyber
3
3
2
24/25
23/24
22/23
Definition
The threat posed to our information or
operational technology from ransomware
and/or a failure to stop/identify
sophisticated malicious cyber intruders on
our IT infrastructure.
Key defence/mitigations
Regular awareness training and testing to
better equip our employees with the
knowledge to identify potential phishing/
other social engineering techniques.
Continued investments in IT security
controls to improve our capability to detect,
respond to and prevent malicious cyber
activity, including hardening of the IT estate
via network segregation between/within IT
and operational technology environments.
Regular improvements in, and testing of, IT
disaster recovery planning through cyber
drills, policies and procedures, including
penetration/vulnerability testing.
Increased expansion of the IT and
operational technology security capabilities
through increased internal resourcing and
external partner support.
Link to business strategy
To double our size
and profitability
Opportunity
Continued investment in a strong cyber
security programme and culture of
awareness to enhance our business
continuity credentials.
Key risk indicator
IT security training effectiveness and
phishing campaign statistics.
Risk tolerance
Risk outlook
Increasing Stable
Risk outlook
Decreasing
AcceptableUnacceptable
Net risk tolerance key
Re-assess
Risk rank change by year key
Principal risk example 1 – highest 12 – lowest
52
Risk management continued
Shopping habits
4
4
12
24/25
23/24
22/23
Definition
We fail to adapt our offer to the pace and
direction of change in consumer spending
across the full retail FMCG spectrum, from the
mega large brands, micro-brands and
omni-channel distribution networks of the
‘big box’ superstores and discounters, to the
rise in e-commerce and importance of
consumers’ values.
Key defence/mitigations
Heavily invested in FMCG and omni-channel
distribution bringing performance packaging,
eco-friendly fibre-based and packaging
innovations to the forefront of our
commercial strategy.
Our Sales, Marketing and Innovation
organisation is supported with a well-located
converting network to ensure that the Group’s
commercial strategy remains agile and aligns
product solutions/services to reflect changing
distribution and consumer preferences
towards circular solutions (including the value
of plastic replacements, point-of-sale
packaging and end-to-end services).
Rethinking and applying a differentiated
service offering to different customer
categories through improved use of
digitisation alongside broader customer
experience solutions (including new
technology platforms, services and tools).
Reinforcing our Trend and Insights &
Marketing teams on understanding customer
and consumer habits, needs and behavioural
changes to inform research and development
options and operational capabilities.
Link to business strategy
To double our size
and profitability
Opportunity
Aligning our investments with consumer
spending patterns to meet consumer
needs with active engagement around
packaging solutions.
Key risk indicator
Revenue and production growth for FMCG
sector.
Risk tolerance
Risk outlook
Regulation and governance
5
5
6
24/25
23/24
22/23
Definition
Our governance model fails to support the
way we are organised and our geographical
spread, resulting in unauthorised, illegal,
unethical or inappropriate actions.
Key defence/mitigations
The Group continues to maintain detailed
and extensive arrangements for the
management of standards, domestic and
international compliance rules alongside
new regulations, with regular business unit
legal compliance and control reviews
including health, safety, environment,
agency and supplier standards and product
integrity/safety.
Regulatory compliance training including
e-learning modules for employees on a
variety of compliance modules including
antitrust, anti-bribery and corruption, and
modern slavery to ensure full understanding
of the applicable laws and high standards
expected, alongside regular reporting and
engagement with senior leadership at
divisional level on legal, governance and
compliance risk.
Implementation of a strong and visual ‘Speak
Up!’ programme across the Group providing a
confidential route for employees to report
perceived malpractice of any type.
Use of the Group Compliance Committee as a
forum to review and assess specific
compliance risk matters.
External advisory checks in parallel to trade
associations (FEFCO, CEPI, AF&PA, FPA).
Link to business strategy
To delight
our customers
Opportunity
Enhancing our strong governance model
beyond the standards requested of us
across the regulatory landscape.
Key risk indicator
Group and divisional compliance training
andreviews.
Risk tolerance
Risk outlook
Sustainability commitments
6
6
4
24/25
23/24
22/23
Definition
Our efforts and significant planned
investments to decarbonise and transition
our supply chain to a circular, low-carbon
economy do not keep pace with growing
customer and investor expectations
on large organisations to make a positive
contribution and address global
climatechange.
Key defence/mitigations
The development, investment and timely
implementation of effective carbon
reduction roadmaps for paper and packaging
energy efficiency, equipment upgrades and
switching to alternative energy sources
across all sites, whilst monitoring and
adapting to regulatory changes.
Ensuring we meet the growing consumer
and investor demand for sustainable
packaging through a focus on packaging
design, use and disposal based on a circular
economy with business leaders and a sales
force equipped to drive this agenda.
Regular reviews of, and governance and
reporting on, our sustainability priorities to
ensure they align with the expectations of
stakeholders, wider society and scientific
climate projections, as well as implementing
TCFD recommendations and submission to
top ESG ratings such as CDP.
Effective governance model focused on
the Now & Next Sustainability Strategy
and the development of new programmes
to address developments such as science-
based targets.
Link to business strategy
To lead the way
in sustainability
Opportunity
Ensuring that our circular packaging
solutions are sustainable through continued
investment in sustainable projects such as
efficiencies in energy upgrades and the
circular economy.
Key risk indicator
Reduction of CO
2
e per tonne of production.
Risk tolerance
Risk outlook
Increasing Stable
Risk outlook
Decreasing
AcceptableUnacceptable
Net risk tolerance key
Re-assess
3
3
2
24/25
23/24
22/23
Risk rank change by year key
Principal risk example 1 – highest 12 – lowest
Annual Report 2024 dssmith.com 53
Strategic Report Governance Financial Statements
Organisation capability
7
7
5
24/25
23/24
22/23
Definition
Risk that the management approach to our
people and assets may not correctly or
sufficiently identify future resourcing
capability needs, particularly in the strategic
growth drivers of Innovation, Sustainability
and Digital and Data.
Key defence/mitigations
A Group HR Corporate Plan focusing on
productivity, capability development,
employee development and engagement,
talent and strengthening our HR function.
A combination of management actions from
L&D programmes, succession planning,
up-skilling, cross-skilling, talent acquisition
and graduate programme/academies
(including the DS Smith Way) to support
the needs of the business and improve
employee engagement and empowerment.
Our HR and operational leaders work to
prioritise key activities aimed at effective
resourcing for new and foreseeable work
realities to build needed skills, reduce
reliance on the external labour market and
review ways of working to improve
organisation flexibility and productivity.
The Group HR function continues to improve
employee-related reporting to reflect wider
support for a targeted and measured
approach on diversity at all management
and operational levels.
Link to business strategy
To realise the potential
of our people
Opportunity
Developing and refining ways to cross-skill
and up-skill our workforce to support both
the current and future needs of the business.
Key risk indicator
Employee turnover including external/
internal hiring ratios and diversity and
inclusion metrics.
Risk tolerance
Risk outlook
Demand volatility and capacity
8
8
8
24/25
23/24
22/23
Definition
Risk of low volume growth and high inflation
impacting our ability to meet changes in
demand patterns and capacity outlook
profitably, whilst servicing customer
agreements, needs and contract
servicelevels.
Key defence/mitigations
We have an agile Corporate Plan and
integrated business planning process
designed to manage out material variations
between demand and capacity forecasting,
using flexible capital investment plans to
support changes in our key markets
alongside the development of new or
expansion of our existing packaging
manufacturing sites.
Enhanced commercial negotiations, mix and
pipeline to ensure profitability.
Continued focus upon labour productivity
improvements, cost reduction, development
of external sales and export opportunities,
product diversification and footprint/
integration.
Targeted capital investments aligned with
mid and long-term business needs and a
capital plan with the purpose of boosting
revenue, profit and/or operational efficiency
through the rationalisation of existing
capacity via a highly compatible customer
and production geographical footprint.
Link to business strategy
To delight
our customers
Opportunity
Aligning our investments to our
commitments to serve all of our customers
and push further growth, through a flexible
end to end supply chain.
Key risk indicator
Packaging demand and production
volumemetrics.
Risk tolerance
Risk outlook
Disruptive market players
9
9
10
24/25
23/24
22/23
Definition
Disruptive behaviours in our key markets,
where there is a risk that significant
suppliers or competitors combine by copying
our business model or disrupting the
fundamental assumptions of our supply
cycle business, causes shock/prolonged
price and volume drop and materially
reduces our capability to purchase
paper or restricts our ability to compete
more effectively.
Key defence/mitigations
The corporate planning process continues to
ensure that the Group’s strategy team and
divisional leadership capture information
on changes in the market environment,
building an acute understanding across our
customer portfolio on their future needs to
determine areas of activity that could be
truly disruptive or where our bespoke
solutions enhance our value proposition.
Continuous improvement of our procurement
and supply chain processes for all paper
grades and critical raw materials, including
enhanced contingency plans if critical
suppliers were to be disrupted.
Leadership and management team retain a
heightened level of awareness of potential
disruptive behaviours, possible blind spots
and built-in institutional challenges to
ensure a level of resilience operates in key
areas of potential growth or change.
Link to business strategy
To double our size
and profitability
Opportunity
Focusing on sustainable growth and
reputation allows us to maintain our strong
market position and compete with any new
disruptive players.
Key risk indicator
Proportion of market share.
Risk tolerance
Risk outlook
54
Risk management continued
Substitution of fibre packaging
10
10
11
24/25
23/24
22/23
Definition
Fibre-based packaging loses its credentials
as a sustainable product of choice against
developments in plastic packaging or other
materials that can be reused and recycled,
resulting in our products being substituted
and/or replaced by competitor products.
Key defence/mitigations
Business investment in diverse portfolio
of materials/services beyond traditional
pulp and paper alongside a dedicated
Government Affairs team that tracks/
monitors proposed government legislation,
the potential impact and sets/drives focused
and proactive communication strategies to
respond centrally as well as through
industry trade associations to support/build
the reputation of fibre-based materials in
terms of recyclability, circularity and quality
standards whilst leveraging our proven
innovation capabilities.
Collaboration between our Paper and
Packaging divisions and R&D teams to deliver
innovative papers and corrugated products,
and develop new materials with our suppliers
and partners for barrier/lamination concepts
and plastic replacements.
Link to business strategy
To lead the way
in sustainability
Opportunity
Accelerating R&D investments into new and
enhanced fibre-based products enables us
to respond quickly and efficiently to any
changes in packaging regulations that may
impact the Group and take proactive action
accordingly to reduce any potential impacts.
Key risk indicator
Fibre packaging volume and market share
growth and level of legislative protection.
Risk tolerance
Risk outlook
Security of paper/fibre supply
11
11
7
24/25
23/24
22/23
Definition
Large fluctuations in the availability of
recovered paper (including OCC) and
containerboard adversely affects our
performance. Our failure to adapt to
changes in installed paper production
capacity and imports, and our inability to
produce a sustainable supply of internal
European fibre for critical paper grades,
including specific virgin papers, leaves us
over-exposed to the threat of significant
commodity availability and price volatility for
extended periods of time.
Key defence/mitigations
Cross-divisional capability to optimise the
make, buy, sell decision across the Group,
ensuring the Group sources key paper
grades from external suppliers to deliver and
flex to paper volume needs.
Investment in end-to-end supply chain
programmes to bring cross-divisional
benefits from improved stock visibility and
plan adherence to help handle forecast
variability through the short, medium and
long-term horizons.
A clearly defined fibre strategy based on
performance packaging, and ‘best fit’
footprint alignment between paper
production, quality fibre sourcing and the
capacity needs of our Packaging division.
The service level agreements with key
suppliers revised/updated for the best
customer-first approach in place when
prioritising how demand should be met
through supply channels.
Link to business strategy
To double our size
and profitability
Opportunity
Generating a best fit cost and quality
solution for our customers through the
expertise of our paper sourcing strategy and
closed loop model.
Key risk indicator
Paper/recovered fibre supply volumes.
Risk tolerance
Risk outlook
Digitisation
12
12
9
24/25
23/24
22/23
Definition
Risk of failing to effectively leverage digital
technologies and strategies to meet key
business priorities, resulting in missed
opportunities for growth, innovation and
operational efficiency. The inadequate
alignment of digital initiatives with strategic
business priorities leading to inefficiencies
in resource allocation and a lack of focus on
high impact areas such as customer
experience enhancement and service
proposition development.
Key defence/mitigations
The Group Strategy Committee oversight of
enterprise-wide efforts to identify/leverage
digital revenue opportunities including
ongoing reviews of digital ‘light house’
projects.
Prioritisation of foundational digital initiatives
(brilliant basics) to establish a robust digital
infrastructure and operational framework.
The central digital centre of excellence
enables guidance and steering around
prioritisation and continuous monitoring.
Implementation of a structured governance
framework that evaluates and prioritises
new technology opportunities, balancing the
need for innovation with risk management
considerations and ensuring optimal resource
allocation and investment decisions.
Link to business strategy
To delight
our customers
Opportunity
Prioritising the latest digital transformation
initiatives to not fall behind our competitors
with regards to speed to market and smart
product offerings.
Key risk indicator
Customer satisfaction surveys and website
visitor traffic.
Risk tolerance
Risk outlook
Increasing Stable
Risk outlook
Decreasing
AcceptableUnacceptable
Net risk tolerance key
Re-assess
3
3
2
24/25
23/24
22/23
Risk rank change by year key
Principal risk example 1 – highest 12 – lowest
Annual Report 2024 dssmith.com 55
Strategic Report Governance Financial Statements
DS Smith recognises we are subject to many general risks and challenges that are not uncommon in the market around greater uncertainty,
increased volatility and more complexity. Changes in socioeconomic conditions, political, financial, general regulatory and legislative changes
can impact our ability to deliver our Corporate Plan. Through our corporate planning cycle, annual risk reporting cycle and ability to find the
opportunity within our risk framework, we are able to counter the effects of these more effectively through better mitigation, greater
preparedness and collaboration.
Geopolitical risks
Description
The rise of nationalism globally poses
a potential risk, as certain groups
prioritise national identity over global
cooperation. This trend exacerbates
geopolitical risks, particularly in regions
like the Middle East and Russia/
Ukraine, where conflicts persist.
Impact
The rise of nationalism may lead to
trade barriers and protectionist
policies, potentially hindering our
exports. It could also trigger political
instability, disrupting supply chains,
and pose challenges navigating
evolving regulations, impacting
operations and profitability.
For example, there could be changes to
regulations around labour, environment
and tariffs that could impact our
operations and profitability.
Action
Overall, we continue to closely monitor
and navigate these potential risks in
order to maintain our position as a
leading global packaging company.
Emerging risks
Our risk management programme reviews emerging risks, defined as those not currently impacting the Group but with potential significant
future impact due to rapid or indirect evolution. These risks, often with longer-term effects, require immediate attention to mitigate adverse
outcomes. Regular monitoring of external trends, combined with internal insights, helps identify potential future risks. We compile a list of key
emerging risks from both internal and external sources, reviewed biannually with the Group Strategy Committee alongside principal risks.
Notably, three emerging risks are gaining increased attention due to their potential for high impact.
Prolonged extreme weather
and infrastructure impact
Description
Unforeseen and prolonged extreme
weather events, including heatwaves,
droughts, floods and storms, may disrupt
supply chains and transportation,
leading to delays, damage and
increased costs.
Impact
Extended extreme weather may
affect energy and water supply to
our facilities, impacting operations
and productivity. Infrastructure
disruptions, like power outages and
road closures, could disrupt our
operations and supply chain.
Action
Our business continuity plans
incorporate contingencies for
extreme weather and infrastructure
disruptions, including diversifying
transportation routes, investing in
backup systems for energy and water,
and exploring alternative sources of
recycled materials.
Potential in AI
integrationrisks
Description
AI technologies have the potential to
improve and transform significant
areas of the Group’s business including
decision-making, operational
efficiency, technology and end-
product and service innovation,
analytics and financial systems.
Impact
The risk of missing out on emerging
opportunities due to inadequate
oversight and investment poses
significant consequences for the
Group, competitors and industry
transformation. Key areas of exposure
include the inability to establish a
secure data infrastructure essential for
AI implementation, requiring ongoing
investment and resourcing, hindering
the transformative potential of AI
within the Group and the industry.
Action
A comprehensive approach to inform
and realise the potential of AI,
addressing the benefits, opportunities
and alignment presented by alternative
AI models. Data governance, trust,
security, privacy and compliance to
safeguard information and results must
be an embedded part of this.
56
Risk management continued
Viability Statement
Context
The Group’s strategy and key differentiators are detailed on pages 3
and pages 8 and 9, and our risk management framework is described
on pages 49 and 50. Understanding of our business model, our
strategy and our principal risks is a key element in the assessment of
the Group’s prospects, as well as the formal consideration of viability.
The Group’s Corporate Plan cycle is the primary annual strategic and
financial planning activity through which the Board assesses the
prospects of the Group, extending for the three successive financial
years that follow beyond the year ending after the assessment date.
The planning process involves modelling under a series of assumptions
surrounding both internal and external parameters, with key
assumptions including economic growth projections, input pricing
(including paper, fibre, energy and labour), foreign exchange rates
and packaging volume growth; combined with the effects of major
capital initiatives. The impact of climate change as expressed through
the Group’s key risks in its risk management framework is taken into
account during the planning process, with capital commitments
consistent with meeting the Group’s SBTi carbon reduction
commitments included within the forecast horizon. The robust
Corporate Plan process is led by the Group Chief Executive, the Group
Finance Director and the Group Head of Strategy, in conjunction with
divisional management. The Board undertakes a detailed review of
the Corporate Plan during its December Board meeting.
Although the Directors have no reason to believe that the Group will
not be viable over a longer period, the three-year period was chosen
for this assessment having considered the speed and degree of
change possible in the key assumptions influencing the Group, as well
as the speed of evolution in the footprint of the Group, which limits
the Directors’ ability to predict beyond this period reliably. Indeed,
given the pace of change in the primary sectors in which the Group
operates, particularly FMCG and e-commerce, as illustrated by the
recent moves away from plastic packaging and the acceleration into
e-commerce driven by the Covid-19 pandemic, the Directors believe
that three years represents the most realistic and appropriate
timescale over which to assess the Group’s viability.
The most recent Corporate Plan process was undertaken against the
backdrop of the uncertain economic environment experienced in
2023/24, impacted by a downturn in paper pricing, and the ongoing
impact of the wider economic consequences of the war in Ukraine
and conflict in the Middle East. The forecast process for 2024/25,
conducted subsequent to the Corporate Planning process, reflected
an updated view of the market dynamics, which anticipate improving
paper sales prices, increased volume demand and input price rises
relating to fibre and energy and paper prices, but validated the overall
Group profitability as set out in the Corporate Plan in the first financial
year. Similarly, the going concern exercise which builds on the
forecast validated the overall Group profitability as set out in the
Corporate Plan for the second year. On that basis, the Directors are
satisfied that the Corporate Plan, which covers a three year forecast
period, provides a suitable basis for the viability assessment.
Assessment of longer-term viability
In accordance with the UK Corporate Governance Code, the Directors
have assessed the viability of the Group over a three-year period to
30 April 2027, which is a longer period than the minimum 12-month
outlook required in adopting the going concern basis of accounting.
This assessment period remains appropriate given the timescale of
the Group’s planning and investment cycle.
The Directors confirm that they have performed a robust assessment
of the principal risks facing the Group as detailed on pages 49 and 51,
including those that will threaten its business model, future
performance and solvency or liquidity.
The assessment of the Group’s viability considers a pessimistic
but plausible downside scenario aligned to the principal risks and
uncertainties set out on pages 52 to 55 where the realisation of
these risks is considered remote, considering the effectiveness
of the Group’s risk management and control systems and current risk
appetite. The degree of severity applied in this scenario was based
on management’s experience and knowledge of the industry to
determine plausible movements in assumptions. The Directors
note that the Group enjoyed a large degree of resilience to the
consequential downturns from the Covid-19 pandemic and through
the increased economic volatility in the post-pandemic period,
influenced by the impact of the war in Ukraine.
The Group has significant financial resources including committed
and uncommitted banking and debt facilities, detailed in note 20.
Inassessing the Group’s viability, the Directors have assumed that
with its investment grade rating and successful history of refinancing
its maturing borrowings, the Group would be able to refinance its
existing banking and debt facilities.
The Directors have also considered mitigating actions available to the
Group that are within management’s control, to respond to the stress
scenarios such as restrictions on capital investment, further cost
reduction opportunities, and dividend suspension or restriction on
dividend levels. The Directors have assumed that these mitigating
actions can be applied on a timely basis and at insignificant or no cost.
Annual Report 2024 dssmith.com 57
Strategic Report Governance Financial Statements
Confirmation of viability
Based on the analysis, the Directors have a reasonable expectation that
the Group will be able to continue in operation and meet its liabilities
as they fall due over the three-year period of their assessment.
In reaching this conclusion the Directors have also considered the
implications in a viability context of the proposed acquisition of the
Group by International Paper which was announced on 16 April 2024.
As set out in the Rule 2.7 Announcement, the Boards of Directors of
both International Paper and DS Smith believe there is a compelling
strategic and financial rationale for the Combination, including the
complementary nature of their geographic footprints and the
significant synergies expected post transaction. On this basis, the
Board of DS Smith believes this supports its viability assessment, in
the event the transaction proceeds. The transaction is expected to
close during the fourth quarter of 2024, subject to the approval of
International Paper shareholders and DS Smith shareholders, as well
as customary closing conditions, including regulatory clearances in
Europe and the U.S., all substantive conditions.
The Group’s borrowings and facilities are subject to change of control
provisions which allow for lenders to request repayment of the
amounts owed but only in the event of a downgrade of the Group’s
credit rating to below investment grade. In light of the announcements
by a credit rating agency, in their Research Update issued on
18 April 2024, that they view the transaction as positive from a
credit perspective (and the credit rating agency signalling their
intention to upgrade the Group’s credit rating as a result of an
acquisition by International Paper), the Board considers the risk
arising as a result of these change of control clauses to be remote.
Even in the remote event that the Group’s borrowings are required to
be repaid, the Board has also evaluated the ability of the enlarged
group to settle any repayment requests and, based on the latest
publicly available information, is satisfied that the available cash and
facilities of the combined group would be sufficient to do so.
The scenarios modelled in the viability assessment were based on
the Group remaining an independent entity and, therefore, remain
appropriate should the proposed acquisition not proceed. Accordingly,
the Directors believe the conclusion that the Group and Company is
viable remains appropriate in the circumstances of the proposed
acquisition completing.
Going concern
The Board has reviewed a detailed consideration of going concern,
based on the Group’s recent trading and forecasts, and including
scenario analysis. This takes into account reasonably foreseeable
changes in trading performance, including the continued uncertainty
caused by high inflation and the ongoing war in Ukraine and
reactivation of Middle East conflict.
At 30 April 2024 there was significant headroom on the Group’s
committed debt facilities, at a level of c. £1.6 billion. The going
concern assessment included the period to 31 October 2025.
Based on the resilience of the Group’s operations to both the
high-cost environment experienced throughout the last 18 months
and the weak demand experienced during FY24, as well as the current
and forecast liquidity available, the Board believes that the Group is
well placed to manage its business risks successfully despite the
uncertainties inherent in the current economic outlook, and to
operate within its current debt facilities.
The Group’s current committed bank facility headroom, its forecast
liquidity headroom over the going concern period of assessment and
potential mitigating activities available to management have been
considered by the Directors in forming their view that it is appropriate
to conclude that there is a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. For this reason, the going concern basis has
been adopted in preparing the financial statements.
The financial statements have been prepared on the going concern basis
with no material uncertainty identified after a detailed assessment.
Further details, including the analysis performed and conclusion
reached, are set out below.
Liquidity and financing position
The total debt facilities at 30 April 2024 were £3.9 billion, of which
£2.5 billion is publicly listed debt with no attached covenants. In addition,
the Group had access to c. £1.5 billion bank facilities, which were
undrawn at 30 April 2024. Group facilities totalling £0.4 billion are due
to expire within the going concern period. Subsequent to the year
end, the Group successfully amended its revolving credit facility,
extending its maturity to May 2027 for an amount of £1.25 billion
replacing the existing facility for £1.4 billion. This means that the
Group will have access to at least £3.35 billion of facilities for the
duration of the going concern period to 31 October 2025. There is
significant liquidity/financing headroom across the going concern
forecast period. For this reason, the going concern review has focused
more on forecast covenant compliance.
58
Risk management continued
Overview
In determining the going concern basis for preparing the financial
statements, the Directors consider the Company’s objectives and
strategy, its principal risks and uncertainties in achieving its objectives
and its review of business performance and financial position. The
economic environment reflected in this Going Concern assessment is
based on the 2024/25 forecast which anticipates moderate organic
box volume growth across each of our regions, recognising the
inflationary pressures in the Group’s raw materials and overhead cost
bases. In preparing the financial statements, the Group has modelled
two scenarios in its assessment of going concern. These are:
• The base case is derived from the 2024/25 full year forecast as
presented to the Board. The key inputs and assumptions include:
Packaging volume growth at moderate levels across the future
periods considered by the modelling, driven by continued FMCG
and e-commerce demand recovery, together with the recovery in
industrial volumes. Both paper sales price and input fibre price are
consistent with those anticipated in the forecast.
• The downside case assumes European packaging volumes largely
stagnating at 2023/24 levels, reflecting no future growth and
double inflationary pressures on the cost base, not mitigated by a
commensurate increase in paper prices. With a significant portion
of the Group’s packaging contracts being either directly linked/
referenced to a paper index, this results in higher input costs for
the Group are more difficult to pass through to end customers.
Mitigating actions
The outturns of the above scenario modelling, combined with a stable
operating performance throughout FY24 provide the Group a level of
comfort that no significant cost/cash flow mitigations need to be built
into the going concern modelling. However, a range of options remain
at the Group’s disposal should they be required which provide the
opportunity to support EBITDA, cash flow and net debt, including:
• Actions in respect of variable and controllable costs such as
discretionary bonuses, pay rises, recruitment freezes and wider
labour force actions in response to higher levels of volume reductions.
• Limiting capital expenditure to minimum maintenance levels by
pausing growth spend (including brownfield sites and other
expansionary spend).
• Strategic actions in respect of the Group’s asset base could be
considered in respect of disposals, mothballing and closures.
• A reduction or temporary suspension of the Group’s dividend.
The Group could also consider actions to assist covenant compliance,
such as increased utilisation of debt factoring facilities and optimising
working capital by negotiating longer payment terms whilst
continuing to pay suppliers in full and in line with contractual terms.
It is estimated that the Group EBITDA would have to fall by about
36per cent from FY24 levels for a breach of the net debt/EBITDA
covenant to occur. The Board considers this scenario to be a remote
possibility based upon the Group’s historical performance.
Going concern basis
Based on the forecast and the scenarios modelled, together with the
performance of the Group in the current year, the Directors consider
that the Group and Company has significant covenant and liquidity
headroom in its borrowing facilities to continue in operational
existence for the length of the going concern period until
31 October2025.
In reaching this conclusion the Board has also considered the
implications in a going concern context of the proposed acquisition
of the Group by International Paper which was announced on
16 April 2024. As set out in the Rule 2.7 Announcement, the Boards
of Directors of both International Paper and DS Smith believe there
is a compelling strategic and financial rationale for the Combination,
including the complementary nature of their geographic footprints
and the significant synergies expected post transaction. On this basis,
the Board of DS Smith believes this supports its going concern
assessment, in the event the transaction proceeds. The transaction
is expected to close during the fourth quarter of 2024, subject
to the approval of International Paper shareholders and DS Smith
shareholders, as well as customary closing conditions, including
regulatory clearances in Europe and the U.S., all substantive conditions.
The Group’s borrowings and facilities are subject to change of
control provisions which allow for lenders to request repayment
of the amounts owed but only in the event of a downgrade of the
Group’s credit rating to below investment grade. In light of the
announcements a credit rating agency, in their Research Update
issued on 18 April 2024, that they view the transaction as positive
from a credit perspective (and the credit rating agency signalling
their intention to upgrade the Group’s credit rating as a result of an
acquisition by International Paper), the Board considers the risk
arising as a result of these change control clauses to be remote. Even
in the remote event that the Group’s borrowings are required to be
repaid, the Board has also evaluated the ability of the enlarged group
to settle any repayment requests and, based on the latest publicly
available information, is satisfied that the available cash and facilities
of the combined group would be sufficient to do so.
The scenarios modelled in the going concern assessment were based
on the Group remaining an independent entity and, therefore, remain
appropriate should the proposed acquisition not proceed. Accordingly,
the Board believes the conclusion that the Group and Company is a
going concern for the period to 31 October 2025 remains appropriate
in the circumstances of the proposed acquisition completing.
Annual Report 2024 dssmith.com 59
Strategic Report Governance Financial Statements
Our circular business model keeps materials recirculating through
recycling services, which support the manufacture of recyclable
packaging. Whilst this alleviates pressure on natural systems, such as
forests, and prevents waste from entering landfills and oceans, it is
energy intensive, generating greenhouse gas (GHG) emissions that
contribute to climate change.
We have set a 1.5°C science-based target to reduce Scopes 1, 2 and 3
GHG emissions 46 per cent by 2030 compared to 2019, and we are
committed to reaching Net Zero by 2050.
Our near-term 2030 target has been validated by the Science Based
Targets initiative (SBTi) and we are in the process of setting a FLAG
(Forest, Land and Agriculture) target and no deforestation
commitment in order to obtain Net Zero validation from the SBTi.
In support of a 1.5°C ‘Net Zero’ economy, we are committed to
considering the Paris Agreement in our activities, including in our
external engagement, as underpinned by the Intergovernmental
Panel on Climate Change (IPCC) Sixth Assessment Report (AR6) and
the IPCC Special Report on Global Warming of 1.5°C (SR1.5).
We first included the TCFD recommendations in our 2018 Annual
Report. Since then we have developed our reporting, reaching
disclosure of all recommendations a year ahead of mandatory
disclosure in 2022. The timeline above demonstrates how we have
used the TCFD recommendations to accelerate climate action.
Our response to
climate change
Task Force on Climate-related Financial Disclosures (TCFD)
2018 2019 2020 2021 2022
2023-24
Voluntary partial
TCFD disclosure
in line with the
recommendations,
predominantly via
CDP Climate Change
The base year
for our science-
based target
(2019/20)
Full voluntary
TCFD disclosure in
Annual Report 2021
First climate
scenario analysis
Commitment to
reach Net Zero
greenhouse gas
emissions by 2050
‘Carbon Project’
to determine
cost-optimised
decarbonisation
pathways, focused
on our paper mills
Full mandatory TCFD
disclosure in Annual
Report 2022
Validation of 1.5°C
science-based target to
reduce Scope 1, 2 and 3
GHG emissions 46
per cent by 2030
compared to 2019
ESG underpin introduced
in the 2021/22 annual
bonus, including the
commitment to using
longer-term science-
based targets
Launch of our Green
Finance Framework,
aligned to our priority
Sustainable Development
Goals (SDGs)
Development of
roadmaps, with key
technical solutions
identified to drive
carbon reduction for
our packaging plants
New governance
organisation,
‘Sustainability Delivery
Team’, to manage
project deployment for
reaching Net Zero
Evolution of the
ESG underpin for
the 2022/23 annual
bonus, including the
development of initial
plans to achieve
longer-term science-
based targets
Publication of our inaugural
Net Zero Transition Plan
Reduced Scope 1, 2 and 3
GHG emissions by 19
per cent compared to
2019/20
Ranked on the CDP ‘A List’,
recognising leadership on
climate change
Announcement of
significant transition
milestone, removing
c. 99,000 tonnes CO
2
e
at Rouen mill
Issuance of our Green Bond,
raising €1.5 billion,
significantly extending our
debt maturity profile at
attractive terms
Voluntary IFRS S2 ‘Climate-related Disclosures’
and UK Transition Plan Taskforce disclosures
For the DS Smith Annual Report 2024, we have enhanced our
TCFD disclosures with reference to IFRS ISSB (International
Sustainability Standards Board) S2 and UK TPT disclosures.
The requirements of IFRS S2 Climate-related Disclosures
integrate, and are consistent with, the TCFD’s four core
recommendations and 11 disclosures, with some additions.
IFRS S2 Climate-related Disclosures require the disclosure of
information about any climate-related transition plan the entity
has and how the entity plans to achieve climate-related targets.
This is consistent with the TCFD’s guidance on metrics, targets
and transition plans (2021) and the UK TPT framework, which
sets out good practice for robust and credible transition plans.
These disclosures are therefore included in this integrated
section of the DS Smith Annual Report 2024.
This early voluntary application of IFRS S2 is accompanied by
IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information on pages 30 to 37.
We will continue to develop these disclosures as the IFRS
sustainability disclosure standards and UK TPT are expected
to become endorsed by the UK Government’s framework to
create UK Sustainability Reporting Standards (UK SRS).
A climate disclosures content index is presented on page 83 to
sign post where relevant disclosures are located.
60
Describe management’s role in assessing and
managing climate-related risks and opportunities
Members of the Health, Safety, Environment and Sustainability
(HSES) Committee, chaired by the Group Chief Executive, assess and
manage climate-related risks and opportunities. This Committee
meets monthly, having met 12 times during 2023/24 to discuss,
amongst other topics:
• GHG emissions forecasts.
• Plans to deliver the science-based target.
• Progress on climate-related opportunities, such as plastic replacement.
Climate-related risks are monitored as part of our standard operating
procedures to ensure that appropriate mitigation is in place and are
regularly reviewed by management. Management is supported by the
Carbon, Water and Waste Steering Committee, which is the primary
thematic steering committee handling climate-related matters,
including the delivery of the science-based target.
Comprising leaders from across the business, the Committee
maintains a portfolio of projects to allocate resources, coordinate
delivery and propose solutions to critical trade-offs related to
addressing climate-related risks and opportunities. These Committees
draw on subject matter experts from Risk and Insurance, Strategy,
Sustainability, Finance and Procurement teams. They report progress
updates and escalate decisions to executive management on an
ongoing basis.
Project deployment and the maintenance of Net Zero roadmaps are
carried out by a technical sustainability delivery team. This team is
responsible for driving carbon/energy, water and waste reduction and
coordinating, through the steering committee, the design, planning
and implementation of our commitment to reach Net Zero.
Climate-related metrics are discussed at least monthly by
management teams. Senior management teams review within year
performance, forecasts and longer-term progress against our targets,
in addition to challenges, trends and opportunities for addressing
climate-related issues monthly, and this is monitored by the HSES
Committee on a quarterly basis, with progress presented to the
Boardannually.
Governance
Describe the Board’s oversight of climate-related risks
and opportunities
The Board and the Audit Committee maintain oversight of climate-
related risks and opportunities when reviewing and guiding strategy,
budgets and business plans. Annual updates on risk assessments,
mitigation and progress are reviewed by the Board, and the Board
makes significant strategic decisions, for example, the adoption of the
science-based target.
The Board considers any trade-offs associated with climate-related
risks and opportunities by evaluating climate matters as part of
setting the strategic direction of the Group, strategy implementation
and resourcing and leadership. The terms of reference of the
Audit Committee document the Committee responsibilities.
These were updated to incorporate TCFD disclosures last year.
Upon appointment to the Board, Directors undertake an induction
programme, receiving a broad range of information about the Group,
including information about sustainability and climate-related
matters, tailored to their previous experience.
Directors are given training and receive presentations to keep their
knowledge current, including on TCFD and transition planning, and
take responsibility for identifying and satisfying their own specific
training requirements.
The Board and its Committees, members of whom have relevant ESG
and sustainability experience, are updated on climate-related issues
at a minimum annually. This includes the progress of our Now & Next
Sustainability Strategy and other items that involve climate-related
issues, such as the Corporate Plan, principal risks and uncertainties,
and remuneration. The Audit Committee is engaged on the assurance
of climate-related metrics and developments in ESG reporting.
Compliance statement
DS Smith Plc has complied with the requirements of Listing Rule
9.8.6R(8) by including climate-related financial disclosures
consistent with the Task Force on Climate-related Financial
Disclosures recommendations (Oct 2021 update) in the
DSSmith Annual Report 2024, pages 61 to 77.
Board
Circularity
Steering Committee
and Working Groups
Carbon, Water
& Waste
Steering Committee
and Working Groups
People &
Communities
Steering Committee
and Working Groups
Nature
Steering Committee
and Working Groups
SitesProject Teams
Health, Safety, Environment and Sustainability (HSES) Committee
Divisional and Functional Leadership
Sustainability governance framework
Annual Report 2024 dssmith.com 61
Strategic Report Governance Financial Statements
Task Force on Climate-related Financial Disclosures (TCFD) continued
Summary of climate-related risks and their potential future impact
Likelihood
Climate-related
risk Type
Time
horizon
1.5°C
scenario
>2°C
scenario
Potential financial impact as indicated by reference to climate
scenarios and our analysis*
Transition Increased
spend on
carbon taxes
Policy and
legal
Short term ••••• • £45-107 million potential increase in operating
costs, depending on the price of future allowances in
emission trading schemes, which would likely be
greater in a 1.5°C scenario versus a >2°C scenario as
a way to meet public policy objectives.
Increased cost
of raw
materials or
threat to
supply
Market Medium
– long term
••• ••••• £26-87 million potential increase in production costs
attributable to climate-related disruption, which
would likely be greater in a warmer scenario (e.g. 10
per cent increase in costs in a >2°C scenario versus 3
per cent increase in a 1.5°C scenario).
Physical
Increased
severity of
extreme
weather
events
Acute
physical
Medium
– long term
•• ••••• £8-90 million potential business value-at-risk due to
production downtime, assuming 1–12 months of
disruption at one of our paper mills located in a region
prone to specific climate events (e.g. 12 months in a
>2°C scenario versus one month in a 1.5°C scenario).
Increased
likelihood of
water stress
Chronic
physical
Long term •• ••••• £1-2 million potential business value-at-risk due to
production downtime, assuming 7-31 days of
interruption at one of our paper mills located in a
region at risk of water stress (e.g. 31 days in a >2°C
scenario versus seven days in a 1.5°C scenario).
Total potential financial impact of climate-related risks £80-286 million*
Strategy
The strategy for managing climate-related risks and opportunities is
integrated into our overall corporate strategies, including our
strategic goal ‘to lead the way in sustainability’ and our Now & Next
Sustainability Strategy.
We have identified seven key climate-related issues that are
described in this section as climate-related risks and opportunities.
This strategy section then goes on to explain our primary strategy for
mitigating climate change, which is articulated within the ‘Carbon’
pillar of our Now & Next Sustainability Strategy, supported by
our Net Zero Transition Plan.
Describe the climate-related risks and opportunities
the organisation has identified over the short, medium
and long term
Climate-related risks and opportunities could arise over the short term
(0-3 years), medium term (3-10 years) and long term (10+ years).
These time horizons fit with the Group’s corporate and capital
planning cycle time horizon (three years), which is used to develop the
Group’s strategy, in addition to the annual risk reporting cycle (one
year), which is used to assess and communicate risk.
Physical assets in our industry tend to have long lifetimes and efforts
are made to extend the lifetime of machinery, components and spare
parts, fitting into the long-term (10+ years) time horizon. As such,
investment decisions are made, including the implications that such
decisions may have on climate-related risks and opportunities under
this long-term time horizon.
Climate-related risks
Increased spend on carbon taxes
In the short term, there is a risk that new carbon taxes could be
introduced or existing carbon taxes could be extended as a policy
tool to incentivise decarbonisation.
Increased cost of raw materials or threat to supply
In the medium to long term, there is a risk that raw materials could
become more expensive or difficult to acquire due to disruption or
market dynamic shifts caused by climate change.
Increased severity of extreme weather events
In the medium to long term, there is a risk that the frequency and
severity of extreme weather events could increase, causing
damage and disruption in our own operations or the value chain.
Increased likelihood of water stress
In the long term, there is a risk that competition for water could
increase in the river basins from which we withdraw water,
increasing the chance that supply constraints could be imposed.
Climate-related opportunities
Growth in demand for sustainable packaging
In the short term, there is an opportunity to drive organic growth
by demonstrating the benefits of circular packaging that helps
brands and consumers to replace plastic and reduce their carbon
footprint in the transition to Net Zero.
Greater resource efficiency
In the short term, there is an opportunity to use fewer resources
(materials, energy and/or water), both in manufacture through
design and operating efficiency, and throughout the value chain to
reduce climate impact and cost.
Use of lower-emission energy sources
In the medium to long term, there is an opportunity to adopt
lower-emission energy sources and energy efficiency measures.
These could be equipment-based (e.g. e-boilers and carbon capture
and storage), fuel-based (e.g. hydrogen) or process-based (e.g. heat
recovery and optimisation through digital and data innovation).
62
Summary of climate-related opportunities and their potential future impact
Likelihood
Climate-related
opportunity Type
Time
horizon
1.5°C
scenario
>2°C
scenario
Potential financial impact as indicated by reference to climate
scenarios and our analysis*
Growth in demand for
sustainable packaging
Products and
services
Short term ••••• ••• £420-637 million potential increase in revenue
owed to production growth, which would likely be
greater in a 1.5°C scenario as society demands more
sustainable products and services.
Greater resource efficiency
Resource
efficiency
Short term ••••• • £12-37 million potential cost saving as a result of
resource efficiency (reduced energy consumption),
which would likely be greater in a 1.5°C scenario as
more efficiency opportunities are exploited.
Use of lower-emission
energy sources
Energy
source
Medium
– long term
••••• • Zero-£77 million potential cost saving as a result of
use of lower-emission energy sources, which would
likely be greater in a 1.5°C scenario as more
lower-emission energy sources are exploited.
Total potential financial impact of climate-related opportunities £432-751 million*
••••• Greater likelihood • Lesser likelihood
* Climate scenarios are used, alongside other tools, to assess vulnerability to climate change and are intended to represent plausible future states to assist learning
and aid decision-making rather than to present future projections or forecasts. The values presented have changed compared to last year owed to changes in
revenues, costs, currency exchange rates and emission values used for the analysis. The values are illustrative and estimated within the context set out by each
reference scenario and then adapted to fit DS Smith. This is based on a single financial metric, without considering the implications of secondary impacts.
For example, there may be a cost associated with damage to reputation that could occur as a result of business interruption owing to climate change.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning
The Board, Group Operating Committee (GOC) and its management
committees consider climate-related issues when reviewing and
setting strategy, policies and financial planning.
There are already changes occurring in our business model and value
chain in response to climate change. We anticipate that these will
continue over the timescales mentioned on the previous page and
accelerate towards 2050.
Acquisitions or divestment
This includes significant strategic decisions, including how capital is
secured and spent. For example, having divested our plastics
business, our focus has turned towards organic growth through
circularity, recyclability and resource efficiency, exploiting climate-
related opportunities as a fibre-based manufacturer.
Capital investment
In our operations, our asset renewal strategies and decisions relating
to capital investment are impacted by the value of emissions. This
includes incorporating emissions valuations into project appraisals
and capital planning, particularly when considering significant
energy-related expenditure in our paper operations (as the most
energy intensive part of our business and therefore the greatest
emissions source).
Research and development (R&D)
Our R&D investments include alternative packaging materials, in
addition to barrier coatings that increase the efficacy of corrugated as
an alternative to plastic.
For example, in 2022 we opened our Fibre and Paper Development
Laboratory at Kemsley mill, as part of our £100 million five-year R&D
package announced in 2021, hosting innovative projects to accelerate
our work on the circular economy. We also invest in achieving greater
resource efficiency for natural assets, such as water. This includes, for
example, the installation of water re-circulation systems within some of
our paper mills.
Strategy and decision-making
Our primary strategy for responding to the effects of climate change
is articulated in the ‘Carbon’ pillar of our Now & Next Sustainability
Strategy, which includes our commitment to reach Net Zero
GHG emissions by 2050.
This is supported by our Net Zero Transition Plan, which documents
the targets, actions and resources deployed to enable the transition,
supporting and guiding our decision-making.
The impact of climate-related risks and opportunities has been
considered in the development of our Net Zero Transition Plan, which
is a ‘living’ document, meaning that it is flexible and responsive to new
information and developments in the external environment.
Key assumptions and external factors
Our transition plan looks into the future, and as such, assumptions
have to be made to support decisions, often made with limited
information. There are significant external factors that we depend on
to deliver our plan. For example, to achieve science-based Scope 3
reductions, we are reliant on our suppliers, particularly those that are
most energy-intensive (e.g. of paper, starch and chemicals), to reduce
their emissions in line with a 1.5°C trajectory.
Our plan is dependent on market factors, including continued demand
for recyclable packaging with a low carbon footprint, and national
investment in recycling infrastructure and renewable energy systems
to increase resource efficiency and ensure secure long-term supply.
Our plan will benefit from stable long-term energy policy, strategies
and incentives that encourage investment, particularly between
2030 to 2050, in terms of future availability of quality bioenergy
feedstocks and technological development.
We remain responsive to changes in our assumptions and the external
environment, for example, reacting to new policy measures and
seeking to benefit from incentives.
Our complete Net Zero Transition Plan report, which documents key
assumptions and external factors in greater detail, can be downloaded
from the ESG Reporting Hub on the DS Smith website.
Annual Report 2024 dssmith.com 63
Strategic Report Governance Financial Statements
A summary of our Net Zero Transition Plan
Our transition plan includes a roadmap of projects to deliver our 1.5°C validated science-based target to reduce Scope 1, 2 and 3
GHG emissions 46 per cent by 2030 compared to 2019 and to reach Net Zero GHG emissions by 2050.
Engaging our suppliers to set their
own science-based targets
Purchased goods and services
We are working with our suppliers to
encourage them to set science-based
targets, collaborating on projects and
building capacity to reduce supply
chainemissions.
Transportation and distribution
We are partnering with our logistics
suppliers to optimise transportation and
distribution, increasing truck-fill, improving
mileage and switching to low
emission fuels.
Waste generated in operations
We work with our waste management
suppliers to divert materials from landfill to
recovery, extracting energy from waste
and keeping materials in use for longer.
Supporting our customers to reduce
downstream product emissions
Processing of sold products
We are helping our customers to identify
reduction opportunities, increasing
recyclability, optimising supply chains
and promoting the adopting of
science-based targets.
Our plan sets clear actions and milestones in our own operations (Scope 1 and 2)
Our plan aims to engage and influence in our value chain (Scope 3)
Downstream emissions
As we continue to develop our internal roadmap and plans to reach Net Zero, we will explore
the best ways to utilise each of these decarbonisation levers, in addition to others that may be
developed between now and 2050. We will reduce greenhouse gas emissions urgently and
cost effectively, taking into consideration the likely future availability and viability of options.
Suppliers
Scope 3 Categories 1, 4, 5 and 9
Customers
Scope 3 Category 10
Consumers
Scope 3 Category 12
Enabling consumers to recycle more
End of life treatment of sold products
We will promote recycling towards increasing
the average recycling rate for 2030,
advocating for source segregation,
consistent collections and greater clarity to
enable consumers to recycle more.
Task Force on Climate-related Financial Disclosures (TCFD) continued
Reducing energy consumption
• We are identifying ways to continuously
improve energy efficiency.
Reducing material consumption
• We keep material use at a minimum
through circular design.
Reducing waste generation
• We are finding ways to minimise
operational waste by focusing on
greater resource efficiency, yield
improvement and higher-quality
‘right first time’ output to reduce
energyconsumption.
Switching to renewable energy
• We are investigating opportunities to
transition from fossil to renewable fuels,
such as biomass and energy generated
from waste, where viable.
• We will purchase electricity generated
from certified renewable sources, such
as wind and solar, where viable.
Adopting new technologies
• We are exploring modernising how we
generate and consume energy, from
new efficient combined heat and power
(CHP) plants, boilers and corrugators,
to future fuel and technological
innovations such as hydrogen,
when available.
Upstream emissions
Our plan is supported by
• Strong governance.
• Transparent reporting.
• Robust assurance.
Reduce Switch Adopt
64
The disclosures within this section of our TCFD disclosures have
been prepared with reference to the UK Transition Plan
Taskforce (UK TPT) framework, which aims to set the gold
standard for private sector transition plans.
Our complete Net Zero Transition Plan, which describes our key
actions and initiatives in greater detail, can be obtained from
our ESG Reporting Hub on the DS Smith website.
Our anticipated pathway to Net Zero GHG emissions
There are inevitable uncertainties relating to the precise timings of the deployment and delivery of our plan, which predominantly stem from planning far
into the future. Actual future emissions are likely to vary as it is challenging to predict the future availability and cost of commodities, policy environment and
timings of project delivery. Our internal plans take into consideration assumptions relating to future growth, which will impact emissions.
Practical considerations in our planning
With the support of our energy transition expert partners, we are
continuing to evaluate the practical considerations associated with
energy transition projects, as part of our planning.
This includes in-depth studies of potential transition changes to be
made to some of our most energy-intensive assets, including our
paper mills and largest packaging operations.
These assessments consider practical factors, such as regional
availability of biomass and renewable certificate supply to meet
future energy demand.
We have evaluated local issues, such as site space availability,
permitting and the impact on site operations and local communities,
such as increased traffic and site-level production growth.
As part of these assessments, assumptions have been made relating
to discount rates, investment years and technical lifetimes, as well as
future costs (e.g. carbon and commodity price forecasts).
2019 2030 2050
-19%
since 2019/20 base year
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Progress to date
Now Next
Driving decarbonisation with the
solutions that exist today
Building on a 19 per cent reduction
since 2019/20, we continue to…
• Reduce energy, materials and waste
• Switch to renewable energy
• Adopt new technologies.
We are engaging with suppliers,
customers and consumers to
reduce our value chain emissions
as part of our combined Scope
1, 2 and 3 science-based target
Scaling up renewable energy
sources in a circular economy
The long-term future will depend
on deploying new innovative
technologies that require
less heat for drying, bioenergy
availability at scale and the
transition to a circular economy
for renewable energy and
materials to cut emissions.
Our pathway to Net Zero for the
long term is illustrative, and through
continuous review, our internal plans,
which contain considerably greater
detail, will be re-aligned to take
advantage of the best-cost options
available at the time considering for
example, future costs, technology and
commodity availability.
High-quality GHG emissions removals,
such as technological and natural
solutions, will be explored to neutralise
any limited emissions that cannot be
eliminated from 2050 onwards.
-46% 1.5°C
science-based target for 2030
Net
Zero
2024
Rouen mill transition from coal to biomass
In partnership with Engie, the coal-fired boiler at Rouen is being
replaced with a new biomass boiler, which will supply
c. 80 per cent of the heat demand, with operation by 2025/26.
It is expected that the 56 MW Valmet boiler will be fuelled by
c. 30 per cent by-products (pulper waste) and c. 70 per cent
waste wood (e.g. from furniture and demolition waste).
It is anticipated that by 2025/26, this will reduce emissions by
c. 99,000 tonnes, reflecting a significant transition delivery
milestone alongside those at Kemsley and Aschaffenburg mills.
Annual Report 2024 dssmith.com 65
Strategic Report Governance Financial Statements
Transitioning our own operations to Net Zero
Around one-third of our total greenhouse gas emissions are
Scope 1 and 2 emissions, meaning that they are either direct
emissions related to the use of fuels in our own operations (Scope 1)
or indirect emissions relating to the electricity and steam we import to
consume in our own operations (Scope 2).
We have identified the primary decarbonisation levers described
on page 64. Within these levers is a roadmap of projects, at varied
stages of project progression, with quantified costs and anticipated
emission reductions.
Predominantly for our own operations, these projects include
upgrades to physical assets, production processes and equipment,
contractual changes and energy efficiency initiatives.
Often, changes made to one part of the process have a range of
implications, for example, upgrading a waste water treatment plant,
bringing improvements in water quality and biogas generation.
Task Force on Climate-related Financial Disclosures (TCFD) continued
Examples of milestones in our transition plan
There are milestones within our plan that tackle our most significant
emission sources. These build on the progress delivered at Kemsley
mill, where one third of the steam demand is met by the neighbouring
‘K3’ waste-to-energy combined heat and power (CHP) generating
facility and the remainder of the steam demand and electricity
demand is met by a modernised E.ON owned and operated ‘K4’ plant.
2023/24 2024/25 2025/26
Products and services
We anticipate that as society transitions to a
1.5°C future, demand for sustainable
packaging will continue to rise as consumers
are more conscious of their impact on the
planet, necessitating greater recycling.
We are adapting our products and services
strategies in response to this, realising our
identified climate-related opportunities.
We work with some of the world’s most iconic
brands, which place climate change at the
forefront of their agendas.
In response, this has impacted our product
strategy, for example in the articulation of
our customer value proposition, which was
recently adapted to include ‘Circular ready:
we help our customers with circular
packaging solutions’.
Crucially, as we implement our Net Zero
Transition Plan in our own operations, we
expect that the product carbon footprint
will decrease.
Circular Design Metrics
We engage our customers using innovative
tools such as our Circular Design Metrics,
which help our customers compare the
industry-average lifecycle carbon footprint*
of different packaging and help our
customers to identify opportunities for
greater resource efficiency across the
supply cycle and engage with them on
sustainability campaigns.
* Carbon footprint calculation is based on
industry-average data from the FEFCO cradle to
grave life cycle assessment. The life cycle
inventory data and methodology can be obtained
from https://www.fefco.org/lca/.
Policies and conditions
We have a range of policies in place, from Carbon and Energy Efficiency to Sustainable
Forest Management and Fibre Sourcing, that promote the necessary conditions to guide
decision-making and actions that support the implementation of our transition plan.
These are explored in our full Net Zero Transition Plan report, which can be downloaded
from our ESG Reporting Hub on the DS Smith website.
The DS Smith Sustainability Report 2024 includes further information on climate-
related topics, such as sustainable forest management, energy management
and procurement.
Preparation of our
inaugural Net Zero
Transition Plan,
building on a 19
per cent reduction in
total GHG emissions
achieved since
2019/20
Start of programme to
introduce partial
waste-to-energy
transition (natural gas
to refuse-derived fuel)
at Aschaffenburg mill
Anticipated
commencement of
biomass boiler
operation (coal to
biomass transition)
at Rouen mill
66
Engagement strategy
Although we are not directly responsible for generating Scope 3
emissions, understanding our value chain emissions presents
opportunities to influence decarbonisation. This involves engaging
with stakeholders to identify reduction opportunities and encourage
the deployment of initiatives to reduce emissions at scale.
Our engagements prioritise the business activities that generate the
greatest emissions to maximise their contribution towards achieving
our science-based target of reducing Scope 1, 2 and 3 greenhouse gas
emissions 46 per cent by 2030 compared to 2019.
As part of setting the science-based target and calculating the base
year Scope 3 emissions, we conducted a screening exercise to
determine significant value chain emission sources.
The most significant emission sources include:
Upstream emissions
• Emissions from the manufacture of production-related goods
(e.g. paper, starch), generated by suppliers.
• Well-to-tank emissions from natural gas, generated by
energysuppliers.
• Emissions from waste sent to landfill, generated by waste
management suppliers.
Downstream emissions
• Emissions from the manufacture of new recycled paper from paper
for recycling sold to our customers.
• Emissions from waste that decomposes in landfill from consumer
end of life disposal.
Reflecting these emission hotspots, our engagement efforts prioritise
suppliers (e.g. strategic suppliers of paper and other production-
related goods that have energy-intensive manufacturing processes)
and customers (e.g. large global FMCG brands).
Further to this, we engage widely with industry, government, public
sector and civil society to support the delivery of our transition plan.
Engaging our suppliers
We engage our strategic suppliers to set science-based targets,
deploying bespoke engagement mechanisms depending on supplier
maturity, towards delivering our Now & Next supplier engagement
target, ‘by 2027, encourage 100 per cent of our strategic suppliers to
set their own science-based targets’*.
We prioritise ‘strategic suppliers’, which we define as the suppliers
with whom we hold a long-term, mutually cooperative relationship
with mutual commitment, where significant and ongoing value is
accrued to both parties through operational capabilities. In 2023/24,
we categorised 110 of our suppliers as strategic. We typically have
large amounts of annual spend with these suppliers, meaning that we
have the greatest degree of leverage to influence actions.
Given that our strategic paper suppliers generate our greatest source
of upstream emissions, our Paper Sourcing team regularly meets with
these suppliers to review their decarbonisation progress, discuss their
plans and identify opportunities to share knowledge.
We engage less mature suppliers through the Supplier Leadership on
Climate Transition initiative, founded by some of our key customers,
to encourage them to calculate their carbon footprint, set a
science-based target and begin reducing emissions.
Scope 3
In 2023/24, we estimate that c. 42 per cent of our Scope 3 Category 1
(Purchased Goods and Services) emissions were generated by
suppliers who have set or are in the process of setting their own
science-based target (2022/23: 32 per cent).
Over the next year, we plan to engage a greater number of suppliers
as a member of the CDP Supply Chain programme, building on our first
CDP cycle in 2023. This enables us to collect data to understand the
progress made in our supply chain.
In line with our Supplier Management policy, we aim to retain and
engage suppliers in instances where the engagement does not lead to
desired changes. In extreme cases, non-adherence can result in
exiting a relationship with a supplier. We continue to assess the
sustainability practices of our suppliers using EcoVadis, in addition to
requiring that our suppliers adhere to our Global Supplier Standards.
* Within our base year Scope 3 inventory, we estimate that these companies
generate c. 76 per cent of emissions in Scope 3 Category 1: Purchased Goods
and Services. In 2023/24, we categorised 110 of our suppliers as ‘strategic’.
The percentage of emissions figure may change as we adopt supplier-specific
emission factors in our greenhouse gas inventory.
Engaging our customers
We engage with our customers on a range of topics relating to
Net Zero, including decarbonisation plans, product life cycle
assessments and bespoke carbon data requests.
These engagements tend to prioritise our largest global FMCG brands,
that have relatively mature sustainability strategies, comprehensive
plans and advanced data requirements. They are typically
pan-European brands with whom we have long-term significant
relationships and from whom we generate significant revenues.
These customers purchase significant volumes and work with us as
their packaging strategists and circularity experts. Our value chains
have become integrated and interdependent, increasing the degree
of leverage to influence actions in our operations, our customers’
operations and the value chain more widely.
This included, for example, purchasing renewable electricity via
Energy Attribute Certificates (EACs) estimated to represent the
electricity consumption associated with the production of packaging
supplied to a global FMCG customer in certain markets.
It is difficult at this stage to accurately quantify the expected
contributions of specific activities, but collective actions with many
customers could contribute meaningful reductions.
1%
14%
73%
12%
Suppliers
Customers
Consumers
Remainder
‘Suppliers’ includes Scope 3
Categories 1, 2, 3, 4, 5, 6 and 9
‘Customers’ includes Scope 3
Category 10
‘Consumers’ includes Scope 3
Category 12
‘Remainder’ includes Scope 3
Categories 7, 8 and 15
Annual Report 2024 dssmith.com 67
Strategic Report Governance Financial Statements
Task Force on Climate-related Financial Disclosures (TCFD) continued
Engagement with government, public sector,
communities and civil society
Our engagement activities with government, public sector,
communities and civil society are prioritised based on the perceived
opportunity to influence policy towards a favourable legislative and
policy landscape for the success of the Company, including in our
ability to deliver our transition plan.
Government and public sector
This includes progressing and securing significant policy issues in the
UK and the EU that involve key external factors that the delivery of
our transition plan is dependent on, such as enabling greater recycling
and decarbonising our industry in a predictable policy environment,
ensuring a successful and smooth transition to Net Zero.
Crucially for the deployment of the transition plan, we call upon
policymakers to remove uncertainty through a predictable policy
environment that enables long-term planning and investment to
achieve the aim of the Paris Agreement under the United Nations
Framework Convention on Climate Change.
Policy priorities
Our policy priorities include:
Decarbonisation of heat
We call on governments to provide increased support for low
carbon energy sources and to set out clear deployment
timelines to enable industry to plan and invest for the future
timely and efficiently
Reuse and recycling
We call on policymakers to promote packaging solutions that
deliver the best outcome for the environment based on
transparent and robust scientific evidence, whereby in a
circular economy, both multi-use and recyclable single-use
packaging have a role
Extended producer responsibility
We call on extended producer responsibility (EPR) systems
to fund improvements in recycling infrastructure and
investment in separate waste collection to achieve
increased recycling rates
Specific policies, laws and regulations related to Net Zero
In 2023/24, our policy engagement specifically focused on:
• Revision of the Packaging and Packaging Waste Directive (via trade
associations FEFCO and Cepi, and direct engagement).
• Delegated acts supplementing the EU Deforestation Regulation
(via trade association Cepi).
• Revision of the Emissions Trading System Directive (via trade
association Cepi).
• Revision of the EU Carbon Border Adjustment Mechanism (via trade
association Cepi).
• Implementation of the UK Packaging Waste Regulations, including
UK EPR (via trade associations CPI and Packaging Federation).
• Proposal for a UK Carbon Border Adjustment Mechanism (CBAM)
(via trade association CPI).
Engagement with industry
We engage with industry peers predominantly through our trade
association memberships. This includes participating in and/or
chairing committees, sub-committees and working groups on
specifictopics.
These industry platforms provide an appropriate engagement
mechanism as they tend to involve industry counterparts and other
relevant adjacent industries, in well-governed, collaborative and
consensus-driven environments.
Engagement activities are prioritised based on the perceived
opportunity to build capacity and transfer knowledge (either to/from
DS Smith and industry counterparts, within the industry and/or
associated industries), build consensus and develop mutually
beneficial capabilities that contribute towards achieving the strategic
ambition of the transition plan.
Our current and planned engagement activities include
engagementswith:
• FEFCO (European Federation of Corrugated Board Manufacturers).
• Cepi (Confederation of European Paper Industries).
• EUROPEN (The European Organisation for Packaging and
theEnvironment).
• 4evergreen.
We also engage through national trade associations, including:
• CPI (The Confederation of Paper Industries).
• The Packaging Federation.
• The Recycling Association.
Driven by significant issues from circularity to carbon, technical
experts from across our business are involved in providing inputs to
these engagements, aiming to actively influence climate change-
related policy and related activities.
For example, 4evergreen, a cross-industry initiative to drive the
recycling rate of paper products in Europe to 90 per cent by 2030, is a
significant opportunity to reduce downstream (Category 12) Scope 3
greenhouse gas emissions.
Our Government Affairs function coordinates our approach to trade
associations, monitoring that contributions and outcomes are in
accordance with a 1.5°C future and that the engagements maintain
alignment with the goals of the transition plan. This includes monthly
internal briefings, policy monitoring and factsheets, disseminated to a
wide cross-functional group, whose responsibilities are linked to the
deployment of our transition plan.
68
Our strategic engagement and advocacy in these priority areas are
helping to minimise risk and amplify opportunities in these areas for
our business, maximising their contribution towards achieving the
strategic ambition of our transition plan.
Our current and planned engagement activities include ensuring
support and incentives for the decarbonisation of our industry,
campaigning for high-quality recycling infrastructure and raising our
profile amongst prominent politicians in the United Kingdom and the
European Union. An example of this can be found in our recent
publication, ’Wasted Paper: A Path to Better Recycling’.
Communities and civil society
One of our most prominent stakeholder relationships is with the Ellen
MacArthur Foundation (EMF), of whom we are a strategic partner.
The EMF aims to promote the circular economy to eliminate waste and
pollution, regenerate nature, minimise new resources and create an
economy that benefits all. Significant areas of engagement activity
with the EMF include initiatives relating to product design, policy
events and policy goals.
We have worked together to develop our Circular Design Principles
and Circular Design Metrics with experts in circular design from the
EMF. We have collaborated to educate EU policy audiences on the
circular economy and design for circularity at key events and we have
contributed to the development of EMF’s universal circular economy
policy goals, enabling governments and businesses to benefit from
the circular economy.
All of these activities contribute to our transition plan at the interface
of circular economy and climate change.
Our engagements with communities and civil society tend to be highly
localised and context specific. We are committed to engaging with our
communities and civil society, particularly in instances where the
deployment of this transition plan impacts these stakeholders.
It is difficult to quantify the expected principal contributions of this
type of engagement as these engagements tend to address long-
term, systemic issues. If left unaddressed, issues of a systemic nature
could present risk to the delivery of our transition plan.
We therefore use our engagement to influence significant actors in
government, parliamentary bodies, public sector, communities and
civil society to help create the optimal external conditions in which to
deliver our transition plan.
See the stakeholder engagement section of the
DS Smith Sustainability Report 2024 for further
examples of how we engage with our stakeholders
Wasted Paper: A Path to
Better Recycling
Our comprehensive report, which
can be downloaded from the
DS Smith website, delves into the
recycling rates for paper and
cardboard packaging across
Europe and the opportunity we
have to achieve an aspirational
90per cent target recycling rate by 2030.
Wemake four key recommendations, including the introduction
and enforcement of long-lasting, consistent recycling
legislation to realise the benefits of keeping resources in use
for longer in the circulareconomy.
Financial position, performance and cash flows
We consider the impact of climate change in preparing our
consolidated financial statements, including the effect upon the
application of our accounting policies, judgements, estimates and
assumptions. In making our assessment of the impact, we consider
climate-related risks and opportunities identified through our
risk management processes as set out in our TCFD disclosures and
in our Now & Next Sustainability Strategy.
These considerations, which are core to our strategy, do not have a
material impact on any accounting estimates and judgements,
including the estimated future cash flows used in the impairment
assessment of goodwill; the assessment of residual values and useful
economic lives of property, plant and equipment; or the adequacy of
provisions for liabilities.
As we continue to identify the actions proposed to be taken to
achieve our 1.5°C science-based target, we will continue to identify
the capital projects, investments and other decarbonisation levers
needed to achieve the strategic ambition of the transition plan.
These projects are considered over the time periods referred to on
page 62 and will be prioritised with consideration for a range of
factors, including asset retirement, technology availability and
investment cost.
These factors are evaluated through annual budget reviews, informed
by the corporate and capital planning processes. Any capital expenditure
or project costs are anticipated to be funded through the existing or
similar replacement financing structures of the Group.
Annual Report 2024 dssmith.com 69
Strategic Report Governance Financial Statements
Climate-related risks
Climate-related risk Description Primary potential financial impacts Key actions in our strategies that mitigate the risk
Increased spend on carbon taxes
Type: Policy and legal transition risk
Time horizon: Short term
Link to principal risk: ‘Regulation and governance’
Potential to impact: our European paper mills, with the potential to
extend to other regions
Definition
New carbon taxes could be introduced, or existing carbon taxes, such
as the European Union Emissions Trading System (EU ETS), could be
extended as a policy tool to incentivise decarbonisation.
Example outcome in a 1.5°C scenario
Carbon taxes are introduced in new regions in the future, and/or
schemes become more expensive to limit emissions.
Example outcome in a >2°C scenario
Carbon taxes are lower.
Increased operating costs (e.g. higher compliance costs)
The scenarios explore a range of potential future carbon taxes.
For example, if the cost per European Union Allowance (EUA)
increased to €130 per tonne and if, as described by the IEA ETP 2°C
scenario, a North American carbon tax was introduced, rising to $93
per tonne by 2030, this could amount to a cost of £107 million.
Alternatively, with a lower cost of carbon estimated at €71 and $64
per tonne, this could amount to a cost of £45 million, which is more
likely in a >2°C scenario with lower carbon taxes.
• Hedge the cost of fuel, energy and carbon with our suppliers and
financial institutions.
• Factor the cost of carbon into our net zero transition planning and
analysis and optimisation of project deployment, alongside
scenarios and forecasts of future growth and fuel availability.
• Deploy actions in our Net Zero Transition Plan to deliver our
1.5°C science-based target, including switching from fossil to
renewable fuels that reduce our GHG emissions and therefore
limit exposure to carbon taxes.
Increased cost of raw materials or threat to supply
Type: Market transition risk and/or acute or chronic physical risk
Time horizon: Medium – long term
Link to principal risk: ‘Security of paper/fibre supply’
Potential to impact: our Paper Sourcing and Procurement functions
Definition
Raw materials, such as paper, pulp or starch, could become more
expensive or difficult to acquire owed to disruption or shifts in market
dynamics as a result of climate change.
Example outcome in a 1.5°C scenario
Disruption or shifts in market dynamics are less severe and more
predictable, e.g. caused by planned regulatory change.
Example outcome in a >2°C scenario
Disruption or shifts in market dynamics are more severe due to
chronic reasons, e.g. extreme weather causes crop failure.
Increased production costs (e.g. higher input prices)
Higher input costs would have to be recovered through increased
packaging pricing, which would increase revenue.
If, for example, in a >2°C scenario, the average price of a key input
was to increase by 10 per cent compared to present day, this could
lead to an increase in production costs, assuming the same level of
production as today, of £87 million.
Alternatively, in a 1.5°C scenario, if only a 3 per cent increase was
observed, owed to less severe disruption, this could lead to an
increase in production costs of £26 million.
• Optimise the best fit between paper production, fibre sourcing and
packaging demand to balance over the long term.
• Remove unnecessary waste and save natural resources through
innovative design, as part of delivering our Now & Next target to
optimise fibre use for unique supply chains.
Increased severity of extreme weather events
Type: Acute physical risk
Time horizon: Medium – long term
Link to principal risk: ‘Security of paper/fibre supply’
Potential to impact: specific geographies as identified by
specialists, e.g. hurricanes on the south-eastern coast of the USA
Definition
The frequency and severity of extreme weather events could
increase, causing damage and disruption.
Example outcome in a 1.5°C scenario
Extreme weather is less severe, causing minimal disruption.
Example outcome in a >2°C scenario
Extreme weather is more severe, causing greater disruption, e.g.
thunderstorms, tornadoes and extreme heat.
Increased capital costs (e.g. more repair and maintenance)
This could be as a result of damage to property, which may result in
higher insurance premiums, compounded by costs to ensure
continuity of supply. We use a ‘business interruption value-at-risk’
metric to determine the potential impact of disruption caused by a
climate-related event.
If, for example, in a >2°C scenario, production was halted for a whole
year at our highest-value site in a geographic region prone to specific
climate events, this could present an incident valued at £90 million.
If, in a 1.5°C scenario, disruption only lasted for one month due to a
less severe climate-related weather event, this would be valued
at£8 million.
• Ensure that climate resilience indicators are part of the evaluation
process when evaluating strategic decisions relating to our
production footprint and capacity planning.
• Implement adequate and flexible business continuity plans, using
data to improve climate modelling and to strengthen our business
resilience with a changing climate pattern.
Increased likelihood of water stress
Type: Chronic physical risk
Time horizon: Long term
Link to principal risk: ‘Regulation and governance’
Potential to impact: specific geographies as identified by the WRI
Aqueduct tool, particularly our paper mills which use significant
volumes of water to convert paper for recycling back into pulp
Definition
Competition for water could increase in the river basins from which
we withdraw water, increasing the chance that water supply
constraints could be imposed by local authorities.
Example outcome in a 1.5°C scenario
Water stress is less severe, causing minimal disruption.
Example outcome in a >2°C scenario
Water stress is more severe, with greater disruption, e.g. as greater
consumption patterns drive up water usage.
Decreased revenues and profit (e.g. temporary curtailment)
This could be as a result of decreased production capacity because of
limits placed on water withdrawal. We use the IPCC 4°C scenario to
identify sites at risk of water stress and a ‘business interruption
value-at-risk’ metric to determine the potential impact resulting from
a climate-related disruption.
If, for example, in a >2°C scenario, production was halted for 31 days
at our highest-value site located in a region at future risk of water
stress, this could present an incident valued at £2 million.
Were this incident only to occur for seven days, in a 1.5°C scenario,
this would be valued at less than £1 million.
• Invest in closed-loop solutions that recycle water and other water
efficiency measures, from optimising the configuration of
processes to modernising water intensive equipment.
• Maintain localised water stress mitigation measures
(water management and water scarcity plans) at sites with
greater than 5,000m
3
water withdrawal, with business
continuity planning, regular contact with relevant stakeholders
(e.g. the water authority and local community) and
monthly performance review.
Task Force on Climate-related Financial Disclosures (TCFD) continued
Climate resilience
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
Our identified climate-related risks and opportunities, alongside example outcomes drawn from several
IEA and IPCC climate scenarios, including industry-specific scenarios, are described in the tables that follow.
70
Climate-related risks
Climate-related risk Description Primary potential financial impacts Key actions in our strategies that mitigate the risk
Increased spend on carbon taxes
Type: Policy and legal transition risk
Time horizon: Short term
Link to principal risk: ‘Regulation and governance’
Potential to impact: our European paper mills, with the potential to
extend to other regions
Definition
New carbon taxes could be introduced, or existing carbon taxes, such
as the European Union Emissions Trading System (EU ETS), could be
extended as a policy tool to incentivise decarbonisation.
Example outcome in a 1.5°C scenario
Carbon taxes are introduced in new regions in the future, and/or
schemes become more expensive to limit emissions.
Example outcome in a >2°C scenario
Carbon taxes are lower.
Increased operating costs (e.g. higher compliance costs)
The scenarios explore a range of potential future carbon taxes.
For example, if the cost per European Union Allowance (EUA)
increased to €130 per tonne and if, as described by the IEA ETP 2°C
scenario, a North American carbon tax was introduced, rising to $93
per tonne by 2030, this could amount to a cost of £107 million.
Alternatively, with a lower cost of carbon estimated at €71 and $64
per tonne, this could amount to a cost of £45 million, which is more
likely in a >2°C scenario with lower carbon taxes.
• Hedge the cost of fuel, energy and carbon with our suppliers and
financial institutions.
• Factor the cost of carbon into our net zero transition planning and
analysis and optimisation of project deployment, alongside
scenarios and forecasts of future growth and fuel availability.
• Deploy actions in our Net Zero Transition Plan to deliver our
1.5°C science-based target, including switching from fossil to
renewable fuels that reduce our GHG emissions and therefore
limit exposure to carbon taxes.
Increased cost of raw materials or threat to supply
Type: Market transition risk and/or acute or chronic physical risk
Time horizon: Medium – long term
Link to principal risk: ‘Security of paper/fibre supply’
Potential to impact: our Paper Sourcing and Procurement functions
Definition
Raw materials, such as paper, pulp or starch, could become more
expensive or difficult to acquire owed to disruption or shifts in market
dynamics as a result of climate change.
Example outcome in a 1.5°C scenario
Disruption or shifts in market dynamics are less severe and more
predictable, e.g. caused by planned regulatory change.
Example outcome in a >2°C scenario
Disruption or shifts in market dynamics are more severe due to
chronic reasons, e.g. extreme weather causes crop failure.
Increased production costs (e.g. higher input prices)
Higher input costs would have to be recovered through increased
packaging pricing, which would increase revenue.
If, for example, in a >2°C scenario, the average price of a key input
was to increase by 10 per cent compared to present day, this could
lead to an increase in production costs, assuming the same level of
production as today, of £87 million.
Alternatively, in a 1.5°C scenario, if only a 3 per cent increase was
observed, owed to less severe disruption, this could lead to an
increase in production costs of £26 million.
• Optimise the best fit between paper production, fibre sourcing and
packaging demand to balance over the long term.
• Remove unnecessary waste and save natural resources through
innovative design, as part of delivering our Now & Next target to
optimise fibre use for unique supply chains.
Increased severity of extreme weather events
Type: Acute physical risk
Time horizon: Medium – long term
Link to principal risk: ‘Security of paper/fibre supply’
Potential to impact: specific geographies as identified by
specialists, e.g. hurricanes on the south-eastern coast of the USA
Definition
The frequency and severity of extreme weather events could
increase, causing damage and disruption.
Example outcome in a 1.5°C scenario
Extreme weather is less severe, causing minimal disruption.
Example outcome in a >2°C scenario
Extreme weather is more severe, causing greater disruption, e.g.
thunderstorms, tornadoes and extreme heat.
Increased capital costs (e.g. more repair and maintenance)
This could be as a result of damage to property, which may result in
higher insurance premiums, compounded by costs to ensure
continuity of supply. We use a ‘business interruption value-at-risk’
metric to determine the potential impact of disruption caused by a
climate-related event.
If, for example, in a >2°C scenario, production was halted for a whole
year at our highest-value site in a geographic region prone to specific
climate events, this could present an incident valued at £90 million.
If, in a 1.5°C scenario, disruption only lasted for one month due to a
less severe climate-related weather event, this would be valued
at£8 million.
• Ensure that climate resilience indicators are part of the evaluation
process when evaluating strategic decisions relating to our
production footprint and capacity planning.
• Implement adequate and flexible business continuity plans, using
data to improve climate modelling and to strengthen our business
resilience with a changing climate pattern.
Increased likelihood of water stress
Type: Chronic physical risk
Time horizon: Long term
Link to principal risk: ‘Regulation and governance’
Potential to impact: specific geographies as identified by the WRI
Aqueduct tool, particularly our paper mills which use significant
volumes of water to convert paper for recycling back into pulp
Definition
Competition for water could increase in the river basins from which
we withdraw water, increasing the chance that water supply
constraints could be imposed by local authorities.
Example outcome in a 1.5°C scenario
Water stress is less severe, causing minimal disruption.
Example outcome in a >2°C scenario
Water stress is more severe, with greater disruption, e.g. as greater
consumption patterns drive up water usage.
Decreased revenues and profit (e.g. temporary curtailment)
This could be as a result of decreased production capacity because of
limits placed on water withdrawal. We use the IPCC 4°C scenario to
identify sites at risk of water stress and a ‘business interruption
value-at-risk’ metric to determine the potential impact resulting from
a climate-related disruption.
If, for example, in a >2°C scenario, production was halted for 31 days
at our highest-value site located in a region at future risk of water
stress, this could present an incident valued at £2 million.
Were this incident only to occur for seven days, in a 1.5°C scenario,
this would be valued at less than £1 million.
• Invest in closed-loop solutions that recycle water and other water
efficiency measures, from optimising the configuration of
processes to modernising water intensive equipment.
• Maintain localised water stress mitigation measures
(water management and water scarcity plans) at sites with
greater than 5,000m
3
water withdrawal, with business
continuity planning, regular contact with relevant stakeholders
(e.g. the water authority and local community) and
monthly performance review.
Annual Report 2024 dssmith.com 71
Strategic Report Governance Financial Statements
Climate-related opportunities
Climate-related opportunity Description Primary potential financial impacts Key actions in our strategies that realise the opportunity
Growth in demand for sustainable packaging
Type: Products and services
Time horizon: Short term
Link to principal risks: ’Changes in shopping habits’, ‘Packaging
capacity fluctuations’, ‘Organisation capability’, ‘Substitution of
fibrepackaging’
Alignment with strategic pillar: To delight our customers
Potential to impact: predominantly our Packaging business, with
implications for our Paper, Paper Sourcing and Recycling operations
Definition
Drive organic growth by demonstrating the benefits of circular
packaging that helps brands and consumers to replace plastic and
reduce their carbon footprint in the transition to Net Zero.
Example outcome in a 1.5°C scenario
Demand for sustainable packaging is greater as consumers are
more conscious of their impact on the planet, necessitating
greaterrecycling.
Example outcome in a >2°C scenario
Uptake for sustainable packaging is slower and appetite for recycling
is lower, foregoing the opportunity.
Increased revenues and profit (e.g. more sales)
Organic growth and market share capture as a result of greater
demand for recyclable packaging, enhanced by the added value of
our sustainability, innovation and circularity credentials.
If, for example, in a 1.5°C scenario, 1.5 per cent annual growth, as
described in the IEA NZE 2050 scenario, could be fully exploited, by
2030 this could increase revenue by c. £637 million.
Alternatively, in a >2°C scenario, with less demand for sustainable
packaging, assuming 1 per cent annual growth, by 2030 this could
increase revenue by c. £420 million.
In each of these figures, we assume that the growth in paper
production described in the reference scenario is a result of
packaging demand, increasing packaging revenue.
• Support our design and innovation community with the tools they
need to design for the circular economy, building on over 1,000
designs for millions of products geared towards reducing the use
of plastic.
• Invest in R&D (doubled to a £100 million package to deliver over
five years) to include the creation of new breakthrough
technologies in materials and design innovation to support the
circular economy.
• Identify new plastic replacement opportunities, including
capitalising on opportunities brought about by regulatory changes,
e.g. the Single Use Packaging Directive and Packaging and
Packaging Waste Regulation (PPWR).
Greater resource efficiency
Type: Resource efficiency
Time horizon: Short term
Link to principal risks: ’Paper/fibre price volatility’, ‘Sustainability
commitments’
Alignment with strategic pillar: To double in size and profitability
Potential to impact: the whole business, but predominantly in
packaging design to reduce material consumption and in the energy
efficiency of our recycled paper mills, as they use heat to evaporate
water in drying pulp and paper
Definition
Use fewer resources (materials, energy and/or water), both in
manufacture through design and operating efficiency, and
throughout the value chain to reduce climate impact and cost.
Example outcome in a 1.5°C scenario
Greater resource efficiency is achieved across the industry at the
‘system’ level, for example, by encouraging markets to invest in
improved recycling infrastructure to create cleaner waste streams.
This has the added benefit of increasing energy efficiency, as cleaner
material requires less processing.
Example outcome in a >2°C scenario
A lesser focus on resource efficiency fails to protect natural
resources and the potential benefits are foregone.
Decreased production costs (e.g. less material consumption)
Decreased cost as a result of reduced materials, energy and water
consumption, increasing profitability and added positive reputation
value associated with a low environmental impact product.
If, for example, in a 1.5°C scenario, energy intensity reduced by c. 2
per cent per year to 2030, as described in the IEA NZE 2050 scenario,
this would result in a saving of c. £37 million.
Alternatively, if in a >2°C scenario, only a 0.6 per cent decrease in
energy consumption was secured, as described in the IEA SDS 2030
scenario, the saving would be reduced to c. £12 million.
Beyond this example of energy efficiency, material efficiency
through better product design and supply chain optimisation could
present more savings and value creation opportunities.
• Reduce energy consumption as part of our Group-wide ISO
50001:2018 certified energy management system at 100 per cent
of relevant sites to continuously improve energy performance,
cost and GHG emissions, with site-level targets and monitoring.
• Advocate for separate collection of recyclables to improve quality
of material by reducing contamination, increasing recycling rates,
lowering environmental impact and cost for local authorities as
part of our engagement with policy makers.
• Work with our customers to reduce fibre consumption,
predominantly through better design, as part of delivering our
Now & Next target to optimise fibre use for unique supply chains.
Use of lower-emission energy sources
Type: Energy source
Time horizon: Medium – long term
Link to principal risk: ‘Sustainability commitments’
Alignment with strategic pillar: To lead the way in sustainability
Potential to impact: the whole business, but predominantly our
recycled paper mills, which rely on fossil fuels as, unlike primary pulp
production, recycled production does not have biofuels readily
available as a by-product from the wood used
Definition
As energy systems evolve, there is an opportunity to adopt lower-
emission energy sources and energy efficiency measures. These
could be equipment-based (e.g. e-boilers and carbon capture and
storage), fuel-based (e.g. hydrogen) or process-based (e.g. heat
recovery and optimisation through digital and data innovation).
Example outcome in a 1.5°C scenario
Transitioning from fossil fuels to renewable fuels, including biomass,
biomethane and hydrogen limits warming to 1.5°C.
Example outcome in a >2°C scenario
Lower-emission energy sources are not affordable or are unavailable
at the scale required to achieve Net Zero and the fuel mix remains
roughly the same as present-day.
Decreased operating costs (e.g. less fossil fuel consumption)
Decreased cost as a result of reduced energy consumption and
less exposure to future fossil fuel price increases and sensitivity to
the cost of carbon. Added returns on investment secured from
low-emission technology.
According to the IEA NZE 2050 scenario, it will be important to move
away from fossil fuels to near zero-emission alternatives for the
industry to reach Net Zero, with the proportion of renewable fuels in
the average energy mix increasing from 43 per cent to almost
50 per cent in 2030.
Assuming average renewable/non-renewable fuel costs, achieving
this transition could present an energy cost reduction of £77 million.
Alternatively, were no transition achieved, this would be zero.
Inevitably costs would be incurred in achieving this transition which
are not included in this analysis.
• Investigate opportunities to implement lower-emission energy
sources, including the viability of renewable fuel sources as fossil
fuel alternatives, to be well-positioned to take advantage of
lower-emission energy sources.
• Deploy actions in our Net Zero Transition Plan, which includes
initiatives relating to switching to lower-emission energy sources
so that our business can grow without increasing emissions,
realising the benefits of harnessing renewable energy.
Task Force on Climate-related Financial Disclosures (TCFD) continued
72
Climate-related opportunities
Climate-related opportunity Description Primary potential financial impacts Key actions in our strategies that realise the opportunity
Growth in demand for sustainable packaging
Type: Products and services
Time horizon: Short term
Link to principal risks: ’Changes in shopping habits’, ‘Packaging
capacity fluctuations’, ‘Organisation capability’, ‘Substitution of
fibrepackaging’
Alignment with strategic pillar: To delight our customers
Potential to impact: predominantly our Packaging business, with
implications for our Paper, Paper Sourcing and Recycling operations
Definition
Drive organic growth by demonstrating the benefits of circular
packaging that helps brands and consumers to replace plastic and
reduce their carbon footprint in the transition to Net Zero.
Example outcome in a 1.5°C scenario
Demand for sustainable packaging is greater as consumers are
more conscious of their impact on the planet, necessitating
greaterrecycling.
Example outcome in a >2°C scenario
Uptake for sustainable packaging is slower and appetite for recycling
is lower, foregoing the opportunity.
Increased revenues and profit (e.g. more sales)
Organic growth and market share capture as a result of greater
demand for recyclable packaging, enhanced by the added value of
our sustainability, innovation and circularity credentials.
If, for example, in a 1.5°C scenario, 1.5 per cent annual growth, as
described in the IEA NZE 2050 scenario, could be fully exploited, by
2030 this could increase revenue by c. £637 million.
Alternatively, in a >2°C scenario, with less demand for sustainable
packaging, assuming 1 per cent annual growth, by 2030 this could
increase revenue by c. £420 million.
In each of these figures, we assume that the growth in paper
production described in the reference scenario is a result of
packaging demand, increasing packaging revenue.
• Support our design and innovation community with the tools they
need to design for the circular economy, building on over 1,000
designs for millions of products geared towards reducing the use
of plastic.
• Invest in R&D (doubled to a £100 million package to deliver over
five years) to include the creation of new breakthrough
technologies in materials and design innovation to support the
circular economy.
• Identify new plastic replacement opportunities, including
capitalising on opportunities brought about by regulatory changes,
e.g. the Single Use Packaging Directive and Packaging and
Packaging Waste Regulation (PPWR).
Greater resource efficiency
Type: Resource efficiency
Time horizon: Short term
Link to principal risks: ’Paper/fibre price volatility’, ‘Sustainability
commitments’
Alignment with strategic pillar: To double in size and profitability
Potential to impact: the whole business, but predominantly in
packaging design to reduce material consumption and in the energy
efficiency of our recycled paper mills, as they use heat to evaporate
water in drying pulp and paper
Definition
Use fewer resources (materials, energy and/or water), both in
manufacture through design and operating efficiency, and
throughout the value chain to reduce climate impact and cost.
Example outcome in a 1.5°C scenario
Greater resource efficiency is achieved across the industry at the
‘system’ level, for example, by encouraging markets to invest in
improved recycling infrastructure to create cleaner waste streams.
This has the added benefit of increasing energy efficiency, as cleaner
material requires less processing.
Example outcome in a >2°C scenario
A lesser focus on resource efficiency fails to protect natural
resources and the potential benefits are foregone.
Decreased production costs (e.g. less material consumption)
Decreased cost as a result of reduced materials, energy and water
consumption, increasing profitability and added positive reputation
value associated with a low environmental impact product.
If, for example, in a 1.5°C scenario, energy intensity reduced by c. 2
per cent per year to 2030, as described in the IEA NZE 2050 scenario,
this would result in a saving of c. £37 million.
Alternatively, if in a >2°C scenario, only a 0.6 per cent decrease in
energy consumption was secured, as described in the IEA SDS 2030
scenario, the saving would be reduced to c. £12 million.
Beyond this example of energy efficiency, material efficiency
through better product design and supply chain optimisation could
present more savings and value creation opportunities.
• Reduce energy consumption as part of our Group-wide ISO
50001:2018 certified energy management system at 100 per cent
of relevant sites to continuously improve energy performance,
cost and GHG emissions, with site-level targets and monitoring.
• Advocate for separate collection of recyclables to improve quality
of material by reducing contamination, increasing recycling rates,
lowering environmental impact and cost for local authorities as
part of our engagement with policy makers.
• Work with our customers to reduce fibre consumption,
predominantly through better design, as part of delivering our
Now & Next target to optimise fibre use for unique supply chains.
Use of lower-emission energy sources
Type: Energy source
Time horizon: Medium – long term
Link to principal risk: ‘Sustainability commitments’
Alignment with strategic pillar: To lead the way in sustainability
Potential to impact: the whole business, but predominantly our
recycled paper mills, which rely on fossil fuels as, unlike primary pulp
production, recycled production does not have biofuels readily
available as a by-product from the wood used
Definition
As energy systems evolve, there is an opportunity to adopt lower-
emission energy sources and energy efficiency measures. These
could be equipment-based (e.g. e-boilers and carbon capture and
storage), fuel-based (e.g. hydrogen) or process-based (e.g. heat
recovery and optimisation through digital and data innovation).
Example outcome in a 1.5°C scenario
Transitioning from fossil fuels to renewable fuels, including biomass,
biomethane and hydrogen limits warming to 1.5°C.
Example outcome in a >2°C scenario
Lower-emission energy sources are not affordable or are unavailable
at the scale required to achieve Net Zero and the fuel mix remains
roughly the same as present-day.
Decreased operating costs (e.g. less fossil fuel consumption)
Decreased cost as a result of reduced energy consumption and
less exposure to future fossil fuel price increases and sensitivity to
the cost of carbon. Added returns on investment secured from
low-emission technology.
According to the IEA NZE 2050 scenario, it will be important to move
away from fossil fuels to near zero-emission alternatives for the
industry to reach Net Zero, with the proportion of renewable fuels in
the average energy mix increasing from 43 per cent to almost
50 per cent in 2030.
Assuming average renewable/non-renewable fuel costs, achieving
this transition could present an energy cost reduction of £77 million.
Alternatively, were no transition achieved, this would be zero.
Inevitably costs would be incurred in achieving this transition which
are not included in this analysis.
• Investigate opportunities to implement lower-emission energy
sources, including the viability of renewable fuel sources as fossil
fuel alternatives, to be well-positioned to take advantage of
lower-emission energy sources.
• Deploy actions in our Net Zero Transition Plan, which includes
initiatives relating to switching to lower-emission energy sources
so that our business can grow without increasing emissions,
realising the benefits of harnessing renewable energy.
Annual Report 2024 dssmith.com 73
Strategic Report Governance Financial Statements
Climate scenario analysis methodology
In order to increase the utility of our climate scenario analysis,
we draw on industry-specific reference scenarios.
Industry-specific reference scenarios:
• Provide data that fits with our business and industry data.
• Address some of the decarbonisation challenges and
climate-related risks and opportunities that we face.
• Align with the latest international agreement on climate.
They include information to 2030 and 2050, the same time
horizon as our science-based target and Net Zero commitment.
The selected scenarios, developed for the pulp and paper
sector, predominantly focus on our paper businesses because
these are our most energy-intensive operations.
IEA NZE 1.5°C by 2030 (Pulp & Paper)
In this scenario, growth in production and energy consumption
are decoupled to achieve decarbonisation to the extent
required to be on track with the Sustainable Development
Scenario (SDS) by 2030.
IEA Net Zero Emissions by 2050 (Pulp & Paper)
In this scenario, annual production expands, necessitating
greater recycling. Using a higher share of bioenergy is
important to align with the Net Zero by 2050 trajectory.
We supplement these with non industry-specific scenarios that
reflect a range of warming trajectories, including greater than
2°C by 2100 compared to pre-industrial levels, presenting a
range of contrasting futures, including an alternative to the
1.5°C scenario. They address cross-industry issues, such as
carbon taxes.
The scope includes our packaging and paper businesses.
IEA ETP SDS 2°C
In this scenario, mitigation measures are applied to carbon
intensive industries, alongside technological advancements to
the extent required to limit global warming to within 2°C by
2100 versus pre-industrial levels.
IPCC RCP 8.5 4°C
In this scenario, a ‘business as usual’ state of no policy changes
leads to growth in emissions, causing some of the physical
effects of climate change to be felt with greater severity.
In each scenario, we assume that we have the same activities as
today, drawing on financial and non-financial data from the
most recent reporting period at the time of the analysis.
We model the most relevant reference points from the
scenarios and use financial data to assess potential future
effects on financial metrics. The primary potential financial
impact figures given are illustrative estimates, given within the
context of each scenario. The analysis was updated in May 2024
and some of the estimates have changed compared to last year,
due to changes in the inputs to our climate scenario analysis
model. For example, revenues, costs and currency exchange
rates have changed compared to those used previously. For
water stress, the latest version of the WRI Aqueduct tool has
updated inputs to the hydrological model, providing more
accurate baseline data, as well as future projection data for 2030,
based on the latest climate models. The estimates provided
may therefore be incomparable to those previously given.
Resilience based on climate scenario analysis
The results obtained from analysis suggest that our present-day
strategy is resilient to climate-related risks and opportunities and that
we would not need to make fundamental changes to our business
model between now and 2030, under a variety of contrasting future
warming scenarios.
The strategic ambition of our Net Zero Transition Plan, including our
science-based target, guides us towards maximising the identified
opportunities arising from the transition to a 1.5°C world.
Our transition plan helps to mitigate climate-related risk through the
deployment of roadmap projects, combined with appropriate risk
management practices, increasing resilience.
As we decarbonise alongside the entire industry, we see an
opportunity to be at the forefront of leading the transition to a circular
economy, which, compared to the linear economy, is a better system
for tackling climate change, pollution and biodiversity loss.
Significant areas of uncertainty
The scenarios used in our analysis explore a range of assumptions
about how climate change and variables such as carbon taxes, rates of
energy efficiency and river basin water demand may develop far into
the future. Inevitably, there is inherent uncertainty relating to these
variables and how they would likely develop towards 2030.
We consider these uncertainties to be acceptable, as the results from
this analysis are used to assess resilience at a high-level to inform
strategic responses, such as the decision to commit to a 1.5°C
science-based target.
Risk management
Describe the organisation’s processes for identifying
and assessing climate-related risks
We undertake regular materiality analysis to ensure our sustainability
priorities remain aligned to those of our stakeholders. In developing
our Now & Next Sustainability Strategy, we consulted our
stakeholders on a range of issues, including climate change, asking
them about their perception of each issue as a risk or opportunity to
our business.
In 2022/23, we refreshed this analysis through a ‘double materiality’
lens, considering financial materiality (e.g. the impact of climate
change on the Group) and impact materiality (e.g. the impact of the
Group on climate change). This is described in detail on page 35.
The results reinforced climate action, energy use and efficiency,
product design for optimal resource use, recyclability and
transitioning to a circular economy as of critical importance for the
business and for the planet and society. These topics, considered of
’critical importance’, are captured within our climate-related risks
andopportunities.
These results, alongside a range of other credible sources such as
industry research, are used to grade risks using the likelihood of the
risk occurring and an estimate of the severity of resulting financial or
strategic impacts over various time horizons.
Based on this risk grading, the highest graded risks are evaluated in
greater depth, considering our operations, supply chain, stakeholder
expectations and regulation.
Task Force on Climate-related Financial Disclosures (TCFD) continued
74
Transition risks are assessed by the Group Risk and Insurance, Group
Sustainability, Government and Community Affairs, and Group
ESG Reporting teams, working across functions to develop
responses to the financial and strategic implications.
Physical risks are assessed by each division, supported by the
Group Risk and Insurance team, drawing on expertise from
specialistorganisations.
Our physical climate risk assessment includes inputs and parameters:
• Site location, with engineering and behavioural considerations.
• Third-party climate exposure data and intelligence, including:
• Environmental mapping (e.g. wind and flood maps).
• Satellite imagery.
• Data models for temperatures and consecutive dry days.
• Data models for maximum one day and five day precipitation.
• Standardised Precipitation Index.
• Statistics relating to sea level rise and wind.
This includes the identification of specific event-driven risks,
combining engineering visits, natural hazard maps and global climate
model data to produce recommendations that maximise resilience to
climate-related risk.
Climate scenario analysis is used to identify acute and chronic physical
risk at our locations, according to a range of scenarios, in the long term
(to 2030 and 2050), specified by peril.
This includes scenarios relating to a range of potential future
outcomes, covering:
• Extreme precipitation.
• Wind.
• Temperature.
• Drought.
• Sea level rise.
This insight identifies the locations with the greatest exposure to
these perils, with financial metrics including property value and
business interruption value at risk.
These analytics include ongoing monitoring, covering all our operations,
and are used to inform our insurance and resilience policies.
Climate-related opportunities are predominantly identified and
assessed by the Group Sustainability team, who lead the sustainability
materiality analysis and propose the strategic direction of the Group
for sustainability by way of the Now & Next Sustainability Strategy,
which sets the strategic ambitions to realise climate-related
opportunities, as well as respond to climate-related risks.
Climate change could affect the availability of raw materials and
production processes, while natural disasters can disrupt supply
chains and damage infrastructure. It could also enhance the focus
and opportunities presented to DS Smith from investment into
alternatives, innovation and focus on regulation. In considering the
prioritisation of climate-related risks and the relative significance of
climate-related risks in relation to other risks, we assess climate
change factors within the wider context of our Group principal risks
(see pages 51 to 55), given that climate change may amplify or
dampen some of the Group’s principal risks.
This integrated approach reduces the chance of inadvertently
neglecting or creating a trade-off between climate change and other
risks, ensuring that climate-related risks and opportunities are
embedded in the Group’s enterprise risk management and corporate
planning. This situates climate-related risks and opportunities
alongside, and integrates climate-related risks and opportunities
with, other types of risks and opportunities.
Describe the organisation’s processes for managing
climate-related risks
Our process for managing, including monitoring and prioritisation of,
climate-related risks involves deciding whether to avoid, transfer,
mitigate or accept a given risk. This is influenced by a range of factors,
such as the type of risk, site location, investment needed and
forecasts of volume demand.
Our risk management processes require that our principal business
risks, including climate risks, are graded on a scale from negligible to
critical using specific impact criteria such as a financial value range.
Byway of example, a financial impact between 2.5 per cent and
10percent of operating income or net profit is graded as a moderate
strategic or financial risk.
Specialist Group functions (e.g. energy procurement), Sustainability
Steering Committees (e.g. nature) and working groups (e.g. those
deploying our Net Zero Transition Plan) work across the divisions and
functions to implement mitigation measures through the delivery
of our Now & Next targets that address climate-related risks and
opportunities. These teams draw on internal and external resource,
utilising specialist analysis, tools and expertise.
For example, we have applied forecasts relating to the carbon price,
electrical demand, decarbonisation policy, renewable deployment, and
availability of technologies in our project work to inform decarbonisation
roadmaps for our packaging plants to manage climate-related risk,
as part of implementing our Net Zero Transition Plan.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management
Climate-related risks and opportunities are integrated into our
principal risk assessments and corporate planning, evaluated using
the Group’s common risk language, where such risks could significantly
affect the business during the Corporate Plan time horizon.
All divisions and Group functions produce formal principal risk
assessment reports twice per year and undertake frequent risk
reviews, considering the grading, trends and controls. The most
significant climate-related risks and opportunities are selected for
climate scenario analysis, prioritising those for which high-quality
data is available.
Key mitigating actions in response to climate-related risks, such as the
science-based target, are agreed and developed by specialist working
groups and teams, with the sponsorship of the Carbon, Water and
Waste Steering Committee and approval of the HSES Committee.
These are prioritised based on factors such as materiality, regulatory
requirements and commercial opportunity. For example, actions
relating to climate change and the circular economy are prioritised
given that our stakeholders considered these issues of ‘critical
importance’ in the most recent materiality assessment.
Prioritised actions are implemented by the relevant sustainability
working group, project teams and site teams, with accountability for
delivery with Divisional and Functional leadership. Management
performance, including challenges and opportunities relating to
deploying mitigating actions, is reviewed alongside the wider review
of sustainability performance and strategy progress. Any material
risks to deployment are captured in our regular operational risk
reviews (see pages 49 and 50).
Our processes for identifying, assessing, prioritising and monitoring
climate-related risk are unchanged compared to the prior period.
Annual Report 2024 dssmith.com 75
Strategic Report Governance Financial Statements
Metrics and targets
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process
Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks
Group greenhouse gas (GHG) emissions (Streamlined Energy and Carbon Reporting (SECR))
Metric Unit of measure 2023/24 2022/23
2019/20
(base year)
Compared
to last year
Compared
to base year
Direct (Scope 1) GHG emissions tonnes CO
2
e 1,340,272* 1,542,250* 2,181,890 -13% -39%
Indirect (Scope 2 market-based) GHG emissions tonnes CO
2
e 944,921* 833,759* 792,275 13% 19%
Indirect (Scope 2 location-based) GHG emissions tonnes CO
2
e 922,923* 891,267* 875,544 4% 5%
Indirect (Scope 3) GHG emissions tonnes CO
2
e 4,700,076 5,015,409 5,671,528 -6% -17%
Total GHG emissions tonnes CO
2
e 6,985,269 7,391,418 8,645,693 -5% -19%
Gross Scope 1 and 2 (market) GHG emissions tonnes CO
2
e 2,285,193* 2,376,009* 2,974,165 -4% -23%
GHG emissions from energy export tonnes CO
2
e 488,604* 529,699* 791,810 -8% -38%
Net Scope 1 and 2 (market) GHG emissions tonnes CO
2
e 1,796,589* 1,846,310* 2,182,355 -3% -18%
Energy consumption MWh 14,058,435* 14,407,601* 15,707,667 -2% -10%
Energy exported MWh 1,525,376* 1,739,186* 1,977,616 -12% -23%
Total production tonnes 9,874,853* 10,164,657* 10,222,065 -3% -3%
GHG emissions (net) per tonne of production kg CO
2
e /t nsp 182* 182* 213 0% -15%
Outside of scopes GHG emissions tonnes CO
2
e 1,022,400* 1,018,232* 911,659 0% 12%
UK reporting: 4 per cent of Scope 1 emissions and 29 per cent of Scope 2 (market-based) generated by UK-based operations in 2023/24.
12 per cent of energy consumption consumed by UK-based operations in 2023/24.
Group Indirect (Scope 3) value chain greenhouse gas (GHG) emissions
Scope 3 category Unit of measure 2023/24 2022/23
2019/20
(base year)
Compared
to last year
Compared
to base year
1: Purchased goods and services tonnes CO
2
e 2,233,164 2,341,614 2,562,626 -5% -13%
2: Capital goods tonnes CO
2
e 141,634 161,217 96,891 -12% 46%
3: Fuel- and energy-related activities tonnes CO
2
e 480,239* 471,063 425,243 2% 13%
4: Upstream transportation and distribution tonnes CO
2
e 363,900 377,052 407,883 -3% -11%
5: Waste generated in operations tonnes CO
2
e 101,192* 119,671* 252,834 -15% -60%
6: Business travel tonnes CO
2
e 3,102 3,912 4,173 -21% -26%
7: Employee commuting tonnes CO
2
e 4,903 5,390 7,992 -9% -39%
8: Upstream leased assets tonnes CO
2
e 4,037 4,110 4,507 -2% -10%
9: Downstream transportation and distribution tonnes CO
2
e 104,621 109,260 109,381 -4% -4%
10: Processing of sold products tonnes CO
2
e 581,463* 693,418 943,600 -16% -38%
12: End of life treatment of sold products tonnes CO
2
e 654,726* 693,027 780,090 -6% -16%
15: Investments tonnes CO
2
e 27,095 35,675 76,308 -24% -64%
Total Indirect (Scope 3) GHG emissions tonnes CO
2
e 4,700,076 5,015,409 5,671,528 -6% -17%
Scope 3 Categories 11, 13 and 14 are excluded on the basis of irrelevance to our value chain, as described in our Basis of Preparation.
GHG emissions are reported in accordance with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Revised), under a financial
control boundary. Department for Business, Energy & Industrial Strategy (BEIS) 2022 emission factors are applied, unless emission factors from other
sources are deemed more appropriate. See our Basis of Preparation, available from our ESG Reporting Hub.
* Independent Assurance has been obtained for metrics marked ’*’, see the statement below.
Independent Assurance Statement
Deloitte have provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000
(ISAE 3000) and Assurance Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards
Board (IAASB) over the selected information, identified with * in the above table, and other selected information relating to carbon, energy, water,
waste, production and employee diversity identified with * within the DS Smith Annual Report 2024, DS Smith Sustainability Report 2024, DS Smith
Net Zero Transition Plan 2024 and DS Smith ESG Databook 2024.
Deloitte’s full unqualified assurance opinions, which include details of the selected information assured in 2023/24, 2022/23 and 2021/22, can be
found on our ESG Reporting Hub, at https://www.dssmith.com/sustainability/reporting-hub.
Independent third-party limited assurance of selected information for the 2019/20 base year was provided by Bureau Veritas.
See the full assurance statement on our ESG Reporting Hub, at https://www.dssmith.com/sustainability/reporting-hub.
Task Force on Climate-related Financial Disclosures (TCFD) continued
76
Carbon pricing
We use internal carbon pricing as a tool to assess and manage
carbon-related risks and opportunities. We apply an internal carbon
price on an ad-hoc, project-by-project basis to arrive at the best cost
solution, balancing financial and non-financial outcomes.
For example, in our strategic assessment to achieve Net Zero, we
modelled growth and investment phasing over 30 years to tackle
our greatest emission sources.
The analysis included a range of historic and forecast carbon prices,
as well as carbon offset costs.
Climate-related remuneration
The importance of ESG and sustainability, including climate change,
continues to be emphasised by the use of a variety of ESG considerations
as an underpin to the annual bonus.
In 2023/24, the three elements of the ESG underpin were met,
including the roll out of an updated Now & Next Sustainability Strategy,
which includes our approach to the delivery of science-based targets.
When considering the application of discretion to override the
formulaic outcome for the 2024/25 annual bonus, the Remuneration
Committee will take into account, alongside other ESG factors,
continued delivery of the updated Now & Next Sustainability Strategy
and of progress towards our science-based targets, taking account of
updated actual performance and current customer/regulatory
requirements. For more information, see page 119.
Describe the targets used by the organisation to manage climate-related risks and opportunities and
performance againsttargets
Industry-specific metrics and targets used to assess and manage outcomes of climate-related risks and opportunities
Climate-related risk or opportunity Metric Unit of measure 2023/24 2022/23 2021/22 Trend
Increased spend on
carbon taxes
Gross global Scope 1 emissions tonnes CO
2
e
1,340,272*
1,542,250* 2,023,278*
Ô
Percentage covered under
emissions-limiting regulations
Per cent
70*
73* 79
Ô
Now & Next target: By 2030, reduce Scope 1, 2 and 3 GHG emissions by 46 per cent compared to 2019
Increased cost of raw
materials or threat
tosupply
Percentage of fibre use
optimised for individual
supplychains
1
Per cent
90
64 26
Ó
Now & Next target: By 2025, optimise fibre for individual supply chains in 100% of new packaging solutions
Increased severity of
extreme weather
events
Internal and highly localised insurance metrics (financial and non-financial), such as loss expectancy and
proprietary risk scores, which can be compared within the Company and across the industry
Increased likelihood
of water stress
Total water withdrawals m
3
52,477,496*
53,802,571* 54,644,995*
Ô
Percentage of water withdrawn
from areas at risk of water stress
Per cent
29*
38 31
Ô
Percentage of paper mills and
packaging sites with a water
management plan in place
Per cent
10
– – –
Now & Next target: By 2025, 100 per cent of our paper mills and packaging sites to have water management plans
2
Growth in demand
for sustainable
packaging
Number of pieces of
plastic replaced
Million units
Over 1.2 billion
(cumulative to
the end of
2023/24)
Ó
Now & Next target: By 2025, help our customers to replace one billion pieces of plastic with alternative fibre-based solutions
Greater resource
efficiency
Total energy consumption MWh
14,058,435*
14,407,601* 15,324,120*
Ô
Water withdrawals at mills in
areas at risk of water stress
m
3
/t nsp
(tonne net
saleable
production)
7.9*
8.9* 8.1
Ô
Now & Next target: Maintain ISO 50001:2018 certification at 100 per cent of in-scope sites, covering 90 per cent of total energy consumption
Use of lower-emission
energy sources
Percentage of overall
energy consumption from
renewable sources
Per cent
29*
26 21
Ó
Percentage of electricity
consumed that was generated
from renewable sources
Per cent
11*
15 13
Ô
Now & Next target: Reach Net Zero GHG emissions by 2050
Selected information marked with an asterisk (*) has been independently assured by Deloitte – see the Independent Assurance Statement on page 76.
1. This figure represents c. 74 of our conventional packaging sites for which BSIR (Board Strength Index Rating) data is available. It does not capture all packaging
designs and specifications and excludes board purchased externally and sheet board sales. See DS Smith Sustainability Report 2024, page 17.
2. Target updated from ’Maintain water stress mitigation plans at 100 per cent of our sites in current or future water stressed areas’.
Scope includes manufacturing sites with >5,000m
3
annual water withdrawal.
Annual Report 2024 dssmith.com 77
Strategic Report Governance Financial Statements
Background
The Taxonomy Regulation sets out a classification system that
translates the European Union’s environmental objectives into criteria
for determining when an activity can be considered environmentally
sustainable for investment purposes.
The Taxonomy Regulation is designed as a transparency tool to
enable investors to compare companies and investment portfolios on
a consistent basis. It is not a mandatory list of activities for investors
to invest in, nor does it set mandatory environmental performance
requirements for companies or financial products. In addition, the
Taxonomy Regulation serves to advance the ambitions of the
European Green Deal by scaling up sustainable investment.
The Taxonomy Regulation establishes technical criteria for
environmental sustainability across more than 100 economic
activities and six environmental objectives:
1. Climate change mitigation,
2. Climate change adaptation,
3. Sustainable use and protection of water and marine resources,
4. Transition to a circular economy,
5. Pollution prevention and control,
6. Protection and restoration of biodiversity and ecosystems.
How does it work?
The Taxonomy Regulation requires four conditions to be met when
meeting these objectives, for an economic activity to qualify as
‘environmentally sustainable’:
• It contributes substantially to one or more environmental
objectives or is an enabling activity.
• It does not significantly harm any environmental objectives.
• It is carried out in compliance with minimum safeguards.
• It complies with technical screening criteria.
The Taxonomy Regulation requires mandatory disclosure of key
performance indicators (KPIs), that identify firstly the ‘Eligibility’ of an
economic activity for consideration under the disclosure requirement
and secondly, the ‘Alignment’ of those economic activities with the
detailed ‘screening criteria’ provided by the act to identify in-scope
activities.
The KPIs required for disclosure are: (1) turnover derived from
products or services associated with economic activities that qualify
as environmentally sustainable, (2) capital expenditure related to
assets or processes associated with qualifying economic activities,
and (3) operational expenditure related to assets or processes
associated with qualifying activities, expressed as a percentage of
the total for each measure, for the in-scope company.
The EU has stated it intends to develop the Taxonomy Regulation
over time and the fact that an activity is not currently recognised as
substantially contributing to one of the EU’s environmental objectives
does not necessarily mean it is not sustainable.
EU Taxonomy
This voluntary disclosure has been prepared in accordance
with Regulation EU 2020/852 (the ‘Taxonomy Regulation’)
and Delegated Regulation EU 2021/2178 (the ‘Disclosures
Delegated Act’).
Evolution of our voluntary disclosure
We are continuing to evolve our Taxonomy Regulation disclosure,
with this Annual Report being the third year of voluntary disclosure.
DS Smith
Annual
Report
2022
First year of
Taxonomy
Regulation
disclosure
We mapped our activities to the EU
Taxonomy-eligible business activities as
set out in the Delegated Regulation (EU)
2021/2139 (Climate Delegated Act) and
identified the percentage of total Group
turnover, capital expenditure and
operating expenditure relating to
EU taxonomy-eligible activities.
DS Smith
Annual
Report
2023
Second year
of Taxonomy
Regulation
disclosure
We reviewed our activities and extended
the list of those activities which we
assessed as eligible and aligned based on
information obtained from the ‘Taxonomy
Navigator’ tool, provided by the
European Commission.
DS Smith
Annual
Report
2024
Third year of
Taxonomy
Regulation
disclosure
For 2023/24, we refreshed our analysis to
include the new set of activities and
criteria introduced with the Delegated
Regulation 2023/2486 (the ‘Taxonomy
Environmental Delegated Act’).
As a UK company with its registered office and headquarters in
London, DS Smith Plc is not currently subject to the Taxonomy
Regulation on a mandatory basis. However, we welcome measures
to increase transparency and seek to comply with the
Taxonomy Regulation on a voluntary basis.
Our industry and primary economic activity (paper and packaging
manufacturing) presently fall outside the scope of economic activities
defined by the Taxonomy Regulation.
Within the current Taxonomy Regulation, we have identified that
some of our activities are environmentally sustainable taxonomy-
aligned activities – predominantly our recycling operations.
Identified eligible activities
We have identified five eligible activities, along with their associated
Standard Classification of Economic Activities in the European
Community (NACE) system codes and sectors.
The use of NACE codes and sectors is for indicative purposes only and
does not prevail over the activity description nor should it be
interpreted as otherwise affecting the scope of reporting.
Cogeneration of heat/cool and power from bioenergy
(D35.11, D35.30) (Energy)
Some of our paper mills generate heat and power in combined heat
and power plants (CHPs) that are fed by renewable fuel sources, such
as wood residuals and heavy black liquor, as by-products of the virgin
papermaking process. Renewable sources for all energy types
contributed c. 29 per cent of total energy consumption in 2023/24.
Collection and transport of non-hazardous waste in source
segregated fractions (E38.11) (Water supply, sewerage,
waste management and remediation)
Our recycling operations manage paper and cardboard for recycling,
including collection and transportation. All separately collected and
transported non-hazardous waste that is segregated at source and
intended for preparation for reuse or recycling operations is
considered to make a substantial contribution to climate mitigation
under the relevant criteria.
78
Construction, extension and operation of waste water
collection and treatment (E37.00) (Water supply, sewerage,
waste management and remediation)
We own and operate industrial waste water treatment plants to meet
our own process water withdrawal and discharge requirements,
including water treated on behalf of third parties.
Forest management (A2) (Forestry)
We manage c. 8,000 hectares of forest in North America and Iberia,
providing timber feedstock to our virgin papermaking process.
We maintain SFI (Sustainable Forestry Initiative) certification
(North America) and FSC® Forest Management certification and PEFC
Sustainable Forest Management (Iberia) certifications.
Installation, maintenance and repair of energy efficiency
equipment (C16, C17) (Construction and real estate)
We maintain equipment to increase energy efficiency in the
manufacture of wood products, paper and paper products.
As this activity relates to building and construction, the most relevant
substantial contribution criteria for climate mitigation is the
installation and replacement of energy efficient light sources.
A more detailed disclosure, set out in the provided
EU Taxonomy Regulation templates, including methodologies,
can be obtained from the DS Smith ESG Reporting Hub at
www.dssmith.com/sustainability/reporting-hub.
Proportions of Taxonomy Regulation-eligible and
Taxonomy-aligned turnover, capital expenditure
and operating expenditure
In 2023/24, c. 3 per cent of turnover, c. 17 per cent of capital
expenditure and c. 1 per cent of operating expenditure related to
Taxonomy-eligible activities.
Of this, c. 2 per cent of turnover, c. 2 per cent of capital expenditure
and c. 1 per cent of operating expenditure was Taxonomy-aligned.
These figures are summarised in the table below.
Proportion of turnover
(share of revenue) (%)
Proportion of capital
expenditure (‘capex’) (%)
Proportion of operating
expenditure (‘opex’) (%)
Eligible Aligned Eligible Aligned Eligible Aligned
Cogeneration of heat/cool and power from
bioenergy (D35.11, D35.30)
Less than
0.03% 0 2 0 0 0
Collection and transport of non-hazardous
waste in source segregated fractions (E38.11) 2.41 2.41 1.50 1.50 0.83 0.83
Construction, extension and operation of
waste water collection and treatment (E37.00)
Less than
0.002% 0
Less than
0.4% 0 – –
Forest management (A2) Less than
1% -
Less than
0.5% – 0 0
Installation, maintenance and repair of energy
efficiency equipment (C16, C17) 0 0 13
Less than
0.1% 0 0
Totals 3 2 17 2 1 1
Annual Report 2024 dssmith.com 79
Strategic Report Governance Financial Statements
The table below sets out where information relating to non-financial and sustainability matters can be found in our Strategic Report.
Compliance statement
DS Smith Plc has complied with the requirements of sections 414CA and 414CB of the Companies Act 2006 (as amended by The Companies
(Strategic Report) (Climate-related Financial Disclosure) Regulations 2022) with the table disclosed below and other disclosures throughout the
Strategic Report. The climate-related financial disclosures of the Company are contained within the Task Force on Climate-related Financial
Disclosures (TCFD) section, on pages 60-77 of this Annual Report.
Reporting requirements Some of the relevant policies
Where to read more in this report about our impact,
including the principal risks relating to these matters Page(s)
Climate change and
sustainability
Group Sustainability policy
2
Task Force on Climate-related Financial Disclosures 60-77
Environmental
matters
Group Sustainability policy
2
Our sustainability approach, strategy, focus and targets
Our sustainability performance
Our differentiators
Risk – sustainability commitments
Task Force on Climate-related Financial Disclosures
3, 9, 23,
30-37
10, 30-37
6-21
53
60-77
Employees Code of Conduct
2
‘Speak Up!’
2
Group Health and Safety policy
2
Equal Opportunities and Anti-Discrimination
policy
2
Personal Data Protection policy
1
Document Retention policy
1
Confidential Information policy
1
Conflicts of Interest policy
1
What we create for our people
Diversity and inclusion
To realise the potential of our people – performance
Health, safety and wellbeing
Risk – organisation capability
Gender pay gap reporting
Our Purpose
22, 26-29
28-29
8, 10, 26-29
10, 27
54
29
3
Human rights Code of Conduct
2
Anti-Slavery and Human Trafficking policy
2
Governance of sustainability
People and communities
Risk – regulation and governance
31
33
49-50, 53
Social matters Code of Conduct
2
Gifts and Hospitality policy
2
Group Sustainability policy
2
People and communities 22-23,
33-34
Compliance Corporate Criminal Offence (Anti-Facilitation
of Tax Evasion) policy
2
Anti-Bribery and Anti-Corruption policy
2
Competition Law Compliance policy
1
Commercial Agents policy
1
Conflicts of Interest policy
1
Risk – regulation and governance 49-50, 53
Business model Our business model 14-15
Non-financial KPIs Employees: Accident frequency rate
Customers: On-time in-full deliveries (OTIF)
Sustainability: Greenhouse gas (GHG) emissions
Climate change: TCFD metrics and targets
10
10
10, 34, 76
76-77
1. Available to all employees through the DS Smith intranet. Not published externally.
2. Available both on our website www.dssmith.com and to employees through the DS Smith intranet.
Non-financial and sustainability
information (NFSI) statement
80
Our policies
A combination of online and in-person training on all the key policies is carried out across the Group and there is also a system of bi-annual
certification for senior managers, certifying that they have read and understood the policies, that they have cascaded the policies down to their
direct reports and that they are not aware of any breach of such policies. All employees, contractors and third parties are encouraged to report
any circumstances where there is a suspected or actual breach of any of the DS Smith policies, applicable laws or the high standards as set out in
the Code of Conduct, either through their managers, the confidential ‘Speak Up!’ helpline or directly to the Group General Counsel and Company
Secretary. All reported incidences of actual or suspected breach of any of the policies are promptly and thoroughly investigated. The Group
Compliance Committee and the Audit Committee also consider any high-risk areas identified by the Internal Audit function, the legal team or the
divisional compliance teams. Many of these policies can be found on our website and additional commentary relating to sustainability can be
found in DS Smith Sustainability Report.
Policy Description
Code of Conduct DS Smith Plc (DS Smith) and its subsidiaries (Group) are committed to the highest ethical standards in the way in which
we engage with each other and our customers, employees, shareholders, suppliers, contractors and other
stakeholders. Our Code of Conduct sets out what these commitments mean and the behaviours which are expected of
all our employees, officers and business partners. This includes our expectations on health and safety, business
practice, human rights, the environment, prevention of tax evasion and employee relations among other key areas for
the business. Alongside the Code of Conduct we have an Employee Charter drawn up in partnership with the European
Works Council (EWC) which builds on our Code of Conduct and reinforces our standing commitment to comply with
applicable legislation and regulatory requirements. We also have other key Group policies outlined below, which serve
to further expand upon the provisions in the Code of Conduct.
Anti-Bribery and
Anti-Corruption
policy
We have zero tolerance for any form of bribery or corruption and are committed to complying with all applicable
anti-bribery and anti-corruption laws. This policy provides guidance on how to comply with the rules against bribery
and other corrupt conduct that apply to the Group. In addition to our employees and contractors, we require that all
third parties engaging with any entity in the Group comply with this policy.
Anti-Slavery and
Human Trafficking
policy
We do not tolerate any form of modern slavery within the Group or within our sphere of influence in the supply chain.
We respect fundamental human rights and are committed to the principles set out in the United Nations Universal
Declaration of Human Rights and this is documented in our Code of Conduct, Employee Charter and Anti-Slavery and
Human Trafficking policy. Our annual Modern Slavery statement sets out the policies and due diligence processes we
have across the Group, together with the steps taken since our last statement to ensure that human rights violations
are not occurring within our operations or our supply chain. The ultimate responsibility for prevention of modern
slavery rests with the Group’s leadership, with the Board of Directors having overall responsibility for ensuring this
policy is implemented across the Group.
Commercial Agents
policy
It is important to our ongoing success that DS Smith avoids damage to its reputation due to an act carried out by an
agent in our name. The Commercial Agents policy outlines the rules that we expect to be followed across the Group
when engaging and monitoring our relationships with agents. This policy also offers guidance to our agents on what is
expected of them as an agent of DS Smith. Such guidance is supplemented by additional e-learning compliance
training where appropriate. This ensures that agents are properly vetted and monitored.
Competition Law
and Antitrust
Compliance policy
We are committed to ensuring that our activities within the European Union (EU) and outside the EU are conducted in
compliance with the principles of the EU competition rules as well as all applicable national rules that apply to the
Group. This policy provides guidance on competition laws, information exchanges, swaps, trade associations and
dawn raids. Additional e-learning training is available to support this policy.
Conflicts of Interest
policy
Conflicts of interest, whether actual, potential or perceived, may impair our ability to act in accordance with our ethical
standards and values. It is therefore important for all of our employees and any person associated with us to be aware
of, and adhere to, the policies and procedures that we have in place to manage such conflicts. This policy outlines the
requirements and processes in respect of conflicts of interest and advises employees of their obligations. It also
includes a self-assessment tool to assist in determining whether there may be a conflict and a form for the disclosure
and handling of conflicts of interest by employees and their line managers.
Confidential
Information policy
We keep certain types of information confidential for important business reasons, including to comply with legal
requirements (such as data protection and competition law), and to maintain a competitive edge. Confidential
information is information that is not generally known or publicly available and is only available to employees or
workers as a result of their employment/engagement with us. This policy sets out how confidential information
should be handled and outlines the procedures that safeguard it.
Corporate Criminal
Offence (Anti-
Facilitation of Tax
Evasion) policy
The Group will not engage in or be associated with any form of tax evasion anywhere in the world, nor facilitate such
activities. This policy sets out the responsibilities of the Group as well as those working for or on behalf of the Group,
and provides information and guidance on how to recognise and deal with potential tax evasion issues and our
compliance processes. This policy must be implemented and followed by everyone who works for us or provides
personal services to the Group and it must be communicated to all suppliers and customers.
Document
Retention policy
In the course of carrying out our various business activities, we collect information from individuals and external
organisations and generate a wide range of data and information which is recorded and stored. DS Smith is therefore
committed to ensuring that it continues to ensure the accuracy of any data stored and ensuring that data (especially
personal data) is only retained for as long as is necessary.
Annual Report 2024 dssmith.com 81
Strategic Report Governance Financial Statements
Policy Description
Equal
Opportunities and
Anti-Discrimination
policy
We are committed to promoting equal opportunities in employment. Job applicants, employees and contingent workers
will receive equal treatment regardless of age, disability, race, religion or belief, sex, sexual orientation, gender
reassignment, marriage and civil partnership, pregnancy and maternity or any other characteristic protected by
applicable law. It is imperative for us to provide a respectful work environment and we have a zero tolerance approach to
discrimination. This policy sets out the Group’s approach to equal opportunities and the avoidance of discrimination at
work, as well as the processes to be followed in the event of any actual or suspected conduct which breaches this policy.
All parties are encouraged to raise concerns if they find conduct within DS Smith that is unwelcome, offensive or a
violation of this policy, through their line manager, local human resources (HR) or use of the ‘Speak Up!’ process so the
Group can investigate and take appropriate remedial measures to end any conduct that violates this policy.
Gifts and
Hospitality policy
We recognise that the act of giving and accepting gifts and hospitality can be part of building normal business
relationships. However, our policy aims to ensure that our employees and contractors never accept gifts or hospitality
which could break the law, compromise their judgement, conflict with their duty to DS Smith or our customers, or
which could appear to others that their business judgement has been improperly influenced. Equally, our employees
and contractors must never offer a gift or hospitality which could have this effect on the recipient. In order to monitor
compliance with these principles, each site must maintain a gifts and hospitality register and registers must also be
kept for head offices and specific functions that are not site specific. Before giving or receiving any gift and/or
hospitality, depending on the value or the identity of the provider/recipient, our employees and contractors may be
required to record the gift and/or hospitality in the relevant gifts and hospitality register, and/or seek approval from
their line manager and the Group General Counsel and Company Secretary.
Group Health
and Safety policy
We are committed to providing healthy and safe working conditions for the prevention of work-related injury and ill
health to ensure that all our employees work in an environment where they, our contractors, site visitors and the
public are healthy and safe. DS Smith actively strives for the continuous improvement of health and safety in the
workplace by maintaining and developing our processes and systems in accordance with our values. This policy sets
out our approach and arrangements with regards to health and safety, including our health, safety and wellbeing
strategy, evaluation of risk and hazard assessments as well as health and safety training, engagement programmes
and communication to raise awareness. The Health, Safety, Environment and Sustainability Committee meets
monthly to oversee the management processes, targets and strategies designed to manage health and safety and
environmental and sustainability risks and opportunities. The ultimate responsibility for health and safety rests with
the Board members, the Group Chief Executive and the executive management team. This responsibility is cascaded
through the organisation via the managing directors of each business unit, including their leadership teams. All staff
collectively share responsibility for ensuring the workplace is a healthy and safe place to work.
Group
Sustainability
policy
Our Now & Next Sustainability Strategy is supported by policies which align the management of sustainability issues
across our organisation. Risks arising from sustainability issues are considered as being among the key risks to the
Group’s operations. To manage and mitigate such risks we have policies for existing and emerging sustainability
issues. Our policies include Conflict Minerals, Carbon and Energy Efficiency, Community Engagement, Global Supplier
Standards, Human Rights, Water Management, Zero Waste to Landfill and Sustainable Forest Management and Fibre
Sourcing. These policies are periodically reviewed and updated, with action plans communicated to the heads of each
business unit. The Board receives regular reports on performance and the Group Chief Executive is responsible for
addressing sustainability-related issues. The Health, Safety, Environment and Sustainability Committee meets
monthly and is supported by four steering committees linked to the pillars of our Now & Next Sustainability Strategy
that oversee the processes for addressing sustainability-related issues and set and monitor internal targets and
strategies to ensure sustainability-related risks and opportunities are appropriately managed.
Personal Data
Protection policy
We recognise our responsibility to treat individuals’ personal data correctly and lawfully and take this issue very seriously.
Compliance with data protection laws is critical to the success of our business. Compliance with statutory data protection is
crucial in our relationship with our employees, customers, suppliers and business partners. The management of the
relevant DS Smith company is responsible for cascading this policy and each site is responsible for confirming compliance.
The Divisional Heads of Privacy will also send an annual confirmation form to check that each site is compliant.
‘Speak Up!’ policy All of our employees, those providing services to DS Smith (contingent workers), shareholders and Non-Executive
Directors are expected to conduct DS Smith business in a legal and ethical manner as detailed in our Code of Conduct.
They have a responsibility not only to be aware of the Code of Conduct but to bring to the attention of management
any activity which may be in violation of our policies or local law or does not meet the standards set out in the Code of
Conduct. Employees are encouraged in the first instance to report any concerns to their line manager, local HR or
employee representative. If not comfortable to do so, then there are ‘Speak Up!’ options available, where a report can
be made through a dedicated free phone line or a secure website (both maintained by an independent third party that
is under a duty of confidentiality). The phone and website support a majority of languages spoken across DS Smith.
Alternatively, the Group General Counsel and Company Secretary can be contacted via email or letter. All ‘Speak Up!’
options are available 24 hours a day, seven days a week and all ‘Speak Up!’ reports are treated in the strictest
confidence and are investigated. Findings from the investigations may include corrective actions and lessons to be
learned. Twice a year, a summary of reports made and findings from the investigations is shared with the Audit
Committee and the EWC Executive. It is our policy to build a climate of support for our employees if concerns are
raised, including a suspected breach of our Code of Conduct, and to ensure that there is an avenue to report concerns
which will then be confidentially investigated.
82
Non-financial and sustainability information statement (NFSI) continued
Statement of approval
This Strategic Report, on pages 1 to 83 , was approved by the Board of Directors on 20 June 2024 and is signed on its behalf by
Miles Roberts
Group Chief Executive
20 June 2024
Climate disclosures index
For this 2024 Annual Report, we have voluntarily enhanced our required Task Force on Climate-related Financial Disclosures (TCFD) reporting
with reference to the IFRS S2 ‘Climate-related Disclosures’ standard. Accompanying IFRS S1 ‘General Requirements for the Disclosure of
Sustainability-related Financial Information’ disclosures can be located on pages 30 to 37. A complete set of disclosures prepared with
reference to the UK Transition Plan Taskforce guidance can be located in our standalone Net Zero Transition Plan, which can be obtained from
the ESG Reporting Hub on the DS Smith website.
Task Force on Climate-related Financial Disclosures (TCFD)
International Sustainability Standards Board (ISSB)
IFRS S2 Climate-related Disclosures UK Transition Plan Taskforce (UK TPT) Location
Governance
Describe the Board’s oversight of
climate-related risks and opportunities
Governance, Governance body(s) Accountability, Governance,
Board oversight and reporting
61
Describe management’s role in assessing
and managing climate-related risks
andopportunities
Governance, Management’s role Accountability, Governance,
Management roles, responsibility,
and accountability
Strategy
Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium and long term
Strategy, Climate-related risks
andopportunities
62
Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy and financial planning
Strategy, Business model and value
chain, Strategy and decision-making,
Financial position, financial
performance and cash flows
Action, Implementation strategy
Engagement strategy
63-69
Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario
Strategy,
Climate resilience
70-74
Risk management
Describe the organisation’s processes for
identifying and assessing climate-related risks
Describe the organisation’s processes for
managing climate-related risks
Risk management N/A 74-75
Describe how processes for identifying,
assessing and managing climate-related risks
are integrated into the organisation’s overall
risk management
Metrics and targets
Describe the metrics used by the organisation
to assess climate-related risks and
opportunities in line with its strategy and risk
management process
Metrics and targets,
Climate-related metrics
Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks
Metrics and targets,
Climate-related targets
Metrics and targets 76-77
Describe the targets used by the organisation
to manage climate-related risks and
opportunities and performance against targets
Metrics and targets,
Climate-related metrics
Annual Report 2024 dssmith.com 83
Strategic Report Governance Financial Statements
Geoff Drabble
Chair
Appointed to the Board on 1 September 2020 as a
Non-Executive Director and became the Chair of
the Board and the Nomination Committee on 3
January 2021.
Key strengths
• Wealth of industrial and international
experience
• Extensive experience of chairing boards
Skills, experience and contribution
Geoff’s wealth of industrial and international
experience, including experience of sales and
marketing, combined with his experience of
chairing boards of listed companies and his
awareness of both the non-executive and chief
executive perspective, means that his skills and
experience contribute to the Board’s practical
understanding of good governance in action,
balancing stakeholders’ interests across the
range of issues considered by the Board,
including environmental, social and governance
(ESG) matters.
Geoff served for 12 years as Chief Executive of
Ashtead Group plc, the FTSE 100 industrial
equipment rental company. He was previously an
executive director of The Laird Group plc and held
a number of senior management positions at
Black & Decker. Geoff retired from being the
Senior Independent Director at Howden Joinery
Group Plc in May 2023. Geoff is a chartered
accountant.
External appointment
Geoff is non-executive chair of Ferguson plc.
Miles Roberts
Group Chief Executive
Appointed to the Board on 4 May 2010 as Group
Chief Executive.
Key strengths
• Clear strategic mindset
• Strong leadership skills
Skills, experience and contribution
Miles’ strong leadership skills combined with his
clear strategic mindset, rooted in the practicality
of his engineering and accountancy training,
means that his skills and experience, and ability
to identify material risks and sustainable growth
opportunities for the Group’s business, contribute
to the Board’s clear strategic vision. He brings to
the Board extensive financial and operational
experience particularly within international
manufacturing industries.
Following his early career in engineering,
Milesbecame a chartered accountant. He was
previously Chief Executive of McBride plc, having
originally joined as its Group Finance Director.
As Group Chief Executive, Miles leads the
executive management of the Group and is
responsible for DS Smith’s overall ESG
performance and its clear objectives at the centre
of our business model, taking into account the
Board’s risk appetite. He chairs the Group’s
Health, Safety, Environment and Sustainability
Committee that monitors the establishment of
goals, management of risks and opportunities,
reporting and related governance procedures in
that area.
External appointment
Miles is a non-executive director of Land
Securities Group PLC.
Richard Pike
Group Finance Director
Appointed to the Board on 30 June 2023 as Group
Finance Director.
Key strengths
• Financial and general management experience
in leadership roles in manufacturing
• Experience in the recycling and sustainability
sectors
Skills, experience and contribution
Richard’s financial and general management
experience in leadership roles within
manufacturing companies, together with his
knowledge and understanding of the recycling
and sustainability sectors and of the growing
importance of ESG matters, play a central role
with the Board’s discussions on the next chapter
of growth for DS Smith.
Before joining DS Smith, Richard was Chief
Financial Officer of Biffa plc. Prior to that he spent
time in the food manufacturing sector as Group
Finance Director of AB Sugar and Managing
Director of British Sugar (both parts of ABF plc),
followed by being Chief Financial Officer of
Boparan Holdings Limited. Earlier in his career
Richard trained and qualified as a chartered
accountant with PwC, and thereafter went on to
hold a variety of roles at Scapa Group plc,
Pilkington plc and Manchester Airports Group.
External appointment
None.
Principal Board
Committees key:
A
Audit
Committee
N
Nomination
Committee
R
Remuneration
Committee
Chair
N
R
N
Board of Directors
84
Tessa Bamford
Non-Executive Director
Appointed to the Board on 1 January 2024 as a
Non-Executive Director.
Key strengths
• Experience of senior executive recruitment
and succession planning
• Online and corporate communications, with a
background in M&A
Skills, experience and contribution
Tessa’s extensive experience in the fields of
leadership advice and recruitment,
communications and investment banking,
contributes further to the Board’s discussions.
Tessa joined the Board following her retirement
from Spencer Stuart, a global leadership search
and advisory firm, where she led the UK Board
and CEO practice, working with clients in the UK
and internationally. Tessa previously held
non-executive director roles at Ferguson plc for
ten years and at Barratt Developments plc for
nine years. Prior to joining Spencer Stuart,
Tessawas a founding director of Cantos
Communications, an online corporate
communications company where she also
managed many of its largest client accounts.
Herearlier career was as an investment banker
for 18 years, which started at BZW, then
Schroders, latterly as a managing director in
which she worked in both the UK and US advising
companies on equity capital markets and M&A.
External appointment
None.
Celia Baxter
Non-Executive Director
Appointed to the Board on 9 October 2019 as a
Non-Executive Director and Chair of the
Remuneration Committee.
Key strengths
• Extensive HR experience and ESG knowledge
and experience
• Board experience in non-UK listed companies
Skills, experience and contribution
Celia’s background of working in a range of
sectors, including manufacturing, means that,
aswell as her experience as a remuneration
committee chair and her understanding of
employee dynamics and ESG issues, she brings
extensive and practical business knowledge to
the Board.
Celia was Director of Group HR and responsible
for all ESG activities at Bunzl plc for 13 years.
Herearly executive career was with Ford Motor
Company and KPMG. She has held HR positions
with Hays plc, Enterprise Oil Plc and Tate & Lyle
Plc. As a non-executive director she was on the
board of NV Bekaert SA until May 2020 and on
the board of RHI Magnesita N.V. until June 2021
and retired as Senior Independent Director and
the remuneration committee chair at Senior plc in
April 2023.
External appointments
Celia is the senior independent director and
remuneration committee chair of Dowlais Group
plc and non-executive director of discoverIE
Group plc.
Alan Johnson CMG
Non-Executive Director
Appointed to the Board on 1 June 2022 as a
Non-Executive Director.
Key strengths
• Strong financial background in the FMCG sector
• Extensive international experience
Skills, experience and contribution
Alan’s extensive financial and international
experience working within the consumer goods
and retail sectors and his experience of chairing
international accountancy bodies brings a range
of important different perspectives to contribute
to the Board’s discussions.
Alan has been President and Chair of the Board of
the International Federation of Accountants and
chaired the audit committee of the International
Valuation Standards Council. Alan held a number
of senior finance positions at Unilever during a
30-year career, including Chief Audit Executive
and Chief Financial Officer of the Global Foods
Division. He was previously Chief Financial Officer
and then a non-executive director at food retailer
Jerónimo Martins, SGPS, SA until April 2016.
External appointments
Alan is a non-executive director of Imperial
Brands plc and William Grant & Sons Holdings
Limited, where he also chairs the audit
committee, and is the Chair of the Stakeholder
Advisory Council, which will provide strategic
advice to the International Ethics Standards
Board for Accountants and the International
Auditing and Assurance Standards Board.
A
N
R A A
N N
R R
Annual Report 2024 dssmith.com 85
Strategic Report Governance Financial Statements
Alina Kessel
Non-Executive Director
Appointed to the Board on 1 May 2020 as a
Non-Executive Director.
Key strengths
• Broad and wide-ranging marketing experience
• International outlook
Skills, experience and contribution
Alina’s experience of living, as well as working, in
a number of different countries, including the US,
combined with her expertise in marketing and
communications means that her skills and
experience contribute an additional perspective
to the Board’s discussions, particularly when
considering the interests of employees (based in
over 30 countries) and our global customers and
discussing how to communicate key non-financial
aspects of our business.
She has over 25 years of experience building
global brands for large multinational clients,
helping them grow their business through
communications, experience, commerce and
technology. Her current role with WPP includes
working with global clients on their sustainability
agenda. Originally from Ukraine and a US national,
Alina has lived and worked in the UK, US, Australia
and Germany.
External appointment
Alina is a Global Client Leader at WPP, a leading
international marketing communications
company.
Eric Olsen
Non-Executive Director
Appointed to the Board as a Non-Executive
Director on 15 May 2023.
Key strengths
• Knowledge of manufacturing operations
• Experience in leading multinational listed
entities
Skills, experience and contribution
Eric’s extensive experience in the fields of
finance, human resources, strategy, operations
and global leadership deepens the range of
perspectives brought to the Board’s discussions.
Eric is a Certified Public Accountant (CPA), holding
a Master of Business Administration from HEC
international business school in Paris. Eric was
the CEO of Aliaxis SA from 2020 to 30 April 2024
and CEO of LafargeHolcim from 2015 to 2017.
Prior to that he also held a number of other roles
within the Lafarge Group, including as EVP
Organisation and Human Resources and EVP in
charge of Operations. Eric started his career in the
field of M&A at Deloitte & Touche and Banque
Paribas and was one of the managing partners of
Trinity Associates for six years. Eric has dual
American and French nationalities.
External appointments
Eric is a board member of Fortera Inc, member of
the Technical and Strategic Advisory Committee
of Breakthrough Energy Ventures Europe and a
corporate advisor for Temasek Holdings Inc.
David Robbie
Senior Independent Director
Appointed to the Board as a Non-Executive
Director on 11 April 2019 and became Chair of
the Audit Committee at the conclusion of the
2019 AGM. He was appointed Senior
Independent Director on 28 February 2022.
Key strengths
• Strong financial, risk management and
corporate finance experience
• International and strategic mindset
Skills, experience and contribution
David’s strong financial, risk management
and corporate finance experience combined
with his international and strategic mindset
and practical governance experience with 25
years serving as a director on FTSE boards
means that his skills and experience add
depth to the Board’s discussions in these
areas.
David was the Interim Chairman, Senior
Independent Director and chair of the audit
committee at FirstGroup plc until June 2021.
He was previously Finance Director of Rexam
PLC. Prior to his role at Rexam, David served
in senior finance roles at BTR plc before
becoming Group Finance Director at CMG plc
in 2000 and then Chief Financial Officer at
Royal P&O Nedloyd N.V. in 2004. He served
as a non-executive director of the BBC
between 2006 and 2010 and as chair of their
audit committee. David qualified as a
chartered accountant at KPMG.
External appointment
David is a non-executive director and audit
committee chair of easyJet plc.
Principal Board
Committees key:
A
Audit
Committee
N
Nomination
Committee
R
Remuneration
Committee
Chair
A A A
N N N
R R R
86
Board of Directors continued
Louise Smalley
Non-Executive Director
Appointed to the Board on 23 June 2014 as a
Non-Executive Director. It was announced in June
2024 that Louise will retire from the Board with
effect from the conclusion of the 2024 AGM.
Key strengths
• Strong HR experience
• Extensive knowledge of people management,
rewards and remuneration schemes
Skills, experience and contribution
Louise’s recent experience as a serving listed
company executive director, combined with her
extensive knowledge of progressive people
management practices in multi-site large-scale
businesses, means that her skill and experience
contribute to the Board’s focus on the importance
of enabling everyone who works for the Group,
whatever their background, to realise their
potential.
She was Group Human Resources Director of
Whitbread PLC and, for nine years until August
2021, an executive director of Whitbread PLC,
where she held several key transformation and
HR roles. She previously worked as a HR
professional in the oil industry, with BP and Esso
Petroleum. Louise is an alumna of the Cambridge
Institute for Sustainability Leadership and has
experience of leading timely evolutions of
sustainability strategies.
External appointments
Louise is a non-executive director and
remuneration committee chair of Informa PLC
and a non-executive director and remuneration
committee chair of A.G. BARR p.l.c.
Iain Simm
Group General Counsel and Company
Secretary
Appointed Group General Counsel and Company
Secretary on 6 June 2016.
Key strengths
• Legal expertise
• Wealth of experience in assisting boards with
legal and governance matters
Skills, experience and contribution
Iain’s experience as general counsel and company
secretary in listed entities operating on a
multi-jurisdictional basis means that the Board
benefits from his advice on governance and
compliance matters as well as advice on complex
legal issues.
Iain has previously held General Counsel and
Company Secretary roles with Signature Aviation
plc and P&O Ports Ltd. He undertook his legal
training with Slaughter and May and worked for a
number of years in their corporate and
commercial department.
External appointment
None.
A
N
R
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Strategic Report Governance Financial Statements
Introduction
This section of the Annual Report focuses on corporate governance.
Having a structured corporate governance framework enables the
right information to be brought before the right people at the right
time to make informed decisions, which in turn strengthens the
Group’s decision-making processes and supports the Board’s key focus
on delivering the Group’s strategy for the benefit of our shareholders
and taking into account the interests of all our stakeholders.
Your Board understands that good corporate governance is an
essential element in helping to build a successful business in a
sustainable manner.
Chair’s introduction to governance
Division of responsibilities
My role as Chair is to lead the Board and be responsible for its overall
effectiveness in directing the Company. It is important that each
member of the Board is clear about their responsibilities and that each
member of the Board is able to contribute fully to all aspects of the
discussions we have as a Board.
The approval of certain Group policies (including some of those listed
in the Non-Financial and Sustainability Information Statement on
pages 80 to 83) is one of the matters reserved to the Board and is one
of the ways we, as a Board, have oversight of longer-term aspects of
the Group’s operations, including our leadership on sustainability
matters and our progress in addressing climate-related issues.
Succession planning
As a Board, and when we meet as the Nomination Committee, we
regularly discuss senior leadership succession, as we recognise that
non-financial resources and the manner in which we deliver our
strategy are as important as financial resources and the strategic
content of our Corporate Plan. For simplicity of presentation,
information about this crucial topic, including the announcement in
December 2023 of Miles’ retirement, is set out in the Nomination
Committee Report.
88
Balancing stakeholders’ interests
Each Board pack for Board meetings includes a reminder of each
Director’s duties under section 172 of the Companies Act 2006. That
frames our deliberations at meetings in the context of a reminder that
every Director must act in the way they consider, in good faith, would
be most likely to promote the success of the Company for the benefit
of its members as a whole, while thinking about the likely
consequences of any decision in the long term, the interests of the
Company’s employees, the need to foster the Company’s business
relationships with suppliers, customers and others, the impact of the
Company’s operations on the community and the environment, the
desirability of the Company maintaining a reputation for high
standards of business conduct, and the need to act fairly as between
the members of the Company.
The principal decisions that the Board takes can be divided into two
categories: there are decisions taken relating to matters considered
each year (such as approving the Corporate Plan, the budget and the
Annual Report, or considering the level of dividend payment to
propose) and there are decisions that relate to a new project or an
identified inflection point, when a new direction is to be taken.
An important continuing project in 2023/24, that the Board has been
regularly briefed on, has been the further development of the Group’s
Net Zero Transition Plan for achieving its 1.5°C validated science-
based target. Progression of the project roadmap has included
challenging the best-cost solutions and the deployment of significant
transition projects, such as the biomass boiler at Rouen Mill (replacing
coal) and waste-to-energy facility at Aschaffenburg Mill (replacing
natural gas). Further feasibility investigations have been conducted
relating to solar and heat pumps, renewable electricity sourcing and
energy efficiency opportunities, prioritising the greatest emission
sources. Over 30 strategic suppliers have been engaged in 2023/24 to
set their own science-based targets and deliver emissions reductions.
The Board has been pleased to note that these initiatives aim to
contribute to the near-term 2030 target to reduce Scope 1, 2 and 3
greenhouse gas emissions 46 per cent by 2030 compared to 2019, as
part of reaching the long-term 2050 target of Net Zero greenhouse
gas emissions.
In addition to the regulatory requirement to include a statement about section 172 of the Companies Act 2006 in the Strategic Report
(which is on page 5), there is also a requirement to make a statement about the Company’s engagement with the wider UK workforce and
with suppliers and customers. The methods of engagement in the UK and outside the UK are broadly the same, so we have cross-
referenced below, not repeated, our disclosures on these matters.
Statement about the Company’s engagement with the wider UK workforce
More detail about how we realise the potential of our people by engaging with our wider workforce (a term that is wider than the term
employees, who are those employed directly by the Group under contracts of service) wherever they are based (not just those based in
the UK) is set out on pages 26 to 29 of the Strategic Report.
Statement about the Company’s engagement with suppliers and customers
More detail about how we engage with our customers and the importance of sustainability throughout our supply chain is set out on
pages 24 and 25 and 30 to 37 of the Strategic Report.
In April 2024 the Board announced its recommendation of an all-share
combination of International Paper Company and the Company, a
combination that would be expected to strengthen the customer
value proposition, combine the expertise of both management teams
to accelerate innovative sustainable solutions and products for all
customers and create new opportunities for employees.
As your Chair I look forward to both supporting and challenging the
executive team as we realise our Purpose of ‘Redefining Packaging for
a Changing World’.
Geoff Drabble
Chair
20 June 2024
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Strategic Report Governance Financial Statements
Division of responsibilities
The Board
The Board is collectively responsible
for the long-term success of the
Group and for ensuring leadership
within a framework of effective
controls. The key roles of the Board
are:
• Setting the strategic direction of
the Group
• Overseeing implementation of the
strategy by ensuring that the
Group is suitably resourced to
achieve its strategic aspirations
• Providing entrepreneurial
leadership within a framework of
prudent and effective controls
which enables risk to be assessed
and managed
• Ensuring that the necessary
financial and human resources are
in place for the Group to meet its
objectives
• Setting the Group’s values.
Chair
• Primarily responsible for overall
operation, leadership and
governance of the Board.
• Leads the Board, sets the agenda
and promotes a culture of open
debate between Executive and
Non-Executive Directors.
• Regularly meets with the Group
Chief Executive and other senior
management to stay informed.
• Ensures effective communication
with our shareholders.
Senior Independent
Director
• Provides a sounding board to the
Chair and appraises his
performance.
• Acts as intermediary for other
Directors, if needed.
• Available to respond to
shareholder concerns if contacted.
Division of responsibilities of the Board
Group Chief Executive
• Responsible for executive
management of the Group as a
whole.
• Delivers strategic and commercial
objectives within the Board’s
stated risk appetite.
• Builds positive relationships with
all the Group’s stakeholders.
Non-Executive Directors
• Constructively challenge and help
develop proposals on strategy.
• Scrutinise the performance of
management.
• Review performance of the
business.
Board and Board Committee meetings attendance
Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
Total number of meetings in 2023/24 7 5 4 5
Executive Directors
Miles Roberts 7/7 5/5 n/a n/a
Richard Pike – joined the Board on 30 June 2023 6/6 n/a n/a n/a
Adrian Marsh – retired from the Board on 30 June 2023 1/1 n/a n/a n/a
Non-Executive Directors
Geoff Drabble 7/7 5/5 n/a 5/5
Tessa Bamford – joined the Board on 1 January 2024 2/3 2/2 1/1 1/2
Celia Baxter 7/7 5/5 4/4 5/5
Alan Johnson 7/7 5/5 4/4 5/5
Alina Kessel 7/7 5/5 4/4 5/5
Eric Olsen – joined the Board on 15 May 2023 6/7 4/5 3/4 3/5
David Robbie 7/7 5/5 4/4 5/5
Louise Smalley 6/7 4/5 4/4 5/5
In addition to the seven scheduled Board meetings there were a number of ad hoc meetings called to discuss matters that the Chair and Group Chief Executive
decided should be considered by the Board. All Directors received papers in advance of meetings and had the opportunity to comment in advance if they were unable
to attend some or all of a meeting.
The Chair also holds meetings with the Non-Executive Directors without the Executive Directors present.
90
Disclosure Committee
which oversees the Company’s compliance with
its disclosure obligations.
Group Health, Safety,
Environment and
Sustainability Committee
Meets monthly
Oversees the management
processes, targets and
strategies designed to manage
health and safety and
environmental and sustainability
risks and opportunities, including
reviewing performance on
climate-related issues and the
Group’s health and safety and
environmental and sustainability
responsibilities and
commitments.
Group Operating
Committee
Meets monthly
Considers Group-wide initiatives
and priorities. Reviews the
implementation of operational
plans. Reviews changes to
policies and procedures and
facilitates the discussion of the
development of new projects.
Group Strategy
Committee
Meets once every two
months
Plans the business strategy
implementation as approved by
the Board and set out by the
annual Corporate Plan process.
The Corporate Plan is used to
develop the Group’s strategy,
based on the set strategic
direction. The Corporate Plan’s
focus is primarily on strategic
actions, supported by high level
financial information. It covers a
three-year time horizon and is
reviewed annually by the Board.
General Purposes Committee
which facilitates efficient operational
management decision-making in relation to day
to day financing and administrative matters.
Group Compliance Committee
Meets quarterly
Oversees compliance with all legal, regulatory
and organisational requirements including the
effective interface between the financial, legal,
risk and internal audit functions, reporting back
to both the Group Operating Committee and the
Audit Committee.
Group M&A Committee
Meets as required
Considers potential acquisitions and disposals
and other related aspects that may impact the
realisation of the Corporate Plan.
Share Scheme Committee
which facilitates administrative matters in
relation to the Group’s share schemes.
Management committees
Four management committees, chaired by the Group Chief Executive, and the Group Compliance Committee also support the work of the
Board and its principal Committees.
Board’s principal Committees
Remuneration Committee
• Recommends the policy for the
remuneration of the Chair, the Executive
Directors, the Company Secretary and
senior executives, in alignment with the
Group’s reward principles.
• Considers remuneration of the wider
workforce when setting remuneration of
the Chair, the Executive Directors, the
Company Secretary and senior executives
and reviews related policies and
alignment of incentives and rewards with
culture, to help inform setting of the
Remuneration policy.
• Considers the business strategy of the
Group and how the Remuneration policy
reflects and supports that strategy.
Audit Committee
• Monitors the integrity of the Group’s
reporting process and financial
management, its accounting processes
and audits (internal and external).
• Ensures that risks are carefully identified
and assessed and that sound systems of
risk management and internal control are
in place.
• Oversees fraud prevention arrangements
and reports received under the ‘Speak Up!’
policy.
For more information see page 100
Nomination Committee
• Reviews the structure, size and
composition of the Board and its
Committees.
• Identifies and recommends suitable
candidates to be appointed to the Board
and reviews the wider senior
management talent pool.
• Considers wider elements of succession
planning below Board level, including
diversity.
For more information see page 95 For more information see page 106
Board’s standing sub-committees
In addition to the three principal Committees of the Board there are three further standing sub-committees of the Board.
Annual Report 2024 dssmith.com 91
Strategic Report Governance Financial Statements
Corporate governance in action
The governance section of the Annual Report outlines how we have
applied the main principles of the 2018 UK Corporate Governance
Code (Code). The Code is published by the Financial Reporting Council
(FRC) and available at www.frc.org.uk.
Corporate governance in context
Our compliance with the UK Corporate
Governance Code’s five sections
1
Board leadership and Company Purpose
Your Board rigorously challenges strategy, assesses performance and
balances the interests of all our stakeholders to ensure that every
decision we make is of the highest quality.
The regulatory requirement is to include in the Strategic Report a
statement about the Directors’ compliance with section 172 of the
Companies Act 2006, which includes taking into account the interests
of a variety of stakeholders. This is on page 5.
s172
We use this symbol in the governance section of the Annual
Report to highlight examples that illustrate aspects of
thatstatement.
The Directors’ biographies on pages 84 to 87 summarise what each
Board member contributes to the governance of the Company and
its long-term success. The Chair’s introduction to governance puts
DSSmith’s approach to matters of corporate governance into our
DSSmith context and links to the topics covered in section 1 of
the Code, as we explain in this governance section how we have
applied aspects of Code principles A to E and how we have put the
related provisions of the Code into practice.
From page 93
2
Division of responsibilities
Your Board and its Directors, both Executive and Non-Executive,
operate within a clear framework of roles and responsibilities. One of
the roles of Non-Executive Directors is to broaden the diversity of
viewpoints shared in the boardroom discussion, drawing on the full
range of their experience in other industries and other countries,
while considering a range of other stakeholders’ perspectives.
We explain how we have applied aspects of Code principles F to I and
how we have put the related provisions of section 2 of the Code into
practice in the section on division of responsibilities and in the
Nomination Committee Report, where we also have more information
about the independence of Directors.
From page 90
3
Composition, succession and evaluation
Your Board scrutinises the effectiveness of its performance in an
annual Board performance review and evaluates the balance of skills,
experience, knowledge and independence of the Directors. That then
informs the succession planning process, which also takes into
account the contribution made by having a diversity of backgrounds
(whether of gender, of social or ethnic backgrounds, or of the less
immediately visible cognitive differences). All new Directors receive a
tailored induction programme, which builds on their personal
experience and ensures that appointments can be made from a wider
pool of talent than one limited to only those with previous experience
of holding a directorship with a UK listed company.
The Nomination Committee Report and the paragraphs on Board
review in practice within the Board leadership section explain how we
have applied aspects of Code principles J to L and how we have put the
provisions of section 3 of the Code into practice.
From page 95
4
Audit, risk and internal control
All your Board’s decisions are discussed within the context of the risks
involved. Effective risk management, set in the context of a well-
structured internal control framework, is central to achieving our
strategic objectives, particularly as we balance the, sometimes
conflicting, interests of our stakeholders.
The audit, risk and internal control section and the Audit Committee
Report explain how we have applied aspects of Code principles M, N
and O in section 4 of the Code and how we have put the provisions of
that section into practice, firstly through matters that come before
the full Board and secondly through the detailed work of the Audit
Committee. Further information about our principal and emerging
risks, as well as our viability and going concern statements, is in the
risk section on pages 49 to 59.
From page 98
5
Remuneration
Our Remuneration policy, which was approved at the 2023 AGM, is
designed to support our long-term strategy and to promote long-term
sustainable success. It is aligned to our Purpose of ‘Redefining
Packaging for a Changing World’.
The remuneration sections of this report explain how we have applied
aspects of principles P, Q and R in section 5 of the Code and how we
have put the provisions of that section into practice, as well as how
we have complied with regulatory requirements in relation to
remuneration matters.
From page 106
All relevant provisions of the Code have been complied with
throughout the year ended 30 April 2024. The Board has been briefed
on the provisions of the revised UK Corporate Governance Code that
was published in 2024 by the FRC and has oversight of appropriate
preparations being made ahead of that coming into force in 2025
and2026.
92
Board leadership and Company Purpose
Board leadership in action
The Code provides that a board should establish a company’s purpose
and values as well as its strategy and that its directors should lead by
example and promote the desired culture.
The Code highlights the importance of effective engagement with
shareholders and other stakeholders. The Group’s key stakeholders
and their differing perspectives are identified and taken into account,
not only as part of the Board’s annual strategy and corporate planning
discussions, but also in our project assessments and in other
Boardconversations.
Health and safety is always a key item on the Board’s agenda and the
Board was pleased to hear that the Group-wide lost time accident
frequency rate has fallen again, to a new low of 1.65.
Delivery of our Corporate Plan will be driven by our continuing
progress in sustainability and circularity, innovation, digital and
data and organic growth. The Board is regularly briefed about our
progress in delivering against each of these. Each element has a key
role in the realisation of our Purpose of ‘Redefining Packaging for a
Changing World’.
The Board understands that the Group has a role as an employer and
as a taxpayer, as well as a member of the wider communities in which
our sites are based and as a key link in the supply chains through
which so many goods pass, and that these roles are broader than the
more traditional single role of a corporate entity reporting on its
financial results to its shareholders. The balancing of the differing
perspectives of all our key stakeholders is a recurrent theme in our
Board’s conversations.
All discussions, assessments and conversations focus not only on
delivering increased value for shareholders, but also assess the
impacts of our decisions and strategies on the Group’s wider
stakeholders. (The concerns of, and our response to, our stakeholders
are summarised on pages 22 and 23.) The Board recognises the
importance of regular, open and constructive dialogue with
shareholders and other stakeholders and this has long been a key
aspect of our culture and of our decision-making.
Engagement with our shareholders
The Group’s Investor Relations team coordinates an ongoing
programme of communication and engagement with shareholders
and analysts throughout the year, and the Board receives regular
updates on the views of the Group’s shareholders from our internal
team and also from the Company’s brokers, so all Board members have
a clear understanding of the views of the shareholders. Celia Baxter,
as Chair of the Remuneration Committee, leads the engagement with
shareholders when we have remuneration matters to discuss.
Each year some institutional investors (and other interested bodies)
issue materials concerning their expectations of companies. These
are summarised for, and considered by, the Board and these also
inform the comments that Board members make on the working
drafts of the Annual Report that they review, prior to its final approval
and publication.
Engagement with our workforce
Our engagement with our workforce makes use of the well-
established European Works Council (EWC) structure.
EWC representatives meet regularly with our Group Chief Executive
and members of our Group HR team to discuss a wide range of topics.
While health and safety, Group performance and sustainable
employment are always on the agenda for these discussions, topics
during 2023/24 have also included discussions about employee
engagement surveys, ageing workforce, performance and
development reviews and heat stress minimum standards. This has
allowed us to share insights and gain quality feedback from
employees, working collaboratively to bring in changes that benefit
employees and enhance the working environment.
Members of management continued to attend EWC meetings
throughout the year, held virtually on a platform that enables live
translation. Again this year an EWC representative joined a meeting
of the Remuneration Committee to support and inform discussions
about both executive remuneration and the remuneration of the
wider workforce, as well as to reflect on some of the topics discussed
when Celia Baxter, the Chair of our Remuneration Committee,
metwith the EWC Executive earlier in 2024. All these meetings
build further on the dialogue started in 2020.
The regular schedule of reporting to the Nomination Committee
includes the review of employee talent, development and succession
plans as well as insight into the progress made on diversity, equity and
inclusion and updates on the growing range of active networks, such
as the gender diversity, disability and allies, culture and ethnicity, and
LGBTQ+ and allies networks. All these activities ensure that the voice
of our workforce is heard regularly in the boardroom and provide
richer context for the Board’s decision-making.
Engagement with our suppliers, customers and
other stakeholders
The business relationships with our suppliers, customers and other
stakeholders, such as regulators and non-governmental
organisations, are matters which the Group Chief Executive covers
in his regular reports to the Board. The Board appreciates the
continuing work being done by the procurement function that
strengthens existing relationships with suppliers so that supplies
flow, even in times of shortage or supply chain stress.
The most recent update to the Board on sales, marketing and
innovation highlighted the well-balanced customer portfolio, across a
wide range of accounts, supported by a strategic marketing function
and digital marketing strategy, with a focus on sustainability
performance. This update built upon and illustrated some of the key
themes and projects that the Board had experienced at first hand
during its March 2024 visit to the Group’s Global R&D and Innovation
Centre (which focuses on early-stage design and prototyping work)
based in Redditch, UK.
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Complementing the regular briefings from operational and functional
management about Group-specific matters (such as reports from our
Corporate Affairs director on progress made during the year on our
programme of wider engagement in the community and the report to
each Board meeting on health and safety), the Board also has a
programme of briefings both from internal specialists (on such topics
as the Packaging and Packaging Waste Regulation in the EU and its
implications for the Group) and from the Group’s external advisers on a
range of topics, including cyber security, and the wider views of the
market, and of institutional shareholders in particular, on the Group.
This enables current and future plans to be set in the wider context of
the broader environment. This covers not just topics that are currently
visible, but emerging areas of interest and concern across a diverse
range of fields.
Our engagement with the local communities of which our sites and
employees are a part has been a developing area of focus in recent
years. The Board has been briefed on recent examples such the beach
clean in Portugal undertaken by colleagues from the Ferreira a Nova
depot and the ‘Let’s Go Circular!’ lesson plan presented to 23
elementary schools in Arnstadt, Germany.
Board engagement through site visits
Board site visits are an important way in which Board members can
engage with our employees, assess and monitor culture, and
understand more about our customers and suppliers. In visiting the
Group’s sites, the Board has an opportunity to put into context, and
learn at first hand about, the Group’s day to day operations, as well as
being able to engage with and challenge a wider group of
management. Site visits also enable the Board to witness the Group’s
culture at first hand. This year the Board has visited both the Group’s
newly built packaging facility at Castelfranco in Italy and its new
Global R&D and Innovation Centre based at Redditch in the UK.
A comprehensive health and safety report is provided to each Board
meeting. This report includes the total number of near misses and
safety observations, key markers of employee engagement and
involvement in observing and reporting positive practices and
recognising health and safety hazards. The level of engagement is
seen as a reflection of the culture and health and safety leadership at
a site. In 2023/24 the health and safety engagement index was 29.8,
a 39 per cent increase compared to the previous year, demonstrating
the increasing levels of engagement achieved through the application
of good management practices across all areas. This is the highest
figure since the Group started tracking this measure in 2017.
Board performance review in practice
Board performance review is an iterative process. After each review
(whether internal or external and including reviews of Committees
and Directors), the Board sets itself objectives. Following the review
in 2023, the Board set itself a number of objectives, including to
maintain focus on talent and succession planning and on actions
supporting our SBTi commitments, to consider the balance between
short, medium and longer term in the corporate planning cycle and
continue to develop the engagement with senior management in
regular site visits.
In the first part of 2024 Board members completed an internal
questionnaire about the performance of the Board and its
Committees, which gave structured content for each Board member’s
individual discussions with the Chair. At that time David Robbie, as
Senior Independent Director, met with all the Directors individually, to
appraise the Chair’s performance and subsequently discussed this
with him. The Directors considered the feedback from the above
process and adopted Board objectives for 2024. Both as part of the
Board and Committee performance review process and during the
year, the Non-Executive Directors met without members of executive
management being present.
Succession and composition
More details about succession planning are set out in the Nomination
Committee Report.
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94
Board leadership and Company Purpose continued
Dear shareholders
The Nomination Committee supports the Board on the crucial topic of
executive and non-executive succession planning.
Our principal objective as a Nomination Committee is to make sure the
Board has individuals with the necessary range of skills and
knowledge, and diversity of experiences to lead the Company and
deliver the Group’s strategy. As a Committee we continue to focus on
senior executive succession planning, as well as Board composition, as
we progress towards a greater range of diversity of experiences
across the Group’s senior leadership team. As Chair of this Committee,
I report to the Board on the outcome of our meetings.
Our priorities over the year were:
• To keep under review succession planning at the Executive Director
level and support succession planning at senior management levels.
• To improve the diversity on the Board.
• To monitor the Group’s progress towards increasing the relative.
number of women in senior management positions and senior
management diversity.
• To keep under review our leadership needs, both executive and
non-executive, with a view to ensuring the continued ability of
DSSmith to compete effectively in the marketplace.
Geoff Drabble
Chair of Nomination Committee
20 June 2024
Nomination Committee Report
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Strategic Report Governance Financial Statements
Membership and operation of the Committee
Member Since
Geoff Drabble (Chair) 2020
Tessa Bamford 2024
Celia Baxter 2019
Alan Johnson 2022
Alina Kessel 2020
Eric Olsen 2023
Miles Roberts 2010
David Robbie 2019
Louise Smalley 2014
During the year, the Committee held five scheduled meetings. Details
of individual Directors’ attendance can be found on page 90. There
were updates between formal meetings and a number of ad hoc
briefings and meetings to discuss items that needed to be considered
between scheduled meetings. The Group General Counsel and
Company Secretary acts as Secretary to the Committee.
Board changes and composition
Adrian Marsh retired from the Board on 30 June 2023 and Richard Pike
replaced Adrian from that date as the Company’s Group Finance
Director and joined the Board as an Executive Director. Eric Olsen
joined the Board with effect from 15 May 2023 and Tessa Bamford
joined the Board with effect from 1 January 2024. Tessa’s election as a
Director of the Company will be put to the Annual General Meeting on
3 September 2024 for approval. All the other Directors held office
throughout the year under review. Their biographies, including their
key strengths, skills, experience and contribution to the Board, are set
out on pages 84 to 87.
It was announced in December 2023 that Miles Roberts would be
stepping down as Group Chief Executive no later than 30 November
2025. It was announced in June 2024 that Louise Smalley will retire
from the Board with effect from the conclusion of the 2024 AGM.
Succession planning and recruitment
The Committee keeps under regular review succession planning at the
Executive Director level and supports succession planning at senior
management levels, valuing the balance of continuity and
refreshment over the medium term. The Committee’s annual rolling
schedule of periodic agenda items includes a deep dive into senior
talent management, talent and skillset mapping and succession
planning, informed by a presentation given by members of the Group
HR team.
For each Board appointment made we follow a similar process, as the
Board seeks to appoint an outstanding candidate, with a different
range of experience, to maximise Board effectiveness. Shortlisted
candidates are interviewed by a number of Executive and Non-
Executive Directors and the Committee makes a recommendation to
the Board.
When we think about diversity we recognise that diversity can take
many forms, including diversity of gender and of socio-economic and
ethnic backgrounds, and diversity of cognitive and personal strengths,
as well as the diversity of life experience and the role of
intersectionality, where different characteristics overlap. We also
recognise that diversity at Board level and throughout the Company is
a valuable strength, bringing with it a range of perspectives.
The mix of skills needed by Board members will change as the
landscape in which the Group operates changes. Therefore, as we
consider each new Board appointment, the role specification is not a
direct replication of the role of a retiring Board member.
When making decisions on new appointments, Board members
consider the skills, experience and knowledge already represented
on the Board and the alignment in terms of the culture and values of
DSSmith. The Committee also keeps in mind the benefits of diversity,
in all its forms, including of gender, ethnicity and life experience.
The announcement in December 2023 that Miles Roberts would be
stepping down as Group Chief Executive no later than 30 November
2025 gave the Company an appropriate amount of time to identify
and appoint Miles’ successor, a process that had begun (and was led
by the Chair) but one that, in the light of the recommended all-share
combination of International Paper with the Company, is not being
progressed. Apart from assisting with recruitment, Korn Ferry has also
provided advice to the Remuneration Committee in relation to various
aspects of remuneration and talent assessment services to the Group.
Korn Ferry does not have any connection with any individual
Directors, other than Korn Ferry during 2023/24 advised the
International Federation of Accountants on the search for its next
chief executive officer and Alan Johnson is the chair of the
searchcommittee.
Key responsibilities of the Nomination
Committee
As a Committee we have delegated authority from the Board to
focus on Board and Committee composition and succession
planning. In discharging those key responsibilities in relation to
succession planning we also consider ways to:
• Improve diversity in the pipeline for senior management roles
• Further strengthen the senior management team.
96
Nomination Committee Report continued
Induction, training and development programmes
Upon appointment to the Board, Directors undertake an induction
programme, receiving a broad range of information about the Group
tailored to their previous experience. This includes information
on the operational and sustainability performance and business of
the Group and details of Group strategy, corporate governance and
Boardprocedures.
Assisted by the Group Company Secretary, the Chair has responsibility
for Directors’ induction programmes, and also for the Board’s training
and professional development. Directors have been given training and
presentations during the course of the year to keep their knowledge
current and enhance their experience. This has included topics such as
updates on remuneration matters, on Task Force on Climate-related
Financial Disclosures (TCFD) and associated ESG reporting and
cybersecurity.
Directors will continue to receive regular training updates from
appropriate internal and external specialists on governance issues,
financial and reporting standards, digital development, cyber security
and sustainability. In addition, Directors are fully aware of their own
responsibility for identifying and satisfying their own specific training
requirements.
Time commitments
Under the Code the reasons for the Board permitting its members to
enter into significant new external appointments should be explained
in the Annual Report.
As part of the process of appointing Tessa Bamford to the Board, the
Board noted the value that the variety of her current roles will bring to
the Group.
The experience gained in external roles held by our Board members
broadens and deepens the knowledge and experience of the
Directors, which in turn benefits the Company. Directors do not take
part in any discussion concerning their own external appointments.
Diversity
The Board diversity and inclusion policy applies to the Board and its
principal Committees. The policy acknowledges the importance of
diversity and includes an explicit requirement to take into account
diversity when considering appointments to the Board. DS Smith
acknowledges the importance of diversity of thought, skills and
experience in the effective functioning of the Board and the wider
organisation. This diversity may arise from any number of sources,
including differences in age, gender, ethnicity, disability, sexual
orientation, cultural and economic background and religious belief.
Our Directors have experience of a wide range of industries and
backgrounds, as well as of complex organisations with a global reach.
Looking at diversity beyond the Board and across the Group, the Board
recognises that some challenges in achieving diversity arise from
social contexts with impacts not limited to DS Smith as a Group, but
the Board remains committed to ensuring that all have an equal
chance of developing their careers within our business. Currently the
Group’s leadership populations are internationally diverse but the
Group is aware that more needs to be done to improve the gender and
ethnic mix and address the ageing demographic in the leadership
population. (See pages 27 to 29 for more about our programmes to
develop diverse leadership talent, from whom might be drawn a
future generation of executive and non-executive directors, and to
improve the gender balance of those in senior management and their
directreports.)
Tables with numerical data reporting on gender and ethnic
background diversity in the format required by the applicable
regulations are set out on page 29. As at 30 April 2024 (the final day
of the financial year, which is our chosen reference date) our Board
was made up of four women and six men, so meeting the 40 per cent
threshold specified by the Financial Conduct Authority. We do not
have a woman in at least one of the specified senior board positions
(chair, chief executive, senior independent director or chief financial
officer). The Board is mindful of this requirement and of changing
expectations of stakeholders. Since the appointment of Alan Johnson
on 1 June 2022 the Board has met the Parker Review recommendation
that each FTSE 100 board should have at least one director from a
non-white ethnic minority background.
Our most recently published UK gender pay gap report is available on
our website. We know that we have a relative lack of women in
executive management positions and that the number of women in
senior leadership roles fluctuates, but the trend in recent years has
been towards a better gender balance.
Members of the Group HR team have shared updates with the
Nomination Committee on the substantial progress made on the
important topics of diversity, equity, inclusion and employee
engagement and the Committee has been impressed with the
work done, including that of creating awareness and building
managercapability.
Independence and re-election of Directors
The Nomination Committee makes an assessment each year of the
criteria set out in the Code concerning independence and the
Committee also reviews the time commitment of Non-Executive
Directors to assess whether each has sufficient time to discharge
their duties. Louise Smalley was first appointed to the Board ten years
ago in June 2014. The Board was of the view that Louise remained
independent as she continued to exercise independent judgement.
She provided continuity and experience of the Board’s previous
discussions, since the other Non-Executive Directors were appointed
much more recently, in 2019 and later. The Committee therefore
confirms that all the Non-Executive Directors are independent and
each has sufficient time to discharge their duties. The Committee also
considered Geoff Drabble to be independent on his appointment to
the Board.
The Nomination Committee this year considered the then current
term of appointment to the Board of Louise Smalley. Board members
reviewed the commitment and contribution to the Board and its
Committees of Louise, as well as the balance of her skills, knowledge
and experience with those of the other Directors. While recognising
that she has been in the role for ten years, it was agreed that Louise’s
term of appointment should be renewed for a further period and that
she will retire at the conclusion of the 2024 AGM. (Directors do not
participate in any debate or decision about their own re-
appointment.) The expiry date of the current term of each of the
Non-Executive Directors is set out on page 124.
All current Directors (other than Louise Smalley) are standing for
re-election or, in the case of Tessa Bamford, election at the
2024AGM.
Board and Committee performance review
Information about this year’s internal performance review of the
Board and its Committees can be found on page 94.
Annual Report 2024 dssmith.com 97
Strategic Report Governance Financial Statements
Risk management and internal control
The Board has overall responsibility for establishing and maintaining
the Group’s systems of risk management and internal control
(including financial, operational and compliance controls) and retains
ultimate accountability for the effectiveness of the systems and
processes implemented. The Board confirms that an annual review of
the overall effectiveness of the Group’s system of internal controls
has been conducted and that risk management procedures were
implemented during the year and up to the date of approval of this
Annual Report, including a robust assessment of the Group’s emerging
and principal risks, summarised on pages 49 to 56. These procedures
are complemented by annual presentations from, and challenges to,
senior management, together with regular updates from the risk,
governance and Internal Audit functions throughout the year.
The systems and processes implemented are designed to identify,
manage and, where appropriate, mitigate or eliminate significant risks
that might affect delivery of the Group’s business objectives – there is
an established and ongoing process for identifying, evaluating and
managing the significant risks and uncertainties faced by the Group.
The systems and processes of internal control are designed to provide
reasonable, but not absolute, assurance against material
misstatement or loss and include a process of self-certification by
senior divisional management, confirming that their divisions have
complied with Group policies and procedures and reporting any
significant control weaknesses identified during the past year. In
addition, the results of the work of the Group’s Internal Audit function
and Group Governance team and the adherence to the risk
identification and management processes identified above are
reviewed. These procedures have continued to be in place throughout
the year and up to the date of approval of this Annual Report.
The Board also has procedures in place to ensure that its powers to
authorise and manage conflicts are operated effectively. These
procedures were followed throughout the year and up to the date of
approval of this Annual Report.
Risk management
Our risk management framework is set out in the Group’s Risk policy.
Those processes remained robust during the year, supporting
management in identifying changes in the profile of our principal risks.
Management and employees have continued to manage the day to
day risks that the Group faces and have been able to adapt and to plan
responses to these changing situations. Our risk reviews, embedded
within our strategic planning process, support effective management
of the Group’s principal risks and uncertainties and inform the regular
updates on specific risk areas that are brought for discussion and
review at the Audit Committee.
The Board discusses regularly the Group’s cyber security programme,
as well as benefiting from presentations from external cyber advisers.
Cyber security is also discussed by senior executive management at
the Group Operating Committee meetings, along with other aspects of
IT infrastructure and security controls.
The Audit Committee has kept up to date with risk developments
throughout the year with in-depth discussion of the Group’s principal
risks and mitigation efforts and has noted the way in which our
divisions and Group functions have continued to demonstrate
resilience and revise risk mitigation remedies in their plans where
appropriate.
The Group Compliance Committee has continued to meet regularly
and to expand its oversight of the business. Recent topics have
included extended producer responsibility policy in the UK and
compliance with the new EU Deforestation Regulation.
Further details on the Group’s risk management and mitigation
approach for each principal risk, including its emerging risks reporting,
are set out in the risk management section on pages 49 to 56 and the
Group’s viability statement on pages 57 and 58. Our Task Force on
Climate-related Financial Disclosures are set out on pages 60 to 77.
Emerging risks are reported on as part of the risk management
reviews. Integrating them into the reporting processes supports the
Board in maintaining a clear overview, taking account of the
increasing ESG disclosure requirements and the effect of
macroeconomic uncertainty.
Audit, risk and internal control
98
Internal control
The Board determines the objectives and broad policies of the Group
and has a set schedule of matters which are required to be brought to
it for decision. Overall management of the Group’s risk appetite, its
tolerance of risk and discussion of key aspects of execution of the
Group’s strategy remain the responsibility of the Board. The Board has
delegated to the Audit Committee the responsibility for establishing a
system of internal controls and framework appropriate to the
business environments in which the Group operates. Key elements of
this system include:
• A clearly defined divisional organisation structure for monitoring
the conduct and operations of individual business units
• Clear delegation of authority throughout the Group, starting with
the matters reserved for the Board.
• A formal process for ensuring that key risks affecting operations
across the Group are identified and assessed on a regular basis,
together with the controls in place to mitigate those risks. Risk
consideration is embedded in decision-making processes at all
levels with input from risk specialists where appropriate, and the
most significant risks are periodically reviewed by the Board. The
risk process is reviewed by the Audit Committee.
• Control policies and procedures in functions including finance, tax,
IT, HR, procurement and legal, are reviewed and updated as
appropriate and supplemented by mandatory training and the
Group’s communications strategy.
• Assurance processes over the internal financial control
environment such as annual control self-assessments and ongoing
divisional control review programmes.
• The preparation and review of comprehensive annual divisional and
Group budgets; and an annual review and approval by the Board of
the three-year Corporate Plan.
• The monthly reporting of actual results using the Group
consolidation system and their review against budget, forecasts
and the previous year, with explanations obtained for all significant
variances.
• The operating framework which outlines key control procedures
and policies to apply throughout the Group. This includes clearly
defined policies and escalating authorisation levels for capital
expenditure and investment, with larger capital projects,
acquisitions and disposals requiring Board approval. This framework
is kept under periodic review.
• Regular formal meetings between the Group Chief Executive,
theGroup Finance Director and divisional management to discuss
strategic, operational and financial issues.
• Communicating key corporate values through our Code of Conduct
and associated policies to all employees to ensure relevant staff are
properly trained and equipped to exercise management oversight
and control.
The Group Governance team is a centrally-led function that maintains
and develops the internal control framework, provides support and
training to the business in complying with that framework and
provides assurance to management about compliance with the
framework through a site and risk-based work programme. As the
second line of defence, an important part of this function’s role is to
support the business in development of remediation plans and
corrective actions for control weaknesses identified through the
governance and compliance work programme, or through Group
Internal Audit’s activities. During the year, the team has been
developing the Group’s response to the anticipated changes in the UK
Corporate Governance Code and to the actual changes when they
became known on issuance of the Code in January 2024. The internal
control framework is a key element in the mitigation of the risk of
fraud.
Internal Audit
The Internal Audit function is an in-house function that provides the
third line of defence. It operates under a charter approved by the
Audit Committee which sets out the purpose, scope and authority of
the function to deliver the Internal Audit plan.
The Internal Audit function’s remit is to provide independent
assurance to measure the success of the organisation at managing
risk and to drive continuous improvement. This takes the form of
reviews of the operations of Group sites, service centres, functions,
projects, processes and compliance risk areas, in accordance with a
previously agreed plan, including an assessment of implemented
systems of internal control. Internal Audit provides reports detailing
findings and recommendations of potential control process
improvements and conducts supplementary follow-up reviews,
where merited, to ensure that management implements the
recommendations agreed. During the year, Internal Audit’s activities
were supported and complemented by management’s Group
Governance team.
The Internal Audit plan is designed each year to align to key risks faced
by the Group, as well as to provide rotational assurance. The annual
Internal Audit plan, and any revisions required to respond to emerging
risks or areas of concern, are approved by the Audit Committee. The
Internal Audit plan considers the scope and effectiveness of the
management assurance programme undertaken by the Group
Governance team in determining rotational coverage of financial
controls audit activities, as well as providing assurance over the
management assurance programme itself.
Findings from the Internal Audit and Group Governance teams are
reported to Group and divisional business management as well as to
the Audit Committee to give a holistic assurance picture.
The Audit Committee periodically considers stakeholder feedback on
the quality of the work of Internal Audit. External Quality Assessment
is required by the Institute of Internal Auditors Standards every five
years so this will next be due in 2025.
Annual Report 2024 dssmith.com 99
Strategic Report Governance Financial Statements
Dear shareholders
I am pleased to present the Audit Committee Report, which provides
an overview of the Audit Committee’s role supporting the Board in its
oversight of the integrity of the reporting process and control
framework across the Group. Details of the Board’s procedures and
processes in relation to oversight of risk management and internal
control are set out on pages 98 and 99.
Our principal objectives as an Audit Committee are:
• To monitor the integrity of the Group’s reporting process and
adherence to the Group’s accounting policies and procedures.
• To ensure that risks are carefully identified and assessed; and that
sound systems of risk management and internal control are
implemented.
Our role as a Committee is pivotal in ensuring the robustness of the
Group’s risk management activities and internal control environment,
ensuring the integrity of the financial reporting process. The Group’s
procedures and systems to identify, mitigate and manage risks
continue to develop to allow the internal control and financial
reporting processes to also benefit from continuous incremental
improvement.
Audit Committee Report
The Committee continues to monitor the presentation of financial
results, particularly taxation and the measures of underlying
performance, cash flows and financial position together with
impairment assessments, going concern and viability. The Committee
has continued to deepen its familiarity and oversight of ESG matters
and disclosures, including the updated TCFD and SECR information.
Inaddition, it has followed the progress, and noted, the current,
narrowed focus of the requirements arising from the UK
Government’s restoring trust in audit and corporate governance
initiative.
As Chair of the Audit Committee I make myself available, including at
the Company’s annual general meeting, to answer any shareholder
questions on the Committee’s remit.
David Robbie
Chair of Audit Committee
20 June 2024
100
Audit Committee meetings’ key topics
• Review of the 2022/23 Annual Report and
announcement, including a review to
ensure the report was fair, balanced and
understandable
• Going concern and viability statement
• Review of the key non-financial metrics in
the SECR and TCFD tables
• Impairment assessment review
• Effectiveness of internal control
framework update
• Review of adjusting items
• Internal Audit report and review of internal
assessment of the effectiveness of the
Internal Audit function
• External Auditor report
• Review of external Auditor effectiveness
• Recommendation of appointment of the
external Auditor
• Update on full-year forecast results
and trading outlook and emerging
year-end accounting issues and matters
ofjudgement
• Ethics and compliance report review
• Update on external Auditor plan and fees
• Risk update and review of emerging risks
• Review and approval of Internal Audit plan
for 2024/25 including confirmation of
non-financial areas to be targeted
• Review of current developments in
ESGreporting
• 2023/24 external Auditor plan for the
halfyear
• Review of letter to management from
external Auditor on 2022/23 audit
• Impairment assessment review
• Review of adjusting items
• Internal Audit report
• Ethics and compliance report review
• Risk update
• Review of the 2023/24 Annual Report and
announcement, including a review to
ensure the report was fair, balanced and
understandable
• Going concern and viability statement
• Review of the key non-financial metrics in
the SECR and TCFD tables
• Impairment assessment review
• Effectiveness of internal control
framework update
• Risk review
• Review of adjusting items
• Internal Audit report and review of the
effectiveness of the Internal Audit
function
• External Auditor report
• Review of external Auditor effectiveness
• Recommendation of appointment of the
external Auditor
• Update on half-year forecast results
• Going concern
• Review of announcement of half-year
results
• External Auditor half-year report, including
confirmation of independence and
objectivity
• Internal Audit report
• Non-audit fees review
• Risk update
JUN
2023
APR
2024
OCT
2023
JUN
2024
DEC
2023
Other matters particularly focused on by the Audit
Committee in its discussions with management include:
• Oversight of external audit transition processes
• Risk management, internal control and compliance enhancements
• Quality of earnings
• Financial commitments and liabilities
• Pensions
• Taxation matters, including review of strategy and risks
• Internal Audit and in-house governance, compliance and corporate
governance activities updates
• Climate and sustainability risks and the evolution of disclosure
requirements
2023
2024
Annual Report 2024 dssmith.com 101
Strategic Report Governance Financial Statements
The Audit Committee met on four occasions during the year, with
meetings scheduled to align with the Group’s external financial
reporting obligations. Details of the attendance of individual Directors
can be found on page 90. As and when required, the Audit Committee
members were joined by the Group Chief Executive, the Group
Finance Director, the Group Financial Controller, the Group Risk Officer
and representatives from the Internal Audit and Governance teams
and the external Auditor for parts of these meetings, by invitation.
The external Auditor was not present at meetings where their
performance was discussed. The Audit Committee also met privately
with the external Auditor as appropriate.
The Group General Counsel and Company Secretary acts as Secretary
to the Committee.
The Board is satisfied that the Chair of the Committee and other
members of the Audit Committee have both recent and relevant
financial experience (as set out on pages 84 to 87) and that the Audit
Committee, as a whole, has competence relevant to the sector
(namely manufacturing) in which the Company operates.
In addition to the scheduled Committee meetings, the Chair of the
Audit Committee held separate individual meetings during the year
with the Group Finance Director and his team, the Group Risk Officer
and representatives from Internal Audit and the external Auditor.
The Audit Committee received sufficient, reliable and timely
information from management to enable it to fulfil its responsibilities.
Risk management, internal control and
Internal Audit
In fulfilling the Committee’s oversight of the risk management and
control environment, a number of key activities are undertaken during
the year, including regular meetings with senior management.
The Audit Committee considered the Group’s risk management
activities during the year (with specific discussions of topics such as
the volatility of paper prices, changes in consumer shopping habits
and regulation and governance risks). The Audit Committee continued
its regular review of risk reporting to ensure that the balance between
risk and opportunity was in keeping with the Group’s risk appetite and
tolerance. The Audit Committee is satisfied that the Group’s executive
compensation arrangements do not prejudice robust controls and
good stewardship.
A key element of the Committee’s oversight role is to challenge
management and test the validity of any critical assumptions and
matters of significant judgement. Areas debated include the process
of impairment assessment and items for consideration within
adjusting profit measures. The Committee has taken a close interest
in developments in ESG reporting including emerging evidence-based
compliance requirements and the Group’s voluntary adoption of
emerging sustainability reporting standards and disclosures. In
conjunction with the Board, the Committee continues to challenge
management on its approach to matters relating to cyber security.
The Committee has also reviewed documented internal controls over
the Group’s principal risks and challenged management to ensure the
extent of assurance activity is appropriate.
The Committee approved the Group’s annual Internal Audit plan,
which was primarily risk-based, focusing on those areas which are the
most significant risks facing the business, as well as providing
rotational coverage of processes, systems, core compliance risks and
strategic projects, and overseeing internal management compliance
activities. During the year, the Committee received regular reports
summarising findings from the Internal Audit reviews performed,
action plans to address any areas highlighted for improvement and
additional activity review summaries from internal compliance teams.
Membership and operation of the Committee
Member Since
David Robbie (Chair) 2019
Tessa Bamford 2024
Celia Baxter 2019
Alan Johnson 2022
Alina Kessel 2020
Eric Olsen 2023
Louise Smalley 2014
Key responsibilities of the Audit Committee
As a Committee we have delegated authority from the Board to
focus on the following key responsibilities:
• Ensuring the integrity of financial reporting and associated
external announcements.
• Reviewing and challenging the application of the accounting
policies and principles reflected in the Group’s financial
statements.
• Reviewing disclosures made under the provisions of the
Streamlined Energy and Carbon Reporting legislation and
Task Force on Climate-related Financial Disclosures
provisions.
• Assessing the basis on which the viability statement and
going concern statement are being made and challenging the
assumptions underlying them.
• Managing the appointment, independence, effectiveness
and remuneration of the Group’s external Auditor, including
the policy on the supply of non-audit services.
• Initiating and conducting the audit tender process for the
external audit.
• Monitoring the adequacy and effectiveness of the internal
control environment.
• Challenging the plans and effectiveness of the Internal Audit
function, which is independent from the Group’s external
Auditor.
• Overseeing the Group’s risk management processes and
performance.
• Reviewing the effectiveness of established fraud prevention
arrangements and reports made through the confidential
‘Speak Up!’ policy process.
• Assessing the Group’s compliance with the 2018 UK
Corporate Governance Code.
• Providing advice to the Board on whether the Annual Report
and financial statements, when taken as a whole, are fair,
balanced and understandable and provide all the necessary
information for shareholders to assess the Group’s position,
performance, business model and strategy.
• Recommending to the Board the appointment of the
externalAuditor.
102
Audit Committee Report continued
Fraud risk
The Group has a framework to both protect itself against the risk and
the consequences of fraud and to detect and investigate instances of
actual and alleged fraud. Fraud encompasses misappropriation of
assets, financial misstatement, and bribery and corruption. The tone
from the top is clear – the Group has a zero tolerance to fraud, as set
out in the fraud policy guidance. In terms of protection against fraud,
there is an operational framework setting out policies on such areas
as code of conduct, anti-bribery and corruption, conflicts of interest
and gifts and hospitality, complemented by mandatory training. The
Group internal financial control framework provides the day to day
first line of defence against misappropriation and misstatement, and
adherence to this control framework is monitored through site visits
by representatives from the Internal Audit and Group Governance
teams and detailed bi-annual certification processes. The confidential
‘Speak Up!’ reporting programme, together with a comprehensive,
specific fraud response policy and associated guidance, underpin the
approach to detection and investigation of alleged and actual fraud.
All instances of alleged fraud are investigated fully and lessons learnt
incorporated, as appropriate, into the frameworks and training. The
Internal Audit function takes the lead on these investigations and the
Audit Committee is informed fully on these activities. Internal Audit
are working with the legal and Governance teams to consider any
adjustments to the frameworks needed to respond to the failure to
prevent fraud offence, which has been introduced recently. The
Committee is satisfied that the Group’s overall framework to mitigate
the risk of fraud is appropriate and proportionate.
Confidential reporting
Twice a year the Committee receives separate reports on matters
raised through ‘Speak Up!’, the Group’s confidential reporting channel,
and any related investigations. The ‘Speak Up!’ programme is available
through a multi-language phone line and web portal and third parties,
such as suppliers and contractors, can also report through that phone
line and web portal. The Code specifies that reports arising from such
confidential reporting channels should either be reviewed by the
Board or an explanation given. All Board members attend that part of
the Audit Committee meeting when ‘Speak Up!’ and any related
investigations are reported on. This means that representatives from
both Internal Audit and the external Auditor (who attend the Audit
Committee meetings but not Board meetings) can contribute their
perspectives, which is a valuable part of the review process. Internal
Audit are also able to provide specialist support where such assurance
is considered necessary.
Financial reporting
At each of its meetings, the Committee receives reports from
management on how the financial performance of the Group will be
reported externally. These reports address the key performance
indicators, the primary financial statements, the presentation of
results and other areas including taxation and significant accounting
and financial reporting judgements. This reporting is complemented
at the June and December meetings by the reports from the external
Auditor on their review and audit work.
Significant matters considered in relation to the financial statements
The significant matters considered in relation to the financial statements are set out below. They represent the key areas where the external
Auditor has challenged management’s assumptions.
Issue Review and conclusion
Carrying
value of
goodwill
The Group has significant balances of goodwill and customer related intangibles arising from the acquisition programme
commencing in 2015. Goodwill is subject to an annual impairment exercise undertaken by comparing the value in use of the
Group’s four cash-generating units (CGUs) – Northern Europe, Southern Europe, Eastern Europe and North America. This
exercise uses the Group’s annual Board approved forecast financial information and assumptions as the basis for the CGUs’
cash flows, together with long-term growth assumptions and market-based discount rates. The Committee has reviewed the
results of this exercise and the disclosures in the Financial Statements. The Committee is mindful that these assumptions are
subject to change and has considered appropriate scenarios reflecting these sensitivities. The Committee noted that the
assumptions for North America, as a region in which the Group has a limited track record, required more judgement and that
reasonably possible changes in the assumptions used could result in impairment. The Committee is satisfied that the
impairment exercise was rigorous and the judgements made by management were reasonable, that there is significant
headroom of value in use over the carrying values of each of the CGUs, that no impairments were necessary and that the
disclosures in the Financial Statements are appropriate.
Taxation
Taxation remains a key area of focus for the Committee, particularly given the continued and increasing level of fiscal authority
activity, ongoing tax enquiries and the second pillar of the OECD Base Erosion and Profit Shifting framework. The Group is
exposed to differing tax regimes and risks which affect both the carrying values of uncertain tax positions and balances
(including deferred tax) and the resultant income statement charges. The Audit Committee reviewed the tax charge for the
half year and the full year, including the underlying tax charge, the appropriateness of and movement in tax provisions
recognised and the risks associated with them. The Committee is satisfied that the amounts recognised in the income
statement and statement of financial position and the disclosure provided are appropriate.
Going
concern
The Committee noted that the implications of the proposed acquisition, announced on 16 April 2024, of the Group by
International Paper have meant that going concern is a significant matter. The strategic and financial rationale for the
combination are believed to be compelling and support the going concern assessment in the event that the transaction
proceeds. The Committee further noted that the Group’s borrowings and facilities are subject to change of control provisions
which allow for lenders to request repayment of the amounts owed but only in the event of a downgrade of the Group’s credit
rating to below investment grade and that, following the announcements by a credit ratings agency that they view the
transaction as positive from a credit perspective, the risk arising as a result of these change of control clauses is regarded as
remote. Lastly, the Committee considered the assessed ability of the enlarged group, following any combination, to repay the
borrowings and the disclosures made. The Committee is satisfied that the going concern basis for preparation of both the
Group and parent company financial statements and the corresponding disclosures are appropriate.
Annual Report 2024 dssmith.com 103
Strategic Report Governance Financial Statements
The Code requires the Board to confirm that the Annual Report
presents a fair, balanced and understandable assessment of the
Group’s performance, business model and strategy. This is an
important area of focus for the Committee. At the request of the
Board, the Committee undertook procedures so as to be able to advise
the Board on this. Committee members gave input at various stages
during the planning and drafting process, as well as taking the
opportunity to review the Annual Report as a whole and discuss, prior
to the June Audit Committee meeting, any areas requiring additional
clarity or better balance in the messaging.
ESG reporting
The ESG reporting landscape has continued to be an area of significant
regulatory development over the past 12 months. The Group has
begun to prepare new disclosures with reference to the requirements
of the CSRD (Corporate Sustainability Reporting Directive), ISSB
(International Sustainability Standards Board) and UK TPT (UK
Transition Plan Task Force). This includes establishing dedicated
resource and project teams for adopting the new reporting standards,
including assessing ‘readiness’ to report against material topics and
drafting disclosures. Developed disclosures can be found in this
Annual Report 2024, including the TCFD (Task Force on Climate-
related Financial Disclosures) on pages 60 to 77, EU Taxonomy (pages
78 and 79), the Non-Financial and Sustainability Information
Statement (pages 80 to 83) and Streamlined Energy and Carbon
Reporting (SECR) in alignment with the greenhouse gas protocol on
page 76. The ESG reporting function is integrated within the Group
finance team and delivers work relating to assurance, reporting
systems, forecasting and planning and disclosures, in addition to
partnering with the business to strengthen the production and use of
ESG data, for example, relating to Scope 3. The Audit Committee has
received comprehensive briefing during the year, covering the
evolving ESG landscape together with regular updates. The
Committee has specifically reviewed the SECR and TCFD disclosures
and is satisfied that they are appropriate.
Deloitte LLP is the independent assurance provider providing
assurance for selected metrics (indicated with an asterisk in the
relevant disclosures in the 2024 Annual Report) during the financial
year 2023/24.
Other activities of the Committee
Preparation for corporate governance reform
The impact of the UK Government’s corporate governance reform
strategy has become clearer during the year following the
Government’s decision not to proceed with legislation and after the
publication by the Financial Reporting Council of the new version of
the UK Corporate Governance Code. The Committee continues to
receive updates on management’s ongoing preparation activities in
these areas.
Financial Reporting Council (FRC) correspondence
The Group received correspondence from the FRC in March 2024
concerning the routine inspection by the FRC of Ernst & Young LLP’s
(EY) audit of the Group’s financial statements for the year ending
30 April 2023. The Audit Committee, through the Chair, provided full
support to the review. There were no key findings as a result of the
review. Four areas of improvement were identified, all of which have
been addressed for the current year (year ending 30 April 2024)
process.
Committee’s continued development
In order to help the Committee continue to meet its responsibilities,
Committee meetings include regular corporate governance updates
and briefings from external advisers or from members of senior
management.
The Committee’s effectiveness was reviewed as part of the wider
Board’s performance review of effectiveness, as described on page
94.
External Auditor
Effectiveness
In addition to the external Auditor confirming their independence and
objectivity, the Audit Committee also evaluates and monitors their
effectiveness through a review of the qualifications, expertise and
resources of the engagement team.
This is conducted through direct assessment and recurring activities.
As part of the current assessment of effectiveness, the Audit
Committee has taken into consideration the guidance issued by the
FRC including the guidance on oversight of the external audit set out
in the “Audit Committees and the External Auditor: Minimum
Standard”. Based on evidence from management, the external
Auditor and, as appropriate, external sources together with its own
experience, the Audit Committee assessed the mindset and culture,
skills, character and knowledge, quality control and judgement of the
external Auditor. The assessment considered the degree of challenge
to management, the level of professional scepticism, the issues
identified and the quality of explanations. The Audit Committee
recognises that the quality of an audit is paramount. The Committee is
satisfied with the effectiveness of the external Auditor and that the
current year audit was one of high quality.
Separate from the meetings of the Audit Committee, the Chair of the
Committee meets regularly with the external Auditor’s lead
engagement partner. The Committee also has meetings with
members of the external Auditor team, with no members of executive
management present.
Independence and objectivity
In order to ensure the independence and objectivity of the external
Auditor, the Audit Committee maintains and regularly reviews the
Auditor Independence policy which covers non-audit services which
may be provided by the external Auditor, and permitted fees.
The Group has a policy on the supply of non-audit services by the
external Auditor, which was most recently updated in April 2023. The
policy prohibits certain categories of work in accordance with
guidance such as the FRC Ethical Standard. It specifies that the Group
should not employ the external Auditor to provide non-audit services
where either the nature of the work or the extent of such services
might impair their independence or objectivity. The external Auditor is
permitted to undertake some non-audit services under the Group’s
policy, providing it has the skill, competence, integrity and appropriate
independence safeguards in place to carry out the work in the best
interests of the Group, for example, permissible reporting accountant
work associated with significant acquisitions. All proposed permitted
non-audit services above a de-minimis financial threshold are subject
to the prior approval of the Audit Committee.
104
Audit Committee Report continued
Non-audit services and fees are reported to the Audit Committee
twice each year. During 2023/24, total non-audit fees paid to the
external Auditor of £0.3 million were 4 per cent of the annual Group
audit fee (2022/23: £0.3 million; 5 per cent): see note 3 to the
consolidated financial statements. In addition, £11.7 million was paid
to other accounting firms for non-audit work, including £0.1 million for
specific work projects allocated by the Internal Audit team.
The EU Audit Regulation (Retained Legislation) and the FRC’s revised
Ethical Standard mean that there is also a cap of 70 per cent on the
ratio of non-audit fees to audit fees that can be paid to the external
Auditor, which places a further constraint on the non-audit services
permitted.
Annually, the Audit Committee receives written confirmation from the
external Auditor of the following:
• Whether they have identified any relationships that might have a
bearing on their independence
• Whether they consider themselves independent within the
meaning of the UK regulatory and professional requirements
• The continued suitability of their quality control processes and
ethical standards.
The external Auditor also confirms that no non-audit services
prohibited by the FRC’s Revised Ethical Standard were provided to the
Group or parent Company.
On the basis of the Committee’s own review, approval requirements in
the non-audit services policy, and the external Auditor’s
confirmations, the Audit Committee is satisfied with the external
Auditor’s independence and objectivity.
External Auditor fee and appointment
External audit fee negotiations are approved by the Audit Committee
each year. There are no contractual restrictions on the Group in regard
to the current external Auditor’s appointment.
Ernst & Young LLP were appointed as external Auditor to the Group in
2022 (following a tender process conducted in 2021), with Kevin
Harkin being appointed the lead audit partner for the 2022/23
yearend.
Pursuant to the terms of the Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Process and Audit Committee Responsibilities) Order 2014
(Competition & Markets Authority Order), which is now in force, the
Audit Committee is solely responsible for negotiating and agreeing
the external Auditor’s fee, the scope of the statutory audit and
initiating and supervising any competitive tender process for the
external audit. When a tender is undertaken, the Committee is
responsible for making recommendations to the Board as to the
external Auditor’s appointment. The Committee’s policy is that the
role of external Auditor will be put out to tender at least every ten
years in line with the applicable rules.
The Audit Committee confirms that the Company has complied with
the provisions of the Competition & Markets Authority Order with
regards to external audit tendering and audit responsibilities
throughout its financial year ended 30 April 2024.
Annual Report 2024 dssmith.com 105
Strategic Report Governance Financial Statements
Dear shareholders
Introduction
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 30 April 2024, which sets
out how we have implemented the Remuneration policy that was
approved by shareholders at the annual general meeting (AGM) in
September 2023.
My letter on pages 106 to 108, the summary on pages 109 to 112 and
the Annual Report on Remuneration on pages 116 to 128 will be
presented for approval by an advisory vote at our AGM in September
2024.
Our role
Our role as a Remuneration Committee is to develop a reward package
for executives and senior management that supports our vision and
strategy as a Group and ensures those rewards are performance-
based and encourage long-term shareholder value creation. Our
Purpose as a Group is ‘Redefining Packaging for a Changing World’.
More about the delivery of our Purpose through our strategic goals
and our Now & Next Sustainability Strategy is set out on page 3 and
pages 30 to 37 of this year’s Annual Report.
Remuneration Committee Report
Recommended all-share combination with
International Paper
In April 2024 the Board announced its recommendation of an
all-share combination of International Paper Company and the
Company, a combination that would be expected to strengthen
the customer value proposition, combine the expertise of both
management teams to accelerate innovative sustainable
solutions and products for all customers and create new
opportunities for employees.
The Committee took into account the interests of shareholders
and employees when considering the remuneration proposals
contemplated in the event shareholders approve the proposed
all-share combination of International Paper Company and the
Company. Those remuneration proposals are set out in the
Co-operation Agreement between International Paper
Company and the Company, available on the Company’s website
at www.dssmith.com.
As at 20 June 2024, shareholder approval of the proposed
all-share combination of International Paper Company and the
Company has not yet been obtained. The Committee has
therefore been operating in compliance with the Takeover
Code during this offer period and has continued to act
independently in relation to remuneration matters as set out in
this report.
106
Stakeholder experience in the year under review
The Committee in its deliberations about variable pay outcomes takes
into account the experience of a wide range of the Group’s key
stakeholders and did so again in considering the 2023/24
financialyear.
We have continued to deliver on our commitment to quality and
service for our customers, with an on-time, in-full rate of 96 per cent
and the strongest customer satisfaction scores since 2017 when we
started running our survey. The strength of our brand has also been
confirmed in our recent brand survey undertaken by the Group that
shows a further increase in the value and standards our brand
represents as scored by our actual and prospective customers.
Group-wide we have kept a strong focus on employee health and
wellbeing. Our programmes have included a Group-wide health,
safety and wellbeing week, when we highlighted the variety of health
and wellbeing programmes available, with over 500 events happening
across the business. There has been a further improvement in the
Group-wide lost time accident frequency rate which has fallen again
to a new low of 1.65.
The Group’s connection with the local communities where our sites
are based has continued to strengthen. For the fifth year running all
our sites with more than 50 full-time employees have participated in
community activities. Over the past 12 months we have continued to
work with our suppliers and at our sites to increase our focus on
human rights due diligence and to integrate this more fully into
ourbusiness.
We continue to work on our policies and practices across all areas of
the ESG agenda and keep up to date with the additional reporting
requirements. The Committee continues to be satisfied with the
progress being made in relation to sustainability matters and sees this
as a key differentiator that is highly appreciated by our customers.
This progress is driven by the Group’s values and has resulted in, for
example, DS Smith being one of a small number of companies that
achieved an ‘A’, out of over 21,000 companies scored, recognised for
corporate transparency and performance on climate change by global
environmental non-profit organisation, CDP.
All these factors drive the Group’s ongoing profitability and cash flow,
impacting the performance measures of our incentive plans. The
underlying importance of these factors to the Group continues to be
emphasised by the use of a variety of these ESG considerations as an
underpin to the annual bonus, both for the 2023/24 and the 2024/25
annual bonus.
In respect of the 2023/24 financial year, an interim dividend has been
paid and a maintained final dividend has been recommended, subject
to the approval of shareholders at the forthcoming AGM.
Our year under review
The key discussions of the Committee and decisions taken since
1 May 2023 were:
• Making sure that there is appropriate balance between the
business need for meaningful incentivisation for
management and the recognition of the wider societal
context in which the business operates, taking into account
the differing expectations of each key stakeholder group,
including our customers, employees, investors and suppliers.
• Reviewing statistics relating to the ‘gender pay gap’, noting
that our median pay levels for the UK (for about 5,000
employees) are broadly at parity.
• Reviewing the salaries of the Group Chief Executive, the
Group Finance Director and the next layer of management
and approving the treatment of remuneration arrangements
for joiners and leavers in that layer of senior management. As
part of our review we always consider the salary increases
implemented across the Group.
• Considering (in principle) the treatment of outstanding
unvested awards under the Performance Share Plan (PSP) and
Deferred Share Bonus Plan (DSBP) held by Miles Roberts, our
current Chief Executive, when he announced his intention to
retire from the Board and from full-time executive roles.
• Considering whether the formulaic outcomes of the annual
bonus and PSP are judged to be appropriately aligned with
business performance and stakeholder experience over the
relevant periods.
• Setting the targets for the annual bonus and PSP awards made
in 2023/24 taking into account a number of factors which
included our medium-term growth targets, the volatility of
paper pricing and our investment programme.
• Setting the performance measures and weighting for the
2024/25 awards (see page 108 for more details).
• Assessing the operation of the ESG underpin in the bonus and
considering whether there is a need to include specific ESG
measures in the bonus and PSP awards. Sustainability continues
to be one of the key values of DS Smith and our progress and our
leading position in promoting the circular economy have been
achieved without the need to directly incentivise ESG.
Accordingly, the Committee decided to maintain the current
approach of having an ESG underpin to the annual bonus.
Our achievements
Our Purpose informs the Group’s approach to strategy, which
has led, not only to the financial and non-financial results
highlighted on the inside front cover, but also to our strong
health and safety performance and our high scores among the
environmental, social and governance (ESG) ratings published
by MSCI (AA) and EcoVadis Gold as well as those issued by
Sustainalytics, S&P Global and CDP. Significantly, our 2023/24
CDP Climate Change response was awarded ‘A’ by CDP, placing
us on the ‘A List’ for our commitment to environmental
transparency.
You can read about the achievements of our business during
2023/24 in more detail in the Strategic Report starting on page 1.
Highlights for the 2023/24 financial year
Highlights for the 2023/24 financial year include:
• Adjusted operating profit of £701 million, (on a constant
currency basis).
• 9 per cent reduction in accident frequency rate.
• Over 1.2 billion units of plastic replaced since 2020.
Annual Report 2024 dssmith.com 107
Strategic Report Governance Financial Statements
Variable pay outcome
Unfortunately the Performance Share Plan (PSP) award made in 2021
will not vest in July 2024 as the performance conditions were not met.
The formulaic outcome for the 2023/24 annual bonus was 20.6 per
cent of the maximum bonus opportunity and the Committee has
therefore decided that the Executive Directors will receive 20.6 per
cent of the maximum annual bonus opportunity. (See pages 118 and
119 for more details.)
Taking into consideration the context of the wider experience of our
key stakeholders described above, the Committee concluded that it
was therefore not necessary to apply any discretion to amend the
outcome of the PSP or the annual bonus.
ESG underpin
In considering whether to apply discretion to override the
annual bonus formulaic outcome, an ESG underpin is used.
TheCommittee took into account three ESG factors:
Roll out of an updated Now & Next Sustainability
Strategy, which includes our approach to the
delivery of science-based targets, to take account
of updated actual performance and current
customer/regulatory requirements
Continuing maintenance of high health and
safetystandards
Continued work with our communities.
The Committee reviewed the evidence of performance against
these factors (see summary on page 119) and concluded this
was satisfactory and that no discretion needed to be applied.
Structure of performance measures and
weighting for 2024/25 awards
The Committee has considered the most important elements to
focus on when choosing the structure and weighting of
performance measures for 2024/25 awards, in the context of
the Board’s recommendation of an all-share combination with
International Paper Company, which is expected to complete
within the 2024/25 financial year.
As a consequence, the Committee is retaining for the 2024/25
annual bonus performance measures EBTA, with a greater
weighting, to incentivise the focus on profitability, and has
replaced free cash flow with strategic objectives to include a focus
on key business projects for the year ahead, alongside the
necessary activities to support the completion of the
recommended combination.
The Committee decided not to include a TSR measure in the PSP
awards made in 2024/25, due to the impact on relative TSR
measures of the prospect of corporate activity during the 60 day
period ending on 30 April 2024 (which would be the starting
point for a relative TSR measure for the applicable performance
period) and the impact of International Papaer Company’s share
price on the Company’s share price.
Our conversation with our shareholders
At the AGM in September 2024, shareholders will be asked to vote on
the Remuneration Report. I hope that the Committee will once again
have your support on that resolution.
As Committee Chair, I continue to be available to engage with
shareholders, as they so wish, on remuneration matters.
Celia Baxter
Chair of Remuneration Committee
20 June 2024
Our Remuneration policy
The Committee has concluded that the Remuneration policy has
operated as intended, both in terms of appropriately incentivising
corporate performance and in respect of quantum, in the context of
the Company’s performance.
Our conversation with our workforce
A European Works Council (EWC) representative joined a Committee
meeting this year to support and inform discussions about both
executive remuneration and the remuneration of the widerworkforce.
In addition, I once again attended meetings of the EWC Executive to
engage and consult with them on executive remuneration and wider
employee remuneration issues. This included an update on the voting
outcome in relation to the approval of the remuneration policy at the
2023 AGM and on key decisions made by the Committee, such as those
in relation to the recruitment of the new Group Finance Director and the
retirement of the Group Chief Executive. These meetings are a regular
feature of the annual timetable as both I and the EWC Executive value
the opportunity they provide to understand more about matters
relating to the Executive Directors’ remuneration and its alignment with
that of the wider workforce, as well as providing an additional channel
through which the voice of employees can be heard in the boardroom.
108
Remuneration Committee Report continued
Miles Roberts
Richard Pike
Fixed pay (salary,
retirement and
other benefits)
Annual bonus
£954 £362 £1,316
£501 £643£142
Vesting as a % of maximum
2023/24
annual bonus
2021/22 PSP
vesting in 2024/25
Miles Roberts 21% 0%
Richard Pike 21% n/a
Single total figure of remuneration
£’000
2023/24 2022/23
Increase/
(Decrease)
Miles Roberts £1,316 4,000
1
(67)%
Richard Pike
2
£643 n/a n/a
1. The long-term incentives for 2022/23 have been restated to reflect the share
price on the vesting date of 14 July 2023, which was 288p.
2. Richard Pike joined the Board on 30 June 2023
For more information on how the single total figure of
remuneration is calculated see page 116
2024/25 application
The table below sets out a summary of how the Remuneration policy will apply during 2024/25.
Remuneration element Application of the Remuneration policy
Base salary
• The salary for Group Chief Executive Miles Roberts will be increased by 4% to £926,000 and the salary for Group
Finance Director Richard Pike will be increased by 4% to £572,000, increases that took into account the average
increase of 4.1% for the UK workforce as a whole.
Annual bonus
• No changes to maximum award levels of:
• Group Chief Executive 200% of salary; and
• Group Finance Director 150% of salary.
• Bonus payable to Executive Directors paid half in cash and half in deferred shares, under the DSBP, with the shares
vesting after three years.
• The performance measures for 2024/25 will be 75% adjusted EBTA and 25 % strategic objectives. (Details of the ESG
underpin are set out on page 119.)
Performance
share plan (PSP)
• No change to maximum award level for Group Chief Executive of 225% and for Group Finance Director of 200%.
• The performance measures for 2024/25 will be adjusted EPS and adjusted ROACE with equal weighting.
• Any shares that vest under this award must be retained for a further two years before they can be sold and they are
also subject to a post-employment holding condition.
Retirement benefit
• Contribution or cash alternative rate for Group Chief Executive and for Group Finance Director is 6%, which is aligned
with that available to the workforce in the UK (being the country where they are based for employment purposes).
Shareholding
guidelines
• Shareholding target remains at 225% of salary for the Group Chief Executive and at 200% of salary for the Group
Finance Director.
• Actual holding (valued at closing price on the last trading day of financial year) was 1,069% for Miles Roberts and
323% for Richard Pike.
Any shares that vest under PSP or DSBP awards granted in 2020/21 or subsequent years will, until the relevant
shareholding requirement is met, be held in a nominee arrangement, because they are subject to a post-employment
holding condition (in addition to the two-year post-vesting holding condition).
Remuneration at a glance
Single total figure of remuneration for 2023/24 (£’000s) (Audited)
Annual Report 2024 dssmith.com 109
Strategic Report Governance Financial Statements
Miles Roberts Richard Pike
£994 £1,834
Fixed pay: 17%
Bonus: 31%
PSP: 52%
£5,831£3,003
£994 £1,834
Fixed pay: 21%
Bonus: 38%
PSP: 41%
£4,830£2,002
£994 £917
Bonus: 38%
PSP: 21%
£2,411
£500
Fixed pay: 100%
£994
£615
£850
Fixed pay: 20%
Bonus: 27%
PSP: 53%
£3,115
£1,650
£615
£850
Fixed pay: 24% Bonus: 33%
PSP: 43%
£2,565£1,100
Fixed pay: 100%
£615
Fixed pay: 41%
£615
£425
Bonus: 32%
PSP: 21%
£1,315
£275
Fixed pay: 47%
Illustration of the application in 2024/25 of the Remuneration policy
The balance between fixed and variable ‘at risk’ elements of remuneration changes with performance. Our Remuneration policy results in a
significant proportion of remuneration received by Executive Directors being dependent on performance. The total remuneration of Miles Roberts
and for Richard Pike for maximum, target and minimum performance in 2024/25 is presented in the charts below. (The basis of the calculation of
the share price appreciation is that the share price embedded in the calculation for the PSP awards in the maximum bar chart is assumed to increase
by 50 per cent across the performance period.) These figures are indicative as future share prices and future dividends are not known at present.
Minimum (fixed remuneration only, i.e. latest known salary, retirement and other benefits): £’000s
Maximum (fixed remuneration plus maximum annual bonus opportunity plus 100% vesting of performance shares) and share price appreciation
of 50%: £’000s
Maximum (fixed remuneration plus maximum annual bonus opportunity plus 100% vesting of performance shares): £’000s
Target (fixed remuneration plus half of maximum annual bonus opportunity plus 25% vesting at threshold of performance shares): £’000s
110
Remuneration at a glance continued
Key attributes to consider in reviewing remuneration matters
Under the 2018 Corporate Governance Code the Remuneration Committee is asked to describe with examples how it has considered six specific
factors. The Committee has reviewed the reward principles (set out on page 112).
The Committee has noted that these principles are clear and expressed simply. Under our reward principles incentive levels are to be
proportionate and designed in a way to minimise any behavioural risks. All the criteria for each element of an individual’s remuneration
are explained, so that each individual has a clear and predictable line of sight as to what actions will impact their remuneration outcomes, so
that all remuneration is appropriately earned for genuine business performance aligned with the Company’s culture, values and strategy.
The decisions made in relation to remuneration matters are taken in alignment with these over-arching reward principles that apply to all
executive management.
Employee voice in the boardroom
Include a reward
session led by the
Group Head of
Reward at the regular
meetings with the
EWC Executive
Invite EWC
representative to
speak regularly at
Remuneration
Committee meetings
Information
flow
Any reward-related
feedback also shared
with Remuneration
Committee
Information flow
Other sources of
feedback on the
total employee
experience
Board
Remuneration
Committee
Use of existing
European Works
Council (EWC)
structure
Annual Report 2024 dssmith.com 111
Strategic Report Governance Financial Statements
DS Smith reward principles
As part of good practice for any reputable company we apply
the following baseline principles when setting reward across
the organisation:
• Meets legal and regulatory requirements.
• Simple and clear to understand.
• Affordable and sustainable.
• Competitive in the market on a total reward basis to enable
DS Smith to attract and retain the right level of talent.
However, to differentiate our employee value proposition and
ensure that our approach to reward aligns to our culture, we
have developed the following DS Smith reward principles:
• We support a culture of meritocracy where our people are
encouraged to reach their potential and are clear on what
they need to do to succeed. For salaried employees, reward
should be differentiated using our Group salary and incentive
ranges for entry, established and high performers. Where pay
is determined through collective bargaining and there is less
scope to differentiate by individual, the highest performers
should be rewarded through development, promotion and
other recognition opportunities.
• We strive to have consistent policies and practices at a local
level and transparency in our benefits offering and policies.
• Incentives are designed to reward collective rather than
individual effort, to support our one DS Smith culture. For
senior managers, this is Group financial performance but for
middle managers and frontline employees, performance
measures can be the key value drivers that the individuals are
able to influence directly such as cost, quality and service.
• All employees should have the opportunity to share in the
success of the Group.
• Share ownership is fundamental at senior levels and
desirable across the Group.
• The Group respects the need for employees to make their
own choices around what they value, although there are
certain reward components linked to health and wellbeing
where the Group may decide it is appropriate to set a
minimum Group standard.
• Our pension offering should be competitive with the local
market where this is a benefit valued by employees.
• When determining rewards, demonstration of an individual’s
behaviours in line with the Group’s values (be caring, be
challenging, be trusted, be responsive and be tenacious) are
considered alongside the results achieved.
• In managed exits people should be treated fairly, in line with
the Group’s values and with dignity, but failure should not be
rewarded.
• Safeguards are applied to ensure that incentive levels are
proportionate, appropriately earned for genuine business
performance aligned to Company strategy and designed in a
way to minimise any behavioural risks.
In summary: key objectives of our
Remuneration policy
The purpose of our Remuneration policy is to deliver a
remuneration package that:
• Attracts and retains high calibre Executive Directors and
senior managers in a challenging and competitive business
environment.
• Reduces complexity, delivering an appropriate balance
between fixed and variable pay for each Executive Director
and the senior management team.
• Encourages long-term performance by setting challenging
targets linked to sustainable growth.
• Is strongly aligned to the achievement of the Group’s
objectives and shareholder interests and to the delivery of
sustainable value to shareholders.
• Seeks to avoid creating excessive risks in the achievement of
performance targets.
• Is consistent with the Company’s Purpose and values.
• Is commensurate with pay and conditions across the Group.
• Is aligned to the DS Smith reward principles.
• Takes into account overall corporate performance as well as
business performance.
All our decisions as a Remuneration Committee are taken in
thiscontext.
112
Remuneration at a glance continued
(approved in 2023)
Set out below are the key elements of our Directors’ remuneration policy applicable from 5 September 2023 when the policy was approved by
our shareholders. The full policy can be found in the Annual Report 2023 and on our website at https://www.dssmith.com/investors/annual-
reports/archive.
Element, purpose and link to strategy Operation and performance metrics Maximum opportunity
Basic salary
To help recruit and retain
key senior executives.
To provide a competitive
salary relative to
comparable companies,
in terms of size and
complexity.
Normally reviewed by the Committee annually and fixed for the
12 months commencing 1 August.
The Committee takes into account:
• role, competence and performance;
• average change in broader workforce salary; and
• total organisational salary budgets.
When external benchmarking is used, the comparator groups are
chosen having regard to:
• size: market capitalisation, turnover, profits and the number of
employees;
• diversity and complexity of the business;
• geographical spread of the business; and
• domicile of the Executive Director.
Salaries will normally be increased
in line with increases for the
workforce in general, unless there
has been an increase in the scope,
responsibility or complexity of the
role, when increases may be higher.
Phased higher increases may also
be awarded to new Executive
Directors who were hired at a
discount to the market level to
bring salary to the desired mid-
market positioning, subject to
individual performance.
The aim is to position salaries
around the mid-market level,
although higher salaries may be
paid, if necessary, in cases of
external recruitment or retention.
Annual bonus
To incentivise executives
to achieve or exceed
specific, predetermined
objectives during a
one-year period.
To reward ongoing
delivery and contribution
to strategic initiatives.
Deferred proportion of
bonus, awarded in
shares, provides a
retention element and
additional alignment of
interests with
shareholders.
Targets are set annually. The performance measures, targets and
weightings may vary from year to year in order to align with the
Company’s strategy and goals during the year to which the bonus
relates.
Performance measures can include some or all of the following:
financial measures, strategic measures and ESG measures.
Bonus payouts are determined by the Committee after the year end,
based on performance against predetermined objectives, at least the
majority of which will be financial.
Up to half of the bonus is paid in cash and the balance is deferred into
shares.
The deferred bonus shares vest after three years. Dividend equivalents
arising over the period between the grant date and the vesting date are
paid in cash or shares in respect of the shares which vest.
The annual bonus plans are not contractual and bonuses under the
plans are not eligible for inclusion in the calculation of the participating
executives’ retirement benefit arrangements.
Malus and clawback provisions apply to the annual bonus plan and the
deferred bonus shares so that individuals are liable to repay/forfeit
some or all of their bonus if there is a material misstatement of results,
error in calculation, gross misconduct, payments based on erroneous or
misleading data, significant reputational damage or corporate failure.
The Committee will act reasonably in the application of malus
andclawback.
Maximum bonus potential of 200%
of base salary, with target bonus
being no greater than one half of
the maximum.
Bonus starts to be earned at the
threshold level (below which 0% is
payable).
Current maximum potential for
each Executive Director is set out in
the Annual Report on
Remuneration.
Remuneration policy
Annual Report 2024 dssmith.com 113
Strategic Report Governance Financial Statements
Element, purpose and link to strategy Operation and performance metrics Maximum opportunity
Performance
share plan (PSP)
To incentivise Executive
Directors and other
senior executives to
achieve returns for
shareholders over a
longer time frame.
To help retain executives
and align their interests
with shareholders
through building a
shareholding in the
Company.
Awards of nil-cost options or conditional awards of shares are made
annually with vesting dependent on the achievement of performance
conditions measured at the end of the three-year performance period.
Awards will vest, subject to performance, on the third anniversary of
grant and will be subject to an additional two-year holding period
post-vesting, during which time awarded shares may not be sold (other
than for tax purposes).
The Committee reviews the quantum of awards annually to ensure that
they are in line with market levels and appropriate, given the
performance of the individual and the Company.
Performance measures can include some or all of the following:
financial measures, strategic measures, ESG measures and relative TSR.
Dividend equivalents arising over the period between the grant date
and the vesting date are paid in cash or shares in respect of the shares
which vest.
Malus and clawback provisions apply to the PSP so that individuals are
liable to repay/forfeit some or all of their shares if there is a material
misstatement of results, error in calculation, gross misconduct, vesting
based on erroneous or misleading data, significant reputational damage
or corporate failure. The Committee will act reasonably in the
application of malus and clawback.
The maximum annual award under
the PSP that may be granted to an
individual in any financial year is
225% of salary in normal
circumstances and 400% of salary
in exceptional circumstances, which
is limited to buy-out awards under
recruitment.
Actual award levels to Executive
Directors are set out in the Annual
Report on Remuneration.
No greater than 25% of the
relevant part of the award will vest
for achieving threshold
performance (which for a relative
TSR performance measure would
be median performance), increasing
to full vesting for the achievement
of maximum performance.
Share ownership
guidelines
To further align the
interests of executives
with those of
shareholders.
During employment
Executive Directors are expected to build and maintain a shareholding
in the Company’s shares as a multiple of their base salary within five
years of appointment as an Executive Director (Group Chief Executive
225%, Group Finance Director 200%). To achieve this, Executive
Directors are expected to retain at least 50% of shares (net of tax)
which vest under the Company’s share plans until the share ownership
guidelines are met. Incentive awards which have vested but that the
Executive Director has yet to exercise and unvested incentive awards
awarded under the DSBP (if they are only subject to a time-based
condition) are considered to count towards the shareholding on a
notional post-tax basis.
Non-Executive Directors are expected to build and maintain a
shareholding that is equivalent to 50% of their annual fee from the
Company within two years of their date of appointment.
After employment
In respect of share plan awards granted from 2020 onwards, Executive
Directors will be required to retain, for two years after leaving the
Company, a holding of shares at a level equal to the lower of the
shareholding requirement they were subject to during employment and
their actual shareholding on departure (excluding shares purchased
with own funds and any shares from share plan awards made before
2020).
Not applicable
All employee share
plan
Encourages long-term
shareholding in the
Company.
Executive Directors have the opportunity to participate in the UK or
international sharesave plans on the same terms as other eligible
employees (which is currently an opportunity to save up to £250, or
local currency equivalent, per month). There are no performance
conditions applicable to awards.
Up to £500 per month (or local
currency equivalent).
Retirement benefit
To provide income in
retirement.
Executive Directors can elect to:
• participate in the Group’s registered defined contribution plan
(DCPlan); or
• receive a salary supplement; or
• a combination of the above.
Maximum: a retirement benefit
contribution rate aligned with that
available to the workforce in the
country where they are based for
employment purposes.
114
Remuneration policy continued
Element, purpose and link to strategy Operation and performance metrics Maximum opportunity
Benefits
To help retain employees
and remain competitive
in the marketplace.
Directors, along with other UK senior executives, receive a car
allowance or company car equivalent, income protection insurance, life
cover of four times salary, family medical insurance and subsidised gym
membership. Additional benefits (including a relocation allowance) may
be provided from time to time, where they are in line with market
practice.
Any reasonable business related expenses may be reimbursed
(including tax thereon, if deemed to be a taxable benefit).
Benefit levels may be increased in
line with market levels to ensure
they remain competitive and valued
by the recipient. However, as the
cost of the provision of benefits can
vary without any change in the level
of provisions, no maximum is
predetermined.
Non-Executive
Directors and Chair
Attract and retain high
performing individuals.
Reviewed annually by the Board (after recommendation by the
Committee in respect of the Chair).
Fee increases, if applicable, are normally effective from 1 August. The
Board and, where appropriate, the Committee, considers pay data at
comparable companies of similar scale.
Directors with additional responsibilities, currently the Senior
Independent Director and the Chairs of the Audit and Remuneration
Committees, receive additional fees.
No eligibility for participation in bonuses, retirement plans or share
plans but limited benefits may be delivered in relation to the
permanency of their duties as a Director (e.g. hospitality, provision of a
mobile phone, tablet/laptop and travel-related expenses). Tax may be
reimbursed if these benefits are deemed to be a taxable benefit.
If there is a temporary yet material increase in the time commitments
for Non-Executive Directors, the Board may pay extra fees on a pro-rata
basis to recognise the additional workload.
No prescribed maximum annual
increase.
Details of current fees are set out in
the annual report on remuneration.
Aggregate annual fees limited by
Articles of Association (currently to
£1,000,000).
Discretions and judgements
The Committee will operate the annual bonus plan and long-term
plans according to the rules of each respective plan, their respective
ancillary documents and the UK Financial Conduct Authority’s Listing
Rules, which, consistent with market practice, include discretion in a
number of respects in relation to the operation of each plan.
Discretions include:
• Who participates in the plan.
• Determining the timing of grants of awards and/or payments.
• Determining the quantum of an award and/or payment.
• Determining the extent of vesting.
• How to deal with a change of control or restructuring of the Group.
• Whether or not an Executive Director or a senior manager is a good
leaver for incentive plan purposes and whether the proportion of
awards that vest do so at the time of leaving or at the normal
vesting date(s).
• How and whether an award may be adjusted in certain
circumstances (e.g. for a rights issue, a corporate restructuring or
for special dividends).
• What the weighting, measures and targets should be for the annual
bonus plan and PSP awards from year to year.
• The Committee also retains the ability, within the policy, if events
occur that cause it to determine that the conditions set in relation
to an annual bonus plan or a granted PSP award are unable to fulfil
their original intended purpose, to adjust targets and/or set
different measures or weightings for the applicable annual bonus
plan and PSP awards.
The Committee can use its judgement to make adjustments to
published outturns for significant events or changes in the Company’s
asset base that were not envisaged when the targets were originally
set or for changes to accounting standards, to ensure that the
performance conditions achieve their original purpose.
The Committee also has the discretion to reduce or apply other
restrictions to an award if, after taking into account all circumstances
known to the Committee, it determines that the amount which a
participant would otherwise receive pursuant to an incentive award in
accordance with its terms would result in the participant receiving an
amount which the Committee considers cannot be justified or which
the Committee considers to be an unfair or undeserved benefit to the
participant.
The Committee has the discretion to override formulaic outcomes to
the bonus and the PSP or DSBP in order to ensure that outcomes
reflect true underlying business performance or to reduce awards if
the business has suffered an exceptional negative event in order to
ensure that outcomes reflect overall corporate performance.
The Committee can use its discretion to reduce or waive the post-
employment shareholding requirement in the event of ill health or
death. The post-employment shareholding requirement would
normally fall away on a change of control.
In addition, the Committee can amend the Remuneration policy with
regard to minor or administrative matters where it would be, in the
opinion of the Committee, disproportionate to seek or await
shareholder approval.
Any historic share awards that were granted before the date a revised
policy came into force remain eligible to vest or be exercised or sold
based on their original award terms and the Remuneration policy that
was in force when those awards were granted.
Annual Report 2024 dssmith.com 115
Strategic Report Governance Financial Statements
The tables below show how we have applied the Remuneration policy during 2023/24. They disclose all the elements of remuneration earned
by the Directors during the year. Full details of the policy that was voted on in 2023 are included in the 2023 Annual Report which is available on
our website.
Ernst & Young LLP has audited, as required by the applicable regulations, those tables labelled as audited.
Single total figure of remuneration for each Director (audited)
Executive Directors during 2023/24
Salary
£’000
Benefits
1
£’000
Retirement
benefits
2
£’000
Total fixed
remuneration
£’000
Annual bonus
3
£’000
Long-term
incentives
£’000
Total variable
remuneration
£’000
Total single
remuneration
figure
£’000
Miles Roberts
Group Chief Executive
2022/23 838 22 100 960 1,677 1,363
4
3,040 4,000
2023/24 879 22 53 954 362 0 362 1,316
Richard Pike
Group Finance Director from
30 June 2023 2023/24
5
460 16 25 501 142 n/a 142 643
Adrian Marsh
Group Finance Director up to
and including 30 June 2023
2022/23 527 19 46 592 790 666
4
1,456 2,048
2023/24
6
89 4 5 98 27 0 27 125
1. Taxable benefits in 2022/23 and 2023/24 principally include an annual car allowance of £20,000 for Miles Roberts and of £17,500 for Richard Pike and Adrian
Marsh. The Executive Directors also receive income protection, life and health cover.
2. In lieu of membership of the defined contribution scheme Miles Roberts, Adrian Marsh and Richard Pike each received an annual retirement benefit allowance
which is not pensionable and is not considered to be salary for the purpose of calculating any bonus payment or long-term incentive.
3. The annual bonus, when paid, is paid 50% in cash and 50% in deferred shares as described in the policy table on page 113.
4. The long-term incentives for 2022/23 were valued in the 2023 Annual Report using the average share price for the last three months of that financial year, which
was 328p. This has been restated to reflect the share price on the vesting date of 14 July 2023, which was 288p. This also impacts the total and sub-total figures
for 2022/23.
5. Richard Pike became an employee before he joined the Board on 30 June 2023. In the financial year ending 30 April 2023 he was paid remuneration totalling
£370,594, being salary of £52,179, benefits of £2,545, retirement benefits of £2,870 and amounts compensating for the loss of benefits accrued in his previous
role of £313,000. In respect of the period from 1 May 2023 to 29 June 2023 he was paid remuneration totalling £125,286, being salary of £89,551, benefits of
£3,138, retirement benefits of £4,925 and £27,672 being the amount in respect of 2023/24 annual bonus pro-rated to reflect the proportion of the applicable
period that relates to time when he was not a Director. All of the remuneration he received from 30 June 2023 when he became a director is included in the above
table, which also includes the amount in respect of 2023/24 annual bonus pro-rated to reflect the proportion of the applicable period that relates to time when he
was a Director. A conditional award will vest in 2024 (after the date of this report) in favour of Richard Pike. Further details are on page 120.
6. After Adrian Marsh retired from the Board on 30 June 2023 he continued to be an employee. In respect of the period from 1 July 2023 to 5 September 2023 he
received remuneration totalling £132,907, being salary of £94,805, benefits of £3,119, retirement benefits of £5,688 and £29,295 being an amount in respect
of 2023/24 annual bonus pro-rated to reflect the proportion of the applicable period that relates to time when he was not a Director. (These details are repeated
on page 125 to comply with regulatory requirements.) The figure in the above table in respect of 2023/24 annual bonus is pro-rated to reflect the proportion of
the applicable period that relates to when he was a Director.
Fees
£’000
Total
4
2023/24
£’000
Total
4
2022/23
£’0002023/24 2022/23
Non-Executive Directors
Geoff Drabble 337 330 337 330
Tessa Bamford
1
23 – 23 –
Celia Baxter 84 79 84 79
Alan Johnson
2
67 59 67 59
Alina Kessel 67 64 67 64
Eric Olsen
3
33 – 33 –
David Robbie 98 89 98 89
Louise Smalley 67 64 67 64
Total 776 685 776 685
1. Tessa Bamford joined the Board on 1 January 2024.
2. Alan Johnson joined the Board on 1 June 2022.
3. Eric Olsen joined the Board on 15 May 2023. At Eric’s request, from 10 November 2023 he has not been paid any fee.
4. Non-Executive Directors received no taxable benefits, annual bonus, long-term incentives or retirement benefit payments during 2022/23 or 2023/24.
Annual report on remuneration
116
Fixed pay
Base salary (audited)
Salaries for Executive Directors (audited)
1 August 2022
(£)
1 August 2023
(£)
1 August 2024
(£)
Earned in
2023/24
(£)
Miles Roberts 846,600 890,000 926,000 879,150
Richard Pike
1
n/a
1
550,000 572,000 460, 449
2
Adrian Marsh
1
532,000 n/a
1
n/a
1
88,667
2
1. Richard Pike joined the Company’s Board and Adrian Marsh retired from the Company’s Board on 30 June 2023.
2. These amounts relate to the periods when Richard Pike and Adrian Marsh were directors. See page 116 for amounts Richard Pike earned when not a director and
page 125 for amounts Adrian Marsh earned when not a director.
When reviewing salaries the Committee takes account of a number of factors, with particular focus on the general level of salary increases
awarded to employees throughout the Group. Where relevant, the Committee also considers external market data on salary and total
remuneration. In April 2024 the usual review of executive remuneration was held and it was agreed that a pay increase would be implemented
on 1 August 2024 of 4% for Miles Roberts and of 4% Richard Pike, an increase that took into account the average increase of 4.1% for the UK
workforce as a whole.
Fees for Non-Executive Directors and the Chair (audited)
In addition to a base fee of £67,750, the Chair of the Audit Committee and the Chair of the Remuneration Committee each receive a fee of
£18,000 per annum and the Senior Independent Director receives a fee of £15,000 per annum. The fee for the Chair, which had been fixed for
three years, was increased with effect from 3 January 2024 from £330,000 to £345,000, an increase made taking into account market rates for
comparable positions. It was agreed that an increase of 4% would be implemented on 1 August 2024 in respect of the base fee for Non-
Executive Directors increasing that to £70,500. This decision took into account market rates for comparable positions and the average increase
for the UK workforce as a whole of 4.1%.
Base fee effective from
Earned in
2023/24
(£)
1 August 2022
(£)
1 August 2023
(£)
1 August 2024
(£)
Geoff Drabble 330,000 330,000
1
345,000
1
336,654
Tessa Bamford
2
n/a n/a 70,500 22,583
Celia Baxter 64,500 67,750 70,500 84,188
Alan Johnson 64,500 67,750 70,500 66,938
Alina Kessel 64,500 67,750 70,500 66,938
Eric Olsen
3
n/a 67,750 70,500 32,737
David Robbie 64,500 67,750 70,500 97,938
Louise Smalley 64,500 67,750 70,500 66,938
1. Geoff Drabble’s fee was increased with effect from 3 January 2024 to £345,000.
2. Tessa Bamford joined the Board on 1 January 2024.
3. Eric Olsen joined the Board on 15 May 2023. At Eric’s request from 10 November 2023 Eric has not been paid any fee.
Annual Report 2024 dssmith.com 117
Strategic Report Governance Financial Statements
Variable pay
The Committee believes it is important that a significant portion of the Executive Directors’ package is performance-related and that the
performance conditions support the delivery of the Group’s strategy and its long-term sustainable success. The Remuneration policy
encourages long-term performance by setting challenging targets linked to sustainable growth for variable pay, which consists of the annual
bonus and the longer-term PSP. The Remuneration Committee has discretion to adjust retrospectively the targets, for example after a
substantial restructuring, and would normally discuss this with its larger shareholders. Alternatively, adjustments to published outturns may be
appropriate for significant events or changes in the asset base that were not envisaged when the targets were originally set, to ensure that the
performance conditions achieve their original purpose. Full disclosure of this would be given in the Remuneration Report. The Remuneration
Committee has the discretion to override formulaic outcomes in order to ensure that outcomes reflect true underlying business performance.
When considering that discretion in relation to the annual bonus for 2023/24 the Committee took, and in relation to the annual bonus for
2024/25 the Committee will take, into account various ESG matters (as described on page 119).
Performance measures
An explanation of the performance measures for the annual bonus (assessed on a constant currency basis) and PSP (assessed on an actual
currency basis without adjustments for exchange rate movements) is set out below. The strategic rationale for the choice of these performance
measures is to focus on the key measures (both financial and strategic) over the performance period for the PSP and the annual bonus.
Adjusted earnings per share (EPS) applicable to the PSP
Adjusted EPS is disclosed in the Annual Report and is the portion of the Group’s adjusted after tax profit allocated to each outstanding share.
Adjusted EPS is an indicator of the underlying performance of the Group.
Adjusted return on average capital employed (ROACE) applicable to the PSP
ROACE is disclosed in the Annual Report. It is defined as earnings before interest, tax, amortisation and adjusting items as a percentage of
average capital employed, including goodwill. This is a measure of the efficiency and profitability of the assets and investments.
Total shareholder return (TSR) applicable to the PSP
TSR is the increase (or decrease) in the value of a notional investment in a share in the Company and each of the companies in the Industrial
Goods and Services Supersector within the FTSE 350 Index over the three-year PSP performance period, taking account of share price
movement and the value of dividends (which are deemed to be re-invested) over that period. This is a measure that takes into account the
experience of shareholders over the applicable period. However the impact of the prospect of corporate activity during the 60 day period
ending on 30 April 2024, (which would have been the starting point for a relative TSR measure for the applicable performance period) and the
impact of International Paper Company’s share price on the Company’s share price was such that it was decided not to include a TSR measure in
the PSP awards made in 2024/25: see page 108.
Adjusted earnings before tax and amortisation (EBTA) applicable to annual bonus
EBTA is adjusted earnings before taxation, amortisation and income from associates. This measure gives a snapshot of the performance of the
Group in the short term of a single financial year.
Free cash flow applicable to annual bonus
Free cash flow is the net movement on debt before cash outflow for adjusting items, dividends paid, acquisition and disposal of subsidiary
businesses (including borrowings acquired), and proceeds from issue of share capital, adjusted for the effects of changes in factoring balances.
This measure focuses on liquidity: see page 108.
Strategic objectives applicable to annual bonus
There are a number of important strategic objectives for 2024/25, which are receiving particular focus in 2024/25: see page 108.
Annual bonus
2023/24 annual bonus
The Executive Directors’ targets for the 2023/24 bonus were based on the financial targets set out below, with annual bonus payments
determined by reference to performance over the financial year ended 30 April 2024. Achievement is calculated on a straight-line basis
between threshold and target and between target and maximum. Adjusted EBTA and free cash flow have equal weighting as annual bonus
performance measures.
Targets and outcomes (audited)
Financial measure
Threshold
0% of maximum
Target
50% of maximum Maximum Achieved
Adjusted EBTA £576m £621m £657m £613m
Free cash flow £(56)m £(16)m £19m £(182)m
118
Annual report on remuneration continued
ESG underpin
ESG underpin element Assessment of performance in 2023/24
Roll out of an updated Now & Next Sustainability Strategy,
which includes our approach to the delivery of science-based
targets, to take account of updated actual performance and
current customer/regulatory requirements
The updated Now & Next Sustainability Strategy was successfully
rolled out to employees, customers and investors in 2023. For more
information see pages 30 to 37.
Continuing maintenance of high health and safety standards Group-wide lost time accident performance is 12% better than
2022/23. Group-wide H&S engagement index has increased in each of
the last seven years, further evolving our safety culture and
contributing to the reduction in the total number of accidents (with
and without lost time) that is 13.6% better than 2022/23. For more
information see pages 26 and 27.
Continued work with our communities The Group has completed the planned community programme activity
in all 157 targeted sites.
Outcomes (audited)
Miles Roberts Richard Pike Adrian Marsh
Adjusted EBTA (as a proportion of the maximum opportunity) 20.6/50 20.6/50 20.6/50
Free cash flow (as a proportion of the maximum opportunity) 0/50 0/50 0/50
Total (as a proportion of the maximum opportunity) 20.6/100 20.6/100 20.6/100
Maximum bonus opportunity as a % of salary 200% 150% 150%
Value of bonus paid in cash £181,105 £71,139
1
£13,699
2
Value of bonus deferred into shares £181,105 £71,139
1
£13,699
2
Overall award level £362,210 £142, 278
1
£27,398
2
1. This amount is pro-rated to reflect the proportion of the applicable period that relates to time when he was a Director from 30 June2023.
2. This amount is pro-rated to reflect the proportion of the applicable period that relates to time when he was a Director, up to and including 30 June 2023.
Performance is assessed on a constant currency basis and therefore the actual published results are restated for bonus purposes using
budgeted exchange rates.
Bonus awards are measured against the achievement of the Group’s objectives. Maximum bonus opportunity for 2023/24 for Miles Roberts was
200% of salary and for Richard Pike and Adrian Marsh was 150% of salary and was between 50% and 100% for the other most senior executives.
When deciding the level of variable pay, including the annual bonus, the Committee considered the experience of the Group’s stakeholders
during the 2023/24 financial year (as summarised on page 107). The Committee concluded that the outcome of the annual bonus in respect of
2023/24 appropriately reflected the Company’s performance in 2023/24 and was commensurate with the broader stakeholder experience in
that period; and that appropriate progress and actions have continued to be made to realise our ESG agenda. It was therefore not felt necessary
to apply any discretion to amend the outcome of the overall award level.
Implementation for 2024/25
The annual bonus for 2024/25 will remain in line with the Remuneration policy and with a maximum opportunity of 200% of salary for the
Group Chief Executive and 150% for the Group Finance Director.
For 2024/25 the bonus will be based on EBTA (as to 75% of maximum bonus opportunity) and strategic objectives (as to 25% of maximum
bonus opportunity). In the event of an unbudgeted acquisition or disposal in the year, the Committee will assess how the financial performance
of the acquired or disposed of company should be treated.
In the opinion of the Committee, the annual bonus targets for 2024/25 are commercially sensitive and accordingly are not disclosed prospectively.
These will be disclosed next year in the Directors’ remuneration report, so that achievement against those targets will be visible, in retrospect.
When considering the application of discretion to override the formulaic outcome for the 2024/25 annual bonus, the Committee will take into
account the following factors:
• Continued delivery of the updated Now & Next Sustainability Strategy and of progress towards our science-based targets, taking
account of updated actual performance and current customer/regulatory requirements
• Continuing maintenance of high health and safety standards
• Continued work with our communities.
Annual Report 2024 dssmith.com 119
Strategic Report Governance Financial Statements
The Committee will report on its assessment of the Group’s performance in those ESG underpin factors in the Annual Report 2025 (following a
similar format to its assessment for 2023/24).
Having an ESG underpin in this way acknowledges the importance of ESG which is integral to the DS Smith strategy, and in particular our
strategic goal to lead the way in sustainability.
Performance Share Plan (PSP)
Overview of the Performance Share Plan
The PSP operates as a long-term incentive plan for senior managers in the Group, with awards vesting after three years, and held for a further
two years by the Executive Directors.
The awards in the past have had three performance measures: adjusted EPS, adjusted ROACE and relative TSR. These had equal weighting.
The Committee’s policy is that no adjustments for exchange rate movements are made to EPS and ROACE over the three-year performance
period as these are of a long-term nature and fluctuations are more likely to average out over the period.
The relative TSR vesting scale is median to upper quartile performance, with no vesting below median performance. 25% of the award vests for
achieving threshold performance, increasing on a straight-line basis to full vesting for maximum performance.
The TSR comparator group for the 2021/22, 2022/23 and 2023/24 awards is the FTSE 350 Industrial Goods and Services Supersector.
2021/22 awards and their performance targets (audited)
The PSP award made on 8 July 2021 has EPS, ROACE and TSR performance conditions, each with an equal weighting and measured at the end of
the three-year performance period ending on 30 April 2024. Those performance targets and actual performance against those targets are set
out in the table below. 25% of the PSP award would have vested for achieving threshold performance, increasing on a straight-line basis to full
vesting for maximum performance. Unfortunately the threshold vesting targets were not met.
Weighting
Threshold
(25% vests)
Maximum
(100% vests) Outcome
Adjusted EPS One third 35.2p 40.0p 33.1p
Adjusted ROACE One third 11.2% 13.1% 10.7%
Relative TSR
1
One third Median Upper quartile Below median
1. Measured against the FTSE 350 Industrial Goods and Services Supersector.
Deferred share bonus plan (DSBP) awards vesting in 2024
The DSBP award vesting in 2024 relates to the deferral into shares of half of the bonus paid in July 2021 in relation to the financial year
2020/21. The number of shares vesting in 2024 under the DSBP award granted on 8 July 2021 to Miles Roberts is 177,529. Details of those
awards and the single total figure of remuneration that included them were set out in the remuneration report for 2020/21. Dividend
equivalents for the DSBP award also accrued during the three-year vesting period. Those dividend equivalents will be paid to Miles Roberts in
27,055 shares shortly after the award vests on 8 July 2024, the third anniversary of grant of the award. This award is subject to a two-year
post-vesting holding period and after vesting will be held in a nominee arrangement, if the required shareholding in the nominee arrangement
has not been met, because it is subject to a post-employment holding condition.
Conditional award vesting in 2024
To compensate Richard Pike for share-based incentive awards that he forfeited on leaving his former employer, Richard was granted a
conditional award on terms equivalent to the DSBP in respect of the Company’s shares over 85,675 shares, which will vest after the date of this
report in 2024. Dividend equivalents for this award also accrued during the vesting period. Those dividend equivalents will be paid in 5,543
shares, shortly after the award vests. This award is subject to a two-year post-vesting holding period and after vesting will be held in a nominee
arrangement, if the required shareholding in the nominee arrangement has not been met, because it is subject to a post-employment holding
condition.
120
Annual report on remuneration continued
PSP and DSBP awards granted in 2023 vesting in 2026/27 (audited)
The PSP awards made in 2023 in respect of 2023/24 were in line with the applicable Remuneration policy and, as reported in last year’s
Remuneration Report, were:
• 225% of salary for the Group Chief Executive and 200% of salary for the Group Finance Director
• Any shares that vest under the PSP awards granted in 2023/24 must be retained for a further two years before they can be sold (a total of
five years from original grant) and they are also subject to a post-employment holding condition, meaning that any applicable shares that
vest will be held in a nominee arrangement, if the required shareholding level in the nominee arrangement has not been met. For any PSP
awards which vest following departure that have been granted good leaver treatment, the Committee will reduce the two year post-vesting
holding period so that it does not extend beyond the second anniversary of departure, provided that the three year period after grant has
been completed
• The PSP awards were granted as nil-cost options and are subject to three performance measures: adjusted EPS, adjusted ROACE and relative
TSR, with equal weighting on each element.
The DSBP awards made in 2023 relate to the deferral into shares of half of the bonus paid in 2023 in relation to the bonus award included in the
single total figure of remuneration for 2022/23. They were granted as nil-cost options and are not subject to performance conditions, but are
subject to continued employment. The DSBP award granted to Adrian Marsh was granted after he retired from the Board on 30 June 2023 and
will be treated in accordance with the DSBP rules that apply to a good leaver.
Executive Director Award
Number of options granted under award
on 10 July 2023
Face value of award at time of grant
(£)
Miles Roberts PSP 687,671 1,904,849
DSBP 302,689 838,449
Richard Pike PSP 397,111 1,099,997
Employee Award
Number of options granted under award
on 10 July 2023
Face value of award at time of grant
(£)
Adrian Marsh DSBP 142,655 395,154
These PSP and DSBP awards were made on 10 July 2023. The face value in the above table is calculated using 277p which was the average price
of a DS Smith share for the three trading days preceding the grant of the award and the price used in the calculation of the number of options
awarded.
The targets for the 2023/24 PSP award are set out below:
% vesting as a proportion
Adjusted EPS
One third
Adjusted ROACE
One third
Relative TSR
One third
1
100% 42.0p 13.8% Upper quartile
Between 25% and 100% 36.0 – 42.0p 12.0 – 13.8% Between median and upper quartile
25% 36.0p 12.0% Median
1. The comparator group for measurement of relative TSR is the FTSE 350 Industrial Goods and Services Supersector, as it was in 2021/22 and 2022/23.
Awards vest on a straight-line basis between threshold and maximum performance. The performance measurement period for the adjusted
EPS and adjusted ROACE targets is the 2025/26 financial year and for the relative TSR target is the three years to 30 April 2026.
PSP awards to be granted in 2024 vesting in 2027/28
The PSP awards to be made in 2024 in respect of 2024/25 will be in line with the applicable Remuneration policy, with grants being made of up
to 225% of salary for the Group Chief Executive and 200% of salary for the Group Finance Director. As a matter of best practice, before
finalising the PSP award levels, the Committee considered the movements in the share price since the 2023 PSP grant and will monitor
performance against the targets to consider whether discretion should be applied to the formulaic outturn when determining the vesting
outturn.
Annual Report 2024 dssmith.com 121
Strategic Report Governance Financial Statements
The targets for the 2024/25 PSP award will be adjusted EPS and adjusted ROACE each having equal weighting:
% vesting as a proportion
Adjusted EPS
One half
Adjusted ROACE
One half
100% 40.2p 13.8%
Between 25% and 100% 35.1 – 40.2p 12.0 – 13.8%
25% 35.1p 12.0%
Awards vest on a straight-line basis between threshold and maximum performance. The performance of adjusted EPS and adjusted ROACE will
be measured on an average basis over the applicable performance period.
The Committee’s aim, as always, has been to set robust targets with a strong degree of stretch in the applicable economic context. In setting the
target ranges the Committee took into account a number of factors which included our medium-term growth targets, the volatility of paper
pricing and our investment programme. Our desire continues to be to set targets which balance stretch with the ability to at least achieve the
threshold level so that awards remain motivating and meaningful to all participants.
DSBP awards in 2024
As set out on page 119, half of the value of the bonus to be paid in 2024 in respect of the performance over the financial year ended 30 April
2024, will be deferred into shares, which will not vest until 2027.
Outstanding PSP and DSBP share awards during 2023/24 and as at 30 April 2024 (audited)
The table below sets out details of outstanding share awards, both under the PSP and the DSBP, held by Miles Roberts, Richard Pike and Adrian
Marsh during the year under review. Unvested awards will vest in future years subject to performance and/or continued service. Vested awards
will expire if not exercised before the relevant expiry date.
Award date
Awards held
at 30 April
2023 Granted
Dividend
equivalents
Exercised/
vested
1
Lapsed/
forfeited
Grant price
for award
(p)
2
Market
price on
date of
exercise (p)
Awards held
at 30 April
2024
Vesting date
(if any
performance
conditions
applicable
are met) Expiry date
Miles Roberts
PSP 14 Jul 20 647,123 – 41,976 473,391 215,708 272.00 305.8 0 14 Jul 23 14 Jul 30
PSP 8 Jul 21 411,635 – – – – 434.00 – 411,635 8 Jul 24 8 Jul 31
PSP 27 Jun 22 638,153 – – – – 287.00 – 638,153 27 Jun 25 27 Jun 32
PSP 10 Jul 23 – 687,671 – – – 277.00 – 687,671 10 Jul 26 10 Jul 33
DSBP 15 Jul 19 168,944 – – 168,944 – 357.00 305.8 0 15 Jul 22 15 Jul 29
DSBP 8 Jul 21 177,529 – – – – 434.00 – 177,529 8 Jul 24 8 Jul 31
DSBP 27 Jun 22 281,881 – – – 287.00 – 281,881 27 Jun 25 27 Jun 32
DSBP 10 Jul 23 – 302,689 – – – 277.00 – 302,689 10 Jul 26 10 Jul 33
2,499,558
Richard Pike
PSP 10 Jul 23 – 397,111 – – 277.00 – 397,111 10 Jul 26 10 Jul 33
– 397,111
Adrian Marsh
PSP 14 Jul 20 316,286 – – – – 272.00 – n/a
3
14 Jul 23 14 Jul 30
PSP 8 Jul 21 229,953 – – – – 434.00 – n/a
3
8 Jul 24 8 Jul 31
PSP 27 Jun 22 356,445 – – – 287.00 n/a
3
27 Jun 25 27 Jun 32
DSBP 8 Jul 21 83,672 – – – – 434.00 – n/a
3
8 Jul 24 8 Jul 31
DSBP 27 Jun 22 132,850 – – – 287.00 – n/a
3
27 Jun 25 27 Jun 32
DSBP 10 Jul 23 – 142,655 – – – 277.00 – n/a
3
10 Jul 26 10 Jul 33
1. As at 30 April 2024 neither Miles Roberts nor Richard Pike held any vested, but unexercised PSP or DSBP awards.
2. The figure in this column is the average price of a DS Smith share for the three trading days preceding the award and is the price used in the calculation of the
number of options originally awarded.
3. Adrian Marsh retired from the Board on 30 June 2023.
122
Annual report on remuneration continued
The target ranges for the 2021/22 PSP awards are set out on page 120. The target ranges for the 2023/24 awards are set out on page 121. The
relative TSR target for the 2022/23 award is the same as it was for the 2021/22 award. For the 2022/23 awards the target ranges for EPS and
ROACE are set out in the audited table below and will be measured at the end of the performance period.
PSP plan EPS range ROACE range
2022/23 36.0 – 42.0p 12.0 – 13.8%
It is currently intended that any ordinary shares required to fulfil entitlements under the DSBP and the award granted to Richard Pike in
connection with his recruitment (the full details of which were set out on pages 116 and 117 of Annual Report 2023) will be satisfied solely with
existing shares acquired by Computershare Trustees (Jersey) Limited in its capacity as trustee of the employee benefit trust (the Trust), which
buys shares to do so. The Trust may also be used to fulfil certain entitlements under the PSP and the employee sharesave plans or those may be
fulfilled by newly-issued shares.
Sharesave – employee share plans (audited)
Executive Directors are eligible to participate in the Sharesave (SAYE) on the same terms as all other UK-based employees of the Company and
participating subsidiaries of the Group. Options are granted under the SAYE, which, in the UK, is an HMRC tax-advantaged plan. Participants
contract to save up to the equivalent of £250 per month over a period of three years (two years in the US). The current maximum permitted
monthly saving of the equivalent of £250 is set by the Company. Under the applicable plan rules (and the Remuneration policy) the monthly
maximum could be increased in the future to up to the equivalent of £500 per month. The option price is discounted by up to 20% (15% in the
US) of the average closing mid-market price of the Company’s shares on the three dealing days prior to invitation (20-day average to the day
before grant in France and the higher of the mid-market average price on the day before invitation and the mid-market average on the day
before grant in the US). In common with most plans of this type, there are no performance conditions applicable to options granted under the
SAYE.
Options held at
30 April 2023
Options granted
during the year
Options
exercised during
the year
Options lapsed
during the year
Market price on
date of exercise
(p)
Options held at
30 April 2024
Exercise price
(p)
Date from which
exercisable Expiry date
Miles Roberts 2,769 – – – – 2,769 325.00 1 Apr 24 30 Sep 24
Adrian Marsh 2,769 – – 2,769 – -
1
325.00 1 Apr 24 30 Sep 24
1. Adrian Marsh retired from the Board on 30 June 2023.
Richard Pike does not hold any SAYE options.
Share ownership guidelines
Executive Directors are expected to build a significant shareholding in the Company within five years from the date of their appointment as an
Executive Director. Executive Directors’ shareholdings (including those of their connected persons) are summarised in the following auditedtable:
Name of Director
Total
shareholding as at
30 April 2023
Total
shareholding as at
30 April 2024
Unvested only
subject to
continued
employment
Vested awards
(not exercised)
Shareholding
required
(% salary)
Shareholding at
30 April 2024
(% salary)
1
Requirement
met
Executive Directors during 2023/24
Miles Roberts 2,063,831 2,314,282 403, 912
2
0 225% 1,069% Yes
Richard Pike n/a
3
461,586 45,408
4
0 200% 323% Yes
Adrian Marsh 301,021 n/a
5
n/a
5
n/a
5
n/a
5
n/a
5
n/a
5
1. Based on the salary as at 30 April 2024 and a share price of 350p (being the closing price on 30 April 2024) multiplied by the current year shareholding and
interests in shares which count towards the shareholding requirement.
2. Includes the awards of deferred bonus shares granted in 2021, 2022 and 2023, which are not subject to any further performance conditions. A reduction to the
gross award levels of 47% has been applied for the expected level of tax and social security deductions that will ultimately be due on these shares.
3. Richard Pike joined the Board on 30 June 2023.
4. Includes the conditional award that is due to vest after the date of this report in 2024. That award is not subject to any further performance conditions.
Areduction to the gross award levels of 47% has been applied for the expected level of tax and social security deductions that will be due on these shares.
5. Adrian Marsh retired from the Board on 30 June 2023, when he held 301,021 shares.
The PSP awards granted in 2022 and 2023 are unvested and remain subject to performance conditions so are not included in the above table as
they do not count towards the shareholding requirement. Nil-cost options which have vested but have yet to be exercised are considered to
count towards the shareholding requirement, other than any such shares that correspond to the estimated tax and national insurance
contributions. As at 30 April 2024 Miles Roberts and Richard Pike did not hold any such vested, but unexercised awards.
Failure to meet the minimum shareholding requirement is taken into account when determining eligibility for share-based incentive awards for
Executive Directors. There have been no changes to the shareholdings set out above between the financial year-end and the date of this report.
Awards which vested on 14 July 2023 are held in a nominee arrangement because they are subject to a post-employment holding condition (in
addition to the two-year post-vesting holding condition that applies to vested PSP awards). Awards which vest in subsequent years will, if the
required shareholding in the nominee arrangement has not been met, also be held in that nominee arrangement. On cessation of employment,
Adrian Marsh was required to retain for a period of two years in that nominee arrangement a shareholding, in respect of awards granted from
2020 onwards only, equal to the lower of 200% of his base salary or his actual shareholding in that arrangement on cessation of employment.
Annual Report 2024 dssmith.com 123
Strategic Report Governance Financial Statements
Non-Executive Directors are expected to build up a holding in shares equivalent to 50% of their annual fees within two years of their date of
appointment. Non-Executive Directors’ shareholdings (including those of their connected persons) are summarised in the following audited table:
Name of Director
Total
shareholding as at
30 April 2023
Total
shareholding as at
30 April 2024
Shareholding
required
(% fee)
Shareholding at
30 April 2024
(% fee)
1
Requirement
met
Non-Executive Directors during 2023/24
Geoff Drabble 77,445 77,445 50% 79% Yes
Tessa Bamford
2
– 0 50% 0% No
2
Celia Baxter 15,113 15,113 50% 62% Yes
Alan Johnson 12,596 12,596 50% 65% Yes
Alina Kessel 19,000 19,000 50% 98% Yes
Eric Olsen
3
– 26,000 50% 134% Yes
3
David Robbie 30,000 30,000 50% 104% Yes
Louise Smalley 18,600 18,600 50% 96% Yes
1. Based on the fee as at 30 April 2024 and a share price of 350p (being the closing price on 30 April 2024) multiplied by the current year shareholding and interests
in shares which count towards the shareholding requirement.
2. Tessa Bamford joined the Board on 1 January 2024. She has not yet been on the Board for two years.
3. Eric Olsen joined the Board on 15 May 2023. He has not yet been on the Board for two years and at his request from 10 November 2023 he has not been paid any
fee. Based on an annual fee of £67,750 he would have met his shareholding requirement.
External appointments
The Board supports Executive Directors taking up appointments outside the Company to broaden their knowledge and experience. Each
Executive Director is permitted to accept one non-executive appointment (or in exceptional circumstances two appointments) from which they
may retain any fee. Any external appointment must not conflict with a Director’s duties and commitments to DS Smith.
Miles Roberts was appointed a non-executive director of Land Securities Group PLC with effect from 19 September 2022 and retained fees of
£71,925 for the year ended 30 April 2024 (£43,526 for the year ended 30 April 2023).
Directors’ contracts and notice periods
Date of
initial appointment to the Board
Expiry date of current term
for Non-Executive Directors
Geoff Drabble Chair 1 September 2020 31 August 2026
Miles Roberts Group Chief Executive 4 May 2010 not applicable
Richard Pike Group Finance Director 30 June 2023 not applicable
Tessa Bamford 1 January 2024 31 December 2026
Celia Baxter Chair of Remuneration Committee 9 October 2019 8 October 2025
Alan Johnson 1 June 2022 30 May 2025
Alina Kessel 1 May 2020 30 April 2026
Eric Olsen 15 May 2023 14 May 2026
David Robbie Chair of Audit Committee and Senior Independent Director 11 April 2019 10 April 2025
Louise Smalley 23 June 2014 3 September 2024
Miles Roberts and Richard Pike each have a notice period of 12 months exercisable by either the Company or the individual. It was announced on
7 December 2023 that Miles Roberts had informed the Company of his intention, following 13 years with the Company, to retire from the Board
and from his role as Group Chief Executive. It is intended that Miles’ formal notice period will start on 1 December 2024, which means that he
would retire from the Board and step down as Group Chief Executive no later than 30 November 2025. It was announced in June 2024 that
Louise Smalley will retire from the Board with effect from the conclusion of the 2024 AGM. Non-Executive Directors have letters of
appointment for an initial term of three years whereupon they are normally renewed. The current terms of the Non-Executive Directors are set
out in the table above. The notice period is one month exercisable by either the Company or the Non-Executive Director. In line with the UK
Corporate Governance Code, all Directors (including Non-Executive Directors) are subject to annual re-election by shareholders at the AGM.
Their letters of appointment detail the time commitment expected of each Non-Executive Director. Both these and the Executive Directors’
service contracts are available for inspection at the registered office during normal business hours and at each AGM.
124
Annual report on remuneration continued
Payments to past Directors (audited)
After Adrian Marsh retired from the Board on 30 June 2023 he continued to be an employee. In respect of the period from 1 July 2023 to
5 September 2023 he received remuneration totalling £132,907, being salary of £94,805, benefits of £3,119, retirement benefits of £5,688
and £29,295 being an amount in respect of 2023/24 annual bonus pro-rated to reflect the proportion of the applicable period that relates to
time when he was not a Director. No other payments were made to past Executive Directors during the year ended 30 April 2024 (2022/23: Nil).
Payments for loss of office (audited)
No payments were made in respect of loss of office during the year ended 30 April 2024 (2022/23: Nil).
Relative importance of spend on pay
The table below shows the expenditure and percentage change in overall spend on employee remuneration and dividends.
2023/24
£m
2022/23
£m
Percentage
change
Overall expenditure on employee pay
1
1,447 1,504 (4)%
Dividend paid during the year
2
247 289 (15)%
1. Total remuneration reflects overall employee costs and includes some exchange rate fluctuation. See consolidated financial statements note 6 for further
information.
2. The year on year change in the dividend paid figure is due to the timing of dividend payments in the prior year.
Review of past performance — total shareholder return graph
The graph below illustrates the Company’s TSR performance since 1 May 2014 (the period required by the applicable regulations), relative to
the FTSE 100 Index as well as the FTSE 250 Index. In December 2017 the Company joined the FTSE 100 Index from the FTSE 250 Index.
Therefore, both indices are considered appropriate comparator indices for the Company. As at 30 April 2024 DS Smith ranked 81 by market
capitalisation. This graph looks at the value, over the ten years to 30 April 2024, of an initial investment of £100 in DS Smith shares compared
with that of £100 invested in both the FTSE 100 and FTSE 250 Index. The other points plotted are the values at intervening financial year ends.
23 24222120191817161514
Total shareholder return
0
50
100
150
200
250
300
+72.2%
DS Smith FTSE 100 FTSE 250
Remuneration of the Group Chief Executive
The table below shows the total remuneration figure for the Group Chief Executive for each of the last ten financial years. The total remuneration
figure includes the annual bonus and long-term incentive awards which vested, based on performance in those years. The annual bonus and
long-term incentive awards percentages show the payout for each year as a percentage of the maximum available for the financial year.
2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
1
2023/24
Total remuneration
(£’000) 5,527 4,447 4,861 4,220 3,065 1,422 2,525 2,580 4,000 1,316
Annual bonus
payout 88% 79% 45% 88% 74% 0% 98% 100% 100% 21%
Long-term
incentive vesting 92% 94% 100% 93% 52% 35% 0% 0% 66.67% 0 %
1. The 2022/23 figure has been restated to include the actual share price on the date of vesting (14 July 2023) for the actual number of options vesting under that
PSP award that is now known.
Annual Report 2024 dssmith.com 125
Strategic Report Governance Financial Statements
Group Chief Executive pay ratio disclosures (audited)
Method
25
th
percentile Median 75
th
percentile
Total pay ratio Total pay ratio Total pay ratio
2018/19 B 100:1 91:1 72:1
2019/20 B 52:1 44:1 35:1
2020/21 B 90:1 71:1 60:1
2021/22 B 81:1 60:1 56:1
2022/23 B 126:1 99:1 96:1
2023/24 B 36:1 29:1 28:1
The table above sets out how the single total figure of remuneration (STFR) for the Group Chief Executive compares to the STFR of the UK
employees at the 25
th
percentile, median and 75
th
percentile. All STFRs for the 2023/24 financial year have been based on full-time equivalent
values and annualised where necessary. In last year’s Annual Report the ratios for 2022/23 were calculated using the average share price in the
last three months of the financial year as an estimate for the value of the 2020/21 PSP. Those figures have been restated to reflect the actual
share price on the vesting day of 14 July 2023 now that this is known. The table below sets out the split between total remuneration (fixed and
variable pay and benefits) and the salary component of that total for UK employees used in the above total pay ratio calculations. DS Smith has
chosen to use methodology B (as defined in the applicable regulations) to calculate the figures in the tables above and below, because, in
2023/24 as was the case in prior years, there were multiple bonus plans in place across the UK which are not payable in some cases in advance
of the Directors’ remuneration report being approved by the Board, meaning it is not practically possible to collate the bonus amounts relating
to performance during 2023/24 for every UK employee in advance of this remuneration report being approved.
Remuneration used to calculate the Group Chief Executive pay ratio disclosures
25
th
percentile pay ratio Median pay ratio 75
th
percentile pay ratio
Total remuneration
(£)
Base salary
(£)
Total remuneration
(£)
Base salary
(£)
Total remuneration
(£)
Base salary
(£)
2018/19 30,744 26,608 33,804 32,051 42,277 31,622
2019/20 27,244 26,647 32,342 31,479 40,349 36,202
2020/21 28,042 25,729 35,384 33,566 42,142 39,756
2021/22 31,877 28,282 42,645 37,647 46,215 42,210
2022/23 31,850 30,632 40,288 38,748 41,564 39,217
2023/24 36,201 34,026 44,945 39,174 46,971 42,122
As DS Smith uses methodology B, the 2023 UK gender pay gap data has been used to identify the relevant comparator employee falling at the
relevant percentile and to calculate the annual total remuneration relating to 2023/24 for the three identified employees on the same basis as
the Group Chief Executive’s annual total remuneration for the same period in the single figure table. We are confident that the three employee
STFR figures (which include applicable bonus) used in the pay ratio reporting are as representative of the respective percentiles as would have
been the case if the 2023/24 STFR had been calculated for all UK employees. (The data reference date was 22 April 2024.)
As a result of the large proportion of variable pay in the Group Chief Executive’s total reward, the ratio can be subject to a high degree of
volatility from one year to the next. That is the case this year, when, a reduced level of variable pay has resulted in a marked decrease in the
ratio.
We will continue to report on trends in these figures, which are expected to fluctuate as variable pay outcomes fluctuate for the Group Chief
Executive. The Company does believe that the median pay ratio for 2023/24 is consistent with the pay, reward and progression policies for UK
employees taken as a whole.
126
Annual report on remuneration continued
Annual percentage change in remuneration of Executive and Non-Executive Directors and employees
The table below shows the percentage change in three aspects of remuneration (salary or fee, benefits and bonus) for the Group Chief
Executive, the Group Finance Director and the Non-Executive Directors who were Directors at 30 April 2024 compared to full-time equivalent
employees of the Company. (The format of the table is prescribed by regulation. Benefits and bonus are not applicable to Non-Executive
Directors.) The section headed ’% change on prior year for 2023/24’ sets out the change from financial year 2022/23 to financial year 2023/24.
The normal date for any implementation of a pay review is 1 August, not the start of the financial year. However the most recent fee increase
for Geoff Drabble was with effect from 3 January 2024, being the anniversary of his becoming Chair. The increase in fees for certain Non-
Executive Directors also includes the increases in fees for their additional roles. (Other explanatory notes concerning the figures for the prior
years were set out in the Annual Reports for 2021, 2022 and 2023.)
Miles
Roberts
Richard
Pike
1
Geoff
Drabble
Tessa
Bamford
2
Celia
Baxter
Alan
Johnson
Alina
Kessel
Eric
Olsen
3
David
Robbie
Louise
Smalley
Company
employees
% change on prior year for
2023/24
Salary/Fee 4.9 n/a 2.0 n/a 6.7 4.8
4
4.8 n/a 10.2 4.8 5.0
Benefits 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a 6.0
Bonus (78.4) n/a n/a n/a n/a n/a n/a n/a n/a n/a (77.5)
% change on prior year for
2022/23
Salary/Fee 3.6 n/a 0 n/a 2.9 n/a 3.7 n/a 13.5 3.7 4.9
Benefits (1.2) n/a n/a n/a n/a n/a n/a n/a n/a n/a 5.0
Bonus 3.6 n/a n/a n/a n/a n/a n/a n/a n/a n/a 9.8
% change on prior year for
2021/22
Salary/Fee 2.9 n/a 0 n/a 1.5 n/a 1.9 n/a 3.7 1.9 4.1
Benefits 2.8 n/a n/a n/a n/a n/a n/a n/a n/a n/a 11.2
Bonus 5.0 n/a n/a n/a n/a n/a n/a n/a n/a n/a 8.3
% change on prior year for
2020/21
Salary/Fee 1.1 n/a n/a n/a 0 n/a n/a n/a 8.1 0.6 2.0
Benefits (1.2) n/a n/a n/a n/a n/a n/a n/a n/a n/a 1.3
Bonus n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
1. Richard Pike joined the Board on 30 June 2023 so in 2023/24 he has no prior year to compare 2023/24 with.
2. Tessa Bamford joined the Board on 1 January 2024 so in 2023/24 she has no prior year to compare 2023/24 with.
3. Eric Olsen joined the Board on 15 May 2023 so in 2023/24 he has no prior year to compare 2023/24 with and at his request from 10 November 2023 Eric has not
been paid any fee.
4. Alan Johnson joined the Board on 1 June 2022 (part way through 2022/23), so to provide a meaningful comparison his fees received for 2022/23 have been
annualised.
Voting on the remuneration policy and on the remuneration report at the 2023 AGM
Set out in the table below is a summary of the votes cast by proxy at the AGM held in 2023 in relation to the remuneration-related resolutions.
Votes in favour Votes against
Votes withheld
(being votes that are not recognised
as a vote in law)
Directors’ remuneration report 975,784,275 (92.42%) 80,084,550 (7.58%) 18,912,889
Remuneration policy 972,164,655 (90.99%) 96,220,706 (9.01%) 6,396,353
Key responsibilities of the Remuneration Committee
• Designing the Remuneration policy
• Implementing the Remuneration policy
• Ensuring the competitiveness of reward, within an appropriate governance framework
• Designing the incentive plans
• Setting incentive targets and determining award levels
• Overseeing all share awards across the Group.
Each of these responsibilities impacts the other. The Committee is very conscious of the importance of the wider context in which it
operates in discharging these responsibilities.
Annual Report 2024 dssmith.com 127
Strategic Report Governance Financial Statements
Remuneration Committee governance
The Board is ultimately accountable for executive remuneration and delegates this responsibility to the Remuneration Committee. The
Committee’s principal function is to support the Group’s strategy by ensuring that its delivery is underpinned by the Company’s overall
Remuneration policy, as described earlier in this report. It also determines the specific remuneration package, including service contracts and
retirement benefit arrangements, for each Executive Director and our most senior executives, as well as the fees paid to the Chair. The
Remuneration Committee’s Terms of Reference can be found at www.dssmith.com/investors/corporate-governance/committees/.
Topics considered as part of regular
annual decision-making cycle of
Remuneration Committee
• Feedback from employee pulse surveys on how employees
feel about the quality of the Group’s leadership. This includes
whether the leadership team continues to demonstrate living
our values, how we measure employee performance and
whether employees believe we have the right approach to
reward.
• Review of guidance from the government and investor bodies.
• Holistic view of market practices.
• Assessing whether our remuneration framework is
appropriately aligned with our culture and continues to
motivate our leaders to achieve the Group’s strategic
objectives and does not inadvertently motivate inappropriate
behaviour giving rise to ESG or other risks.
• Consideration of remuneration and related policies across
theGroup.
• Discussion of the relevant aspects of this year’s Board
effectiveness review.
Members Since
Celia Baxter (Chair) 2019
Geoff Drabble 2020
Tessa Bamford 2024
Alan Johnson 2022
Alina Kessel 2020
Eric Olsen 2023
David Robbie 2019
Louise Smalley 2014
During the year the Committee held five scheduled meetings. Details
of individual Directors’ attendance can be found on page 90. In
addition, the Committee held a number of ad hoc meetings to discuss
matters that needed to be considered by the Committee between
scheduled meetings. The Group General Counsel and Company
Secretary acts as Secretary to the Committee.
All members of the Committee are independent Non-Executive Directors.
This is fundamental to ensuring Executive Directors’ and senior executives’
remuneration is set by people who are independent and have no personal
financial interest, other than as shareholders, in the matters discussed.
There are no potential conflicts of interest arising from cross-directorships
and there is no day to day involvement in running the business. The
Committee consults with the Group Chief Executive, who may attend
meetings of the Committee, although he is not involved in deciding his
own remuneration. The Committee is assisted by the Group Head of Reward,
the Deputy Company Secretary and the Group General Counsel and
Company Secretary. No-one is allowed to participate in any matter directly
concerning the details of their own remuneration or conditions of service.
As described earlier in the report, the Company has discussed with the
EWC Executive matters relating to Executive Directors’ remuneration.
When considering matters relating to the remuneration of the Executive
Directors, the Committee takes into account the overall approach to
reward for, and the pay and employment conditions of, other employees
in the Group.
To differentiate our employee value proposition and reinforce our strong
DS Smith culture, the Group has developed the DS Smith reward
principles (set out on page 112) which are endorsed by the Committee
and were last reviewed by the Committee in 2024. Current policies and
future decision making are matched against these to drive continuous
improvement in this area.
During the financial year of 2023/24 the Committee was advised by Korn
Ferry in relation to various aspects of the remuneration of Executive
Directors for which they were paid £52,050, partly on a fixed fee basis
and partly on a time and materials basis. Korn Ferry in the financial year
2023/24 has also provided search and talent assessment services to the
Group. The teams providing that are separate from the Remuneration
Committee advisers and there was no conflict of interest. The Committee
is satisfied that the advice it receives from its advisers is objective and
independent. Korn Ferry is a member of the Remuneration Consultants
Group and adheres to the Code of Conduct for Remuneration Consultants
(which can be found at www.remunerationconsultantsgroup.com).
This report has been prepared in accordance with applicable legislation
and regulatory requirements, including those of the Large and Medium-
Sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 (Regulations). The Regulations require the Auditor to
report to shareholders on the audited information within this report and
to state whether, in their opinion, the relevant sections have been
prepared in accordance with the Companies Act 2006. The Auditor’s
opinion is set out in the Independent Auditor’s report and we have clearly
marked the audited sections of this annual report on remuneration.
On behalf of the Board
Celia Baxter
Chair of Remuneration Committee
20 June 2024
128
Annual report on remuneration continued
Acquisitions and disposals
Acquisitions and disposals in the year ended 30 April 2024 are
described in note 30 to the consolidated financial statements.
Events after the reporting date
Other than as set out in note 34 to the consolidated financial
statements, there are no subsequent events after the reporting date
which require disclosure.
Share capital
Details of the issued share capital and the rights and restrictions
attached to the shares, together with details of movements in the
Company’s issued share capital during the year, are shown in note 24
to the consolidated financial statements. Pursuant to the Company’s
employee share option schemes 1,803,581 ordinary shares of 10
pence each were issued during the year. Between 1 May and 20 June
2024 inclusive, 304,166 shares were issued pursuant to the
Company’s employee share option schemes. The Company has not
utilised its authority to make market purchases of 137,745,180 shares
granted to it at the 2023 annual general meeting (AGM) but, in line
with market practice, will be seeking to renew such authority at this
year’s AGM.
The trustee of the employee benefit trust, which is used to purchase
shares on behalf of the Company as described in note 24 to the
consolidated financial statements, has the power to vote or not vote,
at its absolute discretion, in respect of any shares in the Company held
unallocated in that trust. However, in accordance with good practice,
the trustee adopts a policy of not voting in respect of such shares. The
trustee has a dividend waiver in place in respect of shares which are
the beneficial property of the trust.
Dividends
An interim dividend for 2023/24 of 6.0 pence per ordinary share was
paid on 31 January 2024 and the Directors recommend a final dividend
of 12.0 pence per ordinary share, which, together with the interim
dividend, increases the total dividend for the year to 18.0 pence per
ordinary share (2022/23: 18.0 pence). Subject to approval of
shareholders at the AGM to be held on 3 September 2024, the final
dividend will be paid on 4 October 2024 to shareholders on the
register at the close of business on 6 September 2024.
Additional information
Political donations
No political donations were made during the year ended 30 April 2024
(2022/23: nil). DS Smith has a policy of not making donations to
political organisations or independent election candidates or incurring
political expenditure, as defined in the Political Parties, Elections and
Referendums Act 2000, anywhere in the world.
Directors’ and officers’ liability insurance
The Company has purchased and maintains appropriate insurance
cover in respect of Directors’ and officers’ liabilities. The Company has
also entered into qualifying third-party indemnity arrangements for
the benefit of all its Directors and qualifying third-party indemnity
arrangements have been entered into by a subsidiary of the Company
for the benefit of certain directors of companies within the Group, all
in a form and scope which comply with the requirements of the
Companies Act 2006. These indemnities were in force throughout the
year and up to the date of this Annual Report.
Additional employee disclosures
In our Strategic Report on pages 1 to 83 we set out some of the ways
in which we realise the potential of our people, including how we
engage with our workforce. As part of creating a modern, diverse and
inclusive culture all companies within the Group strive to operate
fairly at all times and this includes not permitting discrimination on the
basis of race, religion or belief, gender, disability, age, sexual
orientation, gender reassignment, marriage or civil partnership,
pregnancy and maternity or any other characteristic protected by
local law (and complying with the Group’s Equal Opportunities and
Anti-Discrimination policy). This also includes giving full and fair
consideration to suitable applications for employment from disabled
persons, making reasonable adjustments in the hiring process to
ensure fairness and equity in the selection process. For existing
employees with a disability we will make all reasonable adjustments
to support their continued employment, in their same job or, if this is
not practicable, make every effort to find suitable alternative
employment and to provide relevant training and career development
opportunity.
Through the Group’s engagement survey, via our European Works
Council which brings together employee representatives from the
different European countries where we operate, as well as through
site and team meetings and briefing newsletters, the Group provides
employees with various opportunities to obtain information on
matters of concern to them, to improve their awareness of the
financial and economic factors that affect the performance of the
Group and to provide their feedback.
Annual Report 2024 dssmith.com 129
Strategic Report Governance Financial Statements
Substantial shareholdings
Information provided to the Company pursuant to the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules (DTRs) is
published on a Regulatory Information Service and on the Company’s website. The following information has been received, in accordance with
DTR 5, from holders of notifiable interests in the Company’s issued share capital.
As at 30 April 2024 As at 20 June 2024 Nature of holding
Aviva plc and its subsidiaries 5.53% 4.98% Direct & indirect
BlackRock, Inc. Below 5% Below 5% Indirect
abrdn plc Below 5% Below 5% Indirect
Ameriprise Financial, Inc. and its group 4.981% 4.981% Direct & indirect
The Goldman Sachs Group, Inc. 3.118610% 2.743523% Indirect
Sarasin & Partners LLP 3.01% 3.01% Indirect
Merpas (UK) Limited 2.985% 2.985% Direct & indirect
Norges Bank 2.94729% 3.20095% Direct
Black Creek Investment Management Inc. 2.936202% 2.936202% Direct & indirect
Auditor
Each of the persons who is a Director at the date of the approval of
this Annual Report confirms that:
• so far as the Director is aware, there is no relevant audit information
of which the Company’s Auditor is unaware; and
• the Director has taken all the steps he/she ought to have taken as a
Director in order to make him/herself aware of any relevant audit
information and to establish that the Company’s Auditor is aware of
that information.
This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.
A resolution to reappoint Ernst & Young LLP as Auditor will be
proposed at the forthcoming AGM.
Listing Rule 9.8.4 and other required disclosures
To the extent that there is information applicable to be disclosed
under Listing Rule (LR) 9.8.4, such information is set out on the pages
listed in the table below:
Subject matter Page(s)
Interest capitalised note 5 on page 159
Certain information is included in our Strategic Report (pages 1 to 83)
or Financial Statements that would otherwise be required to be
disclosed in this section of the report. This is as follows:
Subject matter Page(s)
Likely future developments in the business 8 and 9
Research and development 7
Use of financial instruments 47
Greenhouse gas emissions 76
As is customary, our principal financing facilities incorporate change
of control clauses.
Companies within the Group have branches in Norway, Poland and
Slovakia.
The information that fulfils the requirements of the corporate
governance statement for the purposes of DTR 7 can be found on
pages 84 to 105, and that governance report also forms part of the
Directors’ report.
The Strategic Report on pages 1 to 83 and the governance report and
Directors’ Remuneration Report on pages 84 to 131 together
represent the management report for the purpose of compliance with
DTR 4.1.8R.
Statement of approval
The Directors’ report was approved by the Board of Directors on
20 June 2024 and is signed on its behalf by:
Iain Simm
Group General Counsel and Company Secretary
20 June 2024
130
Additional information continued
The Directors are responsible for preparing the Annual Report and the
Group and Company Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
Financial Statements for each financial year. Under that law they have
elected to prepare the Group Financial Statements in accordance with
UK-adopted International Accounting Standards in conformity with
the requirements of the Companies Act 2006, and the parent
Company Financial Statements in accordance with UK Accounting
Standards, including FRS 101 Reduced Disclosure Framework.
Company law requires the Directors to prepare Group and parent
Company Financial Statements for each financial year. Under that law
the Directors have elected to prepare the Group Financial Statements
in accordance with UK-adopted international accounting standards
(IFRSs) and have elected to prepare the parent Company Financial
Statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law), including Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ (FRS 101).
Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of their
profit or loss for that period. In preparing each of the Group and
Company Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group Financial Statements, state whether they have been
prepared in accordance with UK-adopted International Accounting
Standards in conformity with the requirements of the Companies
Act 2006;
• for the Company Financial Statements, state whether the
applicable UK Accounting Standards have been followed, subject to
any material departures disclosed and explained in the Company
Financial Statements;
• assess the Group and Company’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going concern;
and
• use the going concern basis of accounting unless they either intend
to liquidate the Group or the Company or to cease operations, or
have no realistic alternative but to do so.
Statement of Directors’ responsibilities
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that its
Financial Statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, a Directors’ Report, a
Directors’ Remuneration Report and a corporate governance
statement that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
Responsibility statement of the Directors in
respect of the Annual Report and the Financial
Statements
We confirm that to the best of our knowledge:
• the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation as a
whole; and
• the Strategic Report and the Directors’ Report, including content
contained by reference, includes a fair review of the development
and performance of the business and the position and performance
of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks
and uncertainties that they face.
The Board confirms that the Annual Report and the Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess the
Group’s position and performance, business model and strategy.
This responsibility statement was approved by the Board of Directors
on 20 June 2024 and is signed on its behalf by:
Miles Roberts
Group Chief Executive
20 June 2024
Richard Pike
Group Finance Director
20 June 2024
Annual Report 2024 dssmith.com 131
Strategic Report Governance Financial Statements
Independent Auditor’s report
to the members of DS Smith Plc
132
Opinion
In our opinion:
• DS Smith Plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of
the state of the group’s and of the parent company’s affairs as at 30 April 2024 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of DS Smith Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended
30 April 2024 which comprise:
Group
Parent Company
Consolidated statement of financial position as at 30 April 2024
Statement of financial position as at 30 April 2024
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year
then
ended
Related notes 1 to 17 to the financial statements, including material
accounting policy information
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 34 to the consolidated financial statements,
including material accounting policy
information
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted
International Accounting Standards. The financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt
the going concern basis of accounting included the following procedures:
• performed independent analysis of events and factors that we would expect to be considered by management, prior to inspecting its going
concern analysis, in order to determine if there were any scenarios or factors not included;
• audited the key factors and assumptions adopted in the assessment of going concern and the cash flow model, including considering whether
management had exercised any bias in selecting their assumptions, by comparing against past performance and available market data;
• understood the operation of management’s model, checked the clerical accuracy of management’s models, and recalculated management’s
forecasts of its compliance with borrowing covenants throughout the assessment period under management’s scenarios;
132
Independent Auditor’s report
to the members of DS Smith Plc
132
Opinion
In our opinion:
• DS Smith Plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of
the state of the group’s and of the parent company’s affairs as at 30 April 2024 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of DS Smith Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended
30 April 2024 which comprise:
Group
Parent Company
Consolidated statement of financial position as at 30 April 2024
Statement of financial position as at 30 April 2024
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year
then
ended
Related notes 1 to 17 to the financial statements, including material
accounting policy information
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 34 to the consolidated financial statements,
including material accounting policy
information
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted
International Accounting Standards. The financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt
the going concern basis of accounting included the following procedures:
• performed independent analysis of events and factors that we would expect to be considered by management, prior to inspecting its going
concern analysis, in order to determine if there were any scenarios or factors not included;
• audited the key factors and assumptions adopted in the assessment of going concern and the cash flow model, including considering whether
management had exercised any bias in selecting their assumptions, by comparing against past performance and available market data;
• understood the operation of management’s model, checked the clerical accuracy of management’s models, and recalculated management’s
forecasts of its compliance with borrowing covenants throughout the assessment period under management’s scenarios;
Annual Report 2024 dssmith.com 133
• verified the terms of the facilities specifically around existence of change of control clause terms, maturity, interest rates, and any restrictions
or covenants of the borrowings held by the group at the date of approving of the financial statements against the original contracts. In addition,
we have obtained independent third-party confirmations for the borrowings held by the group;
• checked the consistency of the factors and assumptions adopted in the going concern assessment with other areas of our audit, including the
group’s asset impairment test and deferred tax assessment;
• challenged the appropriateness and adequacy of the going concern assessment period until 31 October 2025, considering whether any
events or conditions foreseeable after the period indicated a longer review period would be appropriate;
• performed independent sensitivity assessment on revenue and EBITDA to identify which events or conditions could lead to the group
exhausting all liquidity or breaching the financial covenants during the going concern period;
• assessed management’s reverse stress test including reperforming the calculations and agreeing the inputs to the going concern model;
• assessed the reasonableness of management’s available mitigations drawing upon our understanding of the business and nature of the
mitigations, including their quantum and whether these mitigations are within management’s control;
• obtained evidence that the Syndicated Revolving Credit Facility agreement had been amended subsequent to year end which extended the
maturity of the facility to May 2027 for an amount of £1.25bn and updated the change of control clause to consider the upcoming all-share
combination with International Paper as a permitted transaction;
• considered the implications of the upcoming all-share combination with International Paper Company (International Paper) expected to
complete by the end of 2024.
In respect of the proposed transaction, we performed the following procedures:
• obtained management’s assessment of the implications of the change of control clause in the group’s debt facilities;
• obtained evidence of the intention of the acquirer as to their future plans for the business and the parent company standalone entity. This
included examining the acquirer’s presentation to the shareholders as published on their website, related announcements including the Rule
2.7 Announcement released by RNS on 16 April 2024, DS Smith board meeting minutes and third-party analyst reports as well as confirming
with the DS Smith Board of Directors that the solus entity would continue in existence throughout the going concern period;
• from our review of the terms of the facilities, we understood the nature of the change of control clauses and independently assessed the risk
of these being triggered, including consideration of the risk attached to a downgrade in the group’s credit rating;
• worked with our EY Debt Advisory team to establish an independent assessment on the group’s credit rating should the combination complete
and provide their view on the latest published credit agencies’ outlook of the group’s credit rating;
• inspected International Paper’s latest publicly available financial information including its 2023 Annual Report and First Quarter 2024 report
alongside statements and investor presentations related to the combination;
• read the co-operation agreement between DS Smith and International Paper as published in both parties’ websites to understand conditions
precedent which remain to be addressed;
• understood the current status and conditions precedent to finalise the combination.
Disclosures
• considered whether management’s disclosures in the Annual Report and Accounts sufficiently and appropriately capture management’s
assessment of the group and company’s ability to continue as a going concern and the impact of the planned all-share combination through
consideration of the relevant disclosure standards.
Our key observations
On a business as usual basis before consideration of the proposed transaction, the results from management’s evaluation and reverse stress test
on the group’s forecasts and scenarios indicate that the group would need to be exposed to downside events, significantly greater than the
financial effect of the disruption caused in recent years (e.g. due to COVID-19 and high-cost inflation following Russia’s invasion of Ukraine),
throughout the going concern period in order to breach its covenants or exhaust its available liquidity.
As at the balance sheet date, the total facilities available to the group amounted to £3.9bn, of which, £1.5bn was undrawn. Group facilities
totalling £0.4bn are due to expire within the going concern period. Subsequent to the year end, the group successfully amended its revolving
credit facility, extending its maturity to May 2027 for an amount of £1.25bn replacing the existing facility for £1.4bn. The group will have access
to at least £3.35bn of facilities for the duration of the going concern period to 31 October 2025.
The drawn facilities, which amounted to £2.4bn as at the balance sheet date, all relate to drawdowns from the Euro medium-term note
programme, which has a change of control provision. This provision allows the noteholders to request DS Smith to redeem the notes in the event
of a change of control with a consequential credit rating downgrade to a non-investment grade. Similarly, the undrawn revolving credit facility,
which was subsequently successfully renegotiated by the group, requires the enlarged group’s credit rating not to be downgraded to below
investment grade on combination with International Paper. The Board considers this scenario to be remote, noting that third party credit rating
agency commentary has indicated that the group’s proposed all-share combination with International Paper is expected to positively affect the
group’s credit rating upon completion of the transaction. The Board has considered the future intentions of International Paper and concluded
that the Company will continue in existence for the going concern period even in the event of the transaction proceeding.
Annual Report 2024 dssmith.com 133
Strategic Report Governance Financial Statements
Independent Auditor’s report to the members of DS Smith Plc continued
134
Going concern has also been determined to be a key audit matter.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for a period to 31 October 2025.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a
going concern.
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 11 components and audit procedures on specific
balances for a further 9 components.
• The components where we performed full or specific audit procedures accounted for 77% of Profit before tax, 83%
of Revenue and 85% of Total assets.
Key audit
matters
We identified the following key audit matters that, in our professional judgement, had the greatest effect on our overall
audit strategy, the allocation of resources in the audit and in directing the audit team’s efforts:
• Carrying value of goodwill of the North America cash generating unit
• Valuation of uncertain tax positions
• Going Concern
Materiality
Overall group materiality of £23.8m which represents 4.7% of the group’s profit before tax.
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account
size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment, the potential
impact of climate change and other factors such as recent Internal Audit results when assessing the level of work to be performed at
each company.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements within the four geographic segments, three in Europe (Northern Europe, Eastern Europe and
Southern Europe) and another in North America, we selected 20 components (2023: 19) covering entities within the UK, France, Germany, Spain,
Portugal, Italy, USA, Belgium, Denmark, Hungary, Netherlands, Poland, Austria and Sweden, which represent the principal business units within
the group.
Of the 20 components selected, we performed an audit of the complete financial information of 11 components (“full scope components”) which
were selected based on their size or risk characteristics. For the remaining 9 components (“specific scope components”), we performed audit
procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts
in the financial statements either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 77% (2023: 93%) of the group’s profit before tax, 83% (2023:
82%) of the group’s revenue and 85% (2023: 85%) of the group’s total assets. For the current year, the full scope components contributed
58% (2023: 76%) of the group’s profit before tax, 65% (2023: 66%) of the group’s revenue and 73% (2023: 74%) of the group’s total assets.
The specific scope component contributed 19% (2023: 15%) of the group’s profit before tax, 18% (2023: 13%) of the group’s revenue and 12%
(2023: 12%) of the group’s total assets. The audit scope of these components may not have included testing of all significant accounts of the
component but will have contributed to the coverage of significant accounts tested for the group.
Of the remaining components that together represent 23% of the group’s profit before tax, none are individually greater than 4% of the Group’s
profit before tax. For these components, we performed other procedures, including analytical reviews, testing of cash balances, testing of
consolidation journals and enquiry of management about unusual transactions in these components to respond to any potential risks of material
misstatement to the group financial statements.
134
Annual Report 2024 dssmith.com 135
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Profit before tax
Revenue
Total assets
Changes from the prior year
Our scoping has remained largely consistent with the prior period. The reduction in coverage of profit before tax is mainly due to changes in the
profit contribution of the components across the group as a result of movements in paper prices during the year. In addition, Austria has been
included as a specific scope component due to an increase in the size of this business relative to the rest of the group.
Involvement with component teams
In establishing our overall approach to the group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under
our instruction. Of the 11 full scope components, audit procedures were performed on 1 of these directly by the primary audit team who also
performed central testing for a number of significant matters, such as the audit of uncertain tax positions, derivatives, pensions, impairment and
factoring contracts amongst other areas. For the 9 specific scope components, where the work was performed by component auditors, we
determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our
opinion on the group as a whole.
The group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior Executive members of
the audit team visited the primary operating locations where the group audit scope is focused. During the current year’s audit cycle, visits were
undertaken by the primary audit team to the component teams in UK, Spain, USA and Germany (2023: UK, Spain, USA, France, Italy). These visits
involved discussing the audit approach with the component team and any issues arising from their work, and meetings with local management
and visits to operational sites. The primary team interacted regularly with the component teams where appropriate during various stages of the
audit, reviewed relevant working papers and were responsible for the scope and direction of the audit process. This, together with the additional
procedures performed at group level, gave us appropriate evidence for our opinion on the group financial statements.
Independent Auditor’s report to the members of DS Smith Plc continued
134
Going concern has also been determined to be a key audit matter.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for a period to 31 October 2025.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a
going concern.
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 11 components and audit procedures on specific
balances for a further 9 components.
• The components where we performed full or specific audit procedures accounted for 77% of Profit before tax, 83%
of Revenue and 85% of Total assets.
Key audit
matters
We identified the following key audit matters that, in our professional judgement, had the greatest effect on our overall
audit strategy, the allocation of resources in the audit and in directing the audit team’s efforts:
• Carrying value of goodwill of the North America cash generating unit
• Valuation of uncertain tax positions
• Going Concern
Materiality
Overall group materiality of £23.8m which represents 4.7% of the group’s profit before tax.
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account
size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment, the potential
impact of climate change and other factors such as recent Internal Audit results when assessing the level of work to be performed at
each company.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements within the four geographic segments, three in Europe (Northern Europe, Eastern Europe and
Southern Europe) and another in North America, we selected 20 components (2023: 19) covering entities within the UK, France, Germany, Spain,
Portugal, Italy, USA, Belgium, Denmark, Hungary, Netherlands, Poland, Austria and Sweden, which represent the principal business units within
the group.
Of the 20 components selected, we performed an audit of the complete financial information of 11 components (“full scope components”) which
were selected based on their size or risk characteristics. For the remaining 9 components (“specific scope components”), we performed audit
procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts
in the financial statements either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 77% (2023: 93%) of the group’s profit before tax, 83% (2023:
82%) of the group’s revenue and 85% (2023: 85%) of the group’s total assets. For the current year, the full scope components contributed
58% (2023: 76%) of the group’s profit before tax, 65% (2023: 66%) of the group’s revenue and 73% (2023: 74%) of the group’s total assets.
The specific scope component contributed 19% (2023: 15%) of the group’s profit before tax, 18% (2023: 13%) of the group’s revenue and 12%
(2023: 12%) of the group’s total assets. The audit scope of these components may not have included testing of all significant accounts of the
component but will have contributed to the coverage of significant accounts tested for the group.
Of the remaining components that together represent 23% of the group’s profit before tax, none are individually greater than 4% of the Group’s
profit before tax. For these components, we performed other procedures, including analytical reviews, testing of cash balances, testing of
consolidation journals and enquiry of management about unusual transactions in these components to respond to any potential risks of material
misstatement to the group financial statements.
19%
23%
58%
15%
12%
73%
Full scope components
Specific scope
components
Other procedures
Full scope components
Specific scope
components
Other procedures
17%18%
65%
Full scope components
Specific scope
components
Other procedures
Annual Report 2024 dssmith.com 135
Strategic Report Governance Financial Statements
Independent Auditor’s report to the members of DS Smith Plc continued
136
Climate change
Stakeholders are increasingly interested in how climate change will impact DS Smith Plc’s group. The group has determined that the most
significant future impacts from climate change on its operations will be from (i) increased spend on carbon taxes, (ii) increased cost of raw
materials or threat to supply, (iii) increased severity of extreme weather events and (iv) increased likelihood of water stress. These are explained
on pages 60-77 in the required Task Force on Climate Related Financial Disclosures and on pages 49 to 56 in the principal risks and uncertainties.
They have also explained their climate commitments on pages 30 to 37. All of these disclosures form part of the “Other information,” rather than
the audited consolidated financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering
whether they are materially inconsistent with the consolidated financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any consequential
material impact on its consolidated financial statements.
The group has explained in its basis of preparation, in note 1, how they have reflected the impact of climate change in their consolidated financial
statements including how this aligns with their commitment to the aspirations as set out in their TCFD and its defined sustainability targets as
outlined in the Strategic report. The basis of preparation also explains management’s consideration of the impact of climate change in respect of
(a) estimates of future cash flows used in the impairment assessment of goodwill and going concern, (b) assessment of residual values and
estimated useful economic lives of property, plant and equipment, (c) adequacy of provisions for liabilities. Whilst management disclosed that
the group’s sustainability strategy did not have a material impact, management is aware that this will evolve in future periods and will regularly
assess these risks against the judgements and estimates made in preparation of the group’s consolidated financial statements.
Our audit effort in considering the impact of climate change on the consolidated financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed on
pages 60-77 and the significant judgements and estimates disclosed in note 1 and whether these have been appropriately reflected in the
future cash flows used to assess the carrying value of goodwill, economic life of property, plant and equipment, and adequacy of provisions
following the requirements of UK adopted International Accounting Standards. As part of this evaluation, we performed our own risk
assessment, supported by our climate change internal specialists, to determine the risks of material misstatement in the consolidated financial
statements from climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and associated disclosures. Where
considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the consolidated financial statements to be a key audit matter or to
impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our
opinion thereon, and we do not provide a separate opinion on these matters.
Carrying value
of goodwill
Refer to the Audit Committee Report (page 103); Accounting policies (page 150); and Note 10 of the Consolidated
Financial Statements (page
s 164 to 166)
As at 30 April 2024, the total carrying value of goodwill was £2,2
26m (2023: £2,268m) of which £630m (2023:
£633m) relates to the North America Paper and Packaging (“NAPP”) CGU.
Whilst NAPP has been generating positive EBITDA in the past several years, its historical performance was impacted
by different challenges and underlying operational issues which have contributed to a shortfall in actual
performance when compared to budget
. In the current year, NAPP continues to experience a shortfall in
performance due to slow recovery of demand for consumer goods, with US paper and packaging companies
experiencing a trough in pricing and demand.
There is a risk that estimates and assumptions used by management to calculate the cash flows in the impairment
assessment, particularly on volume and pricing may be incorrect. This could result in an impairment charge against
the carrying values specifica
lly for NAPP.
136
Independent Auditor’s report to the members of DS Smith Plc continued
136
Climate change
Stakeholders are increasingly interested in how climate change will impact DS Smith Plc’s group. The group has determined that the most
significant future impacts from climate change on its operations will be from (i) increased spend on carbon taxes, (ii) increased cost of raw
materials or threat to supply, (iii) increased severity of extreme weather events and (iv) increased likelihood of water stress. These are explained
on pages 60-77 in the required Task Force on Climate Related Financial Disclosures and on pages 49 to 56 in the principal risks and uncertainties.
They have also explained their climate commitments on pages 30 to 37. All of these disclosures form part of the “Other information,” rather than
the audited consolidated financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering
whether they are materially inconsistent with the consolidated financial statements or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any consequential
material impact on its consolidated financial statements.
The group has explained in its basis of preparation, in note 1, how they have reflected the impact of climate change in their consolidated financial
statements including how this aligns with their commitment to the aspirations as set out in their TCFD and its defined sustainability targets as
outlined in the Strategic report. The basis of preparation also explains management’s consideration of the impact of climate change in respect of
(a) estimates of future cash flows used in the impairment assessment of goodwill and going concern, (b) assessment of residual values and
estimated useful economic lives of property, plant and equipment, (c) adequacy of provisions for liabilities. Whilst management disclosed that
the group’s sustainability strategy did not have a material impact, management is aware that this will evolve in future periods and will regularly
assess these risks against the judgements and estimates made in preparation of the group’s consolidated financial statements.
Our audit effort in considering the impact of climate change on the consolidated financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed on
pages 60-77 and the significant judgements and estimates disclosed in note 1 and whether these have been appropriately reflected in the
future cash flows used to assess the carrying value of goodwill, economic life of property, plant and equipment, and adequacy of provisions
following the requirements of UK adopted International Accounting Standards. As part of this evaluation, we performed our own risk
assessment, supported by our climate change internal specialists, to determine the risks of material misstatement in the consolidated financial
statements from climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and associated disclosures. Where
considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the consolidated financial statements to be a key audit matter or to
impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our
opinion thereon, and we do not provide a separate opinion on these matters.
Carrying value
of goodwill
Refer to the Audit Committee Report (page 103); Accounting policies (page 150); and Note 10 of the Consolidated
Financial Statements (page
s 164 to 166)
As at 30 April 2024, the total carrying value of goodwill was £2,2
26m (2023: £2,268m) of which £630m (2023:
£633m) relates to the North America Paper and Packaging (“NAPP”) CGU.
Whilst NAPP has been generating positive EBITDA in the past several years, its historical performance was impacted
by different challenges and underlying operational issues which have contributed to a shortfall in actual
performance when compared to budget
. In the current year, NAPP continues to experience a shortfall in
performance due to slow recovery of demand for consumer goods, with US paper and packaging companies
experiencing a trough in pricing and demand.
There is a risk that estimates and assumptions used by management to calculate the cash flows in the impairment
assessment, particularly on volume and pricing may be incorrect. This could result in an impairment charge against
the carrying values specifica
lly for NAPP.
Annual Report 2024 dssmith.com 137
Risk – Carrying value of goodwill (continued)
Our response to
the risk
We tested the estimated recoverable amount of goodwill by performing the following procedures:
•
We obtained an understanding of and identified management’s internal controls designed to respond to the risk
related to the impairment of goodwill.
•
We assessed the appropriateness of the Group’s cash generating units (CGUs) identified by management,
including management’s determination of which assets or liabilities should be included in the carrying value of
the CGUs.
•
We reviewed the valuation methodology for consistency with the requirements of IAS 36 and tested the integrity
of models.
•
We tested the forecast cash flows by comparing the assumptions, such as price, volume and capital expenditures,
used within the impairment models to market prices, approved budgets and business plans. This includes corroborating
management’s price and volume assumptions to external market data and industry peers’ expectation.
•
We involved valuation specialists to assist us in challenging the reasonableness of management’s valuation
assumptions, such as discount rates and long-term growth rates as well as the discounted cash flow
methodology used by management.
•
We performed sensitivity analyses to assess the potential impact of a range of reasonably possible outcomes.
•
We evaluated the appropriateness of the financial statement disclosures.
•
We assessed the historical accuracy of forecasts by looking back at actual results versus those forecast for
each CGU.
•
We reviewed the FY24 actual results in comparison to budget and forecast to understand the status of
operational issues previously discussed and expectations of future growth to ensure that estimates are
reasonable and supportable.
Key
observations
communicated
to the Audit
Committee
Based on our audit procedures, considering the long term growth rate and NAPP’s recent trading results, we consider
management’s assessment that no impairment is required against goodwill relating to NAPP is appropriate.
However, we concluded that there were reasonably possible changes in certain key assumptions which could result
in impairment in the NAPP CGU which required disclosure.
We are satisfied that the disclosures in the Annual Report and financial statements on the sensitivity of the
forecasts, including NAPP, are appropriate and reflect the reasonably possible change in assumption as required
by IAS 36.
Valuation of
Uncertain Tax
Positions
Refer to the Audit Committee Report (page 103); Refer to Accounting policies (page 153); and Note 7 to the
Consolidated Financial Statements (page
s 160 to 162)
For the year ended 30 April 2024 the group recognised a total tax risk pr
ovision (including interest) of £94m
(2023
: £114m).
The group is subject to income tax in numerous jurisdictions and is routinely under audit by tax authorities in the
ordinary course of business.
Management applies judgement in assessing uncertain tax positions in each jurisdiction, which requires
interpretation of local tax laws and specific facts and circumstances. Specifically, each tax provision involves the
evaluation of unique and evolving fa
cts and circumstances.
Given this judgement, there is a risk that tax provisions may be misstated.
Annual Report 2024 dssmith.com 137
Strategic Report Governance Financial Statements
Independent Auditor’s report to the members of DS Smith Plc continued
138
Risk – Valuation of Uncertain Tax Positions (continued)
Our response to
the risk
Our approach focused on the following procedures:
•
We obtained an understanding of management’s key controls over their tax provision in supporting the
prevention, detection and correction of material errors in the financial statements.
•
The group audit team, evaluated the tax positions taken by management in each significant jurisdiction in the
context of local tax law, correspondence with tax authorities and the status of any tax audits. Our work utilised
support from local country tax specialists in jurisdictions where the group has more significant tax exposures.
•
We assessed the group’s transfer pricing judgements, considering the way in which the group’s businesses
operate and the correspondence and agreements reached with tax authorities, including correspondence on tax
audits and reviewing tax returns.
•
We evaluated the methodology adopted by management to calculate uncertain tax provisions and whether this is
compliant with IFRIC 23.
•
In evaluating management’s accounting, we developed our own range of acceptable provision levels for the
group’s tax exposures, based on the evidence we obtained.
•
The group audit team evaluated the completeness of uncertain tax positions by understanding the group’s
process for determining the completeness of identified tax risks and challenging whether risks provided for in
one jurisdiction were applicable in other jurisdictions.
•
We evaluated the adequacy of the related disclosures provided in the group financial statements.
Key
observations
communicated
to the Audit
Committee
Management’s provision falls within our independently determined range and as a result we are satisfied that the
estimates and judgements made by management in the valuation and accounting of uncertain tax provisions are
reasonable and in accordance with I
AS 12 and IFRIC 23. We are satisfied that appropriate disclosures on the
uncertain tax positions have been made in the consolidated financial statements.
In the current year, going concern was considered as a key audit matter as a result of the proposed all-share combination with International
Paper. There have been no other changes in our assessment of key audit matters compared with the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the group to be £23.8 million (2023: £33.5 million), which is 4.7% of profit before tax (2023: 5% of profit before
tax). We have set materiality based on profit before tax as it is a key performance measure for the users of the financial statements.
We determined materiality for the parent company to be £35.9 million (2023: £35.2 million), which is 1% (2023: 1%) of equity which we consider
to be an appropriate basis for materiality for a holding company, as the users of the financial statements focus on a capital-based measure.
During the course of our audit, we reassessed initial materiality and there has been no change from our original assessment determined
during planning.
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Independent Auditor’s report to the members of DS Smith Plc continued
138
Risk – Valuation of Uncertain Tax Positions (continued)
Our response to
the risk
Our approach focused on the following procedures:
•
We obtained an understanding of management’s key controls over their tax provision in supporting the
prevention, detection and correction of material errors in the financial statements.
•
The group audit team, evaluated the tax positions taken by management in each significant jurisdiction in the
context of local tax law, correspondence with tax authorities and the status of any tax audits. Our work utilised
support from local country tax specialists in jurisdictions where the group has more significant tax exposures.
•
We assessed the group’s transfer pricing judgements, considering the way in which the group’s businesses
operate and the correspondence and agreements reached with tax authorities, including correspondence on tax
audits and reviewing tax returns.
•
We evaluated the methodology adopted by management to calculate uncertain tax provisions and whether this is
compliant with IFRIC 23.
•
In evaluating management’s accounting, we developed our own range of acceptable provision levels for the
group’s tax exposures, based on the evidence we obtained.
•
The group audit team evaluated the completeness of uncertain tax positions by understanding the group’s
process for determining the completeness of identified tax risks and challenging whether risks provided for in
one jurisdiction were applicable in other jurisdictions.
•
We evaluated the adequacy of the related disclosures provided in the group financial statements.
Key
observations
communicated
to the Audit
Committee
Management’s provision falls within our independently determined range and as a result we are satisfied that the
estimates and judgements made by management in the valuation and accounting of uncertain tax provisions are
reasonable and in accordance with I
AS 12 and IFRIC 23. We are satisfied that appropriate disclosures on the
uncertain tax positions have been made in the consolidated financial statements.
In the current year, going concern was considered as a key audit matter as a result of the proposed all-share combination with International
Paper. There have been no other changes in our assessment of key audit matters compared with the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the group to be £23.8 million (2023: £33.5 million), which is 4.7% of profit before tax (2023: 5% of profit before
tax). We have set materiality based on profit before tax as it is a key performance measure for the users of the financial statements.
We determined materiality for the parent company to be £35.9 million (2023: £35.2 million), which is 1% (2023: 1%) of equity which we consider
to be an appropriate basis for materiality for a holding company, as the users of the financial statements focus on a capital-based measure.
During the course of our audit, we reassessed initial materiality and there has been no change from our original assessment determined
during planning.
Annual Report 2024 dssmith.com 139
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the group’s overall control environment, our judgement was that
performance materiality was 50% (2023: 50%) of our planning materiality, namely £11.9m (2023: £16.7m). We have set performance
materiality at this percentage consistent with prior year and includes considerations from the findings of our previous year audit.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and
risk of the component to the group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range
of performance materiality allocated to components was £2.4m to £9.5m (2023: £3.3m to £7.5m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £1.1m (2023: £1.6m), which is
set at 4.6% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 131, including the Strategic Report and
Governance sections (including the Directors’ Report; Chair’s introduction to Governance; Division of Responsibilities; Board Leadership and
Company Purpose; Nomination Committee Report; Audit, risk and internal control; Audit Committee Report; Remuneration Committee Report,
and Additional information), other than the financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Annual Report 2024 dssmith.com 139
Strategic Report Governance Financial Statements
Independent Auditor’s report to the members of DS Smith Plc continued
140
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by
the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 58;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate
set out on pages 57 to 58 ;
• Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities
set out on page 58;
• Directors’ statement on fair, balanced and understandable set out on page 131;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 49 to 56;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 102; and;
• The section describing the work of the audit committee set out on pages 100 to 105.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 131, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
140
Independent Auditor’s report to the members of DS Smith Plc continued
140
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by
the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 58;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate
set out on pages 57 to 58 ;
• Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities
set out on page 58;
• Directors’ statement on fair, balanced and understandable set out on page 131;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 49 to 56;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 102; and;
• The section describing the work of the audit committee set out on pages 100 to 105.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 131, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Annual Report 2024 dssmith.com 141
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Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company
and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most
significant and directly relevant to specific assertions in the financial statements are those related to the reporting frameworks (UK adopted
International Accounting Standards and FRS 101), the Companies Act 2006, the UK Corporate Governance Code, the Listing Rules of the UK
Listing Authority and the relevant tax compliance regulations in the jurisdictions in which the group operates. In addition, we concluded that
there are certain significant laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial
statements, mainly relating to health and safety, employee matters and environmental legislation.
• We understood how DS Smith Plc is complying with those frameworks by making enquiries of management, Internal Audit, those responsible
for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of Board minutes and
papers provided to the Audit Committee and attendance at meetings of the Audit Committee, as well as consideration of the results of our
audit procedures across the group to either corroborate or provide contrary evidence which was then followed up. We tested management’s
entity level controls to understand the company culture of honest and ethical behaviour, including the emphasis on fraud prevention.
• We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by meeting with
management from various parts of the business to understand which areas were susceptible to fraud. We also considered performance
targets and their propensity to influence management to manage earnings.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures
involved reviewing Board minutes to identify non-compliance with such laws and regulations, review of reporting to the Audit Committee on
compliance with regulations and enquires of the Company Secretary and management.
• We considered the programmes and controls that the group has established to address risks identified, or that otherwise prevent, deter and
detect fraud; and how senior management monitors those programmes and controls. Where risk was considered as higher, we performed
audit procedures to address each identified fraud risk.
• With the assistance of our forensic specialists and considering our understanding of the group, we designed our audit procedures to identify
non-compliance with such laws and regulations that could have a material impact on the financial statements. Our procedures involved:
enquiries of group management, those charged with governance, head of legal and external legal advisors, and internal audit; review of
internal and external reports; challenging the assumptions and judgements made by management in respect of significant accounting
estimates; incorporating data analytics across our audit approach, testing of manual journal entries recorded to revenue and group-level
adjustments and any other large or unusual transactions to gain reasonable assurance that the financial statements were free from fraud and
error. Where observations are raised about management’s process or controls surrounding compliance with laws and regulations by us or
others, we consider the potential effect of those observations. Furthermore, we performed procedures to conclude on the compliance of
disclosures made in the annual report and accounts with all applicable requirements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee, we were re-appointed by the company at the Annual General Meeting on
5 September 2023 to audit the financial statements for the year ended 30 April 2024 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is two years, covering the years ended
30 April 2023 to 30 April 2024.
• The audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Kevin Harkin (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London, 20 June 2024
Annual Report 2024 dssmith.com 141
Strategic Report Governance Financial Statements
Financial statements
Consolidated income statement
Year ended 30 April 2024
142
Before | Adjusting | After | Before | Adjusting | After | ||
| adjusting | items | adjusting | adjusting | items | adjusting | ||
| items | 2024 | items | items | 2023 | items | ||
| 2024 | (note 4) | 2024 | 2023 | (note 4) | 2023 | ||
Continuing operations | Note | £m | £m | £m | £m | £m | £m |
Revenue | 2 | ||||||
Operating costs | 3,4 | ( | ( | ( | ( | ||
Operating profit before amortisation, acquisitions and divestments | 2 | ||||||
Amortisation of intangible assets; | |||||||
acquisitions and divestments | 10, 4 | ( | ( | ( | ( | ( | |
Operating profit | 4 | ( | |||||
Finance income | 5 | ||||||
Finance costs | 5, 4 | ( | ( | ( | ( | ||
Employment benefit net finance expense | 25 | ( | ( | ( | ( | ||
Net financing costs | ( | ( | ( | ( | |||
Profit after financing costs | ( | ||||||
Share of profit of equity accounted investments, net of tax | 13 | ||||||
Profit before income tax | ( | ||||||
Income tax (expense)/credit | 7, 4 | ( | ( | ( | ( | ||
Profit for the year from continuing operations | ( | ||||||
Discontinued operations | |||||||
Profit for the year from discontinued operations, net of tax | 30(b) | ||||||
Profit for the year | ( | ||||||
Profit for the year attributable to: | |||||||
Owners of the parent | ( | ||||||
Non-controlling interests | |||||||
Earnings per share | |||||||
Earnings per share from continuing and discontinued operations | |||||||
Basic | 8 | ||||||
Diluted | 8 | ||||||
Earnings per share from continuing operations | |||||||
Basic | 8 | ||||||
Diluted | 8 | ||||||
Adjusted earnings per share from continuing operations | |||||||
Basic | 8, 32 | ||||||
Diluted | 8 |
142
Financial statements
Consolidated income statement
Year ended 30 April 2024
142
Continuing
operations
Note
Before
adjusting
items
2024
£m
Adjusting
items
2024
(note 4)
£m
After
adjusting
items
2024
£m
Before
adjusting
items
2023
£m
Adjusting
items
2023
(note 4)
£m
After
adjusting
items
2023
£m
Revenue
2
6,822
–
6,822
8,221
–
8,221
Operating costs
3,4
(6,121)
–
(6,121)
(7,360)
–
(7,360)
Operating profit before amortisation,
acquisitions
and divestments
2
701
–
701
861
–
861
Amortisation of intangible assets;
acquisitions and divestments
10, 4
(98)
1
(97)
(113)
(15)
(128)
Operating profit
4
603
1
604
748
(15)
733
Finance income
5
14
–
14
2
–
2
Finance costs
5, 4
(116)
–
(116)
(75)
–
(75)
Employment benefit net finance expense
25
(1)
–
(1)
(1)
–
(1)
Net financing costs
(103)
–
(103)
(74)
–
(74)
Profit after financing costs
500
1
501
674
(15)
659
Share of profit of equity accounted investments,
net
of tax 13 2 – 2 2 – 2
Profit before income tax
502
1
503
676
(15)
661
Income tax (expense)/credit
7, 4
(119)
1
(118)
(172)
3
(169)
Profit for the year from continuing operations
383
2
385
504
(12)
492
Discontinued operations
Profit for the year from discontinued operations,
net of tax
30(b)
–
–
–
–
11
11
Profit for the year
383
2
385
504
(1)
503
Profit for the year attributable to:
Owners of the parent
383
2
385
503
(1)
502
Non-controlling interests
–
–
–
1
–
1
Earnings per share
Earnings per share from continuing and discontinued operations
Basic
8
28.0p
36.6p
Diluted
8
27.9p
36.3p
Earnings per share from continuing operations
Basic
8
28.0p
35.8p
Diluted
8
27.9p
35.5p
Adjusted earnings per share from continuing operations
Basic
8, 32
33.1p
43.0p
Diluted
8
32.9p
42.7p
Consolidated statement
of comprehensive income
Year ended 30 April 2024
Annual Report 2024 dssmith.com 143
2024 | 2023 | ||
| Note | £m | £m | |
Profit for the year | |||
Items which will not be reclassified subsequently to profit or loss | |||
Actuarial (loss)/gain on employee benefits | 25 | ( | |
Income tax on items which will not be reclassified subsequently to profit or loss | 7 | ( | |
Items which may be reclassified subsequently to profit or loss | |||
Foreign currency translation differences | ( | ||
Reclassification to income statement on asset write-down | ( | ||
Cash flow hedges fair value changes | ( | ( | |
Reclassification from cash flow hedge reserve to income statement | 21(c) | ( | |
Movement in net investment hedge | ( | ||
Income tax on items which may be reclassified subsequently to profit or loss | 7 | ||
Other comprehensive expense for the year, net of tax | ( | ( | |
Total comprehensive income for the year | |||
Total comprehensive income attributable to: | |||
Owners of the parent | |||
Non-controlling interests |
Annual Report 2024 dssmith.com 143
Strategic Report Governance Financial Statements
Financial statements continued
Consolidated statement
of financial position
At 30 April 2024
144
2024 | 2023 | ||
| Note | £m | £m | |
Assets | |||
Non-current assets | |||
Intangible assets | 10 | ||
Biological assets | |||
Property, plant and equipment | 11 | ||
Right-of-use assets | 12 | ||
Equity accounted investments | 13 | ||
Other investments | 14 | ||
Employee benefits | 25 | ||
Deferred tax assets | 22 | ||
Other receivables | 16 | ||
Derivative financial instruments | 21 | ||
Total non-current assets | |||
Current assets | |||
Inventories | 15 | ||
Biological assets | |||
Income tax receivable | |||
Trade and other receivables | 16 | ||
Cash and cash equivalents | 19 | ||
Derivative financial instruments | 21 | ||
Total current assets | |||
Total assets | |||
Liabilities | |||
Non-current liabilities | |||
Borrowings | 20 | ( | ( |
Employee benefits | 25 | ( | ( |
Other payables | 17 | ( | ( |
Provisions | 23 | ( | ( |
Lease liabilities | 12 | ( | ( |
Deferred tax liabilities | 22 | ( | ( |
Derivative financial instruments | 21 | ( | ( |
Total non-current liabilities | ( | ( | |
Current liabilities | |||
Bank overdrafts | 19 | ( | ( |
Borrowings | 20 | ( | ( |
Trade and other payables | 17 | ( | ( |
Income tax liabilities | ( | ( | |
Provisions | 23 | ( | ( |
Lease liabilities | 12 | ( | ( |
Derivative financial instruments | 21 | ( | ( |
Total current liabilities | ( | ( | |
Total liabilities | ( | ( | |
Net assets | |||
Equity | |||
Issued capital | 24 | ||
Share premium | |||
Reserves | 24 | ||
Total equity attributable to owners of the parent | |||
Non-controlling interests | |||
Total equity |
The accompanying notes are an integral part of these consolidated financial statements.
144
Financial statements continued
Consolidated statement
of financial position
At 30 April 2024
144
Note
2024
£m
2023
£m
Assets
Non-current assets
Intangible assets
10
2,811
2,927
Biological assets
11
11
Property, plant and equipment
11
3,743
3,529
Right-of-use assets
12
237
224
Equity accounted investments
13
17
17
Other investments
14
17
17
Employee benefits
25
50
24
Deferred tax assets
22
23
11
Other receivables
16
4
1
Derivative financial instruments
21
15
165
Total non-current assets
6,928
6,926
Current assets
Inventories
15
591
619
Biological assets
5
6
Income tax receivable
37
24
Trade and other receivables
16
1,130
1,256
Cash and cash equivalents
19
499
472
Derivative financial instruments
21
64
154
Total current assets
2,326
2,531
Total assets
9,254
9,457
Liabilities
Non-current liabilities
Borrowings
20
(2,040)
(1,742)
Employee benefits
25
(82)
(79)
Other payables
17
(31)
(34)
Provisions
23
(8)
(11)
Lease liabilities
12
(164)
(154)
Deferred tax liabilities
22
(213)
(262)
Derivative financial instruments
21
(71)
(49)
Total non-current liabilities
(2,609)
(2,331)
Current liabilities
Bank overdrafts
19
(89)
(104)
Borrowings
20
(397)
(74)
Trade and other payables
17
(1,819)
(2,253)
Income tax liabilities
(134)
(165)
Provisions
23
(60)
(54)
Lease liabilities
12
(75)
(70)
Derivative financial instruments
21
(122)
(319)
Total current liabilities
(2,696)
(3,039)
Total liabilities
(5,305)
(5,370)
Net assets
3,949
4,087
Equity
Issued capital
24
138
138
Share premium
2,258
2,251
Reserves
24
1,553
1,695
Total equity attributable to owners of the parent
3,949
4,084
Non-controlling interests
-
3
Total equity
3,949
4,087
Approved by the Board of Directors of DS Smith Plc on 20 June 2024 and signed on its behalf by:
M W Roberts R Pike
Director Director
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated statement
of changes in equity
Year ended 30 April 2024
Annual Report 2024 dssmith.com 145
1
Total equity | ||||||||||
| attributable | Non- | |||||||||
| Share | Share | Hedging | Translation | Own | Retained | to owners of | controlling | Total | ||
| capital | premium | reserve | reserve | shares | earnings | the parent | interests | equity | ||
| Note | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 May 2022 | ( | ( | ||||||||
Profit for the year | ||||||||||
Actuarial gain on employee benefits | 25 | |||||||||
Reclassification to income statement | ||||||||||
on asset write -down | ( | ( | ( | |||||||
Foreign currency translation differences | ||||||||||
Cash flow hedges fair value changes | ( | ( | ( | |||||||
Reclassification from cash flow hedge | ||||||||||
reserve to income statement | 21(c) | ( ) | ( | ( | ||||||
Movement in net investment hedge | ( | ( | ( | |||||||
Income tax on other comprehensive income | ( | |||||||||
Total comprehensive (expense)/income | ( | |||||||||
Issue of share capital | ||||||||||
Employee share trust | ( | ( | ( | ( | ||||||
Share-based payments (net of tax) | ||||||||||
Dividends paid | 9 | ( | ( | ( | ||||||
Other changes in equity in the year | ( | ( | ( | ( | ||||||
At 30 April 2023 | ( | |||||||||
Profit for the year | ||||||||||
Actuarial loss on employee benefits | 25 | ( | ( | ( | ||||||
Foreign currency translation differences | ( | ( | ( | |||||||
Cash flow hedges fair value changes | ( | ( | ( | |||||||
Reclassification from cash flow hedge | ||||||||||
reserve to income statement | 21c | |||||||||
Movement in net investment hedge | ||||||||||
Income tax on other comprehensive income | ||||||||||
Total comprehensive (expense)/income | ( | ( | ||||||||
Issue of share capital | ||||||||||
Employee share trust | ( | ( | ( | |||||||
Share-based payments (net of tax) | ( | ( | ( | |||||||
Dividends paid | 9 | ( | ( | ( | ||||||
Transactions with non-controlling interests | ( | |||||||||
Other changes in equity in the year | ( | ( | ( | ( | ||||||
At 30 April 2024 | ( | ( | ( |
1. Retained earnings include a reserve related to merger relief (note 24).
Annual Report 2024 dssmith.com 145
Strategic Report Governance Financial Statements
Financial statements continued
Consolidated statement
of cash flows
Year ended 30 April 2024
146
2024 | 2023 | ||
Continuing operations | Note | £m | £m |
Operating activities | |||
Cash generated from operations | 27 | ||
Interest received | |||
Interest paid | ( | ( | |
Tax paid | ( | ( | |
Cash flows from operating activities | |||
Investing activities | |||
Acquisition of subsidiary businesses, net of cash and cash equivalents | 30 | ( | |
Divestment of equity accounted investment | 30 | ||
Capital expenditure | ( | ( | |
Proceeds from sale of property, plant and equipment and intangible assets | |||
Cash outflows from restricted cash and other deposits | ( | ||
Other investing activities | |||
Cash flows used in investing activities | ( | ( | |
Financing activities | |||
Proceeds from issue of share capital | |||
Repayment of borrowings | ( | ( | |
Proceeds from borrowings | |||
(Payments)/proceeds from derivative financial instruments | ( | ||
Repayment of principal on lease liabilities | 12 | ( | ( |
Dividends paid to Group shareholders | 9 | ( | ( |
Other financing activities | ( | ( | |
Cash flows from/(used in) financing activities | ( | ||
Increase/(decrease) in cash and cash equivalents | ( | ||
Net cash and cash equivalents at beginning of the year | |||
Exchange (losses)/gains on cash and cash equivalents | ( | ||
Net cash and cash equivalents at end of the year | 19 |
146
Financial statements continued
Consolidated statement
of cash flows
Year ended 30 April 2024
146
Continuing operations
Note
2024
£m
2023
£m
Operating activities
Cash generated from operations
27
555
1,078
Interest received
14
2
Interest paid
(80)
(78)
Tax paid
(169)
(136)
Cash flows from operating activities
320
866
Investing activities
Acquisition of subsidiary businesses, net of cash and cash equivalents
30
(113)
–
Divestment of equity accounted investment
30
5
–
Capital expenditure
(547)
(545)
Proceeds from sale of property, plant and equipment and intangible assets
41
19
Cash outflows from restricted cash and other deposits
–
(2)
Other investing activities
–
2
Cash flows used in investing activities
(614)
(526)
Financing activities
Proceeds from issue of share capital
7
4
Repayment of borrowings
(616)
(679)
Proceeds from borrowings
1,284
332
(Payments)/proceeds from derivative financial instruments
(2)
14
Repayment of principal on lease liabilities
12
(72)
(106)
Dividends paid to Group shareholders
9
(247)
(289)
Other financing activities
(2)
(4)
Cash flows from/(used in) financing activities
352
(728)
Increase/(decrease) in cash and cash equivalents
58
(388)
Net cash and cash equivalents at beginning of the year
368
746
Exchange (losses)/gains on cash and cash equivalents
(16)
10
Net cash and cash equivalents at end of the year
19
410
368
Notes to the consolidated
financial statements
147
Annual Report 2024 dssmith.com 147
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
148
1. Material accounting policies continued
148
Notes to the consolidated financial statements continued
148
1. Material accounting policies continued
The Group could also consider actions to assist covenant compliance,
such as increased utilisation of debt factoring facilities and optimising
working capital by negotiating longer payment terms whilst
continuing to pay suppliers in full and in line with contractual terms.
It is estimated that the Group EBITDA would have to fall by about
36 per cent from FY24 levels for a breach of the net debt:EBITDA
covenant to occur. The Board considers this scenario to be a remote
possibility based upon the Group’s historical performance.
Going concern basis:
based on the forecast and the scenarios modelled,
together with the performance of the Group in the current year, the
Directors consider that the Group and Company has significant covenant
and liquidity headroom in its borrowing facilities to continue in operational
existence for the length of the going concern period until 31 October 2025.
In reaching this conclusion the Board has also considered the implications
in a going concern context of the proposed acquisition of the Group by
International Paper which was announced on 16 April 2024. As set
out in the Rule 2.7 Announcement, the Boards of Directors of both
International Paper and DS Smith believe there is a compelling
strategic and financial rationale for the Combination, including the
complementary nature of their geographic footprints and the significant
synergies expected post transaction. On this basis, the Board of
DS Smith believes this supports its going concern assessment, in the
event the transaction proceeds. The transaction is expected to
close during the fourth quarter of 2024, subject to the approval of
International Paper shareholders and DS Smith shareholders, as well as
customary closing conditions, including regulatory clearances in Europe
and the U.S., all substantive conditions. The Group’s borrowings and
facilities are subject to change of control provisions which allow for
lenders to request repayment of the amounts owed but only in the
event of a downgrade of the Group’s credit rating to below investment
grade. In light of the announcements by a credit rating agency, in their
Research Update issued on 18 April 2024, view the transaction as
positive from a credit perspective (and the credit rating agency signalling
their intention to upgrade the Group’s credit rating as a result of an
acquisition by International Paper), the Board considers the risk arising
as a result of these change of control clauses to be remote. Even in the
remote event that the Group’s borrowings are required to be repaid,
the Board has also evaluated the ability of the enlarged group to settle
any repayment requests and, based on the latest publicly available
information, is satisfied that the available cash and facilities of the
combined group would be sufficient to do so. The scenarios modelled in
the going concern assessment were based on the Group remaining an
independent entity and, therefore, remain appropriate should the
proposed acquisition not proceed. Accordingly, the Board believes the
conclusion that the Group and Company is a going concern for the period
to 31 October 2025 remains appropriate in the circumstances of the
proposed acquisition completing.
(ii) Climate change
The Group has considered the impact of climate change in preparing
these consolidated financial statements, including the effect upon the
application of its accounting policies, judgements, estimates and
assumptions. In making its assessments of the impact the Group
considered the risks identified through its risk management processes,
the Task Force on Climate-related Financial Disclosures (TCFD) on
page 60 to 77 and its defined sustainability targets, as outlined in the
Strategic Report.
These considerations, which are core to the Group’s strategy, did not
have a material impact on any accounting estimates and judgements
including the following areas:
• The estimates of future cash flows used in the impairment
assessment of goodwill (refer to note 10) and going concern;
• The assessment of residual values and estimated useful economic
lives of property, plant and equipment (refer to note 11); and
• The adequacy of provisions for liabilities (refer to note 23).
The impact of climate change will evolve in future periods and the
Group will continue to assess this.
(iii) Discontinued operations
The Group classifies non-current assets and disposal groups as held for
sale if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset or
disposal group, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when
the sale is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Actions required to complete the
sale should indicate that it is unlikely that significant changes to the sale
will be made or that the decision to sell will be withdrawn. Management
must be committed to the plan to sell the asset and the sale is expected to
be completed within one year from the date of the classification.
Assets and liabilities classified as held for sale are presented
separately as current items in the statement of financial position.
Discontinued operations are excluded from the results of continuing
operations and are presented as a single amount as profit or loss after
tax from discontinued operations in the income statement. Cash flows
generated from discontinued operations are presented as a single
item in the statement of cash flows.
All other notes to the financial statements include amounts for
continuing operations.
(iv) New accounting standards adopted
The following amended standards and interpretations were adopted
by the Group during the year ending 30 April 2024. These amended
standards and interpretations have not had a significant impact on the
consolidated financial statements.
• IFRS 17 Insurance Contracts;
• IAS 12 Income Taxes – International Tax Reform – Pillar Two Model Rules;
• Amendments to IAS 12 Income Taxes – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction;
• Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements –
Disclosure of Accounting Policies; and
• Amendments to IAS 8 Accounting Policy Changes in Accounting
Estimates and Errors – Definition of Accounting Estimates.
Annual Report 2024 dssmith.com 149
1. Material accounting policies continued
(iv) New accounting standards adopted continued
Annual Report 2024 dssmith.com 149
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
150
1. Material accounting policies continued
150
Notes to the consolidated financial statements continued
150
1. Material accounting policies continued
(f) Dividends
Dividends attributable to the equity holders of the Company paid
during the year are recognised directly in equity.
(g) Foreign currency translation
The consolidated financial statements are presented in sterling, which
is the Group’s presentational currency. Transactions in foreign
currencies are translated into the respective functional currencies of
Group companies at the foreign exchange rates ruling at the dates
of the transactions. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are translated into the
functional currency at the foreign exchange rates ruling at that date.
Foreign exchange differences arising on translation of monetary
assets and liabilities are recognised in the consolidated income
statement. Non-monetary assets and liabilities that are measured
at historical cost in a foreign currency are translated using the
exchange rates at the dates of the transactions.
The assets and liabilities of all the Group entities that have a functional
currency other than sterling are translated at the closing exchange
rate at the reporting date. 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 date of the transactions).
On consolidation, exchange differences arising from the translation of
the net investment in foreign entities, borrowings, and other financial
instruments designated as hedges of such investments, are
recognised in the translation reserve. On the disposal of foreign
currency entities, the cumulative exchange difference recorded in the
translation reserve is reclassified to the consolidated income
statement as part of the gain or loss on disposal.
(h) Intangible assets
(i) Goodwill
The recognition of business combinations requires the excess of the
purchase price of acquisitions over the net book value of identifiable
assets acquired to be allocated to the assets and liabilities of the
acquired entity. The Group makes judgements and estimates in
relation to the fair value allocation of the purchase price.
Goodwill is stated at cost less accumulated impairment losses.
The useful life of goodwill is considered to be indefinite. Goodwill is
allocated to the cash generating units (CGUs) that are expected to
benefit from the synergies of the combination and is tested annually
for impairment or more frequently if an impairment is indicated.
On disposal of a subsidiary, or a jointly controlled entity, the attributable
amount of goodwill is included in the determination of the profit or
loss recognised in the consolidated income statement.
(ii) Intellectual property
Intellectual property is stated at cost less accumulated amortisation
and impairment.
(iii) Computer software
Computer software that is integral to a related item of hardware is
included within property, plant and equipment. All other computer
software is treated as an intangible asset.
(iv) Customer relationships
Customer relationships, acquired as part of a business combination,
are capitalised separately from goodwill and are carried at cost less
accumulated amortisation and impairment.
(v) Other intangible assets
Other intangible assets that are acquired by the Group are carried at
cost less accumulated amortisation and impairment.
(vi) Amortisation
Amortisation of intangible assets (excluding goodwill) is charged to
the income statement on a straight-line basis over the estimated
useful lives of intangible assets, unless such lives are indefinite.
Intangible assets (other than goodwill) are amortised from the
date they are available for use.
The estimated useful lives are as follows:
Intellectual property
Up to 20 years
Computer software
3–5 years
Customer relationships
5–15 years
Other
2-3 years
(i) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment.
Depreciation is charged to the income statement on a straight-line
basis over the estimated useful lives of each item of property, plant
and equipment, and major components that are accounted
for separately (or in the case of leased assets, the lease period,
if shorter). Land is not depreciated.
The estimated useful lives are as follows:
Freehold and long leasehold properties
10–50 years
Plant and equipment – motor vehicles
3–5 years
Plant and equipment – other, fixtures and fittings
(including IT hardware)
2–30 years
The estimated residual lives are reviewed at each reporting date. The
impact of climate factors on useful lives is considered on an asset by
asset basis and takes into consideration the climate change targets
set by the Group. Capital expenditure will be required for ongoing
projects in order to meet the Group’s climate change targets and this
has not resulted in any significant changes to the estimated useful life
of assets in the current year.
Gains or losses arising on the sale of surplus property assets are
recorded through operating profit before adjusting items.
The Group capitalises borrowing costs on qualifying assets. The
capitalisation rate applied is the weighted average cost of borrowing.
Annual Report 2024 dssmith.com 151
1. Material accounting policies continued
Annual Report 2024 dssmith.com 151
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
152
1. Material accounting policies continued
(l) Derivative financial instruments continued
152
Notes to the consolidated financial statements continued
152
1. Material accounting policies continued
(l) Derivative financial instruments continued
Hedges of net investment in a foreign entity:
these represent the
effective portion of the gain or loss on the hedging instrument that is
recognised directly in equity, while the ineffective portion is
recognised in the income statement. Amounts taken to equity are
reclassified to the income statement when the foreign entity is sold.
Any gains or losses arising from changes in the fair value of all other
derivatives are taken to the income statement. These may arise from
derivatives for which hedge accounting is not applied because they
are not effective as hedging instruments.
The net present value of the expected future payments under options
over interests held by non-controlling interests in the Group’s
subsidiaries is shown as a financial liability. At the end of each period,
the valuation of the liability is reassessed with any changes
recognised in profit or loss for the period.
(m) Treasury shares
When share capital recognised as equity is repurchased, the amount of
the consideration paid, including directly attributable costs, is
recognised as a change in equity. Repurchased shares are classified as
treasury shares and are presented as a deduction from total equity.
(n) Trade and other receivables
Trade and other receivables are recognised initially at fair value less
expected credit loss allowance and subsequently held at amortised
cost. The Group utilises the simplified approach to provide for losses
on receivables under IFRS 9.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling
expenses. The cost of inventories is based on a weighted average cost
and includes expenditure incurred in acquiring the inventories and
bringing them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an
appropriate share of overheads based on normal operating capacity.
(p) Biological assets
Biological assets consist of standing timber, measured at fair
value less cost to sell. Any change in fair value resulting from both
net growth and change in the market value of standing timber is
presented in the income statement. The revenue from the sale
of standing timber is presented within revenue.
(q) Cash and cash equivalents and restricted cash
Cash and cash equivalents comprise cash balances and call deposits.
Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component
of cash and cash equivalents for the purpose of the statement of cash
flows. Cash and cash equivalents are stated at amortised cost.
Cash subject to contractual restrictions on use by the Group is
excluded from cash and cash equivalents in the consolidated
financial statements and is presented within other investments
in the consolidated statement of financial position. Restricted cash is
stated at amortised cost.
(r) Borrowings
Borrowings are recognised initially at fair value, less attributable
transaction costs. Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost unless designated in a fair
value hedge relationship, with borrowing costs being accounted
for on an accruals basis in the income statement using the effective
interest method.
At the reporting date, interest payable is recorded separately from the
associated borrowings, within trade and other payables.
(s) Employee benefits
(i) Defined contribution schemes
Contributions to defined contribution pension schemes are recognised
as an employee benefit expense within personnel expenses in the
income statement, as incurred.
(ii) Defined benefit schemes
The Group’s net obligation in respect of defined benefit pension
schemes is calculated separately for each scheme by estimating
the amount of future benefit that employees have earned in return for
their service in the current and prior periods; that benefit is discounted
to its present value amount and recognised in the income statement
within personnel expenses; a corresponding liability for all future
benefits is established on the statement of financial position and the
fair value of any scheme assets is deducted.
The discount rate is the yield at the reporting date on AA credit
rated bonds that have maturity dates approximating to the duration
of the schemes’ obligations. The calculation is performed by a
qualified actuary using the projected unit method. Actuarial gains and
losses are recognised immediately in the statement of other
comprehensive income.
(iii) Share-based payment transactions
The Group operates equity-settled share-based compensation plans.
The fair value of the employee services received in exchange for the
grant of the options is recognised within personnel expenses, with a
corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards. The fair value of the
options granted is measured using a stochastic model, taking into
account the terms and conditions upon which the options were granted.
The total amount to be expensed over the vesting period
is determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions.
Annual Report 2024 dssmith.com 153
1. Material accounting policies continued
(s) Employee benefits continued
Annual Report 2024 dssmith.com 153
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
154
1. Material accounting policies continued
Effective date – | |
International Financial Reporting Standards (IFRS/IAS) | financial year ending |
Amendments to IAS 7 and IFRS 7 – Supplier Finance | |
Arrangements | 30 April 2025 |
Amendments to IFRS 16 (Seller-Lessee Subsequent | |
Measurement of Sale and Leaseback Transactions) | 30 April 2025 |
Amendments to IAS 1 – Classification of Liabilities | |
and Debt with Covenants | 30 April 2025 |
Amendments to IFRS 7 – Classification and Measurement of Financial Instruments | 30 April 2027 |
154
Notes to the consolidated financial statements continued
154
1. Material accounting policies continued
(y) Non-GAAP performance measures
In the reporting of financial information, the Group has adopted
certain non-GAAP measures of historical or future financial
performance, position or cash flows other than those defined or
specified under IFRS.
Non-GAAP measures are either not defined by IFRS or are adjusted
IFRS figures, and therefore may not be directly comparable with other
companies’ reported non-GAAP measures, including those in the
Group’s industry.
Non-GAAP measures should be considered in addition to, and are not
intended to be a substitute for, or superior to, IFRS measures.
Details of the Group’s non-GAAP performance measures, including
reasons for their use and reconciliations to IFRS figures, are included
as appropriate in note 32.
(z) Key sources of estimation uncertainty
The application of the Group’s accounting policies requires
management to make estimates and assumptions. These estimates
and assumptions affect the reported assets and liabilities and financial
results of the Group. Actual outcomes could differ from the estimates
and assumptions used.
The Group’s key sources of estimation uncertainty are as
detailed below:
(i) Taxation
The Group’s tax payable on profits is determined based on tax laws and
regulations that apply in each of the numerous jurisdictions in which
the Group operates. The Group is required to exercise judgement in
estimating income tax provisions, along with the recognition of
deferred tax assets/liabilities. While the Group aims to ensure that
estimates recorded are accurate, the actual amounts could be
different from those expected. See note 7 for additional information.
(ii) Goodwill impairment
Goodwill is tested annually for impairment or more frequently if an
impairment is indicated. Impairment tests are conducted by
component by value in use of CGUs to their respective carrying
amounts (including allocated goodwill). It is possible that if key
assumptions were changed adversely, impairment would need to be
recognised. See note 10 for additional information.
(iii) Employee benefits
IAS 19
Employee Benefits
requires the Group to make assumptions
including, but not limited to, rates of inflation, discount rates and life
expectancies. The use of different assumptions, in any of the above
calculations, could have a material effect on the accounting values
of the relevant statement of financial position assets and liabilities
which could also result in a change to the cost of such liabilities
as recognised in profit or loss over time. These assumptions are
subject to periodic review. See note 25 for additional information.
(aa) Critical accounting judgement
(i) Adjusting items
The Group is required to exercise judgement in applying the adjusting
items accounting policy to items of income and expenditure, taking
account of their origination, as well as considering similar items in prior
years to ensure consistency and appropriate presentation. See note 4
for additional information.
(ab) IFRS standards and interpretations endorsed but
not yet effective
The IASB and International Financial Reporting Interpretations
Committee (IFRIC) have issued new standards and interpretations
with an effective date after the date of these financial statements.
International Financial Reporting Standards (IFRS/IAS)
Effective date –
financial year ending
Amendments to IAS 7 and IFRS 7 – Supplier Finance
Arrangements
30 April 2025
Amendments to IFRS 16 (Seller-Lessee Subsequent
Measurement of Sale and Leaseback Transactions)
30 April 2025
Amendments to IAS 1 – Classification of Liabilities
and Debt with Covenants
30 April 2025
Amendments to IFRS 7 – Classification and
Measurement of Financial Instruments
30 April 2027
The Group does not anticipate that the adoption of the standards and
interpretations that are effective for the year ending 30 April 2025
and beyond will have a material effect on its financial statements.
(ac) IFRS standards that have been issued but are not
yet endorsed are as follows:
• Amendments to IAS 21 (Lack of exchangeability);
• IFRS S1 (General Requirements for Disclosure of Sustainability-
Related Financial Information);
• IFRS S2 (Climate-Related Disclosures);
• IFRS 18 Presentation and Disclosures in Financial Statements; and
• IFRS 19 Subsidiaries without Public Accountability: Disclosures.
The Group does not anticipate that the adoption of these accounting
standards will have a material effect on its financial statements.
Total | ||||||
| Northern | Southern | Eastern | North | continuing | ||
| Europe | Europe | Europe | America | operations | ||
Year ended 30 April 2024 | Note | £m | £m | £m | £m | £m |
External revenue | 2,598 | 2,532 | 1,106 | 586 | 6,822 | |
Adjusted EBITDA 1 | 310 | 497 | 127 | 90 | 1,024 | |
Depreciation | (111) | (124) | (55) | (33) | (323) | |
Adjusted operating profit 1 | 199 | 373 | 72 | 57 | 701 | |
Unallocated items: | ||||||
Amortisation | 10 | (98) | ||||
Adjusting items in operating profit | 4 | 1 | ||||
Total operating profit (continuing operations) | 604 | |||||
Unallocated items: | ||||||
Net financing costs | (103) | |||||
Share of profit of equity accounted investments, net of tax | 2 | |||||
Profit before income tax | 503 | |||||
Income tax expense | (118) | |||||
Profit for the year (continuing operations) | 385 | |||||
Analysis of total assets and total liabilities | ||||||
Segment assets | 2,512 | 3,197 | 1,469 | 1,354 | 8,532 | |
Unallocated items: | ||||||
Equity accounted investments and other investments | 34 | |||||
Derivative financial instruments | 79 | |||||
Cash and cash equivalents | 499 | |||||
Tax | 60 | |||||
Employee benefits | 50 | |||||
Total assets | 9,254 | |||||
Segment liabilities | (990) | (762) | (238) | (110) | (2,100) | |
Unallocated items: | ||||||
Borrowings, overdrafts and interest payable | (2,583) | |||||
Derivative financial instruments | (193) | |||||
Tax | (347) | |||||
Employee benefits | (82) | |||||
Total liabilities | (5,305) | |||||
Capital expenditure | 153 | 242 | 105 | 47 | 547 |
Annual Report 2024 dssmith.com 155
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
156
2. Segment reporting continued
Total | ||||||
| Northern | Southern | Eastern | North | continuing | ||
| Europe | Europe | Europe | America | operations | ||
Year ended 30 April 2023 | Note | £m | £m | £m | £m | £m |
External revenue | 3,132 | 3,150 | 1,275 | 664 | 8,221 | |
Adjusted EBITDA 1 | 324 | 621 | 125 | 103 | 1,173 | |
Depreciation | (112) | (120) | (49) | (31) | (312) | |
Adjusted operating profit 1 | 212 | 501 | 76 | 72 | 861 | |
Unallocated items: | ||||||
Amortisation | 10 | (113) | ||||
Adjusting items in operating profit | 4 | (15) | ||||
Total operating profit (continuing operations) | 733 | |||||
Unallocated items: | ||||||
Net financing costs | (74) | |||||
Share of profit of equity accounted investments, net of tax | 2 | |||||
Profit before income tax | 661 | |||||
Income tax expense | (169) | |||||
Profit for the year (continuing operations) | 492 | |||||
Analysis of total assets and total liabilities | ||||||
Segment assets | 2,246 | 3,762 | 1,247 | 1,318 | 8,573 | |
Unallocated items: | ||||||
Equity accounted investments and other investments | 34 | |||||
Derivative financial instruments | 319 | |||||
Cash and cash equivalents | 472 | |||||
Tax | 35 | |||||
Employee benefits | 24 | |||||
Total assets | 9,457 | |||||
Segment liabilities | (1,249) | (910) | (282) | (119) | (2,560) | |
Unallocated items: | ||||||
Borrowings, overdrafts and interest payable | (1,936) | |||||
Derivative financial instruments | (368) | |||||
Tax | (427) | |||||
Employee benefits | (79) | |||||
Total liabilities | (5,370) | |||||
Capital expenditure | 134 | 266 | 109 | 36 | 545 |
1. Adjusted to exclude amortisation and adjusting items as presented in the income statement.
156
Notes to the consolidated financial statements continued
156
2. Segment reporting continued
Year ended 30 April
2023
Note
Northern
Europe
£m
Southern
Europe
£m
Eastern
Europe
£m
North
America
£m
Total
continuing
operations
£m
External revenue
3,132
3,150
1,275
664
8,221
Adjusted EBITDA
1
324
621
125
103
1,173
Depreciation
(112)
(120)
(49)
(31)
(312)
Adjusted operating profit
1
212
501
76
72
861
Unallocated items:
Amortisation
10
(113)
Adjusting items in operating profit
4
(15)
Total operating profit (continuing operations)
733
Unallocated items:
Net financing costs
(74)
Share of profit of equity accounted investments, net of tax
2
Profit before income tax
661
Income tax expense
(169)
Profit for the year (continuing operations)
492
Analysis of total assets and total liabilities
Segment assets
2,246
3,762
1,247
1,318
8,573
Unallocated items:
Equity accounted investments and other investments
34
Derivative financial instruments
319
Cash and cash equivalents
472
Tax
35
Employee benefits
24
Total assets
9,457
Segment liabilities
(1,249)
(910)
(282)
(119)
(2,560)
Unallocated items:
Borrowings, overdrafts and interest payable
(1,936)
Derivative financial instruments
(368)
Tax
(427)
Employee benefits
(79)
Total liabilities
(5,370)
Capital expenditure
134
266
109
36
545
1. Adjusted to exclude amortisation and adjusting items as presented in the income statement.
Annual Report 2024 dssmith.com 157
2. Segment reporting continued
External revenue | Non-current assets | Capital expenditure | ||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
Continuing operations | £m | £m | £m | £m | £m | £m |
UK | 1,071 | 1,300 | 525 | 508 | 70 | 67 |
France | 1,009 | 1,203 | 518 | 491 | 76 | 79 |
Iberia | 798 | 970 | 702 | 673 | 94 | 81 |
Germany | 631 | 763 | 429 | 420 | 52 | 38 |
Italy | 720 | 972 | 473 | 426 | 72 | 106 |
USA | 591 | 671 | 410 | 390 | 47 | 36 |
Rest of the World | 2,002 | 2,342 | 938 | 857 | 136 | 138 |
6,822 | 8,221 | 3,995 | 3,765 | 547 | 545 |
2024 | 2023 | |
Continuing operations | £m | £m |
Operating costs | ||
Cost of sales | 3,292 | 4,255 |
Other production costs | 1,318 | 1,328 |
Distribution | 516 | 561 |
Administrative expenses | 995 | 1,216 |
6,121 | 7,360 |
2024 | 2023 | |
Continuing operations | £m | £m |
Depreciation of owned assets | 247 | 241 |
Depreciation of right-of-use assets | 76 | 71 |
Amortisation of intangible assets | 98 | 113 |
(Profit)/loss on sale of non-current assets | (9) | 7 |
Research and development | 8 | 8 |
Impairment (credit)/charge in respect of property, plant and equipment | (4) | 24 |
Annual Report 2024 dssmith.com 157
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
158
3. Operating profit continued
2024 | 2023 | |||||
UK | Overseas | Total | UK | Overseas | Total | |
Auditor’s remuneration | £m | £m | £m | £m | £m | £m |
Fees payable for audit of the Group’s annual financial statements | 1.9 | – | 1.9 | 1.0 | – | 1.0 |
Fees payable for audit of the Group’s subsidiaries, pursuant to legislation | 0.5 | 4.3 | 4.8 | 1.2 | 3.3 | 4.5 |
Total audit fees | 2.4 | 4.3 | 6.7 | 2.2 | 3.3 | 5.5 |
Fees payable to the Group’s Auditor and their associates for other services: | ||||||
Corporate finance services | – | – | – | – | – | – |
Audit related assurance services | 0.2 | 0.1 | 0.3 | 0.2 | 0.1 | 0.3 |
Total non-audit fees | 0.2 | 0.1 | 0.3 | 0.2 | 0.1 | 0.3 |
Total Auditor’s remuneration | 2.6 | 4.4 | 7.0 | 2.4 | 3.4 | 5.8 |
2024 | 2023 | |
Continuing operations | £m | £m |
Acquisition related costs | (9) | (15) |
Gain on acquisitions and divestments | 10 | – |
Net gain/(loss) on acquisitions and divestments | 1 | (15) |
Total pre-tax adjusting items (recognised in operating profit) | 1 | (15) |
Current tax credit on adjusting items | 1 | 3 |
Total post-tax adjusting items | 2 | (12) |
158
Notes to the consolidated financial statements continued
158
3. Operating profit continued
2024
2023
Auditor’s remuneration
UK
£m
Overseas
£m
Total
£m
UK
£m
Overseas
£m
Total
£m
Fees payable for audit of the Group’s annual financial statements
1.9
–
1.9
1.0
–
1.0
Fees payable for audit of the Group’s subsidiaries, pursuant to
legislation
0.5 4.3 4.8 1.2 3.3 4.5
Total audit fees
2.4
4.3
6.7
2.2
3.3
5.5
Fees payable to the Group’s Auditor and their associates for other
services:
Corporate finance services
–
–
–
–
–
–
Audit related assurance services
0.2
0.1
0.3
0.2
0.1
0.3
Total non-audit fees
0.2
0.1
0.3
0.2
0.1
0.3
Total Auditor’s remuneration
2.6
4.4
7.0
2.4
3.4
5.8
Non-audit fees in 2023/24 primarily related to audit-related fees for the review of the interim results and 2022/23 primarily include reporting
and accounting services in respect of the Euro medium-term note (EMTN) issues in the year and audit-related fees for the review of the
interim results.
A description of the work of the Audit Committee is set out in the governance section and includes an explanation of how the external Auditor’s
objectivity and independence are safeguarded when non-audit services are provided by the external Auditor.
4. Adjusting items
Items are presented as adjusting in the financial statements where they are significant items of financial performance that the Directors
consider should be separately disclosed to assist in the understanding of the trading and financial results of the Group. Such items include
business disposals, restructuring and acquisition related and integration costs, and impairments.
Continuing operations
2024
£m
2023
£m
Acquisition related costs
(9)
(15)
Gain on acquisitions and divestments
10
–
Net gain/(loss) on acquisitions and divestments
1
(15)
Total pre-tax adjusting items (recognised in operating profit)
1
(15)
Current tax credit on adjusting items
1
3
Total post-tax adjusting items
2
(12)
Annual Report 2024 dssmith.com 159
4. Adjusting items continued
2024 | 2023 | |
Continuing operations | £m | £m |
Interest income from financial assets | (14) | (2) |
Finance income | (14) | (2) |
Interest on borrowings and overdrafts | 103 | 49 |
Interest on lease liabilities | 12 | 11 |
Other | 1 | 15 |
Finance costs | 116 | 75 |
6. Staff costs
2024 | 2023 | |
Continuing operations | £m | £m |
Wages and salaries | 1,149 | 1,194 |
Social security costs | 238 | 233 |
Contributions to defined contribution pension plans | 57 | 56 |
Service costs for defined benefit schemes (note 25) | 5 | 6 |
Share-based payments (note 26) | (2) | 15 |
Staff costs | 1,447 | 1,504 |
2024 | 2023 | |
Average number of employees | Number | Number |
Northern Europe | 10,639 | 10,874 |
Southern Europe | 8,878 | 9,010 |
Eastern Europe | 7,606 | 7,922 |
North America | 1,720 | 1,755 |
Rest of the World | 652 | 607 |
Average number of employees | 29,495 | 30,168 |
Annual Report 2024 dssmith.com 159
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
160
7. Income tax expense
2024 | 2023 | |
| £m | £m | |
Current tax expense | ||
Current year | (158) | (206) |
Adjustment in respect of prior years | 25 | 32 |
(133) | (174) | |
Deferred tax credit/(charge) | ||
Origination and reversal of temporary differences | 29 | 14 |
Change in tax rates | (3) | (4) |
Recognition of previously unrecognised deferred tax assets | 4 | 1 |
Adjustment in respect of prior years | (16) | (9) |
14 | 2 | |
Total income tax expense before adjusting items | (119) | (172) |
Current tax credit on adjusting items (note 4) | 1 | 3 |
Total income tax expense in the income statement from continuing operations | (118) | (169) |
Total income tax expense in the income statement from discontinued operations (note 30(b)) | – | – |
Total income tax expense in the income statement – total Group | (118) | (169) |
The tax credit on amortisation was £26m (2022/23: £25m).
The reconciliation of the actual tax charge to the domestic corporation tax rate is as follows:
2024 | 2023 | |
| £m | £m | |
Profit before income tax on continuing operations | 503 | 661 |
Profit before income tax on discontinued operations (note 30(b)) | – | 11 |
Share of profit of equity accounted investments, net of tax | (2) | (2) |
Profit before tax and share of profit of equity accounted investments, net of tax | 501 | 670 |
Income tax at the UK corporation tax rate of 25.0% (2022/23: 19.5%) | (125) | (131) |
Effect of additional taxes and tax rates in overseas jurisdictions | (1) | (47) |
Impact of tax credits | 9 | 23 |
Non-deductible expenses | (13) | (34) |
Non-taxable income | 6 | 2 |
Recognition of previously unrecognised deferred tax assets | 4 | 1 |
Deferred tax not recognised | (4) | (2) |
Adjustment in respect of prior years | 9 | 23 |
Effect of change in corporation tax rates | (3) | (4) |
Income tax expense – total Group | (118) | (169) |
The Group’s effective tax rate, excluding amortisation, adjusting items and share of result from equity accounted investments, was 24.2%
(2022/23: 25.0%).
The Finance Act 2021 included a 6% increase in the main UK corporation tax rate to 25% from 1 April 2023, which was substantially enacted on
10 June 2021. The tax reconciliation for the year ended 30 April 2024 is therefore presented at the 25% rate and the effects of additional taxes
and tax rates in overseas jurisdictions is lower than for 2022/23.
160
Notes to the consolidated financial statements continued
160
7. Income tax expense
2024
£m
2023
£m
Current tax expense
Current year
(158)
(206)
Adjustment in respect of prior years
25
32
(133)
(174)
Deferred tax credit/(charge)
Origination and reversal of temporary differences
29
14
Change in tax rates
(3)
(4)
Recognition of previously unrecognised deferred tax assets
4
1
Adjustment in respect of prior years
(16)
(9)
14
2
Total income tax expense before adjusting items
(119)
(172)
Current tax credit on adjusting items (note 4)
1
3
Total income tax expense in the income statement from continuing operations
(118)
(169)
Total income tax expense in the income statement from discontinued operations (note 30(b))
–
–
Total income tax expense in the income statement – total Group
(118)
(169)
The tax credit on amortisation was £26m (2022/23: £25m).
The reconciliation of the actual tax charge to the domestic corporation tax rate is as follows:
2024
£m
2023
£m
Profit before income tax on continuing operations
503
661
Profit before income tax on discontinued operations (note 30(b))
–
11
Share of profit of equity accounted investments, net of tax
(2)
(2)
Profit before tax and share of profit of equity accounted investments, net of tax
501
670
Income tax at the UK corporation tax rate of 25.0% (2022/23: 19.5%)
(125)
(131)
Effect of additional taxes and tax rates in overseas jurisdictions
(1)
(47)
Impact of tax credits
9
23
Non-deductible expenses
(13)
(34)
Non-taxable income
6
2
Recognition of previously unrecognised deferred tax assets
4
1
Deferred tax not recognised
(4)
(2)
Adjustment in respect of prior years
9
23
Effect of change in corporation tax rates
(3)
(4)
Income tax expense – total Group
(118)
(169)
The Group’s effective tax rate, excluding amortisation, adjusting items and share of result from equity accounted investments, was 24.2%
(2022/23: 25.0%).
The Finance Act 2021 included a 6% increase in the main UK corporation tax rate to 25% from 1 April 2023, which was substantially enacted on
10 June 2021. The tax reconciliation for the year ended 30 April 2024 is therefore presented at the 25% rate and the effects of additional taxes
and tax rates in overseas jurisdictions is lower than for 2022/23.
Annual Report 2024 dssmith.com 161
7. Income tax expense continued
Annual Report 2024 dssmith.com 161
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
162
7. Income tax expense continued
Tax on other comprehensive income and equity
Tax credit/ | Tax credit/ | |||||
| Gross | (charge) | Net | Gross | (charge) | Net | |
| 2024 | 2024 | 2024 | 2023 | 2023 | 2023 | |
| £m | £m | £m | £m | £m | £m | |
Actuarial (loss)/gain on employee benefits | (2) | 1 | (1) | 11 | (2) | 9 |
Foreign currency translation differences | (147) | – | (147) | 194 | – | 194 |
Reclassification to income statement on asset write down | – | – | – | (3) | – | (3) |
Movements in cash flow hedges | (211) | 41 | (170) | (645) | 149 | (496) |
Movement in net investment hedge | 41 | 2 | 43 | (74) | – | (74) |
Other comprehensive (expense)/income for the year | (319) | 44 | (275) | (517) | 147 | (370) |
Issue of share capital | 7 | – | 7 | 4 | – | 4 |
Employee share trust | (4) | – | (4) | (8) | – | (8) |
Share-based payments | (2) | (2) | (4) | 15 | (2) | 13 |
Dividends paid to Group shareholders | (247) | – | (247) | (289) | – | (289) |
Other comprehensive (expense)/income and changes in equity | (565) | 42 | (523 ) | (795) | 145 | (650) |
The realisation of underlying reserves is conducted in such a way to ensure there is no material tax consequence.
8. Earnings per share
Basic earnings per share from continuing operations
2024 | 2023 | |
Profit from continuing operations attributable to ordinary shareholders | £385m | £492m |
Weighted average number of ordinary shares | 1,374m | 1,376m |
Basic earnings per share | 28.0p | 35.8p |
Diluted earnings per share from continuing operations
2024 | 2023 | |
Profit from continuing operations attributable to ordinary shareholders | £385m | £492m |
Weighted average number of ordinary shares | 1,374m | 1,376m |
Potentially dilutive shares issuable under share-based payment arrangements | 7m | 10m |
Weighted average number of ordinary shares (diluted) | 1,381m | 1,386m |
Diluted earnings per share | 27.9p | 35.5p |
The number of shares excludes the weighted average number of the Company’s own shares held as treasury shares during the year of 3m
(2022/23: 2m).
2024 | 2023 | |||
Basic | Diluted | Basic | Diluted | |
| pence per | pence per | pence per | pence per | |
share | share | share | share | |
Earnings per share from continuing operations | 28.0p | 27.9p | 35.8p | 35.5p |
Earnings per share from discontinued operations (note 30(b)) | – | – | 0.8p | 0.8p |
Earnings per share from continuing and discontinued operations | 28.0p | 27.9p | 36.6p | 36.3p |
162
Notes to the consolidated financial statements continued
162
7. Income tax expense continued
Tax on other comprehensive income and equity
Gross
2024
£m
Tax credit/
(charge)
2024
£m
Net
2024
£m
Gross
2023
£m
Tax credit/
(charge)
2023
£m
Net
2023
£m
Actuarial (loss)/gain on employee benefits
(2)
1
(1)
11
(2)
9
Foreign currency translation differences
(147)
–
(147)
194
–
194
Reclassification to income statement on asset write down
–
–
–
(3)
–
(3)
Movements in cash flow hedges
(211)
41
(170)
(645)
149
(496)
Movement in net investment hedge
41
2
43
(74)
–
(74)
Other comprehensive (expense)/income for the year
(319)
44
(275)
(517)
147
(370)
Issue of share capital
7
–
7
4
–
4
Employee share trust
(4)
–
(4)
(8)
–
(8)
Share-based payments
(2)
(2)
(4)
15
(2)
13
Dividends paid to Group shareholders
(247)
–
(247)
(289)
–
(289)
Other comprehensive (expense)/income and
changes in equity
(565)
42 (523
)
(795)
145 (650)
The realisation of underlying reserves is conducted in such a way to ensure there is no material tax consequence.
8. Earnings per share
Basic earnings per share from continuing operations
2024 2023
Profit from continuing operations attributable to ordinary shareholders
£385m
£492m
Weighted average number of ordinary shares
1,374m
1,376m
Basic earnings per share
28.0p
35.8p
Diluted earnings per share from continuing operations
2024 2023
Profit from continuing operations attributable to ordinary shareholders
£385m
£492m
Weighted average number of ordinary shares
1,374m
1,376m
Potentially dilutive shares issuable under share-based payment arrangements
7m
10m
Weighted average number of ordinary shares (diluted)
1,381m
1,386m
Diluted earnings per share
27.9p
35.5p
The number of shares excludes the weighted average number of the Company’s own shares held as treasury shares during the year of 3m
(2022/23: 2m).
2024
2023
Basic
pence per
share
Diluted
pence per
share
Basic
pence per
share
Diluted
pence per
share
Earnings per share from continuing operations
28.0p
27.9p
35.8p
35.5p
Earnings per share from discontinued operations (note 30(b))
–
–
0.8p
0.8p
Earnings per share from continuing and discontinued operations
28.0p
27.9p
36.6p
36.3p
Annual Report 2024 dssmith.com 163
8. Earnings per share continued
2024 | 2023 | |||||
Basic | Diluted | Basic | Diluted | |||
| pence | pence | pence | pence | |||
| £m | per share | per share | £m | per share | per share | |
Basic earnings | 385 | 28.0p | 27.9p | 492 | 35.8p | 35.5p |
Add back: | ||||||
Amortisation of intangible assets | 98 | 7.1p | 7.0p | 113 | 8.1p | 8.1p |
Tax credit on amortisation | (26) | (1.9p) | (1.9p) | (25) | (1.8p) | (1.8p) |
Adjusting items, before tax | (1) | (0.1p) | (0.1p) | 15 | 1.1p | 1.1p |
Tax on adjusting items and adjusting tax items | (1) | – | – | (3) | (0.2p) | (0.2p) |
Adjusted earnings | 455 | 33.1p | 32.9p | 592 | 43.0p | 42.7p |
9. Dividends proposed and paid
2024 | 2023 | |||
Pence | Pence | |||
per share | £m | per share | £m | |
2022/23 interim dividend – paid | – | – | 6.0p | 83 |
2022/23 final dividend – paid | – | – | 12.0p | 165 |
2023/24 interim dividend – declared and paid | – | – | ||
2023/24 final dividend – proposed | 12.0p | 166 | – | – |
2024 | 2023 | |
| £m | £m | |
Paid during the year | 247 | 289 |
The final 2022/23 dividend of 12p per share and the 2023/24 interim dividend of 6.0p per share were paid during the year.
Annual Report 2024 dssmith.com 163
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
164
Intellectual | Customer | Carbon | |||||
| Goodwill | Software | property | relationships | credits | Other | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
Cost | |||||||
At 1 May 2023 | 2,285 | 189 | 23 | 1,354 | 17 | 60 | 3,928 |
Acquisitions | 5 | – | – | 5 | – | – | 10 |
Additions | – | 25 | 2 | – | 25 | – | 52 |
Disposals | (1) | (7) | (1) | – | (25) | (1) | (35) |
Reclassification | – | 6 | 1 | – | – | 1 | 8 |
Currency translation | (46) | (5) | (1) | (32) | – | – | (84) |
At 30 April 2024 | 2,243 | 208 | 24 | 1,327 | 17 | 60 | 3,879 |
Amortisation and impairment | |||||||
At 1 May 2023 | (17) | (126) | (16) | (798) | – | (44) | (1,001) |
Amortisation | – | (15) | (2) | (74) | – | (7) | (98) |
Disposals | – | 6 | – | – | – | 1 | 7 |
Currency translation | – | 3 | 1 | 20 | – | – | 24 |
At 30 April 2024 | (17) | (132) | (17) | (852) | – | (50) | (1,068) |
Carrying amount | |||||||
At 1 May 2023 | 2,268 | 63 | 7 | 556 | 17 | 16 | 2,927 |
At 30 April 2024 | 2,226 | 76 | 7 | 475 | 17 | 10 | 2,811 |
| Intellectual | Customer | Carbon | |||||
| Goodwill | Software | property | relationships | credits | Other | Total | |
| £m | £m | £m | £m | £m | £m | £m | |
Cost | |||||||
At 1 May 2022 | 2,210 | 182 | 21 | 1,301 | 14 | 41 | 3,769 |
Additions | – | 3 | 1 | – | 2 | 24 | 30 |
Disposals | – | (4) | – | – | – | (1) | (5) |
Reclassification | – | 4 | (1) | – | – | (4) | (1) |
Currency translation | 75 | 4 | 2 | 53 | 1 | – | 135 |
At 30 April 2023 | 2,285 | 189 | 23 | 1,354 | 17 | 60 | 3,928 |
Amortisation and impairment | |||||||
At 1 May 2022 | (17) | (106) | (12) | (703) | – | (25) | (863) |
Amortisation | – | (20) | (3) | (80) | – | (10) | (113) |
Disposals | – | 4 | – | – | – | 1 | 5 |
Reclassification | – | – | 1 | – | – | 3 | 4 |
Currency translation | – | (4) | (2) | (15) | – | (13) | (34) |
At 30 April 2023 | (17) | (126) | (16) | (798) | – | (44) | (1,001) |
Carrying amount | |||||||
At 1 May 2022 | 2,193 | 76 | 9 | 598 | 14 | 16 | 2,906 |
At 30 April 2023 | 2,268 | 63 | 7 | 556 | 17 | 16 | 2,927 |
164
Notes to the consolidated financial statements continued
164
10. Intangible assets
Goodwill
£m
Software
£m
Intellectual
property
£m
Customer
relationships
£m
Carbon
credits
£m
Other
£m
Total
£m
Cost
At 1 May 2023
2,285
189
23
1,354
17
60
3,928
Acquisitions
5
–
–
5
–
–
10
Additions
–
25
2
–
25
–
52
Disposals
(1)
(7)
(1)
–
(25)
(1)
(35)
Reclassification
–
6
1
–
–
1
8
Currency translation
(46)
(5)
(1)
(32)
–
–
(84)
At 30 April 2024
2,243
208
24
1,327
17
60
3,879
Amortisation and impairment
At 1 May 2023
(17)
(126)
(16)
(798)
–
(44)
(1,001)
Amortisation
–
(15)
(2)
(74)
–
(7)
(98)
Disposals
–
6
–
–
–
1
7
Currency translation
–
3
1
20
–
–
24
At 30 April 2024
(17)
(132)
(17)
(852)
–
(50)
(1,068)
Carrying amount
At 1 May 2023
2,268
63
7
556
17
16
2,927
At 30 April 2024
2,226
76
7
475
17
10
2,811
Goodwill
£m
Software
£m
Intellectual
property
£m
Customer
relationships
£m
Carbon
credits
£m
Other
£m
Total
£m
Cost
At 1 May 2022
2,210
182
21
1,301
14
41
3,769
Additions
–
3
1
–
2
24
30
Disposals
–
(4)
–
–
–
(1)
(5)
Reclassification
–
4
(1)
–
–
(4)
(1)
Currency translation
75
4
2
53
1
–
135
At 30 April 2023
2,285
189
23
1,354
17
60
3,928
Amortisation and impairment
At 1 May 2022
(17)
(106)
(12)
(703)
–
(25)
(863)
Amortisation
–
(20)
(3)
(80)
–
(10)
(113)
Disposals
–
4
–
–
–
1
5
Reclassification
–
–
1
–
–
3
4
Currency translation
–
(4)
(2)
(15)
–
(13)
(34)
At 30 April 2023
(17)
(126)
(16)
(798)
–
(44)
(1,001)
Carrying amount
At 1 May 2022
2,193
76
9
598
14
16
2,906
At 30 April 2023
2,268
63
7
556
17
16
2,927
Included within customer related intangibles at 30 April 2024 are amounts purchased as part of the acquisitions of Europac (carrying amount
£306m, remaining amortisation period 10 years) and Interstate Resources (carrying amount £92m, remaining amortisation period three years).
Annual Report 2024 dssmith.com 165
10. Intangible assets continued
2024 | 2023 | |
| £m | £m | |
Northern Europe | 398 | 405 |
Southern Europe | 1,035 | 1,068 |
Eastern Europe | 163 | 162 |
North America | 630 | 633 |
Total goodwill | 2,226 | 2,268 |
Annual Report 2024 dssmith.com 165
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
166
10. Intangible assets continued
Northern | Southern | Eastern | North | |
Key assumptions by CGU | Europe | Europe | Europe | America |
Long-term growth rate at 30 April 2024 | 1.3% | 1.3% | 2.7% | 2.2% |
Long-term growth rate at 30 April 2023 | 1.4% | 1.3% | 2.8% | 1.8% |
Discount rate at 30 April 2024 | 10.3% | 11.7% | 12.0% | 10.1% |
Discount rate at 30 April 2023 | 10.5% | 12.4% | 12.8% | 10.1% |
166
Notes to the consolidated financial statements continued
166
10. Intangible assets continued
Key assumptions by CGU
Northern
Europe
Southern
Europe
Eastern
Europe
North
America
Long-term growth rate at 30 April 2024
1.3%
1.3%
2.7%
2.2%
Long-term growth rate at 30 April 2023
1.4%
1.3%
2.8%
1.8%
Discount rate at 30 April 2024
10.3%
11.7%
12.0%
10.1%
Discount rate at 30 April 2023
10.5%
12.4%
12.8%
10.1%
Goodwill impairment tests – sensitivities
The value-in-use is based upon anticipated discounted future cash flows. At 30 April 2024, the impairment tests concluded that there was
headroom across all CGUs. Whilst the Directors believe the assumptions used are realistic, it is possible that a reduction in the headroom would
occur if any of the above key assumptions were adversely changed. Factors which could cause an impairment are:
• significant and prolonged underperformance relative to the forecast; and
• deteriorations in the economies in which the Group operates.
To support their assertions, the Directors have reviewed the sensitivity analyses to determine the impact that would result from the above
situations, including reduction or delays in future growth and increased discount rates. In these cases, if future estimates of economic
improvements were delayed by twelve months, the growth rate in the outer years modelled reduced, or if the estimated discount rates applied
to the cash flows were increased by 0.5%, there would still be adequate headroom to support the carrying value of the assets. Based on this
analysis, with the exception of North America, the Directors believe that a reasonably possible change in any of the key assumptions detailed
above would not cause the carrying value of CGUs to exceed their recoverable amounts, although the headroom would decrease. Sensitivities
have also been conducted to determine the change required to the CGUs EBITDA and discount rates, to reduce the recoverable amounts down to
the carrying value of the assets. EBITDA growth is based on a number of elements over the long term, including price and volume growth in the
first year as well as assumptions regarding inflation and the cyclical paper price assumption. With all other assumptions held constant, for
Northern Europe, it would require a reduction in EBITDA of 16% (year ended 30 April 2023: 17%) or a discount rate of 14.0% (year ended 30
April 2023: 15.1%); Southern Europe a reduction in EBITDA of 22% (year ended 30 April 2023: 9%) or a discount rate of 16.2% (year ended 30
April 2023: 13.9%) and Eastern Europe a reduction in EBITDA of 36% (year ended 30 April 2023: 12%) or a discount rate of 21.3% (year ended
30 April 2023: 15.1%). For North America, where future cash flows include domestic volume growth from completed expansion projects and
cyclical paper price improvements, the sensitivity conducted identified that a reasonably possible change to the EBITDA growth assumption or
discount rates applied could reduce the headroom of $338m (£268m) to nil. Any further decrease in EBITDA, or further increase in discount rate
over and above the sensitivity could lead to an impairment. It is possible that these factors could move together in combination. The sensitivity
identified that a reduction of 15% to the EBITDA across the period modelled (year ended 30 April 2023: 14% reduction) or a discount rate of
11.8% (year ended 30 April 2023: 11.7%) would be required to reduce the headroom to nil.
Annual Report 2024 dssmith.com 167
Land and | Plant and | Fixtures | Under | ||
| buildings | equipment | and fittings | construction | Total | |
| £m | £m | £m | £m | £m | |
Cost | |||||
At 1 May 2023 | 1,173 | 3,634 | 110 | 498 | 5,415 |
Acquisitions | 2 | 4 | – | – | 6 |
Additions | 17 | 111 | 4 | 428 | 560 |
Disposals | (18) | (91) | (4) | (8) | (121) |
Reclassification | – | 4 | – | – | 4 |
Transfers | 43 | 265 | 14 | (322) | – |
Currency translation | (40) | (130) | (6) | (12) | (188) |
At 30 April 2024 | 1,177 | 3,797 | 118 | 584 | 5,676 |
Depreciation and impairment | |||||
At 1 May 2023 | (271) | (1,560) | (55) | – | (1,886) |
Acquisitions | – | (3) | – | – | (3) |
Depreciation charge | (35) | (202) | (10) | – | (247) |
Impairment | 1 | 3 | – | – | 4 |
Disposals | 9 | 82 | 3 | – | 94 |
Reclassification | – | (2) | – | – | (2) |
Transfers | (12) | 15 | (3) | – | – |
Currency translation | 20 | 83 | 4 | – | 107 |
At 30 April 2024 | (288) | (1,584) | (61) | – | (1,933) |
Carrying amount | |||||
At 1 May 2023 | 902 | 2,074 | 55 | 498 | 3,529 |
At 30 April 2024 | 889 | 2,213 | 57 | 584 | 3,743 |
Land and | Plant and | Fixtures | Under | ||
| buildings | equipment | and fittings | construction | Total | |
£m | £m | £m | £m | £m | |
Cost | |||||
At 1 May 2022 | 1,043 | 3,260 | 93 | 297 | 4,693 |
Additions | 31 | 103 | 3 | 400 | 537 |
Disposals | (16) | (119) | (4) | – | (139) |
Reclassification | 32 | 6 | 2 | (5) | 35 |
Transfers | 20 | 181 | 7 | (208) | – |
Currency translation | 63 | 203 | 9 | 14 | 289 |
At 30 April 2023 | 1,173 | 3,634 | 110 | 498 | 5,415 |
Depreciation and impairment | |||||
At 1 May 2022 | (218) | (1,304) | (43) | – | (1,565) |
Depreciation charge | (30) | (201) | (10) | – | (241) |
Impairment | (4) | (20) | – | – | (24) |
Disposals | 11 | 89 | 4 | – | 104 |
Reclassification | – | 5 | – | – | 5 |
Currency translation | (30) | (129) | (6) | – | (165) |
At 30 April 2023 | (271) | (1,560) | (55) | – | (1,886) |
Carrying amount | |||||
At 1 May 2022 | 825 | 1,956 | 50 | 297 | 3,128 |
At 30 April 2023 | 902 | 2,074 | 55 | 498 | 3,529 |
Annual Report 2024 dssmith.com 167
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
168
12. Right-of-use assets and lease liabilities
Land and | Plant and | Fixtures | ||
| buildings | equipment | and fittings | Total | |
| £m | £m | £m | £m | |
Cost | ||||
At 1 May 2023 | 197 | 215 | – | 412 |
Additions | 50 | 52 | – | 102 |
Disposals | (33) | (31) | – | (64) |
Currency translation | (4) | (6) | – | (10) |
At 30 April 2024 | 210 | 230 | – | 440 |
Depreciation and impairment | ||||
At 1 May 2023 | (82) | (106) | – | (188) |
Depreciation charge | (33) | (43) | – | (76) |
Disposals | 26 | 30 | – | 56 |
Currency translation | 2 | 3 | – | 5 |
At 30 April 2024 | (87) | (116) | – | (203) |
Carrying amount | ||||
At 1 May 2023 | 115 | 109 | – | 224 |
At 30 April 2024 | 123 | 114 | – | 237 |
Land and | Plant and | Fixtures | ||
| buildings | equipment | and fittings | Total | |
£m | £m | £m | £m | |
Cost | ||||
At 1 May 2022 | 186 | 189 | 1 | 376 |
Additions | 75 | 61 | – | 136 |
Disposals | (37) | (43) | (1) | (81) |
Reclassification | (32) | 1 | – | (31) |
Currency translation | 5 | 7 | – | 12 |
At 30 April 2023 | 197 | 215 | – | 412 |
Depreciation and impairment | ||||
At 1 May 2022 | (72) | (105) | – | (177) |
Depreciation charge | (32) | (39) | – | (71) |
Disposals | 24 | 42 | – | 66 |
Currency translation | (2) | (4) | – | (6) |
At 30 April 2023 | (82) | (106) | – | (188) |
Carrying amount | ||||
At 1 May 2022 | 114 | 84 | 1 | 199 |
At 30 April 2023 | 115 | 109 | – | 224 |
168
Notes to the consolidated financial statements continued
168
12. Right-of-use assets and lease liabilities
Right-of-use assets
Land and
buildings
£m
Plant and
equipment
£m
Fixtures
and fittings
£m
Total
£m
Cost
At 1 May 2023
197
215
–
412
Additions
50
52
–
102
Disposals
(33)
(31)
–
(64)
Currency translation
(4)
(6)
–
(10)
At 30 April 2024
210
230
–
440
Depreciation and impairment
At 1 May 2023
(82)
(106)
–
(188)
Depreciation charge
(33)
(43)
–
(76)
Disposals
26
30
–
56
Currency translation
2
3
–
5
At 30 April 2024
(87)
(116)
–
(203)
Carrying amount
At 1 May 2023
115
109
–
224
At 30 April 2024
123
114
–
237
Land and
buildings
£m
Plant and
equipment
£m
Fixtures
and fittings
£m
Total
£m
Cost
At 1 May 2022
186
189
1
376
Additions
75
61
–
136
Disposals
(37)
(43)
(1)
(81)
Reclassification
(32)
1
–
(31)
Currency translation
5
7
–
12
At 30 April 2023
197
215
–
412
Depreciation and impairment
At 1 May 2022
(72)
(105)
–
(177)
Depreciation charge
(32)
(39)
–
(71)
Disposals
24
42
–
66
Currency translation
(2)
(4)
–
(6)
At 30 April 2023
(82)
(106)
–
(188)
Carrying amount
At 1 May 2022
114
84
1
199
At 30 April 2023
115
109
–
224
During the prior year, a lease in Germany was terminated early and the asset purchased. This was reclassified to land and buildings in property,
plant and equipment.
Annual Report 2024 dssmith.com 169
12. Right-of-use assets and lease liabilities continued
Lease liabilities
The carrying amounts of lease liabilities and the movements during the year are as follows:
2024 | 2023 | |
| £m | £m | |
At beginning of the year | 224 | 203 |
Additions | 102 | 136 |
Accretion of interest | 12 | 11 |
Payments | (84) | (117) |
Early termination | (10) | (15) |
Currency translation | (5) | 6 |
At end of the year | 239 | 224 |
Current | 75 | 70 |
Non-current | 164 | 154 |
239 | 224 |
The maturity analysis of lease liabilities is presented in note 20.
13. Equity accounted investments
2024 | 2023 | |
| £m | £m | |
At beginning of the year | 17 | 17 |
Dividends | (2) | (2) |
Share of profit of equity accounted investments, net of tax | 2 | 2 |
RKTK reversal of impairment | 10 | – |
RKTK disposal | (10) | – |
At end of the year | 17 | 17 |
Principal equity accounted investments
| Principal country | Ownership interest | |||
Nature of business | of operation | 2024 | 2023 | |
PrJSC ‘Rubezhnoye Cardboard and Package Mill’ | Paper and packaging | Ukraine | – | 49.6% |
Philcorr LLC | Packaging | USA | 40.0% | 40.0% |
Philcorr Vineland LLC | Packaging | USA | 40.0% | 40.0% |
Cartonajes Santander, S.L. | Packaging | Spain | 39.6% | 39.6% |
Cartonajes Cantabria S.L. | Packaging | Spain | 39.6% | 39.6% |
Euskocarton, S.L. | Packaging | Spain | 39.6% | 39.6% |
Industria Cartonera Asturiana S.L. | Packaging | Spain | 39.6% | 39.6% |
In April 2024, the Group sold its previously fully written-down Ukrainian associate, RKTK, for £10m. £5m was received by 30 April 2024 and a
further £5m will be received in the next financial year. This resulted in a £10m gain on divestment in the year ended 30 April 2024.
All the above associates are accounted for using the equity method because the Group has the ability to exercise significant influence over the
investments due to the Group’s equity holdings and board representation.
Annual Report 2024 dssmith.com 169
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
170
13. Equity accounted investments continued
Summary of financial information of associates
The financial information below is for the Group’s associates on a 100% basis for the year ended 30 April.
2024 | 2023 | |
| £m | £m | |
Current assets | 16 | 14 |
Non-current assets | 12 | 13 |
Current liabilities | (6) | (5) |
Non-current liabilities | (4) | (5) |
Revenue | 82 | 98 |
Profit after tax | 12 | 4 |
Other comprehensive income | – | 1 |
Total comprehensive income | 12 | 5 |
14. Other investments
2024 | 2023 | |
| £m | £m | |
Investments | 11 | 10 |
Restricted cash | 6 | 7 |
17 | 17 |
15. Inventories
2024 | 2023 | |
£m | £m | |
Raw materials and consumables | 366 | 374 |
Work in progress | 24 | 26 |
Finished goods | 201 | 219 |
591 | 619 |
Inventory provisions at 30 April 2024 were £57m (30 April 2023: £60m).
Inventories of £2,478m were recognised as an expense during the year ended 30 April 2024 (2022/ 23: £3,344m) and included within cost
of sales.
2024 | 2023 | |||
Non- | Non- | |||
| current | Current | current | Current | |
£m | £m | £m | £m | |
Trade receivables | – | 900 | – | 1,060 |
Loss allowance | – | (28) | – | (31) |
Prepayments and accrued income | 4 | 78 | 1 | 77 |
Other deposits | – | 29 | – | 30 |
Other receivables | – | 151 | – | 120 |
4 | 1,130 | 1 | 1,256 |
170
Notes to the consolidated financial statements continued
170
13. Equity accounted investments continued
Summary of financial information of associates
The financial information below is for the Group’s associates on a 100% basis for the year ended 30 April.
2024
£m
2023
£m
Current assets
16
14
Non-current assets
12
13
Current liabilities
(6)
(5)
Non-current liabilities
(4)
(5)
Revenue
82
98
Profit after tax
12
4
Other comprehensive income
–
1
Total comprehensive income
12
5
14. Other investments
2024
£m
2023
£m
Investments
11
10
Restricted cash
6
7
17
17
15. Inventories
2024
£m
2023
£m
Raw materials and consumables
366
374
Work in progress
24
26
Finished goods
201
219
591
619
Inventory provisions at 30 April 2024 were £57m (30 April 2023: £60m).
Inventories of £2,478m were recognised as an expense during the year ended 30 April 2024 (2022/ 23: £3,344m) and included within cost
of sales.
16. Trade and other receivables
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Trade receivables
–
900
–
1,060
Loss allowance
–
(28)
–
(31)
Prepayments and accrued income
4
78
1
77
Other deposits
–
29
–
30
Other receivables
–
151
–
120
4
1,130
1
1,256
Other receivables comprise various items including indirect tax receivable, employee advances and interest receivable.
The Group has sold without recourse certain trade receivables and on realisation the receivable is de-recognised and proceeds are presented
within operating cash flows. Other deposits relate to these arrangements. Sold trade receivables under these arrangements at 30 April 2024
amounted to £369m (30 April 2023: £360m).
Accrued income amounted to £22m (30 April 2023: £19m).
Included within other receivables are energy support receivables of £40m (30 April 2023: £26m) and indirect tax receivable of £61m (30 April
2023: £53m).
Annual Report 2024 dssmith.com 171
16. Trade and other receivables continued
Of which past due | |||||||
| Current | 1 month | 1–3 | 3–6 | 6–12 | More than | ||
| Total | (not past due) | or less | months | months | months | 12 months | |
| £m | £m | £m | £m | £m | £m | £m | |
At 30 April 2024 | |||||||
Gross trade receivables | 900 | 862 | 5 | 6 | 1 | 2 | 24 |
Weighted average loss rate | 3.1% | 0.5% | 20.0% | – | – | 50.0% | 91.7% |
Loss allowance | (28) | (4) | (1) | – | – | (1) | (22) |
At 30 April 2023 | |||||||
Gross trade receivables | 1,060 | 971 | 53 | 7 | 3 | 2 | 24 |
Weighted average loss rate | 2.9% | 0.4% | 3.8% | 28.6% | 33.3% | – | 91.7% |
Loss allowance | (31) | (4) | (2) | (2) | (1) | – | (22) |
2024 | 2023 | |
| £m | £m | |
At beginning of the year | (31) | (30) |
Amounts written off | 2 | 2 |
Net remeasurement of loss allowance | – | (2) |
Currency translation | 1 | (1) |
At end of the year | (28) | (31) |
2024 | 2023 | |||
Non- | Non- | |||
| current | Current | current | Current | |
| £m | £m | £m | £m | |
Trade payables | – | 1,253 | – | 1,572 |
Interest payable | – | 57 | – | 16 |
Other non-trade payables and accrued expenses | 31 | 509 | 34 | 665 |
31 | 1,819 | 34 | 2,253 |
Annual Report 2024 dssmith.com 171
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
172
17. Trade and other payables continued
18. Net debt
The components of net debt and movement during the year are as follows:
Foreign exchange, | |||||
| Continuing | fair value and | ||||
| At 30 April | operations | non-cash | At 30 April | ||
| 2023 | cash flow | movements | 2024 | ||
| Note | £m | £m | £m | £m | |
Cash and cash equivalents | 472 | 44 | (17) | 499 | |
Overdrafts | (104) | 14 | 1 | (89) | |
Net cash and cash equivalents | 19 | 368 | 58 | (16) | 410 |
Other investments – restricted cash | 14 | 6 | 1 | – | 7 |
Other deposits | 30 | (1) | – | 29 | |
Borrowings – after one year | (1,742) | (738) | 440 | (2,040) | |
Borrowings – within one year | (74) | 70 | (393) | (397) | |
Lease liabilities | 12 | (224) | 72 | (87) | (239) |
Derivative financial instruments | |||||
Assets | – | 2 | (2) | – | |
Liabilities | – | – | – | – | |
(2,004) | (594) | (42) | (2,640) | ||
Net debt – reported basis | (1,636) | (536) | (58) | (2,230) | |
IFRS 16 lease liabilities | 220 | 236 | |||
Net debt excluding IFRS 16 liabilities | (1,416) | (1,994) |
Net debt is a non-GAAP measure not defined by IFRS. While the Group has included lease liabilities after transition to IFRS 16
Leases
within total
lease liabilities (in addition to arrangements previously classified as finance leases under IAS 17), IFRS 16 liabilities are currently excluded from
the definition of net debt as set out in the Group’s banking covenant requirements.
Further detail on the use of non-GAAP measures and a reconciliation showing the calculation of adjusted net debt, as defined in the Group’s
banking covenants, is included in note 32.
Derivative financial instruments above relate to forward foreign exchange contracts and cross-currency swaps used to hedge the Group’s
borrowings and the net assets of foreign operations. The difference between the amounts shown above and the total derivative financial
instrument assets and liabilities in the consolidated statement of financial position relates to derivative financial instruments that hedge
forecast foreign currency transactions and the Group’s purchases of energy.
Non-cash movements relate to amortisation of fees incurred on debt issuance and new leases.
Other deposits are included, as these short-term receivables have the characteristics of net debt.
2024 | 2023 | |
| £m | £m | |
Bank balances | 437 | 466 |
Short-term deposits | 62 | 6 |
Cash and cash equivalents (consolidated statement of financial position) | 499 | 472 |
Bank overdrafts | (89) | (104) |
Net cash and cash equivalents (consolidated statement of cash flows) | 410 | 368 |
172
Notes to the consolidated financial statements continued
172
17. Trade and other payables continued
The Group assesses the supply chain finance programmes to ascertain whether liabilities to suppliers who have chosen to access an earlier
payment under the scheme continue to meet the definition of trade payables, or should be reclassified as borrowings. The Group has concluded
that the Group’s liability to the supplier remains unchanged for all such programmes and, as such, these balances remain in trade payables and
the cash flows associated with these programmes remain within operating cash flows.
18. Net debt
The components of net debt and movement during the year are as follows:
Note
At 30 April
2023
£m
Continuing
operations
cash flow
£m
Foreign exchange,
fair value and
non-cash
movements
£m
At 30 April
2024
£m
Cash and cash equivalents
472
44
(17)
499
Overdrafts
(104)
14
1
(89)
Net cash and cash equivalents
19
368
58
(16)
410
Other investments – restricted cash
14
6
1
–
7
Other deposits
30
(1)
–
29
Borrowings – after one year
(1,742)
(738)
440
(2,040)
Borrowings – within one year
(74)
70
(393)
(397)
Lease liabilities
12
(224)
72
(87)
(239)
Derivative financial instruments
Assets
–
2
(2)
–
Liabilities
–
–
–
–
(2,004)
(594)
(42)
(2,640)
Net debt – reported basis
(1,636)
(536)
(58)
(2,230)
IFRS 16 lease liabilities
220
236
Net debt excluding IFRS 16 liabilities
(1,416)
(1,994)
Net debt is a non-GAAP measure not defined by IFRS. While the Group has included lease liabilities after transition to IFRS 16
Leases
within total
lease liabilities (in addition to arrangements previously classified as finance leases under IAS 17), IFRS 16 liabilities are currently excluded from
the definition of net debt as set out in the Group’s banking covenant requirements.
Further detail on the use of non-GAAP measures and a reconciliation showing the calculation of adjusted net debt, as defined in the Group’s
banking covenants, is included in note 32.
Derivative financial instruments above relate to forward foreign exchange contracts and cross-currency swaps used to hedge the Group’s
borrowings and the net assets of foreign operations. The difference between the amounts shown above and the total derivative financial
instrument assets and liabilities in the consolidated statement of financial position relates to derivative financial instruments that hedge
forecast foreign currency transactions and the Group’s purchases of energy.
Non-cash movements relate to amortisation of fees incurred on debt issuance and new leases.
Other deposits are included, as these short-term receivables have the characteristics of net debt.
19. Cash and cash equivalents
2024
£m
2023
£m
Bank balances
437
466
Short-term deposits
62
6
Cash and cash equivalents (consolidated statement of financial position)
499
472
Bank overdrafts
(89)
(104)
Net cash and cash equivalents (consolidated statement of cash flows)
410
368
Annual Report 2024 dssmith.com 173
20. Borrowings
2024 | 2023 | |||||
Non- | Non- | |||||
| Current | current | Total | Current | current | Total | |
| £m | £m | £m | £m | £m | £m | |
Bank and other loans 1 | (2) | (7) | (9) | (42) | (299) | (341) |
Commercial paper | – | – | – | (24) | – | (24) |
Medium-term notes and other fixed-term debt | ||||||
€452.4m medium-term note 1.375% coupon July 2024 | (387) | – | (387) | – | (660) | (660) |
€10m term loan 1.4% coupon September 2025 | (8) | (1) | (9) | (8) | (9) | (17) |
€600m medium-term note 0.85% coupon September 2026 | – | (511) | (511) | – | (525) | (525) |
€850m medium-term note 4.375% coupon July 2027 | – | (721) | (721) | – | – | – |
£250m medium-term note 2.875% coupon July 2029 | – | (249) | (249) | – | (249) | (249) |
€650m medium-term note 4.5% coupon July 2030 | – | (551) | (551) | – | – | – |
(397) | (2,040) | (2,437) | (74) | (1,742) | (1,816) |
1. Drawings under bank loans and revolving credit facility.
Borrowings are unsecured and measured at amortised cost. There have been no breaches of covenants during the year ended 30 April 2024 in
relation to the above borrowings.
Of the total borrowing facilities available to the Group, the undrawn committed facilities available at 30 April were as follows:
2024 | 2023 | |
| £m | £m | |
Expiring within one year | 300 | – |
Expiring between one and two years | 51 | 800 |
Expiring between two and five years | 1,100 | 855 |
Expiring after five years | – | – |
1,451 | 1,655 |
The £1,451m of undrawn facilities consist of revolving credit facilities.
The repayment profile of the Group’s borrowings, after taking into account the effect of forward foreign exchange contracts, is as follows:
2024 | |||||
1 year | 1–2 | 2–5 | More than | ||
| or less | years | years | 5 years | Total | |
| £m | £m | £m | £m | £m | |
Borrowings | |||||
Fixed rate | (397) | (4) | (1,234) | (802) | (2,437) |
Floating rate | – | – | – | – | – |
Total borrowings | (397) | (4) | (1,234) | (802) | (2,437) |
| 2023 | |||||
1 year | 1–2 | 2–5 | More than | ||
| or less | years | years | 5 years | Total | |
| £m | £m | £m | £m | £m | |
Borrowings | |||||
Fixed rate | (74) | (672) | (523) | (249) | (1,518) |
Floating rate | – | – | (298) | – | (298) |
Total borrowings | (74) | (672) | (821) | (249) | (1,816) |
Annual Report 2024 dssmith.com 173
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
174
20. Borrowings continued
The Group’s borrowings, after taking into account the effect of forward foreign exchange contracts, are denominated in the following
currencies:
2024 | |||||
Sterling | Euro | US dollar | Other | Total | |
| £m | £m | £m | £m | £m | |
Borrowings | |||||
Fixed rate | (153) | (2,160) | (124) | – | (2,437) |
Floating rate | – | – | – | – | – |
Net cash and cash equivalents (including bank overdrafts) | (153) | (2,160) | (124) | – | (2,437) |
Floating rate | 38 | 204 | 6 | 162 | 410 |
Net borrowings at 30 April 2024 | (115) | (1,956) | (118) | 162 | (2,027) |
2023 | |||||
Sterling | Euro | US dollar | Other | Total | |
| £m | £m | £m | £m | £m | |
Borrowings | |||||
Fixed rate | (98) | (1,187) | (232) | (1) | (1,518) |
Floating rate | (210) | (88) | – | – | (298) |
Net cash and cash equivalents (including bank overdrafts) | (308) | (1,275) | (232) | (1) | (1,816) |
Floating rate | (23) | 240 | 13 | 138 | 368 |
Net borrowings at 30 April 2023 | (331) | (1,035) | (219) | 137 | (1,448) |
At 30 April 2024, 89% of the Group’s borrowings, after taking into account the effect of cross-currency swaps and forward foreign exchange
contracts, were denominated in euros in order to hedge the underlying assets of the Group’s European operations (30 April 2023: 70%). Interest
rates on floating rate borrowings are based on EURIBOR, or where applicable, local currency base rates. The Group’s sterling denominated
floating rate borrowings are based on SONIA.
Maturity of lease liabilities
1 year | 1–2 | 2–5 | More than | ||
| or less | years | years | 5 years | Total | |
| £m | £m | £m | £m | £m | |
At 30 April 2023 | (70) | (51) | (73) | (30) | (224) |
At 30 April 2024 | (75) | (54) | (78) | (32) | (239) |
Denomination of lease liabilities
Sterling | Euro | US dollar | Other | Total | |
£m | £m | £m | £m | £m | |
At 30 April 2023 | (55) | (109) | (34) | (26) | (224) |
At 30 April 2024 | (54) | (103) | (38) | (44) | (239) |
174
Notes to the consolidated financial statements continued
174
20. Borrowings continued
The Group’s borrowings, after taking into account the effect of forward foreign exchange contracts, are denominated in the following
currencies:
2024
Sterling
£m
Euro
£m
US dollar
£m
Other
£m
Total
£m
Borrowings
Fixed rate
(153)
(2,160)
(124)
–
(2,437)
Floating rate
–
–
–
–
–
(153)
(2,160)
(124)
–
(2,437)
Net cash and cash equivalents (including bank overdrafts)
Floating rate
38
204
6
162
410
Net borrowings at 30 April 2024
(115)
(1,956)
(118)
162
(2,027)
2023
Sterling
£m
Euro
£m
US dollar
£m
Other
£m
Total
£m
Borrowings
Fixed rate
(98)
(1,187)
(232)
(1)
(1,518)
Floating rate
(210)
(88)
–
–
(298)
(308)
(1,275)
(232)
(1)
(1,816)
Net cash and cash equivalents (including bank overdrafts)
Floating rate
(23)
240
13
138
368
Net borrowings at 30 April 2023
(331)
(1,035)
(219)
137
(1,448)
At 30 April 2024, 89% of the Group’s borrowings, after taking into account the effect of cross-currency swaps and forward foreign exchange
contracts, were denominated in euros in order to hedge the underlying assets of the Group’s European operations (30 April 2023: 70%). Interest
rates on floating rate borrowings are based on EURIBOR, or where applicable, local currency base rates. The Group’s sterling denominated
floating rate borrowings are based on SONIA.
Maturity of lease liabilities
1 year
or less
£m
1–2
years
£m
2–5
years
£m
More than
5 years
£m
Total
£m
At 30 April 2023
(70)
(51)
(73)
(30)
(224)
At 30 April 2024
(75)
(54)
(78)
(32)
(239)
Denomination of lease liabilities
Sterling
£m
Euro
£m
US dollar
£m
Other
£m
Total
£m
At 30 April 2023
(55)
(109)
(34)
(26)
(224)
At 30 April 2024
(54)
(103)
(38)
(44)
(239)
Annual Report 2024 dssmith.com 175
20. Borrowings continued
Acquisitions | New leases | ||||||
| At 1 May | Financing | and | and early | Movements | At 30 Apr | ||
| 2023 | cash flows | divestments | termination | in fair value | Other | 2024 | |
| £m | £m | £m | £m | £m | £m | £m | |
Bank and other loans, including commercial paper | (365) | 357 | – | – | – | (1) | (9) |
Medium-term notes and other fixed-term debt | (1,451) | (1,025) | – | – | – | 48 | (2,428) |
Lease liabilities | (224) | 72 | – | (86) | – | (1) | (239) |
Total liabilities from financing activities | (2,040) | (596) | – | (86) | – | 46 | (2,676) |
Acquisitions | New leases | ||||||
| At 1 May | Financing | and | and early | Movements | At 30 Apr | ||
| 2022 | cash flows | divestments | termination | in fair value | Other | 2023 | |
| £m | £m | £m | £m | £m | £m | £m | |
Bank and other loans, including commercial paper | (43) | (316) | – | – | – | (6) | (365) |
Medium-term notes and other fixed-term debt | (2,029) | 663 | – | – | – | (85) | (1,451) |
Lease liabilities | (203) | 106 | – | (121) | – | (6) | (224) |
Derivative financial instruments related to hedging of financial liabilities (note 18) | |||||||
Assets | 12 | (14) | – | – | 2 | – | – |
Liabilities | – | – | – | – | – | – | – |
Total liabilities from financing activities | (2,263) | 439 | – | (121) | 2 | (97) | (2,040) |
Annual Report 2024 dssmith.com 175
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
176
2024 | 2023 | ||||
Carrying | Carrying | ||||
| amount | Fair value | amount | Fair value | ||
Category | £m | £m | £m | £m | |
Financial assets | |||||
Cash and cash equivalents | Amortised cost | 499 | 499 | 472 | 472 |
Restricted cash | Amortised cost | 6 | 6 | 7 | 7 |
Fair value through other comprehensive | |||||
| Other investments | income | 11 | 11 | 10 | 10 |
Trade and other receivables | Amortised cost | 1,134 | 1,134 | 1,257 | 1,257 |
Derivative financial instruments | Fair value – hedging instruments | 79 | 79 | 319 | 319 |
Total financial assets | 1,729 | 1,729 | 2,065 | 2,065 | |
Financial liabilities | |||||
Trade and other payables | Amortised cost, except as detailed below | (1,850) | (1,850) | (2,287) | (2,287) |
Bank and other loans | Amortised cost | (9) | (9) | (341) | (341) |
Commercial paper | Amortised cost | – | – | (24) | (24) |
Medium-term notes and other fixed-term debt | Amortised cost | (2,428) | (2,382) | (1,451) | (1,384) |
Lease liabilities | Amortised cost | (239) | (239) | (224) | (224) |
Bank overdrafts | Amortised cost | (89) | (89) | (104) | (104) |
Derivative financial instruments | Fair value – hedging instruments | (193) | (193) | (368) | (368) |
Total financial liabilities | (4,808) | (4,762) | (4,799) | (4,732) |
176
Notes to the consolidated financial statements continued
176
21. Financial instruments
The Group’s activities expose the Group to a number of key risks which have the potential to affect its ability to achieve its business objectives.
A summary of the Group’s key financial risks and the policies and objectives in place to manage these risks is set out in the Financial review and
Principal risk sections of the Strategic Report.
The derivative financial instruments set out in this note have been entered into in line with the Group’s risk management objectives. The Group’s
treasury policy prohibits entering into speculative transactions.
(a) Carrying amounts and fair values of financial assets and liabilities
Set out below is the accounting classification of the carrying amounts and fair values of all of the Group’s financial assets and liabilities:
2024
2023
Category
Carrying
amount
£m
Fair value
£m
Carrying
amount
£m
Fair value
£m
Financial assets
Cash and cash equivalents
Amortised cost
499
499
472
472
Restricted cash
Amortised cost
6
6
7
7
Other investments
Fair value through other comprehensive
income
11 11 10 10
Trade and other receivables
Amortised cost
1,134
1,134
1,257
1,257
Derivative financial instruments
Fair value – hedging instruments
79
79
319
319
Total financial assets
1,729
1,729
2,065
2,065
Financial liabilities
Trade and other payables
Amortised cost, except as detailed below
(1,850)
(1,850)
(2,287)
(2,287)
Bank and other loans
Amortised cost
(9)
(9)
(341)
(341)
Commercial paper
Amortised cost
–
–
(24)
(24)
Medium-term notes and other
fixed-term debt
Amortised cost
(2,428)
(2,382)
(1,451)
(1,384)
Lease liabilities
Amortised cost
(239)
(239)
(224)
(224)
Bank overdrafts
Amortised cost
(89)
(89)
(104)
(104)
Derivative financial instruments
Fair value – hedging instruments
(193)
(193)
(368)
(368)
Total financial liabilities
(4,808)
(4,762)
(4,799)
(4,732)
The 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. For financial instruments carried at fair value, market prices or rates are used to determine fair value
where an active market exists. The Group uses forward prices for valuing forward foreign exchange and commodity contracts and uses valuation
models with present value calculations based on market yield curves to value fixed rate borrowings. All derivative financial instruments are
shown at fair value in the consolidated statement of financial position.
The Group’s medium-term notes and other fixed-term debt are in effective cash flow and net investment hedges. The fair values of
financial assets and liabilities which bear floating rates of interest or are short term in nature are estimated to be equivalent to their
carrying amounts.
The Group’s financial assets and financial liabilities are categorised within the fair value hierarchy that reflects the significance of the inputs
used in making the assessments. The majority of the Group’s financial instruments are Level 2 financial instruments in accordance with the fair
value hierarchy, meaning although the instruments are not traded in an active market, inputs to fair value are observable for the asset and
liability, either directly (i.e. quoted market prices) or indirectly (i.e. derived from prices). The Group’s medium-term notes are Level 1 financial
instruments, as the notes are listed on the Luxembourg Stock Exchange. Other investments are Level 3 financial instruments. The fair value of
other investments is derived from fair value calculations based on their cash flows, and details of the valuation of the redemption liability are
provided in note 17.
Annual Report 2024 dssmith.com 177
21. Financial instruments continued
Assets | Liabilities | Net | ||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
£m | £m | £m | £m | £m | £m | |
Derivatives held to hedge future transactions: | ||||||
Forward foreign exchange contracts | – | 1 | – | (2) | – | (1) |
Energy and carbon certificate costs | 79 | 318 | (193) | (366) | (114) | (48) |
Total derivative financial instruments | 79 | 319 | (193) | (368) | (114) | (49) |
Current | 64 | 154 | (122) | (319) | (58) | (165) |
Non-current | 15 | 165 | (71) | (49) | (56) | 116 |
79 | 319 | (193) | (368) | (114) | (49) |
Foreign | |||
| Commodity risk | exchange risk | Total | |
| £m | £m | £m | |
Balance at 1 May 2022 | 609 | – | 609 |
Gain/(loss) on designated cash flow hedges: | |||
Cross-currency swaps | – | 7 | 7 |
Commodity contracts | (78) | – | (78) |
Forward foreign exchange contracts | – | (1) | (1) |
Loss/(gain) reclassified from equity to the income statement: | |||
Cross-currency swaps | – | (8) | (8) |
Commodity contracts | (565) | – | (565) |
Deferred tax | 149 | – | 149 |
At 30 April 2023 | 115 | (2) | 113 |
Gain/(loss) on designated cash flow hedges: | |||
Commodity contracts | (237) | – | (237) |
Forward foreign exchange contracts | – | 1 | 1 |
Loss/(gain) reclassified from equity to the income statement: | |||
Commodity contracts | 25 | – | 25 |
Deferred tax | 41 | – | 41 |
At 30 April 2024 | (56) | (1) | (57) |
Annual Report 2024 dssmith.com 177
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
178
21. Financial instruments continued
(c) Cash flow and net investment hedges continued
(i) Hedge reserves continued
2024 | 2023 | |
| £m | £m | |
Operating costs | 25 | (565) |
Finance costs | – | (8) |
Total pre-tax loss/(gain) reclassified from equity to the income statement during the year | 25 | (573) |
2024 | 2023 | |
| £m | £m | |
Net debt | 2,230 | 1,636 |
Total equity | 3,949 | 4,087 |
Managed capital | 6,179 | 5,723 |
178
Notes to the consolidated financial statements continued
178
21. Financial instruments continued
(c) Cash flow and net investment hedges continued
(i) Hedge reserves continued
The amounts reclassified to the income statement from the cash flow hedging reserve during the year are reflected in the following items in the
income statement:
2024
£m
2023
£m
Operating costs
25
(565)
Finance costs
–
(8)
Total pre-tax loss/(gain) reclassified from equity to the income statement during the year
25
(573)
There was £nil recognised ineffectiveness during the year ended 30 April 2024 (2022/23: £nil) in respect of cross-currency swaps, forward
foreign exchange contracts and commodity derivatives.
(ii) Hedges of net investments in foreign operations
The Group utilises foreign currency borrowings, cross-currency swaps and forward foreign exchange contracts as hedges of long-term
investments in foreign subsidiaries. The pre-tax gain on the hedges recognised in equity during the year was £41m (2022/23: loss of £74m).
This £41m is matched by a similar gain in equity on the retranslation of the hedged foreign subsidiary net assets resulting in a net gain of £nil
(2022/23: net gain of £nil) treated as hedge ineffectiveness in the income statement.
(d) Risk identification and risk management
(i) Capital management
The Group defines its managed capital as the sum of equity, as presented in the consolidated statement of financial position, and net debt
(note 18).
2024
£m
2023
£m
Net debt
2,230
1,636
Total equity
3,949
4,087
Managed capital
6,179
5,723
In July 2023 the Group issued a €1.5bn bond split across two tranches (four and seven years) under the Group’s Green Financing Framework. The
Group bought back almost €300m of the €750m bond which is due to mature in July 2024. Scheduled repayments on a term loan amounted to
€9m.
Managed capital is different from capital employed (defined as property, plant and equipment, right-of-use assets, goodwill and intangible
assets, working capital, capital debtors/creditors, provisions, biological assets and assets/liabilities held for sale). Managed capital relates to
the Group’s sources of funding, whereas adjusted return on average capital employed is the Group’s measure of the level of return being
generated by the asset base.
The Group funds its operations from the following sources of capital: operating cash flow, borrowings, shareholders’ equity and, where
appropriate, divestments of non-core businesses. The Group’s objective is to achieve a capital structure that results in an appropriate cost of
capital whilst providing flexibility in short and medium-term funding so as to accommodate significant investments or acquisitions. The Group
also aims to maintain a strong balance sheet and to provide continuity of financing by having borrowings with a range of maturities and from
a variety of sources.
The Group’s overall treasury objectives are to ensure sufficient funds are available for the Group to carry out its strategy and to manage certain
financial risks to which the Group is exposed, as described elsewhere in this note. The Group’s treasury strategy is controlled through the
Balance Sheet Committee which meets every two months and includes the Group Finance Director, the Group General Counsel and Company
Secretary, the Group Financial Controller and the Corporate Finance Director. The Group Treasury function operates in accordance with policies
and procedures approved by the Board and is controlled by the Corporate Finance Director. The function arranges funding for the Group,
provides a service to operations and implements strategies for financial risk management.
(ii) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument fluctuate because of a change in market prices. The Group
is exposed to changes in interest rates, foreign currency exchange rates and commodity prices.
Annual Report 2024 dssmith.com 179
21. Financial instruments continued
(d) Risk identification and risk management continued
2024 | 2023 | |
| £m | £m | |
Impact on profit of increase in market interest rates of 100 basis points | (6) | (2) |
2024 | 2023 | |||
EUR | USD | EUR | USD | |
| £m | £m | £m | £m | |
Trade receivables | 636 | 64 | 769 | 65 |
Trade payables | (1,183) | (74) | (1,392) | (177) |
Net borrowings 1 | (1,956) | (118) | (1,035) | (219) |
2024 | 2023 | |||
Average | Closing | Average | Closing | |
Euro | 1.161 | 1.170 | 1.152 | 1.136 |
US dollar | 1.258 | 1.254 | 1.201 | 1.247 |
Annual Report 2024 dssmith.com 179
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
180
21. Financial instruments continued
(d) Risk identification and risk management continued
(ii) Market risk continued
Foreign exchange risk on transactions continued
2024 | 2023 | |||
Impact on | Impact on | Impact on | Impact on | |
| profit | total equity | profit | total equity | |
| £m | £m | £m | £m | |
10% strengthening of sterling | – | 25 | – | 30 |
10% weakening of sterling | – | (31) | – | (37) |
2024 | 2023 | |||
Impact on | Impact on | Impact on | Impact on | |
| profit | total equity | profit | total equity | |
| £m | £m | £m | £m | |
10% increase in electricity prices | – | – | – | 8 |
10% increase in gas prices | – | 25 | – | 44 |
10% increase in carbon certificate prices | – | 5 | – | 7 |
180
Notes to the consolidated financial statements continued
180
21. Financial instruments continued
(d) Risk identification and risk management continued
(ii) Market risk continued
Foreign exchange risk on transactions continued
The following sensitivity analysis shows the impact on the Group’s results of a 10% strengthening and weakening in the sterling exchange rate
against all other currencies representing management’s assessment of the reasonably possible change in foreign exchange rates. The analysis is
restricted to financial instruments denominated in a foreign currency and excludes the impact of financial instruments designated as net
investment hedges.
Net investment hedges are excluded as the impact of the foreign exchange movements on these are offset by equal and opposite movements in
the hedged items.
The results are presented before non-controlling interests and tax.
2024
2023
Impact on
profit
£m
Impact on
total equity
£m
Impact on
profit
£m
Impact on
total equity
£m
10% strengthening of sterling
–
25
–
30
10% weakening of sterling
–
(31)
–
(37)
Commodity risk
The Group’s main commodity exposures are to changes in gas and electricity prices. The Group also hedges its exposure to fluctuations in the
cost of carbon emission certificates. This commodity price risk is managed by a combination of physical supply agreements and derivative
instruments. At 30 April 2024, losses of £56m net of tax (2022/23: gains of £115m) are deferred in equity in respect of cash flow hedges in
accordance with IAS 39. Any gains or losses deferred in equity will be reclassified to the income statement in the period in which the hedged item
also affects the income statement, which will occur within three years.
The following table details the Group’s sensitivity to a 10% increase in these prices, which is management’s assessment of the reasonably
possible change, on average, over any given year. A decrease of 10% in these prices would produce an opposite effect on equity. As all of
the Group’s commodity financial instruments achieve hedge accounting under IAS 39, there is no impact on profit for either year.
The results are presented before non-controlling interests and tax.
2024
2023
Impact on
profit
£m
Impact on
total equity
£m
Impact on
profit
£m
Impact on
total equity
£m
10% increase in electricity prices
–
–
–
8
10% increase in gas prices
–
25
–
44
10% increase in carbon certificate prices
–
5
–
7
(iii) Credit risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due, causing financial loss
to the Group. In the current economic environment, the Group has placed increased emphasis on the management of credit risk. The carrying amount of
financial assets at 30 April 2024 was £1,729m and is analysed in note 21(a). This represents the maximum credit risk exposure.
Credit risk on financial instruments held with financial institutions is assessed and managed by reference to the long-term credit ratings
assigned to that counterparty by S&P Global Ratings’ and Moody’s credit rating agencies. Amounts deposited with counterparties are subject to
limits based on their credit ratings. There are no significant concentrations of credit risk.
See note 16 for information on credit risk with respect to trade receivables.
Annual Report 2024 dssmith.com 181
21. Financial instruments continued
(d) Risk identification and risk management continued
Contractual repayments | ||||
1 year | 1–5 | More than | ||
| Total | or less | years | 5 years | |
At 30 April 2024 | £m | £m | £m | £m |
Non-derivative financial liabilities | ||||
Trade and other payables | 1,850 | 1,819 | 31 | – |
Bank and other loans | 9 | 2 | 7 | – |
Medium-term notes and other fixed-term debt | 2,441 | 395 | 1,240 | 806 |
Lease liabilities | 271 | 77 | 150 | 44 |
Bank overdrafts | 89 | 89 | – | – |
Interest payments on borrowings | 364 | 74 | 233 | 57 |
Total non-derivative financial liabilities | 5,024 | 2,456 | 1,661 | 907 |
Contractual repayments | ||||
1 year | 1–5 | More than | ||
| Total | or less | years | 5 years | |
At 30 April 2023 | £m | £m | £m | £m |
Non-derivative financial liabilities | ||||
Trade and other payables | 2,287 | 2,253 | 34 | – |
Bank and other loans | 343 | 42 | 301 | – |
Commercial paper | 24 | 24 | – | – |
Medium-term notes and other fixed-term debt | 1,455 | 8 | 1,197 | 250 |
Lease liabilities | 264 | 72 | 143 | 49 |
Bank overdrafts | 104 | 104 | – | – |
Interest payments on borrowings | 88 | 21 | 45 | 22 |
Total non-derivative financial liabilities | 4,565 | 2,524 | 1,720 | 321 |
Annual Report 2024 dssmith.com 181
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
182
21. Financial instruments continued
(d) Risk identification and risk management continued
(iv) Liquidity risk continued
Contractual payments/(receipts) | ||||
1 year | 1–5 | More than | ||
| Total | or less | years | 5 years | |
At 30 April 2024 | £m | £m | £m | £m |
Derivative financial liabilities | ||||
Energy derivatives | 199 | 124 | 75 | – |
Forward foreign exchange contracts: | ||||
Payments | 73 | 69 | 4 | – |
Receipts | (72) | (68) | (4) | – |
Total derivative financial liabilities | 200 | 125 | 75 | – |
Contractual payments/(receipts) | ||||
1 year | 1–5 | More than | ||
| Total | or less | years | 5 years | |
At 30 April 2023 | £m | £m | £m | £m |
Derivative financial liabilities | ||||
Energy derivatives | 374 | 322 | 52 | – |
Forward foreign exchange contracts: | ||||
Payments | 277 | 277 | – | – |
Receipts | (271) | (271) | – | – |
Total derivative financial liabilities | 380 | 328 | 52 | – |
182
Notes to the consolidated financial statements continued
182
21. Financial instruments continued
(d) Risk identification and risk management continued
(iv) Liquidity risk continued
The following table is an analysis of the undiscounted contractual maturities of derivative financial liabilities. Where the payable and receivable
legs of these derivatives are denominated in foreign currencies, the contractual payments or receipts have been calculated based on exchange
rates prevailing at the respective year ends. The disclosure shows net cash flow amounts for derivatives that are net cash-settled and gross cash
inflow and outflow amounts for derivatives that have simultaneous gross cash settlement.
Where applicable, interest and foreign exchange rates prevailing at the reporting date are assumed to remain constant over the future
contractual maturities.
Contractual payments/(receipts)
At 30 April
2024
Total
£m
1 year
or less
£m
1–5
years
£m
More than
5 years
£m
Derivative financial liabilities
Energy derivatives
199
124
75
–
Forward foreign exchange contracts:
Payments
73
69
4
–
Receipts
(72)
(68)
(4)
–
Total derivative financial liabilities
200
125
75
–
Contractual payments/(receipts)
At 30 April 2023
Total
£m
1 year
or less
£m
1–5
years
£m
More than
5 years
£m
Derivative financial liabilities
Energy derivatives
374
322
52
–
Forward foreign exchange contracts:
Payments
277
277
–
–
Receipts
(271)
(271)
–
–
Total derivative financial liabilities
380
328
52
–
Annual Report 2024 dssmith.com 183
Property, plant and | ||||||||||
| equipment and | Employee benefits | Tax | ||||||||
| intangible assets | including pensions | losses | Other | Total | ||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At beginning of the year | (296) | (302) | 19 | 27 | 50 | 58 | (24) | (172) | (251) | (389) |
Credit/(charge) for the year: | ||||||||||
– continuing | (12) | 12 | (5) | (5) | 17 | (7) | 14 | 2 | 14 | 2 |
Recognised directly in equity | – | – | (1) | (4) | – | – | 41 | 149 | 40 | 145 |
Currency translation | 5 | (6) | (2) | 1 | 1 | (1) | 3 | (3) | 7 | (9) |
At end of the year | (303) | (296) | 11 | 19 | 68 | 50 | 34 | (24) | (190) | (251) |
2024 | 2023 | |
| £m | £m | |
Deferred tax liabilities | (213) | (262) |
Deferred tax assets | 23 | 11 |
Net deferred tax | (190) | (251) |
Annual Report 2024 dssmith.com 183
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
184
Carbon | ||||
| Restructuring | Credits | Other | Total | |
| £m | £m | £m | £m | |
At 1 May 2023 | 24 | 3 | 38 | 65 |
Acquisitions | – | – | 1 | 1 |
Charged to income | 7 | 34 | 6 | 47 |
Credited to income | – | – | (16) | (16) |
Utilised | (27) | – | – | (27) |
Currency translation | – | (1) | (1) | (2) |
At 30 April 2024 | 4 | 36 | 28 | 68 |
Non-current | – | – | 8 | 8 |
Current | 4 | 36 | 20 | 60 |
At 30 April 2024 | 4 | 36 | 28 | 68 |
Number of shares | ||||
2024 | 2023 | 2024 | 2023 | |
| millions | millions | £m | £m | |
Ordinary equity shares of 10 pence each: | ||||
Issued, allotted, called up and fully paid | 1,379 | 1,377 | 138 | 138 |
184
Notes to the consolidated financial statements continued
184
23. Provisions
Restructuring
£m
Carbon
Credits
£m
Other
£m
Total
£m
At 1 May 2023
24
3
38
65
Acquisitions
–
–
1
1
Charged to income
7
34
6
47
Credited to income
–
–
(16)
(16)
Utilised
(27)
–
–
(27)
Currency translation
–
(1)
(1)
(2)
At 30 April 2024
4
36
28
68
Non-current
–
–
8
8
Current
4
36
20
60
At 30 April 2024
4
36
28
68
The restructuring provision includes amounts associated with the site closures and restructuring costs.
The Group was one of a number of companies operating in the paper packaging industry that was subject to a decision (currently the subject of
appeal) by the Italian Competition Authority concerning anti-competitive behaviour in Italy (the ‘Decision’). Given its position as leniency
applicant, the Group was not fined. The Group is subject to a number of claims (both actual and threatened) for compensation in respect of the
Decision, which the Group intends to defend robustly. Given the early stage of these claims, the ongoing appeal process, the Group’s intention to
defend all claims robustly and having applied the tests in IAS 37, no provision has been recognised and instead this item has been disclosed as a
contingent liability.
Other provisions relate to environmental and restoration liabilities, indemnities and estimated liabilities arising from actual and potential
litigation and disputes. The Group has considered the impact of climate factors. Other than those relating to carbon emissions (refer to note 10
for further details) on its operations, no other climate-related provision has been recognised in the current financial year.
The timing of the utilisation of these provisions is uncertain, except where the associated costs are contractual, in which case the provision is
utilised over the time period specified in the contract.
24. Capital and reserves
Share capital
Number of shares
2024
millions
2023
millions
2024
£m
2023
£m
Ordinary equity shares of 10 pence each:
Issued, allotted, called up and fully paid
1,379
1,377
138
138
During the year ended 30 April 2024, 1,803,581 (2022/23: 1,527,919) ordinary shares were issued as a result of exercises of employee
share options.
The net movements in share capital and share premium are disclosed in the consolidated statement of changes in equity.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings
of the Company.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations
and the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.
Share premium
The share premium account represents the difference between the issue price and the nominal value of shares issued.
Annual Report 2024 dssmith.com 185
24. Capital and reserves continued
Total | UK | Overseas | ||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |
Balance sheet | £m | £m | £m | £m | £m | £m |
Present value of post-retirement obligations | (840) | (893) | (717) | (772) | (123) | (121) |
Government issued nominal bonds | 128 | 120 | 128 | 120 | – | – |
Government issued index-linked bonds | 468 | 403 | 468 | 403 | – | – |
Equities/multi-strategy | 27 | 65 | 12 | 52 | 15 | 13 |
Debt instruments | 368 | 230 | 344 | 205 | 24 | 25 |
Derivatives | (1) | 233 | (1) | 233 | – | – |
Real estate | 1 | 1 | – | – | 1 | 1 |
Cash and cash equivalents | 22 | 9 | 21 | 9 | 1 | – |
Other | 157 | 72 | 139 | 54 | 18 | 18 |
Debt (repurchase agreements) used to fund liability driven investments | (350) | (285) | (350) | (285) | – | – |
820 | 848 | 761 | 791 | 59 | 57 | |
Net post-retirement plan (deficit)/surplus | (20) | (45) | 44 | 19 | (64) | (64) |
Other employee benefit liabilities | (12) | (10) | – | – | (12) | (10) |
Total employee benefit (deficit)/surplus | (32) | (55) | 44 | 19 | (76) | (74) |
Related deferred tax asset/(liability) | 7 | 14 | (11) | (5) | 18 | 19 |
Net employee benefit (deficit)/surplus | (25) | (41) | 33 | 14 | (58) | (55) |
Annual Report 2024 dssmith.com 185
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
186
25. Employee benefits continued
186
Notes to the consolidated financial statements continued
186
25. Employee benefits continued
UK schemes
The DS Smith Group Pension Scheme (the ‘Group Scheme’) is a UK funded final salary defined benefit scheme providing pensions and lump sum
benefits to members and dependants. The Group Scheme closed to future accrual from 30 April 2011 with pensions calculated based on
pensionable salaries up to the point of closure (or the date of leaving the Group Scheme, if earlier). The Group Scheme has a normal retirement
age of 65 although some members are able to take their benefits earlier than this. Increases to pensions are affected by changes in the rate of
inflation for the majority of members.
The Group Scheme is governed by a Trustee Company (DS Smith Pension Trustees Limited), which is comprised of a Board of Trustee Directors
(the ‘Trustee Board’) represented by two independent members, two member appointees and two Group appointed members. The Trustee
Board is responsible for managing the operation, funding and investment strategy of the Group Scheme.
During the prior year in response to the market turmoil following the mini-budget, the Group made funding support of up to £100m available to
the main UK defined benefit pension scheme. This took the form initially of a cash advance in anticipation of potential margin calls and latterly a
liquidity facility. The cash advance was fully repaid within days of being made and as at 30 April 2024 a liquidity facility remained in place but
was undrawn.
UK legislation requires the Trustee Board to carry out actuarial funding valuations at least every three years and to target full funding over
an appropriate period of time, taking into account the current circumstances of the Group Scheme and the Group on a basis that prudently
reflects the risks to which the Group Scheme is exposed (the ‘Technical Provisions’ basis). The most recent funding valuation was carried out as
at 30 April 2022, following which a deficit recovery plan was agreed with the Trustee Board on 21 July 2023. The Group has agreed to maintain
the previous Schedule of Contributions. The contribution for the year ended 30 April 2024 under the plan was £21m. The recovery plan is
expected to be completed on or around September 2025.
The Trustee Board and the Group have in place a secondary Long-Term Funding Target (the ‘LTFT’), in addition to the statutory funding
requirement, the purpose of which is to achieve material additional security for the Group Scheme’s members. The objective of the LTFT is
for the Group Scheme to be funded by 30 April 2035 to a level that does not expect to rely on future contributions from the Group. The LTFT
comprises actuarial assumptions to assess whether any additional contributions above the deficit recovery contributions are required, and
an investment strategy approach to be followed for de-risking the scheme’s assets. In recent valuations, the secondary funding assessment has
concluded that the deficit recovery plan contributions are sufficient and no additional contributions from the Group under the LTFT are required.
In order to manage risk, the Group Scheme’s investment strategy is designed to closely align movements in the Group Scheme’s assets to
those of its liabilities, whilst maintaining an appropriate level of expected return. To help the Trustee Board to monitor, review and assess
investment matters, the Investment and Funding Committee (the ‘IFC’), which consists of representatives from the Trustee Board and the Group,
meets on a quarterly basis throughout the year.
The Group Scheme exposes the Group to risks, such as longevity risk, currency risk, inflation risk, interest rate risk and investment risk. As the
Group Scheme’s obligation is to provide lifetime pension benefits to members upon retirement, increases in life expectancy will result in an
increase in the Group Scheme’s liabilities. Other assumptions used to value the defined benefit obligation are also uncertain.
The Group Scheme deficit recovery plan agreed with the Trustee Board is considered a minimum funding requirement as described in IFRIC 14
IAS 19 – the Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
. The Group has an unconditional right
to a return of any surplus in a run-off scenario and has therefore recognised the IAS 19 accounting surplus on the Group’s balance sheet at
30 April 2024.
The assets in the Group Scheme (apart from the cash held) are nearly all Level 2 instruments under the fair value hierarchy. All Level 2 assets are
held in daily traded pooled funds for which daily bid prices are available, and the valuation process for these assets involves minimal judgement
and is agreed by reference to independent third parties. The Group Scheme does not hold any investment in DS Smith securities.
On 16 June 2023, the High Court issued a ruling in respect of Virgin Media vs NTL Pensions Trustees II Limited (and others) calling into question
the validity of changes made to benefits provided by contracted-out schemes between 1997 and 2016 where certain documentation under
Section 37 of the Pension Scheme Act 2003 wasn’t obtained. Virgin Media has appealed the decision and an appeal hearing . The Trustee Board
are aware of this matter and mindful of any potential impact on scheme liabilities. However, to date, given the legal and legislative uncertainty,
any impact on liabilities has not yet been quantified and no allowance has been made for it in scheme liabilities reported at 30 April 2024.
The largest defined contribution arrangement operated by the Group is in the UK. The UK defined contribution scheme is a trust-based
arrangement offering members a range of investments. All assets are held independently from the Group. The Group also operates a small
unfunded arrangement in the UK.
Annual Report 2024 dssmith.com 187
25. Employee benefits continued
2024 | 2023 | |
£m | £m | |
Schemes’ liabilities at beginning of the year | (903) | (1,199) |
Interest cost | (41) | (34) |
Service cost recognised in the consolidated income statement | (5) | (6) |
Member contributions | – | (1) |
Pension payments | 53 | 53 |
Unfunded benefits paid | 8 | 8 |
Actuarial gains – financial assumptions | 16 | 270 |
Actuarial gains/(losses) – experience | 13 | (17) |
Actuarial gains – demographic | 3 | 29 |
Currency translation | 4 | (6) |
Schemes’ liabilities at end of the year | (852) | (903) |
Annual Report 2024 dssmith.com 187
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
188
25. Employee benefits continued
2024 | 2023 | |
| £m | £m | |
Schemes’ assets at beginning of the year | 848 | 1,113 |
Employer contributions | 21 | 23 |
Member contributions | – | – |
Interest income | 40 | 33 |
Actuarial losses | (34) | (271) |
Pension payments | (53) | (53) |
Currency translation | (2) | 3 |
Schemes’ assets at end of the year | 820 | 848 |
Within 5 | 6 to 10 | 11 to 20 | 21 to 30 | 31 to 40 | 41 to 50 | Over 50 | |
| years | years | years | years | years | years | years | |
At 30 April 2024 | £m | £m | £m | £m | £m | £m | £m |
Projected benefit payments | 278 | 305 | 578 | 421 | 230 | 73 | 11 |
2024 | 2023 | |
Discount rate for scheme liabilities | 5.4% | 5.0% |
Inflation | 3.3% | 3.2% |
Pre-retirement pension increases | 2.9% | 2.8% |
Future pension increases for pre 30 April 2005 service | 2.9% | 2.8% |
Future pension increases for post 30 April 2005 service | 2.1% | 2.1% |
188
Notes to the consolidated financial statements continued
188
25. Employee benefits continued
Movements in the fair value of employee benefit plans’ assets recognised in the consolidated statement of
financial position
2024
£m
2023
£m
Schemes’ assets at beginning of the year
848
1,113
Employer contributions
21
23
Member contributions
–
–
Interest income
40
33
Actuarial losses
(34)
(271)
Pension payments
(53)
(53)
Currency translation
(2)
3
Schemes’ assets at end of the year
820
848
Durations and expected payment profile
The following table provides information on the distribution of the timing of expected benefit payments for the Group Scheme:
At 30 April
2024
Within 5
years
£m
6 to 10
years
£m
11 to 20
years
£m
21 to 30
years
£m
31 to 40
years
£m
41 to 50
years
£m
Over 50
years
£m
Projected benefit payments
278
305
578
421
230
73
11
The weighted average duration for the Group Scheme is 12 years.
The Group made agreed contributions of £21m to fund the Group Scheme in 2023/24 (2022/23: £20m). The Group’s current best estimate of
contributions expected to be made to the Group Scheme in the year ending 30 April 2025 will be approximately £21m. A charge over four
UK Packaging properties has been made as security for the unfunded arrangement in the UK, the liability for which totals £5m.
Significant actuarial assumptions
Principal actuarial assumptions for the Group Scheme are as follows:
2024
2023
Discount rate for scheme liabilities
5.4%
5.0%
Inflation
3.3%
3.2%
Pre-retirement pension increases
2.9%
2.8%
Future pension increases for pre 30 April 2005 service
2.9%
2.8%
Future pension increases for post 30 April 2005 service
2.1%
2.1%
For overseas arrangements, the weighted average actuarial assumptions are at an average discount rate of 1.8% (30 April 2023: 2.9%) and an
inflation rate of 2.0% (30 April 2023: 2.7%).
Annual Report 2024 dssmith.com 189
25. Employee benefits continued
2024 | 2023 | |||
Male | Female | Male | Female | |
Life expectancy at age 65 | ||||
Member currently aged 65 | 20.7 | 23.1 | 20.9 | 23.3 |
Member currently aged 45 | 21.7 | 24.4 | 21.9 | 24.7 |
Increase in | |
| pension liability | |
| £m | |
0.5% decrease in discount rate | (45) |
0.5% increase in inflation | (32) |
0.5% pre-retirement pension increases | (10) |
0.5% CPI 5% on pre 30 April 2005 service | (24) |
0.5% CPI 2.5% on post 30 April 2005 service | (5) |
1 year increase in life expectancy | (24) |
Total | ||
2024 | 2023 | |
| £m | £m | |
Post-retirement benefits current service cost | (5) | (6) |
Total service cost | (5) | (6) |
Net interest cost on net pension liability | (1) | (1) |
Pension Protection Fund levy | – | – |
Employment benefit net finance expense | (1) | (1) |
Total expense recognised in the consolidated income statement | (6) | (7) |
| Items recognised in other comprehensive income | ||
Remeasurement of defined benefit obligation | 32 | 282 |
Return on plan assets excluding amounts included in employment benefit net finance expense | (34) | (271) |
Total (losses)/gains recognised in other comprehensive income | (2) | 11 |
Annual Report 2024 dssmith.com 189
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
190
190
Notes to the consolidated financial statements continued
190
26. Share-based payment expense
The Group’s share-based payment arrangements are as follows:
(i) A Performance Share Plan (PSP). Awards under the PSP normally become exercisable after three years subject to remaining in
service and the satisfaction of performance conditions measured over the three financial years commencing with the year of grant.
Awards have been made under the PSP annually since 2008, originally based on the following performance measures, in the proportions
shown below:
i. the Group’s total shareholder return (TSR) compared to the constituents of the Industrial Goods and Services Supersector within the
FTSE 250;
ii. average adjusted earnings per share (EPS); and
iii. average adjusted return on average capital employed (ROACE).
Awards made in 2016 are subject to three performance measures:
i. 33.3% of each award based on a TSR component;
ii. 33.3% of each award based on average adjusted EPS; and
iii. 33.3% of each award based on average adjusted ROACE.
Awards made from 2017 to 2019 are subject to either two performance measures or three performance measures:
(a) Two performance measures:
i. 50% of each award based on average adjusted EPS; and
ii. 50% of each award based on average adjusted ROACE.
(b) Three performance measures:
i. 33.3% of each award based on a TSR component;
ii. 33.3% of each award based on average adjusted EPS; and
iii. 33.3% of each award based on average adjusted ROACE.
Awards made from 2020 are subject to either two performance measures or to three performance measures:
(a) Two performance measures:
i. 50% of each award based on adjusted EPS; and
ii. 50% of each award based on adjusted ROACE.
(b) Three performance measures:
i. 33.3% of each award based on a TSR component;
ii. 33.3% of each award based on adjusted EPS; and
iii. 33.3% of each award based on adjusted ROACE.
Some awards granted in 2016, 2017 and 2020 have vested but have not yet been fully exercised. The maximum term of the options granted
under the above scheme is the 10 year anniversary of the grant date.
(ii) A Deferred Share Bonus Plan (DSBP) is operated for Executive Directors and, from 2012/13, for senior executives. Shares awarded
under the DSBP will vest automatically if the Director or senior executive is still employed by the Group three years after the grant of
the award. The maximum term of the options granted under the above scheme is the 10 year anniversary of the grant date.
(iii) An international Sharesave Plan was introduced in January 2014 with further invitations being made in subsequent years. All employees of
the Group and participating subsidiaries were eligible to participate in this Plan or an HMRC approved UK Sharesave Plan. Options are granted
to participants who have contracted to save up to a maximum of £250 (or local currency equivalent) across all open invitations per month
over a period of three years, at a discount of up to 20% to the average closing mid-market price of a DS Smith Plc ordinary share on the three
dealing days prior to invitation. Options cannot normally be exercised until a minimum of three years has elapsed. In common with most plans
of this type there are no performance conditions applicable to options granted under this Plan. The provisions of this Plan are subject to
minor country specific variances. In France, the option price is discounted by up to 20% of the 20-day average up to the day before grant
date. A standard US Stock Purchase Plan was introduced in January 2014 with further invitations in subsequent years. US employees of the
Group are eligible to participate in this Plan. Options are granted to participants who have contracted to save up to the local currency
equivalent of £250 per month over a period of two years at a discount of up to 15% to the higher of the mid-market average price on the day
before invitation and the mid-market average on the day before grant of a DS Smith Plc ordinary share. Options cannot normally be exercised
until a minimum of two years has elapsed.
Annual Report 2024 dssmith.com 191
26. Share-based payment expense continued
Options outstanding | Options exercisable | |||||
Weighted | ||||||
| average | Weighted | Weighted | ||||
| remaining | average | average | ||||
| Number | Option price | contract life | exercise | Number | exercise | |
| of shares | range (p) | (years) | price (p) | exercisable | price (p) | |
Performance Share Plan | 10,885,792 | Nil | 0.7 | Nil | 428,199 | Nil |
Deferred Share Bonus Plan | 2,725,827 | Nil | 1.3 | Nil | 48,225 | Nil |
Sharesave Plan | 9,270,969 | 235.0-412.0 | 2.0 | 267.7 | 1,104,273 | 324.7 |
Performance | Deferred Share | Sharesave | ||||
| Share Plan | Bonus Plan | Plan | ||||
Weighted | Weighted | Weighted | ||||
| average | average | average | ||||
| exercise | Options | exercise | Options | exercise | Options | |
202 4 | price (p) | (‘000s) | price (p) | (‘000s) | price (p) | (‘000s) |
At 1 May 2023 | Nil | 10,154 | Nil | 2,132 | 321.6 | 6,278 |
Granted | Nil | 4,687 | Nil | 1,022 | 235.0 | 5,733 |
Exercised | Nil | (2,214) | Nil | (259) | 324.9 | (1,804) |
Lapsed | Nil | (1,741) | Nil | (169) | 318.2 | (936) |
At 30 April 2024 | Nil | 10,886 | Nil | 2,726 | 267.7 | 9,271 |
Exercisable at 30 April 2024 | Nil | 428 | Nil | 48 | 324.7 | 1,104 |
Performance | Deferred Share | Sharesave | ||||
| Share Plan | Bonus Plan | Plan | ||||
Weighted | Weighted | Weighted | ||||
| average | average | average | ||||
| exercise | Options | exercise | Options | exercise | Options | |
2023 | price (p) | (‘000s) | price (p) | (‘000s) | price (p) | (‘000s) |
At 1 May 2022 | Nil | 8,965 | Nil | 1,346 | 308.8 | 12,965 |
Granted | Nil | 4,235 | Nil | 1,219 | Nil | Nil |
Exercised | Nil | (4) | Nil | (319) | 285.0 | (4,214) |
Lapsed | Nil | (3,042) | Nil | (114) | 316.8 | (2,473) |
At 30 April 2023 | Nil | 10,154 | Nil | 2,132 | 321.6 | 6,278 |
Exercisable at 30 April 2023 | Nil | 73 | Nil | 308 | 266.0 | 1 |
Annual Report 2024 dssmith.com 191
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
192
27. Cash generated from operations
2024 | 2023 | |
Continuing operations | £m | £m |
Profit for the year | 385 | 492 |
Adjustments for: | ||
Amortisation of intangible assets; acquisitions and divestments | 97 | 128 |
Cash outflow for adjusting items | (11) | (14) |
Depreciation | 323 | 312 |
(Profit)/loss on sale of non-current assets | (9) | 7 |
Share of profit of equity accounted investments, net of tax | (2) | (2) |
Employment benefit net finance expense | 1 | 1 |
Share-based payments | (2) | 15 |
Finance income | (14) | (2) |
Finance costs | 116 | 75 |
Other non-cash items | (13) | 24 |
Income tax expense | 118 | 169 |
Change in provisions | 7 | 19 |
Change in employee benefits | (24) | (25) |
Cash generation before working capital movement | 972 | 1,199 |
Changes in: | ||
Inventories | 6 | 99 |
Trade and other receivables | 88 | 15 |
Trade and other payables | (511) | (235) |
Working capital movement | (417) | (121) |
Cash generated from continuing operations | 555 | 1,078 |
192
Notes to the consolidated financial statements continued
192
27. Cash generated from operations
Continuing operations
2024
£m
2023
£m
Profit for the year
385
492
Adjustments for:
Amortisation of intangible assets; acquisitions and divestments
97
128
Cash outflow for adjusting items
(11)
(14)
Depreciation
323
312
(Profit)/loss on sale of non-current assets
(9)
7
Share of profit of equity accounted investments, net of tax
(2)
(2)
Employment benefit net finance expense
1
1
Share-based payments
(2)
15
Finance income
(14)
(2)
Finance costs
116
75
Other non-cash items
(13)
24
Income tax expense
118
169
Change in provisions
7
19
Change in employee benefits
(24)
(25)
Cash generation before working capital movement
972
1,199
Changes in:
Inventories
6
99
Trade and other receivables
88
15
Trade and other payables
(511)
(235)
Working capital movement
(417)
(121)
Cash generated from continuing operations
555
1,078
Annual Report 2024 dssmith.com 193
28. Reconciliation of net cash flow to movement in net debt
2024 | 2023 | |
| £m | £m | |
Profit for the year | 385 | 492 |
Income tax expense | 118 | 169 |
Share of profit of equity accounted investments, net of tax | (2) | (2) |
Net financing costs | 103 | 74 |
Amortisation of intangible assets; acquisitions and divestments | 97 | 128 |
Adjusted operating profit | 701 | 861 |
Depreciation | 323 | 312 |
Adjusted EBITDA | 1,024 | 1,173 |
Working capital movement | (417) | (121) |
Change in provisions | 7 | 19 |
Change in employee benefits | (24) | (25) |
Other | (24) | 46 |
Cash generated from operations before adjusting cash items | 566 | 1,092 |
Capital expenditure | (547) | (545) |
Proceeds from sale of property, plant and equipment and other investments | 41 | 19 |
Tax paid | (169) | (136) |
Net interest paid | (66) | (76) |
Free cash flow | (175) | 354 |
Cash outflow for adjusting items | (11) | (14) |
Dividends paid | (247) | (289) |
Acquisition of subsidiary businesses, net of cash and cash equivalents | (113) | – |
Divestment of equity accounted investments | 5 | – |
Other | (2) | (2) |
Net cash flow | (543) | 49 |
Proceeds from issue of share capital | 7 | 4 |
Net movement on debt | (536) | 53 |
Foreign exchange, fair value and other non-cash movements (note 18) | (58) | (205) |
Net debt movement – continuing operations | (594) | (152) |
Opening net debt | (1,636) | (1,484) |
Closing net debt – reported basis | (2,230) | (1,636) |
Adjusted operating profit, adjusted EBITDA, free cash flow, and net debt are non-GAAP measures not defined by IFRS. Further detail on the use
of non-GAAP measures is included in note 32.
Annual Report 2024 dssmith.com 193
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
194
Year ended | Year ended | |
30 April 2024 | 30 April 2023 | |
| £m | £m | |
Revenue | – | – |
Operating costs | – | – |
Operating profit before amortisation and adjusting items | – | – |
Amortisation of intangible assets | – | – |
Profit on disposal before tax | – | – |
Other pre-tax adjusting items | – | 11 |
Net finance cost | – | – |
Profit before income tax | – | 11 |
Income tax credit/(expense) | – | – |
Profit for the year from discontinued operations | – | 11 |
194
Notes to the consolidated financial statements continued
194
30. Acquisitions and divestments
(a) 2023/24
On 29 March 2024, the Group completed the acquisition of Bosis doo, a Serbia-based packaging company, for £17m, net of cash and cash
equivalents.
In April 2024, the Group sold its previously fully written-down Ukrainian associate, RKTK, for £10m. £5m was received by 30 April 2024 and a
further £5m will be received in the next financial year. This resulted in a £10m gain on divestment in the year ended 30 April 2024.
2022/23
The crystallisation of the put option for the final 10% stake in Interstate Resources occurred during the financial year. Additional costs as a
result of the business meeting performance obligations were recognised together with the costs of hedging the dollar payment of the liability,
the latter of which will continue until the payment is made. These costs of £15m have been taken to adjusting items; refer to note 4 for further
details. Refer to note 17 for further details on the valuation of this final payment.
(b) Plastics division
On 27 February 2020, the sale of the Group’s Plastics division to Olympus Partners and its affiliate Liqui-Box Holdings was completed.
Plastics principally comprised flexible packaging and dispensing solutions, extruded and injection moulded products and foam products.
The Plastics segment has been classified as a discontinued operation as disclosed in note 1(a)(ii). The consolidated income statement
presents the Plastics segment as a discontinued operation with a single line amount of profit from discontinued operation, net of tax.
The consolidated statement of cash flows presents a single amount of net cash flow from discontinued operations.
Consolidated income statement – discontinued operations
Year ended
30 April
2024
£m
Year ended
30 April 2023
£m
Revenue
–
–
Operating costs
–
–
Operating profit before amortisation and adjusting items
–
–
Amortisation of intangible assets
–
–
Profit on disposal before tax
–
–
Other pre-tax adjusting items
–
11
Net finance cost
–
–
Profit before income tax
–
11
Income tax credit/(expense)
–
–
Profit for the year from discontinued operations
–
11
Settlement of certain costs and obligations arising from the disposal of the Plastics division in the year ended 30 April 2023 resulted in a gain in
adjusting items in profit from discontinued operations of £11m.
Annual Report 2024 dssmith.com 195
30. Acquisitions and divestments continued
2024 | 2023 | |
Profit from discontinued operations attributable to ordinary shareholders | – | £11m |
Weighted average number of ordinary shares | 1,374m | 1,376m |
Basic earnings per share | – | 0.8p |
2024 | 2023 | |
Profit from discontinued operations attributable to ordinary shareholders | – | £11m |
Weighted average number of ordinary shares | 1,374m | 1,376m |
Potentially dilutive shares issuable under share-based payment arrangement | 7m | 10m |
Weighted average number of ordinary shares (diluted) | 1,381m | 1,386m |
Diluted earnings per share | – | 0.8p |
Annual Report 2024 dssmith.com 195
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
196
2024 | 2023 | |
| £m | £m | |
Sales to equity accounted investees | 14 | 18 |
Purchases from equity accounted investees | 22 | 24 |
196
Notes to the consolidated financial statements continued
196
31. Related parties
Identity of related parties
In the normal course of business, the Group undertakes a wide variety of transactions between its subsidiaries and equity accounted investments.
The key management personnel of the Group comprise the Chair, Executive Directors and Non-Executive Directors. The compensation
of key management personnel can be found in the single total figure remuneration table in the Remuneration Committee report. Certain key
management personnel also participate in the Group’s share-based incentive programme (note 26). Included within share-based payments, and detailed
in the Remuneration Committee report, is a credit of £nil (2022/23: £3m charge) relating to key management personnel.
Transactions with pension trustees are disclosed in note 25.
Other related party transactions
2024
£m
2023
£m
Sales to equity accounted investees
14
18
Purchases from equity accounted investees
22
24
32. Non-GAAP performance measures
The Group presents reported and adjusted financial information in order to provide shareholders with additional information to further
understand the Group’s operational performance and financial position.
The principal adjustments to financial information are made to exclude the effects of adjusting items (refer to note 4) and amortisation.
Total reported financial information represents the Group’s overall performance and financial position, but can contain significant unusual
or non-operational items that may obscure understanding of the key trends and position. These unusual or non-operational items include
business disposals, restructuring and project costs, acquisition-related and integration costs, and impairments. Restructuring items treated as
adjusting items are major programmes usually spanning more than one year, with uneven impact on the profit and loss for those years affected.
Other adjusting items, such as business disposals, impairments, integration and acquisition costs, are by nature either highly variable or can also
have a similar distorting effect. Therefore, the Directors consider that presenting non-GAAP measures which exclude adjusting items enables
comparability of the recurring core business, complementing the IFRS measures presented.
Amortisation relates primarily to customer contracts and relationships arising from or as a result of business combinations. Significant costs
are incurred in maintaining, developing and increasing the value of such intangibles, costs which are charged in determining adjusted profit. Exclusion of
amortisation remedies this double count as well as, in the case of customer contracts and relationships, providing comparability over the accounting
treatment of customer contracts and relationships arising from the acquisition of businesses and those generated internally.
The Group’s key non-GAAP measures are used both internally and externally to evaluate business performance against the Group’s KPIs
and banking and debt covenants, as a key constituent of the Group’s planning process, as well as comprising targets against which compensation
is determined.
Certain non-GAAP performance measures can be, and are, reconciled to information presented in the financial statements. Other financial
key performance measures are calculated using information which is not presented in the financial statements and is based on, for example,
average 12-month balances or average exchange rates.
Unlike other of the Group’s non-GAAP performance measures, net debt and net debt/EBITDA remain calculated under the previous standard, IAS
17
Leases
, because they are calculated in accordance with the Group’s banking covenant requirements which remain on the previous GAAP basis.
As such, for net debt and net debt/EBITDA, the reconciliation for the non-GAAP performance measure below has been expanded to show the
calculation to return the non-GAAP performance measure to the IAS 17 basis.
Annual Report 2024 dssmith.com 197
32. Non-GAAP performance measures continued
2024 | 2023 | |
| £m | £m | |
Adjusted operating profit | 701 | 861 |
Revenue | 6,822 | 8,221 |
Return on sales | 10.3% | 10.5% |
2024 | 2023 | |
| £m | £m | |
Capital employed at 30 April | 6,636 | 6,203 |
Currency inter-month and acquisition/divestment movements | (79) | (194) |
Last 12 months’ average capital employed | 6,557 | 6,009 |
Last 12 months’ adjusted operating profit | 701 | 861 |
Adjusted return on average capital employed | 10.7% | 14.3% |
Annual Report 2024 dssmith.com 197
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
198
32. Non-GAAP performance measures continued
2024 | 2023 | |
| £m | £m | |
Net debt – reported basis (see note 18) | 2,230 | 1,636 |
IFRS 16 lease liabilities (see note 18) | (236) | (220) |
Adjustment to average rate | 7 | (17) |
Net debt – adjusted basis | 2,001 | 1,399 |
Adjusted EBITDA – last 12 months’ reported basis (continuing operations) | 1,024 | 1,173 |
Adjust to IAS 17 basis | (85) | (85) |
Acquisition and divestment effects | 3 | – |
Adjusted EBITDA – banking covenant basis | 942 | 1,088 |
Net debt/EBITDA | 2.1x | 1.3x |
2024 | 2023 | |
| £m | £m | |
Growth capital expenditure | 186 | 275 |
Non-growth capital expenditure | 361 | 270 |
Total capital expenditure (note 28) | 547 | 545 |
Free cash flow (note 28) | (175) | 354 |
Tax paid (note 28) | 169 | 136 |
Net interest paid (note 28) | 66 | 76 |
Growth capital expenditure | 186 | 275 |
Change in employee benefits (note 28) | 24 | 25 |
Adjusted free cash flow | 270 | 866 |
Adjusted operating profit | 701 | 861 |
Cash conversion | 39% | 101% |
198
Notes to the consolidated financial statements continued
198
32. Non-GAAP performance measures continued
Net debt and net debt/EBITDA
Net debt is the measure by which the Group assesses its level of overall indebtedness within its financial position. The components of net debt
as they reconcile to the primary financial statements and notes to the accounts are disclosed in note 18.
Net debt/EBITDA is the ratio of net debt to adjusted EBITDA, calculated in accordance with the Group’s banking covenant requirements.
Net debt/EBITDA is considered a key measure of balance sheet strength and financial stability by which the Group assesses its financial position.
The Group’s banking covenant requirements currently exclude IFRS 16 liabilities from the definition of net debt, as well as requiring that EBITDA
is calculated before the effects of IFRS 16, so an adjustment to the previous IAS 17 basis is made in the calculation.
In calculating the ratio, net debt is stated at average rates as opposed to closing rates, and adjusted EBITDA is adjusted operating profit before
depreciation from the previous 12 month period adjusted for the full year effect of acquisitions and divestments in the period, and to adjust to an
IAS 17 basis.
2024
£m
2023
£m
Net debt – reported basis (see note 18)
2,230
1,636
IFRS 16 lease liabilities (see note 18)
(236)
(220)
Adjustment to average rate
7
(17)
Net debt – adjusted basis
2,001
1,399
Adjusted EBITDA – last 12 months’ reported basis (continuing operations)
1,024
1,173
Adjust to IAS 17 basis
(85)
(85)
Acquisition and divestment effects
3
–
Adjusted EBITDA – banking covenant basis
942
1,088
Net debt/EBITDA
2.1x
1.3x
Free cash flow
Free cash flow is the net movement on debt before cash outflow for adjusting items, dividends paid, acquisition and divestment of subsidiary
businesses (including borrowings acquired), and proceeds from issue of share capital.
A reconciliation from Adjusted EBITDA to free cash flow is set out in note 28.
Cash conversion
Cash conversion is free cash flow, as defined above, adjusted to exclude tax, net interest, growth capital expenditure and pension payments as a
percentage of adjusted operating profit and can be derived directly from note 28, other than growth capital expenditure, which is capital
expenditure necessary for the development or expansion of the business as follows:
2024
£m
2023
£m
Growth capital expenditure
186
275
Non-growth capital expenditure
361
270
Total capital expenditure (note 28)
547
545
Free cash flow (note 28)
(175)
354
Tax paid (note 28)
169
136
Net interest paid (note 28)
66
76
Growth capital expenditure
186
275
Change in employee benefits (note 28)
24
25
Adjusted free cash flow
270
866
Adjusted operating profit
701
861
Cash conversion
39%
101%
Annual Report 2024 dssmith.com 199
32. Non-GAAP performance measures continued
2024 | 2023 | |
| £m | £m | |
Inventories (note 15) | 591 | 619 |
Trade and other receivables | 1,099 | 1,211 |
Trade and other payables | (1,696) | (2,105) |
Inter-month movements and exclusion of capital and acquisition and divestment-related items | 80 | 36 |
Last 12 months’ average working capital | 74 | (239) |
Last 12 months’ revenue | 6,822 | 8,221 |
Average working capital to sales | 1.1% | (2.9%) |
Adjusted | ||
| operating | ||
| Revenue | profit | |
| £m | £m | |
Reported basis – comparative year ended 30 April 2023 | 8,221 | 861 |
Currency effects | (84) | (11) |
Constant currency basis – comparative year ended 30 April 2023 | 8,137 | 850 |
Organic growth | (1,315) | (149) |
Reported basis – year ended 30 April 2024 | 6,822 | 701 |
Return on sales – comparative year ended April 2023 – constant currency basis | 10.4% | |
£m | ||
Reported profit before tax comparative year ended 30 April 2023 | 661 | |
Currency effects | (10) | |
Constant currency profit before tax comparative year ended 30 April 2023 | 651 | |
Basic earnings per share from continuing operations for the comparative year ended 30 April 2023 – constant currency basis | £m | |
Profit from continuing operations | 492 | |
Currency effects | (9) | |
483 | ||
Weighted average number of ordinary shares | 1,376m | |
Basic earnings per share – constant currency basis | 35.1p |
Annual Report 2024 dssmith.com 199
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
200
32. Non-GAAP performance measures continued
Constant currency and organic growth continued
Adjusted earnings per share for the comparative year ended 30 April 2023 – constant currency basis | £m |
Adjusted earnings | 592 |
Currency effects | (10) |
582 | |
Weighted average number of ordinary shares | 1,376m |
Adjusted earnings per share – constant currency basis | 42.3p |
Dividend cover
Dividend cover is adjusted earnings per share divided by the total dividend for the year.
2024 | 2023 | |
Adjusted earnings per share | 33.1p | 43.0p |
Total dividend | 18.0p | 18.0p |
Dividend cover | 1.8x | 2.4x |
200
Notes to the consolidated financial statements continued
200
32. Non-GAAP performance measures continued
Constant currency and organic growth continued
Adjusted earnings per share for the comparative year ended 30 April 2023 – constant currency basis
£m
Adjusted earnings
592
Currency effects
(10)
582
Weighted average number of ordinary shares
1,376m
Adjusted earnings per share – constant currency basis
42.3p
Dividend cover
Dividend cover is adjusted earnings per share divided by the total dividend for the year.
2024
2023
Adjusted earnings per share
33.1p
43.0p
Total dividend
18.0p
18.0p
Dividend cover
1.8x
2.4x
Annual Report 2024 dssmith.com 201
Fully owned subsidiaries | Notes | Notes | Notes | ||
Argentina | Finland | DS Smith Paper Deutschland GmbH | DE7 | ||
Total Marketing Support Argentina SA | AR1 | DS Smith Packaging Baltic Holding Oy | FI1 | DS Smith Recycling Deutschland GmbH | DE4 |
Australia | DS Smith Packaging Finland Oy | FI1 | DS Smith Stange B.V. & Co. KG | DE8 | |
Total Marketing Support Pacific Pty Ltd | AU1 | DS Smith Packaging Pakkausjaloste Oy | FI2 | DS Smith Transport Services GmbH | DE7 |
Austria | Eastpac Oy | FI1 | Greece | ||
DS Smith Austria Holdings GmbH | AT1 | France | DS Smith Cretan Hellas S.A. | GR1 | |
DS Smith Packaging Austria | AT1 | DS Smith France | FR1 | DS Smith Hellas S.A. | GR2 |
Beteiligungsverwaltungs GmbH | DS Smith Hêtre Blanc | FR2 | Guatemala | ||
DS Smith Packaging Austria GmbH | AT2 | DS Smith Packaging Ales | FR3 | TMS Global Guatemala, Sociedad Anonima | GT1 |
DS Smith Packaging South East GmbH | AT1 | DS Smith Packaging Anjou | FR2 | Honduras | |
Belgium | DS Smith Packaging Atlantique | FR2 | Total Marketing Support Honduras, S.A. | HN1 | |
DS Smith Packaging Belgium N.V. | BE1 | DS Smith Packaging Bretagne | FR4 | Hungary | |
DS Smith Packaging Marketing N.V. | BE2 | DS Smith Packaging C.E.R.A. | FR5 | DS Smith Packaging Hungary Kft. | HU2 |
Bolivia | DS Smith Packaging Consumer | FR2 | Merpas Hungary Kft. | HU1 | |
TotalMarketing Support Bolivia S.A. | BO1 | DS Smith Packaging Contoire-Hamel | FR6 | India | |
Bosnia & Herzegovina | DS Smith Packaging Display and Services | FR2 | The Less Packaging Company India | IN1 | |
DS Smith Packaging BH d.o.o. Sarajevo | BA1 | DS Smith Packaging DPF | FR7 | Private Limited | |
DS Smith Recycling Bosnia d.o.o. | BA2 | DS Smith Packaging Durtal | FR8 | Total Marketing Support India Private | IN2 |
Brazil | DS Smith Packaging Fegersheim | FR9 | Limited | ||
Total Marketing Support Brazil Ltda | BR1 | DS Smith Packaging France | FR2 | Indonesia | |
Bulgaria | DS Smith Packaging Kaypac | FR10 | PT Total Marketing Support Indonesia | ID1 | |
DS Smith Bulgaria S.A. | c, BG1 | DS Smith Packaging Larousse | FR11 | Ireland | |
Canada | DS Smith Packaging Mehun-CIM | FR12 | DS Smith Ireland Treasury Designated | IR1 | |
TMS Canada 360 Inc. | CA1 | DS Smith Packaging Nord Est | FR1 | Activity Company | |
Chile | DS Smith Packaging Premium | FR13 | DS Smith Recycling Ireland Limited | IR2 | |
Total Marketing Support Chile SpA | CL1 | DS Smith Packaging Savoie | FR14 | Italy | |
China | DS Smith Packaging Seine Normandie | FR15 | DS Smith Holding Italia SpA | IT3 | |
DS Smith Shanghai Trading Ltd | CN1 | DS Smith Packaging Sud Est | FR16 | DS Smith Packaging Italia SpA | IT3 |
TMS Shanghai Trading Ltd | CN2 | DS Smith Packaging Sud Ouest | FR13 | DS Smith Paper Italia Srl | IT3 |
Colombia | DS Smith Packaging Systems | FR17 | DS Smith Recycling Italia Srl | IT2 | |
Total Marketing Support Colombia S A S | CO1 | DS Smith Packaging Velin | FR18 | Toscana Ondulati SpA | IT1 |
Croatia | DS Smith Packaging Vervins | FR2 | Japan | ||
Bilokalnik-IPA d.d. | HR1 | DS Smith Paper Coullons | FR19 | Total Marketing Support Japan Ltd | JP1 |
DS Smith Belišće Croatia d.o.o. | HR2 | DS Smith Paper Kaysersberg | FR20 | Kazakhstan | |
DS Smith Unijapapir Croatia d.o.o. | HR3 | DS Smith Paper Rouen | FR15 | Total Marketing Support Kazakhstan L.L.P. | KZ1 |
Czech Republic | DS Smith Recycling France | FR21 | Latvia | ||
DS Smith Packaging Czech Republic s.r.o. | CZ1 | Rowlandson France | FR1 | SIA DS Smith Packaging Latvia | LV1 |
Denmark | Tecnicarton France | FR22 | Lithuania | ||
DS Smith Packaging Denmark A/S | DK1 | Germany | UAB DS Smith Packaging Lithuania | LT1 | |
Ecuador | Bretschneider Verpackungen GmbH | h, DE2 | Luxembourg | ||
Total Marketing Support Ecuador TM-EC | EC1 | Delta Packaging Services GmbH | DE6 | DS Smith (Luxembourg) S.à r.l. | LU1 |
C.L. | DS Smith Packaging Arenshausen | DE3 | DS Smith Perch Luxembourg S.à r.l. | LU1 | |
Egypt | Mivepa GmbH | DS Smith Re S.A. | LU1 | ||
TMS Egypt LLC | EG1 | DS Smith Packaging Arnstadt GmbH | DE1 | Malaysia | |
Estonia | DS Smith Packaging Beteiligungen GmbH | DE8 | Total Marketing Support (360) Malaysia | MY1 | |
DS Smith Packaging Estonia AS | EE1 | DS Smith Packaging Deutschland Stiftung | DE5 | Sdn. Bhd. | |
DS Smith Packaging Deutschland Stiftung | DE8 | ||||
& Co KG |
Annual Report 2024 dssmith.com 201
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
202
33. DS Smith Group companies continued
Fully owned subsidiaries continued | Notes | Notes | Notes | ||||||||
Mexico | Romania | David S. Smith Nominees Limited | PSQ | ||||||||
Total Marketing Support 360 Mexico S.A de | MX1 | DS Smith Packaging Ghimbav S.R.L. | d, RO1 | D.W. Plastics (UK) Limited (00495461) 1 | PSQ | ||||||
C.V | DS Smith Packaging Romania S.R.L. | RO3 | DS Smith (UK) Limited (00501594) 1 | PSQ | |||||||
Morocco | DS Smith Paper Zarnesti. S.R.L. | b, RO2 | DS Smith America (UK) LLP (0C428961) 1 | PSQ | |||||||
Tecnicartón Tánger S.a.r.l. AU | MA1 | Serbia | DS Smith Business Services Limited | PSQ | |||||||
Netherlands | DS Smith Packaging Offset d.o.o. Valjevo | RS3 | The DS Smith Charitable Foundation | PSQ | |||||||
David S. Smith (Netherlands) B.V. | NL2 | DS Smith Inos Papir Servis d.o.o. | RS1 | DS Smith Corrugated Packaging Limited | PSQ | ||||||
DS Smith B.V. | PSQ | DS Smith Packaging d.o.o. Kruševac | RS2 | DS Smith | Display Holding | Limited | (00382678) | PSQ | |||
DS Smith Baars B.V. | DE8 | Papir Servis DP d.o.o. Kruševac | RS2 | DS Smith Dormant Five Limited | PSQ | ||||||
DS Smith De Hoop Holding B.V. | NL2 | Slovakia | DS Smith Euro Finance Limited (05987239) | PSQ | |||||||
DS Smith Finance B.V. | NL2 | DS Smith Packaging Slovakia s.r.o. | SK1 | DS Smith Europe Limited | PSQ | ||||||
DS Smith Hellas Netherlands B.V. | NL2 | DS Smith Turpak Obaly a.s. | e, SK2 | DS Smith Finco Limited (06740135) | a, PSQ | ||||||
DS Smith Italy B.V. | PSQ | Slovenia | DS Smith Haddox Limited | PSQ | |||||||
DS Smith Packaging Almelo B.V. | NL1 | DS Smith Slovenija d.o.o. | SI1 | DS Smith Holdings Limited (06739623) | a, PSQ | ||||||
DS Smith Packaging Barneveld B.V. | NL3 | South Africa | DS Smith International Limited | (02636539) | PSQ | ||||||
DS Smith Packaging Belita B.V. | NL2 | TMS 360 SA (PTY) Ltd | ZA1 | DS Smith Italy Limited (04424098) | 1 | PSQ | |||||
DS Smith Packaging Holding B.V. | NL2 | Spain | DS Smith Logistics Limited | PSQ | |||||||
DS Smith Packaging International B.V. | NL2 | Bertako S.L.U. | ES1 | DS Smith Packaging Limited | PSQ | ||||||
DS Smith Packaging Netherlands B.V. | NL2 | DS Smith Andorra S.A. | ES3 | DS Smith Paper Limited | PSQ | ||||||
DS Smith Packaging Tilburg B.V. | NL5 | DS Smith Business Services S.L.U. | ES3 | DS Smith Pension Trustees Limited | PSQ | ||||||
DS Smith Recycling Benelux B.V. | NL2 | DS Smith Packaging Cartogal S.A. | ES9 | DS Smith Perch Limited (08150751) | PSQ | ||||||
DS Smith Recycling Holding B.V. | NL2 | DS Smith Packaging Dicesa S.A. | g, ES5 | DS Smith Recycling UK Limited | PSQ | ||||||
DS Smith Salm B.V. | NL2 | DS Smith Packaging Galicia S.A. | ES10 | DS Smith Roma Limited | PSQ | ||||||
DS Smith Toppositie B.V. | NL2 | DS Smith Packaging Holding S.L.U. | ES3 | DS Smith Sudbrook Limited (00518152) | 1 | PSQ | |||||
Nicaragua | DS Smith Packaging Lucena, S.L. | ES7 | DS Smith Supplementary Life Cover | PSQ | |||||||
Total Marketing Support Nicaragua, | NI1 | DS Smith Packaging Madrid S.L. | ES3 | Scheme Limited | |||||||
Sociedad Anonima | DS Smith Packaging Penedes S.A.U. | ES5 | DS | Smith | Ukraine | Limited (06352659) | PSQ | ||||
Nigeria | DS Smith Recycling Spain S.A. | ES2 | DSS Eastern Europe Limited | PSQ | |||||||
Total Marketing Support 360 Nigeria | NG1 | DS Smith Spain, S.A. | ES4 | DSS Poznan Limited | PSQ | ||||||
Limited | Tecnicartón, S.L. | ES8 | DSSH No. 1 Limited (02873032) | PSQ | |||||||
North Macedonia | Sweden | Grovehurst Energy Limited (02197516) | PSQ | ||||||||
DS Smith AD Skopje | f, MK1 | DS Smith Packaging Sweden AB | SE1 | JDS Holding | PSQ | ||||||
Pakistan | DS Smith Packaging Sweden Holding AB | SE1 | Miljoint Limited | PSQ | |||||||
TMS Pakistan (Private) Limited | PK1 | Switzerland | Multigraphics Holdings Limited | PSQ | |||||||
Philippines | DS Smith Packaging Switzerland AG | CH1 | Multigraphics Limited | PSQ | |||||||
Total Marketing Support Philippines, Inc | PH1 | Turkey | Multigraphics Services Limited | PSQ | |||||||
Poland | DS Smith Ambalaj A.Ş. | TR1 | Priory Packaging Limited | PSQ | |||||||
DS Smith Packaging sp. Z o.o. | PL1 | Total Marketing Support Turkey Baskı | Reed & Smith Limited | PSQ | |||||||
DS Smith Polska sp. Z o.o. | PL1 | Yönetimi Hizmetleri A.Ş. | TR2 | (00328480) 1 | St. Regis International Limited | PSQ | |||||
Portugal | Ukraine | St. Regis Kemsley Limited | PSQ | ||||||||
DS Smith Displays P&I, S.A. | PT2 | Total Marketing Support Ukraine | UA1 | St. Regis Paper Company Limited | PSQ | ||||||
DS Smith Energia Viana, S.A. | PT6 | United Arab Emirates | The Brand Compliance Company Limited | PSQ | |||||||
DS Smith Packaging Portugal, S.A. | PT3 | Total Marketing Support Middle East | The Less Packaging Company Limited | PSQ | |||||||
DS Smith Paper Viana, S.A. | PT6 | DMCC | AE1 | (07023121) | |||||||
DS Smith Portugal, SGPS, S.A. | PT6 | UK | TheBannerPeople.Com Limited | PSQ | |||||||
DS Smith Recycling Portugal, S.A. | PT7 | Abbey Corrugated Limited | PSQ | TMS Global UK Limited | PSQ | ||||||
Iberian Forest Fund – Fundo Especial de | PT8 | Ashton Corrugated | PSQ | Total Marketing Support Global Limited | PSQ | ||||||
Investimento Imobiliario Florestal | Ashton Corrugated (Southern) Limited | PSQ | Total Marketing Support Limited | PSQ | |||||||
Fechado | Avonbank Paper Disposal Limited | PSQ | Treforest Mill plc | PSQ | |||||||
Nova DS Smith Embalagem, S.A. | PT5 | Biber Paper Converting Limited | PSQ | United Shopper Marketing Limited | PSQ | ||||||
Tecnicartón Portugal Unipessoal Lda | PT1 | Calara Holding Limited | PSQ | W. Rowlandson & Company Limited | (00133121) 1 | PSQ | |||||
Conew Limited | PSQ | Waddington & Duval Limited | PSQ | ||||||||
Corrugated Products Limited | PSQ | ||||||||||
202
Notes to the consolidated financial statements continued
202
33. DS Smith Group companies continued
Fully owned subsidiaries continued
Notes
Mexico
Total Marketing Support 360 Mexico S.A de
C.V
MX1
Morocco
Tecnicartón Tánger S.a.r.l. AU
MA1
Netherlands
David S. Smith (Netherlands) B.V.
NL2
DS Smith B.V.
PSQ
DS Smith Baars B.V.
DE8
DS Smith De Hoop Holding B.V.
NL2
DS Smith Finance B.V.
NL2
DS Smith Hellas Netherlands B.V.
NL2
DS Smith Italy B.V.
PSQ
DS Smith Packaging Almelo B.V.
NL1
DS Smith Packaging Barneveld B.V.
NL3
DS Smith Packaging Belita B.V.
NL2
DS Smith Packaging Holding B.V.
NL2
DS Smith Packaging International B.V.
NL2
DS Smith Packaging Netherlands B.V.
NL2
DS Smith Packaging Tilburg B.V.
NL5
DS Smith Recycling Benelux B.V.
NL2
DS Smith Recycling Holding B.V.
NL2
DS Smith Salm B.V.
NL2
DS Smith Toppositie B.V.
NL2
Nicaragua
Total Marketing Support Nicaragua,
Sociedad Anonima
NI1
Nigeria
Total Marketing Support 360 Nigeria
Limited
NG1
North Macedonia
DS Smith AD Skopje
f, MK1
Pakistan
TMS Pakistan (Private) Limited
PK1
Philippines
Total Marketing Support Philippines, Inc
PH1
Poland
DS Smith Packaging sp. Z o.o.
PL1
DS Smith Polska sp. Z o.o.
PL1
Portugal
DS Smith Displays P&I, S.A.
PT2
DS Smith Energia Viana, S.A.
PT6
DS Smith Packaging Portugal, S.A.
PT3
DS Smith Paper Viana, S.A.
PT6
DS Smith Portugal, SGPS, S.A.
PT6
DS Smith Recycling Portugal, S.A.
PT7
Iberian Forest Fund – Fundo Especial de
Investimento Imobiliario Florestal
Fechado
PT8
Nova DS Smith Embalagem, S.A.
PT5
Tecnicartón Portugal Unipessoal Lda
PT1
Notes
Romania
DS Smith Packaging Ghimbav S.R.L.
d, RO1
DS Smith Packaging Romania S.R.L.
RO3
DS Smith Paper Zarnesti. S.R.L.
b, RO2
Serbia
DS Smith Packaging Offset d.o.o. Valjevo
RS3
DS Smith Inos Papir Servis d.o.o.
RS1
DS Smith Packaging d.o.o. Kruševac
RS2
Papir Servis DP d.o.o. Kruševac
RS2
Slovakia
DS Smith Packaging Slovakia s.r.o.
SK1
DS Smith Turpak Obaly a.s.
e, SK2
Slovenia
DS Smith Slovenija d.o.o.
SI1
South Africa
TMS 360 SA (PTY) Ltd
ZA1
Spain
Bertako S.L.U.
ES1
DS Smith Andorra S.A.
ES3
DS Smith Business Services S.L.U.
ES3
DS Smith Packaging Cartogal S.A.
ES9
DS Smith Packaging Dicesa S.A.
g, ES5
DS Smith Packaging Galicia S.A.
ES10
DS Smith Packaging Holding S.L.U.
ES3
DS Smith Packaging Lucena, S.L.
ES7
DS Smith Packaging Madrid S.L.
ES3
DS Smith Packaging Penedes S.A.U.
ES5
DS Smith Recycling Spain S.A.
ES2
DS Smith Spain, S.A.
ES4
Tecnicartón, S.L.
ES8
Sweden
DS Smith Packaging Sweden AB
SE1
DS Smith Packaging Sweden Holding AB
SE1
Switzerland
DS Smith Packaging Switzerland AG
CH1
Turkey
DS Smith Ambalaj A.Ş.
TR1
Total Marketing Support Turkey Baskı
Yönetimi Hizmetleri A.Ş.
TR2
Ukraine
Total Marketing Support Ukraine
UA1
United Arab Emirates
Total Marketing Support Middle East
DMCC
AE1
UK
Abbey Corrugated Limited
PSQ
Ashton Corrugated
PSQ
Ashton Corrugated (Southern) Limited
PSQ
Avonbank Paper Disposal Limited
PSQ
Biber Paper Converting Limited
PSQ
Calara Holding Limited
PSQ
Conew Limited
PSQ
Corrugated Products Limited
PSQ
Notes
David S. Smith Nominees Limited
PSQ
D.W. Plastics (UK) Limited
(00495461)
1
PSQ
DS Smith (UK) Limited (00501594)
1
PSQ
DS Smith America (UK) LLP
(0C428961)
1
PSQ
DS Smith Business Services Limited
PSQ
The DS Smith Charitable Foundation
PSQ
DS Smith Corrugated Packaging Limited
PSQ
DS Smith Display Holding Limited
(00382678)
1
PSQ
DS Smith Dormant Five Limited
PSQ
DS Smith Euro Finance Limited (05987239)
1
PSQ
DS Smith Europe Limited
PSQ
DS Smith Finco Limited
(06740135)
1
a, PSQ
DS Smith Haddox Limited
PSQ
DS Smith Holdings Limited
(06739623)
1
a, PSQ
DS Smith International Limited
(02636539)
1
PSQ
DS Smith Italy Limited (04424098)
1
PSQ
DS Smith Logistics Limited
PSQ
DS Smith Packaging Limited
PSQ
DS Smith Paper Limited
PSQ
DS Smith Pension Trustees Limited
PSQ
DS Smith Perch Limited
(08150751)
1
PSQ
DS Smith Recycling UK Limited
PSQ
DS Smith Roma Limited
PSQ
DS Smith Sudbrook Limited
(00518152)
1
PSQ
DS Smith Supplementary Life Cover
Scheme Limited
PSQ
DS Smith Ukraine Limited
(06352659)
1
PSQ
DSS Eastern Europe Limited
PSQ
DSS Poznan Limited
PSQ
DSSH No. 1 Limited
(02873032)
1
PSQ
Grovehurst Energy Limited
(02197516)
1
PSQ
JDS Holding
PSQ
Miljoint Limited
PSQ
Multigraphics Holdings Limited
PSQ
Multigraphics Limited
PSQ
Multigraphics Services Limited
PSQ
Priory Packaging Limited
PSQ
Reed & Smith Limited
PSQ
St. Regis International Limited (00328480)
1
PSQ
St. Regis Kemsley Limited
PSQ
St. Regis Paper Company Limited
PSQ
The Brand Compliance Company Limited
PSQ
The Less Packaging Company Limited
(07023121)
1
PSQ
TheBannerPeople.Com Limited
PSQ
TMS Global UK Limited
PSQ
Total Marketing Support Global Limited
PSQ
Total Marketing Support Limited
PSQ
Treforest Mill plc
PSQ
United Shopper Marketing Limited
PSQ
W. Rowlandson & Company Limited (00133121)
1
PSQ
Waddington & Duval Limited
PSQ
Annual Report 2024 dssmith.com 203
33. DS Smith Group companies continued
Fully owned subsidiaries continued | Notes | Associate entities | Notes | Ownership interest at 30 April 2024 | |
USA | Netherlands | a | Directly held by DS Smith Plc | ||
Carolina Graphic Services, LLC | US1 | Stort Doonweg B.V. | i, NL4 | b | 99.927% ownership interest |
Cedarpak, LLC | US3 | Portugal | c | 99.699% ownership interest | |
CEMT Holdings Group, LLC | US4 | Companhia Termica Do Serrado A.c.e. | l, PT4 | d | 99.285% ownership interest |
Corrugated Container Corporation | US13 | Spain | e | 98.89% ownership interest | |
Corrugated Container Corporation of | US14 | Cartonajes Cantabria, S.L. | k, ES6 | f | 81.39% ownership interest |
Shenandoah Valley | Cartonajes Santander, S.L. | k, ES6 | g | 80% ownership interest | |
Corrugated Container Corporation of | US15 | Euskocarton, S.L. | k, ES6 | h | 51% ownership interest |
Tennessee | Industria Cartonera Asturiana, S.A. | k,ES11 | i | 50% ownership interest | |
Corrugated Supply, LLC | US4 | USA | j | 40% ownership interest | |
Corrugated Supply, L.P. | US4 | Philcorr LLC | j, US2 | k | 39.58% ownership interest |
DS Smith Creative Solutions Inc. | US16 | PhilCorr Vineland LLC | j, US2 | l | 30% ownership interest |
DS Smith Holdings, Inc. | US3 | ||||
DS Smith Management Resources, Inc. | US3 | ||||
DS Smith North America Recycling, LLC | US3 | ||||
DS Smith North America Shared | US3 | ||||
Services, LLC | |||||
DS Smith Packaging-Holly Springs, LLC | US18 | ||||
DS Smith Packaging-Lebanon, LLC | US17 | ||||
DS Smith Packaging-Stream, LLC | US3 | ||||
Evergreen Community Power, LLC | US3 | ||||
Interstate Container Columbia, LLC | US6 | ||||
Interstate Container New Castle, LLC | US7 | ||||
Interstate Container Reading, LLC | US8 | ||||
Interstate Corrpack, LLC | US5 | ||||
Interstate Holding, Inc. | US3 | ||||
Interstate Mechanical Packaging, LLC | US6 | ||||
Interstate Paper, LLC | US9 | ||||
Interstate Realty Hialeah, LLC | US3 | ||||
Interstate Resources, Inc. | US3 | ||||
Interstate Southern Packaging, LLC | US10 | ||||
Newport Timber, LLC | US9 | ||||
Phoenix Technology Holdings USA, Inc. | US3 | ||||
RB Lumber Company, LLC | US9 | ||||
RFC Container, LLC | US4 | ||||
SouthCorr, L.L.C. | US11 | ||||
St. George Timberland Holdings, Inc. | US3 | ||||
TMS America, LLC | US19 | ||||
United Corrstack, LLC | US12 | ||||
Uruguay | |||||
Total Marketing Support Uruguay S.A. | UY1 |
Annual Report 2024 dssmith.com 203
Strategic Report Governance Financial Statements
Notes to the consolidated financial statements continued
204
33. DS Smith Group companies continued
Registered offices | ||||||||
PSQ | Level 3, 1 Paddington Square, London, W2 1DL, United Kingdom | FR21 2 Rue Paul Cezanne, 93360, Neuilly Plaisance, France | ||||||
AR1 | Avenida Eduardo Madero 1020, 5 th floor, Office “B”, The City of Buenos | FR22 27 Rue du Tennis, 25110, Baume les Dames, France | ||||||
| Aires, Argentina | DE1 | Bierweg 11, 99310 | Arnstadt, Germany | |||||
AU1 | Baker Mckenzie, Level 46, 100 Barangaroo Avenue, Sydney NSW 2000, Australia | DE2 | Bretschneiderstr. 5, D-08309 Eibenstock, Germany | |||||
AT1 | Friedrichstraße 10, 1010, Wien, Austria | DE3 | Miwepa | 80, 37318 Arenshausen, Germany | ||||
AT2 | Heidestrasse 15, 2433 Margarethen am Moos, Austria | DE4 | Kufsteiner Strasse 27, 83064 Raubling, Germany | |||||
BE1 | New Orleansstraat 100, 9000 Gent, Belgium | DE5 | Rollnerstrasse 14, D-90408 Nürnberg, Germany | |||||
BE2 | Leonardo da Vincilaan 2, Corporate Village – Gebouw Gent 1831 | DE6 | Siemensstrasse 8, 50259 Pulheim, Germany | |||||
| Machelen-Diegem, Belgium | DE7 | Weichertstrasse 7, D-63741 Aschaffenburg, Germany | ||||||
BO1 | Santa Cruz de la Sierra – Calle Dr. Mariano Zambrana No 700 UV: S/N | DE8 | Zum Fliegerhorst 1312 – 1318, 63526 Erlensee, Germany | |||||
MZNO: S/N Zona: Oeste, Bolivia | GR1 | PO Box 90, GR-72200 Ierapetra, Kriti, Greece | ||||||
BA1 | ul. Igmanska bb, Sarajevo, Vogošća, Bosnia and Herzegovina | GR2 | PO Box | 1010, | 57022 | Sindos Industrial Area, Thessaloniki, Greece | ||
BA2 | Jovana Dučića br 25 A, Banja Luka, Bosnia and Herzegovina | GT1 | 15 Calle 1-04 Zona 10, Centrica Plaza, Torre I, Oficina 301, Guatemala, | |||||
BR1 | Avenida Paulista no. 807, conjunto 810, Bela Vista, Cidade de Sao Paulo, | 01010, | Guatemala | |||||
| Estado de Sao Paulo, CEP 01311-100, Brazil | HN1 | Avenida La Paz, No. 2702, Tegucigalpa, M.D.C., PO Box 2735, Honduras | ||||||
BG1 | Glavinitsa, 4400 Pazardzhik, Bulgaria | HU1 | Váci út 1-3., “A” Tower, 6 th | floor, 1062 | Budapest, Hungary | |||
CA1 | 215-1673 Carling Avenue, Ottowa ON K2A 1C4, Canada | HU2 | Záhony u. 7, HU-1031 Budapest, Hungary | |||||
CL1 | Santa Beatriz, 111. Of 1104. Providencia, Santiago de Chile, Chile | IN1 | A-5/30, Basement, Behind Oriental Bank of Commerce, Paschim Vihar, | |||||
CN1 | Room 308, No. 1, Building , 1588, Shenchang Road, , Minhang District, | New Delhi, 110063 , India | ||||||
| Shanghai, China | IN2 | G-56 Green Park (main), New Delhi – 110016, India | ||||||
CN2 | R919, 9/F, No. 1788 West Nan Jin Rd, Jing An District, Shanghai, | ID1 | Tempo Scan Tower Lantai 32, Jalan H.r. Rasuna Said Kav 3-4, Kel. Kuningan | |||||
200040, | China | Timur, Kec.Setiabudi, Kota Adm. Jakarta Selatan, Prov. DKI Jakarta, Indonesia | ||||||
CO1 | Carrera 12 89 33 Piso 6, Bogotá D.C., Colombia | IR1 | 10 Ely Place, Dublin 2, D02 HR98, Ireland | |||||
HR1 | Dravska ulica 19, Koprivnica (Grad Koprivnica), Croatia | IR2 | 3 Dublin Landings, North Wall Quay, Dublin 1, DO1 C4E, Ireland | |||||
HR2 | Vijenac Salamona Henricha Gutmanna 30, Belišće, Croatia | IT1 | Capannori (Lu) Via del Fanuccio, 126 Cap, 55014 Frazione Marlia, Italy | |||||
HR3 | Lastovska ulica 5, Zagreb, Croatia | IT2 | Strada Lanzo 237, cap 10148, Torino (TO), Italy | |||||
CZ1 | Teplická 109, Martiněves, 405 02 Jílové , Czech Republic | IT3 | Via Torri Bianche, n. 24, 20871 Vimercate (MB), Italy | |||||
DK1 | Åstrupvej 30, 8500 Grenaa, Denmark | JP1 | Nihonbashi 3 Chome Square 11F, 3-9-1 Nihonbashi, Chuo-ku, Tokyo, | |||||
EC1 | Ecuador | Bulgaria E7-70 | (203), Diego de Almagro, Edificio Bulgaria PB, Quito, | KZ1 | Japan | Abay Ave. 52, 8 floor, 802-6 office “Innova Tower” BC, 050008, | ||
EG1 | Nile City Towers, North Tower, 22 nd Floor, Cornish EI Nil, Cairo, 11624, Egypt | Almaty, Kazakhstan | ||||||
EE1 | Pae 24, 11415 | Tallinn, Estonia | LV1 | Hospitāļu iela 23-102, Rīga LV-1013, Latvia | ||||
FI1 | PL 426, 33101 | Tampere, Finland | LT1 | Savanoriu ave. 183, 02300 Vilnius, Lithuania | ||||
FI2 | Virranniementie 3, 70420 Kuopio, Finland | LU1 | 8-10 Avenue de la Gare, L-1610 Luxembourg | |||||
FR1 | 11 route Industrielle, F-68320, Kunheim, France | MY1 | Unit C-12-4, Level 12, Block C, Megan Avenue II, No. 12 Jalan Yap Kwan | |||||
FR2 | 1 Terrasse Bellini, 92800, Puteaux, France | Seng, 50450 | Kuala Lumpur, Wilayah Persekutuan, Malaysia | |||||
FR3 | 345 | Impasse de Saint-Alban Avenue de Croupillac, 30100 Ales, France | MX1 | Calle Rio Mississippi 49, Piso 10, Oficina 1002-08, Colonia Cuauhtémoc, | ||||
FR4 | ZAC de Kevoasdoue, 29270, Carhaix, France | Alcaldía Cuauhtémoc, Ciudad de Mexico, Codigo Postal 06500, Mexico | ||||||
FR5 | 6-8 | Boulevard Monge, 69330, Meyzieu, Lyon, France | MA1 | Tanger, Zone Franche d’Exportation, Ilot 11, Lot 5, Morocco | ||||
FR6 | 570 | Rue Nationale Contoire Hamel, 80500 Trois- Rivieres, France | NL1 | Bedrijvenpark Twente 90, NL-7602 KD Almelo, Netherlands | ||||
FR7 | 350 | Zone Artisanale des Trois Fontaines, 38140 Rives, France | NL2 | Coldenhovenseweg 130, 6961 EH, Eerbeek, Netherlands | ||||
FR8 | 550, Route de Bazouges, 49430 Durtal, France | NL3 | Hermesweg 2, 3771 ND, Barneveld, Netherlands | |||||
FR9 | 146 | Route de Lyon, 67640, Fegersheim, France | NL4 | Kanaalweg 8 A, 6961 LW, Eerbeek, Netherlands | ||||
FR10 Zone Industrielle, Voiveselles Croisette, 88800, B.P. 37, Vittel, France | NL5 | Wegastraat 2, 5015 BS, Tilburg, Netherlands | ||||||
FR11 5 rue de la Deviniere, 45510 Tigy, France | NI1 | Car Building, 3 rd Floor, Highway to Masaya, Managua, Nicaragua | ||||||
FR12 Route de Marmagne, 18500, Mehun sur Yevre, France | NG1 | 3, Ijora – Causeway, Ijora, Lagos, Nigeria | ||||||
FR13 Zone Industrielle de Châteaubernard, 16100, Cognac, France | MK1 | Str. 1632 no. 1, Skopje 1000, North Macedonia | ||||||
FR14 Avenue Robert Franck, 73110, La Rochette, France | PK1 | 668, Main Double Road, E-11/3, NPF Islamabad islamabad , Islamabad | ||||||
FR15 Rue Desire Granet, 76800 St. Etienne du Rouvray, France | Capital Territory (I.C.T.), Pakistan | |||||||
FR16 Zone Industrielle du Pré de la Barre, 38440, St-Jean de Bournay, France | PH1 | 24/F Philam Life Tower, 8767 Paseo de Roxas Avenue, Bel-Air, City of | ||||||
FR17 12 rue Gay Lussac ZI Dijon Chenove, 21300, Chenove, France | Makati, Fourth District, NCR, 1226, Philippines | |||||||
FR18 Zone Industrielle de la Plaine, 88510 Eloyes, France | PL1 | Komitetu Obrony Robotników 45D, 02-146 Warsaw, Poland | ||||||
FR19 la Fosse, 45720, Coullons, France | ||||||||
FR20 77 Route de Lapoutroie, 68240, Kaysersberg, France | ||||||||
204
Notes to the consolidated financial statements continued
204
33. DS Smith Group companies continued
Registered offices
PSQ Level 3, 1 Paddington Square, London, W2 1DL, United Kingdom
AR1 Avenida Eduardo Madero 1020, 5
th
floor, Office “B”, The City of Buenos
Aires, Argentina
AU1 Baker Mckenzie, Level 46, 100 Barangaroo Avenue, Sydney NSW 2000, Australia
AT1 Friedrichstraße 10, 1010, Wien, Austria
AT2 Heidestrasse 15, 2433 Margarethen am Moos, Austria
BE1 New Orleansstraat 100, 9000 Gent, Belgium
BE2 Leonardo da Vincilaan 2, Corporate Village – Gebouw Gent 1831
Machelen-Diegem, Belgium
BO1 Santa Cruz de la Sierra – Calle Dr. Mariano Zambrana No 700 UV: S/N
MZNO: S/N Zona: Oeste, Bolivia
BA1 ul. Igmanska bb, Sarajevo, Vogošća, Bosnia and Herzegovina
BA2 Jovana Dučića br 25 A, Banja Luka, Bosnia and Herzegovina
BR1 Avenida Paulista no. 807, conjunto 810, Bela Vista, Cidade de Sao Paulo,
Estado de Sao Paulo, CEP 01311-100, Brazil
BG1 Glavinitsa, 4400 Pazardzhik, Bulgaria
CA1 215-1673 Carling Avenue, Ottowa ON K2A 1C4, Canada
CL1 Santa Beatriz, 111. Of 1104. Providencia, Santiago de Chile, Chile
CN1 Room 308, No. 1, Building , 1588, Shenchang Road, , Minhang District,
Shanghai, China
CN2 R919, 9/F, No. 1788 West Nan Jin Rd, Jing An District, Shanghai,
200040, China
CO1 Carrera 12 89 33 Piso 6, Bogotá D.C., Colombia
HR1 Dravska ulica 19, Koprivnica (Grad Koprivnica), Croatia
HR2 Vijenac Salamona Henricha Gutmanna 30, Belišće, Croatia
HR3 Lastovska ulica 5, Zagreb, Croatia
CZ1 Teplická 109, Martiněves, 405 02 Jílové , Czech Republic
DK1 Åstrupvej 30, 8500 Grenaa, Denmark
EC1 Bulgaria E7-70 (203), Diego de Almagro, Edificio Bulgaria PB, Quito,
Ecuador
EG1 Nile City Towers, North Tower, 22
nd
Floor, Cornish EI Nil, Cairo, 11624, Egypt
EE1 Pae 24, 11415 Tallinn, Estonia
FI1 PL 426, 33101 Tampere, Finland
FI2 Virranniementie 3, 70420 Kuopio, Finland
FR1 11 route Industrielle, F-68320, Kunheim, France
FR2 1 Terrasse Bellini, 92800, Puteaux, France
FR3 345 Impasse de Saint-Alban Avenue de Croupillac, 30100 Ales, France
FR4 ZAC de Kevoasdoue, 29270, Carhaix, France
FR5 6-8 Boulevard Monge, 69330, Meyzieu, Lyon, France
FR6 570 Rue Nationale Contoire Hamel, 80500 Trois- Rivieres, France
FR7 350 Zone Artisanale des Trois Fontaines, 38140 Rives, France
FR8 550, Route de Bazouges, 49430 Durtal, France
FR9 146 Route de Lyon, 67640, Fegersheim, France
FR10 Zone Industrielle, Voiveselles Croisette, 88800, B.P. 37, Vittel, France
FR11 5 rue de la Deviniere, 45510 Tigy, France
FR12 Route de Marmagne, 18500, Mehun sur Yevre, France
FR13 Zone Industrielle de Châteaubernard, 16100, Cognac, France
FR14 Avenue Robert Franck, 73110, La Rochette, France
FR15 Rue Desire Granet, 76800 St. Etienne du Rouvray, France
FR16 Zone Industrielle du Pré de la Barre, 38440, St-Jean de Bournay, France
FR17 12 rue Gay Lussac ZI Dijon Chenove, 21300, Chenove, France
FR18 Zone Industrielle de la Plaine, 88510 Eloyes, France
FR19 la Fosse, 45720, Coullons, France
FR20 77 Route de Lapoutroie, 68240, Kaysersberg, France
FR21 2 Rue Paul Cezanne, 93360, Neuilly Plaisance, France
FR22 27 Rue du Tennis, 25110, Baume les Dames, France
DE1 Bierweg 11, 99310 Arnstadt, Germany
DE2 Bretschneiderstr. 5, D-08309 Eibenstock, Germany
DE3 Miwepa 80, 37318 Arenshausen, Germany
DE4 Kufsteiner Strasse 27, 83064 Raubling, Germany
DE5 Rollnerstrasse 14, D-90408 Nürnberg, Germany
DE6 Siemensstrasse 8, 50259 Pulheim, Germany
DE7 Weichertstrasse 7, D-63741 Aschaffenburg, Germany
DE8 Zum Fliegerhorst 1312 – 1318, 63526 Erlensee, Germany
GR1 PO Box 90, GR-72200 Ierapetra, Kriti, Greece
GR2 PO Box 1010, 57022 Sindos Industrial Area, Thessaloniki, Greece
GT1 15 Calle 1-04 Zona 10, Centrica Plaza, Torre I, Oficina 301, Guatemala,
01010, Guatemala
HN1 Avenida La Paz, No. 2702, Tegucigalpa, M.D.C., PO Box 2735, Honduras
HU1 Váci út 1-3., “A” Tower, 6
th
floor, 1062 Budapest, Hungary
HU2 Záhony u. 7, HU-1031 Budapest, Hungary
IN1 A-5/30, Basement, Behind Oriental Bank of Commerce, Paschim Vihar,
New Delhi, 110063 , India
IN2 G-56 Green Park (main), New Delhi – 110016, India
ID1 Tempo Scan Tower Lantai 32, Jalan H.r. Rasuna Said Kav 3-4, Kel. Kuningan
Timur, Kec.Setiabudi, Kota Adm. Jakarta Selatan, Prov. DKI Jakarta, Indonesia
IR1 10 Ely Place, Dublin 2, D02 HR98, Ireland
IR2 3 Dublin Landings, North Wall Quay, Dublin 1, DO1 C4E, Ireland
IT1 Capannori (Lu) Via del Fanuccio, 126 Cap, 55014 Frazione Marlia, Italy
IT2 Strada Lanzo 237, cap 10148, Torino (TO), Italy
IT3 Via Torri Bianche, n. 24, 20871 Vimercate (MB), Italy
JP1 Nihonbashi 3 Chome Square 11F, 3-9-1 Nihonbashi, Chuo-ku, Tokyo,
Japan
KZ1 Abay Ave. 52, 8 floor, 802-6 office “Innova Tower” BC, 050008,
Almaty, Kazakhstan
LV1 Hospitāļu iela 23-102, Rīga LV-1013, Latvia
LT1 Savanoriu ave. 183, 02300 Vilnius, Lithuania
LU1 8-10 Avenue de la Gare, L-1610 Luxembourg
MY1 Unit C-12-4, Level 12, Block C, Megan Avenue II, No. 12 Jalan Yap Kwan
Seng, 50450 Kuala Lumpur, Wilayah Persekutuan, Malaysia
MX1
Calle Rio Mississippi 49, Piso 10, Oficina 1002-08, Colonia Cuauhtémoc,
Alcaldía Cuauhtémoc, Ciudad de Mexico, Codigo Postal 06500, Mexico
MA1 Tanger, Zone Franche d’Exportation, Ilot 11, Lot 5, Morocco
NL1 Bedrijvenpark Twente 90, NL-7602 KD Almelo, Netherlands
NL2 Coldenhovenseweg 130, 6961 EH, Eerbeek, Netherlands
NL3 Hermesweg 2, 3771 ND, Barneveld, Netherlands
NL4 Kanaalweg 8 A, 6961 LW, Eerbeek, Netherlands
NL5 Wegastraat 2, 5015 BS, Tilburg, Netherlands
NI1 Car Building, 3
rd
Floor, Highway to Masaya, Managua, Nicaragua
NG1 3, Ijora – Causeway, Ijora, Lagos, Nigeria
MK1 Str. 1632 no. 1, Skopje 1000, North Macedonia
PK1 668, Main Double Road, E-11/3, NPF Islamabad islamabad , Islamabad
Capital Territory (I.C.T.), Pakistan
PH1 24/F Philam Life Tower, 8767 Paseo de Roxas Avenue, Bel-Air, City of
Makati, Fourth District, NCR, 1226, Philippines
PL1 Komitetu Obrony Robotników 45D, 02-146 Warsaw, Poland
Annual Report 2024 dssmith.com 205
33. DS Smith Group companies continued
Registered offices continued | ||||||
34. Subsequent events
In November 2018, the Group signed a £1.4 billion five-year committed syndicated revolving credit facility with its core banks. The second
extension option was exercised in November 2020. A further extension was agreed in June 2024, such that the new facility of £1.25 billion
matures in May 2027.
On 19 June 2024, the Group signed a 5 year €200m loan facility with Bayerische LB, Commerzbank, IKB Deutsche Industriebank Ag and
Unicredit Bank.
Annual Report 2024 dssmith.com 205
Strategic Report Governance Financial Statements
Parent Company statement
of financial position
At 30 April 2024
206
Note
2024
£m
2023
£m
Assets
Non-current assets
Intangible assets
3
48
44
Property, plant and equipment and right-of-use assets
4
25
27
Investments in subsidiaries
5
4,920
4,645
Deferred tax assets
10
28
9
Other receivables
6
7,375
6,115
Derivative financial instruments
12
72
154
Employee benefits
13
14
5
Total non-current assets
12,482
10,999
Current assets
Trade and other receivables
6
341
318
Cash and cash equivalents
7
61
1
Derivative financial instruments
12
116
156
Total current assets
518
475
Total assets
13,000
11,474
Liabilities
Non-current liabilities
Borrowings
9
(2,033)
(1,739)
Other payables
8
(62)
(21)
Lease liabilities
11
(13)
(12)
Provisions
–
(3)
Derivative financial instruments
12
(71)
(49)
Total non-current liabilities
(2,179)
(1,824)
Current liabilities
Borrowings
9
(477)
(80)
Trade and other payables
8
(6,563)
(5,499)
Income tax liabilities
–
(2)
Lease liabilities
11
(2)
(2)
Derivative financial instruments
12
(122)
(319)
Total current liabilities
(7,164)
(5,902)
Total liabilities
(9,343)
(7,726)
Net assets
3,657
3,748
Equity
Issued capital
14
138
138
Share premium account
14
2,258
2,251
Reserves
14
1,261
1,359
Shareholders’ equity
3,657
3,748
The Company made a profit for the year of £262m (2022/23: profit of £17m including the recognition of intra-group dividends).
Approved by the Board of Directors of DS Smith Plc (company registered number 1377658) on 20 June 2024 and signed on its behalf by:
M W Roberts R Pike
Director Director
The accompanying notes are an integral part of these financial statements.
206
Parent Company statement
of financial position
At 30 April 2024
206
Note
2024
£m
2023
£m
Assets
Non-current assets
Intangible assets
3
48
44
Property, plant and equipment and right-of-use assets
4
25
27
Investments in subsidiaries
5
4,920
4,645
Deferred tax assets
10
28
9
Other receivables
6
7,375
6,115
Derivative financial instruments
12
72
154
Employee benefits
13
14
5
Total non-current assets
12,482
10,999
Current assets
Trade and other receivables
6
341
318
Cash and cash equivalents
7
61
1
Derivative financial instruments
12
116
156
Total current assets
518
475
Total assets
13,000
11,474
Liabilities
Non-current liabilities
Borrowings
9
(2,033)
(1,739)
Other payables
8
(62)
(21)
Lease liabilities
11
(13)
(12)
Provisions
–
(3)
Derivative financial instruments
12
(71)
(49)
Total non-current liabilities
(2,179)
(1,824)
Current liabilities
Borrowings
9
(477)
(80)
Trade and other payables
8
(6,563)
(5,499)
Income tax liabilities
–
(2)
Lease liabilities
11
(2)
(2)
Derivative financial instruments
12
(122)
(319)
Total current liabilities
(7,164)
(5,902)
Total liabilities
(9,343)
(7,726)
Net assets
3,657
3,748
Equity
Issued capital
14
138
138
Share premium account
14
2,258
2,251
Reserves
14
1,261
1,359
Shareholders’ equity
3,657
3,748
The Company made a profit for the year of £262m (2022/23: profit of £17m including the recognition of intra-group dividends).
Approved by the Board of Directors of DS Smith Plc (company registered number 1377658) on 20 June 2024 and signed on its behalf by:
M W Roberts R Pike
Director Director
The accompanying notes are an integral part of these financial statements.
Parent Company statement
of changes in equity
At 30 April 2024
Annual Report 2024 dssmith.com 207
Share
capital
£m
Share
premium
£m
Hedging
reserve
£m
Own
shares
£m
Merger relief
reserve
£m
Retained
earnings
£m
Total
equity
£m
At 1 May 2022
137
2,248
603
(9)
32
1,500
4,511
Profit for the year
–
–
–
–
–
17
17
Actuarial loss on employee benefits
–
–
–
–
–
(1)
(1)
Cash flow hedges fair value changes
–
–
(72)
–
–
–
(72)
Reclassification from cash flow hedge reserve to
income statement
–
–
(573)
–
–
–
(573)
Income tax on other comprehensive income
–
–
146
–
–
–
146
Total comprehensive (expense)/income
–
–
(499)
–
–
16
(483)
Issue of share capital
1
3
–
–
–
–
4
Employee share trust
–
–
–
(5)
–
(3)
(8)
Share-based payments (net of tax)
–
–
–
–
–
13
13
Dividends paid
–
–
–
–
–
(289)
(289)
Other changes in equity in the year
1
3
–
(5)
–
(279)
(280)
At 30 April 2023
138
2,251
104
(14)
32
1,237
3,748
Profit for the year
–
–
–
–
–
262
262
Actuarial loss on employee benefits
–
–
–
–
–
1
1
Income tax on other comprehensive income
–
–
–
–
–
(2)
(2)
Total comprehensive income
–
–
–
–
–
261
261
Issue of share capital
–
7
–
–
–
–
7
Employee share trust
–
–
–
5
–
(9)
(4)
Share-based payments (net of tax)
–
–
–
–
–
(4)
(4)
Dividends paid
–
–
–
–
–
(247)
(247)
Reclassification (Note 1 (j))
–
–
(104)
–
–
–
(104)
Other changes in equity in the year
–
7
(104)
5
–
(260)
(352)
At 30 April 2024
138
2,258
–
(9)
32
1,238
3,657
Annual Report 2024 dssmith.com 207
Strategic Report Governance Financial Statements
Notes to the parent Company
financial statements
208
1. Material accounting policies
(a) Basis of preparation
These financial statements of DS Smith Plc (the ‘Company’) have been
prepared on the going concern basis and in accordance with Financial
Reporting Standard 101
Reduced Disclosure Framework
(FRS 101) and
the UK Companies Act.
The accounts are prepared under the historical cost convention with
the exception of certain financial instruments and employee benefit
plans that are stated at their fair value and share-based payments that
are stated at their grant date fair value.
Under section 408 of the Companies Act 2006 the Company is exempt
from the requirement to present its own income statement or
statement of comprehensive income.
In these financial statements, the Company has applied the
exemptions available under FRS 101 in respect of the
following disclosures:
• statement of cash flows and related notes;
• a comparative period reconciliation for share capital;
• disclosures in respect of transactions with wholly-owned
subsidiaries;
• comparative period reconciliations for tangible fixed assets and
intangible assets;
• disclosures in respect of capital management;
• the effects of new but not yet effective IFRSs; and
• disclosures in respect of key management personnel.
As the Group financial statements include the equivalent disclosures,
the Company has also taken advantage of the exemptions under FRS
101 available in respect of the following disclosures:
• IAS 24
Related Party Disclosure
in respect of transactions entered
with wholly-owned subsidiaries;
• IFRS 2
Share
-
based Payment
in respect of Group settled
share-based payments;
• IFRS 13
Fair Value Measurement
and the disclosures required by
IFRS 7
Financial Instruments; and
•
IAS 12 Income Taxes
in respect of recognising and disclosing
information about deferred tax assets and liabilities related to Pillar
Two income taxes.
The following amended standards and interpretations were adopted
by the Company during the year ending 30 April 2024. These amended
standards and interpretations have not had a significant impact on the
consolidated financial statements.
• IFRS 17 Insurance Contracts;
• IAS 12 Income Taxes – International Tax Reform – Pillar Two
Model Rules;
• Amendments to IAS 12 Income Taxes – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction;
• Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements –
Disclosure of Accounting Policies; and
• Amendments to IAS 8 Accounting Policy Changes in Accounting
Estimates and Errors – Definition of Accounting Estimates.
The accounting policies set out above have been applied consistently
in all periods presented in these Company financial statements.
The accounting policies have been applied consistently by all
Group entities.
(b) Foreign currencies
The Company’s financial statements are presented in sterling, which is
the Company’s functional currency and presentation currency.
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange at the date of the
transaction, and retranslated at the rate of exchange ruling at the
balance sheet date. Exchange differences arising on translation are
taken to the income statement.
(c) Intangible assets
Intangible assets are stated at cost less accumulated amortisation and
impairment losses. Amortisation is charged to the income statement
on a straight-line basis over the estimated useful lives of each item,
which range between three and five years.
(d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Depreciation is charged to the
income statement on a straight-line basis over the estimated useful
lives of each item of property, plant and equipment. Estimated useful
lives of plant and equipment are between two and 30 years, and for
leasehold improvements are over the period of the lease.
208
Notes to the parent Company
financial statements
208
1. Material accounting policies
(a) Basis of preparation
These financial statements of DS Smith Plc (the ‘Company’) have been
prepared on the going concern basis and in accordance with Financial
Reporting Standard 101
Reduced Disclosure Framework
(FRS 101) and
the UK Companies Act.
The accounts are prepared under the historical cost convention with
the exception of certain financial instruments and employee benefit
plans that are stated at their fair value and share-based payments that
are stated at their grant date fair value.
Under section 408 of the Companies Act 2006 the Company is exempt
from the requirement to present its own income statement or
statement of comprehensive income.
In these financial statements, the Company has applied the
exemptions available under FRS 101 in respect of the
following disclosures:
• statement of cash flows and related notes;
• a comparative period reconciliation for share capital;
• disclosures in respect of transactions with wholly-owned
subsidiaries;
• comparative period reconciliations for tangible fixed assets and
intangible assets;
• disclosures in respect of capital management;
• the effects of new but not yet effective IFRSs; and
• disclosures in respect of key management personnel.
As the Group financial statements include the equivalent disclosures,
the Company has also taken advantage of the exemptions under FRS
101 available in respect of the following disclosures:
• IAS 24
Related Party Disclosure
in respect of transactions entered
with wholly-owned subsidiaries;
• IFRS 2
Share
-
based Payment
in respect of Group settled
share-based payments;
• IFRS 13
Fair Value Measurement
and the disclosures required by
IFRS 7
Financial Instruments; and
•
IAS 12 Income Taxes
in respect of recognising and disclosing
information about deferred tax assets and liabilities related to Pillar
Two income taxes.
The following amended standards and interpretations were adopted
by the Company during the year ending 30 April 2024. These amended
standards and interpretations have not had a significant impact on the
consolidated financial statements.
• IFRS 17 Insurance Contracts;
• IAS 12 Income Taxes – International Tax Reform – Pillar Two
Model Rules;
• Amendments to IAS 12 Income Taxes – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction;
• Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements –
Disclosure of Accounting Policies; and
• Amendments to IAS 8 Accounting Policy Changes in Accounting
Estimates and Errors – Definition of Accounting Estimates.
The accounting policies set out above have been applied consistently
in all periods presented in these Company financial statements.
The accounting policies have been applied consistently by all
Group entities.
(b) Foreign currencies
The Company’s financial statements are presented in sterling, which is
the Company’s functional currency and presentation currency.
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange at the date of the
transaction, and retranslated at the rate of exchange ruling at the
balance sheet date. Exchange differences arising on translation are
taken to the income statement.
(c) Intangible assets
Intangible assets are stated at cost less accumulated amortisation and
impairment losses. Amortisation is charged to the income statement
on a straight-line basis over the estimated useful lives of each item,
which range between three and five years.
(d) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Depreciation is charged to the
income statement on a straight-line basis over the estimated useful
lives of each item of property, plant and equipment. Estimated useful
lives of plant and equipment are between two and 30 years, and for
leasehold improvements are over the period of the lease.
Annual Report 2024 dssmith.com 209
1. Material accounting policies continued
(e) Leases
The Company recognises a right-of-use asset and a lease liability at
the lease commencement date.
The right-of-use asset is initially measured at cost, being the initial
amount of the lease liability adjusted for any lease payments made at
or before commencement date, plus any initial direct costs incurred
and an estimate of end of lease dismantling or restoration costs,
less any incentives received and related provisions.
Lease liabilities are recorded at the present value of lease payments.
The interest rate implicit in the lease is used to discount lease
payments, or, if that rate cannot be determined, the Company’s
incremental borrowing rate is used, being the rate that the Company
would have to pay to borrow the funds necessary to obtain an asset of
similar value in a similar economic environment with similar terms
and conditions.
Right-of-use assets are depreciated on a straight-line basis over the
lease term, or the useful life if shorter.
Interest is recognised on the lease liability, resulting in a higher
finance cost in the earlier years of the lease term.
Lease payments relating to low value assets or to short-term leases
are recognised as an expense on a straight-line basis over the lease
term. Short-term leases are those with 12 months or less duration.
When the Company enters into a back-to-back lease arrangement
on behalf of a subsidiary, corresponding lease receivables
are recognised.
(f) Investments in subsidiaries
Investments in subsidiaries are valued at cost less provisions
for impairment.
Impairment testing is performed annually for investment in
subsidiaries by comparing the carrying amount of each investment
with the relevant subsidiary’s consolidated balance sheet. Where the
net assets are lower than the investment value, a discounted cash
flow is utilised to calculate the present value of the investment to
confirm whether any impairment is required.
(g) Deferred taxation
Deferred tax is provided for 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 amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable
that future taxable profits will be available against which the asset can
be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
(h) Employee benefits
(i) Defined benefit schemes
The Company is the sponsoring employer for a UK funded,
defined benefit scheme, the DS Smith Group Pension scheme
(the ‘Group Scheme’).
The Group has in place a stated policy for allocating the net
defined benefit cost relating to the Group Scheme to participating
Group entities.
Accordingly, both the Company’s statement of financial position
and income statement reflect the Company’s share of the net defined
benefit liability and net defined benefit cost in respect of the Group
Scheme, allocated per the stated policy. Actuarial gains and losses are
recognised immediately in the statement of comprehensive income.
(ii) Share-based payment transactions
The Company operates an equity-settled, share-based compensation
plan. The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense. The fair value of
the options granted is measured using a stochastic model, taking into
account the terms and conditions upon which the options were
granted. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions. Non-
market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable.
At each reporting date, the Company revises its estimate of
the number of options that are expected to become exercisable.
It recognises the impact of the revision of original estimates, if any,
in the income statement, and a corresponding adjustment to equity.
Where applicable, the fair value of employee services received by
subsidiary undertakings within the Group in exchange
for options granted by the Company is recognised as an expense in
the financial statements of the subsidiary by means of a recharge from
the Company.
(i) Shares held by employee share trust
The cost of shares held in the employee share trust is deducted
from equity. All differences between the purchase price of the shares
held to satisfy options granted and the proceeds received
for the shares, whether on exercise or lapse, are charged
to retained earnings.
Annual Report 2024 dssmith.com 209
Strategic Report Governance Financial Statements
Notes to the parent Company financial statements continued
210
1. Material accounting policies continued
(j) Financial instruments
The Company uses derivative financial instruments, primarily currency
and commodity swaps, to manage interest rate, currency and
commodity risks associated with the Group’s underlying business
activities and the financing of these activities. The Group has a policy
not to, and does not, undertake any speculative activity in these
instruments. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value.
Derivatives are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Derivative financial instruments are accounted for as hedges when
designated as hedges at the inception of the contract and when the
financial instruments provide an effective hedge of the underlying
risk. Any gains or losses arising from the hedging instruments are
offset against the hedged items.
For the purpose of hedge accounting, hedges are classified as cash
flow hedges due to hedging exposure to variability in cash flows that
is either attributable to a particular risk associated with a recognised
asset or liability or a highly probable forecast transaction.
The Company’s strategy for energy and carbon certificate costs is to
hedge on a Group exposure basis by portfolio. On maturity of a hedged
position, the resulting settlement is charged or credited in
its entirety to subsidiaries based on their respective actual energy use.
As a result, no benefits or costs are retained or absorbed by the
Company. Derivative contracts with counterparties external to the
Group are mirrored by agreements between the Company and its
subsidiaries and recorded as derivatives in the financial statements.
At each reporting date, the Company revises its estimate of
the number of options that are expected to become exercisable.
It recognises the impact of the revision of original estimates, if any,
in the income statement, and a corresponding adjustment to equity.
Where applicable, the fair value of employee services received by
subsidiary undertakings within the Group in exchange
for options granted by the Company is recognised as an expense in
the financial statements of the subsidiary by means of a recharge from
the Company.
(k) Financial guarantee contracts
Financial guarantee contracts are recorded at fair value on initial
recognition and subsequently assessed for any changes in the
risk of default which would result in an expense recorded in the
income statement.
(l) Dividend income
Dividend income from subsidiary undertakings is recognised in the
income statement when paid.
(m) Accounting judgements and key sources of
estimation uncertainty
Employee benefits
IAS 19
Employee Benefits
requires the Company to make assumptions
including, but not limited to, rates of inflation, discount rates and life
expectancies. The use of different assumptions, in any of the above
calculations, could have a material effect on the accounting values
of the relevant statement of financial position assets and liabilities
which could also result in a change to the cost of such liabilities
as recognised in profit or loss over time. These assumptions are
subject to periodic review. See note 25 of the Group’s accounts for
additional information.
210
Notes to the parent Company financial statements continued
210
1. Material accounting policies continued
(j) Financial instruments
The Company uses derivative financial instruments, primarily currency
and commodity swaps, to manage interest rate, currency and
commodity risks associated with the Group’s underlying business
activities and the financing of these activities. The Group has a policy
not to, and does not, undertake any speculative activity in these
instruments. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value.
Derivatives are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
Derivative financial instruments are accounted for as hedges when
designated as hedges at the inception of the contract and when the
financial instruments provide an effective hedge of the underlying
risk. Any gains or losses arising from the hedging instruments are
offset against the hedged items.
For the purpose of hedge accounting, hedges are classified as cash
flow hedges due to hedging exposure to variability in cash flows that
is either attributable to a particular risk associated with a recognised
asset or liability or a highly probable forecast transaction.
The Company’s strategy for energy and carbon certificate costs is to
hedge on a Group exposure basis by portfolio. On maturity of a hedged
position, the resulting settlement is charged or credited in
its entirety to subsidiaries based on their respective actual energy use.
As a result, no benefits or costs are retained or absorbed by the
Company. Derivative contracts with counterparties external to the
Group are mirrored by agreements between the Company and its
subsidiaries and recorded as derivatives in the financial statements.
At each reporting date, the Company revises its estimate of
the number of options that are expected to become exercisable.
It recognises the impact of the revision of original estimates, if any,
in the income statement, and a corresponding adjustment to equity.
Where applicable, the fair value of employee services received by
subsidiary undertakings within the Group in exchange
for options granted by the Company is recognised as an expense in
the financial statements of the subsidiary by means of a recharge from
the Company.
(k) Financial guarantee contracts
Financial guarantee contracts are recorded at fair value on initial
recognition and subsequently assessed for any changes in the
risk of default which would result in an expense recorded in the
income statement.
(l) Dividend income
Dividend income from subsidiary undertakings is recognised in the
income statement when paid.
(m) Accounting judgements and key sources of
estimation uncertainty
Employee benefits
IAS 19
Employee Benefits
requires the Company to make assumptions
including, but not limited to, rates of inflation, discount rates and life
expectancies. The use of different assumptions, in any of the above
calculations, could have a material effect on the accounting values
of the relevant statement of financial position assets and liabilities
which could also result in a change to the cost of such liabilities
as recognised in profit or loss over time. These assumptions are
subject to periodic review. See note 25 of the Group’s accounts for
additional information.
Annual Report 2024 dssmith.com 211
2. Employee information
The average number of employees employed by the Company during the year was 427 (2022/23: 381).
2024
£m
2023
£m
Wages and salaries
46
42
Social security costs
4
5
Pension costs
3
2
Total
53
49
Note 26 to the consolidated financial statements sets out the disclosure information required for the Company’s share-based payments.
3. Intangible assets
Software
£m
Other
£m
Carbon credits
£m
Under
construction
£m
Total
£m
Cost
At 1 May 2023
82
10
17
11
120
Additions
–
–
25
12
37
Disposals
–
–
(25)
–
(25)
Reclassifications
4
(1)
–
(3)
–
At 30 April 2024
86
9
17
20
132
Amortisation
At 1 May 2023
(73)
(3)
–
–
(76)
Amortisation charge
(5)
(3)
–
–
(8)
At 30 April 2024
(78)
(6)
–
–
(84)
Carrying amount
At 1 May 2023
9
7
17
11
44
At 30 April 2024
8
3
17
20
48
4. Property, plant and equipment and right-of-use assets
Right-of-use
assets
£m
Leasehold
improvements
£m
Plant and
equipment
£m
Under
construction
£m
Total
£m
Cost
At 1 May 2023
15
6
4
4
29
Additions
–
–
–
1
1
Reclassification
–
4
(2)
(2)
–
At 30 April 2024
15
10
2
3
30
Depreciation
At 1 May 2023
(1)
–
(1)
–
(2)
Depreciation charge
(2)
(1)
–
–
(3)
At 30 April 2024
(3)
(1)
(1)
–
(5)
Carrying amount
At 1 May 2023
14
6
3
4
27
At 30 April 2024
12
9
1
3
25
Right-of-use assets relate to land and buildings.
Annual Report 2024 dssmith.com 211
Strategic Report Governance Financial Statements
Notes to the parent Company financial statements continued
212
5. Investments in subsidiaries
Shares in Group
undertakings
£m
At 1 May 2023
4,645
Additions
275
At 30 April 2024
4,920
The Company’s principal trading subsidiary undertakings at 30 April 2024 are shown in note 33 to the consolidated financial statements.
Additions in the year ended 30 April 2024 are a result of intergroup restructuring transactions.
6. Trade and other receivables
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Amounts owed by subsidiary undertakings
7,375
326
6,115
300
Other receivables
–
1
–
1
Prepayments and accrued income
–
14
–
17
7,375
341
6,115
318
When measuring the potential impairment of receivables from subsidiary undertakings, forward-looking information based on assumptions for
the future movement of different economic drivers is considered.
7. Cash and cash equivalents
2024
£m
2023
£m
Bank balances
1
1
Short-term deposits
60
–
61
1
8. Trade and other payables
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Trade payables
–
10
–
32
Amounts owed to subsidiary undertakings
62
6,421
21
5,411
Other tax and social security payables
–
14
–
12
Non-trade payables, accruals and deferred income
–
118
–
44
62
6,563
21
5,499
Amounts owed to subsidiaries are subject to interest at rates based on EURIBOR or, where applicable, forward-looking base rates and are
repayable between 2025 and 2029.
212
Notes to the parent Company financial statements continued
212
5. Investments in subsidiaries
Shares in Group
undertakings
£m
At 1 May 2023
4,645
Additions
275
At 30 April 2024
4,920
The Company’s principal trading subsidiary undertakings at 30 April 2024 are shown in note 33 to the consolidated financial statements.
Additions in the year ended 30 April 2024 are a result of intergroup restructuring transactions.
6. Trade and other receivables
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Amounts owed by subsidiary undertakings
7,375
326
6,115
300
Other receivables
–
1
–
1
Prepayments and accrued income
–
14
–
17
7,375
341
6,115
318
When measuring the potential impairment of receivables from subsidiary undertakings, forward-looking information based on assumptions for
the future movement of different economic drivers is considered.
7. Cash and cash equivalents
2024
£m
2023
£m
Bank balances
1
1
Short-term deposits
60
–
61
1
8. Trade and other payables
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Trade payables
–
10
–
32
Amounts owed to subsidiary undertakings
62
6,421
21
5,411
Other tax and social security payables
–
14
–
12
Non-trade payables, accruals and deferred income
–
118
–
44
62
6,563
21
5,499
Amounts owed to subsidiaries are subject to interest at rates based on EURIBOR or, where applicable, forward-looking base rates and are
repayable between 2025 and 2029.
Annual Report 2024 dssmith.com 213
9. Borrowings
2024
2023
Non-
current
£m
Current
£m
Non-
current
£m
Current
£m
Bank loans and overdrafts
–
83
–
72
Medium-term notes and other fixed-term debt
2,033
394
1,739
8
2,033
477
1,739
80
Disclosures in respect of the Group’s borrowings are provided in note 20 to the consolidated financial statements.
10. Deferred tax assets and liabilities
Analysis of movements in recognised deferred tax assets and liabilities during the year
Property, plant and
equipment and
intangible assets
Employee benefits
including pensions
Tax
losses
Derivative financial
instruments Total
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
At beginning of the year
13
10
5
7
19
24
(28)
(174)
9
(133)
Credit/(charge) for the year
(3)
3
(2)
(1)
(2)
(5)
(6)
–
(13)
(3)
Recognised directly in equity
–
–
(2)
(1)
–
–
34
146
32
145
At end of the year
10
13
1
5
17
19
–
(28)
28
9
11. Lease liabilities
The carrying amounts of lease liabilities and the movements during the year are as follows:
2024
£m
2023
£m
Cost
At beginning of the year
14
4
Additions
–
11
Accretion of interest
1
1
Payments
–
(2)
At end of the year
15
14
Current
2
2
Non-current
13
12
15
14
Maturity of lease liabilities
1 year
or less
£m
1–2
years
£m
2–5
years
£m
More than
5 years
£m
Total
£m
At 30 April 2023
(2)
(2)
(5)
(5)
(14)
At 30 April 2024
(3)
(2)
(6)
(4)
(15)
Annual Report 2024 dssmith.com 213
Strategic Report Governance Financial Statements
Notes to the parent Company financial statements continued
214
12. Derivative financial instruments
The assets and liabilities of the Company at 30 April in respect of derivative financial instruments are as follows:
Assets
Liabilities
Net
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
Derivatives held to:
Manage the currency exposures on business activities, borrowings
and net investments
–
–
–
–
–
–
Derivative financial instruments included in net debt
–
–
–
–
–
–
Derivatives held to hedge future transactions:
Forward foreign exchange contracts
–
–
–
–
–
–
Energy and carbon certificate costs
188
310
(193)
(368)
(5)
(58)
Total derivative financial instruments
188
310
(193)
(368)
(5)
(58)
Current
116
156
(122)
(319)
(6)
(163)
Non-current
72
154
(71)
(49)
1
105
188
310
(193)
(368)
(5)
(58)
Disclosures in respect of the Group’s derivative financial instruments are provided in note 21 to the consolidated financial statements.
In the current year the cash flow hedge reserve balance has been classified as intergroup derivatives to reflect the hedging model more
appropriately and commodity swaps are no longer recognised as eligible for cash flow hedge accounting. Movements on commodity swaps are
recognised through income with equivalent offsetting movements on, as the case may be, derivative payables and receivables.
13. Employee benefits
The Company participates in the Group’s UK pension schemes. The accounting valuation is consistent with the Group valuation, as described in
note 25 to the consolidated financial statements, where full disclosures relating to these schemes are given.
2024
£m
2023
£m
Present value of funded obligations
(712)
(767)
Present value of unfunded obligations
(5)
(5)
Fair value of scheme assets
761
791
Total IAS 19 surplus, net
44
19
Allocated to other participating employers
(30)
(14)
Company’s share of IAS 19 surplus, net
14
5
14. Share capital and reserves
Details of the Company’s share capital and merger relief reserve are provided in note 24 to the consolidated financial statements. Movements in
shareholders’ equity are shown in the parent Company statement of changes in equity.
The closing merger relief reserve of £32m (30 April 2023: £32m) relates to the shares issued in consideration to the sellers of EcoPack/EcoPaper.
The reserve for the Company’s own shares comprises the cost of the Company’s shares held by the Group. The Group operates a General
Employee Benefit Trust, which acquires shares in the Company that can be used to satisfy the requirements of the Performance Share Plan.
At 30 April 2024, the Trust held 2.8m shares (30 April 2023: 4.2m shares). The market value of the shares at 30 April 2024 was £9.7m
(30 April 2023 : £13.0m). Dividends receivable on the shares owned by the Trust have been waived.
As at 30 April 2024, the Company had distributable reserves of £1,229m (30 April 2023: £1,223m).
214
Notes to the parent Company financial statements continued
214
12. Derivative financial instruments
The assets and liabilities of the Company at 30 April in respect of derivative financial instruments are as follows:
Assets
Liabilities
Net
2024
£m
2023
£m
2024
£m
2023
£m
2024
£m
2023
£m
Derivatives held to:
Manage the currency exposures on business activities, borrowings
and net investments
–
–
–
–
–
–
Derivative financial instruments included in net debt
–
–
–
–
–
–
Derivatives held to hedge future transactions:
Forward foreign exchange contracts
–
–
–
–
–
–
Energy and carbon certificate costs
188
310
(193)
(368)
(5)
(58)
Total derivative financial instruments
188
310
(193)
(368)
(5)
(58)
Current
116
156
(122)
(319)
(6)
(163)
Non-current
72
154
(71)
(49)
1
105
188
310
(193)
(368)
(5)
(58)
Disclosures in respect of the Group’s derivative financial instruments are provided in note 21 to the consolidated financial statements.
In the current year the cash flow hedge reserve balance has been classified as intergroup derivatives to reflect the hedging model more
appropriately and commodity swaps are no longer recognised as eligible for cash flow hedge accounting. Movements on commodity swaps are
recognised through income with equivalent offsetting movements on, as the case may be, derivative payables and receivables.
13. Employee benefits
The Company participates in the Group’s UK pension schemes. The accounting valuation is consistent with the Group valuation, as described in
note 25 to the consolidated financial statements, where full disclosures relating to these schemes are given.
2024
£m
2023
£m
Present value of funded obligations
(712)
(767)
Present value of unfunded obligations
(5)
(5)
Fair value of scheme assets
761
791
Total IAS 19 surplus, net
44
19
Allocated to other participating employers
(30)
(14)
Company’s share of IAS 19 surplus, net
14
5
14. Share capital and reserves
Details of the Company’s share capital and merger relief reserve are provided in note 24 to the consolidated financial statements. Movements in
shareholders’ equity are shown in the parent Company statement of changes in equity.
The closing merger relief reserve of £32m (30 April 2023: £32m) relates to the shares issued in consideration to the sellers of EcoPack/EcoPaper.
The reserve for the Company’s own shares comprises the cost of the Company’s shares held by the Group. The Group operates a General
Employee Benefit Trust, which acquires shares in the Company that can be used to satisfy the requirements of the Performance Share Plan.
At 30 April 2024, the Trust held 2.8m shares (30 April 2023: 4.2m shares). The market value of the shares at 30 April 2024 was £9.7m
(30 April 2023 : £13.0m). Dividends receivable on the shares owned by the Trust have been waived.
As at 30 April 2024, the Company had distributable reserves of £1,229m (30 April 2023: £1,223m).
Annual Report 2024 dssmith.com 215
15. Guarantees and contingent liabilities
The Company has entered into financial guarantees to guarantee the indebtedness of other companies within the Group of £8.0m (30 April
2023: £4.9m). The probability of default is remote and there was no change in the assessment of the risk of default during the year.
The Company has also issued guarantees over the liabilities of a number of UK subsidiary companies as at 30 April 2024 and for which the
companies are taking the exemption from the requirements of an audit for their individual financial statements as permitted by section 479A of
the Companies Act. Refer to note 33 of the Group’s consolidated financial statements for further details.
16. Related party disclosure
The Company has identified the Directors of the Company, its key management personnel, and Group’s UK pension schemes as related parties.
Details of the relevant relationships with these related parties are disclosed in the Remuneration Committee report and note 31 to the
consolidated financial statements respectively.
17. Auditor’s remuneration
Auditor’s remuneration in respect of the Company is detailed in note 3 to the consolidated financial statements.
Annual Report 2024 dssmith.com 215
Strategic Report Governance Financial Statements
Five-year financial summary
Unaudited
216
Continuing operations
2020
£m
2021
£m
2022
£m
2023
£m
2024
£m
Revenue
6,043
5,976
7,241
8,221
6,822
Operating profit
1
660
502
616
861
701
Amortisation
(143)
(142)
(138)
(113)
(98)
Share of profit of equity-accounted investments
before adjusting items, net of tax
7 5 7 2 2
Net financing costs before adjusting items
(87)
(78)
(70)
(74)
(103)
Profit before taxation and adjusting items
437
287
415
676
502
Acquisitions and divestments
(4)
(5)
2
(15)
1
Other adjusting items
(65)
(51)
(39)
–
–
Profit before income tax
368
231
378
661
503
Adjusted earnings per share
1
33.2p
24.2p
30.7p
43.0p
33.1p
Dividends per share
n/a
12.1p
15.0p
18.0p
18.0p
Return on sales
2
10.9%
8.4%
8.5%
10.5%
10.3%
Adjusted return on average capital employed
1,2,3
10.6%
8.2%
10.8%
14.3%
10.7%
1. Before amortisation and adjusting items.
2. Adjusted return on average capital employed is defined as operating profit before amortisation and adjusting items divided by average capital employed.
3. Average capital employed is the average monthly capital employed for the last 12 months. Capital employed is made up of property, plant and equipment, right-of-
use assets, goodwill and intangible assets, working capital, capital debtors/creditors, provisions, biological assets and assets/liabilities held for sale. Assets and
liabilities relating to discontinued operations are excluded. The definition of capital employed is different from the definition of managed capital as defined in note
21 to the consolidated financial statements, which consists of equity as presented in the consolidated statement of financial position, plus net debt.
216
1.5°C-aligned
The target set out in the Paris Agreement to limit global warming to 1.5°C by 2100 compared to pre-industrial
levels to avoid the worst impacts of climate change
AFR
Accident Frequency Rate is the number of lost time accidents per million hours worked
Circular Design Metrics
A pioneering tool from DS Smith that rates and compares the circularity of packaging designs across eight
indicators, giving a clear identification of a packaging design’s sustainability performance, and where to
focusattention
Circular Design Principles
A set of principles, developed by DS Smith in collaboration with the Ellen MacArthur Foundation, which guide
designers to develop more circular packaging solutions
DEI
Diversity, Equity and Inclusion
ESG
Environmental, Social and Governance
ESG Databook
A yearly publication to stakeholders, documenting non-financial performance in the previous and historic
financial years
FMCG
Fast moving consumer goods
GHG
Greenhouse gas
GOC
Group Operating Committee
HSES Committee
Health, Safety, Environment and Sustainability Committee
ISO
International Standards Organisation
LTA
Lost Time Accident is an accident resulting in lost time of one shift or more
LTI
Lost Time Injury being an injury resulting in lost time of one shift or more
Net Zero
The state of reaching a balance between the amount of greenhouse gas produced and taken out of the
atmosphere resulting in no net impact on the climate from greenhouse gas emissions to limit global
temperature rise
Net Zero Transition Plan
A time-bound roadmap of decarbonisation activities to reach Net Zero, with defined targets and actions
OTIF
On-time, in full
ROACE
Return on average capital employed being earnings before interest, tax, amortisation and adjusting items as a
percentage of average capital employed, including goodwill, over the prior 12-month period
SBT (science-based target),
SBTi (Science-Based
Targets initiative)
A carbon reduction target that reflects an emissions reduction in line with climate science, as promoted by the
SBTi, an NGO which drives ambitious climate action in the private sector
Scope 1 (direct) GHG
emissions
Greenhouse gas emissions arising from the combustion of fuels in assets owned by the Company (e.g.
emissions from owned boilers, furnaces, vehicles, etc)
Scope 2 (indirect)
GHGemissions
Greenhouse gas emissions arising from the generation of purchased electricity, heat, steam or cooling, which
physically occur at the facility where the energy is generated
Scope 3 (indirect)
GHGemissions
Greenhouse gas emissions arising in the value chain from all other sources as a consequence of our activities
but from sources not owned by the Group
TCFD
Task Force on Climate-related Financial Disclosures being a framework developed to help public companies
and other organisations disclose climate-related risks and opportunities
TNFD
Task Force on Nature-related Financial Disclosures being a nature-related risk-management and
disclosureframework
Glossary
Annual Report 2024 dssmith.com 217
Registered office and advisers
Secretary and
Registered Office
Iain Simm
Registered in England
Company No: 01377658
Auditor
Ernst & Young
1 More London Place
London SE1 2AF
Solicitor
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Stockbroker
Citigroup
Citigroup Centre
33 Canada Square
Canary Wharf
London E14 5LB
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Registrar
Please contact the Registrar at the above right address to advise of a
change of address or for any enquiries relating to dividend payments,
lost share certificates or other share registration matters. The Registrar
provides online facilities at www.shareview.co.uk. Once you have
registered you will be able to access information on your DSSmith Plc
shareholding, update your personal details and amend your dividend
payment instructions online without having to call or write to
theRegistrar.
Dividends
Shareholders who wish to have their dividends paid directly into a bank
or building society account should contact the Registrar. In addition,
the Registrar is now able to pay dividends to over 90 different
countries. This service enables the payment of your dividends directly
into your bank account in your home currency. For international
payments, a charge is deducted from each dividend payment to
cover the costs involved. Please contact the Registrar to request
furtherinformation.
Share dealing services
The Registrar offers a real-time telephone and internet dealing
service for the UK. Further details including terms and rates can be
obtained by logging on to the website at www.shareview.co.uk/
dealing or by calling 0345 603 7037. Lines are open between 8am
and 4.30pm, UK time, Monday to Friday.
Company website
The Company’s website at www.dssmith.com contains the latest
information for shareholders, including press releases and an updated
financial diary. Email alerts of the latest news, press releases and
financial reports about the Company may be obtained by registering
for the email news alert service on the website.
Share price information
The latest price of the Company’s ordinary shares is available at
www.londonstockexchange.com. DS Smith’s ticker symbol is SMDS.
It≈is recommended that you consult your financial adviser and verify
information obtained before making any investment decision.
Shareholder information
Financial diary
3 September 2024 Annual General Meeting
5 December 2024* Announcement of half-year results for the six
months ended 31 October 2024
19 June 2025* Announcement of full-year results for the
year ended 30 April 2025
* Provisional date
Other information
Information on how to manage your shareholdings can be found at
https://help.shareview.co.uk. The pages at this web address provide
answers to commonly asked questions regarding shareholder
registration, links to downloadable forms and guidance notes. If your
question is not answered by the information provided, you can send
your enquiry via secure email from these pages. You will be asked
to complete a structured form and to provide your shareholder
reference, name and address. You will also need to provide your
email address if this is how you would like to receive your response.
Alternatively, you can telephone +44 (0)371 384 2197. Lines are open
between 8.30am and 5.30pm, UK time, Monday to Friday. Forcall
charges, please check with your provider as costs may vary.
This report contains certain forward-looking statements with respect
to the operations, performance and financial condition of the Group.
By their nature, these statements involve uncertainty since future
events and circumstances can cause results and developments to
differ materially from those anticipated or may not be within our
control. The forward-looking statements reflect knowledge and
information available at the date of preparation of this report and
DSSmith Plc undertakes no obligation to update these forward-looking
statements. This report includes climate, nature, circular economy
and sustainability-related disclosures, which remain under
development and are subject to greater uncertainty than other
disclosures, as relevant knowledge, models and methodologies are
nascent and evolving, the disclosures are of a long-term nature and
rely on third party information or other matters outside our control,
there are challenges with current data availability and reliability and
other factors, such as the developing policy and regulatory landscape,
socio-political environment and market practice. As such, the
disclosures included in this report may be amended and updated,
asmarket practice and data quality and availability develop, and
underlying uncertainties, assumptions and estimates change. These
factors could also lead to actual achievements, results, performance
or other future events or conditions differing from those stated,
implied and/or reflected in any forward-looking statements or metrics
included in our climate and sustainability disclosures. Nothing
contained in this report should be construed as a profit forecast.
Pages 1 to 83 consist of a Strategic Report and Directors’ Report
(including the Directors’ Remuneration Report) that have been drawn
up and presented in accordance with and in reliance upon applicable
English company law. The liability of the Directors in connection with
such reports shall be subject to the limitation and restrictions provided
by, and shall be no greater than is required by, applicable English
company law.
This Annual Report is dedicated to the memory of Paul Coleman
1982-2024
218
Printed in the UK by Principal Colour Ltd on
Nautilus Superwhite, Revive 100% recycled
offset andRevive 100% recycled silk.
Both manufactured at a mill certified to
bothISO 14001 and FSC® accredited.
Principal Colour Ltd are certified to the
ISO14001 Environmental Management
Systemand FSC® accredited.
Consultancy and design by Black Sun Global
www.blacksun-global.com
+44 (0) 20 7736 0011
@dssmithgroup
DS Smith
DS Smith
@dssmith.group
DS Smith Plc
Level 3
1 Paddington Square
London
W2 1DL
Telephone
+44 (0) 20 7756 1800
Registered in England.
Company number: 01377658
Keep in touch
@dssmithgroup