Ag Vision - Group Newsletter (1)

AG Vision - Group_Newsletter 01/12/2009 13:10 Page 1

News from across the Ardagh Group

Issue 1

December 2009

Niall Wall, CEO

Welcome to the first Newsletter from Ardagh As you are aware, 2009 has been a difficult year for many businesses across the world. Europe was particularly affected by the global recession including all the markets we operate in and although our industry held up more than most, sales volumes have deteriorated. As a result we have had to make some difficult decisions with temporary line closures across the Group and furnace closures in Bad Münder and Obernkirchen. These actions were taken with much thought and deliberation in order to allow the business to become leaner and more efficient with the intention of safeguarding employment for the majority of our people. In April this year the Company undertook a project called Project Sense, with the aim of reducing costs by €70m against the 2007 budget. All stakeholders were involved and through a combined effort we will achieve our objectives, placing Ardagh at a competitive advantage for 2010. I would personally like to thank all Ardagh employees for their support in this project which will help us stay competitive as the challenges for our business continue into 2010. Your continued support will ensure Ardagh remains successful in the coming years and develop its position as one of Europe’s leading glass manufacturers.

www.ardaghglass.com

Production begins for Heineken at new Moerdijk Furnace Less than one year after the announcement of a new furnace at Moerdijk in the Netherlands, dedicated to Heineken, beer bottles are rolling off the production line. The new furnace, which doubles production at the plant, is close to one of Heineken’s main production centres. We, and colleagues from Heineken, are proud to welcome this outstanding achievement, which significantly reduces the environmental impact of the glass bottles which we produce for them. The furnace CO2 emissions are reduced by 12%, energy usage is reduced by 13% and the CO2 from road transportation is additionally reduced by 80%. The new furnace has the latest state of the art oxy-fuel fired technology, significantly reducing emissions in compliance with future European legislation. The Moerdijk project is a significant development, which consolidates the long term partnership between Ardagh Glass and Heineken.

We are supporting various Children’s Charities across Europe this Christmas

I would also like to take this opportunity to thank David Currie for the outstanding contribution he has made to the business in his various roles over the years, most recently in the position of Managing Director of Operations. I’m sure you will join with me in offering David our best wishes for his retirement. Johan Gorter will now officially take over the role of Managing Director of Operations. His knowledge and experience of the glass industry will be a great asset to the Company going forward.

one brandone vision

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Operational Excellence Group (OEG) Even if you are not already aware of the Company’s “Operational Excellence Group” (OEG), all functions and regions are now benefitting from its work in some way.

“Converting ideas into solutions through combined technical excellence” When Ardagh Glass expanded into 7 countries we knew that there were different cultures and ways of working, but we also knew we had a wealth of technical and practical knowledge in all our plants and so needed to find a way of harnessing this expertise and developing a “best practice” programme. The solution was to create a new group of technical experts within the Company, combining the knowledge of both plant and group personnel. This cross functional and cross regional team has now been fully empowered to do what they do best - share information and implement it ‘at the speed of light’ once it has been proven to be effective. We recognised that we needed a two way communications channel within each plant to ensure that we are made aware of any problem or issue that might need tackling, and which would allow for solutions to be implemented as smoothly as possible. We therefore established an OEG representative in each plant, to provide a key link with the Group.

I am delighted to report that OEG has been successful in both the results it has achieved with specific projects, and in creating a more coherent best practice approach throughout the Group. Here are some examples:

• Through focussed OEG plant reviews we have been able to create a best practice protocol for forehearth set-up.

• Through OEG we have introduced a high-speed camera as a very powerful problem solving tool. What in the past might have taken years, was implemented in less than 3 months.

• We have also established best practice programmes in the vital areas of quality checks, critical defect reduction, inspection equipment and customer services. Customer critical defect complaints have been reduced by 75% as a direct result of this initiative.

• Through sub-groups we have been able to optimise cooling fans and establish a best practice maintenance plan. Through the OEG, we are far more focused on quality risk management and customer needs. We are moving towards a standardised approach that provides us with the fastest know-how transfer so that quality can be reproduced throughout the Company. Above all, there is now a very effective channel for communicating cost saving and quality improving ideas and suggestions.

Business Processes & Systems To support the ongoing development of Ardagh’s business we have recognised the need to improve and integrate our systems.

Johan Gorter - Managing Director European Operations

To this end, a formal structure to ensure Ardagh’s business processes and systems are controlled has been introduced to enhance the work of the SCC (SAP Competence Centre) and Key Users. The SCC will change its name to the BST (Business Systems Team) and together with the BPT (Business Processes Team) made up of Group Key Users will be responsible for ensuring process and system development fits with the requirements of the business. Specifically, the coordination and development of the key business systems (SAP, MERA and BW), together with integration to APS and iShare will become the responsibility of the BST and BPT teams under the guidance of a Steering Group. These improvements will ensure the requirements of Sales, Planning, Finance, Operations, HR and the Supply Chain are optimised and met in the most cost-effective way. To help this process succeed, knowledge sharing across the Group will be a priority as well as communication and collaboration across all regions. Michael Kennedy - CFO Operations

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The importance of Corporate Social Responsibility (CSR) to Ardagh Glass "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large" (World Business Council for Sustainable Development) As a Company, we are increasingly being asked by our customers to state our policies towards Corporate Social Responsibility. CSR has become a major issue, as far as both the environment and the way we treat all our stakeholders is concerned. At both Group and Plant level, Ardagh supports a wide range of community and regional based events and initiatives - ranging from sports and environmental, cultural and educational, to various charities. Here are some examples.

Through Dublin Head Office we have supported the Peter McVerry Trust for Homeless Children through sponsorship of a cycle team in the recent “Welcome Home” 150 kilometres cycle race from Dublin to Wexford.

In the UK an annual schools design competition based around recycling is sponsored by Wheatley and from Portland in Scotland we sponsor one of the main regional football competitions, the Ardagh League Cup. Football is very important to many of the towns and villages around the factory in Irvine, where long term sponsorship has benefited thousands of players, their families and supporters.

In Germany, as half of all finished products are collected by our customers, we have developed a highly effective “reverse logistics” scheme. Deliveries to customers are synchronised with collections at the plant to significantly reduce mileage and thus the carbon and noise impact of transportation. A similar arrangement is now being operated by our hauliers to keep empty return journeys to a minimum. This approach is also being adopted throughout the Company.

In the Netherlands we sponsor the "Roparun" in May each year. This is a long distance running competition in which teams run the 530 kilometres from Paris to Rotterdam in aid of young cancer patients.

We run a very active community programme in Poland, where recent initiatives have included sponsoring a theatre group performance for hospitalised children, supporting a local kindergarten and creating a foundation for the disabled.

At Ardagh’s Limmared factory in Sweden, scholarships are awarded to local students who achieve outstanding exam results. There is also a scheme to provide low carbon energy to the local community and Ardagh is involved in the national “Keep Sweden Tidy” campaign.

Support for education features highly on Ardagh’s CSR priority list. The German and Dutch plants also work closely with local schools at all levels, supporting events, facilitating works visits, sponsoring anniversaries and mentoring projects.

“How we relate to our neighbours, our communities, our employees and the environment are all embedded in our core values and feature prominently in Company training programs at group and local levels.” Monika Markowska - Group HR Director, Poland

A focus on sustainability – Trendtag Glas 2009 This year’s Trendtag Glas Conference, the main event in the German glass making calendar held in Hamburg in October, focused on the sustainability of glass as a packaging material. A host of high profile speakers from the industry as well as from the world of science and technology highlighted the merits of glass as the packaging material of the future in a world where environmental concerns are becoming top of the agenda for businesses and brands. The conference also acknowledged that as well as being perceived by consumers as a highly sustainable material, glass also offered innovative solutions for businesses evaluating their credentials in the area of sustainability.

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How glass is able to measure the whole iceberg As you read this article, people all over the world will be reflecting on the Copenhagen Climate Change Conference of December, involving 180 countries. Will the challenge of finding ways to reduce greenhouse gas emissions to manageable levels and avoid raising global temperatures be met?

We shall find out soon enough!

Thousands of people throughout Europe have positive things to say about glass... So, in 2008, FEVE, the European Glass Container Association, (www.feve.org) announced the launch of a new campaign called “Friends of Glass”. The aim of Friends of Glass is to promote the benefits of glass packaging directly to consumers using modern communication techniques such as blogging and social networking (eg, Facebook & Twitter). It is a “word of mouth” movement designed to engage consumers and promote the sustainability, health and functional benefits that glass has over other materials. We are facing increasing competition from other packaging materials so it’s both a timely and positive step for our industry to act together in securing a positive future for glass packaging. The campaign has completed its first phase across Europe with the staging of “Choose Glass Week” in September.

Images from ‘Choose Glass Week, Brussels’

The glass industry has always taken a pro-active approach towards the environment. Some regions have been running recycling programmes for over 30 years and have made significant progress in container lightweighting, in some cases halving weights over the past 20 years. The European Glass Container Association – FEVE, alongside its USA equivalent the Glass Packaging Institute, is currently compiling a Life Cycle Analysis (LCA). This further demonstrates the industry’s commitment to understanding and reducing our environmental impact. This LCA study takes a ‘cradle to cradle’ approach which measures not just the environmental impact of the material up to the factory gate, but continues up to the ‘end of life’ or waste phase. Because it has used data from 200 glass furnaces and was independently verified, it is the most credible and comprehensive assessment ever conducted across all packaging industries. A good way to describe our approach is to use the metaphor of an Iceberg. Other materials measure themselves against the visible part of the iceberg (ie, by excluding the waste phase) and ignore what is under the water. The new LCA data for glass considers the full picture. LCA is a complex subject, but thanks to this study the glass industry is gaining credibility. The results help us to fully understand our impact and target real reductions. As an industry we are developing strong messages to counter unfair comparisons with other materials and support our industry going forward. Steffen Seehausen - Head of Group Physical Risk Management

Results to date have been good with an estimated coverage of over 20 million European consumers. This includes over half a million viewings of a viral video starring HANK ‘The Singing Bottle’ (www.friendsofglass.com).

Sharon Crayton - Head of Group Marketing

Managing an uncertain market As we reach the end of 2009 demand for glass packaging in Europe is expected to be down 6%. However, due to the economic downturn this was something Ardagh anticipated early in the year and we took appropriate measures at the start of the cycle to adjust our stock levels and costs. As a result, the Company is in better shape to move forward and take advantage of any economic rebound that is predicted for 2010. The good news is that we have already secured contracts for more than half our 2010 sales target, including long term contracts with key customers such as Heineken, Absolut and ABInBev. We must expect that next year customers will be able to take advantage of a competitive market for glass packaging. However, the long-term relationships we enjoy with many customers, our strong and experienced sales team, and the flexibility we now have across the whole business will ensure this is carefully managed. Reiner Brand - Group Sales & Marketing Director