| Wed 30 Jul 2008, 9:40 | | MND / MNP - Mondi - Half-Yearly Report For The Six Months Ended 30 June 2008 and |
|
MND MNP
MND MNP
MND / MNP - Mondi - Half-Yearly Report For The Six Months Ended 30 June 2008 and
dividend declaration
30 July 2008
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND & ISIN: ZAE000097051
Mondi plc
(Incorporated in England and Wales)
(Registration number: 6209386)
JSE share code: MNP & ISIN: GB00B1CRLC47
LSE share code: MNDI
As part of the dual listed company structure, Mondi Limited and Mondi plc
(together `Mondi Group`) notify both the JSE Limited and the London Stock
Exchange of matters required to be disclosed under the JSE listings
requirements and/or the Disclosure and Transparency and Listing Rules of the
United Kingdom Listing Authority.
HALF-YEARLY REPORT FOR THE
SIX MONTHS ENDED 30 JUNE
2008
Financial Summary 1
EUR million, except for percentages and per share measures
Six months June Six months Half year
2008 June 2007 change %
Group revenue 3,263 3,052 +7
EBITDA 456 421 +8
Underlying operating profit 263 243 +8
Underlying profit before tax 210 203 +3
Reported profit before tax 171 250 -32
Basic earnings per share (EUR
cents per share) 2 17.1 31.9 -46
Underlying earnings per share
(EUR cents per share) 2 24.8 22.6 +10
Headline earnings per share
(EUR cents per share) 2 18.3 17.3 +6
Interim dividend per share
(EUR cents per share) 7.7 7.3 +5
Cash inflow from operations 310 356 -13
Net debt 1,655 1,335 +24
Group ROCE 11.1% 10.0% +11
1 See Glossary of Financial Terms
2 2007 is pro forma and based on the number of shares admitted following the
demerger from Anglo American plc on 2 July 2007.
Operational and Financial Highlights:
- Underlying operating profit up 8% at EUR263 million driven by a strong
performance from the Europe & International Division
- Improved profit trend in South Africa Division following a slow start to the
year
- Results continue to benefit from our low cost operations and our low cost
wood resource in Russia and South Africa
- Delivered cost savings of EUR58 million, representing 2.1% of cost base
- Underlying earnings per share up 10% and ROCE up 11%
- Major projects in Poland and Russia are on schedule and within budgeted
capital cost
- Substantial cash inflow from operations of EUR310 million which was lower
than prior period due to working capital outflow on the back of higher trading
activity
- Strong financial position with EUR1.1 billion of undrawn committed facilities
as at end of June
- Reported profit before taxation is down 32% because of a change in special
items from a EUR47 million gain in 2007 (mainly disposals) to a EUR39 million
charge in 2008 (mainly closure costs)
- Half year dividend up 5% at 7.7 euro cents per share
David Hathorn, Mondi Group Chief executive, said:
"This is a good result achieved in a softening European market. It reflects
Mondi`s strategic positioning, in particular, our broad business base with
leading market positions, emerging market focus, including major positions in
South Africa and Russia (where demand is good), our continued push to drive
down costs and a willingness to respond quickly to changing market conditions.
In the second half, South Africa should see a further improvement as actions to
enhance profitability continue to take effect. This should help to offset a
softening trading environment in Europe. Overall Mondi expects to make progress
for the year as a whole."
Contact details:
Mondi Group
David Hathorn +27 (0)11 9945418
Paul Hollingworth +44 (0)1932 826326
Lisa Attenborough +44 (0)1932 826380 / +44 (0)7872 672669
Financial Dynamics
Sophie Kernon +44 (0)20 7269 7121/ +44 (0)7802 877243
Louise Brugman +27 (0)11 214 2415 / +27 (0)83 504 1186
Conference call dial-in and audio cast details:
Please see below details of our dial-in conference call and audio cast that will
be held at 10:00 (UK) and 11:00 (SA).
The conference call dial-in numbers are:
South Africa 0800 991 276 (toll-free)
UK +44 20 7190 1232
0800 358 5260 (toll-free)
Europe & Other +44 20 7190 1232
An online audio cast facility will be available via:
http://events.ctn.co.uk/ec/mondi/547/
Password: HYResults08
The presentation will be available online via the above web site address before
the audio cast commences.
Questions can be submitted either via the dial-in conference call or by email
via the audio cast.
Should you have any issues on the day with accessing the dial-in conference,
please call +44 20 8901 5400.
Should you have any issues on the day with accessing the audio cast, please
email mondievents@ctn.co.uk and you will be contacted immediately.
An audio recording of the presentation will be available on Mondi`s website
during the afternoon on 30 July 2008.
Editors` notes:
Mondi is an international paper and packaging group and in 2007 had revenues of
EUR6.3 billion. Its key operations and interests are in western Europe,
emerging Europe, Russia and South Africa.
The Group is principally involved in the manufacture of packaging paper and
converted packaging products; uncoated fine paper; and speciality products and
processes, including coating, release liner and consumer flexibles.
Mondi is fully integrated across the paper and packaging process, from the
growing of wood and manufacture of pulp and paper (including recycled paper) to
the converting of packaging papers into corrugated packaging and industrial
bags.
Mondi has production operations across 35 countries and had an average of
35,000 employees in 2007.
Group performance overview
As previously announced, from 1 January 2008, the former Mondi Packaging and
Mondi Business Paper Business units now operate as two divisions: Europe &
International and South Africa. Accordingly, we have used this new reporting
structure for commenting on trading in this Half-yearly Report.
The Group`s underlying operating profit was 8% ahead of the comparable period
for the prior year helped by a strong performance from the Europe &
International Division. Within Europe & International there were good
performances from the Bags & Specialities and Uncoated Fine Paper Business
units. This was partially offset by reduced profits from Corrugated as prices
came under pressure. Measures to improve the South Africa Division`s
profitability started to bear fruit towards the end of the first half and
overall the Division recorded an increase in underlying operating profit.
Merchant and Newsprint saw a significant decline in profits as our joint
venture, Aylesford Newsprint, suffered from both a decline in selling prices
and an increase in input costs.
The Group continued to benefit from its low cost base and its own fibre supply
from the emerging markets of Russia and South Africa, with circa 50% of the
Group`s fibre demand available from these sources. Overall the Group delivered
a further EUR58 million in cost savings, representing circa 2.1% of the prior
year cash cost base, further contributing to the positive performance versus
the prior year. Mondi remains committed to targeting annual savings of at least
2%.
Europe & International Division
Six months Six months Half year
EUR million June 2008 June 2007 change %
Segment revenue 2,742 2,544 +8
- of which inter-segment revenue 81 74 +9
EBITDA 364 321 +13
Underlying operating profit 215 182 +18
Bags & Specialities 109 80 +36
Uncoated Fine Paper 69 48 +44
Corrugated 37 54 -31
Capital expenditure 1 260 101 +157
Net segment assets 4,166 3,755 +11
Return on capital employed (%) 12.0% 9.8% +22
1 Capital expenditure is cash payments and excludes business combinations
Whilst the European business environment is increasingly challenging, our focus
on driving down costs, leading market positions and exposure to the growth
markets of emerging Europe and Russia (where demand is good), all contributed
to underlying operating profit up 18% versus the prior period. The Division
delivered EUR50 million in cost savings, with the benefits from the
reorganisation of the Uncoated Fine Paper operations announced last year a
significant contributor.
In the Bags & Specialities business underlying operating profits were up EUR29
million. The business has benefitted from significantly higher kraft paper and
converted bag prices (up around 6% since the year end), however converting
volumes saw softness as demand from the building industry has started to slow.
The results also benefit marginally from the acquisition of Unterland in the
second half of 2007 which is now trading more in line with expectations.
In the Uncoated Fine Paper (UFP) business underlying operating profits were up
EUR21 million, with sales volumes only marginally down despite the closure of
our Hungarian mill during the period. Selling prices are up on average 3%
against the comparable period but are relatively unchanged since the year end.
The business also benefited from the internal restructuring announced last year
end as well as a better performance from all our mills including our Russian
mill where the local market continues to experience strong demand growth.
In the Corrugated business, which represents 17% of divisional operating
profit, underlying operating profits are down EUR17 million at EUR37 million as
selling prices fell back following substantial increases achieved in 2007.
Kraftliner prices are down 5% since the year end due to ongoing imports on the
back of the weak US dollar. As expected, following a rapid rise during 2007,
testliner prices have declined over 10% since the year end. The current price
declines are due to a substantial destocking combined with slowing demand. Box
prices, having increased since the year end, have now started to level off.
Results were also impacted by cost inflation, particularly recycled waste
fibre costs up 20%, market related downtime and the timing of maintenance
shuts. We will continue to monitor market conditions, in particular utilisation
levels, and take action if appropriate.
The recent acquisition of Tire Kutsan in Turkey continues to underperform. This
is mainly a result of softer demand coupled with new competitor capacity coming
on-stream and the resulting impact on prices in the local market. A number of
small acquisitions were completed in the period, primarily focused on the
strengthening of the product mix and geographic coverage of our Bags &
Specialities business. The enterprise value of all acquisitions in the period
totalled EUR36 million. The Division disposed of the remaining sheet feeder
plants in the United Kingdom for an enterprise value of EUR23 million and
completed the closure of the Szolnok mill in Hungary.
The construction of the new 470,000 tonne recycled containerboard machine at
Swiecie in Poland is progressing well (total cost of EUR305 million). Orders
for the main machine have been placed and we remain on track for completion in
the second half of 2009 within the budgeted cost. We anticipate this machine
will have the lowest operating cost of its type. The investment in the new box
plant and associated infrastructure (EUR45 million) has been delayed pending
agreement on the availability of subsidies.
The project to modernise our Russian mill (total cost of EUR525 million) is
also making good progress. All main equipment contracts have been agreed,
construction has commenced and we remain on track for completion within the
budgeted cost by mid to late 2010. The key value drivers of this project are to
improve efficiency and our cost base in Russia, increase energy production and
revenue by selling surplus energy to the grid and provide modest extra capacity
(both pulp and paper) for the strongly growing domestic market.
South Africa Division
Six months Six months Half year
EUR million June 2008 June 2007 change %
Segment revenue 274 295 -7
- of which inter-segment revenue 174 168 +4
EBITDA 67 65 +3
Underlying operating profit 45 44 +2
Uncoated Fine Paper 30 32 -6
Corrugated 15 12 +25
Capital expenditure 1 23 11 +109
Net segment assets 789 981 -20
Return on capital employed (%) 10.6% 9.9% +7
1 Capital expenditure is cash payments and excludes business combinations
The South Africa Division recorded a small increase in underlying operating
profits of EUR1 million. An increase in profitability towards the end of the
period followed a slow start due partially to the loss of more than three weeks
of production at Richards Bay (largely as a result of an extensive maintenance
shut versus none in 2007). Throughout the period substantial progress was made
on the management of product mix to optimise margins as opposed to volumes.
Results towards the end of the period benefited from product mix changes as
well as selling price increases for both domestic (5% increase effective 1 May)
and export sales (following a 23% weakening of the rand).
The Division has also delivered EUR6 million in cost savings in the period.
In the domestic market (which represents about one third of the Division`s UFP
volume), further price increases of up to 15% have been announced for
implementation during August. This will more than compensate for rising
domestic input costs. The domestic market for UFP continues to grow at around
6% per annum. Sales to Africa (which represent circa one third of the
division`s UFP volume) also continue to grow, where price increases (quoted in
US dollars) of around 5% are in progress. The remaining UFP volume, which is
destined for the international markets, will benefit from the weaker rand.
The corrugated operations consist of the white top linerboard machine at
Richards Bay with approximately 80% of its production exported. The global
supply/demand balance remained favourable and there have been no announcements
of new capacity additions. Corrugated profits were up in the period with export
sales benefiting from the weaker rand.
These factors should support the ongoing improvement in the South Africa
Division`s results on translation into euros for the full year.
Mondi Packaging South Africa (MPSA)
Six months Six months Half year
EUR million June 2008 June 2007 change %
Segment revenue 223 173 +29
- of which inter-segment revenue 14 17 -18
EBITDA 27 21 +29
Underlying operating profit 14 15 -7
Capital expenditure 1 25 14 +79
Net segment assets 308 207 +49
Return on capital employed (%) 11.1% 18.8% -41
1 Capital expenditure is cash payments and excludes business combinations
Demand and pricing remained positive with corrugated packaging and corrugated
case material volumes up 7% and 3% respectively versus the comparator period.
This performance was helped by good demand from the agricultural sector, which
represents half of MPSA`s corrugated box revenue. The agriculture sector is
highly export driven and is expected to continue to enjoy good volume growth.
Double digit price increases are targeted for the domestic containerboard
market with effect from 1 October. The Lenco acquisition (rigid plastics
manufacturer) completed in July 2007 contributed positively to profits, in
particular EBITDA, and is now performing better after a slow start. The
improved local performance is however impacted on translation into euros at the
much weaker rand rate and a EUR2 million charge for the amortisation of Lenco
intangibles (2007: nil).
Progress on the execution of major projects has been good with the Felixton
rebuild which was commissioned on time and within budget. This will increase
containerboard production by 45,000 tonnes per annum to 155,000 tonnes per
annum. This repositions Felixton to produce lightweight recycled containerboard
to serve the fast growing domestic market.
Merchant and Newsprint
Six months Six months Half year
EUR million June 2008 June 2007 change %
Segment revenue 293 286 +2
- of which inter-segment revenue - 1 n/a
EBITDA 18 27 -33
Underlying operating profit 10 16 -38
Capital expenditure 1 5 8 -38
Net segment assets 248 265 -6
Return on capital employed (%) 15.0% 14.1% +6
1 Capital expenditure is cash payments and excludes business combinations
At Europapier volumes and prices remained firm with good demand in emerging
Europe and Russia. At Mondi Shanduka Newsprint earnings were up in local
currency with volume and price increases largely eroded by a significantly
weaker rand exchange rate. Mondi`s joint venture, Aylesford Newsprint (which
accounted for just under half the Divisions 2007 full year operating profit),
has seen a significant deterioration in profitability as a result of falling
selling prices, due to competition from imports, and rising energy and recycled
fibre input costs. The recent weakening of sterling should see competition from
imports lessen.
Corporate and other
Net corporate costs are EUR7 million higher than the comparable period in 2007
due to the establishment of Mondi`s own corporate capacity following the
demerger from Anglo American plc as well as the disposal of non-core businesses
at the end of 2007 that contributed circa EUR2 million of profits in the
comparable period.
Input costs and currency
External wood cost pressures have continued to ease but waste-based fibre
costs were up by circa 20% on the comparable period although they started to
fall towards the end of the 2008 first half. Other input cost pressures remain
a concern and the rising oil price continues to feed through into rising energy
and transport bills. Importantly, our results continued to benefit from Mondi`s
ongoing focus on cost reductions, restructuring and productivity improvements,
all of which help to mitigate the impact of cost inflation and delivered EUR58
million in cost savings during the period.
The relatively modest levels of net export dependency of UFP and containerboard
(circa 5% versus 20% for most coated and graphic paper grades) have helped to
limit the impact of the weak US dollar for Mondi. Whilst the profitability of
export sales from South Africa have benefited from the weakness of the Rand,
the strength of the emerging European currencies (up circa 5 to 10% against
the Euro) has impacted on the Polish, Czech and Slovakian operations` margi ns
for Euro based exports.
Restructuring and operating special items
The previously announced closure of our 140,000 tonne uncoated fine paper mill
in Hungary was completed during the period (production ceased on 20 March
2008). We also completed the restructuring and simplification of our European
UFP divisional structure and are now beginning to see the benefits of these
actions coming through. The charge for impairment of the Hungarian site was
recognised in the 2007 results and closure and other costs of EUR26 million
have been disclosed as a special item in the first half. In addition, we
incurred a EUR5 million charge on the closure of the Nyborg Bags & Specialities
plant in Denmark with certain of the volumes transferred within Mondi.
Loss on sale
The EUR3 million loss on sale of the remaining United Kingdom Corrugated sheet
feeder plants for an enterprise value of EUR23 million has been reflected as a
special item.
Net finance costs
Overall finance charges were higher than the comparable period. For the first
half of 2007 Mondi was a subsidiary of Anglo American plc and operated under a
different capital structure which resulted in lower finance charges.
Taxation
The effective tax rate before special items, of 29% is down one percentage
point on the comparable period and is similar to the 2007 year end rate. This
is mainly a result of lower tax rates in our key geographies. The reported tax
rate after special items of 36% is 12 percentage points higher than the
comparator period in 2007, principally as disposals in the first half of 2007
were realised in a tax efficient manner.
Minority interests
Minority interests for the half year were EUR3 million lower than the
comparator period as earnings were down at the significant operations where
there are non-controlling interests particularly in our Corrugated operations
within Europe & International.
Cash flow and borrowings
As expected, Group borrowings have increased by EUR148 million since the year
end as the rate of capital expenditure increases due to the commencement of
the two key capital projects in Poland and Russia. In the period EUR140 million
was spent on these two projects versus nil in the comparator period (full year
2007: EUR40 million). Mondi`s other major primary production sites are well
invested following major projects in recent years and, as such, capital
expenditure going forward will reduce to levels below depreciation.
Mondi enjoys a strong financial position and as at the end of June the Group
had just under EUR1.1 bill ion of undrawn committed debt facilities (EUR0.8
billion of which is available under a EUR1.55 billion facility expiring on 22
June 2012).
Principal risks and uncertainties
It is in the nature of our business that Mondi is exposed to risks and
uncertainties which may have an impact on future performance and financial
results, as well as upon our ability to meet certain social and environmental
objectives. The Group believes that it has effective systems and controls in
place to manage the key risks identified below.
The markets for paper and packaging products are highly competitive, with many
participants and prices determined by market conditions including industry
operating capacities and exchange rates. Prices of Mondi`s key paper grades
have experienced substantial fluctuations in the past; however, Mondi is
flexible and responsive to changing market and operating conditions and the
Group`s significant exposure to low cost emerging markets provides some measure
of protection from market conditions.
Materials, energy and consumables used by Mondi include significant amounts of
wood, pulp, recovered paper, packaging papers and chemicals. Increases in the
costs of any of these raw materials, or any difficulties in procuring wood in
certain countries, could have an adverse effect on Mondi`s business,
operational performance or financial condition. However, Mondi`s relatively
high level of integration and access to its own fibre in Russia and South
Africa, acts to help mitigate this risk.
Mondi has announced two significant capital investments to expand and upgrade
existing facilities in Poland and Russia. These projects carry risks and Mondi
has put in place dedicated teams to ensure delivery of the projects on time and
within budget.
Board and Group Executive
As stated in the prospectus, a requirement of the South African Ministry of
Finance is that the Chief financial officer`s role is based at the head office
in South Africa from the beginning of 2009. Paul Hollingworth, our Chief
financial officer, has decided not to relocate and as such, will step down from
the Board as Chief financial officer during the fourth quarter. He will stay
with Mondi until the end of December 2008. Mondi would like to thank Paul for
his significant contribution to the Group and also for helping to establish
Mondi as a separate listed Group following its demerger from Anglo American
plc. We are pleased that we have an excellent replacement, Andrew King, who has
worked for Mondi for 7 years, latterly as Group strategy and business
development director, who will take up the position of Chief financial officer
and will be based in South Africa. Andrew King will join the Board as Chief
financial officer during the fourth quarter.
Interim dividend
An interim dividend of 7.7 euro cents per share, an increase of 5.5%, will be
paid on 16 September 2008 to those shareholders on the register of Mondi plc on
29 August 2008.
An equivalent interim dividend will be paid in South African rand on 16
September 2008 to shareholders on the register of Mondi Limited on 29 August
2008. Holders of Mondi Limited Depositary Interests who hold their interests
through Equiniti Corporate Nominee Ltd will receive their dividend in UK
sterling on 23 September 2008.
Current year outlook
The 8% increase in first half underlying operating profits against a worsening
economic backdrop is a good result. It is testament to Mondi`s strategic
positioning, in particular, its broad business base with leading market
positions, emerging market focus, including major positions in South Africa and
Russia (where demand is good), continued push to drive down costs and a
willingness to respond quickly to changing market conditions.
In the second half, South Africa should see a further improvement as actions to
enhance profitability continue to take effect. This should help to offset a
softening trading environment in Europe. Overall Mondi expects to make progress
for the year as a whole.
Directors` responsibility statement
The directors confirm that to the best of their knowledge:
- The condensed set of combined and consolidated financial statements has
been
prepared in accordance with IAS 34, `Interim Financial Reporting`;
- The Half-yearly report includes a fair review of the important events
during
the six months ended 30 June 2008 and a description of the principal risks and
uncertainties for the remaining six months of the year ending 31 December 2008;
- There have been no changes in the Group`s related party relationships from
those reported in the Group`s annual financial statements for the year ended
31 December 2007; and
- The Half-yearly report includes a fair review of the Group`s related party
transactions.
By order of the Boards,
David Hathorn Paul Hollingworth
Director Director
29 July 2008
Independent review report to the members of Mondi Limited
Introduction
We have been instructed by the company to review the condensed financial
information of the Mondi Group for the six months ended 30 June 2008 which
comprises the condensed combined and consolidated income statement, the
condensed combined and consolidated balance sheet, the condensed combined and
consolidated cash flow statement, the condensed combined and consolidated
statement of total recognised income and expense and related notes 1 to 20. We
have read the other information contained in the Half-yearly report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors` responsibilities
The Half-yearly report, including the financial information contained therein,
is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the Half-yearly report in accordance
with the basis of preparation set out in note 1, the JSE Listing Requirements
and the requirements of International Accounting Standard 34, "Interim
Financial Reporting", which require that the accounting policies and
presentation applied to the Half-yearly figures are consistent with those
applied in preparing the preceding audited financial information except where
any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in
International Standards on Review Engagements 2410-"Review of Interim
Financial Information performed by Independent Auditor of the Entity" issued by
the International Accounting Standards Board. A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with International Standards on Auditing and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half-yearly
report for the six months ended 30 June 2008 is not prepared, in all material
respects, in accordance with International Accounting Standard 34.
Deloitte & Touche
Per C Sagar
Partner
29 July 2008
Note: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Independent review report to the members of Mondi plc
We have been engaged by the company to review the condensed set of financial
statements in the Half-yearly report for the six months ended 30 June 2008
which comprises the condensed combined and consolidated income statement, the
condensed combined and consolidated balance sheet, the condensed combined and
consolidated cash flow statement, the condensed combined and consolidated
statement of recognised income and expense and related notes 1 to 20. We have
read the other information contained in the Half-yearly report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to them in an independent review
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, for our
review work, for this report, or for the conclusions we have formed.
Directors` responsibilities
The Half-yearly report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Half-yearly report
in accordance with the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this Half-yearly report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting" as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the Half-yearly report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half-yearly
report for the six months ended 30 June 2008 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditor
29 July 2008
London, UK
Note: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Condensed combined and consolidated income statement
For the six months ended 30 June 2008
(Reviewed)
Six months ended
30 June 2008
Before Special
special items
EUR million Note items (note 5)
Group revenue 4 3,263 - 3,263
Materials, energy and
consumables used (1,729) - (1,729)
Variable selling expenses (281) - (281)
Gross margin 1,253 - 1,253
Maintenance and other indirect
expenses (143) - (143)
Personnel costs (470) (17) (487)
Other net operating expenses (184) (16) (200)
Depreciation and amortisation (193) (3) (196)
Operating profit/(loss) from
subsidiaries and joint ventures 4 263 (36) 227
Net (loss)/profit on disposals 5 - (3) (3)
Net income from associates 2 - 2
Total profit/(loss) from
operations
and associates 265 (39) 226
Investment income 19 - 19
Interest expense (74) - (74)
Net finance costs 6 (55) - (55)
Profit/(loss) before tax 210 (39) 171
Taxation (charge)/credit 7 (61) - (61)
Profit/(loss) for the financial
period/year 149 (39) 110
Attributable to:
Minority interests 23 - 23
Equity holders 126 (39) 87
Pro forma earnings per share
(`EPS`) for profit attributable to
equity holders
Basic EPS (EUR cents) 8 17.1
Diluted EPS (EUR cents) 8 16.9
Basic underlying EPS (EUR
cents) 8 24.8
Diluted underlying EPS (EUR
cents) 8 24.4
Basic headline EPS (EUR cents) 8 18.3
Diluted headline EPS (EUR
cents) 8 18.0
(Reviewed)
Six months ended
30 June 2007
Before Special
special items
EUR million items (note 5)
Group revenue 3,052 - 3,052
Materials, energy and
consumables used (1,577) - (1,577)
Variable selling expenses (280) - (280)
Gross margin 1,195 - 1,195
Maintenance and other indirect
expenses (130) - (130)
Personnel costs (446) (5) (451)
Other net operating expenses (198) - (198)
Depreciation and amortisation (178) (3) (181)
Operating profit/(loss) from
subsidiaries and joint ventures 243 (8) 235
Net (loss)/profit on disposals - 84 84
Net income from associates 2 - 2
Total profit/(loss) from operations
and associates 245 76 321
Investment income 21 - 21
Interest expense (63) (29) (92)
Net finance costs (42) (29) (71)
Profit/(loss) before tax 203 47 250
Taxation (charge)/credit (61) 1 (60)
Profit/(loss) for the financial
period/year 142 48 190
Attributable to:
Minority interests 26 - 26
Equity holders 116 48 164
Pro forma earnings per share
(`EPS`) for profit attributable to
equity holders
Basic EPS (EUR cents) 31.9
Diluted EPS (EUR cents) 31.9
Basic underlying EPS (EUR
cents) 22.6
Diluted underlying EPS (EUR
cents) 22.6
Basic headline EPS (EUR cents) 17.3
Diluted headline EPS (EUR
cents) 17.3
(Audited)
Year ended
31 December 2007
Before Special
special items
EUR million items (note 5)
Group revenue 6,269 - 6,269
Materials, energy and
consumables used (3,265) - (3,265)
Variable selling expenses (558) - (558)
Gross margin 2,446 - 2,446
Maintenance and other indirect
expenses (289) - (289)
Personnel costs (906) (17) (923)
Other net operating expenses (381) - (381)
Depreciation and amortisation (368) (60) (428)
Operating profit/(loss) from
subsidiaries and joint ventures 502 (77) 425
Net (loss)/profit on disposals - 83 83
Net income from associates 2 - 2
Total profit/(loss) from operations
and associates 504 6 510
Investment income 44 - 44
Interest expense (143) (29) (172)
Net finance costs (99) (29) (128)
Profit/(loss) before tax 405 (23) 382
Taxation (charge)/credit (117) 15 (102)
Profit/(loss) for the financial
period/year 288 (8) 280
Attributable to:
Minority interests 47 - 47
Equity holders 241 (8) 233
Pro forma earnings per share
(`EPS`) for profit attributable to
equity holders
Basic EPS (EUR cents) 45.4
Diluted EPS (EUR cents) 45.1
Basic underlying EPS (EUR
cents) 46.9
Diluted underlying EPS (EUR
cents) 46.7
Basic headline EPS (EUR cents) 39.5
Diluted headline EPS (EUR
cents) 39.3
There were no discontinued operations in any of the periods presented.
Condensed combined and consolidated balance sheet
As at 30 June 2008
(Reviewed) (Reviewed) (Audited)
As at As at As at
30 June 30 June 31 December
EUR million Note 2008 2007 2007
Intangible assets 524 381 520
Property, plant and
equipment 3,750 3,594 3,731
Forestry assets 206 220 224
Investments in
associates 7 7 6
Financial asset
investments 25 25 25
Deferred tax assets 39 40 32
Retirement benefits
surplus 15 8 11
Derivative
financial
instruments 5 - -
Total non-current
assets 4,571 4,275 4,549
Inventories 759 710 760
Trade and other
receivables 1,349 1,355 1,304
Current tax assets 24 33 52
Cash and cash
equivalents 10 152 176 180
Derivative
financial
instruments 19 7 17
Total current assets 2,303 2,281 2,3 13
Assets held for sale - 2 -
Total assets 6,874 6,558 6,862
Short-term
borrowings 10 (406) (311) (453)
Trade and other
payables (1,095) (1,016) (1,150)
Current tax
liabilities (87) (87) (81)
Provisions (14) (9) (14)
Derivative
financial
instruments (14) (2) (3)
Total current
liabilities (1,616) (1,425) (1,701)
Medium and
long-term
borrowings 10 (1,401) (1,200) (1,234)
Retirement benefits
obligation (190) (212) (200)
Deferred tax
liabilities (313) (317) (322)
Provisions (46) (42) (50)
Other non-current
liabilities (16) (15) (17)
Derivative
financial
instruments - - (2)
Total non-current
liabilities (1,966) (1,786) (1,825)
Total liabilities (3,582) (3,211) (3,526)
Net assets 3,292 3,347 3,336
Equity
Anglo American plc
investment in the
Group 11 - 2,051 -
Ordinary share
capital 11 114 - 114
Share premium 11 532 - 532
Retained earnings
and other reserves 11 2,239 944 2,317
Total attributable
to equity holders 2,885 2,995 2,963
Minority interests 407 352 373
3,292 3,347 3,336
Condensed combined and consolidated cash flow statement
For the six months ended 30 June 2008
(Reviewed)
Six months ended
30 June
EUR million Note 2008
Cash inflows from operations 310
Dividends from associates -
Income tax paid (27)
Net cash inflows from operating activities 283
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and cash
equivalents (35)
Proceeds from disposal of subsidiaries, net of
cash and cash
equivalents 2
Proceeds from disposal of associates -
Purchases of property, plant and equipment 12 (313)
Proceeds from disposal of property, plant and
equipment 12 7
Investment in forestry assets (22)
Purchase of available for sale investments -
Purchase of intangible assets (4)
Proceeds from disposal of available-for-sale
investments 2
Loan (advances to)/repayments from related parties (2)
Interest received 9
Other investing activities 1
Net cash (used in)/generated from investing
activities (355)
Cash flows from financing activities
Repayment of short-term borrowings 10 (143)
Proceeds from medium and long-term borrowings 10 285
Interest paid (69)
Dividends paid to minority interests (9)
Dividends paid to equity holders 9,11 (80)
Dividends paid to Anglo American plc group
companies 11 -
Increase in Anglo American plc invested capital 11 -
Purchase of treasury shares 11 (15)
Other financing activities 13
Net cash used in financing activities (18)
Net decrease in cash and cash equivalents 1 (90)
Cash and cash equivalents 1 at start of
period/year 10 59
Cash movements in the period/year 10 (90)
Reclassifications 10 -
Effects of changes in foreign exchange rates 10 1
Cash and cash equivalents 1 at end of period/year (30)
