| Tue 23 Feb 2010, 9:00 | | MND/ MNP - Mondi Limited / Mondi Plc - Full year results for the year ended 31 |
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MND MNP
MND MNP
MND/ MNP - Mondi Limited / Mondi Plc - Full year results for the year ended 31
December 2009
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
23 February 2010
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.
Full year results for the year ended 31 December 2009
Financial Summary
EUR million, except for % and per share
measures 2009 2008 Change %
Group revenue 5,257 6,345 -17
EBITDA 1 645 814 -21
Underlying operating profit 2 294 441 -33
Underlying profit before tax 3 182 284 -36
Reported profit/(loss) before tax 6 49 (103) 148
Basic loss per share (EUR cents)4 (6.5) (41.6) 84
Underlying earnings per share (EUR cents)4 18.7 33.9 -45
Headline earnings per share (EUR cents)4 11.4 20.3 -44
Cash generated from operations 867 795 9
Net debt 1,517 1,690 10
Group ROCE 5 7.6% 9.5% -20
Total dividend per share (EUR cents) 9.5 12.7 -25
Highlights:
- Clear pick-up in European trading conditions in the final quarter.
- Strong performance from European uncoated fine paper business throughout the
year.
- Substantial cash generation from operations of EUR867 million.
- Strong cash management with net debt down to EUR1.5 billion despite around
EUR300 million spent on major capital projects.
- Delivered cost savings of EUR251 million, significantly in excess of target.
- Achieved very strong control of working capital, resulting in a net working
capital inflow of EUR248 million for the year.
- Polish recycled containerboard machine and box plant projects successfully
completed.
David Hathorn, Mondi Group chief executive, said:
"Mondi has delivered a solid full year performance in very challenging market
conditions. The early part of the year was particularly difficult for our
European operations, characterised by sharp volume declines and consequent
pricing pressures. It was, however, pleasing to see the subsequent recovery in
demand, which supported price increases during the fourth quarter in various of
our packaging segments.
The strong performance throughout the year of our European uncoated fine paper
business was particularly noteworthy and is testament to the inherent strengths
of this business and management`s unwavering focus under very challenging
circumstances.
The South African export focused businesses continue to struggle, in large part
due to the strength of the rand, and while we continue to take steps to improve
performance, it is clear that a return to satisfactory levels of profitability
will not be possible without some increase in the rand selling prices.
A significant achievement this year was the successful start-up of the new
recycled containerboard machine in Poland, with current performance
significantly exceeding the investment plan. Congratulations must be extended
to the whole team involved in the execution of this project, which puts us in a
great position to exploit the growing demand for lightweight containerboard in
central and eastern Europe.
Our initiatives to prioritise cash flow generation in light of the downturn in
trading have been very successful, evidenced by the reduction in net debt over
the course of the year while still funding the two major capital expenditure
projects.
Looking ahead, it is clear that the Group`s performance will largely depend on
the pace and extent of the global economic recovery. Furthermore, while there
has been substantial industry capacity rationalisation over the past year,
further supply side reductions may be required to ensure that supply and demand
are balanced. Encouragingly, however, we have seen a steady improvement in
industry order volumes, with some recent price recovery in the European
packaging grades. This improvement in our trading environment, together with
the various restructuring actions taken over the course of 2009, positions
Mondi well for the year ahead."
Notes:
1 EBITDA is operating profit of subsidiaries and joint ventures before special
items, depreciation and amortisation.
2 Underlying operating profit is operating profit of subsidiaries and joint
ventures before special items.
3 Underlying profit before tax is reported profit before tax before special
items.
4 The Group has presented underlying earnings per share to exclude the impact
of special items, and headline earnings per share in accordance with circular
3/2009 `Headline Earnings` as issued by the South African Institute of
Chartered Accountants.
5 Group return on capital employed (ROCE) is an annualised measure based on
underlying operating profit plus share of associates net earnings divided by
average trading capital employed before impairments and adjusted for major
capital projects not yet commissioned.
6 Profit/(loss) before tax is reported after special items of EUR133 million.
Contact details:
Mondi Group
David Hathorn +27 (0)11 994 5418
Andrew King +27 (0)11 994 5415
Kerry Crandon +27 (0)11 994 5425 / +27 (0)83 389 3738
Financial Dynamics
Richard Mountain +44 (0) 20 7269 7291
Chloe Webb +27 (0) 11 214 2421
Dial-in audio cast facility will be available via:
Please see below details of our dial-in conference call and audio cast that
will be held at 09:30 (UK) and 11:30 (SA). The conference call dial-in numbers
are:
South Africa: 0800 200 648
UK: 0800 917 7042
Europe & Other: 00800 246 78 700
An online audio cast facility will be available via:
www.mondigroup.com/FYResults09 Password: FYResults09
The presentation will be available online via the above web site address an
hour before the audio cast commences. Questions can be submitted either via the
dial-in conference call or electronically via the audio cast. Should you have
any issues on the day with accessing the dial-in conference, please call +27
(0)11 535 3600. Should you have any issues on the day with accessing the audio
cast, please email mondi@kraftwerk.co.at and you will be contacted immediately.
An audio recording of the presentation will be available on Mondi`s website
from late afternoon on 23 February 2010.
Editors` notes:
Mondi is an international paper and packaging group and in 2009 had revenues of
EUR5.3 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 as well as speciality products.
Mondi is fully integrated across the paper and packaging process, the growing
of wood and the manufacture of pulp (including recycled paper) to the
conversion of packaging papers into corrugated packaging and industrial bags.
Mondi has production operations across 31 countries and had an average of
31,000 employees in 2009.
Results
The Group`s underlying operating profit decreased by 33% compared with 2008,
reflecting the difficult trading conditions that persisted for much of the
year. Pleasingly, the fourth quarter results came in significantly above
expectations, supported by volume improvements across all main paper grades,
price increases in most of the key packaging grades and a largely stable
pricing environment in the European uncoated fine paper market.
The benefits of the early and decisive actions taken to restructure the cost
base in light of market pressures were clearly evident. The Group`s cost
reduction programme delivered savings of EUR251 million, significantly
exceeding the EUR180 million target announced at the beginning of the year. In
just over two years, Mondi has exited (either temporarily or permanently)
around 930,000 tonnes of high cost paper capacity and closed or sold 18
converting sites. Furthermore, the focus on cash flow optimisation was
extremely successful, with working capital inflows for the year amounting to
EUR248 million and capital expenditure outside the two major projects reduced
to 63% of depreciation. All this contributed to a reduction in net debt for the
year of EUR173 million despite funding around EUR300 million of capital
expenditure on the two major expansion projects in Poland and Russia. Mondi
enjoys a strong liquidity position and, as at the end of December, the Group
had nearly EUR1 billion of undrawn committed debt facilities.
In addition to the benefits from the cost savings programme noted above, a
number of the Group`s key input costs declined compared with the previous year,
helping to offset the revenue pressures. There was, however, some evidence of
rising input costs towards the end of the period. Wood, recovered fibre, pulp,
chemicals and energy costs have all increased from the lows reached earlier in
the year.
Currency movements had a mixed impact on the Group`s performance during the
period. The weaker eastern European currencies, notably the Czech koruna and
Polish zloty, benefited the results of our eastern European production base in
the second half. Conversely, the significant strengthening of the South African
rand from the middle of the second quarter eroded margins on the export sales
from the South Africa Division, placing significant pressure on the
profitability of this business as the year progressed.
Average return on capital employed, a key measure of Mondi`s performance, was
7.6%. While this is a disappointing outcome in relation to the Group`s target
of 13% across the cycle, it nevertheless represents a resilient performance
given the backdrop of the extremely difficult business environment.
Importantly, the Group is confident that the actions taken over the past year
place the business in a stronger competitive position than it was when it
entered the downturn, allowing it to take full advantage of any improvement in
the business cycle.
Net finance costs of EUR114 million were EUR45 million lower than those of
2008, mainly owing to higher levels of capitalised interest relating to major
capital projects and lower exchange losses on foreign currency debt balances.
The effective tax rate before special items of 32% was higher than that of the
previous year, primarily due to an increase in non-recognised assessed losses
as a consequence of the decline in profitability.
Underlying earnings per share were 18.7 euro cents per share, down by 45%
compared with 2008.
The Group is proposing to pay a final dividend of 7.0 euro cents per share,
giving a total dividend of 9.5 euro cents per share for the year.
Operational review
Europe & International Division
EUR million 2009 2008 change %
Segment revenue 4,099 5,159 -21
- of which inter-segment revenue 110 155 -29
EBITDA 515 623 -17
Underlying operating profit 251 334 -25
Uncoated Fine Paper 146 126 16
Corrugated 23 49 -53
Bags & Specialities 82 159 -48
Capital expenditure 1
Major Projects 2 300 324 -7
Other 167 277 -40
Net segment assets 3,588 3,659 -2
Return on capital employed (%) 9.1 9.6 -5
Notes:
1 Capital expenditure is cash payments and excludes business combinations.
2 Polish and Russian expansion projects, which commenced in the second half of
2007.
Underlying operating profit of EUR251 million was down by EUR83 million or 25%
compared with the previous period, significantly affected by the decrease in
demand for a number of the Group`s key products as a consequence of the general
economic slowdown. Pricing was down across all major paper grades, while
volumes were negatively affected by the approximately 173,000 tonnes of
market-related downtime taken in the year. Encouragingly, market-related
downtime taken in the second half of 2009 was minimal, reflecting a steady
pick-up in order inflows over the course of the year. Prices in the downstream
converting markets were more resilient, partially offsetting price declines in
the paper grades.
There was some benefit from lower input costs, including wood, recovered paper,
chemicals and other variable costs, while the Division delivered EUR205 million
in cost savings. Furthermore, the restructuring actions the Group has taken in
exiting higher-cost capacity helped to offset the revenue pressures while also
contributing to a more balanced market.
Pleasingly, the Division saw an upward trend in performance, with the second
half of the year stronger than the first half on the back of a very strong
fourth quarter. Price increases were achieved across all the main packaging
paper grades as a result of firm demand, while the uncoated fine paper business
delivered a particularly strong performance in the fourth quarter. This was
supported by ongoing cost savings and optimisation measures as pricing and
volumes remained firm despite concerns over the impact on the market of new
capacity from Portucel.
Operations
In the Uncoated Fine Paper (UFP) business, underlying operating profits were up
by EUR20 million, or 16%, at EUR146 million. This represents a very strong
result given the difficult economic environment and reflects the strength of
the Group`s low-cost asset base and favourable market positioning. While order
inflows for European producers as a whole were down by around 6% compared with
the previous year, the Group was able to achieve volume increases owing to its
greater exposure to the cut-size product segment and to emerging Europe, both
market segments that have proved more resilient to the economic downturn. As a
domestic producer in Russia, where management estimates that overall demand was
down by similar levels to those seen in the rest of Europe, the business was
able to maintain volumes at the expense of importers. As a consequence, results
from the Russian operation were particularly strong, with stable volumes and
marginally improved domestic selling prices supported by good cost control.
Combined with lower pulp input costs at the non-integrated facilities and
cost-reduction initiatives across the business, this more than offset the
impact of lower European selling prices (office paper down on average 7%
year-on-year).
In the Corrugated business, underlying operating profits declined by EUR26
million, or 53%, to EUR23 million in a very challenging trading environment.
Weak demand coupled with insufficient supply-side response put pressure on
containerboard prices. Average recycled containerboard prices decreased by
around 31% year-on-year. Similarly, average virgin containerboard prices were
down by some 13%. However, the pick-up in demand witnessed in the second half
of the year supported price increases, which were implemented in the fourth
quarter. By the end of the year, recycled containerboard prices had increased
by some 29% from their lows in August 2009, while kraftliner prices improved by
around 9% from their lows. The downstream corrugated operations saw some
improvement in operating margins compared with the previous year, benefiting
from the paper price declines.
In February 2010, agreement was reached to sell the 170,000 tonne per annum
Frohnleiten recycled containerboard mill in Austria, subject to regulatory
approval. Further, it was announced in January 2010 that negotiations are
progressing concerning a potential transaction that would involve Smurfit Kappa
Group (SKG) acquiring Mondi`s corrugated operations in the UK, with Mondi
acquiring SKG`s sack converting operations. There remains no certainty that
this transaction will be completed.
To the extent these transactions are completed, it will bring to an end an 18
month programme of restructuring the Group`s western European corrugated
packaging and recycled containerboard portfolio. This comes in response to
ongoing overcapacity concerns in western Europe, and a desire to improve our
asset quality by both moving down the cost curve in recycled containerboard,
and refining our geographical footprint around our core central and eastern
European and Turkish positions. It will have seen the Group exit four of its
five western European recycled containerboard mills (Holcombe in the UK,
Niedergosgen in Switzerland, Monza in Italy and Frohnleiten in Austria) with
aggregate capacity of 540,000 tonnes per annum. The remaining recycled
containerboard mill in western Europe, the 210,000 tonne per annum Raubling
mill in Germany, coupled with the new 470,000 tonne per annum recycled
containerboard machine in Poland and other smaller machines in our Polish and
Czech mill complexes, gives the Group a very strong and highly cost competitive
asset base in central and eastern Europe, serving mainly the Group`s integrated
converting network in the region.
In the Bags & Specialities business, underlying operating profits for the year
were down by EUR77 million, or 48%, to EUR82 million. The business was affected
by sharply lower average sack kraft paper prices (down by around 20%) and
weaker volumes, although speciality kraft paper prices and volumes held up
well. Significant market-related downtime was taken in the first half of 2009
to balance inventories (some 86,000 tonnes or 18% of capacity in the half), as
demand was badly impacted by the slowdown in the construction sector.
Pleasingly, demand recovered after a very weak first quarter to the extent that
almost no market-related downtime was taken in the second half of 2009 and
order inflows were sufficiently strong to support a sack kraft paper price
increase of around 12%, announced in September 2009.
A EUR47 million investment in a new 45,000 tonne per annum machine glazed paper
machine at the Steti mill in the Czech Republic was successfully completed in
August 2009 on time and within budget. Production from this machine is targeted
at growing niche applications, including the release liner and flexible
packaging markets, as well as supplying customers previously served by the
20,000 tonne per annum Ruzomberok kraft paper machine, which was closed in
October 2009.
Bag converting margins benefited during the year from lower paper prices
although volumes were soft mainly due to poor demand from the building and
chemical industries. Profitability in the Specialities business unit has
improved compared with the previous year driven by resilient demand in consumer
markets, lower plastic resin and paper input costs and stable pricing.
Major projects
The new 470,000 tonne recycled containerboard machine and a new state of the
art box plant at Swiecie in Poland (total budgeted cost of EUR350 million) saw
the first saleable production in September 2009, and is currently producing
well ahead of expectations. The Group anticipates that this machine will have
the lowest operating costs of its type. Up to 50% of its offtake is secured by
physical integration with the surrounding box plant network. Start-up of the
machine was ahead of schedule and the project is expected to come in around
EUR20 million below budget. Start-up costs on the machine were capitalised to
the end of September 2009. The project had a marginal effect on underlying
operating profit in 2009.
The project to modernise Mondi`s mill in Syktyvkar is also making good progress
and completion is anticipated in the second half of 2010. Severe weather
conditions in December 2009/January 2010 did impact the project.
A small cost overrun of up to 4% (around EUR20 million) is now anticipated,
giving a total capital cost of up to EUR545 million. The key value drivers of
this project are to improve efficiency, lower the Group`s cost base in Russia
and increase energy production and revenue by selling surplus energy to the
grid. In addition it will provide modest extra capacity (both pulp and paper)
for the domestic market.
By the end of the period, EUR664 million had been spent on these two projects
out of the total budgeted capital commitment of EUR875 million. The bulk of the
remaining expenditure is expected to be incurred in 2010, with some occurring
in 2011.
South Africa Division
EUR million 2009 2008 change %
Segment revenue 478 587 -19
- of which inter-segment revenue 210 285 -26
EBITDA 76 152 -50
Underlying operating profit 32 111 -71
Uncoated Fine Paper 1 16 75 -79
Corrugated 16 36 -56
Capital expenditure 2 26 44 -41
Net segment assets 840 760 11
Return on capital employed (%) 4.6 15.9 -71
Notes:
1 Includes pulp and forestry business.
2 Capital expenditure is cash payments and excludes business combinations.
The South Africa Division recorded a decrease in underlying operating profits
of EUR79 million, or 71%, to EUR32 million. In the uncoated woodfree operations
profitability was negatively affected by lower pulp, woodchip and paper export
prices together with lower woodchip and paper volumes. Significant US dollar
market price increases in the second half of 2009 in both pulp and African
paper sales (excluding South Africa) were largely offset by the strengthening
rand. Market-related downtime in paper production of 62,000 tonnes was taken to
balance inventories in the first half of 2009, related mainly to export
business. This led to the decision to mothball the 120,000 tonne per annum PM32
at Merebank, which was completed early in the second half of 2009. A further
56,000 tonnes of market-related downtime was taken on the remaining machines in
the second half of 2009. This in turn enabled increased sales of market pulp,
where US dollar prices have been rising since the second quarter of 2009.
Domestic uncoated fine paper cut-size prices continue to hold up, with demand in
the first half of 2009 below the comparable period but recovering fully in the
second half of 2009. The Division did not recognise fair value gains on forestry
assets to the extent seen in 2008, as local wood prices remained relatively flat
in 2009.
After a reasonable performance in the first half of 2009, the containerboard
operation struggled in the second half as a result of the strengthening rand,
lower white-top kraftliner export prices (down by 6% compared with the first
half of the year and by 13% compared with the second half of 2008) and reduced
volumes due to the national strike and annual maintenance shut. However, the
final quarter of 2009 saw an increase in European white-top kraftliner prices.
Input costs offered some limited relief, however, and the Division delivered
EUR30 million in cost savings.
Prior to the year end, agreement was reached to sell around 38,000 hectares of
forestry assets in three separate transactions. Completion of these
transactions remains subject to regulatory approval, which is anticipated in
the first quarter of 2010.
Mondi Packaging South Africa (MPSA)
EUR million 2009 2008 change %
Segment revenue 498 474 5
- of which inter-segment revenue 25 27 -7
EBITDA 62 52 19
Underlying operating profit 36 28 29
Capital expenditure 1 17 38 -55
Net segment assets 335 301 11
Return on capital employed (%) 11.5 8.6 34
Note:
1 Capital expenditure is cash payments and excludes business combinations.
Underlying operating profit increased by EUR8 million, or 29%, to EUR36
million. Despite a slowdown in the local economy and a stronger South African
rand, the business was able to maintain average pricing levels during the year
and benefited from a favourable product mix. Sales volumes, however, were
lower, especially in corrugated packaging, owing to lower consumer demand both
locally and internationally. Market-related downtime in paper production
totalling 58,000 tonnes was taken in order to balance inventories. Specific
cost savings initiatives assisted in lowering the cost base, although these
gains were partially offset by higher input costs, mainly in energy.
Merchant & Newsprint
EUR million 2009 2008 change %
Segment revenue 528 593 -11
- of which inter-segment revenue 1 1 0
EBITDA 28 24 17
Underlying operating profit 12 7 71
Capital expenditure 1 7 10 -30
Net segment assets 194 196 -1
Return on capital employed (%) 6.0 3.3 82
Note:
1 Capital expenditure is cash payments and excludes business combinations.
Aylesford Newsprint returned to profitability, benefiting from improved selling
prices on its annual contract business, although rising input costs and the
structurally weak European newsprint market remain a concern for the future.
Europapier`s operating profit came in below that of the previous year, owing to
lower sales volumes and prices, exacerbated by the weakening of some emerging
European currencies in which it trades and higher bad debts, as several of its
smaller customers were badly affected by the economic downturn. Mondi Shanduka
Newsprint came under pressure from lower domestic demand and pricing pressures,
recording operating profits slightly below the levels of last year.
Corporate & other
Net corporate costs before special items decreased by EUR2 million compared
with 2008. This was mainly as a result of cost savings initiatives offset by
certain non-recurring costs incurred in the second half of 2009.
Restructuring
Continuing our strategy to focus on retaining a high-quality, low-cost asset
base and in response to the economic downturn, we accelerated our restructuring
plans. Significant actions were taken including:
- divestment of the four remaining corrugated converting operations in France
for total proceeds of approximately EUR51 million, thereby completing the
withdrawal from this market;
- restructuring of the Turkish corrugated business, the coatings business in
Finland and the UK, and the consumer flexibles business in Austria;
- closure of a corrugated plant in the UK and four bag-converting plants across
Europe;
- sale of the Italian recycled containerboard plant, Cartonstrong (100,000
tonne per annum capacity) and the related sheet feeder, and the 170,000 tonne
per annum Frohnleiten recycled containerboard mill in Austria (subject to
regulatory approval); and
- mothballing of the 110,000 tonne per annum Stambolijski kraft paper mill in
Bulgaria and the PM32 machine at Merebank, effectively removing capacity of
120,000 tonnes uncoated fine paper per annum.
These actions, together with those taken in 2008, have seen Mondi exit around
810,000 tonnes of higher-cost paper capacity in Europe (around 15% of the
Group`s European paper production capacity) and around 9% (120,000 tonnes) of
its South African paper production capacity in just over two years.
Importantly, these measures, together with the various cost reduction
initiatives in ongoing operations, have placed the Group in a stronger
competitive position than it was when it entered the downturn, thereby
positioning the Group to take advantage of any upturn in the business cycle.
Maintaining our competitive advantage
We believe that our strategy remains valid, especially in the current economic
environment. Leading market positions, low-cost operations and a robust focus
on performance have always been key elements of that strategy and in today`s
challenging economic times, its benefits are even more pronounced.
Building on market leadership
At a time of global uncertainty in our industry, we believe it is more
important than ever that we continue to strengthen our leading positions in
packaging and UFP, particularly in emerging markets. These markets have not
been immune to the recession, but they continue to offer above average
long-term growth potential.
Remaining a low cost producer
We are committed to delivering superior returns, above the average of our
competitors, and this commitment is undiminished by the difficult trading
conditions. The value of having much of our production in some of the world`s
lowest cost regions is a significant benefit when volumes and selling prices
are under pressure.
Our high level of vertical integration in the supply chain, combining low-cost
upstream assets with low-cost production, gives us good security of supply and
greatly reduces our exposure to volatility in raw material prices.
Sharpening focus on performance
The requirement for continuous productivity improvements and cost reduction is
imperative in our business. Our highly experienced management teams have
implemented a continuous series of business excellence programmes in recent
years and rigorous asset management is second nature for everyone in our
operations. This unwavering emphasis on cost control and operational performance
has never been more important than in the current economic climate. While much
has been achieved in this regard in 2009, we will continue to target further
cost savings in 2010.
Financial review
Special items (refer to note 6 of the condensed financial statements)
In aggregate, pre tax special items amounted to a charge of EUR133 million.
An operating special item charge of EUR128 million was recognised, principally
comprising:
- asset impairment costs of EUR78 million;
- goodwill impairment costs of EUR12 million;
- closure and restructuring costs of EUR43 million;
- insurance profits of EUR8 million; and
- charges related to arrangements put in place for senior executives following
the demerger from Anglo American plc in July 2007 of EUR3 million.
The asset impairments relate primarily to the write-down of the PM32 paper
machine at Merebank, the impairment of the recycled containerboard mills at
Frohnleiten in Austria and Raubling in Germany and converting operations in the
Corrugated and Bags & Specialities business units that have been restructured
or closed. Costs related to the mothballing of the Stambolijski mill in
Bulgaria and the closure or restructuring of the various converting operations
represent the bulk of the EUR43 million closure and restructuring charge.
The goodwill impairment charge relates solely to the write-down of goodwill in
Europapier, while the net insurance profits relate to a fire at one of MPSA`s
plastics operations.
A non-operating special items charge of EUR5 million was recognised, which
mainly comprises the net profit on the sale of four corrugated operations in
France (EUR3 million profit), offset by the impairment of the held for sale
assets of the Cartonstrong, Italy operations of EUR7 million (subsequently
sold).
Finance costs
Net finance costs of EUR114 million were EUR45 million lower than those of the
previous year, mainly as a result of higher levels of capitalised interest
relating to major capital projects and lower exchange losses on foreign
currency debt balances. Excluding the impact of capitalised interest, interest
on net debt increased marginally from EUR148 million in 2008 to EUR151 million,
even though overall debt levels declined during the year, owing to an increase
in the effective gross cost of net debt from 9.1% in 2008 to 9.3% in 2009. This
was principally because of the increase in the Group`s rouble debt resulting
from capital expenditure in Russia at a time of exceptionally high interest
rates during the height of the financial crisis. At year end, approximately 24%
of the Group`s debt was drawn in euro, 23% in South African rand and 15% in
Russian rouble.
Taxation
The effective tax rate before special items of 32% was higher than the rate of
the previous year (29%), due primarily to an increase in unrecognised assessed
losses as a consequence of the decline in profitability. There is only minor tax
relief on special items.
Minority interests
Minority interests before special items for the year were EUR1 million lower
than those of the previous year. Earnings were down at Swiecie in Poland (66%
owned), although this impact was largely offset by higher earnings in Tire
Kutsan (the effectively 63.4% held Turkish corrugated business) and Mondi
Packaging South Africa (70% owned).
Cash flow and borrowings
EBITDA of EUR645 million for the year was 21%, or EUR169 million lower than in
2008, reflecting the more difficult trading environment. Cash generated from
operations of EUR867 million increased by EUR72 million, or 9%, compared with
the previous year, mainly because of significantly higher inflows from working
capital than were achieved in 2008, offset by the lower EBITDA. Cash inflow
from working capital of EUR248 million was achieved despite an already strong
performance in the 2007 and 2008 financial years (EUR124 million cumulative
inflow).
Capital expenditure, including purchase of intangible assets, of EUR222 million
(excluding spend on the two major strategic projects of around EUR300 million),
was significantly lower than depreciation and amortisation of EUR351 million,
reflecting the decision taken in the fourth quarter of 2008 to limit new
capital expenditure approvals to below 40% of depreciation. The remaining
expenditure on the two major projects is estimated at around EUR210 million,
the bulk of which will be spent in 2010 with minimal flow through to 2011.
There were no major business acquisitions during the year.
Balance sheet
Trading capital employed at year end was EUR4,314 million, EUR53 million lower
than in 2008, mainly because of working capital inflows of EUR248 million,
special item impairments of EUR98 million and disposals of EUR59 million,
partially offset by capital expenditure including intangibles of EUR522 million
(EUR171 million in excess of depreciation) and foreign exchange movements of
EUR195 million.
Treasury and borrowings
The Group`s treasury function operates within clearly defined Board-approved
policies and limits, follows controlled reporting procedures and is subject to
regular internal and external reviews. As part of management`s regular review
of the suitability of treasury risk management policies, the Group`s currency
hedging policy has been amended. Effective from the start of 2010, only
material balance sheet exposures and highly probable forecast capital
expenditures are hedged.
Net debt at year end of EUR1,517 million was EUR173 million down compared with
the previous year. This was achieved despite significant capital spend of
around EUR300 million on the two key capital projects in Poland and Russia,
through a strong focus on cash flow optimisation across the Group, including
the release of working capital and the reduction of capital expenditure outside
of the two major projects. Gearing as at 31 December 2009 was 35.1%, and the
net debt to trailing 12 months EBITDA ratio was 2.4.
Group liquidity is provided through a range of committed debt facilities
amounting to EUR2.5 billion, which are in excess of the Group`s short-term
needs. The principal debt facility is the EUR1.55 billion, five year,
syndicated revolving credit facility which matures in June 2012. In total
EUR735 million of this facility was drawn at year end, leaving EUR815 million
undrawn, committed and available to the Group. The other key facilities include
a EUR170 million export credit agency loan in Russia with an amortising
repayment until 2020 and a EUR115 million European Investment Bank (EIB)
facility in Poland with an amortising repayment until 2017. Total undrawn
committed debt facilities at year end amount to EUR990 million.
The average maturity of the committed debt facilities is 2.2 years (compared
with 3.4 years in 2008). Drawn facilities maturing over the next 12 months
amount to EUR219 million. To the extent they are not renewed they can be
financed out of existing undrawn committed facilities. The Group`s major
refinancing event occurs in June 2012, when the EUR1.55 billion, five year,
syndicated revolving credit facility becomes due. It is intended that this
facility will be refinanced well ahead of this date, utilising a combination of
bank and other debt markets.
Reclassification of Mondi plc shares
After a constructive dialogue with the South African Reserve Bank and Treasury,
we announced in July 2009 that the Minister of Finance had decided to
reclassify the secondary listing of Mondi plc ordinary shares on the JSE
Limited as domestic assets in the hands of South African investors. It is
pleasing to note the subsequent significant narrowing of the price differential
that had existed between the Mondi plc and Mondi Limited ordinary shares.
Related party transactions
Related party transactions are disclosed in note 17 of the condensed financial
statements.
Principal risks and uncertainties
It is in the nature of Mondi`s business that the Group is exposed to risks and
uncertainties which may have an impact on future performance and financial
results, as well as on its 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.
Mondi operates in a highly competitive environment
The markets for paper and packaging products are highly competitive. Similarly,
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 geographical and product diversification
provides some measure of protection. Uncertain trading conditions in the future
may have an impact on the carrying value of goodwill and tangible assets and
may result in further restructuring activities.
Input costs are subject to significant fluctuations
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, the Group`s focus on
operational performance, relatively high level of integration and access to its
own fibre in Russia and South Africa, serve to mitigate these risks. It is also
anticipated that the recent settlement of land claims in South Africa will
provide a framework for settling future forestry land claims with Mondi.
Significant capital investments including acquisitions carry project risk
Mondi is in the process of completing a significant capital investment to
expand and upgrade existing facilities in Russia. This project carries risks
and Mondi has put in place dedicated teams to ensure delivery of the project on
time and within budget. Severe weather conditions in December 2009/January 2010
did have an impact on the project timetable. Together with a stronger than
forecast Russian rouble this is expected to result in a small cost overrun of
up to 4%.
Going Concern
The current economic conditions have had an impact on short-term demand growth
for our products, as well as placing pressure on both customers and suppliers
who may face liquidity issues, and could have an adverse impact on the Group`s
business. Furthermore, the lack of credit availability could impact the Group`s
ability to execute its strategy effectively. However, Mondi`s geographical
spread, product diversity and large customer base mitigate these risks. The
proactive initiatives by management in rationalising the business through
cost-cutting, asset closures and divestitures have consolidated the Group`s
leading cost position in its chosen markets. Strong working capital management
has resulted in a significant net cash inflow from working capital over the
period, while capital expenditure programmes have been reduced.
The Group had nearly EUR1.0 billion of undrawn committed debt facilities as at
31 December 2009 with an average maturity of 2.2 years, which should provide
sufficient liquidity for Mondi in the medium term.
The Group`s forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should be able to operate
within the level of its current facilities and the related covenants.
As a consequence, the directors believe that the Group is well placed to manage
its business risks successfully.
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going-concern
basis in preparing the annual report and accounts.
Board
Following his appointment as chairman of Anglo American plc on 1 August 2009,
Sir John Parker stepped down as joint chairman of Mondi Limited and Mondi plc
on 4 August 2009. Sir John was succeeded as joint chairman by David Williams
who had been Mondi`s senior independent director and chairman of the DLC audit
committee since joining the Boards in May 2007. Anne Quinn, an independent
non-executive director and chair of the DLC remuneration committee, who also
joined the boards of Mondi Limited and Mondi plc in May 2007, succeeded David
Williams as senior independent director. In October 2009, John Nicholas was
appointed an independent non-executive director of Mondi Limited and Mondi plc
and took over the chairmanship of the DLC audit committee.
Dividend
The Boards aim to offer shareholders long-term dividend growth within a targeted
dividend cover range of two to three times on average over the cycle. The
decision was taken in the prior year to pay a reduced full year dividend in
light of the uncertain economic outlook and lack of liquidity in the financial
markets. This also served to ensure that dividend cover was maintained within
the targeted range. Given the Group`s strong balance sheet and healthy operating
cash flows, coupled with an improving outlook, it is proposed to pay a final
dividend that reflects an increase on the prior year final dividend, while
remaining within the Group`s targeted cover range.
Accordingly, the boards of Mondi Limited and Mondi plc have recommended a final
dividend of 7.0 euro cents per share (2008: 5.0 euro cents per share), payable
on 19 May 2010 to shareholders on the register at 23 April 2010. An equivalent
final dividend will be paid in South African rand on the same terms. Together
with the interim dividend paid in September 2009 of 2.5 euro cents per share,
this gives a full year dividend of 9.5 euro cents per share.
Current year outlook
Looking ahead, it is clear that the Group`s performance will largely depend on
the pace and extent of the global economic recovery. Furthermore, while there
has been substantial industry capacity rationalisation over the past year,
further supply side reductions may be required to ensure that supply and demand
are balanced. Encouragingly, however, we have seen a steady improvement in
industry order volumes, with some recent price recovery in the European
packaging grades. This improvement in our trading environment, together with
the various restructuring actions taken over the course of 2009, positions
Mondi well for the year ahead.
Directors` responsibility statement on the annual report
The responsibility statement below has been prepared in connection with the
Group`s full annual report for the year ended 31 December 2009. Certain parts
thereof are not included within this announcement.
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with International Financial
Reporting Standards (IFRSs), give a true and fair view of the assets,
liabilities, financial position and profit or loss of Mondi Limited, Mondi plc
and the undertakings included in the consolidation taken as a whole; and
- the management report, which is incorporated into the directors` report,
includes a fair view of the development and performance of the business and the
position of the Group and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties that they face.
This responsibility statement was approved by the boards on 22 February 2010
and is signed on their behalf by:
David Hathorn Andrew King
Director Director
22 February 2010 22 February 2010
Combined and consolidated income statement
for the year ended 31 December 2009
2009
Before Special After
special items special
EUR million Notes items (note 6) items
Group revenue 4 5,257 - 5,257
Materials, energy and
consumables used (2,768) - (2,768)
Variable selling expenses (472) - (472)
Gross margin 2,017 - 2,017
Maintenance and other indirect
expenses (241) - (241)
Personnel costs (838) (24) (862)
Other net operating expenses (293) (14) (307)
Depreciation, amortisation and
impairments (351) (90) (441)
Operating profit/(loss) 4/5 294 (128) 166
Net profit/(loss) on disposals 6 - 3 3
Impairment of assets held for sale 6 - (8) (8)
Net income from associates 2 - 2
Total profit/(loss) from
operations and associates 296 (133) 163
Investment income 26 - 26
Interest expense (140) - (140)
Net finance costs 7 (114) - (114)
Profit/(loss) before tax 182 (133) 49
Tax (charge)/credit 8 (58) 6 (52)
Profit/(loss) from continuing
operations 124 (127) (3)
Attributable to:
Minority interests 29 1 30
Equity holders of the parent
companies 95 (128) (33)
Earnings per share (EPS) for
profit/(loss) attributable to
equity holders of the parent
companies
Basic EPS (EUR cents) 10 (6.5)
Diluted EPS (EUR cents) 10 (6.5)
Basic underlying EPS (EUR cents) 10 18.7
Diluted underlying EPS (EUR cents) 10 18.2
Basic headline EPS (EUR cents) 10 11.4
Diluted headline EPS (EUR cents) 10 11.1
2008
Before Special After
special items special
EUR million items (note 6) items
Group revenue 6,345 - 6,345
Materials, energy and consumables used (3,384) - (3,384)
Variable selling expenses (542) - (542)
Gross margin 2,419 - 2,419
Maintenance and other indirect expenses (300) - (300)
Personnel costs (926) (41) (967)
Other net operating expenses (379) (24) (403)
Depreciation, amortisation and impairments (373) (293) (666)
Operating profit/(loss) 441 (358) 83
Net profit/(loss) on disposals - (27) (27)
Impairment of assets held for sale - (2) (2)
Net income from associates 2 - 2
Total profit/(loss) from operations and
associates 443 (387) 56
Investment income 15 - 15
Interest expense (174) - (174)
Net finance costs (159) - (159)
Profit/(loss) before tax 284 (387) (103)
Tax (charge)/credit (82) 4 (78)
Profit/(loss) from continuing operations 202 (383) (181)
Attributable to:
Minority interests 30 - 30
Equity holders of the parent companies 172 (383) (211)
Earnings per share (EPS) for profit/(loss)
attributable to
equity holders of the parent companies
Basic EPS (EUR cents) (41.6)
Diluted EPS (EUR cents) (41.6)
Basic underlying EPS (EUR cents) 33.9
Diluted underlying EPS (EUR cents) 33.4
Basic headline EPS (EUR cents) 20.3
Diluted headline EPS (EUR cents) 20.0
There were no discontinued operations in either of the years presented.
Combined and consolidated statement of comprehensive income
for the year ended 31 December 2009
EUR million 2009 2008
Loss for the financial year (3) (181)
Other comprehensive income:
Fair value gains/(losses) on cash flow hedges 26 (61)
Actuarial gains/(losses) and surplus restriction
on post-retirement benefit schemes 7 (17)
Fair value gains/(losses) on
available-for-sale investments 1 (1)
Exchange gains/(losses) on translation
of foreign operations 118 (246)
Share of other comprehensive income of associates 1 (1)
Tax relating to components of other
comprehensive income (7) 17
Other comprehensive income for the financial
year, net of tax 146 (309)
Total comprehensive income for the financial year 143 (490)
Attributable to:
Minority interests 39 23
Equity holders of the parent companies 104 (513)
Combined and consolidated statement of financial position
as at 31 December 2009
EUR million Notes 2009 2008
Intangible assets 308 323
Property, plant and equipment 3,847 3,611
Forestry assets 251 214
Investments in associates 6 5
Financial asset investments 27 19
Deferred tax assets 29 36
Retirement benefits surplus 8 -
Total non-current assets 4,476 4,208
Inventories 617 684
Trade and other receivables 933 1,104
Current tax assets 16 32
Cash and cash equivalents 123 155
Derivative financial instruments 7 73
Total current assets 1,696 2,048
Assets held for sale 36 5
Total assets 6,208 6,261
Short-term borrowings (219) (378)
Trade and other payables (1,023) (1,035)
Current tax liabilities (55) (53)
Provisions (40) (25)
Derivative financial instruments (32) (38)
Total current liabilities (1,369) (1,529)
Medium and long-term borrowings (1,421) (1,467)
Retirement benefits obligation (184) (182)
Deferred tax liabilities (316) (292)
Provisions (45) (39)
Other non-current liabilities (21) (14)
Derivative financial instruments (19) (39)
Total non-current liabilities (2,006) (2,033)
Liabilities directly associated with assets
classified as held for sale (9) (3)
Total liabilities (3,384) (3,565)
Net assets 2,824 2,696
Equity
Ordinary share capital 12 114 114
Share premium 12 532 532
Retained earnings and other reserves 1,753 1,677
Total attributable to equity holders of the
parent companies 2,399 2,323
Minority interest in equity 425 373
Total equity 2,824 2,696
The Group`s combined and consolidated financial statements, and related notes,
were approved by the Boards and authorised for issue on 22 February 2010 and
were signed on its behalf by:
David Hathorn Andrew King
Director Director
Mondi Limited company registration number: 1967/013038/06
Mondi plc company registration number: 6209386
Combined and consolidated statement of cash flows
for the year ended 31 December 2009
EUR million Notes 2009 2008
Cash generated from operations 14a 867 795
Dividends from associates 2 2
Income tax paid (32) (71)
Net cash generated from operating activities 837 726
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and cash
equivalents 13 (2) (49)
Proceeds from disposal of subsidiaries, net of
cash and cash equivalents 54 17
Proceeds from disposal of associates 3 -
Purchases of property, plant and equipment 4 (517) (693)
Proceeds from the disposal of property, plant and
equipment 11 29
Investment in forestry assets (40) (43)
Purchases of financial asset investments (7) (2)
Purchase of intangible assets (5) (7)
Proceeds from the sale of financial asset investments - 1
Loan repayments from related parties 1 -
Loan repayments from external parties 1 1
Interest received 8 28
Other investing activities 1 8
Net cash used in investing activities (492) (710)
Cash flows from financing activities
Repayment of short-term borrowings 14c (288) (214)
Proceeds from medium and long-term borrowings 14c 38 543
Interest paid (163) (169)
Dividends paid to minority interests (9) (20)
Dividends paid to equity holders of the parent
companies 9 (39) (118)
Purchase of treasury shares (1) (15)
Contribution by minorities 27 -
Net realised gain on cash and asset management swaps 67 4
Other financing activities 4 (3)
Net cash (used in)/generated from financing activities (364) 8
Net (decrease)/increase in cash and cash equivalents (19) 24
Cash and cash equivalents at start of year 1 75 59
Cash movement in the year 14c (19) 24
Cash acquired through business combinations 14c - 3
Cash disposed through disposal of businesses 14c (2) -
Reclassifications 14c (19) (2)
Effects of changes in foreign exchange rates 14c 2 (9)
Cash and cash equivalents at end of year 1 37 75
Note:
1 `Cash and cash equivalents` includes overdrafts and cash flows from disposal
groups and is reconciled to the statement of financial position in note 14b.
Combined and consolidated statement of changes in equity
for the year ended 31 December 2009
Share capital
Mondi Combined
Mondi Limited share capital
Limited share Mondi plc and share
EUR million share capital premium share capital premium
At 1 January 2008 11 532 103 646
Dividends paid - - - -
Total comprehensive
income for the year - - - -
Issue of shares under
employee share schemes - - - -
Purchase of treasury
shares 2 - - - -
Share options
exercised -
Anglo American share - - - -
scheme
Disposal of businesses - - - -
Minority share dilution - - - -
Adjustments to minority
share in the net asset
values of business
acquisitions - - - -
Minorities bought out - - - -
Other - - - -
At 31 December 2008 11 532 103 646
Dividends paid - - - -
Total comprehensive
income for the year - - - -
Issue of shares under
employee share schemes - - - -
Purchase of treasury
Shares 2 - - - -
Reclassifications - - - -
Minorities buy in - - - -
Minorities bought out - - - -
Other - - - -
At 31 December 2009 11 532 103 646
Total
attributable
to equity
holders of
Retained Other the parent
EUR million earnings reserves 1 companies
At 1 January 2008 2,154 163 2,963
Dividends paid (118) - (118)
Total comprehensive
income for the year (211) (302) (513)
Issue of shares under
employee share schemes 7 (7) -
Purchase of treasury shares 2 (15) - (15)
Share options exercised -
Anglo American share (3) - (3)
scheme
Disposal of businesses (1) - (1)
Minority share dilution (4) - (4)
Adjustments to minority
share in the net asset
values of business acquisitions - - -
Minorities bought out - - -
Other - 14 14
At 31 December 2008 1,809 (132) 2,323
Dividends paid (39) - (39)
Total comprehensive
income for the year (33) 137 104
Issue of shares under
employee share schemes 19 (19) -
Purchase of treasury shares 2 (1) - (1)
Reclassifications (12) 15 3
Minorities buy in - - -
Minorities bought out - - -
Other - 9 9
At 31 December 2009 1,743 10 2,399
Minority Total
EUR million interests equity
At 1 January 2008 373 3,336
Dividends paid (20) (138)
Total comprehensive income for the year 23 (490)
Issue of shares under employee share schemes - -
Purchase of treasury shares 2 - (15)
Share options exercised - Anglo American share - (3)
scheme
Disposal of businesses - (1)
Minority share dilution 4 -
Adjustments to minority share in the net asset
values of business acquisitions (3) (3)
Minorities bought out (3) (3)
Other (1) 13
At 31 December 2008 373 2,696
Dividends paid (9) (48)
Total comprehensive income for the year 39 143
Issue of shares under employee share schemes - -
Purchase of treasury shares 2 - (1)
Reclassifications (3) -
Minorities buy in 27 27
Minorities bought out (3) (3)
Other 1 10
At 31 December 2009 425 2,824
Notes:
1 Other reserves are analysed further below.
2 The treasury shares purchased represents the cost of shares in Mondi Limited
and Mondi plc purchased in the market and held by the Mondi Incentive Schemes
Trust and the Mondi Employee Share Trust respectively to satisfy options under
the Group`s share options schemes. The number of ordinary shares held by the
Mondi Incentive Schemes Trust and the Mondi Employee Share Trust at 31 December
2009 was 53,700 and 5,087,561 shares respectively (2008: 115,000 and 7,943,115
respectively) at an average price of R35.71 and GBP4.05 per share respectively
(2008: R47.51 and GBP3.95 per share respectively).
Cumulative
Share-based translation
payment adjustment
EUR million reserve reserve
At 1 January 2008 13 (88)
Total comprehensive income for the year - (248)
Mondi share schemes` charge 18 -
Issue of shares under employee
share schemes (7) -
Call option issued - -
At 31 December 2008 24 (336)
Total comprehensive income for the year - 114
Mondi share schemes` charge 8 -
Issue of shares under employee
share schemes (19) -
Minority put option issued - -
Reclassifications - -
At 31 December 2009 13 (222)
Other reserves 1
Cash flow
Available-for- hedge
EUR million sale reserve reserve
At 1 January 2008 - 4
Total comprehensive income for the year (1) (39)
Mondi share schemes` charge - -
Issue of shares under employee
share schemes - -
Call option issued - -
At 31 December 2008 (1) (35)
Total comprehensive income for the year 1 16
Mondi share schemes` charge - -
Issue of shares under employee
share schemes - -
Minority put option issued - -
Reclassifications - -
At 31 December 2009 - (19)
Post-
retirement
benefit Merger
EUR million reserve reserve
At 1 January 2008 (22) 259
Total comprehensive income for the year (14) -
Mondi share schemes` charge - -
Issue of shares under employee
share schemes - -
Call option issued - -
At 31 December 2008 (36) 259
Total comprehensive income for the year 6 -
Mondi share schemes` charge - -
Issue of shares under employee
share schemes - -
Minority put option issued - -
Reclassifications 2 -
At 31 December 2009 (28) 259
Other
EUR million reserves Total
At 1 January 2008 (3) 163
Total comprehensive income for the
year - (302)
Mondi share schemes` charge - 18
Issue of shares under employee
share schemes - (7)
Call option issued (4) (4)
At 31 December 2008 (7) (132)
Total comprehensive income for the
year - 137
Mondi share schemes` charge - 8
Issue of shares under employee
share schemes - (19)
Minority put option issued 1 1
Reclassifications 13 15
At 31 December 2009 7 10
Note:
1 All movements in other reserves are disclosed net of minority interests. The
movements in minority interests as a direct result of the movements in other
reserves for the year ended 31 December 2009 are as follows - increase in
minority interests related to total comprehensive income for the year EUR9
million (2008: decrease of EUR7 million) and a decrease in minority interest
related to the call option issued of EURnil (2008: EUR1 million).
Notes to the combined and consolidated financial statements
1 Basis of preparation
The Group has two separate legal parent entities, Mondi Limited and Mondi plc,
which operate under a dual listed company (DLC) structure. The substance of the
DLC structure is such that Mondi Limited, and its subsidiaries, and Mondi plc,
and its subsidiaries, operate together as a single economic entity through a
sharing agreement, with neither parent entity assuming a dominant role.
Accordingly, Mondi Limited and Mondi plc are reported on a combined and
consolidated basis as a single reporting entity under International Financial
Reporting Standards (IFRSs).
The condensed financial information included in this preliminary announcement
has been prepared in accordance with the measurement and recognition criteria
of International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB) and has been prepared in
accordance with IAS 34, `Interim Financial Reporting`. There are no differences
for the Group in applying IFRSs as issued by the IASB and as endorsed by the
European Union (EU) and therefore the Group also complies with IFRS as endorsed
by the EU. The financial statements have been prepared on a going concern basis.
This is discussed in the business review under the heading `Going concern`.
The information set out above does not constitute statutory accounts for the
years ended 31 December 2009 or 2008, but is derived from those accounts.
Statutory accounts for 2008 have been delivered to the Registrar of Companies
and those for 2009 will be delivered following the Group`s annual general
meeting. The auditors have reported on those accounts: their reports were
unqualified, did not contain statements under s498 (2) or (3) of the Companies
Act 2006 or equivalent preceding legislation. Copies of their unqualified
auditors` reports are available for inspection at the Mondi Limited and Mondi
plc registered offices.
2 Accounting policies
With the exception of the new standards noted below, the same accounting
policies, presentation and measurement principles have been followed in the
preparation of the combined and consolidated financial statements as were
applied in the preparation of the Group`s annual financial statements for the
year ended 31 December 2008. The Group has implemented the revised IAS 1,
`Presentation of Financial Statements`, and IFRS 8, `Operating Segments`. Both
standards became effective on 1 January 2009.
The impacts of the changes to IAS 1 are of a presentation and disclosure nature
only, with the most significant changes being:
The replacement of the `statement of recognised income and expense` with a
`statement of comprehensive income` which discloses information on a gross
rather than a net basis and also reconciles the profit or loss for the period
to the total comprehensive income for the period.
The presentation of a complete statement of changes in equity as a primary
statement rather than a note to the financial statements.
There is no impact on the financial results disclosed.
IFRS 8 results in additional disclosure of segmental information, but the
reportable segments remain unchanged.
3 Seasonality
The seasonality of the Group`s operations does not impact significantly on the
combined and consolidated financial statements.
4 Operating segments
Identification of the Group`s externally reportable operating segments
The Group`s externally reportable segments reflect the internal reporting
structure of the Group, which is the basis on which resource allocation
decisions are made by management in the attainment of strategic objectives. The
Group operates under two primary geographic regions reflecting its South
African activities and assets, and its international, principally European,
activities and assets. These broad geographic regions are further split by
product segments reflecting the management of the Group. In addition the Group
manages Mondi Packaging South Africa and the Merchant & Newsprint businesses
separately and therefore these have been presented as separate segments.
Product revenues
The material product types from which the Group`s externally reportable
segments derive both their internal and external revenues are presented as
follows:
Operating segments Internal revenues 1 External revenues
Europe & International
Uncoated Fine Paper - Uncoated fine paper - Uncoated fine paper
- Pulp - Pulp
- Newsprint - Newsprint
Corrugated - Corrugated products - Corrugated products
Bags & Specialities - Kraft paper & bags - Kraft paper & bags
- Specialities
South Africa
Uncoated Fine Paper - Uncoated fine paper - Uncoated fine paper
- Pulp - Pulp
- Woodchips
Containerboard - Corrugated products - Corrugated products
Mondi Packaging South Africa - Corrugated products - Corrugated products
- Recycled fibre
Merchant & Newsprint businesses - Newsprint - Merchanting
- Newsprint
Note:
1 The Group operates a vertically-integrated structure in order to benefit from
economies of scale and to more effectively manage the risk of adverse price
movements in key input costs. Internal revenues are therefore generated across
the supply chain.
Measurement of operating segment revenues, profit or loss, assets and
non-current non-financial assets
Management has regard to certain operating segment measures in making resource
allocation decisions and monitoring segment performance. The operating segment
measures required to be disclosed under IFRS 8 adhere to the recognition and
measurement criteria presented in the Group`s accounting policies. In addition,
the Group has presented certain non-GAAP measures by segment to supplement the
user`s understanding. All intra-group transactions are conducted on an arm`s
length basis.
The Group`s measure of net segment assets includes the allocation of retirement
benefits surpluses and deficits on an appropriate basis. The measure of segment
results exclude, however, the financing effects of the Group`s defined benefit
pension plans. In addition, the Group`s measure of net segment assets does not
include an allocation for derivative assets and liabilities, non-operating
receivables and payables and assets held for sale and associated liabilities.
The measure of segment results, however, includes the effects of certain
movements in these unallocated balances.
The Group`s geographic analysis is presented on the following level:
continental; or
sub-continental; or
by individual country (if greater than 10% of the Group total).
Operating segment revenues
Internal and external segment revenues are presented, and reconciled to Group
revenue, as follows:
2009
Segment Internal External
EUR million revenue revenue 1 revenue 2
Europe & International
Uncoated Fine Paper 1,351 (130) 1,221
Corrugated 1,041 (36) 1,005
Bags & Specialities 1,787 (24) 1,763
Intra-segment elimination (80) 80 -
Total Europe & International 4,099 (110) 3,989
South Africa
Uncoated Fine Paper 386 (120) 266
Containerboard 121 (119) 2
Intra-segment elimination (29) 29 -
Total South Africa 478 (210) 268
Mondi Packaging South Africa 498 (25) 473
Merchant & Newsprint businesses 528 (1) 527
Segments total 5,603 (346) 5,257
Inter-segment elimination (346) 346 -
Group total 5,257 - 5,257
2008
Segment Internal External
EUR million revenue revenue 1 revenue 2
Europe & International
Uncoated Fine Paper 1,565 (174) 1,391
Corrugated 1,555 (58) 1,497
Bags & Specialities 2,138 (22) 2,116
Intra-segment elimination (99) 99 -
Total Europe & International 5,159 (155) 5,004
South Africa
Uncoated Fine Paper 474 (174) 300
Containerboard 134 (132) 2
Intra-segment elimination (21) 21 -
Total South Africa 587 (285) 302
Mondi Packaging South Africa 474 (27) 447
Merchant & Newsprint businesses 593 (1) 592
Segments total 6,813 (468) 6,345
Inter-segment elimination (468) 468 -
Group total 6,345 - 6,345
Notes:
1 Inter-segment transactions are conducted on an arm`s length basis.
2 The description of each business segment reflects the nature of the main
products they sell. In certain instances the business segments sell minor
volumes of other products and due to this reason the external segment revenues
will not necessarily reconcile to the external revenues by each type of product
presented below.
The Group`s external revenues for each type of product are presented as
follows:
EUR million 2009 2008
Products
Corrugated products 1,357 1,849
Uncoated fine paper 1,195 1,313
Kraft paper & bags 886 1,066
Specialities 731 854
Merchanting 468 487
Newsprint 208 162
Pulp 129 160
Woodchips 61 105
Other 1 222 349
Group total 5,257 6,345
Note:
1 Revenues derived from product types that are not material are classed as
other.
An analysis of the Group`s external revenues attributed to the countries, where
material, and the continents in which external customers are located, is
presented as follows 1:
EUR million 2009 2008
Revenues
Africa
South Africa 2 644 616
Rest of Africa 196 251
Africa total 840 867
Western Europe
Germany 641 745
United Kingdom 2 367 483
Rest of Western Europe 1,292 1,704
Western Europe total 2,300 2,932
Emerging Europe 1,105 1,326
Russia 387 430
North America 157 183
South America 17 31
Asia and Australia 451 576
Group total 5,257 6,345
Notes:
1 Revenues by customer location are presented since the Group believes that
this provides useful additional information for the user of the Group`s
combined and consolidated financial statements.
2 These revenues, which total EUR1,011 million (2008: EUR1,099 million), are
attributable to the countries in which the Group`s parent entities are
domiciled.
An analysis of the Group`s external revenues attributed to the countries, where
material, and the continents from which revenues are derived, is presented as
follows:
EUR million 2009 2008
Revenues
Africa
South Africa 1 948 1,015
Rest of Africa 13 15
Africa total 961 1,030
Western Europe
Austria 1,010 1,226
United Kingdom 1 244 344
Rest of Western Europe 855 1,202
Western Europe total 2,109 2,772
Emerging Europe 1,413 1,691
Russia 519 569
North America 104 120
Asia and Australia 151 163
Group total 5,257 6,345
Note:
1 These revenues, which total EUR1,192 million (2008: EUR1,359 million), are
attributable to the countries in which the Group`s parent entities are
domiciled.
There are no external customers which account for more than 10% of the Group`s
total external revenue.
Operating segment operating profit
Segment operating profits are presented and reconciled to Group profit/(loss)
before tax, as follows:
Segment operating profit
before special items 1
EUR million 2009 2008
Europe & International
Uncoated Fine Paper 146 126
Corrugated 23 49
Bags & Specialities 82 159
Total Europe & International 251 334
South Africa
Uncoated Fine Paper 16 75
Containerboard 16 36
Total South Africa 32 111
Mondi Packaging South Africa 36 28
Merchant & Newsprint businesses 12 7
Corporate & other businesses (37) (39)
Segments total 294 441
Net profit/(loss) on disposals (see note 6) - -
Impairment of assets held for sale (see note 6) - -
Net income from associates 2 2
Net finance costs (see note 7) (114) (159)
Group profit/(loss) before tax from continuing operations 182 284
Segment operating
profit/(loss) after special
items 1/2
EUR million 2009 2008
Europe & International
Uncoated Fine Paper 144 98
Corrugated (27) (62)
Bags & Specialities 34 (58)
Total Europe & International 151 (22)
South Africa
Uncoated Fine Paper (6) 75
Containerboard 16 36
Total South Africa 10 111
Mondi Packaging South Africa 43 28
Merchant & Newsprint businesses - 7
Corporate & other businesses (38) (41)
Segments total 166 83
Net profit/(loss) on disposals (see note 6) 3 (27)
Impairment of assets held for sale (see note 6) (8) (2)
Net income from associates 2 2
Net finance costs (see note 7) (114) (159)
Group profit/(loss) before tax from continuing operations 49 (103)
Notes:
1 Management reviews underlying segment operating profit on a regular basis as
part of the resource allocation decision making process and the ongoing
assessment of segment performance. Accordingly, segment underlying operating
profits are presented here. Segment profits stated after operating special
items are also presented since the Group believes that this provides useful
additional information for the user of the Group`s combined and consolidated
financial statements.
2 Special items are disclosed per operating segment in note 6.
Segment assets and liabilities
Segment assets, liabilities and net assets are presented, and reconciled to
their respective Group totals, as follows:
2009
Segment Segment Net segment
EUR million assets 1 liabilities 2 assets 3
Europe & International
Uncoated Fine Paper 1,671 (177) 1,494
Corrugated 1,071 (199) 872
Bags & Specialities 1,531 (309) 1,222
Intra-segment elimination (33) 33 -
Total Europe & International 4,240 (652) 3,588
South Africa
Uncoated Fine Paper 804 (92) 712
Containerboard 150 (22) 128
Intra-segment elimination (6) 6 -
Total South Africa 948 (108) 840
Mondi Packaging South Africa 432 (97) 335
Merchant & Newsprint businesses 263 (69) 194
Corporate & other businesses 3 1 4
Inter-segment elimination (74) 74 -
Segments total 3 5,812 (851) 4,961
Unallocated:
Investments in associates 6 - 6
Deferred tax assets/(liabilities) 29 (316) (287)
Other non-operating
assets/(liabilities) 4 211 (577) (366)
Group trading capital employed 6,058 (1,744) 4,314
Financial asset investments 27 - 27
Net debt 5 123 (1,640) (1,517)
Group net assets 6,208 (3,384) 2,824
2008
Net
Segment Segment segment
EUR million assets 1 liabilities 2 assets 3
Europe & International
Uncoated Fine Paper 1,589 (177) 1,412
Corrugated 1,171 (241) 930
Bags & Specialities 1,632 (315) 1,317
Intra-segment elimination (76) 76 -
Total Europe & International 4,316 (657) 3,659
South Africa
Uncoated Fine Paper 720 (80) 640
Containerboard 139 (19) 120
Intra-segment elimination (2) 2 -
Total South Africa 857 (97) 760
Mondi Packaging South Africa 371 (70) 301
Merchant & Newsprint businesses 283 (87) 196
Corporate & other businesses 13 (3) 10
Inter-segment elimination (101) 101 -
Segments total 3 5,739 (813) 4,926
Unallocated:
Investments in associates 5 - 5
Deferred tax assets/(liabilities) 36 (292) (256)
Other non-operating
assets/(liabilities) 4 307 (615) (308)
Group trading capital employed 6,087 (1,720) 4,367
Financial asset investments 19 - 19
Net debt 5 155 (1,845) (1,690)
Group net assets 6,261 (3,565) 2,696
Notes:
1 Segment assets are operating assets and at 31 December 2009 consist of
property, plant and equipment of EUR3,847 million (2008: EUR3,611 million),
intangible assets of EUR308 million (2008: EUR323 million), forestry assets of
EUR251 million (2008: EUR214 million), retirement benefits surplus of EUR8
million (2008: EURnil), inventories of EUR617 million (2008: EUR684 million)
and operating receivables of EUR781 million (2008: EUR907 million).
2 Segment liabilities are operating liabilities and at 31 December 2009 consist
of non-interest bearing current liabilities of EUR648 million (2008: EUR619
million), restoration and environmental provisions of EUR19 million (2008:
EUR12 million) and provisions for post-retirement benefits of EUR184 million
(2008: EUR182 million).
3 Management reviews net segment assets on a regular basis as part of the
resource allocation decision making process and the ongoing assessment of
segment performance. Accordingly, net segment assets and segment liabilities
are also presented since the Group believes that this provides useful
additional information to the user of the Group`s combined and consolidated
financial statements.
4 Other non-operating assets consist of derivative assets of EUR7 million
(2008: EUR73 million), current income tax receivables of EUR16 million (2008:
EUR32 million), other non-operating receivables of EUR152 million (2008: EUR197
million) and assets held for sale of EUR36 million (2008: EUR5 million). Other
non-operating liabilities consist of derivative liabilities of EUR51 million
(2008: EUR77 million), non-operating provisions of EUR66 million (2008: EUR52
million), current income tax liabilities of EUR55 million (2008: EUR53
million), other non-operating liabilities of EUR396 million (2008: EUR430
million) and liabilities directly associated with assets held for sale of EUR9
million (2008: EUR3 million).
5 Overdrafts of EUR86 million (2008: EUR80 million) are included in borrowings.
An analysis of the Group`s non-current non-financial assets, segment assets and
net segment assets attributed to the countries, where material, and the
continents in which the assets are located, is presented as follows:
2009
Non-current Net
non-financial Segment segment
assets 1 assets 2 assets 3
EUR million
Africa
South Africa 4 1,074 1,346 1,163
Rest of Africa 10 19 16
Africa total 1,084 1,365 1,179
Western Europe
Austria 398 735 529
United Kingdom 4 162 231 173
Rest of Western Europe 401 605 492
Western Europe total 961 1,571 1,194
Emerging Europe
Poland 600 704 631
Slovakia 544 588 543
Rest of Emerging Europe 380 524 425
Emerging Europe total 1,524 1,816 1,599
Russia 742 865 836
North America 46 74 65
Asia and Australia 49 121 88
Group total 4,406 5,812 4,961
2008
Non-current Net
non-financial Segment segment
assets 1 assets 2 assets 3
EUR million
Africa
South Africa 4 948 1,195 1,043
Rest of Africa 6 11 10
Africa total 954 1,206 1,053
Western Europe
Austria 582 947 769
United Kingdom 4 160 247 179
Rest of Western Europe 490 799 653
Western Europe total 1,232 1,993 1,601
Emerging Europe
Poland 448 554 500
Slovakia 543 607 548
Rest of Emerging Europe 365 539 462
Emerging Europe total 1,356 1,700 1,510
Russia 503 618 585
North America 52 86 75
Asia and Australia 51 136 102
Group total 4,148 5,739 4,926
Notes:
1 Non-current non-financial assets are non-current assets and consist of
property, plant and equipment, intangible assets and forestry assets, but
excludes retirement benefits surplus, deferred tax assets and non-current
financial assets.
2 Segment assets are operating assets and consist of property, plant and
equipment, intangible assets, forestry assets, retirement benefits surplus,
inventories and operating receivables.
3 Net segment assets and segment assets by location are also presented since
the Group believes that this provides useful additional information to the user
of the Group`s combined and consolidated financial statements.
4 These non-current non-financial assets, segment assets and net segment
assets, which total EUR1,236 million, EUR1,577 million and EUR1,336 million
respectively (2008: EUR1,108 million, EUR1,442 million and EUR1,222 million
respectively), are attributable to the countries in which the Group`s parent
entities are domiciled.
Capital expenditure cash payments and the additions to the Group`s non-current
non-financial assets, other than deferred tax assets and pension surpluses, are
presented by operating segment as follows:
Capital expenditure cash payments 1
EUR million 2009 2008
Europe & International
Uncoated Fine Paper 191 266
Corrugated 195 199
Bags & Specialities 81 136
Total Europe & International 467 601
South Africa
Uncoated Fine Paper 22 37
Containerboard 4 7
Total South Africa 26 44
Mondi Packaging South Africa 17 38
Merchant & Newsprint businesses 7 10
Corporate & other businesses - -
Group and segments total 517 693
Additions to non-current non-financial assets 2
EUR million 2009 2008
Europe & International
Uncoated Fine Paper 257 284
Corrugated 178 246
Bags & Specialities 83 185
Total Europe & International 518 715
South Africa
Uncoated Fine Paper 59 79
Containerboard 4 7
Total South Africa 63 86
Mondi Packaging South Africa 17 44
Merchant & Newsprint businesses 10 13
Corporate & other businesses 6 1
Group and segments total 614 859
Notes:
1 Management reviews segment capital expenditure cash payments on a regular
basis as part of the resource allocation decision making process and the
ongoing assessment of segment performance. Accordingly, segment capital
expenditure cash payments are presented since the Group believes that this
provides useful additional information to the user of the Group`s combined and
consolidated financial statements. Capital expenditure cash payments exclude
business combinations, interest capitalised and the purchase of intangible and
forestry assets.
2 Additions to non-current non-financial assets reflect cash payments and
accruals in respect of additions to property, plant and equipment, intangible
assets and forestry assets and include interest capitalised as well as
additions resulting from acquisitions through business combinations.
5 Operating profit/(loss)
EUR million 2009 2008
Operating profit/(loss) for the year has been arrived at
after
(charging)/crediting:
Depreciation of property, plant and equipment (341) (364)
Amortisation of intangible assets (10) (9)
Rentals under operating leases (62) (71)
Research and development expenditure (8) (10)
Restructuring/closure costs (excluding special items) (3) (7)
Operating special items (see note 6) (128) (358)
Net foreign currency (losses)/gains (13) 22
Green energy sales and disposal of emissions credits 47 53
Fair value gains on forestry assets 28 46
Felling costs (50) (43)
Profit on disposal of tangible and intangible assets 4 6
Total revenue, as defined under IAS 18, `Revenue`, consisting of Group revenue,
sale of green energy and disposal of emissions credits, and interest income and
dividend income, was EUR5,313 million (2008: EUR6,421 million).
6 Special items 1
EUR million 2009 2008
Operating special items
Goodwill impairments
Corrugated (Europe & International) - (74)
Bags & Specialities (Europe & International) - (120)
Merchant & Newsprint businesses (12) -
Total goodwill impairments (12) (194)
Asset impairments
Uncoated Fine Paper (Europe & International) - (1)
Corrugated (Europe & International) (44) (28)
Bags & Specialities (Europe & International) (14) (70)
Uncoated Fine Paper (South Africa) (19) -
Mondi Packaging South Africa (1) -
Total asset impairments (78) (99)
Restructuring and closure costs
Restructuring and closure costs excluding related personnel
costs
Uncoated Fine Paper (Europe & International) 5 (15)
Corrugated (Europe & International) (2) (1)
Bags & Specialities (Europe & International) (25) (8)
Personnel costs relating to restructuring
Uncoated Fine Paper (Europe & International) (7) (8)
Corrugated (Europe & International) (3) (6)
Bags & Specialities (Europe & International) (8) (18)
Uncoated Fine Paper (South Africa) (3) -
Total restructuring and closure costs (43) (56)
Demerger arrangements
Uncoated Fine Paper (Europe & International) - (4)
Corrugated (Europe & International) (1) (2)
Bags & Specialities (Europe & International) (1) (1)
Corporate & other businesses (1) (2)
Total demerger arrangements (3) (9)
Proceeds on insurance
Mondi Packaging South Africa 8 -
Total operating special items (128) (358)
Non-operating special items
Profit/(loss) on disposals
Corrugated (Europe & International) 3 (11)
Bags & Specialities (Europe & International) - (16)
Net profit/(loss) on disposal 3 (27)
Asset impairment of assets held for sale
Corrugated (Europe & International) (8) (2)
Total non-operating special items (5) (29)
Total special items before tax and minority interests (133) (387)
Tax 6 4
Minority interest (1) -
Total special items attributable to equity holders of the
parent companies (128) (383)
Note:
1 Special items by operating segment are presented since the Group believes
that this provides useful additional information for the user of the Group`s
combined and consolidated financial statements.
Year ended 31 December 2009
Operating special items
The continuation of the difficult trading conditions throughout most of the
year led management to take early and decisive action to restructure the cost
base.
Uncoated Fine Paper (Europe & International)
Management has rationalised forestry operations at Syktyvkar resulting in costs
of EUR7 million reduced by the gain on the sale of an asset written off during
the Szolnok closure of EUR5 million.
Corrugated
Given the continued difficult trading conditions in the Corrugated Packaging
sector Mondi responded by closing, or restructuring, certain high cost
operations. This has resulted in restructuring and closure costs of EUR5
million and asset impairment costs in certain German and Austrian recycled
containerboard mills and a UK corrugated plant of EUR44 million.
Bags & Specialities
Market related down time has been taken due to overcapacity created by a
significant slowdown in demand. Various restructuring initiatives have been
implemented in response to the lower demand environment. As a result the Group
has incurred restructuring and closure costs of EUR33 million relating to the
mothballing of the Stambolijski mill and the closure of various converting
operations. Associated asset impairment costs of EUR14 million were incurred.
Uncoated Fine Paper (South Africa)
The South Africa Division announced the mothballing of its PM32 paper machine
which represents a 120,000 tonne capacity reduction. An asset impairment of
EUR19 million was recognised together with restructuring costs of EUR3 million.
Mondi Packaging South Africa
Insurance proceeds in excess of net book value were received to replace fire
damaged assets at a subsidiary of Mondi Packaging South Africa amounting to
EUR8 million, while an impairment of EUR1 million of the damaged assets was
recognised.
Merchant & Newsprint businesses
Europapier has suffered from declining sales prices and volumes, resulting in
an impairment of goodwill of EUR12 million.
Demerger arrangements
Equity settled demerger arrangements for senior management have also resulted
in additional share based payments of EUR3 million.
Non-operating special items
The Group disposed of the four remaining corrugated converting operations in
France resulting in a profit of EUR3 million and a held for sale asset
impairment of EUR1 million. The sale of the Italian recycled containerboard
plant, Cartonstrong and the related sheetfeeder gave rise to a held for sale
asset impairment of EUR7 million.
7 Net finance costs
Net finance costs and related foreign exchange gains/(losses) are presented
below:
EUR million 2009 2008
Investment income
Interest income
Bank deposits, loan receivables and other 8 22
Available-for-sale investments 1 -
Past due receivables - 1
Total interest income 9 23
Expected return on defined benefit arrangements 17 20
Foreign currency losses (1) (28)
Impairment of financial assets (excluding trade receivables) (1) (1)
Other financial income 2 1
Total investment income 26 15
Financing costs
Interest expense
Interest on bank overdrafts and loans (158) (169)
Interest on obligations under finance leases (1) (1)
Interest on defined benefit arrangements (26) (28)
Total interest expense (185) (198)
Less: interest capitalised 45 24
Total financing costs (140) (174)
Net finance costs (114) (159)
The weighted average interest rate applicable to interest on general borrowings
capitalised for the year ended 31 December 2009 is 10.2% (2008: 13.0%), mainly
related to loans in Poland and Russia.
8 Tax charge
(a) Analysis of charge for the year from continuing operations
EUR million 2009 2008
UK corporation tax at 28% (2008: 28.5%) 1 (5)
Overseas tax 51 66
Current tax (excluding tax on special items) 52 61
Deferred tax in respect of the current period (excluding tax
on special items) 15 30
Deferred tax in respect of prior period over provision (9) (9)
Total tax charge before special items 58 82
Current tax on special items 1 (2)
Deferred tax on special items (7) (2)
Total tax credit on special items (see note 6) (6) (4)
Total tax charge 52 78
The Group`s effective rate of tax before special items for the year ended 31
December 2009, calculated on profit before tax before special items and
including net income from associates, is 32% (2008: 29%).
9 Dividends
Dividend payments
An interim dividend for the year ended 31 December 2009 of 28.41150 cents
/ 2.5 euro cents per share was paid on 15 September 2009 to all Mondi Limited
and Mondi plc ordinary shareholders on the relevant registers on 28 August
2009.
A proposed final dividend for the year ended 31 December 2009 of 7.0 euro cents
per share will be paid on 19 May 2010 to all Mondi Limited and Mondi plc
ordinary shareholders on the relevant registers on 23 April 2010.
The final dividend is subject to the approval of the shareholders of Mondi
Limited and Mondi plc at the respective annual general meetings scheduled for 6
May 2010.
Dividend timetable
The proposed final dividend for the year ended 31 December 2009 of 7.0 euro
cents per share will be paid in accordance with the following timetable:
Mondi Limited Mondi plc
Last date to trade
shares cum-dividend
JSE Limited 16 April 2010 16 April 2010
London Stock Exchange Not applicable 20 April 2010
Shares commence trading ex-dividend
JSE Limited 19 April 2010 19 April 2010
London Stock Exchange Not applicable 21 April 2010
Record date
JSE Limited 23 April 2010 23 April 2010
London Stock Exchange Not applicable 23 April 2010
Last date for Dividend Reinvestment Plan
(DRIP) elections by Central Securities 4 May 2010 4 May 2010
Depository Participants
Last date for DRIP elections to
UK Registrar and South African
Transfer Secretaries 5 May 2010 5 May 2010
by shareholders of Mondi Limited
and Mondi plc
Payment date
South African Register 19 May 2010 19 May 2010
UK Register Not applicable 19 May 2010
Depositary Interest holders
(dematerialised DIs) 25 May 2010 Not applicable
Holders within Equiniti
Corporate Nominee 27 May 2010 Not applicable
Currency conversion date
ZAR / euro 23 February 2010 23 February 2010
Euro / sterling Not applicable 10 May 2010
DRIP purchase settlement dates 26 May 2010 24 May 2010*
*26 May 2010 for Mondi plc South African branch register shareholders
Please note that the DRIP plan is not available to Depositary Interest holders
and holders within the Equiniti Corporate Nominee.
Share certificates on the South African registers of Mondi Limited and Mondi
plc may not be dematerialised or rematerialised between 19 April 2010 and 25
April 2010, both dates inclusive, nor may transfers between the UK and South
African registers of Mondi plc take place between 14 April 2010 and 25 April
2010, both dates inclusive.
10 Earnings per share
EUR cents per share 2009 2008
Loss for the financial year attributable to
equity holders of the parent companies
Basic EPS (6.5) (41.6)
Diluted EPS (6.5) 3 (41.6) 3
Underlying earnings for the financial year 1
Basic EPS 18.7 33.9
Diluted EPS 18.2 33.4
Headline earnings for the financial year 2
Basic EPS 11.4 20.3
Diluted EPS 11.1 20.0
Notes:
1 The Boards believe that underlying EPS provides a useful additional non-GAAP
measure of the Group`s underlying performance. Underlying EPS excludes the
impact of special items.
2 The presentation of Headline EPS is mandated under the JSE Listings
Requirements. Headline earnings has been calculated in accordance with Circular
3/2009, `Headline Earnings`, as issued by the South African Institute of
Chartered Accountants. Please see the reconciliation presented below.
3 Diluted EPS is consistent with Basic EPS as the impact of potential ordinary
shares is anti-dilutive.
The calculation of basic and diluted EPS, basic and diluted underlying EPS, and
basic and diluted headline EPS is based on the following data:
Earnings
EUR million 2009 2008
Loss for the financial year attributable to equity
holders of the parent companies (33) (211)
Special items: operating 128 358
Net (profit)/loss on disposals (3) 27
Impairment of assets held for sale 8 2
Related tax (6) (4)
Related minority interest 1 -
Underlying earnings 95 172
Profit on disposal of tangible and intangible assets (4) (6)
Special items: demerger arrangements (3) (9)
Special items: restructuring and closure cost (43) (56)
Impairments not included in special items 10 -
Related tax 3 2
Headline earnings 58 103
Number of shares
million 2009 2008
Basic number of ordinary shares outstanding 1 508 507
Effect of dilutive potential ordinary shares 2 13 8
Diluted number of ordinary shares outstanding 521 515
Notes:
1 The basic number of ordinary shares outstanding represents the weighted
average number in issue for Mondi Limited and Mondi plc for the year, as
adjusted for the weighted average number of treasury shares held during the
year.
2 Diluted EPS is calculated by adjusting the weighted average number of
ordinary shares in issue, net of treasury shares, on the assumption of
conversion of all potentially dilutive ordinary shares.
11 Asset values per share
Asset values per share are disclosed in accordance with the JSE Listings
Requirements. Net asset value per share is defined as net assets divided by the
combined number of ordinary shares in issue as at 31 December 2009, less
treasury shares held. Tangible net asset value per share is defined as the net
assets less intangible assets divided by the combined number of ordinary shares
in issue as at 31 December 2009, less treasury shares held.
2009 2008
Net asset value per share (EUR) 5.55 5.34
Tangible net asset value per share (EUR) 4.94 4.70
12 Share capital and share premium
Authorised
Number of shares R million
Mondi Limited R0.20 ordinary shares 250,000,000 50
Mondi Limited R0.20 special converting
shares 650,000,000 130
Authorised
Number of shares EUR million
Mondi plc EUR0.20 ordinary shares 3,177,608,605 636
Mondi plc EUR0.20 special converting shares 250,000,000 50
There has been no change to the authorised share capital of either Mondi
Limited or Mondi plc since listing on the respective stock exchanges on 3 July
2007.
2009 Number of shares Share capital
Mondi Limited R0.20 ordinary shares
issued on the JSE 146,896,322 3
Mondi plc 1 EUR0.20 ordinary shares
issued on the LSE 367,240,805 74
Total ordinary shares in issue 514,137,127 77
Mondi Limited R0.20 special converting
Shares 2 367,240,805 8
Mondi plc EUR0.20 special converting
shares 146,896,322 29
Total special converting shares 514,137,127 37
Total shares 1,028,274,254 114
Called up, allotted and fully
paid/EUR million
2009 Share premium Total
Mondi Limited R0.20 ordinary shares
issued on the JSE 532 535
Mondi plc 1 EUR0.20 ordinary shares
issued on the LSE - 74
Total ordinary shares in issue 532 609
Mondi Limited R0.20 special
converting shares 2 - 8
Mondi plc EUR0.20 special
converting shares - 29
Total special converting shares - 37
Total shares 532 646
2008 Number of shares Share capital
Mondi Limited R0.20 ordinary shares
issued on the JSE 146,896,322 3
Mondi plc 1 EUR0.20 ordinary shares
issued on the LSE 367,240,805 74
Total ordinary shares in issue 514,137,127 77
Mondi Limited R0.20 special converting
shares 2 367,240,805 8
Mondi plc EUR0.20 special converting
shares 146,896,322 29
Total special converting shares 514,137,127 37
Total shares 1,028,274,254 114
Called up, allotted and fully
paid/EUR million
2008 Share premium Total
Mondi Limited R0.20 ordinary shares
issued on the JSE 532 535
Mondi plc 1 EUR0.20 ordinary shares
issued on the LSE - 74
Total ordinary shares in issue 532 609
Mondi Limited R0.20 special
converting shares 2 - 8
Mondi plc EUR0.20 special
converting shares - 29
Total special converting shares - 37
Total shares 532 646
Notes:
1 Mondi plc also issued 50,000 5% cumulative GBP1 preference shares in 2007. The
Group classifies these preference shares as a liability, and not as equity
instruments, since they contractually obligate the Group to make cumulative
dividend payments to the holders. The dividend payments are treated as a
finance cost rather than distributions.
2 The special converting shares are held on trust and do not carry dividend
rights. The special converting shares provide a mechanism for equality of
treatment on termination for both Mondi Limited and Mondi plc ordinary equity
holders.
13 Business combinations
There were no major acquisitions made for the year ended 31 December 2009.
Details of the aggregate net assets acquired, as adjusted from book to fair
value, and the attributable goodwill are presented as follows:
EUR million Book value Revaluation Fair value
Net assets acquired: 1
Long-term borrowings - 2 2
Equity minority interest 3 - 3
Other (1) - (1)
Net assets acquired 2 2 4
Goodwill arising on acquisition -
Total cost of acquisition 4
Debt consideration (2)
Net cash paid 2
Note:
1 The business combinations were not individually material and therefore have
not been shown separately.
The values used in accounting for the identifiable assets and liabilities of
these acquisitions are provisional in nature at the reporting date. If
necessary, adjustments will be made to these carrying values, and to the
related goodwill, within 12 months of the acquisition date.
14 Consolidated cash flow analysis
(a) Reconciliation of profit before tax to cash generated from operations
EUR million 2009 2008
Profit/(loss) before tax 49 (103)
Depreciation and amortisation 351 373
Share option expense 5 9
Non-cash effect of special items 98 368
Net finance costs 114 159
Net income from associates (2) (2)
Decrease in provisions and post-employment benefits (16) (21)
Decrease in inventories 80 26
Decrease in operating receivables 170 106
Decrease in operating payables (2) (105)
Fair value gains on forestry assets (28) (46)
Cost of felling 50 43
Profit on disposal of tangible and intangible assets (4) (6)
Other adjustments 2 (6)
Cash generated from operations 867 795
(b) Cash and cash equivalents
EUR million 2009 2008
Cash and cash equivalents per statement of
financial position 123 155
Bank overdrafts included in short-term borrowings (86) (80)
Net cash and cash equivalents per statement of cash flows 37 75
(c) Movement in net debt
The Group`s net debt position, excluding disposal groups is as follows:
Cash and
cash Debt due Debt due
equivalents 1 within one after one Total net
year 2 year debt
EUR million
At 1 January 2008 59 (332) (1,234) (1,507)
Cash flow 24 214 (543) (305)
Business combinations
(see note 13) 3 (3) (37) (37)
Disposal of businesses - 5 20 25
Reclassifications (2) (215) 215 (2)
Currency movements (9) 33 112 136
At 31 December 2008 75 (298) (1,467) (1,690)
Cash flow (19) 288 (38) 231
Business combinations
(see note 13) - - 2 2
Disposal of businesses (2) 8 - 6
Reclassifications (19) (119) 153 15
Currency movements 2 (12) (71) (81)
At 31 December 2009 37 (133) (1,421) (1,517)
Notes:
1 The Group operates in certain countries (principally South Africa) where the
existence of exchange controls may restrict the use of certain cash balances.
These restrictions are not expected to have any material effect on the Group`s
ability to meet its ongoing obligations.
2 Excludes overdrafts, which are included as cash and cash equivalents. At 31
December 2009, short-term borrowings on the combined and consolidated statement
of financial position of EUR219 million (2008: EUR378 million) include EUR86
million of overdrafts (2008:EUR80 million).
(d) Reconciliation of cash generated from operations to EBITDA for the years
ended 31 December
EUR million 2009 2008
Cash generated from operations 867 795
Share option expense (5) (9)
Fair value gains on forestry assets 28 46
Cost of felling (50) (43)
Decrease in provisions and post employment benefits 16 21
Decrease in inventories (80) (26)
Decrease in operating receivables (170) (106)
Decrease in operating payables 2 105
Profit on disposal of tangible and intangible assets 4 6
Add back cash effect of operating special items 35 19
Other adjustments (2) 6
EBITDA 1 645 814
Note:
1 EBITDA is operating profit before special items, depreciation and
amortisation.
(e) EBITDA by operating segment 1
EUR million 2009 2008
Europe & International
Uncoated Fine Paper 239 221
Corrugated 87 131
Bags & Specialities 189 271
Total Europe & International 515 623
South Africa
Uncoated Fine Paper 52 109
Containerboard 24 43
Total South Africa 76 152
Mondi Packaging South Africa 62 52
Merchant & Newsprint businesses 28 24
Corporate & other businesses (36) (37)
EBITDA 645 814
Note:
1 Management reviews segment EBITDA on a regular basis as part of the resource
allocation decision making process and the ongoing assessment of segment
performance. Accordingly, segment EBITDA is presented since the Group believes
that this provides useful additional information to the user of the Group`s
combined and consolidated financial statements.
EBITDA is stated before special items and is reconciled to `Total profit from
operations and associates` as follows:
EUR million 2009 2008
Total profit from operations and associates 163 56
Special items (excluding associates) 128 358
Net profit on disposals (excluding associates) (3) 27
Impairment of assets held for sale 8 2
Depreciation and amortisation 351 373
Share of associates` net income (2) (2)
EBITDA 645 814
15 Capital commitments
EUR million 2009 2008
Contracted for but not provided 214 405
Approved, not yet contracted for 291 219
These capital commitments will be financed by existing cash resources and
borrowing facilities.
16 Contingent liabilities and contingent assets
Disclosable contingent liabilities comprise aggregate amounts at 31 December
2009 of EUR21 million (2008:EUR17 million) in respect of loans and guarantees
given to banks and other third parties. Acquired contingent liabilities of
EURnil (2008: EUR2 million) have been recorded on the Group`s combined and
consolidated statement of financial position.
There are a number of legal or potential claims against the Group. Provision is
made for all liabilities that are expected to materialise.
There were no significant disclosable contingent assets at 31 December 2009 or
31 December 2008.
17 Related party transactions
The Group has a related party relationship with its associates and joint
ventures. Transactions between Mondi Limited, Mondi plc and their respective
subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
The Group and its subsidiaries, in the ordinary course of business, enter into
various sale, purchase and service transactions with joint ventures and
associates and others in which the Group has a material interest. These
transactions are under terms that are no less favourable than those arranged
with third parties. These transactions, in total, are not considered to be
significant.
The executive directors, who together with the non-executive directors comprise
the Boards, are deemed to be the key management personnel of the Group; their
remuneration is disclosed in the remuneration report.
Joint
2009/EUR million ventures Associates
Sales to related parties 11 -
Purchases from related parties (1) -
Loans to related parties 19 -
Receivables due from related parties 8 -
Payables due to related parties (1) -
Joint
2008/EUR million ventures Associates
Sales to related parties 11 -
Purchases from related parties (1) (32)
Loans to related parties 10 -
Receivables due from related parties 7 1
Cyril Ramaphosa, joint chairman of Mondi, has a 34.3% (2008: 32.7%) stake in
Shanduka Group (Proprietary) Limited, an entity that has controlling interests
in Shanduka Advisors (Proprietary) Limited, Shanduka Resources (Proprietary)
Limited, Shanduka Packaging (Proprietary) Limited and Shanduka Newsprint
(Proprietary) Limited and participating interests in Mondi Shanduka Newsprint
(Proprietary) Limited, Kangra Coal (Proprietary) Limited, Shanduka Coal
(Proprietary) Limited and Mondi Packaging South Africa (Proprietary) Limited.
Fees of EUR383,728 (2008: EUR340,000) and EURnil (2008: EUR392,000) were paid
to Shanduka Advisors (Proprietary) Limited and Shanduka Resources (Proprietary)
Limited respectively for management services provided to the Group during the
year ended 31 December 2009. Shanduka Packaging (Proprietary) Limited and
Shanduka Newsprint (Proprietary) Limited have also provided a shareholders`
loan to the Group. The balance outstanding at 31 December 2009 was EUR15.8
million (2008: EUR12.9 million) and EUR8.7 million (2008: EUR7.1 million),
respectively. In the normal course of business, and on an arm`s length basis,
the Group purchased supplies from Kangra Coal (Proprietary) Limited totalling
EUR8.8 million (2008: EUR12 million) and from Shanduka Coal (Proprietary)
Limited totalling EUR3.5 million (2008: EURnil) during the period. EUR480,000
(2008: EUR1 million) remains outstanding on these purchases at 31 December
2009.
Dividends received from associates for the year ended 31 December 2009
totalling EUR2 million (2008: EUR2 million), as disclosed in the combined and
consolidated statement of cash flows.
18 Events occurring after 31 December 2009
With the exception of the proposed final dividend for 2009, included in note 9,
there have been no material reportable events since 31 December 2009.
Production statistics
Year ended Year ended
31 December 31 December
2009 2008
Europe & International
Containerboard Tonnes 1,768,696 1,926,829
Kraft paper Tonnes 841,378 814,187
Corrugated board and boxes Mm 2 1,697 2,104
Bag converting m units 3,303 3,536
Coating and release liners Mm 2 2,672 2,667
Uncoated fine paper Tonnes 1,470,381 1,452,058
Newsprint Tonnes 194,564 192,921
Total hardwood pulp Tonnes 873,844 804,686
Total softwood pulp Tonnes 1,773,265 1,827,980
External hardwood pulp Tonnes 40,041 126,479
External softwood pulp Tonnes 205,076 200,676
South Africa
Containerboard Tonnes 238,915 251,944
Uncoated fine paper Tonnes 353,707 416,509
Woodchips Bone dry tonnes 273,526 780,932
Total hardwood pulp Tonnes 578,032 595,449
Total softwood pulp Tonnes 109,142 106,390
External hardwood pulp Tonnes 170,391 139,235
Mondi Packaging South Africa
Packaging papers Tonnes 367,741 388,199
Corrugated board and boxes Mm 2 369 381
Total hardwood pulp Tonnes 30,861 32,499
Total softwood pulp Tonnes 15,966 18,215
Newsprint Joint Ventures
(attributable share)
Newsprint Tonnes 312,736 331,929
Aylesford Tonnes 191,035 200,540
Mondi Shanduka Newsprint (MSN) Tonnes 121,701 131,389
Total softwood pulp MSN Tonnes 72,105 86,464
Exchange rates
Year ended Year ended
31 December 31 December
2009 2008
Closing rates against the euro
South African rand 10.67 13.07
Pounds sterling 0.89 0.95
Polish zloty 4.10 4.15
Russian rouble 43.15 41.28
US dollar 1.44 1.39
Czech koruna 26.47 26.87
Average rates for the period against the euro
South African rand 11.68 12.06
Pounds sterling 0.89 0.80
Polish zloty 4.33 3.52
Russian rouble 44.12 36.45
US dollar 1.39 1.47
Czech koruna 26.44 24.97
Date: 23/02/2010 09:00:08 Produced by the JSE SENS Department.
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