| Tue 10 Aug 2010, 8:09 | | MND / MNP - Mondi / Mondi Plc - Half-yearly results for the six months ended 30 |
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MND MNP
MND MNP
MND / MNP - Mondi / Mondi Plc - Half-yearly results for the six months ended 30
June 2010
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000097051
Mondi plc
(Incorporated in England and Wales)
(Registration number: 6209386)
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
As part of the dual listed company structure, Mondi Limited and Mondi plc
(together `Mondi Group`) notify both the JSE Limited and the London Stock
Exchange of matters required to be disclosed under the JSE listings
requirements and/or the Disclosure and Transparency and Listing Rules of the
United Kingdom Listing Authority.
Half-yearly results for the six months ended 30 June 2010
Financial summary
EUR million Six months Six months Half-yearly
ended 30 ended 30 change %
June 2010 June 2009
Group revenue 3,033 2,614 16
EBITDA1 405 308 31
Underlying operating profit2 222 138 61
Underlying profit before tax3 176 81 117
Profit/(loss) before tax6 177 (1) n/m7
Basic earnings/(loss) per
share (EUR cents)4 21.5 (7.1) n/m7
Underlying earnings per share
(EUR cents)4 20.3 8.3 145
Headline earnings/(loss) per
share (EUR cents)4 24.8 (0.8) n/m7
Interim dividend per share
(EUR cents) 3.5 2.5 40
Cash generated from operations 269 392 (31)
Net debt 1,632 1,661 (2)
Group Return on Capital
Employed (ROCE)5 9.5% 7.4% 28
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 a
12 month trailing 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 EUR1 million.
7 n/m - not measureable.
Highlights
Underlying operating profit up 61%, driven by a strong performance from the
Europe & International Division
Sustained improvement in order inflows, volumes and prices across all key
paper grades
Improving performance in South Africa Division
Restructuring of European Corrugated business completed
Major capital project in Russia on schedule for completion in second half
Successful issuance of inaugural EUR500 million Eurobond, used to pay down
existing debt
Interim dividend up 40% at 3.5 euro cents per share
David Hathorn, Mondi Group chief executive, said:
"Mondi achieved a pleasing result in the period against a backdrop of improving
market conditions, supported by a particularly strong performance from the
European Uncoated Fine Paper business. The outcome bears testament to our robust
business model, which encompasses leading market positions in higher growth
emerging markets, low-cost operations and a relentless focus on performance.
Despite cost pressures, the positive pricing momentum witnessed in Europe since
the beginning of the fourth quarter of 2009 in most of the Group`s key grades
should see the business continue to deliver a strong performance in the second
half. The South Africa Division should benefit from the further management
actions taken to improve profitability, although much depends on the outlook
for the rand and export pulp prices. While the sustainability of the economic
recovery remains uncertain, we believe the Group is well positioned to continue
benefiting from the current positive trading environment."
Contact details
Mondi Group
David Hathorn +27 (0)11 994 5418
Andrew King +27 (0)11 994 5415
Lora Rossler +27 (0)31 451 2040 / +27 (0)83 627 0292
Financial Dynamics
Richard Mountain +44 20 7269 7186 / +44 20 7909 684 466
Chloe Webb +27 (0)11 214 2421
Conference call dial-in and audio cast details
Please see below details of our dial-in conference call and audio cast that
will be held at 10:00 (UK) and 11:00 (SA).
The conference call dial-in numbers are:
South Africa 0800 200 648 (toll-free)
UK 0800 917 8183 (toll-free)
Europe & Other 0800 246 78 700 (toll-free)
An online audio cast facility will be available via:
www.mondigroup.com/HYResults10.
Password: HYResults10.
The presentation will be available online via the above website address before
the audio cast commences.
Questions can be submitted via the dial-in conference call or by e-mail via the
audio cast.
Should you have any issues on the day with accessing the dial-in conference
call, please call +27 (0)11 535 3600.
Should you have any issues on the day with accessing the audio cast, please
e-mail mondi@kraftwerk.co.at and you will be contacted immediately.
An audio recording of the presentation will be available on Mondi`s website
during the afternoon of 10 August 2010.
Editors` notes
Mondi is an international paper and packaging company, with production
operations across 31 countries and revenues of EUR5.3 billion in 2009. The
Group`s key operations are located in central Europe, Russia and South Africa
and employed 31,000 people on average in 2009.
Mondi is fully integrated across the paper and packaging process, from the
growing of wood and the manufacture of pulp and paper (including recycled
paper), to the conversion of packaging papers into corrugated packaging and
industrial bags.
The Group is principally involved in the manufacture of uncoated fine paper
(UFP), packaging paper and converted packaging products, as well as speciality
products.
Mondi has a dual listed company structure, with a primary listing on the JSE
Limited for Mondi Limited under the ticker code MND and a premium listing on
the London stock exchange for Mondi plc, under the ticker code MNDI. The Group
has been recognised for its sustainability performance through its inclusion in
the FTSE4Good UK, Europe and Global indices in 2008 and 2009 and the JSE`s
Socially Responsible Investment (SRI) Index in 2007, 2008 and 2009.
Forward-looking statements
This document includes forward-looking statements. All statements other than
statements of historical facts included herein, including, without limitation,
those regarding Mondi`s financial position, business strategy, plans and
objectives of management for future operations, are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Mondi, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on
numerous assumptions regarding Mondi`s present and future business strategies
and the environment in which Mondi will operate in the future. Among the
important factors that could cause Mondi`s actual results, performance or
achievements to differ materially from those in the forward-looking statements
include, but are not limited to, those discussed under Principal risks and
uncertainties, below. These forward-looking statements speak only as of the
date on which they are made. Mondi expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement contained herein to reflect any change in Mondi`s expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.
Group performance review
The Group`s underlying operating profit of EUR222 million was 61% up on the
comparable prior year period and 42% up on the result of the second half of the
prior year.
Order inflows and sales volumes continue to improve and price increases were
achieved across all key paper grades. Furthermore, the benefits of the
significant restructuring actions and cost reduction initiatives implemented
through the economic downturn supported the strong recovery in profitability.
Ongoing profit improvement initiatives have yielded a further EUR75 million
during the first half which, at 2.9% of our cost base, continue to exceed
targets. Rising commodity input costs partially offset revenue gains.
Currency movements had a mixed impact on the Group`s results. The stronger rand
eroded export margins in South Africa whilst exports from Europe benefited from
the weaker euro against the dollar. Other emerging European currencies
strengthened against the euro in the first quarter of the year placing pressure
on the export focussed operations in Poland and the Czech Republic, although
this trend reversed in the second quarter.
Underlying earnings per share was 20.3 cents, an increase of 145% on the
comparable prior year period. An interim dividend of 3.5 euro cents, up 40% on
the prior year interim dividend, will be paid.
During the first quarter, Mondi concluded the sale of the 170,000 tonne
Frohnleiten recycled containerboard mill in Austria. During May, the Group`s
western European corrugated packaging and recycled containerboard restructuring
programme concluded with the sale of its corrugated box plants in the UK to
Smurfit Kappa. The Group also acquired Smurfit Kappa`s industrial and consumer
bag operations in Spain, France and Italy. These operations will be
restructured and some of the plants may be rationalised with our existing
plants.
The sale of the Europapier paper merchant business to the Heinzel Group
announced in early May 2010 remains subject to approval by the relevant
competition authorities.
Net debt at 30 June 2010 increased from 31 December 2009 by EUR115 million to
EUR1.63 billion. Robust EBITDA generation was offset primarily by an increase
in working capital (in line with growth in revenue), ongoing funding for the
EUR545 million Russian expansion project and foreign exchange movements. In
March 2010, the Group issued a seven year Eurobond of EUR500 million at a
coupon of 5.75%, the proceeds of which were used to settle existing short and
medium term debt and consequently increased the average maturity of the Group`s
debt.
The Group`s financial position remains robust with net assets increasing to
EUR3.1 billion on the back of higher working capital and exchange impacts on
translation into euro. The Group retains adequate borrowing facilities.
Europe & International Division
EUR million
Six months Six months Half-yearly
ended 30 ended 30 change %
June 2010 June 2009
Segment revenue 2,372 2,063 15
- of which inter-segment revenue 61 53 15
EBITDA 336 238 41
Underlying operating profit 201 108 86
Uncoated Fine Paper 98 71 38
Corrugated 48 1 n/m
Bags & Coatings 55 36 53
Capital expenditure 159 272 (42)
Net segment assets 3,822 3,620 6
ROCE (%) 12.2% 7.3% 67
Underlying operating profit of EUR201 million was 86% higher than that of the
comparable prior year period with ROCE, on a twelve month trailing basis,
increasing to 12.2%. The improved result was due to good demand across all
businesses, higher prices in all paper grades and the benefit of previously
implemented profit improvement initiatives.
Profit improvement initiatives have yielded EUR59 million to date partially
offsetting increased input costs, particularly wood, pulp and recovered paper.
The extended shut at the Syktyvkar plant in Russia as part of the final
integration of the expansion project, together with the planned maintenance
shuts at a number of the pulp and paper mills in the traditionally slower
European summer months, will impact results in the second half of the year.
Uncoated Fine Paper
The operating profit of EUR98 million was 38% up on the comparable prior year
period, giving a very strong ROCE, on a twelve month trailing basis, of 17.5%.
This excellent performance, following a strong second half in the previous
year, reflects a continued positive trading environment with both prices and
volumes increasing. This was supported by a pleasing operating performance with
all mills achieving record production volumes. The Russian operation,
Syktyvkar, performed particularly well, supported by a positive contribution
from the recently rebuilt uncoated fine paper machine.
Selling prices have increased with benchmark cut-size office paper prices
increasing by around 5% from 31 December 2009 levels. Further price increases
have been announced in the second half, supported by continued input cost
pressures particularly for the non-integrated producers, and the weakness of
the euro relative to the dollar.
With average pulp prices increasing during the period, by 24% for softwood and
32% for hardwood in US dollar terms when compared to the second half of the
previous year, the larger mills benefited from their backward integration. The
non-integrated mills, despite achieving price increases, could not entirely
offset the higher pulp prices.
The major capital project in Syktyvkar, Russia is expected to be completed and
integrated into the existing mill during an extended shut in the second half.
The impact of the shut on the second half operating profit contribution from
Syktyvkar is estimated at around EUR20 million.
Corrugated
The Corrugated business achieved a significant improvement in underlying
operating profit to EUR48 million, benefiting from the new recycled
containerboard machine at Swiecie, restructuring and cost reduction
initiatives, and improved product prices and volumes. Average increases of
around 23% compared to the second half of the prior year were seen for
benchmark recycled containerboard prices, supported by significant input cost
pressures (recovered paper prices increased by 52% in the period).
Although sales volumes increased, price increases achieved in the corrugated
box plants were not sufficient to recover the increased paper input costs.
Further box price increases are anticipated in the second half of the year.
The restructuring of the Corrugated business was concluded during the first
half with the sale of the UK box plants to Smurfit Kappa in May 2010 and the
recycled containerboard mill in Austria to the Prinzhorn Group.
The business is now well positioned to focus on its core central and south
eastern European markets, with leading market positions in the high growth
markets of Poland and Turkey. The containerboard mills in Poland, Germany and
Turkey provide the Group with a competitive paper asset base serving the
Group`s integrated converting network in these regions.
Having started up in September 2009, the 470,000 tonne recycled containerboard
machine in Swiecie, Poland is performing ahead of plan, with production of
197,000 tonnes in the first half, and full year production from this machine
expected to be around 400,000 to 410,000 tonnes including the impact of a
maintenance shut in the second half.
Bags & Coatings
The Bags & Coatings business achieved an underlying operating profit of EUR55
million, an increase of 53% on the comparable prior year period. This reflects
both improved sales volumes and increased kraft paper prices.
Significant kraft paper selling price increases of around 10% on average
compared to the second half of the prior year were achieved in the period, more
than offsetting the sharp rise in input costs, particularly wood costs. Further
selling price increases have been announced and are expected to be implemented
during the third quarter. While demand in the Group`s core European markets has
recovered from a low base, supported by some restocking, very strong demand
growth is being seen in export markets. In response, the 80,000 tonne
Stambolijski kraft paper machine was restarted in June 2010, having been
mothballed during the previous year.
Volumes remain strong in the bag converting segment, up 12% on the comparable
period in the prior year. However, more than half of the sales volume is sold
under annual fixed price contracts, leading to short-term margin pressures in
this segment as paper input costs increase. The acquisition of the Smurfit
Kappa bag plants provides the Group with stronger market positions in Spain,
France and Italy. Although these newly acquired plants are currently operating
at a loss, restructuring and potential rationalisation with our existing plants
is planned for the coming months and they are expected to contribute positively
to the Group`s performance from 2011.
Robust volume increases in Coatings, Consumer Bags & Films have resulted in a
significant increase in underlying operating profit, although Consumer Bags &
Films remains under some pressure from rising polymer prices.
South Africa Division
EUR million Six months Six months Half-yearly
ended 30 ended 30 change %
June 2010 June 2009
Segment revenue 276 249 11
- of which inter-segment revenue 107 113 (5)
EBITDA 44 48 (8)
Underlying operating profit 18 28 (36)
Uncoated Fine Paper 14 13 8
Containerboard 4 15 (73)
Capital expenditure 9 13 (31)
Net segment assets 932 868 7
ROCE (%) 3.1% 13.5% (77)
A decrease of 36% in underlying operating profit on the comparable prior year
period reflects somewhat disappointing results partially due to the strength of
the rand and consequently lower export margins. ROCE, on a twelve month
trailing basis, at 3.1%, remains well below targeted levels. The results are
however significantly better than the weak second half of 2009.
Sales prices improved across all products with pulp being the main contributor
during the period. Increasing labour and input, particularly electricity, costs
will impact results in the second half.
The decision has been taken to exit the uncoated fine paper export market due
to poor profitability and to focus on the domestic and African markets. The
mothballing of the 120,000 tonne uncoated fine paper machine and related
equipment in Merebank, along with a restructuring programme, is expected to be
concluded during the second half of the year.
This restructuring and the associated increased sales of pulp are expected to
result in an improved second half performance, notwithstanding an apparent
weakening in global pulp markets.
Mondi Packaging South Africa (MPSA)
EUR million
Six months Six months Half-yearly
ended 30 ended 30 change %
June 2010 June 2009
Segment revenue 298 227 31
- of which inter-segment revenue 16 13 23
EBITDA 33 23 43
Underlying operating profit 18 11 64
Capital expenditure 14 6 133
Net segment assets 368 342 8
ROCE (%) 12.9% 7.3% 77
MPSA achieved a 64% increase in operating profit to EUR18 million off the low
base of the comparable prior year period giving a ROCE, on a twelve month
trailing basis, of 12.9%. The improvement reflects an approximately 10%
increase in sales volumes and the benefits of significant cost savings. The
euro result was also enhanced by translation at a stronger rand exchange rate.
In local currency terms, the increase in underlying operating profit was 37%.
With its exposure to the agricultural sector, coupled with price increases
expected to take effect during the second half, the second half of the year is
expected to be stronger than the first.
Newsprint
EUR million Six months Six months Half-yearly
ended 30 ended 30 change %
June 2010 June 2009
Segment revenue 271 254 7
- of which inter-segment revenue - - -
EBITDA 8 16 (50)
Underlying operating profit 1 8 (88)
Capital expenditure 2 2 -
Net segment assets1 108 218 (50)
ROCE (%) 2.2% 2.9% (24)
Note:
1 Excluding assets of Europapier business, classified as held for sale.
The Newsprint business reflected a significant decline in underlying operating
profit to EUR1 million mainly due to a disappointing performance at Aylesford
Newsprint. Aylesford Newsprint experienced reduced sales volumes and prices and
an operating loss resulted. Sales price increases of around GBP20/tonne are
being implemented during the second half of the year, although this is not
likely to lead to a significant improvement in profitability due to ongoing
input cost pressures. Mondi Shanduka Newsprint`s underlying operating profit was
marginally lower than the comparable prior year period mainly resulting from
increasing raw material costs. The European merchant business, Europapier,
performed well, benefiting from increased selling prices and volumes. The sale
of Europapier is expected to be concluded in the second half of the year,
pending competition clearance.
Input costs and currency exposure
All fibre input costs have seen significant increases in the first half of the
year.
Procured pulp wood prices in central Europe are up significantly versus the
comparable prior year period on the back of increased demand from bio-mass
energy producers and reduced supply due to the closure of sawmilling operations
in the region.
Average pulp prices, exacerbated by supply disruptions due to the Chilean
earthquake, have increased by 24% for softwood and 32% for hardwood during the
period when compared to the second half of the prior year.
Strong Chinese demand in the first quarter drove rapid price escalations in
European recovered paper markets. The average benchmark price of recovered
paper increased by 52%, when compared to the second half of the previous year.
Mondi benefits from its structural position in South Africa and Russia due to
integration into wood supply. The Group`s integrated pulp and paper mills
reduce the impact of pulp price escalations, with the Group, on an annualised
basis, being net short of around 135,000 tonnes of pulp following the recent
restructuring announcements. Restructuring initiatives and a relentless focus
on cost reduction and productivity improvement further mitigate the impact of
input cost pressures.
Financial review
Special items
The special items, as more fully set out in the notes to the half-yearly
financial statements, include:
closure of the paper machine and related restructuring provisions in South
Africa;
reversal of previously recognised closure provisions no longer required
following the sale of the Szolnok site;
reversal of impairment and related closure provisions of the Stambolijski
mill following its start-up in June 2010;
partial impairment of underperforming kraft paper assets in Lohja and
Ruzomberok;
gain on acquisition of the industrial bags plants in western Europe which
will be subject to future restructuring;
loss on disposal of the corrugated packaging plants in the UK;
profit on sale of forestry assets in South Africa; and
write-down of assets and recognition of expected loss on disposal of the
Europapier business.
Finance costs
Net finance costs of EUR48 million were lower than those of the comparable
prior year period mainly due to exchange rate gains on foreign currency debt
and a reduction in interest rates in some locations. The higher interest rate
of the Eurobond when compared to existing short-term facilities, as well as a
reduction in interest capitalised to major projects, will increase finance
costs in the second half of the year.
Tax
A reduction in the underlying effective tax rate from 32% to 26% is realised
primarily due to the improved profitability enabling the use of previously
unrecognised tax losses carried forward; increased profitability in regions
with lower tax rates; and benefits of tax incentives granted in certain
countries in which the Group operates, notably those related to the major
Polish and Russian capital projects.
Cash flow
As expected, cash flow generated from operating activities was negatively
impacted by an increase in working capital attributable to the significantly
increased revenue. Working capital, as a percentage of annualised revenue,
moved up from 10.0% at 31 December 2009 to 10.7% at 30 June 2010. Despite this,
cash generated from operating activities amounted to EUR235 million.
Capital expenditure of EUR184 million, including EUR75 million on our major
project in Russia, was incurred. Outside of our major projects in Russia and
Poland, capital expenditure remains at 51% of depreciation reflecting a
continued conservative approach to investment.
Treasury and borrowings
Net debt at 30 June 2010 was EUR1.6 billion, an increase of EUR115 million from
the prior year end. Excluding the impact of exchange rate movements, net debt
was largely unchanged from the year end position, despite the ongoing major
capital expenditure project in Russia and the investment in working capital.
The net debt to trailing 12 month EBITDA ratio was 2.2 times and the headroom
in the Group`s syndicated EUR1.55 billion facility increased to EUR1.2 billion.
During March, Mondi successfully launched a EUR500 million, seven year
Eurobond, further strengthening the Group`s already robust financial position
as evidenced by the long-term corporate credit ratings received of Baa3 from
Moody`s Investor Service and BB+ from Standard & Poor`s, both with a stable
outlook. Following the launch of the Eurobond, a large proportion of the
Group`s debt, 78%, is at fixed rates of interest for varying terms.
Interest rates have remained largely unchanged in the period under review.
The average maturity of committed debt facilities is 3.1 years (compared to 2.2
years at the end of the previous year) and drawn committed debt facilities
maturing over the next 12 months amount to EUR83 million.
Dividend
A dividend of 3.5 euro cents per share has been declared by the directors and
will be paid on 14 September 2010 to those shareholders on the register of
Mondi plc on 27 August 2010. An equivalent South African rand interim dividend
will be paid on 14 September 2010 to shareholders on the register of Mondi
Limited on 27 August 2010.
Outlook
Despite cost pressures, the positive pricing momentum witnessed in Europe since
the beginning of the fourth quarter of 2009 in most of the Group`s key grades
should see the business continue to deliver a strong performance in the second
half. The South Africa Division should benefit from the further management
actions taken to improve profitability, although much depends on the outlook
for the rand and export pulp prices. While the sustainability of the economic
recovery remains uncertain, we believe the Group is well positioned to continue
benefiting from the current positive trading environment.
Supplementary information
Going concern
An improvement in trading conditions is evident although some risks remain in
specific locations and business segments. This is mitigated by Mondi`s
geographical spread, product diversity and large customer base.
Through ongoing initiatives of cost management, prudent capital investment,
stringent working capital targets and restructuring and rationalisation of
assets where appropriate, Mondi has a leading cost position in its chosen
markets.
The Group maintains adequate undrawn borrowing facilities (EUR1.4 billion at 30
June 2010) and the average maturity of its debt is approximately three years,
thus providing sufficient short and medium term liquidity.
The Group`s forecasts, taking into account reasonably possible changes in
trading performance, show that Mondi will be able to operate well within the
levels of its current facilities and related covenants.
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, the going concern basis continues to be
adopted in preparing financial reports.
Principal risks and uncertainties
It is in the nature of its business that Mondi is exposed to risks and
uncertainties that 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. The key risks identified remain
consistent with those presented on pages 31 and 32 of the 2009 annual report.
Mondi operates in a highly competitive environment
The paper and packaging markets are highly competitive. Mondi is flexible and
responsive to changing market and operating conditions and the geographical and
product diversification provides some measure of protection. Uncertain trading
conditions may impact the carrying value of goodwill and tangible assets and
may necessitate further restructuring.
Input costs are subject to significant fluctuations
Significant fluctuations in raw material costs, particularly wood, pulp and
recovered paper, have been experienced during the first half of the year. The
Group`s relatively high level of integration and access to its own fibre in
Russia and South Africa, coupled with the focus on operational performance,
serve to mitigate these risks.
Significant capital investments including acquisitions carry project risk
The capital investment programme in Russia is largely completed and indications
are that the project will be completed during the second half of 2010. The
acquisition of the industrial bag operations in Spain, France and Italy will
require some restructuring in order to generate the required returns.
Directors` responsibility statement
The directors confirm that to the best of their knowledge:
the condensed set of combined and consolidated financial statements has been
prepared in accordance with International Financial Reporting Standards and in
particular with International Accounting Standard 34, `Interim Financial
Reporting`;
the half-yearly report includes a fair review of the important events during
the six months ended 30 June 2010 and a description of the principal risks and
uncertainties for the remaining six months of the year ending 31 December 2010;
and
there have been no significant individual related party transactions during
the first six months of the financial year and nor have there been any
significant changes in the Group`s related party relationships from those
reported in the Group`s annual financial statements for the year ended 31
December 2009.
David Hathorn Andrew King
Director Director
9 August 2010
Independent review report to the members of Mondi Limited
Introduction
We have reviewed the Group`s condensed combined and consolidated financial
statements for the six months ended 30 June 2010 which comprise the condensed
combined and consolidated income statement, the condensed combined and
consolidated statement of comprehensive income, the condensed combined and
consolidated statement of financial position, the condensed combined and
consolidated statement of cash flows and the condensed combined and consolidated
statement of changes in equity, the summary of significant accounting policies
and other explanatory notes. Management is responsible for the preparation and
presentation of these condensed combined and consolidated financial statements
in accordance with International Accounting Standards on Interim Financial
Reporting (IAS 34) and the Companies Act of South Africa. Our responsibility is
to express a conclusion on these Group condensed combined and consolidated
financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410, `Review of Interim Financial Information Performed by the
Independent Auditor of the Entity`.
A review consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the Group`s interim condensed combined and consolidated financial
statements is not prepared, in all material respects, in accordance with
International Accounting Standards on Interim Financial Reporting (IAS 34) and
the Companies Act of South Africa.
Bronwyn Kilpatrick
Partner
Sandton
9 August 2010
Deloitte & Touche
Registered Auditors
Buildings 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton
Republic of South Africa
National Executive G G Gelink Chief Executive A E Swiegers Chief Operating
Officer G M Pinnock Audit DL Kennedy Tax, Legal and Risk Advisory L Geeringh
Consulting L Bam Corporate Finance CR Beukman Finance T J Brown Clients &
Markets N T Mtoba Chairman of the Board
A full list of partners and directors is available on request.
Independent review report to the members of Mondi plc
We have been engaged by the Company to review the condensed combined and
consolidated financial statements in the half-yearly financial report for the
six months ended 30 June 2010 which comprises the condensed combined and
consolidated income statement, the condensed combined and consolidated statement
of comprehensive income, the condensed combined and consolidated statement of
financial position, the condensed combined and consolidated statement of cash
flows, the condensed combined and consolidated statement of changes in equity
and related notes 1 to 19. We have read the other information contained in the
half-yearly report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed financial
statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, `Review of Interim
Financial Information Performed by the Independent Auditor of the Entity`,
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Respective responsibilities of directors and auditors
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
report in accordance with the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, `Interim Financial Reporting`, as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of the review of the condensed financial statements
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity`, issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom`s Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London, United Kingdom
9 August 2010
Note: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Condensed combined and consolidated income statement
for the six months ended 30 June 2010
(Reviewed)
Six months ended 30 June 2010
Before Special After
special items special
Notes items (note 6) items
EUR million
Group revenue 4 3,033 - 3,033
Materials, energy and consumables (1,624) - (1,624)
used
Variable selling expenses (277) - (277)
Gross margin 1,132 - 1,132
Maintenance and other indirect (132) - (132)
expenses
Personnel costs (458) (2) (460)
Other net operating expenses (137) 56 (81)
Depreciation, amortisation and (183) (18) (201)
impairments
Operating profit/(loss) 4/5 222 36 258
Net (loss)/profit on disposals 6 - (22) (22)
Impairment of assets held for sale 6 - (13) (13)
Net income from associates 2 - 2
Total profit/(loss) from operations 224 1 225
and associates
Investment income 16 - 16
Foreign currency gains/(losses) 11 - 11
Interest expense 7 (75) - (75)
Net finance costs (48) - (48)
Profit/(loss) before tax 176 1 177
Tax (charge)/credit 8 (46) 4 (42)
Profit/(loss) from continuing 130 5 135
operations
Attributable to:
Non-controlling interests 27 (1) 26
Equity holders of the parent 103 6 109
companies
(Reviewed)
Six months ended 30 June 2009
Before Special After
special items special
items (note 6) items
EUR million
Group revenue 2,614 - 2,614
Materials, energy and consumables (1,387) - (1,387)
used
Variable selling expenses (225) - (225)
Gross margin 1,002 - 1,002
Maintenance and other indirect (111) - (111)
expenses
Personnel costs (430) (11) (441)
Other net operating expenses (153) (32) (185)
Depreciation, amortisation and (170) (36) (206)
impairments
Operating profit/(loss) 138 (79) 59
Net (loss)/profit on disposals - 5 5
Impairment of assets held for sale - (8) (8)
Net income from associates 1 - 1
Total profit/(loss) from operations 139 (82) 57
and associates
Investment income 15 - 15
Foreign currency gains/(losses) (2) - (2)
Interest expense (71) - (71)
Net finance costs (58) - (58)
Profit/(loss) before tax 81 (82) (1)
Tax (charge)/credit (27) 4 (23)
Profit/(loss) from continuing 54 (78) (24)
operations
Attributable to:
Non-controlling interests 12 - 12
Equity holders of the parent 42 (78) (36)
companies
(Audited)
Year ended 31 December 2009
Before Special After
special items special
items (note 6) items
EUR million
Group revenue 5,257 - 5,257
Materials, energy and consumables (2,768) - (2,768)
used
Variable selling expenses (472) - (472)
Gross margin 2,017 - 2,017
Maintenance and other indirect (241) - (241)
expenses
Personnel costs (838) (24) (862)
Other net operating expenses (293) (14) (307)
Depreciation, amortisation and (351) (90) (441)
impairments
Operating profit/(loss) 294 (128) 166
Net (loss)/profit on disposals - 3 3
Impairment of assets held for sale - (8) (8)
Net income from associates 2 - 2
Total profit/(loss) from operations 296 (133) 163
and associates
Investment income 27 - 27
Foreign currency gains/(losses) (1) - (1)
Interest expense (140) - (140)
Net finance costs (114) - (114)
Profit/(loss) before tax 182 (133) 49
Tax (charge)/credit (58) 6 (52)
Profit/(loss) from continuing 124 (127) (3)
operations
Attributable to:
Non-controlling interests 29 1 30
Equity holders of the parent 95 (128) (33)
companies
Earnings per share (EPS) for profit
/(loss) attributable to equity holders
of the parent companies
Basic EPS (EUR cents) 9 21.5 (7.1) (6.5)
Diluted EPS (EUR cents) 9 21.2 (7.1) (6.5)
Basic underlying EPS (EUR cents) 9 20.3 8.3 18.7
Diluted underlying EPS (EUR cents) 9 20.0 8.1 18.2
Basic headline EPS (EUR cents) 9 24.8 (0.8) 11.4
Diluted headline EPS(EUR cents) 9 24.5 (0.8) 11.1
Condensed combined and consolidated statement of comprehensive
income for the six months ended 30 June 2010
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
EUR million ended 30 June ended 30 June December
2010 2009 2009
Profit /(loss) for the
financial period/year 135 (24) (3)
Other comprehensive income:
Fair value gains on cash
flow hedges 6 14 26
Actuarial (losses)/ gains
and surplus restriction
on post-retirement benefit (9) 1 7
schemes
Fair value gains on
available-for-sale investments - - 1
Exchange gains on translation
of foreign operations 171 72 118
Share of other
comprehensive income of associates - 1 1
Tax relating to components of
other comprehensive income 2 (1) (7)
Other comprehensive
income for the financial
period/year, net of tax 170 87 146
Total comprehensive
income for the financial
period/year 305 63 143
Attributable to:
Non-controlling interests 36 14 39
Equity holders of the
parent companies 269 49 104
Condensed combined and consolidated statement of financial position
as at 30 June 2010
(Reviewed)
EUR million Notes As at 30 June
2010
Intangible assets 314
Property, plant and equipment 3,990
Forestry assets 290
Investments in associates 6
Financial asset investments 33
Deferred tax assets 31
Retirement benefits surplus 11 13
Total non-current assets 4,677
Inventories 688
Trade and other receivables 1,083
Current tax assets 19
Cash and cash equivalents 15b-c 77
Derivative financial instruments 13
Total current assets 1,880
Assets held for sale 14 172
Total assets 6,729
Short-term borrowings 15c (217)
Trade and other payables (1,123)
Current tax liabilities (75)
Provisions (50)
Derivative financial instruments (4)
Total current liabilities (1,469)
Medium and long-term borrowings 15c (1,492)
Retirement benefits obligation 11 (202)
Deferred tax liabilities (334)
Provisions (35)
Other non-current liabilities (21)
Derivative financial instruments (23)
Total non-current liabilities (2,107)
Liabilities directly associated with assets
classified as held for sale 14 (60)
Total liabilities (3,636)
Net assets 3,093
Equity
Ordinary share capital 114
Share premium 532
Retained earnings and other reserves 2,006
Total attributable to equity holders of the parent
companies 2,652
Non-controlling interests in equity 441
Total equity 3,093
(Reviewed) (Audited)
EUR million As at 30 June As at 31
2009 December 2009
Intangible assets 321 308
Property, plant and equipment 3,769 3,847
Forestry assets 268 251
Investments in associates 8 6
Financial asset investments 24 27
Deferred tax assets 43 29
Retirement benefits surplus - 8
Total non-current assets 4,433 4,476
Inventories 611 617
Trade and other receivables 1,075 933
Current tax assets 23 16
Cash and cash equivalents 171 123
Derivative financial instruments 15 7
Total current assets 1,895 1,696
Assets held for sale 22 36
Total assets 6,350 6,208
Short-term borrowings (435) (219)
Trade and other payables (1,013) (1,023)
Current tax liabilities (46) (55)
Provisions (47) (40)
Derivative financial instruments (40) (32)
Total current liabilities (1,581) (1,369)
Medium and long-term borrowings (1,397) (1,421)
Retirement benefits obligation (184) (184)
Deferred tax liabilities (329) (316)
Provisions (48) (45)
Other non-current liabilities (14) (21)
Derivative financial instruments (47) (19)
Total non-current liabilities (2,019) (2,006)
Liabilities directly associated with assets
classified as held for sale (3) (9)
Total liabilities (3,603) (3,384)
Net assets 2,747 2,824
Equity
Ordinary share capital 114 114
Share premium 532 532
Retained earnings and other reserves 1,707 1,753
Total attributable to equity holders of the
parent companies 2,353 2,399
Non-controlling interests in equity 394 425
Total equity 2,747 2,824
The Group`s condensed combined and consolidated financial statements, and
related notes 1 to 19, were approved by the Boards and authorised for issue on
9 August 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
Condensed combined and consolidated statement of cash flows
for the six months ended 30 June 2010
(Reviewed)
EUR million Notes Six months
ended 30 June
2010
Cash generated from operations 15a 269
Dividends from associates 2
Income tax paid (36)
Net cash generated from operating activities 235
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and cash
equivalents 13 11
Non-controlling interests bought out (4)
Proceeds from disposal of subsidiaries, net of cash
and cash equivalents 64
Proceeds from disposal of associates -
Investment in property, plant and equipment (184)
Proceeds from the disposal of property, plant and
equipment 6
Investment in forestry assets (21)
Investment in intangible assets (1)
Investment in financial asset investments (1)
Proceeds from the sale of financial asset
investments 2
Loan (advances to)/repayments from related parties (4)
Loan repayments from external parties -
Interest received 4
Other investing activities -
Net cash used in investing activities (128)
Cash flows from financing activities
Repayment of short-term borrowings 15c (95)
Proceeds from medium and long-term borrowings 15c 527
Repayment of medium and long-term borrowings 15c (452)
Interest paid (60)
Dividends paid to non-controlling interests 10 (17)
Dividends paid to equity holders of the parent
companies 10 (36)
Purchases of treasury shares (1)
Contribution by non-controlling interests -
Net realised (loss)/gain on cash and asset
management swaps (61)
Other financing activities -
Net cash used in financing activities (195)
Net decrease in cash and cash equivalents (88)
Cash and cash equivalents at beginning of financial
period/year1 15c 37
Cash movement in the financial period/year 15c (88)
Reclassification 15c (1)
Effects of changes in foreign exchange rates 15c (6)
Cash and cash equivalents at end of financial
period/year1 (58)
(Reviewed) (Audited)
EUR million Six months Year ended 31
ended 30 June December
2009 2009
Cash generated from operations 392 867
Dividends from associates - 2
Income tax paid (18) (32)
Net cash generated from operating activities 374 837
Cash flows from investing activities
Acquisition of subsidiaries, net of cash
and cash equivalents (2) (2)
Non-controlling interests bought out - -
Proceeds from disposal of subsidiaries, net
of cash and cash equivalents 47 54
Proceeds from disposal of associates - 3
Investment in property, plant and equipment (293) (517)
Proceeds from the disposal of property,
plant and equipment 7 11
Investment in forestry assets (20) (40)
Investment in intangible assets (2) (5)
Investment in financial asset investments - (7)
Proceeds from the sale of financial asset
investments - -
Loan (advances to)/repayments from related
parties (1) 1
Loan repayments from external parties - 1
Interest received 4 8
Other investing activities - 1
Net cash used in investing activities (260) (492)
Cash flows from financing activities
Repayment of short-term borrowings (81) (288)
Proceeds from medium and long-term
borrowings 16 138
Repayment of medium and long-term borrowings (22) (100)
Interest paid (93) (163)
Dividends paid to non-controlling interests - (9)
Dividends paid to equity holders of the
parent companies (26) (39)
Purchases of treasury shares (1) (1)
Contribution by non-controlling interests 10 27
Net realised (loss)/gain on cash and asset
management swaps 84 67
Other financing activities (1) 4
Net cash used in financing activities (114) (364)
Net decrease in cash and cash equivalents - (19)
Cash and cash equivalents at beginning of
financial period/year1 75 75
Cash movement in the financial period/year - (19)
Reclassification - (19)
Effects of changes in foreign exchange rates 4 -
Cash and cash equivalents at end of
financial period/year1 79 37
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 15c.
Condensed combined and consolidated statement of changes in equity
for the six months ended 30 June 2010
EUR million
Share capital
Combined
Mondi Mondi share
Limited Limited Mondi plc capital and
share share share share
capital premium capital premium
At 1 January 2009 11 532 103 646
Dividends paid - - - -
Total comprehensive - - - -
income for the financial
period
Issue of shares under - - - -
employee share
schemes
Purchases of treasury - - - -
shares2
Reclassification - - - -
Non-controlling - - - -
interests buy in
Non-controlling - - - -
interests bought out
Other - - - -
At 30 June 2009 11 532 103 646
Dividends paid - - - -
Total comprehensive - - - -
income for the financial
period
Issue of shares under - - - -
employee share
schemes
Reclassification - - - -
Non-controlling - - - -
interests buy in
Other - - - -
At 31 December 2009 11 532 103 646
Dividends paid - - - -
Total comprehensive - - - -
income for the financial
period
Issue of shares under - - - -
employee share
schemes
Purchases of treasury - - - -
shares2
Disposal of businesses - - - -
Non-controlling - - - -
interests bought out
Other - - - -
At 30 June 2010 11 532 103 646
Total
attributable
to equity
holders of
Retained Other the parent
earnings reserves1 companies
At 1 January 2009 1,809 (132) 2,323
Dividends paid (26) - (26)
Total comprehensive (36) 85 49
income for the financial
period
Issue of shares under 2 (2) -
employee share
schemes
Purchases of treasury (1) - (1)
shares2
Reclassification (14) 14 -
Non-controlling - - -
interests buy in
Non-controlling - - -
interests bought out
Other - 8 8
At 30 June 2009 1,734 (27) 2,353
Dividends paid (13) - (13)
Total comprehensive 3 52 55
income for the financial
period
Issue of shares under 17 (17) -
employee share
schemes
Reclassification 2 1 3
Non-controlling - - -
interests buy in
Other - 1 1
At 31 December 2009 1,743 10 2,399
Dividends paid (36) - (36)
Total comprehensive 109 160 269
income for the financial
period
Issue of shares under 5 (5) -
employee share
schemes
Purchases of treasury (1) - (1)
shares2
Disposal of businesses - 19 19
Non-controlling (1) - (1)
interests bought out
Other - 3 3
At 30 June 2010 1,819 187 2,652
Non-
controlling Total
interests equity
At 1 January 2009 373 2,696
Dividends paid - (26)
Total comprehensive 14 63
income for the financial
period
Issue of shares under - -
employee share
schemes
Purchases of treasury - (1)
shares2
Reclassification - -
Non-controlling 10 10
interests buy in
Non-controlling (3) (3)
interests bought out
Other - 8
At 30 June 2009 394 2,747
Dividends paid (9) (22)
Total comprehensive 25 80
income for the financial
period
Issue of shares under - -
employee share
schemes
Reclassification (3) -
Non-controlling 17 17
interests buy in
Other 1 2
At 31 December 2009 425 2,824
Dividends paid (17) (53)
Total comprehensive 36 305
income for the financial
period
Issue of shares under - -
employee share
schemes
Purchases of treasury - (1)
shares2
Disposal of businesses - 19
Non-controlling (3) (4)
interests bought out
Other - 3
At 30 June 2010 441 3,093
Notes:
1 Other reserves include the share-based payment, cumulative translation
adjustment, available-for-sale, cash flow hedge, post-retirement benefit,
merger and other sundry reserves.
2 The treasury shares purchased represent 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 option schemes. The number of ordinary shares held by the
Mondi Incentive Schemes Trust as at 30 June 2010 was 97,690 shares (as at 30
June 2009: 259,334; as at 31 December 2009: 53,700) at an average price of
R43.75 per share (as at 30 June 2009: R33.24 per share; as at 31 December 2009:
R35.71 per share). The number of ordinary shares held by the Mondi Employee
Share Trust as at 30 June 2010 was 4,462,901 shares (as at 30 June 2009:
7,113,962; as at 31 December 2009: 5,087,561) at an average price of GBP4.05 per
share (as at 30 June 2009: GBP4.03 per share; as at 31 December 2009: GBP4.05
per share).
Notes to the condensed 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 (IFRS).
The condensed combined and consolidated half-yearly financial information for
the six months ended 30 June 2010 has been prepared in accordance with IAS 34,
`Interim Financial Reporting`. It should be read in conjunction with the
Group`s annual financial statements for the year ended 31 December 2009,
prepared in accordance with IFRS. The Group has also complied with South
African Statements and Interpretations of Statements of Generally Accepted
Accounting Practice. In addition, there are no differences for the Group in
applying IFRS as issued by the International Accounting Standards Board and as
endorsed by the European Union (EU). As discussed in the Group performance
overview under the heading `Going concern`, the condensed combined and
consolidated financial statements have been prepared on a going concern basis.
The information for the year ended 31 December 2009 does not constitute
statutory accounts as defined by section 434 of the UK Companies Act 2006. A
copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditors` report on those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the UK Companies Act 2006.
2 Accounting policies
The same accounting policies, methods of computation and presentation have been
followed in the preparation of the condensed combined and consolidated
financial statements as were applied in the preparation of the Group`s annual
financial statements for the year ended 31 December 2009, except as described
below.
In the current financial year, the Group has adopted IFRS 3, `Business
Combinations` (revised 2008), and IAS 27, `Consolidated and Separate Financial
Statements` (revised 2008). Both standards became effective for annual
reporting periods beginning on or after 1 July 2009.
The most significant changes, all of which are applied prospectively, to the
Group`s previous accounting policies for business combinations are as follows:
acquisition related costs which previously would have been included in the
cost of a business combination are included in administrative expenses as they
are incurred;
any pre-existing equity interest in the acquiree is remeasured to fair value
at the date of obtaining control (the acquisition date), with any resulting
gain or loss recognised in profit or loss;
any changes in the Group`s ownership interest subsequent to the acquisition
date are recognised directly in equity, with no adjustment to goodwill; and
any changes to the cost of an acquisition, including contingent
consideration, resulting from events after the acquisition date are recognised
in profit or loss. Previously, such changes resulted in an adjustment to
goodwill.
Any adjustments to contingent consideration for acquisitions made prior to 1
January 2010 which result in an adjustment to goodwill continue to be accounted
for under IFRS 3 (2004) and IAS 27 (2005), for which the accounting policies
can be found in the Group`s annual financial statements for the year ended 31
December 2009. Comprehensive details of changes to accounting policies will be
presented in the Group`s annual financial statements for the year ended 31
December 2010.
3 Seasonality
The seasonality of the Group`s operations has no significant impact on the
condensed combined and consolidated financial statements.
4 Operating segments
Operating segment revenues
(Reviewed)
Six months ended 30 June 2010
Segment Internal External
revenue revenue1 revenue2
EUR million
Europe & International
Uncoated Fine Paper 762 (75) 687
Corrugated 610 (26) 584
Bags & Coatings 1,060 (20) 1,040
Intra-segment (60) 60 -
elimination
Total Europe & 2,372 (61) 2,311
International
South Africa
Uncoated Fine Paper 226 (58) 168
Containerboard 69 (68) 1
Intra-segment (19) 19 -
elimination
Total South Africa 276 (107) 169
Mondi Packaging South 298 (16) 282
Africa
Merchant & Newsprint 271 - 271
businesses
Segments total 3,217 (184) 3,033
Inter-segment elimination (184) 184 -
Group total 3,033 - 3,033
(Reviewed)
Six months ended 30 June 2009
Segment Internal External
revenue revenue1 revenue2
EUR million
Europe & International
Uncoated Fine Paper 680 (62) 618
Corrugated 527 (16) 511
Bags & Coatings 893 (12) 881
Intra-segment (37) 37 -
elimination
Total Europe & 2,063 (53) 2,010
International
South Africa
Uncoated Fine Paper 197 (64) 133
Containerboard 66 (63) 3
Intra-segment (14) 14 -
elimination
Total South Africa 249 (113) 136
Mondi Packaging South 227 (13) 214
Africa
Merchant & Newsprint 254 - 254
businesses
Segments total 2,793 (179) 2,614
Inter-segment elimination (179) 179 -
Group total 2,614 - 2,614
(Audited)
Year ended 31 December 2009
Segment Internal External
revenue revenue1 revenue2
EUR million
Europe & International
Uncoated Fine Paper 1,351 (130) 1,221
Corrugated 1,041 (36) 1,005
Bags & Coatings 1,787 (24) 1,763
Intra-segment (80) 80 -
elimination
Total Europe & 4,099 (110) 3,989
International
South Africa
Uncoated Fine Paper 386 (120) 266
Containerboard 121 (119) 2
Intra-segment (29) 29 -
elimination
Total South Africa 478 (210) 268
Mondi Packaging South 498 (25) 473
Africa
Merchant & Newsprint 528 (1) 527
businesses
Segments total 5,603 (346) 5,257
Inter-segment elimination (346) 346 -
Group total 5,257 - 5,257
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.
External revenue by product type
EUR million (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30
June 2010 June 2009 December 2009
Products
Corrugated products 788 709 1,357
Uncoated fine paper 674 592 1,195
Kraft paper & bags 503 437 886
Coatings, consumer bags & films 431 374 731
Merchant sales 238 202 468
Newsprint 104 74 208
Pulp 104 68 129
Woodchips 39 35 61
Other1 152 123 222
Group total 3,033 2,614 5,257
Note:
1 Revenues derived from product types that are not material are classed as
other.
External revenue by location of customer
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended 31
ended 30 ended 30
June 2010 June 2009 December 2009
Revenue
Africa
South Africa1 379 291 644
Rest of Africa 129 103 196
Africa total 508 394 840
Western Europe
Germany 375 317 641
United Kingdom1 169 184 367
Rest of Western Europe 727 684 1,292
Western Europe total 1,271 1,185 2,300
Emerging Europe 584 526 1,105
Russia 249 188 387
North America 111 79 157
South America 14 9 17
Asia and Australia 296 233 451
Group total 3,033 2,614 5,257
Note:
1 These revenues, which total EUR548 million (six months ended 30 June 2009:
EUR475 million; year ended 31 December 2009: EUR1,011 million), are
attributable to the countries in which the Group`s parent entities are
domiciled.
External revenue by location of production
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months
ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009
Revenue
Africa
South Africa1 561 467 948
Rest of Africa 9 5 13
Africa total 570 472 961
Western Europe
Austria 597 502 1,010
United Kingdom1 88 129 244
Rest of Western Europe 463 440 855
Western Europe total 1,148 1,071 2,109
Emerging Europe
Poland 335 216 486
Rest of Emerging Europe 512 471 927
Emerging Europe total 847 687 1,413
Russia 322 251 519
North America 62 54 104
Asia and Australia 84 79 151
Group total 3,033 2,614 5,257
Note:
1 These revenues, which total EUR649 million (six months ended 30 June 2009:
EUR596 million; year ended 31 December 2009: EUR1,192 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/(loss)
Segment operating profit before special items
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months
ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009
Europe & International
Uncoated Fine Paper 98 71 146
Corrugated 48 1 23
Bags & Coatings 55 36 82
Total Europe & International 201 108 251
South Africa
Uncoated Fine Paper 14 13 16
Containerboard 4 15 16
Total South Africa 18 28 32
Mondi Packaging South Africa 18 11 36
Merchant & Newsprint
businesses 1 8 12
Corporate & other businesses (16) (17) (37)
Segments total 222 138 294
Net (loss)/profit on
disposals (see note 6) - - -
Impairment of assets held
for sale (see note 6) - - -
Net income from associates 2 1 2
Net finance costs (48) (58) (114)
Group profit/(loss) before
tax 176 81 182
Segment operating profit/(loss) after special items
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months
ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009
Europe & International
Uncoated Fine Paper 108 71 144
Corrugated 48 (10) (27)
Bags & Coatings 103 (13) 34
Total Europe & International 259 48 151
South Africa
Uncoated Fine Paper (7) (6) (6)
Containerboard 4 15 16
Total South Africa (3) 9 10
Mondi Packaging South Africa 17 11 43
Merchant & Newsprint
businesses 1 8 -
Corporate & other businesses (16) (17) (38)
Segments total 258 59 166
Net (loss)/profit on
disposals (see note 6) (22) 5 3
Impairment of assets held
for sale (see note 6) (13) (8) (8)
Net income from associates 2 1 2
Net finance costs (48) (58) (114)
Group profit/(loss) before
tax 177 (1) 49
EBITDA by operating segment
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months
ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009
Europe & International
Uncoated Fine Paper 146 117 239
Corrugated 82 32 87
Bags & Coatings 108 89 189
Total Europe & International 336 238 515
South Africa
Uncoated Fine Paper 35 29 52
Containerboard 9 19 24
Total South Africa 44 48 76
Mondi Packaging South Africa 33 23 62
Merchant & Newsprint
businesses 8 16 28
Corporate & other businesses (16) (17) (36)
EBITDA 405 308 645
Segment assets and liabilities
(Reviewed)
As at 30 June 2010
Segment Segment Net
assets1 liabilities2 segment
assets
EUR million
Europe & International
Uncoated Fine Paper 1,862 (220) 1,642
Corrugated 1,074 (212) 862
Bags & Coatings 1,720 (402) 1,318
Intra-segment elimination (67) 67 -
Total Europe & International 4,589 (767) 3,822
South Africa
Uncoated Fine Paper 897 (101) 796
Containerboard 159 (23) 136
Intra-segment elimination (4) 4 -
Total South Africa 1,052 (120) 932
Mondi Packaging South Africa 475 (107) 368
Merchant & Newsprint businesses 148 (40) 108
Corporate & other businesses 18 - 18
Inter-segment elimination (71) 71 -
Segments total 6,211 (963) 5,248
Unallocated:
Investments in associates 6 - 6
Deferred tax assets/(liabilities) 31 (334) (303)
Other non-operating 371 (630) (259)
assets/(liabilities)3
Group trading capital employed 6,619 (1,927) 4,692
Financial asset investments 33 - 33
Net debt 77 (1,709) (1,632)
Group net assets 6,729 (3,636) 3,093
(Reviewed)
As at 30 June 2009
Segment Segment Net
assets1 liabilities2 segment
assets
EUR million
Europe & International
Uncoated Fine Paper 1,640 (174) 1,466
Corrugated 1,044 (207) 837
Bags & Coatings 1,585 (268) 1,317
Intra-segment elimination (25) 25 -
Total Europe & International 4,244 (624) 3,620
South Africa
Uncoated Fine Paper 834 (100) 734
Containerboard 152 (18) 134
Intra-segment elimination (3) 3 -
Total South Africa 983 (115) 868
Mondi Packaging South Africa 438 (96) 342
Merchant & Newsprint businesses 290 (72) 218
Corporate & other businesses 7 (1) 6
Inter-segment elimination (97) 97 -
Segments total 5,865 (811) 5,054
Unallocated:
Investments in associates 8 - 8
Deferred tax assets/(liabilities) 43 (329) (286)
Other non-operating 239 (631) (392)
assets/(liabilities)3
Group trading capital employed 6,155 (1,771) 4,384
Financial asset investments 24 - 24
Net debt 171 (1,832) (1,661)
Group net assets 6,350 (3,603) 2,747
(Audited)
As at 31 December 2009
Segment Segment Net
assets1 liabilities2 segment
assets
EUR million
Europe & International
Uncoated Fine Paper 1,671 (177) 1,494
Corrugated 1,071 (199) 872
Bags & Coatings 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 5,812 (851) 4,961
Unallocated:
Investments in associates 6 - 6
Deferred tax assets/(liabilities) 29 (316) (287)
Other non-operating 211 (577) (366)
assets/(liabilities)3
Group trading capital employed 6,058 (1,744) 4,314
Financial asset investments 27 - 27
Net debt 123 (1,640) (1,517)
Group net assets 6,208 (3,384) 2,824
Notes:
1 Segment assets are operating assets and consist of property, plant and
equipment, intangible assets, forestry assets, retirement benefits surplus,
inventories and operating receivables.
2 Segment liabilities are operating liabilities and consist of non-interest
bearing current liabilities, restoration and environmental provisions and
provisions for post-retirement benefits.
3 Other non-operating assets consist of derivative assets, current income tax
receivables, other non-operating receivables and assets held for sale. Other
non-operating liabilities consist of derivative liabilities, non-operating
provisions, current income tax liabilities and liabilities directly associated
with assets classified as held for sale.
Capital expenditure cash payments and the additions to the Group`s non-current
non-financial assets, other than deferred tax assets and retirement benefits
surplus, are presented by operating segment as follows:
Capital expenditure cash payments
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended
ended 30 ended 30 31 December
June 2010 June 2009 2009
Europe & International
Uncoated Fine Paper 82 122 191
Corrugated 42 108 195
Bags & Coatings 35 42 81
Total Europe & International 159 272 467
South Africa
Uncoated Fine Paper 7 12 22
Containerboard 2 1 4
Total South Africa 9 13 26
Mondi Packaging South Africa 14 6 17
Merchant & Newsprint businesses 2 2 7
Corporate & other businesses - - -
Group and segments total 184 293 517
Additions to non-current non-financial assets1
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended
ended 30 ended 30 31 December
June 2010 June 2009 2009
Europe & International
Uncoated Fine Paper 74 159 257
Corrugated 38 106 178
Bags & Coatings 45 39 83
Total Europe & International 157 304 518
South Africa
Uncoated Fine Paper 26 30 59
Containerboard 2 1 4
Total South Africa 28 31 63
Mondi Packaging South Africa 14 6 17
Merchant & Newsprint businesses 4 2 10
Corporate & other businesses - 2 6
Group and segments total 203 345 614
Note:
1 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 Write-down of inventories to net realisable value
The write-downs of inventories to net realisable value, recognised as an
expense for the six months ended 30 June 2010, total EUR11 million (six months
ended 30 June 2009: EUR11 million; year ended 31 December 2009: EUR18 million).
The aggregate reversal of previous write-downs, recognised as a reduction in
the amount of inventories expensed for the six months ended 30 June 2010, total
EUR2 million (six months ended 30 June 2009: EUR2 million; year ended 31
December 2009: EUR3 million).
6 Special items
(Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended 31
ended 30 June ended 30 June December
2010 2009 2009
Operating special items
Goodwill impairments - - (12)
Asset impairments (26) (36) (78)
Reversal of asset
impairments 8 - -
Restructuring and closure costs
Restructuring and closure
costs excluding related
personnel costs (1) (29) (22)
Personnel costs relating
to restructuring (2) (11) (21)
Reversal of restructuring
and closure costs 26 - -
Demerger arrangements - (3) (3)
Proceeds on insurance - - 8
Gain on acquisition of business 31 - -
Total operating special items 36 (79) (128)
Non-operating special items
Net (loss)/profit on disposal (22) 5 3
Asset impairment of
assets held for sale (13) (8) (8)
Total non-operating
special items (35) (3) (5)
Total special items
before tax and
non-controlling interests 1 (82) (133)
Tax 4 4 6
Non-controlling interests 1 - (1)
Total special items
attributable to equity
holders of the parent companies 6 (78) (128)
Operating special items
A 120,000 tonne uncoated fine paper machine and related converting capacity in
the Merebank plant will be mothballed in September 2010 and the business
restructured. This has led to an asset impairment of EUR18 million and related
restructuring costs of EUR3 million being recognised.
The completion of the sale of the Szolnok site has resulted in the reversal of
previously recognised restructuring and closure provisions and the realisation
of the cumulative translation adjustment reserve, amounting to EUR10 million.
The restarting of the Stambolijski kraft paper line during June 2010 has
resulted in a reversal of impairment (EUR8 million) and related provisions
(EUR17 million) recognised for the closure that are no longer required,
amounting to EUR25 million.
Underperforming non-integrated kraft paper assets in Lohja and Ruzomberok have
been partially impaired by EUR8 million.
The acquisition of the industrial bag businesses in western Europe resulted in
a gain of EUR31 million being recognised. These plants will be subject to
future restructuring.
Non-operating special items
The sale of the corrugated plants in the UK to Smurfit Kappa resulted in a loss
on disposal (including realisation of the cumulative translation adjustment
reserve) of EUR17 million.
Sale of forestry assets in South Africa realised a gain of EUR7 million.
The expected sale of the Europapier business resulted in a write-down of assets
of EUR13 million and recognition of the expected loss on sale of EUR12 million,
amounting in total to EUR25 million.
7 Finance costs
(Reviewed) (Reviewed) (Audited)
Six months ended Six months ended Year ended
EUR million 30 June 2010 30 June 2009 31 December 2009
Total interest expense (82) (102) (185)
Less: interest capitalised 7 31 45
Total financing costs (75) (71) (140)
8 Tax charge
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
EUR million ended 30 June ended 30 June 31 December
2010 2009 2009
UK corporation tax (1) - 1
Overseas tax 55 23 52
Current tax (including tax
on special items) 54 23 53
Deferred tax (12) - (1)
Total tax charge 42 23 52
The Group`s estimated effective annual rate of tax before special items for the
six months ended 30 June 2010, calculated on profit before tax before special
items and including net income from associates, is 26% (six months ended 30
June 2009: 34%; year ended 31 December 2009: 32%). The reduction in the
effective tax rate from 32% to 26% is realised primarily due to the improved
profitability enabling the use of previously unrecognised tax losses carried
forward; increased profitability in regions with lower tax rates; and benefits
of tax incentives granted in certain countries in which the Group operates,
notably those related to the major Polish and Russian capital projects.
9 Earnings per share
(Reviewed) (Reviewed) (Audited)
EUR cents per share Six months Six months Year ended
ended 30 ended 30 31 December
June 2010 June 2009 2009
Profit/(loss) for the financial
period/year attributable to equity
holders of the parent companies
Basic EPS 21.5 (7.1) (6.5)
Diluted EPS 21.2 (7.1)3 (6.5)3
Underlying earnings for the
financial period/year1
Basic EPS 20.3 8.3 18.7
Diluted EPS 20.0 8.1 18.2
Headline earnings/(loss) for the
financial period/year2
Basic EPS 24.8 (0.8) 11.4
Diluted EPS 24.5 (0.8) 11.1
Notes:
1 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.
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
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
EUR million ended 30 June ended 30 June December
2010 2009 2009
Profit/(loss) for the
financial period/year
attributable to equity
holders of the parent 109 (36) (33)
companies
Special items: operating (36) 79 128
Net loss/(profit) on
disposals 22 (5) (3)
Impairment of assets held
for sale 13 8 8
Related tax (4) (4) (6)
Related non-controlling interests (1) - 1
Underlying earnings for
the financial period/year 103 42 95
Profit on disposal of
tangible and intangible assets (1) (4) (4)
Special items: demerger arrangements - (3) (3)
Special items:
restructuring and closure costs 23 (40) (43)
Impairments not included
in special items - - 10
Related tax 1 1 3
Headline earnings/(loss)
for the financial period/year 126 (4) 58
Number of shares
(Reviewed) (Reviewed) (Audited)
million As at 30 June As at 30 June As at 31
2010 2009 December
2009
Basic number of ordinary
shares outstanding1 508 507 508
Effect of dilutive
potential ordinary shares2 7 12 13
Diluted number of ordinary
shares outstanding 515 519 521
Notes:
1 The basic number of ordinary shares outstanding represents the weighted
average number in issue for Mondi Limited and Mondi plc for the period/year, as
adjusted for the weighted average number of treasury shares held during the
period/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.
10 Dividends
The interim dividend for the year ending 31 December 2010 of 3.5 euro cents per
ordinary share will be paid on 14 September 2010 to Mondi Limited and Mondi plc
ordinary shareholders on the relevant registers on 27 August 2010. The dividend
will be paid from distributable reserves of Mondi Limited and of Mondi plc, as
presented in the respective company annual financial statements for the year
ended 31 December 2009.
The interim dividend for the year ending 31 December
2010 will be paid in
accordance with the following timetable:
Mondi Limited
Last date to trade shares cum-dividend
JSE Limited 20 August 2010
London Stock Exchange Not applicable
Shares commence trading ex-dividend
JSE Limited 23 August 2010
London Stock Exchange Not applicable
Record date
JSE Limited 27 August 2010
London Stock Exchange Not applicable
Last date for receipt of Dividend Reinvestment Plan
(DRIP) elections by 1 September 2010
Central Securities Depository Participants
Last date for DRIP elections to UK Registrar and South
African Transfer 2 September 2010
Secretaries by shareholders of Mondi Limited and Mondi
plc
Payment Date
South African Register 14 September 2010
UK Register Not applicable
Depositary Interest holders 20 September 2010
(dematerialised DIs)
Holders within the Corporate Nominee 20 September 2010
DRIP purchase settlement dates 21 September 2010
Currency conversion dates
ZAR/euro 10 August 2010
Euro/sterling Not applicable
Mondi plc
Last date to trade shares cum-dividend
JSE Limited 20 August 2010
London Stock Exchange 24 August 2010
Shares commence trading ex-dividend
JSE Limited 23 August 2010
London Stock Exchange 25 August 2010
Record date
JSE Limited 27 August 2010
London Stock Exchange 27 August 2010
Last date for receipt of Dividend Reinvestment Plan
(DRIP) elections by 1 September 2010
Central Securities Depository Participants
Last date for DRIP elections to UK Registrar and South
African Transfer 27 August 2010*
Secretaries by shareholders of Mondi Limited and Mondi
plc
Payment Date
South African Register 14 September 2010
UK Register 14 September 2010
Depositary Interest holders Not applicable
(dematerialised DIs)
Holders within the Corporate Nominee Not applicable
DRIP purchase settlement dates 17 September 2010**
Currency conversion dates
ZAR/euro 10 August 2010
Euro/sterling 27 August 2010
* 2 September 2010 for Mondi plc South African branch register shareholders
** 21 September 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 Corporate Nominee.
Share certificates on the South African registers of Mondi Limited and Mondi
plc may not be dematerialised or rematerialised between 23 August 2010 and 27
August 2010, both dates inclusive, nor may transfers between the UK and South
African registers of Mondi plc take place between 18 August 2010 and 30 August
2010, both dates inclusive.
11 Retirement benefits
There were no significant curtailments, settlements or other significant
one-time events relating to the Group`s defined benefit schemes,
post-retirement medical plans or statutory retirement obligations during the
six months ended 30 June 2010.
All assumptions of the Group`s material defined benefit schemes and
post-retirement medical plan liabilities were re-assessed individually and the
remaining Group defined benefit schemes and unfunded statutory retirement
obligations were re-assessed in aggregate for the six months ended 30 June
2010. The net change in assumptions from those applied as at 31 December 2009
resulted in a EUR13 million increase in the net retirement benefit obligations
recorded on the condensed combined and consolidated statement of financial
position. The assets backing the defined benefit scheme liabilities reflect
their market values as at 30 June 2010. Any movements in the assumptions have
been recognised as an actuarial movement in the condensed combined and
consolidated statement of comprehensive income. EUR11 million of the movement
in net retirement benefits is due to the decrease in the discount rate from
5.25% at 31 December 2009 to 4.50% at 30 June 2010 in the European defined
benefit schemes and unfunded statutory retirement obligations.
12 Asset values per share
Net asset value per share is defined as net assets divided by the combined
number of ordinary shares in issue as at the reporting dates presented, 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 the reporting dates presented, less treasury shares held.
(Reviewed) (Reviewed) (Audited)
As at As at As at
30 June 2010 30 June 2009 31 December 2009
Net asset value per
share (EUR) 6.07 5.42 5.55
Tangible net asset value
per share (EUR) 5.45 4.79 4.94
13 Business combinations
In line with Mondi`s strategy to strengthen its leading market position in
industrial and consumer bags in Europe an agreement was concluded in April 2010
with Smurfit Kappa for the acquisition of its western European industrial and
consumer bag operations in Spain, France and Italy.
The businesses acquired have incurred operating losses prior to their
acquisition by Mondi and will be subject to future restructuring activities. As
a result of this and the cash in the business on date of acquisition, a gain on
acquisition has been recognised in operating special items in the income
statement. The fair value accounting reflected in these results is provisional
in nature as the transaction was only concluded on 4 May 2010. If necessary,
adjustments will be made to these carrying values, and to the gain on
acquisition, within 12 months of the acquisition date.
Prior to any planned restructuring activities, the acquired industrial bag
plants generate turnover of approximately EUR7 million per month and operating
losses of EUR0.8 million per month. Had the acquisition occurred on 1 January
2010, the increase in revenue would have been EUR50 million with an operating
loss of EUR5 million. Transaction costs related to the acquisition are
estimated at EUR1 million.
There were no other acquisitions made for the six months ended 30 June 2010.
Details of the aggregate net assets acquired, as adjusted from book to fair
value, are presented as follows:
EUR million Book value Revaluation Fair value
Net assets acquired:
Property, plant and equipment 27 (14) 13
Inventories 15 - 15
Trade and other receivables 21 (1) 20
Cash and cash equivalents 18 - 18
Trade and other payables (22) - (22)
Short-term borrowings (1) - (1)
Retirement benefits obligation (2) - (2)
Provisions (3) - (3)
Net assets acquired 53 (15) 38
Gain arising on acquisition (31)
Total cost of acquisition 7
Cash acquired net of overdrafts (18)
Net cash received 11
14 Disposal groups and assets held for sale
On 5 May 2010, Mondi signed an agreement with the Heinzel Group for the sale of
100% of its shares in Europapier, a paper merchant business selling graphic,
packaging and office papers, as well as other office supplies to customers
across central Europe and Russia. The loss on disposal of the business will be
approximately EUR25 million. As part of the reclassification of the underlying
assets as held for sale, the tangible fixed assets were fully impaired. The
sale is subject to approval by various competition authorities and is expected
to be completed in the second half of 2010. Accordingly the assets and
associated liabilities are classified as held for sale at 30 June 2010.
15 Consolidated cash flow analysis
(a) Reconciliation of profit/(loss) before tax to cash generated from
operations
(Reviewed) (Reviewed) (Audited)
Six months Six months
EUR million ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009
Profit/(loss) before tax 177 (1) 49
Depreciation and amortisation 183 170 351
Share-based payments 3 4 5
Non-cash effect of special items (8) 64 98
Net finance costs 48 58 114
Net income from associates (2) (1) (2)
Decrease in provisions and
post-employment benefits (4) (9) (16)
(Increase)/decrease in
inventories (64) 81 80
(Increase)/decrease in
operating receivables (192) 19 170
Increase/(decrease) in
operating payables 115 (1) (2)
Fair value gains on forestry
assets (16) (15) (28)
Felling costs 32 26 50
Profit on disposal of tangible
and intangible assets (1) (4) (4)
Other adjustments (2) 1 2
Cash generated from operations 269 392 867
(b) Cash and cash equivalents
(Reviewed) (Reviewed) (Audited)
As at As at As at
EUR million 30 June 2010 30 June 2009 31 December
2009
Cash and cash equivalents per
statement of financial position 77 171 123
Bank overdrafts included in
short-term borrowings (135) (92) (86)
Net cash and cash equivalents
per statement of cash flows (58) 79 37
(c) Movement in net debt
The Group`s net debt position, excluding disposal groups is as follows:
EUR million
Cash and Debt due Debt due
cash within one after one Total net
equivalents1 year2 year debt
At 1 January 2009 75 (298) (1,467) (1,690)
Cash flow - 81 6 87
Business combinations - - 2 2
Disposal of businesses - 8 - 8
Reclassification - (112) 112 -
Currency movements 4 (22) (50) (68)
At 30 June 2009 79 (343) (1,397) (1,661)
Cash flow (19) 207 (44) 144
Reclassification (19) (7) 41 15
Currency movements (4) 10 (21) (15)
At 31 December 2009 37 (133) (1,421) (1,517)
Cash flow (88) 95 (75) (68)
Business combinations - (1) - (1)
Disposal of businesses - 5 - 5
Movement in unamortised
loan costs - - (2) (2)
Reclassification (1) (33) 40 6
Currency movements (6) (15) (34) (55)
At 30 June 2010 (58) (82) (1,492) (1,632)
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. As at
30 June 2010, short-term borrowings on the condensed combined and consolidated
statement of financial position of EUR217 million (as at 30 June 2009: EUR435
million; as at 31 December 2009: EUR219 million) include EUR135 million of
overdrafts (as at 30 June 2009: EUR92 million; as at 31 December 2009: EUR86
million).
The Group launched its inaugural publicly traded bond on 26 March 2010. The
EUR500 million bond, which matures on 3 April 2017, was issued at a discount of
EUR5.63 million and pays a fixed coupon of 5.75% per annum. The bond contains a
coupon step up clause whereby the coupon will be increased by 1.25% per annum
whilst Mondi fails to maintain at least one investment grade credit rating from
either Moody`s or Standard & Poor`s.
The following table shows the amounts available to draw down on the Group`s
committed loan facilities:
(Reviewed) (Reviewed) (Audited)
As at As at As at
EUR million 30 June 2010 30 June 2009 31 December 2009
Expiry date
In one year or less 211 178 141
In more than one year 1,147 895 849
Total credit available 1,358 1,073 990
16 Capital commitments
(Reviewed) (Reviewed) (Audited)
As at As at As at
EUR million 30 June 2010 30 June 2009 31 December 2009
Contracted for but not
provided 184 258 214
Approved, not yet
contracted for 200 136 291
17 Contingent liabilities and contingent assets
Contingent liabilities comprise aggregate amounts as at 30 June 2010 of EUR20
million (as at 30 June 2009: EUR16 million; as at 31 December 2009: EUR21
million) in respect of loans and guarantees given to banks and other third
parties. Acquired contingent liabilities of EURnil (six months ended 30 June
2009: EURnil; year ended 31 December 2009: EURnil) have been recorded on the
Group`s combined and consolidated statement of financial position.
There are a number of legal and tax claims against the Group. Provision is made
for all liabilities that are expected to materialise.
Contingent assets comprise aggregate amounts as at 30 June 2010 of EUR5 million
(as at 30 June 2009:EURnil; as at 31 December 2009: EURnil) and mainly relate to
energy credits to be received.
18 Related party transactions
The Group has related party relationships 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.
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 other related parties. These transactions are entered into on an
arm`s length basis at market rates.
There have been no significant changes to the related parties as disclosed in
note 39 of the Group`s annual financial statements for the year ended 31
December 2009.
Dividends received from associates for the six months ended 30 June 2010 amount
to EUR2 million (six months ended 30 June 2009: EUR0.4 million; year ended 31
December 2009: EUR2 million).
19 Events occurring after 30 June 2010
With the exception of the proposed interim dividend for 2010, as disclosed in
note 10, there have been no material reportable events since 30 June 2010.
Production statistics
Six months
ended 30
June 2010
Europe & International
Uncoated fine paper Tonnes 790,748
Containerboard Tonnes 1,008,305
Kraft paper Tonnes 466,156
Hardwood pulp Tonnes 474,700
Internal consumption Tonnes 451,524
External Tonnes 23,176
Softwood pulp Tonnes 935,783
Internal consumption Tonnes 856,279
External Tonnes 79,504
Corrugated board and boxes Mm2 713
Industrial bags M units 1,858
Coating and release liners Mm2 1,601
Newsprint Tonnes 98,051
South Africa
Uncoated fine paper Tonnes 152,663
Containerboard Tonnes 128,830
Hardwood pulp Tonnes 287,417
Internal consumption Tonnes 162,785
External Tonnes 124,632
Softwood pulp Tonnes 56,885
Woodchips Bone dry tonnes 129,516
Mondi Packaging South Africa
Packaging papers Tonnes 197,023
Corrugated board and boxes Mm2 185
Newsprint Joint Ventures
(attributable share)
Aylesford Tonnes 92,575
Mondi Shanduka Newsprint (MSN) Tonnes 64,976
Six months
ended 30
June 2009
Europe & International
Uncoated fine paper Tonnes 709,433
Containerboard Tonnes 836,456
Kraft paper Tonnes 383,373
Hardwood pulp Tonnes 425,533
Internal consumption Tonnes 408,527
External Tonnes 17,006
Softwood pulp Tonnes 845,093
Internal consumption Tonnes 746,122
External Tonnes 98,971
Corrugated board and boxes Mm2 924
Industrial bags M units 1,655
Coating and release liners Mm2 1,258
Newsprint Tonnes 99,390
South Africa
Uncoated fine paper Tonnes 179,325
Containerboard Tonnes 120,989
Hardwood pulp Tonnes 305,763
Internal consumption Tonnes 204,476
External Tonnes 101,287
Softwood pulp Tonnes 55,394
Woodchips Bone dry tonnes 197,436
Mondi Packaging South Africa
Packaging papers Tonnes 177,796
Corrugated board and boxes Mm2 177
Newsprint Joint Ventures
(attributable share)
Aylesford Tonnes 96,262
Mondi Shanduka Newsprint (MSN) Tonnes 62,221
Year ended 31
December 2009
Europe & International
Uncoated fine paper Tonnes 1,470,381
Containerboard Tonnes 1,768,696
Kraft paper Tonnes 841,378
Hardwood pulp Tonnes 873,844
Internal consumption Tonnes 833,803
External Tonnes 40,041
Softwood pulp Tonnes 1,773,265
Internal consumption Tonnes 1,568,189
External Tonnes 205,076
Corrugated board and boxes Mm2 1,697
Industrial bags M units 3,303
Coating and release liners Mm2 2,672
Newsprint Tonnes 194,564
South Africa
Uncoated fine paper Tonnes 353,707
Containerboard Tonnes 238,915
Hardwood pulp Tonnes 578,032
Internal consumption Tonnes 407,641
External Tonnes 170,391
Softwood pulp Tonnes 109,142
Woodchips Bone dry tonnes 273,526
Mondi Packaging South Africa
Packaging papers Tonnes 367,741
Corrugated board and boxes Mm2 369
Newsprint Joint Ventures
(attributable share)
Aylesford Tonnes 191,035
Mondi Shanduka Newsprint (MSN) Tonnes 121,701
Note:
Comparative figures have been restated where necessary to afford a better
comparison.
Exchange rates Six months Six months Year ended
ended 30 June ended 30 June 31 December
2010 2009 2009
Closing rates against the euro
South African rand 9.38 10.89 10.67
Pounds sterling 0.82 0.85 0.89
Polish zloty 4.15 4.45 4.10
Russian rouble 38.28 43.88 43.15
US dollar 1.23 1.41 1.44
Czech koruna 25.69 25.88 26.47
Average rates for the
period against the euro
South African rand 9.99 12.25 11.68
Pounds sterling 0.87 0.89 0.89
Polish zloty 4.00 4.47 4.33
Russian rouble 39.88 44.08 44.12
US dollar 1.33 1.33 1.39
Czech koruna 25.72 27.13 26.44
10 August 2010
Sponsor: UBS South Africa (Pty) Ltd
Date: 10/08/2010 08:09:03 Produced by the JSE SENS Department.
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