| Thu 28 Jul 2011, 8:00 | | MND/MNP - Mondi Limited/Mondi plc - Half-yearly results for the six months |
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MND MNP
MND MNP
MND/MNP - Mondi Limited/Mondi plc - Half-yearly results for the six months
ended 30 June 2011
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 Listings Requirements
of the JSE 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 2011
Financial summary1
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 2 change %
EUR million, except for
percentages and per share measures
From continuing operations
Group revenue 2,942 2,752 7
EBITDA 526 371 42
Underlying operating profit 354 204 74
Underlying profit before tax 296 164 80
Profit before tax 300 166 81
Per share measures
Basic earnings per share from
continuing operations (EUR cents) 39.0 19.3 102
Basic earnings per share -
alternative measure3 (EUR cents) 41.7 20.2 106
Basic earnings per share from
total operations (EUR cents) 41.6 21.5 93
Interim dividend per share (EUR cents) 8.25 3.5 136
Cash generated from operations 403 269 50
Net debt 1,200 1,632 (26)
Group Return on Capital Employed (ROCE) 15.2% 9.9%
Notes:
1 Refer to definitions in the glossary of financial terms in the half-yearly
financial statements.
2 Comparative information has been re-presented where appropriate to take
cognisance of the discontinued operation.
3 The directors have elected to present an alternative, non-IFRS measure of
earnings per share from continuing operations. As more fully set out in note
11 of the half-yearly financial statements, the effects of the
recapitalisation and the demerger of Mpact (formerly Mondi Packaging South
Africa) and the Mondi Limited share consolidation have been adjusted to
reflect the position as if the transaction had been completed at the beginning
of each period presented. This will enable a useful comparison of earnings per
share from continuing operations, based on the consolidated number of shares.
Operational and financial highlights
- Underlying operating profit up 74%, driven by a very strong performance from
the Europe & International Division
- Demerger of Mpact successfully completed
- Refinancing of Group revolving credit facility completed
- Interim dividend of 8.25 euro cents per share
- Return on capital employed up to 15.2%, in excess of the Group`s through-the-
cycle target of 13%
David Hathorn, Chief executive officer, said:
"The good result achieved in positive market conditions confirms the validity
of our strategy. All operations are running well and our recent major
investments have made a meaningful contribution to the Group`s profits.
The successful completion of the Mpact demerger endorses the strategies of
both Mondi and Mpact, allowing both businesses to pursue their increasingly
divergent strategic priorities and focus on their respective growth
opportunities.
In the Europe & International Division, following a period of strong demand
order books remain good but are somewhat softer, having returned to more
normalised levels. As previously indicated, maintenance shuts planned at a
number of the large and strongly profitable European mills will impact second
half performance. The South Africa Division should benefit from improved
output following the extended maintenance shut taken in the first half.
Looking further ahead, while the uncertainties in the broader macroeconomic
environment continue to be a concern for demand, supply-side fundamentals in
our core grades remain good. Overall, we believe Mondi remains well-positioned
to continue adding value for shareholders."
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 7042 (toll-free)
Europe & Other 00800 246 78 700 (toll-free)
An online audio cast facility will be available via:
www.mondigroup.com/HYResults11. Password: HYResults11.
The presentation will be available online via the above website address an
hour 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 28 July 2011.
Editors` notes
Mondi is an international paper and packaging Group, with production
operations across 31 countries and revenues of EUR6.2 billion in 2010. The
Group`s key operations are located in central Europe, Russia and South Africa
and as at the end of 2010, Mondi employed 29,000 people. (2010 figures include
Mpact.)
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,
industrial bags and coatings.
The Group is principally involved in the manufacture of packaging paper,
converted packaging products and uncoated fine paper (UFP).
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 through its inclusion in the
FTSE4Good UK, Europe and Global indices in 2008, 2009 and 2010 and the JSE`s
Socially Responsible Investment (SRI) Index in 2007, 2008, 2009 and 2010.
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 from continuing operations of EUR354
million was up 74% on the comparable prior year period and up 39% on the
second half of the previous year.
Sales volumes continued to improve and average selling prices for the period
were higher across all key paper grades compared to the second half of the
previous year. Rising commodity input costs partially offset the benefit from
revenue gains.
The demerger of Mpact was approved by shareholders on 30 June 2011 and was
effected on 18 July 2011, with Mpact having commenced trading as an
independent listed entity on 11 July 2011. The related consolidation of Mondi
Limited shares will be effected on 8 August 2011, with the new Mondi Limited
shares commencing trading on 1 August 2011. Mondi Limited`s shares in issue
will reduce from 147 million shares to 118 million shares, bringing the total
number of shares in issue for the Mondi Group down from 514 million to 486
million.
At 30 June 2011, the results of Mpact are presented as a discontinued
operation and comparative information has been re-presented accordingly. In
order to reflect the continuing business of the Mondi Group, the Group has
elected to present an additional alternative measure of earnings per share as
if the recapitalisation and demerger of Mpact and Mondi Limited share
consolidation had taken place at the beginning of each period presented. This
is more fully detailed in note 11 of the financial statements. Set out in the
table following the principal risks and uncertainties, are the illustrative
effects on the Mondi Group as if the Mpact recapitalisation, subsequent
demerger and Mondi Limited share consolidation had taken place at the
beginning of each period presented.
Basic earnings per share - alternative measure was 41.7 cents, an increase of
106%.
An interim dividend of 8.25 euro cents will be paid.
Net debt at 30 June 2011 decreased from 31 December 2010 by EUR164 million to
EUR1.20 billion, excluding the net external debt of Mpact (EUR111 million).
Robust EBITDA generation and the benefits of an exchange rate gain were offset
primarily by an increase in working capital (in line with growth in revenue),
the annual interest payment on the Eurobond, payable in April of each year and
a significantly increased final dividend payment. The average maturity of the
Group`s committed debt facilities is 4.1 years with unutilised committed
borrowing facilities of EUR781 million.
Europe & International Division
Uncoated Fine Paper
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 change %
EUR million
Segment revenue 734 762 (4)
- of which inter-segment revenue 13 75
EBITDA 169 146 16
Underlying operating profit 118 98 20
Capital expenditure 33 82
Net segment assets 1,360 1,642
ROCE 16.9% 17.5%
The underlying operating profit of EUR118 million was 20% up on the comparable
prior year period, giving a very strong ROCE of 16.9%. This continued
excellent performance reflects the positive trading environment supported by a
strong operational performance and an increasing contribution from the
Syktyvkar mill modernisation investment, completed in the second half of 2010.
The reduction in turnover is largely attributable to the sale of the Group`s
controlling interest in Mondi Hadera at the end of the previous year and the
decline in sales of uncoated fine paper from South Africa, following the
decision in mid-2010 to mothball a paper machine at Mondi South Africa
Division`s Merebank mill and withdraw from the European export markets.
Average benchmark European cut-size office paper prices increased by
approximately 11% from the comparable prior year period and by approximately
2% compared to the second half of the previous year. The increase in selling
prices was offset to some extent by increased wood, pulp, energy and chemical
costs. Maintenance shuts in all three of the mills (Syktyvkar, Ruzomberok and
Neusiedler) are planned for the second half of the year, which will impact
results, both due to the maintenance charges associated with these shuts and
the lost contribution from what are strongly profitable operations.
Corrugated
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 change %
EUR million
Segment revenue 704 610 15
- of which inter-segment revenue 34 26
EBITDA 142 82 73
Underlying operating profit 105 48 119
Capital expenditure 18 42
Net segment assets 1,058 862
ROCE 20.1% 9.4%
The Corrugated business achieved a significant improvement in underlying
operating profit to EUR105 million, delivering a ROCE of 20.1%. The business
benefited from significant increases in selling prices, increased volumes from
the Swiecie mill as the recycled containerboard machine commissioned in late
2009 continues to ramp-up to full production and a significantly increased
contribution from the rebuilt containerboard machine at Syktyvkar, completed
in the second half of 2010.
Average benchmark selling price increases were recorded for recycled
containerboard (28% up on the first half of 2010 and in excess of 10% up on
the second half of 2010), kraftliner (31% up on the first half of 2010 and 6%
up on the second half of 2010) and white top containerboard (18% up on the
first half of 2010 and 7% up on the second half of 2010). Input cost pressures
remain with average benchmark recovered paper prices having increased by 23%
in the period compared to the second half of the previous year and wood and
chemical prices also continuing to increase.
Price increases achieved in the corrugated box plants more than offset the
increased paper input costs, leading to some margin expansion.
Planned maintenance shuts at both Swiecie and Syktyvkar, the two largest and
most profitable operations in this business unit, will impact the second half.
Bags & Coatings
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 change %
EUR million
Segment revenue 1,319 1,060 24
- of which inter-segment revenue 27 20
EBITDA 179 108 66
Underlying operating profit 128 55 133
Capital expenditure 43 35
Net segment assets 1,398 1,318
ROCE 17.4% 9.2%
The Bags & Coatings business achieved an underlying operating profit of EUR128
million, an increase of 133% on the comparable prior year period resulting in
a ROCE of 17.4%. This reflects both improved sales volumes, attributable in
part to the restarted Stambolijski plant, and increased selling prices.
Average benchmark sack kraft paper selling price increases of around 27% were
achieved against the comparable prior year period (9% up on the second half of
the prior year), more than offsetting the continued increase in input costs,
particularly wood and chemicals. Price increases were achieved on strong
demand growth, particularly in export markets, coupled with the effects of
reduced industry capacity following the closures that took place during the
2008/9 economic downturn.
Volumes were good in the bag converting segment. Significant price increases
were achieved from the beginning of the year on annual contractual volumes,
although subsequent increases in paper input costs have eroded some of these
gains. The business is benefiting from the integration of the Smurfit Kappa
bags plants, acquired in mid-2010.
Robust volume increases in Coatings & Consumer Packaging, particularly the
release liner segment, coupled with selling price increases largely offset
increasing paper and chemical input costs.
Maintenance shuts are planned at various paper mills during the second half of
the year, notably at the large operation of Steti in the Czech Republic.
South Africa Division
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 change %
EUR million
Segment revenue 269 276 (3)
- of which inter-segment revenue 90 106
EBITDA 54 44 23
Underlying operating profit 27 18 50
Capital expenditure 13 9
Net segment assets 877 932
ROCE 9.7% 3.1%
Notwithstanding the negative impact of the planned extended maintenance shut
at Richards Bay during June 2011, the South Africa Division realised a 50%
improvement in underlying operating profit to EUR27 million versus the
comparable prior year period. The ROCE of 9.7% reflects the benefits of higher
average selling prices, improved operating efficiencies and the positive
impact of the closure of the 120,000 tonne uncoated fine paper machine in the
previous year and related restructuring of the fixed cost base.
Against the comparable prior year period, average sales prices have improved
across most products with containerboard and pulp being the main contributors
during the period. These benefits have been partially offset by increased
fibre and energy costs as well as the negative impact of the stronger rand.
The recent industry-wide strike had no impact on the Division as resolution
was achieved at a local level.
The Division continues to pursue the settlement of outstanding land claims
with further progress expected during the second half of the year.
Newsprint
Six months Six months
ended 30 June ended 30 June
2011 2010
EUR million
Segment revenue 80 271
- of which inter-segment revenue - -
EBITDA 2 8
Underlying operating (loss)/profit (5) 1
Capital expenditure 2 2
Net segment assets 100 108
ROCE (9.2%) 2.2%
Note:
The 2010 comparative figure includes turnover of EUR198 million, EBITDA of
EUR4 million and underlying operating profit of EUR3 million attributable to
the Europapier business.
The Newsprint business made an underlying operating loss of EUR5 million.
Despite significant sales price increases having been realised at Aylesford
Newsprint, these were not sufficient to return the business to profitability
on the back of increased input costs. In South Africa, Mondi Shanduka
Newsprint has been severely impacted by electricity price increases which
cannot be passed on to customers.
Input costs and currency exposure
Average fibre input costs have increased during the first half of the year.
- Procured wood prices in central Europe continue to increase, albeit at a
slower pace than in the comparable prior year period. Average costs have
increased by approximately 12% compared to the second half of the previous
year.
- Average pulp prices have increased by 2% for softwood whilst prices have
reduced by 2% for hardwood during the period when compared to the second half
of the prior year. Closing benchmark prices at 30 June 2011 were 8% up for
softwood and 3% up for hardwood compared to 31 December 2010 prices.
- The average benchmark price of recovered paper increased by 23%, when
compared to the second half of the previous year.
Energy and chemical prices also increased during the period under review.
Mondi benefits from its structural position in South Africa and Russia due to
integration into wood supply. Similarly, the Group`s integrated pulp and paper
mills negate the impact of pulp price escalations. The Group, on an annualised
basis, is now marginally long on pulp following the completion of the
Syktyvkar modernisation and other restructuring activities. Restructuring
initiatives and an ongoing focus on cost reduction and productivity
improvement further mitigate the impact of input cost pressures.
More recently there has been evidence of some weakness in certain key input
costs, most notably recovered paper.
The Group continues to experience the effects of significant exchange rate
volatility. The Group`s hedging programme is intended to curb the impact of
short-term fluctuations in exchange rates by hedging its on-balance sheet
exposure. Over the period under review, strong emerging market currencies,
coupled with ongoing relatively high levels of inflation in these
jurisdictions, served to increase the underlying cost base of operations in
those countries, thus eroding their relative competitiveness. This is
particularly the case in South Africa, and to a lesser extent in the emerging
European markets of Poland, Czech Republic, Turkey and Russia. The ongoing
weakness of the US$ relative to the euro continues to pose challenges,
weakening the ability to achieve price increases in Europe.
Financial review
Special items
There were no significant special items during the period. Special items
(aggregate gain of EUR4 million), as more fully set out in the notes to the
half-yearly financial statements, include the impact of ongoing restructuring
initiatives as well as the finalisation of certain business combination
transactions from previous periods.
Finance costs
Despite lower average borrowings, net finance costs of EUR60 million were
higher than those of the comparable prior year period mainly due to the
reduction in capitalisation of finance charges following the completion of the
Syktyvkar modernisation, and an exchange rate loss of EUR2 million compared to
a gain in the comparable prior year period of EUR11 million. Whilst interest
rates have remained largely unchanged during the period, the higher interest
rate on the EUR500 million Eurobond, compared to the interest rate on the
facilities it replaced, resulted in the effective interest rate (pre-
capitalised interest) for the period of 8.97% being above that of 7.64% in the
comparable prior year period. A large proportion of the Group`s debt (76%) is
at fixed rates of interest for varying terms.
The first annual interest payment on the Eurobond of EUR29 million, made
during April 2011, results in an increase in interest paid in the statement of
cash flows.
Taxation
The reduction in the underlying effective tax rate on continuing operations to
20% is primarily due to increased profitability in regions with lower tax
rates and the benefits of tax incentives granted in certain countries in which
the Group operates, notably Poland.
Discontinued Operation - Mpact
(previously Mondi Packaging South Africa)
Six months Six months
ended 30 June ended 30 June Half-year
2011 2010 change %
EUR million
Segment revenue 310 298 4
EBITDA 36 33 9
Underlying operating profit 19 18 6
Capital expenditure 17 14
Mpact`s underlying operating profit increased marginally during the period due
to improved margins offset to some extent by reduced sales volumes.
Cash flow
Cash generated from operations amounted to EUR403 million, an increase of 50%
on the comparable prior year period primarily due to the significant increase
in EBITDA generation. As expected, cash flow generated from operating
activities was negatively impacted by an increase in working capital on
increased trading activity and seasonal fluctuations, although working capital
levels remain well within the target range of 10-12% of turnover.
Capital expenditure
Capital expenditure of EUR126 million, including EUR16 million on the major
project in Russia, was incurred. Outside of this major project, capital
expenditure for the period, excluding Mpact, is at 53% of depreciation.
The Group is exploring various opportunities in respect of energy efficiencies
in its European mills. The previously announced process for the intended
exercise of the option by Mondi Swiecie to acquire the power and heat
generating plant owned by Saturn Management is unlikely to be concluded before
the end of the current year.
Treasury and borrowings
Net debt at 30 June 2011 was EUR1.20 billion, a decrease of EUR164 million
from 31 December 2010. Positive exchange rate movements of EUR46 million and
the classification of the Mpact external debt of EUR111 million as held for
sale positively impacted this figure. The settlement of intercompany loans
from Mpact, following its recapitalisation and subsequent listing, will be
reflected in the second half of the year.
The net debt to trailing 12 month EBITDA ratio was 1.3 times. On 14 April
2011, Mondi signed a new EUR750 million five year syndicated revolving credit
facility to refinance its existing EUR1.55 billion revolving facility that was
due to mature in June 2012. Following this refinancing the average maturity of
the Group`s committed debt facilities is extended to 4.1 years from 2.6 years
as at December 2010, with unutilised committed borrowing facilities of EUR781
million.
The long-term corporate credit ratings received of Baa3 (stable outlook) from
Moody`s Investor Service and BB+ (positive outlook) from Standard & Poor`s
were confirmed during the period.
Dividend
A dividend of 8.25 euro cents per share has been declared by the directors and
will be paid on 13 September 2011 to those shareholders on the register of
Mondi plc on 19 August 2011. An equivalent South African rand interim dividend
will be paid on 13 September 2011 to shareholders on the register of Mondi
Limited on 19 August 2011. Note that the dividend to Mondi Limited
shareholders will be based on the new Mondi Limited shares, following the
completion of the share consolidation in August 2011.
Outlook
In the Europe & International Division, following a period of strong demand
order books remain good but are somewhat softer, having returned to more
normalised levels. As previously indicated, maintenance shuts planned at a
number of the large and strongly profitable European mills will impact second
half performance. The South Africa Division should benefit from improved
output following the extended maintenance shut taken in the first half.
Looking further ahead, while the uncertainties in the broader macroeconomic
environment continue to be a concern for demand, supply-side fundamentals in
our core grades remain good. Overall, we believe Mondi remains well-positioned
to continue adding value for shareholders.
Supplementary information
Going concern
Positive trading conditions are 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 committed undrawn borrowing facilities (EUR781
million at 30 June 2011) and the average maturity of its debt is approximately
four 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 page 31 of the 2010 annual report.
- Mondi operates in a highly competitive environment
The markets for paper and packaging products are highly competitive. Prices of
Mondi`s key products have experienced substantial fluctuations in the past.
Furthermore, product substitution and declining demand in certain markets,
coupled with new capacity being introduced, may have an impact on market
prices. A downturn in trading conditions in the future may have an impact on
the carrying value of goodwill and tangible assets and may result in further
restructuring activities. Mondi is flexible and responsive to changing market
and operating conditions and the Group`s geographical and product
diversification provide some measure of protection.
- Input costs are subject to significant fluctuations
Materials, energy and consumables used by Mondi include significant amounts of
wood, pulp, recovered fibre, packaging papers and chemicals. Increases in the
costs of any of these raw materials, or any difficulties in procuring wood or
recovered fibre in certain countries, could have an adverse effect on Mondi`s
business, operational performance or financial position. The Group`s focus on
operational performance, relatively high levels of integration and access to
its own virgin fibre in Russia and South Africa, serve to mitigate these
risks.
Approximately fifty percent of the South African forestry acreage is subject
to land claims. The continued acceptance of the Mondi settlement model as the
industry standard by the South African government provides some predictability
for future land claim settlements.
- Foreign currency exposure and exchange rate volatility
The location of some of the Group`s significant operations in emerging markets
results in foreign currency exposure. Adverse currency movements and high
degrees of volatility may impact on the financial performance and position of
the Group. The most significant emerging market currency exposures are to the
South African rand, Russian rouble, Czech koruna, Polish zloty and Turkish
lira. The Group`s policy is to hedge balance sheet exposures against short-
term currency volatility.
- Cost and availability of supply of electricity in South Africa may adversely
impact operations
South Africa continues to experience increases in the cost of electricity well
above inflation. In 2010, the price of electricity increased by in excess of
25% and similar increases are forecast for the next three years. Electricity
demand is expected to continue to outstrip supply until new generation
capacity is brought on stream, which is unlikely to be before 2013. Mondi
continues to monitor electricity consumption and has invested in projects to
increase its own generation capacity and reduce its dependence on the national
energy provider.
- Significant capital investments including acquisitions carry project risk
The business is capital intensive and therefore requires ongoing capital
investment to expand or upgrade existing facilities and to develop new
facilities. Projects that require significant capital expenditure carry risks
including: failure to complete a project within the required timetable and/or
within budget; failure of a project to perform according to prescribed
operating specifications; and significant, unforeseen changes in raw material
costs or inability to sell the envisaged volumes or achieve envisaged price
levels. The successful completion of the Group`s two most significant capital
investment programmes in Poland and Russia has reduced the potential impact of
this risk. Larger capital projects are subject to specific approval by the
Boards and regular monitoring and reporting. Skilled and experienced teams are
assigned to large capital projects under the oversight of the Group technical
director.
- Investments in certain countries may be adversely affected by political,
economic and legal developments in those countries
The Group operates in a number of countries where the political, economic and
legal systems are less predictable than in countries with more developed
institutional structures. Significant changes in the political, economic or
legal landscape in such countries may have a material effect on the Group`s
operations in those countries. The Group has invested in a number of countries
thereby diversifying its exposure to any single jurisdiction. The Group`s
diversified management structure ensures that business managers are able to
closely monitor and adapt to changes in the environment in which they operate.
Financial effects of Mpact demerger
The Mpact demerger was completed on 18 July 2011, with Mpact having commenced
trading as an independent listed entity on 11 July 2011, and the related Mondi
Limited share consolidation will be concluded on 8 August 2011, with the
consolidated shares commencing trading on 1 August 2011. The following table
presents the illustrative effect on the Mondi Group as if the recapitalisation
and demerger of Mpact and related Mondi Limited share consolidation had taken
place at the beginning of each period presented.
Details of the adjustments are set out in note 11 of the half-yearly financial
statements.
As reported
Six months Six months Year ended
ended 30 ended 30 31 December
June 2011 June 2010 2010
EUR million
Continuing operations
Underlying operating profit 354 204 458
Net income from associates 2 2 2
Finance costs (60) (42) (106)
Tax charge (59) (46) (88)
Non-controlling interests (42) (27) (60)
Underlying earnings attributable to
equity holders of the
parent companies 195 91 206
Discontinued operations1 13 11 32
Profit before special items
attributable to equity holders of
the parent companies 208 102 238
Special items1 4 7 (14)
Profit for the year attributable to
equity holders of the parent companies 212 109 224
Weighted average shares in issue 510 508 508
Underlying earnings per share (EUR cents) 38.2 17.9 40.6
Basic earnings per share (EUR cents) 41.6 21.5 44.1
Adjusted earnings
Six months Six months Year ended
ended ended 31 December
3 June 2011 30 June 2010 2010
EUR million
Continuing operations
Underlying operating profit 354 204 458
Net income from associates 2 2 2
Finance costs (57) (39) (99)
Tax charge (56) (43) (82)
Non-controlling interests (42) (27) (60)
Underlying earnings attributable
to equity holders of the
parent companies 201 97 219
Discontinued operations1 - - -
Profit before special items
attributable to equity holders of
the parent companies 201 97 219
Special items1 4 7 (14)
Profit for the year attributable
to equity holders of the
parent companies 205 104 205
Weighted average shares in issue 482 480 480
Underlying earnings per share (EUR cents)41.7 20.2 45.6
Basic earnings per share (EUR cents)
Note:
1 Reported net of tax and non-controlling interests.
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 2011 and a description of the principal risks and
uncertainties for the remaining six months of the year ending 31 December
2011; 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 2010.
David Hathorn Andrew King
Director Director
27 July 2011
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 2011 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 of interim financial information
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.
Deloitte & Touche
Per Bronwyn Kilpatrick
Partner
Sandton
27 July 2011
Deloitte & Touche
Registered Auditors
Buildings 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton
Republic of South Africa
National Executive GG Gelink Chief Executive AE Swiegers Chief Operating
Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax & Legal
Services L Geeringh Consulting L Bam Corporate Finance JK Mazzocco Human
Resources CR Beukman Finance TJ Brown Clients & Markets NT Mtoba Chairman of
the Board MJ Comber Deputy 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 set of financial statements in the half-yearly financial report
for the six months ended 30 June 2011 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 21. We have read the other
information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, `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 it in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Directors` responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial 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 Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, `Review of Interim Financial Information
Performed by the Independent Auditor of the Entity`, issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2011 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 Auditor
London, United Kingdom
27 July 2011
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 2011
(Reviewed)
Six months ended 30 June 2011
Before Special After
special items special
Notes items (note 6) items
EUR million
Continuing operations
Group revenue 4 2,942 - 2,942
Materials, energy and consumables used (1,528) - (1,528)
Variable selling expenses (257) - (257)
Gross margin 1,157 - 1,157
Maintenance and other indirect expenses (133) - (133)
Personnel costs (417) - (417)
Other net operating expenses (81) 1 (80)
Depreciation, amortisation and
impairments (172) - (172)
Operating profit 4/5 354 1 355
Non-operating special items 6 - 3 3
Net income from associates 2 - 2
Total profit/(loss) from operations
and associates 356 4 360
Net finance costs (60) - (60)
Investment income 15 - 15
Foreign currency (losses)/gains (2) - (2)
Finance costs 7 (73) - (73)
Profit/(loss) before tax 296 4 300
Tax (charge)/credit 8 (59) - (59)
Profit/(loss) from continuing operations 237 4 241
Discontinued operation
Profit from discontinued operation 9 13
Profit for the financial period/year 254
Attributable to:
Non-controlling interests 42
Equity holders of the parent companies 212
(Restated)
(Reviewed)
Six months ended 30 June 2010
Before Special After
special items special
items (note 6) items
EUR million
Continuing operations
Group revenue 2,752 - 2,752
Materials, energy and consumables used (1,480) - (1,480)
Variable selling expenses (252) - (252)
Gross margin 1,020 - 1,020
Maintenance and other indirect expenses (120) - (120)
Personnel costs (409) (2) (411)
Other net operating expenses (120) 56 (64)
Depreciation, amortisation and impairments (167) (17) (184)
Operating profit 204 37 241
Non-operating special items - (35) (35)
Net income from associates 2 - 2
Total profit/(loss) from operations and
associates 206 2 208
Net finance costs (42) - (42)
Investment income 14 - 14
Foreign currency (losses)/gains 11 - 11
Finance costs (67) - (67)
Profit/(loss) before tax 164 2 166
Tax (charge)/credit (46) 4 (42)
Profit/(loss) from continuing operations 118 6 124
Discontinued operation
Profit from discontinued operation 11
Profit for the financial period/year 135
Attributable to:
Non-controlling interests 26
Equity holders of the parent companies 109
(Restated)
(Audited)
Year ended 31 December 2010
Before Special After
special items special
items (note 6) items
EUR million
Continuing operations
Group revenue 5,610 - 5,610
Materials, energy and consumables used (3,006) - (3,006)
Variable selling expenses (494) - (494)
Gross margin 2,110 - 2,110
Maintenance and other indirect expenses (272) - (272)
Personnel costs (829) (23) (852)
Other net operating expenses (211) 50 (161)
Depreciation, amortisation and impairments (340) (23) (363)
Operating profit 458 4 462
Non-operating special items - (25) (25)
Net income from associates 2 - 2
Total profit/(loss) from operations and
associates 460 (21) 439
Net finance costs (106) - (106)
Investment income 31 - 31
Foreign currency (losses)/gains 7 - 7
Finance costs (144) - (144)
Profit/(loss) before tax 354 (21) 333
Tax (charge)/credit (88) 6 (82)
Profit/(loss) from continuing operations 266 (15) 251
Discontinued operation
Profit from discontinued operation 34
Profit for the financial period/year 285
Attributable to:
Non-controlling interests 61
Equity holders of the parent companies 224
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Notes Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
Earnings per share (EPS) for profit
attributable to equity holders of
the parent companies
From continuing operations
Basic EPS (EUR cents) 10 39.0 19.3 37.8
Diluted EPS (EUR cents) 10 38.5 19.0 37.4
Basic underlying EPS (EUR cents) 10 38.2 17.9 40.6
Diluted underlying EPS (EUR cents) 10 37.7 17.7 40.1
From continuing and discontinued
operations
Basic EPS (EUR cents) 10 41.6 21.5 44.1
Diluted EPS (EUR cents) 10 41.0 21.2 43.6
Basic headline EPS (EUR cents) 10 39.4 24.8 47.0
Diluted headline EPS (EUR cents) 10 38.9 24.5 46.5
Condensed combined and consolidated statement of comprehensive
income for the six months ended 30 June 2011
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
2011 2010 December 2010
EUR million
Profit for the financial
period/year 254 135 285
Other comprehensive income:
Effect of cash flow hedges 5 6 11
Actuarial losses and surplus
restriction on post-retirement
benefit schemes (2) (9) (18)
Exchange differences on
translation of foreign operations (84) 171 193
Share of other comprehensive
income of associates (1) - 1
Tax relating to components
of other comprehensive income (1) 2 4
Other comprehensive income
for the financial period/year,
net of tax (83) 170 191
Total comprehensive income
for the financial period/year 171 305 476
Attributable to:
Non-controlling interests 33 36 75
Equity holders of the parent companies 138 269 401
Condensed combined and consolidated statement of financial position
as at 30 June 2011
(Reviewed)
As at 30 June
EUR million Notes 2011
Intangible assets 241
Property, plant and equipment 3,625
Forestry assets 299
Investments in associates 12
Financial asset investments 31
Deferred tax assets 11
Retirement benefits surplus 13 12
Derivative financial instruments -
Total non-current assets 4,231
Inventories 726
Trade and other receivables 959
Current tax assets 8
Cash and cash equivalents 17b-c 33
Derivative financial instruments 4
Total current assets 1,730
Assets held for sale
Continuing operations 16 1
Discontinued operation 9 495
Total assets 6,457
Short-term borrowings 17c (485)
Trade and other payables (989)
Current tax liabilities (84)
Provisions (45)
Derivative financial instruments (4)
Total current liabilities (1,607)
Medium and long-term borrowings 17c (748)
Retirement benefits obligation 13 (196)
Deferred tax liabilities (326)
Provisions (36)
Other non-current liabilities (20)
Derivative financial instruments (10)
Total non-current liabilities (1,336)
Liabilities directly associated with assets classified
as held for sale
Continuing operations 16 -
Discontinued operation 9 (248)
Total liabilities (3,191)
Net assets 3,266
Equity
Ordinary share capital and share premium 646
Retained earnings and other reserves 2,168
Total attributable to equity holders of the parent
companies 2,814
Non-controlling interests in equity 452
Total equity 3,266
(Reviewed) (Audited)
As at 30 June As at 31 December
EUR million 2010 2010
Intangible assets 314 312
Property, plant and equipment 3,990 3,976
Forestry assets 290 320
Investments in associates 6 16
Financial asset investments 33 34
Deferred tax assets 31 21
Retirement benefits surplus 13 11
Derivative financial instruments - 3
Total non-current assets 4,677 4,693
Inventories 688 702
Trade and other receivables 1,083 992
Current tax assets 19 11
Cash and cash equivalents 77 83
Derivative financial instruments 13 11
Total current assets 1,880 1,799
Assets held for sale
Continuing operations 172 1
Discontinued operation - -
Total assets 6,729 6,493
Short-term borrowings (217) (410)
Trade and other payables (1,123) (1,034)
Current tax liabilities (75) (78)
Provisions (50) (64)
Derivative financial instruments (4) (9)
Total current liabilities (1,469) (1,595)
Medium and long-term borrowings (1,492) (1,037)
Retirement benefits obligation (202) (211)
Deferred tax liabilities (334) (349)
Provisions (35) (39)
Other non-current liabilities (21) (23)
Derivative financial instruments (23) (15)
Total non-current liabilities (2,107) (1,674)
Liabilities directly associated with
assets classified as held for sale
Continuing operations (60) -
Discontinued operation - -
Total liabilities (3,636) (3,269)
Net assets 3,093 3,224
Equity
Ordinary share capital and share premium 646 646
Retained earnings and other reserves 2,006 2,117
Total attributable to equity holders of
the parent companies 2,652 2,763
Non-controlling interests in equity 441 461
Total equity 3,093 3,224
The Group`s condensed combined and consolidated financial statements, and
related notes 1 to 21, were approved by the Boards and authorised for issue on
27 July 2011 and were signed on their 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 2011
(Reviewed)
Six months
ended 30 June
Notes 2011
EUR million
Cash generated from operations 17a 403
Dividends from associates -
Dividends from other investments -
Income tax paid (45)
Net cash generated from operating activities 358
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and cash
equivalents 15 (12)
Acquisition of associates, net of cash and cash
equivalents -
Proceeds from disposal of subsidiaries, net of cash
and cash equivalents 14
Investment in property, plant and equipment (126)
Investment in intangible assets (1)
Proceeds from the disposal of property, plant and
equipment and intangible assets 7
Investment in forestry assets (23)
Investment in financial asset investments (7)
Proceeds from the sale of financial asset investments 7
Loan (advances to)/repayments from related parties (1)
Loan repayments from external parties 1
Interest received 5
Other investing activities -
Net cash used in investing activities (136)
Cash flows from financing activities
Repayment of short-term borrowings 17c (13)
Proceeds from medium and long-term borrowings 17c 13
Repayment of medium and long-term borrowings 17c (112)
Interest paid (75)
Dividends paid to non-controlling interests 12 (40)
Dividends paid to equity holders of the parent companies 12 (86)
Purchases of treasury shares (7)
Non-controlling interests bought out (1)
Net realised loss on cash and asset management swaps -
Other financing activities 2
Net cash used in financing activities (319)
Net decrease in cash and cash equivalents (97)
Cash and cash equivalents at beginning of financial
period/year1 17c 24
Cash movement in the financial period/year 17c (97)
Reclassification of discontinued operation 17c (23)
Reclassification 17c -
Effects of changes in foreign exchange rates 17c 3
Cash and cash equivalents at end of financial
period/year1 (93)
(Reviewed) (Audited)
Six months Year ended
ended 30 June 31 December
2010 2010
EUR million
Cash generated from operations 269 778
Dividends from associates 2 2
Dividends from other investments - 1
Income tax paid (36) (47)
Net cash generated from operating activities 235 734
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and
cash equivalents 11 -
Acquisition of associates, net of cash and cash
equivalents - (2)
Proceeds from disposal of subsidiaries, net of
cash and cash equivalents 64 100
Investment in property, plant and equipment (184) (394)
Investment in intangible assets (1) (4)
Proceeds from the disposal of property, plant
and equipment and intangible assets 6 14
Investment in forestry assets (21) (46)
Investment in financial asset investments (1) (11)
Proceeds from the sale of financial asset investments 2 3
Loan (advances to)/repayments from related parties (4) 1
Loan repayments from external parties - 2
Interest received 4 10
Other investing activities - (2)
Net cash used in investing activities (124) (329)
Cash flows from financing activities
Repayment of short-term borrowings (95) (51)
Proceeds from medium and long-term borrowings 527 717
Repayment of medium and long-term borrowings (452) (831)
Interest paid (60) (117)
Dividends paid to non-controlling interests (17) (18)
Dividends paid to equity holders of the parent companies (36) (54)
Purchases of treasury shares (1) (2)
Non-controlling interests bought out (4) (5)
Net realised loss on cash and asset management swaps (61) (48)
Other financing activities - -
Net cash used in financing activities (199) (409)
Net decrease in cash and cash equivalents (88) (4)
Cash and cash equivalents at beginning of
financial period/year1 37 37
Cash movement in the financial period/year (88) (4)
Reclassification of discontinued operation - -
Reclassification (1) -
Effects of changes in foreign exchange rates (6) (9)
Cash and cash equivalents at end of financial
period/year1 (58) 24
Note:
1 `Cash and cash equivalents` includes overdrafts and cash flows from disposal
groups and is reconciled to the condensed combined and consolidated statement
of financial position in note 17c.
Condensed combined and consolidated statement of changes in equity
for the six months ended 30 June 2011
Combined
share capital
and share Retained
premium 1 earnings Other reserves 2
EUR million
At 1 January 2010 646 1,743 10
Dividends paid - (36) -
Total comprehensive income for
the financial period - 109 160
Issue of shares under employee
share schemes - 5 (5)
Purchases of treasury shares - (1) -
Disposal of businesses - - 19
Non-controlling interests bought out - (1) -
Other - - 3
At 30 June 2010 646 1,819 187
Dividends paid - (18) -
Total comprehensive income for
the financial period - 115 17
Purchases of treasury shares - (1) -
Disposal of businesses - - (7)
Reclassification - 1 (1)
Other - - 5
At 31 December 2010 646 1,916 201
Dividends paid - (86) -
Total comprehensive income for
the financial period - 212 (74)
Issue of shares under employee
share schemes - 7 (7)
Purchases of treasury shares - (7) -
Non-controlling interests bought out - 1 -
Other - - 5
At 30 June 2011 646 2,043 125
Total
attributable to
equity holders
of the parent Non-controlling Total
companies interests equity
EUR million
At 1 January 2010 2,399 425 2,824
Dividends paid (36) (17) (53)
Total comprehensive income for
the financial period 269 36 305
Issue of shares under employee
share schemes - - -
Purchases of treasury shares (1) - (1)
Disposal of businesses 19 - 19
Non-controlling interests bought out (1) (3) (4)
Other 3 - 3
At 30 June 2010 2,652 441 3,093
Dividends paid (18) (1) (19)
Total comprehensive income for
the financial period 132 39 171
Purchases of treasury shares (1) - (1)
Disposal of businesses (7) (18) (25)
Reclassification - - -
Other 5 - 5
At 31 December 2010 2,763 461 3,224
Dividends paid (86) (40) (126)
Total comprehensive income for
the financial period 138 33 171
Issue of shares under employee
share schemes - - -
Purchases of treasury shares (7) - (7)
Non-controlling interests bought out 1 (2) (1)
Other 5 - 5
At 30 June 2011 2,814 452 3,266
Notes:
1 After 30 June 2011, Mondi Limited`s par value shares will be converted by
special resolution to shares with no par value. As a result Mondi Limited`s
share capital and share premium will be combined into a stated capital
account. The share consolidation described in notes 10 and 11 will have no
impact on the share capital and stated capital of Mondi plc and Mondi Limited
respectively.
2 Other reserves consist of the share-based payment, cumulative translation
adjustment, cash flow hedge, post-retirement benefit, merger and other sundry
reserves.
Notes to the condensed combined and consolidated financial statements
for the six months ended 30 June 2011
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 2011 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 2010,
prepared in accordance with IFRS as issued by the International Accounting
Standards Board (IASB). The Group has also complied with South African
Statements and Interpretations of Statements of Generally Accepted Accounting
Practice.
There are no differences for the Group in applying IFRS as issued by the IASB
and IFRS as adopted by the European Union (EU) and therefore the Group also
complies with Article 4 of the EU IAS Regulation. The condensed combined and
consolidated financial statements have been prepared on a going concern basis
as discussed in the business review, under the heading `Going concern`.
Comparative information has been re-presented where appropriate to reflect the
discontinued operation of Mpact (previously Mondi Packaging South Africa) as
described in note 9.
The information for the year ended 31 December 2010 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 auditor`s 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 2010.
The condensed combined and consolidated financial statements have been
prepared on the historical cost basis, except for the revaluation of certain
properties and financial instruments. Historical cost is generally based on
the fair value of the consideration given in exchange for assets.
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 2011
Segment Internal External
revenue revenue1 revenue2
EUR million
Europe & International
Uncoated Fine Paper 734 (13) 721
Corrugated 704 (34) 670
Bags & Coatings 1,319 (27) 1,292
Intra-segment elimination (73) 73 -
Total Europe & International 2,684 (1) 2,683
South Africa Division 269 (90) 179
Newsprint businesses 80 - 80
Segments total 3,033 (91) 2,942
Inter-segment elimination (91) 91 -
Group total 2,942 - 2,942
(Restated)
(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 elimination (60) 60 -
Total Europe & International 2,372 (61) 2,311
South Africa Division 276 (106) 170
Newsprint businesses 271 - 271
Segments total 2,919 (167) 2,752
Inter-segment elimination (167) 167 -
Group total 2,752 - 2,752
(Restated)
(Audited)
Year ended 31 December 2010
Segment Internal External
revenue revenue1 revenue2
EUR million
Europe & International
Uncoated Fine Paper 1,516 (129) 1,387
Corrugated 1,235 (59) 1,176
Bags & Coatings 2,226 (39) 2,187
Intra-segment elimination (125) 125 -
Total Europe & International 4,852 (102) 4,750
South Africa Division 580 (211) 369
Newsprint businesses 492 (1) 491
Segments total 5,924 (314) 5,610
Inter-segment elimination (314) 314 -
Group total 5,610 - 5,610
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 type of product
presented below.
External revenue by product type
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Products
Corrugated products 686 596 1,212
Uncoated fine paper 684 674 1,351
Kraft paper & industrial bags 716 531 1,170
Coatings & consumer packaging 479 403 809
Pulp 125 104 247
Newsprint 123 104 221
Woodchips 25 39 76
Merchant 14 215 373
Other1 90 86 151
Group total 2,942 2,752 5,610
Note:
1 Revenues derived from product types that are not individually material are
classified as other.
External revenue by location of customer
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Revenue
Africa
South Africa1 129 120 249
Rest of Africa 137 107 226
Africa total 266 227 475
Western Europe
Germany 420 375 768
United Kingdom1 145 169 323
Rest of Western Europe 821 727 1,474
Western Europe total 1,386 1,271 2,565
Emerging Europe 584 584 1,184
Russia 281 249 491
North America 130 111 234
South America 15 14 30
Asia and Australia 280 296 631
Group total 2,942 2,752 5,610
Note:
1 These revenues, which total EUR274 million (six months ended 30 June 2010:
EUR289 million; year ended 31 December 2010: EUR572 million), are attributable
to the countries in which the Group`s parent entities are domiciled.
External revenue by location of production
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Revenue
Africa
South Africa1 281 286 593
Rest of Africa 4 3 5
Africa total 285 289 598
Western Europe
Austria 593 597 1,161
United Kingdom1 67 88 155
Rest of Western Europe 572 463 997
Western Europe total 1,232 1,148 2,313
Emerging Europe
Poland 406 335 711
Rest of Emerging Europe 568 512 1,076
Emerging Europe total 974 847 1,787
Russia 355 322 617
North America 81 62 131
Asia and Australia 15 84 164
Group total 2,942 2,752 5,610
Note:
1 These revenues, which total EUR348 million (six months ended 30 June 2010:
EUR374 million; year ended 31 December 2010: EUR748 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 profit/(loss) before special items from continuing operations
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Europe & International
Uncoated Fine Paper 118 98 179
Corrugated 105 48 119
Bags & Coatings 128 55 133
Total Europe & International 351 201 431
South Africa Division 27 18 64
Newsprint businesses (5) 1 (4)
Corporate & other businesses (19) (16) (33)
Segments total 354 204 458
Special items from continuing
operations (see note 6) 4 2 (21)
Net income from associates 2 2 2
Net finance costs (60) (42) (106)
Group profit before tax from
continuing operations 300 166 333
Operating segment assets
(Reviewed)
As at 30 June 2011
Segment Net segment
assets1 assets
EUR million
Europe & International
Uncoated Fine Paper 1,553 1,360
Corrugated 1,286 1,058
Bags & Coatings 1,839 1,398
Intra-segment elimination (56) -
Total Europe & International 4,622 3,816
South Africa Division 1,015 877
Newsprint businesses 130 100
Corporate & other businesses 10 10
Inter-segment elimination (52) -
Segments total 5,725 4,803
Unallocated:
Discontinued operation 495 247
Investments in associates 12 12
Deferred tax assets/(liabilities) 11 (315)
Other non-operating assets/(liabilities)2 150 (312)
Group trading capital employed 6,393 4,435
Financial asset investments 31 31
Net debt 33 (1,200)
Group assets 6,457 3,266
(Restated)
(Reviewed)
As at 30 June 2010
Segment Net
assets1 segment assets
EUR million
Europe & International
Uncoated Fine Paper 1,862 1,642
Corrugated 1,074 862
Bags & Coatings 1,720 1,318
Intra-segment elimination (67) -
Total Europe & International 4,589 3,822
South Africa Division 1,052 932
Newsprint businesses 148 108
Corporate & other businesses 18 18
Inter-segment elimination (71) -
Segments total 5,736 4,880
Unallocated:
Discontinued operation 475 368
Investments in associates 6 6
Deferred tax assets/(liabilities) 31 (303)
Other non-operating assets/(liabilities)2 371 (259)
Group trading capital employed 6,619 4,692
Financial asset investments 33 33
Net debt 77 (1,632)
Group assets 6,729 3,093
(Restated)
(Audited)
As at 31 December 2010
Segment Net
assets1 segment assets
EUR million
Europe & International
Uncoated Fine Paper 1,672 1,512
Corrugated 1,112 898
Bags & Coatings 1,731 1,333
Intra-segment elimination (55) -
Total Europe & International 4,460 3,743
South Africa Division 1,091 953
Newsprint businesses 141 106
Corporate & other businesses 10 7
Inter-segment elimination (63) -
Segments total 5,639 4,809
Unallocated:
Discontinued operation 507 393
Investments in associates 16 16
Deferred tax assets/(liabilities) 21 (328)
Other non-operating assets/(liabilities)2 193 (336)
Group trading capital employed 6,376 4,554
Financial asset investments 34 34
Net debt 83 (1,364)
Group assets 6,493 3,224
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 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, other non-operating payables and
deferred income, and liabilities directly associated with assets classified as
held for sale.
Additions to non-current non-financial assets
Additions to non-current non-financial assets 1
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Europe & International
Uncoated Fine Paper 21 74 138
Corrugated 19 38 79
Bags & Coatings 53 45 102
Total Europe & International 93 157 319
South Africa Division 34 28 71
Newsprint businesses 4 4 10
Corporate & other businesses - - -
Segments total 131 189 400
Unallocated:
Discontinued operation 18 14 28
Group total 149 203 428
Capital expenditure cash payments 2
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Europe & International
Uncoated Fine Paper 33 82 151
Corrugated 18 42 87
Bags & Coatings 43 35 92
Total Europe & International 94 159 330
South Africa Division 13 9 28
Newsprint businesses 2 2 7
Corporate & other businesses - - 1
Segments total 109 170 366
Unallocated:
Discontinued operation 17 14 28
Group total 126 184 394
Notes:
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. Additions
to non-current non-financial assets, however, exclude additions to deferred
tax assets, retirement benefits surplus and non-current financial assets.
2 Capital expenditure cash payments exclude business combinations, interest
capitalised and investments in intangible and forestry assets.
5 Write-down of inventories to net realisable value
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Combined and consolidated income statement
From continuing operations
Write-downs of inventories to
net realisable value (9) (11) (20)
Aggregate reversal of previous
write-downs of inventories 4 2 4
6 Special items
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six month Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Operating special items from
continuing operations
Asset impairments - (25) (32)
Reversal of asset impairments - 8 9
Restructuring and closure costs
Restructuring and closure
costs excluding related personnel costs (1) (1) (14)
Personnel costs relating to restructuring - (2) (24)
Reversal of restructuring and
closure costs excluding
related personnel costs 2 26 30
Reversal of personnel costs
relating to restructuring - - 1
Gain on acquisition of business - 31 34
Total operating special items
from continuing operations 1 37 4
Non-operating special items
from continuing operations
Profit/(loss) on disposals 3 (22) (11)
Impairment of assets held for sale - (13) (14)
Total non-operating special
items from continuing operations 3 (35) (25)
Total special items before tax
and non-controlling interests 4 2 (21)
Tax - 4 6
Non-controlling interests - 1 1
Total special items
attributable to equity holders
of the parent companies 4 7 (14)
Special items before tax and non-controlling interests from continuing
operations by operating segment
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Europe & International
Uncoated Fine Paper 2 10 5
Corrugated 3 (16) (15)
Bags & Coatings (1) 48 28
Total Europe & International 4 42 18
South Africa Division - (14) (10)
Newsprint businesses - (26) (29)
Group and segments total from
continuing operations 4 2 (21)
Operating special items
A purchase price adjustment on the sale of the Szolnok site resulted in the
reversal of previously recognised restructuring provisions of EUR2 million in
the Europe & International Uncoated Fine Paper business.
Restructuring activities relating to the Polish industrial bag plant acquired
from Smurfit Kappa UK Limited resulted in a EUR1 million charge in the Europe
& International Bags & Coatings business.
Non-operating special items
Finalisation of the sale of Frohnleiten and the UK corrugated plants resulted
in a gain of EUR3 million being recognised in the Europe & International
Corrugated business.
7 Finance costs
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
From continuing operations
Total interest expense (74) (74) (152)
Less: interest capitalised 1 7 8
Total finance costs from
continuing operations (73) (67) (144)
8 Tax charge
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
From continuing operations
UK corporation tax at 26.5% (2010: 28%) - (1) (2)
SA corporation tax at 28% (2010: 28%) 4 2 3
Overseas tax 51 52 74
Current tax (including tax on
special items from continuing operations) 55 53 75
Deferred tax 4 (11) 7
Total tax charge from
continuing operations 59 42 82
The Group`s estimated effective annual rate of tax from continuing operations
before special items for the six months ended 30 June 2011, calculated on
profit before tax from continuing operations before special items and
including net income from associates, is 20% (six months ended 30 June 2010:
28%; year ended 31 December 2010: 25%). The reduction in the effective tax
rate from 28% to 20% is primarily due to increased profitability in regions
with lower tax rates, and benefits from tax incentives granted in certain
countries in which the Group operates, notably Poland.
9 Discontinued operation
On 30 June 2011, the Mondi Group shareholders approved a special resolution to
separate the Group`s interest in Mondi Packaging South Africa (MPSA) via a
demerger in terms of which all the ordinary shares in MPSA held by Mondi
Limited were distributed to the Mondi Limited ordinary shareholders by way of
a dividend in specie. MPSA was listed on 11 July 2011 under a new name, Mpact
Limited (Mpact), on the securities exchange operated by the JSE Limited (JSE).
Prior to the demerger (i) Mondi Limited and Shanduka Packaging Proprietary
Limited (Shanduka Packaging) subscribed for new Mpact shares; (ii) certain
shareholder loans made to Mpact were repaid using the cash proceeds received
from the new share subscription and newly arranged borrowing facilities of
Mpact; and (iii) the Mpact shares held by Mondi Limited`s employee share
ownership trust were acquired by the Mondi Group. The Mondi Group`s
shareholding in Mpact increased to 89.55% of the total number of Mpact shares
in issue following these steps and Shanduka Packaging`s shareholding reduced
to 10.45%.
The resulting interest in Mpact held by the Mondi Group was distributed to
Mondi Limited shareholders by way of the dividend in specie.
The dividend in specie declared to Mondi Limited shareholders will be measured
at the fair value of the Mpact shares distributed, which was EUR201 million.
The carrying value of the investment, immediately prior to distribution as a
dividend in specie was approximately EUR170 million. The resulting gain on
disposal of the business was approximately EUR31 million before related
transaction costs. The demerger and disposal of Mpact was completed after 30
June 2011. The gain on disposal will be separately recognised as part of the
discontinued operation in the second half of the year. The assets and
associated liabilities of Mpact were classified as held for sale at 30 June
2011.
Subsequent to the demerger, a consolidation of the Mondi Limited ordinary
shares owned by Mondi Limited shareholders, the effect of which will be to
reduce their proportionate interest in the Mondi Group will be undertaken in
order to compensate Mondi plc shareholders for the value distributed to Mondi
Limited shareholders under the demerger.
The Mondi Limited share consolidation was intended to have, as far as
practicable, an equivalent but not necessarily identical economic effect on
Mondi plc shareholders as the economic effect that the demerger will have on
Mondi Limited shareholders.
The total number of new Mondi Limited ordinary shares held by Mondi Limited
shareholders after the Mondi Limited share consolidation was determined by
reference to the volume weighted average price (VWAP) of Mpact shares traded
on the JSE, the VWAP of existing Mondi Limited ordinary shares traded on the
JSE and the VWAP of Mondi plc ordinary shares traded on the London Stock
Exchange plc (LSE) and JSE, in each case during the applicable VWAP
determination period, being the nine business days from 11 July 2011 to 21
July 2011. The formula for determining the number of new Mondi Limited
ordinary shares was designed to ensure that the benefit per Mondi plc ordinary
share received by each Mondi plc shareholder as a result of the Mondi Limited
share consolidation matched as closely as possible the value per Mondi Limited
ordinary share received (in the form of Mpact shares) by each Mondi Limited
shareholder pursuant to the demerger.
Following the conclusion of the VWAP determination period, the number of Mondi
Limited shares in issue will reduce from 147 million to 118 million and the
total number of Mondi shares in issue will reduce from 514 million to 486
million.
Mpact paid interest of EUR13 million (six months ended 30 June 2010: EUR13
million; year ended 31 December 2010: EUR28 million) to Mondi Limited in
respect of intercompany financing provided. This interest is eliminated on
consolidation and is thus not taken into consideration in the tables below.
The results of the discontinued operation, which have been included in the
condensed combined and consolidated income statement for the six months ended
30 June 2011, were as follows:
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Revenue 296 281 618
Expenses (283) (270) (579)
Profit before tax 13 11 39
Related tax charge - - (5)
Profit after tax from
discontinued operation 13 11 34
Attributable to:
Non-controlling interests - - 2
Equity holders of the parent companies 13 11 32
Mpact contributed the following cash flows to the Group:
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR million
Net cash generated from
operating activities 31 27 69
Net cash used in investing
activities (17) (13) (29)
Net cash generated from/(used
in) financing activities 13 (7) (36)
Earnings per share from the discontinued operation are presented as follows
(see note 10):
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
EUR cents per share
Profit from discontinued
operation for the financial
period/year attributable to
equity holders of the parent companies
Basic EPS 2.6 2.2 6.3
Diluted EPS 2.5 2.2 6.2
Details of the disposal group and assets held for sale of the discontinued
operation are presented as follows:
(Reviewed)
Six months
ended 30 June
2011
EUR million
Intangible assets 68
Property, plant and equipment 195
Investments in associates 5
Financial asset investments 1
Deferred tax assets 3
Retirement benefits surplus 1
Total non-current assets 273
Inventories 74
Trade and other receivables 125
Cash and cash equivalents 23
Total current assets 222
Total assets classified as held for sale 495
Short-term borrowings (15)
Trade and other payables (99)
Current tax liabilities (1)
Total current liabilities (115)
Medium and long-term borrowings (119)
Retirement benefits obligation (7)
Deferred tax liabilities (1)
Derivative financial instruments (2)
Other non-current liabilities (4)
Total non-current liabilities (133)
Total liabilities directly associated with assets classified as
held for sale (248)
Net assets 247
10 Earnings per share
(a) From continuing operations
As discussed in note 9, Mondi Limited`s ordinary shares were subject to a
share consolidation which will be recognised from 1 August 2011, the date on
which the new Mondi Limited ordinary shares commence trading on the JSE.
As more fully described in note 9, the share consolidation is the matching
action to compensate Mondi plc shareholders for the dividend in specie
declared to Mondi Limited shareholders. IFRS requires that the number of
shares subject to the consolidation be adjusted from the effective date of the
consolidation, and thus the number of shares in issue is unchanged at 30 June
2011. Hence, for the period under review no account is taken of the share
consolidation.
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR cents per share
Profit from continuing
operations for the financial
period/year attributable to
equity holders of the parent
companies
Basic EPS 39.0 19.3 37.8
Diluted EPS 38.5 19.0 37.4
Underlying earnings for the
financial period/year1
Basic EPS 38.2 17.9 40.6
Diluted EPS 37.7 17.7 40.1
Note:
1 Underlying EPS excludes the impact of special items.
The calculation of basic and diluted EPS and basic and diluted underlying EPS
from continuing operations is based on the following data:
Earnings
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR million
Profit for the financial
period/year attributable to
equity holders of the parent companies 212 109 224
Profit from discontinued
operation (see note 9) (13) (11) (39)
Related tax (see note 9) - - 5
Related non-controlling
interests (see note 9) - - 2
Profit from continuing
operations for the financial
period/year attributable to
equity holders of the parent companies 199 98 192
Special items from continuing
operations (see note 6) (4) (2) 21
Related tax (see note 6) - (4) (6)
Related non-controlling
interests (see note 6) - (1) (1)
Underlying earnings for the
financial period/year1 195 91 206
Note:
1 Underlying earnings excludes the impact of special items.
Number of shares
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
million
Basic number of ordinary
shares outstanding prior to
Mondi Limited share consolidation1 510 508 508
Effect of dilutive potential
ordinary shares2 7 7 6
Diluted number of ordinary
shares outstanding prior to
Mondi Limited share consolidation 517 515 514
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.
(b) From continuing and discontinued operations
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 ended 30 June 31 December
June 2011 2010 2010
EUR cents per share
Profit for the financial
period/year attributable to
equity holders of the parent companies
Basic EPS 41.6 21.5 44.1
Diluted EPS 41.0 21.2 43.6
Headline earnings for the
financial period/year 1
Basic EPS 39.4 24.8 47.0
Diluted EPS 38.9 24.5 46.5
Note:
1 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.
The calculation of basic and diluted EPS and basic and diluted headline EPS
from continuing and discontinued operations is based on the following data:
Earnings
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR million
Profit for the financial
period/year attributable to
equity holders of the parent companies 212 109 224
Special items (4) (2) 21
Special items: restructuring
and closure costs 1 23 (7)
Remeasurements related to the
discontinued operation1 - 1 1
Profit on disposal of tangible
and intangible assets (6) (1) (1)
Impairments not included in
special items - - 6
Related tax (2) (3) (4)
Related non-controlling interests - (1) (1)
Headline earnings for the
financial period/year 201 126 239
Note:
1 Remeasurements as defined in Circular 3/2009, `Headline Earnings`, as issued
by the South African Institute of Chartered Accountants.
11 Alternative measure of earnings per share
The directors have elected to present an alternative, non-IFRS measure of
earnings per share from continuing operations in order to provide shareholders
with a comparison of the continuing operations of the Group as if the demerger
and related share consolidation had occurred at the beginning of each period
presented. This is deemed appropriate as it is the continuing operations of
the Group, after taking the impact of the share consolidation into
consideration, which will be the basis of the future performance of the Group.
This approach will enable a useful comparison of earnings per share from
continuing operations, based on the consolidated shares, for all future
periods.
In addition, the effect of the recapitalisation of Mpact resulted in a
repayment of intercompany debt by Mpact to Mondi Limited on 4 and 5 July 2011
of EUR76 million. These proceeds were used to reduce the Group`s net debt. The
alternative measure of earnings per share has therefore been adjusted to take
the related saving on interest paid into consideration as if the
recapitalisation had occurred at the beginning of each period presented.
Earnings
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR million
Underlying earnings for the
financial period/year1 195 91 206
Tax saving by Mondi Limited on
intercompany interest received
from Mpact2 4 4 8
Saving of interest paid on net
debt at 8.6% per annum 3 3 7
Tax at 28% on saving of interest paid (1) (1) (2)
Adjusted earnings for the
financial period/year 201 97 219
Notes:
1 Underlying earnings excludes the impact of special items.
2 Had the recapitalisation of Mpact occurred at the beginning of each period
presented, Mondi Limited would no longer have received interest on its
intercompany loans to Mpact and thus the tax charge on the interest received
would not have been incurred.
The revised weighted average number of shares is determined as follows:
Number of shares
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
million
Basic number of ordinary
shares outstanding prior to
Mondi Limited share consolidation 510 508 508
Effect of Mondi Limited
share consolidation1 (28) (28) (28)
Basic number of ordinary
shares outstanding after
Mondi Limited share consolidation2 482 480 480
Effect of dilutive potential
ordinary shares3 6 6 5
Diluted number of ordinary
shares outstanding after
Mondi Limited share consolidation 488 486 485
Notes:
1 The actual number of shares subject to consolidation was 29 million. These
figures represent the proportionate adjustment calculated in relation to the
weighted average number of shares in issue.
2 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.
3 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.
Based on the adjusted earnings and weighted average number of shares, the
alternative, non-IFRS earnings per share figures for continuing operations
would be:
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR cents per share
Earnings per share -
alternative measure for the
financial period/year
Basic EPS - alternative measure 41.7 20.2 45.6
Diluted EPS - alternative measure 41.2 20.0 45.2
12 Dividends
The interim dividend for the year ending 31 December 2011 of 8.25 euro cents
per ordinary share will be paid on 13 September 2011 to Mondi Limited and
Mondi plc ordinary shareholders on the relevant registers on 19 August 2011.
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 2010.
The interim dividend for the year ending 31 December 2011 will be paid in
accordance with the following timetable:
Mondi Limited Mondi plc
Last date to trade shares cum-dividend
JSE Limited 12 August 2011 12 August 2011
London Stock Exchange Not applicable 16 August 2011
Shares commence trading ex-dividend
JSE Limited 15 August 2011 15 August 2011
London Stock Exchange Not applicable 17 August 2011
Record date
JSE Limited 19 August 2011 19 August 2011
London Stock Exchange Not applicable 19 August 2011
Last date for receipt of Dividend
Reinvestment Plan 25 August 2011 25 August 2011
(DRIP) elections by Central Securities
Depository Participants
Last date for DRIP elections to UK
Registrar and South 26 August 2011 19 August 2011*
African Transfer Secretaries by
shareholders of Mondi Limited and Mondi plc
Payment Date
South African Register 13 September 2011 13 September 2011
UK Register Not applicable 13 September 2011
DRIP purchase settlement dates 20 September 2011 16 September 2011**
Currency conversion dates
ZAR/euro 28 July 2011 28 July 2011
Euro/sterling Not applicable 26 August 2011
* 26 August 2011 for Mondi plc South African branch register shareholders
** 20 September 2011 for Mondi plc South African branch register shareholders
Share certificates on the South African registers of Mondi Limited and Mondi
plc may not be dematerialised or rematerialised between 15 August 2011 and 21
August 2011, both dates inclusive, nor may transfers between the UK and South
African registers of Mondi plc take place between 10 August 2011 and 21 August
2011, both dates inclusive.
Please note that following the demerger of Mpact Limited and the Mondi Limited
consolidation, with effect from Monday 1 August 2011, Mondi Limited ordinary
shares will trade on the JSE under the new ISIN ZAE000156550 and the same JSE
code MND.
13 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 2011.
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
2011. The net retirement benefit obligation decreased by EUR16 million mainly
due to an exchange rate impact of EUR9 million and a transfer of the
discontinued operation to be classified as held for sale of EUR6 million. The
assets backing the defined benefit scheme liabilities reflect their market
values as at 30 June 2011. Any movements in the assumptions have been
recognised as an actuarial movement in the condensed combined and consolidated
statement of comprehensive income.
14 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 30 June As at 30 June As at 31
2011 2010 December 2010
Net asset value per share (EUR) 6.40 6.07 6.33
Tangible net asset value per
share (EUR) 5.93 5.45 5.71
15 Business combinations
There were no major acquisitions made for the six months ended 30 June 2011.
Details of the aggregate net assets acquired, as adjusted from book to fair
value, are presented as follows:
Book value Revaluation Fair value
EUR million
Net assets acquired:
Intangible assets 1 4 5
Property, plant and equipment 12 (8) 4
Inventories 5 - 5
Trade and other receivables 9 - 9
Trade and other payables (6) - (6)
Short-term borrowings (4) - (4)
Medium and long-term borrowings (1) - (1)
Net assets acquired 16 (4) 12
Goodwill arising on acquisition 1
Total cost of acquisition 13
Debt consideration (1)
Net cash paid 12
16 Disposal groups and assets held for sale
Other than the discontinued operation and associated disposal group held for
sale disclosed in note 9, there were no major disposal groups or assets held
for sale as at 30 June 2011.
17 Consolidated cash flow analysis
(a) Reconciliation of profit before tax from continuing operations to cash
generated from operations
(Restated) (Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 ended 30 June December
June 2011 2010 2010
EUR million
Profit before tax from
continuing operations 300 166 333
Depreciation and amortisation 172 167 340
Share-based payments 5 3 7
Non-cash effect of special items (13) (8) 11
Net finance costs 60 41 105
Net income from associates (2) (2) (2)
Decrease in provisions and
post-employment benefits (15) (5) (3)
Increase in inventories (104) (66) (102)
Increase in operating
receivables (134) (187) (127)
Increase in operating payables 95 116 119
Fair value gains on forestry assets (23) (16) (36)
Felling costs 34 32 65
Profit on disposal of tangible
and intangible assets (6) (1) (1)
Other adjustments 2 (2) (4)
Cash generated from continuing
operations 371 238 705
Cash generated from
discontinued operation 32 31 73
Cash generated from operations 403 269 778
(b) Cash and cash equivalents
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
EUR million
Cash and cash equivalents
per condensed combined and
consolidated statement of
financial position 33 77 83
Bank overdrafts included in
short-term borrowings (126) (135) (59)
Net cash and cash
equivalents per condensed
combined and consolidated
statement of cash flows (93) (58) 24
(c) Movement in net debt
The Group`s net debt position, excluding disposal groups is as follows:
Cash and Debt due Debt due
cash within one after one Total net
equivalents1 year2 year debt
EUR million
At 1 January 2010 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)
Cash flow 84 (44) 189 229
Disposal of businesses - 18 52 70
Movement in
unamortised loan costs - - (2) (2)
Reclassification 1 (240) 233 (6)
Currency movements (3) (3) (17) (23)
At 31 December 2010 24 (351) (1,037) (1,364)
Cash flow (97) - 112 15
Business combinations - (4) (1) (5)
Movement in unamortised
loan costs - - (3) (3)
Reclassification of
discontinued operation (23) 15 119 111
Reclassification - (39) 39 -
Currency movements 3 20 23 46
At 30 June 2011 (93) (359) (748) (1,200)
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 2011, short-term borrowings on the condensed combined and consolidated
statement of financial position of EUR458 million (as at 30 June 2010: EUR217
million; as at 31 December 2010: EUR410 million) include EUR126 million of
overdrafts (as at 30 June 2010: EUR135 million; as at 31 December 2010: EUR59
million).
The following table shows the amounts available to draw down on the Group`s
committed loan facilities:
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
EUR million
Expiry date
In one year or less 39 211 44
In more than one year 742 1,147 1,437
Total credit available 781 1,358 1,481
18 Capital commitments
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
EUR million
Contracted for but not provided 122 184 98
Approved, not yet contracted for 182 200 316
The maturity of these capital commitments is:
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
2011 2010 December 2010
EUR million
Within one year 237 242 296
One to two years 58 47 77
Two to five years 9 91 39
After five years - 4 2
Total capital commitments 304 384 414
19 Contingent liabilities and contingent assets
Contingent liabilities comprise aggregate amounts as at 30 June 2011 of EUR19
million (as at 30 June 2010: EUR20 million; as at 31 December 2010: EUR20
million) in respect of loans and guarantees given to banks and other third
parties. Acquired contingent liabilities of EURnil (six months ended 30 June
2010: EURnil; year ended 31 December 2010: EURnil) have been recorded on the
Group`s condensed 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 2011 of EURnil (as
at 30 June 2010: EUR5 million; as at 31 December 2010: EUR1 million).
20 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
and are not disclosed in this note.
The Group and its subsidiaries, in the ordinary course of business, enter into
various sale, purchase and service transactions with joint ventures and
associates and others in which the Group has a material interest. These
transactions are under terms that are no less favourable than those arranged
with third parties. These transactions, in total, are not considered to be
significant.
There have been no significant changes to the related parties as disclosed in
note 38 of the Group`s annual financial statements for the year ended 31
December 2010.
Dividends received from associates for the six months ended 30 June 2011
amount to EURnil (six months ended 30 June 2010: EUR2 million; year ended 31
December 2010: EUR2 million).
21 Events occurring after 30 June 2011
The following events have occurred subsequent to 30 June 2011:
- Mpact (previously called Mondi Packaging South Africa) demerger (see note
9);
- Mondi Limited share consolidation (see notes 9 to 11); and
- Proposed interim dividend (see note 12).
Production statistics
Six months Six months Year ended 31
ended 30 June ended 30 June December
2011 2010 2010
Europe & International
Uncoated fine paper Tonnes 712,886 790,748 1,524,225
Containerboard Tonnes 991,970 1,008,305 1,939,935
Kraft paper Tonnes 535,238 466,156 984,607
Hardwood pulp Tonnes 527,889 474,700 935,628
Internal consumption Tonnes 496,518 451,524 825,664
External Tonnes 31,371 23,176 109,964
Softwood pulp Tonnes 1,011,757 935,783 1,899,518
Internal consumption Tonnes 934,588 856,279 1,688,472
External Tonnes 77,169 79,504 211,046
Corrugated board and boxes Mm2 609 713 1,308
Industrial bags M units 2,050 1,858 3,850
Coating and release liners Mm2 1,797 1,601 3,187
Newsprint Tonnes 97,931 98,051 197,601
South Africa Division
Uncoated fine paper Tonnes 114,686 152,663 276,957
Containerboard Tonnes 126,516 128,830 259,785
Hardwood pulp Tonnes 282,284 287,417 589,186
Internal consumption Tonnes 153,402 162,785 366,170
External Tonnes 128,882 124,632 223,016
Softwood pulp Tonnes 58,646 56,885 112,956
Woodchips Bone
dry
tonnes 101,454 129,516 280,154
Newsprint Joint Ventures
(attributable share)
Aylesford Tonnes 95,955 92,575 187,971
Mondi Shanduka Newsprint (MSN) Tonnes 61,548 64,976 126,530
Exchange rates
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2011 2010 2010
Closing rates against the euro
South African rand 9.86 9.38 8.86
Pounds sterling 0.90 0.82 0.86
Polish zloty 3.99 4.15 3.97
Russian rouble 40.40 38.28 40.82
US dollar 1.45 1.23 1.34
Czech koruna 24.34 25.69 25.06
Turkish lira 2.35 1.94 2.07
Average rates for the period
against the euro
South African rand 9.69 9.99 9.70
Pounds sterling 0.87 0.87 0.86
Polish zloty 3.95 4.00 3.99
Russian rouble 40.14 39.88 40.27
US dollar 1.40 1.33 1.33
Czech koruna 24.35 25.72 25.29
Turkish lira 2.21 2.02 2.00
28 July 2011
Sponsor: UBS South Africa (Pty) Ltd
Date: 28/07/2011 08:00:09 Produced by the JSE SENS Department.
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