| Tue 7 Aug 2012, 9:42 | | MONDI PLC - Half-yearly results for the six months |
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MONDI PLC - Half-yearly results for the six months 7 Aug 2012
MNP MND 201208070004A
Half-yearly results for the six months ended 30 June 2012
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000156550
Mondi plc
(Incorporated in England and Wales)
(Registered number: 6209386)
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
7 August 2012
As part of the dual listed company structure, Mondi Limited and Mondi plc (together Mondi Group') notify both
the JSE Limited and the London Stock Exchange of matters required to be disclosed under the JSE Listings
Requirements and/or the Disclosure Rules and Transparency Rules and/or the Listing Rules of the United
Kingdom Listing Authority.
Half-yearly results for the six months ended 30 June 2012
Highlights
? Good operating performance after a challenging start to the year
? Return on Capital Employed of 13.3%, in excess of the Group's through-the-cycle target of 13%
? Interim dividend of 8.9 euro cents per share, up 8%
? Strong cash generation of EUR353 million
? Significant strategic acquisitions:
* Swiecie minorities acquired for EUR296 million
* EUR655 million acquisition of Nordenia agreed
Financial summary
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million, except for percentages and per share measures June 2012 2011 2011
From continuing operations
Group revenue 2,840 2,942 2,797
Underlying EBITDA(1) 436 526 438
Underlying operating profit(1) 269 354 268
Underlying profit before tax(1) 217 296 216
Profit before tax 223 300 157
Per share measures
Basic underlying earnings per share 30.9 38.2 29.9
Basic earnings per share alternative measure(2)(EUR cents) 30.9 41.7 30.1
Basic earnings per share from continuing operations (EUR cents) 31.7 39.0 18.5
Basic earnings per share (EUR cents) 31.7 41.6 24.5
Interim dividend per share (EUR cents) 8.9 8.25
Free cash flow per share3 (EUR cents) 9.3 19.6 59.2
Cash generated from operations 353 403 514
Net debt 1,273 1,200 831
Group Return on Capital Employed (ROCE )(4) 13.3% 15.2% 15.0%
Notes:
1 The Group presents underlying EBITDA, operating profit and profit before tax as measures which exclude special items in order to provide a
more effective comparison of the underlying financial performance between reporting periods.
2 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 in the 2011 comparative earnings per share figures to reflect the position
as if the transaction had been completed on 1 January 2011. This is intended to enable a more useful comparison of earnings per share from
continuing operations, based on the consolidated number of shares.
3 Free cash flow per share is net increase in cash and cash equivalents before the effects of acquisitions and disposals of businesses and
changes in net debt and dividends paid divided by the net number of shares in issue at the end of the reporting period.
4 ROCE is the 12 month rolling average underlying operating profit expressed as a percentage of the average rolling 12 month capital employed,
adjusted for impairments and spend on strategic projects which are not yet in operation.
David Hathorn, Mondi Group chief executive, said:
"We are pleased to announce good results following the anticipated pick-up in trading after a
challenging start to the year. Cash generation is robust and our return on capital employed remains
above our through-the-cycle target, reflecting the strength of our low-cost operating model.
We have made significant progress on a number of strategic initiatives, most notably the acquisition
of the remaining minority interest in Swiecie and the agreement to acquire a 93.9% interest in
Nordenia. These steps build on our position as a leading international packaging and paper company
with a strong platform for continued growth in emerging markets.
The macroeconomic environment remains a concern, with continued soft demand evident in certain
western European markets. Encouragingly, demand in a number of the emerging markets to which the
Group is exposed remains firm, and positive supply side fundamentals in various of our core grades
offer price support. As such, we remain confident of delivering against our expectations for the full
year."
Contact details
Mondi Group
David Hathorn +27 (0)11 994 5418
Andrew King +27 (0)11 994 5415
Lora Rossler +27 (0)11 994 5400 / +27 (0)83 627 0292
FTI Consulting
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) or +27 (0)11 535 3600
An online audio cast facility will be available via: www.mondigroup.com/HYResults12.
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 7 August
2012.
Editors' notes
Mondi is an international packaging and paper Group, with production operations across 28 countries and
revenues of EUR5.7 billion in 2011. The Group's key operations are located in central Europe, Russia and South
Africa and as at the end of 2011, Mondi Group employed 23,400 people.
Mondi Group 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 paper 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 Group 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 Global, European and UK Index Series (since 2008) and the JSE's Socially Responsible
Investment (SRI) Index since 2007. The Group was also included in the FTSE350 Carbon Disclosure
Leadership Index for the second year.
Forward-looking statements
This document includes (or may include) certain forward-looking statements. All statements other than
statements of historical facts included herein, including, without limitation, those regarding Mondi's financial
position, business strategy, plans and objectives of management for future operations, are forward-looking
statements. Such forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be
materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding
Mondi's present and future business strategies and the environment in which Mondi will operate in the future.
Among the important factors that could cause Mondi's actual results, performance or achievements to differ
materially from those in the forward-looking statements include, but are not limited to, those discussed under
Principal risks and uncertainties', below. These forward-looking statements speak only as of the date on
which they are made. Mondi expressly disclaims any obligation or undertaking to release publicly any updates
or revisions to any forward-looking statement contained herein to reflect any change in Mondi's expectations
with regard thereto or any change in events, conditions or circumstances on which any such statement is
based.
Group performance review
The Group's underlying operating profit of EUR269 million was in line with that of the second half of 2011 and
24% below that of the comparable prior year period.
Average selling prices were lower across all grades compared to both the first and second half of the prior
year.
Sales volumes were above those of the second half of the prior year, reflecting improving demand, but were
still below the volumes achieved in the first half of 2011 in certain segments, most notably kraft paper and
industrial bags.
Input costs provided some benefit with recovered fibre and pulp prices, on average, below 2011 levels.
Finance charges for the period were lower than those of the comparable prior year period mainly as a result of
the lower average net debt.
The underlying effective tax rate of 20% is consistent with that of 2011 as the Group continued to benefit from
a favourable profit mix and investment incentives, most notably in Poland.
Underlying earnings per share in the six months ended 30 June 2012 was 30.9 euro cents per share, a 26%
decrease on the basic earnings per share - alternative measure applicable to the comparable prior year period
and better than that achieved in the second half of 2011. An interim dividend of 8.9 euro cents per share, up
8% on the prior year interim dividend of 8.25 euro cents per share, has been declared.
The Group achieved a Return on Capital Employed (ROCE) of 13.3%, above the through-the-cycle target of
13%.
The Group remains strongly cash generative with cash generated from operations of EUR353 million, including
the effects of the normal seasonal pick-up in working capital in the first half of the year.
Capital expenditure of EUR112 million represents 67% of the Group's depreciation charge. An increase in capital
expenditure is expected in the second half, partly due to investment in the previously announced energy and
de-bottlenecking investment projects ramping up as well as the normal seasonal variation in capital
expenditure.
On 18 April 2012, Mondi concluded an all cash public tender offer for the shares in Mondi Swiecie that it did
not already own increasing its holding to 93.2% from 66%. On 18 May 2012, Mondi acquired the remaining
shares it did not already own. The total consideration paid by Mondi was EUR296 million.
On 2 May 2012 Mondi Swiecie S.A. acquired Saturn Management Sp. Z o.o., the company that owns the
power and heat generating plant that provides Mondi Swiecie S.A. with most of its electricity requirements and
all of its heat and steam needs, for a net cash consideration of EUR31 million and the assumption of debt of EUR57
million.
Net debt of EUR1,273 million at 30 June 2012 increased from EUR831 million at 31 December 2011, reflecting the
impact of the Mondi Swiecie acquisitions described above as well as the usual bias towards the first half of the
year in respect of cash outflows from other financing activities.
The average maturity of the Group's committed debt facilities at 30 June 2012 was 4.0 years, with unutilised
committed facilities in excess of EUR580 million.
On 11 July 2012, Mondi announced that it has agreed to acquire 93.4% of the outstanding share capital of
Nordenia International AG for a total cash consideration of EUR240 million and the assumption of debt and debt
like liabilities of EUR398 million, implying an enterprise value of EUR655 million. The transaction is subject to
customary completion conditions including the approval of certain competition authorities. On 23 July 2012,
agreement was reached to acquire a further 0.5% interest on the same completion conditions. The acquisition
is expected to be completed in the fourth quarter of 2012 and the cash consideration will be financed by
means of a new, two-year EUR250 million committed bank debt facility obtained subsequent to 30 June 2012.
Nordenia is an international supplier of innovative consumer packaging solutions and hygiene components.
Following the completion of the Nordenia acquisition, Mondi will reorganise its Europe & International Division
into four businesses: Packaging Paper; Fibre Packaging; Consumer Packaging; and Uncoated Fine Paper
(UFP). Nordenia will form part of the Consumer Packaging business. The Group's restated historical
segmental information, to reflect this reorganisation, is presented as an annexure to this half-yearly report.
Europe & International - Uncoated Fine Paper business
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million June 2012 2011 2011
Segment revenue 749 734 695
of which inter-segment revenue 8 13 7
EBITDA 154 169 140
Underlying operating profit 100 118 87
Capital expenditure 24 33 28
Net segment assets 1,270 1,360 1,283
ROCE 15.7% 16.9% 16.7%
The business continued to deliver a strong operating performance with ROCE of 15.7%. Underlying operating
profit of EUR100 million, 15% below the comparable prior year period, reflects primarily the effects of the annual
planned maintenance shut at Syktyvkar, which took place during June, compared to July in the previous year,
resulting in lower sales volumes and higher costs compared to the first half of 2011. Marginally lower average
net selling prices, due in part to a change in sales mix, also contributed to the lower result. Average
benchmark European uncoated fine paper prices were slightly lower than the comparable prior year period
and approximately 2% below the average prices in the second half of 2011.
Lower pulp and chemical costs benefited the business whilst energy costs increased across all mills due to
higher gas and other fuel costs. Wood costs were lower in central Europe but higher in Russia.
Planned maintenance shuts in Ruomberok and Neusiedler will take place during the third quarter of the year
as European markets enter the traditional slower summer period.
Europe & International - Corrugated business
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million June 2012 2011 2011
Segment revenue 680 704 680
of which inter-segment revenue 20 34 30
EBITDA 100 142 109
Underlying operating profit 65 105 73
Capital expenditure 22 18 26
Net segment assets 1,087 1,058 967
ROCE 14.1% 20.1% 18.5%
While ROCE remained above the Group's through the cycle target at 14.1%, the underlying operating profit of
EUR65 million was well below that of the comparable prior year period due to significantly lower average selling
prices of containerboard. Sales volumes were slightly higher over the same period.
Despite price increases implemented across all grades during the period following the lows reached in the
early part of the year, average benchmark kraftliner and recycled containerboard prices were both 12% lower
than those of the comparable prior year period. While the virgin containerboard grades showed positive price
momentum throughout the period under review, supported by capacity reductions in Europe and the stronger
US dollar, recycled containerboard grades came under pressure in the second quarter due to a combination of
lower recovered fibre costs, low demand growth and new production capacity. Price increases for white top,
virgin and recycled containerboard were announced in July. The actual price increase achieved will be subject
to individual negotiations with customers.
Average benchmark recovered fibre costs declined by approximately 6% compared to the second half of 2011
during the period, and were more than 10% lower than the comparable prior year period. Wood, pulp and
energy costs were also lower during the period whilst chemical costs increased marginally.
The planned maintenance shut for Mondi Swiecie took place during July.
The corrugated packaging business reflected a pleasing improvement in underlying operating profit, mainly
due to increased average selling prices due to product mix improvements driven by an increased focus on
customer segmentation and lower paper input costs.
Europe & International - Bags & Coatings business
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million June 2012 2011 2011
Segment revenue 1,149 1,319 1,159
of which inter-segment revenue 22 27 19
EBITDA 145 179 148
Underlying operating profit 96 128 100
Capital expenditure 47 43 67
Net segment assets 1,347 1,398 1,279
ROCE 16.5% 17.4% 19.0%
Underlying operating profit of EUR96 million was 25% lower than the comparable prior year period but broadly in
line with the second half of 2011. ROCE remained robust at 16.5%.
Commercial downtime in the kraft paper business, taken in the second half of 2011, continued at reduced
levels into the first quarter of 2012. Full production resumed in the second quarter on the back of the end of
destocking and improved demand in export markets. Average selling prices were approximately 7% lower
than the comparable prior year period and 9% lower than the second half of 2011, reflecting the lower prices
agreed on contract volumes set in the early part of the year. Price increases were announced in the latter part
of the second quarter and are expected to take effect in the second half of the year. While the outlook for
near-term European demand continues to be uncertain, export markets remain strong, driven by a
combination of underlying demand growth and supply contraction. The business benefited from lower wood
and pulp input costs whilst energy prices were higher.
Selling prices in industrial bags were broadly in line with the comparable prior year period but demand was
weaker, particularly in southern Europe. The business benefited from lower paper input costs and an ongoing
focus on fixed costs savings.
Coatings was negatively impacted by lower sales prices and volumes versus the comparable prior year
period, although sales volumes have improved from the weaker demand seen during the second half of 2011.
Furthermore, the start-up of a new facility in the US, coupled with the related closure of an old site and
relocation of activities negatively impacted results. Consumer packaging benefited from stable demand.
Higher resin prices were successfully passed on to customers and the business also benefited from an
improved product mix.
South Africa Division
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million June 2012 2011 2011
Segment revenue 287 269 300
of which inter-segment revenue 57 90 65
EBITDA 55 54 60
Underlying operating profit 29 27 35
Capital expenditure 15 13 14
Net segment assets 840 877 828
ROCE 9.5% 9.7% 8.9%
The underlying operating profit of EUR29 million was marginally higher than the comparable prior year period.
The business benefited from both the weaker South African rand and an increase in sales volumes and lower
operating costs, primarily due to the shift in the planned annual maintenance shut at the key Richards Bay
operations from the first half in the prior year to the third quarter in the current year. This was partially offset by
lower average selling prices, particularly for hardwood pulp and white top containerboard. A continued focus
on the domestic market and improved operating performance at Richards Bay has benefited the business
through improved margins.
In June 2012 a further 8 forestry land settlement agreements were reached. To date Mondi has signed a total
of 19 land settlements involving about 35,000 hectares of its forestry land. The settlements were reached
using a sale and lease back framework developed by Mondi and the South African Government which
ensures that title to the land is transferred to the various claimant communities, that Mondi is paid a fair price
for the land and which secures a continued fibre supply for its mills.
Newsprint
Six months
Six months Six months ended 31
ended 30 ended 30 June December
EUR million June 2012 2011 2011
Segment revenue 83 80 84
of which inter-segment revenue 1 - -
EBITDA - 1 (6)
Underlying operating profit (3) (5) (13)
Capital expenditure 1 2 2
Net segment assets 66 100 59
ROCE (20.6%) (9.2%) (19.2%)
The Newsprint business made an operating loss of EUR3 million. Mondi Shanduka Newsprint benefited from
price increases during the period, which were sufficient to return the business to a modest level of profitability
in the second quarter and address electricity price increases for the year. Aylesford Newsprint was negatively
impacted by lower average selling prices as well as higher chemical and energy costs, offset by cost reduction
initiatives and a lower depreciation charge.
Financial review
Input costs
Lower input costs provided some offset to lower selling prices during the period. Lower wood costs were
experienced in general across central Europe, although this was offset by higher costs in Russia and South
Africa. Benchmark recovered fibre costs were approximately 10% lower on average than the comparable prior
year period. Prices were volatile throughout the period, increasing significantly off the lows at the end of 2011
through the first quarter, and subsequently weakening in the latter part of the period under review. Average
benchmark pulp prices were approximately 7% lower in euro terms (14% lower in US dollar terms) than the
comparable prior year period benefiting the European businesses in the Group that are net consumers of
pulp. Overall, the Group is around 95,000 tonnes long in pulp, resulting in a small negative impact on overall
Group profitability.
Higher energy costs impacted margins across the business. The coatings & consumer packaging business
benefited from lower average resin prices and other chemical input costs versus the comparable prior year
period, although prices did increase during the period under review.
Currency exposure
Currency effects were muted during the period with most production currencies at similar average levels
versus the euro to those of the second half of 2011 and weaker than levels of the comparable prior year
period. The stronger US dollar versus the euro has however had a positive impact across the Group, both on
dollar denominated exports, and due to the support offered to European pricing levels.
Non-controlling interests
Lower profitability in the Swiecie and Ruomberok mills, particularly in the first quarter of 2012, resulted in a
reduction in earnings attributable to holders of non-controlling interests in those entities. The acquisition of the
non-controlling interests in April and May in Mondi Swiecie S.A. further contributed to the reduction in earnings
attributable to holders of non-controlling interests. The full effect of this acquisition will be seen in the second
half of the year.
Special items
There were no significant special items during the period. A gain of EUR6 million was realised on the sale of land
in the South Africa Division and Mondi Shanduka Newsprint as part of their ongoing settlement of land claims.
Cash flow
Cash flow from operations of EUR353 million was negatively impacted by the lower profitability compared to the
prior year period as well as a net outflow due to increased working capital. Working capital as a percentage of
turnover increased during the period to 12.6%, due to normal seasonal effects as well as a build up of
inventory in anticipation of a number of planned maintenance shuts to take place in the second half of the
year.
Capital expenditure
Good progress is being made on the energy related investments in Syktyvkar, Stambolijski, Richards Bay and
Frantschach. The pulp dryer approved for Syktyvkar has been put on hold pending clarification of various
technical and financial parameters.
Capital expenditure in the period under review was at 67% of the Group's depreciation charge. This is
expected to increase in the second half of the year, and in subsequent years, to approximate the Group's
depreciation charge as expenditure on the various energy related investments ramps up.
Treasury and borrowings
Net debt of EUR1,273 million was EUR442 million higher than at 31 December 2011. This was impacted by the
acquisitions of both the non-controlling interest in Mondi Swiecie S.A., and of Saturn Management Sp. Z o.o.
(together EUR384 million). The net debt to trailing 12 month EBITDA ratio was 1.5 times and gearing was 31% at
30 June 2012. The Group's long-term investment grade credit ratings of Baa3 (Moody's Investor Services)
and BBB- (Standard and Poor's) were reaffirmed during the period.
In July 2012, Mondi secured a new two-year EUR250 million committed bank debt facility in order to fund the
proposed acquisition of Nordenia International AG.
Principal risks and uncertainties
It is in the nature of Mondi's business that the Group is exposed to risks and uncertainties which may have an
impact on future performance and financial results, as well as on its ability to meet certain social and
environmental objectives.
On an annual basis, the DLC executive committee and Boards conduct a formal systematic review of the most
significant risks and uncertainties and the Group's responses to those risks. These risks are assessed against
pre-determined risk tolerance limits, established by the Boards. Additional risk reviews are undertaken on an
ad-hoc basis for significant investment decisions and when changing business conditions dictate. The key
risks have been reviewed as part of the half-yearly results and remain consistent with those presented on
pages 24 and 25 of the 2011 integrated report and financial statements.
The Group believes that it has effective systems and controls in place to manage the key risks identified below
within the risk tolerance levels established by the Boards.
? 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.
? Cost and availability of a sustainable supply of fibre
Fibre (wood, pulp, recovered paper) is Mondi's most important raw material, comprising approximately
one-third of total input costs. Increases in the costs of any of these raw materials, or any difficulties in
procuring a sustainable supply of wood, pulp or recovered paper 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 FSC certified virgin fibre in Russia and South Africa, serve to mitigate these risks. It is the
Group's objective to acquire fibre (wood and pulp) from sustainable sources with internationally
credible certification and to avoid any illegal or controversial supply.
? Foreign currency exposure and exchange rate volatility
The location of a number of the Group's significant operations in a range of different countries 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 currency exposures are
to the US dollar, South African rand, Russian rouble, Czech koruna, Polish zloty, Swedish krona and
Turkish lira.
The Group's policy is to hedge balance sheet exposures against short-term currency volatility.
Furthermore, the Group's geographic diversification provides some level of protection.
? 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 with differing political, economic and legal systems. In
some countries, such systems are less predictable than in countries with more developed institutional
structures. Significant changes in the political, economic or legal landscape of any country in which
the Group is invested may have a material effect on the Group's operations in that country.
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.
? Employee attraction, retention and safety
The complexity of operations and geographic diversity of the Group demands high quality,
experienced employees in all operations.
Appropriate reward and retention strategies are in place to attract and retain talent at all levels of the
organisation. Mondi has a policy of working towards zero-harm. Incidents are fully investigated,
remedial actions taken and early warning indicators used to direct preventative work. Mondi adopts
internationally recognised safety and health management systems across all its operations.
? Capital intensive operations
Mondi operates large facilities, often in remote locations. The ongoing safety and sustainable
operation of such sites is critical to the success of the Group.
Mondi's management system ensures ongoing monitoring of all operations to ensure they meet the
requisite standards and performance requirements. A structured maintenance programme is in place
under the auspices of the Group technical director. Emergency preparedness and response
procedures are in place and subject to periodic drills. Mondi has adequate insurance in place to cover
material property damage, business interruption and liability risks.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance
and position are set out above. The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the financial statements.
Mondi's geographical spread, product diversity and large customer base mitigate potential risks of customer or
supplier liquidity issues. Ongoing initiatives by management in implementing profit improvement initiatives
which include plant optimisation, cost-cutting, and restructuring and rationalisation activities have consolidated
the Group's leading cost position in its chosen markets. Working capital levels and capital expenditure
programmes are strictly monitored and controlled.
The Group meets its funding requirements from a variety of sources. The availability of some of these facilities
is dependent on the Group meeting certain financial covenants all of which have been complied with. Mondi
had EUR584 million of undrawn committed debt facilities as at 30 June 2012 which should provide sufficient
liquidity in the medium term. In addition, subsequent to 30 June 2012, the Group has obtained a new, two-
year EUR250 million committed bank debt facility to fund the cash consideration of the purchase of Nordenia
International AG.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
including an assessment of the current macroeconomic environment, particularly in Europe, indicate that the
Group should be able to operate well within the level 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 the half-yearly financial statements.
Dividend
An interim dividend of 8.9 euro cents per share has been declared by the directors and will be paid on 18
September 2012 to those shareholders on the register of Mondi plc on 24 August 2012. An equivalent South
African rand interim dividend will be paid on 18 September 2012 to shareholders on the register of Mondi
Limited on 24 August 2012. 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 2011.
Outlook
The macroeconomic environment remains a concern, with continued soft demand evident in certain western
European markets. Encouragingly, demand in a number of the emerging markets to which the Group is
exposed remains firm, and positive supply side fundamentals in various of our core grades offer price support.
As such, we remain confident of delivering against our expectations for the full year.
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 2012 and a description of the principal risks and uncertainties for the remaining six months of the
year ending 31 December 2012; 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 2011.
David Hathorn Andrew King
Director Director
6 August 2012
Independent review report to the shareholders of Mondi Limited
Introduction
We have reviewed the Group's condensed combined and consolidated financial statements for the six months
ended 30 June 2012 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 requirements of 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
requirements of the Companies Act of South Africa.
Deloitte & Touche
Registered Auditor
Per Bronwyn Kilpatrick
Partner
Sandton
6 August 2012
Deloitte & Touche
Registered Auditors
Buildings 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton
Republic of South Africa
National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL
Kennedy Risk Advisory NB Kader Tax L Geeringh Consulting & Clients & Industries JK Mazzocco Talent &
Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of
the Board MJ Comber Deputy Chairman of the Board.
A full list of partners and directors is available on request.
B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code
Member of Deloitte Touche Tohmatsu Limited
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 2012 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 2012 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
6 August 2012
Condensed combined and consolidated income statement
for the six months ended 30 June 2012
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June Six months ended 30 June
2012 2011 Year ended 31 December 2011
Before Special After Before Special After Before Special After
special items special special items special special items special
EUR million Notes items (note 6) items items (note 6) items items (note 6) items
Continuing operations
Group revenue 4 2,840 - 2,840 2,942 - 2,942 5,739 - 5,739
Materials, energy and consumables
used (1,500) - (1,500) (1,528) - (1,528) (2,998) - (2,998)
Variable selling expenses (264) - (264) (257) - (257) (511) - (511)
Gross margin 1,076 - 1,076 1,157 - 1,157 2,230 - 2,230
Maintenance and other indirect
expenses (124) - (124) (133) - (133) (272) - (272)
Personnel costs (413) - (413) (417) - (417) (808) (4) (812)
Other net operating expenses (103) - (103) (81) 1 (80) (186) (2) (188)
Depreciation, amortisation and
impairments (167) - (167) (172) - (172) (342) (48) (390)
Operating profit/(loss) 4/5 269 - 269 354 1 355 622 (54) 568
Non-operating special items 6 - 6 6 - 3 3 - (1) (1)
Net income from associates 1 - 1 2 - 2 1 - 1
Total profit/(loss) from operations
and associates 270 6 276 356 4 360 623 (55) 568
Net finance costs (53) - (53) (60) - (60) (111) - (111)
Investment income 6 - 6 15 - 15 30 - 30
Foreign currency losses (3) - (3) (2) - (2) - - -
Finance costs 7 (56) - (56) (73) - (73) (141) - (141)
Profit/(loss) before tax 217 6 223 296 4 300 512 (55) 457
Tax (charge)/credit 8 (43) (2) (45) (59) - (59) (102) 2 (100)
Profit/(loss) from continuing
operations 174 4 178 237 4 241 410 (53) 357
Discontinued operation
Profit from discontinued operation 9 - 13 43
Profit for the financial period/year 178 254 400
Attributable to:
Non-controlling interests 25 42 70
Equity holders of the parent
companies 153 212 330
Condensed combined and consolidated income statement
for the six months ended 30 June 2012 (continued)
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June Six months ended 30 June
Notes 2012 2011 Year ended 31 December 2011
Earnings per share (EPS) for
profit attributable to equity
holders of the parent companies
From continuing operations
Basic EPS (EUR cents) 10 31.7 39.0 57.5
Diluted EPS (EUR cents) 10 31.6 38.5 56.8
Basic underlying EPS (EUR cents) 10 30.9 38.2 68.1
Diluted underlying EPS (EUR cents) 10 30.8 37.7 67.3
From continuing and
discontinued operations
Basic EPS (EUR cents) 10 31.7 41.6 66.1
Diluted EPS (EUR cents) 10 31.6 41.0 65.3
Basic headline EPS (EUR cents) 10 30.9 39.4 69.9
Diluted headline EPS (EUR cents) 10 30.8 38.9 69.1
Condensed combined and consolidated statement of comprehensive income
for the six months ended 30 June 2012
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
EUR million 2012 2011 December 2011
Profit for the financial period/year 178 254 400
Other comprehensive income
Items that may subsequently be reclassified to the combined and consolidated
income statement:
Effect of cash flow hedges 3 5 12
Exchange differences on translation of foreign operations 48 (84) (196)
Share of other comprehensive income of associates - (1) (1)
Tax effect thereof - (1) (4)
Items that will not subsequently be reclassified to the combined and consolidated
income statement:
Actuarial losses on post-retirement benefit schemes (35) (1) (18)
Surplus restriction on post-retirement benefit schemes 23 (1) (3)
Tax effect thereof 1 - 4
Other comprehensive income for the financial period/year, net of tax 40 (83) (206)
Total comprehensive income for the financial period/year 218 171 194
Attributable to:
Non-controlling interests 36 33 43
Equity holders of the parent companies 182 138 151
Condensed combined and consolidated statement of financial position
as at 30 June 2012
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
EUR million Notes 2012 2011 December 2011
Intangible assets 243 241 238
Property, plant and equipment 3,454 3,625 3,377
Forestry assets 306 299 297
Investments in associates 12 12 10
Financial asset investments 40 31 33
Deferred tax assets 5 11 5
Retirement benefits surplus 13 6 12 8
Derivative financial instruments 2 - 3
Total non-current assets 4,068 4,231 3,971
Inventories 666 726 637
Trade and other receivables 936 959 829
Current tax assets 5 8 6
Financial asset investments - - 1
Cash and cash equivalents 17b-c 60 33 191
Derivative financial instruments 5 4 10
Assets held for sale
Continuing operations 16 - 1 -
Discontinued operation 9 - 495 -
Total current assets 1,672 2,226 1,674
Total assets 5,740 6,457 5,645
Short-term borrowings 17c (319) (485) (286)
Trade and other payables (884) (989) (891)
Current tax liabilities (81) (84) (78)
Provisions (34) (45) (43)
Derivative financial instruments (5) (4) (8)
Total current liabilities (1,323) (1,607) (1,306)
Medium and long-term borrowings 17c (1,014) (748) (737)
Retirement benefits obligation 13 (217) (196) (202)
Deferred tax liabilities (317) (326) (310)
Provisions (33) (36) (35)
Derivative financial instruments (1) (10) -
Other non-current liabilities (20) (20) (20)
Liabilities directly associated with assets classified as held for sale
Discontinued operation 9 - (248) -
Total non-current liabilities (1,602) (1,584) (1,304)
Total liabilities (2,925) (3,191) (2,610)
Net assets 2,815 3,266 3,035
Equity
Ordinary share capital and stated capital 542 646 542
Retained earnings and other reserves 1,973 2,168 2,044
Total attributable to equity holders of the parent companies 2,515 2,814 2,586
Non-controlling interests in equity 300 452 449
Total equity 2,815 3,266 3,035
Condensed combined and consolidated statement of financial position
as at 30 June 2012 (continued)
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 6 August 2012 and were signed on their behalf by:
David Hathorn Andrew King
Director Director
Mondi Limited company registration number: 1967/013038/06
Mondi plc company registered number: 6209386
Condensed combined and consolidated statement of cash flows
for the six months ended 30 June 2012
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
EUR million Notes 2012 2011 December 2011
Cash generated from operations 17a 353 403 917
Dividends from associates - - 2
Income tax paid (45) (45) (85)
Net cash generated from operating activities 308 358 834
Cash flows from investing activities
Investment in property, plant and equipment (109) (126) (263)
Investment in intangible assets (3) (1) (5)
Proceeds from the disposal of property, plant and equipment and intangible
assets 5 7 9
Investment in forestry assets (29) (23) (42)
Investment in financial asset investments (4) (7) (13)
Proceeds from the sale of financial asset investments 4 7 8
Acquisition of subsidiaries, net of cash and cash equivalents 15 (34) (12) (12)
Acquisition of associates, net of cash and cash equivalents - - (2)
Proceeds from the disposal of subsidiaries, net of cash and cash
equivalents 1 14 17
Disposal of discontinued operation's cash and cash equivalents - - (38)
Loan advances to related parties (8) (1) -
Loan repayments from/(advances to) external parties - 1 (1)
Interest received 2 5 9
Other investing activities - - 2
Net cash used in investing activities (175) (136) (331)
Cash flows from financing activities
Repayment of short-term borrowings 17c (52) (13) (135)
Proceeds from medium and long-term borrowings 17c 291 13 123
Repayment of medium and long-term borrowings 17c (51) (112) (127)
Interest paid (60) (75) (106)
Dividends paid to non-controlling interests 12 (29) (40) (43)
Dividends paid to equity holders of the parent companies 12 (85) (86) (126)
Purchases of treasury shares
