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MND / MNP - Mondi / Mondi Plc - Half-yearly results for the six months ended 30

Release Date: 10/08/2010 08:09
Code(s): MND MNP
Wrap Text

MND / MNP - Mondi / Mondi Plc - Half-yearly results for the six months ended 30 June 2010 Mondi Limited (Incorporated in the Republic of South Africa) (Registration number: 1967/013038/06) JSE share code: MND ISIN: ZAE000097051 Mondi plc (Incorporated in England and Wales) (Registration number: 6209386) JSE share code: MNP ISIN: GB00B1CRLC47 LSE share code: MNDI As part of the dual listed company structure, Mondi Limited and Mondi plc (together `Mondi Group`) notify both the JSE Limited and the London Stock Exchange of matters required to be disclosed under the JSE listings requirements and/or the Disclosure and Transparency and Listing Rules of the United Kingdom Listing Authority. Half-yearly results for the six months ended 30 June 2010 Financial summary EUR million Six months Six months Half-yearly ended 30 ended 30 change %
June 2010 June 2009 Group revenue 3,033 2,614 16 EBITDA1 405 308 31 Underlying operating profit2 222 138 61 Underlying profit before tax3 176 81 117 Profit/(loss) before tax6 177 (1) n/m7 Basic earnings/(loss) per share (EUR cents)4 21.5 (7.1) n/m7 Underlying earnings per share (EUR cents)4 20.3 8.3 145 Headline earnings/(loss) per share (EUR cents)4 24.8 (0.8) n/m7 Interim dividend per share (EUR cents) 3.5 2.5 40 Cash generated from operations 269 392 (31) Net debt 1,632 1,661 (2) Group Return on Capital Employed (ROCE)5 9.5% 7.4% 28 Notes: 1 EBITDA is operating profit of subsidiaries and joint ventures before special items, depreciation and amortisation. 2 Underlying operating profit is operating profit of subsidiaries and joint ventures before special items. 3 Underlying profit before tax is reported profit before tax before special items. 4 The Group has presented underlying earnings per share to exclude the impact of special items, and headline earnings per share in accordance with circular 3/2009 `Headline Earnings` as issued by the South African Institute of Chartered Accountants. 5 Group return on capital employed (ROCE) is an annualised measure based on a 12 month trailing underlying operating profit plus share of associates net earnings divided by average trading capital employed before impairments and adjusted for major capital projects not yet commissioned. 6 Profit/(loss) before tax is reported after special items of EUR1 million. 7 n/m - not measureable. Highlights Underlying operating profit up 61%, driven by a strong performance from the Europe & International Division Sustained improvement in order inflows, volumes and prices across all key paper grades Improving performance in South Africa Division Restructuring of European Corrugated business completed Major capital project in Russia on schedule for completion in second half Successful issuance of inaugural EUR500 million Eurobond, used to pay down existing debt Interim dividend up 40% at 3.5 euro cents per share David Hathorn, Mondi Group chief executive, said: "Mondi achieved a pleasing result in the period against a backdrop of improving market conditions, supported by a particularly strong performance from the European Uncoated Fine Paper business. The outcome bears testament to our robust business model, which encompasses leading market positions in higher growth emerging markets, low-cost operations and a relentless focus on performance. Despite cost pressures, the positive pricing momentum witnessed in Europe since the beginning of the fourth quarter of 2009 in most of the Group`s key grades should see the business continue to deliver a strong performance in the second half. The South Africa Division should benefit from the further management actions taken to improve profitability, although much depends on the outlook for the rand and export pulp prices. While the sustainability of the economic recovery remains uncertain, we believe the Group is well positioned to continue benefiting from the current positive trading environment." Contact details Mondi Group David Hathorn +27 (0)11 994 5418 Andrew King +27 (0)11 994 5415 Lora Rossler +27 (0)31 451 2040 / +27 (0)83 627 0292 Financial Dynamics Richard Mountain +44 20 7269 7186 / +44 20 7909 684 466 Chloe Webb +27 (0)11 214 2421 Conference call dial-in and audio cast details Please see below details of our dial-in conference call and audio cast that will be held at 10:00 (UK) and 11:00 (SA). The conference call dial-in numbers are: South Africa 0800 200 648 (toll-free) UK 0800 917 8183 (toll-free) Europe & Other 0800 246 78 700 (toll-free) An online audio cast facility will be available via: www.mondigroup.com/HYResults10. Password: HYResults10. The presentation will be available online via the above website address before the audio cast commences. Questions can be submitted via the dial-in conference call or by e-mail via the audio cast. Should you have any issues on the day with accessing the dial-in conference call, please call +27 (0)11 535 3600. Should you have any issues on the day with accessing the audio cast, please e-mail mondi@kraftwerk.co.at and you will be contacted immediately. An audio recording of the presentation will be available on Mondi`s website during the afternoon of 10 August 2010. Editors` notes Mondi is an international paper and packaging company, with production operations across 31 countries and revenues of EUR5.3 billion in 2009. The Group`s key operations are located in central Europe, Russia and South Africa and employed 31,000 people on average in 2009. Mondi is fully integrated across the paper and packaging process, from the growing of wood and the manufacture of pulp and paper (including recycled paper), to the conversion of packaging papers into corrugated packaging and industrial bags. The Group is principally involved in the manufacture of uncoated fine paper (UFP), packaging paper and converted packaging products, as well as speciality products. Mondi has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker code MND and a premium listing on the London stock exchange for Mondi plc, under the ticker code MNDI. The Group has been recognised for its sustainability performance through its inclusion in the FTSE4Good UK, Europe and Global indices in 2008 and 2009 and the JSE`s Socially Responsible Investment (SRI) Index in 2007, 2008 and 2009. Forward-looking statements This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi`s financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Mondi`s present and future business strategies and the environment in which Mondi will operate in the future. Among the important factors that could cause Mondi`s actual results, performance or achievements to differ materially from those in the forward-looking statements include, but are not limited to, those discussed under Principal risks and uncertainties, below. These forward-looking statements speak only as of the date on which they are made. Mondi expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Mondi`s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Group performance review The Group`s underlying operating profit of EUR222 million was 61% up on the comparable prior year period and 42% up on the result of the second half of the prior year. Order inflows and sales volumes continue to improve and price increases were achieved across all key paper grades. Furthermore, the benefits of the significant restructuring actions and cost reduction initiatives implemented through the economic downturn supported the strong recovery in profitability. Ongoing profit improvement initiatives have yielded a further EUR75 million during the first half which, at 2.9% of our cost base, continue to exceed targets. Rising commodity input costs partially offset revenue gains. Currency movements had a mixed impact on the Group`s results. The stronger rand eroded export margins in South Africa whilst exports from Europe benefited from the weaker euro against the dollar. Other emerging European currencies strengthened against the euro in the first quarter of the year placing pressure on the export focussed operations in Poland and the Czech Republic, although this trend reversed in the second quarter. Underlying earnings per share was 20.3 cents, an increase of 145% on the comparable prior year period. An interim dividend of 3.5 euro cents, up 40% on the prior year interim dividend, will be paid. During the first quarter, Mondi concluded the sale of the 170,000 tonne Frohnleiten recycled containerboard mill in Austria. During May, the Group`s western European corrugated packaging and recycled containerboard restructuring programme concluded with the sale of its corrugated box plants in the UK to Smurfit Kappa. The Group also acquired Smurfit Kappa`s industrial and consumer bag operations in Spain, France and Italy. These operations will be restructured and some of the plants may be rationalised with our existing plants. The sale of the Europapier paper merchant business to the Heinzel Group announced in early May 2010 remains subject to approval by the relevant competition authorities. Net debt at 30 June 2010 increased from 31 December 2009 by EUR115 million to EUR1.63 billion. Robust EBITDA generation was offset primarily by an increase in working capital (in line with growth in revenue), ongoing funding for the EUR545 million Russian expansion project and foreign exchange movements. In March 2010, the Group issued a seven year Eurobond of EUR500 million at a coupon of 5.75%, the proceeds of which were used to settle existing short and medium term debt and consequently increased the average maturity of the Group`s debt. The Group`s financial position remains robust with net assets increasing to EUR3.1 billion on the back of higher working capital and exchange impacts on translation into euro. The Group retains adequate borrowing facilities. Europe & International Division EUR million Six months Six months Half-yearly
ended 30 ended 30 change % June 2010 June 2009 Segment revenue 2,372 2,063 15 - of which inter-segment revenue 61 53 15 EBITDA 336 238 41 Underlying operating profit 201 108 86 Uncoated Fine Paper 98 71 38 Corrugated 48 1 n/m Bags & Coatings 55 36 53 Capital expenditure 159 272 (42) Net segment assets 3,822 3,620 6 ROCE (%) 12.2% 7.3% 67 Underlying operating profit of EUR201 million was 86% higher than that of the comparable prior year period with ROCE, on a twelve month trailing basis, increasing to 12.2%. The improved result was due to good demand across all businesses, higher prices in all paper grades and the benefit of previously implemented profit improvement initiatives. Profit improvement initiatives have yielded EUR59 million to date partially offsetting increased input costs, particularly wood, pulp and recovered paper. The extended shut at the Syktyvkar plant in Russia as part of the final integration of the expansion project, together with the planned maintenance shuts at a number of the pulp and paper mills in the traditionally slower European summer months, will impact results in the second half of the year. Uncoated Fine Paper The operating profit of EUR98 million was 38% up on the comparable prior year period, giving a very strong ROCE, on a twelve month trailing basis, of 17.5%. This excellent performance, following a strong second half in the previous year, reflects a continued positive trading environment with both prices and volumes increasing. This was supported by a pleasing operating performance with all mills achieving record production volumes. The Russian operation, Syktyvkar, performed particularly well, supported by a positive contribution from the recently rebuilt uncoated fine paper machine. Selling prices have increased with benchmark cut-size office paper prices increasing by around 5% from 31 December 2009 levels. Further price increases have been announced in the second half, supported by continued input cost pressures particularly for the non-integrated producers, and the weakness of the euro relative to the dollar. With average pulp prices increasing during the period, by 24% for softwood and 32% for hardwood in US dollar terms when compared to the second half of the previous year, the larger mills benefited from their backward integration. The non-integrated mills, despite achieving price increases, could not entirely offset the higher pulp prices. The major capital project in Syktyvkar, Russia is expected to be completed and integrated into the existing mill during an extended shut in the second half. The impact of the shut on the second half operating profit contribution from Syktyvkar is estimated at around EUR20 million. Corrugated The Corrugated business achieved a significant improvement in underlying operating profit to EUR48 million, benefiting from the new recycled containerboard machine at Swiecie, restructuring and cost reduction initiatives, and improved product prices and volumes. Average increases of around 23% compared to the second half of the prior year were seen for benchmark recycled containerboard prices, supported by significant input cost pressures (recovered paper prices increased by 52% in the period). Although sales volumes increased, price increases achieved in the corrugated box plants were not sufficient to recover the increased paper input costs. Further box price increases are anticipated in the second half of the year. The restructuring of the Corrugated business was concluded during the first half with the sale of the UK box plants to Smurfit Kappa in May 2010 and the recycled containerboard mill in Austria to the Prinzhorn Group. The business is now well positioned to focus on its core central and south eastern European markets, with leading market positions in the high growth markets of Poland and Turkey. The containerboard mills in Poland, Germany and Turkey provide the Group with a competitive paper asset base serving the Group`s integrated converting network in these regions. Having started up in September 2009, the 470,000 tonne recycled containerboard machine in Swiecie, Poland is performing ahead of plan, with production of 197,000 tonnes in the first half, and full year production from this machine expected to be around 400,000 to 410,000 tonnes including the impact of a maintenance shut in the second half. Bags & Coatings The Bags & Coatings business achieved an underlying operating profit of EUR55 million, an increase of 53% on the comparable prior year period. This reflects both improved sales volumes and increased kraft paper prices. Significant kraft paper selling price increases of around 10% on average compared to the second half of the prior year were achieved in the period, more than offsetting the sharp rise in input costs, particularly wood costs. Further selling price increases have been announced and are expected to be implemented during the third quarter. While demand in the Group`s core European markets has recovered from a low base, supported by some restocking, very strong demand growth is being seen in export markets. In response, the 80,000 tonne Stambolijski kraft paper machine was restarted in June 2010, having been mothballed during the previous year. Volumes remain strong in the bag converting segment, up 12% on the comparable period in the prior year. However, more than half of the sales volume is sold under annual fixed price contracts, leading to short-term margin pressures in this segment as paper input costs increase. The acquisition of the Smurfit Kappa bag plants provides the Group with stronger market positions in Spain, France and Italy. Although these newly acquired plants are currently operating at a loss, restructuring and potential rationalisation with our existing plants is planned for the coming months and they are expected to contribute positively to the Group`s performance from 2011. Robust volume increases in Coatings, Consumer Bags & Films have resulted in a significant increase in underlying operating profit, although Consumer Bags & Films remains under some pressure from rising polymer prices. South Africa Division EUR million Six months Six months Half-yearly ended 30 ended 30 change % June 2010 June 2009 Segment revenue 276 249 11 - of which inter-segment revenue 107 113 (5) EBITDA 44 48 (8) Underlying operating profit 18 28 (36) Uncoated Fine Paper 14 13 8 Containerboard 4 15 (73) Capital expenditure 9 13 (31) Net segment assets 932 868 7 ROCE (%) 3.1% 13.5% (77) A decrease of 36% in underlying operating profit on the comparable prior year period reflects somewhat disappointing results partially due to the strength of the rand and consequently lower export margins. ROCE, on a twelve month trailing basis, at 3.1%, remains well below targeted levels. The results are however significantly better than the weak second half of 2009. Sales prices improved across all products with pulp being the main contributor during the period. Increasing labour and input, particularly electricity, costs will impact results in the second half. The decision has been taken to exit the uncoated fine paper export market due to poor profitability and to focus on the domestic and African markets. The mothballing of the 120,000 tonne uncoated fine paper machine and related equipment in Merebank, along with a restructuring programme, is expected to be concluded during the second half of the year. This restructuring and the associated increased sales of pulp are expected to result in an improved second half performance, notwithstanding an apparent weakening in global pulp markets. Mondi Packaging South Africa (MPSA) EUR million Six months Six months Half-yearly ended 30 ended 30 change %
June 2010 June 2009 Segment revenue 298 227 31 - of which inter-segment revenue 16 13 23 EBITDA 33 23 43 Underlying operating profit 18 11 64 Capital expenditure 14 6 133 Net segment assets 368 342 8 ROCE (%) 12.9% 7.3% 77 MPSA achieved a 64% increase in operating profit to EUR18 million off the low base of the comparable prior year period giving a ROCE, on a twelve month trailing basis, of 12.9%. The improvement reflects an approximately 10% increase in sales volumes and the benefits of significant cost savings. The euro result was also enhanced by translation at a stronger rand exchange rate. In local currency terms, the increase in underlying operating profit was 37%. With its exposure to the agricultural sector, coupled with price increases expected to take effect during the second half, the second half of the year is expected to be stronger than the first. Newsprint EUR million Six months Six months Half-yearly ended 30 ended 30 change %
June 2010 June 2009 Segment revenue 271 254 7 - of which inter-segment revenue - - - EBITDA 8 16 (50) Underlying operating profit 1 8 (88) Capital expenditure 2 2 - Net segment assets1 108 218 (50) ROCE (%) 2.2% 2.9% (24) Note: 1 Excluding assets of Europapier business, classified as held for sale. The Newsprint business reflected a significant decline in underlying operating profit to EUR1 million mainly due to a disappointing performance at Aylesford Newsprint. Aylesford Newsprint experienced reduced sales volumes and prices and an operating loss resulted. Sales price increases of around GBP20/tonne are being implemented during the second half of the year, although this is not likely to lead to a significant improvement in profitability due to ongoing input cost pressures. Mondi Shanduka Newsprint`s underlying operating profit was marginally lower than the comparable prior year period mainly resulting from increasing raw material costs. The European merchant business, Europapier, performed well, benefiting from increased selling prices and volumes. The sale of Europapier is expected to be concluded in the second half of the year, pending competition clearance. Input costs and currency exposure All fibre input costs have seen significant increases in the first half of the year. Procured pulp wood prices in central Europe are up significantly versus the comparable prior year period on the back of increased demand from bio-mass energy producers and reduced supply due to the closure of sawmilling operations in the region. Average pulp prices, exacerbated by supply disruptions due to the Chilean earthquake, have increased by 24% for softwood and 32% for hardwood during the period when compared to the second half of the prior year. Strong Chinese demand in the first quarter drove rapid price escalations in European recovered paper markets. The average benchmark price of recovered paper increased by 52%, when compared to the second half of the previous year. Mondi benefits from its structural position in South Africa and Russia due to integration into wood supply. The Group`s integrated pulp and paper mills reduce the impact of pulp price escalations, with the Group, on an annualised basis, being net short of around 135,000 tonnes of pulp following the recent restructuring announcements. Restructuring initiatives and a relentless focus on cost reduction and productivity improvement further mitigate the impact of input cost pressures. Financial review Special items The special items, as more fully set out in the notes to the half-yearly financial statements, include: closure of the paper machine and related restructuring provisions in South Africa; reversal of previously recognised closure provisions no longer required following the sale of the Szolnok site; reversal of impairment and related closure provisions of the Stambolijski mill following its start-up in June 2010; partial impairment of underperforming kraft paper assets in Lohja and Ruzomberok; gain on acquisition of the industrial bags plants in western Europe which will be subject to future restructuring; loss on disposal of the corrugated packaging plants in the UK; profit on sale of forestry assets in South Africa; and write-down of assets and recognition of expected loss on disposal of the Europapier business. Finance costs Net finance costs of EUR48 million were lower than those of the comparable prior year period mainly due to exchange rate gains on foreign currency debt and a reduction in interest rates in some locations. The higher interest rate of the Eurobond when compared to existing short-term facilities, as well as a reduction in interest capitalised to major projects, will increase finance costs in the second half of the year. Tax A reduction in the underlying effective tax rate from 32% to 26% is realised primarily due to the improved profitability enabling the use of previously unrecognised tax losses carried forward; increased profitability in regions with lower tax rates; and benefits of tax incentives granted in certain countries in which the Group operates, notably those related to the major Polish and Russian capital projects. Cash flow As expected, cash flow generated from operating activities was negatively impacted by an increase in working capital attributable to the significantly increased revenue. Working capital, as a percentage of annualised revenue, moved up from 10.0% at 31 December 2009 to 10.7% at 30 June 2010. Despite this, cash generated from operating activities amounted to EUR235 million. Capital expenditure of EUR184 million, including EUR75 million on our major project in Russia, was incurred. Outside of our major projects in Russia and Poland, capital expenditure remains at 51% of depreciation reflecting a continued conservative approach to investment. Treasury and borrowings Net debt at 30 June 2010 was EUR1.6 billion, an increase of EUR115 million from the prior year end. Excluding the impact of exchange rate movements, net debt was largely unchanged from the year end position, despite the ongoing major capital expenditure project in Russia and the investment in working capital. The net debt to trailing 12 month EBITDA ratio was 2.2 times and the headroom in the Group`s syndicated EUR1.55 billion facility increased to EUR1.2 billion. During March, Mondi successfully launched a EUR500 million, seven year Eurobond, further strengthening the Group`s already robust financial position as evidenced by the long-term corporate credit ratings received of Baa3 from Moody`s Investor Service and BB+ from Standard & Poor`s, both with a stable outlook. Following the launch of the Eurobond, a large proportion of the Group`s debt, 78%, is at fixed rates of interest for varying terms. Interest rates have remained largely unchanged in the period under review. The average maturity of committed debt facilities is 3.1 years (compared to 2.2 years at the end of the previous year) and drawn committed debt facilities maturing over the next 12 months amount to EUR83 million. Dividend A dividend of 3.5 euro cents per share has been declared by the directors and will be paid on 14 September 2010 to those shareholders on the register of Mondi plc on 27 August 2010. An equivalent South African rand interim dividend will be paid on 14 September 2010 to shareholders on the register of Mondi Limited on 27 August 2010. Outlook Despite cost pressures, the positive pricing momentum witnessed in Europe since the beginning of the fourth quarter of 2009 in most of the Group`s key grades should see the business continue to deliver a strong performance in the second half. The South Africa Division should benefit from the further management actions taken to improve profitability, although much depends on the outlook for the rand and export pulp prices. While the sustainability of the economic recovery remains uncertain, we believe the Group is well positioned to continue benefiting from the current positive trading environment. Supplementary information Going concern An improvement in trading conditions is evident although some risks remain in specific locations and business segments. This is mitigated by Mondi`s geographical spread, product diversity and large customer base. Through ongoing initiatives of cost management, prudent capital investment, stringent working capital targets and restructuring and rationalisation of assets where appropriate, Mondi has a leading cost position in its chosen markets. The Group maintains adequate undrawn borrowing facilities (EUR1.4 billion at 30 June 2010) and the average maturity of its debt is approximately three years, thus providing sufficient short and medium term liquidity. The Group`s forecasts, taking into account reasonably possible changes in trading performance, show that Mondi will be able to operate well within the levels of its current facilities and related covenants. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis continues to be adopted in preparing financial reports. Principal risks and uncertainties It is in the nature of its business that Mondi is exposed to risks and uncertainties that may have an impact on future performance and financial results, as well as on its ability to meet certain social and environmental objectives. The Group believes that it has effective systems and controls in place to manage the key risks identified below. The key risks identified remain consistent with those presented on pages 31 and 32 of the 2009 annual report. Mondi operates in a highly competitive environment The paper and packaging markets are highly competitive. Mondi is flexible and responsive to changing market and operating conditions and the geographical and product diversification provides some measure of protection. Uncertain trading conditions may impact the carrying value of goodwill and tangible assets and may necessitate further restructuring. Input costs are subject to significant fluctuations Significant fluctuations in raw material costs, particularly wood, pulp and recovered paper, have been experienced during the first half of the year. The Group`s relatively high level of integration and access to its own fibre in Russia and South Africa, coupled with the focus on operational performance, serve to mitigate these risks. Significant capital investments including acquisitions carry project risk The capital investment programme in Russia is largely completed and indications are that the project will be completed during the second half of 2010. The acquisition of the industrial bag operations in Spain, France and Italy will require some restructuring in order to generate the required returns. Directors` responsibility statement The directors confirm that to the best of their knowledge: the condensed set of combined and consolidated financial statements has been prepared in accordance with International Financial Reporting Standards and in particular with International Accounting Standard 34, `Interim Financial Reporting`; the half-yearly report includes a fair review of the important events during the six months ended 30 June 2010 and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2010; and there have been no significant individual related party transactions during the first six months of the financial year and nor have there been any significant changes in the Group`s related party relationships from those reported in the Group`s annual financial statements for the year ended 31 December 2009. David Hathorn Andrew King Director Director 9 August 2010 Independent review report to the members of Mondi Limited Introduction We have reviewed the Group`s condensed combined and consolidated financial statements for the six months ended 30 June 2010 which comprise the condensed combined and consolidated income statement, the condensed combined and consolidated statement of comprehensive income, the condensed combined and consolidated statement of financial position, the condensed combined and consolidated statement of cash flows and the condensed combined and consolidated statement of changes in equity, the summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and presentation of these condensed combined and consolidated financial statements in accordance with International Accounting Standards on Interim Financial Reporting (IAS 34) and the Companies Act of South Africa. Our responsibility is to express a conclusion on these Group condensed combined and consolidated financial statements based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, `Review of Interim Financial Information Performed by the Independent Auditor of the Entity`. A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the Group`s interim condensed combined and consolidated financial statements is not prepared, in all material respects, in accordance with International Accounting Standards on Interim Financial Reporting (IAS 34) and the Companies Act of South Africa. Bronwyn Kilpatrick Partner Sandton 9 August 2010 Deloitte & Touche Registered Auditors Buildings 1 and 2, Deloitte Place, The Woodlands Woodlands Drive, Woodmead, Sandton Republic of South Africa National Executive G G Gelink Chief Executive A E Swiegers Chief Operating Officer G M Pinnock Audit DL Kennedy Tax, Legal and Risk Advisory L Geeringh Consulting L Bam Corporate Finance CR Beukman Finance T J Brown Clients & Markets N T Mtoba Chairman of the Board A full list of partners and directors is available on request. Independent review report to the members of Mondi plc We have been engaged by the Company to review the condensed combined and consolidated financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the condensed combined and consolidated income statement, the condensed combined and consolidated statement of comprehensive income, the condensed combined and consolidated statement of financial position, the condensed combined and consolidated statement of cash flows, the condensed combined and consolidated statement of changes in equity and related notes 1 to 19. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed financial statements. This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, `Review of Interim Financial Information Performed by the Independent Auditor of the Entity`, issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Respective responsibilities of directors and auditors The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the Disclosure and Transparency Rules of the United Kingdom`s Financial Services Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, `Interim Financial Reporting`, as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of the review of the condensed financial statements We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, `Review of Interim Financial Information Performed by the Independent Auditor of the Entity`, issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom`s Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditors London, United Kingdom 9 August 2010 Note: A review does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial information since first published. These matters are the responsibility of the directors but no control procedures can provide absolute assurance in this area. Condensed combined and consolidated income statement for the six months ended 30 June 2010 (Reviewed) Six months ended 30 June 2010 Before Special After
special items special Notes items (note 6) items EUR million Group revenue 4 3,033 - 3,033 Materials, energy and consumables (1,624) - (1,624) used Variable selling expenses (277) - (277) Gross margin 1,132 - 1,132 Maintenance and other indirect (132) - (132) expenses Personnel costs (458) (2) (460) Other net operating expenses (137) 56 (81) Depreciation, amortisation and (183) (18) (201) impairments Operating profit/(loss) 4/5 222 36 258 Net (loss)/profit on disposals 6 - (22) (22) Impairment of assets held for sale 6 - (13) (13) Net income from associates 2 - 2 Total profit/(loss) from operations 224 1 225 and associates Investment income 16 - 16 Foreign currency gains/(losses) 11 - 11 Interest expense 7 (75) - (75) Net finance costs (48) - (48) Profit/(loss) before tax 176 1 177 Tax (charge)/credit 8 (46) 4 (42) Profit/(loss) from continuing 130 5 135 operations Attributable to: Non-controlling interests 27 (1) 26 Equity holders of the parent 103 6 109 companies (Reviewed) Six months ended 30 June 2009 Before Special After special items special
items (note 6) items EUR million Group revenue 2,614 - 2,614 Materials, energy and consumables (1,387) - (1,387) used Variable selling expenses (225) - (225) Gross margin 1,002 - 1,002 Maintenance and other indirect (111) - (111) expenses Personnel costs (430) (11) (441) Other net operating expenses (153) (32) (185) Depreciation, amortisation and (170) (36) (206) impairments Operating profit/(loss) 138 (79) 59 Net (loss)/profit on disposals - 5 5 Impairment of assets held for sale - (8) (8) Net income from associates 1 - 1 Total profit/(loss) from operations 139 (82) 57 and associates Investment income 15 - 15 Foreign currency gains/(losses) (2) - (2) Interest expense (71) - (71) Net finance costs (58) - (58) Profit/(loss) before tax 81 (82) (1) Tax (charge)/credit (27) 4 (23) Profit/(loss) from continuing 54 (78) (24) operations Attributable to: Non-controlling interests 12 - 12 Equity holders of the parent 42 (78) (36) companies (Audited)
Year ended 31 December 2009 Before Special After special items special items (note 6) items
EUR million Group revenue 5,257 - 5,257 Materials, energy and consumables (2,768) - (2,768) used Variable selling expenses (472) - (472) Gross margin 2,017 - 2,017 Maintenance and other indirect (241) - (241) expenses Personnel costs (838) (24) (862) Other net operating expenses (293) (14) (307) Depreciation, amortisation and (351) (90) (441) impairments Operating profit/(loss) 294 (128) 166 Net (loss)/profit on disposals - 3 3 Impairment of assets held for sale - (8) (8) Net income from associates 2 - 2 Total profit/(loss) from operations 296 (133) 163 and associates Investment income 27 - 27 Foreign currency gains/(losses) (1) - (1) Interest expense (140) - (140) Net finance costs (114) - (114) Profit/(loss) before tax 182 (133) 49 Tax (charge)/credit (58) 6 (52) Profit/(loss) from continuing 124 (127) (3) operations Attributable to: Non-controlling interests 29 1 30 Equity holders of the parent 95 (128) (33) companies Earnings per share (EPS) for profit /(loss) attributable to equity holders of the parent companies Basic EPS (EUR cents) 9 21.5 (7.1) (6.5) Diluted EPS (EUR cents) 9 21.2 (7.1) (6.5) Basic underlying EPS (EUR cents) 9 20.3 8.3 18.7 Diluted underlying EPS (EUR cents) 9 20.0 8.1 18.2 Basic headline EPS (EUR cents) 9 24.8 (0.8) 11.4 Diluted headline EPS(EUR cents) 9 24.5 (0.8) 11.1 Condensed combined and consolidated statement of comprehensive income for the six months ended 30 June 2010 (Reviewed) (Reviewed) (Audited) Six months Six months Year ended 31 EUR million ended 30 June ended 30 June December 2010 2009 2009 Profit /(loss) for the financial period/year 135 (24) (3) Other comprehensive income: Fair value gains on cash flow hedges 6 14 26 Actuarial (losses)/ gains and surplus restriction on post-retirement benefit (9) 1 7 schemes Fair value gains on available-for-sale investments - - 1 Exchange gains on translation of foreign operations 171 72 118 Share of other comprehensive income of associates - 1 1 Tax relating to components of other comprehensive income 2 (1) (7) Other comprehensive income for the financial period/year, net of tax 170 87 146 Total comprehensive income for the financial period/year 305 63 143 Attributable to: Non-controlling interests 36 14 39 Equity holders of the parent companies 269 49 104 Condensed combined and consolidated statement of financial position as at 30 June 2010 (Reviewed) EUR million Notes As at 30 June 2010 Intangible assets 314 Property, plant and equipment 3,990 Forestry assets 290 Investments in associates 6 Financial asset investments 33 Deferred tax assets 31 Retirement benefits surplus 11 13 Total non-current assets 4,677 Inventories 688 Trade and other receivables 1,083 Current tax assets 19 Cash and cash equivalents 15b-c 77 Derivative financial instruments 13 Total current assets 1,880 Assets held for sale 14 172 Total assets 6,729 Short-term borrowings 15c (217) Trade and other payables (1,123) Current tax liabilities (75) Provisions (50) Derivative financial instruments (4) Total current liabilities (1,469) Medium and long-term borrowings 15c (1,492) Retirement benefits obligation 11 (202) Deferred tax liabilities (334) Provisions (35) Other non-current liabilities (21) Derivative financial instruments (23) Total non-current liabilities (2,107) Liabilities directly associated with assets classified as held for sale 14 (60) Total liabilities (3,636) Net assets 3,093 Equity Ordinary share capital 114 Share premium 532 Retained earnings and other reserves 2,006 Total attributable to equity holders of the parent companies 2,652 Non-controlling interests in equity 441 Total equity 3,093 (Reviewed) (Audited) EUR million As at 30 June As at 31 2009 December 2009 Intangible assets 321 308 Property, plant and equipment 3,769 3,847 Forestry assets 268 251 Investments in associates 8 6 Financial asset investments 24 27 Deferred tax assets 43 29 Retirement benefits surplus - 8 Total non-current assets 4,433 4,476 Inventories 611 617 Trade and other receivables 1,075 933 Current tax assets 23 16 Cash and cash equivalents 171 123 Derivative financial instruments 15 7 Total current assets 1,895 1,696 Assets held for sale 22 36 Total assets 6,350 6,208 Short-term borrowings (435) (219) Trade and other payables (1,013) (1,023) Current tax liabilities (46) (55) Provisions (47) (40) Derivative financial instruments (40) (32) Total current liabilities (1,581) (1,369) Medium and long-term borrowings (1,397) (1,421) Retirement benefits obligation (184) (184) Deferred tax liabilities (329) (316) Provisions (48) (45) Other non-current liabilities (14) (21) Derivative financial instruments (47) (19) Total non-current liabilities (2,019) (2,006) Liabilities directly associated with assets classified as held for sale (3) (9) Total liabilities (3,603) (3,384) Net assets 2,747 2,824 Equity Ordinary share capital 114 114 Share premium 532 532 Retained earnings and other reserves 1,707 1,753 Total attributable to equity holders of the parent companies 2,353 2,399 Non-controlling interests in equity 394 425 Total equity 2,747 2,824 The Group`s condensed combined and consolidated financial statements, and related notes 1 to 19, were approved by the Boards and authorised for issue on 9 August 2010 and were signed on its behalf by: David Hathorn Andrew King Director Director Mondi Limited company registration number: 1967/013038/06 Mondi plc company registration number: 6209386 Condensed combined and consolidated statement of cash flows for the six months ended 30 June 2010 (Reviewed)
EUR million Notes Six months ended 30 June 2010 Cash generated from operations 15a 269 Dividends from associates 2 Income tax paid (36) Net cash generated from operating activities 235 Cash flows from investing activities Acquisition of subsidiaries, net of cash and cash equivalents 13 11 Non-controlling interests bought out (4) Proceeds from disposal of subsidiaries, net of cash and cash equivalents 64 Proceeds from disposal of associates - Investment in property, plant and equipment (184) Proceeds from the disposal of property, plant and equipment 6 Investment in forestry assets (21) Investment in intangible assets (1) Investment in financial asset investments (1) Proceeds from the sale of financial asset investments 2 Loan (advances to)/repayments from related parties (4) Loan repayments from external parties - Interest received 4 Other investing activities - Net cash used in investing activities (128) Cash flows from financing activities Repayment of short-term borrowings 15c (95) Proceeds from medium and long-term borrowings 15c 527 Repayment of medium and long-term borrowings 15c (452) Interest paid (60) Dividends paid to non-controlling interests 10 (17) Dividends paid to equity holders of the parent companies 10 (36) Purchases of treasury shares (1) Contribution by non-controlling interests - Net realised (loss)/gain on cash and asset management swaps (61) Other financing activities - Net cash used in financing activities (195) Net decrease in cash and cash equivalents (88) Cash and cash equivalents at beginning of financial period/year1 15c 37 Cash movement in the financial period/year 15c (88) Reclassification 15c (1) Effects of changes in foreign exchange rates 15c (6) Cash and cash equivalents at end of financial period/year1 (58) (Reviewed) (Audited) EUR million Six months Year ended 31 ended 30 June December
2009 2009 Cash generated from operations 392 867 Dividends from associates - 2 Income tax paid (18) (32) Net cash generated from operating activities 374 837 Cash flows from investing activities Acquisition of subsidiaries, net of cash and cash equivalents (2) (2) Non-controlling interests bought out - - Proceeds from disposal of subsidiaries, net of cash and cash equivalents 47 54 Proceeds from disposal of associates - 3 Investment in property, plant and equipment (293) (517) Proceeds from the disposal of property, plant and equipment 7 11 Investment in forestry assets (20) (40) Investment in intangible assets (2) (5) Investment in financial asset investments - (7) Proceeds from the sale of financial asset investments - - Loan (advances to)/repayments from related parties (1) 1 Loan repayments from external parties - 1 Interest received 4 8 Other investing activities - 1 Net cash used in investing activities (260) (492) Cash flows from financing activities Repayment of short-term borrowings (81) (288) Proceeds from medium and long-term borrowings 16 138 Repayment of medium and long-term borrowings (22) (100) Interest paid (93) (163) Dividends paid to non-controlling interests - (9) Dividends paid to equity holders of the parent companies (26) (39) Purchases of treasury shares (1) (1) Contribution by non-controlling interests 10 27 Net realised (loss)/gain on cash and asset management swaps 84 67 Other financing activities (1) 4 Net cash used in financing activities (114) (364) Net decrease in cash and cash equivalents - (19) Cash and cash equivalents at beginning of financial period/year1 75 75 Cash movement in the financial period/year - (19) Reclassification - (19) Effects of changes in foreign exchange rates 4 - Cash and cash equivalents at end of financial period/year1 79 37 Note: 1 `Cash and cash equivalents` includes overdrafts and cash flows from disposal groups and is reconciled to the statement of financial position in note 15c. Condensed combined and consolidated statement of changes in equity for the six months ended 30 June 2010 EUR million Share capital
Combined Mondi Mondi share Limited Limited Mondi plc capital and share share share share
capital premium capital premium At 1 January 2009 11 532 103 646 Dividends paid - - - - Total comprehensive - - - - income for the financial period Issue of shares under - - - - employee share schemes Purchases of treasury - - - - shares2 Reclassification - - - - Non-controlling - - - - interests buy in Non-controlling - - - - interests bought out Other - - - - At 30 June 2009 11 532 103 646 Dividends paid - - - - Total comprehensive - - - - income for the financial period Issue of shares under - - - - employee share schemes Reclassification - - - - Non-controlling - - - - interests buy in Other - - - - At 31 December 2009 11 532 103 646 Dividends paid - - - - Total comprehensive - - - - income for the financial period Issue of shares under - - - - employee share schemes Purchases of treasury - - - - shares2 Disposal of businesses - - - - Non-controlling - - - - interests bought out Other - - - - At 30 June 2010 11 532 103 646 Total attributable to equity holders of
Retained Other the parent earnings reserves1 companies At 1 January 2009 1,809 (132) 2,323 Dividends paid (26) - (26) Total comprehensive (36) 85 49 income for the financial period Issue of shares under 2 (2) - employee share schemes Purchases of treasury (1) - (1) shares2 Reclassification (14) 14 - Non-controlling - - - interests buy in Non-controlling - - - interests bought out Other - 8 8 At 30 June 2009 1,734 (27) 2,353 Dividends paid (13) - (13) Total comprehensive 3 52 55 income for the financial period Issue of shares under 17 (17) - employee share schemes Reclassification 2 1 3 Non-controlling - - - interests buy in Other - 1 1 At 31 December 2009 1,743 10 2,399 Dividends paid (36) - (36) Total comprehensive 109 160 269 income for the financial period Issue of shares under 5 (5) - employee share schemes Purchases of treasury (1) - (1) shares2 Disposal of businesses - 19 19 Non-controlling (1) - (1) interests bought out Other - 3 3 At 30 June 2010 1,819 187 2,652 Non- controlling Total interests equity
At 1 January 2009 373 2,696 Dividends paid - (26) Total comprehensive 14 63 income for the financial period Issue of shares under - - employee share schemes Purchases of treasury - (1) shares2 Reclassification - - Non-controlling 10 10 interests buy in Non-controlling (3) (3) interests bought out Other - 8 At 30 June 2009 394 2,747 Dividends paid (9) (22) Total comprehensive 25 80 income for the financial period Issue of shares under - - employee share schemes Reclassification (3) - Non-controlling 17 17 interests buy in Other 1 2 At 31 December 2009 425 2,824 Dividends paid (17) (53) Total comprehensive 36 305 income for the financial period Issue of shares under - - employee share schemes Purchases of treasury - (1) shares2 Disposal of businesses - 19 Non-controlling (3) (4) interests bought out Other - 3 At 30 June 2010 441 3,093 Notes: 1 Other reserves include the share-based payment, cumulative translation adjustment, available-for-sale, cash flow hedge, post-retirement benefit, merger and other sundry reserves. 2 The treasury shares purchased represent the cost of shares in Mondi Limited and Mondi plc purchased in the market and held by the Mondi Incentive Schemes Trust and the Mondi Employee Share Trust respectively to satisfy options under the Group`s share option schemes. The number of ordinary shares held by the Mondi Incentive Schemes Trust as at 30 June 2010 was 97,690 shares (as at 30 June 2009: 259,334; as at 31 December 2009: 53,700) at an average price of R43.75 per share (as at 30 June 2009: R33.24 per share; as at 31 December 2009: R35.71 per share). The number of ordinary shares held by the Mondi Employee Share Trust as at 30 June 2010 was 4,462,901 shares (as at 30 June 2009: 7,113,962; as at 31 December 2009: 5,087,561) at an average price of GBP4.05 per share (as at 30 June 2009: GBP4.03 per share; as at 31 December 2009: GBP4.05 per share). Notes to the condensed combined and consolidated financial statements 1 Basis of preparation The Group has two separate legal parent entities, Mondi Limited and Mondi plc, which operate under a dual listed company (DLC) structure. The substance of the DLC structure is such that Mondi Limited, and its subsidiaries, and Mondi plc, and its subsidiaries, operate together as a single economic entity through a sharing agreement, with neither parent entity assuming a dominant role. Accordingly, Mondi Limited and Mondi plc are reported on a combined and consolidated basis as a single reporting entity under International Financial Reporting Standards (IFRS). The condensed combined and consolidated half-yearly financial information for the six months ended 30 June 2010 has been prepared in accordance with IAS 34, `Interim Financial Reporting`. It should be read in conjunction with the Group`s annual financial statements for the year ended 31 December 2009, prepared in accordance with IFRS. The Group has also complied with South African Statements and Interpretations of Statements of Generally Accepted Accounting Practice. In addition, there are no differences for the Group in applying IFRS as issued by the International Accounting Standards Board and as endorsed by the European Union (EU). As discussed in the Group performance overview under the heading `Going concern`, the condensed combined and consolidated financial statements have been prepared on a going concern basis. The information for the year ended 31 December 2009 does not constitute statutory accounts as defined by section 434 of the UK Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors` report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the UK Companies Act 2006. 2 Accounting policies The same accounting policies, methods of computation and presentation have been followed in the preparation of the condensed combined and consolidated financial statements as were applied in the preparation of the Group`s annual financial statements for the year ended 31 December 2009, except as described below. In the current financial year, the Group has adopted IFRS 3, `Business Combinations` (revised 2008), and IAS 27, `Consolidated and Separate Financial Statements` (revised 2008). Both standards became effective for annual reporting periods beginning on or after 1 July 2009. The most significant changes, all of which are applied prospectively, to the Group`s previous accounting policies for business combinations are as follows: acquisition related costs which previously would have been included in the cost of a business combination are included in administrative expenses as they are incurred; any pre-existing equity interest in the acquiree is remeasured to fair value at the date of obtaining control (the acquisition date), with any resulting gain or loss recognised in profit or loss; any changes in the Group`s ownership interest subsequent to the acquisition date are recognised directly in equity, with no adjustment to goodwill; and any changes to the cost of an acquisition, including contingent consideration, resulting from events after the acquisition date are recognised in profit or loss. Previously, such changes resulted in an adjustment to goodwill. Any adjustments to contingent consideration for acquisitions made prior to 1 January 2010 which result in an adjustment to goodwill continue to be accounted for under IFRS 3 (2004) and IAS 27 (2005), for which the accounting policies can be found in the Group`s annual financial statements for the year ended 31 December 2009. Comprehensive details of changes to accounting policies will be presented in the Group`s annual financial statements for the year ended 31 December 2010. 3 Seasonality The seasonality of the Group`s operations has no significant impact on the condensed combined and consolidated financial statements. 4 Operating segments Operating segment revenues (Reviewed) Six months ended 30 June 2010
Segment Internal External revenue revenue1 revenue2 EUR million Europe & International Uncoated Fine Paper 762 (75) 687 Corrugated 610 (26) 584 Bags & Coatings 1,060 (20) 1,040 Intra-segment (60) 60 - elimination Total Europe & 2,372 (61) 2,311 International South Africa Uncoated Fine Paper 226 (58) 168 Containerboard 69 (68) 1 Intra-segment (19) 19 - elimination Total South Africa 276 (107) 169 Mondi Packaging South 298 (16) 282 Africa Merchant & Newsprint 271 - 271 businesses Segments total 3,217 (184) 3,033 Inter-segment elimination (184) 184 - Group total 3,033 - 3,033 (Reviewed) Six months ended 30 June 2009 Segment Internal External revenue revenue1 revenue2
EUR million Europe & International Uncoated Fine Paper 680 (62) 618 Corrugated 527 (16) 511 Bags & Coatings 893 (12) 881 Intra-segment (37) 37 - elimination Total Europe & 2,063 (53) 2,010 International South Africa Uncoated Fine Paper 197 (64) 133 Containerboard 66 (63) 3 Intra-segment (14) 14 - elimination Total South Africa 249 (113) 136 Mondi Packaging South 227 (13) 214 Africa Merchant & Newsprint 254 - 254 businesses Segments total 2,793 (179) 2,614 Inter-segment elimination (179) 179 - Group total 2,614 - 2,614 (Audited) Year ended 31 December 2009
Segment Internal External revenue revenue1 revenue2 EUR million Europe & International Uncoated Fine Paper 1,351 (130) 1,221 Corrugated 1,041 (36) 1,005 Bags & Coatings 1,787 (24) 1,763 Intra-segment (80) 80 - elimination Total Europe & 4,099 (110) 3,989 International South Africa Uncoated Fine Paper 386 (120) 266 Containerboard 121 (119) 2 Intra-segment (29) 29 - elimination Total South Africa 478 (210) 268 Mondi Packaging South 498 (25) 473 Africa Merchant & Newsprint 528 (1) 527 businesses Segments total 5,603 (346) 5,257 Inter-segment elimination (346) 346 - Group total 5,257 - 5,257 Notes: 1 Inter-segment transactions are conducted on an arm`s length basis. 2 The description of each business segment reflects the nature of the main products they sell. In certain instances the business segments sell minor volumes of other products and due to this reason the external segment revenues will not necessarily reconcile to the external revenues by each type of product presented below. External revenue by product type EUR million (Reviewed) (Reviewed) (Audited) Six months Six months Year ended 31 ended 30 ended 30 June 2010 June 2009 December 2009
Products Corrugated products 788 709 1,357 Uncoated fine paper 674 592 1,195 Kraft paper & bags 503 437 886 Coatings, consumer bags & films 431 374 731 Merchant sales 238 202 468 Newsprint 104 74 208 Pulp 104 68 129 Woodchips 39 35 61 Other1 152 123 222 Group total 3,033 2,614 5,257 Note: 1 Revenues derived from product types that are not material are classed as other. External revenue by location of customer (Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended 31 ended 30 ended 30 June 2010 June 2009 December 2009 Revenue Africa South Africa1 379 291 644 Rest of Africa 129 103 196 Africa total 508 394 840 Western Europe Germany 375 317 641 United Kingdom1 169 184 367 Rest of Western Europe 727 684 1,292 Western Europe total 1,271 1,185 2,300 Emerging Europe 584 526 1,105 Russia 249 188 387 North America 111 79 157 South America 14 9 17 Asia and Australia 296 233 451 Group total 3,033 2,614 5,257 Note: 1 These revenues, which total EUR548 million (six months ended 30 June 2009: EUR475 million; year ended 31 December 2009: EUR1,011 million), are attributable to the countries in which the Group`s parent entities are domiciled. External revenue by location of production (Reviewed) (Reviewed) (Audited) EUR million Six months Six months ended 30 ended 30 Year ended 31
June 2010 June 2009 December 2009 Revenue Africa South Africa1 561 467 948 Rest of Africa 9 5 13 Africa total 570 472 961 Western Europe Austria 597 502 1,010 United Kingdom1 88 129 244 Rest of Western Europe 463 440 855 Western Europe total 1,148 1,071 2,109 Emerging Europe Poland 335 216 486 Rest of Emerging Europe 512 471 927 Emerging Europe total 847 687 1,413 Russia 322 251 519 North America 62 54 104 Asia and Australia 84 79 151 Group total 3,033 2,614 5,257 Note: 1 These revenues, which total EUR649 million (six months ended 30 June 2009: EUR596 million; year ended 31 December 2009: EUR1,192 million), are attributable to the countries in which the Group`s parent entities are domiciled. There are no external customers which account for more than 10% of the Group`s total external revenue. Operating segment operating profit/(loss) Segment operating profit before special items
(Reviewed) (Reviewed) (Audited) EUR million Six months Six months ended 30 ended 30 Year ended 31 June 2010 June 2009 December 2009
Europe & International Uncoated Fine Paper 98 71 146 Corrugated 48 1 23 Bags & Coatings 55 36 82 Total Europe & International 201 108 251 South Africa Uncoated Fine Paper 14 13 16 Containerboard 4 15 16 Total South Africa 18 28 32 Mondi Packaging South Africa 18 11 36 Merchant & Newsprint businesses 1 8 12 Corporate & other businesses (16) (17) (37) Segments total 222 138 294 Net (loss)/profit on disposals (see note 6) - - - Impairment of assets held for sale (see note 6) - - - Net income from associates 2 1 2 Net finance costs (48) (58) (114) Group profit/(loss) before tax 176 81 182 Segment operating profit/(loss) after special items (Reviewed) (Reviewed) (Audited)
EUR million Six months Six months ended 30 ended 30 Year ended 31 June 2010 June 2009 December 2009 Europe & International Uncoated Fine Paper 108 71 144 Corrugated 48 (10) (27) Bags & Coatings 103 (13) 34 Total Europe & International 259 48 151 South Africa Uncoated Fine Paper (7) (6) (6) Containerboard 4 15 16 Total South Africa (3) 9 10 Mondi Packaging South Africa 17 11 43 Merchant & Newsprint businesses 1 8 - Corporate & other businesses (16) (17) (38) Segments total 258 59 166 Net (loss)/profit on disposals (see note 6) (22) 5 3 Impairment of assets held for sale (see note 6) (13) (8) (8) Net income from associates 2 1 2 Net finance costs (48) (58) (114) Group profit/(loss) before tax 177 (1) 49 EBITDA by operating segment (Reviewed) (Reviewed) (Audited) EUR million Six months Six months ended 30 ended 30 Year ended 31 June 2010 June 2009 December 2009 Europe & International Uncoated Fine Paper 146 117 239 Corrugated 82 32 87 Bags & Coatings 108 89 189 Total Europe & International 336 238 515 South Africa Uncoated Fine Paper 35 29 52 Containerboard 9 19 24 Total South Africa 44 48 76 Mondi Packaging South Africa 33 23 62 Merchant & Newsprint businesses 8 16 28 Corporate & other businesses (16) (17) (36) EBITDA 405 308 645 Segment assets and liabilities (Reviewed) As at 30 June 2010 Segment Segment Net
assets1 liabilities2 segment assets EUR million Europe & International Uncoated Fine Paper 1,862 (220) 1,642 Corrugated 1,074 (212) 862 Bags & Coatings 1,720 (402) 1,318 Intra-segment elimination (67) 67 - Total Europe & International 4,589 (767) 3,822 South Africa Uncoated Fine Paper 897 (101) 796 Containerboard 159 (23) 136 Intra-segment elimination (4) 4 - Total South Africa 1,052 (120) 932 Mondi Packaging South Africa 475 (107) 368 Merchant & Newsprint businesses 148 (40) 108 Corporate & other businesses 18 - 18 Inter-segment elimination (71) 71 - Segments total 6,211 (963) 5,248 Unallocated: Investments in associates 6 - 6 Deferred tax assets/(liabilities) 31 (334) (303) Other non-operating 371 (630) (259) assets/(liabilities)3 Group trading capital employed 6,619 (1,927) 4,692 Financial asset investments 33 - 33 Net debt 77 (1,709) (1,632) Group net assets 6,729 (3,636) 3,093 (Reviewed) As at 30 June 2009 Segment Segment Net assets1 liabilities2 segment
assets EUR million Europe & International Uncoated Fine Paper 1,640 (174) 1,466 Corrugated 1,044 (207) 837 Bags & Coatings 1,585 (268) 1,317 Intra-segment elimination (25) 25 - Total Europe & International 4,244 (624) 3,620 South Africa Uncoated Fine Paper 834 (100) 734 Containerboard 152 (18) 134 Intra-segment elimination (3) 3 - Total South Africa 983 (115) 868 Mondi Packaging South Africa 438 (96) 342 Merchant & Newsprint businesses 290 (72) 218 Corporate & other businesses 7 (1) 6 Inter-segment elimination (97) 97 - Segments total 5,865 (811) 5,054 Unallocated: Investments in associates 8 - 8 Deferred tax assets/(liabilities) 43 (329) (286) Other non-operating 239 (631) (392) assets/(liabilities)3 Group trading capital employed 6,155 (1,771) 4,384 Financial asset investments 24 - 24 Net debt 171 (1,832) (1,661) Group net assets 6,350 (3,603) 2,747 (Audited)
As at 31 December 2009 Segment Segment Net assets1 liabilities2 segment assets
EUR million Europe & International Uncoated Fine Paper 1,671 (177) 1,494 Corrugated 1,071 (199) 872 Bags & Coatings 1,531 (309) 1,222 Intra-segment elimination (33) 33 - Total Europe & International 4,240 (652) 3,588 South Africa Uncoated Fine Paper 804 (92) 712 Containerboard 150 (22) 128 Intra-segment elimination (6) 6 - Total South Africa 948 (108) 840 Mondi Packaging South Africa 432 (97) 335 Merchant & Newsprint businesses 263 (69) 194 Corporate & other businesses 3 1 4 Inter-segment elimination (74) 74 - Segments total 5,812 (851) 4,961 Unallocated: Investments in associates 6 - 6 Deferred tax assets/(liabilities) 29 (316) (287) Other non-operating 211 (577) (366) assets/(liabilities)3 Group trading capital employed 6,058 (1,744) 4,314 Financial asset investments 27 - 27 Net debt 123 (1,640) (1,517) Group net assets 6,208 (3,384) 2,824 Notes: 1 Segment assets are operating assets and consist of property, plant and equipment, intangible assets, forestry assets, retirement benefits surplus, inventories and operating receivables. 2 Segment liabilities are operating liabilities and consist of non-interest bearing current liabilities, restoration and environmental provisions and provisions for post-retirement benefits. 3 Other non-operating assets consist of derivative assets, current income tax receivables, other non-operating receivables and assets held for sale. Other non-operating liabilities consist of derivative liabilities, non-operating provisions, current income tax liabilities and liabilities directly associated with assets classified as held for sale. Capital expenditure cash payments and the additions to the Group`s non-current non-financial assets, other than deferred tax assets and retirement benefits surplus, are presented by operating segment as follows: Capital expenditure cash payments (Reviewed) (Reviewed) (Audited) EUR million Six months Six months Year ended ended 30 ended 30 31 December June 2010 June 2009 2009 Europe & International Uncoated Fine Paper 82 122 191 Corrugated 42 108 195 Bags & Coatings 35 42 81 Total Europe & International 159 272 467 South Africa Uncoated Fine Paper 7 12 22 Containerboard 2 1 4 Total South Africa 9 13 26 Mondi Packaging South Africa 14 6 17 Merchant & Newsprint businesses 2 2 7 Corporate & other businesses - - - Group and segments total 184 293 517 Additions to non-current non-financial assets1
(Reviewed) (Reviewed) (Audited) EUR million Six months Six months Year ended ended 30 ended 30 31 December June 2010 June 2009 2009
Europe & International Uncoated Fine Paper 74 159 257 Corrugated 38 106 178 Bags & Coatings 45 39 83 Total Europe & International 157 304 518 South Africa Uncoated Fine Paper 26 30 59 Containerboard 2 1 4 Total South Africa 28 31 63 Mondi Packaging South Africa 14 6 17 Merchant & Newsprint businesses 4 2 10 Corporate & other businesses - 2 6 Group and segments total 203 345 614 Note: 1 Additions to non-current non-financial assets reflect cash payments and accruals in respect of additions to property, plant and equipment, intangible assets and forestry assets and include interest capitalised as well as additions resulting from acquisitions through business combinations. 5 Write-down of inventories to net realisable value The write-downs of inventories to net realisable value, recognised as an expense for the six months ended 30 June 2010, total EUR11 million (six months ended 30 June 2009: EUR11 million; year ended 31 December 2009: EUR18 million). The aggregate reversal of previous write-downs, recognised as a reduction in the amount of inventories expensed for the six months ended 30 June 2010, total EUR2 million (six months ended 30 June 2009: EUR2 million; year ended 31 December 2009: EUR3 million). 6 Special items (Reviewed) (Reviewed) (Audited)
EUR million Six months Six months Year ended 31 ended 30 June ended 30 June December 2010 2009 2009 Operating special items Goodwill impairments - - (12) Asset impairments (26) (36) (78) Reversal of asset impairments 8 - - Restructuring and closure costs Restructuring and closure costs excluding related personnel costs (1) (29) (22) Personnel costs relating to restructuring (2) (11) (21) Reversal of restructuring and closure costs 26 - - Demerger arrangements - (3) (3) Proceeds on insurance - - 8 Gain on acquisition of business 31 - - Total operating special items 36 (79) (128) Non-operating special items Net (loss)/profit on disposal (22) 5 3 Asset impairment of assets held for sale (13) (8) (8) Total non-operating special items (35) (3) (5) Total special items before tax and non-controlling interests 1 (82) (133) Tax 4 4 6 Non-controlling interests 1 - (1) Total special items attributable to equity holders of the parent companies 6 (78) (128) Operating special items A 120,000 tonne uncoated fine paper machine and related converting capacity in the Merebank plant will be mothballed in September 2010 and the business restructured. This has led to an asset impairment of EUR18 million and related restructuring costs of EUR3 million being recognised. The completion of the sale of the Szolnok site has resulted in the reversal of previously recognised restructuring and closure provisions and the realisation of the cumulative translation adjustment reserve, amounting to EUR10 million. The restarting of the Stambolijski kraft paper line during June 2010 has resulted in a reversal of impairment (EUR8 million) and related provisions (EUR17 million) recognised for the closure that are no longer required, amounting to EUR25 million. Underperforming non-integrated kraft paper assets in Lohja and Ruzomberok have been partially impaired by EUR8 million. The acquisition of the industrial bag businesses in western Europe resulted in a gain of EUR31 million being recognised. These plants will be subject to future restructuring. Non-operating special items The sale of the corrugated plants in the UK to Smurfit Kappa resulted in a loss on disposal (including realisation of the cumulative translation adjustment reserve) of EUR17 million. Sale of forestry assets in South Africa realised a gain of EUR7 million. The expected sale of the Europapier business resulted in a write-down of assets of EUR13 million and recognition of the expected loss on sale of EUR12 million, amounting in total to EUR25 million. 7 Finance costs (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended EUR million 30 June 2010 30 June 2009 31 December 2009 Total interest expense (82) (102) (185) Less: interest capitalised 7 31 45 Total financing costs (75) (71) (140) 8 Tax charge (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended EUR million ended 30 June ended 30 June 31 December 2010 2009 2009 UK corporation tax (1) - 1 Overseas tax 55 23 52 Current tax (including tax on special items) 54 23 53 Deferred tax (12) - (1) Total tax charge 42 23 52 The Group`s estimated effective annual rate of tax before special items for the six months ended 30 June 2010, calculated on profit before tax before special items and including net income from associates, is 26% (six months ended 30 June 2009: 34%; year ended 31 December 2009: 32%). The reduction in the effective tax rate from 32% to 26% is realised primarily due to the improved profitability enabling the use of previously unrecognised tax losses carried forward; increased profitability in regions with lower tax rates; and benefits of tax incentives granted in certain countries in which the Group operates, notably those related to the major Polish and Russian capital projects. 9 Earnings per share (Reviewed) (Reviewed) (Audited)
EUR cents per share Six months Six months Year ended ended 30 ended 30 31 December June 2010 June 2009 2009 Profit/(loss) for the financial period/year attributable to equity holders of the parent companies Basic EPS 21.5 (7.1) (6.5) Diluted EPS 21.2 (7.1)3 (6.5)3 Underlying earnings for the financial period/year1 Basic EPS 20.3 8.3 18.7 Diluted EPS 20.0 8.1 18.2 Headline earnings/(loss) for the financial period/year2 Basic EPS 24.8 (0.8) 11.4 Diluted EPS 24.5 (0.8) 11.1 Notes: 1 Underlying EPS excludes the impact of special items. 2 The presentation of Headline EPS is mandated under the JSE Listings Requirements. Headline earnings has been calculated in accordance with Circular 3/2009, `Headline Earnings`, as issued by the South African Institute of Chartered Accountants. 3 Diluted EPS is consistent with Basic EPS as the impact of potential ordinary shares is anti-dilutive. The calculation of basic and diluted EPS, basic and diluted underlying EPS, and basic and diluted headline EPS is based on the following data: Earnings (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31 EUR million ended 30 June ended 30 June December 2010 2009 2009 Profit/(loss) for the financial period/year attributable to equity holders of the parent 109 (36) (33) companies Special items: operating (36) 79 128 Net loss/(profit) on disposals 22 (5) (3) Impairment of assets held for sale 13 8 8 Related tax (4) (4) (6) Related non-controlling interests (1) - 1 Underlying earnings for the financial period/year 103 42 95 Profit on disposal of tangible and intangible assets (1) (4) (4) Special items: demerger arrangements - (3) (3) Special items: restructuring and closure costs 23 (40) (43) Impairments not included in special items - - 10 Related tax 1 1 3 Headline earnings/(loss) for the financial period/year 126 (4) 58 Number of shares
(Reviewed) (Reviewed) (Audited) million As at 30 June As at 30 June As at 31 2010 2009 December 2009
Basic number of ordinary shares outstanding1 508 507 508 Effect of dilutive potential ordinary shares2 7 12 13 Diluted number of ordinary shares outstanding 515 519 521 Notes: 1 The basic number of ordinary shares outstanding represents the weighted average number in issue for Mondi Limited and Mondi plc for the period/year, as adjusted for the weighted average number of treasury shares held during the period/year. 2 Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, net of treasury shares, on the assumption of conversion of all potentially dilutive ordinary shares. 10 Dividends The interim dividend for the year ending 31 December 2010 of 3.5 euro cents per ordinary share will be paid on 14 September 2010 to Mondi Limited and Mondi plc ordinary shareholders on the relevant registers on 27 August 2010. The dividend will be paid from distributable reserves of Mondi Limited and of Mondi plc, as presented in the respective company annual financial statements for the year ended 31 December 2009. The interim dividend for the year ending 31 December 2010 will be paid in accordance with the following timetable: Mondi Limited Last date to trade shares cum-dividend JSE Limited 20 August 2010 London Stock Exchange Not applicable Shares commence trading ex-dividend JSE Limited 23 August 2010 London Stock Exchange Not applicable Record date JSE Limited 27 August 2010 London Stock Exchange Not applicable Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by 1 September 2010 Central Securities Depository Participants Last date for DRIP elections to UK Registrar and South African Transfer 2 September 2010 Secretaries by shareholders of Mondi Limited and Mondi plc Payment Date South African Register 14 September 2010 UK Register Not applicable Depositary Interest holders 20 September 2010 (dematerialised DIs) Holders within the Corporate Nominee 20 September 2010 DRIP purchase settlement dates 21 September 2010 Currency conversion dates ZAR/euro 10 August 2010 Euro/sterling Not applicable Mondi plc
Last date to trade shares cum-dividend JSE Limited 20 August 2010 London Stock Exchange 24 August 2010 Shares commence trading ex-dividend JSE Limited 23 August 2010 London Stock Exchange 25 August 2010 Record date JSE Limited 27 August 2010 London Stock Exchange 27 August 2010 Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by 1 September 2010 Central Securities Depository Participants Last date for DRIP elections to UK Registrar and South African Transfer 27 August 2010* Secretaries by shareholders of Mondi Limited and Mondi plc Payment Date South African Register 14 September 2010 UK Register 14 September 2010 Depositary Interest holders Not applicable (dematerialised DIs) Holders within the Corporate Nominee Not applicable DRIP purchase settlement dates 17 September 2010** Currency conversion dates ZAR/euro 10 August 2010 Euro/sterling 27 August 2010 * 2 September 2010 for Mondi plc South African branch register shareholders ** 21 September 2010 for Mondi plc South African branch register shareholders Please note that the DRIP plan is not available to Depositary Interest holders and holders within the Corporate Nominee. Share certificates on the South African registers of Mondi Limited and Mondi plc may not be dematerialised or rematerialised between 23 August 2010 and 27 August 2010, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place between 18 August 2010 and 30 August 2010, both dates inclusive. 11 Retirement benefits There were no significant curtailments, settlements or other significant one-time events relating to the Group`s defined benefit schemes, post-retirement medical plans or statutory retirement obligations during the six months ended 30 June 2010. All assumptions of the Group`s material defined benefit schemes and post-retirement medical plan liabilities were re-assessed individually and the remaining Group defined benefit schemes and unfunded statutory retirement obligations were re-assessed in aggregate for the six months ended 30 June 2010. The net change in assumptions from those applied as at 31 December 2009 resulted in a EUR13 million increase in the net retirement benefit obligations recorded on the condensed combined and consolidated statement of financial position. The assets backing the defined benefit scheme liabilities reflect their market values as at 30 June 2010. Any movements in the assumptions have been recognised as an actuarial movement in the condensed combined and consolidated statement of comprehensive income. EUR11 million of the movement in net retirement benefits is due to the decrease in the discount rate from 5.25% at 31 December 2009 to 4.50% at 30 June 2010 in the European defined benefit schemes and unfunded statutory retirement obligations. 12 Asset values per share Net asset value per share is defined as net assets divided by the combined number of ordinary shares in issue as at the reporting dates presented, less treasury shares held. Tangible net asset value per share is defined as the net assets less intangible assets divided by the combined number of ordinary shares in issue as at the reporting dates presented, less treasury shares held. (Reviewed) (Reviewed) (Audited) As at As at As at 30 June 2010 30 June 2009 31 December 2009 Net asset value per share (EUR) 6.07 5.42 5.55 Tangible net asset value per share (EUR) 5.45 4.79 4.94 13 Business combinations In line with Mondi`s strategy to strengthen its leading market position in industrial and consumer bags in Europe an agreement was concluded in April 2010 with Smurfit Kappa for the acquisition of its western European industrial and consumer bag operations in Spain, France and Italy. The businesses acquired have incurred operating losses prior to their acquisition by Mondi and will be subject to future restructuring activities. As a result of this and the cash in the business on date of acquisition, a gain on acquisition has been recognised in operating special items in the income statement. The fair value accounting reflected in these results is provisional in nature as the transaction was only concluded on 4 May 2010. If necessary, adjustments will be made to these carrying values, and to the gain on acquisition, within 12 months of the acquisition date. Prior to any planned restructuring activities, the acquired industrial bag plants generate turnover of approximately EUR7 million per month and operating losses of EUR0.8 million per month. Had the acquisition occurred on 1 January 2010, the increase in revenue would have been EUR50 million with an operating loss of EUR5 million. Transaction costs related to the acquisition are estimated at EUR1 million. There were no other acquisitions made for the six months ended 30 June 2010. Details of the aggregate net assets acquired, as adjusted from book to fair value, are presented as follows: EUR million Book value Revaluation Fair value Net assets acquired: Property, plant and equipment 27 (14) 13 Inventories 15 - 15 Trade and other receivables 21 (1) 20 Cash and cash equivalents 18 - 18 Trade and other payables (22) - (22) Short-term borrowings (1) - (1) Retirement benefits obligation (2) - (2) Provisions (3) - (3) Net assets acquired 53 (15) 38 Gain arising on acquisition (31) Total cost of acquisition 7 Cash acquired net of overdrafts (18) Net cash received 11 14 Disposal groups and assets held for sale On 5 May 2010, Mondi signed an agreement with the Heinzel Group for the sale of 100% of its shares in Europapier, a paper merchant business selling graphic, packaging and office papers, as well as other office supplies to customers across central Europe and Russia. The loss on disposal of the business will be approximately EUR25 million. As part of the reclassification of the underlying assets as held for sale, the tangible fixed assets were fully impaired. The sale is subject to approval by various competition authorities and is expected to be completed in the second half of 2010. Accordingly the assets and associated liabilities are classified as held for sale at 30 June 2010. 15 Consolidated cash flow analysis (a) Reconciliation of profit/(loss) before tax to cash generated from operations (Reviewed) (Reviewed) (Audited) Six months Six months EUR million ended 30 ended 30 Year ended 31 June 2010 June 2009 December 2009 Profit/(loss) before tax 177 (1) 49 Depreciation and amortisation 183 170 351 Share-based payments 3 4 5 Non-cash effect of special items (8) 64 98 Net finance costs 48 58 114 Net income from associates (2) (1) (2) Decrease in provisions and post-employment benefits (4) (9) (16) (Increase)/decrease in inventories (64) 81 80 (Increase)/decrease in operating receivables (192) 19 170 Increase/(decrease) in operating payables 115 (1) (2) Fair value gains on forestry assets (16) (15) (28) Felling costs 32 26 50 Profit on disposal of tangible and intangible assets (1) (4) (4) Other adjustments (2) 1 2 Cash generated from operations 269 392 867 (b) Cash and cash equivalents (Reviewed) (Reviewed) (Audited)
As at As at As at EUR million 30 June 2010 30 June 2009 31 December 2009 Cash and cash equivalents per statement of financial position 77 171 123 Bank overdrafts included in short-term borrowings (135) (92) (86) Net cash and cash equivalents per statement of cash flows (58) 79 37 (c) Movement in net debt The Group`s net debt position, excluding disposal groups is as follows: EUR million Cash and Debt due Debt due cash within one after one Total net equivalents1 year2 year debt At 1 January 2009 75 (298) (1,467) (1,690) Cash flow - 81 6 87 Business combinations - - 2 2 Disposal of businesses - 8 - 8 Reclassification - (112) 112 - Currency movements 4 (22) (50) (68) At 30 June 2009 79 (343) (1,397) (1,661) Cash flow (19) 207 (44) 144 Reclassification (19) (7) 41 15 Currency movements (4) 10 (21) (15) At 31 December 2009 37 (133) (1,421) (1,517) Cash flow (88) 95 (75) (68) Business combinations - (1) - (1) Disposal of businesses - 5 - 5 Movement in unamortised loan costs - - (2) (2) Reclassification (1) (33) 40 6 Currency movements (6) (15) (34) (55) At 30 June 2010 (58) (82) (1,492) (1,632) Notes: 1 The Group operates in certain countries (principally South Africa) where the existence of exchange controls may restrict the use of certain cash balances. These restrictions are not expected to have any material effect on the Group`s ability to meet its ongoing obligations. 2 Excludes overdrafts, which are included as cash and cash equivalents. As at 30 June 2010, short-term borrowings on the condensed combined and consolidated statement of financial position of EUR217 million (as at 30 June 2009: EUR435 million; as at 31 December 2009: EUR219 million) include EUR135 million of overdrafts (as at 30 June 2009: EUR92 million; as at 31 December 2009: EUR86 million). The Group launched its inaugural publicly traded bond on 26 March 2010. The EUR500 million bond, which matures on 3 April 2017, was issued at a discount of EUR5.63 million and pays a fixed coupon of 5.75% per annum. The bond contains a coupon step up clause whereby the coupon will be increased by 1.25% per annum whilst Mondi fails to maintain at least one investment grade credit rating from either Moody`s or Standard & Poor`s. The following table shows the amounts available to draw down on the Group`s committed loan facilities: (Reviewed) (Reviewed) (Audited) As at As at As at EUR million 30 June 2010 30 June 2009 31 December 2009 Expiry date In one year or less 211 178 141 In more than one year 1,147 895 849 Total credit available 1,358 1,073 990 16 Capital commitments (Reviewed) (Reviewed) (Audited) As at As at As at EUR million 30 June 2010 30 June 2009 31 December 2009 Contracted for but not provided 184 258 214 Approved, not yet contracted for 200 136 291 17 Contingent liabilities and contingent assets Contingent liabilities comprise aggregate amounts as at 30 June 2010 of EUR20 million (as at 30 June 2009: EUR16 million; as at 31 December 2009: EUR21 million) in respect of loans and guarantees given to banks and other third parties. Acquired contingent liabilities of EURnil (six months ended 30 June 2009: EURnil; year ended 31 December 2009: EURnil) have been recorded on the Group`s combined and consolidated statement of financial position. There are a number of legal and tax claims against the Group. Provision is made for all liabilities that are expected to materialise. Contingent assets comprise aggregate amounts as at 30 June 2010 of EUR5 million (as at 30 June 2009:EURnil; as at 31 December 2009: EURnil) and mainly relate to energy credits to be received. 18 Related party transactions The Group has related party relationships with its associates and joint ventures. Transactions between Mondi Limited, Mondi plc and their respective subsidiaries, which are related parties, have been eliminated on consolidation. The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service transactions with joint ventures and associates and other related parties. These transactions are entered into on an arm`s length basis at market rates. There have been no significant changes to the related parties as disclosed in note 39 of the Group`s annual financial statements for the year ended 31 December 2009. Dividends received from associates for the six months ended 30 June 2010 amount to EUR2 million (six months ended 30 June 2009: EUR0.4 million; year ended 31 December 2009: EUR2 million). 19 Events occurring after 30 June 2010 With the exception of the proposed interim dividend for 2010, as disclosed in note 10, there have been no material reportable events since 30 June 2010. Production statistics Six months ended 30
June 2010 Europe & International Uncoated fine paper Tonnes 790,748 Containerboard Tonnes 1,008,305 Kraft paper Tonnes 466,156 Hardwood pulp Tonnes 474,700 Internal consumption Tonnes 451,524 External Tonnes 23,176 Softwood pulp Tonnes 935,783 Internal consumption Tonnes 856,279 External Tonnes 79,504 Corrugated board and boxes Mm2 713 Industrial bags M units 1,858 Coating and release liners Mm2 1,601 Newsprint Tonnes 98,051 South Africa Uncoated fine paper Tonnes 152,663 Containerboard Tonnes 128,830 Hardwood pulp Tonnes 287,417 Internal consumption Tonnes 162,785 External Tonnes 124,632 Softwood pulp Tonnes 56,885 Woodchips Bone dry tonnes 129,516 Mondi Packaging South Africa Packaging papers Tonnes 197,023 Corrugated board and boxes Mm2 185 Newsprint Joint Ventures (attributable share) Aylesford Tonnes 92,575 Mondi Shanduka Newsprint (MSN) Tonnes 64,976 Six months ended 30
June 2009 Europe & International Uncoated fine paper Tonnes 709,433 Containerboard Tonnes 836,456 Kraft paper Tonnes 383,373 Hardwood pulp Tonnes 425,533 Internal consumption Tonnes 408,527 External Tonnes 17,006 Softwood pulp Tonnes 845,093 Internal consumption Tonnes 746,122 External Tonnes 98,971 Corrugated board and boxes Mm2 924 Industrial bags M units 1,655 Coating and release liners Mm2 1,258 Newsprint Tonnes 99,390 South Africa Uncoated fine paper Tonnes 179,325 Containerboard Tonnes 120,989 Hardwood pulp Tonnes 305,763 Internal consumption Tonnes 204,476 External Tonnes 101,287 Softwood pulp Tonnes 55,394 Woodchips Bone dry tonnes 197,436 Mondi Packaging South Africa Packaging papers Tonnes 177,796 Corrugated board and boxes Mm2 177 Newsprint Joint Ventures (attributable share) Aylesford Tonnes 96,262 Mondi Shanduka Newsprint (MSN) Tonnes 62,221 Year ended 31 December 2009
Europe & International Uncoated fine paper Tonnes 1,470,381 Containerboard Tonnes 1,768,696 Kraft paper Tonnes 841,378 Hardwood pulp Tonnes 873,844 Internal consumption Tonnes 833,803 External Tonnes 40,041 Softwood pulp Tonnes 1,773,265 Internal consumption Tonnes 1,568,189 External Tonnes 205,076 Corrugated board and boxes Mm2 1,697 Industrial bags M units 3,303 Coating and release liners Mm2 2,672 Newsprint Tonnes 194,564 South Africa Uncoated fine paper Tonnes 353,707 Containerboard Tonnes 238,915 Hardwood pulp Tonnes 578,032 Internal consumption Tonnes 407,641 External Tonnes 170,391 Softwood pulp Tonnes 109,142 Woodchips Bone dry tonnes 273,526 Mondi Packaging South Africa Packaging papers Tonnes 367,741 Corrugated board and boxes Mm2 369 Newsprint Joint Ventures (attributable share) Aylesford Tonnes 191,035 Mondi Shanduka Newsprint (MSN) Tonnes 121,701 Note: Comparative figures have been restated where necessary to afford a better comparison. Exchange rates Six months Six months Year ended ended 30 June ended 30 June 31 December 2010 2009 2009 Closing rates against the euro South African rand 9.38 10.89 10.67 Pounds sterling 0.82 0.85 0.89 Polish zloty 4.15 4.45 4.10 Russian rouble 38.28 43.88 43.15 US dollar 1.23 1.41 1.44 Czech koruna 25.69 25.88 26.47 Average rates for the period against the euro South African rand 9.99 12.25 11.68 Pounds sterling 0.87 0.89 0.89 Polish zloty 4.00 4.47 4.33 Russian rouble 39.88 44.08 44.12 US dollar 1.33 1.33 1.39 Czech koruna 25.72 27.13 26.44 10 August 2010 Sponsor: UBS South Africa (Pty) Ltd Date: 10/08/2010 08:09:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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