Wrap Text
Half-yearly results for the six months ended 30 June 2015
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000156550
Mondi plc
(Incorporated in England and Wales)
(Registered number: 6209386)
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
6 August 2015
As part of the dual listed company structure, Mondi Limited and Mondi plc (together "Mondi Group") notify both the
JSE Limited and the London Stock Exchange of matters required to be disclosed under the Listings Requirements
of the JSE Limited 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 2015
Highlights
- Strong performance on all key financial metrics, with all business units delivering significantly improved results
- Underlying operating profit of EUR490 million, up 30%
- Underlying earnings of 67.8 euro cents per share, up 31%
- Cash generated from operations of EUR538 million, up 23%
- Return on capital employed of 19%
- Successful delivery on capital projects and acquisitions
- Recently completed projects delivering ahead of plan
- Current major projects on time and on budget
- Turnaround of US Bags business acquired in 2014 on track
- Interim dividend of 14.38 euro cents per share, up 9%
Financial summary
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, except for percentages and per share measures 2015 2014 December 2014
Group revenue 3,459 3,148 3,254
Underlying EBITDA(1) 671 553 573
Underlying operating profit(1) 490 377 390
Operating profit 451 374 354
Profit before tax 392 312 307
Per share measures
Basic underlying earnings per share(1)(EUR cents) 67.8 51.9 55.4
Basic earnings per share (EUR cents) 60.3 48.6 48.8
Interim dividend per share (EUR cents) 14.38 13.23
Cash generated from operations 538 439 594
Net debt 1,741 1,758 1,613
Group return on capital employed (ROCE)(2) 19.0% 16.0% 17.2%
Notes:
(1) The Group presents underlying EBITDA, operating profit and related per share information as measures which exclude special items in order to
provide a more effective comparison of the underlying financial performance between reporting periods.
(2) ROCE is the 12 month rolling average underlying operating profit expressed as a percentage of the average rolling 12 month capital employed,
adjusted for impairments and spend on strategic projects which are not yet in operation.
David Hathorn, Mondi Group chief executive, said:
"I am pleased to report another strong performance, building on the good results achieved in the prior
year. Improvements in underlying profit in all business units, driven by generally positive selling price
and volume developments, coupled with good cost control and the contribution from recently completed
capital projects, enabled the Group to deliver an impressive return on capital employed of 19%.
A focus during the period was on the optimisation of major capital projects completed in the prior year. It
is pleasing to note all are performing ahead of expectation. Furthermore, all ongoing projects remain on
time and on budget for completion over the coming two years.
We continue to assess opportunities for value-enhancing growth and cost optimisation through further
major capital investments, centred on our high-quality, low-cost packaging paper assets in central
Europe, while still being open to value-enhancing growth through acquisition. We recently announced the
purchase of two plants from Walki Oy, subject to competition clearance, which will strengthen our
position in the European extrusion coatings market.
As in prior years, the second half will be impacted by the seasonal downturn in our Uncoated Fine Paper
business and planned annual maintenance shuts at a number of our mills. Price increases in certain
paper grades should provide some positive momentum, offset in part by increases in various input costs
and currency volatility.
With our robust business model, clear strategic focus and culture of continuous improvement,
management remains confident of continuing to deliver industry leading performance and making good
progress for the year."
Group performance review
Group underlying operating profit increased 30% to EUR490 million compared to the first half of the previous year.
Strong performances across all business units were complemented by the full period contribution from a number
of large capital projects completed during 2014.
Group revenue was up 10% due to higher sales volumes and prices, acquisitions and currency effects. Excluding
the effects of acquisitions and disposals, revenue was up 3.9%.
Like-for-like sales volumes were up across all the Europe & International business segments despite the
continued slow economic growth in Europe and ongoing structural decline in European uncoated fine paper
markets. Sales from the South Africa Division were negatively impacted by the extended annual maintenance
shut at Richards Bay.
Similarly, selling prices were, on average, higher than the comparable prior year period. Average European
benchmark selling prices were 3% higher for virgin containerboard and sack kraft paper and prices for key paper
grades sold in the Russian and South African markets were up on the comparable prior year period. This was
partly offset by lower European recycled containerboard and uncoated fine paper prices. Price effects were mixed
in the Consumer and Fibre Packaging businesses reflecting product mix changes and movements in input costs.
The Group benefited from generally lower input costs across most of its operations. Wood costs were lower in
Europe, while in Russia the impact of the weaker rouble more than offset the increased domestic wood costs.
Average benchmark paper for recycling prices were down on the first half of the previous year, although prices
increased over the course of the second quarter. Energy costs were significantly lower than the comparable prior
year period, impacted by lower average crude oil, coal and gas prices, together with the benefits of the energy
investments completed in the prior year. Chemical prices were also lower, while supply interruptions led to
significant volatility and higher average prices for polyethylene. In South Africa, input cost increases were
contained to well within inflationary levels.
In the first half of the year, annual maintenance shuts took place at the Swiecie mill in Poland and Richards Bay
mill in South Africa, and at two of the Group's kraft paper mills. The balance of the annual maintenance shuts are
scheduled for the second half of the year. Based on prevailing market prices, the impact on underlying operating
profit of the Group's maintenance shuts is estimated at around EUR90 million, of which the first half effect was
around EUR35 million.
The strengthening of the US dollar versus the euro provided a net benefit to the Group, both through the
translation of dollar denominated sales, mainly from the South Africa Division and the Industrial Bags segment,
and through the support provided to European selling prices for a number of the Group's key paper grades. The
weaker Russian rouble had a net negative impact on translation of the profits of the domestically focused
uncoated fine paper business, although this was fully compensated by higher domestic selling prices and the
transactional benefits enjoyed by the export oriented Russian packaging paper operations.
Underlying earnings per share increased 31% over the comparable prior year period to 67.8 euro cents per share,
in line with the increase in underlying operating profit.
The Group remains strongly cash generative with cash generated from operations of EUR538 million, an increase
of 23% over the first half of 2014.
The Group benefited from the ramp-up and full period contribution from a number of projects completed during
2014, including the 155,000 tonne per annum bleached kraft paper machine at Steti, Czech Republic, the recovery
boiler replacement in Ruzomberok, Slovakia and the 100,000 tonne per annum pulp dryer in Syktyvkar, Russia.
During the period, the incremental operating profit from strategic capital projects completed in 2014 amounted to
approximately EUR35 million. It is anticipated that the full year incremental contribution will be around
EUR60 million. This represents an increase of EUR10 million over the previous estimate, driven by a stronger
than expected performance from all projects due to a combination of operating performance and strong market
conditions. Ongoing major projects are proceeding on time and on budget.
Net debt of EUR1,741 million at 30 June 2015 was up EUR128 million from 31 December 2014. Excluding the
impact of foreign exchange effects, net debt was up EUR77 million. This reflects the seasonally higher working
capital levels at 30 June 2015 and the bias of the Group's financing outflows towards the first half of the year. In
the absence of further strategic acquisitions, and despite an anticipated increase in the level of capital
expenditure, de-leveraging in the second half is anticipated.
An interim dividend of 14.38 euro cents per share, up 9% on the prior year interim dividend of 13.23 euro cents
per share, has been declared.
Europe & International – Packaging Paper
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, unless otherwise stated 2015 2014 December 2014
Segment revenue 1,122 1,022 1,021
Underlying EBITDA 266 216 227
Underlying operating profit 211 167 175
% margin 18.8% 16.3% 17.1%
Capital expenditure 104 116 143
Operating net segment assets 1,734 1,627 1,588
ROCE 26.6% 22.5% 23.7%
Underlying operating profit of EUR211 million was 26% above that of the comparable prior year period on higher
sales volumes, lower input costs, currency effects, and the benefits of strong contributions from recently
completed capital projects.
Good sales volumes growth of over 4% was achieved in all containerboard grades, supported by a strong
operating performance, European market growth and export sales. Demand remains robust going into the second
half of the year.
Average European benchmark selling prices for unbleached virgin containerboard were 3% higher than the
comparable prior year period. Selling price increases were achieved over the course of the reporting period, with
the average benchmark price ending the period around 3% higher than that at the start of the period.
Average benchmark selling prices for recycled containerboard were approximately 4% lower than the comparable
prior year period and broadly in line with prices in the second half of 2014. A EUR40/tonne price increase was
successfully implemented at the beginning of the third quarter of 2015 on good demand and higher paper for
recycling costs, with further increases announced for implementation in August.
Demand for sack kraft paper in Europe was stable over the reporting period. Sales volumes were higher than the
prior year, largely as a result of the contribution from the kraft paper mill in the US acquired in mid-2014, some
growth in export markets and increased paper integration following the ramp-up in the bleached kraft paper
machine at Steti. Good demand was seen for the Group's range of speciality kraft papers, although sales
volumes were negatively impacted by the closure of the small kraft paper mill in Finland.
Average European sack kraft prices were approximately 3% higher than the comparable prior year period,
although this did represent a decline on the price levels achieved in the second half of last year. Prices for the
speciality grades were, on average, higher than the comparable prior year period.
Lower average wood, paper for recycling and energy costs provided a net benefit. Green energy prices in Poland
were lower than the prior year, reducing the contribution from sales of green energy credits. Paper for recycling
costs increased around 16% over the course of the second quarter, which will impact margins in the second half of
the year.
As a net exporter from Poland, Russia, the Czech Republic and Sweden, the weakness of these currencies
relative to the euro and US dollar provided a net benefit to the Packaging Paper business.
The capital projects completed during 2014 made a significant contribution to the performance of the business.
The most significant contributors were the bleached kraft paper machine in Steti and the pulp dryer in Syktyvkar.
A planned project implementation shut at the Swiecie mill took place towards the end of the second quarter.
Planned maintenance shuts were also completed at two of the Group's kraft paper mills. The remaining annual
maintenance shuts are scheduled for the second half of the year, including a planned maintenance shut at
Swiecie, which will also incorporate project implementation activities.
Europe & International – Fibre Packaging
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, unless otherwise stated 2015 2014 December 2014
Segment revenue 1,046 868 984
Underlying EBITDA 101 78 88
Underlying operating profit 68 48 54
% margin 6.5% 5.5% 5.5%
Capital expenditure 58 30 47
Operating net segment assets 963 884 875
ROCE 15.2% 12.3% 13.4%
Underlying operating profit increased 42% to EUR68 million with a positive year-on-year contribution from all
business segments.
The Corrugated Packaging segment benefited from like-for-like volume growth of around 2.4%. Margins were
further supported by lower variable costs and improved product mix due to various commercial excellence
initiatives. During the period, a number of capital projects were completed, positioning the business for further
growth in its core markets.
The Industrial Bags segment benefited from modest underlying demand growth, higher average selling prices and
foreign currency gains from sales in US dollars or US dollar linked currencies. Good cost control, the benefits of
commercial excellence initiatives and a one-off gain from the sale of land and buildings in Italy also contributed to
the positive results. Pleasingly, the business also saw an improved performance from the US Bags business,
acquired in mid-2014, with the turnaround progressing according to plan.
Sales volumes in the Extrusion Coatings segment were at similar levels to the comparable prior year period with
the business benefiting from product mix effects. Selling price increases were implemented to offset higher raw
material input costs.
In May 2015, Mondi announced its intention to acquire two extrusion coatings plants located in Pietarsaari, Finland
and Wroclaw, Poland from Walki Oy for a debt and cash free consideration of EUR60 million. The acquisition will
strengthen the Group's position in the European extrusion coatings market and increase the range of technical
capabilities on offer to customers. The transaction remains subject to competition clearance and is expected to be
concluded in the third quarter of 2015.
Europe & International – Consumer Packaging
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, unless otherwise stated 2015 2014 December 2014
Segment revenue 730 685 694
Underlying EBITDA 83 69 89
Underlying operating profit 49 39 57
% margin 6.7% 5.7% 8.2%
Capital expenditure 50 35 45
Operating net segment assets 1,065 979 1,021
ROCE 10.9% 8.3% 10.4%
The Consumer Packaging business continued to show good progress with underlying operating profit of
EUR49 million, 26% above that of the comparable prior year period.
The business benefited from ongoing initiatives to focus more on innovation and customer service and enhance
sales and application engineering infrastructure.
In line with the business unit strategy, the steps taken to pro-actively phase out lower value-added mature
products and substitute these volumes by sales into higher value-added segments yielded margin improvement.
Good growth was achieved in the high value-added segments of consumer laminates and bags despite the
closure of the Spanish plant in April, while the films and components segments showed flat to marginal growth as
we exited some low margin business in these segments. Volume growth was supported by the ramp-up of the
plant in China, opened in the first quarter of 2014, and the Polish plant acquired in July 2014.
Margins have been impacted by significant price volatility in input costs, particularly for polyethylene. Whilst
mechanisms are in place to pass price changes in raw materials on to customers, high levels of volatility influence
short-term selling prices and margins.
In July 2015, Mondi signed an agreement with POLIFILM Extrusion GmbH, to sell the film manufacturing site in Osterburken,
Germany, subject to competition clearance. In August 2015, Mondi signed an agreement for the sale of its two film and
packaging plants in Malaysia to Scientex Packaging Film Sdn Bhd. These sales enable Mondi to further refine its product
portfolio, focusing on higher value added segments.
Europe & International – Uncoated Fine Paper
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, unless otherwise stated 2015 2014 December 2014
Segment revenue 626 646 594
Underlying EBITDA 152 127 111
Underlying operating profit 113 80 68
% margin 18.1% 12.4% 11.4%
Capital expenditure 32 59 58
Operating net segment assets 951 1,113 922
ROCE 19.4% 15.6% 16.1%
Uncoated Fine Paper generated underlying operating profit of EUR113 million, up 41% on the comparable prior
year period. Higher selling prices in Russia, generally lower costs and the benefits of recently completed capital
projects more than offset negative currency effects and softer European pricing.
Despite demand contraction in the wider European and Russian markets, the business was able to marginally
increase sales volumes of uncoated fine paper compared to the first half of 2014. Sales of market pulp increased
due to the increased capacity in Ruzomberok following the successful start-up of the new recovery boiler in late
2014.
Average European benchmark selling prices were 2% lower than the comparable prior year period and 1% lower
than the second half of 2014. Selling prices were increased in April 2015 by 2-3% in Europe. A further price
increase of up to 12% has been announced for implementation during the third quarter of 2015 on the back of
tightening supply and increased hardwood pulp prices.
Price increases were implemented in Russia in the first quarter of 2015 in response to rising domestic inflationary
pressures driven by the sharp rouble devaluation. A partial reduction of these increases was implemented in the
second quarter following the subsequent revaluation of the rouble. Should the recent renewed rouble weakness
persist in the second half, it will negatively impact euro operating profit.
The business benefited from lower wood, chemical and energy costs. In Syktyvkar, higher domestic wood costs
were more than offset by the weakening of the rouble. The business was also supported by a strong contribution
from the recovery boiler investment in Ruzomberok.
In line with the previous year, the second half will be impacted by the expected seasonal slowdown in demand in
the third quarter and annual maintenance shuts at all key facilities.
South Africa Division
Six months Six months Six months
ended 30 June ended 30 June ended 31
EUR million, unless otherwise stated 2015 2014 December 2014
Segment revenue 314 284 312
Underlying EBITDA 89 78 75
Underlying operating profit 69 58 54
% margin 22.0% 20.4% 17.3%
Capital expenditure 32 9 20
Operating net segment assets 672 608 626
ROCE 22.9% 20.5% 21.9%
The South Africa Division continued to perform well, delivering underlying operating profit of EUR69 million, 19%
above the comparable prior year period on higher average selling prices, the benefits of the stronger US dollar on
exports, gains from the sale of land and a higher fair value gain on forestry assets.
The planned extended annual maintenance shut at the Richards Bay mill was successfully completed during the
period. The shut resulted in lower sales volumes than the comparable prior year period.
Average domestic selling prices were above both the comparable prior year period and the second half of the
previous year across all product grades. Export selling prices for both white-top containerboard and hardwood
pulp were also up on the prior year.
Ongoing management focus ensured that input cost increases were contained below the levels of domestic
inflation.
Forestry gains are dependent on a variety of factors over which the Group has limited control, the most significant
of which is the market price of timber. Selling prices increased during the period, with the Division recognising a
EUR23 million fair value gain in respect of its forestry assets, EUR3 million higher than the gain recognised in the
comparable prior year period and EUR9 million higher than in the second half of 2014. This level of gain is not
expected to recur in the second half given current market conditions.
Financial review
Tax
The Group's underlying effective tax rate of 19% is in line with the comparable prior year period, with the Group
continuing to benefit from investment related incentives in Eastern Europe and the recognition of accumulated tax
losses in certain jurisdictions.
Special items
The net special item charge of EUR39 million before tax is attributable to:
- EUR14 million charge in respect of the closure of the Group's speciality Kraft Paper mill in Finland;
- EUR12 million charge for the closure of a Consumer Packaging operation in Spain;
- EUR10 million charge in respect of further restructuring in the Group's Fibre Packaging operations in the
United States following the acquisition of the bags business from Graphic Packaging in 2014; and
- EUR3 million charge for the write-off of a receivable related to the 2012 acquisition of Nordenia.
Cash flow
Cash generated from operations of EUR538 million, including the impact of an increase in working capital of
EUR101 million, reflects the continued strong cash generating capacity of the Group.
Working capital at 30 June 2015 was 14.1% of revenue, above the year-end level of 12.3%. This reflected the
usual seasonal uptick in the first half of the year, one-off effects, the increasing contribution from the more
working capital intensive Industrial Bags business following the 2014 acquisition in the US, and an increase in
working capital in Consumer Packaging as the business positions itself for an improved service offering.
Net cash outflows from financing activities of EUR208 million include the payment of dividends to holders of non-
controlling interests, the payment of the final 2014 dividend in May 2015 and payment of the 5.75% coupon on the
EUR500 million 2017 Eurobond.
Capital expenditure
Capital expenditure for the period amounted to EUR276 million. It is expected that the rate of capital expenditure
will pick up in the second half as certain of the major capital projects near completion.
In July 2015, the first phase of the EUR166 million Swiecie recovery boiler project in Poland was commissioned
according to schedule. The remainder of the first phase of the project and the second phase, to provide an
additional 100,000 tonnes per annum of softwood pulp and 80,000 tonnes per annum of kraftliner, remain on track
for completion by the third quarter of 2016.
Good progress is being made on other major capital projects, with all projects on track and in line with budget.
These include the upgrade to the wood yard at Richards Bay as well as a number of projects intended to
modernise some of the Group's kraft paper and converting operations.
We continue to assess opportunities for value-enhancing growth and cost optimisation through further major
capital investments, centred on our high-quality, low-cost packaging paper assets in central Europe. This includes
a new MG kraft paper machine to replace capacity lost through grade conversion at the Steti mill and the closure
of the high-cost Lohja mill in Finland.
Treasury and borrowings
Net debt at 30 June 2015 was EUR1,741 million, an increase of EUR128 million from 31 December 2014. The net
debt to 12 month trailing EBITDA ratio was 1.4 times and gearing at 30 June 2015 was 36%.
At 30 June 2015, the Group had EUR2.1 billion of committed facilities of which EUR500 million were undrawn.
The weighted average maturity of the committed debt facilities is approximately 4 years.
In May 2015, Standard and Poor's announced an upgrade of the Group's credit rating to BBB (stable outlook).
This follows the upgrade of the Group's credit rating by Moody's Investor Services to Baa2 in October 2014.
Finance charges of EUR59 million were above those of the comparable prior year period. Average net debt was
around 4% higher than the first half of 2014. The effective interest rate of 6.9% increased from 5.5% in the
comparable prior year period, mainly as a result of higher average interest rates in Russia following the sharp
increases in December 2014 and certain one-off effects. Cash interest paid was down 11% on the prior year at
EUR57 million largely due to the refinancing of the Nordenia high-yield bond in July 2014.
Dividend
An interim dividend of 14.38 euro cents per share has been declared by the directors and will be paid on
15 September 2015 to those shareholders on the register of Mondi plc on 21 August 2015. An equivalent South
African rand interim dividend will be paid on 15 September 2015 to shareholders on the register of Mondi Limited
on 21 August 2015. 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 2014.
Outlook
As in prior years, the second half will be impacted by the seasonal downturn in our Uncoated Fine Paper business
and planned annual maintenance shuts at a number of our mills. Price increases in certain paper grades should
provide some positive momentum, offset in part by increases in various input costs and currency volatility.
Given the Group's robust business model, clear strategic focus and culture of continuous improvement,
management remains confident of continuing to deliver industry leading performance and making good progress
for the year.
Supplementary information
Principal risks and uncertainties
Risk management is by nature a dynamic and ongoing process. Our risk management framework is designed to
address all the significant strategic, sustainability, financial, operational and compliance-related risks that could
undermine our ability to achieve our business objectives into the future. It is flexible, to ensure that it remains
relevant at all levels of the business; and dynamic to ensure we can be responsive to changing business
conditions. This is particularly important given the diversity of the Group's locations, markets and production
processes.
Over the course of the year, the audit committee reviews each of the principal risks set out below. In evaluating
the Group's risk management and internal control processes, the committee considers both internal and external
audit reports and receives confirmation from the finance heads of the business units that financial control
frameworks have operated satisfactorily.
The Boards are satisfied that the Group has effective systems and controls in place to manage its key risks within
the risk tolerance levels established by the Boards.
Industry capacity
Plant utilisation levels are the main driver of profitability in paper mills. New capacity additions are usually in large
increments which, through their impact on the supply/demand balance, influence market prices. Unless market
growth exceeds capacity additions, excess capacity may lead to lower selling prices.
We monitor industry developments in terms of changes in capacity as well as trends and developments in our own
product markets. Our strategic focus on low-cost production and innovation activities to produce higher value
added products, combined with our focus on growing markets, with consistent investment in our operating
capacity ensures that we remain competitive.
Product substitution
Sustainability considerations and changes in consumer preferences affect the demand for packaging products.
Factors such as the weight of packaging materials, increased use of recycled materials, electronic substitution of
paper products, increasing demand for certified and labelled goods and specific material qualities all impact on the
demand for the products Mondi produces.
Our ability to meet changes in consumer demand depends on our capacity to correctly anticipate such changes
and develop new products on a sustainable, competitive and cost effective basis. Our focus for growth is on
products enjoying positive substitution dynamics and growing regional markets. We work with our customers in
developing new markets and new products. Our broad range of converting products provides some protection
from the effects of substitution between paper and plastic based packaging products.
Selling price variability
Our selling prices are determined by changes in capacity and by demand for our products, which are, in turn,
influenced by macroeconomic conditions, consumer spending preferences and inventory levels maintained by our
customers. Changes in prices differ between products and geographic regions and the timing and magnitude of
such changes have varied significantly over time and are unpredictable.
Our strategic focus is on higher growth markets and products where we enjoy a competitive advantage through
innovation, proximity or a production cost advantage. We continue to invest in our low-cost, high quality
production assets to ensure we maintain our competitive cost position. Our high levels of vertical integration
reduce our exposure to price volatility of our key input costs. Our financial policies and structures are designed
taking the inherent price volatility of the markets in which we operate into consideration.
Country risk
We have production operations across more than 30 countries, a number of which are in jurisdictions where the
political, economic and legal systems are less predictable than in countries with more developed institutional
structures. Political or economic upheaval, inflation, changes in laws, nationalisation or expropriation of assets
may have a material effect on our operations in those countries.
We actively monitor all countries and environments in which we operate and have established limits on exposure
to any particular geographic environment. We engage in regular formal and informal interaction with the
authorities to ensure we remain abreast of any new development. New investments are subject to rigorous
strategic and commercial evaluation. Our geographic diversity and decentralised management structure, utilising
local resources in countries in which we operate, reduces our exposure to any specific jurisdiction.
Political and economic structural weaknesses in the Eurozone's single currency framework caused by the recent
economic crisis in Greece have heightened uncertainty regarding the future of the Eurozone. This may result in
substantial defaults on existing Euro sovereign debt and could lead to economic dislocation. It could also result in
capital exchange controls being imposed, domestic banking failures or the expropriation of assets.
We have minimal exposure to Greece, with sales representing less than 1% of the Group's revenue.
We have around 11% of our capital employed in Russia and a limited presence in the Ukraine. The US, European
Union and a number of other countries imposed economic sanctions and other measures on persons and
corporate entities in Russia and the Ukraine. Possible additional sanctions and/or other measures on Russia
could have a material adverse effect on our business. To date, the measures imposed have had no material
impact on our operations.
Employee and contractor safety
We operate large facilities, often in remote locations. Accidents/incidents cause injury to our employees or
contractors, property damage, lost production time and harm to our reputation.
We have a zero harm policy. We continually monitor incidents and close calls and actively transfer learnings
across our operations. We apply an externally accredited safety management system and conduct regular audits
of our operations to ensure our facilities remain fit-for-purpose.
Fibre supply
Wood, pulp and paper for recycling comprise approximately a third of our input costs. We have access to our own
sources of wood in Russia and South Africa and purchase wood, pulp and paper for recycling to meet our needs
in the balance of our operations. Wood prices and availability may be adversely affected by reduced quantities of
available wood supply that meet our standards for chain-of-custody certified or controlled wood, and initiatives to
promote the use of wood as a renewable energy source.
We are committed to acquiring fibre from sustainable, responsible sources and avoiding the use of any
controversial or illegal supply. The sustainable management of our forestry operations is key in managing our
overall environmental impact, helping to preserve ecosystems and resilient landscapes. We have built strong
forestry management resources in Russia and South Africa to actively monitor and manage our wood resources in
those countries. We maintain 100% FSC certification of our forests in Russia and South Africa. We have multiple
suppliers for each of our mills and actively pursue longer term agreements with strategic suppliers of wood, pulp
and paper for recycling. We work in collaboration with private and public sectors to address challenges in meeting
the global demand for sustainable, responsible fibre.
Energy and related input costs
Energy and related input costs comprise approximately a third of our variable costs. Mondi is a significant
consumer of electricity and both purchases electricity from external suppliers and generates it internally. To the
extent that we don't generate electricity from biomass and by-products of our production processes, we are
dependent on external suppliers for raw materials such as gas, oil and coal.
We monitor our electricity usage levels, emission levels and use of renewable energy. Most of our larger
operations have high levels of electricity self-sufficiency. We focus on improving the efficiency of our operations
and have invested in our operations to improve our energy profile and increase electrical self-sufficiency, while
reducing ongoing operating costs and emission levels. To the extent that we generate electricity surplus to our
own requirements, we may sell such surplus externally. We also generate revenue from the sale of green energy
credits in certain of our operations, the prices of which are determined in the open market.
Environmental impact
We operate in a high-impact sector and need to manage the associated risks and responsibilities. Our operations
are water, carbon and energy intensive; consume materials such as fibre, polymers, metals and chemicals; and
generate emissions in the air, water and land. We are the custodian of more than two million hectares of forested
land. We are subject to a wide range of international, national, state and local environmental laws and regulations
as well as the requirements of our customers.
We ensure that we are complying with all applicable environmental, health and safety requirements where we
operate. Our own policies and procedures, at or above local policy requirements, are embedded in all our
operations. We focus on a clean production philosophy to address the impact from emissions, discharge and
waste. We focus on increasing the energy efficiency of our operations and using biomass-based fuels, reducing
our use of fossil-based energy sources. We emphasise the responsible management of forests and associated
ecosystems, protecting high conservation value areas.
Reputational risk
Non-compliance with the legal and governance requirements in any of the jurisdictions in which we operate could
expose us to significant risk if not actively managed. These include laws relating to the environment, exports,
price controls, taxation and labour.
We operate a comprehensive training and compliance programme, supported by self-certification and reporting.
We also operate a confidential reporting hotline, Speakout, enabling employees, customers, suppliers, managers
and other stakeholders to raise concerns about conduct that may be contrary to our values.
Financial risks
Our trading and financing activities expose the Group to financial risks that, if left unmanaged, could adversely
impact our financial position. These risks relate to the currencies in which we conduct our activities, interest rate
and liquidity risks and exposure to customer credit risk. Our approach to financial risk management is described
in notes 29 and 30 of the Group's annual financial statements for the year ended 31 December 2014.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and
position, the most significant risks and the Group's related management and mitigating actions are set out above.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the
condensed financial statements.
Mondi's geographical spread, product diversity and large customer base mitigate potential risks of customer or
supplier liquidity issues. Ongoing initiatives by management in implementing profit improvement initiatives which
include ongoing investment in its operations, plant optimisation, cost-cutting and restructuring and rationalisation
activities have consolidated the Group's leading cost position in its chosen markets. Working capital levels and
capital expenditure programmes are strictly monitored and controlled.
The Group meets its funding requirements from a variety of sources. The availability of some of these facilities is
dependent on the Group meeting certain financial covenants all of which have been complied with. Mondi had
EUR500 million of undrawn committed debt facilities as at 30 June 2015 which should provide sufficient liquidity in
the medium term.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
including an assessment of the current macroeconomic environment indicate that the Group should be able to
operate well within the level of its current facilities and related covenants.
The directors have reviewed the overall Group strategy, the latest forecast for the remainder of 2015 and the
budget for subsequent years, considered the assumptions contained in the forecasts and budget and reviewed the
critical risks which may impact the Group's performance. After making such enquiries, the directors are satisfied
that the Group remains solvent and has adequate liquidity in order to meet its obligations and continue in
operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern
basis in preparing this report.
Related parties
As set out in the condensed combined and consolidated financial statements for the six months ended 30 June
2015, there have been no significant individual related party transactions during the first six months of the financial
year and there have been no significant changes to the Group's related party relationships as disclosed in note 31
of the Group's annual financial statements for the year ended 31 December 2014.
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, market
growth and developments, expectations of growth and profitability and plans and objectives of management for
future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the
use of forward-looking terminology such as "believe", "expects", "may", "will", "could", "should", "shall", "risk",
"intends", "estimates", "aims", "plans", "predicts", "continues", "assumes", "positioned" or "anticipates" or the
negative thereof, other variations thereon or comparable terminology. 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 and
other statements contained in this document regarding matters that are not historical facts involve predictions and
are based on numerous assumptions regarding Mondi's present and future business strategies and the
environment in which Mondi will operate in the future. These forward-looking statements speak only as of the date
on which they are made.
No assurance can be given that such future results will be achieved; various factors could cause actual future
results, performance or events to differ materially from those described in these statements. Such factors include
in particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities
and the achievement of efficiencies therein, continued success of product development plans and targets,
changes in the degree of protection created by Mondi's patents and other intellectual property rights and the
availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of
competition, prevailing and future global market prices for Mondi's products and raw materials and the pricing
pressures thereto, financial condition of the customers, suppliers and the competitors of Mondi and potential
introduction of competing products and technologies by competitors; and (3) general economic conditions, such as
rates of economic growth in Mondi's principal geographical markets or fluctuations of exchange rates and interest
rates.
Mondi expressly disclaims a) any warranty or liability as to accuracy or completeness of the information provided
herein; and b) any obligation or undertaking to review or confirm analysts' expectations or estimates or to update
any forward-looking statements to reflect any change in Mondi's expectations or any events that occur or
circumstances that arise after the date of making any forward-looking statements, unless required to do so by
applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE.
Any reference to future financial performance included in this announcement has not been reviewed or reported
on by the Group's auditors.
Contact details:
Mondi Group
David Hathorn +27 11 994 5418
Andrew King +27 11 994 5415
Lora Rossler +27 83 627 0292
FTI Consulting
Richard Mountain +44 7909 684 466
Roger Newby +44 20 3727 1385
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 9:00 (UK) and 10:00
(SA).
The conference call dial-in numbers are:
South Africa 0800 200 648 (toll-free)
UK 0808 162 4061 (toll-free)
Europe & Other +800 246 78 700 (toll-free) or +27 11 535 3600
An online audio cast facility will be available via: www.mondigroup.com/HYResults15.
The presentation will be available online via the above website address an hour before the audio cast
commences. Questions can be submitted via the dial-in conference call or by e-mail via the audio cast.
Should you have any issues on the day with accessing the dial-in conference call, please call +27 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 6 August 2015.
Editors' notes
We are Mondi: In touch every day
Mondi is an international packaging and paper Group, employing around 25,000 people across more than 30
countries. Our key operations are located in central Europe, Russia, North America and South Africa. We offer
over 100 packaging and paper products, customised into more than 100,000 different solutions for customers and
end consumers. In 2014, Mondi had revenues of EUR6.4 billion and a return on capital employed of 17.2%.
The Mondi Group is fully integrated across the packaging and paper value chain - from managing forests and
producing pulp, paper and compound plastics, to developing effective and innovative industrial and consumer
packaging solutions. Our innovative technologies and products can be found in a variety of applications including
hygiene components, stand-up pouches, super-strong cement bags, clever retail boxes and office paper. Our key
customers are in industries such as automotive; building and construction; chemicals; food and beverage; home
and personal care; medical and pharmaceutical; packaging and paper converting; pet care; and office and
professional printing.
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.
For us, acting sustainably makes good business sense. We don't just talk about sustainability; we make it part of
the way we work every day. We have been included in the FTSE4Good Index Series since 2008 and the JSE's
Socially Responsible Investment (SRI) Index since 2007.
Directors' responsibility statement
The directors confirm that to the best of their knowledge:
- the condensed combined and consolidated financial statements have 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 significant events during the six months ended 30 June
2015 and a description of the principal risks and uncertainties for the remaining six months of the year
ending 31 December 2015;
- there have been no significant individual related party transactions during the first six months of the
financial year; and
- there have been no significant changes in the Group's related party relationships.
The Group's condensed combined and consolidated financial statements, and related notes, were approved by
the Boards and authorised for issue on 5 August 2015 and were signed on their behalf by:
David Hathorn Andrew King
Director Director
5 August 2015
Independent auditors' review report on interim financial information to the
shareholders of Mondi Limited
We have reviewed the condensed combined and consolidated financial statements of Mondi Limited contained in
the accompanying interim report, which comprise the condensed combined and consolidated statement of
financial position as at 30 June 2015 and the condensed combined and consolidated income statement, the
condensed combined and consolidated statement of comprehensive income, condensed combined and
consolidated statement of changes in equity and condensed combined and consolidated statement of cash flows
for the six months then ended, and selected explanatory notes.
Directors' responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these interim financial statements in
accordance with International Accounting Standard 34,'Interim Financial Reporting' (IAS 34), the SAICA Financial
Reporting Guides, as issued by the Accounting Practices Committee, and Financial Pronouncements as issued by
the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa, and for
such internal control as the directors determine is necessary to enable the preparation of interim financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors' responsibility
Our responsibility is to express a conclusion on these interim financial statements. 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' (ISRE 2410). ISRE 2410 requires us to conclude whether
anything has come to our attention that causes us to believe that the interim financial statements are not prepared
in all material respects in accordance with the applicable financial reporting framework. This standard also
requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. We
perform procedures, primarily consisting of making inquiries of management and others within the entity, as
appropriate, and applying analytical procedures to evaluate the evidence obtained.
The procedures performed in a review are substantially less than and differ in nature from those performed in an
audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit
opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
condensed combined and consolidated financial statements of Mondi Limited for the six months ended 30 June
2015 are not prepared, in all material respects, in accordance with IAS 34, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies Act of South Africa.
Deloitte & Touche
Registered Auditors
Per: Shelly Nelson
Partner
Sandton
5 August 2015
Building 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton, Republic of South Africa
National Executive: *LL Bam Chief Executive *AE Swiegers Chief Operating Officer *GM Pinnock Audit
DL Kennedy Risk Advisory *NB Kader Tax TP Pillay Consulting *K Black Clients & Industries *JK Mazzocco
Talent & Transformation *MJ Jarvis Finance *M Jordan Strategy S Gwala Managed Services *TJ Brown
Chairman of the Board MJ Comber Deputy Chairman of the Board
A full list of partners and directors is available on request *Partner and Registered Auditor
BBBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code
Member of Deloitte Touche Tohmatsu Limited
Independent review report to Mondi plc
We have been engaged by the company to review the condensed set of financial statements in the half-yearly
report for the six months ended 30 June 2015, 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 the
related notes 1 to 20. 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
set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK
and Ireland) 2410,'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'
(ISRE 2410), issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an independent review report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly 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 Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly report has been prepared in accordance with International Accounting
Standard 34,'Interim Financial Reporting' (IAS 34), 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 report based on our review.
Scope of review
We conducted our review in accordance with ISRE 2410, 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 report for the six months ended 30 June 2015 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
5 August 2015
Condensed combined and consolidated income statement
for the six months ended 30 June 2015
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June Six months ended 30 June Year ended 31 December
2015 2014 2014
Before Special After Before Special After Before Special After
special items special special items special special items special
EUR million Notes items (note 5) items items (note 5) items items (note 5) items
Group revenue 3,459 - 3,459 3,148 - 3,148 6,402 - 6,402
Materials, energy and consumables
used (1,727) - (1,727) (1,654) - (1,654) (3,314) - (3,314)
Variable selling expenses (264) - (264) (251) - (251) (499) - (499)
Gross margin 1,468 - 1,468 1,243 - 1,243 2,589 - 2,589
Maintenance and other indirect
expenses (146) - (146) (120) - (120) (283) - (283)
Personnel costs (515) (17) (532) (456) (7) (463) (946) (29) (975)
Other net operating expenses (136) (18) (154) (114) 4 (110) (234) (4) (238)
Depreciation, amortisation and
impairments (181) (4) (185) (176) - (176) (359) (6) (365)
Operating profit/(loss) 490 (39) 451 377 (3) 374 767 (39) 728
Net profit from associates - - - 1 - 1 1 - 1
Total profit/(loss) from operations
and associates 490 (39) 451 378 (3) 375 768 (39) 729
Net finance costs 7 (59) - (59) (50) (13) (63) (97) (13) (110)
Investment income 2 - 2 1 - 1 3 - 3
Foreign currency losses - - - (1) - (1) - - -
Finance costs (61) - (61) (50) (13) (63) (100) (13) (113)
Profit/(loss) before tax 431 (39) 392 328 (16) 312 671 (52) 619
Tax (charge)/credit 8 (82) 3 (79) (62) - (62) (126) 4 (122)
Profit/(loss) for the period 349 (36) 313 266 (16) 250 545 (48) 497
Attributable to:
Non-controlling interests 21 21 15 15 26 26
Shareholders 328 292 251 235 519 471
Earnings per share (EPS) for profit
attributable to shareholders
Basic EPS (EUR cents) 9 60.3 48.6 97.4
Diluted EPS (EUR cents) 9 60.2 48.5 97.1
Basic underlying EPS (EUR cents) 9 67.8 51.9 107.3
Diluted underlying EPS (EUR cents) 9 67.7 51.8 107.0
Basic headline EPS (EUR cents) 9 60.1 48.3 99.5
Diluted headline EPS (EUR cents) 9 60.0 48.2 99.2
Condensed combined and consolidated statement of comprehensive
income
for the six months ended 30 June 2015
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended 31
ended 30 June ended 30 June December
EUR million 2015 2014 2014
Profit for the period 313 250 497
Other comprehensive income/(expense)
Items that may subsequently be reclassified to the condensed combined and
consolidated income statement:
Fair value gains on cash flow hedges - - 2
Gains on available-for-sale investments - - 1
Exchange differences on translation of foreign operations 92 (23) (193)
Tax effect thereof - - (1)
Items that will not subsequently be reclassified to the condensed combined
and consolidated income statement:
Remeasurements on retirement benefits plans 20 (16) (46)
Asset ceiling movement - 2 2
Tax effect thereof (3) 3 9
Other comprehensive income/(expense) for the period, net of tax 109 (34) (226)
Total comprehensive income for the period 422 216 271
Attributable to:
Non-controlling interests 22 16 28
Shareholders 400 200 243
Condensed combined and consolidated statement of financial position
as at 30 June 2015
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
EUR million Notes 2015 2014 December 2014
Intangible assets 655 670 658
Property, plant and equipment 3,615 3,505 3,432
Forestry assets 11 260 233 235
Other non-current assets 49 37 42
Total non-current assets 4,579 4,445 4,367
Inventories 895 834 843
Trade and other receivables 1,147 1,058 966
Financial instruments 22 4 76
Cash and cash equivalents 15b 48 49 56
Other current assets 26 18 40
Total current assets 2,138 1,963 1,981
Total assets 6,717 6,408 6,348
Short-term borrowings 12 (299) (458) (176)
Trade and other payables (1,064) (1,028) (998)
Other current liabilities (164) (142) (149)
Total current liabilities (1,527) (1,628) (1,323)
Medium and long-term borrowings 12 (1,506) (1,343) (1,565)
Net retirement benefits liability (234) (226) (250)
Deferred tax liabilities (261) (254) (259)
Other non-current liabilities (56) (52) (57)
Total non-current liabilities (2,057) (1,875) (2,131)
Total liabilities (3,584) (3,503) (3,454)
Net assets 3,133 2,905 2,894
Equity
Share capital and stated capital 542 542 542
Retained earnings and other reserves 2,321 2,103 2,086
Total attributable to shareholders 2,863 2,645 2,628
Non-controlling interests 270 260 266
Total equity 3,133 2,905 2,894
Condensed combined and consolidated statement of changes in equity
for the six months ended 30 June 2015
Equity
attributable to Non-controlling Total
EUR million shareholders interests equity
At 1 January 2014 (Audited) 2,591 255 2,846
Total comprehensive income for the period 200 16 216
Dividends paid (129) (11) (140)
Purchase of treasury shares (22) - (22)
Other 5 - 5
At 30 June 2014 (Reviewed) 2,645 260 2,905
Total comprehensive income for the period 43 12 55
Dividends paid (64) (5) (69)
Other 4 (1) 3
At 31 December 2014 (Audited) 2,628 266 2,894
Total comprehensive income for the period 400 22 422
Dividends paid (140) (17) (157)
Purchase of treasury shares (31) - (31)
Other 6 (1) 5
At 30 June 2015 (Reviewed) 2,863 270 3,133
Equity attributable to shareholders (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Combined share capital and stated capital 542 542 542
Treasury shares (29) (25) (24)
Retained earnings 2,631 2,327 2,497
Cumulative translation adjustment reserve (477) (398) (569)
Post-retirement benefit reserve (75) (68) (92)
Share-based payment reserve 16 14 19
Cash flow hedge reserve (1) (2) (1)
Statutory reserves 256 255 256
Total 2,863 2,645 2,628
Condensed combined and consolidated statement of cash flows
for the six months ended 30 June 2015
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million Notes 2015 2014 2014
Cash flows from operating activities
Cash generated from operations 15a 538 439 1,033
Dividends from associates - - 2
Income tax paid (90) (49) (106)
Net cash generated from operating activities 448 390 929
Cash flows from investing activities
Investment in property, plant and equipment (276) (249) (562)
Investment in forestry assets 11 (21) (18) (37)
Proceeds from the disposal of tangible and intangible assets 22 27 33
Acquisition of subsidiaries, net of cash and cash equivalents - (47) (72)
Other investing activities (1) (1) (5)
Net cash used in investing activities (276) (288) (643)
Cash flows from financing activities
(Repayment of)/proceeds from medium and long-term borrowings 15c (69) 95 354
Proceeds from/(repayment of) short-term borrowings 15c 89 (45) (375)
Interest paid (57) (64) (125)
Dividends paid to shareholders 10 (140) (129) (193)
Dividends paid to non-controlling interests (18) (11) (13)
Purchases of treasury shares (31) (22) (22)
Net realised gain on held-for-trading derivatives 39 6 27
Other financing activities (1) 5 7
Net cash used in financing activities (188) (165) (340)
Net decrease in cash and cash equivalents (16) (63) (54)
Cash and cash equivalents at beginning of period 9 64 64
Cash movement in the period 15c (16) (63) (54)
Effects of changes in foreign exchange rates 15c 1 - (1)
Cash and cash equivalents at end of period 15b (6) 1 9
Notes to the condensed combined and consolidated financial statements for
the six months ended 30 June 2015
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.
The Group's condensed combined and consolidated half-yearly financial statements and notes 1 to 20 for the six
months ended 30 June 2015 have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) and contain the information required by
International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34). It should be read in conjunction with
the Group's annual financial statements for the year ended 31 December 2014, prepared in accordance with IFRS
as issued by the IASB.
There are no differences for the Group in applying IFRS as issued by the IASB and IFRS as adopted by the
European Union (EU) and therefore the Group complies with Article 4 of the EU IAS Regulation. The Group has
complied with the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council of South Africa.
The financial information set out above does not constitute statutory accounts as defined by section 434 of the UK
Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2014 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.
The condensed combined and consolidated financial statements have been prepared on a going concern basis as
discussed in the Group performance review, under the heading 'Going concern'.
The condensed combined and consolidated financial statements have been prepared on the historical cost basis,
except for the fair valuing of financial instruments and forestry assets.
These financial statements have been prepared under the supervision of the Group chief financial officer, Andrew
King CA (SA).
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 for the six months ended 30 June 2015 as were
applied in the preparation of the Group's annual financial statements for the year ended 31 December 2014.
3 Seasonality
The seasonality of the Group's operations has no significant impact on the condensed combined and consolidated
financial statements.
4 Operating segments
Identification of the Group's externally reportable operating segments
The Group's externally reportable segments reflect the internal reporting structure of the Group. The Group
operates under two primary geographic regions reflecting its South African activities and assets, and its
international, principally European, activities and assets. The broad Europe & International Division is further split
by product segments.
Reorganisation of business segments
During the prior year, the Group refined its organisational structure, resulting in several changes to segmental
reporting as described in note 2 of the Group's annual financial statements for the year ended 31 December 2014.
Comparative segmental information for the six months ended 30 June 2014 has been restated. The
reorganisation had no impact on the overall Group result.
Six months ended 30 June 2015 (Reviewed)
Europe & International
Packaging Fibre Consumer Uncoated South Africa Corporate & Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Fine Paper Division other elimination total
Segment revenue 1,122 1,046 730 626 314 - (379) 3,459
Internal revenue (307) (19) (3) (3) (47) - 379 -
External revenue 815 1,027 727 623 267 - - 3,459
EBITDA 266 101 83 152 89 (20) - 671
Depreciation, amortisation and
impairments (55) (33) (34) (39) (20) - - (181)
Underlying operating
profit/(loss) 211 68 49 113 69 (20) - 490
Special items (14) (10) (15) - - - - (39)
Operating segment assets 2,125 1,285 1,250 1,128 791 8 (183) 6,404
Operating net segment assets 1,734 963 1,065 951 672 9 - 5,394
Additions to non-current
non-financial assets 106 57 37 20 52 1 - 273
Capital expenditure cash
payments 104 58 50 32 32 - - 276
Operating margin (%) 18.8 6.5 6.7 18.1 22.0 - - 14.2
Return on capital employed (%) 26.6 15.2 10.9 19.4 22.9 - - 19.0
Average number of employees
(thousands) 5.3 7.8 4.7 6.0 1.6 0.1 - 25.5
Six months ended 30 June 2014 (Restated) (Reviewed)
Europe & International
Packaging Fibre Consumer Uncoated South Africa Corporate & Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Fine Paper Division other elimination total
Segment revenue 1,022 868 685 646 284 - (357) 3,148
Internal revenue (282) (20) (3) (4) (48) - 357 -
External revenue 740 848 682 642 236 - - 3,148
EBITDA 216 78 69 127 78 (15) - 553
Depreciation, amortisation and
impairments (49) (30) (30) (47) (20) - - (176)
Underlying operating
profit/(loss) 167 48 39 80 58 (15) - 377
Special items - (7) 4 - - (13) - (16)
Operating segment assets 1,988 1,170 1,140 1,301 728 6 (177) 6,156
Operating net segment assets 1,627 884 979 1,113 608 7 - 5,218
Additions to non-current
non-financial assets 135 27 33 50 29 23 - 297
Capital expenditure cash
payments 116 30 35 59 9 - - 249
Operating margin (%) 16.3 5.5 5.7 12.4 20.4 - - 12.0
Return on capital employed (%) 22.5 12.3 8.3 15.6 20.5 - - 16.0
Average number of employees
(thousands) 4.9 6.6 4.5 6.6 1.6 0.1 - 24.3
Year ended 31 December 2014 (Audited)
Europe & International
Packaging Fibre Consumer Uncoated South Africa Corporate & Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Fine Paper Division other elimination total
Segment revenue 2,043 1,852 1,379 1,240 596 - (708) 6,402
Internal revenue (559) (41) (5) (6) (97) - 708 -
External revenue 1,484 1,811 1,374 1,234 499 - - 6,402
EBITDA 443 166 158 238 153 (32) - 1,126
Depreciation, amortisation and
impairments (101) (64) (62) (90) (41) (1) - (359)
Underlying operating
profit/(loss) 342 102 96 148 112 (33) - 767
Special items (6) (16) (17) - - (13) - (52)
Operating segment assets 1,961 1,165 1,185 1,089 743 4 (166) 5,981
Operating net segment assets 1,588 875 1,021 922 626 2 - 5,034
Additions to non-current
non-financial assets 279 104 109 125 68 - - 685
Capital expenditure cash
payments 259 77 80 117 29 - - 562
Operating margin (%) 16.7 5.5 7.0 11.9 18.8 - - 12.0
Return on capital employed (%) 23.7 13.4 10.4 16.1 21.9 - - 17.2
Average number of employees
(thousands) 5.0 7.3 4.6 6.5 1.6 0.1 - 25.1
Reconciliation of operating profit before special items to profit before tax
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Operating profit before special items 490 377 767
Special items (see note 5) (39) (16) (52)
Net profit from associates - 1 1
Net finance costs (excluding financing special item) (59) (50) (97)
Profit before tax 392 312 619
Reconciliation of total profit from operations and associates to EBITDA
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Total profit from operations and associates 451 375 729
Special items (see note 5) (excluding financing special item) 39 3 39
Depreciation, amortisation and impairments 181 176 359
Net profit from associates - (1) (1)
EBITDA 671 553 1,126
Reconciliation of operating segment assets
(Restated)
(Reviewed) (Reviewed) (Audited)
As at 30 June 2015 As at 30 June 2014 As at 31 December 2014
Net Net Net
Segment segment Segment segment Segment segment
EUR million assets assets assets assets assets assets
Segments total 6,404 5,394 6,156 5,218 5,981 5,034
Unallocated
Investments in associates 4 4 6 6 5 5
Deferred tax assets/(liabilities) 17 (244) 4 (250) 10 (249)
Other non-operating assets/(liabilities) 223 (280) 193 (311) 224 (283)
Group capital employed 6,648 4,874 6,359 4,663 6,220 4,507
Financial instruments/(net debt) 69 (1,741) 49 (1,758) 128 (1,613)
Total assets/equity 6,717 3,133 6,408 2,905 6,348 2,894
External revenue by location of External revenue by location of
production customer
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended Six months Six months Year ended
ended 30 ended 30 31 December ended 30 ended 30 31 December
EUR million June 2015 June 2014 2014 June 2015 June 2014 2014
Revenue
Africa
South Africa 312 284 596 226 192 419
Rest of Africa 6 6 10 104 111 216
Africa total 318 290 606 330 303 635
Western Europe
Austria 509 494 960 77 79 153
Germany 469 463 931 483 505 966
United Kingdom 21 18 34 128 118 236
Rest of western Europe 321 348 664 717 690 1,331
Western Europe total 1,320 1,323 2,589 1,405 1,392 2,686
Emerging Europe
Poland 458 440 873 255 242 484
Rest of emerging Europe 635 582 1,144 444 434 857
Emerging Europe total 1,093 1,022 2,017 699 676 1,341
Russia 335 350 685 253 282 559
North America 341 135 437 396 174 515
South America - - - 36 32 61
Asia and Australia 52 28 68 340 289 605
Group total 3,459 3,148 6,402 3,459 3,148 6,402
There are no external customers which account for more than 10% of the Group's total external revenue.
External revenue by product type
(Restated)
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Products
Fibre packaging products 1,013 831 1,776
Packaging paper products 787 716 1,435
Consumer packaging products 614 687 1,385
Uncoated fine paper 735 611 1,185
Pulp 150 114 240
Newsprint 68 75 146
Other 92 114 235
Group total 3,459 3,148 6,402
5 Special items
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Operating special items
Asset impairments (4) - (6)
Restructuring and closure costs:
Personnel costs relating to restructuring (17) (7) (29)
Restructuring and closure costs excluding related personnel costs (15) - (9)
Subsequent adjustments relating to Nordenia acquisition (3) 4 4
Transaction costs for US acquisition - - (2)
Gain on settlement of 2007 legal case - - 3
Total operating special items (39) (3) (39)
Financing special item
Net charge on early redemption of EUR280 million Eurobond - (13) (13)
Total special items before tax and non-controlling interests (39) (16) (52)
Tax (see note 8) 3 - 4
Total special items attributable to shareholders (36) (16) (48)
Operating special items
Operating special items during the period comprise:
- Packaging Paper
- Closure of a small speciality kraft paper mill in Finland. Restructuring costs of EUR11 million and
related impairment of assets of EUR3 million were recognised;
- Fibre Packaging
- Further restructuring (EUR10 million) following the acquisition of the bags business from Graphic
Packaging in the US in 2014;
- Consumer Packaging
- Closure of a plant in Spain. Restructuring costs of EUR11 million and related impairment of assets
of EUR1 million were recognised; and
- Write-off of receivable of EUR3 million related to 2012 Nordenia acquisition.
6 Write-down of inventories to net realisable value
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Write-down of inventories to net realisable value (15) (9) (24)
Aggregate reversal of previous write-down of inventories 11 4 16
7 Net finance costs
Net finance costs and related foreign exchange losses are presented below:
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Investment income
Interest on bank deposits, loan receivables and other 2 1 3
Foreign currency losses
Foreign currency losses - (1) -
Finance costs
Interest expense
Interest on bank overdrafts and loans (60) (47) (94)
Net interest expense on net retirement benefits liability (5) (5) (11)
Total interest expense (65) (52) (105)
Less: interest capitalised 4 2 5
Total finance costs before special item (61) (50) (100)
Financing special item (see note 5) - (13) (13)
Total finance costs after special item (61) (63) (113)
Net finance costs (59) (63) (110)
8 Tax charge
The Group's effective rate of tax before special items for the six months ended 30 June 2015, calculated on profit
before tax before special items and including net profit from associates, is 19% (six months ended 30 June 2014:
19%; year ended 31 December 2014: 19%).
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
UK corporation tax at 20.5% (2014: 21.5%) - - 1
SA corporation tax at 28% (2014: 28%) 13 16 30
Overseas tax 87 56 86
Current tax 100 72 117
Deferred tax (18) (10) 9
Total tax charge before special items 82 62 126
Current tax on special items (3) - -
Deferred tax on special items - - (4)
Total tax credit on special items (see note 5) (3) - (4)
Total tax charge 79 62 122
9 Earnings per share
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR cents per share 2015 2014 2014
Profit for the period attributable to shareholders
Basic EPS 60.3 48.6 97.4
Diluted EPS 60.2 48.5 97.1
Underlying earnings for the period
Basic underlying EPS 67.8 51.9 107.3
Diluted underlying EPS 67.7 51.8 107.0
Headline earnings for the period
Basic headline EPS 60.1 48.3 99.5
Diluted headline EPS 60.0 48.2 99.2
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
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Profit for the period attributable to shareholders 292 235 471
Special items (see note 5) 39 16 52
Related tax (see note 5) (3) - (4)
Underlying earnings for the period 328 251 519
Special items not excluded from headline earnings (32) (16) (46)
Profit on disposal of property, plant & equipment and intangible assets (11) (1) -
Impairments not included in special items 1 - 4
Related tax 5 - 4
Headline earnings for the period 291 234 481
Weighted average number of shares
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
million 2015 2014 December 2014
Basic number of ordinary shares outstanding 483.9 483.5 483.6
Effect of dilutive potential ordinary shares 0.9 1.3 1.3
Diluted number of ordinary shares outstanding 484.8 484.8 484.9
10 Dividends
Dividends paid to the shareholders of Mondi Limited and Mondi plc are presented on a combined basis.
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR cents per share 2015 2014 2014
Final dividend paid (in respect of prior year) 28.77 26.45 26.45
Interim dividend paid - - 13.23
Interim dividend declared for the six months ended 30 June 14.38 13.23
Final dividend proposed for the year ended 31 December 28.77
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Final dividend paid (in respect of prior year) 140 129 129
Interim dividend paid - - 64
Interim dividend declared for the six months ended 30 June 70 64
Final dividend proposed for the year ended 31 December 139
Declared by Group companies to non-controlling interests 17 11 16
The interim dividend for the year ending 31 December 2015 of 14.38 euro cents per ordinary share will be paid on
15 September 2015 to those shareholders on the register of Mondi plc on 21 August 2015. An equivalent South
African rand interim dividend will be paid on 15 September 2015 to shareholders on the register of Mondi Limited
on 21 August 2015. 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 2014.
The interim dividend for the year ending 31 December 2015 will be paid in accordance with the following
timetable:
Mondi Limited Mondi plc
Last date to trade shares cum-dividend
JSE Limited 14 August 2015 14 August 2015
London Stock Exchange Not applicable 19 August 2015
Shares commence trading ex-dividend
JSE Limited 17 August 2015 17 August 2015
London Stock Exchange Not applicable 20 August 2015
Record date
JSE Limited 21 August 2015 21 August 2015
London Stock Exchange Not applicable 21 August 2015
Last date for receipt of Dividend Reinvestment Plan (DRIP) 27 August 2015 27 August 2015
elections by Central Securities Depository Participants
Last date for DRIP elections to UK Registrar and South 28 August 2015 21 August 2015*
African Transfer Secretaries by shareholders of Mondi
Limited and Mondi plc
Payment Date
South African Register 15 September 2015 15 September 2015
UK Register Not applicable 15 September 2015
DRIP purchase settlement dates 23 September 2015 17 September 2015**
(subject to the purchase of shares in the open market)
Currency conversion dates
ZAR/euro 6 August 2015 6 August 2015
Euro/sterling Not applicable 28 August 2015
* 28 August 2015 for Mondi plc South African branch register shareholders
** 23 September 2015 for Mondi plc South African branch register shareholders
Share certificates on the South African registers of Mondi Limited and Mondi plc may not be dematerialised or
rematerialised between 17 August 2015 and 23 August 2015, both dates inclusive, nor may transfers between the
UK and South African registers of Mondi plc take place between 12 August 2015 and 23 August 2015, both dates
inclusive.
Information relating to the dividend tax to be withheld from Mondi Limited shareholders and Mondi plc
shareholders on the South African branch register will be announced separately, together with the ZAR/euro
exchange rate to be applied, on or shortly after 6 August 2015.
11 Forestry assets
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
At 1 January 235 233 233
Capitalised expenditure 19 17 35
Acquisition of assets 2 1 2
Fair value gains 23 20 34
Disposal of assets - (13) (13)
Felling costs (25) (27) (54)
Reclassified to assets held for sale - - (11)
Currency movements 6 2 9
Closing balance 260 233 235
The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy (see note
18) and this category is consistent with prior periods. The fair value of forestry assets is calculated on the basis of
future expected net cash flows arising on the Group's owned forestry assets, discounted based on a pre tax real
yield on long-term bonds over the last five years. All fair value gains originate from South Africa.
12 Borrowings
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Secured
Bank loans and overdrafts 7 7 4
Obligations under finance leases 1 6 2
Total secured 8 13 6
Unsecured
Bank loans and overdrafts 786 495 723
Bonds 996 1,274 995
Bonds 1,332
Call option derivative (58)
Other loans 15 19 17
Total unsecured 1,797 1,788 1,735
Total borrowings 1,805 1,801 1,741
Maturity of borrowings
Current 299 458 176
Non-current 1,506 1,343 1,565
Financing facilities
Group liquidity is provided through a range of committed debt facilities. The principal loan arrangements in place
include the following:
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million Maturity Interest rate % 2015 2014 2014
Financing facilities
Syndicated Revolving Credit Facility July 2020 EURIBOR / LIBOR
+ margin 750 750 750
EUR500 million Eurobond April 2017 5.75% 500 500 500
EUR500 million Eurobond September 2020 3.375% 500 500 500
EUR280 million Eurobond July 2014 9.75% - 280 -
Export Credit Agency Facility June 2020 EURIBOR + margin 82 101 92
European Investment Bank Facility June 2025 EURIBOR + margin 95 100 100
Other Various Various 169 220 164
Total committed facilities 2,096 2,451 2,106
Drawn (1,594) (1,706) (1,650)
Total committed facilities available 502 745 456
Expiry date of facilities
Within one year 68 88 59
Two to six years 434 657 397
Both the EUR500 million Eurobonds contain a coupon step-up clause whereby the coupon will be increased by
1.25% per annum if Mondi fails to maintain at least one investment grade credit rating from either Moody's
Investors Service or Standard & Poor's. Mondi currently has investment grade credit ratings from both Moody's
Investors Service (Baa2, outlook stable) and Standard & Poor's (BBB, outlook stable).
13 Retirement benefits
All assumptions related to 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 2015. The net retirement
benefit obligation decreased by EUR16 million mainly due to changes in assumptions. The assets backing the
defined benefit scheme liabilities reflect their market values as at 30 June 2015. Any movements in the
assumptions have been recognised as a remeasurement in the condensed combined and consolidated statement
of comprehensive income.
14 Business combinations
To 30 June 2015
There were no acquisitions completed during the six months ended 30 June 2015.
In May 2015, Mondi announced that it had signed an agreement with Walki Oy for the acquisition of two extrusion
coatings plants located in Pietarsaari, Finland and Wroclaw, Poland. The consideration to be paid on a debt and
cash-free basis amounts to EUR60 million. For the twelve months ended 30 April 2015, the plants generated
combined revenues of EUR113 million and EBITDA of EUR9 million.
The acquisition will strengthen the Group's position in the European extrusion coatings market and increase the
range of technical capabilities on offer to customers. The transaction remains subject to competition clearance and
other customary closure conditions and is expected to be completed during the third quarter of 2015.
To 31 December 2014
On 30 June 2014, Mondi acquired the bags and kraft paper business of Graphic Packaging International Inc, a
wholly-owned subsidiary of Graphic Packaging Holding Company, for a total consideration of US$101 million
(EUR74 million) on a debt and cash-free basis.
On 31 July 2014, a consumer packaging plant in Poland was acquired from Printpack Inc, for US$23 million
(EUR17 million) on a debt and cash-free basis.
On 31 October 2014, the industrial bags business was acquired from Inn_Flex S.r.L. & David Tomasin (Intercell),
for US$12 million (EUR9 million) on a debt and cash-free basis.
Details of the net assets acquired, as adjusted from book to fair value, are as follows:
EUR million Book value Revaluation Fair value
Net assets acquired
Intangible assets - 1 1
Property, plant and equipment 97 (48) 49
Inventories 62 (7) 55
Trade and other receivables 33 (1) 32
Cash and cash equivalents 6 - 6
Total assets 198 (55) 143
Trade and other payables (31) (3) (34)
Net retirement benefits liability (1) - (1)
Deferred tax liabilities - (1) (1)
Total liabilities (excluding debt) (32) (4) (36)
Short-term borrowings (30) - (30)
Medium and long-term borrowings (2) - (2)
Net assets acquired 134 (59) 75
Transaction costs expensed 3
Cash acquired net of overdrafts (6)
Net cash paid per combined and consolidated statement of cash flows 72
EUR million Net assets Net cash paid
Graphic 44 46
Printpack 23 17
Intercell 8 9
Other acquisitions total 75 72
The fair value accounting of the Printpack and Intercell acquisitions is provisional in nature. The nature of these
businesses is such that further adjustments to the carrying values of acquired assets and/or liabilities are possible
as the detail of the acquired businesses is evaluated post acquisition. If necessary, any adjustments will be made
within 12 months of the acquisition dates.
15 Consolidated cash flow analysis
(a) Reconciliation of profit before tax to cash generated from operations
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
EUR million 2015 2014 2014
Profit before tax 392 312 619
Depreciation and amortisation 180 176 355
Impairment of property, plant & equipment and intangible assets (not included in
special items) 1 - 4
Share-based payments 6 5 10
Non-cash effect of special items 17 (7) 15
Net finance costs (including financing special item) 59 63 110
Net profit from associates - (1) (1)
Decrease in provisions and net retirement benefits (5) (9) (10)
Increase in inventories (25) (30) (71)
Increase in operating receivables (163) (82) (2)
Increase/(decrease) in operating payables 87 6 (14)
Fair value gains on forestry assets (23) (20) (34)
Felling costs 25 27 54
Profit on disposal of property, plant & equipment and intangible assets (11) (1) -
Other adjustments (2) - (2)
Cash generated from operations 538 439 1,033
(b) Cash and cash equivalents
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
EUR million 2015 2014 December 2014
Cash and cash equivalents per condensed combined and consolidated
statement of financial position 48 49 56
Bank overdrafts included in short-term borrowings (54) (48) (47)
Net cash and cash equivalents per condensed combined and
consolidated statement of cash flows (6) 1 9
(c) Movement in net debt
The composition of net debt has been revised to take into account the Group's debt-related derivative financial
instruments. Comparative information has been restated.
The Group's net debt position is as follows:
Debt-related
Cash and Debt due Debt due Current derivative
cash within one after one financial asset financial Total net
EUR million equivalents year year investments instruments debt
At 1 January 2014 (Audited) 64 (115) (1,571) 1 2 (1,619)
Cash flow (63) 45 (95) - - (113)
Business combinations - (30) - - - (30)
Movement in unamortised loan costs - - 13 - - 13
Net movement in derivative financial
instruments - - - - (9) (9)
Reclassification - (306) 306 - - -
Currency movements - (4) 4 - - -
At 30 June 2014 (Reviewed) (Restated) 1 (410) (1,343) 1 (7) (1,758)
Cash flow 9 330 (259) (1) - 79
Business combinations - - (2) - - (2)
Movement in unamortised loan costs - - 3 - - 3
Net movement in derivative financial
instruments - - - - 79 79
Reclassification - (82) 82 - - -
Currency movements (1) 33 (46) - - (14)
At 31 December 2014 (Audited) 9 (129) (1,565) - 72 (1,613)
Cash flow (16) (89) 69 - - (36)
Movement in unamortised loan costs - - (2) - - (2)
Net movement in derivative financial
instruments - - - - (65) (65)
Reclassification - (21) 21 - - -
Currency movements 1 (6) (29) - 9 (25)
At 30 June 2015 (Reviewed) (6) (245) (1,506) - 16 (1,741)
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.
16 Capital commitments
Capital commitments and expenditure is based on capital projects approved to date and the budget approved by
the Boards.
As previously indicated, capital expenditure is expected to average around EUR550 million per annum over the
next two years in the absence of any further major projects. Given the timing of the anticipated major project cash
outflows, it is expected that there will be a bias towards 2015.
These capital projects are expected to be financed from existing cash resources and borrowing facilities.
17 Contingent liabilities and contingent assets
Contingent liabilities comprise aggregate amounts as at 30 June 2015 of EUR15 million (as at 30 June 2014:
EUR26 million; as at 31 December 2014: EUR26 million) in respect of loans and guarantees given to banks and
other third parties. No acquired contingent liabilities have been recorded in the Group's condensed combined and
consolidated statement of financial position for all periods presented.
18 Fair value disclosures
Financial instruments that are measured in the condensed combined and consolidated statement of financial
position at fair value or where the fair value of financial instruments have been disclosed in notes to the
condensed combined and consolidated financial statements require disclosure of fair value measurements by
level based on the following fair value measurement hierarchy:
- level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
- level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and
- level 3 – inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
The Group does not hold any financial instruments categorised as level 3 financial instruments. The only assets
measured at fair value on level 3 of the fair value measurement hierarchy are the Group's forestry assets as set
out in note 11.
There have also been no transfers of assets or liabilities between levels of the fair value hierarchy during the year.
The fair values of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) are determined using standard valuation techniques. These valuation techniques maximise the use of
observable market data where available and rely as little as possible on Group specific estimates.
Specific valuation methodologies used to value financial instruments include:
- the fair values of interest rate swaps and foreign exchange contracts are calculated as the present value
of expected future cash flows based on observable yield curves and exchange rates;
- the Group's commodity price derivatives are fair valued by independent third parties, who in turn calculate
the fair values as the present value of expected future cash flows based on observable market data; and
- other techniques, including discounted cash flow analysis, are used to determine the fair values of other
financial instruments.
Except as detailed in the following table, the directors consider that the carrying values of financial assets and
financial liabilities recorded at amortised cost in the condensed combined and consolidated financial statements
are approximately equal to their fair values.
Carrying amount Fair value
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
As at 31 As at 31
As at 30 June As at 30 June December As at 30 June As at 30 June December
EUR million 2015 2014 2014 2015 2014 2014
Financial liabilities
Borrowings 1,805 1,801 1,741 1,894 1,920 1,852
19 Related party transactions
The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service
transactions with equity accounted investees and others in which the Group has a material interest. These
transactions are under terms that are no less favourable than those arranged with third parties. These
transactions, in total, are not considered to be significant. Transactions between Mondi Limited, Mondi plc and
their respective subsidiaries, which are related parties, have been eliminated on consolidation.
There have been no significant changes to the related parties as disclosed in note 31 of the Group's annual
financial statements for the year ended 31 December 2014.
20 Events occurring after 30 June 2015
The following events have occurred after 30 June 2015:
- The Boards proposed an interim dividend of 14.38 euro cents per share (refer to note 10).
- Announcement of the sale of the Consumer Packaging operation in Osterburken, Germany, subject to
competition approval.
- Announcement of the sale of two film and packaging plants in Malaysia.
Production statistics
(Restated)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2015 2014 2014
Packaging Paper
Containerboard Tonnes 1,086,057 1,075,226 2,160,485
Kraft paper Tonnes 605,741 531,040 1,130,220
Softwood pulp Tonnes 1,082,595 1,025,692 2,085,191
Internal consumption Tonnes 1,004,719 950,545 1,970,491
Market pulp Tonnes 77,876 75,147 114,700
Fibre Packaging
Corrugated board and boxes million m2 668 672 1,343
Industrial bags million units 2,506 2,133 4,446
Extrusion coatings million m2 735 730 1,401
Consumer Packaging
Consumer packaging million m2 3,330 3,249 6,397
Uncoated Fine Paper
Uncoated fine paper Tonnes 696,231 684,678 1,361,243
Newsprint Tonnes 97,113 104,574 201,998
Hardwood pulp Tonnes 583,033 567,432 1,127,594
Internal consumption Tonnes 527,729 529,482 1,041,104
Market pulp Tonnes 55,304 37,950 86,490
South Africa Division
Containerboard Tonnes 112,980 124,157 252,526
Uncoated fine paper Tonnes 116,768 126,907 258,083
Hardwood pulp Tonnes 291,311 311,914 648,635
Internal consumption Tonnes 147,686 164,112 332,085
Market pulp Tonnes 143,625 147,802 316,550
Softwood pulp – internal consumption Tonnes 59,462 75,675 138,640
Newsprint Tonnes 55,805 58,859 117,087
Exchange rates
Average Closing
Six months Six months Year ended Six months Six months Year ended
ended 30 June ended 30 June 31 December ended 30 June ended 30 June 31 December
versus euro 2015 2014 2014 2015 2014 2014
South African rand 13.31 14.67 14.42 13.64 14.46 14.04
Czech koruna 27.50 27.44 27.53 27.25 27.45 27.74
Polish zloty 4.14 4.18 4.18 4.19 4.16 4.27
Pounds sterling 0.73 0.82 0.81 0.71 0.80 0.78
Russian rouble 64.60 48.01 50.73 62.36 46.38 72.34
Turkish lira 2.86 2.97 2.91 3.00 2.90 2.83
US dollar 1.12 1.37 1.33 1.12 1.37 1.21
Glossary of financial terms
This report contains a number of terms which are explained below:
EBITDA Operating profit before special items, depreciation, amortisation and impairments.
Underlying operating profit Operating profit before special items.
Special items Those non-recurring financial items which the Group believes should be separately
disclosed on the face of the combined and consolidated income statement to assist in
understanding the underlying financial performance achieved by the Group.
Underlying earnings Net profit after tax before special items attributable to shareholders.
Headline EPS The presentation of headline earnings per share (EPS) is mandated under the Listings
Requirements of the JSE Limited. Headline earnings has been calculated in
accordance with Circular 2/2014, 'Headline Earnings', as issued by the South African
Institute of Chartered Accountants.
Net debt A measure comprising short, medium, and long-term interest-bearing borrowings and
the fair value of debt-related derivatives less cash and cash equivalents and current
financial asset investments.
Return on capital employed (ROCE) Trailing 12 month underlying operating profit, including share of associates' net profit,
divided by trailing 12 month average capital employed and for segments has been
extracted from management reports. Capital employed is adjusted for impairments in
the year and spend on those strategic projects which are not yet in production.
Sponsor in South Africa: UBS South Africa Proprietary Limited
Date: 06/08/2015 08:00:00 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
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