Wrap Text
Half-yearly results for the six months ended 30 June 2016
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
4 August 2016
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 Guidance and Transparency and Listing Rules of the United Kingdom Listing Authority.
Half-yearly results for the six months ended 30 June 2016
Highlights
- Continued strong financial performance on all key metrics
- Underlying operating profit of EUR529 million, up 8%
- Underlying earnings of 75.0 euro cents per share, up 11%
- Cash generated from operations of EUR620 million, up 15%
- Return on capital employed of 21.2%
- Capital projects continue to deliver growth
- Strategic acquisitions enhance packaging portfolio
- Interim dividend declared of 18.81 euro cents per share
Financial Summary
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million, except for percentages and per share measures 2016 2015 2015
Group revenue 3,312 3,459 3,360
Underlying EBITDA(1) 714 671 654
Underlying operating profit(1) 529 490 467
Operating profit 529 451 449
Profit before tax 482 392 404
Per share measures
Basic underlying earnings per share(1) (euro cents) 75.0 67.8 65.9
Basic earnings per share (euro cents) 75.0 60.3 63.7
Interim dividend per share (euro cents) 18.81 14.38
Cash generated from operations 620 538 741
Net debt 1,491 1,741 1,498
Group return on capital employed (ROCE)(2) 21.2% 19.0% 20.5%
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 of the Group between financial reporting periods. A reconciliation of underlying operating
profit to profit before tax is provided in note 4 of the condensed financial statements.
(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:
"Mondi delivered a strong performance in the first half of 2016 with underlying operating profit up 8% to EUR529 million and
a return on capital employed of 21.2%. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and
the South Africa Division, partially offset by the anticipated price weakness in certain of our packaging paper grades.
We continue to make good progress in driving growth through our capital investment programme. We are on track to
deliver an anticipated EUR60 million in incremental operating profit in 2016 from recently completed major capital projects,
and our projects in development remain on time and on budget. The Boards recently approved the first phase of a
modernisation programme at our Steti mill in the Czech Republic with follow-on investments still under evaluation.
In April 2016 we completed the acquisition of a corrugated packaging plant in Poland, and we have recently completed
two acquisitions that will further enhance our product offering and geographic reach in the growing consumer packaging
segment.
While we saw some price weakness in certain of our packaging grades in the first half, demand for these products
remains strong and pricing has generally stabilised with increases recently achieved in certain grades. The second half
will be impacted by planned maintenance shuts at a number of our mills and the usual seasonal downturn in our
Uncoated Fine Paper business. Furthermore, we anticipate a lower forestry fair value gain than was recognised in the
first half. We expect to continue to benefit from stable input costs and incremental contributions from our capital
investment programme, together with the stability afforded by our downstream converting businesses.
While mindful of the heightened macroeconomic and political uncertainties in Europe, we remain confident of continuing to deliver an
industry leading performance in line with our expectations."
Group performance review
Our underlying operating profit for the half-year ended 30 June 2016 increased 8% to EUR529 million compared to the first half of
2015. We saw strong contributions from Consumer Packaging, Uncoated Fine Paper and the South Africa Division, driven by
volume growth, pricing benefits and forestry fair value gains, respectively. This was partially offset by Packaging Paper, which was
negatively impacted by lower average selling prices, and Fibre Packaging, which saw lower sales volumes and experienced
negative currency effects.
Revenue was down 4%, primarily due to currency effects and disposals completed in 2015. Excluding these effects revenue grew 1%.
Like-for-like sales volumes were similar to the comparable prior year period, with generally stable volumes in the paper businesses
and strong volume growth in Consumer Packaging offset by lower sales volumes in the Industrial Bags and Extrusion Coatings
segments of Fibre Packaging.
Pricing movements in the Group's key paper grades were mixed, with domestic currency selling prices significantly up in Uncoated
Fine Paper, more modestly up in the South Africa Division, and down in Packaging Paper on the comparable prior year period.
Input costs were generally lower in our Europe & International businesses. Wood, fuel and energy input costs were lower than the
comparable prior year period, enhanced by the benefits of the green energy investments at Swiecie, Poland, completed in the
second half of 2015. Average benchmark paper for recycling costs were up 13% on the comparable prior year period, at similar
levels to the second half of 2015. In the South Africa Division, higher domestic wood costs and inflationary increases contributed to
higher variable costs in local currency terms, partially offset by higher energy sales. A significantly higher fair value gain on forestry
assets reduced the net cost base in South Africa.
In the first half of 2016, we completed the annual maintenance shut at our Syktyvkar mill in Russia and some smaller shuts at a
number of our other mills. The balance of our maintenance shuts are scheduled for the second half of the year. Based on
prevailing market prices, the full year impact on underlying operating profit of the Group's maintenance shuts is estimated at
around EUR70 million (2015: EUR90 million) of which the first half effect was around EUR20 million (2015: EUR35 million).
Generally weaker emerging market currencies had a net negative impact on translation of the profits of our domestically focused
uncoated fine paper and Fibre Packaging operations in those countries, partly offset by the benefits of the export oriented
packaging paper and pulp operations in Russia, Poland and South Africa.
Underlying earnings increased 11% to 75.0 euro cents per share, reflecting the increase in underlying operating profit and the
benefit of lower net finance charges.
An interim dividend of 18.81 euro cents per share has been declared.
Packaging Paper (Europe & International Division)
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015
Segment revenue 1,045 1,122 1,034
Underlying EBITDA 251 266 239
Underlying operating profit 192 211 180
Underlying operating profit margin 18.4% 18.8% 17.4%
Special items — (14) —
Capital expenditure 70 104 155
Net segment assets 1,712 1,734 1,753
ROCE 23.5% 26.6% 25.5%
Underlying operating profit of EUR192 million was down 9% on the comparable prior year period.
On a like-for-like basis, excluding the impact of the sale of the Raubling mill during 2015, sales volumes were marginally up across
all containerboard grades.
As anticipated, despite solid demand, increased supply from new capacity in Europe and competition from importers benefiting
from weak emerging market currencies resulted in downward pressure on kraftliner prices during the period. Average European
benchmark selling prices for unbleached kraftliner were down 2% on the comparable prior year period and down 5% on the second
half of 2015. European white-top kraftliner prices were similar to the comparable prior year period and down around 2% on the
second half of 2015. In response to sustained good demand and a strong order position, by the beginning of August, selling price
increases of EUR20/tonne had been implemented for both unbleached kraftliner and white-top kraftliner in all European markets excluding
southern Europe. In Russia, price increases for white-top kraftliner were implemented at the beginning of the year.
Average European benchmark selling prices for recycled containerboard were up 3% on the comparable prior year period, but
down around 3% on the second half of 2015.
Sales volumes for sack kraft paper were at similar levels to the comparable prior year period. As previously indicated, demand
softness in a number of export markets and seasonal weakness in European markets towards the end of the prior year lead to
average selling prices for sack kraft paper produced in Europe declining by 5-6% in the early part of 2016. Demand has since
improved in the important export markets of south east Asia and the Middle East, while Europe has seen the usual seasonal pick-
up in demand, supporting the stabilising of pricing.
We saw good demand across our range of speciality kraft papers, although sales volumes of certain grades were impacted by the
closure of high cost production capacity in 2015. Selling prices were, on average, marginally higher than in the comparable prior
year period.
Input costs were at a similar level to the comparable prior year period with the business benefiting from stable raw material input
costs and lower energy costs which offset higher paper for recycling costs and other inflationary increases. Green energy prices
were lower in Poland, reducing the contribution from the sale of green energy credits.
We completed planned maintenance shuts at our Syktyvkar, Russia and Swiecie, Poland mills during the first half. A further
planned maintenance shut is scheduled at Swiecie in the third quarter and the majority of our kraft paper mill shuts will take place
during the final quarter of the year.
Fibre Packaging (Europe & International Division)
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015
Segment revenue 968 1,046 985
Underlying EBITDA 94 101 86
Underlying operating profit 59 68 52
Underlying operating profit margin 6.1% 6.5% 5.3%
Special items — (10) (11)
Capital expenditure 50 58 60
Net segment assets 993 963 935
ROCE 12.6% 15.2% 13.9%
Underlying operating profit of EUR59 million was down by 13%. Lower sales volumes in Industrial Bags and Extrusion Coatings and a
one-off gain recorded in the comparable prior year period were partially offset by the benefits of restructuring and rationalisation
activities. Weaker emerging market currencies had a significant negative impact on the translation of the results of our domestically
focused Fibre Packaging operations.
Sales volumes in our Corrugated Packaging segment were in line with the comparable prior year period. We achieved good growth
in central Europe, offset by lower volumes in Turkey which continued to be impacted by political turbulence in the region. In
Poland, sales volumes were up following the acquisition of SIMET S.A. in the early part of the year, although sales growth was
tempered by the ongoing Russian embargo preventing the export of fresh fruit and vegetables to that market.
In the Industrial Bags segment, while volumes in European markets were up around 3%, capacity rationalisation and challenging
market conditions in the US and weakness in the CIS region resulted in an overall decline in sales volumes. This was partly offset
by significant cost savings resulting from a strong focus on cost management and the benefits of restructuring and rationalisation
activities completed during 2015.
Lower sales volumes in Extrusion Coatings were largely offset by improved sales margins and ongoing cost management.
Consumer Packaging (Europe & International Division)
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015
Segment revenue 765 730 739
Underlying EBITDA 100 83 94
Underlying operating profit 64 49 59
Underlying operating profit margin 8.4% 6.7% 8.0%
Special items — (15) (7)
Capital expenditure 42 50 42
Net segment assets 1,148 1,065 1,146
ROCE 11.6% 10.9% 10.7%
Consumer Packaging continues to show good progress, with a 31% increase in operating profit over the comparable prior year
period to EUR64 million driven by strong volume growth.
Sales volumes grew across most product segments on a like-for-like basis, with particularly strong growth in the high value-added
segment of consumer laminates and bags.
Fixed costs were higher, in line with the increased focus on innovation and customer service, incorporating an enhanced sales and
application engineering infrastructure. This was partially offset by one off gains during the period. We are making good progress with
initiatives to improve the productivity and efficiency of our operations and capital expenditure is directed at both growth
opportunities and the modernisation of equipment at a number of our sites.
We also benefited from the successful integration of Ascania, Germany and KSP, South Korea and Thailand, acquired in the
second half of 2015. During July 2016, we completed two further acquisitions supporting the growth of this business. In Turkey,
we acquired 90% of the outstanding share capital in Kalenobel, a consumer packaging company focused on the manufacture of
flexible consumer packaging for ice cream and other applications, as well as aseptic cartons. The company is headquartered in
Istanbul and operates two manufacturing sites northwest of the city, serving both international FMCG companies as well as
regional food and beverage producers. In Russia, we acquired 100% of Uralplastic which manufactures a range of consumer
flexible packaging products for food, hygiene, homecare and other applications. The company serves both local and international
customers.
Uncoated Fine Paper (Europe & International Division)
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015
Segment revenue 625 626 607
Underlying EBITDA 172 152 139
Underlying operating profit 133 113 99
Underlying operating profit margin 21.3% 18.1% 16.3%
Capital expenditure 27 32 33
Net segment assets 864 951 821
ROCE 30.3% 19.4% 25.6%
Our Uncoated Fine Paper business continued to perform strongly, with underlying operating profit of EUR133 million, up 18% on the
comparable prior year period. Strong pricing, stable volumes and lower input costs, particularly energy costs, more than offset
negative currency effects and inflationary pressures on the fixed cost base.
The business maintained sales volumes at a similar level to the comparable prior year period. European prices were stable
following the increases seen in the second half of 2015, with the benefits of industry capacity rationalisation in the prior year offset
by subdued demand and pressure from imports. Average benchmark European selling prices were up 2.4% on the comparable
prior year period and in line with the second half of 2015.
In Russia, we achieved higher average selling prices following the increases implemented during 2015 and at the beginning of the
current year.
We completed maintenance shuts at Syktyvkar, Russia and Ružomberok, Slovakia in the first half of 2016. A further shut is
scheduled for the Ružomberok mill during the second half of the year. In line with previous years, the second half is also expected
to be impacted by the seasonal slowdown in demand during the third quarter.
South Africa Division
Six months
Six months Six months ended
ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015
Segment revenue 290 314 338
Underlying EBITDA 114 89 110
Underlying operating profit 98 69 92
Underlying operating profit margin 33.8% 22.0% 27.2%
Capital expenditure 25 32 29
Net segment assets 640 672 563
ROCE 37.4% 22.9% 30.1%
Underlying operating profit of EUR98 million was up 42% on the first half of 2015, benefiting from higher domestic selling prices,
forestry gains and the timing of the Richards Bay shut.
Average domestic selling prices were above both the comparable prior year period and the second half of 2015 across all product
grades. Export selling prices for white-top kraftliner were in line with the comparable prior year period, while pulp export prices
were well below those achieved in the first half of the previous year. Average benchmark US dollar hardwood pulp prices were
down 5% on the comparable prior year period and down 9% on the second half of 2015.
Forestry gains are dependent on a variety of external factors, the most significant of which is the export price of timber. Significant
increases in selling prices resulted in a fair value gain of EUR48 million being recognised in the first half of the year, an increase of
EUR25 million over the comparable prior year period. This level of gain is not expected to recur in the second half of 2016.
In 2015, the annual maintenance shut of our Richards Bay mill in South Africa took place in the first quarter of the year, while in
2016 it is scheduled for the fourth quarter.
Tax
Based on the Group's geographic profit mix and the relevant tax rates applicable, we would expect our tax rate to be around 22%.
However, we continued to benefit from tax incentives related to our capital investments in Poland, Slovakia and Russia, giving rise
to an underlying effective tax rate of 19%, consistent with the comparable prior year period.
Special items
Special items are those items of financial performance that we believe should be separately disclosed to assist in the
understanding of our underlying financial performance. Special items are considered to be material either in nature or in amount.
There were no special items in the six months ended 30 June 2016. In the six months ended 30 June 2015, the Group recognised
a net special item charge after tax of EUR36 million.
Cash flow
Cash generated from our operations of EUR620 million was up 15% on the comparable prior year period.
Working capital at 30 June 2016 was 13.3% of revenue, in line with our target of 12-14% and higher than the year-end level of
11.6%. This reflects the usual seasonal uptick in the first half of the year, giving rise to a net outflow of EUR61 million
(2015: EUR101 million).
Significant net cash outflows from financing activities included the payment of the final 2015 dividend in May 2016, payment of the
5.75% coupon on the EUR500 million 2017 Eurobond and payments of dividends to holders of non-controlling interests.
Capital investments
During the first half of the year we invested EUR214 million in our property, plant and equipment.
We benefited from the contributions from a number of our recently completed capital projects and remain on track to deliver an
anticipated incremental operating profit contribution of EUR60 million in 2016. These include the EUR166 million recovery and biofuel
boiler project at Swiecie, Poland, which started up in the second half of 2015; the ongoing ramp-up of the rebuilt paper and inline
coating machine at Steti, Czech Republic and investments in our Packaging Paper and Fibre Packaging operations.
We made good progress with our ongoing projects, all of which are running on time and on budget. These include the EUR94 million
second phase of the investment at Swiecie to provide 100,000 tonnes of additional softwood pulp capacity and 80,000 tonnes of
lightweight kraftliner; the upgrade of the woodyard and project to provide capacity to produce unbleached kraftliner at Richards
Bay, South Africa; and a number of investments to modernise and expand our facilities in our Fibre and Consumer Packaging
businesses.
During the period, the Boards approved:
- an investment of EUR310 million in a new 300,000 tonne per annum kraft top white machine at our Ružomberok mill in Slovakia and
related pulp mill upgrades. This project remains subject to obtaining approval of tax incentives from the European
Commission and necessary permitting; and
- the first phase of the modernisation of the Steti mill in the Czech Republic, which includes a new woodyard and bleaching
line for a total investment of EUR41 million.
Further investments in the Steti mill, including the possible replacement of the recovery boiler, remain under evaluation.
Given the current approved major project pipeline, annual capital expenditure is expected to remain in line with previous estimates
at between EUR400 million and EUR450 million per annum over the 2016/2017 period.
Treasury and borrowings
Net debt at 30 June 2016 was EUR1,491 million (31 December 2015: EUR1,498 million). The net debt to 12 month trailing EBITDA ratio
was 1.1 times.
On 14 April 2016 we issued a 1.5% EUR500 million Eurobond with an 8 year term under our European Medium Term Note
Programme, thereby extending the Group's maturity profile and ensuring ample liquidity. At 30 June 2016, we had EUR2.5 billion of
committed facilities of which EUR757 million were undrawn and EUR293 million in cash. The weighted average maturity of our committed
debt facilities is approximately 4.4 years.
Finance charges of EUR47 million were below those of the comparable prior year period. Average net debt was around 14% down on
the comparable prior year period and the average effective interest rate for the period was 5.9% (six months ended 30 June
2015: 6.9%; six months ended 31 December 2015: 5.6%). Cash interest paid decreased to EUR46 million.
Dividend
The Boards' aim is to offer shareholders long-term dividend growth within a targeted dividend cover range of two to three times
over the business cycle.
An interim dividend of 18.81 euro cents per share has been declared by the directors and will be paid on 13 September 2016 to
those shareholders on the register of Mondi plc on 19 August 2016. An equivalent South African rand interim dividend will be paid
on 13 September 2016 to shareholders on the register of Mondi Limited on 19 August 2016. The dividend will be paid from
distributable reserves of Mondi Limited and Mondi plc, as presented in the respective company annual financial statements for the
year ended 31 December 2015.
Outlook
While we saw some price weakness in certain of our packaging grades in the first half, demand for these products remains strong
and pricing has generally stabilised with increases recently achieved in certain grades. The second half will be impacted by
planned maintenance shuts at a number of our mills and the usual seasonal downturn in our Uncoated Fine Paper business. Furthermore,
we anticipate a lower forestry fair value gain than was recognised in the first half. We expect to continue to benefit from stable
input costs and incremental contributions from our capital investment programme, together with the stability afforded by our downstream
converting businesses.
While mindful of the heightened macroeconomic and political uncertainties in Europe, we remain confident of continuing to deliver an industry
leading performance in line with our expectations.
Principal risks and uncertainties
The Boards are responsible for the effectiveness of the Group's risk management activities and internal control processes. The
Boards have put in place procedures for identifying, evaluating and managing significant risks that the Group faces.
Risk management is by nature a dynamic and ongoing process. Our approach 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 will review 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 and that there have been no significant changes to these risks during the reporting
period.
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. In our converting operations, newer technology may lower operating
costs and provide increased product functionality, impacting margins.
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 and consistent investment in our operating capacity, ensures that we remain competitive.
Product substitution
Changing global socio-economic and demographic trends and increased public awareness of sustainability challenges affect the
demand for Mondi's products.
Factors that impact the demand for our products include reduced weight of packaging materials; increased use of recycled
materials; electronic substitution of paper products; increased demand for high-quality printed material; certified and responsibly
produced goods; and specific material qualities.
Our ability to meet changes in consumer demand depends on our capacity to correctly anticipate change and develop new
products on a sustainable, competitive and cost-effective basis. Our focus is on products enjoying positive substitution dynamics
and growing regional markets. We work with our customers to develop 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.
Fluctuations and variability in selling prices and gross margins
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.
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 high-quality, low-cost 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.
Economic risks in the markets in which we operate
We are an international packaging and paper group with more than 100 production operations across more than 30 countries.
Consequently, our business, financial condition and/or results of operations are affected by changes in global economic conditions.
A number of our operations 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. Areas of weaker governance also present
the challenge of addressing potential human rights issues in our operations and supply chain. From a human capital perspective,
we face different demographic and social conditions in the countries we operate in, affecting the availability of skills and talent
for the Group.
We actively monitor all countries and environments in which we operate. We engage in regular formal and informal interaction with
the authorities to ensure we remain abreast of any new developments. Despite recent improvements in certain segments of the
global economy, uncertainties remain concerning the future economic environment, including concerns over slowing growth
(particularly in China), political and economic structural weakness in the Eurozone's single currency framework, the impact of
political challenges in Turkey and uncertainty over the UK's continued membership of the European Union.
Our geographic diversity and decentralised management structure, utilising local resources in countries in which we operate,
reduces our exposure to any specific jurisdiction.
Cost and availability of responsibly produced wood, pulp and paper for recycling
We have access to our own sources of wood in Russia and South Africa and we 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 FSC or PEFC Chain-of-Custody standards and our minimum wood standard that complies with
the standard for Controlled Wood (FSC-STD-40-005), as well as initiatives to promote the use of woody biomass from residues
of pulp and paper processes 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
protect ecosystems and develop 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 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 are involved in multi-stakeholder processes to address challenges in meeting the global demand for
sustainable, responsible fibre.
Energy security and related input costs
Mondi is a significant consumer of electricity, which we generate internally and purchase from external suppliers. Where 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.
As an energy-intensive business, we face potential physical and regulatory risks related to climate change.
We monitor our electricity usage, carbon emission levels and use of renewable energy. Most of our larger operations have high
levels of electricity self-sufficiency. We focus on improving the energy efficiency of our operations and have invested in our
operations to improve our energy profile and increase electricity self-sufficiency, while reducing ongoing operating costs and
carbon 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.
Technical integrity of our operating assets
We have five major mills which together account for approximately 70% of our total pulp and paper production capacity and a
significant consumer packaging manufacturing facility in Germany. If operations at any of these key facilities were interrupted for
any significant length of time, it could have a material adverse effect on our financial position or performance. Accidents or
incidents such as fires, explosions or large machinery breakdowns, could result in property damage, loss of production,
reputational damage and/or safety incidents.
Our capital investment programme supports the replacement of older equipment to improve both reliability and integrity and our
proactive repair and maintenance strategy is designed to minimise breakdown risks.
We conduct detailed risk assessments of our high-priority equipment and have specific processes and procedures in place for the
ongoing management and maintenance of such equipment.
We actively monitor all incidents and have a formal process which allows us to share lessons learnt across our operations, identify
emerging issues, conduct benchmarking and evaluate the effectiveness of our risk reduction activities.
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 to 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 and local environmental laws and regulations as well as the requirements of our customers and expectations
of our broader stakeholders.
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.
Employee and contractor safety
We operate large facilities, often in remote locations. Accidents or incidents cause injury to our employees or contractors, property
damage, lost production time and/or 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 support safe and
productive workplaces.
We focus on engineering out the most significant risks in our operations, supported by robust controls and procedures for operating
those assets.
Reputational risk
Non-compliance with the legal and governance requirements and globally established responsible business conduct practices 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, human rights and labour.
We operate a comprehensive training and compliance programme, supported by self-certification and reporting. Our legal and
governance compliance is managed at business unit level, supported by a central team of relevant professionals, and is subject to
regular internal audit review.
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.
We increasingly work with our suppliers to promote responsible business conduct in the value chain.
Information technology risk
Many of our operations are dependent on the availability of IT services and an extended interruption of such services may result in
plant shutdown. Cyber crime continues to increase and attempts are more and more sophisticated, with the consequences of
successful attacks including compromised data, financial fraud and system shutdowns.
We have a comprehensive IT Security Policy approved by our Boards. We conduct regular threat assessments and utilise external
providers to evaluate and review our security policies and procedures. Where possible, we have redundancies in place, our system
landscape is based on well-proven products and we have cyber crime insurance.
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 18 and 30 of the Group's annual financial statements for the year
ended 31 December 2015.
Going concern
The directors have reviewed the Group's budget and latest outlook for 2016, considered the assumptions contained therein and
reviewed the critical risks which may impact the Group's performance in the near term. These include an evaluation of the current
macroeconomic environment and reasonably possible changes in the Group's trading performance.
The Group's financial position, cash flows, liquidity position and borrowing facilities are described in the financial statements. At
30 June 2016, Mondi had EUR757 million of undrawn, committed debt facilities. The Group's debt facilities have maturity dates of
between 1 and 9 years, with a weighted average maturity of 4.4 years.
Based on their evaluation, the Boards are satisfied that the Group remains solvent and has adequate liquidity 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 the condensed financial statements.
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
Max Gebhardt +27 11 214 2402
Conference call dial-in and webcast details
Please see below details of our dial-in conference call and webcast that will be held at 09:00 (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 00800 246 78 700 (toll-free)
The webcast will be available via www.mondigroup.com/HYResults16.
The presentation will be available to download from the above website an hour before the webcast commences. Questions can be
submitted via the dial-in conference call or via the webcast.
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 webcast, please e-mail mondi@kraftwerk.co.at and you will be
contacted immediately.
A video recording of the presentation will be available on Mondi's website during the afternoon of 4 August 2016.
Directors' responsibility statement
The directors confirm that to the best of their knowledge:
- the condensed combined and consolidated financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards and in particular with International Accounting Standard 34, 'Interim Financial Reporting';
- the half-yearly results announcement includes a fair review of the significant events during the six months ended 30 June
2016 and a description of the principal risks and uncertainties for the remaining six months of the year ending
31 December 2016;
- 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 from that reported in the Integrated
report and financial statements 2015.
The Group's condensed combined and consolidated financial statements, and related notes, were approved by the Boards and
authorised for issue on 3 August 2016 and were signed on their behalf by:
David Hathorn Andrew King
Director Director
3 August 2016
Independent auditor's 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 2016 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 2008, 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.
Auditor's 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 2016 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 2008.
Deloitte & Touche
Registered Auditor
Per Shelly Nelson
Partner
Sandton
3 August 2016
Building 1 and 2, Deloitte Place, The Woodlands Riverwalk Office Park, Block B
Woodlands Drive, Woodmead, Sandton, 41 Matroosberg Road, Ashlea Gardens X6, Pretoria,
Republic of South Africa Republic of South Africa
National Executive: *LL Bam Chief Executive Officer *TMM Jordan Deputy Chief Executive Officer *MJ Jarvis Chief Operating Officer *GM Pinnock Audit *N Sing Risk
Advisory *NB Kader Tax TP Pillay Consulting S Gwala BPaaS *K Black Clients & Industries *JK Mazzocco Talent & Transformation *MJ Comber Reputation & Risk
*TJ Brown Chairman of the Board
A full list of partners and directors is available on request
B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code
Associate of Deloitte Africa, a member of Deloitte Touche Tohmatsu Limited
*Partner and Registered Auditor
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 2016, 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 changes in equity, the condensed combined and consolidated
statement of cash flows and the related notes 1 to 21. 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 2016 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
3 August 2016
Condensed combined and consolidated income statement
for the six months ended 30 June 2016
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June 2016 Six months ended 30 June 2015 Year ended 31 December 2015
Special Special Special
items items items
EUR million Notes Underlying (Note 5) Total Underlying (Note 5) Total Underlying (Note 5) Total
Group revenue 3,312 — 3,312 3,459 — 3,459 6,819 — 6,819
Materials, energy and
consumables used (1,614) — (1,614) (1,727) — (1,727) (3,413) — (3,413)
Variable selling expenses (251) — (251) (264) — (264) (512) — (512)
Gross margin 1,447 — 1,447 1,468 — 1,468 2,894 — 2,894
Maintenance and other indirect
expenses (136) — (136) (146) — (146) (308) — (308)
Personnel costs (493) — (493) (515) (17) (532) (1,003) (28) (1,031)
Other net operating expenses (104) — (104) (136) (18) (154) (258) (25) (283)
Depreciation, amortisation and
impairments (185) — (185) (181) (4) (185) (368) (4) (372)
Operating profit 529 — 529 490 (39) 451 957 (57) 900
Net profit from associates — — — — — — 1 — 1
Total profit from operations
and associates 529 — 529 490 (39) 451 958 (57) 901
Net finance costs 7 (47) — (47) (59) — (59) (105) — (105)
Profit before tax 482 — 482 431 (39) 392 853 (57) 796
Tax charge 8 (92) — (92) (82) 3 (79) (161) 10 (151)
Profit for the period 390 — 390 349 (36) 313 692 (47) 645
Attributable to:
Non-controlling interests 27 27 21 21 45 45
Shareholders 363 363 328 292 647 600
Earnings per share (EPS) for
profit attributable to
shareholders
Basic EPS (euro cents) 9 75.0 60.3 124.0
Diluted EPS (euro cents) 9 74.9 60.2 123.7
Basic underlying EPS (euro
cents) 9 75.0 67.8 133.7
Diluted underlying EPS (euro
cents) 9 74.9 67.7 133.4
Basic headline EPS (euro cents) 9 75.0 60.1 123.4
Diluted headline EPS (euro cents) 9 74.9 60.0 123.1
Condensed combined and consolidated statement of comprehensive income
for the six months ended 30 June 2016
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Profit for the period 390 313 645
Items that may subsequently be reclassified to the condensed combined and
consolidated income statement
Fair value losses on cash flow hedges — — (1)
Exchange differences on translation of foreign operations 32 92 (122)
Tax effect thereof — — —
Items that will not subsequently be reclassified to the condensed combined
and consolidated income statement
Remeasurements of retirement benefits plans (29) 20 27
Tax effect thereof 7 (3) (3)
Other comprehensive income/(expense) for the period 10 109 (99)
Total comprehensive income for the period 400 422 546
Attributable to:
Non-controlling interests 27 22 41
Shareholders 373 400 505
Condensed combined and consolidated statement of financial position
as at 30 June 2016
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31
EUR million Notes 2016 2015 December 2015
Property, plant and equipment 3,598 3,615 3,554
Goodwill 592 549 590
Intangible assets 100 106 105
Forestry assets 11 267 260 219
Other non-current assets 55 49 58
Total non-current assets 4,612 4,579 4,526
Inventories 835 895 838
Trade and other receivables 1,041 1,147 994
Financial instruments 10 22 15
Cash and cash equivalents 16b 322 48 64
Other current assets 33 26 32
Total current assets 2,241 2,138 1,943
Total assets 6,853 6,717 6,469
Short-term borrowings 12 (669) (299) (250)
Trade and other payables (993) (1,064) (1,038)
Other current liabilities (150) (164) (165)
Total current liabilities (1,812) (1,527) (1,453)
Medium and long-term borrowings 12 (1,137) (1,506) (1,319)
Net retirement benefits liability (243) (234) (212)
Deferred tax liabilities (240) (261) (241)
Other non-current liabilities (61) (56) (57)
Total non-current liabilities (1,681) (2,057) (1,829)
Total liabilities (3,493) (3,584) (3,282)
Net assets 3,360 3,133 3,187
Equity
Share capital and stated capital 542 542 542
Retained earnings and other reserves 2,536 2,321 2,363
Total attributable to shareholders 3,078 2,863 2,905
Non-controlling interests in equity 282 270 282
Total equity 3,360 3,133 3,187
The Group's condensed combined and consolidated financial statements, and related notes 1 to 21, were approved by the Boards
and authorised for issue on 3 August 2016 and were signed on their behalf by:
David Hathorn Andrew King
Director Director
Mondi Limited company registration number: 1967/013038/06
Mondi plc company registered number: 6209386
Condensed combined and consolidated statement of changes in equity
for the six months ended 30 June 2016
Equity
attributable to Non-controlling Total
EUR million shareholders interests equity
At 1 January 2015 (Audited) 2,628 266 2,894
Total comprehensive income for the period 400 22 422
Dividends paid (140) (17) (157)
Purchases of treasury shares (31) — (31)
Other 6 (1) 5
At 30 June 2015 (Reviewed) 2,863 270 3,133
Total comprehensive income for the period 105 19 124
Dividends paid (69) (8) (77)
Other 6 1 7
At 31 December 2015 (Audited) 2,905 282 3,187
Total comprehensive income for the period 373 27 400
Dividends paid (183) (30) (213)
Purchases of treasury shares (20) — (20)
Other 3 3 6
At 30 June 2016 (Reviewed) 3,078 282 3,360
Equity attributable to shareholders (Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Combined share capital and stated capital 542 542 542
Treasury shares (24) (29) (29)
Retained earnings 3,031 2,631 2,868
Cumulative translation adjustment reserve (653) (477) (685)
Post-retirement benefits reserve (87) (75) (65)
Share-based payment reserve 15 16 20
Cash flow hedge reserve (2) (1) (2)
Statutory reserves 256 256 256
Total 3,078 2,863 2,905
Condensed combined and consolidated statement of cash flows
for the six months ended 30 June 2016
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million Notes 2016 30 June 2015 2015
Cash flows from operating activities
Cash generated from operations 16a 620 538 1,279
Income tax paid (104) (90) (160)
Net cash generated from operating activities 516 448 1,119
Cash flows from investing activities
Investment in property, plant and equipment (214) (276) (595)
Investment in forestry assets (18) (21) (41)
Proceeds from the disposal of property, plant and equipment and forestry
assets 8 22 41
Acquisition of subsidiaries, net of cash and cash equivalents 14 (10) — (72)
Proceeds from the disposal of businesses, net of cash and cash equivalents 15 — — 38
Other investing activities (2) (1) (4)
Net cash used in investing activities (236) (276) (633)
Cash flows from financing activities
Proceeds from medium and long-term borrowings 500 — 2
Repayment of medium and long-term borrowings (145) (69) (221)
(Repayment of)/proceeds from short-term borrowings 16c (109) 89 52
Interest paid (46) (57) (93)
Dividends paid to shareholders 10 (183) (140) (209)
Dividends paid to non-controlling interests (30) (18) (26)
Purchases of treasury shares (20) (31) (31)
Net realised gain on held-for-trading derivatives 10 39 74
Other financing activities — (1) (2)
Net cash used in financing activities (23) (188) (454)
Net increase/(decrease) in cash and cash equivalents 257 (16) 32
Cash and cash equivalents at beginning of period 36 9 9
Cash movement in the period 16c 257 (16) 32
Effects of changes in foreign exchange rates 16c — 1 (5)
Cash and cash equivalents at end of period 16b 293 (6) 36
Notes to the condensed combined and consolidated financial statements
for the six months ended 30 June 2016
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 21 for the six months ended
30 June 2016 have been prepared in accordance with International Financial Reporting Standard IAS 34, 'Interim Financial
Reporting'; the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting
Practices Committee; the requirements of the Companies Act of South Africa; and Financial Reporting Pronouncements as issued
by the Financial Reporting Council. They should be read in conjunction with the Group's Integrated report and financial statements
2015, prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (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 also complies with Article 4 of the EU IAS Regulation.
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 2015 has been delivered to the Registrar of Companies.
The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the UK Companies Act 2006.
These 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.
The condensed combined and consolidated financial statements have been prepared on a going concern basis as discussed in the
commentary under the heading 'Going concern'.
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 2016 as were applied in the preparation of the
Group's annual financial statements for the year ended 31 December 2015, except that the quantitative threshold for recognition of
special items incurred after 1 January 2016 has been increased to EUR10 million (2015: EUR5 million).
3 Seasonality
The seasonality of the Group's operations had 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 operating segments reflect the internal reporting structure of the Group. Due to its unique
characteristics in terms of geography, currency and underlying risks, the South Africa Division is managed and reported as a
separate geographic segment. The remaining operating segments, consolidated as the Europe & International Division, are
managed based on the nature of the underlying products produced by that business and comprise four distinct segments.
Each of the reportable business segments derives its income from the sale of manufactured products.
Six months ended 30 June 2016 (Reviewed)
Europe & International
Packaging Fibre Consumer Uncoated Fine South Africa Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Paper Division Corporate elimination total
Segment revenue 1,045 968 765 625 290 — (381) 3,312
Internal revenue (305) (17) (2) (2) (55) — 381 —
External revenue 740 951 763 623 235 — — 3,312
Underlying EBITDA 251 94 100 172 114 (17) — 714
Depreciation and impairments (58) (33) (28) (38) (16) — — (173)
Amortisation (1) (2) (8) (1) — — — (12)
Underlying operating
profit/(loss) 192 59 64 133 98 (17) — 529
Operating segment assets 2,078 1,288 1,347 1,043 749 7 (192) 6,320
Operating net segment assets 1,712 993 1,148 864 640 6 — 5,363
Additions to non-current
non-financial assets 60 65 40 22 42 — — 229
Capital expenditure cash
payments 70 50 42 27 25 — — 214
Operating margin (%) 18.4 6.1 8.4 21.3 33.8 — — 16.0
Return on capital employed
(%) 23.5 12.6 11.6 30.3 37.4 — — 21.2
Average number of employees
(thousands) 5.0 7.6 4.9 5.6 1.7 0.1 — 24.9
Six months ended 30 June 2015 (Reviewed)
Europe & International
Packaging Fibre Consumer Uncoated Fine South Africa Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Paper Division Corporate 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
Underlying EBITDA 266 101 83 152 89 (20) — 671
Depreciation and impairments (54) (31) (26) (38) (20) — — (169)
Amortisation (1) (2) (8) (1) — — — (12)
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
Year ended 31 December 2015 (Audited)
Europe & International
Packaging Fibre Consumer Uncoated Fine South Africa Intersegment Segments
EUR million, unless otherwise stated Paper Packaging Packaging Paper Division Corporate elimination total
Segment revenue 2,156 2,031 1,469 1,233 652 — (722) 6,819
Internal revenue (574) (37) (4) (6) (101) — 722 —
External revenue 1,582 1,994 1,465 1,227 551 — — 6,819
Underlying EBITDA 505 187 177 291 199 (34) — 1,325
Depreciation and impairments (111) (63) (54) (77) (38) (1) — (344)
Amortisation (3) (4) (15) (2) — — — (24)
Underlying operating
profit/(loss) 391 120 108 212 161 (35) — 957
Special items (14) (21) (22) — — — — (57)
Operating segment assets 2,094 1,224 1,333 1,001 669 6 (168) 6,159
Operating net segment assets 1,753 935 1,146 821 563 1 — 5,219
Additions to non-current
non-financial assets 281 118 173 56 104 1 — 733
Capital expenditure cash
payments 259 118 92 65 61 — — 595
Operating margin (%) 18.1 5.9 7.4 17.2 24.7 — — 14.0
Return on capital employed
(%) 25.5 13.9 10.7 25.6 30.1 — — 20.5
Average number of employees
(thousands) 5.3 7.7 4.6 6.0 1.6 0.1 — 25.3
Reconciliation of underlying EBITDA and underlying operating profit to profit before tax
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Underlying EBITDA 714 671 1,325
Depreciation and impairments (173) (169) (344)
Amortisation (12) (12) (24)
Underlying operating profit 529 490 957
Special items (see note 5) — (39) (57)
Net profit from associates — — 1
Net finance costs (47) (59) (105)
Profit before tax 482 392 796
Reconciliation of operating segment assets
(Reviewed) (Reviewed) (Audited)
As at 30 June 2016 As at 30 June 2015 As at 31 December 2015
Segment Net segment Segment Net segment Segment Net segment
EUR million assets assets assets assets assets assets
Segments total 6,320 5,363 6,404 5,394 6,159 5,219
Unallocated
Investment in equity accounted investees 10 10 4 4 9 9
Deferred tax assets/(liabilities) 19 (221) 17 (244) 23 (218)
Other non-operating
assets/(liabilities) 174 (301) 223 (280) 201 (325)
Group capital employed 6,523 4,851 6,648 4,874 6,392 4,685
Financial instruments/(net debt) 330 (1,491) 69 (1,741) 77 (1,498)
Total assets/equity 6,853 3,360 6,717 3,133 6,469 3,187
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 June ended 30 June 31 December ended 30 June ended 30 June 31 December
EUR million 2016 2015 2015 2016 2015 2015
Revenue
Africa
South Africa 286 312 652 189 226 465
Rest of Africa 6 6 13 98 104 205
Africa total 292 318 665 287 330 670
Western Europe
Austria 500 509 981 73 77 144
Germany 445 469 964 466 483 960
United Kingdom 17 21 39 116 128 252
Rest of western Europe 273 321 607 666 717 1,360
Western Europe total 1,235 1,320 2,591 1,321 1,405 2,716
Emerging Europe
Poland 465 458 909 274 255 515
Rest of emerging Europe 625 635 1,225 433 444 877
Emerging Europe total 1,090 1,093 2,134 707 699 1,392
Russia 350 335 674 273 253 535
North America 302 341 664 371 396 771
South America — — — 34 36 72
Asia and Australia 43 52 91 319 340 663
Group total 3,312 3,459 6,819 3,312 3,459 6,819
5 Special items
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Operating special items
Asset impairments — (4) (4)
Restructuring and closure costs:
Personnel costs relating to restructuring — (17) (28)
Restructuring and closure costs excluding related personnel costs — (15) (17)
Adjustments relating to 2012 Nordenia acquisition — (3) (8)
Total special items before tax and non-controlling interests — (39) (57)
Tax (see note 8) — 3 10
Total special items attributable to shareholders — (36) (47)
6 Write-down of inventories to net realisable value
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Write-down of inventories to net realisable value (21) (15) (24)
Aggregate reversal of previous write-down of inventories 13 11 19
7 Net finance costs
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Investment income
Total investment income 3 2 4
Foreign currency losses
Foreign currency losses (2) — —
Finance costs
Interest expense
Interest on bank overdrafts and loans (46) (60) (107)
Net interest expense on net retirement benefits liability (4) (5) (9)
Total interest expense (50) (65) (116)
Less: Interest capitalised 2 4 7
Total finance costs (48) (61) (109)
Net finance costs (47) (59) (105)
8 Tax charge
The Group's effective rate of tax before special items for the six months ended 30 June 2016, calculated on profit before tax before
special items and including net profit from associates, was 19% (six months ended 30 June 2015: 19%, year ended 31 December 2015: 19%).
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
UK corporation tax at 20.0% (2015: 20.5%) 1 — 1
SA corporation tax at 28% (2015: 28%) 17 13 35
Overseas tax 72 87 137
Current tax 90 100 173
Deferred tax 2 (18) (12)
Total tax charge before special items 92 82 161
Current tax on special items — (3) (2)
Deferred tax on special items — — (8)
Total tax credit on special items (see note 5) — (3) (10)
Total tax charge 92 79 151
9 Earnings per share
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 Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Profit for the period attributable to shareholders 363 292 600
Special items (see note 5) — 39 57
Related tax (see note 5) — (3) (10)
Underlying earnings for the period 363 328 647
Special items not excluded from headline earnings — (32) (53)
Profit on disposal of property, plant and equipment (1) (11) (13)
Impairments not included in special items 1 1 3
Related tax — 5 13
Headline earnings for the period 363 291 597
Weighted average number of shares
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
million 2016 30 June 2015 2015
Basic number of ordinary shares outstanding 484.1 483.9 483.9
Effect of dilutive potential ordinary shares 0.3 0.9 1.1
Diluted number of ordinary shares outstanding 484.4 484.8 485.0
10 Dividends
The interim dividend for the year ending 31 December 2016 of 18.81 euro cents per share will be paid on 13 September 2016 to
those shareholders on the register of Mondi plc on 19 August 2016. An equivalent South African rand interim dividend will be paid
on 13 September 2016 to shareholders on the register of Mondi Limited on 19 August 2016. The dividend will be paid from
distributable reserves of Mondi Limited and Mondi plc, as presented in the respective company annual financial statements for the
year ended 31 December 2015.
Dividends paid to the shareholders of Mondi Limited and Mondi plc are presented on a combined basis.
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
euro cents per share 2016 30 June 2015 2015
Final dividend paid (in respect of prior year) 37.62 28.77 28.77
Interim dividend paid 14.38
Interim dividend declared for the six months ended 30 June 18.81 14.38
Final dividend proposed for the year ended 31 December 2015 37.62
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Final dividend paid (in respect of prior year) 183 140 140
Interim dividend paid 69
Total dividends paid 183 140 209
Interim dividend declared for the six months ended 30 June 91 70
Final dividend proposed for the year ended 31 December 2015 182
Declared by Group companies to non-controlling interests 30 17 25
Dividend timetable
The interim dividend for the year ending 31 December 2016 will be paid in accordance with the following timetable:
Mondi Limited Mondi plc
Last date to trade shares cum-dividend
JSE Limited 16 August 2016 16 August 2016
London Stock Exchange Not applicable 17 August 2016
Shares commence trading ex-dividend
JSE Limited 17 August 2016 17 August 2016
London Stock Exchange Not applicable 18 August 2016
Record date
JSE Limited 19 August 2016 19 August 2016
London Stock Exchange Not applicable 19 August 2016
Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by
Central Securities Depository Participants 25 August 2016 25 August 2016
Last date for DRIP elections to UK Registrar and South African Transfer
Secretaries by shareholders of Mondi Limited and Mondi plc 26 August 2016 19 August 2016*
Payment Date
South African Register 13 September 2016 13 September 2016
UK Register Not applicable 13 September 2016
DRIP purchase settlement dates (subject to market conditions and the purchase
of shares in the open market) 19 September 2016 15 September 2016**
Currency conversion dates
ZAR/euro 4 August 2016 4 August 2016
Euro/sterling Not applicable 26 August 2016
*26 August 2016 for Mondi plc South African branch register shareholders
**19 September 2016 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 2016 and 21 August 2016, both dates inclusive, nor may transfers between the UK and South African registers
of Mondi plc take place between 10 August 2016 and 21 August 2016, 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
4 August 2016.
11 Forestry assets
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
At 1 January 219 235 235
Capitalised expenditure 17 19 38
Acquisition of assets 1 2 3
Fair value gains 48 23 40
Disposal of assets — — (1)
Felling costs (26) (25) (51)
Currency movements 8 6 (45)
At 30 June / 31 December 267 260 219
The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy (see note 19) and this
category is consistent with prior years. 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 yield on long-term bonds.
12 Borrowings
(Reviewed) (Reviewed) (Audited)
Six months Year ended
ended 30 June Six months ended 31 December
EUR million 2016 30 June 2015 2015
Secured 7 8 6
Unsecured
Bonds 1,493 996 996
Bank loans and overdrafts 292 786 553
Other loans 14 15 14
Total unsecured 1,799 1,797 1,563
Total borrowings 1,806 1,805 1,569
Maturity of borrowings
Current 669 299 250
Non-current 1,137 1,506 1,319
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 Year ended
ended 30 June Six months ended 31 December
EUR million Maturity Interest rate % 2016 30 June 2015 2015
Financing facilities
EURIBOR/LIBOR +
Syndicated Revolving Credit Facility July 2021 margin 750 750 750
EUR500 million Eurobond April 2017 5.75% 500 500 500
EUR500 million Eurobond September 2020 3.375% 500 500 500
EUR500 million Eurobond April 2024 1.50% 500 — —
European Investment Bank Facility June 2025 EURIBOR + margin 86 95 90
Export Credit Agency Facility June 2020 EURIBOR + margin 63 82 72
Other Various Various 82 169 90
Total committed facilities 2,481 2,096 2,002
Drawn (1,724) (1,594) (1,404)
Total committed facilities available 757 502 598
On 14 April 2016 Mondi issued a 1.5% EUR500 million Eurobond with an 8 year term under its Euro Medium Term Note Programme.
The EUR500 million Eurobonds maturing in 2017 & 2020 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 defined benefit schemes and unfunded statutory retirement obligations were re-assessed
in aggregate for the six months ended 30 June 2016. The net retirement benefit liability increased by EUR31 million mainly due to
changes in assumptions. The assets backing the defined benefit scheme liabilities reflect their market values as at 30 June 2016.
Net remeasurement losses arising from changes in assumptions amounting to EUR29 million have been recognised in the condensed
combined and consolidated statement of comprehensive income.
14 Business combinations
To 30 June 2016
Acquisition of SIMET S.A.
Mondi acquired 100% of the outstanding share capital of SIMET S.A. (SIMET) on 27 April 2016 for a consideration of EUR13 million
on a debt and cash-free basis. SIMET is a corrugated plant that produces a wide range of flexo printed packaging. Mondi
intends to expand and upgrade this operation to a high-efficiency box plant, including the addition of a corrugator line for on-site
board production. The acquisition strengthens Mondi's Corrugated Packaging market position in central and emerging Europe.
SIMET's revenue for the six months ended 30 June 2016 was EUR8 million with a profit after tax of EURnil. SIMET's revenue of
EUR3 million and profit after tax of EURnil since the date of acquisition have been included in the condensed combined and consolidated
income statement.
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
Property, plant and equipment 6 2 8
Intangible assets — 2 2
Inventories 1 — 1
Trade and other receivables 5 — 5
Total assets 12 4 16
Trade and other payables (4) — (4)
Deferred tax liabilities — (1) (1)
Other non-current liabilities (2) — (2)
Total liabilities (excluding debt) (6) (1) (7)
Short-term borrowings (1) — (1)
Medium and long-term borrowings (2) — (2)
Debt assumed (3) — (3)
Net assets acquired 3 3 6
Goodwill arising on acquisition 4
Net cash paid per condensed combined and consolidated statement of cash flows 10
Transaction costs were charged to the condensed combined and consolidated income statement.
The fair value accounting of this acquisition is provisional in nature. The nature of the business is such that further adjustments to
the carrying values of acquired assets and/or liabilities, and adjustments to the purchase price, are possible as the detail of the
acquired business is evaluated post acquisition. If necessary, any adjustments to the fair values recognised will be made within
12 months of the acquisition date.
In respect of trade and other receivables, the gross contractual amounts receivable less the best estimates at the acquisition date
of the contractual cash flows not expected to be collected approximate the book values as presented.
Acquisitions completed subsequent to 30 June 2016
On 12 July, Mondi acquired a 90% interest in Kale Nobel Ambalaj Sanayi ve Ticaret Anonim Sirketi (Kalenobel) for a consideration
of EUR90 million on a debt and cash-free basis. Kalenobel is a consumer packaging company focused on the manufacture of flexible
consumer packaging for ice cream and other applications as well as aseptic cartons. The acquisition supports Mondi's growing
Consumer Packaging business. For the year ended 31 December 2015 Kalenobel generated revenues of EUR63 million
(TRL191 million).
On 15 July, Mondi acquired a 100% interest in ZAO Uralplastic-N (Uralplastic). The final consideration is to be determined based
on earnings to 30 September 2016 and is currently estimated at around RUB2,949 million (EUR41 million). Uralplastic manufactures a
range of consumer flexible packaging products for food, hygiene, homecare and other applications and the acquisition supports
Mondi's growing Consumer Packaging business. For the year ended 31 December 2015 Uralplastic generated revenues of
EUR29 million (RUB1,988 million).
The final purchase price and the fair value of the assets acquired, liabilities assumed and goodwill recognised for Kalenobel and
Uralplastic had not yet been determined on the date these financial statements were authorised for issue.
To 31 December 2015
There were no acquisitions during the six months ended 30 June 2015.
Mondi acquired 100% of the outstanding share capital of Ascania nonwoven Germany GmbH (Ascania) on 2 November 2015 for a
consideration of EUR53 million on a debt and cash-free basis. Ascania is a producer of nonwoven fabrics and nonwoven composites
primarily used for personal care, hygiene and medical products as well as household applications.
On 14 December 2015, Mondi acquired a 95% interest in KSP, Co. (KSP), for a consideration of EUR41 million on a debt and cash-
free basis. KSP is a flexible packaging company specialising in the production of high-quality spouted and retort stand-up pouches
for the food, pet food and beverage industries.
Details of the net assets acquired are as follows:
Revised fair
EUR million Fair value Adjustments value
Net assets acquired
Property, plant and equipment 40 (1) 39
Intangible assets 6 — 6
Share of joint venture 4 — 4
Inventories 4 — 4
Trade and other receivables 17 (2) 15
Cash and cash equivalents 12 — 12
Total assets 83 (3) 80
Trade and other payables (8) (1) (9)
Income tax liabilities (2) — (2)
Net retirement benefits liability (2) — (2)
Deferred tax liabilities (9) — (9)
Total liabilities (excluding debt) (21) (1) (22)
Short-term borrowings (13) 2 (11)
Medium and long-term borrowings (8) 2 (6)
Debt assumed (21) 4 (17)
Net assets acquired 41 — 41
Goodwill arising on acquisition 44 — 44
Non-controlling interests in equity (1) — (1)
Cash acquired net of overdrafts (12) — (12)
Net cash paid per condensed combined and consolidated statement of cash flows 72 — 72
EUR million Goodwill Net assets Net cash paid
Ascania 25 26 47
KSP 19 15 25
Acquisitions total 44 41 72
The provisional at acquisition fair values of KSP have been adjusted. The net effect of the adjustments is EURnil and has been
recorded during the six months ended 30 June 2016. No adjustments were made to other prior year acquisitions.
15 Disposal of businesses
To 30 June 2016
There were no significant disposals during the six months ended 30 June 2016.
To 31 December 2015
There were no disposals during the six months ended 30 June 2015.
On 11 August 2015, Mondi sold 100% of the shares in Mondi Ipoh Sdn Bhd (Ipoh) to Scientex Packaging Film Sdn Bhd.
On 24 August 2015 Mondi sold 100% of the shares in Mondi Osterburken GmbH (Osterburken) to POLIFILM Extrusion GmbH.
On 22 December 2015, Mondi disposed of 100% of the shares in the Mondi Raubling Group (Raubling), which comprise Mondi
Raubling GmbH, HBB Heizkraftwerk Bauernfeind Betreibergesellschaft m.b.H and Chiemgau Recycling GmbH to the Heinzel Group.
Details of the net assets disposed, were as follows:
EUR million 2015
Property, plant and equipment 45
Intangible assets 3
Inventories 16
Trade and other receivables 21
Cash and cash equivalents 12
Total assets 97
Trade and other payables (30)
Net retirement benefits liability (2)
Deferred tax liabilities (2)
Provisions (3)
Total liabilities (excluding debt) (37)
Short-term borrowings (18)
Net assets disposed 42
Cumulative translation adjustment reserve realised 2
Profit on disposal 6
Disposal proceeds 50
Cash disposed net of overdrafts (12)
Net cash received per condensed combined and consolidated statement of cash flows 38
EUR million Net cash inflow
Ipoh 13
Osterburken 7
Raubling 18
Disposals total 38
16 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 31 December
EUR million 2016 30 June 2015 2015
Profit before tax 482 392 796
Depreciation and amortisation 184 180 365
Net cash flow effect of current and prior period special items (10) 17 15
Net finance costs 47 59 105
Decrease in provisions and net retirement benefits (4) (5) (15)
Movement in working capital (61) (101) 9
Fair value gains on forestry assets (48) (23) (40)
Felling costs 26 25 51
Profit on disposal of property, plant and equipment and intangible assets (1) (11) (13)
Other adjustments 5 5 6
Cash generated from operations 620 538 1,279
(b) Cash and cash equivalents
(Reviewed) (Reviewed) (Audited)
As at As at
30 June As at 31 December
EUR million 2016 30 June 2015 2015
Cash and cash equivalents per condensed combined and consolidated statement of
financial position 322 48 64
Bank overdrafts included in short-term borrowings (29) (54) (28)
Cash and cash equivalents per condensed combined and consolidated
statement of cash flows 293 (6) 36
(c) Movement in net debt
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 2015 (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)
Cash flow 48 37 150 — — 235
Business combinations (see note 14) — 5 (8) — — (3)
Movement in unamortised loan costs — — (1) — — (1)
Net movement in derivative financial instruments — — — — (8) (8)
Reclassification — (33) 33 2 — 2
Currency movements (6) 14 13 — (3) 18
At 31 December 2015 (Audited) 36 (222) (1,319) 2 5 (1,498)
Cash flow 257 109 (355) — — 11
Business combinations (see note 14) — (1) (2) — — (3)
Business combinations - fair value adjustments (see note 14) — 2 2 — — 4
Movement in unamortised loan costs — — (2) — — (2)
Net movement in derivative financial instruments — — — — (13) (13)
Reclassification — (527) 527 — — —
Currency movements — (1) 12 — (1) 10
At 30 June 2016 (Reviewed) 293 (640) (1,137) 2 (9) (1,491)
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.
17 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 be in the range of EUR400 - EUR450 million per annum over the next two
years in the absence of any further major projects.
These capital projects are expected to be financed from existing cash resources and borrowing facilities.
18 Contingent liabilities
Contingent liabilities comprise aggregate amounts as at 30 June 2016 of EUR10 million (as at 30 June 2015: EUR15 million; as at
31 December 2015: EUR9 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.
19 Fair value measurement
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, are 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 been no transfers of assets or liabilities between levels of the fair value hierarchy during the period.
The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are
determined using generally accepted 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 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 As at As at As at
30 June As at 31 December 30 June As at 31 December
EUR million 2016 30 June 2015 2015 2016 30 June 2015 2015
Financial liabilities
Borrowings 1,806 1,805 1,569 1,902 1,894 1,653
20 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 Integrated report and financial
statements 2015.
21 Events occurring after 30 June 2016
With the exception of the events listed below there have been no material reportable events since 30 June 2016:
- Acquisition of Kalenobel and Uralplastic (see note 14); and
- Interim dividend declared for the six months ended 30 June 2016 (see note 10).
Production statistics
Six months Year ended
ended 30 June Six months ended 31 December
2016 30 June 2015 2015
Packaging Paper
Containerboard '000 tonnes 1,001 1,086 2,138
Kraft paper '000 tonnes 601 606 1,162
Softwood pulp '000 tonnes 1,119 1,083 2,108
Internal consumption '000 tonnes 1,026 1,005 1,952
Market pulp '000 tonnes 93 78 156
Fibre Packaging
Corrugated board and boxes million m2 681 668 1,350
Industrial bags million units 2,523 2,506 4,925
Extrusion coatings million m2 651 735 1,389
Consumer Packaging
Consumer packaging million m2 3,511 3,330 6,594
Uncoated Fine Paper
Uncoated fine paper '000 tonnes 704 696 1,379
Hardwood pulp '000 tonnes 604 583 1,161
Internal consumption '000 tonnes 568 528 1,061
Market pulp '000 tonnes 36 55 100
Newsprint '000 tonnes 102 97 197
South Africa Division
Containerboard '000 tonnes 127 113 247
Uncoated fine paper '000 tonnes 129 117 240
Hardwood pulp '000 tonnes 305 292 619
Internal consumption '000 tonnes 167 148 305
Market pulp '000 tonnes 138 144 314
Newsprint '000 tonnes 55 56 113
Softwood pulp – internal consumption '000 tonnes 75 59 138
Exchange rates
Average Closing
Six months Year ended Six months Year ended
ended 30 June Six months ended 31 December ended 30 June Six months ended 31 December
versus euro 2016 30 June 2015 2015 2016 30 June 2015 2015
South African rand 17.20 13.31 14.17 16.45 13.64 16.95
Czech koruna 27.04 27.50 27.28 27.13 27.25 27.02
Polish zloty 4.37 4.14 4.18 4.44 4.19 4.26
Pounds sterling 0.78 0.73 0.73 0.83 0.71 0.73
Russian rouble 78.31 64.60 68.04 71.52 62.36 80.67
Turkish lira 3.26 2.86 3.02 3.21 3.00 3.18
US dollar 1.12 1.12 1.11 1.11 1.12 1.09
Glossary of financial terms
This announcement contains a number of terms which are explained below:
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.
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 EBITDA Operating profit before special items, depreciation and amortisation.
Underlying operating profit Operating profit before special items.
Underlying profit before tax Reported profit before tax and special items.
Underlying earnings Net profit after tax before special items attributable to shareholders.
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.
Editors' notes
We are Mondi: In touch every day
At Mondi, our products protect and preserve the things that matter.
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, end consumers and industrial end uses - touching
the lives of millions of people every day. In 2015, Mondi had revenues of EUR6.8 billion and a return on capital employed of 20.5%.
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 and is 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.
Sponsor in South Africa: UBS South Africa Proprietary Limited
Date: 04/08/2016 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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