Half-yearly Report

Mondi Limited (Incorporated in the Republic of South Africa) (Registration number: 1967/013038/06) JSE share code: MND ISIN: ZAE000156550 Mondi plc (Incorporated in England and Wales) (Registered number: 6209386) JSE share code: MNP ISIN: GB00B1CRLC47 LSE share code: MNDI 7 August 2012 As part of the dual listed company structure, Mondi Limited and Mondi plc (together 'Mondi Group') notify both the JSE Limited and the London Stock Exchange of matters required to be disclosed under the JSE Listings Requirements and/or the Disclosure Rules and Transparency Rules and/or the Listing Rules of the United Kingdom Listing Authority. Half-yearly results for the six months ended 30 June 2012 Highlights Good operating performance after a challenging start to the year Return on Capital Employed of 13.3%, in excess of the Group's through-the-cycle target of 13% Interim dividend of 8.9 euro cents per share, up 8% Strong cash generation of â‚¬353 million Significant strategic acquisitions: Swiecie minorities acquired for â‚¬296 million â‚¬655 million acquisition of Nordenia agreed Financial summary Six Six Six months months months ended ended ended 31 â‚¬ million, except for percentages and per share 30 June 30 June December measures 2012 2011 2011 From continuing operations Group revenue 2,840 2,942 2,797 Underlying EBITDA1 436 526 438 Underlying operating profit1 269 354 268 Underlying profit before tax1 217 296 216 Profit before tax 223 300 157 Per share measures Basic underlying earnings per share 30.9 38.2 29.9 Basic earnings per share - alternative measure2 (â‚¬ cents) 30.9 41.7 30.1 Basic earnings per share from continuing operations (â‚¬ cents) 31.7 39.0 18.5 Basic earnings per share (â‚¬ cents) 31.7 41.6 24.5 Interim dividend per share (â‚¬ cents) 8.9 8.25 Free cash flow per share3(â‚¬ cents) 9.3 19.6 59.2 Cash generated from operations 353 403 514 Net debt 1,273 1,200 831 Group Return on Capital Employed (ROCE4) 13.3% 15.2% 15.0% Notes: 1 The Group presents underlying EBITDA, operating profit and profit before tax as measures which exclude special items in order to provide a more effective comparison of the underlying financial performance between reporting periods. 2 The directors have elected to present an alternative, non-IFRS measure of earnings per share from continuing operations. As more fully set out in note 11 of the half-yearly financial statements, the effects of the recapitalisation and the demerger of Mpact (formerly Mondi Packaging South Africa) and the Mondi Limited share consolidation have been adjusted in the 2011 comparative earnings per share figures to reflect the position as if the transaction had been completed on 1 January 2011. This is intended to enable a more useful comparison of earnings per share from continuing operations, based on the consolidated number of shares. 3 Free cash flow per share is net increase in cash and cash equivalents before the effects of acquisitions and disposals of businesses and changes in net debt and dividends paid divided by the net number of shares in issue at the end of the reporting period. 4 ROCE is the 12 month rolling average underlying operating profit expressed as a percentage of the average rolling 12 month capital employed, adjusted for impairments and spend on strategic projects which are not yet in operation. David Hathorn, Mondi Group chief executive, said: "We are pleased to announce good results following the anticipated pick-up in trading after a challenging start to the year. Cash generation is robust and our return on capital employed remains above our through-the-cycle target, reflecting the strength of our low-cost operating model. We have made significant progress on a number of strategic initiatives, most notably the acquisition of the remaining minority interest in Swiecie and the agreement to acquire a 93.9% interest in Nordenia. These steps build on our position as a leading international packaging and paper company with a strong platform for continued growth in emerging markets. The macroeconomic environment remains a concern, with continued soft demand evident in certain western European markets. Encouragingly, demand in a number of the emerging markets to which the Group is exposed remains firm, and positive supply side fundamentals in various of our core grades offer price support. As such, we remain confident of delivering against our expectations for the full year." Contact details Mondi Group David Hathorn +27 (0)11 994 5418 Andrew King +27 (0)11 994 5415 Lora Rossler +27 (0)11 994 5400 / +27 (0)83 627 0292 FTI Consulting Richard Mountain +44 20 7269 7186 / +44 20 7909 684 466 Chloe Webb +27 (0)11 214 2421 Conference call dial-in and audio cast details Please see below details of our dial-in conference call and audio cast that will be held at 10:00 (UK) and 11:00 (SA). The conference call dial-in numbers are: South Africa 0800 200 648 (toll-free) UK 0800 917 7042 (toll-free) Europe & Other 00800 246 78 700 (toll-free) or +27 (0)11 535 3600 An online audio cast facility will be available via: www.mondigroup.com/ HYResults12. The presentation will be available online via the above website address an hour before the audio cast commences. Questions can be submitted via the dial-in conference call or by e-mail via the audio cast. Should you have any issues on the day with accessing the dial-in conference call, please call +27 (0)11 535 3600. Should you have any issues on the day with accessing the audio cast, please e-mail mondi@kraftwerk.co.at and you will be contacted immediately. An audio recording of the presentation will be available on Mondi's website during the afternoon of 7 August 2012. Editors' notes Mondi is an international packaging and paper Group, with production operations across 28 countries and revenues of â‚¬5.7 billion in 2011. The Group's key operations are located in central Europe, Russia and South Africa and as at the end of 2011, Mondi Group employed 23,400 people. Mondi Group is fully integrated across the paper and packaging process, from the growing of wood and the manufacture of pulp and paper (including recycled paper), to the conversion of packaging paper into corrugated packaging, industrial bags and coatings. The Group is principally involved in the manufacture of packaging paper, converted packaging products and uncoated fine paper (UFP). Mondi Group has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker code MND and a premium listing on the London Stock Exchange for Mondi plc, under the ticker code MNDI. The Group has been recognised for its sustainability through its inclusion in the FTSE4Good Global, European and UK Index Series (since 2008) and the JSE's Socially Responsible Investment (SRI) Index since 2007. The Group was also included in the FTSE350 Carbon Disclosure Leadership Index for the second year. Forward-looking statements This document includes (or may include) certain forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi's financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Mondi's present and future business strategies and the environment in which Mondi will operate in the future. Among the important factors that could cause Mondi's actual results, performance or achievements to differ materially from those in the forward-looking statements include, but are not limited to, those discussed under 'Principal risks and uncertainties', below. These forward-looking statements speak only as of the date on which they are made. Mondi expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Mondi's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Group performance review The Group's underlying operating profit of â‚¬269 million was in line with that of the second half of 2011 and 24% below that of the comparable prior year period. Average selling prices were lower across all grades compared to both the first and second half of the prior year. Sales volumes were above those of the second half of the prior year, reflecting improving demand, but were still below the volumes achieved in the first half of 2011 in certain segments, most notably kraft paper and industrial bags. Input costs provided some benefit with recovered fibre and pulp prices, on average, below 2011 levels. Finance charges for the period were lower than those of the comparable prior year period mainly as a result of the lower average net debt. The underlying effective tax rate of 20% is consistent with that of 2011 as the Group continued to benefit from a favourable profit mix and investment incentives, most notably in Poland. Underlying earnings per share in the six months ended 30 June 2012 was 30.9 euro cents per share, a 26% decrease on the basic earnings per share - alternative measure applicable to the comparable prior year period and better than that achieved in the second half of 2011. An interim dividend of 8.9 euro cents per share, up 8% on the prior year interim dividend of 8.25 euro cents per share, has been declared. The Group achieved a Return on Capital Employed (ROCE) of 13.3%, above the through-the-cycle target of 13%. The Group remains strongly cash generative with cash generated from operations of â‚¬353 million, including the effects of the normal seasonal pick-up in working capital in the first half of the year. Capital expenditure of â‚¬112 million represents 67% of the Group's depreciation charge. An increase in capital expenditure is expected in the second half, partly due to investment in the previously announced energy and de-bottlenecking investment projects ramping up as well as the normal seasonal variation in capital expenditure. On 18 April 2012, Mondi concluded an all cash public tender offer for the shares in Mondi Swiecie that it did not already own increasing its holding to 93.2% from 66%. On 18 May 2012, Mondi acquired the remaining shares it did not already own. The total consideration paid by Mondi was â‚¬296 million. On 2 May 2012 Mondi Swiecie S.A. acquired Saturn Management Sp. Z o.o., the company that owns the power and heat generating plant that provides Mondi Swiecie S.A. with most of its electricity requirements and all of its heat and steam needs, for a net cash consideration of â‚¬31 million and the assumption of debt of â‚¬57 million. Net debt of â‚¬1,273 million at 30 June 2012 increased from â‚¬831 million at 31 December 2011, reflecting the impact of the Mondi Swiecie acquisitions described above as well as the usual bias towards the first half of the year in respect of cash outflows from other financing activities. The average maturity of the Group's committed debt facilities at 30 June 2012 was 4.0 years, with unutilised committed facilities in excess of â‚¬580 million. On 11 July 2012, Mondi announced that it has agreed to acquire 93.4% of the outstanding share capital of Nordenia International AG for a total cash consideration of â‚¬240 million and the assumption of debt and debt like liabilities of â‚¬398 million, implying an enterprise value of â‚¬655 million. The transaction is subject to customary completion conditions including the approval of certain competition authorities. On 23 July 2012, agreement was reached to acquire a further 0.5% interest on the same completion conditions. The acquisition is expected to be completed in the fourth quarter of 2012 and the cash consideration will be financed by means of a new, two-year â‚¬250 million committed bank debt facility obtained subsequent to 30 June 2012. Nordenia is an international supplier of innovative consumer packaging solutions and hygiene components. Following the completion of the Nordenia acquisition, Mondi will reorganise its Europe & International Division into four businesses: Packaging Paper; Fibre Packaging; Consumer Packaging; and Uncoated Fine Paper (UFP). Nordenia will form part of the Consumer Packaging business. The Group's restated historical segmental information, to reflect this reorganisation, is presented as an annexure to this half-yearly report. Europe & International - Uncoated Fine Paper business Six months Six months Six months ended ended ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Segment revenue 749 734 695 - of which inter-segment revenue 8 13 7 EBITDA 154 169 140 Underlying operating profit 100 118 87 Capital expenditure 24 33 28 Net segment assets 1,270 1,360 1,283 ROCE 15.7% 16.9% 16.7% The business continued to deliver a strong operating performance with ROCE of 15.7%. Underlying operating profit of â‚¬100 million, 15% below the comparable prior year period, reflects primarily the effects of the annual planned maintenance shut at Syktyvkar, which took place during June, compared to July in the previous year, resulting in lower sales volumes and higher costs compared to the first half of 2011. Marginally lower average net selling prices, due in part to a change in sales mix, also contributed to the lower result. Average benchmark European uncoated fine paper prices were slightly lower than the comparable prior year period and approximately 2% below the average prices in the second half of 2011. Lower pulp and chemical costs benefited the business whilst energy costs increased across all mills due to higher gas and other fuel costs. Wood costs were lower in central Europe but higher in Russia. Planned maintenance shuts in Ruzomberok and Neusiedler will take place during the third quarter of the year as European markets enter the traditional slower summer period. Europe & International - Corrugated business Six months Six months Six months ended ended ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Segment revenue 680 704 680 - of which inter-segment revenue 20 34 30 EBITDA 100 142 109 Underlying operating profit 65 105 73 Capital expenditure 22 18 26 Net segment assets 1,087 1,058 967 ROCE 14.1% 20.1% 18.5% While ROCE remained above the Group's through the cycle target at 14.1%, the underlying operating profit of â‚¬65 million was well below that of the comparable prior year period due to significantly lower average selling prices of containerboard. Sales volumes were slightly higher over the same period. Despite price increases implemented across all grades during the period following the lows reached in the early part of the year, average benchmark kraftliner and recycled containerboard prices were both 12% lower than those of the comparable prior year period. While the virgin containerboard grades showed positive price momentum throughout the period under review, supported by capacity reductions in Europe and the stronger US dollar, recycled containerboard grades came under pressure in the second quarter due to a combination of lower recovered fibre costs, low demand growth and new production capacity. Price increases for white top, virgin and recycled containerboard were announced in July. The actual price increase achieved will be subject to individual negotiations with customers. Average benchmark recovered fibre costs declined by approximately 6% compared to the second half of 2011 during the period, and were more than 10% lower than the comparable prior year period. Wood, pulp and energy costs were also lower during the period whilst chemical costs increased marginally. The planned maintenance shut for Mondi Swiecie took place during July. The corrugated packaging business reflected a pleasing improvement in underlying operating profit, mainly due to increased average selling prices due to product mix improvements driven by an increased focus on customer segmentation and lower paper input costs. Europe & International - Bags & Coatings business Six months Six months Six months ended ended ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Segment revenue 1,149 1,319 1,159 - of which inter-segment revenue 22 27 19 EBITDA 145 179 148 Underlying operating profit 96 128 100 Capital expenditure 47 43 67 Net segment assets 1,347 1,398 1,279 ROCE 16.5% 17.4% 19.0% Underlying operating profit of â‚¬96 million was 25% lower than the comparable prior year period but broadly in line with the second half of 2011. ROCE remained robust at 16.5%. Commercial downtime in the kraft paper business, taken in the second half of 2011, continued at reduced levels into the first quarter of 2012. Full production resumed in the second quarter on the back of the end of destocking and improved demand in export markets. Average selling prices were approximately 7% lower than the comparable prior year period and 9% lower than the second half of 2011, reflecting the lower prices agreed on contract volumes set in the early part of the year. Price increases were announced in the latter part of the second quarter and are expected to take effect in the second half of the year. While the outlook for near-term European demand continues to be uncertain, export markets remain strong, driven by a combination of underlying demand growth and supply contraction. The business benefited from lower wood and pulp input costs whilst energy prices were higher. Selling prices in industrial bags were broadly in line with the comparable prior year period but demand was weaker, particularly in southern Europe. The business benefited from lower paper input costs and an ongoing focus on fixed costs savings. Coatings was negatively impacted by lower sales prices and volumes versus the comparable prior year period, although sales volumes have improved from the weaker demand seen during the second half of 2011. Furthermore, the start-up of a new facility in the US, coupled with the related closure of an old site and relocation of activities negatively impacted results. Consumer packaging benefited from stable demand. Higher resin prices were successfully passed on to customers and the business also benefited from an improved product mix. South Africa Division Six months Six months Six months ended ended ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Segment revenue 287 269 300 - of which inter-segment revenue 57 90 65 EBITDA 55 54 60 Underlying operating profit 29 27 35 Capital expenditure 15 13 14 Net segment assets 840 877 828 ROCE 9.5% 9.7% 8.9% The underlying operating profit of â‚¬29 million was marginally higher than the comparable prior year period. The business benefited from both the weaker South African rand and an increase in sales volumes and lower operating costs, primarily due to the shift in the planned annual maintenance shut at the key Richards Bay operations from the first half in the prior year to the third quarter in the current year. This was partially offset by lower average selling prices, particularly for hardwood pulp and white top containerboard. A continued focus on the domestic market and improved operating performance at Richards Bay has benefited the business through improved margins. In June 2012 a further 8 forestry land settlement agreements were reached. To date Mondi has signed a total of 19 land settlements involving about 35,000 hectares of its forestry land. The settlements were reached using a sale and lease back framework developed by Mondi and the South African Government which ensures that title to the land is transferred to the various claimant communities, that Mondi is paid a fair price for the land and which secures a continued fibre supply for its mills. Newsprint Six months Six months Six months ended ended ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Segment revenue 83 80 84 - of which inter-segment revenue 1 - - EBITDA - 1 (6) Underlying operating profit (3) (5) (13) Capital expenditure 1 2 2 Net segment assets 66 100 59 ROCE (20.6%) (9.2%) (19.2%) The Newsprint business made an operating loss of â‚¬3 million. Mondi Shanduka Newsprint benefited from price increases during the period, which were sufficient to return the business to a modest level of profitability in the second quarter and address electricity price increases for the year. Aylesford Newsprint was negatively impacted by lower average selling prices as well as higher chemical and energy costs, offset by cost reduction initiatives and a lower depreciation charge. Financial review Input costs Lower input costs provided some offset to lower selling prices during the period. Lower wood costs were experienced in general across central Europe, although this was offset by higher costs in Russia and South Africa. Benchmark recovered fibre costs were approximately 10% lower on average than the comparable prior year period. Prices were volatile throughout the period, increasing significantly off the lows at the end of 2011 through the first quarter, and subsequently weakening in the latter part of the period under review. Average benchmark pulp prices were approximately 7% lower in euro terms (14% lower in US dollar terms) than the comparable prior year period benefiting the European businesses in the Group that are net consumers of pulp. Overall, the Group is around 95,000 tonnes long in pulp, resulting in a small negative impact on overall Group profitability. Higher energy costs impacted margins across the business. The coatings & consumer packaging business benefited from lower average resin prices and other chemical input costs versus the comparable prior year period, although prices did increase during the period under review. Currency exposure Currency effects were muted during the period with most production currencies at similar average levels versus the euro to those of the second half of 2011 and weaker than levels of the comparable prior year period. The stronger US dollar versus the euro has however had a positive impact across the Group, both on dollar denominated exports, and due to the support offered to European pricing levels. Non-controlling interests Lower profitability in the Swiecie and Ruzomberok mills, particularly in the first quarter of 2012, resulted in a reduction in earnings attributable to holders of non-controlling interests in those entities. The acquisition of the non-controlling interests in April and May in Mondi Swiecie S.A. futher contributed to the reduction in earnings attributable to holders of non-controlling interests. The full effect of this acquisition will be seen in the second half of the year. Special items There were no significant special items during the period. A gain of â‚¬6 million was realised on the sale of land in the South Africa Division and Mondi Shanduka Newsprint as part of their ongoing settlement of land claims. Cash flow Cash flow from operations of â‚¬353 million was negatively impacted by the lower profitability compared to the prior year period as well as a net outflow due to increased working capital. Working capital as a percentage of turnover increased during the period to 12.6%, due to normal seasonal effects as well as a build up of inventory in anticipation of a number of planned maintenance shuts to take place in the second half of the year. Capital expenditure Good progress is being made on the energy related investments in Syktyvkar, Stambolijski, Richards Bay and Frantschach. The pulp dryer approved for Syktyvkar has been put on hold pending clarification of various technical and financial parameters. Capital expenditure in the period under review was at 67% of the Group's depreciation charge. This is expected to increase in the second half of the year, and in subsequent years, to approximate the Group's depreciation charge as expenditure on the various energy related investments ramps up. Treasury and borrowings Net debt of â‚¬1,273 million was â‚¬442 million higher than at 31 December 2011. This was impacted by the acquisitions of both the non-controlling interest in Mondi Swiecie S.A., and of Saturn Management Sp. Z o.o. (together â‚¬384 million). The net debt to trailing 12 month EBITDA ratio was 1.5 times and gearing was 31% at 30 June 2012. The Group's long-term investment grade credit ratings of Baa3 (Moody's Investor Services) and BBB- (Standard and Poor's) were reaffirmed during the period. In July 2012, Mondi secured a new two-year â‚¬250 million committed bank debt facility in order to fund the proposed acquisition of Nordenia International AG. Principal risks and uncertainties It is in the nature of Mondi's business that the Group is exposed to risks and uncertainties which may have an impact on future performance and financial results, as well as on its ability to meet certain social and environmental objectives. On an annual basis, the DLC executive committee and Boards conduct a formal systematic review of the most significant risks and uncertainties and the Group's responses to those risks. These risks are assessed against pre-determined risk tolerance limits, established by the Boards. Additional risk reviews are undertaken on an ad-hoc basis for significant investment decisions and when changing business conditions dictate. The key risks have been reviewed as part of the half-yearly results and remain consistent with those presented on pages 24 and 25 of the 2011 integrated report and financial statements. The Group believes that it has effective systems and controls in place to manage the key risks identified below within the risk tolerance levels established by the Boards. Mondi operates in a highly competitive environment The markets for paper and packaging products are highly competitive. Prices of Mondi's key products have experienced substantial fluctuations in the past. Furthermore, product substitution and declining demand in certain markets, coupled with new capacity being introduced, may have an impact on market prices. A downturn in trading conditions in the future may have an impact on the carrying value of goodwill and tangible assets and may result in further restructuring activities. Mondi is flexible and responsive to changing market and operating conditions and the Group's geographical and product diversification provide some measure of protection. Cost and availability of a sustainable supply of fibre Fibre (wood, pulp, recovered paper) is Mondi's most important raw material, comprising approximately one-third of total input costs. Increases in the costs of any of these raw materials, or any difficulties in procuring a sustainable supply of wood, pulp or recovered paper in certain countries, could have an adverse effect on Mondi's business, operational performance or financial position. The Group's focus on operational performance, relatively high levels of integration and access to its own FSCâ„¢ certified virgin fibre in Russia and South Africa, serve to mitigate these risks. It is the Group's objective to acquire fibre (wood and pulp) from sustainable sources with internationally credible certification and to avoid any illegal or controversial supply. Foreign currency exposure and exchange rate volatility The location of a number of the Group's significant operations in a range of different countries results in foreign currency exposure. Adverse currency movements and high degrees of volatility may impact on the financial performance and position of the Group. The most significant currency exposures are to the US dollar, South African rand, Russian rouble, Czech koruna, Polish zloty, Swedish krona and Turkish lira. The Group's policy is to hedge balance sheet exposures against short-term currency volatility. Furthermore, the Group's geographic diversification provides some level of protection. Investments in certain countries may be adversely affected by political, economic and legal developments in those countries The Group operates in a number of countries with differing political, economic and legal systems. In some countries, such systems are less predictable than in countries with more developed institutional structures. Significant changes in the political, economic or legal landscape of any country in which the Group is invested may have a material effect on the Group's operations in that country. The Group has invested in a number of countries thereby diversifying its exposure to any single jurisdiction. The Group's diversified management structure ensures that business managers are able to closely monitor and adapt to changes in the environment in which they operate. Employee attraction, retention and safety The complexity of operations and geographic diversity of the Group demands high quality, experienced employees in all operations. Appropriate reward and retention strategies are in place to attract and retain talent at all levels of the organisation. Mondi has a policy of working towards zero-harm. Incidents are fully investigated, remedial actions taken and early warning indicators used to direct preventative work. Mondi adopts internationally recognised safety and health management systems across all its operations. Capital intensive operations Mondi operates large facilities, often in remote locations. The ongoing safety and sustainable operation of such sites is critical to the success of the Group. Mondi's management system ensures ongoing monitoring of all operations to ensure they meet the requisite standards and performance requirements. A structured maintenance programme is in place under the auspices of the Group technical director. Emergency preparedness and response procedures are in place and subject to periodic drills. Mondi has adequate insurance in place to cover material property damage, business interruption and liability risks. Going concern The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial statements. Mondi's geographical spread, product diversity and large customer base mitigate potential risks of customer or supplier liquidity issues. Ongoing initiatives by management in implementing profit improvement initiatives which include plant optimisation, cost-cutting, and restructuring and rationalisation activities have consolidated the Group's leading cost position in its chosen markets. Working capital levels and capital expenditure programmes are strictly monitored and controlled. The Group meets its funding requirements from a variety of sources. The availability of some of these facilities is dependent on the Group meeting certain financial covenants all of which have been complied with. Mondi had â‚¬584 million of undrawn committed debt facilities as at 30 June 2012 which should provide sufficient liquidity in the medium term. In addition, subsequent to 30 June 2012, the Group has obtained a new, two-year â‚¬250 million committed bank debt facility to fund the cash consideration of the purchase of Nordenia International AG. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, including an assessment of the current macroeconomic environment, particularly in Europe, indicate that the Group should be able to operate well within the level of its current facilities and related covenants. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis continues to be adopted in preparing the half-yearly financial statements. Dividend An interim dividend of 8.9 euro cents per share has been declared by the directors and will be paid on 18 September 2012 to those shareholders on the register of Mondi plc on 24 August 2012. An equivalent South African rand interim dividend will be paid on 18 September 2012 to shareholders on the register of Mondi Limited on 24 August 2012. The dividend will be paid from distributable reserves of Mondi Limited and of Mondi plc, as presented in the respective company annual financial statements for the year ended 31 December 2011. Outlook The macroeconomic environment remains a concern, with continued soft demand evident in certain western European markets. Encouragingly, demand in a number of the emerging markets to which the Group is exposed remains firm, and positive supply side fundamentals in various of our core grades offer price support. As such, we remain confident of delivering against our expectations for the full year. Directors' responsibility statement The directors confirm that to the best of their knowledge: the condensed set of combined and consolidated financial statements has been prepared in accordance with International Financial Reporting Standards and in particular with International Accounting Standard 34, 'Interim Financial Reporting'; the half-yearly report includes a fair review of the important events during the six months ended 30 June 2012 and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2012; and there have been no significant individual related party transactions during the first six months of the financial year and nor have there been any significant changes in the Group's related party relationships from those reported in the Group's annual financial statements for the year ended 31 December 2011. David Hathorn Andrew King Director Director 6 August 2012 Independent review report to the shareholders of Mondi Limited Introduction We have reviewed the Group's condensed combined and consolidated financial statements for the six months ended 30 June 2012 which comprise the condensed combined and consolidated income statement, the condensed combined and consolidated statement of comprehensive income, the condensed combined and consolidated statement of financial position, the condensed combined and consolidated statement of cash flows and the condensed combined and consolidated statement of changes in equity, the summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and presentation of these condensed combined and consolidated financial statements in accordance with International Accounting Standards on Interim Financial Reporting (IAS 34) and the requirements of the Companies Act of South Africa. Our responsibility is to express a conclusion on these Group condensed combined and consolidated financial statements based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the Group's interim condensed combined and consolidated financial statements is not prepared, in all material respects, in accordance with International Accounting Standards on Interim Financial Reporting (IAS 34) and the requirements of the Companies Act of South Africa. Deloitte & Touche Registered Auditor Per Bronwyn Kilpatrick Partner Sandton 6 August 2012 Deloitte & Touche Registered Auditors Buildings 1 and 2, Deloitte Place, The Woodlands Woodlands Drive, Woodmead, Sandton Republic of South Africa National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax L Geeringh Consulting & Clients & Industries JK Mazzocco Talent & Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board. A full list of partners and directors is available on request. B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code Member of Deloitte Touche Tohmatsu Limited Independent review report to the members of Mondi plc We have been engaged by the Company to review the condensed combined and consolidated set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 which comprises the condensed combined and consolidated income statement, the condensed combined and consolidated statement of comprehensive income, the condensed combined and consolidated statement of financial position, the condensed combined and consolidated statement of cash flows, the condensed combined and consolidated statement of changes in equity and related notes 1 to 21. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 6 August 2012 Condensed combined and consolidated income statement for the six months ended 30 June 2012 (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 30 June 2012 30 June 2011 31 December 2011 Before Special After Before Special After Before Special After special items special special items special special items special â‚¬ million Notes items (note 6) items items (note 6) items items (note 6) items Continuing operations Group revenue 4 2,840 - 2,840 2,942 - 2,942 5,739 - 5,739 Materials, energy and consumables used (1,500) - (1,500) (1,528) - (1,528) (2,998) - (2,998) Variable selling expenses (264) - (264) (257) - (257) (511) - (511) Gross margin 1,076 - 1,076 1,157 - 1,157 2,230 - 2,230 Maintenance and other indirect expenses (124) - (124) (133) - (133) (272) - (272) Personnel costs (413) - (413) (417) - (417) (808) (4) (812) Other net operating expenses (103) - (103) (81) 1 (80) (186) (2) (188) Depreciation, amortisation and impairments (167) - (167) (172) - (172) (342) (48) (390) Operating profit/(loss) 4/5 269 - 269 354 1 355 622 (54) 568 Non-operating special items 6 - 6 6 - 3 3 - (1) (1) Net income from associates 1 - 1 2 - 2 1 - 1 Total profit/ (loss) from operations and associates 270 6 276 356 4 360 623 (55) 568 Net finance costs (53) - (53) (60) - (60) (111) - (111) Investment income 6 - 6 15 - 15 30 - 30 Foreign currency losses (3) - (3) (2) - (2) - - - Finance costs 7 (56) - (56) (73) - (73) (141) - (141) Profit/(loss) before tax 217 6 223 296 4 300 512 (55) 457 Tax (charge)/ credit 8 (43) (2) (45) (59) - (59) (102) 2 (100) Profit/(loss) from continuing operations 174 4 178 237 4 241 410 (53) 357 Discontinued operation Profit from discontinued operation 9 - 13 43 Profit for the financial period/year 178 254 400 Attributable to: Non-controlling interests 25 42 70 Equity holders of the parent companies 153 212 330 Earnings per share (EPS) for profit attributable to equity holders of the parent companies From continuing operations Basic EPS (â‚¬ cents) 10 31.7 39.0 57.5 Diluted EPS (â‚¬ cents) 10 31.6 38.5 56.8 Basic underlying EPS (â‚¬ cents) 10 30.9 38.2 68.1 Diluted underlying EPS (â‚¬ cents) 10 30.8 37.7 67.3 From continuing and discontinued operations Basic EPS (â‚¬ cents) 10 31.7 41.6 66.1 Diluted EPS (â‚¬ cents) 10 31.6 41.0 65.3 Basic headline EPS (â‚¬ cents) 10 30.9 39.4 69.9 Diluted headline EPS (â‚¬ cents) 10 30.8 38.9 69.1 Condensed combined and consolidated statement of comprehensive income for the six months ended 30 June 2012 (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Profit for the financial period/year 178 254 400 Other comprehensive income Items that may subsequently be reclassified to the combined and consolidated income statement: Effect of cash flow hedges 3 5 12 Exchange differences on translation of foreign operations 48 (84) (196) Share of other comprehensive income of associates - (1) (1) Tax effect thereof - (1) (4) Items that will not subsequently be reclassified to the combined and consolidated income statement: Actuarial losses on post-retirement benefit schemes (35) (1) (18) Surplus restriction on post-retirement benefit schemes 23 (1) (3) Tax effect thereof 1 - 4 Other comprehensive income for the financial period/ year, net of tax 40 (83) (206) Total comprehensive income for the financial period/ year 218 171 194 Attributable to: Non-controlling interests 36 33 43 Equity holders of the parent companies 182 138 151 Condensed combined and consolidated statement of financial position as at 30 June 2012 (Reviewed) (Reviewed) (Audited) As at As at As at 31 30 June 30 June December â‚¬ million Notes 2012 2011 2011 Intangible assets 243 241 238 Property, plant and equipment 3,454 3,625 3,377 Forestry assets 306 299 297 Investments in associates 12 12 10 Financial asset investments 40 31 33 Deferred tax assets 5 11 5 Retirement benefits surplus 13 6 12 8 Derivative financial instruments 2 - 3 Total non-current assets 4,068 4,231 3,971 Inventories 666 726 637 Trade and other receivables 936 959 829 Current tax assets 5 8 6 Financial asset investments - - 1 Cash and cash equivalents 17b-c 60 33 191 Derivative financial instruments 5 4 10 Assets held for sale Continuing operations 16 - 1 - Discontinued operation 9 - 495 - Total current assets 1,672 2,226 1,674 Total assets 5,740 6,457 5,645 Short-term borrowings 17c (319) (485) (286) Trade and other payables (884) (989) (891) Current tax liabilities (81) (84) (78) Provisions (34) (45) (43) Derivative financial instruments (5) (4) (8) Total current liabilities (1,323) (1,607) (1,306) Medium and long-term borrowings 17c (1,014) (748) (737) Retirement benefits obligation 13 (217) (196) (202) Deferred tax liabilities (317) (326) (310) Provisions (33) (36) (35) Derivative financial instruments (1) (10) - Other non-current liabilities (20) (20) (20) Liabilities directly associated with assets classified as held for sale Discontinued operation 9 - (248) - Total non-current liabilities (1,602) (1,584) (1,304) Total liabilities (2,925) (3,191) (2,610) Net assets 2,815 3,266 3,035 Equity Ordinary share capital and stated capital 542 646 542 Retained earnings and other reserves 1,973 2,168 2,044 Total attributable to equity holders of the parent companies 2,515 2,814 2,586 Non-controlling interests in equity 300 452 449 Total equity 2,815 3,266 3,035 Condensed combined and consolidated statement of financial position as at 30 June 2012 (continued) The Group's condensed combined and consolidated financial statements, and related notes 1 to 21, were approved by the Boards and authorised for issue on 6 August 2012 and were signed on their behalf by: David Hathorn Andrew King Director Director Mondi Limited company registration number: 1967/013038/06 Mondi plc company registered number: 6209386 Condensed combined and consolidated statement of cash flows for the six months ended 30 June 2012 (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million Notes 2012 2011 2011 Cash generated from operations 17a 353 403 917 Dividends from associates - - 2 Income tax paid (45) (45) (85) Net cash generated from operating activities 308 358 834 Cash flows from investing activities Investment in property, plant and equipment (109) (126) (263) Investment in intangible assets (3) (1) (5) Proceeds from the disposal of property, plant and equipment and intangible assets 5 7 9 Investment in forestry assets (29) (23) (42) Investment in financial asset investments (4) (7) (13) Proceeds from the sale of financial asset investments 4 7 8 Acquisition of subsidiaries, net of cash and cash equivalents 15 (34) (12) (12) Acquisition of associates, net of cash and cash equivalents - - (2) Proceeds from the disposal of subsidiaries, net of cash and cash equivalents 1 14 17 Disposal of discontinued operation's cash and cash equivalents - - (38) Loan advances to related parties (8) (1) - Loan repayments from/(advances to) external parties - 1 (1) Interest received 2 5 9 Other investing activities - - 2 Net cash used in investing activities (175) (136) (331) Cash flows from financing activities Repayment of short-term borrowings 17c (52) (13) (135) Proceeds from medium and long-term borrowings 17c 291 13 123 Repayment of medium and long-term borrowings 17c (51) (112) (127) Interest paid (60) (75) (106) Dividends paid to non-controlling interests 12 (29) (40) (43) Dividends paid to equity holders of the parent companies 12 (85) (86) (126) Purchases of treasury shares (34) (7) (12) Non-controlling interests bought out 14 (296) (1) (1) Net realised gain on cash and asset management swaps 2 - 9 Other financing activities - 2 (1) Net cash used in financing activities (314) (319) (419) Net (decrease)/increase in cash and cash equivalents (181) (97) 84 Cash and cash equivalents at beginning of financial period/year1 17c 117 24 24 Cash movement in the financial period/year 17c (181) (97) 84 Reclassification of discontinued operation 17c - (23) - Effects of changes in foreign exchange rates 17c (1) 3 9 Cash and cash equivalents at end of financial period/year1 (65) (93) 117 Note: 1 'Cash and cash equivalents' includes overdrafts and cash flows from disposal groups and is reconciled to the condensed combined and consolidated statement of financial position in note 17c. Condensed combined and consolidated statement of changes in equity for the six months ended 30 June 2012 Total Combined attributable share to equity capital holders and of the Non- stated Retained Other parent controlling Total â‚¬ million capital earnings reserves1 companies interests equity At 1 January 2011 646 1,916 201 2,763 461 3,224 Dividends paid - (86) - (86) (40) (126) Total comprehensive income for the financial period - 212 (74) 138 33 171 Issue of shares under employee share schemes - 7 (7) - - - Purchases of treasury shares - (7) - (7) - (7) Non-controlling interests bought out - 1 - 1 (2) (1) Other - - 5 5 - 5 At 30 June 2011 646 2,043 125 2,814 452 3,266 Dividends paid - (40) - (40) (3) (43) Effect of dividend in specie distributed (104) (101) - (205) - (205) Total comprehensive income for the financial period - 118 (105) 13 10 23 Issue of shares under employee share schemes - 5 (5) - - - Purchases of treasury shares - (5) - (5) - (5) Disposal of treasury shares - 4 - 4 - 4 Disposal of discontinued operation - - (5) (5) (6) (11) Disposal of businesses - - (1) (1) - (1) Non-controlling interests bought out - 4 - 4 (4) - Reclassification - 13 (13) - - - Other - - 7 7 - 7 At 31 December 2011 542 2,041 3 2,586 449 3,035 Dividends paid - (85) - (85) (29) (114) Total comprehensive income for the financial period - 153 29 182 36 218 Issue of shares under employee share schemes - 9 (9) - - - Purchases of treasury shares - (34) - (34) - (34) Non-controlling interests bought out - (140) - (140) (156) (296) Other - - 6 6 - 6 At 30 June 2012 542 1,944 29 2,515 300 2,815 Note: 1 Other reserves consist of the share-based payment reserve in surplus of â‚¬14 million (six months ended 30 June 2011: â‚¬15 million; year ended 31 December 2011: â‚¬17 million), cumulative translation adjustment reserve in deficit of â‚¬171 million (six months ended 30 June 2011: â‚¬107 million; year ended 31 December 2011: â‚¬208 million), cash flow hedge reserve in surplus of â‚¬1 million (six months ended 30 June 2011: deficit of â‚¬7 million; year ended 31 December 2011: deficit of â‚¬2 million), post-retirement benefit reserve in deficit of â‚¬67 million (six months ended 30 June 2011: â‚¬41 million; year ended 31 December 2011: â‚¬56 million), merger reserve in surplus of â‚¬259 million (six months ended 30 June 2011: â‚¬259 million; year ended 31 December 2011: â‚¬259 million) and other sundry reserves in deficit of â‚¬7 million (six months ended 30 June 2011: surplus of â‚¬6 million; year ended 31 December 2011: deficit of â‚¬7 million). Notes to the condensed combined and consolidated financial statements for the six months ended 30 June 2012 1 Basis of preparation The Group has two separate legal parent entities, Mondi Limited and Mondi plc, which operate under a dual listed company (DLC) structure. The substance of the DLC structure is such that Mondi Limited and its subsidiaries, and Mondi plc and its subsidiaries, operate together as a single economic entity through a sharing agreement, with neither parent entity assuming a dominant role. Accordingly, Mondi Limited and Mondi plc are reported on a combined and consolidated basis as a single reporting entity under International Financial Reporting Standards (IFRS). The condensed combined and consolidated half-yearly financial information for the six months ended 30 June 2012 has been prepared in accordance with IAS 34, 'Interim Financial Reporting'. It should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2011, prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Group has also complied with South African Statements and Interpretations of Statements of Generally Accepted Accounting Practice. There are no differences for the Group in applying IFRS as issued by the IASB and IFRS as adopted by the European Union (EU) and therefore the Group also complies with Article 4 of the EU IAS Regulation. The condensed combined and consolidated financial statements have been prepared on a going concern basis as discussed in the business review, under the heading 'Going concern'. The information for the year ended 31 December 2011 does not constitute statutory accounts as defined by section 434 of the UK Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the UK Companies Act 2006. These financial statements have been prepared under supervision of the Group Chief Financial Officer, Andrew King CA (SA), as required by Section 29(1)(e) (ii) of the Companies Act of South Africa 2008. 2 Accounting policies The same accounting policies, methods of computation and presentation have been followed in the preparation of the condensed combined and consolidated financial statements as were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2011. The condensed combined and consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets. 3 Seasonality The seasonality of the Group's operations has no significant impact on the condensed combined and consolidated financial statements. 4 Operating segments Operating segment revenues (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended 30 June 2012 ended 30 June 2011 31 December 2011 Segment Internal External Segment Internal External Segment Internal External â‚¬ million revenue revenue1 revenue2 revenue revenue1 revenue2 revenue revenue1 revenue2 Europe & International Uncoated Fine Paper 749 (8) 741 734 (13) 721 1,429 (20) 1,409 Corrugated 680 (20) 660 704 (34) 670 1,384 (64) 1,320 Bags & Coatings 1,149 (22) 1,127 1,319 (27) 1,292 2,478 (46) 2,432 Intra-segment elimination (50) 50 - (73) 73 - (129) 129 - Total Europe & International 2,528 - 2,528 2,684 (1) 2,683 5,162 (1) 5,161 South Africa Division 287 (57) 230 269 (90) 179 569 (155) 414 Newsprint businesses 83 (1) 82 80 - 80 164 - 164 Segments total 2,898 (58) 2,840 3,033 (91) 2,942 5,895 (156) 5,739 Inter-segment elimination (58) 58 - (91) 91 - (156) 156 - Group total 2,840 - 2,840 2,942 - 2,942 5,739 - 5,739 Notes: 1 Inter-segment transactions are conducted on an arm's length basis. 2 The description of each business segment reflects the nature of the main products they sell. In certain instances the business segments sell minor volumes of other products and due to this reason the external segment revenues will not necessarily reconcile to the external revenues by type of product presented below. External revenue by product type (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Products Corrugated products 697 686 1,369 Uncoated fine paper 687 684 1,337 Kraft paper & industrial bags 630 716 1,350 Coatings & consumer packaging 414 479 881 Pulp 140 125 263 Newsprint 130 123 251 Woodchips 28 25 60 Merchant 21 14 41 Other1 93 90 187 Group total 2,840 2,942 5,739 Note: 1 Revenues derived from product types that are not individually material are classified as other. External revenue by location of customer (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Revenue Africa South Africa1 197 129 303 Rest of Africa 122 137 268 Africa total 319 266 571 Western Europe Germany 383 420 810 United Kingdom1 138 145 278 Rest of western Europe 731 821 1,529 Western Europe total 1,252 1,386 2,617 Emerging Europe 569 584 1,144 Russia 291 281 556 North America 124 130 243 South America 21 15 30 Asia and Australia 264 280 578 Group total 2,840 2,942 5,739 Note: 1 These revenues, which total â‚¬335 million (six months ended 30 June 2011: â‚¬274 million; year ended 31 December 2011: â‚¬581 million), are attributable to the countries in which the Group's parent entities are domiciled. External revenue by location of production (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Revenue Africa South Africa1 323 281 617 Rest of Africa 5 4 10 Africa total 328 285 627 Western Europe Austria 526 593 1,110 United Kingdom1 75 67 147 Rest of western Europe 520 572 1,090 Western Europe total 1,121 1,232 2,347 Emerging Europe Poland 382 406 794 Rest of emerging Europe 544 568 1,075 Emerging Europe total 926 974 1,869 Russia 359 355 703 North America 89 81 159 Asia and Australia 17 15 34 Group total 2,840 2,942 5,739 Note: 1 These revenues, which total â‚¬398 million (six months ended 30 June 2011: â‚¬348 million; year ended 31 December 2011: â‚¬764 million), are attributable to the countries in which the Group's parent entities are domiciled. There are no external customers which account for more than 10% of the Group's total external revenue. Operating profit/(loss) from continuing operations before special items (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Europe & International Uncoated Fine Paper 100 118 205 Corrugated 65 105 178 Bags & Coatings 96 128 228 Total Europe & International 261 351 611 South Africa Division 29 27 62 Newsprint businesses (3) (5) (18) Corporate & other businesses (18) (19) (33) Segments total 269 354 622 Special items (see note 6) 6 4 (55) Net income from associates 1 2 1 Net finance costs (53) (60) (111) Group profit from continuing operations before tax 223 300 457 Earnings before interest, tax, depreciation and amortisation (EBITDA) (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Europe & International Uncoated Fine Paper 154 169 309 Corrugated 100 142 251 Bags & Coatings 145 179 327 Total Europe & International 399 490 887 South Africa Division 55 54 114 Newsprint businesses - 1 (5) Corporate & other businesses (18) (19) (32) Group and segments total from continuing operations 436 526 964 Operating margin1 (Reviewed) (Reviewed) (Audited) As at As at As at 31 December % 30 June 2012 30 June 2011 2011 Europe & International Uncoated Fine Paper 13.4 16.1 14.3 Corrugated 9.6 14.9 12.9 Bags & Coatings 8.3 9.7 9.2 South Africa Division 10.1 10.0 10.9 Newsprint businesses (3.6) (6.3) (11.0) Group 9.5 12.0 10.8 Note: 1 Operating margin is underlying operating profit divided by revenue. Return on capital employed (ROCE)1 (Reviewed) (Reviewed) (Audited) As at As at As at 31 December % 30 June 2012 30 June 2011 2011 Europe & International Uncoated Fine Paper 15.7 16.9 16.7 Corrugated 14.1 20.1 18.5 Bags & Coatings 16.5 17.4 19.0 South Africa Division 9.5 9.7 8.9 Newsprint businesses (20.6) (9.2) (19.2) Group 13.3 15.2 15.0 Note: 1 Return on capital employed (ROCE) is trailing 12 month underlying operating profit, including share of associates' net income, divided by trailing 12 month average trading capital employed and for segments has been extracted from management reports. Capital employed is adjusted for impairments in the year and spend on strategic projects which are not yet in production. Operating segment assets (Reviewed) (Reviewed) (Audited) As at As at As at 31 30 June 30 June December 2012 2011 2011 Net Net Net Segment segment Segment segment Segment segment â‚¬ million assets1 assets assets1 assets assets1 assets Europe & International Uncoated Fine Paper 1,469 1,270 1,553 1,360 1,473 1,283 Corrugated 1,300 1,087 1,286 1,058 1,215 967 Bags & Coatings 1,727 1,347 1,839 1,398 1,640 1,279 Intra-segment elimination (59) - (56) - (87) - Total Europe & International 4,437 3,704 4,622 3,816 4,241 3,529 South Africa Division 978 840 1,015 877 964 828 Newsprint businesses 95 66 130 100 94 59 Corporate & other businesses 8 9 10 10 6 3 Inter-segment elimination (32) - (52) - (40) - Segments total 5,486 4,619 5,725 4,803 5,265 4,419 Unallocated: Discontinued operation - - 495 247 - - Investments in associates 12 12 12 12 10 10 Deferred tax assets/ (liabilities) 5 (312) 11 (315) 5 (305) Other non-operating assets/ (liabilities)2 137 (271) 150 (312) 140 (291) Group trading capital employed 5,640 4,048 6,393 4,435 5,420 3,833 Financial asset investments 40 40 31 31 33 33 Net debt 60 (1,273) 33 (1,200) 192 (831) Group assets 5,740 2,815 6,457 3,266 5,645 3,035 Notes: 1 Segment assets are operating assets and consist of property, plant and equipment, intangible assets, forestry assets, retirement benefits surplus, inventories and operating receivables. 2 Other non-operating assets consist of derivative assets, current income tax receivables, other non-operating receivables and assets held for sale. Other non-operating liabilities consist of derivative liabilities, non-operating provisions, current income tax liabilities, other non-operating payables and deferred income, and liabilities directly associated with assets classified as held for sale. Additions to non-current non-financial assets Additions to Capital non-current expenditure non-financial cash assets1 payments2 (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) Year Year Six months Six months ended Six months Six months ended ended ended 31 ended ended 31 30 June 30 June December 30 June 30 June December â‚¬ million 2012 2011 2011 2012 2011 2011 Europe & International Uncoated Fine Paper 21 21 51 24 33 61 Corrugated 115 19 43 22 18 44 Bags & Coatings 47 53 120 47 43 110 Total Europe & International 183 93 214 93 94 215 South Africa Division 42 34 66 15 13 27 Newsprint businesses 3 4 7 1 2 4 Segments total 228 131 287 109 109 246 Unallocated: Discontinued operation - 18 18 - 17 17 Group total 228 149 305 109 126 263 Notes: 1 Additions to non-current non-financial assets reflect cash payments and accruals in respect of additions to property, plant and equipment, intangible assets and forestry assets and include interest capitalised as well as additions resulting from acquisitions through business combinations. Additions to non-current non-financial assets, however, exclude additions to deferred tax assets, retirement benefits surplus and non-current financial assets. 2 Capital expenditure cash payments exclude business combinations, interest capitalised and investments in intangible and forestry assets. 5 Write-down of inventories to net realisable value (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Combined and consolidated income statement From continuing operations Write-downs of inventories to net realisable value (9) (9) (15) Aggregate reversal of previous write-downs of inventories 3 4 4 6 Special items (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Operating special items Asset impairments - - (48) Restructuring and closure costs Restructuring and closure costs excluding related personnel costs - (1) (5) Personnel costs relating to restructuring - - (4) Reversal of restructuring and closure costs excluding related personnel costs - 2 3 Total operating special items - 1 (54) Non-operating special items Profit/(loss) on disposals 6 3 (1) Total non-operating special items 6 3 (1) Total special items from continuing operations before tax and non-controlling interests 6 4 (55) Tax (2) - 2 Non-controlling interests - - - Total special items attributable to equity holders of the parent companies 4 4 (53) Special items from continuing operations before tax and non-controlling interests by operating segment (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Europe & International Uncoated Fine Paper - 2 2 Corrugated - 3 3 Bags & Coatings - (1) (27) Total Europe & International - 4 (22) South Africa Division 5 - - Newsprint businesses 1 - (33) Group and segments total from continuing operations 6 4 (55) Non-operating special items A gain of â‚¬6 million was realised on the sale of land in South Africa Division and Mondi Shanduka Newsprint as part of their ongoing settlement of land claims. The settlements were reached using the sale and leaseback framework developed by Mondi and the South African Government which ensures that title to the land is transferred to the claimant, that Mondi is paid a fair price for the land and secures a continued fibre supply for its mills. 7 Finance costs (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 From continuing operations Total interest expense (56) (74) (141) Less: interest capitalised - 1 - Total finance costs from continuing operations (56) (73) (141) 8 Tax charge (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 From continuing operations UK corporation tax at 24.5% (2011: 26.5%) - - 1 SA corporation tax at 28% (2011: 28%) 11 4 7 Overseas tax 38 51 84 Current tax (including tax on special items from continuing operations) 49 55 92 Deferred tax (4) 4 8 Total tax charge from continuing operations 45 59 100 The Group's estimated effective annual rate of tax from continuing operations before special items for the six months ended 30 June 2012, calculated on profit from continuing operations before tax before special items and including net income from associates, is 20% (six months ended 30 June 2011: 20%; year ended 31 December 2011: 20%). The Group continues to benefit from tax incentives granted in certain countries in which the Group operates, most notably Poland. 9 Discontinued operation On 30 June 2011, the Mondi Group shareholders approved a special resolution to separate the Group's interest in Mondi Packaging South Africa (MPSA) via a demerger in terms of which all the ordinary shares in MPSA held by Mondi Limited were distributed to the Mondi Limited ordinary shareholders by way of a dividend in specie. MPSA was listed on 11 July 2011 under a new name, Mpact Limited (Mpact), on the securities exchange operated by the JSE Limited (JSE). Subsequent to the demerger, a consolidation of the Mondi Limited ordinary shares owned by Mondi Limited shareholders, the effect of which was to reduce their proportionate interest in the Mondi Group, was undertaken in order to compensate Mondi plc shareholders for the value distributed to Mondi Limited shareholders in terms of the demerger. The result of the Mondi Limited share consolidation was that the number of Mondi Limited shares in issue reduced from 147 million to 118 million and the total number of Mondi shares in issue reduced from 514 million to 486 million. Prior to the demerger, Mpact paid interest of â‚¬13 million for the six months ended 30 June 2011 (year ended 31 December 2011: â‚¬13 million) to Mondi Limited in respect of intercompany financing provided, which eliminated on consolidation and thus was not taken into consideration in the tables below. The results of the discontinued operation were: (Reviewed) (Audited) Six months ended Year ended 30 June 31 December â‚¬ million 2011 2011 Revenue 296 296 Expenses (283) (282) Profit before tax 13 14 Related tax charge - - Profit after tax from discontinued operation 13 14 Gain on distribution of discontinued operation - 29 Related tax charge - - Net gain on distribution of discontinued operation - 29 Total profit attributable to discontinued operation 13 43 Attributable to: Non-controlling interests - - Equity holders of the parent companies 13 43 Earnings per share from the discontinued operation were (see note 10): (Reviewed) (Audited) Year Six months ended ended 31 30 June December â‚¬ cents per share 2011 2011 Profit from discontinued operation for the financial period/year attributable to equity holders of the parent companies Basic EPS 2.6 8.6 Diluted EPS 2.5 8.5 Details of the disposal group and assets held for sale of the discontinued operation as at 30 June 2011 were: (Reviewed) Six months ended 30 June â‚¬ million 2011 Non-current assets 273 Current assets 222 Total assets classified as held for sale 495 Current liabilities (115) Non-current liabilities (133) Total liabilities directly associated with assets classified as held for sale (248) Net assets 247 Details of the discontinued operation disposed were: (Audited) Year ended 31 December â‚¬ million 2011 Net assets disposed 181 Cumulative translation adjustment reserve realised (5) Non-controlling interests disposed (6) Net carrying value of discontinued operation distributed 170 Dividend in specie distributed to Mondi Limited shareholders 205 Net carrying value of discontinued operation distributed (170) Fair value gain on discontinued operation distributed 35 Transaction costs (6) Net fair value gain on discontinued operation distributed 29 10 Earnings per share (a) From continuing operations (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ cents per share 2012 2011 2011 Profit from continuing operations for the financial period/year attributable to equity holders of the parent companies Basic EPS 31.7 39.0 57.5 Diluted EPS 31.6 38.5 56.8 Underlying earnings for the financial period/year1 Basic EPS 30.9 38.2 68.1 Diluted EPS 30.8 37.7 67.3 Note: 1 Underlying EPS excludes the impact of special items. The calculation of basic and diluted EPS and basic and diluted underlying EPS from continuing operations is based on the following data: Earnings (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Profit for the financial period/year attributable to equity holders of the parent companies 153 212 330 Profit from discontinued operation (see note 9) - (13) (14) Net gain on distribution of discontinued operation (see note 9) - - (29) Related tax (see note 9) - - - Related non-controlling interests (see note 9) - - - Profit from continuing operations for the financial period/year attributable to equity holders of the parent companies 153 199 287 Special items (see note 6) (6) (4) 55 Related tax (see note 6) 2 - (2) Related non-controlling interests (see note 6) - - - Underlying earnings for the financial period/year1 149 195 340 Note: 1 Underlying earnings excludes the impact of special items. As described in note 9, Mondi Limited's ordinary shares were subject to a share consolidation which was recognised from 1 August 2011, the date on which the new Mondi Limited ordinary shares commenced trading on the JSE. IFRS requires that the number of shares subject to the consolidation be adjusted from the effective date of the consolidation, hence for the periods under review the effect of the share consolidation was included from 1 August 2011. Number of shares (Reviewed) (Reviewed) (Audited) As at As at As at 31 December million 30 June 2012 30 June 2011 2011 Basic number of ordinary shares outstanding1 483 510 499 Effect of dilutive potential ordinary shares2 1 7 6 Diluted number of ordinary shares outstanding 484 517 505 Notes: 1 The basic number of ordinary shares outstanding represents the weighted average number in issue for Mondi Limited and Mondi plc for the period/year, as adjusted for the weighted average number of treasury shares held during the period/year, and includes the impact of the share consolidation in 2011. 2 Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, net of treasury shares, on the assumption of conversion of all potentially dilutive ordinary shares. (b) From continuing and discontinued operations (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ cents per share 2012 2011 2011 Profit for the financial period/year attributable to equity holders of the parent companies Basic EPS 31.7 41.6 66.1 Diluted EPS 31.6 41.0 65.3 Headline earnings for the financial period/year1 Basic EPS 30.9 39.4 69.9 Diluted EPS 30.8 38.9 69.1 Note: 1 The presentation of Headline EPS is mandated under the JSE Listings Requirements. Headline earnings has been calculated in accordance with Circular 3/2009, 'Headline Earnings', as issued by the South African Institute of Chartered Accountants. The calculation of basic and diluted EPS and basic and diluted headline EPS from continuing and discontinued operations is based on the following data: Earnings (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Profit for the financial period/year attributable to equity holders of the parent companies 153 212 330 Net gain on distribution of discontinued operation (see note 9) - - (29) Special items (6) (4) 55 Special items: restructuring and closure costs - 1 (6) Profit on disposal of tangible and intangible assets - (6) - Impairments not included in special items - - 1 Related tax 2 (2) (2) Related non-controlling interests - - - Headline earnings for the financial period/year 149 201 349 11 Alternative measure of earnings per share The directors have elected to present an alternative, non-IFRS measure of earnings per share from continuing operations in order to provide shareholders with a comparison of the continuing operations of the Group as if the demerger and related share consolidation had occurred at the beginning of each period presented. This is deemed appropriate as it is the continuing operations of the Group, after taking the impact of the share consolidation into consideration, which will be the basis of the future performance of the Group. This approach will enable a useful comparison of earnings per share from continuing operations, based on the consolidated shares, for all future periods. The presentation of such an alternative, non-IFRS measure of earnings per share is classified by the JSE Limited as pro-forma financial information. Refer to pages 34 to 39 of the printed half-yearly report for the pro-forma financial information and independent reporting accountants' report thereon. In addition, the effect of the recapitalisation of Mpact resulted in a repayment of intercompany debt by Mpact to Mondi Limited on 4 and 5 July 2011 of â‚¬76 million. These proceeds were used to reduce the Group's net debt. The alternative measure of earnings per share has therefore been adjusted to take the related saving on interest paid into consideration as if the recapitalisation had occurred at the beginning of each period presented. Earnings (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ million 2012 2011 2011 Underlying earnings for the financial period/year1 149 195 340 Tax saving by Mondi Limited on intercompany interest received from Mpact2 - 4 4 Saving of interest paid on net debt at 8.6% per annum - 3 3 Tax at 28% on saving of interest paid - (1) (1) Adjusted earnings for the financial period/year 149 201 346 Notes: 1 Underlying earnings excludes the impact of special items. 2 Had the recapitalisation of Mpact occurred at the beginning of each period presented, Mondi Limited would no longer have received interest on its intercompany loans to Mpact and thus the tax charge on the interest received would not have been incurred. The revised weighted average number of shares is determined as follows: Number of shares (Reviewed) (Reviewed) (Audited) As at As at As at 31 30 June 30 June December million 2012 2011 2011 Basic number of ordinary shares outstanding 483 510 499 Adjustment for Mondi Limited share consolidation1 - (28) (17) Adjusted basic number of ordinary shares outstanding2 483 482 482 Effect of dilutive potential ordinary shares3 1 6 6 Diluted number of ordinary shares outstanding after Mondi Limited share consolidation 484 488 488 Notes: 1 The actual number of shares subject to consolidation was 29 million. The adjustment reflects the impact on the number of shares as if the share consolidation had occurred with effect from 1 January 2011 and takes treasury shares into consideration. The adjustment reflects the period up to the date of the share consolidation as the share consolidation is included in the basic number of ordinary shares outstanding from 1 August 2011. 2 The basic number of ordinary shares outstanding represents the weighted average number in issue for Mondi Limited and Mondi plc for the period/year, as adjusted for the weighted average number of treasury shares held during the period/year. 3 Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, net of treasury shares, on the assumption of conversion of all potentially dilutive ordinary shares. Based on the adjusted earnings and weighted average number of shares, the alternative, non-IFRS earnings per share figures for continuing operations would be: (Reviewed) (Reviewed) (Audited) Year Six months Six months ended ended ended 31 30 June 30 June December â‚¬ cents per share 2012 2011 2011 Earnings per share - alternative measure for the financial period/year Basic EPS - alternative measure 30.9 41.7 71.8 Diluted EPS - alternative measure 30.8 41.2 70.9 12 Dividends The interim dividend for the year ending 31 December 2012 of 8.9 euro cents per ordinary share will be paid on 18 September 2012 to those shareholders on the register of Mondi plc on 24 August 2012. An equivalent South African rand interim dividend will be paid on 18 September 2012 to shareholders on the register of Mondi Limited on 24 August 2012. The dividend will be paid from distributable reserves of Mondi Limited and of Mondi plc, as presented in the respective company annual financial statements for the year ended 31 December 2011. The interim dividend for the year ending 31 December 2012 will be paid in accordance with the following timetable: Mondi Limited Mondi plc Last date to trade shares cum-dividend JSE Limited 17 August 2012 17 August 2012 London Stock Exchange Not applicable 21 August 2012 Shares commence trading ex-dividend JSE Limited 20 August 2012 20 August 2012 London Stock Exchange Not applicable 22 August 2012 Record date JSE Limited 24 August 2012 24 August 2012 London Stock Exchange Not applicable 24 August 2012 Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by Central Securities Depository Participants 30 August 2012 30 August 2012 Last date for DRIP elections to UK Registrar and South African Transfer Secretaries by shareholders of Mondi Limited and Mondi plc 31 August 2012 23 August 2012* Payment Date South African Register 18 September 2012 18 September 2012 UK Register Not applicable 18 September 2012 DRIP purchase settlement dates 27 September 2012 21 September 2012** Currency conversion dates ZAR/euro 7 August 2012 7 August 2012 Euro/sterling Not applicable 31 August 2012 * 31 August 2012 for Mondi plc South African branch register shareholders ** 27 September 2012 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 20 August 2012 and 26 August 2012, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place between 15 August 2012 and 26 August 2012, 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 7 August 2012. 13 Retirement benefits In November 2011 the trustees of the defined benefit pension plan in South Africa, with agreement from the participating pensioners and employees, resolved to initiate a process to wind up the fund subject to regulatory approval. Regulatory approval was received in January 2012 and accordingly, Mondi Limited recognised a settlement charge of â‚¬2 million in the condensed combined and consolidated income statement. Mondi Limited expects to receive a reimbursement of the pension surplus of â‚¬6 million once the fund is wound up, subject to any potential claims. All assumptions of the Group's material defined benefit schemes and post-retirement medical plan liabilities were re-assessed individually and the remaining Group defined benefit schemes and unfunded statutory retirement obligations were re-assessed in aggregate for the six months ended 30 June 2012. The net retirement benefit obligation increased by â‚¬17 million mainly due to changes in assumptions, an exchange rate impact of â‚¬2 million and the above mentioned settlement charge of â‚¬2 million. The assets backing the defined benefit scheme liabilities reflect their market values as at 30 June 2012. Any movements in the assumptions have been recognised as an actuarial movement in the condensed combined and consolidated statement of comprehensive income. 14 Non-controlling interests bought out On 18 April 2012, Mondi concluded an all cash public tender offer for the share in Mondi Swiecie S.A. that it did not already own, increasing its shareholding to 93.2% from 66%. On 18 May 2012, Mondi acquired the remaining shares it did not already own. The total consideration paid by Mondi was â‚¬296 million including transaction costs of approximately â‚¬1 million which were expensed. The acquisition is reflected in the condensed combined and consolidated statement of changes in equity as a transaction between shareholders with the premium over the carrying value of the non-controlling interests being reflected as a reduction in retained earnings. 15 Business combinations On 2 May 2012, following completion of a number of suspensive conditions, including a ruling from the Arbitration Court of the National Chamber of Commerce in Poland, Mondi Swiecie S.A. acquired the entire share capital of Saturn Management Sp. Z o.o. from Polish Energy Partners S.A. for a net cash consideration of â‚¬31 million and the assumption of debt of â‚¬57 million. Transaction costs of approximately â‚¬1 million were expensed. Saturn Energy is the owner of the power and heat generating plant that provides Mondi Swiecie S.A. with most of its electricity requirements and all of its heat and steam needs. The fair value accounting reflected in these results is provisional in nature. If necessary, adjustments will be made to these fair values, and to the goodwill on acquisition, within 12 months of the acquisition date. The acquired business has contributed underlying operating profit of â‚¬2 million. Had the acquisition occurred on 1 January 2012, the acquired business would have contributed underlying operating profit of â‚¬9 million. Details of the aggregate net assets acquired, as adjusted from book to fair value, are: â‚¬ million Book value Revaluation Fair value Net assets acquired: Property, plant and equipment 70 25 95 Trade and other receivables 3 - 3 Cash and cash equivalents 2 - 2 Trade and other payables (6) - (6) Short-term borrowings (11) - (11) Medium and long-term borrowings (48) - (48) Deferred tax liabilities - (8) (8) Net assets acquired 10 17 27 Goodwill arising on acquisition 4 Total cost of acquisition 31 Cash acquired net of overdrafts (2) Purchase price adjustment receivable 5 Net cash paid 34 16 Disposal groups and assets held for sale There were no major disposal groups or assets held for sale as at 30 June 2012. 17 Consolidated cash flow analysis (a) Reconciliation of profit from continuing operations before tax to cash generated from operations (Reviewed) (Reviewed) (Audited) Six months Six months ended ended Year ended 30 June 30 June 31 December â‚¬ million 2012 2011 2011 Profit from continuing operations before tax 223 300 457 Depreciation and amortisation 167 172 342 Share-based payments 6 5 10 Non-cash effect of special items (4) (13) 36 Net finance costs 53 60 111 Net income from associates (1) (2) (1) Decrease in provisions and post-employment benefits (7) (15) (25) Increase in inventories (19) (104) (55) Increase in operating receivables (86) (134) (32) Increase in operating payables 3 95 19 Fair value gains on forestry assets (13) (23) (49) Felling costs 32 34 65 Profit on disposal of tangible and intangible assets - (6) - Other adjustments (1) 2 5 Cash generated from continuing operations 353 371 883 Cash generated from discontinued operation - 32 34 Cash generated from operations 353 403 917 (b) Cash and cash equivalents (Reviewed) (Reviewed) (Audited) As at As at As at 31 30 June 30 June December â‚¬ million 2012 2011 2011 Cash and cash equivalents per condensed combined and consolidated statement of financial position 60 33 191 Bank overdrafts included in short-term borrowings (see note 17c) (125) (126) (74) Net cash and cash equivalents per condensed combined and consolidated statement of cash flows (65) (93) 117 (c) Movement in net debt The Group's net debt position, excluding disposal groups, is: Debt due Current Cash and Debt due after financial cash within one one asset Total net â‚¬ million equivalents1 year2 year investments debt At 1 January 2011 24 (351) (1,037) - (1,364) Cash flow (97) - 112 - 15 Business combinations - (4) (1) - (5) Movement in unamortised loan costs - - (3) - (3) Effect of discontinued operation (23) 15 119 - 111 Reclassification - (39) 39 - - Currency movements 3 20 23 - 46 At 30 June 2011 (93) (359) (748) - (1,200) Cash flow 181 135 (108) 1 209 Disposal of businesses - 30 12 - 42 Movement in unamortised loan costs - - (3) - (3) Effect of discontinued operation 23 - 76 - 99 Reclassification - (25) 25 - - Currency movements 6 7 9 - 22 At 31 December 2011 117 (212) (737) 1 (831) Cash flow (181) 52 (240) (1) (370) Business combinations - (11) (48) - (59) Movement in unamortised loan costs - - (3) - (3) Reclassification - (19) 19 - - Currency movements (1) (4) (5) - (10) At 30 June 2012 (65) (194) (1,014) - (1,273) Notes: 1 The Group operates in certain countries (principally South Africa) where the existence of exchange controls may restrict the use of certain cash balances. These restrictions are not expected to have any material effect on the Group's ability to meet its ongoing obligations. 2 Excludes overdrafts, which are included as cash and cash equivalents. As at 30 June 2012, short-term borrowings on the condensed combined and consolidated statement of financial position of â‚¬315 million (as at 30 June 2011: â‚¬ 485 million; as at 31 December 2011: â‚¬286 million) include â‚¬125 million of overdrafts (as at 30 June 2011: â‚¬126 million; as at 31 December 2011: â‚¬74 million). The following table shows the amounts available to draw down on the Group's committed loan facilities: (Reviewed) (Reviewed) (Audited) As at As at As at 31 December â‚¬ million 30 June 2012 30 June 2011 2011 Expiry date In one year or less 26 39 38 In more than one year 558 742 851 Total credit available 584 781 889 18 Capital commitments (Reviewed) (Reviewed) (Audited) As at As at As at 31 December â‚¬ million 30 June 2012 30 June 2011 2011 Contracted for but not provided 178 122 140 Approved, not yet contracted for 230 182 372 These capital commitments relate to the following categories of non-current non-financial assets: (Reviewed) (Reviewed) (Audited) As at As at As at 31 December â‚¬ million 30 June 2012 30 June 2011 2011 Intangible assets 11 5 13 Property, plant and equipment 397 299 499 Total capital commitments 408 304 512 The expected maturity of these capital commitments is: (Reviewed) (Reviewed) (Audited) As at As at As at 31 December â‚¬ million 30 June 2012 30 June 2011 2011 Within one year 270 237 339 One to two years 122 58 141 Two to five years 16 9 32 Total capital commitments 408 304 512 Capital commitments are based on capital projects approved to date and the budget approved by the Boards. Major capital projects still require further approval before they commence. These capital commitments will be financed by existing cash resources and borrowing facilities. Capital commitments related to joint venture entities are immaterial. 19 Contingent liabilities and contingent assets Contingent liabilities comprise aggregate amounts as at 30 June 2012 of â‚¬13 million (as at 30 June 2011: â‚¬19 million; as at 31 December 2011: â‚¬17 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. There are a number of legal and tax claims against the Group. Provision is made for all liabilities that are expected to materialise. There were no contingent assets for all periods presented. Contingent assets and liabilities related to joint venture entities are immaterial. 20 Related party transactions The Group has related party relationships with its associates and joint ventures. Transactions between Mondi Limited, Mondi plc and their respective subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service transactions with joint ventures and associates and others in which the Group has a material interest. These transactions are under terms that are no less favourable than those arranged with third parties. These transactions, in total, are not considered to be significant. Other than the transactions described in notes 13 and 14, there have been no significant changes to the related parties as disclosed in note 39 of the Group's annual financial statements for the year ended 31 December 2011. Dividends received from associates for the six months ended 30 June 2012 amount to â‚¬nil (six months ended 30 June 2011: â‚¬nil; year ended 31 December 2011: â‚¬2 million). 21 Events occurring after 30 June 2012 On 11 July 2012, Mondi announced that it had agreed to acquire 93.4% of the outstanding share capital of Nordenia International AG for a total cash consideration of â‚¬240 million, subject to customary completion conditions including the approval of certain competition authorities. On 23 July 2012, agreement was reached to acquire a further 0.5% interest on the same completion conditions. The acquisition is expected to be completed in the fourth quarter of 2012. The directors declared an interim dividend of 8.9 euro cents per share as set out in note 12. Pro-forma financial information The directors have in the past presented underlying earnings per share in accordance with IAS 33.73 as they believe it provides a useful measure for shareholders to understand the underlying financial performance of the Group. Underlying earnings represents the earnings of the Group, from continuing operations, excluding special items. Special items are 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 of the Group. IAS 33 requires that the number of shares subject to the Mondi Limited share consolidation be adjusted from the effective date of the consolidation. This results in a mismatch between the underlying earnings, which excludes the discontinued operation for the full year, and the weighted average number of shares, which only reflects the adjusted number of shares from the date of the share consolidation. The directors have therefore elected to present an alternative, non-IFRS measure of underlying earnings per share from continuing operations for the prior year comparative periods in order to provide shareholders with a comparison of the continuing operations of the Group as if the demerger of Mpact and related Mondi Limited share consolidation had occurred at the beginning of each financial period presented. This is deemed appropriate as it is the continuing operations of the Group, after taking the impact of the share consolidation into consideration, which will be the basis of the future performance of the Group. This approach will enable a useful comparison of earnings per share from continuing operations, based on the consolidated shares, for all future periods. The presentation of such an alternative, non-IFRS measure of earnings per share is classified by the JSE Limited (JSE) as pro-forma financial information and must comply with section 8 of the JSE Listings Requirements. The unaudited pro-forma financial information below has been prepared for illustrative purposes to provide information on how the alternative measure of earnings per share adjustments would have impacted on the financial results of the Group. Because of its nature, the unaudited pro-forma financial information does not reflect the Group's actual results of operations which are set out in the combined and consolidated financial statements. The unaudited pro-forma results set out below only reflect an adjustment to the combined and consolidated income statement as no adjustments were made to the combined and consolidated statement of financial position. The combined and consolidated statement of comprehensive income is not presented as the pro-forma information relates only to the earnings per share measures, determined from the combined and consolidated income statement. The directors do not propose to present any pro-forma measures other than those relating to underlying earnings per share and therefore have not presented the effect of the pro-forma adjustments to headline earnings per share or earnings per share measures from continuing and discontinued operations. The underlying information used in the preparation of the pro-forma financial information has been prepared using the accounting policies set out in note 1 of the audited combined and consolidated financial statements for the year ended 31 December 2011 without adjustment. The directors of the Group are responsible for the compilation, contents and preparation of the unaudited pro-forma financial information set out below. Their responsibility includes determining that: the unaudited pro-forma financial information has been properly compiled on the basis stated; the basis is consistent with the accounting policies of the Group; and the pro-forma adjustments are appropriate for the purposes of the unaudited pro-forma financial information disclosed in terms of the JSE Listings Requirements. The unaudited pro-forma financial information should be read in conjunction with the Deloitte & Touche independent reporting accountants' report thereon. Pro-forma combined and consolidated income statement Six months Year ended 30 ended 31 June December 2011 2011 Reviewed Audited Adjust- Pro-forma Adjust- Pro-forma â‚¬ million (A) ments (unaudited) (A) ments (unaudited) Continuing operations Group revenue 2,942 - 2,942 5,739 - 5,739 Materials, energy and consumables used (1,528) - (1,528) (2,998) - (2,998) Variable selling expenses (257) - (257) (511) - (511) Gross margin 1,157 - 1,157 2,230 - 2,230 Maintenance and other indirect expenses (133) - (133) (272) - (272) Personnel costs (excluding special items) (417) - (417) (808) - (808) Other net operating expenses (excluding special items) (81) - (81) (186) - (186) Depreciation and amortisation (172) - (172) (342) - (342) Underlying operating profit 354 - 354 622 - 622 Special items (note B) 4 - 4 (55) - (55) Net income from associates 2 - 2 1 - 1 Total profit from operations and associates 360 - 360 568 - 568 Net finance costs (60) 3 (57) (111) 3 (108) Investment income 15 - 15 30 - 30 Foreign currency losses (2) - (2) - - - Finance costs (note B) (73) 3 (70) (141) 3 (138) Profit before tax 300 3 303 457 3 460 Tax (charge)/credit (note B) (59) 3 (56) (100) 3 (97) Profit from continuing operations 241 6 247 357 6 363 Profit from discontinued operations 13 - 13 43 - 43 Profit for the financial period/year 254 6 260 400 6 406 Attributable to: Non-controlling interests 42 - 42 70 - 70 Equity holders of the parent companies 212 6 218 330 6 336 Earnings per share (EPS) for profit attributable to equity holders of the parent companies From continuing operations (note D) Basic underlying (â‚¬ EPS cents) 38.2 41.7 68.1 71.8 Diluted (â‚¬ underlying EPS cents) 37.7 41.2 67.3 70.9 Notes to the pro-forma combined and consolidated income statement A. The Group financial information has been extracted, without adjustment, from the Group's reviewed combined and consolidated financial statements for the six months ended 30 June 2011 and the Group's audited combined and consolidated financial statements for the year ended 31 December 2011. B. The adjustments to the combined and consolidated financial statements to reflect the unaudited pro-forma earnings are set out below: Earnings Six Year months ended ended 31 30 June December â‚¬ million 2011 2011 Profit for the period/year attributable to equity holders of the parent companies 212 330 Discontinued operation (13) (43) Effect of special items (refer note 10a of the financial statements) (4) 55 Tax and non-controlling interests in respect of special items (refer note 10a of the financial statements) - (2) Underlying earnings attributable to equity holders of the parent companies (refer note 10a of the financial statements)1 195 340 Pro-forma adjustments Saving of interest paid on net debt at 8.6% per annum2 3 3 Tax at 28% on saving of interest paid (1) (1) Tax saving by Mondi Limited on intercompany interest received from Mpact3 4 4 Adjusted pro-forma underlying earnings for the financial period/year 201 346 Notes: 1 Underlying earnings excludes the impact of special items as described in note 6 of the condensed combined and consolidated financial statements. 2 The effect of the recapitalisation of Mpact resulted in a repayment of intercompany debt by Mpact to Mondi Limited on 4 and 5 July 2011 of â‚¬ 76 million. These proceeds were used to reduce the Group's net debt. The alternative measure of earnings per share has been adjusted to take the related saving on interest paid into consideration as if the recapitalisation had occurred at the beginning of each period presented. 3 Had the recapitalisation of Mpact occurred at the beginning of each financial period presented, Mondi Limited would no longer have received interest on its intercompany loans to Mpact and thus the tax charge on the interest received would not have been incurred. C. The revised weighted average number of shares is determined as follows: Number of shares Six Year months ended ended 31 30 June December million 2011 2011 Basic number of ordinary shares outstanding 510 499 Adjustment for Mondi Limited share consolidation1 (28) (17) Adjusted basic number of ordinary shares outstanding2 482 482 Effect of dilutive potential ordinary shares3 6 6 Diluted number of ordinary shares outstanding after Mondi Limited share consolidation 488 488 Notes: 1 The actual number of shares subject to consolidation was 29 million. The adjustment reflects the impact on the number of shares as if the share consolidation had occurred with effect from 1 January 2011 and takes treasury shares into consideration. The adjustment reflects the period up to the date of the share consolidation as the share consolidation is included in the basic number of ordinary shares outstanding from 1 August 2011 as set out in note 10a of the condensed combined and consolidated financial statements. 2 The basic number of ordinary shares outstanding represents the weighted average number in issue for Mondi Limited and Mondi plc for the period/year, as adjusted for the weighted average number of treasury shares held during the period/year. 3 Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, net of treasury shares, on the assumption of conversion of all potentially dilutive ordinary shares. D. Based on the adjusted earnings and weighted average number of shares, the alternative, non-IFRS underlying earnings per share figures for continuing operations would be: Six Year months ended ended 31 30 June December â‚¬ cents per share 2011 2011 Underlying earnings per share - alternative measure for the financial period/year Basic EPS - alternative measure 41.7 71.8 Diluted EPS - alternative measure 41.2 70.9 The directors do not propose to present any pro-forma measures other than those relating to underlying earnings per share and therefore have not presented the effect of the pro-forma adjustments to headline earnings per share or earnings per share measures from continuing and discontinued operations. Independent reporting accountants' assurance report on the pro-forma financial information of the Mondi dual listed structure (Mondi Group) We have performed our limited assurance engagement in respect of the pro-forma financial information set out on pages 34 to 37 of the printed half-yearly condensed combined and consolidated financial statements for the six months ended 30 June 2012 dated 6 August 2012 issued in connection with presentation of the alternative, non-IFRS measure of earnings per share from continuing operations in the condensed combined and consolidated financial statements of Mondi Group for the six months ended 30 June 2011 and the year ended 31 December 2011. The presentation of this alternative, non-IFRS measure is disclosed to provide shareholders with a comparison of the continuing operations of the Group as if the demerger of Mpact Limited and related share consolidation in Mondi Limited had occurred at the beginning of each financial period presented. The demerger of Mpact Limited and the share consolidation was finalised in August 2011. The pro-forma financial information has been prepared in accordance with the requirements of the JSE Limited (JSE) Listings Requirements, for illustrative purposes only, to provide information about how the alternative, non-IFRS measure might affect the reported financial information presented. Directors' responsibility The directors are responsible for the compilation, contents and presentation of the pro-forma financial information contained in the condensed combined consolidated financial statements. Their responsibility includes determining that: the pro-forma financial information has been properly compiled on the basis stated; the basis is consistent with the accounting policies of the Mondi Group and the pro-forma adjustments are appropriate for the purposes of the pro-forma financial information disclosed in terms of the JSE Listings Requirements. Reporting accountants' responsibility Our responsibility is to express our limited assurance conclusion on the pro-forma financial information included in the condensed combined consolidated financial statements of the Mondi Group. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements applicable to Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and the Guide on Pro Forma Financial Information issued by SAICA. This standard requires us to obtain sufficient appropriate evidence on which to base our conclusion. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the pro-forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue. Sources of information and work performed Our procedures consisted primarily of comparing the unadjusted financial information with the source documents, considering the pro-forma adjustments in light of the accounting policies of the Mondi Group, the issuer, considering the evidence supporting the pro-forma adjustments and discussing the adjusted pro-forma financial information with the directors of the Group in respect of the alternative, non-IFRS measure presented in the condensed combined and consolidated results that is a result of the demerger of Mpact completed in August 2011. In arriving at our conclusion, we have relied upon financial information prepared by the directors of the Mondi Group and other information from various public, financial and industry sources. While our work performed has involved an analysis of the historical published audited financial information and other information provided to us, our assurance engagement does not constitute an audit or review of any of the underlying financial information conducted in accordance with International Standards on Auditing or International Standards on Review Engagements and accordingly, we do not express an audit or review opinion. In a limited assurance engagement, the evidence-gathering procedures are more limited than for a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement. We believe our evidence obtained is sufficient and appropriate to provide a basis for our conclusion. Conclusion Based on our examination of the evidence obtained, nothing has come to our attention, which causes us to believe that, in terms of the section 8.17 and 8.30 of the JSE Listings Requirements: the pro-forma financial information has not been properly compiled on the basis stated, such basis is inconsistent with the accounting policies of the issuer, and the adjustments are not appropriate for the purposes of the pro-forma financial information as disclosed. Consent We consent to the inclusion of this report, which will form part of the SENS announcement and the condensed combined and consolidated financial statements, to be issued on or about 6 August 2012, in the form and context in which it will appear. Deloitte & Touche Registered Auditor Per Bronwyn Kilpatrick Partner Sandton 6 August 2012 Deloitte & Touche Registered Auditors Buildings 1 and 2, Deloitte Place, The Woodlands Woodlands Drive, Woodmead, Sandton Republic of South Africa National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax L Geeringh Consulting & Clients & Industries JK Mazzocco Talent & Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board. A full list of partners and directors is available on request. B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code Member of Deloitte Touche Tohmatsu Limited Revised operating segments subsequent to acquisition of Nordenia International AG Operating segment revenues Six months ended Six months ended 30 June 2012 30 June 2011 Segment Internal External Segment Internal External â‚¬ million revenue revenue1 revenue2 revenue revenue1 revenue2 Europe & International Packaging Paper 960 (249) 711 1,063 (260) 803 Fibre Packaging 946 (19) 927 973 (18) 955 Consumer Packaging 150 (1) 149 207 (3) 204 Uncoated Fine Paper 749 (8) 741 734 (13) 721 Intra-segment elimination (277) 277 - (293) 293 - Total Europe & International 2,528 - 2,528 2,684 (1) 2,683 South Africa Division 287 (57) 230 269 (90) 179 Newsprint businesses 83 (1) 82 80 - 80 Segments total 2,898 (58) 2,840 3,033 (91) 2,942 Inter-segment elimination (58) 58 - (91) 91 - Group total 2,840 - 2,840 2,942 - 2,942 Year ended Year ended 31 December 2011 31 December 2010 Segment Internal External Segment Internal External â‚¬ million revenue revenue1 revenue2 revenue revenue1 revenue2 Europe & International Packaging Paper 2,006 (469) 1,537 1,747 (423) 1,324 Fibre Packaging 1,881 (33) 1,848 1,728 (30) 1,698 Consumer Packaging 372 (5) 367 348 (7) 341 Uncoated Fine Paper 1,429 (20) 1,409 1,516 (129) 1,387 Intra-segment elimination (526) 526 - (487) 487 - Total Europe & International 5,162 (1) 5,161 4,852 (102) 4,750 South Africa Division 569 (155) 414 580 (211) 369 Newsprint businesses 164 - 164 492 (1) 491 Segments total 5,895 (156) 5,739 5,924 (314) 5,610 Inter-segment elimination (156) 156 - (314) 314 - Group total 5,739 - 5,739 5,610 - 5,610 Notes: 1 Inter-segment transactions are conducted on an arm's length basis. 2 The description of each business segment reflects the nature of the main products they sell. In certain instances the business segments sell minor volumes of other products and due to this reason the external segment revenues will not necessarily reconcile to the external revenues by type of product presented below. External revenue by product type Six months Six months Year ended Year ended ended ended 31 December 31 December â‚¬ million 30 June 2012 30 June 2011 2011 2010 Products Fibre packaging products 909 937 1,810 1,657 Packaging paper 689 748 1,438 1,202 Uncoated fine paper 687 684 1,337 1,351 Consumer packaging products 149 204 367 341 Pulp 140 125 263 247 Newsprint 130 123 251 221 Other1 136 121 273 591 Group total 2,840 2,942 5,739 5,610 Note: 1 Revenues derived from product types that are not individually material are classified as other. Operating profit/(loss) from continuing operations before special items Six months Six months Year ended Year ended ended ended 31 31 30 June 30 June December December â‚¬ million 2012 2011 2011 2010 Europe & International Packaging Paper 104 173 295 178 Fibre Packaging 47 46 86 52 Consumer Packaging 10 14 25 22 Uncoated Fine Paper 100 118 205 179 Total Europe & International 261 351 611 431 South Africa Division 29 27 62 64 Newsprint businesses (3) (5) (18) (4) Corporate & other businesses (18) (19) (33) (33) Segments total 269 354 622 458 Special items (see note 6) 6 4 (55) (21) Net income from associates 1 2 1 2 Net finance costs (53) (60) (111) (106) Group profit from continuing operations before tax 223 300 457 333 Significant components of operating profit from continuing operations before special items The DLC executive committee uses EBITDA as a measure of cash flow, coupled with the depreciation and amortisation charge, for making decisions about, amongst others, allocation of funds for capital investment. EBITDA Year Year Six months Six months ended ended ended ended 31 31 30 June 30 June December December â‚¬ million 2012 2011 2011 2010 Europe & International Packaging Paper 150 224 392 270 Fibre Packaging 80 77 149 120 Consumer Packaging 15 20 37 35 Uncoated Fine Paper 154 169 309 279 Total Europe & International 399 490 887 704 South Africa Division 55 54 114 117 Newsprint businesses - 1 (5) 10 Corporate & other businesses (18) (19) (32) (33) Group and segments total from continuing operations 436 526 964 798 Green energy sales and disposal Depreciation Operating of and lease emissions amortisation charges credits Year Year Year Year Year ended ended ended ended ended 31 Year ended 31 31 31 31 December 31 December December December December December â‚¬ million 2011 2010 2011 2010 2011 2010 Europe & International Packaging Paper 97 92 32 25 79 74 Fibre Packaging 63 68 9 9 - - Consumer Packaging 12 13 1 2 - - Uncoated Fine Paper 104 100 7 8 5 6 Total Europe & International 276 273 49 44 84 80 South Africa Division 52 53 5 5 - - Newsprint businesses 13 14 1 6 - - Corporate & other businesses 1 - 1 2 - - Group and segments total from continuing operations 342 340 56 57 84 80 Operating margin1 As at As at As at 31 As at 31 % 30 June 2012 30 June 2011 December 2011 December 2010 Europe & International Packaging Paper 10.8 16.3 14.7 10.2 Fibre Packaging 5.0 4.7 4.6 3.0 Consumer Packaging 6.7 6.8 6.7 6.3 Uncoated Fine Paper 13.4 16.1 14.3 11.8 South Africa Division 10.1 10.0 10.9 11.0 Newsprint businesses (3.6) (6.3) (11.0) (0.8) Group 9.5 12.0 10.8 8.2 Note: 1 Operating margin is underlying operating profit divided by revenue. Return on capital employed (ROCE)1 As at As at As at 31 As at 31 % 30 June 2012 30 June 2011 December 2011 December 2010 Europe & International Packaging Paper 18.5 25.8 24.4 17.0 Fibre Packaging 10.9 8.5 11.0 7.5 Consumer Packaging 14.6 14.4 15.0 13.5 Uncoated Fine Paper 15.7 16.9 16.7 16.9 South Africa Division 9.5 9.7 8.9 8.4 Newsprint businesses (20.6) (9.2) (19.2) (2.8) Group 13.3 15.2 15.0 12.3 Note: 1 Return on capital employed (ROCE) is trailing 12 month underlying operating profit, including share of associates' net income, divided by trailing 12 month average trading capital employed and for segments has been extracted from management reports. Capital employed is adjusted for impairments in the year and spend on the strategic projects which are not yet in production. Operating segment assets As at As at 30 June 30 June 2012 2011 Net Net Segment segment Segment segment â‚¬ million assets1 assets assets1 assets Europe & International Packaging Paper 1,709 1,373 1,718 1,337 Fibre Packaging 1,207 916 1,244 928 Consumer Packaging 189 145 248 191 Uncoated Fine Paper 1,469 1,270 1,553 1,360 Intra-segment elimination (137) - (141) - Total Europe & International 4,437 3,704 4,622 3,816 South Africa Division 978 840 1,015 877 Newsprint businesses 95 66 130 100 Corporate & other businesses 8 9 10 10 Inter-segment elimination (32) - (52) - Segments total 5,486 4,619 5,725 4,803 Unallocated: Discontinued operation - - 495 247 Investments in associates 12 12 12 12 Deferred tax assets/(liabilities) 5 (312) 11 (315) Other non-operating assets/(liabilities)2 137 (271) 150 (312) Group trading capital employed 5,640 4,048 6,393 4,435 Financial asset investments 40 40 31 31 Net debt 60 (1,273) 33 (1,200) Group assets 5,740 2,815 6,457 3,266 As at As at 31 December 31 December 2011 2010 Net Net Segment segment Segment segment â‚¬ million assets1 assets assets1 assets Europe & International Packaging Paper 1,593 1,249 1,526 1,208 Fibre Packaging 1,131 866 1,139 840 Consumer Packaging 175 131 239 183 Uncoated Fine Paper 1,473 1,283 1,672 1,512 Intra-segment elimination (131) - (116) - Total Europe & International 4,241 3,529 4,460 3,743 South Africa Division 964 828 1,091 953 Newsprint businesses 94 59 141 106 Corporate & other businesses 6 3 10 7 Inter-segment elimination (40) - (63) - Segments total 5,265 4,419 5,639 4,809 Unallocated: Discontinued operation - - 507 393 Investments in associates 10 10 16 16 Deferred tax assets/(liabilities) 5 (305) 21 (328) Other non-operating assets/(liabilities)2 140 (291) 193 (336) Group trading capital employed 5,420 3,833 6,376 4,554 Financial asset investments 33 33 34 34 Net debt 192 (831) 83 (1,364) Group assets 5,645 3,035 6,493 3,224 Notes: 1 Segment assets are operating assets and consist of property, plant and equipment, intangible assets, forestry assets, retirement benefits surplus, inventories and operating receivables. 2 Other non-operating assets consist of derivative assets, current income tax receivables, other non-operating receivables and assets held for sale. Other non-operating liabilities consist of derivative liabilities, non-operating provisions, current income tax liabilities, other non-operating payables and deferred income, and liabilities directly associated with assets classified as held for sale. Additions to non-current non-financial assets Additions to Capital non-current expenditure non-financial cash assets1 payments2 Six months Six months Six months Six months ended ended ended ended â‚¬ million 30 June 2012 30 June 2011 30 June 2012 30 June 2011 Europe & International Packaging Paper 125 22 34 20 Fibre Packaging 29 43 28 34 Consumer Packaging 8 7 7 7 Uncoated Fine Paper 21 21 24 33 Total Europe & International 183 93 93 94 South Africa Division 42 34 15 13 Newsprint businesses 3 4 1 2 Segments total 228 131 109 109 Unallocated: Discontinued operation - 18 - 17 Group total 228 149 109 126 Additions to Capital non-current expenditure non-financial cash assets1 payments2 Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December â‚¬ million 2011 2010 2011 2010 Europe & International Packaging Paper 66 94 67 109 Fibre Packaging 82 77 72 59 Consumer Packaging 15 10 15 11 Uncoated Fine Paper 51 138 61 151 Total Europe & International 214 319 215 330 South Africa Division 66 71 27 28 Newsprint businesses 7 10 4 7 Corporate & other businesses - - - 1 Segments total 287 400 246 366 Unallocated: Discontinued operation 18 28 17 28 Group total 305 428 263 394 Notes: 1 Additions to non-current non-financial assets reflect cash payments and accruals in respect of additions to property, plant and equipment, intangible assets and forestry assets and include interest capitalised as well as additions resulting from acquisitions through business combinations. Additions to non-current non-financial assets, however, exclude additions to deferred tax assets, retirement benefits surplus and non-current financial assets. 2 Capital expenditure cash payments exclude business combinations, interest capitalised and investments in intangible and forestry assets. Production statistics Six Six months months Year ended ended ended 31 30 June 30 June December 2012 2011 2011 Europe & International Containerboard Tonnes 1,042,937 991,970 2,009,984 Kraft paper Tonnes 489,279 535,238 955,741 Softwood pulp Tonnes 992,772 1,011,757 1,954,284 Internal consumption Tonnes 907,194 934,588 1,799,577 External Tonnes 85,578 77,169 154,707 Corrugated board and boxes MmÂ² 606 609 1,213 Industrial bags M units 2,005 2,050 3,958 Coating and release liners MmÂ² 1,758 1,797 3,357 Consumer packaging MmÂ² 376 373 702 Uncoated fine paper Tonnes 715,575 712,886 1,400,991 Newsprint Tonnes 98,936 97,931 199,337 Hardwood pulp Tonnes 527,310 527,889 1,033,226 Internal consumption Tonnes 483,642 496,518 975,121 External Tonnes 43,668 31,371 58,105 South Africa Division Containerboard Tonnes 132,251 126,516 257,680 Uncoated fine paper Tonnes 129,337 114,686 233,837 Hardwood pulp Tonnes 330,963 282,284 637,205 Internal consumption Tonnes 169,584 153,402 316,388 External Tonnes 161,379 128,882 320,817 Softwood pulp Tonnes 51,859 58,646 115,606 Bone dry Woodchips tonnes 68,632 101,454 206,150 Newsprint Joint Ventures (attributable share) Aylesford Tonnes 96,509 95,955 188,536 Mondi Shanduka Newsprint (MSN) Tonnes 58,770 61,548 124,914 Exchange rates Six months Six months ended ended Year ended 30 June 30 June 31 December 2012 2011 2011 Closing rates against the euro South African rand 10.37 9.86 10.48 Pounds sterling 0.81 0.90 0.84 Czech koruna 25.64 24.34 25.79 Polish zloty 4.25 3.99 4.46 Russian rouble 41.37 40.40 41.77 Turkish lira 2.28 2.35 2.44 US dollar 1.26 1.45 1.29 Average rates for the period against the euro South African rand 10.29 9.69 10.10 Pounds sterling 0.82 0.87 0.87 Czech koruna 25.16 24.35 24.59 Polish zloty 4.24 3.95 4.12 Russian rouble 39.69 40.14 40.88 Turkish lira 2.34 2.21 2.34 US dollar 1.30 1.40 1.39 Sponsor in South Africa: UBS South Africa (Pty) Ltd

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