.
30 July 2008
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000097051
Mondi plc
(Incorporated in England and Wales)
(Registration number: 6209386)
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
As part of the dual listed company structure, Mondi Limited and Mondi plc
(together 'Mondi Group') notify both the JSE Limited and the London Stock
Exchange of matters required to be disclosed under the JSE listings
requirements and/or the Disclosure and Transparency and Listing Rules of the
United Kingdom Listing Authority.
HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2008
Financial Summary 1
EUR million, except for percentages and Six months Six months Half year
per share measures June 2008 June 2007 change %
Group revenue 3,263 3,052 +7
EBITDA 456 421 +8
Underlying operating profit 263 243 +8
Underlying profit before tax 210 203 +3
Reported profit before tax 171 250 -32
Basic earnings per share (EUR cents per 17.1 31.9 -46
share) 2
Underlying earnings per share (EUR cents 24.8 22.6 +10
per share) 2
Headline earnings per share (EUR cents per 18.3 17.3 +6
share) 2
Interim dividend per share (EUR cents per 7.7 7.3 +5
share)
Cash inflow from operations 310 356 -13
Net debt 1,655 1,335 +24
Group ROCE 11.1% 10.0% +11
1 See Glossary of Financial Terms
2 2007 is pro forma and based on the number of shares admitted following the
demerger from Anglo American plc on 2 July 2007.
Operational and Financial Highlights:
Underlying operating profit up 8% at EUR 263 million driven by a strong
performance from the Europe & International Division
Improved profit trend in South Africa Division following a slow start to the
year
Results continue to benefit from our low cost operations and our low cost wood
resource in Russia and South Africa
Delivered cost savings of EUR 58 million, representing 2.1% of cost base
Underlying earnings per share up 10% and ROCE up 11%
Major projects in Poland and Russia are on schedule and within budgeted capital
cost
Substantial cash inflow from operations of EUR 310 million which was lower than
prior period due to working capital outflow on the back of higher trading
activity
Strong financial position with EUR 1.1 billion of undrawn committed facilities as
at end of June
Reported profit before taxation is down 32% because of a change in special
items from a EUR 47 million gain in 2007 (mainly disposals) to a EUR 39 million
charge in 2008 (mainly closure costs)
Half year dividend up 5% at 7.7 euro cents per share
David Hathorn, Mondi Group Chief executive, said:
"This is a good result achieved in a softening European market. It reflects
Mondi's strategic positioning, in particular, our broad business base with
leading market positions, emerging market focus, including major positions in
South Africa and Russia (where demand is good), our continued push to drive
down costs and a willingness to respond quickly to changing market conditions.
In the second half, South Africa should see a further improvement as actions to
enhance profitability continue to take effect. This should help to offset a
softening trading environment in Europe. Overall Mondi expects to make progress
for the year as a whole."
Contact details:
Mondi Group
David Hathorn +27 (0)11 9945418
Paul Hollingworth +44 (0)1932 826326
Lisa Attenborough +44 (0)1932 826380 / +44 (0)7872 672669
Financial Dynamics
Sophie Kernon +44 (0)20 7269 7121/+44(0)7802 877 243
Louise Brugman +27 (0)11 214 2415 / +27 (0)83 504 1186
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 991 276 (toll-free)
UK +44 20 7190 1232
0800 358 5260 (toll-free)
Europe & Other +44 20 7190 1232
An online audio cast facility will be available via: http://events.ctn.co.uk/
ec/mondi/547/
Password: HYResults08
The presentation will be available online via the above web site address before
the audio cast commences. Questions can be submitted either via the dial-in
conference call or by email via the audio cast.
Should you have any issues on the day with accessing the dial-in conference,
please call +44 20 8901 5400.
Should you have any issues on the day with accessing the audio cast, please
email mondievents@ctn.co.uk and you will be contacted immediately.
An audio recording of the presentation will be available on Mondi's website
during the afternoon on 30 July 2008.
Editors' notes:
Mondi is an international paper and packaging group and in 2007 had revenues of
EUR 6.3 billion. Its key operations and interests are in western Europe, emerging
Europe, Russia and South Africa.
The Group is principally involved in the manufacture of packaging paper and
converted packaging products; uncoated fine paper; and speciality products and
processes, including coating, release liner and consumer flexibles.
Mondi is fully integrated across the paper and packaging process, from the
growing of wood and manufacture of pulp and paper (including recycled paper) to
the converting of packaging papers into corrugated packaging and industrial
bags.
Mondi has production operations across 35 countries and had an average of
35,000 employees in 2007.
Group performance overview
As previously announced, from 1 January 2008, the former Mondi Packaging and
Mondi Business Paper Business units now operate as two divisions: Europe &
International and South Africa. Accordingly, we have used this new reporting
structure for commenting on trading in this Half-yearly Report.
The Group's underlying operating profit was 8% ahead of the comparable period
for the prior year helped by a strong performance from the Europe &
International Division. Within Europe & International there were good
performances from the Bags & Specialities and Uncoated Fine Paper Business
units. This was partially offset by reduced profits from Corrugated as prices
came under pressure. Measures to improve the South Africa Division's
profitability started to bear fruit towards the end of the first half and
overall the Division recorded an increase in underlying operating profit.
Merchant and Newsprint saw a significant decline in profits as our joint
venture, Aylesford Newsprint, suffered from both a decline in selling prices
and an increase in input costs.
The Group continued to benefit from its low cost base and its own fibre supply
from the emerging markets of Russia and South Africa, with circa 50% of the
Group's fibre demand available from these sources. Overall the Group delivered
a further EUR 58 million in cost savings, representing circa 2.1% of the prior
year cash cost base, further contributing to the positive performance versus
the prior year. Mondi remains committed to targeting annual savings of at least
2%.
Europe & International Division
Six months Six months Half year change %
EUR million June 2008 June 2007
Segment revenue 2,742 2,544 +8
- of which inter-segment revenue 81 74 +9
EBITDA 364 321 +13
Underlying operating profit 215 182 +18
Bags & Specialities 109 80 +36
Uncoated Fine Paper 69 48 +44
Corrugated 37 54 -31
Capital expenditure 1 260 101 +157
Net segment assets 4,166 3,755 +11
Return on capital employed (%) 12.0% 9.8% +22
1Capital expenditure is cash payments and excludes business combinations
Whilst the European business environment is increasingly challenging, our focus
on driving down costs, leading market positions and exposure to the growth
markets of emerging Europe and Russia (where demand is good), all contributed
to underlying operating profit up 18% versus the prior period. The Division
delivered EUR 50 million in cost savings, with the benefits from the
reorganisation of the Uncoated Fine Paper operations announced last year a
significant contributor.
In the Bags & Specialities business underlying operating profits were up EUR 29
million. The business has benefitted from significantly higher kraft paper and
converted bag prices (up around 6% since the year end), however converting
volumes saw softness as demand from the building industry has started to slow.
The results also benefit marginally from the acquisition of Unterland in the
second half of 2007 which is now trading more in line with expectations.
In the Uncoated Fine Paper (UFP) business underlying operating profits were up
EUR 21 million, with sales volumes only marginally down despite the closure of our
Hungarian mill during the period. Selling prices are up on average 3% against
the comparable period but are relatively unchanged since the year end. The
business also benefited from the internal restructuring announced last year end
as well as a better performance from all our mills including our Russian mill
where the local market continues to experience strong demand growth.
In the Corrugated business, which represents 17% of divisional operating
profit, underlying operating profits are down EUR 17 million at EUR 37 million as
selling prices fell back following substantial increases achieved in 2007.
Kraftliner prices are down 5% since the year end due to ongoing imports on the
back of the weak US dollar. As expected, following a rapid rise during 2007,
testliner prices have declined over 10% since the year end. The current price
declines are due to a substantial destocking combined with slowing demand. Box
prices, having increased since the year end, have now started to level off.
Results were also impacted by cost inflation, particularly recycled waste fibre
costs up 20%, market related downtime and the timing of maintenance shuts. We
will continue to monitor market conditions, in particular utilisation levels,
and take action if appropriate.
The recent acquisition of Tire Kutsan in Turkey continues to underperform.
This is mainly a result of softer demand coupled with new competitor capacity
coming on-stream and the resulting impact on prices in the local market. A
number of small acquisitions were completed in the period, primarily focused on
the strengthening of the product mix and geographic coverage of our Bags &
Specialities business. The enterprise value of all acquisitions in the period
totalled EUR 36 million. The Division disposed of the remaining sheet feeder
plants in the United Kingdom for an enterprise value of EUR 23 million and
completed the closure of the Szolnok mill in Hungary.
The construction of the new 470,000 tonne recycled containerboard machine at
Swiecie in Poland is progressing well (total cost of EUR 305 million). Orders for
the main machine have been placed and we remain on track for completion in the
second half of 2009 within the budgeted cost. We anticipate this machine will
have the lowest operating cost of its type. The investment in the new box
plant and associated infrastructure (EUR 45 million) has been delayed pending
agreement on the availability of subsidies.
The project to modernise our Russian mill (total cost of EUR 525 million) is also
making good progress. All main equipment contracts have been agreed,
construction has commenced and we remain on track for completion within the
budgeted cost by mid to late 2010. The key value drivers of this project are
to improve efficiency and our cost base in Russia, increase energy production
and revenue by selling surplus energy to the grid and provide modest extra
capacity (both pulp and paper) for the strongly growing domestic market.
South AfricaDivision
Six months Six months Half year change %
EUR million June 2008 June 2007
Segment revenue 274 295 -7
- of which inter-segment revenue 174 168 +4
EBITDA 67 65 +3
Underlying operating profit 45 44 +2
Uncoated Fine Paper 30 32 -6
Corrugated 15 12 +25
Capital expenditure 1 23 11 +109
Net segment assets 789 981 -20
Return on capital employed (%) 10.6% 9.9% +7
1Capital expenditure is cash payments and excludes business combinations
The South Africa Division recorded a small increase in underlying operating
profits of EUR 1 million. An increase in profitability towards the end of the
period followed a slow start due partially to the loss of more than three weeks
of production at Richards Bay (largely as a result of an extensive maintenance
shut versus none in 2007). Throughout the period substantial progress was made
on the management of product mix to optimise margins as opposed to volumes.
Results towards the end of the period benefited from product mix changes as
well as selling price increases for both domestic (5% increase effective 1 May)
and export sales (following a 23% weakening of the rand). The Division has also
delivered EUR 6 million in cost savings in the period.
In the domestic market (which represents about one third of the Division's UFP
volume), further price increases of up to 15% have been announced for
implementation during August. This will more than compensate for rising
domestic input costs. The domestic market for UFP continues to grow at around
6% per annum. Sales to Africa (which represent circa one third of the
division's UFP volume) also continue to grow, where price increases (quoted in
US dollars) of around 5% are in progress. The remaining UFP volume, which is
destined for the international markets, will benefit from the weaker rand.
The corrugated operations consist of the white top linerboard machine at
Richards Bay with approximately 80% of its production exported. The global
supply/demand balance remained favourable and there have been no announcements
of new capacity additions. Corrugated profits were up in the period with
export sales benefiting from the weaker rand.
These factors should support the ongoing improvement in the South Africa
Division's results on translation into euros for the full year.
Mondi Packaging South Africa (MPSA)
Six months Six months Half year change %
EUR million June 2008 June 2007
Segment revenue 223 173 +29
- of which inter-segment revenue 14 17 -18
EBITDA 27 21 +29
Underlying operating profit 14 15 -7
Capital expenditure 1 25 14 +79
Net segment assets 308 207 +49
Return on capital employed (%) 11.1% 18.8% -41
1Capital expenditure is cash payments and excludes business combinations
Demand and pricing remained positive with corrugated packaging and corrugated
case material volumes up 7% and 3% respectively versus the comparator period.
This performance was helped by good demand from the agricultural sector, which
represents half of MPSA's corrugated box revenue. The agriculture sector is
highly export driven and is expected to continue to enjoy good volume
growth. Double digit price increases are targeted for the domestic
containerboard market with effect from 1 October. The Lenco acquisition (rigid
plastics manufacturer) completed in July 2007 contributed positively to
profits, in particular EBITDA, and is now performing better after a slow
start. The improved local performance is however impacted on translation into
euros at the much weaker rand rate and a EUR 2 million charge for the amortisation
of Lenco intangibles (2007: nil).
Progress on the execution of major projects has been good with the Felixton
rebuild which was commissioned on time and within budget. This will increase
containerboard production by 45,000 tonnes per annum to 155,000 tonnes per
annum. This repositions Felixton to produce lightweight recycled
containerboard to serve the fast growing domestic market.
Merchant and Newsprint
Six months Six months Half year change %
EUR million June 2008 June 2007
Segment revenue 293 286 +2
- of which inter-segment revenue - 1 n/a
EBITDA 18 27 -33
Underlying operating profit 10 16 -38
Capital expenditure 1 5 8 -38
Net segment assets 248 265 -6
Return on capital employed (%) 15.0% 14.1% +6
1 Capital expenditure is cash payments and excludes business combinations
At Europapier volumes and prices remained firm with good demand in emerging
Europe and Russia. At Mondi Shanduka Newsprint earnings were up in local
currency with volume and price increases largely eroded by a significantly
weaker rand exchange rate. Mondi's joint venture, Aylesford Newsprint (which
accounted for just under half the Divisions 2007 full year operating profit),
has seen a significant deterioration in profitability as a result of falling
selling prices, due to competition from imports, and rising energy and
recycled fibre input costs. The recent weakening of sterling should see
competition from imports lessen.
Corporate and other
Net corporate costs are EUR 7 million higher than the comparable period in 2007
due to the establishment of Mondi's own corporate capacity following the
demerger from Anglo American plc as well as the disposal of non-core businesses
at the end of 2007 that contributed circa EUR 2 million of profits in the
comparable period.
Input costs and currency
External wood cost pressures have continued to ease but waste-based fibre costs
were up by circa 20% on the comparable period although they started to fall
towards the end of the 2008 first half. Other input cost pressures remain a
concern and the rising oil price continues to feed through into rising energy
and transport bills. Importantly, our results continued to benefit from Mondi's
ongoing focus on cost reductions, restructuring and productivity improvements,
all of which help to mitigate the impact of cost inflation and delivered EUR 58
million in cost savings during the period.
The relatively modest levels of net export dependency of UFP and containerboard
(circa 5% versus 20% for most coated and graphic paper grades) have helped to
limit the impact of the weak US dollar for Mondi. Whilst the profitability of
export sales from South Africa have benefited from the weakness of the Rand,
the strength of the emerging European currencies (up circa 5 to 10 % against
the Euro) has impacted on the Polish, Czech and Slovakian operations' margins
for Euro based exports.
Restructuring and operating special items
The previously announced closure of our 140,000 tonne uncoated fine paper mill
in Hungary was completed during the period (production ceased on 20 March
2008). We also completed the restructuring and simplification of our European
UFP divisional structure and are now beginning to see the benefits of these
actions coming through. The charge for impairment of the Hungarian site was
recognised in the 2007 results and closure and other costs of EUR 26 million have
been disclosed as a special item in the first half. In addition, we incurred a
EUR 5 million charge on the closure of the Nyborg Bags & Specialities plant in
Denmark with certain of the volumes transferred within Mondi.
Loss on sale
The EUR 3 million loss on sale of the remaining United Kingdom Corrugated sheet
feeder plants for an enterprise value of EUR 23 million has been reflected as a
special item.
Net finance costs
Overall finance charges were higher than the comparable period. For the first
half of 2007 Mondi was a subsidiary of Anglo American plc and operated under a
different capital structure which resulted in lower finance charges.
Taxation
The effective tax rate before special items, of 29% is down one percentage
point on the comparable period and is similar to the 2007 year end rate. This
is mainly a result of lower tax rates in our key geographies. The reported tax
rate after special items of 36% is 12 percentage points higher than the
comparator period in 2007, principally as disposals in the first half of 2007
were realised in a tax efficient manner.
Minority interests
Minority interests for the half year were EUR 3 million lower than the comparator
period as earnings were down at the significant operations where there are
non-controlling interests particularly in our Corrugated operations within
Europe & International.
Cash flow and borrowings
As expected, Group borrowings have increased by EUR 148 million since the year end
as the rate of capital expenditure increases due to the commencement of the two
key capital projects in Poland and Russia. In the period EUR 140 million was
spent on these two projects versus nil in the comparator period (full year
2007: EUR 40 million). Mondi's other major primary production sites are well
invested following major projects in recent years and, as such, capital
expenditure going forward will reduce to levels below depreciation.
Mondi enjoys a strong financial position and as at the end of June the Group
had just under EUR 1.1 billion of undrawn committed debt facilities (EUR 0.8 billion
of which is available under a EUR 1.55 billion facility expiring on 22 June 2012).
Principal risks and uncertainties
It is in the nature of our business that Mondi is exposed to risks and
uncertainties which may have an impact on future performance and financial
results, as well as upon our ability to meet certain social and environmental
objectives. The Group believes that it has effective systems and controls in
place to manage the key risks identified below.
The markets for paper and packaging products are highly competitive, with many
participants and prices determined by market conditions including industry
operating capacities and exchange rates. Prices of Mondi's key paper grades
have experienced substantial fluctuations in the past; however, Mondi is
flexible and responsive to changing market and operating conditions and the
Group's significant exposure to low cost emerging markets provides some measure
of protection from market conditions.
Materials, energy and consumables used by Mondi include significant amounts of
wood, pulp, recovered paper, packaging papers and chemicals. Increases in the
costs of any of these raw materials, or any difficulties in procuring wood in
certain countries, could have an adverse effect on Mondi's business,
operational performance or financial condition. However, Mondi's relatively
high level of integration and access to its own fibre in Russia and South
Africa, acts to help mitigate this risk.
Mondi has announced two significant capital investments to expand and upgrade
existing facilities in Poland and Russia. These projects carry risks and Mondi
has put in place dedicated teams to ensure delivery of the projects on time and
within budget.
Board and Group Executive
As stated in the prospectus, a requirement of the South African Ministry of
Finance is that the Chief financial officer's role is based at the head office
in South Africa from the beginning of 2009. Paul Hollingworth, our Chief
financial officer, has decided not to relocate and as such, will step down from
the Board as Chief financial officer during the fourth quarter. He will stay
with Mondi until the end of December 2008. Mondi would like to thank Paul for
his significant contribution to the Group and also for helping to establish
Mondi as a separate listed Group following its demerger from Anglo American
plc. We are pleased that we have an excellent replacement, Andrew King, who
has worked for Mondi for 7 years, latterly as Group strategy and business
development director, who will take up the position of Chief financial officer
and will be based in South Africa. Andrew King will join the Board as Chief
financial officer during the fourth quarter.
Interim dividend
An interim dividend of 7.7 euro cents per share, an increase of 5.5%, will be
paid on 16 September 2008 to those shareholders on the register of Mondi plc on
29 August 2008.
An equivalent interim dividend will be paid in South African rand on 16
September 2008 to shareholders on the register of Mondi Limited on 29 August
2008. Holders of Mondi Limited Depositary Interests who hold their interests
through Equiniti Corporate Nominee Ltd will receive their dividend in UK
sterling on 23 September 2008.
Current year outlook
The 8% increase in first half underlying operating profits against a worsening
economic backdrop is a good result. It is testament to Mondi's strategic
positioning, in particular, its broad business base with leading market
positions, emerging market focus, including major positions in South Africa and
Russia (where demand is good), continued push to drive down costs and a
willingness to respond quickly to changing market conditions.
In the second half, South Africa should see a further improvement as actions to
enhance profitability continue to take effect. This should help to offset a
softening trading environment in Europe. Overall Mondi expects to make progress
for the year as a whole.
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 IAS 34, 'Interim Financial Reporting';
* The Half-yearly report includes a fair review of the important events
during the six months ended 30 June 2008 and a description of the principal
risks and uncertainties for the remaining six months of the year ending 31
December 2008;
* There have been no changes in the Group's related party relationships from
those reported in the Group's annual financial statements for the year
ended 31 December 2007; and
* The Half-yearly report includes a fair review of the Group's related party
transactions.
By order of the Boards,
David
Hathorn
Paul Hollingworth
Director
Director
29 July 2008
Independent review report to the members of Mondi Limited
Introduction
We have been instructed by the company to review the condensed financial
information of the Mondi Group for the six months ended 30 June 2008 which
comprises the condensed combined and consolidated income statement, the
condensed combined and consolidated balance sheet, the condensed combined and
consolidated cash flow statement, the condensed combined and consolidated
statement of total recognised income and expense and related notes 1 to 20. We
have read the other information contained in the Half-yearly report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The Half-yearly report, including the financial information contained therein,
is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the Half-yearly report in accordance
with the basis of preparation set out in note 1, the JSE Listing Requirements
and the requirements of International Accounting Standard 34, "Interim
Financial Reporting", which require that the accounting policies and
presentation applied to the Half-yearly figures are consistent with those
applied in preparing the preceding audited financial information except where
any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in
International Standards on Review Engagements 2410 - "Review of Interim
Financial Information performed by Independent Auditor of the Entity" issued by
the International Accounting Standards Board. A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with International Standards on Auditing and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an
audit opinion on the financial information.
Review conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Half-yearly
report for the six months ended 30 June 2008 is not prepared, in all material
respects, in accordance with International Accounting Standard 34.
Deloitte & Touche
Per C Sagar
Partner
29 July 2008
Note: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no
control procedures can provide absolute assurance in this area.
Independent review report to the members of Mondi plc
We have been engaged by the company to review the condensed set of financial
statements in the Half-yearly report for the six months ended 30 June 2008
which comprises the condensed combined and consolidated income statement, the
condensed combined and consolidated balance sheet, the condensed combined and
consolidated cash flow statement, the condensed combined and consolidated
statement of recognised income and expense and related notes 1 to 20. We have
read the other information contained in the Half-yearly report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to them in an independent review
report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company, for our
review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The Half-yearly report is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the Half-yearly report
in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial 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 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 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
report for the six months ended 30 June 2008 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 & Touche LLP
Chartered Accountants and Registered Auditor
29 July 2008
London, UK
Note: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no
control procedures can provide absolute assurance in this area.
Condensed combined and consolidated income statement
For the six months ended 30 June 2008
(Reviewed) (Reviewed) (Audited)
Six months ended Six months ended Year ended
30 June 2008 30 June 2007 31 December 2007
Special Special Special
Before items Before items Before items
special (note special (note special (note
EUR million Note items 5) items 5) items 5)
Group
revenue 4 3,263 - 3,263 3,052 - 3,052 6,269 - 6,269
Materials,
energy and
consumables
used (1,729) - (1,729) (1,577) - (1,577) (3,265) - (3,265)
Variable
selling
expenses (281) - (281) (280) - (280) (558) - (558)
Gross margin 1,253 - 1,253 1,195 - 1,195 2,446 - 2,446
Maintenance
and other
indirect
expenses (143) - (143) (130) - (130) (289) - (289)
Personnel
costs (470) (17) (487) (446) (5) (451) (906) (17) (923)
Other net
operating
expenses (184) (16) (200) (198) - (198) (381) - (381)
Depreciation
and
amortisation (193) (3) (196) (178) (3) (181) (368) (60) (428)
Operating
profit/
(loss) from
subsidiaries
and joint
ventures 4 263 (36) 227 243 (8) 235 502 (77) 425
Net (loss)/
profit on
disposals 5 - (3) (3) - 84 84 - 83 83
Net income
from
associates 2 - 2 2 - 2 2 - 2
Total profit
/(loss) from
operations
and
associates 265 (39) 226 245 76 321 504 6 510
Investment
income 19 - 19 21 - 21 44 - 44
Interest
expense (74) - (74) (63) (29) (92) (143) (29) (172)
Net finance
costs 6 (55) - (55) (42) (29) (71) (99) (29) (128)
Profit/
(loss)
before tax 210 (39) 171 203 47 250 405 (23) 382
Taxation
(charge)/
credit 7 (61) - (61) (61) 1 (60) (117) 15 (102)
Profit/
(loss) for
the
financial
period/year 149 (39) 110 142 48 190 288 (8) 280
Attributable
to:
Minority
interests 23 - 23 26 - 26 47 - 47
Equity
holders 126 (39) 87 116 48 164 241 (8) 233
Pro forma
earnings per
share
('EPS') for
profit
attributable
to equity
holders
Basic EPS (EUR
cents) 8 17.1 31.9 45.4
Diluted EPS
(EUR cents) 8 16.9 31.9 45.1
Basic
underlying
EPS (EUR
cents) 8 24.8 22.6 46.9
Diluted
underlying
EPS (EUR
cents) 8 24.4 22.6 46.7
Basic
headline EPS
(EUR cents) 8 18.3 17.3 39.5
Diluted
headline EPS
(EUR cents) 8 18.0 17.3 39.3
There were no discontinued operations in any of the periods presented.
Condensed combined and consolidated balance sheet
As at 30 June 2008
(Audited)
(Reviewed) (Reviewed)
As at As at As at
30 June 30 June 31 December
EUR million Note 2008 2007 2007
Intangible assets 524 381 520
Property, plant and equipment 3,750 3,594 3,731
Forestry assets 206 220 224
Investments in associates 7 7 6
Financial asset investments 25 25 25
Deferred tax assets 39 40 32
Retirement benefits surplus 15 8 11
Derivative financial instruments 5 - -
Total non-current assets 4,571 4,275 4,549
Inventories 759 710 760
Trade and other receivables 1,349 1,355 1,304
Current tax assets 24 33 52
Cash and cash equivalents 10 152 176 180
Derivative financial instruments 19 7 17
Total current assets
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