Half-yearly Report

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. 5 August 2009 HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2009 Financial summary1 â‚¬ million, except for percentages and Six months Six months Half-year per share measures June 2009 June 2008 change % Group revenue 2,614 3,263 -20 EBITDA 308 456 -32 Underlying operating profit 138 263 -48 Underlying profit before tax 81 210 -61 Reported (loss)/profit before tax (1) 171 -100 Basic (loss)/earnings per share (â‚¬ cents per share) (7.1) 17.1 -142 Underlying earnings per share (â‚¬ cents per share) 8.3 24.8 -67 Headline (loss)/earnings per share (â‚¬ cents per share) (0.8) 18.3 -104 Interim dividend per share (â‚¬ cents per share) 2.5 7.7 -68 Cash inflow from operations 392 310 26 Net debt 1,661 1,655 0 Group ROCE 7.4% 11.1% -33 Key points Cash inflow from operations up 26% at â‚¬392 million A strong performance from the European uncoated fine paper business Successful execution of a number of restructuring initiatives Well on track to deliver full-year cost savings target of â‚¬180 million - â‚¬109 million to date Demonstrated excellent financial discipline with net debt at â‚¬1.66 billion (â‚¬29 million reduction since 31 December 2008) Over â‚¬1 billion of undrawn committed facilities as at end of June Major projects in Poland and Russia are on schedule and within budgeted capital cost Interim dividend of 2.5 euro cents per share David Hathorn, Mondi Group chief executive, said: "This is a resilient performance in the face of a very challenging trading environment, supported by the strong performance of our European uncoated fine paper business. Particularly pleasing is the strong cashflow generation, evidenced by the fact that we achieved a reduction in net debt for the period despite funding a further circa â‚¬179 million investment in our two major projects in Poland and Russia. Similarly, we continue to make good progress in improving efficiencies and reducing costs, in part by exiting higher-cost operations that we believe will not prosper through the economic cycle. The benefits of the actions taken to restructure the cost base are expected to continue to flow through in the second half. Order inflows in most of our key product areas have improved following a weak start to the year, albeit they remain well down on the prior year. However, the full impact of the price declines in our main products over the course of the first half is now being felt. This is likely to provide further challenges in the near term. While prices appear to be bottoming following some industry rationalisation, the impact of new capacity expected to come on to the market in the second half is uncertain. We believe the decisive actions taken to reduce capacity, lower the overall cost base and optimise cash flows, coupled with our high-quality, low-cost asset base leave us well positioned to benefit when market conditions improve." 1 See glossary of financial terms Contact details Mondi Group David Hathorn +27 (0)11 994 5418 Andrew King +27 (0)11 994 5415 Lora Rossler +27 (0)31 451 2040 / +27 (0)83 627 0292 Financial Dynamics Sophie Kernon +44 20 7269 7225 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 200 648 (toll-free) UK 0800 917 7042 (toll-free) Europe & Other 0800 246 78 700 (toll-free) An online audio cast facility will be available via: www.mondigroup.com/ HYResults09 Password: HYResults09. The presentation will be available online via the above website address before the audio cast commences. Questions can be submitted via the dial-in conference call or by e-mail via the audio cast. Should you have any issues on the day with accessing the dial-in conference call, please call +27 (0)11 535 3600. Should you have any issues on the day with accessing the audio cast, please e-mail mondi@kraftwerk.co.atand you will be contacted immediately. An audio recording of the presentation will be available on Mondi's website during the afternoon of 5 August 2009. Editors' notes Mondi is an international paper and packaging group and in 2008 had revenues of â‚¬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 33,400 employees in 2008. Forward-looking statements This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi's financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Mondi's present and future business strategies and the environment in which Mondi will operate in the future. Among the important factors that could cause Mondi's actual results, performance or achievements to differ materially from those in the forward-looking statements include, but are not limited to, those discussed under Principal risks and uncertainties, below. These forward-looking statements speak only as of the date on which they are made. Mondi expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Mondi's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Group performance overview The Group's underlying operating profit was 48% down on the comparable period in the prior year, reflecting a continuation of the difficult trading conditions brought on by the general economic slowdown. Order inflows for the Group's major products have recovered from the lows reached in the December to January period, albeit they remain well down on the prior year. Prices have, however, declined during the period. While the European businesses were the first to be impacted by the economic slowdown, with a sharp fall in profitability in the fourth quarter of 2008, the profitability of the South African operations only began to decline during the current period on the back of softer volumes and reduced export prices. The Group continues to make good progress on the various initiatives taken in response to the downturn, including delivering on the â‚¬180 million cost reduction programme announced at the 2008 full-year results in February (â‚¬109 million delivered year-to-date), exiting various higher-cost operations, focusing on working capital management and reducing capital expenditure. These efforts build on Mondi's competitive advantages, and ensure the Group remains well positioned to benefit when market conditions improve. The Group remains in a sound financial position, with net debt at the end of June 2009 of â‚¬1.66 billion, a decrease of around â‚¬29 million on the position at the end of December 2008. Taking into consideration a further circa â‚¬179 million spent on the two major capital projects in Poland and Russia in the period, this outcome is testament to the strong focus on cash flow optimisation. At the end of June 2009, the Group had just over â‚¬1 billion of undrawn committed debt facilities. Europe & International Division Six months Six months Half-year change % â‚¬ million June 2009 June 2008 Segment revenue 2,063 2,742 -25 - of which inter-segment revenue 53 81 -35 EBITDA 238 364 -35 Underlying operating profit 108 215 -50 Uncoated Fine Paper 71 69 +3 Corrugated 1 37 -97 Bags & Specialities 36 109 -67 Capital expenditure1 272 260 +5 Net segment assets 3,620 4,166 -13 Return on capital employed (%)2 7.3% 12.0% -39 1Capital expenditure is cash payments and excludes business combinations 2 Return on capital employed (%) is calculated based on the trailing 12 months data Underlying operating profit of â‚¬108 million was 50% lower than the comparable period last year, although the trend was up on a very weak fourth quarter of 2008, driven by better performances from Bags & Specialities and Uncoated Fine Paper. To balance weak demand across all businesses, around 163,000 tonnes of market-related downtime was taken in the first half, representing around 8% of capacity in the period. Encouragingly, market-related downtime taken in the second quarter of 2009 was significantly below that of the first quarter (44,000 tonnes versus 119,000 tonnes), reflecting a steady pickup in order inflows from the lows reached over the turn of the year. Disappointingly, selling prices declined in all major grades, under pressure from the slowdown in demand coupled with insufficient supply-side response. There has been some offset from decreasing input costs, including wood, recovered paper, chemicals and other variable costs, although many of these are now showing signs of stabilising. Some input costs have increased since the beginning of the year, notably recovered paper. The restructuring actions the Group has taken in exiting higher cost-capacity are helping to offset the revenue pressures while also contributing to a more balanced market. Underlying operating profit in the Uncoated Fine Paper Business was up â‚¬2 million on the comparable period at â‚¬71 million and up around â‚¬14 million on the second half of 2008. This represents a very strong result in the current economic environment and reinforces the strength of the Group's low-cost asset base and favourable market positioning. While order inflows for European producers as a whole are down around 11% versus the comparable period, the Group has been significantly less impacted due to its greater exposure to the cut-size product segment and, geographically, to emerging Europe, both market segments that have proved more resilient to the economic downturn. In Russia, where management estimates that overall demand is down by similar levels to that seen in Europe, as a domestic producer the business has been able to maintain volumes at the expense of importers. Results from the Russian operation were particularly strong, with marginally improved domestic selling prices supported by good cost control. Combined with decreasing pulp input costs at the non-integrated facilities and cost-reduction initiatives across the business, this more than offset the impact of lower European selling prices (office paper down 4% since the year end). In the Corrugated Business trading remains extremely challenging. The business delivered a marginal underlying operating profit, significantly down on the â‚¬37 million achieved in the comparable period. Weak demand coupled with insufficient supply-side response put pressure on containerboard prices. Average recycled containerboard prices were down around 36% on the comparable period. At the end of June 2009 prices were down around 27% on those in December 2008. Similarly, virgin containerboard prices are down around 20% since the beginning of the year, driven downwards by the increased substitution threat caused by lower recycled containerboard prices. Results from our important Polish operations continued to be impacted by the relatively strong Polish zloty as the business delivered into forward currency contracts taken out under the Group's rolling six month currency hedging programme. Under this programme the weakening of the Polish zloty seen at the end of 2008 and into early 2009 only started to benefit the business late in the second quarter. Converted box prices have been impacted by the reduction in paper prices. In the Bags & Specialities Business underlying operating profit was sharply down on a strong comparable period a year ago. Pleasingly, the trend in underlying operating profit is up on a very weak fourth quarter of 2008 on better volumes, strong cost control and a good performance from the consumer flexibles segment. However, the business continued to be affected by weak year-on-year demand in kraft paper and industrial bags, impacting both volumes and pricing. Significant market-related downtime of around 86,000 tonnes was taken in the period to balance inventories, although encouragingly this was predominantly in the first quarter as the market stabilised following the lows reached over the December 2008-January 2009 period, when destocking appeared to be at its height. The previously announced mothballing of the Dynas PM5 kraft paper machine has been delayed until the end of the year due to stronger than anticipated seasonal demand. Mothballing of the Stambolijski kraft paper mill became effective in May. The expected effect of these actions will be to reduce the Group's fixed cost base and ensure the business is well positioned to face the challenges of a lower demand environment. Profitability in the Specialities Business unit has improved since the second half of 2008 driven by resilient demand, lower plastic resin input costs and stable pricing. South AfricaDivision Six months Six months Half-year change % â‚¬ million June 2009 June 2008 Segment revenue 249 274 -9 - of which inter-segment revenue 113 174 -35 EBITDA 48 67 -28 Underlying operating profit 28 45 -38 Uncoated Fine Paper 13 30 -57 Containerboard 15 15 0 Capital expenditure1 13 23 -43 Net segment assets 868 789 10 Return on capital employed (%)2 13.5% 10.6% 27 1Capital expenditure is cash payments and excludes business combinations 2 Return on capital employed (%) is calculated based on the trailing 12 months data First half underlying operating profit in the South Africa Division was 38% below the comparable period last year, impacted by lower pulp, woodchip and uncoated fine paper export prices together with lower woodchip and uncoated fine paper volumes. Significant market-related downtime in uncoated fine paper production of 62,000 tonnes was taken in the period to balance inventories. This in turn led to an increase in sales of market pulp as the Richards Bay pulp mill continued to run at full capacity. The domestic prices for uncoated fine paper cut-size continue to hold up, although there are signs of softening volumes. Similarly, open market pulp prices appear to be increasing, albeit off low levels (30% lower than last year). In response to the continued difficult trading conditions, in particular the weak export sales margins on uncoated fine paper due to a combination of the strong local currency and softening export prices, the proposed mothballing of the 120,000 tonnes per annum PM32 at Merebank in the second half was announced. This is expected to result in annualised cash cost savings of around â‚¬7 million while not significantly affecting production volumes from current levels. In April 2009 agreement was reached on the settlement of a further seven land claims in South Africa. Structured around the initial Mondi land claims model as a sale and leaseback agreement, Mondi retains ownership of the forests while meeting the needs of the land restitution process in South Africa. A recent wage dispute that led to industry-wide strike action affecting all South African mills was settled on 29 July 2009. All sites have since returned to normal operations, with no significant impact to Group profitability. Mondi Packaging South Africa (MPSA) Six months Six months Half-year change % â‚¬ million June 2009 June 2008 Segment revenue 227 223 2 - of which inter-segment revenue 13 14 -7 EBITDA 23 27 -15 Underlying operating profit 11 14 -21 Capital expenditure1 6 25 -76 Net segment assets 342 308 11 Return on capital employed (%)2 7.3% 11.1% -34 1Capital expenditure is cash payments and excludes business combinations 2 Return on capital employed (%) is calculated based on the trailing 12 months data Underlying operating profit is â‚¬3 million below the comparable period last year as lower sales volumes and increasing input costs are only partially offset by higher selling prices and additional cost savings. Sales volumes are down across all business units although revenues are above the comparable period as businesses benefited from the price increases implemented in the fourth quarter of last year. The softening volumes are starting to lead to pressure for price reductions. Market related downtime of 33,000 tonnes was taken in the period to balance inventories. Merchant and Newsprint Six months Six months Half-year change % â‚¬ million June 2009 June 2008 Segment revenue 254 293 -13 - of which inter-segment revenue - - 0 EBITDA 16 18 -11 Underlying operating profit 8 10 -20 Capital expenditure1 2 5 -60 Net segment assets 218 248 -13 Return on capital employed (%)2 2.9% 15.0% -81 1Capital expenditure is cash payments and excludes business combinations 2 Return on capital employed (%) is calculated based on the trailing 12 months data To date Europapier is performing well below the comparable period in the prior year due to lower sales volumes and prices, exacerbated by the weakening of certain of the emerging European currencies in which it trades. Mondi Shanduka Newsprint continues to hold up well, although there is some evidence of softening demand and pricing pressures in its domestic market. Aylesford Newsprint has benefited from improved pricing on its annual contract business (up around 20% in sterling terms), although demand weakness from significantly reduced advertising spend and rising input costs remain a concern. Restructuring The restructuring actions previously announced in response to the economic downturn are on schedule. We have completed the divestment of the four remaining corrugated converting operations in France for total proceeds of approximately â‚¬51 million, thereby completing our withdrawal from this market. Restructuring and impairment costs recorded as special items in the first half of 2009 amounted to â‚¬79 million. The restructuring of the Turkish corrugated business, the coatings business in Finland and the UK, and the consumer flexibles business in Austria are well under way. Furthermore, we have completed the closure of a corrugated plant in the UK and will complete the closure of four bag-converting plants across Europe by the end of the third quarter. As mentioned, the mothballing of the Stambolijski mill is now complete, while the process to mothball the Dynas PM5 paper machine has been delayed to the end of the year. The sale of the Italian recycled containerboard plant Cartonstrong (100,000 tonnes per annum capacity) and related sheet feeder was completed at the end of July. After the period end we announced the proposed mothballing of the 120,000 tonnes per annum PM32 paper machine at Merebank as well as the reorganisation of its newsprint and paper production operations. These closures will have seen Mondi exit around 700,000 tonnes of higher-cost paper capacity in Europe (around 16% of the Group's European paper production capacity) and around 8% (120,000 tonnes) of its South African paper production capacity in 2008/2009. The above measures are expected to have the effect of adjusting the Group's production capacity in light of the changing demand environment, lowering its overall cost base and streamlining its asset portfolio to focus on those businesses that we believe provide Mondi with sustainable competitive advantage in its respective markets. Major projects We have made good progress in the development of our two major projects in Poland and Russia, which will serve to further secure the Group's position as a cost leader in its chosen markets. The construction of the new 470,000-tonne recycled containerboard machine and related box plant at Swiecie in Poland, at a total cost of â‚¬350 million, is progressing well. Mondi remains on track for completion in the second half of 2009 within the budgeted cost. We anticipate that this machine will have the lowest operating cost of its type, with up to around 50% of its offtake secured by physical integration with the surrounding box plant network. The project to modernise the Russian mill at a total cost of â‚¬525 million is also making good progress and remains on track for completion within the budgeted cost in 2010. The key objectives of the project are to lower the Group's cost base in Russia, improve efficiency, increase energy production and revenue by selling surplus energy to the grid as well as providing limited extra capacity (both pulp and paper) for the domestic market. As such, the market risk on the project is relatively limited. The previously announced initiatives to curtail capital expenditure outside of the two major projects (new capital expenditure approvals limited to 40% of depreciation) are ongoing with benefits in cash flows already evident. Input costs and currency There has been easing of key input costs, notably wood, recovered paper, pulp and chemicals since the comparable period in the prior year. However, some key input costs have already risen since the beginning of this year. Recovered paper, while down around 60% on average since the comparable period last year, has risen around 40% since the start of the year. Importantly, results continue to benefit from Mondi's ongoing focus on cost reductions, restructuring and productivity improvements, all of which help to mitigate the impact of the weaker markets. Mondi remains on track to achieve the cost savings target set for the year of â‚¬180 million. â‚¬109 million of cost savings were delivered in the first half. The weakening of the major eastern European currencies witnessed towards the end of 2008 and into early 2009, notably the Polish zloty and Czech koruna, will have a positive impact on the results of our eastern European production base, although the effect is delayed due to the Group's rolling six-month currency hedging programme. Conversely, the recent strengthening of the South African rand is putting pressure on margins on export sales from the South Africa Division. FINANCIAL REVIEW Special items (refer to note 5 of the condensed financial statements) In aggregate, pre tax special items amounted to a charge of â‚¬82 million. An operating special item charge of â‚¬79 million was recognised, principally comprising: asset impairment costs of â‚¬36 million; closure and restructuring costs of â‚¬40 million; and charges related to arrangements put in place for senior executives following the demerger from Anglo American plc in July 2007 of â‚¬3 million. The asset impairments relate primarily to the write-down of the PM32 paper machine at Merebank and converting operations in the Corrugated and Bags & Specialities business units that have been restructured or closed. Other costs related to the mothballing of PM32 will be recognised mainly in the second half of this year. Costs related to the mothballing of the Stambolijski mill and the closure or restructuring of the various converting operations represent the bulk of the â‚¬ 40 million closure and restructuring charge. A non-operating special item charge of â‚¬3 million was recognised, which mainly comprises the net profit on the sale of four corrugated operations in France (â‚¬ 5 million profit) and the impairment of the assets in corrugated operations held for sale (circa â‚¬8 million charge). Finance costs Net finance charges of â‚¬58 million were â‚¬3 million higher than the comparable period due mainly to higher average interest rates as the proportion of debt denominated in higher-yielding currencies increased. Taxation The effective tax rate before special items of 34% is significantly higher than the prior period (29%) due primarily to an increase in non-recognised assessed losses as a consequence of the decline in profitability. There is only minor tax relief on special items. Minority interests Minority interests for the period were â‚¬11 million lower than the comparable period, as earnings were down at the significant operations where there are non-controlling interests, particularly at Swiecie in Poland within the Europe & International Division. Cash flow and borrowings EBITDA of â‚¬308 million in the period was 32%, or â‚¬148 million, lower than 2008, reflecting the more difficult trading environment. Cash inflows from operations of â‚¬392 million were â‚¬82 million up on the comparable period, mainly due to working capital inflows of â‚¬99 million versus an outflow of â‚¬126 million in the comparable period. Capital expenditure of â‚¬116 million (excluding spend on the two major strategic projects of â‚¬179 million) was lower than depreciation of â‚¬170 million, reflecting the decision taken in the fourth quarter of 2008 to limit 2009 capital expenditure approvals to below 40% of depreciation. The remaining expenditure on the two major projects is estimated at â‚¬332 million. While phasing of the capital expenditure outflows on the projects has been adjusted such that more than originally planned will be spent in 2010 with some flow through to 2011, the bulk will still be spent in 2009. Treasury and borrowings Net debt of â‚¬1,661 million at 30 June 2009 was â‚¬29 million lower than 31 December 2008 and â‚¬6 million higher than 30 June 2008. Gearing as at 30 June 2009 was 37.9% and the net debt to trailing 12 months EBITDA ratio was 2.5. Group liquidity is provided through various committed debt facilities totalling â‚¬2.8 billion, of which, circa â‚¬1 billion is currently undrawn. The principal debt facility is a â‚¬1.55 billion, syndicated revolving credit facility maturing in June 2012. Despite the unfavourable banking environment the Group has been successful in maintaining the quantum of committed debt facilities available to it since the prior year end through securing an additional R500 million (â‚¬46 million) of committed 3 year amortising term loan facilities and successfully rolling over most of the smaller facilities maturing in the period. The average maturity of the committed debt facilities is 2.9 years (3.4 years at December 2008). Drawn facilities maturing over the next 12 months amount to â‚¬343 million, the majority of which are expected to be renewed; however, to the extent they are not renewed they can be financed out of existing undrawn committed facilities (in excess of â‚¬1 billion at 30 June 2009). Reclassification of Mondi plc shares During the period we announced after a constructive dialogue with the South African Reserve Bank and Treasury that the Minister of Finance had decided to reclassify the secondary listing of Mondi plc ordinary shares on the JSE Limited as domestic assets in the hands of South African investors. It is pleasing to note the subsequent significant narrowing of the price differential that had existed between the Mondi plc and Mondi Limited ordinary shares. Related party transactions Related party transactions are disclosed in note 17 of the condensed financial statements. PRINCIPAL RISKS AND UNCERTAINTIES It is in the nature of our business that Mondi is exposed to risks and uncertainties that 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 key risks identified have not changed significantly from those discussed on pages 22 and 23 of the 2008 annual report. Mondi operates in a highly competitive environment The markets for paper and packaging products are highly competitive. Similarly, 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 geographic and product diversification provides some measure of protection. Uncertain future trading conditions may have an impact on the carrying value of goodwill and tangible assets and may result in further restructuring activities. Input costs are subject to significant fluctuations 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 focus on operational performance and relatively high level of integration and access to its own fibre in Russia and South Africa act to mitigate these risks. It is also anticipated that the recent successful settlements of land claims in South Africa will provide a framework for settling future forestry land claims with Mondi. Significant capital investments, including acquisitions carry project risk Mondi is in the process of completing 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. Going concern The current economic conditions will impact short-term demand growth for our products, as well as place pressure on both customers and suppliers who may face liquidity issues, and could have an adverse impact on Mondi's business. Furthermore, the lack of credit availability could impact the Group's ability to effectively execute its strategy. However, Mondi's geographic spread, product diversity and large customer base mitigate these risks. The proactive initiatives by management in rationalising the business through cost-cutting, asset closures and divestitures have improved the Group's cost position in its chosen markets. Strong working capital management has resulted in a significant net cash inflow from working capital over the period, while capital expenditure programmes have been reduced. The Group meets its funding requirements through a number of loan facilities, the principal one being a â‚¬1.55 billion, 5 five-year syndicated revolving credit facility expiring in June 2012. The availability of these facilities is dependent upon the Group meeting certain financing covenants, most significantly an EBITDA to net debt ratio of 3.5. At the period end this ratio was 2.5. Mondi had in excess of â‚¬1 billion of committed debt facilities as at 30 June 2009 with an average maturity of 2.9 years. The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within the level of its current facility and the related covenants. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully, despite the current uncertain economic outlook. 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, they continue to adopt the going concern basis in preparing the Half-yearly report and accounts. DIVIDEND An interim dividend of 2.5 euro cents per share will be paid on 15 September 2009 to those shareholders on the register of Mondi plc on 28 August 2009. An equivalent interim dividend will be paid in South African rand on 15 September 2009 to shareholders on the register of Mondi Limited on 28 August 2009. CURRENT YEAR OUTLOOK The benefits of the actions taken to restructure the cost base are expected to continue to flow through in the second half. Order inflows in most of our key product areas have improved following a weak start to the year, albeit they remain well down on the prior year. However, the full impact of the price declines in our main products over the course of the first half is now being felt. This is likely to provide further challenges in the near term. While prices appear to be bottoming following some industry rationalisation, the impact of new capacity expected to come onto the market in the second half is uncertain. We believe the decisive actions taken to reduce capacity, lower the overall cost base and optimise cash flows, coupled with our high-quality, low-cost asset base leave us well positioned to benefit when market conditions improve. Directors' responsibilitystatement 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 2009 and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2009; 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 2008; and The Half-yearly report includes a fair review of the Group's related party transactions. By order of the Boards, David Hathorn Andrew King Director Director 4 August 2009 Independent review report to the members of Mondi Limited Introduction We have reviewed the accompanying condensed combined and consolidated statement of financial position of Mondi Limited as at 30 June 2009 and the related condensed combined and consolidated statements of income, comprehensive income, changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The company's directors are responsible for the preparation and fair presentation of this interim financial information in accordance with the international accounting standard applicable to interim financial reporting and in the manner required by the Companies Act of South Africa. Our responsibility is to express a conclusion on this interim financial information 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 accompanying interim financial information does not present fairly, in all material respects, the financial position of Mondi Limited as at 30 June 2009, and of its financial performance and its cash flows for the six-month period then ended in accordance with the International Accounting Standard applicable to interim financial reporting (IAS34) and in the manner required by the Companies Act of South Africa. B Nosworthy Partner Sandton 4 August 2009 Deloitte & Touche Registered Auditors Buildings 1 and 2, Deloitte Place, The Woodlands Woodlands Drive, Woodmead, Sandton National Executive: G G Gelink Chief Executive A E Swiegers Chief Operating Officer G M Pinnock Audit DL Kennedy Tax and Legal and Risk Advisory L Geeringh Consulting L Bam Corporate Finance CR Beukman Finance T J Brown Clients & Markets N T Mtoba Chairman of the Board CR Qually Deputy Chairman of the Board. A full list of partners and directors is available on request. Independent review report to the members of Mondi plc We have been engaged by the company to review the condensed set of financial statements in the Half-yearly report for the six months ended 30 June 2009, which comprises the condensed combined and consolidated income statement, the condensed combined and consolidated statement of comprehensive income, the condensed combined and consolidated statement of financial position, the condensed combined and consolidated statement of cash flows, the condensed combined and consolidated statement of changes in equity and related notes 1 to 19. We have read the other information contained in the Half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed 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 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 (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 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom''s Financial Services Authority. Deloitte LLP Chartered Accountants and Statutory Auditors London 4 August 2009 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 2009 (Reviewed) (Reviewed) (Audited) Year Six months Six months ended 31 ended 30 ended 30 December June 2009 June 2008 2008 Before After Before After Before After special Special special special Special special special Special special items items items â‚¬ million Notes items (note 5) items items (note 5) items items (note 5) items Group revenue 4 2,614 - 2,614 3,263 - 3,263 6,345 - 6,345 Materials, energy and consumables used (1,387) - (1,387) (1,729) - (1,729) (3,384) - (3,384) Variable selling expenses (225) - (225) (281) - (281) (542) - (542) Gross margin 1,002 - 1,002 1,253 - 1,253 2,419 - 2,419 Maintenance and other indirect expenses (111) - (111) (143) - (143) (300) - (300) Personnel costs (430) (11) (441) (470) (17) (487) (926) (41) (967) Other net operating expenses (153) (32) (185) (184) (16) (200) (379) (24) (403) Depreciation, amortisation and impairments (170) (36) (206) (193) (3) (196) (373) (293) (666) Operating profit/(loss) 4 138 (79) 59 263 (36) 227 441 (358) 83 Net profit/ (loss) on disposals 5 - 5 5 - (3) (3) - (27) (27) Impairment of assets held for sale 5 - (8) (8) - - - - (2) (2) Net income from associates 1 - 1 2 - 2 2 - 2 Total profit/ (loss) from operations and associates 139 (82) 57 265 (39) 226 443 (387) 56 Investment income 13 - 13 19 - 19 15 - 15 Interest expense (71) - (71) (74) - (74) (174) - (174) Net finance costs 6 (58) - (58) (55) - (55) (159) - (159) Profit/(loss) before tax 81 (82) (1) 210 (39) 171 284 (387) (103) Taxation (charge)/ credit 7 (27) 4 (23) (61) - (61) (82) 4 (78) Profit/(loss) from continuing operations 54 (78) (24) 149 (39) 110 202 (383) (181) Attributable to: Minority interests 12 - 12 23 - 23 30 - 30 Equity holders of the parent companies 42 (78) (36) 126 (39) 87 172 (383) (211) Earnings per share ("EPS") for (loss)/ profit attributable to equity holders of the parent companies Basic EPS (â‚¬ cents) 8 (7.1) 17.1 (41.6) Diluted EPS (â‚¬ cents) 8 (7.1) 16.9 (41.6) Basic underlying EPS (â‚¬ cents) 8 8.3 24.8 33.9 Diluted underlying EPS (â‚¬ cents) 8 8.1 24.4 33.4 Basic headline EPS (â‚¬ cents) 8 (0.8) 18.3 20.3 Diluted headline EPS (â‚¬ cents) 8 (0.8) 18.0 20.0 There were no discontinued operations in any of the periods presented. Condensed combined and consolidated statement of comprehensive income for the six months ended 30 June 2009 (Reviewed) (Reviewed) (Audited) As at 30 As at 30 As at 31 â‚¬ million June 2009 June 2008 December 2008 (Loss)/profit for the financial period/year (24) 110 (181) Other comprehensive income: Fair value gains/(losses) on cash flow hedges 14 8 (61) Actuarial gains/(losses) and surplus restriction on post-retirement benefit schemes 1 2 (17) Fair value losses on available for sale investments - - (1) Exchange gains/(losses) on translation of foreign operations 72 (64) (246) Share of other comprehensive income of associates 1 (1) (1) Taxation relating to components of other comprehensive income (1) (2) 17 Other comprehensive income for the financial period/year, net of tax 87 (57) (309) Total comprehensive income for the financial period/year 63 53 (490) Attributable to: Minority interests 14 45 23 Equity holders of the parent companies 49 8 (513) Condensed combined and consolidated statement of financial position as at 30 June 2009 (Reviewed) (Reviewed) (Audited) As at 30 As at 30 As at 31 â‚¬ million Notes June 2009 June 2008 December 2008 Intangible assets 321 524 323 Property, plant and equipment 3,769 3,750 3,611 Forestry assets 268 206 214 Investments in associates 8 7 5 Financial asset investments 24 25 19 Deferred tax assets 43 39 36 Retirement benefits surplus - 15 - Derivative financial instruments - 5 - Total non-current assets 4,433 4,571 4,208 Inventories 611 759 684 Trade and other receivables 1,075 1,349 1,104 Current tax assets 23 24 32 Cash and cash equivalents 10 171 152 155 Derivative financial instruments 15 19 73 Total current assets 1,895 2,303 2,048 Assets held for sale 22 - 5 Total assets 6,350 6,874 6,261 Short-term borrowings 10 (435) (406) (378) Trade and other payables (1,013) (1,095) (1,035) Current tax liabilities (46) (87) (53) Provisions (47) (14) (25) Derivative financial instruments (40) (14) (38) Total current liabilities (1,581) (1,616) (1,529) Medium and long-term borrowings 10 (1,397) (1,401) (1,467) Retirement benefits obligation (184) (190) (182) Deferred tax liabilities (329) (313) (292) Provisions (48) (46) (39) Other non-current liabilities (14) (16) (14) Derivative financial instruments (47) - (39) Total non-current liabilities (2,019) (1,966) (2,033) Liabilities directly associated with assets classified as held for sale (3) - (3) Total liabilities (3,603) (3,582) (3,565) Net assets 2,747 3,292 2,696 Equity Ordinary share capital 114 114 114 Share premium 532 532 532 Retained earnings and other reserves 1,707 2,239 1,677 Total equity attributable to equity holders of the parent companies 2,353 2,885 2,323 Minority interests in equity 394 407 373 Total equity 2,747 3,292 2,696 Condensed combined and consolidated statement of cash flows for the six months ended 30 June 2009 (Reviewed) (Reviewed) (Audited) Six months Six months ended 30 June ended 30 June Year ended 31 â‚¬ million Notes 2009 2008 December 2008 Cash inflows from operations 12 392 310 795 Dividends from associates - - 2 Income tax paid (18) (27) (71) Net cash inflows generated from operating activities 374 283 726 Cash flows from investing activities Acquisition of subsidiaries, net of cash and cash equivalents (2) (35) (49) Proceeds from disposal of subsidiaries, net of cash and cash equivalents 47 2 17 Purchases of property, plant and equipment 11 (293) (313) (693) Proceeds from the disposal of property, plant and equipment 7 7 29 Investment in forestry assets (20) (22) (43) Purchases of financial asset investments - - (2) Purchase of intangible assets (2) (4) (7) Proceeds from the sale of financial asset investments - 2 1 Loan (advances to)/repayments from related parties (1) (2) 1 Interest received 4 9 28 Other investing activities - 1 8 Net cash used in investing activities (260) (355) (710) Cash flows from financing activities Repayment of short-term borrowings 10 (81) (143) (214) (Repayment of)/Proceeds from medium and long-term borrowings 10 (6) 285 543 Interest paid (93) (69) (169) Dividends paid to minority interests - (9) (20) Dividends paid to equity holders 9 (26) (80) (118) Purchase of treasury shares (1) (15) (15) Injection by minorities 10 - - Net realised gain on cash and asset management swaps 84 12 4 Other financing activities (1) 1 (3) Net cash (used in)/generated from financing activities (114) (18) 8 Net increase/(decrease) in cash and cash equivalents - (90) 24 Cash and cash equivalents at start of financial period/year1 10 75 59 59 Cash movement in the financial period/year 10 - (90) 24 Cash acquired through business combinations 10 - - 3 Reclassifications 10 - - (2) Effects of changes in foreign exchange rates 10 4 1 (9) Cash and cash equivalents at end of financial period/year1 79 (30) 75 Note: 1 'Cash and cash equivalents' includes overdrafts. Condensed combined and consolidated statement of changes in equity for the six months ended 30 June 2009 Share capital Combined share Mondi Mondi Mondi capital Limited Limited plc and share share share share Retained Other Minority Total â‚¬ million capital premium capital premium earnings reserves1 Total interests equity At 1 January 2008 11 532 103 646 2,154 163 2,963 373 3,336 Dividends paid - - - - (80) - (80) (9) (89) Total comprehensive income for the financial period /year - - - - 87 (79) 8 45 53 Issue of shares under employee share schemes - - - - 1 (1) - - - Purchase of treasury shares2 - - - - (15) - (15) - (15) Share options exercised - Anglo American share scheme - - - - (3) - (3) - (3) Adjustments to minority share in the net asset values of business acquisitions - - - - - - - (2) (2) Other - - - - - 12 12 - 12 At 30 June 2008 11 532 103 646 2,144 95 2,885 407 3,292 Dividends paid - - - - (38) - (38) (11) (49) Total comprehensive income for the financial period /year - - - - (298) (223) (521) (22) (543) Issue of shares under employee share schemes - - - - 6 (6) - - - Disposal of business - - - - (1) - (1) - (1) Minority share dilution - - - - (4) - (4) 4 - Adjustments to minority share in the net asset values of business acquisitions - - - - - - - (1) (1) Minorities bought out - - - - - - - (3) (3) Other - - - - - 2 2 (1) 1 At 31 December 2008 11 532 103 646 1,809 (132) 2,323 373 2,696 Dividends paid - - - - (26) - (26) - (26) Total comprehensive income for the financial period /year - - - - (36) 85 49 14 63 Issue of shares under employee share schemes - - - - 2 (2) - - - Purchase of treasury shares2 - - - - (1) - (1) - (1) Reclassification - - - - (14) 14 - - - Minorities buy in - - - - - - - 10 10 Minorities bought out - - - - - - - (3) (3) Other - - - - - 8 8 - 8 At 30 June 2009 11 532 103 646 1,734 (27) 2,353 394 2,747 Notes: 1 Other reserves include the share-based payments, cumulative translation adjustment, available-for-sale, cash flow hedge, post-retirement benefit obligation, merger and other sundry reserves. 2 The treasury shares purchased represents the cost of shares in Mondi plc and Mondi Limited purchased in the market and held by the Mondi Employee Share Trust and the Mondi Incentive Schemes Trust, respectively, to satisfy options under the Group's share options schemes. The number of ordinary shares held by the Mondi Employee Share Trust and the Mondi Incentive Schemes Trust at 30 June 2009 was 7,113,962 and 259,334 shares respectively (at 30 June 2008: 8,417,103 and nil respectively, at 31 December 2008: 7,943,115 and 115,000 respectively) at an average price of â‚¤4.03 and R33.24 per share, respectively (at 30 June 2008: â‚¤4.07 and Rnil per share respectively, at 31 December 2008: â‚¤3.95 and R47.51 per share, respectively). Notes to the condensed combined and consolidated financial information 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 (IFRSs). The condensed combined and consolidated Half-yearly financial information for the six months ended 30 June 2009 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 2008, which have been prepared in accordance with all applicable IFRSs. There are no differences for the Group in applying IFRSs as issued by the International Accounting Standards Board and as endorsed by the European Union (EU). Consequently, the Group's annual financial statements for the year ended 31 December 2008 are also compliant with IFRSs as endorsed by the EU. The financial statements have been prepared on a going concern basis. This is discussed in the Group performance overview under the heading 'Going concern'. The information for the year ended 31 December 2008 does not constitute statutory accounts as defined by section 240 of the Companies Act 1985 of the United Kingdom. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report was not qualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. 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 2008. In addition the Group has implemented the revised IAS 1 'Presentation of Financial Statements' and IFRS 8 'Operating Segments' for its interim reporting. Both standards became effective on 1 January 2009. The impacts of the changes to IAS 1 are of a presentation and disclosure nature only, with the most significant changes being: The replacement of the 'statement of recognised income and expense' with a 'statement of comprehensive income' which discloses information on a gross rather than a net basis and also reconciles the profit or loss for the period to the total comprehensive income for the period. The presentation of a complete statement of changes in equity as a primary statement rather than a note to the financial statements. There is no impact on the financial results disclosed. IFRS 8 results in additional disclosure of segmental information, but the reportable segments remain unchanged. 3 Seasonality The seasonality of the Group's operations does not impact significantly on the condensed combined and consolidated financial statements. 4 Operating segments Identification of the Group's externally reportable operating segments The Group's externally reportable segments reflect the internal reporting structure of the Group, which is the basis on which resource allocation decisions are made by management in the attainment of strategic objectives. The Group operates under two primary geographic regions reflecting its South African activities and assets, and its international, principally European, activities and assets. These broad geographic regions are further split by product segments reflecting the management of the Group. In addition the Group manages Mondi Packaging South Africa and the Merchant and Newsprint businesses separately and therefore these have been presented as separate segments. Operating segment revenues Internal and external segment revenues are presented, and reconciled to Group revenue, as follows: (Reviewed) (Reviewed) (Audited) Year Six months Six months ended 31 ended 30 ended 30 December June 2009 June 2008 2008 Segment Internal External Segment Internal External Segment Internal External â‚¬ million revenue revenue revenue revenue revenue revenue revenue revenue revenue Europe & International Uncoated Fine Paper 680 (62) 618 846 (92) 754 1,565 (174) 1,391 Corrugated 527 (16) 511 830 (34) 796 1,555 (58) 1,497 Bags & Specialities 893 (12) 881 1,121 (10) 1,111 2,138 (22) 2,116 Intra-segment elimination (37) 37 - (55) 55 - (99) 99 - Total Europe & International 2,063 (53) 2,010 2,742 (81) 2,661 5,159 (155) 5,004 South Africa Uncoated Fine Paper 197 (64) 133 221 (122) 99 474 (174) 300 Containerboard 66 (63) 3 63 (62) 1 134 (132) 2 Intra-segment elimination (14) 14 - (10) 10 - (21) 21 - Total South Africa 249 (113) 136 274 (174) 100 587 (285) 302 Mondi Packaging South Africa 227 (13) 214 223 (14) 209 474 (27) 447 Merchant and Newsprint 254 - 254 293 - 293 593 (1) 592 Corporate and other businesses - - - - - - - - - Segments total 2,793 (179) 2,614 3,532 (269) 3,263 6,813 (468) 6,345 Inter-segment elimination (179) 179 - (269) 269 - (468) 468 - Group total 2,614 - 2,614 3,263 - 3,263 6,345 - 6,345 4 Operating segments (continued) Operating segment operating profit Segment operating profitsare presented, and reconciled to Group profit/(loss) before tax, as follows: Segment operating Segment profit operating before profit/(loss) special after special items1 items1/2 (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) Year Year Six months Six months ended 31 Six months Six months ended 31 ended 30 ended 30 December ended 30 ended 30 June December â‚¬ million June 2009 June 2008 2008 June 2009 2008 2008 Europe & International Uncoated Fine Paper 71 69 126 71 42 98 Corrugated 1 37 49 (10) 35 (62) Bags & Specialities 36 109 159 (13) 103 (58) Total Europe & International 108 215 334 48 180 (22) South Africa Uncoated Fine Paper 13 30 75 (6) 30 75 Containerboard 15 15 36 15 15 36 Total South Africa 28 45 111 9 45 111 Mondi Packaging South Africa 11 14 28 11 14 28 Merchant and Newsprint 8 10 7 8 10 7 Corporate and other businesses (17) (21) (39) (17) (22) (41) Segments total 138 263 441 59 227 83 Net profit/(loss) on disposals (see note 5) - - - 5 (3) (27) Impairment of assets held for sale (see note 5) - - - (8) - (2) Net income from associates 1 2 2 1 2 2 Net finance costs (see note 6) (58) (55) (159) (58) (55) (159) Group profit/ (loss) before tax and discontinued operations 81 210 284 (1) 171 (103) Notes: 1 Management reviews underlying segment operating profit on a regular basis as part of the resource allocation decision making process and the ongoing assessment of segment performance. Accordingly, segment underlying operating profits are presented here. Segment profits stated after operating special items are also presented since the Group believes that this provides useful additional information for the user of the Group's condensed combined and consolidated financial statements. 2 Special items are disclosed per operating segment in note 5. 4 Operating segments (continued) Balance sheet Segment assets, liabilities and net assets are presented, and reconciled to their respective Group totals, as follows: (Reviewed) (Reviewed) (Audited) As at 31 As at 30 As at 30 December June 2009 June 2008 2008 Net Net Net Segment Segment segment Segment Segment segment Segment Segment segment â‚¬ million assets1 liabilities2 assets assets1 liabilities2 assets assets1 liabilities2 assets Europe & International Uncoated Fine Paper 1,640 (174) 1,466 1,605 (200) 1,405 1,589 (177) 1,412 Corrugated 1,044 (207) 837 1,356 (247) 1,109 1,171 (241) 930 Bags & Specialities 1,585 (268) 1,317 1,965 (313) 1,652 1,632 (315) 1,317 Intra-segment elimination (25) 25 - (30) 30 - (76) 76 - Total Europe & International 4,244 (624) 3,620 4,896 (730) 4,166 4,316 (657) 3,659 South Africa Uncoated Fine Paper 834 (100) 734 765 (99) 666 720 (80) 640 Containerboard 152 (18) 134 138 (15) 123 139 (19) 120 Intra-segment elimination (3) 3 - (2) 2 - (2) 2 - Total South Africa 983 (115) 868 901 (112) 789 857 (97) 760 Mondi Packaging South Africa 438 (96) 342 385 (77) 308 371 (70) 301 Merchant and Newsprint 290 (72) 218 330 (82) 248 283 (87) 196 Corporate and other businesses 7 (1) 6 5 (2) 3 13 (3) 10 Inter-segment elimination (97) 97 - (110) 110 - (101) 101 - Segments total 3 5,865 (811) 5,054 6,407 (893) 5,514 5,739 (813) 4,926 Unallocated: Investment in associates 8 - 8 7 - 7 5 - 5 Deferred tax assets/ (liabilities) 43 (329) (286) 39 (313) (274) 36 (292) (256) Other non-operating assets/ (liabilities)4 239 (631) (392) 244 (569) (325) 307 (615) (308) Group trading capital employed 6,155 (1,771) 4,384 6,697 (1,775) 4,922 6,087 (1,720) 4,367 Financial asset investments 24 - 24 25 - 25 19 - 19 Net debt5 171 (1,832) (1,661) 152 (1,807) (1,655) 155 (1,845) (1,690) Group net assets 6,350 (3,603) 2,747 6,874 (3,582) 3,292 6,261 (3,565) 2,696 Notes: 1 Segment assets are operating assets and consist of property, plant and equipment, intangible assets, forestry assets, retirement benefits surplus, inventories and operating receivables. 2 Segment liabilities are operating liabilities and consist of non-interest bearing current liabilities, provisions and provisions for post-retirement benefits. 3 Management reviews net segment assets on a regular basis as part of the resource allocation decision making process and the ongoing assessment of segment performance. Accordingly, net segment assets are presented here, together with segment assets, as required by IFRS 8. Segment liabilities are also presented since the Group believes that this provides useful additional information to the user of the Group's condensed combined and consolidated financial statements. 4 Other non-operating assets consist of derivative assets, current income tax receivables, other non-operating receivables, assets held for sale. Other non-operating liabilities consist of derivative liabilities, non-operating provisions, current income tax liabilities, other non-operating liabilities and liabilities directly associated with assets held for sale. 5 Overdrafts are included in borrowings. 4 Operating segments (continued) An analysis of the Group's external revenues attributed to the countries, where material, and the continents in which external customers are located, is presented as follows: (Reviewed) (Reviewed) (Audited) Six months ended 30 Six months ended 30 Year ended 31 December â‚¬ million June 2009 June 2008 2008 Revenues South Africa 291 284 616 Rest of Africa 103 133 251 Western Europe 1,185 1,552 2,932 Emerging Europe 526 688 1,326 Russia 188 224 430 North America 79 97 183 South America 9 15 31 Asia and Australia 233 270 576 Group total 2,614 3,263 6,345 An analysis of the Group's external revenues attributed to the countries, where material, and the continents from which revenues are derived, is presented as follows: (Reviewed) (Reviewed) (Audited) Six months ended 30 Six months ended 30 Year ended 31 December â‚¬ million June 2009 June 2008 2008 Revenues South Africa 467 470 1,015 Rest of Africa 5 6 15 Western Europe 1,071 1,475 2,772 Emerging Europe 687 895 1,691 Russia 251 282 569 North America 54 58 120 Asia and Australia 79 77 163 Group total 2,614 3,263 6,345 An analysis of the Group's segment assets, liabilities and net assets attributed to the countries, where material, and the continents in which assets and liabilities are located, is presented as follows: (Reviewed) (Reviewed) (Audited) As at 30 June 2009 As at 30 June 2008 As at 31 December 2008 Net Net Net Segment Segment segment Segment Segment segment Segment Segment segment â‚¬ million assets liabilities assets assets liabilities assets assets liabilities assets South Africa 1,388 (189) 1,199 1,266 (141) 1,125 1,195 (152) 1,043 Rest of Africa 14 (4) 10 12 (4) 8 11 (1) 10 Western Europe total 1,814 (359) 1,455 2,204 (374) 1,830 1,993 (392) 1,601 Emerging Europe total 1,707 (179) 1,528 2,132 (282) 1,850 1,700 (190) 1,510 Russia 736 (41) 695 576 (40) 536 618 (33) 585 North America 78 (9) 69 97 (12) 85 86 (11) 75 South America - - - - - - - - - Asia and Australia 128 (30) 98 120 (40) 80 136 (34) 102 Group total 5,865 (811) 5,054 6,407 (893) 5,514 5,739 (813) 4,926 5 Special items (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 Operating special items Asset impairments Uncoated Fine Paper (Europe & International) - - (1) Corrugated (Europe & International) (3) - (28) Bags & Specialities (Europe & International) (14) - (70) Uncoated Fine Paper (South Africa) (19) - - Total asset impairments (36) - (99) Restructuring and closure costs Restructuring and closure costs excluding related personnel costs Uncoated Fine Paper (Europe & International) - (18) (15) Corrugated (Europe & International) (3) - (1) Bags & Specialities (Europe & International) (26) (3) (8) Personnel costs relating to restructuring Uncoated Fine Paper (Europe & International) - (8) (8) Corrugated (Europe & International) (3) - (6) Bags & Specialities (Europe & International) (8) (2) (18) Total restructuring and closure costs (40) (31) (56) Goodwill impairments Corrugated (Europe & International) - - (74) Bags & Specialities (Europe & International) - - (120) Total goodwill impairments - - (194) Demerger arrangements Uncoated Fine Paper (Europe & International) - (1) (4) Corrugated (Europe & International) (2) (2) (2) Bags & Specialities (Europe & International) (1) (1) (1) Corporate and other businesses - (1) (2) Total demerger arrangements (3) (5) (9) Total operating special items (79) (36) (358) Profit/(loss) on disposals Corrugated (Europe & International) 5 (3) (11) Bags & Specialities (Europe & International) - - (16) Net profit/(loss) on disposal 5 (3) (27) Asset impairment of assets held for sale Corrugated (Europe & International) (8) - (2) Total non-operating special items (3) (3) (29) Total special items before tax and minority interests (82) (39) (387) Taxation 4 - 4 Total special items attributable to equity holders (78) (39) (383) 5 Special items (continued) Operating special items The sharp decline in demand experienced in a number of markets, together with the recognition that we are in a prolonged global economic downturn has resulted in management taking a number of actions. Uncoated Fine Paper (South Africa) In response to the continued difficult trading conditions, in particular the weak export sales margins on uncoated fine paper due to a combination of the strong local currency and softening export prices, the proposed mothballing of the 12,000 tonnes per annum PM32 paper machine at Merebank has been announced resulting in an impairment of â‚¬19 million. Corrugated Given the continued difficult trading conditions in the Corrugated Packaging sector Mondi responded by closing, or restructuring, certain high cost operations. This has resulted in closure costs of â‚¬6 million and asset impairment costs of â‚¬3 million. Bags & Specialities Significant market related down time has been taken due to overcapacity created by a significant slowdown in demand. Various restructuring initiatives have been implemented in response to the lower demand environment. As a result the Group has incurred restructuring and closure costs of â‚¬34 million, and asset impairment costs of â‚¬14 million. Demerger arrangements Equity settled demerger arrangements for senior management have also resulted in additional share based payments of â‚¬3 million Non-operating special items The Group disposed of its interest in four corrugated operations in France for a consideration of â‚¬51 million at a profit of â‚¬5 million. The Group has impaired the â‚¬8 million assets of the Cartonstrong corrugated plant in Italy that is reflected as held for sale in the balance sheet. 6 Net finance costs (Reviewed) (Reviewed) (Audited) Six months Six months ended 30 June ended 30 June Year ended 31 â‚¬ million 2009 2008 December 2008 Investment income Interest and other financial income 5 8 24 Expected return on defined benefit arrangements 8 10 20 Foreign currency (losses)/gains1 (2) 1 (28) Impairment reversal/(charge) of financial assets (excluding trade receivables) 2 - (1) Total investment income 13 19 15 Financing costs Interest on bank loans, overdrafts and finance leases2 (90) (67) (170) Interest on defined benefit arrangements (12) (13) (28) Total interest expense (102) (80) (198) Less: interest capitalised 31 6 24 Total financing costs (71) (74) (174) Net finance costs (58) (55) (159) Notes: 1 Net of fair value movements attributable to forward foreign exchange contracts. 2 Net of fair value movements attributable to interest rate swap contracts. 7 Taxation charge (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 United Kingdom taxation - - (5) Overseas taxation 23 55 64 Current tax (including tax on special items) 23 55 59 Deferred taxation - 6 19 Total tax charge 23 61 78 The Group's estimated effective annual rate of taxation before special items for the six months ended 30 June 2009 is 34% (six months ended 30 June 2008: 29%). IAS 1 requires income from associates to be presented net of tax on the face of the condensed combined and consolidated income statement. The Group's share of its associates' tax charge is therefore not presented within the Group's total tax charge.The associates' tax charge included within 'Net income from associates' for the six months ended 30 June 2009 is â‚¬0.5 million (six months ended 30 June 2008: â‚¬0.5 million, year ended 31 December 2008: â‚¬1 million). 8 Earnings per share (Reviewed) (Reviewed) (Audited) Six months Six months ended 30 June ended 30 June Year ended 31 â‚¬ million 2009 2008 December 2008 (Loss)/profit for the financial period /year attributable to equity holders Basic EPS (7.1) 17.1 (41.6) Diluted EPS (7.1)3 16.9 (41.6)3 Underlying earnings for the financial period/year1 Basic EPS 8.3 24.8 33.9 Diluted EPS 8.1 24.4 33.4 Headline (loss)/earnings for the financial period/year2 Basic EPS (0.8) 18.3 20.3 Diluted EPS (0.8) 18.0 20.0 Notes: 1 The Boards believe that underlying EPS provides a useful additional non-GAAP measure of the Group's underlying performance. Underlying EPS excludes the impact of special items. 2 The presentation of Headline EPS is mandated under the JSE Listings Requirements. Headline earnings has been calculated in accordance with Circular8/2007, 'Headline Earnings', as issued by the South African Institute of Chartered Accountants. Please see the reconciliation presented below. 3 Diluted EPS is consistent with Basic EPS as the impact of potential ordinary shares is anti-dilutive. The calculation of basic and diluted EPS, basic and diluted underlying EPS, and basic and diluted Headline EPS is based on the following data: Earnings (Reviewed) (Reviewed) (Audited) Six months Six months ended 30 June ended 30 June Year ended 31 â‚¬ million 2009 2008 December 2008 (Loss)/profit for the financial period /year attributable to equity holders (36) 87 (211) Special items: operating 79 36 358 Net (profit)/loss on disposals (5) 3 27 Impairment of assets held for sale 8 - 2 Related tax (4) - (4) Underlying earnings for the financial period/year 42 126 172 Profit on disposal of tangible fixed assets (4) - (6) Special items: demerger arrangements (3) (5) (9) Special items: restructuring and closure cost (40) (28) (56) Related tax 1 - 2 Headline (loss)/earnings for the financial period/year (4) 93 103 8 Earnings per share (continued) Number of shares (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 Basic number of ordinary shares outstanding1 507 508 507 Effect of dilutive potential ordinary shares2 12 8 8 Diluted number of ordinary shares outstanding 519 516 515 Notes: 1 The basic number of ordinary shares outstanding represents the weighted average number in issue for Mondi Limited and Mondi plc for the year, as adjusted for the weighted average number of treasury shares held during the year. 2 Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue, net of treasury shares, on the assumption of conversion of all potentially dilutive ordinary shares. 9 Dividends Dividends paid to the equity holders of Mondi Limited and Mondi plc are presented on a combined basis. (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 Amounts recognised as distributions to equity holders Final and interim dividends paid 26 80 38 Amounts proposed as distributions to equity holders1 Proposed interim and final dividends 13 40 26 Full year dividend paid and proposed 64 (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ cents per share 30 June 2009 30 June 2008 December 2008 Amounts recognised as distributions to equity holders Final and interim dividend paid 5.0 15.7 7.7 Amounts proposed as distributions to equity holders Interim and final dividends 2.5 7.7 5.0 Full year dividend paid and proposed 12.7 The interim dividend for the year ending 31 December 2009 of 2.5 euro cents per ordinary share will be paid on 15 September 2009 to Mondi Limited and Mondi plc ordinary shareholders on the relevant registers on 28 August 2009. 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 2008. 9 Dividends (continued) The interim dividend for the year ending 31 December 2009 will be paid in accordance with the following time table: Mondi Limited Mondi plc Last date to trade shares cum-dividend 21 August 21 August JSE Limited 2009 2009 Not 25 August London Stock Exchange applicable 2009 Shares commence trading ex-dividend 24 August 24 August JSE Limited 2009 2009 Not 26 August London Stock Exchange applicable 2009 Record date 28 August 28 August JSE Limited 2009 2009 Not 28 August London Stock Exchange applicable 2009 2 2 Last date for Dividend Reinvestment Plan (DRIP) elections by September September Central Securities Depository Participants 2009 2009 Last date for DRIP elections to UK Registrar and South African 3 3 Transfer Secretaries by shareholders of Mondi Limited and Mondi September September plc 2009 2009 Payment date 15 15 September September South African Register 2009 2009 15 Not September UK Register applicable 2009 18 September Not Depositary Interest holders (dematerialised DIs) 2009 applicable 22 September Not Holders within the Equiniti Corporate Nominee 2009 applicable 22 18 September September DRIP purchase settlement dates 2009 20091 Currency conversion dates 5 August 5 August ZAR/euro 2009 2009 7 Not September Euro/sterling applicable 2009 Note: 1 22 September 2009 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 24 August 2009 and 30 August 2009, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place between 19 August 2009 and 31 August 2009, both dates inclusive. 10 Net debt The Group's net debt position, excluding disposal groups is as follows: Cash and Debt due Debt due cash within one after one Total net â‚¬ million equivalents1 year2 year debt Balance at 1 January 2008 59 (332) (1,234) (1,507) Cash flow (90) 143 (285) (232) Business combinations - (3) (5) (8) Disposal of businesses - 4 16 20 Reclassifications - (42) 42 - Currency movements 1 6 65 72 Closing balance at 30 June 2008 (30) (224) (1,401) (1,655) Cash flow 114 71 (258) (73) Business combinations 3 - (32) (29) Disposal of businesses - 1 4 5 Reclassifications (2) (173) 173 (2) Currency movements (10) 27 47 64 Closing balance at 31 December 2008 75 (298) (1,467) (1,690) Cash flow - 81 6 87 Business combinations - - 2 2 Disposal of businesses - 8 - 8 Reclassifications - (112) 112 - Currency movements 4 (22) (50) (68) Closing balance at 30 June 2009 79 (343) (1,397) (1,661) 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. At 30 June 2009, short-term borrowings on the condensed combined and consolidated balance sheet of â‚¬435million (at 30 June 2008: â‚¬406 million, at 31 December 2008: â‚¬378 million) include â‚¬92million of overdrafts (at 30 June 2008: â‚¬ 182 million, at 31 December 2008: â‚¬80 million). The following table shows the amounts available to draw down on the Group's committed loan facilities. (Reviewed) (Reviewed) (Audited) Six months ended 30 Six months ended 30 Year ended 31 â‚¬ million June 2009 June 2008 December 2008 Expiry date In one year or less 178 154 167 In more than one year 895 934 895 Total credit available 1,073 1,088 1,062 11 Capital expenditure cash payments (Reviewed) (Reviewed) (Audited) Six months ended 30 Six months ended 30 Year ended 31 â‚¬ million June 2009 June 2008 December 2008 Europe & International Uncoated Fine Paper 122 130 266 Corrugated 108 83 199 Bags & Specialities 42 47 136 Sub-total 272 260 601 South Africa Uncoated Fine Paper 12 4 37 Containerboard 1 19 7 Sub-total 13 23 44 Mondi Packaging South Africa 6 25 38 Merchant and Newsprint 2 5 10 Total1 293 313 693 Note: 1 Excludes business combinations, interest capitalised and the purchase of intangible assets. 12 Earnings before interest, tax, depreciation and amortisation (EBITDA) A reconciliation of cash inflows from operations to EBITDA is presented as follows: (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 Cash inflows from operations 392 310 795 Share option expense (4) (6) (9) Fair value gains on forestry assets 15 24 46 Cost of felling (26) (22) (43) Decrease in provisions and post employment benefits 9 11 21 (Decrease)/increase in inventories (81) 11 (26) (Decrease)/increase in operating receivables (19) 87 (106) Decrease in operating payables 1 28 105 Profit on disposal of assets 4 - 6 Add back cash effect of operating special items 18 - 19 Other adjustments (1) 13 6 EBITDA1 308 456 814 Note: 1 EBITDA is operating profit before special items, depreciation and amortisation. 12 Earnings before interest, tax, depreciation and amortisation (EBITDA) (continued) EBITDA by business segment is presented as follows: (Reviewed) (Reviewed) (Audited) Six months ended 30 Six months ended 30 Year ended 31 â‚¬ million June 2009 June 2008 December 2008 Europe & International Uncoated Fine Paper 117 122 221 Corrugated 32 78 131 Bags & Specialities 89 164 271 Sub-total 238 364 623 South Africa Uncoated Fine Paper 29 48 109 Containerboard 19 19 43 Sub-total 48 67 152 Mondi Packaging South Africa 23 27 52 Merchant and Newsprint 16 18 24 Corporate and other businesses (17) (20) (37) EBITDA 308 456 814 EBITDA is stated before special items and is reconciled to 'Total profit from operations and associates' as follows: (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 31 â‚¬ million 30 June 2009 30 June 2008 December 2008 Total profit from operations and associates 57 226 56 Operating special items (excluding associates) 79 36 358 Net (profit)/loss on disposals (excluding associates) (5) 3 27 Impairment of assets held for sale 8 - 2 Depreciation and amortisation 170 193 373 Share of associates' net income (1) (2) (2) EBITDA 308 456 814 13 Business combinations There are no material business combinations for the six months ended 30 June 2009. 14 Write-down of inventories to net realisable value The write-downs of inventories to net realisable value, recognised as an expense for the six months ended 30 June 2009, total â‚¬11 million (2008: â‚¬9 million). The aggregate reversal of previous write-downs, recognised as a reduction in the amount of inventories expensed for the six months ended 30 June 2009, total â‚¬2 million (2008: â‚¬1 million). 15 Retirement benefits There were no significant curtailments, settlements, or other significant one-time events relating to the Group's defined benefit schemes, post-retirement medical plans or statutory retirement obligations during the six months ended 30 June 2009. Material schemes The Group's material defined benefit scheme and post-retirement medical plan liabilities were re-assessed for the half-year ended 30 June 2009. The net change in assumptions from those applied as at 31 December 2008 resulted in an immaterial impact on the present value of the liabilities. The assets backing the defined benefit scheme liabilities were updated to reflect their market values as at 30 June 2009. Any difference between the expected return on assets and the actual return on assets has been recognised as an actuarial experience movement within equity. Remaining Group defined benefit schemes and unfunded statutory obligations The remaining Group defined benefit schemes and unfunded statutory retirement obligations are calculated on a year-to-date basis. The calculations performed make use of the actuarial and financial assumptions published in the Group's annual financial statements for the year ended 31 December 2008. Although certain of these assumptions require adjustment to reflect market fluctuations during the half-year ended 30 June 2009, the net effect of applying these adjustments would have been immaterial. 16 Capital commitments (Reviewed) (Reviewed) (Audited) As at 30 June As at 30 June As at 31 December â‚¬ million 2009 2008 2008 Contracted for but not provided 258 421 405 Approved, not yet contracted for 136 436 219 17 Related party transactions The Group has a related party relationship 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. 17 Related party transactions (continued) Joint â‚¬ million Ventures Associates Six months ended/as at 30 June 2009 Sales to related parties 5 - Purchases from related parties - (13) Loans to related parties 15 - Receivables due from related parties 7 - Payables due to related parties - (2) Six months ended/as at 30 June 2008 Sales to related parties 5 - Purchases from related parties - (18) Loans to related parties 13 - Receivables due from related parties 5 - Year ended/as at 31 December 2008 Sales to related parties 11 - Purchases from related parties (1) (32) Loans to related parties 10 - Receivables due from related parties 7 1 Cyril Ramaphosa, joint chairman of Mondi, has a 29.82% (at 30 June 2008: 39.96%, at 31 December 2008: 32.7%) stake in Shanduka Group (Pty) Limited, an entity that has controlling interests in Shanduka Advisors (Pty) Limited, Shanduka Resources (Pty) Limited, Shanduka Packaging (Pty) Limited and Shanduka Newsprint (Pty) Limited and participating interests in Mondi Shanduka Newsprint (Pty) Limited, Kangra Coal (Pty) Limited, Shanduka Coal (Pty) Limited and Mondi Packaging South Africa (Pty) Limited. Fees of â‚¬178,285 (six months ended 30 June 2008: â‚¬166,000, year ended 31 December 2008: â‚¬340,000) and â‚¬nil (six months ended 30 June 2008: â‚¬303,000, year ended 31 December 2008: â‚¬392,000) were paid to Shanduka Advisors (Pty) Limited and Shanduka Resources (Pty) Limited respectively for management services provided to the Group during the six months ended 30 June 2009. Shanduka Packaging (Pty) Limited and Shanduka Newsprint (Pty) Limited have also provided a shareholder's loan to the Group. The balance outstanding at 30 June 2009 was â‚¬15.5 million (at 30 June 2008: â‚¬14 million, at 31 December 2008: â‚¬12.9 million) and â‚¬8.5 million (at 30 June 2008: â‚¬7 million, at 31 December 2008: â‚¬7.1 million), respectively. In the normal course of business, and on an arm's length basis, the Group purchased supplies from Kangra Coal (Pty) Limited totaling â‚¬4.2 million (six months ended 30 June 2008: â‚¬6 million, year ended 31 December 2008: â‚¬12 million) and from Shanduka Coal (Pty) Limited totaling â‚¬0.5 million (six months ended 30 June 2008: â‚¬nil, year ended 31 December 2008: â‚¬nil) during the period. â‚¬0.5 million (at 30 June 2008: â‚¬1 million, at 31 December 2008: â‚¬1 million) remains outstanding on these purchases at 30 June 2009. Dividends received from associates for the six months ended 30 June 2009 totalling â‚¬0.4 million (six months ended 30 June 2008: â‚¬nil, year ended 31 December 2008: â‚¬2 million), as disclosed in the condensed combined and consolidated cash flow statement. 18 Asset values per share Asset values per share are disclosed in accordance with the JSE Listings Requirements. Net asset value per share is defined as net assets divided by the combined number of shares in issue as at the reporting balance sheet date, less treasury shares held as at the same date. Tangible net asset value per share is defined as the net assets less intangible assets divided by the combined number of shares in issue as at the reporting balance sheet date, less treasury shares held as at the same date. (Reviewed) (Reviewed) (Audited) As at 30 June As at 30 June As at 31 December 2009 2008 2008 Net asset value per share (â‚¬) 5.42 6.51 5.34 Tangible net asset value per share (â‚¬) 4.79 5.47 4.70 19 Events occurring after 30 June 2009 With the exception of the proposed interim dividend for 2009, as disclosed in note 9, there have been no material reportable events since 30 June 2009. Production statistics Six months ended Six months ended Year ended 31 30 June 2009 30 June 2008 December 2008 Europe & International Containerboard Tonnes 836,456 965,319 1,926,829 Kraft paper Tonnes 383,373 461,754 814,187 Corrugated board and MmÂ² boxes 924 1,143 2,104 Bag converting m units 1,655 1,902 3,536 Coating and release MmÂ² liners 1,258 1,414 2,667 Uncoated fine paper Tonnes 709,433 754,364 1,452,058 Newsprint Tonnes 99,390 97,821 192,921 Total hardwood pulp Tonnes 513,666 607,356 1,012,470 Total softwood pulp Tonnes 756,960 970,356 1,620,155 External hardwood pulp Tonnes 17,098 38,171 126,479 External softwood pulp Tonnes 98,880 105,299 200,676 South Africa Containerboard Tonnes 120,989 117,449 251,944 Uncoated fine paper Tonnes 179,325 229,938 416,509 Bone dry Wood chips tonnes 197,436 364,247 780,932 Total hardwood pulp Tonnes 305,763 264,003 595,449 Total softwood pulp Tonnes 55,394 50,321 106,390 External hardwood pulp Tonnes 101,287 13,214 139,235 Mondi Packaging South Africa Packaging papers Tonnes 139,170 146,179 388,199 Corrugated board and MmÂ² boxes 177 183 381 Total hardwood pulp Tonnes 37,583 40,147 82,554 Total softwood pulp Tonnes 22,057 34,090 43,090 Newsprint Joint Ventures (attributable share) Newsprint Tonnes 158,483 163,753 331,929 Aylesford Tonnes 96,262 99,639 200,540 Shanduka Tonnes 62,221 64,114 131,389 Total softwood pulp Tonnes Shanduka 36,450 40,816 86,464 Exchange rates Six months ended Six months ended Year ended 31 30 June 2009 30 June 2008 December 2008 Closing rates against the euro South African rand 10.89 12.34 13.07 Pounds sterling 0.85 0.79 0.95 Polish zloty 4.45 3.35 4.15 Russian rouble 43.88 36.95 41.28 US dollar 1.41 1.58 1.39 Czech koruna 25.88 23.89 26.87 Average rates for the period against the euro South African rand 12.25 11.73 12.06 Pounds sterling 0.89 0.78 0.80 Polish zloty 4.47 3.49 3.52 Russian rouble 44.08 36.61 36.45 US dollar 1.33 1.53 1.47 Czech koruna 27.13 25.21 24.97 Glossary of financial terms EBITDA Operating profit of subsidiaries and joint ventures before special items, depreciation, and amortisation. EBITDA EBITDA divided by net debt finance charges (before special financing interest items). cover Gearing The ratio of net debt to total capital employed. Group revenue Total turnover of subsidiaries and proportionate share of joint venture turnover. Headline JSE listing measure, calculated in accordance with Circular 8/2007, earnings 'Headline Earnings', as issued by the South African Institute of Chartered Accountants. Net debt A non-GAAP measure, comprising short and medium-term borrowings and bank overdrafts less cash and cash equivalents and current financial asset investments. Net segment Net segment assets are segment assets, consisting of property, plant assets and equipment, intangibles, forestry assets, retirement benefit surplus, inventories and operating receivables less segment liabilities consisting of non-interest-bearing current liabilities, restoration and decommissioning provisions and provisions for post-retirement benefits. Operating Underlying operating profit divided by Group revenue. margin Reported Reported (loss)/profit before tax but after special items (loss)/profit before tax Return on This is trailing twelve month underlying operating profit, including capital share of associates' net earnings, divided by trailing twelve month (ROCE) average trading capital employed and for segments has been extracted from management reports. Capital employed is adjusted for impairments in the year end spend on the two strategic projects in Poland and Russia, which are not yet in production. Shareholders' Share capital, share premium, retained profits and other reserves funds attributable to equity holders of the parent companies. Special items Those non-recurring financial items which the Group believes should be separately disclosed on the face of the combined and consolidated income statement to assist in understanding the underlying financial performance achieved by the Group and its businesses. Total equity Shareholders' funds and minority interests in equity. Trading Net segment assets plus investment in associates, deferred tax, and capital other non-operating assets and liabilities excluding financial employed investments. Underlying Net profit after tax before special items attributable to equity earnings holders of the Group. Underlying Operating profit of subsidiaries and joint ventures before special operating items. profit Underlying Reported profit before tax and special items. profit before tax

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