Half-yearly Report
10 August 2010
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 results for the six months ended 30 June 2010
Financial summary
Six months ended 30 Six months ended 30 Half-yearly
€ million June 2010 June 2009 change %
Group revenue 3,033 2,614 16
EBITDA1 405 308 31
Underlying operating profit2 222 138 61
Underlying profit before tax3 176 81 117
Profit/(loss) before tax6 177 (1) n/m7
Basic earnings/(loss) per
share (€ cents)4 21.5 (7.1) n/m7
Underlying earnings per share
(€ cents)4 20.3 8.3 145
Headline earnings/(loss) per
share (€ cents)4 24.8 (0.8) n/m7
Interim dividend per share (€
cents) 3.5 2.5 40
Cash generated from operations 269 392 (31)
Net debt 1,632 1,661 (2)
Group Return on Capital
Employed (ROCE)5 9.5% 7.4% 28
Notes:
1 EBITDA is operating profit of subsidiaries and joint ventures before
special items, depreciation and amortisation.
2 Underlying operating profit is operating profit of subsidiaries and joint
ventures before special items.
3 Underlying profit before tax is reported profit before tax before special
items.
4 The Group has presented underlying earnings per share to exclude the impact
of special items, and headline earnings per share in accordance with circular 3
/2009 'Headline Earnings' as issued by the South African Institute of Chartered
Accountants.
5 Group return on capital employed (ROCE) is an annualised measure based on
a 12 month trailing underlying operating profit plus share of associates net
earnings divided by average trading capital employed before impairments and
adjusted for major capital projects not yet commissioned.
6 Profit/(loss) before tax is reported after special items of €1 million.
7 n/m - not measureable.
Highlights
Underlying operating profit up 61%, driven by a strong performance from the
Europe & International Division
Sustained improvement in order inflows, volumes and prices across all key paper
grades
Improving performance in South Africa Division
Restructuring of European Corrugated business completed
Major capital project in Russia on schedule for completion in second half
Successful issuance of inaugural €500 million Eurobond, used to pay down
existing debt
Interim dividend up 40% at 3.5 euro cents per share
David Hathorn, Mondi Group chief executive, said:
"Mondi achieved a pleasing result in the period against a backdrop of improving
market conditions, supported by a particularly strong performance from the
European Uncoated Fine Paper business. The outcome bears testament to our
robust business model, which encompasses leading market positions in higher
growth emerging markets, low-cost operations and a relentless focus on
performance.
Despite cost pressures, the positive pricing momentum witnessed in Europe since
the beginning of the fourth quarter of 2009 in most of the Group's key grades
should see the business continue to deliver a strong performance in the second
half. The South Africa Division should benefit from the further management
actions taken to improve profitability, although much depends on the outlook
for the rand and export pulp prices. While the sustainability of the economic
recovery remains uncertain, we believe the Group is well positioned to continue
benefiting from the current positive trading environment."
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
Richard Mountain +44 20 7269 7186 / +44 20 7909 684 466
Chloe Webb +27 (0)11 214 2421
Conference call dial-in and audio cast details
Please see below details of our dial-in conference call and audio cast that
will be held at 10:00 (UK) and 11:00 (SA).
The conference call dial-in numbers are:
South Africa 0800 200 648 (toll-free)
UK 0800 917 8183 (toll-free)
Europe & Other 0800 246 78 700 (toll-free)
An online audio cast facility will be available via: www.mondigroup.com/
HYResults10.
Password: HYResults10.
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.at and you will be contacted immediately.
An audio recording of the presentation will be available on Mondi's website
during the afternoon of 10 August 2010.
Editors' notes
Mondi is an international paper and packaging company, with production
operations across 31 countries and revenues of €5.3 billion in 2009. The
Group's key operations are located in central Europe, Russia and South Africa
and employed 31,000 people on average in 2009.
Mondi is fully integrated across the paper and packaging process, from the
growing of wood and the manufacture of pulp and paper (including recycled
paper), to the conversion of packaging papers into corrugated packaging and
industrial bags.
The Group is principally involved in the manufacture of uncoated fine paper
(UFP), packaging paper and converted packaging products, as well as speciality
products.
Mondi has a dual listed company structure, with a primary listing on the JSE
Limited for Mondi Limited under the ticker code MND and a premium listing on
the London stock exchange for Mondi plc, under the ticker code MNDI. The Group
has been recognised for its sustainability performance through its inclusion in
the FTSE4Good UK, Europe and Global indices in 2008 and 2009 and the JSE's
Socially Responsible Investment (SRI) Index in 2007, 2008 and 2009.
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 review
The Group's underlying operating profit of €222 million was 61% up on the
comparable prior year period and 42% up on the result of the second half of the
prior year.
Order inflows and sales volumes continue to improve and price increases were
achieved across all key paper grades. Furthermore, the benefits of the
significant restructuring actions and cost reduction initiatives implemented
through the economic downturn supported the strong recovery in profitability.
Ongoing profit improvement initiatives have yielded a further €75 million
during the first half which, at 2.9% of our cost base, continue to exceed
targets. Rising commodity input costs partially offset revenue gains.
Currency movements had a mixed impact on the Group's results. The stronger rand
eroded export margins in South Africa whilst exports from Europe benefited from
the weaker euro against the dollar. Other emerging European currencies
strengthened against the euro in the first quarter of the year placing pressure
on the export focussed operations in Poland and the Czech Republic, although
this trend reversed in the second quarter.
Underlying earnings per share was 20.3 cents, an increase of 145% on the
comparable prior year period. An interim dividend of 3.5 euro cents, up 40% on
the prior year interim dividend, will be paid.
During the first quarter, Mondi concluded the sale of the 170,000 tonne
Frohnleiten recycled containerboard mill in Austria. During May, the Group's
western European corrugated packaging and recycled containerboard restructuring
programme concluded with the sale of its corrugated box plants in the UK to
Smurfit Kappa. The Group also acquired Smurfit Kappa's industrial and consumer
bag operations in Spain, France and Italy. These operations will be
restructured and some of the plants may be rationalised with our existing
plants.
The sale of the Europapier paper merchant business to the Heinzel Group
announced in early May 2010 remains subject to approval by the relevant
competition authorities.
Net debt at 30 June 2010 increased from 31 December 2009 by €115 million to €
1.63 billion. Robust EBITDA generation was offset primarily by an increase in
working capital (in line with growth in revenue), ongoing funding for the €545
million Russian expansion project and foreign exchange movements. In March
2010, the Group issued a seven year Eurobond of €500 million at a coupon of
5.75%, the proceeds of which were used to settle existing short and medium term
debt and consequently increased the average maturity of the Group's debt.
The Group's financial position remains robust with net assets increasing to €
3.1 billion on the back of higher working capital and exchange impacts on
translation into euro. The Group retains adequate borrowing facilities.
Europe & International Division
Six months ended 30 Six months ended 30 Half-yearly
€ million June 2010 June 2009 change %
Segment revenue 2,372 2,063 15
- of which inter-segment
revenue 61 53 15
EBITDA 336 238 41
Underlying operating
profit 201 108 86
Uncoated Fine Paper 98 71 38
Corrugated 48 1 n/m
Bags & Coatings 55 36 53
Capital expenditure 159 272 (42)
Net segment assets 3,822 3,620 6
ROCE (%) 12.2% 7.3% 67
Underlying operating profit of €201 million was 86% higher than that of the
comparable prior year period with ROCE, on a twelve month trailing basis,
increasing to 12.2%. The improved result was due to good demand across all
businesses, higher prices in all paper grades and the benefit of previously
implemented profit improvement initiatives.
Profit improvement initiatives have yielded €59 million to date partially
offsetting increased input costs, particularly wood, pulp and recovered paper.
The extended shut at the Syktyvkar plant in Russia as part of the final
integration of the expansion project, together with the planned maintenance
shuts at a number of the pulp and paper mills in the traditionally slower
European summer months, will impact results in the second half of the year.
Uncoated Fine Paper
The operating profit of €98 million was 38% up on the comparable prior year
period, giving a very strong ROCE, on a twelve month trailing basis, of 17.5%.
This excellent performance, following a strong second half in the previous
year, reflects a continued positive trading environment with both prices and
volumes increasing. This was supported by a pleasing operating performance with
all mills achieving record production volumes. The Russian operation,
Syktyvkar, performed particularly well, supported by a positive contribution
from the recently rebuilt uncoated fine paper machine.
Selling prices have increased with benchmark cut-size office paper prices
increasing by around 5% from 31 December 2009 levels. Further price increases
have been announced in the second half, supported by continued input cost
pressures particularly for the non-integrated producers, and the weakness of
the euro relative to the dollar.
With average pulp prices increasing during the period, by 24% for softwood and
32% for hardwood in US dollar terms when compared to the second half of the
previous year, the larger mills benefited from their backward integration. The
non-integrated mills, despite achieving price increases, could not entirely
offset the higher pulp prices.
The major capital project in Syktyvkar, Russia is expected to be completed and
integrated into the existing mill during an extended shut in the second half.
The impact of the shut on the second half operating profit contribution from
Syktyvkar is estimated at around €20 million.
Corrugated
The Corrugated business achieved a significant improvement in underlying
operating profit to €48 million, benefiting from the new recycled
containerboard machine at Åšwiecie, restructuring and cost reduction
initiatives, and improved product prices and volumes. Average increases of
around 23% compared to the second half of the prior year were seen for
benchmark recycled containerboard prices, supported by significant input cost
pressures (recovered paper prices increased by 52% in the period).
Although sales volumes increased, price increases achieved in the corrugated
box plants were not sufficient to recover the increased paper input costs.
Further box price increases are anticipated in the second half of the year.
The restructuring of the Corrugated business was concluded during the first
half with the sale of the UK box plants to Smurfit Kappa in May 2010 and the
recycled containerboard mill in Austria to the Prinzhorn Group. The business is
now well positioned to focus on its core central and south eastern European
markets, with leading market positions in the high growth markets of Poland and
Turkey. The containerboard mills in Poland, Germany and Turkey provide the
Group with a competitive paper asset base serving the Group's integrated
converting network in these regions.
Having started up in September 2009, the 470,000 tonne recycled containerboard
machine in Åšwiecie, Poland is performing ahead of plan, with production of
197,000 tonnes in the first half, and full year production from this machine
expected to be around 400,000 to 410,000 tonnes including the impact of a
maintenance shut in the second half.
Bags & Coatings
The Bags & Coatings business achieved an underlying operating profit of €55
million, an increase of 53% on the comparable prior year period. This reflects
both improved sales volumes and increased kraft paper prices.
Significant kraft paper selling price increases of around 10% on average
compared to the second half of the prior year were achieved in the period, more
than offsetting the sharp rise in input costs, particularly wood costs. Further
selling price increases have been announced and are expected to be implemented
during the third quarter. While demand in the Group's core European markets has
recovered from a low base, supported by some restocking, very strong demand
growth is being seen in export markets. In response, the 80,000 tonne
Stambolijski kraft paper machine was restarted in June 2010, having been
mothballed during the previous year.
Volumes remain strong in the bag converting segment, up 12% on the comparable
period in the prior year. However, more than half of the sales volume is sold
under annual fixed price contracts, leading to short-term margin pressures in
this segment as paper input costs increase. The acquisition of the Smurfit
Kappa bag plants provides the Group with stronger market positions in Spain,
France and Italy. Although these newly acquired plants are currently operating
at a loss, restructuring and potential rationalisation with our existing plants
is planned for the coming months and they are expected to contribute positively
to the Group's performance from 2011.
Robust volume increases in Coatings, Consumer Bags & Films have resulted in a
significant increase in underlying operating profit, although Consumer Bags &
Films remains under some pressure from rising polymer prices.
South Africa Division
Six months ended 30 Six months ended 30 Half-yearly
€ million June 2010 June 2009 change %
Segment revenue 276 249 11
- of which inter-segment
revenue 107 113 (5)
EBITDA 44 48 (8)
Underlying operating
profit 18 28 (36)
Uncoated Fine Paper 14 13 8
Containerboard 4 15 (73)
Capital expenditure 9 13 (31)
Net segment assets 932 868 7
ROCE (%) 3.1% 13.5% (77)
A decrease of 36% in underlying operating profit on the comparable prior year
period reflects somewhat disappointing results partially due to the strength of
the rand and consequently lower export margins. ROCE, on a twelve month
trailing basis, at 3.1%, remains well below targeted levels. The results are
however significantly better than the weak second half of 2009.
Sales prices improved across all products with pulp being the main contributor
during the period. Increasing labour and input, particularly electricity, costs
will impact results in the second half.
The decision has been taken to exit the uncoated fine paper export market due
to poor profitability and to focus on the domestic and African markets. The
mothballing of the 120,000 tonne uncoated fine paper machine and related
equipment in Merebank, along with a restructuring programme, is expected to be
concluded during the second half of the year.
This restructuring and the associated increased sales of pulp are expected to
result in an improved second half performance, notwithstanding an apparent
weakening in global pulp markets.
Mondi Packaging South Africa (MPSA)
Six months ended 30 Six months ended 30 Half-yearly
€ million June 2010 June 2009 change %
Segment revenue 298 227 31
- of which inter-segment
revenue 16 13 23
EBITDA 33 23 43
Underlying operating
profit 18 11 64
Capital expenditure 14 6 133
Net segment assets 368 342 8
ROCE (%) 12.9% 7.3% 77
MPSA achieved a 64% increase in operating profit to €18 million off the low
base of the comparable prior year period giving a ROCE, on a twelve month
trailing basis, of 12.9%. The improvement reflects an approximately 10%
increase in sales volumes and the benefits of significant cost savings. The
euro result was also enhanced by translation at a stronger rand exchange rate.
In local currency terms, the increase in underlying operating profit was 37%.
With its exposure to the agricultural sector, coupled with price increases
expected to take effect during the second half, the second half of the year is
expected to be stronger than the first.
Newsprint
Six months ended 30 Six months ended 30 Half-yearly
€ million June 2010 June 2009 change %
Segment revenue 271 254 7
- of which inter-segment
revenue - - -
EBITDA 8 16 (50)
Underlying operating
profit 1 8 (88)
Capital expenditure 2 2 -
Net segment assets1 108 218 (50)
ROCE (%) 2.2% 2.9% (24)
Note:
1 Excluding assets of Europapier business, classified as held for sale.
The Newsprint business reflected a significant decline in underlying operating
profit to €1 million mainly due to a disappointing performance at Aylesford
Newsprint. Aylesford Newsprint experienced reduced sales volumes and prices and
an operating loss resulted. Sales price increases of around £20/tonne are being
implemented during the second half of the year, although this is not likely to
lead to a significant improvement in profitability due to ongoing input cost
pressures. Mondi Shanduka Newsprint's underlying operating profit was
marginally lower than the comparable prior year period mainly resulting from
increasing raw material costs. The European merchant business, Europapier,
performed well, benefiting from increased selling prices and volumes. The sale
of Europapier is expected to be concluded in the second half of the year,
pending competition clearance.
Input costs and currency exposure
All fibre input costs have seen significant increases in the first half of the
year.
Procured pulp wood prices in central Europe are up significantly versus the
comparable prior year period on the back of increased demand from bio-mass
energy producers and reduced supply due to the closure of sawmilling operations
in the region.
Average pulp prices, exacerbated by supply disruptions due to the Chilean
earthquake, have increased by 24% for softwood and 32% for hardwood during the
period when compared to the second half of the prior year.
Strong Chinese demand in the first quarter drove rapid price escalations in
European recovered paper markets. The average benchmark price of recovered
paper increased by 52%, when compared to the second half of the previous year.
Mondi benefits from its structural position in South Africa and Russia due to
integration into wood supply. The Group's integrated pulp and paper mills
reduce the impact of pulp price escalations, with the Group, on an annualised
basis, being net short of around 135,000 tonnes of pulp following the recent
restructuring announcements. Restructuring initiatives and a relentless focus
on cost reduction and productivity improvement further mitigate the impact of
input cost pressures.
Financial review
Special items
The special items, as more fully set out in the notes to the half-yearly
financial statements, include:
closure of the paper machine and related restructuring provisions in South
Africa;
reversal of previously recognised closure provisions no longer required
following the sale of the Szolnok site;
reversal of impairment and related closure provisions of the Stambolijski mill
following its start-up in June 2010;
partial impairment of underperforming kraft paper assets in Lohja and Ruzomberok;
gain on acquisition of the industrial bags plants in western Europe which will
be subject to future restructuring;
loss on disposal of the corrugated packaging plants in the UK;
profit on sale of forestry assets in South Africa; and
write-down of assets and recognition of expected loss on disposal of the
Europapier business.
Finance costs
Net finance costs of €48 million were lower than those of the comparable prior
year period mainly due to exchange rate gains on foreign currency debt and a
reduction in interest rates in some locations. The higher interest rate of the
Eurobond when compared to existing short-term facilities, as well as a
reduction in interest capitalised to major projects, will increase finance
costs in the second half of the year.
Tax
A reduction in the underlying effective tax rate from 32% to 26% is realised
primarily due to the improved profitability enabling the use of previously
unrecognised tax losses carried forward; increased profitability in regions
with lower tax rates; and benefits of tax incentives granted in certain
countries in which the Group operates, notably those related to the major
Polish and Russian capital projects.
Cash flow
As expected, cash flow generated from operating activities was negatively
impacted by an increase in working capital attributable to the significantly
increased revenue. Working capital, as a percentage of annualised revenue,
moved up from 10.0% at 31 December 2009 to 10.7% at 30 June 2010. Despite this,
cash generated from operating activities amounted to €235 million.
Capital expenditure of €184 million, including €75 million on our major project
in Russia, was incurred. Outside of our major projects in Russia and Poland,
capital expenditure remains at 51% of depreciation reflecting a continued
conservative approach to investment.
Treasury and borrowings
Net debt at 30 June 2010 was €1.6 billion, an increase of €115 million from the
prior year end. Excluding the impact of exchange rate movements, net debt was
largely unchanged from the year end position, despite the ongoing major capital
expenditure project in Russia and the investment in working capital.
The net debt to trailing 12 month EBITDA ratio was 2.2 times and the headroom
in the Group's syndicated €1.55 billion facility increased to €1.2 billion.
During March, Mondi successfully launched a €500 million, seven year Eurobond,
further strengthening the Group's already robust financial position as
evidenced by the long-term corporate credit ratings received of Baa3 from
Moody's Investor Service and BB+ from Standard & Poor's, both with a stable
outlook. Following the launch of the Eurobond, a large proportion of the
Group's debt, 78%, is at fixed rates of interest for varying terms.
Interest rates have remained largely unchanged in the period under review.
The average maturity of committed debt facilities is 3.1 years (compared to 2.2
years at the end of the previous year) and drawn committed debt facilities
maturing over the next 12 months amount to €83 million.
Dividend
A dividend of 3.5 euro cents per share has been declared by the directors and
will be paid on 14 September 2010 to those shareholders on the register of
Mondi plc on 27 August 2010. An equivalent South African rand interim dividend
will be paid on 14 September 2010 to shareholders on the register of Mondi
Limited on 27 August 2010.
Outlook
Despite cost pressures, the positive pricing momentum witnessed in Europe since
the beginning of the fourth quarter of 2009 in most of the Group's key grades
should see the business continue to deliver a strong performance in the second
half. The South Africa Division should benefit from the further management
actions taken to improve profitability, although much depends on the outlook
for the rand and export pulp prices. While the sustainability of the economic
recovery remains uncertain, we believe the Group is well positioned to continue
benefiting from the current positive trading environment.
Supplementary information
Going concern
An improvement in trading conditions is evident although some risks remain in
specific locations and business segments. This is mitigated by Mondi's
geographical spread, product diversity and large customer base. Through ongoing
initiatives of cost management, prudent capital investment, stringent working
capital targets and restructuring and rationalisation of assets where
appropriate, Mondi has a leading cost position in its chosen markets.
The Group maintains adequate undrawn borrowing facilities (€1.4 billion at 30
June 2010) and the average maturity of its debt is approximately three years,
thus providing sufficient short and medium term liquidity.
The Group's forecasts, taking into account reasonably possible changes in
trading performance, show that Mondi will be able to operate well within the
levels of its current facilities and related covenants.
After making enquiries, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the going concern basis continues to be
adopted in preparing financial reports.
Principal risks and uncertainties
It is in the nature of its business that Mondi is exposed to risks and
uncertainties that may have an impact on future performance and financial
results, as well as on its 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 remain
consistent with those presented on pages 31 and 32 of the 2009 annual report.
Mondi operates in a highly competitive environment
The paper and packaging markets are highly competitive. Mondi is flexible and
responsive to changing market and operating conditions and the geographical and
product diversification provides some measure of protection. Uncertain trading
conditions may impact the carrying value of goodwill and tangible assets and
may necessitate further restructuring.
Input costs are subject to significant fluctuations
Significant fluctuations in raw material costs, particularly wood, pulp and
recovered paper, have been experienced during the first half of the year. The
Group's relatively high level of integration and access to its own fibre in
Russia and South Africa, coupled with the focus on operational performance,
serve to mitigate these risks.
Significant capital investments including acquisitions carry project risk
The capital investment programme in Russia is largely completed and indications
are that the project will be completed during the second half of 2010. The
acquisition of the industrial bag operations in Spain, France and Italy will
require some restructuring in order to generate the required returns.
Directors' responsibility statement
The directors confirm that to the best of their knowledge:
the condensed set of combined and consolidated financial statements has been
prepared in accordance with International Financial Reporting Standards and in
particular with International Accounting Standard 34, 'Interim Financial
Reporting';
the half-yearly report includes a fair review of the important events during
the six months ended 30 June 2010 and a description of the principal risks and
uncertainties for the remaining six months of the year ending 31 December 2010;
and
there have been no significant individual related party transactions during the
first six months of the financial year and nor have there been any significant
changes in the Group's related party relationships from those reported in the
Group's annual financial statements for the year ended 31 December 2009.
David Hathorn Andrew King
Director Director
9 August 2010
Independent review report to the members of Mondi Limited
Introduction
We have reviewed the Group's condensed combined and consolidated financial
statements for the six months ended 30 June 2010 which comprise the condensed
combined and consolidated income statement, the condensed combined and
consolidated statement of comprehensive income, the condensed combined and
consolidated statement of financial position, the condensed combined and
consolidated statement of cash flows and the condensed combined and
consolidated statement of changes in equity, the summary of significant
accounting policies and other explanatory notes. Management is responsible for
the preparation and presentation of these condensed combined and consolidated
financial statements in accordance with International Accounting Standards on
Interim Financial Reporting (IAS 34) and the Companies Act of South Africa. Our
responsibility is to express a conclusion on these Group condensed combined and
consolidated financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'.
A review consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the Group's interim condensed combined and consolidated financial
statements is not prepared, in all material respects, in accordance with
International Accounting Standards on Interim Financial Reporting (IAS 34) and
the Companies Act of South Africa.
Bronwyn Kilpatrick
Partner
Sandton
9 August 2010
Deloitte & Touche
Registered Auditors
Buildings 1 and 2, Deloitte Place, The Woodlands
Woodlands Drive, Woodmead, Sandton
Republic of South Africa
National Executive G G Gelink Chief Executive A E Swiegers Chief Operating
Officer G M Pinnock Audit DL Kennedy Tax, 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
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 combined and
consolidated financial statements in the half-yearly financial report for the
six months ended 30 June 2010 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 financial statements.
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity',
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to 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.
Respective responsibilities of directors and auditors
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of the review of the condensed financial statements
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity', issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2010 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, United Kingdom
9 August 2010
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 2010
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June Six months ended 30 June Year ended 31 December
2010 2009 2009
Before Special After Before Special After Before Special After
special items special special items special special items special
€ million Notes items (note 6) items items (note 6) items items (note 6) items
Group revenue 4 3,033 - 3,033 2,614 - 2,614 5,257 - 5,257
Materials,
energy and
consumables
used (1,624) - (1,624) (1,387) - (1,387) (2,768) - (2,768)
Variable
selling
expenses (277) - (277) (225) - (225) (472) - (472)
Gross margin 1,132 - 1,132 1,002 - 1,002 2,017 - 2,017
Maintenance and
other indirect
expenses (132) - (132) (111) - (111) (241) - (241)
Personnel costs (458) (2) (460) (430) (11) (441) (838) (24) (862)
Other net
operating
expenses (137) 56 (81) (153) (32) (185) (293) (14) (307)
Depreciation,
amortisation
and impairments (183) (18) (201) (170) (36) (206) (351) (90) (441)
Operating
profit/(loss) 4/5 222 36 258 138 (79) 59 294 (128) 166
Net (loss)/
profit on
disposals 6 - (22) (22) - 5 5 - 3 3
Impairment of
assets held for
sale 6 - (13) (13) - (8) (8) - (8) (8)
Net income from
associates 2 - 2 1 - 1 2 - 2
Total profit/
(loss) from
operations and
associates 224 1 225 139 (82) 57 296 (133) 163
Investment
income 16 - 16 15 - 15 27 - 27
Foreign
currency gains/
(losses) 11 - 11 (2) - (2) (1) - (1)
Interest
expense 7 (75) - (75) (71) - (71) (140) - (140)
Net finance
costs (48) - (48) (58) - (58) (114) - (114)
Profit/(loss)
before tax 176 1 177 81 (82) (1) 182 (133) 49
Tax (charge)/
credit 8 (46) 4 (42) (27) 4 (23) (58) 6 (52)
Profit/(loss)
from continuing
operations 130 5 135 54 (78) (24) 124 (127) (3)
Attributable
to:
Non-controlling
interests 27 (1) 26 12 - 12 29 1 30
Equity holders
of the parent
companies 103 6 109 42 (78) (36) 95 (128) (33)
Earnings per
share (EPS) for
profit /(loss)
attributable to
equity holders
of the parent
companies
Basic EPS(€ cents) 9 21.5 (7.1) (6.5)
Diluted EPS(€ cents)9 21.2 (7.1) (6.5)
Basic underlying EPS(€ cents)9 20.3 8.3 18.7
Diluted underlying EPS(€ cents)9 20.0 8.1 18.2
Basic headline EPS (€ cents)9 24.8 (0.8) 11.4
Diluted headline EPS(€ cents)9 24.5 (0.8) 11.1
Condensed combined and consolidated statement of comprehensive income
for the six months ended 30 June 2010
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
€ million 2010 2009 December 2009
Profit /(loss) for the financial period/
year 135 (24) (3)
Other comprehensive income:
Fair value gains on cash flow hedges 6 14 26
Actuarial (losses)/ gains and surplus
restriction on post-retirement benefit
schemes (9) 1 7
Fair value gains on available-for-sale
investments - - 1
Exchange gains on translation of foreign
operations 171 72 118
Share of other comprehensive income of
associates - 1 1
Tax relating to components of other
comprehensive income 2 (1) (7)
Other comprehensive income for the
financial period/year, net of tax 170 87 146
Total comprehensive income for the
financial period/year 305 63 143
Attributable to:
Non-controlling interests 36 14 39
Equity holders of the parent companies 269 49 104
Condensed combined and consolidated statement of financial position
as at 30 June 2010
(Reviewed) (Reviewed) (Audited)
As at 30 As at 30 As at 31
€ million Notes June 2010 June 2009 December 2009
Intangible assets 314 321 308
Property, plant and equipment 3,990 3,769 3,847
Forestry assets 290 268 251
Investments in associates 6 8 6
Financial asset investments 33 24 27
Deferred tax assets 31 43 29
Retirement benefits surplus 11 13 - 8
Total non-current assets 4,677 4,433 4,476
Inventories 688 611 617
Trade and other receivables 1,083 1,075 933
Current tax assets 19 23 16
Cash and cash equivalents 15b-c 77 171 123
Derivative financial instruments 13 15 7
Total current assets 1,880 1,895 1,696
Assets held for sale 14 172 22 36
Total assets 6,729 6,350 6,208
Short-term borrowings 15c (217) (435) (219)
Trade and other payables (1,123) (1,013) (1,023)
Current tax liabilities (75) (46) (55)
Provisions (50) (47) (40)
Derivative financial instruments (4) (40) (32)
Total current liabilities (1,469) (1,581) (1,369)
Medium and long-term borrowings 15c (1,492) (1,397) (1,421)
Retirement benefits obligation 11 (202) (184) (184)
Deferred tax liabilities (334) (329) (316)
Provisions (35) (48) (45)
Other non-current liabilities (21) (14) (21)
Derivative financial instruments (23) (47) (19)
Total non-current liabilities (2,107) (2,019) (2,006)
Liabilities directly associated with
assets classified as held for sale 14 (60) (3) (9)
Total liabilities (3,636) (3,603) (3,384)
Net assets 3,093 2,747 2,824
Equity
Ordinary share capital 114 114 114
Share premium 532 532 532
Retained earnings and other reserves 2,006 1,707 1,753
Total attributable to equity holders of
the parent companies 2,652 2,353 2,399
Non-controlling interests in equity 441 394 425
Total equity 3,093 2,747 2,824
The Group's condensed combined and consolidated financial statements, and
related notes 1 to 19, were approved by the Boards and authorised for issue on
9 August 2010 and were signed on its behalf by:
David Hathorn Andrew King
Director Director
Mondi Limited company registration number: 1967/013038/06
Mondi plc company registration number: 6209386
Condensed combined and consolidated statement of cash flows
for the six months ended 30 June 2010
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
€ million Notes 2010 2009 December 2009
Cash generated from operations 15a 269 392 867
Dividends from associates 2 - 2
Income tax paid (36) (18) (32)
Net cash generated from operating
activities 235 374 837
Cash flows from investing
activities
Acquisition of subsidiaries, net of
cash and cash equivalents 13 11 (2) (2)
Non-controlling interests bought
out (4) - -
Proceeds from disposal of
subsidiaries, net of cash and cash
equivalents 64 47 54
Proceeds from disposal of
associates - - 3
Investment in property, plant and
equipment (184) (293) (517)
Proceeds from the disposal of
property, plant and equipment 6 7 11
Investment in forestry assets (21) (20) (40)
Investment in intangible assets (1) (2) (5)
Investment in financial asset
investments (1) - (7)
Proceeds from the sale of financial
asset investments 2 - -
Loan (advances to)/repayments from
related parties (4) (1) 1
Loan repayments from external
parties - - 1
Interest received 4 4 8
Other investing activities - - 1
Net cash used in investing
activities (128) (260) (492)
Cash flows from financing
activities
Repayment of short-term borrowings 15c (95) (81) (288)
Proceeds from medium and long-term
borrowings 15c 527 16 138
Repayment of medium and long-term
borrowings 15c (452) (22) (100)
Interest paid (60) (93) (163)
Dividends paid to non-controlling
interests 10 (17) - (9)
Dividends paid to equity holders of
the parent companies 10 (36) (26) (39)
Purchases of treasury shares (1) (1) (1)
Contribution by non-controlling
interests - 10 27
Net realised (loss)/gain on cash
and asset management swaps (61) 84 67
Other financing activities - (1) 4
Net cash used in financing
activities (195) (114) (364)
Net decrease in cash and cash
equivalents (88) - (19)
Cash and cash equivalents at
beginning of financial period/year1 15c 37 75 75
Cash movement in the financial
period/year 15c (88) - (19)
Reclassification 15c (1) - (19)
Effects of changes in foreign
exchange rates 15c (6) 4 -
Cash and cash equivalents at end of
financial period/year1 (58) 79 37
Note:
1 'Cash and cash equivalents' includes overdrafts and cash flows from
disposal groups and is reconciled to the statement of financial position in
note 15c.
Condensed combined and consolidated statement of changes in equity
for the six months ended 30 June 2010
Share capital
Combined Total
share attributable
Mondi Mondi Mondi capital to equity
Limited Limited plc and holders of
share share share share Retained Other the parent Non-controlling Total
€ million capital premium capital premium earnings reserves1 companies interests equity
At 1 January
2009 11 532 103 646 1,809 (132) 2,323 373 2,696
Dividends paid - - - - (26) - (26) - (26)
Total
comprehensive
income for the
financial period - - - - (36) 85 49 14 63
Issue of shares
under employee
share schemes - - - - 2 (2) - - -
Purchases of
treasury shares2 - - - - (1) - (1) - (1)
Reclassification - - - - (14) 14 - - -
Non-controlling
interests buy in - - - - - - - 10 10
Non-controlling
interests bought
out - - - - - - - (3) (3)
Other - - - - - 8 8 - 8
At 30 June 2009 11 532 103 646 1,734 (27) 2,353 394 2,747
Dividends paid - - - - (13) - (13) (9) (22)
Total
comprehensive
income for the
financial period - - - - 3 52 55 25 80
Issue of shares
under employee
share schemes - - - - 17 (17) - - -
Reclassification - - - - 2 1 3 (3) -
Non-controlling
interests buy in - - - - - - - 17 17
Other - - - - - 1 1 1 2
At 31 December
2009 11 532 103 646 1,743 10 2,399 425 2,824
Dividends paid - - - - (36) - (36) (17) (53)
Total
comprehensive
income for the
financial period - - - - 109 160 269 36 305
Issue of shares
under employee
share schemes - - - - 5 (5) - - -
Purchases of
treasury shares2 - - - - (1) - (1) - (1)
Disposal of
businesses - - - - - 19 19 - 19
Non-controlling
interests bought
out - - - - (1) - (1) (3) (4)
Other - - - - - 3 3 - 3
At 30 June 2010 11 532 103 646 1,819 187 2,652 441 3,093
Notes:
1 Other reserves include the share-based payment, cumulative translation
adjustment, available-for-sale, cash flow hedge, post-retirement benefit,
merger and other sundry reserves.
2 The treasury shares purchased represent the cost of shares in Mondi
Limited and Mondi plc purchased in the market and held by the Mondi Incentive
Schemes Trust and the Mondi Employee Share Trust respectively to satisfy
options under the Group's share option schemes. The number of ordinary shares
held by the Mondi Incentive Schemes Trust as at 30 June 2010 was 97,690 shares
(as at 30 June 2009: 259,334; as at 31 December 2009: 53,700) at an average
price of R43.75 per share (as at 30 June 2009: R33.24 per share; as at 31
December 2009: R35.71 per share). The number of ordinary shares held by the
Mondi Employee Share Trust as at 30 June 2010 was 4,462,901 shares (as at 30
June 2009: 7,113,962; as at 31 December 2009: 5,087,561) at an average price of
₤4.05 per share (as at 30 June 2009: ₤4.03 per share; as at 31 December 2009: ₤
4.05 per share).
Notes to the condensed combined and consolidated financial statements
1 Basis of preparation
The Group has two separate legal parent entities, Mondi Limited and Mondi plc,
which operate under a dual listed company (DLC) structure. The substance of the
DLC structure is such that Mondi Limited, and its subsidiaries, and Mondi plc,
and its subsidiaries, operate together as a single economic entity through a
sharing agreement, with neither parent entity assuming a dominant role.
Accordingly, Mondi Limited and Mondi plc are reported on a combined and
consolidated basis as a single reporting entity under International Financial
Reporting Standards (IFRS).
The condensed combined and consolidated half-yearly financial information for
the six months ended 30 June 2010 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 2009,
prepared in accordance with IFRS. The Group has also complied with South
African Statements and Interpretations of Statements of Generally Accepted
Accounting Practice. In addition, there are no differences for the Group in
applying IFRS as issued by the International Accounting Standards Board and as
endorsed by the European Union (EU). As discussed in the Group performance
overview under the heading 'Going concern', the condensed combined and
consolidated financial statements have been prepared on a going concern basis.
The information for the year ended 31 December 2009 does not constitute
statutory accounts as defined by section 434 of the UK Companies Act 2006. A
copy of the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditors' report on those accounts was unqualified,
did not draw attention to any matters by way of emphasis and did not contain a
statement under section 498(2) or (3) of the UK Companies Act 2006.
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 2009, except as described
below.
In the current financial year, the Group has adopted IFRS 3, 'Business
Combinations' (revised 2008), and IAS 27, 'Consolidated and Separate Financial
Statements' (revised 2008). Both standards became effective for annual
reporting periods beginning on or after 1 July 2009.
The most significant changes, all of which are applied prospectively, to the
Group's previous accounting policies for business combinations are as follows:
acquisition related costs which previously would have been included in the cost
of a business combination are included in administrative expenses as they are
incurred;
any pre-existing equity interest in the acquiree is remeasured to fair value at
the date of obtaining control (the acquisition date), with any resulting gain
or loss recognised in profit or loss;
any changes in the Group's ownership interest subsequent to the acquisition
date are recognised directly in equity, with no adjustment to goodwill; and
any changes to the cost of an acquisition, including contingent consideration,
resulting from events after the acquisition date are recognised in profit or
loss. Previously, such changes resulted in an adjustment to goodwill.
Any adjustments to contingent consideration for acquisitions made prior to 1
January 2010 which result in an adjustment to goodwill continue to be accounted
for under IFRS 3 (2004) and IAS 27 (2005), for which the accounting policies
can be found in the Group's annual financial statements for the year ended 31
December 2009. Comprehensive details of changes to accounting policies will be
presented in the Group's annual financial statements for the year ended 31
December 2010.
3 Seasonality
The seasonality of the Group's operations has no significant impact on the
condensed combined and consolidated financial statements.
4 Operating segments
Operating segment revenues
(Reviewed) (Reviewed) (Audited)
Six months ended 30 June Six months ended 30 June Year ended 31 December
2010 2009 2009
Segment Internal External Segment Internal External Segment Internal External
€ million revenue revenue1 revenue2 revenue revenue1 revenue2 revenue revenue1 revenue2
Europe &
International
Uncoated Fine
Paper 762 (75) 687 680 (62) 618 1,351 (130) 1,221
Corrugated 610 (26) 584 527 (16) 511 1,041 (36) 1,005
Bags & Coatings 1,060 (20) 1,040 893 (12) 881 1,787 (24) 1,763
Intra-segment
elimination (60) 60 - (37) 37 - (80) 80 -
Total Europe &
International 2,372 (61) 2,311 2,063 (53) 2,010 4,099 (110) 3,989
South Africa
Uncoated Fine
Paper 226 (58) 168 197 (64) 133 386 (120) 266
Containerboard 69 (68) 1 66 (63) 3 121 (119) 2
Intra-segment
elimination (19) 19 - (14) 14 - (29) 29 -
Total South Africa 276 (107) 169 249 (113) 136 478 (210) 268
Mondi Packaging
South Africa 298 (16) 282 227 (13) 214 498 (25) 473
Merchant &
Newsprint
businesses 271 - 271 254 - 254 528 (1) 527
Segments
total 3,217 (184) 3,033 2,793 (179) 2,614 5,603 (346) 5,257
Inter-segment
elimination (184) 184 - (179) 179 - (346) 346 -
Group total 3,033 - 3,033 2,614 - 2,614 5,257 - 5,257
Notes:
1 Inter-segment transactions are conducted on an arm's length basis.
2 The description of each business segment reflects the nature of the main
products they sell. In certain instances the business segments sell minor
volumes of other products and due to this reason the external segment revenues
will not necessarily reconcile to the external revenues by each type of product
presented below.
External revenue by product type
(Reviewed) (Reviewed) (Audited)
Six months ended 30 Six months ended 30 Year ended 31
€ million June 2010 June 2009 December 2009
Products
Corrugated products 788 709 1,357
Uncoated fine paper 674 592 1,195
Kraft paper & bags 503 437 886
Coatings, consumer
bags & films 431 374 731
Merchant sales 238 202 468
Newsprint 104 74 208
Pulp 104 68 129
Woodchips 39 35 61
Other1 152 123 222
Group total 3,033 2,614 5,257
Note:
1 Revenues derived from product types that are not material are classed as
other.
External revenue by location of customer
(Reviewed) (Reviewed) (Audited)
Six months ended 30 Six months ended 30 Year ended 31
€ million June 2010 June 2009 December 2009
Revenue
Africa
South Africa1 379 291 644
Rest of Africa 129 103 196
Africa total 508 394 840
Western
Europe
Germany 375 317 641
United Kingdom1 169 184 367
Rest of Western
Europe 727 684 1,292
Western Europe
total 1,271 1,185 2,300
Emerging Europe 584 526 1,105
Russia 249 188 387
North America 111 79 157
South America 14 9 17
Asia and Australia 296 233 451
Group total 3,033 2,614 5,257
Note:
1 These revenues, which total €548 million (six months ended 30 June 2009:
€475 million; year ended 31 December 2009: €1,011 million), are attributable to
the countries in which the Group's parent entities are domiciled.
External revenue by location of production
(Reviewed) (Reviewed) (Audited)
Six months ended 30 Six months ended 30 Year ended 31
€ million June 2010 June 2009 December 2009
Revenue
Africa
South Africa1 561 467 948
Rest of Africa 9 5 13
Africa total 570 472 961
Western
Europe
Austria 597 502 1,010
United Kingdom1 88 129 244
Rest of Western
Europe 463 440 855
Western Europe
total 1,148 1,071 2,109
Emerging Europe
Poland 335 216 486
Rest of Emerging
Europe 512 471 927
Emerging Europe
total 847 687 1,413
Russia 322 251 519
North America 62 54 104
Asia and Australia 84 79 151
Group total 3,033 2,614 5,257
Note:
1 These revenues, which total €649 million (six months ended 30 June 2009: €
596 million; year ended 31 December 2009: €1,192 million), are attributable to
the countries in which the Group's parent entities are domiciled.
There are no external customers which account for more than 10% of the Group's
total external revenue.
Operating segment operating profit/(loss)
Segment operating profit before Segment operating profit/(loss)
special items after special items
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Year ended Year ended
Six months Six months 31 Six months Six months 31
ended 30 ended 30 December ended 30 ended 30 December
€ million June 2010 June 2009 2009 June 2010 June 2009 2009
Europe &
International
Uncoated Fine
Paper 98 71 146 108 71 144
Corrugated 48 1 23 48 (10) (27)
Bags & Coatings 55 36 82 103 (13) 34
Total Europe &
International 201 108 251 259 48 151
South Africa
Uncoated Fine
Paper 14 13 16 (7) (6) (6)
Containerboard 4 15 16 4 15 16
Total South
Africa 18 28 32 (3) 9 10
Mondi Packaging
South Africa 18 11 36 17 11 43
Merchant &
Newsprint
businesses 1 8 12 1 8 -
Corporate & other
businesses (16) (17) (37) (16) (17) (38)
Segments
total 222 138 294 258 59 166
Net (loss)/profit
on disposals (see
note 6) - - - (22) 5 3
Impairment of
assets held for
sale (see note 6) - - - (13) (8) (8)
Net income from
associates 2 1 2 2 1 2
Net finance costs (48) (58) (114) (48) (58) (114)
Group profit/
(loss) before tax 176 81 182 177 (1) 49
EBITDA by operating segment
(Reviewed) (Reviewed) (Audited)
Six months ended 30 Six months ended 30 Year ended 31
€ million June 2010 June 2009 December 2009
Europe & International
Uncoated Fine Paper 146 117 239
Corrugated 82 32 87
Bags & Coatings 108 89 189
Total Europe &
International 336 238 515
South Africa
Uncoated Fine Paper 35 29 52
Containerboard 9 19 24
Total South Africa 44 48 76
Mondi Packaging South
Africa 33 23 62
Merchant & Newsprint
businesses 8 16 28
Corporate & other
businesses (16) (17) (36)
EBITDA 405 308 645
Segment assets and liabilities
(Reviewed) (Reviewed) (Audited)
As at 30 June 2010 As at 30 June 2009 As at 31 December 2009
Net Net Net
Segment Segment segment Segment Segment segment Segment Segment segment
€ million assets1 liabilities2 assets assets1 liabilities2 assets assets1 liabilities2 assets
Europe &
International
Uncoated Fine
Paper 1,862 (220) 1,642 1,640 (174) 1,466 1,671 (177) 1,494
Corrugated 1,074 (212) 862 1,044 (207) 837 1,071 (199) 872
Bags &
Coatings 1,720 (402) 1,318 1,585 (268) 1,317 1,531 (309) 1,222
Intra-segment
elimination (67) 67 - (25) 25 - (33) 33 -
Total Europe &
International 4,589 (767) 3,822 4,244 (624) 3,620 4,240 (652) 3,588
South Africa
Uncoated Fine
Paper 897 (101) 796 834 (100) 734 804 (92) 712
Containerboard 159 (23) 136 152 (18) 134 150 (22) 128
Intra-segment
elimination (4) 4 - (3) 3 - (6) 6 -
Total South
Africa 1,052 (120) 932 983 (115) 868 948 (108) 840
Mondi
Packaging
South
Africa 475 (107) 368 438 (96) 342 432 (97) 335
Merchant &
Newsprint
businesses 148 (40) 108 290 (72) 218 263 (69) 194
Corporate &
other
businesses 18 - 18 7 (1) 6 3 1 4
Inter-segment
elimination (71) 71 - (97) 97 - (74) 74 -
Segments total 6,211 (963) 5,248 5,865 (811) 5,054 5,812 (851) 4,961
Unallocated:
Investments in
associates 6 - 6 8 - 8 6 - 6
Deferred tax
assets/
(liabilities) 31 (334) (303) 43 (329) (286) 29 (316) (287)
Other
non-operating
assets/
(liabilities)3 371 (630) (259) 239 (631) (392) 211 (577) (366)
Group trading
capital
employed 6,619 (1,927) 4,692 6,155 (1,771) 4,384 6,058 (1,744) 4,314
Financial
asset
investments 33 - 33 24 - 24 27 - 27
Net debt 77 (1,709) (1,632) 171 (1,832) (1,661) 123 (1,640) (1,517)
Group net
assets 6,729 (3,636) 3,093 6,350 (3,603) 2,747 6,208 (3,384) 2,824
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, restoration and environmental provisions and
provisions for post-retirement benefits.
3 Other non-operating assets consist of derivative assets, current income tax
receivables, other non-operating receivables and assets held for sale. Other
non-operating liabilities consist of derivative liabilities, non-operating
provisions, current income tax liabilities and liabilities directly associated
with assets classified as held for sale.
Capital expenditure cash payments and the additions to the Group's non-current
non-financial assets, other than deferred tax assets and retirement benefits
surplus, are presented by operating segment as follows:
Additions to non-current
Capital expenditure cash payments non-financial assets1
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Six months Six months Year ended Six months Six months Year ended
ended 30 ended 30 31 December ended 30 ended 30 31 December
€ million June 2010 June 2009 2009 June 2010 June 2009 2009
Europe &
International
Uncoated Fine
Paper 82 122 191 74 159 257
Corrugated 42 108 195 38 106 178
Bags &
Coatings 35 42 81 45 39 83
Total Europe &
International 159 272 467 157 304 518
South Africa
Uncoated Fine
Paper 7 12 22 26 30 59
Containerboard 2 1 4 2 1 4
Total South
Africa 9 13 26 28 31 63
Mondi
Packaging
South Africa 14 6 17 14 6 17
Merchant &
Newsprint
businesses 2 2 7 4 2 10
Corporate &
other
businesses - - - - 2 6
Group and
segments total 184 293 517 203 345 614
Note:
1 Additions to non-current non-financial assets reflect cash payments and
accruals in respect of additions to property, plant and equipment, intangible
assets and forestry assets and include interest capitalised as well as
additions resulting from acquisitions through business combinations.
5 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 2010, total €11 million (six months
ended 30 June 2009: €11 million; year ended 31 December 2009: €18 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 2010, total €2
million (six months ended 30 June 2009: €2 million; year ended 31 December
2009: €3 million).
6 Special items
(Reviewed) (Reviewed) (Audited)
Six months Six months
ended 30 June ended 30 June Year ended 31
€ million 2010 2009 December 2009
Operating special items
Goodwill impairments - - (12)
Asset impairments (26) (36) (78)
Reversal of asset impairments 8 - -
Restructuring and closure costs
Restructuring and closure costs
excluding related personnel costs (1) (29) (22)
Personnel costs relating to
restructuring (2) (11) (21)
Reversal of restructuring and closure
costs 26 - -
Demerger arrangements - (3) (3)
Proceeds on insurance - - 8
Gain on acquisition of business 31 - -
Total operating special items 36 (79) (128)
Non-operating special items
Net (loss)/profit on disposal (22) 5 3
Asset impairment of assets held for
sale (13) (8) (8)
Total non-operating special items (35) (3) (5)
Total special items before tax and
non-controlling interests 1 (82) (133)
Tax 4 4 6
Non-controlling interests 1 - (1)
Total special items attributable to
equity holders of the parent companies 6 (78) (128)
Operating special items
A 120,000 tonne uncoated fine paper machine and related converting capacity in
the Merebank plant will be mothballed in September 2010 and the business
restructured. This has led to an asset impairment of €18 million and related
restructuring costs of €3 million being recognised.
The completion of the sale of the Szolnok site has resulted in the reversal of
previously recognised restructuring and closure provisions and the realisation
of the cumulative translation adjustment reserve, amounting to €10 million.
The restarting of the Stambolijski kraft paper line during June 2010 has
resulted in a reversal of impairment (€8 million) and related provisions (€17
million) recognised for the closure that are no longer required, amounting to €
25 million.
Underperforming non-integrated kraft paper assets in Lohja and Ruzomberok have been
partially impaired by €8 million.
The acquisition of the industrial bag businesses in western Europe resulted in
a gain of €31 million being recognised. These plants will be subject to future
restructuring.
Non-operating special items
The sale of the corrugated plants in the UK to Smurfit Kappa resulted in a loss
on disposal (including realisation of the cumulative translation adjustment
reserve) of €17 million.
Sale of forestry assets in South Africa realised a gain of €7 million.
The expected sale of the Europapier business resulted in a write-down of assets
of €13 million and recognition of the expected loss on sale of €12 million,
amounting in total to €25 million.
7 Finance costs
(Reviewed) (Reviewed) (Audited)
Six months ended 30 Six months ended 30 Year ended 31
€ million June 2010 June 2009 December 2009
Total interest
expense (82) (102) (185)
Less: interest
capitalised 7 31 45
Total financing
costs (75) (71) (140)
8 Tax charge
(Reviewed) (Reviewed) (Audited)
Six months ended Six months ended Year ended 31
€ million 30 June 2010 30 June 2009 December 2009
UK corporation tax (1) - 1
Overseas tax 55 23 52
Current tax (including tax
on special items) 54 23 53
Deferred tax (12) - (1)
Total tax charge 42 23 52
The Group's estimated effective annual rate of tax before special items for the
six months ended 30 June 2010, calculated on profit before tax before special
items and including net income from associates, is 26% (six months ended 30
June 2009: 34%; year ended 31 December 2009: 32%). The reduction in the
effective tax rate from 32% to 26% is realised primarily due to the improved
profitability enabling the use of previously unrecognised tax losses carried
forward; increased profitability in regions with lower tax rates; and benefits
of tax incentives granted in certain countries in which the Group operates,
notably those related to the major Polish and Russian capital projects.
9 Earnings per share
(Reviewed) (Reviewed) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 December
€ cents per share 2010 2009 2009
Profit/(loss) for the financial period/year
attributable to equity holders of the parent
companies
Basic EPS 21.5 (7.1) (6.5)
Diluted EPS 21.2 (7.1)3 (6.5)3
Underlying earnings for the financial period
/year1
Basic EPS 20.3 8.3 18.7
Diluted EPS 20.0 8.1 18.2
Headline earnings/(loss) for the financial
period/year2
Basic EPS 24.8 (0.8) 11.4
Diluted EPS 24.5 (0.8) 11.1
Notes:
1 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 Circular
3/2009, 'Headline Earnings', as issued by the South African Institute of
Chartered Accountants.
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 Year ended
ended 30 June ended 30 June 31 December
€ million 2010 2009 2009
Profit/(loss) for the financial period/year
attributable to equity holders of the parent
companies 109 (36) (33)
Special items: operating (36) 79 128
Net loss/(profit) on disposals 22 (5) (3)
Impairment of assets held for sale 13 8 8
Related tax (4) (4) (6)
Related non-controlling interests (1) - 1
Underlying earnings for the financial period
/year 103 42 95
Profit on disposal of tangible and
intangible assets (1) (4) (4)
Special items: demerger arrangements - (3) (3)
Special items: restructuring and closure
costs 23 (40) (43)
Impairments not included in special items - - 10
Related tax 1 1 3
Headline earnings/(loss) for the financial
period/year 126 (4) 58
Number of shares
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31 December
million 2010 2009 2009
Basic number of ordinary shares
outstanding1 508 507 508
Effect of dilutive potential
ordinary shares2 7 12 13
Diluted number of ordinary shares
outstanding 515 519 521
Notes:
1 The basic number of ordinary shares outstanding represents the weighted
average number in issue for Mondi Limited and Mondi plc for the period/year, as
adjusted for the weighted average number of treasury shares held during the
period/year.
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.
10 Dividends
The interim dividend for the year ending 31 December 2010 of 3.5 euro cents per
ordinary share will be paid on 14 September 2010 to Mondi Limited and Mondi plc
ordinary shareholders on the relevant registers on 27 August 2010. 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 2009.
The interim dividend for the year ending 31 December 2010 will be paid in
accordance with the following timetable:
Mondi Mondi plc
Limited
Last date to trade shares cum-dividend
JSE Limited 20 August 20 August
2010 2010
London Stock Exchange Not 24 August
applicable 2010
Shares commence trading ex-dividend
JSE Limited 23 August 23 August
2010 2010
London Stock Exchange Not 25 August
applicable 2010
Record date
JSE Limited 27 August 27 August
2010 2010
London Stock Exchange Not 27 August
applicable 2010
Last date for receipt of Dividend Reinvestment Plan (DRIP) 1 1
elections by Central Securities Depository Participants September September
2010 2010
Last date for DRIP elections to UK Registrar and South African 2 27 August
Transfer Secretaries by shareholders of Mondi Limited and Mondi September 2010*
plc 2010
Payment Date
South African Register 14 14
September September
2010 2010
UK Register Not 14
applicable September
2010
Depositary Interest holders 20 Not
September applicable
(dematerialised DIs) 2010
Holders within the Corporate Nominee 20 Not
September applicable
2010
DRIP purchase settlement dates 21 17
September September
2010 2010**
Currency conversion dates
ZAR/euro 10 August 10 August
2010 2010
Euro/sterling Not 27 August
applicable 2010
* 2 September 2010 for Mondi plc South African branch register shareholders
** 21 September 2010 for Mondi plc South African branch register shareholders
Please note that the DRIP plan is not available to Depositary Interest holders
and holders within the Corporate Nominee.
Share certificates on the South African registers of Mondi Limited and Mondi
plc may not be dematerialised or rematerialised between 23 August 2010 and 29
August 2010, both dates inclusive, nor may transfers between the UK and South
African registers of Mondi plc take place between 18 August 2010 and 30 August
2010, both dates inclusive.
11 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 2010.
All assumptions of the Group's material defined benefit schemes and
post-retirement medical plan liabilities were re-assessed individually and the
remaining Group defined benefit schemes and unfunded statutory retirement
obligations were re-assessed in aggregate for the six months ended 30 June
2010. The net change in assumptions from those applied as at 31 December 2009
resulted in a €13 million increase in the net retirement benefit obligations
recorded on the condensed combined and consolidated statement of financial
position. The assets backing the defined benefit scheme liabilities reflect
their market values as at 30 June 2010. Any movements in the assumptions have
been recognised as an actuarial movement in the condensed combined and
consolidated statement of comprehensive income. €11 million of the movement in
net retirement benefits is due to the decrease in the discount rate from 5.25%
at 31 December 2009 to 4.50% at 30 June 2010 in the European defined benefit
schemes and unfunded statutory retirement obligations.
12 Asset values per share
Net asset value per share is defined as net assets divided by the combined
number of ordinary shares in issue as at the reporting dates presented, less
treasury shares held. Tangible net asset value per share is defined as the net
assets less intangible assets divided by the combined number of ordinary shares
in issue as at the reporting dates presented, less treasury shares held.
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31 December
2010 2009 2009
Net asset value per share (€) 6.07 5.42 5.55
Tangible net asset value per
share (€) 5.45 4.79 4.94
13 Business combinations
In line with Mondi's strategy to strengthen its leading market position in
industrial and consumer bags in Europe an agreement was concluded in April 2010
with Smurfit Kappa for the acquisition of its western European industrial and
consumer bag operations in Spain, France and Italy.
The businesses acquired have incurred operating losses prior to their
acquisition by Mondi and will be subject to future restructuring activities. As
a result of this and the cash in the business on date of acquisition, a gain on
acquisition has been recognised in operating special items in the income
statement. The fair value accounting reflected in these results is provisional
in nature as the transaction was only concluded on 4 May 2010. If necessary,
adjustments will be made to these carrying values, and to the gain on
acquisition, within 12 months of the acquisition date.
Prior to any planned restructuring activities, the acquired industrial bag
plants generate turnover of approximately €7 million per month and operating
losses of €0.8 million per month. Had the acquisition occurred on 1 January
2010, the increase in revenue would have been €50 million with an operating
loss of €5 million. Transaction costs related to the acquisition are estimated
at €1 million.
There were no other acquisitions made for the six months ended 30 June 2010.
Details of the aggregate net assets acquired, as adjusted from book to fair
value, are presented as follows:
€ million Book value Revaluation Fair value
Net assets acquired:
Property, plant and equipment 27 (14) 13
Inventories 15 - 15
Trade and other receivables 21 (1) 20
Cash and cash equivalents 18 - 18
Trade and other payables (22) - (22)
Short-term borrowings (1) - (1)
Retirement benefits obligation (2) - (2)
Provisions (3) - (3)
Net assets acquired 53 (15) 38
Gain arising on acquisition (31)
Total cost of acquisition 7
Cash acquired net of overdrafts (18)
Net cash received 11
14 Disposal groups and assets held for sale
On 5 May 2010, Mondi signed an agreement with the Heinzel Group for the sale of
100% of its shares in Europapier, a paper merchant business selling graphic,
packaging and office papers, as well as other office supplies to customers
across central Europe and Russia. The loss on disposal of the business will be
approximately €25 million. As part of the reclassification of the underlying
assets as held for sale, the tangible fixed assets were fully impaired. The
sale is subject to approval by various competition authorities and is expected
to be completed in the second half of 2010. Accordingly the assets and
associated liabilities are classified as held for sale at 30 June 2010.
15 Consolidated cash flow analysis
(a) Reconciliation of profit/(loss) before tax to cash generated from
operations
(Reviewed) (Reviewed) (Audited)
Six months ended Six months ended Year ended 31
€ million 30 June 2010 30 June 2009 December 2009
Profit/(loss) before tax 177 (1) 49
Depreciation and amortisation 183 170 351
Share-based payments 3 4 5
Non-cash effect of special 64
items (8) 98
Net finance costs 48 58 114
Net income from associates (2) (1) (2)
Decrease in provisions and (9)
post-employment benefits (4) (16)
(Increase)/decrease in 81
inventories (64) 80
(Increase)/decrease in 19
operating receivables (192) 170
Increase/(decrease) in (1)
operating payables 115 (2)
Fair value gains on forestry (15)
assets (16) (28)
Felling costs 32 26 50
Profit on disposal of tangible (4)
and intangible assets (1) (4)
Other adjustments (2) 1 2
Cash generated from operations 269 392 867
(b) Cash and cash equivalents
(Reviewed) (Reviewed) (Audited)
As at 30 As at 30 As at 31
€ million June 2010 June 2009 December 2009
Cash and cash equivalents per statement of 77 171 123
financial position
Bank overdrafts included in short-term (135) (92) (86)
borrowings
Net cash and cash equivalents per
statement of cash flows (58) 79 37
(c) Movement in 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
€ million equivalents1 year2 year debt
At 1 January 2009 75 (298) (1,467) (1,690)
Cash flow - 81 6 87
Business combinations - - 2 2
Disposal of businesses - 8 - 8
Reclassification - (112) 112 -
Currency movements 4 (22) (50) (68)
At 30 June 2009 79 (343) (1,397) (1,661)
Cash flow (19) 207 (44) 144
Reclassification (19) (7) 41 15
Currency movements (4) 10 (21) (15)
At 31 December 2009 37 (133) (1,421) (1,517)
Cash flow (88) 95 (75) (68)
Business combinations - (1) - (1)
Disposal of businesses - 5 - 5
Movement in unamortised loan costs - - (2) (2)
Reclassification (1) (33) 40 6
Currency movements (6) (15) (34) (55)
At 30 June 2010 (58) (82) (1,492) (1,632)
Notes:
1 The Group operates in certain countries (principally South Africa) where
the existence of exchange controls may restrict the use of certain cash
balances. These restrictions are not expected to have any material effect on
the Group's ability to meet its ongoing obligations.
2 Excludes overdrafts, which are included as cash and cash equivalents. As at
30 June 2010, short-term borrowings on the condensed combined and consolidated
statement of financial position of €217 million (as at 30 June 2009: €
435 million; as at 31 December 2009: €219 million) include €135 million of
overdrafts (as at 30 June 2009: €92 million; as at 31 December 2009: €86
million).
The Group launched its inaugural publicly traded bond on 26 March 2010. The €
500 million bond, which matures on 3 April 2017, was issued at a discount of €
5.63 million and pays a fixed coupon of 5.75% per annum. The bond contains a
coupon step up clause whereby the coupon will be increased by 1.25% per annum
whilst Mondi fails to maintain at least one investment grade credit rating from
either Moody's or Standard & Poor's.
The following table shows the amounts available to draw down on the Group's
committed loan facilities:
(Reviewed) (Reviewed) (Audited)
€ million As at 30 June 2010 As at 30 June 2009 As at 31 December 2009
Expiry date
In one year or less 211 178 141
In more than one year 1,147 895 849
Total credit available 1,358 1,073 990
16 Capital commitments
(Reviewed) (Reviewed) (Audited)
As at 30 June As at 30 June As at 31 December
€ million 2010 2009 2009
Contracted for but not
provided 184 258 214
Approved, not yet contracted
for 200 136 291
17 Contingent liabilities and contingent assets
Contingent liabilities comprise aggregate amounts as at 30 June 2010 of €20
million (as at 30 June 2009: €16 million; as at 31 December 2009: €21 million)
in respect of loans and guarantees given to banks and other third parties.
Acquired contingent liabilities of €nil (six months ended 30 June 2009: €nil;
year ended 31 December 2009: €nil) have been recorded on the Group's combined
and consolidated statement of financial position.
There are a number of legal and tax claims against the Group. Provision is made
for all liabilities that are expected to materialise.
Contingent assets comprise aggregate amounts as at 30 June 2010 of €5 million
(as at 30 June 2009: €nil; as at 31 December 2009: €nil) and mainly relate to
energy credits to be received.
18 Related party transactions
The Group has related party relationships with its associates and joint
ventures. Transactions between Mondi Limited, Mondi plc and their respective
subsidiaries, which are related parties, have been eliminated on consolidation.
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 other related parties. These transactions are entered into on an
arm's length basis at market rates.
There have been no significant changes to the related parties as disclosed in
note 39 of the Group's annual financial statements for the year ended 31
December 2009.
Dividends received from associates for the six months ended 30 June 2010 amount
to €2 million (six months ended 30 June 2009: €0.4 million; year ended 31
December 2009: €2 million).
19 Events occurring after 30 June 2010
With the exception of the proposed interim dividend for 2010, as disclosed in
note 10, there have been no material reportable events since 30 June 2010.
Production statistics
Production statistics
Six months ended Six months ended Year ended 31
30 June 2010 30 June 2009 December 2009
Europe & International
Uncoated fine paper Tonnes 790,748 709,433 1,470,381
Containerboard Tonnes 1,008,305 836,456 1,768,696
Kraft paper Tonnes 466,156 383,373 841,378
Hardwood pulp Tonnes 474,700 425,533 873,844
Internal consumption Tonnes 451,524 408,527 833,803
External Tonnes 23,176 17,006 40,041
Softwood pulp Tonnes 935,783 845,093 1,773,265
Internal consumption Tonnes 856,279 746,122 1,568,189
External Tonnes 79,504 98,971 205,076
Corrugated board and
boxes Mm² 713 924 1,697
Industrial bags M units 1,858 1,655 3,303
Coating and release
liners Mm² 1,601 1,258 2,672
Newsprint Tonnes 98,051 99,390 194,564
South Africa
Uncoated fine paper Tonnes 152,663 179,325 353,707
Containerboard Tonnes 128,830 120,989 238,915
Hardwood pulp Tonnes 287,417 305,763 578,032
Internal consumption Tonnes 162,785 204,476 407,641
External Tonnes 124,632 101,287 170,391
Softwood pulp Tonnes 56,885 55,394 109,142
Woodchips Bone dry
tonnes 129,516 197,436 273,526
Mondi Packaging South
Africa
Packaging papers Tonnes 197,023 177,796 367,741
Corrugated board and
boxes Mm² 185 177 369
Newsprint Joint Ventures
(attributable share)
Aylesford Tonnes 92,575 96,262 191,035
Mondi Shanduka Newsprint
(MSN) Tonnes 64,976 62,221 121,701
Note:
Comparative figures have been restated where necessary to afford a better
comparison.
Exchange rates
Six months ended Six months ended Year ended 31
30 June 2010 30 June 2009 December 2009
Closing rates against the
euro
South African rand 9.38 10.89 10.67
Pounds sterling 0.82 0.85 0.89
Polish zloty 4.15 4.45 4.10
Russian rouble 38.28 43.88 43.15
US dollar 1.23 1.41 1.44
Czech koruna 25.69 25.88 26.47
Average rates for the period
against the euro
South African rand 9.99 12.25 11.68
Pounds sterling 0.87 0.89 0.89
Polish zloty 4.00 4.47 4.33
Russian rouble 39.88 44.08 44.12
US dollar 1.33 1.33 1.39
Czech koruna 25.72 27.13 26.44