Half-yearly Report

Mondi Limited (Incorporated in the Republic of South Africa) (Registration number: 1967/013038/06) JSE share code: MND ISIN: ZAE000156550 Mondi plc (Incorporated in England and Wales) (Registered number: 6209386) JSE share code: MNP ISIN: GB00B1CRLC47 LSE share code: MNDI 8 August 2013 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 2013 Financial highlights * Underlying operating profit of €366 million, up 35% * Underlying earnings of 49.4 euro cents per share, up 60% * Cash generated from operations of €431 million, up 21% * Interim dividend of 9.55 euro cents per share, up 7% * ROCE of 14.8%, well in excess of through-the-cycle hurdle rate of 13% Operational highlights * Integration of acquisitions and related synergy targets on track * Major capital projects on time and within budget Financial summary € million, except for percentages and per share Six months Six months Six months measures ended 30 ended 30 ended 31 June 2013 June 2012 December (Restated) 2012 4 (Restated) 4 Group revenue 3,342 2,819 2,971 Underlying EBITDA1 554 437 490 Underlying operating profit1 366 272 302 Underlying profit before tax1 310 216 243 Operating profit 285 272 275 Profit before tax 229 222 146 Per share measures Basic underlying earnings per share (€ cents) 49.4 30.9 38.3 Basic earnings per share (€ cents) 35.3 31.7 18.4 Interim dividend per share (€ cents) 9.55 8.90 Free cash flow per share2 (€ cents) 14.7 10.3 42.4 Cash generated from operations 431 355 494 Net debt 1,844 1,257 1,872 Group Return on Capital Employed (ROCE)3 (%) 14.8 13.4 13.6 Notes: 1 The Group presents underlying EBITDA, operating profit and profit before tax as measures which exclude special items in order to provide a more effective comparison of the underlying financial performance between reporting periods. 2 Free cash flow per share is net increase in cash and cash equivalents before the effects of acquisitions and disposals of businesses and changes in net debt and dividends paid divided by the net number of shares in issue at the end of the reporting period. 3 ROCE is the 12 month rolling average underlying operating profit expressed as a percentage of the average rolling 12 month capital employed, adjusted for impairments and spend on strategic projects which are not yet in operation. 4 The Group has restated comparative information following the adoption of revised IFRS standards relating to consolidations, joint ventures and employee benefits. Full details of the restatements are set out in note 2 of the half-yearly financial statements. David Hathorn, Mondi Group chief executive, said: "A strong operating performance and benefits derived from our strategic acquisitions completed towards the end of the previous year have enabled Mondi to deliver record financial results despite what remains a challenging economic backdrop. The strong profitability and relentless focus on performance is reflected in a return on capital employed of 14.8%, which remains well above our through-the-cycle hurdle rate of 13%. A focus over the past six months has been on integrating and optimising the significant acquisitions made towards the end of 2012 and executing the major expansion projects initiated over the past eighteen months. I am pleased to report that we continue to make good progress in this regard. The Group's major expansion projects are progressing according to plan and remain within budget. Some of the synergies identified at the time of the acquisitions have already been achieved, and we remain on track to meet the previously announced synergy targets. Just as important, we have made good progress in aligning organisational culture, which sets the platform for the future success of the combined business. Looking forward, new industry capacity in the uncoated fine paper segment, coupled with prevailing demand softness in Europe, may impact the supply/demand balance in the short term. Furthermore, the second half will be impacted by the Group's regular annual mill maintenance programmes.However, with the momentum from the strong first half performance and the expected continuation of a good pricing environment in the packaging grades, management remains confident of delivering in line with its expectations." Contact details Mondi Group David Hathorn +27 11 994 5418 Andrew King +27 11 994 5415 Lora Rossler +27 83 627 0292 Kerry Crandon +27 83 389 3738 FTI Consulting Richard Mountain +44 20 7269 7186 Sophie McMillan +44 20 7909 684 466 Lerato Matsaneng +27 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 0808 162 4061 (toll-free) Europe & Other +800 246 78 700 (toll-free) or +27 11 535 3600 An online audio cast facility will be available via: www.mondigroup.com/ HYResults13. The presentation will be available online via the above website address an hour before the audio cast commences. Questions can be submitted via the dial-in conference call or by e-mail via the audio cast. Should you have any issues on the day with accessing the dial-in conference call, please call +27 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 8 August 2013. Capital Markets Day On 2 September 2013 Mondi will host a Capital Markets Day for investors and analysts in London, where executive directors David Hathorn, Andrew King and Peter Oswald, together with other key senior management, including business unit heads and innovation managers, will share insights into the Mondi business. Editors' notes Mondi is an international packaging and paper Group, with production operations across 30 countries and revenue of €5.8 billion in 2012. The Group's key operations are located in central Europe, Russia and South Africa and as at the end of 2012, Mondi Group employed 25,700 people. Mondi Group is fully integrated across the paper and packaging process, from the growing of wood and the manufacture of pulp and paper (packaging paper and uncoated fine paper), to the conversion of packaging paper into corrugated packaging, industrial bags, extrusion coatings and release liner. Mondi is also a supplier of innovative consumer packaging solutions, advanced films and hygiene products components. Mondi Group has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker code MND and a premium listing on the London Stock Exchange for Mondi plc, under the ticker code MNDI. The Group has been recognised for its sustainability through its inclusion in the FTSE4Good Global, European and UK Index Series (since 2008) and the JSE's Socially Responsible Investment (SRI) Index since 2007. The Group was also included in the Carbon Disclosure Project's (CDP) FTSE350 Carbon Disclosure Leadership Index for the third year and in CDP's FTSE350 Carbon Performance Leadership Index for the first time in 2012. 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'. 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. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group's auditors. Group performance review The positive momentum from the end of the previous year, with good sales volumes and reasonable price levels in Europe, continued into the first half of the year. The Group's underlying operating profit of €366 million, a record result for the Group, was 21% above that of the second half of 2012 and 35% above that of the comparable prior year period. This reflects both the strong operating performance and reasonable trading environment, particularly in Packaging Paper and the South Africa Division, and the benefit of the Group's strategic acquisitions completed in the latter part of the previous year. Excluding the impact of the major strategic acquisitions, underlying operating profit increased by 12% compared to the second half of 2012 and 24% on the comparable prior year period. The period under review also benefited from the absence of any major mill maintenance shuts. Compared to the first half of 2012, sales volumes increased across all major paper grades. While European demand remains generally sluggish, this was compensated by market share gains, and in the case of kraft paper, strong gains in export markets. A reasonable industry supply/demand dynamic, supported by some supply side rationalisation, enabled the Group to maintain or increase selling prices in most key paper grades during the period. The Group's annual major maintenance shuts will all take place in the second half of the year, the impact of which, at prevailing profit margins, is estimated to be in the range of €50 million to €60 million on underlying operating profit when compared to the first half of the year. At the underlying earnings per share level, in addition to the strong underlying operating profit, the Group benefited from a lower effective tax rate and a lower non-controlling interest charge, the latter positively impacted by the acquisition of the remaining minority interest in Mondi Swiecie in the first half of 2012. Underlying earnings per share in the six months ended 30 June 2013 was 49.4 euro cents per share, a 60% increase on the comparable prior year period and 29% better than that achieved in the second half of 2012. The Group remains strongly cash generative with cash generated from operations of €431 million. Working capital as a percentage of turnover was 13%, reflecting the normal seasonal pick-up in the first half of the year as well as the changing business mix following the acquisition of Nordenia in the fourth quarter of 2012. Capital expenditure of €167 million represents 89% of the Group's depreciation charge. Good progress is being made on the major strategic projects, which should see the rate of capital expenditure increase in the second half as planned. Net debt of €1,844 million at 30 June 2013 decreased from €1,872 million at 31 December 2012. The bias of the Group's financing related outflows towards the first half, coupled with the increase in working capital levels negatively impacted net debt. This was offset by exchange gains of around €41 million from the devaluation of certain currencies in which the Group's net debt is held, most notably the South African rand and Russian rouble. An interim dividend of 9.55 euro cents per share, up 7% on the prior year interim dividend of 8.90 euro cents per share, has been declared. Europe & International - Packaging Paper € million, unless otherwise stated Six Six Six months months months ended 30 ended 30 ended 31 June June December 2013 2012 2012 Segment revenue 1,043 960 936 - of which inter-segment revenue 267 249 220 EBITDA 195 150 171 Underlying operating profit 148 104 123 Capital expenditure 55 34 55 Net segment assets 1,441 1,373 1,466 ROCE % 20.1 18.5 17.9 Packaging Paper benefited from increased sales volumes and higher average selling prices compared to both the comparable prior year period, and the previous six months. These positive trading conditions resulted in an underlying operating profit of €148 million, 42% above the comparable prior year period, delivering a very strong ROCE of 20.1%. Sales volumes increased for all grades despite a generally soft demand environment in Europe. The business benefited from market share gains and good demand in export markets for kraft paper. Selling price increases were achieved across all containerboard grades during the second quarter. In recycled containerboard, increased competitor capacity in Poland has to date only had a muted effect on markets, while the recently announced capacity closures in the UK have served to improve market fundamentals. Nonetheless, industry profitability in the recycled containerboard grades remains unsatisfactory. During July, the Group announced price increases of €50/tonne for recycled containerboard, to take effect from August 2013. In kraft paper, the pricing environment remained stable, with Europe remaining under pressure but offset by continued good export markets. Except for paper for recycling costs, which were lower than the comparable prior year period, input costs per tonne were largely unchanged. Average benchmark paper for recycling costs were 4% higher than the second half of the previous year. Synergy benefits, in the form of reduced transport and logistics costs from the acquisition of the corrugated box plants in Germany and the Czech Republic in the latter half of 2012, were realised during the period. Production and productivity were strong in all mills, with the white-top kraftliner mill in Syktyvkar showing a notable improvement. The market price of green energy credits in Poland remained below prevailing levels of the previous year as a consequence of ongoing uncertainty created by proposed changes to the regulatory environment surrounding renewable energy in Poland. As previously reported, the carrying value of green energy credits was written down by €11 million in the first quarter of the year. In addition, the benefits from green energy credits in Poland in the first half of 2013 were more than 50% lower than the comparable prior year period. Europe & International - Fibre Packaging € million, unless otherwise stated Six Six Six months months months ended 30 ended 30 ended 31 June June December 2013 2012 2012 Segment revenue 1,002 946 914 - of which inter-segment revenue 17 19 23 EBITDA 83 80 88 Underlying operating profit 48 47 54 Capital expenditure 35 28 48 Net segment assets 982 916 958 ROCE % 12.0 10.9 12.5 Underlying operating profit of €48 million was in line with the comparable prior year period, but below that of the second half of the previous year as the business was impacted by higher input costs, primarily due to rising paper prices. The acquisition of the corrugated box plants in Germany and the Czech Republic in the last quarter of 2012 contributed positively to underlying operating profit in the corrugated business. However, paper input price increases put pressure on margins, offsetting in large part the gains from the acquisitions. Industrial bags benefited from good demand from the US and Middle East, offsetting reduced sales volumes in central and western Europe. Margins were at similar levels to the comparable prior year period, supported by strong cost reduction initiatives. Weak demand, particularly for automotive and building applications, and increasing raw material costs, coupled with increased competitor capacity have impacted on margins in the coatings business. Europe & International - Consumer Packaging € million, unless otherwise stated Six Six Six months months months ended 30 ended 30 ended 31 June June December 2013 2012 2012 Segment revenue 582 150 352 - of which inter-segment revenue 2 1 3 EBITDA 66 15 30 Underlying operating profit 39 10 9 Capital expenditure 24 7 21 Net segment assets 875 145 872 ROCE % - adjusted* 10.1 14.6 10.8 * Adjusted to exclude €14 million of one-off costs in the second half of 2012 relating to the acquisition of Nordenia Consumer Packaging generated underlying operating profit of €39 million with an adjusted ROCE of 10.1%. The significant increase in underlying operating profit versus both the comparable prior year period and the second half of the previous year is due to the acquisition of Nordenia, completed on 1 October 2012. The comparability of the results for the second half of 2012 were further impacted by one-off effects associated with the acquisition of €14 million. On a pro-forma basis, assuming Nordenia was acquired at the beginning of 2012, and excluding the effects of acquisition accounting, the underlying operating profit of the combined business increased by around 11% versus the comparable prior year period. Sales volumes were marginally down on the comparable prior year period, driven by weakness in the films business. This was more than compensated by the delivery of net synergy gains and other cost reduction initiatives. Integration activities remain well on track, with delivery of synergies in line with expectations. The previously announced closure of the Lindlar operation in Germany and resulting transfer of production to plants in Germany, Hungary and the Czech Republic is progressing according to plan. Europe & International - Uncoated Fine Paper € million, unless otherwise stated Six Six Six months months months ended 30 ended 30 ended 31 June June December 2013 2012 2012 Segment revenue 740 749 717 - of which inter-segment revenue 8 8 5 EBITDA 157 154 146 Underlying operating profit 102 100 91 Capital expenditure 36 24 34 Net segment assets 1,176 1,270 1,248 ROCE % 17.4 15.7 16.7 Uncoated Fine Paper generated underlying operating profit of €102 million, marginally above the comparable prior year period. Sales volumes were slightly above that of the comparable prior year period, mainly due to the timing of the annual maintenance shut in Syktyvkar which took place in June of the previous year and will take place in the third quarter of 2013. Average net selling prices were lower than the comparable prior year period and the second half of the previous year. The stronger Russian rouble in the early part of the year resulted in increased competition from importers, impacting margins in that region. This was partly compensated by further cost reduction initiatives. Sales volumes into western Europe continue to be affected by the structural decline in those markets whilst central and eastern Europe remain largely unchanged. Sales volumes into Russia and overseas markets increased. To date there has been little market impact from the new capacity coming on stream from competitors in Russia and France. In May 2013, Mondi announced plans to restructure the non-integrated Neusiedler operation to improve the competitiveness of the mill. Negotiations with employee unions are currently in progress. An impairment charge of €42 million and related restructuring costs of €8 million were recognised as a special item in the period. Input costs remain well controlled. Unit wood costs at both the Syktyvkar and Ruzomberok mills decreased, with the benefits from improved forestry management practices at Syktyvkar offsetting inflationary cost pressures. Higher pulp prices negatively impacted margins at the non-integrated Neusiedler mill. Fixed cost increases continue to be well controlled with increases below inflation. South Africa Division € million, unless otherwise stated Six Six Six months months months ended 30 ended 30 ended 31 June June December 2013 2012 2012 (restated)(restated) Segment revenue 325 348 354 - of which inter-segment revenue 56 57 51 EBITDA 67 56 69 Underlying operating profit 44 29 40 Capital expenditure 14 17 26 Net segment assets 687 903 821 ROCE % 12.8 9.1 9.6 Comparative information has been restated with Mondi Shanduka Newsprint now consolidated as a subsidiary for all periods presented. South Africa Division delivered a strong performance, with underlying operating profit of €44 million, a 52% increase on the comparable prior year period, and ROCE of 12.8%. This reflects the impact of higher domestic selling prices, good domestic containerboard volume growth, and improved export margins due to the weaker South African rand coupled with higher average export pulp and containerboard prices. South Africa Division continues to focus on cost containment, in particular on reducing forestry costs through increased mechanisation in the current year. Comparison with the previous six months is distorted by a large fair value gain on the revaluation of forestry assets of €27 million recognised in the six months to end 2012. The comparable amount for the first half of 2013 was €10 million. In May 2013, Mondi announced the proposed closure of one of the two newsprint machines located in Merebank. The machine stopped production with effect from 1 July 2013. The business will continue to operate the remaining 120,000 tonne per annum newsprint machine. Further restructuring activities in the Merebank mill as a result of the closure of the newsprint machine were also implemented. In total, a special item charge of €18 million was recognised. Financial review Input costs Wood costs were, on average, lower than the comparable prior period and reflect a steady downward trend over the last three half-year periods. Average benchmark hardwood pulp prices increased by 7% from the comparable prior year period and by 1% over the second half of 2012, largely as a consequence of price increases in the second quarter. Softwood pulp prices increased by 3% over the second half of 2012, but remained 1% below the average in the comparable prior year period. Average benchmark paper for recycling prices were 15% lower than the comparable prior year period but 4% higher than the prices of the second half of 2012. The average benchmark low density polyethylene price, an indicator of the key raw material input cost in Consumer Packaging, was at similar levels to the comparable prior year period and 1% above that of the second half of 2012. Average prices decreased by approximately 6% in the second quarter from the levels experienced at the beginning of the year. Currencies With the exception of the South African rand, the currencies in which the Group operates continue to trade within a relatively narrow range and the impact on underlying operating profit remains muted. The South African rand weakened by a further 12% against the euro from the average rate in the second half of the prior year and has weakened by more than 25% from levels at June 2012. This devaluation provided a net benefit to the Group due to South Africa Division's large export position (accounting for approximately 40% of sales) and predominantly rand-denominated cost base. Non-controlling interests The reduction in earnings attributable to non-controlling interests is largely as a result of the acquisition of the remaining minority interest in Mondi Swiecie in the second quarter of 2012, offset in part by higher net earnings at the 51% owned Ruzomberok mill. Tax The Group's underlying effective tax rate of 18% is lower than the comparable prior year period primarily due to a favourable underlying profit mix as well as the continued benefit of investment incentives in eastern Europe, principally in Poland. Special items The net special item charge of €81 million before tax, the cash component of which amounts to €26 million, is attributable to: * the closure of Consumer Packaging's Lindlar operation in Germany (€13 million) * the closure of the newsprint machine in Merebank, South Africa and related restructuring activities (€18 million), and * impairment of Uncoated Fine Paper's Neusiedler mill and related restructuring costs (€50 million) Cash flow Cash generated from operations of €431 million, including the impact of the increase in working capital of €129 million, reflects the continued strong cash generating capacity of the Group. Net cash outflows from financing activities of €178 million include the payment of dividends to holders of non-controlling interests, the payment of the final 2012 dividend in May 2013 and payment of the 5.75% coupon on the €500 million Eurobond, reflecting the bias of financing activities towards the first half of the year. Capital expenditure Capital expenditure for the period amounted to €167 million, 89% of depreciation. The energy investments in the Group's Frantschach, Richards Bay and Stambolijski mills are progressing in line with expectations and are expected to be completed towards the end of the second half of the year. These projects will significantly improve the energy efficiency and self-sufficiency at those mills. Good progress is being made on the other major projects announced earlier in the year, with the bleached kraft paper machine in Steti expected to start up in the first half of 2014 and the recovery boiler in Ruzomberok in the latter part of 2014. The Group's capital expenditure is expected to remain around the previously envisaged range of approximately 125% of depreciation on average over the 2013/ 2014 period, with 2014 being the peak spend year. Treasury and borrowings Net debt at 30 June 2013 was €1,844 million, a decrease of €28 million from 31 December 2012. The net debt to 12 month trailing EBITDA ratio was 1.8 times and gearing at 30 June 2013 was 40%. At the end of June 2013, the €100 million European Investment Bank facility put in place in December 2011 was fully drawn down. The amortising loan matures in 2025 and incurs interest based on Euribor. The South African bilateral facilities that matured in the first half of 2013 have been extended for an additional year on similar terms. At 30 June 2013, the Group had €2.6 billion of committed facilities of which €743 million were undrawn. The weighted average maturity of the Eurobonds and committed debt facilities was 4.0 years at 30 June 2013. The Group's long-term investment grade credit ratings of Baa3 (Moody's Investor Services) and BBB- (Standard and Poor's) were reaffirmed during the period. Finance charges of €57 million were similar to those of the comparable prior year notwithstanding the significant increase in average net debt from the levels at 30 June 2012. The lower effective interest rate of 5.5% (first half of 2012: 9.4%) is due to the effect of the €500 million Eurobond issued in October 2012 with a coupon of 3.375% and the unwinding of various fixed rate swaps during 2012. Dividend An interim dividend of 9.55 euro cents per share has been declared by the directors and will be paid on 17 September 2013 to those shareholders on the register of Mondi plc on 23 August 2013. An equivalent South African rand interim dividend will be paid on 17 September 2013 to shareholders on the register of Mondi Limited on 23 August 2013. 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 2012. Outlook New industry capacity in the uncoated fine paper segment, coupled with prevailing demand softness in Europe, may impact the supply/demand balance in the short term. Furthermore, the second half will be impacted by the Group's regular annual mill maintenance programmes. However, with the momentum from the strong first half performance and the expected continuation of a good pricing environment in the packaging grades, management remains confident of delivering in line with its expectations. Supplementary information Principal risks and uncertainties It is in the nature of Mondi's business that the Group is exposed to risks and uncertainties which may have an impact on future performance and financial results, as well as on its ability to meet certain social and environmental objectives. On an annual basis, the DLC executive committee and Boards conduct a formal systematic review of the most significant risks and uncertainties and the Group's responses to those risks. These risks are assessed against pre-determined risk tolerance limits, established by the Boards. In addition, the DLC audit committee reviews each of the principal risks in detail over the course of the year. Additional risk reviews are undertaken on an ad-hoc basis for significant investment decisions and when changing business conditions dictate. The Boards' risk management framework addresses all significant strategic, sustainability, financial, operational and compliance-related risks which could undermine the Group's ability to achieve its business objectives in a sustainable manner. The risk management framework is designed to be flexible, to ensure that it remains relevant at all levels of the business given the diversity of the Group's locations, markets and production processes; and dynamic, to ensure that it remains current and responsive to changing business conditions. The Group believes that it has effective systems and controls in place to manage the key risks identified below within the risk tolerance levels established by the Boards. Competitive environment in which Mondi operates The industry in which Mondi operates is highly competitive and subject to significant volatility. New capacity additions are usually in large increments which, combined with product substitution towards lighter weight products and alternative packaging solutions and increasing environmental considerations, have an impact on the supply/demand balance and hence on market prices. Mondi monitors industry developments in terms of changes in capacity as well as trends and developments in its own product range and potential substitutes. A flexible and responsive approach to market and operating conditions and the Group's strategic focus on low-cost production in growing markets, with consistent investment in its operating capacity serve to mitigate this risk. In 2012, the acquisitions of Nordenia and the corrugated packaging plants in Germany and the Czech Republic, as well as the disposal of Aylesford Newsprint, further position the Group in its selected strategic growth areas. Cost and availability of a sustainable supply of raw materials Fibre (wood, pulp and paper for recycling) and resins account for approximately one-third of the Group's input costs. It is the Group's objective to acquire fibre from sustainable sources and to avoid the use of any illegal or controversial supply. All plantations in South Africa and leased/managed forests in Russia are FSC™ certified. With the exception of Stambolijski, Bulgaria, all mills have chain-of-custody certificates in place, ensuring that the wood procured in 2012 was from non-controversial sources. Stambolijski will be certified to FSC™ chain-of-custody standards in 2013 and currently wood supplies meet Mondi's minimum wood standards that ensure legality and non-controversial wood sources. Mondi constantly monitors international market prices for its other raw materials (paper for recycling and resins) and, where possible, has cost pass-through mechanisms in place with customers to mitigate the risk of input cost increases. The Group's focus on high-quality, low-cost operations, relatively high levels of integration and access to its own fibre in Russia and South Africa further mitigate this risk. Cost of energy and related input costs Non-fibre input costs comprise approximately a third of the Group's total variable costs. Increasing energy costs, and the consequential impact thereof on both chemical and transport costs, may impact the Group's operating profit margins. Active investment in energy-related projects have significantly improved energy self-sufficiency and efficiency in the Group. Capital intensive operations Mondi operates large facilities, often in remote locations. The ongoing safety and sustainable operation of such sites is critical to the success of the Group. Mondi's management system ensures ongoing monitoring of all operations to ensure they meet the requisite standards and performance requirements. The Group has adequate insurance in place to cover material property damage, business interruption and liability risks. A structured maintenance programme is in place under the auspices of the Group technical director. Emergency preparedness and response procedures are in place and subject to periodic drills. The locations in which the Group operates Mondi operates in a number of countries with differing political, economic and legal systems. In some countries, such systems are less predictable than in countries with more developed institutional structures. In addition, economic risks in certain regions are heightened following the macroeconomic uncertainties experienced in recent years. Mondi is invested in a number of geographical locations, with a strategic focus on low-cost high-growth markets. This geographical diversity and decentralised management structure, utilising local resources in countries in which the Group operates reduces its exposure to any specific jurisdiction. Mondi continues to actively monitor and adapt to changes in the environments in which it operates. Attraction and retention of key skills and talent The complexity of operations and geographic diversity of the Group is such that high-quality, experienced employees are required in all locations. Appropriate reward and retention strategies are in place to attract and retain talent across the organisation. At more senior levels, these include a share-based incentive scheme. Employee and contractor safety Mondi's employees work in potentially dangerous environments where hazards are ever-present and must be managed. Mondi's objective is a zero harm environment. The Group engages in extensive safety training sessions, involving employees and contractors, at all its operations. The Nine Safety Rules to Live By, applied across the Group, are integral to the safety strategy. Operations conduct statutory safety committee meetings where management and employees are represented. A risk-based approach underpins safety and health programmes. All business units and operations are required to have safety improvement plans in place. Mondi's Total Recordable Case Rate (TRCR per 200,000 hours worked) at 30 June 2013 was 0.76 (31 December 2012: 0.79). Regrettably, there were two fatalities at our Syktyvkar operations in the first half of the year. Environmental footprint Maintaining the Group's socio-economic licence to trade is a strategic imperative. This encompasses continued access to credible sources of fibre as described above, protection of High Conservation Value (HCV) areas and bio-diversity, eco-efficiency of products throughout their life cycle and the Group's carbon and energy footprint. Mondi's approach to product stewardship is based on the Life-Cycle Initiative set out in the United Nations Environmental Programme (UNEP). The Group's certified products carry clear and informative labelling to ensure that its customers are aware of the environmental process controls and health and safety assessments conducted throughout the life cycles of Mondi's products. In 2012, no incidents of non-compliance relating to the regulation and voluntary codes, to which the Group subscribes, concerning product and service information and labelling were recorded. Mondi does not convert natural forests, riparian areas, wetlands or protected areas into plantations. HCV areas are identified and preserved or enhanced, as is biological diversity. In Russia 522,260 hectares have been set aside for conservation (24.8% of our landholding) and 76,398 hectares in South Africa (25% of our landholding). Mondi uses biomass energy sources such as black liquor as an alternative to fossil fuels at all of its mills. Some 58% of Mondi's fuel consumption comes from biomass and a number of operations are completely energy self-sufficient. Governance risks The Group operates in a number of legal jurisdictions and non-compliance with legal and governance requirements in these jurisdictions could expose the Group to significant risk if not adequately managed. The Group's legal and governance risk management and compliance were set out in the Corporate governance report in the integrated report and financial statements 2012. Financial risks Mondi's trading and financing activities expose the Group to financial risks that, if left unmanaged, could adversely impact current or future earnings. These risks relate to the currencies in which the Group conducts its activities, interest rate and liquidity risks as well as exposure to customer credit risk. Mondi's approach to financial risk management is described in notes 37 and 38 of the annual financial statements for the year ended 31 December 2012. Going concern The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the financial statements. Mondi's geographical spread, product diversity and large customer base mitigate potential risks of customer or supplier liquidity issues. Ongoing initiatives by management in implementing profit improvement initiatives which include plant optimisation, cost-cutting, and restructuring and rationalisation activities have consolidated the Group's leading cost position in its chosen markets. Working capital levels and capital expenditure programmes are strictly monitored and controlled. The Group meets its funding requirements from a variety of sources. The availability of some of these facilities is dependent on the Group meeting certain financial covenants, all of which have been complied with. Mondi had €743 million of undrawn committed debt facilities as at 30 June 2013 which should provide sufficient liquidity in the medium term. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, including an assessment of the current macroeconomic environment, particularly in Europe, indicate that the Group should be able to operate well within the level of its current facilities and related covenants. The directors have reviewed the Group's strategy and latest financial forecasts, considered the assumptions in the forecast and reviewed the critical risks which may impact the Group's performance. After making such enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the going concern basis continues to be adopted in preparing the half-yearly financial statements. 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 2013 and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2013; * there have been no significant individual related party transactions during the first six months of the financial year; * with effect from 3 May 2013, Cyril Ramaphosa ceased to be a director of Mondi Limited and Mondi plc. As a result, all transactions with the Shanduka Group Proprietary Limited, in which Mr Ramaphosa held a 29.6% interest, and its subsidiaries, are no longer classified as related party transactions from that date; and * there have been no other significant changes in the Group's related party relationships. David Hathorn Andrew King Director Director 7 August 2013 Independent auditor's review report on interim financial information of Mondi Limited We have reviewed the accompanying interim financial information of Mondi Limited, comprising the condensed statement of financial position as of 30 June 2013 and the condensed statement of comprehensive income, condensed statement of changes in equity, condensed statement of cash flows and selected explanatory notes for the six months then ended. Directors' responsibility for the Interim Financial Statements The directors are responsible for the preparation and presentation of this interim financial information in accordance with International Financial Reporting Standard (IAS 34),`Interim Financial Reporting', the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express a conclusion on these interim financial statements based on our review. We conducted our review in accordance with International Standard on Review Engagements (ISRE) 2410, `Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. This standard requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are not prepared in all material respects in accordance with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical requirements. A review of interim financial statements in accordance with this standard 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 and consequently does not enable the auditor to obtain assurance that the auditor would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We believe that the evidence we have obtained in our review is sufficient and appropriate to provide a basis for our conclusion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information of Mondi Limited for the six months ended 30 June 2013 are not prepared, in all material respects, in accordance with International Financial Reporting Standards (IAS 34),'Interim Financial Reporting', the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements of the Companies Act of South Africa. Deloitte & Touche Registered Auditor Per: Bronwyn Kilpatrick Partner 7 August 2013 Buildings 1 and 2, Deloitte Place, The Woodlands, Woodlands Drive, Woodmead, Sandton, Republic of South Africa National Executive: LL Bam Chief Executive AE Swiegers Chief Operating Officer GM Pinnock Audit DL Kennedy Risk Advisory NB Kader Tax TP Pillay Consulting K Black Clients & Industries JK Mazzocco Talent & Transformation CR Beukman Finance M Jordan Strategy S Gwala Special Projects TJ Brown Chairman of the Board MJ Comber Deputy Chairman of the Board. A full list of partners and directors is available on request. B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code Member of Deloitte Touche Tohmatsu Limited Independent review report to Mondi plc We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013, 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 the related notes 1 to 22. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410,'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34,`Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 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 Conduct Authority. Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 7 August 2013 Condensed combined and consolidated income statement for the six months ended 30 June 2013 (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months ended Six months ended Year ended 30 June 2013 30 June 2012 31 December 2012 € million Notes Before Special After Before Special After Before Special After special items special special items special special items special items (note 6) items items (note 6) items items (note 6) items Group revenue 4 3,342 - 3,342 2,819 - 2,819 5,790 - 5,790 Materials, (1,758) - (1,758) (1,478) - (1,478) (3,024) - (3,024) energy and consumables used Variable (282) - (282) (266) - (266) (527) - (527) selling expenses Gross margin 1,302 - 1,302 1,075 - 1,075 2,239 - 2,239 Maintenance and (122) - (122) (123) - (123) (279) - (279) other indirect expenses Personnel costs (484) (16) (500) (409) - (409) (834) (16) (850) Other net (142) (10) (152) (106) - (106) (199) (10) (209) operating expenses Depreciation, (188) (55) (243) (165) - (165) (353) (1) (354) amortisation and impairments Operating 4;5 366 (81) 285 272 - 272 574 (27) 547 profit/(loss) Non-operating 6 - - - - 6 6 - (64) (64) special items Net income/ 1 - 1 (1) - (1) (5) - (5) (loss) from associates Total profit/ 367 (81) 286 271 6 277 569 (91) 478 (loss) from operations and associates Net finance (57) - (57) (55) - (55) (110) - (110) costs Investment 2 - 2 - - - 4 - 4 income Foreign (1) - (1) (3) - (3) (2) - (2) currency losses Finance costs 7 (58) - (58) (52) - (52) (112) - (112) Profit/(loss) 310 (81) 229 216 6 222 459 (91) 368 before tax Tax (charge)/ 8 (56) 13 (43) (43) (2) (45) (90) (1) (91) credit Profit/(loss) 254 (68) 186 173 4 177 369 (92) 277 for the financial period Attributable to: Non-controlling 15 24 35 interests Equity holders 171 153 242 of the parent companies Earnings per share (EPS) for profit attributable to equity holders of the parent companies Basic EPS (€ 9 35.3 31.7 50.1 cents) Diluted EPS (€ 9 35.3 31.6 49.9 cents) Basic 9 49.4 30.9 69.2 underlying EPS (€ cents) Diluted 9 49.3 30.8 68.9 underlying EPS (€ cents) Basic headline 9 45.7 30.9 62.9 EPS (€ cents) Diluted 9 45.6 30.8 62.7 headline EPS (€ cents) Condensed combined and consolidated statement of comprehensive income for the six months ended 30 June 2013 € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Profit for the financial period 186 177 277 Other comprehensive (expense)/income: Items that may subsequently be reclassified to the combined and consolidated income statement: Effect of cash flow hedges - 3 2 Gains on available-for-sale investments - - 1 Exchange differences on translation of foreign (145) 48 49 operations Share of other comprehensive income of (1) - - associates Tax effect thereof - - - Items that will not subsequently be reclassified to the combined and consolidated income statement: Remeasurement of post-retirement benefit schemes 18 (35) (61) Effect of asset ceiling on post-retirement (1) 24 28 benefit schemes Tax effect thereof (4) - 8 Other comprehensive (expense)/income for the (133) 40 27 financial period, net of tax Total comprehensive income for the financial 53 217 304 period Attributable to: Non-controlling interests 9 35 42 Equity holders of the parent companies 44 182 262 Condensed combined and consolidated statement of financial position as at 30 June 2013 € million Notes (Restated) (Restated) (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Intangible assets 684 243 695 Property, plant and equipment 3,446 3,431 3,709 Forestry assets 11 257 318 311 Investments in associates 6 18 6 Financial asset investments 25 24 26 Deferred tax assets 8 5 10 Retirement benefits surplus 12 2 6 - Derivative financial instruments - 2 - Total non-current assets 4,428 4,047 4,757 Inventories 767 663 783 Trade and other receivables 1,112 927 1,010 Current tax assets 17 5 10 Financial asset investments 1 - 1 Cash and cash equivalents 17b 84 60 56 Derivative financial instruments 9 5 4 Assets held for sale - - 2 Total current assets 1,990 1,660 1,866 Total assets 6,418 5,707 6,623 Short-term borrowings 17b-c (265) (294) (281) Trade and other payables (1,008) (874) (1,029) Current tax liabilities (69) (81) (66) Provisions (75) (34) (67) Derivative financial instruments (4) (5) (4) Total current liabilities (1,421) (1,288) (1,447) Medium and long-term borrowings 17c (1,664) (1,023) (1,648) Retirement benefits obligation 12 (225) (217) (253) Deferred tax liabilities (291) (319) (344) Provisions (33) (29) (33) Derivative financial instruments (1) (1) (1) Other non-current liabilities (19) (19) (24) Total non-current liabilities (2,233) (1,608) (2,303) Total liabilities (3,654) (2,896) (3,750) Net assets 2,764 2,811 2,873 Equity Share capital and stated capital 542 542 542 Retained earnings and other reserves 1,963 1,973 2,030 Total attributable to equity holders of 2,505 2,515 2,572 the parent companies Non-controlling interests in equity 259 296 301 Total equity 2,764 2,811 2,873 Condensed combined and consolidated statement of financial position as at 30 June 2013 (continued) The Group's condensed combined and consolidated financial statements, and related notes 1 to 22, were approved by the Boards and authorised for issue on 7 August 2013 and were signed on its behalf by: David Hathorn Andrew King Director Director Mondi Limited company registration number: 1967/013038/06 Mondi plc company registered number: 6209386 Condensed combined and consolidated statement of cash flows for the six months ended 30 June 2013 € million Notes (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Cash generated from operations 17a 431 355 849 Dividends from associates - - 1 Dividends from other investments - - 1 Income tax paid (75) (45) (109) Net cash generated from operating 356 310 742 activities Cash flows from investing activities Investment in property, plant and (164) (110) (294) equipment Investment in intangible assets (3) (3) (9) Investment in forestry assets (20) (30) (51) Investment in financial asset investments (4) (4) (7) Proceeds from the disposal of property, 21 5 15 plant and equipment and intangible assets Proceeds from the disposal of financial 4 4 4 asset investments Acquisition of subsidiaries, net of cash 14 - (34) (381) and cash equivalents Investment in associates - - (43) Proceeds from the disposal of businesses, 3 1 1 net of cash and cash equivalents Loan (advances to)/repayments from related - (3) 1 parties Loan repayments from external parties - - 16 Interest received 2 1 3 Other investing activities - - (1) Net cash used in investing activities (161) (173) (746) Cash flows from financing activities Repayment of short-term borrowings 17c (19) (59) (114) Proceeds from medium and long-term 17c 108 291 613 borrowings Repayment of medium and long-term 17c (52) (51) (65) borrowings Interest paid (68) (59) (92) Dividends paid to equity holders of the 10 (92) (85) (128) parent companies Purchases of treasury shares (23) (34) (34) Dividends paid to non-controlling 10 (50) (29) (29) interests Non-controlling interests bought out 13 (2) (296) (298) Net realised gain/(loss) on held for 16 2 (9) trading derivatives Government grants received 2 - - Other financing activities 2 - - Net cash used in financing activities (178) (320) (156) Net increase/(decrease) in cash and cash 17 (183) (160) equivalents Cash and cash equivalents at beginning of 17c (37) 119 119 financial period1 Cash movement in the financial period 17c 17 (183) (160) Effects of changes in foreign exchange 17c 11 (1) 4 rates Cash and cash equivalents at end of (9) (65) (37) financial period1 Note: 1 Cash and cash equivalents include overdrafts and cash flows from disposal groups and are reconciled to the condensed combined and consolidated statement of financial position in note 17b. Condensed combined and consolidated statement of changes in equity for the six months ended 30 June 2013 € million Combined Total share attributable capital to equity and holders of Non- stated Retained Other the parent controlling Total capital earnings reserves companies interests equity At 31 December 2011, 542 2,041 3 2,586 449 3,035 as previously reported Effect of restatement - - - - (3) (3) At 1 January 2012 542 2,041 3 2,586 446 3,032 (Restated) Total comprehensive - 153 29 182 35 217 income for the financial period Dividends paid - (85) - (85) (29) (114) Issue of shares under - 9 (9) - - - employee share schemes Purchases of treasury - (34) - (34) - (34) shares Non-controlling - (140) - (140) (156) (296) interests bought out Other - - 6 6 - 6 At 30 June 2012 542 1,944 29 2,515 296 2,811 (Restated) Total comprehensive - 89 (9) 80 7 87 income for the financial period Dividends paid - (43) - (43) - (43) Disposal of businesses - - 15 15 - 15 (see note 16) Non-controlling - (1) - (1) (1) (2) interests bought out Reclassification - (12) 12 - - - Other - 2 4 6 (1) 5 At 31 December 2012 542 1,979 51 2,572 301 2,873 (Restated) Total comprehensive - 171 (127) 44 9 53 income for the financial period Dividends paid - (92) - (92) (50) (142) Issue of shares under - 10 (10) - - - employee share schemes Purchases of treasury - (23) - (23) - (23) shares Non-controlling - (1) - (1) (1) (2) interests bought out Other - - 5 5 - 5 At 30 June 2013 542 2,044 (81) 2,505 259 2,764 Other reserves € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Share-based payment reserve 13 14 18 Cumulative translation adjustment reserve (291) (171) (151) Cash flow hedge reserve - 1 - Post-retirement benefit reserve (56) (66) (69) Merger reserve 259 259 259 Other sundry reserves (6) (8) (6) Group total (81) 29 51 Notes to the condensed combined and consolidated financial statements for the six months ended 30 June 2013 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 2013 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 2012, prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB). There are no differences for the Group in applying IFRS as issued by the IASB and IFRS as adopted by the European Union (EU) and therefore the Group also complies with Article 4 of the EU IAS Regulation. The Group has also complied with the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Reporting Standards Council of South Africa. The condensed combined and consolidated financial statements have been prepared on a going concern basis as discussed in the Group performance review, under the heading `Going concern'. The information for the year ended 31 December 2012 does not constitute statutory accounts as defined by section 434 of the UK Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the UK Companies Act 2006. The condensed combined and consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets. These financial statements have been prepared under the supervision of the Group chief financial officer, Andrew King CA (SA), as required in terms of Section 29(1)(e)(ii) of the Companies Act of South Africa 2008. 2a 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 2012, except as set out below. The Group has adopted the following Standards and amendments to published Standards during the current year, and their impact on the Group's results were as follows: * IFRS 10 - Consolidated Financial Statements * IFRS 11 - Joint Arrangements * IAS 19 (revised) - Employee Benefits IFRS 10 and IFRS 11 broadened the concept of control and eliminated the option of proportionate consolidation for joint ventures, except in certain circumstances. The impact of these Standards has been that Mondi Shanduka Newsprint Proprietary Limited has been consolidated whilst Aylesford Newsprint has been accounted for using the equity method up to the date of sale in 2012. Comparative information has been restated as set out in note 2b. IAS 19 (revised) impacted the measurement of the various components representing movements in the defined benefit pension obligation and associated disclosures. As the Group has always recognised actuarial gains and losses immediately, the Group's total obligation was unchanged. This Standard has been adopted with effect from 1 January 2012 as it was impractical to complete revised actuarial valuations prior to that date. Following the replacement of expected returns on plan assets with a net finance cost in the combined and consolidated income statement, the profit for the period was reduced and accordingly other comprehensive income increased in 2012. Comparative information for the year ended 31 December 2012 has been restated as set out in note 2b. The following Standards and amendments to published Standards which the Group has adopted during the current year, had no significant impact on the Group's results except for the addition of certain disclosures: * IFRS 7 - Financial Instruments: Disclosure * IFRS 13 - Fair Value Measurement * IFRS 12 - Disclosure of Interests in Other Entities * IAS 1 - Presentation of Financial Statements * IAS 16 - Property, Plant and Equipment * IAS 27 - Separate Financial Statements * IAS 28 - Investments in Associates and Joint Ventures * IAS 32 - Financial Instruments: Presentation * IAS 34 - Interim Financial Reporting 2b Restatement of comparative information The following tables summarise the material impacts resulting from the changes in accounting policies on the Group's financial position, comprehensive income and cash flows. Income statement Six months ended 30 June 2012 Year ended 31 December 2012 € million As Effect As Effect previously of As previously of As reported restatement restated reported restatement restated Group revenue 2,840 (21) 2,819 5,807 (17) 5,790 Gross margin 1,076 (1) 1,075 2,235 4 2,239 Operating profit 269 3 272 541 6 547 Non-operating special 6 - 6 (64) - (64) items Net income/(loss) from 1 (2) (1) 1 (6) (5) associates Total profit from 276 1 277 478 - 478 operations and associates Net finance costs (53) (2) (55) (107) (3) (110) Investment income 6 (6) - 10 (6) 4 Foreign currency losses (3) - (3) (2) - (2) Finance costs (56) 4 (52) (115) 3 (112) Profit before tax 223 (1) 222 371 (3) 368 Tax charge (45) - (45) (92) 1 (91) Profit for the 178 (1) 177 279 (2) 277 financial period Attributable to: Non-controlling 25 (1) 24 35 - 35 interests Equity holders of the 153 - 153 244 (2) 242 parent companies The restatement had no impact on special items. Earnings per share As Effect As Effect (EPS) for profit previously of As previously of As attributable to equity reported restatement restated reported restatement restated holders of the parent companies Basic EPS (€ cents) 31.7 - 31.7 50.5 (0.4) 50.1 Diluted EPS (€ cents) 31.6 - 31.6 50.3 (0.4) 49.9 Basic underlying EPS 30.9 - 30.9 69.6 (0.4) 69.2 (€ cents) Diluted underlying EPS 30.8 - 30.8 69.3 (0.4) 68.9 (€ cents) Basic headline EPS (€ 30.9 - 30.9 63.4 (0.5) 62.9 cents) Diluted headline EPS 30.8 - 30.8 63.1 (0.4) 62.7 (€ cents) Statement of comprehensive income Six months ended 30 June 2012 Year ended 31 December 2012 € million As Effect As Effect previously of As previously of As reported restatement restated reported restatement restated Profit for the 178 (1) 177 279 (2) 277 financial period Other comprehensive income/(expense): Items that may 51 - 51 52 - 52 subsequently be reclassified to the combined and consolidated income statement Items that will not (11) - (11) (27) 2 (25) subsequently be reclassified to the combined and consolidated income statement Other comprehensive 40 - 40 25 2 27 income for the financial period, net of tax Total comprehensive 218 (1) 217 304 - 304 income for the financial period Attributable to: Non-controlling 36 (1) 35 42 - 42 interests Equity holders of the 182 - 182 262 - 262 parent companies Statement of financial position As at 30 June 2012 As at 31 December 2012 € million As Effect As Effect previously of As previously of As reported restatement restated reported restatement restated Non-current assets 4,068 (21) 4,047 4,755 2 4,757 Current assets 1,672 (12) 1,660 1,859 7 1,866 Total assets 5,740 (33) 5,707 6,614 9 6,623 Current liabilities (1,323) 35 (1,288) (1,443) (4) (1,447) Non-current liabilities (1,602) (6) (1,608) (2,295) (8) (2,303) Total liabilities (2,925) 29 (2,896) (3,738) (12) (3,750) Net assets 2,815 (4) 2,811 2,876 (3) 2,873 Equity Share capital and 542 - 542 542 - 542 stated capital Retained earnings and 1,973 - 1,973 2,030 - 2,030 other reserves Total attributable to 2,515 - 2,515 2,572 - 2,572 equity holders of the parent companies Non-controlling 300 (4) 296 304 (3) 301 interests in equity Total equity 2,815 (4) 2,811 2,876 (3) 2,873 Net debt (1,273) 16 (1,257) (1,864) (8) (1,872) Statement of cash flows Six months ended 30 June 2012 Year ended 31 December 2012 € million As Effect As Effect previously of As previously of As reported restatement restated reported restatement restated Net cash generated from 308 2 310 740 2 742 operating activities Net cash used in (175) 2 (173) (725) (21) (746) investing activities Net cash used in (314) (6) (320) (173) 17 (156) financing activities Net decrease in cash (181) (2) (183) (158) (2) (160) and cash equivalents Cash and cash 117 2 119 117 2 119 equivalents at beginning of financial period Cash movement in the (181) (2) (183) (158) (2) (160) financial period Effects of changes in (1) - (1) 4 - 4 foreign exchange rates Cash and cash (65) - (65) (37) - (37) equivalents at end of financial period 3 Seasonality The seasonality of the Group's operations has no significant impact on the condensed combined and consolidated financial statements. 4 Operating segments The newsprint joint venture, Mondi Shanduka Newsprint, was incorporated into the South Africa Division during 2012 due to similarities in geographical location, production processes and the integrated nature of the production facilities. Mondi Shanduka Newsprint Proprietary Limited is now consolidated as a subsidiary. The effects of this change on the comparative periods are set out in note 2b. The Group's segmental information for the comparative periods has been restated to reflect this change in accounting policy. Six months ended 30 June 2013 (Reviewed) Europe & International SA Corporate Intersegment Segments Division & other elimination Total € million, unless Uncoated otherwise stated Packaging Fibre Consumer Fine Paper Packaging Packaging Paper Segment revenue 1,043 1,002 582 740 325 - (350) 3,342 Internal revenue (267) (17) (2) (8) (56) - 350 - External revenue 776 985 580 732 269 - - 3,342 EBITDA 195 83 66 157 67 (14) - 554 Operating profit/ 148 48 39 102 44 (15) - 366 (loss) from operations before special items Special items - - (13) (50) (18) - - (81) Operating segment 1,793 1,239 1,018 1,366 810 7 (129) 6,104 assets Operating net 1,441 982 875 1,176 687 7 - 5,168 segment assets Additions to 57 25 25 33 34 - - 174 non-current non-financial assets Capital expenditure 55 35 24 36 14 - - 164 cash payments Operating margin (%) 14.2 4.8 6.7 13.8 13.5 - - 11.0 Return on capital 20.1 12.0 7.8 17.4 12.8 - - 14.8 employed (%) Six months ended 30 June 2012 (Restated) (Reviewed) Europe & International SA Corporate Intersegment Segments Division & other elimination Total € million, unless Uncoated otherwise stated Packaging Fibre Consumer Fine Paper Packaging Packaging Paper Segment revenue 960 946 150 749 348 - (334) 2,819 Internal revenue (249) (19) (1) (8) (57) - 334 - External revenue 711 927 149 741 291 - - 2,819 EBITDA 150 80 15 154 56 (18) - 437 Operating profit/ 104 47 10 100 29 (18) - 272 (loss) from operations before special items Special items - - - - 6 - - 6 Operating segment 1,709 1,207 189 1,469 1,053 7 (170) 5,464 assets Operating net segment 1,373 916 145 1,270 903 9 - 4,616 assets Additions to 125 29 8 21 46 - - 229 non-current non-financial assets Capital expenditure 34 28 7 24 17 - - 110 cash payments Operating margin (%) 10.8 5.0 6.7 13.4 8.3 - - 9.6 Return on capital 18.5 10.9 14.6 15.7 9.1 - - 13.4 employed (%) Year ended 31 (Restated) (Audited) December 2012 Europe & International SA Corporate Intersegment Segments Division & other elimination Total € million, unless Uncoated otherwise stated Packaging Fibre Consumer Fine Paper Packaging Packaging Paper Segment revenue 1,896 1,860 502 1,466 702 - (636) 5,790 Internal revenue (469) (42) (4) (13) (108) - 636 - External revenue 1,427 1,818 498 1,453 594 - - 5,790 EBITDA 321 168 45 300 125 (32) - 927 Operating profit/ 227 101 19 191 69 (33) - 574 (loss) from operations before special items Special items - (16) (11) - 6 (70) - (91) Operating segment 1,829 1,229 1,019 1,450 975 5 (150) 6,357 assets Operating net segment 1,466 958 872 1,248 821 1 - 5,366 assets Additions to 249 144 621 60 93 - - 1,167 non-current non-financial assets Capital expenditure 89 76 28 58 43 - - 294 cash payments Operating margin (%) 12.0 5.4 3.8 13.0 9.8 - - 9.9 Return on capital 17.9 12.5 6.2 16.7 9.6 - - 13.6 employed (%) 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 product type presented below. External revenue by product type € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Products Fibre packaging 963 909 1,785 Packaging paper 766 689 1,393 Uncoated fine paper 669 687 1,355 Consumer packaging 580 149 498 Pulp 133 140 276 Newsprint 97 108 215 Other 134 137 268 Group total 3,342 2,819 5,790 External revenue by location of External revenue by location of customer production € million (Restated) (Restated) (Restated) (Restated) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended Six months Six months Year ended ended ended 31 ended ended 31 30 June 30 June December 30 June 30 June December 2013 2012 2012 2013 2012 2012 Revenue Africa South Africa 217 219 448 325 348 702 Rest of Africa 129 125 242 5 5 8 Africa total 346 344 690 330 353 710 Western Europe Austria 83 75 145 506 526 1,025 Germany 509 378 783 496 171 486 United Kingdom 137 108 230 28 29 53 Rest of western 730 648 1,287 372 349 693 Europe Western Europe total 1,459 1,209 2,445 1,402 1,075 2,257 Emerging Europe Poland 227 175 364 448 382 766 Rest of emerging 457 394 816 595 544 1,086 Europe Emerging Europe total 684 569 1,180 1,043 926 1,852 Russia 314 291 592 389 359 729 North America 181 124 270 143 89 196 South America 29 21 41 - - - Asia and Australia 329 261 572 35 17 46 Group total 3,342 2,819 5,790 3,342 2,819 5,790 There are no external customers which account for more than 10% of the Group's total external revenue. Reconciliation of operating profit before special items € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Operating profit before special items 366 272 574 Special items (see note 6) (81) 6 (91) Net income/(loss) from associates 1 (1) (5) Net finance costs (57) (55) (110) Group profit before tax 229 222 368 Reconciliation of operating segment assets (Restated) (Restated) (Restated) (Restated) (Reviewed) (Reviewed) (Reviewed) (Reviewed) (Audited) (Audited) As at 30 June 2013 As at 30 June 2012 As at 31 December 2012 € million Net Net Net Segment segment Segment segment Segment segment assets assets assets assets assets assets Segments total 6,104 5,168 5,464 4,616 6,357 5,366 Unallocated: Investments in 6 6 18 18 6 6 associates Deferred tax assets/ 8 (283) 5 (314) 10 (334) (liabilities) Other non-operating 190 (308) 136 (276) 167 (319) assets/(liabilities) Group trading 6,308 4,583 5,623 4,044 6,540 4,719 capital employed Financial asset 25 25 24 24 26 26 investments Net debt 85 (1,844) 60 (1,257) 57 (1,872) Group 6,418 2,764 5,707 2,811 6,623 2,873 5 Write-down of inventories to net realisable value € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Condensed combined and consolidated income statement Write-down of inventories to net realisable (12) (9) (19) value Aggregate reversal of previous write-down of 4 3 13 inventories 6 Special items € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Operating special items Asset impairments (55) - (1) Restructuring and closure costs: Restructuring and closure costs excluding (10) - (4) related personnel costs Personnel costs relating to restructuring (16) - (16) Transaction costs incurred on the acquisition of - - (11) Nordenia Gain on insurance settlement - - 5 Total operating special items (81) - (27) Non-operating special items Loss on disposals (see note 16) - - (70) Profit on sale of land - 6 6 Total non-operating special items - 6 (64) Total special items from continuing operations (81) 6 (91) before tax and non-controlling interests Tax 13 (2) (1) Non-controlling interests - - - Total special items attributable to equity (68) 4 (92) holders of the parent companies During the first quarter of the year a decision was taken to close the Lindlar operation in Germany and redirect production to existing plants in Germany, Hungary and the Czech Republic. Restructuring and closure costs amounting to € 13 million were recognised. In May 2013, Mondi announced the closure of one of the two newsprint machines located in Merebank. Further restructuring activities in the Merebank mill as a result of the closure of the newsprint machine have also been implemented. An impairment charge of €13 million and associated closure and restructuring costs of €5 million were recognised. In May 2013, Mondi announced plans to restructure the Neusiedler operation to improve the cost base of this mill. An impairment charge of €42 million and restructuring costs of €8 million were recognised. 7 Finance costs € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Interest on bank overdrafts and loans (54) (46) (98) Net interest on defined benefit arrangements (5) (6) (15) Total interest expense (59) (52) (113) Less: interest capitalised 1 - 1 Total finance costs (58) (52) (112) 8 Tax charge € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 UK corporation tax at 23.25% (2012: 24.5%) 1 - - SA corporation tax at 28% (2012: 28%) 13 10 19 Overseas tax 65 38 66 Current tax 79 48 85 Deferred tax (23) (5) 5 Total tax charge before special items 56 43 90 Current tax on special items (6) 1 2 Deferred tax on special items (7) 1 (1) Total tax (credit)/charge on special items (13) 2 1 Total tax charge 43 45 91 The Group's effective rate of tax before special items for the six months ended 30 June 2013, calculated on profit before tax before special items and including net income from associates, is 18% (six months ended 30 June 2012: 20%; year ended 31 December 2012: 20%). The Group continues to benefit from tax incentives granted in certain countries in which the Group operates, most notably Poland. 9 Earnings per share € cents per share (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Profit for the financial period attributable to equity holders of the parent companies Basic EPS 35.3 31.7 50.1 Diluted EPS 35.3 31.6 49.9 Underlying earnings for the financial period Basic EPS 49.4 30.9 69.2 Diluted EPS 49.3 30.8 68.9 Headline earnings for the financial period Basic EPS 45.7 30.9 62.9 Diluted EPS 45.6 30.8 62.7 The calculation of basic and diluted EPS, basic and diluted underlying EPS and basic and diluted headline EPS is based on the following data: Weighted average number of shares million (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Basic number of ordinary shares outstanding 484 483 483 Effect of dilutive potential ordinary shares 1 1 2 Diluted number of ordinary shares outstanding 485 484 485 Earnings € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Profit for the financial period attributable to 171 153 242 equity holders of the parent companies Special items 81 (6) 91 Related tax (13) 2 1 Underlying earnings for the financial period 239 149 334 Special items: restructuring and closure costs (26) - (20) Transaction costs incurred on the acquisition - - (11) of Nordenia Profit on disposal of tangible and intangible - - (4) assets Impairments not included in special items 1 - 4 Related tax 7 - 1 Headline earnings for the financial period 221 149 304 10 Dividends The interim dividend for the year ending 31 December 2013 of 9.55 euro cents per ordinary share will be paid on 17 September 2013 to those shareholders on the register of Mondi plc on 23 August 2013. An equivalent South African rand interim dividend will be paid on 17 September 2013 to shareholders on the register of Mondi Limited on 23 August 2013. 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 2012. The interim dividend for the year ending 31 December 2013 will be paid in accordance with the following timetable: Mondi Limited Mondi plc Last date to trade shares cum-dividend JSE Limited 16 August 2013 16 August 2013 London Stock Exchange Not applicable 20 August 2013 Shares commence trading ex-dividend JSE Limited 19 August 2013 19 August 2013 London Stock Exchange Not applicable 21 August 2013 Record date JSE Limited 23 August 2013 23 August 2013 London Stock Exchange Not applicable 23 August 2013 Last date for receipt of Dividend 29 August 2013 29 August 2013 Reinvestment Plan (DRIP) elections by Central Securities Depository Participants Last date for DRIP elections to UK Registrar 30 August 2013 23 August 2013* and South African Transfer Secretaries by shareholders of Mondi Limited and Mondi plc Payment Date South African Register 17 September 2013 17 September 2013 UK Register Not applicable 17 September 2013 DRIP purchase settlement dates 26 September 2013 20 September 2013** Currency conversion dates ZAR/euro 8 August 2013 8 August 2013 Euro/sterling Not applicable 30 August 2013 * 30 August 2013 for Mondi plc South African branch register shareholders ** 26 September 2013 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 19 August 2013 and 25 August 2013, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place between 14 August 2013 and 25 August 2013, both dates inclusive. Information relating to the dividend tax to be withheld from Mondi Limited shareholders and Mondi plc shareholders on the South African branch register will be announced separately, together with the ZAR/euro exchange rate to be applied, on or shortly after 8 August 2013. 11 Forestry assets € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 At 31 December, as previously reported 297 297 Effect of restatement 12 12 At 1 January (Restated) 311 309 309 Capitalised expenditure 19 22 42 Acquisition of assets 1 8 9 Fair value gains 10 13 40 Disposal of assets (9) (3) (3) Felling costs (30) (34) (66) Currency movements (45) 3 (20) Closing balance 257 318 311 The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy (see note 21). The fair value of forestry assets is calculated on the basis of future expected cash flows discounted using a discount rate relevant in the local country, based on a pre tax real yield on long-term bonds over the last five years. All fair value gains originate from South Africa. 12 Retirement benefits All assumptions related to the Group's material defined benefit schemes and post-retirement medical plan liabilities were re-assessed individually and the remaining Group defined benefit schemes and unfunded statutory retirement obligations were re-assessed in aggregate for the six months ended 30 June 2013. The net retirement benefit obligation decreased by €30 million mainly due to changes in assumptions and an exchange rate impact of €14 million. The assets backing the defined benefit scheme liabilities reflect their market values as at 30 June 2013. Any movements in the assumptions have been recognised as a remeasurement in the condensed combined and consolidated statement of comprehensive income. 13 Non-controlling interests bought out On 18 April 2012, Mondi concluded an all cash public tender offer for the share in Mondi Świecie S.A. that it did not already own, increasing its shareholding to 93.2% from 66%. On 18 May 2012, Mondi acquired the remaining shares it did not already own. The total consideration paid by Mondi was €296 million including transaction costs of approximately €1 million which were expensed. These acquisitions are reflected in the condensed combined and consolidated statement of changes in equity as transactions between shareholders with the premium over the carrying value of the non-controlling interests being reflected as a reduction in retained earnings. 14 Business combinations There were no significant acquisitions made during the period ended 30 June 2013. Acquisitions during 2012 On 2 May 2012, Mondi Świecie S.A. acquired the entire share capital of Saturn Management Sp. Z o.o. (Saturn) from Polish Energy Partners S.A. for a net cash consideration of €31 million and the assumption of debt of €57 million. On 1 October 2012 Mondi acquired 99.93% of the outstanding share capital of Nordenia from Oaktree Capital Management L.P. and certain other minority shareholders for a cash consideration of €259 million. On 5 November 2012, Mondi acquired two corrugated box plants in Germany and the Czech Republic and a 105,000 tonne recycled containerboard mill in the Czech Republic from Duropack GmbH (Duropack) for a cash consideration of €133 million. The recycled containerboard mill was subsequently closed in December 2012. Subsequent to 31 December 2012, the fair value of the property, plant and equipment attributable to the assets acquired from Duropack was increased by €3 million and goodwill adjusted accordingly. Details of the aggregate net assets acquired, as adjusted from book to fair value, are: € million Book Revaluation Fair value value Net assets acquired: Intangible assets 2 103 105 Property, plant and equipment 324 22 346 Financial asset investments 17 - 17 Deferred tax assets 4 - 4 Inventories 123 5 128 Trade and other receivables 143 - 143 Cash and cash equivalents 53 - 53 Other current assets 1 - 1 Short-term borrowings (67) - (67) Trade and other payables (156) - (156) Current tax liabilities (7) - (7) Provisions (28) (1) (29) Medium and long-term borrowings (348) (45) (393) Retirement benefits obligation (21) - (21) Deferred tax liabilities (15) (26) (41) Other non-current liabilities (16) - (16) Net assets acquired 9 58 67 Goodwill arising on acquisitions 356 Total cost of acquisitions 423 Transaction costs expensed 11 Cash acquired net of overdrafts (53) Net cash paid per condensed combined and 381 consolidated statement of cash flows € million Net Goodwill Net cash assets paid Nordenia (9) 268 237 Saturn 27 4 29 Duropack 49 84 115 Group total 67 356 381 15 Disposal groups and assets held for sale There were no significant disposal groups or assets held for sale as at 30 June 2013. 16 Disposal of businesses There were no significant disposals in the six months ended 30 June 2013 or the six months ended 30 June 2012. Disposals during 2012 On 2 October 2012, Mondi and Svenska Cellulosa Aktiebolaget (SCA) sold their 100% interest in the jointly owned Aylesford Newsprint to The Martland Holdings for a nominal consideration. The loss on disposal of €70 million was recognised as a special item in the combined and consolidated income statement. Transaction costs were insignificant and were expensed. € million (Restated) (Audited) Year ended 31 December 2012 Net investment in equity accounted investee 48 Guarantee liability retained 7 Cumulative translation adjustment reserve realised 15 Loss on disposal of investment in equity accounted investee (70) Disposal proceeds - Deferred consideration received in respect of the sale of Mondi 1 Frohnleiten in 2010 Net cash inflow from disposal of businesses 1 17 Consolidatedcash flow analysis (a) Reconciliation of profit before tax to cash generated from operations € million (Restated) (Restated) (Reviewed) (Reviewed) (Audited) Six months Six months Year ended ended ended 31 30 June 30 June December 2013 2012 2012 Profit before tax 229 222 368 Depreciation and amortisation 187 165 349 Impairment of tangible and intangible assets 1 - 4 (not included in special items) Share-based payments 5 6 10 Non-cash effect of special items 71 (4) 91 Net finance costs 57 55 110 Net (income)/loss from associates (1) 1 5 Decrease in provisions and post-employment (12) (6) (22) benefits Increase in inventories (9) (21) (16) Increase in operating receivables (138) (91) (38) Increase/(decrease) in operating payables 18 7 (29) Fair value gains on forestry assets (10) (13) (40) Felling costs 30 34 66 Profit on disposal of tangible and intangible - - (4) assets Other adjustments 3 - (5) Cash generated from operations 431 355 849 (b) Cash and cash equivalents € million (Restated) (Restated) (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Cash and cash equivalents per condensed combined 84 60 56 and consolidated statement of financial position Bank overdrafts included in short-term (93) (125) (93) borrowings (see note 17c) Net cash and cash equivalents per condensed (9) (65) (37) combined and consolidated statement of cash flows (c) Movement in net debt (Restated) The Group's net debt position, excluding disposal groups is as follows: € million Cash and Debt due Debt due Current Total cash within after financial net equivalents1 one year one year asset debt investments At 31 December 2011 117 (212) (737) 1 (831) Effect of restatement 2 18 (9) - 11 At 1 January 2012 (Restated) 119 (194) (746) 1 (820) Cash flow (183) 59 (240) (1) (365) Business combinations - (11) (49) - (60) Movement in unamortised loan - - (2) - (2) costs Reclassification - (19) 19 - - Currency movements (1) (4) (5) - (10) At 30 June 2012 (Restated) (65) (169) (1,023) - (1,257) Cash flow 23 55 (308) 1 (229) Business combinations - (56) (344) - (400) Movement in unamortised loan - - 5 - 5 costs Reclassification - (27) 27 - - Currency movements 5 9 (5) - 9 At 31 December 2012 (Restated) (37) (188) (1,648) 1 (1,872) Cash flow 17 19 (56) - (20) Movement in unamortised loan - - 7 - 7 costs Reclassification - (20) 20 - - Currency movements 11 17 13 - 41 At 30 June 2013 (9) (172) (1,664) 1 (1,844) Note: 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. The following table shows the amounts available to draw down on the Group's committed loan facilities: € million (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Expiry date In one year or less 56 26 27 In more than one year 687 558 735 Total credit available 743 584 762 18 Capital commitments € million (Restated) (Restated) (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Contracted for but not provided 271 177 129 Approved, not yet contracted for 361 228 589 These capital commitments relate to the following categories of non-current non-financial assets: € million (Restated) (Restated) (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Intangible assets 6 11 9 Property, plant and equipment 626 394 709 Total capital commitments 632 405 718 The expected maturity of these capital commitments is: € million (Restated) (Restated) (Audited) (Reviewed) (Reviewed) As at As at As at 31 30 June 30 June December 2013 2012 2012 Within one year 438 269 445 One to two years 146 120 263 Two to five years 48 16 10 Total capital commitments 632 405 718 Capital commitments are based on capital projects approved to date and the budget approved by the Boards. Major capital projects still require further approval before they commence. These capital commitments are expected to be financed by existing cash resources and borrowing facilities. 19 Contingent liabilities and contingent assets Contingent liabilities comprise aggregate amounts as at 30 June 2013 of €14 million (as at 30 June 2012: €13 million; as at 31 December 2012: €15 million) in respect of loans and guarantees given to banks and other third parties. No acquired contingent liabilities have been recorded in the Group's condensed combined and consolidated statement of financial position for all periods presented. There are a number of legal and tax claims against the Group. Provision is made for all liabilities that are expected to materialise. There were no contingent assets for all periods presented. 20 Related party transactions The Group has a related party relationship with its equity accounted investees. 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 equity accounted investees and others in which the Group has a material interest. These transactions are under terms that are no less favourable than those arranged with third parties. These transactions, in total, are not considered to be significant. With effect from 3 May 2013, Cyril Ramaphosa ceased to be a director of Mondi Limited and Mondi plc. As a result, all transactions with the Shanduka Group Proprietary Limited, in which Mr Ramaphosa held a 29.6% interest, and its subsidiaries are no longer classified as related party transactions from that date. Other than the paragraph above, 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 2012. 21 Financial instruments' fair value disclosures Financial instruments that are measured in the condensed combined and consolidated statement of financial position at fair value require disclosure of fair value measurements by level based on the following fair value measurement hierarchy: * level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; * level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and * level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are determined using standard valuation techniques. These valuation techniques maximise the use of observable market data where available and rely as little as possible on Group specific estimates. The significant inputs required to fair value all of the Group's financial instruments are observable. The Group only holds level 2 financial instruments and therefore does not hold any financial instruments categorised as either level 1 or level 3 financial instruments. There have also been no transfers of assets or liabilities between levels of the fair value hierarchy. Specific valuation methodologies used to value financial instruments include: * the fair values of interest rate swaps and foreign exchange contracts are calculated as the present value of expected future cash flows based on observable yield curves and exchange rates; * the Group's commodity price derivatives are fair valued by independent third parties, who in turn calculate the fair values as the present value of expected future cash flows based on observable market data; and * other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments. Except as detailed in the following table, the directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the condensed combined and consolidated financial statements are approximately equal to their fair values. Carrying amount Fair value (Reviewed) (Restated) (Restated) (Reviewed) (Restated) (Restated) (Reviewed) (Audited) (Reviewed) (Audited) € million As at 30 As at 30 As at 31 As at 30 As at 30 As at 31 June 2013 June 2012 December June 2013 June 2012 December 2012 2012 Financial liabilities Borrowings 1,929 1,317 1,929 2,013 1,372 2,040 22 Events occurring after 30 June 2013 The directors declared an interim dividend of 9.55 euro cents per share as set out in note 10. Production statistics Six Six Year months months ended ended ended 31 30 June 30 June December 2013 2012 2012 Europe & International Containerboard Tonnes 1,077,702 1,042,937 2,079,005 Kraft paper Tonnes 515,822 489,279 980,637 Softwood pulp Tonnes 1,014,483 992,772 1,978,583 Internal consumption Tonnes 942,445 907,194 1,825,916 External Tonnes 72,038 85,578 152,667 Corrugated board and boxes Mm² 678 606 1,213 Industrial bags M units 2,017 2,005 3,829 Coating and release liners Mm² 1,718 1,758 3,352 Consumer packaging1 Tonnes 146,763 36,706 121,127 Uncoated fine paper Tonnes 708,880 715,575 1,417,709 Newsprint Tonnes 103,620 98,936 201,278 Hardwood pulp Tonnes 547,819 527,310 1,059,140 Internal consumption Tonnes 513,366 483,642 972,883 External Tonnes 34,453 43,668 86,257 South Africa Division Containerboard Tonnes 132,077 132,251 263,468 Uncoated fine paper Tonnes 131,741 129,337 257,747 Hardwood pulp Tonnes 326,981 330,963 658,368 Internal consumption Tonnes 169,935 169,584 320,772 External Tonnes 157,046 161,379 337,596 Softwood pulp2 - internal consumption Tonnes 102,987 108,126 215,828 Newsprint2 Tonnes 87,088 101,328 198,024 Notes: 1 Includes Nordenia from October 2012. 2 Restated to include 100% of the Mondi Shanduka Newsprint production. Exchange rates Six Six Year months months ended ended ended 31 30 June 30 June December 2013 2012 2012 Closing rates against the euro South African rand 13.07 10.37 11.17 Czech koruna 25.95 25.64 25.15 Polish zloty 4.34 4.25 4.07 Pounds sterling 0.86 0.81 0.82 Russian rouble 42.84 41.37 40.33 Turkish lira 2.52 2.28 2.36 US dollar 1.31 1.26 1.32 Average rates for the period against the euro South African rand 12.10 10.29 10.55 Czech koruna 25.70 25.16 25.14 Polish zloty 4.18 4.24 4.18 Pounds sterling 0.85 0.82 0.81 Russian rouble 40.73 39.69 39.91 Turkish lira 2.38 2.34 2.31 US dollar 1.31 1.30 1.29 Sponsor in South Africa: UBS South Africa (Pty) Ltd

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