AGM Statement

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 As part of the dual listed company structure, Mondi Limited and Mondi plcnotify both the JSE Limited and the London Stock Exchange of matters requiredto be disclosed under the Listing Requirements of the JSE Limited and/or theDisclosure and Listing Rules of the United Kingdom Listing Authority. 14 May 2014 MONDI LIMITED AND MONDI plc - ANNUAL GENERAL MEETINGS ADDRESS TO SHAREHOLDERS BY THE JOINT CHAIRMEN, CHAIRMAN OF THE SOCIAL & ETHICSCOMMITTEE AND CHIEF EXECUTIVE OFFICER Fred Phaswana, Joint Chairman, speaking from Johannesburg: Good morning, ladies and gentlemen. On behalf of the boards of Mondi Limitedand Mondi plc, we welcome you to the seventh Annual General Meeting of theMondi Group. We are delighted that you are joining us here in Johannesburg andthere in London. As is custom at our meeting, although we're on separatecontinents with the use of modern technology, David Williams and I, and ourfellow board directors, take great pleasure in being able to talk to you thismorning, as one. As you know, we share the chair of the Mondi Group and David Williams and Iwould both like to say a few words this morning about Mondi's progress over thelast year. Imogen will then report on the Social and Ethics Committee beforeyour Chief Executive, David Hathorn, reviews the Group's performance andstrategy in a little more detail as well as updating you on the Group's InterimManagement Statement that we published earlier today. After this we will bedelighted, as a board, to take your questions. But first, let me introduce youto your directors. To my immediate left is Imogen Mkhize, an independent non-executive directorand chair of the Mondi Limited Social and Ethics Committee. Next to her isDavid Hathorn, your Chief Executive Officer. And on his left is PhilipLaubscher, Company Secretary of Mondi Limited. Next to Philip is Andrew King,your Chief Financial Officer. With David Williams in London, we have Stephen Harris, an independentnon-executive director and chairman of the DLC Sustainable DevelopmentCommittee. Anne Quinn, our senior independent director and chair of the DLCRemuneration Committee and beside her Carol Hunt, Company Secretary of Mondiplc. To David's right, we have Peter Oswald, Chief Executive Officer of the Europe &International Division and, finally, John Nicholas independent non-executivedirector and chairman of the DLC Audit Committee. For the benefit of our new shareholders I should point out that, although thedual listed company structure means that Mondi Limited in South Africa andMondi plc in the UK are separate corporate entities, each with its own boardand shareholders, Mondi operates as a single corporate group, managed as asingle economic enterprise. The two companies have the same board members andthe same management team. The DLC structure means that shareholders in eachcompany fully share in the performance of the Group as a whole. 2013 was another successful year for the Group. Mondi delivered record resultsand made significant headway with its strategic initiatives. A full year'scontribution and synergies from the large acquisitions made in 2012, ongoingcost containment, as well as the benefits from the capital expenditureprogramme all contributed to what was a great year for consolidating andbuilding on the inherent strengths of the organisation. Mondi's focus is increasingly on the development of our packaging businesses,with a bias towards emerging markets. We continue to work with customers todevelop smarter, more cost-effective processes and to find inventive,innovative, advanced solutions that deliver exceptional value. Investing ingreen energy is important to the Group's ongoing success and we have committedto various related projects at several of our large operations. In 2013, wemade good progress with integrating and optimising the significant acquisitionsmade towards the end of 2012. The record financial performance and strong cash generation enabled the Groupto further strengthen its financial position in 2013. In line with the boards'aim to offer shareholders long-term dividend growth within a targeted dividendcover range of two to three times, on average, over the cycle, we are pleasedto recommend an increase in the final dividend. The boards of Mondi Limited andMondi plc have recommended a final dividend of 26.45 euro cents per share. Ifapproved, this amounts to a total dividend for the year of 36 euro cents pershare. Before I hand over to David Williams, I would just like to highlight a fewareas in which we made particular progress last year. At the end of 2013 Mondi employed some twenty four thousand people at ninetyeight separate operating sites across thirty countries, with a particularlystrong presence in central and Eastern Europe, Russia and South Africa. Often,we are the single largest employer in the area in which we are located. Thisbrings with it a great responsibility, which we take very seriously. We wantMondi to be a sustainable, socially-responsible business that makes a real andlasting contribution to every community within which we operate. We evaluate the economic and social impact of our operations on its localcommunity. This enables us to build tailored programmes that bring tangiblebenefits to those communities. In 2013 we contributed 9.9 million euros tocorporate social investment projects and charitable donations with a focusmainly on education and health. Here in South Africa, we continue to be a supporter of the government's policyof broad-based black economic empowerment, which influences many of ouremployment and procurement practices. We have been working constructively with land claims officials over severalyears. Our current focus on development work with settled land claimscommunities has resulted in several sustainable community contractorenterprises in our South African forestry value chain. All of thesedevelopments and more are covered in detail in our integrated report and thesustainability section on our website, additional copies of our reports areavailable today - or you can download these from our web site. With that, I'd like to hand over to my co-chairman, David Williams, in London.David. David Williams, Joint Chairman, speaking from London: Thank you, Fred. I would like to take this opportunity to welcome Fred to his first Mondi AnnualGeneral Meeting. As you know, Fred replaced Cyril Ramaphosa who stepped down asjoint chairman in May 2013. As Fred has explained the board structure, I would add that those boards remainindependent of the executive committee, led by David Hathorn, which manages thegroup on a day-to-day basis. We strive to maintain the highest standards of corporate governance. Theoperation of the boards and committees is regularly reviewed and theperformance of the directors in 2013 was externally evaluated and was verypositive. It also suggested actions to deliver further improvement in 2014. Safety remains paramount to all of us and for several years we have continuedto reduce accidents across our operations. However, despite all theseimprovements, we deeply regret that four contractors were fatally injuredduring the year, two in Russia and two in South Africa. The Group remainscommitted to its goal of zero harm and following thorough investigations aftereach incident, management has developed action plans with implementation wellprogressed across the Group. Safety remains a high priority for all of us andis a key item on the agenda at every DLC board meeting. Our focus and commitment to sustainability covers a wide range of aspectsbeyond safety. Our sites are monitored against our integrated sustainabledevelopment management system and appropriate action is taken which is thenreviewed by the DLC Sustainable Development Committee. We are particularly pleased with our continued progress in sustainableforestry, the increased use of renewable energy sources and emissionreductions. All our forests in Russia and South Africa have retained foreststewardship council certification. You can read more about our achievements and significant progress in areas suchas resource usage in the sustainability section of our web site. Considering the challenging economic environments many of our businessescontinue to face, Mondi's management has been impressive in the way they findsolutions and deliver value in a responsible way. We thank the executive andall of Mondi's people for their determination, innovation and willingness to gothe extra mile. I now hand you back to South Africa and Imogen Mkhize, who will provide thereport on the Social and Ethics Committee. Imogen. Imogen Mkhize, Chairman of the Mondi Limited Social & Ethics Committee,speaking from Johannesburg: Thank you, David. In accordance with the requirements of the South African Companies Act, I nowprovide a report on the matters within the mandate of the Social and EthicsCommittee. During the year, we reviewed our committee charter and finalised a work planthat ensures functional and systematic fulfillment of the Committee's oversightobjectives. In broad terms, the Committee's mandate focuses our attention onMondi Limited's social and economic development efforts; environmentalprotection practices; promotion of health and public safety; fair labourpractices; relations with customers. The mandate also directs attention to thecompany's ethical conduct. Performance in all of these areas is managed throughout the organisation, andthe Social and Ethics Committee works in close collaboration with other boardcommittees, receiving support from management and various operationalstructures. These matters are, therefore, addressed in more detail acrossdifferent sections of the Group's Integrated Report, and in particular, theGovernance Report and the Sustainable Development report. In addition, Mondi'sprinted document called, `Sharing our sustainable future', reflects thecompany's consistent rigor and discipline in monitoring performance againstmandatory social requirements and voluntary commitments. In monitoring the company's activities relating to socioeconomic development,the committee noted the impact of social investment spent and the effectivenessof formal community engagements. An initiative that stands out is the Mkhondodevelopment project, a public-private partnership with provincial and municipalauthorities, offering residents of the area a choice to pursue rurallivelihoods in planned and serviced agri-villages or in newly serviced urbanresidential developments. Further contribution is also seen from Mondi Zimele, a project established tosupport and promote small and medium sized enterprises. Since the project'sinception in 2007, it has created and sustained businesses with an employmentfootprint in excess of 4,200 jobs. In general, the company continues to function in a responsible manner, withgood progress on the commitments made in respect of material sustainabledevelopment issues, including sustainable fibre security, progress with energyand climate change, natural resource constraints, employee and contractorwellbeing, and the eco-efficiency of our products. In the year ahead, the Social and Ethics Committee will continue to monitor theindustry realignment process of the Forestry Sector Codes with the BBBEE Act.The environmental regulatory context has also seen new developments that willrequire continued focus by Mondi Limited, specifically on air quality, wastemanagement, and climate change. To conclude, Mondi's philosophy and activities are anchored in good governancecharacterised by high ethical standards, along with appropriate, adequateprocesses and procedures deployed to meet its responsibilities in themarketplace, the workplace, social environment, and the natural environment.The Social and Ethics Committee thus confirms the company's compliance withlegal responsibilities that flow from formal laws and regulations. Mostimportant though, is the achievement of voluntary objectives that firmlyposition Mondi as a highly responsible corporate citizen. With that, I'd like to hand over to your Chief Executive, David Hathorn. David. David Hathorn, Chief Executive Officer, speaking from Johannesburg: Thank you, Imogen. As your chairmen have said, in 2013 Mondi delivered a record financialperformance, benefiting from a strong operating performance and the strategicacquisitions completed in the latter part of 2012. The focus over the last year has been on integrating and optimising thesignificant acquisitions made towards the end of 2012 and delivering the majorcapital projects initiated over the past two years. Excellent progress has beenmade in this regard, with synergy targets delivered, a number of the capitalprojects having been completed in the latter part of 2013, and the remainingprojects on track for completion within budget and on schedule over the nexttwo years. Return on capital employed (ROCE), a key performance metric for the Group, was15.3%, a record for the Group despite the dilutive effect of the acquisitionsmade in 2012. ROCE over the past three years, averaging 14.6%, has beenconsistently above the Group's through-the-cycle hurdle rate of 13%. Our emphasis is on growing our packaging interests, which currently contributearound 70% of the Group's revenues, while at the same time continuing to investappropriately to maintain and improve the competitiveness of our uncoated finepaper business. Within the broader packaging sphere, we see greater opportunities to developthose segments offering exposure to consumer related packaging. We continue todevelop our presence in emerging markets, which offer us inherent cost andgrowth benefits, while recognising in some areas, most notably ConsumerPackaging, that there are also opportunities to develop and leverage ourcompetencies in mature markets. Overall, approximately 62% of the Group's netoperating assets and 51% of revenue by destination are currently in emergingmarkets. The Packaging Paper business was the standout performer in 2013, benefitingfrom higher average pricing in all key grades and good volume growth. Thedownstream Fibre Packaging business was challenged by rising paper prices, butgenerally made good progress in recovering margins. The Uncoated Fine Paper business continued to deliver strong results despitethe structural demand decline seen in mature Western European markets, atestament to the business' superior cost and market positioning. The South Africa Division also made very good progress during the year and isnow delivering well in excess of the Group's 13% through-the-cycle hurdle rate. The Group remains strongly cash generative with cash generated from operatingactivities exceeding 1 billion euro for the first time. Mondi's investment grade credit ratings, first issued in March 2010, were againreaffirmed during the year at BBB- (Standard and Poor's) and Baa3 (Moody'sInvestors Service). Working capital levels were maintained within the Group's targeted level of 10%to 12% of turnover. Capital expenditure of 405 million euro was 111 million euro higher than theprior year as expenditure on a number of the Group's previously announcedenergy and debottlenecking investments ramped up. The capital expenditure todepreciation ratio was 113%. The benefits from these projects to be realised from 2014 onwards, includereduced energy costs, improved efficiencies and improved electricityself-sufficiency. In the first half of 2013, a 128 million euro project to replace the recoveryboiler at the Ruzomberok uncoated fine paper mill in Slovakia commenced.Completion is scheduled towards the end of 2014. The project will reduce themill's environmental footprint and improve its overall cost position. In the second half of the year, the Boards approved a 166 million euroinvestment at the Mondi Swiecie containerboard mill in Poland, bringing forwardthe planned replacement of the recovery boiler and the mill's coal firedboilers, with completion expected towards the end of 2015. The benefits includea reduction of ongoing maintenance costs, an improvement in overall energyefficiency and a reduction in CO2e emissions. These investments are allproceeding according to schedule. As you know, earlier today we released our Interim Management Statement. Iwould like to take this opportunity to briefly summarise the main points of theannouncement. First quarter underlying operating profit of 183 million euro was 13% above thecomparable prior year period of 162 million euro and 14% above the 161 millioneuro of the fourth quarter of 2013 and in line with management's expectations. Sales volumes were broadly in line with the comparable prior year period, andabove the previous quarter, mainly due to the scheduling of maintenance shutsin the second half of the year. As expected, average selling prices in Europe for all key paper grades werelower than those in both the prior year comparable period and the previousquarter, with the exception of recycled containerboard. The corrugatedpackaging business benefitted from further pass through of prior periodrecycled containerboard price increases, while pricing in the South AfricaDivision was higher than the comparable prior year period in equivalentcurrency terms. In the Group's Packaging Paper business, price increases were announced forunbleached kraftliner in the European market on the back of good demand.Negotiations with customers are ongoing, with a small increase alreadyimplemented. Recycled containerboard prices came under some pressure towardsthe end of the quarter and into April, impacted by new capacity entering themarket and falling costs of paper for recycling. Selling price increases for unbleached sack kraft paper have been announced onthe back of a strong pick-up in demand in the first quarter, with priceincreases expected to be realised in the second half of the year when a numberof fixed price contracts come up for renewal. In Fibre Packaging, corrugated packaging price increases have been realisedfollowing the recycled containerboard price increases seen in the previousquarter. Consumer Packaging performance has improved from a weak fourth quarter of 2013benefiting from an improved product mix, despite constrained demand and thephasing out of mature products in the films and components segment. The Uncoated Fine Paper business was impacted by the anticipated price erosionin the European markets in the first quarter. However, good demand and tightersupply into European markets following significant capacity closures in theUnited States has encouraged the business to announce price increases ofapproximately 5% in all European markets. The South Africa division continued to benefit from good domestic demand, withselling prices rising in local currency terms during the quarter. Benchmarkhardwood pulp sales prices came under increasing pressure during the quarter,with average euro prices around 1% lower than the prior quarter. There was some increase in key input costs over the quarter, with increases inwood costs and paper for recycling affecting the European operations.Offsetting these increases is the benefit from the various energy optimisationprojects and restructuring initiatives completed during the prior year. While the Group remains vigilant of the ongoing political developments in theUkraine, to date they have had no material impact on the Group's operations. Good progress is being made on the Group's major capital investment projects,with all projects proceeding on schedule and within budget. A recent highlightwas the successful commercial production of bleached kraft paper from the new155,000 tonne paper machine at the Steti mill in the Czech Republic in April,meeting a strong order book. Production will be ramped up over the course ofthe year. The Group's financial position remains strong with net debt down to1,580 million euro. Strong operating cash inflows were offset by a seasonalincrease in working capital and higher capital investment cash flows as anumber of the Group's strategic investments reach completion. The trading environment remains mixed. As anticipated selling prices for anumber of the Group's key paper grades are currently below those of the prioryear. However, fundamentals in our core markets remain generally solid andprice increases in certain grades are under discussion. Furthermore, theongoing capital investment programme is already making an importantcontribution to the profitability of the Group, with further projects on trackfor completion over the course of this year. As such, we remain confident inthe Group's ability to continue delivering an industry-leading performance. Now I would like to hand you back to our joint chairman David Williams. Ends About Mondi Mondi is an international packaging and paper Group, employing around 24,000people in production facilities across 30 countries. In 2013, Mondi hadrevenues of EUR6.5 billion and a ROCE of 15.3%. The Group's key operations arelocated in central Europe, Russia, the Americas and South Africa. The Mondi Group is fully integrated across the packaging and paper value chain- from the management of its own forests and the production of pulp and paper(packaging paper and uncoated fine paper), to the conversion of packaging paperinto corrugated packaging, industrial bags, extrusion coatings and releaseliner. Mondi is also a supplier of innovative consumer packaging solutions,advanced films and hygiene products components. Mondi has a dual listed company structure, with a primary listing on the JSELimited for Mondi Limited under the ticker code MND and a premium listing onthe London Stock Exchange for Mondi plc, under the ticker code MNDI. TheGroup's performance, and the responsible approach it takes to good businesspractice, has been recognised by its inclusion in the FTSE4Good Global,European and UK Index Series (since 2008) and the JSE's Socially ResponsibleInvestment (SRI) Index since 2007.

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