AGM Statement

MONDI PLC - AGM Statement

PR Newswire

London, May 2

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 JSE Listing Requirements and/or the Disclosure andListing Rules of the United Kingdom Listing Authority.

3 May 2013

MONDI LIMITED AND MONDI plc - ANNUAL GENERAL MEETINGS

ADDRESS TO SHAREHOLDERS BY THE JOINT CHAIRMEN, CHAIRMAN OF THE SOCIAL & ETHICSCOMMITTEE AND CHIEF EXECUTIVE OFFICER

Cyril Ramaphosa, 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 sixth annual general meeting of the MondiGroup. We are delighted that you are joining us here in Johannesburg and therein London. As is custom at our meeting, although we're on separate continentswith the use of modern technology, David Williams and I, and our fellow boarddirectors, take great pleasure in being able to talk to you this morning, asone.

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.

In 2012 the Mondi Group delivered solid results in what was initially aparticularly challenging year but culminated in a strong final quarter.

The Group's streamlined high quality assets performed very well throughout theyear, with the focus on low-cost production and high-growth emerging marketsagain delivering positive outcomes for shareholders, despite the uncertaineconomic environment.

Mondi remains a strong Group with a robust strategy and operational model. As alow-cost producer, we are fully integrated across the packaging and paperprocess, adding value at every stage of the product chain, from forestry, pulpand paper to the conversion of packaging paper into corrugated packaging andindustrial bags and the manufacture of consumer packaging products.

Given the Group's strong financial position, notwithstanding the significantdebt-funded acquisitions during the year, and the board's stated objective toincrease distributions to shareholders, we are pleased to recommend an increasein the final dividend to 19.1 euro cents per share. If approved, this will makea total dividend for the year of 28.0 euro cents per share.

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 2012 Mondi employed some twenty five thousand people at onehundred and two separate operating sites across thirty countries, with aparticularly strong presence in Central and Eastern Europe, Russia and SouthAfrica. Often, we are the single largest employer in the area in which we arelocated. This brings with it a great responsibility, which we take veryseriously. We want Mondi to be a sustainable, socially-responsible businessthat makes a real and lasting contribution to every community within which weoperate.

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 2012 we contributed EUR14.3 million incharitable donations and community projects with a focus on health andeducation.

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 continue to make progress with land restitution and to date we haveconcluded nineteen claims using our successful model for engaging and settlingwith land claimant communities which ensures that the community derives anincome and Mondi retains a reliable source of wood supply. Mondi has alsoachieved significant milestones in improving working conditions in its forestryoperations in Russia and South Africa. The objective over several years hasbeen to develop practices that meet international good practice standards andto ensure international competitiveness.

All of these developments and more are covered in detail in our integratedreport and the sustainability section on our website, additional copies of ourreports are available today - or you can download these from our web site.

As this is my last annual general meeting I would like to take the opportunityto highlight how much I have enjoyed being part of the boards of the MondiGroup. Seeing the Group grow in stature and success since it became anindependently listed company in 2007, has been particularly pleasing. I alsowish to thank David Williams, my Co Chairman and the directors for the verypositive and constructive manner in which the boards have worked together. Aspecial thank you also goes to David Hathorn and the Group executive team. Iwish Mondi much continued success in the future.

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, Cyril.

As Cyril said, although Mondi is a dual listed company domiciled on twocontinents, it is a single group with a unified management. Our boards comprisethe same directors, with independent non-executives on each, and those boardsremain independent of the executive committee, led by David Hathorn, whichmanages the Group on a day-to-day basis.

We continue to strive to maintain the highest standards of governance practice.The operation of the boards and committees is regularly reviewed and theperformance of the directors in 2012 was evaluated, producing a clear actionplan for further improvement in 2013.

Safety remains paramount to us across the Group and we continued to reduceaccidents in the workplace. However, despite these improvements, we deeplyregret that two people were fatally injured during the year, one in Finland andone in Russia. The Group is committed to its goal of zero harm and thoroughinvestigations were undertaken after each incident to ensure that we continueto refine the safety measures, including training programmes necessary to keepall our employees and contractors safe. Safety is a key item on the agenda atevery DLC board meeting and we have tasked management with further entrenchingsafe behaviour throughout our business.

Our focus and commitment to sustainability across the Group, is of course, muchwider than safety. Our sites are monitored against our integrated sustainabledevelopment management system and the DLC sustainable development committeereviews regular reports.

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.

The Group's track record remains impressive in the sustainability area.

You can read more about our achievements and significant progress in areas suchas resource usage in the sustainability section of our web site.

The commendable set of financial results in 2012 was achieved by Mondi'sdedicated twenty five thousand employees across the globe. We thank them allfor their considerable efforts.

2012 was another challenging year, with broader macroeconomic weaknesscontinuing to impact business across the globe. Against this backdrop, we arepleased with Mondi's performance in 2012 as the Group again demonstrated itsability to deliver good results. The Group's high-quality well invested assetsand its focus on low-cost production continue to be major competitiveadvantages.

The important acquisitions made during the past year will strengthen theGroup's exposure to high-growth product segments and complement its strategicpositioning to continue to deliver value to shareholders into the future.

Before I hand you back to South Africa, I would like to say a few words aboutCyril, my co chairman. As announced on 23 January this year, Cyril will bestepping down at the conclusion of this annual general meeting. On behalf ofthe boards and myself personally I would like to thank Cyril for hissignificant contribution to the Mondi Group over many years and wish him wellfor the future in the important role he has assumed as deputy president of theAfrican National Congress. Our search for a replacement co-chair is on-going.

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.

The South African Companies Act requires a report at the Annual General Meetingto shareholders on the matters within the mandate of the Social and EthicsCommittee.

A full report on the activities of the committee has been included in theGovernance section of the Group's Integrated Report. I do not intend to repeateverything covered in that report but can advise that, during 2012, theCommittee held two meetings, during which it assessed the scope of itsactivities and considered the policies, practices and procedures of MondiLimited relevant to that scope. I am pleased to report that it is the opinionof the Committee that the existing policies, practices and procedures aresufficient to address the statutory scope of the Committee, and that nomaterial shortcomings had been identified. During 2013 the Committee willfollow its work plan ensuring that all areas of its mandate are adequatelymonitored.

David Hathorn, Chief Executive Officer, speaking from Johannesburg:

Thank you, Imogen.

As your chairmen have said, in 2012 Mondi Group delivered a solid financialperformance in what remains an uncertain economic environment. While the earlypart of the year was particularly challenging, trading picked up as the yearprogressed, culminating in a strong final quarter.

In addition, Mondi has continued to make significant progress with growing itspackaging interests. The share of the Group's capital employed in packagingbusinesses, with typically higher structural growth rates, has increased from54% to 67% over the last year.

The difficult first quarter was characterised by a continuation of the weakorder book seen towards the end of 2011, with trading picking up as the yearprogressed. Sales volumes recovered into the second quarter and this, in turn,saw some price recovery in certain of the Group's major grades going into thesecond half of the year. The third quarter was impacted by the traditionalEuropean summer slowdown in trading, but a strong finish to the year, with goodvolumes and reasonable price levels in Europe, meant the Group was able todeliver full year underlying operating profit of EUR568 million, 9% down on thevery strong prior year result.

It is pleasing to see that the progress already made in integrating our recentacquisitions is exemplified by the fact we have increased our estimate ofexpected synergies by 33%, to EUR30 million per annum within two years.

Continued strong profitability resulted in a return on capital employed of13.7%, once again above our through-the-cycle target of 13%. The Groupcontinued to be strongly cash generative with cash generated from operations ofEUR845 million.

During the year good progress was made in the ongoing process of shiftingMondi's portfolio to higher growth products. This included EUR1.2 billion ofacquisitions in the growing corrugated packaging and consumer packaging valuechains.

The successful Nordenia acquisition complements and strengthens Mondi'sexisting consumer packaging business with a complementary product portfoliowhich positions the Group well to develop a leading consumer packagingbusiness, with an enlarged geographic footprint and strong competitiveadvantages.

Mondi's investment grade credit ratings first issued in 2010 were reaffirmedduring the year by both Moody's Investors Service (Baa3 outlook positive) andStandard & Poors (upgraded to BBB- outlook positive).

Working capital levels were maintained within the Group's targeted level of 10%to 12% of turnover.

During the year capital expenditure amounted to EUR298 million, EUR35 millionhigher than the previous year. The capital expenditure to depreciation ratiowas 86% including expenditure on a number of the Group's strategic energyprojects.

In early 2012, Mondi announced that it had approved various energy relatedinvestments totaling approximately EUR140 million. The benefits of theseinvestments, mainly in the form of reduced energy costs, improved efficienciesand energy self-sufficiency are expected to be realised from the end of 2013 asthese projects reach completion. As announced a number of additional energyrelated projects, amounting to approximately EUR250 million, were underconsideration. In this regard, the Boards have since approved a further EUR128million strategic energy investment at the 51% held Ruzomberok mill in Slovakiawhich is expected to be completed in the fourth quarter of 2014, delivering anafter-tax internal rate of return in excess of 40%. The Boards also approved aEUR70 million project at the Steti kraft paper mill which is expected to becompleted in the latter part of 2014, delivering an after-tax internal rate ofreturn of around 20%. Including the announced strategic projects, capitalexpenditure is expected to be approximately 125% of the Group's depreciationcharge on average over the next two years.

Our focus in the near term is on the integration and optimisation of the recentacquisitions and successful delivery of the significant capital investmentprojects we have initiated over the course of the past year.

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.

Underlying operating profit for the first quarter of 2013 was EUR162 million,in line with our expectations despite the write-down in the value of greenenergy credits of EUR11 million. This reflects a 35% increase on the comparableprior year period of EUR120 million and is in line with the EUR163 million inthe previous quarter. The significant increase over the comparable prior yearperiod is a result of improved market conditions in the Packaging Paper andSouth African businesses as well as the benefits from the acquisitions ofNordenia and the corrugated packaging plants in Germany and the Czech Republiccompleted towards the end of 2012.

In summary, the effects of expected capacity increases in recycledcontainerboard and uncoated fine paper, coupled with prevailing demand softnessacross the European businesses, remain a concern. However, recent priceincreases in the packaging paper grades provide support and good progress isbeing made in integrating the Group's recent acquisitions. Management remainsconfident of continuing to make progress, in line with its expectations.

In closing, I extend the Group's sincere appreciation to Cyril Ramaphosa forhis role as Co-Chairman. I have thoroughly enjoyed our working relationship andam grateful for Cyril's invaluable contribution to Mondi over the years.

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, with production operationsacross 30 countries and revenue of EUR5.8 billion in 2012. The Group's keyoperations are located in central Europe, Russia and South Africa and as at theend of 2012, Mondi employed 25,700 people.

Mondi Group is fully integrated across the packaging and paper value chain,from the growing of wood and the production of pulp and paper (packaging paperand uncoated fine paper), to the conversion of packaging paper into corrugatedpackaging, industrial bags, extrusion coatings and release liner. Mondi is alsoa supplier of innovative consumer packaging solutions, advanced films andhygiene products components.

Mondi Group has a dual listed company structure, with a primary listing on theJSE Limited for Mondi Limited under the ticker code MND and a premium listingon the London Stock Exchange for Mondi plc, under the ticker code MNDI. TheGroup has been recognised for its sustainability through its inclusion in theFTSE4Good Global, European and UK Index Series (since 2008) and the JSE'sSocially Responsible Investment (SRI) Index since 2007. The Group was alsoincluded in the Carbon Disclosure Project's (CDP) FTSE 350 Carbon DisclosureLeadership Index (CDLI) for the third year and in CDP's FTSE 350 CarbonPerformance Leadership Index (CPLI) for the first time in 2012.

Sponsor in South Africa: UBS South Africa (Pty) Ltd