Final Results

MONDI PLC - Final Results

PR Newswire

London, February 20

21 February 2013

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 plc(together `Mondi Group') notify both the JSE Limited and the London StockExchange of matters required to be disclosed under the Listings Requirements ofthe JSE and/or the Disclosure and Transparency and Listing Rules of the UnitedKingdom Listing Authority.

Full year results for the year ended 31 December 2012

Financial highlights

Strategic highlights

Underlying operating profit1 568 622 (9) 299 268 12

Underlying profit before tax1 462 512 (10) 245 216 13

1 The Group presents underlying EBITDA, operating profit, profit before tax andrelated per share information as measures which exclude special items in orderto provide a more effective comparison of the underlying financial performanceof the Group between financial reporting periods.

2 The directors have elected to continue to present an alternative, non-IFRSmeasure of earnings per share from continuing operations. As more fully set outin note 8 of the condensed financial statements, the effects of the demerger ofMpact Limited and the Mondi Limited share consolidation have been adjusted inthe 2011 comparative earnings per share figures to reflect the position as ifthe transaction had been completed on 1 January 2011. This is intended toenable a more useful comparison of underlying earnings per share fromcontinuing operations, based on the consolidated number of shares. In 2012,there is no difference between the alternative measure presented and underlyingearnings per share.

3 Free cash flow per share is the net increase in cash and cash equivalentsbefore the effects of acquisitions and disposals of businesses, changes in netdebt and dividends paid divided by the net number of shares in issue at yearend.

4 ROCE is underlying profit expressed as a percentage of the average capitalemployed for the year, adjusted for impairments and spend on strategic projectswhich are not yet in operation.

David Hathorn, Mondi Group chief executive, said:

`Mondi delivered a solid financial performance in what remains an uncertaineconomic environment. While the early part of the year was particularlychallenging, trading picked up as the year progressed, culminating in a strongfinal quarter.

Continued strong profitability resulted in a return on capital employed (ROCE)of 13.7%, once again above our through-the-cycle target of 13%. Net debtfinished the year at €1,864 million, largely due to the €1.2 billion ofstrategic acquisitions in higher growth packaging segments completed during theyear. Our continued strong cash generation and underlying earnings per share of69.6 euro cents per share has resulted in the directors recommending a finaldividend of 19.1 euro cents per share, bringing the total dividend to 28.0 eurocents per share for the year, an increase of 8%.

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. I am very pleasedto see the progress we have already made in integrating our recentacquisitions, exemplified by the fact we have revised upwards by 33% ourestimate of expected synergies to €30 million per annum within two years.

Fundamentals for our core segments remain sound, although recently announcedcapacity additions by various manufacturers in selected paper grades are aconcern, exacerbated by the prevailing demand softness as Europe remainsaffected by the macroeconomic slowdown. However, with the strong finish to theyear, coupled with the expected contribution from the recent acquisitions, weremain confident of making progress in the year ahead.'

Richard Mountain / Sophie McMillan +44 20 7269 7186 / +44 20 7909 684

Sandra Sowray / Lerato Matsaneng +27 11 214 2422 / +27 11 214 2407

Conference call dial-in and audio cast details

Please see below details of our dial-in conference call and audio cast thatwill be held at 09:00 (UK) and 11:00 (SA).

The conference call dial-in numbers are:

South Africa 0800 200 648 (toll-free)

UK Primary 0808 162 4061 (toll-free)

UK Alternative 0800 917 7042 (toll-free)

Europe & Other 00800 246 78 700 (toll-free)

An online audio cast facility will be available via: www.mondigroup.com/FYResults12.

The presentation will be available online via the above website address beforethe audio cast commences. Questions can be submitted via the dial-in conferencecall or by e-mail via the audio cast.

Should you have any issues on the day with accessing the dial-in conferencecall, please call +27 11 535 3600.

Should you have any issues on the day with accessing the audio cast, pleasee-mail mondi@kraftwerk.co.at and you will be contacted immediately.

An audio recording of the presentation will be available on Mondi's websiteduring the afternoon of 21 February 2013.

Editors' notes

Mondi is an international packaging and paper Group, with production operationsacross 30 countries and revenues of €5.8 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) Carbon Disclosure LeadershipIndex for the third year and in CDP's Carbon Performance Leadership Index(CPLI) for the first time in 2012.

Forward-looking statements

This document includes forward-looking statements. All statements other thanstatements of historical facts included herein, including, without limitation,those regarding Mondi's financial position, business strategy, plans andobjectives of management for future operations, are forward-looking statements.Such forward-looking statements involve known and unknown risks, uncertaintiesand other factors which may cause the actual results, performance orachievements of Mondi, or industry results, to be materially different from anyfuture results, performance or achievements expressed or implied by suchforward-looking statements. Such forward-looking statements are based onnumerous assumptions regarding Mondi's present and future business strategiesand the environment in which Mondi will operate in the future. Among theimportant factors that could cause Mondi's actual results, performance orachievements to differ materially from those in the forward-looking statementsinclude, but are not limited to, those discussed under `Principal risks anduncertainties'. These forward-looking statements speak only as of the date onwhich they are made. Mondi expressly disclaims any obligation or undertaking torelease publicly any updates or revisions to any forward-looking statementcontained herein to reflect any change in Mondi's expectations with regardthereto or any change in events, conditions or circumstances on which any suchstatement is based.

While the first quarter was particularly difficult, characterised by acontinuation of the weak order books seen towards the end of 2011, tradingpicked up as the year progressed. Sales volumes recovered into the secondquarter and this, in turn, saw some price recovery in certain of the Group'smajor grades going into the second half of the year. The third quarter wasimpacted by the traditional European summer slowdown in trading, but a strongfinish to the year, with good volumes and reasonable price levels in Europe,meant the Group was able to deliver full year underlying operating profit of €568 million, 9% down on the very strong prior year result.

Fundamentals for each of the Group's core businesses remain good, althoughrecently announced capacity additions in segments that remain in oversupply area concern. While the uncoated fine paper business remains in structural declinein the mature western European region, prices have remained stable due tocontinued supply side contraction in the face of poor profitability among themore marginal players. Such rationalisation will need to continue in order toensure market stability. On the packaging side, fundamentals for growth in themedium term remain firmly in place with only the kraft paper/industrial bagsvalue chain in western Europe suffering some secular demand decline, offset bystrong export markets.

The Group continued to be strongly cash generative with cash generated fromoperations of €845 million. Working capital levels were maintained within theGroup's targeted level of 10-12% as a percentage of turnover, closing the year(based on the annualised sales of Nordenia) at 11.8%. During the year, capitalexpenditure amounted to €298 million.

Net debt at 31 December 2012 was €1,864 million, an increase of €1,033 millionfrom 31 December 2011. The increase is attributable to the €1.2 billion ofstrategic acquisitions completed during the year (further detailed below). Theacquisitions were financed by the proceeds from an 8-year 3.375% €500 millionEurobond and from existing borrowing facilities. Excluding the effects ofacquisitions, net debt reduced by €180 million.

At the underlying earnings per share level, results were down only 3% on thecomparable prior year figure, supported by lower interest charges and areduction in the non-controlling interest charge, primarily due to theacquisition of the remaining minority interest in Mondi Swiecie in the firsthalf of the year. This strong performance bears testament not only to thestrength of our strategic positioning, but also the unrelenting focus on costmanagement and strong operating performance achieved across the Group.

The Group is proposing to pay a final dividend of 19.1 euro cents per share,bringing the total dividend for the year to 28.0 euro cents per share, anincrease of 8% on 2011.

Progress on strategy

During the year good progress was made in the ongoing process of shiftingMondi's portfolio to higher growth products. This included €1.2 billion ofacquisitions in the growing corrugated packaging and consumer packaging valuechains and the disposal of the 50% interest in Aylesford Newsprint, whichoperates in the structurally challenged newsprint sector.

Key acquisitions included:

Over the past year, the share of the Group's capital employed in the packagingbusinesses, with typically higher structural growth rates than the graphicpaper grades, has increased from 57% to 67%.

Following the completion of the Nordenia acquisition and disposal of AylesfordNewsprint, the Group management and reporting structures were reorganised. TheEurope & International Division has been restructured into four business units,divided into upstream and downstream activities with a clear separation betweenpackaging and uncoated fine paper: Packaging Paper, Fibre Packaging, ConsumerPackaging and Uncoated Fine Paper. The remaining Newsprint business, MondiShanduka Newsprint, has been incorporated into the South Africa Division.Europe & International contributed €538 million to underlying operating profitand the South Africa Division €68 million. Corporate costs remained at similarlevels to the previous year.

Europe & International - Packaging Paper

Packaging Paper delivered another good financial performance despite the morechallenging trading environment, with a ROCE of 17.9% and underlying operatingprofit of €227 million.

The early part of the year was characterised by weak demand, with marketrelated downtime continuing from the end of 2011 into the first quarter of2012. Demand improved during the first half, enabling the business to implementprice increases in the virgin containerboard and kraft paper grades, whichbecame effective during the second half of the year. Sales volumes ofcontainerboard were similar to those of the previous year whilst volumes ofkraft paper increased as a result of stronger export markets.

Whilst industry wide demand for the various containerboard grades wasmarginally lower than the previous year, with growth in the emerging centralEuropean countries only partly offsetting the decline in the more maturewestern markets, Mondi increased its volumes by 3% during the year. Europeanmarkets for sack kraft paper remained weak with demand below prior year levels.The sack kraft business, however, continued to benefit from strong exportgrowth, particularly in Asia and Africa.

In 2012, virgin containerboard pricing was weaker on average than in 2011.Average benchmark kraftliner prices were 6% lower. However, supply sidecontraction coupled with reduced imports from the US resulted in an improvedsupply/demand balance with price increases being realised in stages throughoutthe second half of 2012. Average benchmark prices in the second half of 2012for kraftliner were 7% higher than in the first half. European virgincontainerboard markets remain firm in early 2013.

Surplus capacity in recycled containerboard continued to influence pricing andaverage benchmark prices were 10% lower than in 2011. After recovering throughthe end of the first quarter and into the second quarter from the January 2012lows, pricing weakened in the second half on lower input costs. Averagebenchmark prices in the second half of 2012 were 4% lower than in the firsthalf. Recent capacity closures coupled with a stable demand environment havefirmed up the recycled containerboard market. As yet, there has been littleimpact from the start-up of new capacity in Poland. A price increase of €60/tonne was announced in January 2013.

Sack kraft paper prices were on average 2-4% lower than in 2011 despite priceincreases having been implemented in the third quarter, reflected in averageprices in the second half being around 2% higher than the first half. Europeanprice levels have weakened marginally in early 2013, while pricing in exportmarkets remains stable.

Packaging Paper benefited from lower input costs particularly in the secondhalf of the year with lower wood costs in central Europe, and recycled papercosts being on average 16% lower than in 2011. The acquisition by Mondi Swiecieof the power and heat generating plant benefited the business with lower costsand increased green energy credits, although the lower average selling pricesachieved for green energy credits did provide some offset.

The business also benefited significantly from profit improvement initiatives,which, along with improved productivity, enabled the business to continue torealise good returns on invested capital.

The containerboard business is expected to benefit from synergies from theacquisition of the Duropack corrugated packaging plants in Germany and theCzech Republic, completed in November 2012, primarily through reducedtransportation costs (refer to Europe & International - Fibre Packaging formore detail).

Europe & International - Fibre Packaging

Fibre Packaging realised a 17% increase in underlying operating profit to €101million in 2012. The improvement reflects the benefits of ongoing profitimprovement initiatives and lower input costs. The ROCE of 12.5%, whilst stillbelow our 13% target, reflects a pleasing improvement on 2011 levels.

The corrugated packaging business benefited from generally stable pricing andvolumes coupled with lower paper input costs. Market demand for corrugatedpackaging products was broadly unchanged in the mature central European marketswhilst pleasing growth continued to be seen in emerging Europe. Average sellingprices in emerging Europe were higher than in 2011 which offset in part thedeclines experienced in the more mature markets.

In line with the Group's strategy to strengthen its leading market position incorrugated packaging in central and eastern Europe, Mondi acquired twocorrugated box plants in Germany and the Czech Republic consuming 130,000tonnes of containerboard per annum, and a 105,000 tonne recycled containerboardmill in the Czech Republic from Duropack GmbH on 5 November 2012. On 19November 2012, Mondi announced its intention to close the recycledcontainerboard mill. The acquisition of the packaging plants is expected toprovide the Group with improved access to these regional markets and generatelogistics synergies from their proximity to the Swiecie containerboard mill inPoland. Cost synergies are estimated at approximately €10 million per annum, uparound one-third from the original estimate at the time of acquisition. Aftertaking into account the restructuring and closure costs of the containerboardmill of €3 million, the contribution to underlying operating profit in 2012from this acquisition was a loss of €2 million.

Industrial bags benefited from lower paper input costs and productivity andcost improvement initiatives, which more than offset lower sales volumes andlower average selling prices. Growth in the CIS, Middle East, North Africa andAsia regions was positive whilst the western European markets continued to beweak, particularly in the south. This has necessitated restructuring inBelgium, Spain and France with restructuring provisions and an asset impairmentcharge amounting to €21 million being recognised in special items.

The coatings business benefited from lower input costs for both paper and resinas well as from stringent cost management measures and productivityimprovements. These gains were offset in part by weaker demand, particularlyfrom the automotive and building industries, and consequently lower sellingprices. The new facility in the US continues to ramp up its activities,particularly in respect of product qualification in higher value markets.

Europe & International - Consumer Packaging

The growth in consumer packaging reflects a significant step in the Group'sstrategic development in higher growth markets. Mondi acquired a 99.93%interest in Nordenia International AG with effect from 1 October 2012.

Nordenia, as an international supplier of innovative consumer packagingsolutions and hygiene components, enables the Group to develop a leadingconsumer packaging business, building on existing deep, long-term customerrelationships. Nordenia enjoys a strong competitive advantage through itsproprietary technology, global presence and a proven track record of innovationand growth.

Stripping out the effects of one-off costs and depreciation and amortisationcharges largely related to the acquisition accounting of €18 million detailedbelow, the ex-Nordenia business delivered underlying operating profit of €19million in the fourth quarter, in line with expectations at the time of theacquisition.

On acquisition, the Group recognised the net assets of Nordenia at their fairmarket value (the details of which are set out in note 12 of the condensedfinancial statements) resulting in a higher depreciation and amortisationcharge than recognised in the stand-alone Nordenia business. In the threemonths to 31 December 2012, this charge amounted to €4 million. The increase indepreciation and amortisation from 2013 will be approximately €13 million peryear.

In the fourth quarter a number of one-off costs, amounting to €14 million wererecognised. These costs mainly related to the acquisition accounting for theNordenia transaction and include the effect of the recognition of short-termassets at their fair value which were subsequently recognised as an expense inthe income statement.

Comparability with the prior year is further complicated by the sale ofUnterland in October 2011 which contributed €7 million of EBITDA and €5 millionof underlying operating profit up to the date of disposal.

In addition to the full year contribution from Nordenia in 2013, synergiesamounting to approximately €20 million per annum are expected to be realised bythe end of 2014, with approximately half the benefit already expected in 2013.This synergy target exceeds the original estimates at the time of theacquisition of €15 million per annum, largely due to increased confidence inthe delivery of a number of cost reduction initiatives.

Consumer Packaging has a strong product pipeline in development. The businessexpects its plant in Taicang, China to commence operations towards the end of2013 with full capacity being reached by 2015.

Europe & International - Uncoated Fine Paper

Uncoated Fine Paper again delivered a strong operating performance withunderlying operating profit of €191 million and a ROCE of 16.7%.

Whilst western European markets remained soft, impacted by both short-termcyclical and longer-term structural challenges, demand growth in eastern Europe(excluding the CIS region) was marginally positive. Market demand in Russia wasdown on a very strong 2011. In aggregate, Mondi's sales volumes for uncoatedfine paper were on a similar level to that of the previous year.

In Europe, selling prices were stable throughout the year with averagebenchmark European uncoated fine paper prices declining by 1% in the year,while marginal price increases were achieved in the Russian market.

Russia entered the World Trade Organisation in August 2012 and, as aconsequence, import duties for uncoated fine paper will reduce by 2.5% per yearuntil they reach a level of 5% in 2016. Implementation is due to start in 2013.The reduction in trade duties, coupled with new capacity coming on stream inboth Russia and France, is expected to place some pressure on pricing in theshort to medium term.

South Africa Division delivered an improved result with underlying operatingprofit increasing by 8% to €68 million and ROCE to 9.9%. Whilst still below theGroup's target rate, it is pleasing to note the continued improvement in thisbusiness from the lows of 2009.

Sales volumes increased across all grades, largely on the back of increasingdomestic demand.

Domestic selling price increases for uncoated fine paper and newsprint wereimplemented early in 2012 and prices remained at those levels throughout theyear. Both pulp and white-top kraftliner sales prices decreased on the back oflower average international benchmark US dollar selling prices. Lower averageselling prices were offset in large part by gains from the weaker rand versusthe US dollar and euro.

Above inflation wage and energy price increases were mitigated through ongoingcost management and efficiency improvement initiatives such that overall costincreases were kept below prevailing inflation rates.

Good progress is being made in land claims with a further eight claims havingbeen settled during the year.

Financial review

Special items

Special items for the year, giving rise to a net charge of €91 million beforetax, include the following:

Further detail is provided in note 4 of the condensed financial statements.

Input costs

Wood, recovered fibre and pulp comprise approximately one third of the inputcosts of the Group.

Wood costs decreased on average for both hardwood and softwood (1% and 5%respectively) versus the prior year. On average benchmark European recoveredpaper prices in 2012 were around 16% lower than in 2011 with an increase in theearly part of the year followed by a significant drop off in the second half ofthe year. Current recovered paper prices are at their lowest levels since March2010.

Average benchmark euro denominated pulp prices were 8% lower for softwood pulpand largely unchanged for hardwood pulp versus 2011. Softwood pulp pricescontinued to decline over the course of the year whilst average hardwood pulpprices were 6% higher in the second half of 2012 than the first half.

Energy cost increases for the year were significant, with oil increasing by 7%,gas by 12% and coal and power by 17% on average. This highlights the importanceof the Group's efforts to increase both energy efficiency and energyself-sufficiency.

Mondi's well established and relentless pursuit of cost saving initiatives boresignificant benefits across the value chain. These initiatives enabled theGroup to realise significant savings on input costs and fixed cost increaseswere kept well within inflation.

Currencies

The weaker rand and a stronger Polish zloty and US dollar against the europrovided a net positive impact to the Group. Positive translational andtransaction gains were realised in Packaging Paper, Fibre Packaging and theSouth Africa Division. Exchange rate volatility was more muted during the yearwith most currencies trading within a relatively narrow range against the euro.

Tax

The effective tax rate before special items was 20% - consistent with that of2011. The low tax rate continues to be a result of profitability in regionswith lower statutory tax rates and the benefits of tax incentives granted incertain countries in which the Group operates, notably those related to themajor Polish and Russian projects.

Non-controlling interests

Earnings attributable to holders of non-controlling interests declinedsignificantly from €70 million in the prior year to €35 million, primarily as aresult of the acquisition of the non-controlling interest in Mondi Swiecie inthe second quarter of 2012.

Cash flow

Despite the challenging economic environment, EBITDA from continuing operationsof €923 million was only 4% lower than in 2011. The strong cash generationreflects the contribution in the fourth quarter from the acquisition ofNordenia and the successful profit improvement and cost management initiativesthroughout the Group.

Mondi generated €845 million in cash from operations (2011: €917 million) aftertaking into account a net increase in working capital of €80 million. Theincrease in working capital includes the settlement of a number of short-termobligations recognised as part of the acquisition of Nordenia as well as thecancellation of the factoring arrangements that were in place prior to theacquisition.

The strong cash flow generation, supplemented by additional borrowings raisedduring the year, were applied to fund the Group's capital expenditure of €298million, its strategic acquisitions and distributions to shareholders.

Capital expenditure

Capital expenditure of €298 million was €35 million higher than the prior year.The capital expenditure to depreciation ratio was 86% including expenditure ona number of the Group's strategic energy projects.

Mondi's approved energy related investments totalling approximately €140million announced in early 2012 included a bark boiler at Syktyvkar in Russia,a steam turbine and recovery boiler economiser at Stambolijski, Bulgaria, a newrecovery boiler at Frantschach, Austria and a new steam turbine at the RichardsBay mill in South Africa. The benefits of these investments, mainly in the formof reduced energy costs, improved efficiencies and energy self-sufficiency areexpected to be realised from the end of 2013 as these projects reachcompletion. In addition, the decision has recently been taken to commence the €30 million pulp dryer project in Syktyvkar. The project was initially announcedin early 2012 but put on hold pending clarification of various technicalparameters, which have since been resolved.

As announced early in 2012 various additional energy related projects,amounting to approximately €250 million, were under consideration. In thisregard, the Boards have since approved a further €128 million strategic energyinvestment at the 51% held Ruzomberok mill. Further options remain underevaluation.

The Ruzomberok investment, including a new recovery boiler at the mill, willincrease pulp production, reduce the mill's environmental footprint and improvethe overall cost position. The project will also include improvements inchemical recovery and green energy and heat production during the pulpproduction process. Some of the project benefits also result from avoidingotherwise essential stay-in-business capital expenditure. The project isexpected to be completed in the fourth quarter of 2014, delivering an after-taxinternal rate of return in excess of 40%.

The Boards also approved a €70 million project in the Steti kraft paper millwhich will enable the mill to integrate the remaining open market pulpproduction on site by producing additional volumes of bleached kraft paper andwill provide growth opportunities for the kraft business. The project isexpected to be completed in the latter part of 2014 delivering an after taxinternal rate of return of around 20%.

Including the announced strategic projects, capital expenditure is expected tobe approximately 125% of the Group's depreciation charge on average over thenext two years.

Treasury and borrowings

Net debt at the end of the year was €1,864 million, a €1,033 million increasefrom the prior year end. Gearing increased to 39.3% at the end of 2012, up from21.5% at the end of 2011, and the net debt to 12 month trailing EBITDA ratiowas 2.0, well within the Group's key financial covenant requirements.

Finance charges of €107 million were similar to the previous year (€111million) due to a lower effective average interest rate offset by the increasednet debt. The majority of the increase in the Group's net debt occurred in thelast quarter of the year as a consequence of the acquisitions of Nordenia andthe corrugated packaging plants of Duropack in Germany and the Czech Republic.The debt assumed in the Nordenia acquisition included a high yield bond, whichwas recognised on acquisition at its fair market value, with the premium overbook value amortised over the remaining term of the bond. As a consequence, theeffective interest rate recognised in the financial statements approximates theGroup's average borrowing rate, well below the 9.75% coupon applicable to thatbond.

Mondi's public credit ratings, first issued in March 2010, were reaffirmedduring the year at BBB- from Standard and Poor's and Baa3 from Moody'sInvestors Service.

The Group actively manages its liquidity risk by ensuring it maintainsdiversified sources of funding and debt maturities. During the year the EuroMedium Term Note (EMTN) programme under which the €500 million, seven year bondwas issued in March 2010 was renewed. In September 2012 Mondi successfullylaunched an eight year, 3.375% fixed coupon, €500 million bond maturing in 2020under the same programme.

At the end of the year the Group's committed debt facilities amounted to €2.6billion with €762 million undrawn, which provides significant liquidity to meetMondi's short and medium-term funding requirements. Drawn committed facilitiesmaturing in 2013 amount to €191 million.

The weighted average maturity of the Eurobonds and committed debt facilitiesincreased to 4.8 years as at 31 December 2012 compared to 4.3 years a yearearlier.

Principal risks and uncertainties

It is in the nature of Mondi's business that the Group is exposed to risks anduncertainties which may have an impact on future performance and financialresults, as well as on its ability to meet certain social and environmentalobjectives.

On an annual basis, the DLC executive committee and Boards conduct a formalsystematic review of the most significant risks and uncertainties and theGroup's responses to those risks. These risks are assessed againstpre-determined risk tolerance limits, established by the Boards. In addition,the DLC audit committee reviews each of the principal risks in detail over thecourse of the year. Additional risk reviews are undertaken on an ad-hoc basisfor significant investment decisions and when changing business conditionsdictate.

The Boards' risk management framework addresses all significant strategic,sustainability, financial, operational and compliance-related risks which couldundermine the Group's ability to achieve its business objectives in asustainable manner. The risk management framework is designed to be flexible,to ensure that it remains relevant at all levels of the business given thediversity of the Group's locations, markets and production processes; anddynamic, to ensure that it remains current and responsive to changing businessconditions.

The Group believes that it has effective systems and controls in place tomanage the key risks identified below within the risk tolerance levelsestablished by the Boards.

Competitive environment in which Mondi operates

The industry in which Mondi operates is highly competitive and subject tosignificant volatility. New capacity additions are usually in large incrementswhich, combined with product substitution towards lighter weight products andalternative 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 astrends and developments in its own product range and potential substitutes. Aflexible and responsive approach to market and operating conditions and theGroup's strategic focus on low-cost production in growing markets, withconsistent investment in its operating capacity serve to mitigate this risk.

In 2012, the acquisitions of Nordenia and the corrugated packaging plants inGermany 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 recovered paper) and resins accounts for approximatelyone-third of the Group's input costs. It is the Group's objective to acquirefibre from sustainable sources and to avoid the use of any illegal orcontroversial supply.

All plantations in South Africa and leased/managed forests in Russia are FSC™certified. With the exception of Stambolijski, Bulgaria, all mills havechain-of-custody certificates in place, ensuring that the wood procured in 2012was from non-controversial sources. Stambolijski will be certified to FSC™chain-of-custody standards in 2013 and currently wood supplies meet Mondi'sminimum wood standards that ensure legality and non-controversial wood sources.Mondi constantly monitors international market prices for its other rawmaterials (recovered paper and resins) and, where possible, have costpass-through mechanisms in place with customers to mitigate the risk of inputcost increases. The Group's focus on high-quality, low-cost operations,relatively high levels of integration and access to its own fibre in Russia andSouth Africa further mitigate this risk.

Cost of energy and related input costs

Non-fibre input costs comprise approximately a third of the Group's totalvariable costs. Increasing energy costs, and the consequential impact thereofon both chemical and transport costs, may impact the Group's operating profitmargins.

Active investment in energy related projects have significantly improved energyself-sufficiency and efficiency in the Group.

Capital intensive operations

Mondi operates large facilities, often in remote locations. The ongoing safetyand sustainable operation of such sites is critical to the success of theGroup.

Mondi's management system ensures ongoing monitoring of all operations toensure they meet the requisite standards and performance requirements. TheGroup has adequate insurance in place to cover material property damage,business interruption and liability risks. A structured maintenance programmeis in place under the auspices of the Group technical director. Emergencypreparedness and response procedures are in place and subject to periodicdrills.

The locations in which the Group operates

Mondi operates in a number of countries with differing political, economic andlegal systems. In some countries, such systems are less predictable than incountries with more developed institutional structures. In addition, economicrisks in certain regions are heightened following the macroeconomicuncertainties experienced in recent years.

Mondi is invested in a number of geographical locations, with a strategic focuson low-cost high-growth markets. This geographical diversity and decentralisedmanagement structure utilising local resources in countries in which the Groupoperates reduces its exposure to any specific jurisdiction. Mondi continues toactively 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 thathigh-quality, experienced employees are required in all locations.

Appropriate reward and retention strategies are in place to attract and retaintalent across the organisation. At more senior levels, these include a sharebased incentive scheme.

Employee and contractor safety

Mondi's employees work in potentially dangerous environments where hazards areever-present and must be managed. Mondi's objective is a zero harm environment.

The Group engages in extensive safety training sessions, involving employeesand contractors, at all its operations. The Nine Safety Rules to Live By,applied across the Group, are integral to the safety strategy. Operationsconduct statutory safety committee meetings where management and employees arerepresented. A risk-based approach underpins safety and health programmes. Allbusiness units and operations are required to have safety improvement plans inplace. Mondi's Total Recordable Case Rate (TRCR per 200,000 hours worked) was0.79 (2011: 0.92). Regrettably, there were two fatalities at our operationsduring the year - one in Finland and one in Russia.

Environmental footprint

Maintaining the Group's socio-economic license to trade is a strategicimperative. This encompasses continued access to credible sources of fibre asdescribed above, protection of High Conservation Value (HCV) areas andbio-diversity, eco-efficiency of products throughout their lifecycle and theGroup's carbon and energy footprint.

Mondi's approach to product stewardship is based on the Life-Cycle Initiativeset out in the United Nations Environmental Programme (UNEP). The Group'scertified products carry clear and informative labelling to ensure that itscustomers are aware of the environmental process controls and health and safetyassessments 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 andlabelling were recorded. Mondi does not convert natural forests, riparianareas, wetlands or protected areas into plantations. HCV areas are identifiedand preserved or enhanced, as is biological diversity. In Russia 522,260hectares have been set aside for conservation (24.8% of our landholding) and76,398 hectares in South Africa (25% of our landholding). Mondi uses biomassenergy sources such as black liquor as an alternative to fossil fuels at all ofits mills. Some 58% of Mondi's fuel consumption comes from biomass and a numberof operations are completely energy self-sufficient.

Governance risks

The Group operates in a number of legal jurisdictions and non-compliance withlegal and governance requirements in these jurisdictions could expose the Groupto significant risk if not adequately managed.

The Group's legal and governance risk management and compliance will be set outin the Corporate governance report in the integrated reporting and financialstatements 2012.

Financial risks

Mondi's trading and financing activities expose the Group to financial risksthat, if left unmanaged, could adversely impact current or future earnings.These risks relate to the currencies in which the Group conducts itsactivities, interest rate and liquidity risks as well as exposure to customercredit risk.

Mondi's approach to financial risk management is described in notes 37 and 38of the annual financial statements.

Going concern

The Group's business activities, together with the factors likely to affect itsfuture development, performance and position are set out in the businessreview. The financial position of the Group, its cash flows, liquidity positionand borrowing facilities are described in the annual financial statements. Inaddition, the risk report sets out the most significant risks facing the Groupand the management and mitigation thereof.

Mondi's geographical spread, product diversity and large customer base mitigatepotential risks of customer or supplier liquidity issues. Ongoing initiativesby management in implementing profit improvement initiatives which includeplant optimisation, cost-cutting, and restructuring and rationalisationactivities have consolidated the Group's leading cost position in its chosenmarkets. Working capital levels and capital expenditure programmes are strictlymonitored and controlled.

The Group meets its funding requirements from a variety of sources as morefully described in note 10 of the condensed financial statements. Theavailability of some of these facilities is dependent on the Group meetingcertain financial covenants all of which have been complied with. Mondi had €762 million of undrawn committed debt facilities as at 31 December 2012 whichshould provide sufficient liquidity in the medium term.

The Group's forecasts and projections, taking account of reasonably possiblechanges in trading performance, including an assessment of the currentmacroeconomic environment, particularly in Europe, indicate that the Groupshould be able to operate well within the level of its current facilities andrelated covenants.

The directors have reviewed the overall Group strategy, the budget for 2013 andsubsequent years, considered the assumptions contained in the budget andreviewed the critical risks which may impact the Group's performance. Aftermaking such enquiries, the directors have a reasonable expectation that theGroup has adequate resources to continue in operational existence for theforeseeable future. Accordingly, they continue to adopt the going concern basisin preparing the integrated report and financial statements.

Dividend

The Boards' aim is to offer shareholders long-term dividend growth within atargeted dividend cover range of two to three times over the business cycle.Given the Group's strong financial position notwithstanding the significantdebt-funded acquisitions during the year, and the Boards' stated objective toincrease distributions to shareholders through the ordinary dividend, we arepleased to recommend an increase in the final dividend.

The boards of Mondi Limited and Mondi plc have recommended a final dividend of19.1 euro cents per share (2011: 17.75 euro cents per share), payable on 16 May2013 to shareholders on the register at 19 April 2013. Together with theinterim dividend of 8.9 euro cents per share, paid on 18 September 2012, thisamounts to a total dividend for the year of 28.0 euro cents per share. In 2011,the total dividend for the year was 26.0 euro cents per share.

Outlook

Mondi's focus in the near term will be the integration and optimisation of therecent acquisitions and successful delivery of the significant capitalinvestment projects initiated over the course of the past year. It is pleasingto see the progress that has already been made in integrating the recentacquisitions, exemplified by the fact that the Group has revised upwards by 33%its estimate of expected synergies to €30 million per annum within two years.

Fundamentals for Mondi's core segments remain sound, although recentlyannounced capacity additions by various manufacturers in selected paper gradesare a concern, exacerbated by the prevailing demand softness as Europe remainsaffected by the macroeconomic slowdown. However, with the strong finish to theyear, coupled with the expected contribution from the recent acquisitions, theBoards remain confident of making progress in the year ahead.

Directors' responsibility statement

These financial statements have been prepared under supervision of the GroupChief Financial Officer, Andrew King CA (SA), as required by Section 29(1)(e)(ii) of the Companies Act of South Africa 2008, and have been audited incompliance with the applicable requirements of the Companies Act of SouthAfrica 2008 and the UK Companies Act 2006.

The responsibilty statement below has been prepared in connection with theGroup's annual report for the year ended 31 December 2012. Certain partsthereof are not included within this announcement.

The Boards confirm that to the best of their knowledge:

The Group's combined and consolidated financial statements, and related notes,were approved by the Boards and authorised for issue on 20 February 2013 andwere signed on its behalf by:

20 February 2013 20 February 2013

Audited financial information

The combined and consolidated financial statements for the year ended 31December 2012 have been audited by the Group's auditors, Deloitte LLP andDeloitte & Touche. Their unqualified audit reports are available for inspectionat the Group's registered offices.

Condensed combined and consolidated income statementfor the year ended 31 December 2012

Other net operating expenses (193) (10) (203) (186) (2) (188)

Non-operating special items 4 - (64) (64) - (1) (1)

Condensed combined and consolidated statement of comprehensive incomefor the year ended 31 December 2012

The Group's combined and consolidated financial statements, and related notes,were approved by the Boards and authorised for issue on 20 February 2013 andwere signed on its behalf by:

Mondi Limited company registration number: 1967/013038/06

Mondi plc company registered number: 6209386

Condensed combined and consolidated statement of cash flowsfor the year ended 31 December 2012

Note:

1 Cash and cash equivalents include overdrafts and cash flows from disposalgroups and are reconciled to the combined and consolidated statement offinancial position in note 15b.

Condensed combined and consolidated statement of changes in equityfor the year ended 31 December 2012

1 In August 2011, Mondi Limited's par value shares were converted by specialresolution to shares with no par value. As a result Mondi Limited's sharecapital and share premium were combined into a stated capital account. Theshare consolidation described in notes 6 and 7 had no impact on the statedcapital and share capital of Mondi Limited and Mondi plc respectively.

2 Other reserves are analysed further below.

1 All movements in other reserves are disclosed net of non-controllinginterests. The movement in non-controlling interests as a direct result of themovement in other reserves for the year ended 31 December 2012 was an increasein non-controlling interests related to total comprehensive income for the yearof €7 million (2011: decrease of €27 million).

2 Statutory reserves consist of the merger reserve of €259 million (2011: €259 million) and other sundry reserves in deficit of €6 million (2011: deficitof €7 million).

Notes to the condensed combined and consolidated financial statementsfor the year ended 31 December 2012

1 Basis of preparation

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 theDLC structure is such that Mondi Limited and its subsidiaries, and Mondi plcand its subsidiaries, operate together as a single economic entity through asharing agreement, with neither parent entity assuming a dominant role.Accordingly, Mondi Limited and Mondi plc are reported on a combined andconsolidated basis as a single reporting entity.

The condensed combined and consolidated financial information included in thispreliminary announcement has been prepared in accordance with the measurementand recognition criteria of International Financial Reporting Standards (IFRS)as issued by the International Accounting Standards Board (IASB) and containsthe information required by IAS 34, `Interim Financial Reporting'. The Grouphas also complied with the South African Institute of Chartered AccountantsFinancial Reporting Guides as issued by the Accounting Practices Committee andFinancial Reporting Pronouncements as issued by the Reporting Standards Councilof South Africa. There are no differences for the Group in applying IFRS asissued by the IASB and IFRS as adopted by the European Union (EU) and thereforethe Group also complies with Article 4 of the EU IAS Regulation. The combinedand consolidated financial statements have been prepared on a going concernbasis as discussed in the business review, under the heading `Going concern'.

The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2012 or 2011 but is derivedfrom those accounts. Statutory accounts for 2011 have been delivered to theregistrar of companies, and those for 2012 will be delivered in due course. Theauditors have reported on those accounts; their reports were (i) unqualified,(ii) did not include a reference to any matters to which the auditors drewattention by way of emphasis without qualifying their report and (iii) did notcontain a statement under section 498 (2) or (3) of the UK Companies Act2006. Copies of their unqualified auditors' reports are available forinspection at the Mondi Limited and Mondi plc registered offices.

2 Accounting policies

The same accounting policies, methods of computation and presentation have beenfollowed in the preparation of the combined and consolidated financialstatements as were applied in the preparation of the Group's annual financialstatements for the year ended 31 December 2011.

3 Operating segments

Identification of the Group's externally reportable operating segments

The Group's externally reportable segments reflect the internal reportingstructure of the Group, which is the basis on which resource allocationdecisions are made by management in the pursuit of strategic objectives. TheGroup operates under two primary geographic regions reflecting its SouthAfrican activities and assets, and its international, principally European,activities and assets. The broad European region is further split by productsegments reflecting the management structure of the Group.

Following the completion of the acquisition of Nordenia International AG(Nordenia) on 1 October 2012 (refer note 12) the Europe & Internationalbusiness was reorganised to comprise four operating segments: Packaging Paper,Fibre Packaging, Consumer Packaging and Uncoated Fine Paper. Furthermore, thedisposal of Aylesford Newsprint on 2 October 2012 (refer note 14) resulted inthe previously reported Newsprint segment no longer meeting any of thequantitative thresholds required for classification as a separate operatingsegment. The remaining newsprint joint venture, Mondi Shanduka Newsprint, hasaccordingly been incorporated into the South Africa Division due tosimilarities in geographical location, production processes and the integratednature of the production facilities. The Group's segmental information for theyear ended 31 December 2011 has been restated to reflect these reorganisations.

Product revenues

1 Revenues are generated from both internal and external sales. The Groupoperates a vertically-integrated structure in order to benefit from economiesof scale and to more effectively manage the risk of adverse price movements inkey input costs. Internal revenues are therefore generated across the supplychain.

2 South Africa Division generates newsprint revenue from external sales only.

Measurement of operating segment revenues, profit and loss, assets andnon-current non-financial assets

Management has regard to certain operating segment measures in making resourceallocation decisions and monitoring segment performance. The operating segmentmeasures required to be disclosed adhere to the recognition and measurementcriteria presented in the Group's accounting policies. In addition, the Grouphas presented certain non-IFRS measures by segment to supplement the user'sunderstanding. All intra-group transactions are conducted on an arm's lengthbasis.

The Group's measure of net segment assets includes the allocation of retirementbenefits surpluses and deficits on an appropriate basis. The measure of segmentresults exclude, however, the financing effects of the Group's defined benefitpension plans. In addition, the Group's measure of net segment assets does notinclude an allocation for derivative assets and liabilities, non-operatingreceivables and payables and assets held for sale and associated liabilities.The measure of segment results includes the effects of certain movements inthese unallocated balances.

The Group's geographic analysis is presented on the following level:

1 Inter-segment transactions are conducted on an arm's length basis.

2 The description of each business segment reflects the nature of the mainproducts they sell. In certain instances the business segments sell minorvolumes of other products and due to this reason the external segment revenueswill not necessarily reconcile to the external revenues by type of productpresented below.

External revenue by product type

1 Revenues derived from product types that are not individually material areclassified as other.

External revenue by location of customer

1 These revenues, which total €676 million (2011: €581 million), areattributable to the countries in which the Group's parent entities aredomiciled.

External revenue by location of production

1 These revenues, which total €772 million (2011: €764 million), areattributable to the countries in which the Group's parent entities aredomiciled.

There are no external customers which account for more than 10% of the Group'stotal external revenue.

Operating profit from continuing operations before special items

Significant components of operating profit from continuing operations beforespecial items

The DLC executive committee uses EBITDA as a measure of cash flow, coupled withthe depreciation and amortisation charge, for making decisions about, amongstothers, allocation of funds for capital investment.

1 Excluding impairments included in special items (see note 4).

Group total from continuing operations 38 56 76 84

Reconciliation of total profit from operations and associates to EBITDA

1 Excluding impairments included in special items (see note 4).

Other non-operating assets/(liabilities)2 170 (315) 140 (291)

1 Segment assets are operating assets and as at 31 December 2012 consist ofproperty, plant and equipment of €3,706 million (2011: €3,377 million),intangible assets of €695 million (2011: €238 million), forestry assets of €311 million (2011: €297 million), retirement benefits surplus of €nil (2011: €8 million), inventories of €779 million (2011: €637 million) and operatingreceivables of €854 million (2011: €708 million).

2 Other non-operating assets consist of derivative assets of €4 million (2011:€13 million), current income tax receivables of €10 million (2011: €6 million),other non-operating receivables of €153 million (2011: €121 million) and assetsheld for sale of €2 million (2011: €nil). Other non-operating liabilitiesconsist of derivative liabilities of €4 million (2011: €8 million),non-operating provisions of €94 million (2011: €68 million), current income taxliabilities of €66 million (2011: €78 million) and other non-operating payablesand deferred income of €320 million (2011: €277 million).

Non-current non-financial assets

1 Non-current non-financial assets are non-current assets and consist ofproperty, plant and equipment, intangible assets and forestry assets, butexclude retirement benefits surplus, deferred tax assets and non-currentfinancial assets.

2 These non-current non-financial assets, segment assets and net segmentassets, which total €832 million, €1,007 million and €846 million respectively(2011: €862 million, €1,051 million and €893 million respectively), areattributable to the countries in which the Group's parent entities aredomiciled.

Additions to non-current non-financial assets

1 Additions to non-current non-financial assets reflect cash payments andaccruals in respect of additions to property, plant and equipment, intangibleassets and forestry assets and include interest capitalised as well asadditions resulting from acquisitions through business combinations. Additionsto non-current non-financial assets, however, exclude additions to deferred taxassets, retirement benefits surplus and non-current financial assets.

2 Capital expenditure cash payments exclude business combinations, interestcapitalised and investments in intangible and forestry assets.

Restructuring and closure costs excluding related personnel (4) (5)costs

Transaction costs incurred on the acquisition of Nordenia (11) -

Total special items from continuing operations before tax (91) (55)and non-controlling interests

Total special items attributable to equity holders of the (92) (53)parent companies

Special items from continuing operations before tax and non-controllinginterests by operating segment

Operating special items

Asset impairments of €1 million and restructuring costs of €20 million in theIndustrial Bags segment of the Fibre Packaging business in Belgium, Spain,France and Mexico were recognised. These costs were partly offset by a €5million gain on the settlement of an insurance claim.

Transaction costs incurred by the Consumer Packaging business on theacquisition of Nordenia amounted to €11 million.

Non-operating special items

A gain of €6 million was realised on the sale of land in the South AfricaDivision as part of its ongoing settlement of land claims. The settlements werereached using the sale and leaseback framework developed by Mondi and the SouthAfrican Government which ensures that title to the land is transferred to theclaimant and that Mondi is paid a fair price for the land and secures acontinued fibre supply for its mills.

The disposal of Aylesford Newsprint resulted in a loss on disposal of €70million. The shares in Aylesford Newsprint were sold for a nominalconsideration satisfied in cash at completion.

5 Tax charge

(a) Analysis of charge for the year from continuing operations

Deferred tax in respect of the current period (excluding tax 16 22on special items)

(b) Factors affecting tax charge for the year

The Group's effective rate of tax from continuing operations before specialitems for the year ended 31 December 2012, calculated on profit from continuingoperations before tax before special items and including net income fromassociates, is 20% (2011: 20%).

The Group's total tax charge from continuing operations for the year can bereconciled to the tax on the Group's profit from continuing operations beforetax at the weighted average UK and SA corporation tax rate of 24.9% (2011:26.6%), as follows:

Tax in Mondi Limited on intercompany interest received from - 4Mpact Limited

Current year tax losses and other temporary differences not 36 26recognised

Prior period tax losses and other temporary differences not (8) (12)previously recognised

Effect of differences between local rates and UK and SA (19) (28)rates

Tax charge from continuing operations for the financial year 92 100

Note:

1 The weighted average tax rate has been determined by weighting the profitfrom continuing operations before tax after special items of Mondi Limited andits subsidiaries and Mondi plc and its subsidiaries.

2 For the year ended 31 December 2012, changes in tax rates principally relateto adjustments made to deferred tax balances based on substantively enactedfuture changes in corporation tax rates in Slovakia and Sweden.

The Group's share of its associates' tax charge included within net income fromassociates for the year ended 31 December 2012 is €nil (2011: €nil).

6 Discontinued operation

On 30 June 2011, the Mondi Group shareholders approved a special resolution toseparate the Group's interest in Mondi Packaging South Africa (MPSA) via ademerger in terms of which all the ordinary shares in MPSA held by MondiLimited were distributed to the Mondi Limited ordinary shareholders by way of adividend in specie. MPSA was listed on 11 July 2011 under a new name, MpactLimited (Mpact), on the securities exchange operated by the JSE Limited (JSE).

Subsequent to the demerger, a consolidation of the Mondi Limited ordinaryshares owned by Mondi Limited shareholders, the effect of which was to reducetheir proportionate interest in the Mondi Group, was undertaken in order tocompensate Mondi plc shareholders for the value distributed to Mondi Limitedshareholders in terms of the demerger.

The result of the Mondi Limited share consolidation was that the number ofMondi Limited shares in issue reduced from 147 million to 118 million and thetotal number of Mondi shares in issue reduced from 514 million to 486 million.

Prior to the demerger, Mpact paid interest of €13 million for the year ended 31December 2011 to Mondi Limited in respect of intercompany financing provided,which eliminated on consolidation and thus was not taken into consideration inthe tables below.

The results of the discontinued operation were:

Earnings per share from the discontinued operation were:

Details of the discontinued operation disposed were as follows:

7 Earnings per share

As described in note 6, Mondi Limited's ordinary shares were subject to a shareconsolidation which was recognised from 1 August 2011, the date on which thenew Mondi Limited ordinary shares commenced trading on the JSE.

Note:

1 The basic number of ordinary shares outstanding represents the weightedaverage number in issue for Mondi Limited and Mondi plc for the year, asadjusted for the weighted average number of treasury shares held during theyear, and includes the impact of the share consolidation in 2011.

(a) From continuing operations

The calculation of basic and diluted EPS and basic and diluted underlying EPSfrom continuing operations is based on the following data:

Profit for the financial year attributable to equity holders 244 330of the parent companies

Net gain on distribution of discontinued operation (see note - (29)6)

Profit from continuing operations for the financial year 244 287attributable to equity holders of the parent companies

(b) From continuing and discontinued operations

1 The presentation of headline EPS is mandated under the JSE ListingsRequirements. Headline earnings has been calculated in accordance with Circular3/2012, `Headline Earnings', as issued by the South African Institute ofChartered Accountants.

The calculation of basic and diluted EPS and basic and diluted headline EPSfrom continuing and discontinued operations is based on the following data:

Profit for the financial year attributable to equity holders 244 330of the parent companies

Net gain on distribution of discontinued operation (see note - (29)6)

8 Alternative measure of earnings per share

The directors elected to present an alternative, non-IFRS measure of earningsper share from continuing operations in order to provide shareholders with acomparison of the continuing operations of the Group as if the demerger andrelated share consolidation had occurred on 1 January 2011. This is deemedappropriate as it is the continuing operations of the Group, after taking theimpact of the share consolidation into consideration, which form the basis ofthe performance of the Group. This approach enables a useful comparison ofearnings per share from continuing operations, based on the consolidatedshares, for all future periods.

The presentation of such an alternative, non-IFRS measure of earnings per shareis classified by the JSE Limited as pro-forma financial information. Refer tothe Mondi Group Integrated report and financial statements for the year ended31 December 2011 for the pro-forma financial information and independentreporting accountants' report thereon.

In addition, the effect of the recapitalisation of Mpact resulted in arepayment of intercompany debt by Mpact to Mondi Limited on 4 and 5 July 2011of €76 million. These proceeds were used to reduce the Group's net debt. Thealternative measure of earnings per share has therefore been adjusted to takethe related saving on interest paid into consideration as if therecapitalisation had occurred on 1 January 2011.

The demerger and related share consolidation had no impact on the Group'sresults for the year ended 31 December 2012.

Note:

1 Had the recapitalisation of Mpact occurred on 1 January 2011, Mondi Limitedwould no longer have received interest on its intercompany loans to Mpact andthus the tax charge on the interest received would not have been incurred.

The revised weighted average number of shares is determined as follows:

1 The actual number of shares subject to consolidation was 29 million. Theadjustment reflects the impact on the number of shares as if the shareconsolidation had occurred with effect from 1 January 2011 and takes treasuryshares into consideration. In 2011, the adjustment reflects the period up tothe date of the share consolidation as the share consolidation is included inthe basic number of ordinary shares outstanding from 1 August 2011.

2 The basic number of ordinary shares outstanding represents the weightedaverage number in issue for Mondi Limited and Mondi plc for the year, asadjusted for the weighted average number of treasury shares held during theyear.

Based on the adjusted earnings and weighted average number of shares, thealternative, non-IFRS earnings per share figures for continuing operationswould be:

An interim dividend for the year ended 31 December 2012 of 90.44358 rand cents/ 8.90 euro cents per share was paid on 18 September 2012 to all Mondi Limitedand Mondi plc ordinary shareholders on the relevant registers on 24 August2012.

A proposed final dividend for the year ended 31 December 2012 of 19.1 eurocents per ordinary share will be paid on 16 May 2013 to all those shareholderson the register of Mondi plc on 19 April 2013. An equivalent South African randfinal dividend will be paid on 16 May 2013 to shareholders on the register ofMondi Limited on 19 April 2013. The final dividend is subject to the approvalof the shareholders of Mondi Limited and Mondi plc at the respective annualgeneral meetings scheduled for 3 May 2013.

Dividend timetable

The proposed final dividend for the year ended 31 December 2012 of 19.1 eurocents per share will be paid in accordance with the following timetable:

Last date for receipt of Dividend 25 April 2013 25 April 2013Reinvestment Plan (DRIP) elections

Last date for DRIP elections to UK 26 April 2013 21 April 2013*Registrar and South African

*26 April 2013 for Mondi plc South African branch register shareholders

**24 May 2013 for Mondi plc South African branch register shareholders

Share certificates on the South African registers of Mondi Limited and Mondiplc may not be dematerialised or rematerialised between 15 April 2013 and 21April 2013, both dates inclusive, nor may transfers between the UK and SouthAfrican registers of Mondi plc take place between 10 April 2013 and 21 April2013, both dates inclusive.

Information relating to the dividend tax to be withheld from Mondi Limitedshareholders and Mondi plc shareholders on the South African branch registerwill be announced separately, together with the ZAR/euro exchange rate to beapplied, on or shortly after 21 February 2013.

Obligations under finance leases

The maturity of obligations under finance leases is:

The Group does not have any individual finance lease arrangements which areconsidered material.

Financing facilities

Group liquidity is provided through a range of committed debt facilities. Theprincipal loan arrangements in place include the following:

€750 million Syndicated Revolving Credit Facility (RCF)

The RCF is a five year multi-currency revolving credit facility which wassigned on 14 April 2011. Interest is charged on the balance outstanding atmarket-related rates linked to EURIBOR.

€500 million 2017 Eurobond

Mondi Finance plc launched its inaugural seven year publicly traded bond,guaranteed by Mondi plc, in March 2010. The €500 million bond, which matures on3 April 2017, was issued at a discount of €5.63 million and pays a fixed couponof 5.75% per annum. The bond contains a coupon step up clause whereby thecoupon will be increased by 1.25% per annum if Mondi fails to maintain at leastone investment grade credit rating from either Moody's Investors Service orStandard & Poor's. Mondi currently has investment grade credit ratings fromboth Standard & Poor's (BBB-, outlook stable) and Moody's Investors Service(Baa3, outlook stable).

€500 million 2020 Eurobond

In September 2012 Mondi Finance plc launched an eight year publicly tradedbond, guaranteed by Mondi plc. The €500 million bond, which matures on 28September 2020, was issued at a discount of €0.1 million and pays a fixedcoupon of 3.375% per annum. The bond contains the same 1.25% per annum couponstep up clause as the €500 million 2017 Eurobond.

€280 million Eurobond

As part of the acquisition of Nordenia (see note 12) Mondi assumed Nordenia's €280 million Eurobond, paying a coupon of 9.75% per annum and maturing on 15July 2017. The bond was recognised at its fair value of €324 million at date ofacquisition. The fair value of the bond includes the fair value of an option tocall the bond early at the following redemption rates:

The option is valued at €47 million at 31 December 2012.

€160 million Export Credit Agency Facility (ECAF)

The ECAF is used to part finance expansionary capital expenditure in Russia.The facility has an amortising repayment until 2020 and interest is charged onthe balance outstanding at a market-related rate linked to LIBOR.

PLN 474 million European Investment Bank Facility (EIBF1)

The EIBF1 is used to part finance expansionary capital expenditure at MondiSwiecie in Poland. The facility has an amortising repayment until 2017 andinterest is charged at a market-related rate linked to WIBOR (Warsaw InterbankOffered Rate).

€100 million European Investment Bank Facility (EIBF2)

The EIBF2 is used to part finance expansionary capital expenditure in Russia.The facility is currently undrawn and is available to be drawn until 28 May2013. Once drawn, the facility amortises over 12 years with a two year graceperiod. Interest is charged on the balance outstanding at a market-related ratelinked to EURIBOR.

RUB 1.6 billion European Bank for Reconstruction and Development Facility(EBRDF)

The EBRDF is used to part finance expansionary capital expenditure in Russia.The facility has an amortising repayment until 2019 and interest is charged onthe balance outstanding at a market-related rate linked to MOSPRIME (MoscowPrime Offered Rate).

In addition to the facilities above, the Group has committed facilitiesamounting to R1.2 billion in South Africa, comprising of two revolving loans ofR500 million (2011: R500 million) and R700 million (2011: R500 million)respectively. These loans are repayable on their extended maturity dates of 15June 2013 and 23 August 2013 and bear interest at one month JIBAR plusdifferent margins, payable monthly.

In addition to the above, the Group swaps euro debt into other currenciesthrough the foreign exchange market.

The fair values of the €500 million 2017 Eurobond, €500 million 2020 Eurobondand €280 million Eurobond are estimated with reference to the last price quotedin the secondary market and for all other financial liabilities are estimatedby discounting the future contractual cash flows at the current market interestrate that is available to the Group for similar financial instruments.

The Group has pledged specific assets as collateral against certain borrowings.The fair values of these assets as at 31 December are as follows:

The Group is entitled to receive all cash flows from these pledged assets.Further, there is no obligation to remit these cash flows to another entity.

11 Retirement benefits

All assumptions of the Group's material defined benefit schemes andpost-retirement medical plan liabilities were reassessed individually and theremaining Group defined benefit schemes and unfunded statutory retirementobligations were reassessed in aggregate for the year ended 31 December 2012.

The net retirement benefit obligation increased by €59 million mainly due tochanges in assumptions, €21 million of net liabilities acquired throughbusiness combinations (see note 12), an exchange rate impact of €4 million anda €2 million settlement charge resulting from the winding-up of the MondiPension Fund in South Africa. Mondi Limited expects to receive a reimbursementof the pension surplus of €6 million once the fund is wound up, subject to anypotential claims. The reimbursement is included in trade and other receivables.

The assets backing the defined benefit scheme liabilities reflect their marketvalues as at 31 December 2012. Any movements in the assumptions have beenrecognised as an actuarial movement in the combined and consolidated statementof comprehensive income.

On 1 October 2012 Mondi acquired 99.93% of the outstanding share capital ofNordenia from Oaktree Capital Management L.P. and certain other minorityshareholders for a cash consideration of €259 million. The acquisition enablesMondi to create a leading consumer packaging business.

Nordenia generated operating profits prior to its acquisition by Mondi, but washighly geared and as a result had an equity deficit. The premium of €268million paid over the fair values of Nordenia's identifiable net assets wasrecognised as goodwill on acquisition and can be attributed to significantsynergies to be realised from combining Nordenia's existing consumer packagingactivities with those of Mondi, the ability to leverage Nordenia's existingcompetencies in high-growth emerging markets, exposure to Nordenia's proveninnovation and product development processes and access to Nordenia's long-termrelationships with a broad blue chip customer base. It is not expected that anyportion of the goodwill will be deductible for tax purposes.

The interest of non-controlling interests in Nordenia of 0.07% recognised atthe acquisition date was insignificant.

The fair value accounting reflected in these results is provisional in nature.The nature of this business is such that adjustments to the carrying values ofacquired assets and/or liabilities, and to the goodwill arising on acquisition,are possible as the detail of the acquired business is evaluated postacquisition. If necessary, these adjustments will be made within 12 months ofthe acquisition date.

Prior to being acquired by Mondi, Nordenia generated revenue of approximately €74 million per month and underlying operating profit of €6 million permonth. Nordenia's revenue for the year ended 31 December 2012 was €873 millionwith a profit after tax of €1 million. Nordenia's revenue of €208 million andunderlying operating profit of €1 million since date of acquisition have beenincluded in the combined and consolidated income statement. Transaction costsof €11 million related to the acquisition are recognised as a special item inthe combined and consolidated income statement.

Details of the net assets acquired, as adjusted from book to fair value, andthe attributable goodwill are as follows:

In respect of trade and other receivables, the gross contractual amountsreceivable and the best estimate at the acquisition date of the contractualcash flows not expected to be collected approximate the book value and therevaluation amount respectively as presented.

Other acquisitions

On 2 May 2012, following completion of a number of suspensive conditions,including a ruling from the Arbitration Court of the National Chamber ofCommerce in Poland, Mondi Swiecie S.A. acquired the entire share capital ofSaturn Management Sp. Z o.o. from Polish Energy Partners S.A. for a net cashconsideration of €31 million and the assumption of debt of €57 million. Thepremium of €4 million paid over the acquisition date fair values of the netassets acquired is attributable to expected cost saving synergies. Transactioncosts of approximately €1 million were expensed. Saturn Energy is the owner ofthe power and heat generating plant that provides Mondi Swiecie S.A. with mostof its electricity requirements and all of its heat and steam needs.

In line with Mondi's existing strategy to strengthen its leading marketposition in corrugated packaging in central and eastern Europe, Mondi acquiredtwo corrugated box plants in Germany and the Czech Republic, consuming 130,000tonnes of containerboard per annum, and a 105,000 tonne recycled containerboardmill in the Czech Republic from Duropack GmbH (Duropack) for a cashconsideration of €133 million on 5 November 2012. On 19 November 2012 the Groupannounced its intention to close the recycled containerboard mill. Closurecosts of €3 million were recognised in the combined and consolidated incomestatement.

The premium of the purchase price over the acquisition date fair values of thenet assets acquired from Duropack amounted to €84 million and is mainlyattributable to synergies expected to be realised from combining the convertingactivities of the two box plants with the Group's existing operations.

It is not expected that any portion of the goodwill arising from theacquisition of these businesses will be deductible for tax purposes.

The fair value accounting reflected in these results is provisional in nature.The nature of these businesses is such that adjustments to the carrying valuesof acquired assets and/or liabilities, and to the goodwill arising onacquisition, are possible as the detail of each acquired business is evaluatedpost acquisition. If necessary, these adjustments will be made within 12 monthsof the acquisition dates.

Prior to the acquisitions, the businesses generated revenue of approximately €12 million per month and underlying operating profits of €1 million permonth. The businesses' aggregate revenues for the year ended 31 December 2012were €148 million with profits after tax of €7 million. Since the acquisitiondates, turnover of €27 million and underlying operating losses of €1 millionwere contributed by the businesses and included in the combined andconsolidated income statement.

Details of the aggregate net assets acquired, as adjusted from book to fairvalue, and the attributable goodwill are presented as follows:

1 €27 million of net assets acquired is attributable to Saturn and €49 millionto Duropack.

2 €4 million of the goodwill arising on acquisitions is attributable to Saturnand €84 million to Duropack.

3 €29 million of the net cash paid is attributable to Saturn and €115 millionto Duropack.

In respect of trade and other receivables, the gross contractual amountsreceivable and the best estimates at the acquisition dates of the contractualcash flows not expected to be collected approximate the book values and therevaluation amounts respectively as presented.

There were no other acquisitions made during the year ended 31 December 2012.

To 31 December 2011

There were no major acquisitions made during the year ended 31 December 2011.

Details of the aggregate net assets acquired are disclosed in note 29 of theGroup's annual financial statements for the year ended 31 December 2012.

13 Non-controlling interests bought out

On 18 April 2012, Mondi concluded an all cash public tender offer for theordinary shares in Mondi Swiecie S.A. that it did not already own, increasingits shareholding to 93.2% from 66%. On 18 May 2012, Mondi acquired theremaining shares it did not already own. The total consideration paid by Mondiwas €296 million including transaction costs of approximately €1 million whichwere expensed.

€2 million was paid for the acquisition of an additional 3.1% of the ordinaryshares of Mondi Tire Kutsan Kagit Ve Ambalaj Sanayi Anonim Sirketi.

These acquisitions are reflected in the combined and consolidated statement ofchanges in equity as transactions between shareholders with the premium overthe carrying value of the non-controlling interests being reflected as areduction in retained earnings.

14 Disposal of joint ventures and subsidiaries

To 31 December 2012

Disposal of Aylesford Newsprint

On 2 October 2012, Mondi and Svenska Cellulosa Aktiebolaget (SCA) sold their100% interest in the jointly owned Aylesford Newsprint to The Martland Holdingsfor a nominal consideration. Aylesford Newsprint specialises in newsprintproduction from recycled fibre. The loss on disposal of €70 million wasrecognised in special items in the combined and consolidated income statement.Transaction costs were insignificant and were expensed.

Other disposals

There were no other significant disposals during the year ended 31 December2012.

Details of the aggregate net assets disposed are presented as follows:

To 31 December 2011

The discontinued operation and associated demerger of Mpact is disclosed innote 6.

There were no other major disposals during the year ended 31 December 2011.Details of the aggregate net assets disposed are disclosed in note 31 of theGroup's annual financial statements for the year ended 31 December 2012.

15 Consolidated cash flow analysis

(a) Reconciliation of profit from continuing operations before tax to cashgenerated from operations

(b) Cash and cash equivalents

Bank overdrafts included in short-term borrowings (see note (93) (74)15c)

Net cash and cash equivalents per combined and consolidated (37) 117statement of cash flows

The fair value of cash and cash equivalents approximate the carrying valuespresented.

(c) Movement in net debt

The Group's net debt position, excluding disposal groups is as follows:

1 The Group operates in certain countries (principally South Africa) where theexistence of exchange controls may restrict the use of certain cash balances.These restrictions are not expected to have any material effect on the Group'sability to meet its ongoing obligations.

2 Excludes overdrafts, which are included in cash and cash equivalents. As at31 December 2012, short-term borrowings in the combined and consolidatedstatement of financial position of €281 million (2011: €286 million) include €93 million of overdrafts (2011: €74 million).

16 Capital commitments

The expected maturity of these capital commitments is:

Capital commitments are based on capital projects approved to date and thebudget approved by the Boards.

Major capital projects still require further approval before they commence.These capital commitments are expected to be financed by existing cashresources and borrowing facilities.

17 Contingent liabilities and contingent assets

Contingent liabilities comprise aggregate amounts as at 31 December 2012 of €15 million (2011: €17 million) in respect of loans and guarantees given tobanks and other third parties. No acquired contingent liabilities have beenrecorded in the Group's combined and consolidated statement of financialposition for both years presented.

There are a number of legal and tax claims against the Group. Provision is madefor all liabilities that are expected to materialise.

There were no contingent assets at 31 December 2012 or 31 December 2011.

18 Related party transactions

The Group has related party relationships with its joint ventures andassociates. Transactions between Mondi Limited, Mondi plc and their respectivesubsidiaries, which are related parties, have been eliminated on consolidation.

The Group and its subsidiaries, in the ordinary course of business, enter intovarious sale, purchase and service transactions with joint ventures andassociates and others in which the Group has a material interest. Thesetransactions are under terms that are no less favourable than those arrangedwith third parties. These transactions, in total, are not considered to besignificant.

There have been no significant changes to the related parties as disclosed innote 39 of the Group's annual financial statements for the year ended 31December 2012.

19 Events occurring after 31 December 2012

With the exception of the proposed final dividend for 2012, included in note 9,there have been no material reportable events since 31 December 2012.

Unaudited financial information

1 Includes Nordenia from October 2012.

Sponsor in South Africa: UBS South Africa (Proprietary) Limited