Final Results

24 February 2015 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 Limited and/or the Disclosure and Transparency and Listing Rules of theUnited Kingdom Listing Authority. Full year results for the year ended 31 December 2014 Highlights * Excellent financial performance + Underlying operating profit of €767 million, up 10% + Underlying earnings of 107.3 euro cents per share, up 13% + Strong contribution from all business units * Capital projects delivering meaningful contribution + Completed investments delivering to plan + Strong capital investment pipeline * Good progress in integrating acquisitions + Bags and kraft paper acquisition in US, extending global leadership + Consumer Packaging acquisition in Poland increases capacity in low cost location * Recommended full year dividend of 42.0 euro cents per share, up 17% Financial Summary € million, except for Year Year Change Six Six Changepercentages and per share ended 31 ended 31 % months months %measures December December ended 31 ended 31 2014 2013 December December 2014 2013 Group revenue 6,402 6,476 (1) 3,254 3,134 4 Underlying EBITDA1 1,126 1,068 5 573 514 11 Underlying operating 767 699 10 390 333 17profit1 Operating profit 728 605 20 354 320 11 Profit before tax 619 499 24 307 270 14 Per share measures Basic underlying earnings 107.3 95.0 13per share1 (€ cents) Basic earnings per share (€ 97.4 79.8 22cents) Total dividend per share (€ 42.0 36.0 17cents) Free cash flow per share2 55.0 64.1 (14)(€ cents) Cash generated from 1,033 1,036operations Net debt 1,613 1,619 Group return on capital 17.2% 15.3%employed (ROCE)3 Notes: 1 The Group presents underlying EBITDA, operating profit and related per shareinformation as measures which exclude special items in order to provide a moreeffective comparison of the underlying financial performance of the Groupbetween financial reporting periods. A reconciliation of underlying operatingprofit to profit before tax is provided in note 3 of the condensed financialstatements. 2 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. 3 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: "I am pleased to report another successful year for Mondi. Underlying earningsper share increased by 13% to 107.3 euro cents per share and our return oncapital employed was 17.2%, with a strong contribution from all business units. During the year, we made good progress in growing the business. We completed anumber of key capital projects, including the 155,000 tonne per annum bleachedkraft paper machine in the Czech Republic, the recovery boiler in Slovakia andthe 100,000 tonne per annum softwood pulp dryer in Russia. Over the past 18months, we have approved further major projects amounting to a total capitalcommitment of around €420 million, thereby ensuring a strong pipeline forfuture growth. We extended our global leadership position in industrial bagswith the acquisition of Graphic Packaging's bags business in the US, while inConsumer Packaging, we acquired a modern converting plant in Poland. The Boards have recommended a final dividend of 28.77 euro cents per share,bringing the total dividend for the year to 42.0 euro cents per share, anincrease of 17%. Economic growth is expected to remain below historical averages in the regionsin which we operate. We expect this slow economic growth to continue to impacton demand for our products in the short term, although underlying industryfundamentals remain generally sound, with supply/demand balance supported bysupply-side constraint. Recent exchange rate movements provide a mixed impact, although with a clearlypositive bias when considered for the Group as a whole. Furthermore, therecently completed capital investments and ongoing projects should contributemeaningfully to our performance going forward. As such, we are confident ofmaking further progress in the year ahead." Overview In 2014, Mondi delivered an excellent financial performance despite thecontinued slow economic growth in a number of key markets, testament to theGroup's robust business model and high-quality, low-cost asset base. Revenue was broadly in line with the prior year. On a like for like basis,selling prices and volumes were similar to the prior year, with revenue boostedby the acquisition of the bags business in the US, offset by negative currencyimpacts and disposals or closures of non-core businesses. Mondi's underlying operating profit of €767 million was up 10% on 2013.Packaging Paper continued to deliver very strongly despite a generally weakerpricing environment, driven by cost reduction and currency benefits. The FibrePackaging business benefited from lower paper input costs and good volumegrowth. Consumer Packaging saw a strong improvement in trading in the secondhalf of the year. Coupled with the benefits of a number of sales and marginimprovement initiatives, the business was able to deliver a pleasingimprovement in year-on-year performance. Uncoated Fine Paper came underpressure from weaker pricing and negative currency effects but neverthelesscontinued to deliver strongly, while the South Africa Division benefited fromhigher average selling prices and the weak rand. Contributing to these resultswere the benefits from recently completed capital investments, primarily aroundenergy efficiencies and other cost optimisation in the pulp and paperoperations, and continued strong cost management across the Group. While acquisition led growth remains a key component of the Group's strategy,and opportunities continue to be evaluated as they arise, management currentlysees greater opportunity for value-enhancing growth through capital investmentsin existing operations. A number of key capital projects were completed duringthe year, including the 155,000 tonne per annum bleached kraft paper machine inthe Czech Republic, the recovery boiler in Slovakia and the 100,000 tonne perannum softwood pulp dryer in Russia. Over the past 18 months further majorprojects were approved, amounting to a total capital commitment of around €420million, thereby ensuring a strong pipeline for future growth. The Groupextended its global leadership position in industrial bags with the acquisitionof Graphic Packaging's bags business in the US in June, while in ConsumerPackaging, a modern converting plant in Poland was acquired in July. Volatility in foreign exchange rates had a significant impact on theperformance of the different business units, although the net impact on theGroup was limited. The sharp devaluation of the rouble in the second halfnegatively impacted the domestically focused Russian operations of the UncoatedFine Paper business unit, while benefiting the export orientated RussianPackaging Paper activities. Rand weakness supported the export business fromSouth Africa. The stronger US dollar versus the euro had a net positive impacton US dollar denominated export sales, although the greater impact is expectedto be in the support it provides going forward to European pricing levels giventhe reduced import threat. The Group benefited from a general reduction in variable costs compared to theprior year. European wood costs were lower as a result of lower demand andcurrency effects. Paper for recycling costs were 3% lower than the previousyear. Chemical input costs, particularly starch, also declined during the year.The packaging converting operations benefited from lower average paper inputcosts. Benchmark polyethylene prices were broadly in line with the previousyear but declined sharply towards the end of the year as a consequence of loweroil prices. The Group benefited from lower energy costs largely as a result of the energyinvestments completed over the last few years, which have significantlyimproved the efficiency and self-sufficiency of the larger, more energyintensive, pulp and paper operations. Lower average oil and gas prices alsocontributed to the lower energy costs, in addition to supporting a reduction intransport and logistics costs. Green energy sales prices and volumes werehigher than the previous year, providing further cost offset. Fixed costs were lower than the previous year, driven by foreign exchangebenefits and the continued strategic focus on operating performance andefficiencies. Consistent with the prior year, the impact of the Group's maintenance shuts onunderlying operating profit was around €55 million. In 2015, the effect isexpected to be more significant, with longer shuts planned at certain mills toallow for project implementation and the move of certain mills to an eighteenmonth rotation. The impact on underlying operating profit, at prevailing pricelevels, is estimated at around €80 million. Cash generated from operations of €1,033 million was similar to 2013 despite anincrease in working capital of €87 million. Excluding the impact ofacquisitions, working capital as a percentage of revenue was 12.3%, marginallyabove the Group's targeted 10-12% range. Underlying earnings of 107.3 euro cents per share were up 13% compared to 2013. The Boards are recommending payment of a final dividend of 28.77 euro cents pershare, bringing the total dividend for the year to 42.0 euro cents per share,an increase of 17% on 2013. Europe & International - Packaging Paper € million Year Year Change Six Six Change ended 31 ended 31 % months months % December December ended 31 ended 31 2014 2013 December December 2014 2013 Segment revenue 2,043 2,073 (1) 1,021 995 3 Underlying EBITDA 443 408 9 227 206 10 Underlying operating profit 342 308 11 175 154 14 Underlying operating profit 16.7% 14.9% 17.1% 15.5%margin Special items (6) - (6) - Capital expenditure 259 141 143 85 Net segment assets 1,588 1,543 ROCE 23.7% 21.7% Building on the strong performance of 2013, Packaging Paper's underlyingoperating profit increased by 11% to €342 million, with a ROCE of 23.7%. Thiswas achieved on modest volume growth, lower costs and foreign exchange gains,offset in part by lower average selling prices. Sales volumes of containerboard grades were similar to the previous year, withall operations running at capacity. Sales volumes of kraft paper increased asthe business benefited from the successful start-up of the 155,000 tonne perannum bleached kraft paper machine in the second quarter, forward integratingpulp that was previously sold on the open market, and the additional volumesfrom the kraft paper machine in the US following the acquisition from GraphicPackaging in June. Average benchmark unbleached virgin containerboard prices were 5% lower thanthe previous year. After starting the year at lower levels than the previousyear and subsequently drifting lower during the first half, price increaseswere successfully implemented towards the end of the third quarter. Furtherprices increases of €40 per tonne have been announced in February 2015 insouthern Europe. European white top kraftliner prices remained stable throughout the year. Priceincreases were implemented in Russia to offset the weaker rouble. Average benchmark recycled containerboard prices were 3% higher than theprevious year. Having fallen sharply through the first half due to increasedsupply from newly installed capacity, prices stabilised before a series ofprice increases were implemented in the third quarter. At the beginning of 2014, sack kraft prices were approximately 9% lower thanthe highs of the previous year. On the back of a strong pick-up in demand,price increases in brown sack kraft paper of around 4% to 5% were successfullyimplemented early in the second half, although average selling prices for theyear remained approximately 4% lower than the previous year. In early 2015,sack kraft prices have reduced by approximately 2% to 4% as a result ofseasonally weak demand and increased competition from producers experiencing areduction in their cost base from currency devaluation. The Speciality Kraft Paper business benefited from good demand, with generallyhigher average selling prices than in the previous year. The business benefited from lower energy input costs with gas and electricitycosts lower than the previous year. Paper for recycling input costs declinedmarginally throughout the year impacted by lower demand from China. Averagebenchmark prices were 3% lower than the previous year. Good progress is being made in integrating the kraft paper mill in the USacquired in June 2014 as part of the Graphic Packaging bags acquisition. The annual maintenance shut at the Swiecie mill took place in June 2014 and theremainder of the shuts were completed in the second half of the year. In 2013, operating profit was impacted by the €11 million write-down of greenenergy credits following the significant decline in market prices. Green energyprices recovered during 2014 and the business benefited from both the increasedmarket prices and increased volumes. As a net exporter from Russia, the Czech Republic and Sweden, the devaluationof these currencies relative to the euro provided a net benefit to thePackaging Paper business. Europe & International - Fibre Packaging € million Year Year Change Six Six Change ended 31 ended 31 % months months % December December ended 31 ended 31 2014 2013 December December 2014 2013 Segment revenue 1,852 1,690 10 984 834 18 Underlying EBITDA 166 146 14 88 71 24 Underlying operating profit 102 86 19 54 42 29 Underlying operating profit 5.5% 5.1% 5.5% 5.0%margin Special items (16) (3) (9) (3) Capital expenditure 77 71 47 40 Net segment assets 875 771 ROCE 13.4% 11.8% The Fibre Packaging business continues to show steady progress with underlyingoperating profit of €102 million, an increase of 19%, and a ROCE of 13.4%. Thebusiness benefited from gross margin expansion and good cost control. Higher average selling prices across all geographic regions, stable input costsand good fixed cost management resulted in a strong improvement in theCorrugated Packaging business. Sales volumes were broadly in line with theprevious year despite the negative impact of the rationalisation activities inTurkey completed in the previous year. The business was negatively impacted bycurrency translation losses as a result of the weaker Turkish lira. Industrial Bags had a very strong start to the year and, despite a slowdown inthe second half, on a like-for-like basis, sales volumes for the year ended 3%higher than in 2013. The volume growth, coupled with lower average paper inputcosts, enabled the business to deliver a strong underlying operating profitperformance. The acquisition of the bags business from Graphic Packaging in the US, combinedwith the Group's existing operations in that region creates a leading player inthe North American bags market, further expanding the Group's global footprint.Following the acquisition, a number of rationalisation and restructuringactivities were implemented, with a net special item charge of €10 millionrecognised. The business contributed €150 million of revenue in the six monthssince it was acquired, with a negligible contribution to underlying operatingprofit, as planned. The Extrusion Coatings business benefited from good cost management, therestructuring of the Belgium operations and stable pricing, but was negativelyimpacted by lower sales volumes. Europe & International - Consumer Packaging € million Year Year Change Six Six Change ended 31 ended 31 % months months % December December ended 31 ended 31 2014 2013 December December 2014 2013 Segment revenue 1,379 1,414 (2) 694 693 - Underlying EBITDA 158 143 10 89 69 29 Underlying operating profit 96 79 22 57 37 54 Underlying operating profit 7.0% 5.6% 8.2% 5.3%margin Special items (17) (13) (21) - Capital expenditure 80 61 45 34 Net segment assets 1,021 964 ROCE 10.4% 8.7% Underlying operating profit increased by 22% to €96 million. The second halfperformance was particularly encouraging as the business benefited fromimproving volumes, input cost reductions and successful implementation ofvarious sales and margin improvement initiatives. Management sought to pro-actively phase out a number of lower value-addedmature products during the year, although the weak trading conditions,particularly in the first half, made it difficult to adequately replace thesevolumes by sales into higher value-added segments. Sales volumes increasedduring the second half of the year in a generally more favourable tradingenvironment. A number of steps were taken during the year to improve the operatingperformance of the business, including increasing investments in innovationactivities and the business' sales and application engineering infrastructureas well as further optimisation and specialisation of production facilities.The acquisition of a plant for €17 million provides additional productioncapacity and, importantly, expands the production technology base through theaddition of flexographic printing technology in Poland. During the year, theTaicang plant in China started commercial production, with good sales volumesand underlying profit ahead of plan in its first year of operation. Europe & International - Uncoated Fine Paper € million Year Year Change Six Six Change ended 31 ended 31 % months months % December December ended 31 ended 31 2014 2013 December December 2014 2013 Segment revenue 1,240 1,335 (7) 594 624 (5) Underlying EBITDA 238 266 (11) 111 116 (4) Underlying operating profit 148 164 (10) 68 67 1 Underlying operating profit 11.9% 12.3% 11.4% 10.7%margin Special items - (60) - (10) Capital expenditure 117 80 58 44 Net segment assets 922 1,099 ROCE 16.1% 16.0% The Uncoated Fine Paper business generated underlying operating profit of€148 million, down on the prior year as a result of lower average selling pricesin Europe and the impact of a significantly weaker Russian rouble. Good costcontrol, benefits from the restructuring of the Neusiedler mill in Austria,completed in 2013, and lower input costs provided some offset to theseheadwinds. Demand for uncoated fine paper increased by around 1% in Europe, while Russiandemand is estimated to have declined by approximately 3% compared to theprevious year. Uncoated fine paper sales volumes were marginally down on the prior year due tothe effects of the restructuring at the Neusiedler mill, while sales of marketpulp increased as more volume was produced at the Ruzomberok operationfollowing the successful start-up of the new recovery boiler. Sales into thedomestic Russian market were maintained at similar levels to the prior yeardespite the lower overall market demand as the business gained market share atthe expense of importers. Average benchmark uncoated fine paper selling prices were down 2% year on yearin Europe. Selling price increases were implemented during the year in Russia,although these were not sufficient to fully offset the negative impact of theweaker rouble. Following the significant devaluation of the rouble towards theend of the year, a 15% price increase in the domestic Russian market wasimplemented in February 2015. In Europe, price increases of 5%-8% wereannounced to take effect from the end of the first quarter of 2015. The business benefited from lower wood costs in Russia, with local currencyincreases more than offset by the weaker rouble. Wood costs in central Europewere up marginally. Significantly lower gas and chemical input costs provided afurther benefit to the business. A continued focus on cost optimisation meant that fixed costs were containedwell within inflationary levels. The benefits of the recently completedrecovery boiler replacement in Ruzomberok are expected to be fully realised in2015. South Africa Division € million Year Year Change Six Six Change ended 31 ended 31 % months months % December December ended 31 ended 31 2014 2013 December December 2014 2013 Segment revenue 596 624 (4) 312 299 4 Underlying EBITDA 153 135 13 75 68 10 Underlying operating profit 112 93 20 54 49 10 Underlying operating profit 18.8% 14.9% 17.3% 16.4%margin Special items - (11) - 7 Capital expenditure 29 52 20 38 Net segment assets 626 622 ROCE 21.9% 16.0% Underlying operating profit of €112 million was 20% higher than the prior year,with the business delivering a ROCE of 21.9%. The business benefited fromhigher average selling prices, the weaker rand and higher fair value gains fromits forestry assets. Domestic selling prices were, on average, higher than the previous year.Benchmark average international hardwood pulp prices were 6% lower than theprevious year, but, as a net exporter of pulp and containerboard, the businessbenefited from the stronger US dollar and euro relative to the rand whichoffset the lower international selling prices. Sales volumes were similar to the prior year except for newsprint as a resultof the closure of a newsprint machine during 2013. The newsprint businessrealised price increases and cost savings as a result of the restructuring andmachine closure completed in 2013, enabling this business to continue togenerate a modest level of operating profit. Higher selling prices for wood and lower input costs, attributable in part toreduced transportation costs as a result of the oil price decline, resulted ina €17 million increase in fair value gains on forestry assets compared to theprevious year. The business remains under pressure from higher administered costs with labourand electricity costs increasing in excess of inflationary levels. Strong costmanagement and active measures to improve productivity and competitivenessenabled the business to limit increases to well within inflationary levels. Thebusiness benefited from energy sales following completion of the steam turbineat the end of 2013, which moved the Richards Bay mill into a net energyproducing position. The maintenance shut in Richards Bay was completed during the first half of theyear. In 2015, a longer shut is required in order to conduct additional plannedmaintenance activities and is scheduled to take place in the first half of theyear. Tax The Group's underlying effective tax rate of 19% was up 2% on the prior year onchanges to the underlying profit mix and as the incentives related to previousmajor investments were fully utilised during the year. Special items Special items are those items of financial performance that the Group believesshould be separately disclosed to assist in the understanding of the underlyingfinancial performance achieved by the Group and its businesses. These items areconsidered to be material either in nature or in amount. The net special item charge of €52 million before tax comprised the following: * €2 million charge for transaction costs relating to the acquisition of the bags and kraft paper business from Graphic Packaging in the US; * €38 million charge for various restructuring activities and €6 million charge for related asset impairments in the Speciality Kraft Paper business, Industrial Bags business, Extrusion Coatings business and Consumer Packaging business; * €4 million gain on release of a provision for transaction costs attributable to the Nordenia acquisition; * €3 million gain on settlement of a 2007 court case; and * €13 million charge on early redemption of the €280 million Eurobond. Further detail is provided in note 3 of the condensed financial statements. After taking special items into consideration, profit attributable toshareholders of €471 million (97.4 euro cents per share) was 22% higher thanthe previous year (€386 million, 79.8 euro cents per share). Treasury and borrowings The Group maintains diversified sources of funding and debt maturities. Ourpolicy is to fund subsidiaries in their local functional currency. Externalfunding is obtained in a range of currencies, and where required, translatedinto the subsidiaries' functional currencies through the swap market. Net debt at 31 December 2014 of €1,613 million was at a similar level to theprevious year. Net finance charges of €97 million were €18 million lower thanthe previous year, with the Group benefiting from lower average interest ratesand lower average net debt. The fair value of the Group's debt related derivative instruments is includedin the calculation of net debt. The significant depreciation of the roubletowards the end of 2014 led to a significant unrealised gain being recognisedat 31 December 2014. Mondi's public credit ratings, first issued in March 2010, were reaffirmedduring the year by Standard and Poor's at BBB- and Moody's Investors Serviceupgraded the Group's credit rating from Baa3 to Baa2. The upgrade validates theGroup's high-quality, low-cost and well-diversified asset base and is testamentto the robustness of the Group's business model and ability to generate strongcash flows through the business cycle. In July 2014, the 9.75% €280 million bond assumed as part of the acquisition ofNordenia in 2012 was redeemed at a premium of 4.875%. The net loss onredemption of €13 million was recognised as a special item. The redemption wasfinanced from existing borrowing facilities. Gearing at 31 December 2014 was 36%, similar to the prior year. The Group's netdebt to 12 month trailing EBITDA ratio was 1.4 times, well within the Group'skey financial covenant requirement of 3.5 times. The weighted average maturity ofthe Eurobonds and committed debt facilities was 4 years at 31 December 2014.At the end of the year €456 million of the Group's €2.1 billion committed debtfacilities remained undrawn. Cash flow Mondi's cash generation continues to be strong. In 2014, the cash generatedfrom our operating activities was €1,033 million. Excluding the impact of the Graphic Packaging acquisition, working capital as apercentage of revenue was 12.3%, marginally above the Group's targeted range of10-12%. The net investment in working capital during the year was €87 million(2013: €27 million). Interest paid and returns to shareholders amounted to €331 million during theyear, compared to €322 million in the previous year. Dividends of €193 millionwere paid to shareholders of the Group (2013: €138 million) and interest paidwas €125 million (2013: €124 million). Dividends paid to holders ofnon-controlling interests in the Group's subsidiaries were lower in 2014,primarily due to the lower dividend from the 51% held Ruzomberok operations ascash was utilised for the completion of the €128 million recovery boilerinvestment. In 2014, we invested €562 million in capital expenditure and completed 3acquisitions with a total purchase price (including debt assumed) of€104 million. Capital investments Capital expenditure amounted to €562 million, with a number of large investmentprojects both completed and initiated during the year. The €70 million, 155,000 tonne per annum bleached kraft paper machine in Steti,Czech Republic was successfully started up during April 2014. The new €128 million recovery boiler in Ruzomberok, Slovakia started up inNovember, significantly improving the mill's environmental footprint, makingthe mill 100% energy self-sufficient, reducing ongoing operating andmaintenance costs and providing additional pulp production capacity. Around the same time, the €30 million pulp dryer in Syktyvkar, Russia,producing 100,000 tonnes of FSC certified softwood market pulp per year, wasalso completed. The Group has a strong capital project pipeline, with a number of significantprojects underway. The €166 million project in Swiecie, Poland, bringingforward the planned replacement of the recovery boiler and coal fired boilersis progressing according to plan and on track for project start-up in thesecond half of 2015. Early in 2015, the Boards approved the €94 million secondphase of this project which will ensure full utilisation of the new recoveryboiler's capacity, provide an additional 100,000 tonnes per annum of softwoodpulp, 80,000 tonnes per annum of kraftliner and further improve the mill'sproduct mix flexibility. The Boards have also approved approximately €30 million for a project at theSouth Africa Division's Richards Bay mill to upgrade the wood yard. Othersignificant projects in progress or approved during the year, amounting toapproximately €130 million, include projects intended to further modernise someof the Group's kraft paper and converting operations, provide additionalcapacity and production flexibility and reduce ongoing operating andmaintenance costs. The incremental operating profit expected from major projects in 2015 is around€50 million (2014: €45 million), illustrating the benefits that arise fromthese high return investments. Given this project pipeline, and in the absenceof other major projects, capital expenditure is expected to average €550 -€560 million per year over the next two years. 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 and the Boards' stated objective toincrease distributions to shareholders through the ordinary dividend, theBoards have recommended an increase in the final dividend. The Boards of Mondi Limited and Mondi plc have recommended a final dividend of28.77 euro cents per share (2013: 26.45 euro cents per share), payable on 21May 2015 to shareholders on the register on 24 April 2015. Together with theinterim dividend of 13.23 euro cents per share, paid on 16 September 2014, thisamounts to a total dividend for the year of 42.0 euro cents per share. In 2013,the total dividend for the year was 36.0 euro cents per share. The final dividend is subject to the approval of the shareholders of MondiLimited and Mondi plc at the respective annual general meetings scheduled for13 May 2015. Outlook Economic growth is expected to remain below historical averages in the regionsin which the Group operates. This slow economic growth is expected to continueto impact on demand for Mondi's products in the short term, although underlyingindustry fundamentals remain generally sound, with supply/demand balancesupported by supply-side constraint. Recent exchange rate movements provide a mixed impact, although with a clearlypositive bias when considered for the Group as a whole. Furthermore, therecently completed capital investments and ongoing projects should contributemeaningfully to the Group's performance going forward. As such, management isconfident that Mondi will make further progress in the year ahead. Principal risks and uncertainties The executive committee, audit committee and Boards conduct an annual formalsystematic review of the Group's most significant risks and uncertainties,including how these risks are monitored and managed. Risk management isembedded in all decision making processes, with ongoing review of the Group'srisks throughout the year as well as risk assessments being conducted as partof all investment decisions. A number of the key risks to which we are exposedare a function of our strategy and thus are long-term in nature and do not tendto change significantly from year to year. Risk management is by nature a dynamic and ongoing process. Our risk managementframework is designed to address all the significant strategic, sustainability,financial, operational and compliance-related risks that could undermine ourability to achieve our business objectives into the future. It is flexible, toensure that it remains relevant at all levels of the business; and dynamic toensure we can be responsive to changing business conditions. This isparticularly important given the diversity of the Group's locations, marketsand production processes. Over the course of the year, the audit committee has reviewed each of theprincipal risks set out below. In evaluating the Group's risk management andinternal control processes, the committee has considered both internal andexternal audit reports and received confirmation from the finance heads of thebusiness units that financial control frameworks have operated satisfactorily. The Boards are satisfied that the Group has effective systems and controls inplace to manage its key risks within the risk tolerance levels established bythe Boards. Industry capacity Plant utilisation levels are the main driver of profitability in paper mills.New capacity additions are usually in large increments which, through theirimpact on the supply/demand balance, influence market prices. Unless marketgrowth exceeds capacity additions, excess capacity may lead to lower sellingprices. We monitor industry developments in terms of changes in capacity as well astrends and developments in our own product markets. Our strategic focus onlow-cost production and innovation activities to produce higher value addedproducts, combined with our focus on growing markets, with consistentinvestment in our operating capacity ensures that we remain competitive. Product substitution Sustainability considerations and changes in consumer preferences affect thedemand for packaging products. Factors such as the weight of packagingmaterials, increased use of recycled materials, electronic substitution ofpaper products, increasing demand for certified and labelled goods and specificmaterial qualities all impact on the demand for the products Mondi produces. Our ability to meet changes in consumer demand depends on our capacity tocorrectly anticipate such changes and develop new products on a sustainable,competitive and cost effective basis. Our focus for growth is on productsenjoying positive substitution dynamics and growing regional markets. We workwith our customers in developing new markets and new products. Our broad rangeof converting products provides some protection from the effects ofsubstitution between paper and plastic based packaging products. Selling price variability Our selling prices are determined by changes in capacity and by demand for ourproducts, which are, in turn, influenced by macroeconomic conditions, consumerspending preferences and inventory levels maintained by our customers. Changesin prices differ between products and geographic regions and the timing andmagnitude of such changes have varied significantly over time and areunpredictable. Our strategic focus is on higher growth markets and products where we enjoy acompetitive advantage through innovation, proximity or a production costadvantage. We continue to invest in our low-cost, high quality productionassets to ensure we maintain our competitive cost position. Our high levels ofvertical integration reduce our exposure to price volatility of our key inputcosts. Our financial policies and structures are designed taking the inherentprice volatility of the markets in which we operate into consideration. Country risk We have production operations across more than 30 countries, a number of whichare in jurisdictions where the political, economic and legal systems are lesspredictable than in countries with more developed institutional structures.Political or economic upheaval, inflation, changes in laws, nationalisation orexpropriation of assets may have a material effect on our operations in thosecountries. We actively monitor all countries and environments in which we operate and haveestablished limits on exposure to any particular geographic environment. Weengage in regular formal and informal interaction with the authorities toensure we remain abreast of any new development. New investments are subject torigorous strategic and commercial evaluation. Our geographic diversity anddecentralised management structure, utilising local resources in countries inwhich we operate, reduces our exposure to any specific jurisdiction. We have around 11% of our capital employed in Russia and a limited presence inthe Ukraine. The US, European Union and a number of other countries imposedeconomic sanctions and other measures on persons and corporate entities inRussia and the Ukraine. Possible additional sanctions and/or other measures onRussia could have a material adverse effect on our business. To date, themeasures imposed have had no material impact on our operations. Fibre supply Wood, pulp and paper for recycling comprise approximately a third of our inputcosts. We have access to our own sources of wood in Russia and South Africa andpurchase wood, pulp and paper for recycling to meet our needs in the balance ofour operations. Wood prices and availability may be adversely affected byreduced quantities of available wood supply that meet our standards forchain-of-custody certified or controlled wood, and initiatives to promote theuse of wood as a renewable energy source. We are committed to acquiring fibre from sustainable, responsible sources andavoiding the use of any controversial or illegal supply. The sustainablemanagement of our forestry operations is key in managing our overallenvironmental impact, helping to preserve ecosystems and resilient landscapes.We have built strong forestry management resources in Russia and South Africato actively monitor and manage our wood resources in those countries. Wemaintain 100% FSC certification of our forests in Russia and South Africa. Wehave multiple suppliers for each of our mills and actively pursue longer termagreements with strategic suppliers of wood, pulp and paper for recycling. Wework in collaboration with private and public sectors to address challenges inmeeting the global demand for sustainable, responsible fibre. Energy and related input costs Energy and related input costs comprise approximately a third of our variablecosts. Mondi is a significant consumer of electricity and both purchaseselectricity from external suppliers and generates it internally. To the extentthat we don't generate electricity from biomass and by-products of ourproduction processes, we are dependent on external suppliers for raw materialssuch as gas, oil and coal. We monitor our electricity usage levels, emission levels and use of renewableenergy. Most of our larger operations have high levels of electricityself-sufficiency. We focus on improving the efficiency of our operations andhave invested in our operations to improve our energy profile and increaseelectrical self-sufficiency, while reducing ongoing operating costs andemission levels. To the extent that we generate electricity surplus to our ownrequirements, we may sell such surplus externally. We also generate revenuefrom the sale of green energy credits in certain of our operations, the pricesof which are determined in the open market. Environmental impact We operate in a high-impact sector and need to manage the associated risks andresponsibilities. Our operations are water, carbon and energy intensive;consume materials such as fibre, polymers, metals and chemicals; and generateemissions in the air, water and land. We are the custodian of more than twomillion hectares of forested land. We are subject to a wide range ofinternational, national, state and local environmental laws and regulations aswell as the requirements of our customers. We ensure that we are complying with all applicable environmental, health andsafety requirements where we operate. Our own policies and procedures, at orabove local policy requirements, are embedded in all our operations. We focuson a clean production philosophy to address the impact from emissions,discharge and waste. We focus on increasing the energy efficiency of ouroperations and using biomass-based fuels, reducing our use of fossil-basedenergy sources. We emphasise the responsible management of forests andassociated ecosystems, protecting high conservation value areas. Employee and contractor safety We operate large facilities, often in remote locations. Accidents/incidentscause injury to our employees or contractors, property damage, lost productiontime and harm to our reputation. We have a zero harm policy. We continually monitor incidents and close callsand actively transfer learnings across our operations. We apply an externallyaccredited safety management system and conduct regular audits of ouroperations to ensure our facilities remain fit-for-purpose. Reputational risk Non-compliance with the legal and governance requirements in any of thejurisdictions in which we operate could expose us to significant risk if notactively managed. These include laws relating to the environment, exports,price controls, taxation and labour. We operate a comprehensive training and compliance programme, supported byself-certification and reporting. We also operate a confidential reportinghotline, Speakout, enabling employees, customers, suppliers, managers and otherstakeholders to raise concerns about conduct that may be contrary to ourvalues. Financial risks Our trading and financing activities expose the Group to financial risks that,if left unmanaged, could adversely impact our financial position. These risksrelate to the currencies in which we conduct our activities, interest rate andliquidity risks and exposure to customer credit risk. Our approach to financial risk management is described in notes 29 and 30 ofthe annual financial statements. Going concern The Group's business activities, together with the factors likely to affect itsfuture development, performance and position, the most significant risks andthe Group's related management and mitigating actions are set out above. Thefinancial position of the Group, its cash flows, liquidity position andborrowing facilities are described in the condensed financial statements. 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 includeongoing investment in its operations, plant optimisation, cost-cutting andrestructuring and rationalisation activities have consolidated the Group'sleading cost position in its chosen markets. Working capital levels and capitalexpenditure programmes are strictly monitored and controlled. The Group meets its funding requirements from a variety of sources as morefully described in note 11 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€456 million of undrawn committed debt facilities as at 31 December 2014 whichshould provide sufficient liquidity in the medium term. The Group's debtfacilities have maturity dates of between 1 and 11 years, with a weightedaverage maturity of 4 years. The Group's forecasts and projections, taking account of reasonably possiblechanges in trading performance, including an assessment of the currentmacroeconomic environment indicate that the Group should be able to operatewell within the level of its current facilities and related covenants. The directors have reviewed the overall Group strategy, the budget for 2015 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 are satisfied that the Group remainssolvent and has adequate liquidity in order to meet its obligations andcontinue in operational existence for the foreseeable future. Accordingly, theGroup continues to adopt the going concern basis in preparing this report. Contact details Mondi Group David Hathorn +27 11 994 5418 Andrew King +27 11 994 5415 Lora Rossler +27 83 627 0292 FTI Consulting Richard Mountain +44 7909 684 466 Sue I Ong +44 20 3727 1340 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 08:30 (UK) and 10:30 (SA). The conference call dial-in numbers are: South Africa 0800 200 648 (toll-free) UK 0808 162 4061 (toll-free) Europe 00800 246 78 700 (toll-free) Alternate +27 11 535 3600 An online audio cast facility will be available via: www.mondigroup.com/FYResults14. The presentation will be available online via the above website address an hourbefore the audio cast commences. Questions can be submitted via the dial-inconference call 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 [email protected] and you will be contacted immediately. An audio recording of the presentation will be available on Mondi's websiteduring the afternoon of 24 February 2015. Directors' responsibility statement These financial statements have been prepared under the supervision of theGroup chief financial officer, Andrew King CA (SA), and have been audited incompliance with the applicable requirements of the Companies Act of SouthAfrica 2008 and the UK Companies Act 2006. The directors confirm that to the best of their knowledge: * the condensed combined and consolidated financial statements of the Group has been prepared in accordance with International Financial Reporting Standards and in particular with International Accounting Standard 34, `Interim Financial Reporting'; * the full year results announcement includes a fair review of the significant events during the year ended 31 December 2014 and a description of the principal risks and uncertainties; * there have been no significant individual related party transactions during the year; and * there have been no significant changes in the Group's related party relationships from that reported in the half-yearly results for the six months ended 30 June 2014. The Group's condensed combined and consolidated financial statements, andrelated notes, were approved by the Boards and authorised for issue on 23February 2015 and were signed on their behalf by: David Hathorn Andrew King Director Director 23 February 2015 Audited financial information The condensed combined and consolidated financial statements and notes 1 to 19for the year ended 31 December 2014 have been audited by the Group's auditors,Deloitte LLP and Deloitte & Touche. Their unqualified audit reports areavailable for inspection at the Group's registered offices. Condensed combined and consolidated income statementfor the year ended 31 December 2014 2014 2013 € million Notes Before Special After Before Special After special items special special items special items (note 4) items items (note 4) items Group revenue 6,402 - 6,402 6,476 - 6,476 Materials, energy and (3,314) - (3,314) (3,391) - (3,391)consumables used Variable selling expenses (499) - (499) (523) - (523) Gross margin 2,589 - 2,589 2,562 - 2,562 Maintenance and other (283) - (283) (278) - (278)indirect expenses Personnel costs (946) (29) (975) (940) (17) (957) Other net operating expenses (234) (4) (238) (276) (10) (286) Depreciation, amortisation (359) (6) (365) (369) (67) (436)and impairments Operating profit 767 (39) 728 699 (94) 605 Non-operating special items 4 - - - - 7 7 Net profit from associates 1 - 1 2 - 2 Total profit from operations 768 (39) 729 701 (87) 614and associates Net finance costs 6 (97) (13) (110) (115) - (115) Investment income 3 - 3 3 - 3 Foreign currency losses - - - (1) - (1) Finance costs (100) (13) (113) (117) - (117) Profit before tax 671 (52) 619 586 (87) 499 Tax charge 7 (126) 4 (122) (98) 13 (85) Profit for the year 545 (48) 497 488 (74) 414 Attributable to: Non-controlling interests 26 26 28 28 Shareholders 519 471 460 386 Earnings per share (EPS) forprofit attributable toshareholders Basic EPS (€ cents) 8 97.4 79.8 Diluted EPS (€ cents) 8 97.1 79.6 Basic underlying EPS (€ 8 107.3 95.0cents) Diluted underlying EPS (€ 8 107.0 94.8cents) Basic headline EPS (€ cents) 8 99.5 91.3 Diluted headline EPS (€ 8 99.2 91.1cents) Condensed combined and consolidated statement of comprehensive incomefor the year ended 31 December 2014 2014 2013 € million Before Tax Net of Before Tax Net of tax (expense) tax tax expense tax amount /benefit amount amount amount Profit for the year 497 414 Other comprehensive(expense)/income Items that maysubsequently bereclassified to thecombined and consolidatedincome statement: Fair value gains/(losses) 2 (1) 1 (2) - (2)on cash flow hedges Gains on 1 - 1 2 - 2available-for-saleinvestments Exchange differences on (193) - (193) (233) - (233)translation of foreignoperations Share of other - - - (1) - (1)comprehensive expense ofassociates Items that will notsubsequently bereclassified to thecombined and consolidatedincome statement: Remeasurements on (44) 9 (35) 19 (6) 13retirement benefitsplans: Return on plan assets 11 4 Actuarial gains/(losses) 2 (4)arising from changes indemographic assumptions Actuarial (losses)/gains (62) 17arising from changes infinancial assumptions Actuarial gains arising 3 4from experienceadjustments Asset ceiling movement 2 (2) Other comprehensive (234) 8 (226) (215) (6) (221)(expense)/income for theyear Other comprehensive(expense)/incomeattributable to: Non-controlling interests 2 - 2 (11) - (11) Shareholders (236) 8 (228) (204) (6) (210) Total comprehensive 271 193income for the year Total comprehensiveincome attributable to: Non-controlling interests 28 17 Shareholders 243 176 Condensed combined and consolidated statement of financial positionas at 31 December 2014 € million Notes 2014 2013 Intangible assets 658 675 Property, plant and equipment 3,432 3,428 Forestry assets 10 235 233 Other non-current assets 42 38 Total non-current assets 4,367 4,374 Inventories 843 746 Trade and other receivables 966 954 Financial instruments 76 6 Cash and cash equivalents 14b 56 130 Other current assets 40 30 Total current assets 1,981 1,866 Total assets 6,348 6,240 Short-term borrowings 11 (176) (181) Trade and other payables (998) (989) Other current liabilities (149) (126) Total current liabilities (1,323) (1,296) Medium and long-term borrowings 11 (1,565) (1,571) Net retirement benefits liability 12 (250) (211) Deferred tax liabilities (259) (264) Other non-current liabilities (57) (52) Total non-current liabilities (2,131) (2,098) Total liabilities (3,454) (3,394) Net assets 2,894 2,846 Equity Share capital and stated capital 542 542 Retained earnings and other reserves 2,086 2,049 Total attributable to shareholders 2,628 2,591 Non-controlling interests in equity 266 255 Total equity 2,894 2,846 The Group's condensed combined and consolidated financial statements, andrelated notes, were approved by the Boards and authorised for issue on 23February 2015 and were signed on their behalf by: David Hathorn Andrew King Director Director Mondi Limited company registration number: 1967/013038/06 Mondi plc company registered number: 6209386 Condensed combined and consolidated statement of changes in equityfor the year ended 31 December 2014 € million Equity Non-controlling Total attributable interests equity to shareholders At 1 January 2013 2,572 301 2,873 Total comprehensive income/ 176 17 193(expense) for the year Dividends paid (138) (60) (198) Purchases of treasury shares (30) - (30) Other 11 (3) 8 At 31 December 2013 2,591 255 2,846 Total comprehensive income/ 243 28 271(expense) for the year Dividends paid (193) (16) (209) Purchases of treasury shares (22) - (22) Other 9 (1) 8 At 31 December 2014 2,628 266 2,894 Equity attributable to shareholders € million 2014 2013 Combined share capital and stated 542 542capital Treasury shares (24) (24) Retained earnings 2,497 2,233 Cumulative translation adjustment (569) (374)reserve Post-retirement benefits reserve (92) (57) Share-based payment reserve 19 18 Cash flow hedge reserve (1) (2) Merger reserve 259 259 Other sundry reserves (3) (4) Total 2,628 2,591 Condensed combined and consolidated statement of cash flowsfor the year ended 31 December 2014 € million Notes 2014 2013 Cash flows from operating activities Cash generated from operations 14a 1,033 1,036 Dividends from associates 2 1 Income tax paid (106) (126) Net cash generated from operating activities 929 911 Cash flows from investing activities Investment in property, plant and equipment (562) (405) Investment in intangible assets (8) (12) Investment in forestry assets 10 (37) (41) Acquisition of subsidiaries, net of cash and cash 13 (72) -equivalents Other investing activities 36 45 Net cash used in investing activities (643) (413) Cash flows from financing activities Proceeds from medium and long-term borrowings 14c 354 107 Repayment of medium and long-term borrowings 14c - (117) Repayment of short-term borrowings 14c (375) (77) Interest paid (125) (124) Dividends paid to shareholders 9 (193) (138) Dividends paid to non-controlling interests (13) (60) Purchases of treasury shares (22) (30) Other financing activities 34 28 Net cash used in financing activities (340) (411) Net (decrease)/increase in cash and cash equivalents (54) 87 Cash and cash equivalents at beginning of year 64 (37) Cash movement in the year 14c (54) 87 Effects of changes in foreign exchange rates 14c (1) 14 Cash and cash equivalents at end of year 14b 9 64 Notes to the condensed combined and consolidated financial statementsfor the year ended 31 December 2014 1 Basis of preparation The Group has two separate legal parent entities, Mondi Limited and Mondi plc,which operate under a dual listed company (DLC) structure. The substance of 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 Group's condensed combined and consolidated financial statements and notes1 to 19 have been prepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International Accounting Standards Board(IASB) and the South African Institute of Chartered Accountants (SAICA)Financial Reporting Guides as issued by the Accounting Practices Committee andFinancial Reporting Pronouncements as issued by the Financial ReportingStandards Council and contain the information required by IAS 34, `InterimFinancial Reporting'. There are no differences for the Group in applying IFRSas issued by the IASB and IFRS as adopted by the European Union (EU) andtherefore the Group also complies with Article 4 of the EU IAS Regulation. The condensed combined and consolidated financial statements have been preparedon a going concern basis as discussed in the Group overview under the heading`Going concern'. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2014 or 2013 but is derivedfrom those accounts. Statutory accounts for 2013 have been delivered to theRegistrar of Companies, and those for 2014 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 Act 2006.Copies of their unqualified auditors' reports on the Integrated report andfinancial statements 2014 as well as the condensed combined and consolidatedfinancial statements are available for inspection at the Mondi Limited andMondi plc registered offices. These condensed combined and consolidated financial statements have beenprepared on the historical cost basis, except for the fair valuing of financialinstruments and forestry assets. 2 Accounting policies The same accounting policies, methods of computation and presentation have beenfollowed in the preparation of the condensed combined and consolidatedfinancial statements as were applied in the preparation of the Group's annualfinancial statements for the year ended 31 December 2013. 3 Operating segments Reorganisation of business segments During the year, the Group refined its organisational structure, resulting inseveral changes to segmental reporting. The most significant of these changeswere the: * transfer of the release liner business from Fibre Packaging to Consumer Packaging to take advantage of identified synergies in customer relations, innovation and the global footprint of these businesses; and * transfer of the 66,000 tonne per annum kraft paper machine at the Ruzomberok mill from Uncoated Fine Paper to Packaging Paper. All comparative segmental information has been restated. The reorganisation hadno impact on the overall Group result. Year ended 31 December 2014 Europe & International € million, unless Packaging Fibre Consumer Uncoated South Corporate Intersegment Segmentsotherwise stated Paper Packaging Packaging Fine Africa & other elimination total Paper Division Segment revenue 2,043 1,852 1,379 1,240 596 - (708) 6,402 Internal revenue (559) (41) (5) (6) (97) - 708 - External revenue 1,484 1,811 1,374 1,234 499 - - 6,402 EBITDA 443 166 158 238 153 (32) - 1,126 Depreciation, (101) (64) (62) (90) (41) (1) - (359)amortisation andimpairments Operating profit/ 342 102 96 148 112 (33) - 767(loss) fromoperations beforespecial items Special items (6) (16) (17) - - (13) - (52) Operating segment 1,961 1,165 1,185 1,089 743 4 (166) 5,981assets Operating net 1,588 875 1,021 922 626 2 - 5,034segment assets Additions to 279 104 109 125 68 - - 685non-currentnon-financialassets Capital expenditure 259 77 80 117 29 - - 562cash payments Operating margin 16.7 5.5 7.0 11.9 18.8 - - 12.0(%) Return on capital 23.7 13.4 10.4 16.1 21.9 - - 17.2employed (%) Average number of 5.0 7.3 4.6 6.5 1.6 0.1 - 25.1employees(thousands) Year ended 31 December 2013 (restated) Europe & International € million, unless Packaging Fibre Consumer Uncoated South Corporate Intersegment Segmentsotherwise stated Paper Packaging Packaging Fine Africa & other elimination total Paper Division Segment revenue 2,073 1,690 1,414 1,335 624 - (660) 6,476 Internal revenue (506) (43) (4) (6) (101) - 660 - External revenue 1,567 1,647 1,410 1,329 523 - - 6,476 EBITDA 408 146 143 266 135 (30) - 1,068 Depreciation, (100) (60) (64) (102) (42) (1) - (369)amortisation andimpairments Operating profit/ 308 86 79 164 93 (31) - 699(loss) fromoperations beforespecial items Special items - (3) (13) (60) (11) - - (87) Operating segment 1,905 1,001 1,121 1,270 731 2 (140) 5,890assets Operating net 1,543 771 964 1,099 622 1 - 5,000segment assets Additions to 165 66 65 85 93 - - 474non-currentnon-financialassets Capital expenditure 141 71 61 80 52 - - 405cash payments Operating margin 14.9 5.1 5.6 12.3 14.9 - - 10.8(%) Return on capital 21.7 11.8 8.7 16.0 16.0 - - 15.3employed (%) Average number of 5.0 6.7 4.6 7.1 1.8 - - 25.2employees(thousands) Reconciliation of operating profit before special items € million 2014 2013 Operating profit before special items 767 699 Special items (see note 4) (52) (87) Net profit from associates 1 2 Net finance costs (excluding financing special item) (97) (115) Group profit before tax 619 499 Reconciliation of total profit from operations and associates to EBITDA € million 2014 2013 Total profit from operations and associates 729 614 Special items (see note 4) (excluding financing special 39 87item) Depreciation, amortisation and impairments 359 369 Net profit from associates (1) (2) EBITDA 1,126 1,068 Reconciliation of operating segment assets (Restated) 2014 2013 € million Segment Net Segment Net assets segment assets segment assets assets Segments total 5,981 5,034 5,890 5,000 Unallocated: Investments in associates 5 5 6 6 Deferred tax assets/(liabilities) 10 (249) 4 (260) Other non-operating assets/(liabilities) 224 (283) 207 (281) Group capital employed 6,220 4,507 6,107 4,465 Financial instruments/(net debt) 128 (1,613) 133 (1,619) Total assets/equity 6,348 2,894 6,240 2,846 External revenue by product type (Restated) € million 2014 2013 Products Fibre packaging products 1,776 1,617 Packaging paper products 1,435 1,482 Consumer packaging products 1,385 1,422 Uncoated fine paper 1,185 1,284 Pulp 240 269 Newsprint 146 177 Other 235 225 Group total 6,402 6,476 External revenue External revenue by location of by location of production customer € million 2014 2013 2014 2013 Revenue Africa South Africa 596 623 419 432 Rest of Africa 10 11 216 231 Africa total 606 634 635 663 Western Europe Austria 960 958 153 161 Germany 931 993 966 1,003 United Kingdom 34 48 236 262 Rest of western Europe 664 720 1,331 1,390 Western Europe total 2,589 2,719 2,686 2,816 Emerging Europe Poland 873 877 484 450 Rest of emerging Europe 1,144 1,168 857 893 Emerging Europe total 2,017 2,045 1,341 1,343 Russia 685 741 559 608 North America 437 274 515 349 South America - - 61 57 Asia and Australia 68 63 605 640 Group total 6,402 6,476 6,402 6,476 4 Special items€ million 2014 2013 Operating special items Asset impairments (6) (67) Restructuring and closure costs: Personnel costs relating to restructuring (29) (17) Restructuring and closure costs excluding related personnel (9) (10)costs Reversal of provision for transaction costs attributable to 4 -Nordenia acquisition Transaction costs for US acquisition (2) - Gain on settlement of 2007 legal case 3 - Total operating special items (39) (94) Non-operating special item Gain on sale of land - 7 Financing special item Net charge on early redemption of €280 million Eurobond (13) - Total special items before tax and non-controlling interests (52) (87) Tax (see note 7) 4 13 Total special items attributable to shareholders (48) (74) Operating special items Restructuring and closure costs and related asset impairments during the yearcomprise: * closure of one of the two speciality kraft paper machines in Finland with a capacity of 30,000 tonnes per annum. Restructuring costs of €5 million and related impairment of assets of €1 million were recognised in Packaging Paper; * restructuring of certain operations in the Extrusion Coatings segment of Fibre Packaging giving rise to restructuring costs of €7 million; * restructuring following the acquisition of the bags business from Graphic Packaging in the US, including the closure of the New Philadelphia operation. Restructuring costs of €10 million were recognised in Fibre Packaging; * relocation of the Consumer Packaging head office and restructuring activities in its operations across Europe. Restructuring costs of €16 million and related asset impairments of €5 million were recognised. Transaction costs of €2 million for the acquisition of the bags and kraft paperbusiness from Graphic Packaging in the US were incurred. A provision of €4 million in respect of transaction costs for the 2012 Nordeniaacquisition was released. A gain of €3 million was recognised in the Corrugated Packaging segment ofFibre Packaging for the settlement of a 2007 legal case. Financing special item On 15 July 2014, the Group redeemed the 9.75% €280 million Eurobond assumed aspart of the acquisition of Nordenia in 2012. The net charge on redemption of€13 million was recognised. 5 Write-down of inventories to net realisable value € million 2014 2013 Write-down of inventories to net realisable value (24) (21) Aggregate reversal of previous write-down of inventories 16 12 6 Net finance costs Net finance costs and related foreign exchange losses are presented below: € million 2014 2013 Investment income Interest on bank deposits, loan receivables and other 3 3 Foreign currency losses Foreign currency losses - (1) Finance costs Interest expense Interest on bank overdrafts and loans (94) (108) Net interest expense on net retirement benefits liability (11) (11) Total interest expense (105) (119) Less: interest capitalised 5 2 Total finance costs before special item (100) (117) Financing special item (see note 4) (13) - Total finance costs after special item (113) (117) Net finance costs (110) (115) The weighted average interest rate applicable to capitalised interest ongeneral borrowings for the year ended 31 December 2014 is 8.36% (2013: 5.34%)and is related to investments in Poland, Russia & Czech Republic (2013: relatedto investments in Austria and South Africa). 7 Taxation The Group's effective rate of tax before special items for the year ended 31December 2014, calculated on profit before tax before special items andincluding net profit from associates, is 19% (2013: 17%). € million 2014 2013 UK corporation tax at 21.5% (2013: 23.25%) 1 1 SA corporation tax at 28% (2013: 28%) 30 21 Overseas tax 86 105 Current tax 117 127 Deferred tax in respect of the current period 23 (1) Deferred tax in respect of prior period over provision (14) (28) Total tax charge before special items 126 98 Current tax on special items - (5) Deferred tax on special items (4) (8) Total tax credit on special items (see note 4) (4) (13) Total tax charge 122 85 8 Earnings per share € cents per share 2014 2013 Profit for the year attributable to shareholders Basic EPS 97.4 79.8 Diluted EPS 97.1 79.6 Underlying earnings for the year Basic underlying EPS 107.3 95.0 Diluted underlying EPS 107.0 94.8 Headline earnings for the year Basic headline EPS 99.5 91.3 Diluted headline EPS 99.2 91.1 The calculation of basic and diluted EPS, basic and diluted underlying EPS andbasic and diluted headline EPS is based on the following data: Earnings € million 2014 2013 Profit for the year attributable to shareholders 471 386 Special items (see note 4) 52 87 Related tax (see note 4) (4) (13) Underlying earnings for the year 519 460 Special items not excluded from headline earnings (46) (27) Profit on disposal of property, plant and equipment and - (2)intangible assets Impairments not included in special items 4 4 Related tax 4 7 Headline earnings for the year 481 442 Weighted average number of shares million 2014 2013 Basic number of ordinary shares outstanding 483.6 484 Effect of dilutive potential ordinary shares 1.3 1 Diluted number of ordinary shares outstanding 484.9 485 9 Dividends An interim dividend for the year ended 31 December 2014 of 189.93650 rand cents/13.23 euro cents per share was paid on 16 September 2014 to all Mondi Limitedand Mondi plc ordinary shareholders on the relevant registers on 22 August2014. A proposed final dividend for the year ended 31 December 2014 of 28.77 eurocents per ordinary share will be paid on 21 May 2015 to those shareholders onthe register of Mondi plc on 24 April 2015. An equivalent South African randfinal dividend will be paid on 21 May 2015 to shareholders on the register ofMondi Limited on 24 April 2015. The final dividend is subject to the approvalof the shareholders of Mondi Limited and Mondi plc at the respective annualgeneral meetings scheduled for 13 May 2015. Dividend timetable The proposed final dividend for the year ended 31 December 2014 of 28.77 eurocents per share will be paid in accordance with the following timetable: Mondi Mondi plc Limited Last date to trade shares cum-dividend JSE Limited 17 April 17 April 2015 2015 London Stock Exchange Not 22 April applicable 2015 Shares commence trading ex-dividend JSE Limited 20 April 20 April 2015 2015 London Stock Exchange Not 23 April applicable 2015 Record date JSE Limited 24 April 24 April 2015 2015 London Stock Exchange Not 24 April applicable 2015 Last date for receipt of Dividend Reinvestment Plan 30 April 30 April(DRIP) elections by Central Securities Depository 2015 2015Participants Last date for DRIP elections to UK Registrar and 4 May 2015 26 AprilSouth African Transfer Secretaries by shareholders 2015*of Mondi Limited and Mondi plc Payment Date South African Register 21 May 2015 21 May 2015 UK Register Not 21 May 2015 applicable DRIP purchase settlement dates 29 May 2015 26 May 2015** (subject to the purchase of shares in the open market) Currency conversion date 24 February 24 FebruaryZAR/euro 2015 2015 Euro/sterling Not 5 May 2015 applicable *4 May 2015 for Mondi plc South African branch register shareholders **29 May 2015 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 20 April 2015 and 27April 2015, both dates inclusive, nor may transfers between the UK and SouthAfrican registers of Mondi plc take place between 15 April 2015 and 27 April2015, 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 24 February 2015. Dividends paid to the shareholders of Mondi Limited and Mondi plc are presentedon a combined basis. € cents per share 2014 2013 Final dividend paid (in respect of prior year) 26.45 19.10 Interim dividend paid 13.23 9.55 Final dividend proposed for the year ended 31 December 28.77 26.45 € million 2014 2013 Final dividend paid (in respect of prior year) 129 92 Interim dividend paid 64 46 Final dividend proposed for the year ended 31 December 139 128 Declared by Group companies to non-controlling interests 16 60 10 Forestry assets € million 2014 2013 At 1 January 233 311 Capitalised expenditure 35 39 Acquisition of assets 2 2 Fair value gains 34 17 Disposal of assets (13) (9) Felling costs (54) (55) Reclassified to assets held for sale (11) - Currency movements 9 (72) At 31 December 235 233 Comprising: Mature 148 146 Immature 87 87 Total forestry assets 235 233 The fair value of forestry assets is a level 3 measure in terms of the fairvalue measurement hierarchy (see note 30b) and this category is consistent withprior years. The fair value of forestry assets is calculated on the basis offuture expected net cash flows arising on the Group's owned forestry assets,discounted based on a pre tax yield on long-term bonds over the last fiveyears. 11 Borrowings 2014 2013 € million Current Non-current Total Current Non-current Total Secured Bank loans and 2 2 4 4 2 6overdrafts Obligations under 1 1 2 1 6 7finance leases Total secured 3 3 6 5 8 13 Unsecured Bank loans and 170 553 723 175 261 436overdrafts Bonds - 995 995 - 1,289 1,289 Bonds - 1,340 1,340 Call option derivative - (51) (51) Other loans 3 14 17 1 13 14 Total unsecured 173 1,562 1,735 176 1,563 1,739 Total borrowings 176 1,565 1,741 181 1,571 1,752 The Group's borrowings as at 31 December are analysed by nature and underlyingcurrency as follows: 2014/€ million Floating Fixed rate Non-interest Total Fair rate borrowings bearing carrying value borrowings borrowings value Euro 199 999 - 1,198 1,309 Pounds sterling 355 - - 355 355 South African rand 58 - 7 65 65 Polish zloty 48 - - 48 48 Russian rouble 11 - - 11 11 Turkish lira 28 - - 28 28 Other currencies 24 6 6 36 36 Carrying value 723 1,005 13 1,741 Fair value 723 1,116 13 1,852 2013/€ million Floating Fixed rate Non-interest Total Fair rate borrowings bearing carrying value borrowings borrowings value Euro 208 1,299 - 1,507 1,591 South African rand 79 - 6 85 85 Polish zloty 64 - - 64 64 Russian rouble 30 - - 30 30 Turkish lira 33 - - 33 33 Other currencies 25 2 6 33 33 Carrying value 439 1,301 12 1,752 Fair value 439 1,385 12 1,836 The fair values of the €500 million 2017 Eurobond and €500 million 2020Eurobond are estimated from reference to the last price quoted in the secondarymarket. All other financial liabilities are estimated by discounting the futurecontractual cash flows at the current market interest rate that is available tothe Group for similar financial instruments. In addition to the above, the Group swaps euro and sterling debt into othercurrencies through the foreign exchange market. The currencies swapped into/(out of) and the amounts as at 31 December were as follows: € million 2014 2013 Long-dated contracts with tenures of more than 12 months Russian rouble - 27 Short-dated contracts with tenures of less than 12 months Russian rouble 141 179 Czech koruna 179 81 US dollar 67 80 Pounds sterling (322) 62 Swedish krona 50 34 Polish zloty 198 94 Other 41 57 Total swapped 354 614 Financing facilities Group liquidity is provided through a range of committed debt facilities. Theprincipal loan arrangements in place include the following: € million, unless otherwise Maturity Interest rate % 2014 2013stated Financing facilities Syndicated Revolving Credit Jul 2019 EURIBOR/LIBOR + 750 750Facility margin €500 million Eurobond Apr 2017 5.75% 500 500 €500 million Eurobond Sep 2020 3.375% 500 500 €280 million Eurobond Jul 2014 9.75% - 280 Export Credit Agency Facility Jun 2020 EURIBOR + margin 92 111 European Investment Bank Jun 2025 EURIBOR + margin 100 100Facility Other Various Various 192 246 Total committed facilities 2,134 2,487 Drawn (1,678) (1,695) Total committed facilities 456 792available Both the €500 million Eurobonds contain 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 Moody's Investors Service (Baa2, outlook stable) and Standard & Poor's(BBB-, outlook positive). 12 Retirement benefits All assumptions related to the Group's defined benefit schemes andpost-retirement medical plan liabilities were re-assessed individually for theyear ended 31 December 2013. The net retirement benefit liability increased by€38 million mainly due to changes in assumptions. The assets backing thedefined benefit scheme liabilities reflect their market values as at 31December 2014. Any movements in the assumptions have been recognised as aremeasurement in the condensed combined and consolidated statement ofcomprehensive income. 13 Business combinations To 31 December 2014 Acquisition of bags and kraft paper business of Graphic Packaging InternationalInc On 30 June 2014, Mondi acquired the bags and kraft paper business of GraphicPackaging International Inc (Graphic), a wholly-owned subsidiary of GraphicPackaging Holding Company, for a total consideration of US$101 million (€74million) on a debt and cash-free basis. The production base comprised anintegrated kraft paper mill, with production capacity of 135,000 tonnes perannum, and nine bags plants. The combination of Graphic with Mondi's existingnetwork created a leading bags player in North America and expanded the Group'sgrowing global footprint in this market. Graphic's revenue for the year ended 31 December 2014 was €312 million with aloss after tax of €7 million. Graphic's revenue of €159 million and a lossafter tax of €9 million since date of acquisition have been included in thecombined and consolidated income statement. Details of the net assets acquired, as adjusted from book to fair value, are asfollows: € million Book Revaluation Fair value value Net assets acquired: Intangible assets - 1 1 Property, plant and equipment 77 (50) 27 Inventories 59 (7) 52 Trade and other receivables 28 (1) 27 Total assets 164 (57) 107 Trade and other payables (30) (1) (31) Net retirement benefits liability (1) - (1) Deferred tax liabilities - (1) (1) Total liabilities (excluding debt) (31) (2) (33) Short-term borrowings (30) - (30) Net assets acquired 103 (59) 44 Transaction costs expensed 2 Net cash paid per combined and consolidated 46statement of cash flows Other acquisitions On 31 July 2014, the acquisition of a consumer packaging plant in Poland fromPrintpack Inc (Printpack), for US$23 million (€17 million) on a debt andcash-free basis, was completed, adding to the Group's production capacity inthat region. Printpack's revenue for the year ended 31 December 2014 was €12 million with aloss after tax of €4 million. Since the acquisition date, revenue of €4 millionand a loss of €1 million was contributed by Printpack and included in thecombined and consolidated income statement. On 31 October 2014, the industrial bags business was acquired from Inn_FlexS.r.L. & David Tomasin (Intercell), for US$12 million (€9 million) on a debtand cash-free basis, in line with the Group's growth strategy. Intercell's revenue for the year ended 31 December 2014 was €11 million with aloss after tax of €1 million. Since the acquisition date, revenue of €2 millionand a loss of €nil was contributed by Intercell and included in the combinedand consolidated income statement. Details of the net assets acquired, as adjusted from book to fair value, are asfollows: € million Book Revaluation Fair value value Net assets acquired: Property, plant and equipment 20 2 22 Inventories 3 - 3 Trade and other receivables 5 - 5 Cash and cash equivalents 6 - 6 Total assets 34 2 36 Trade and other payables (1) (2) (3) Total liabilities (excluding debt) (1) (2) (3) Medium and long-term borrowings (2) - (2) Net assets acquired 31 - 31 Transaction costs expensed 1 Cash acquired net of overdrafts (6) Net cash paid per combined and consolidated 26statement of cash flows € million Net Net cash assets paid Printpack 23 17 Intercell 8 9 Other acquisitions total 31 26 The fair value accounting of these acquisitions is provisional in nature. Thenature of these businesses is such that further adjustments to the carryingvalues of acquired assets and/or liabilities are possible as the detail of theacquired businesses is evaluated post acquisition. If necessary, anyadjustments will be made within 12 months of the acquisition dates. 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. To 31 December 2013 There were no significant acquisitions during the year ended 31 December 2013. 14 Consolidated cash flow analysis (a) Reconciliation of profit before tax to cash generated from operations€ million 2014 2013 Profit before tax 619 499 Depreciation and amortisation 355 365 Impairment of property, plant and equipment and intangible 4 4assets (not included in special items) Share-based payments 10 11 Non-cash effect of special items 15 60 Net finance costs (including financing special item) 110 115 Net profit from associates (1) (2) Decrease in provisions and net retirement benefits (10) (25) Increase in inventories (71) (7) Increase in operating receivables (2) (14) Decrease in operating payables (14) (6) Fair value gains on forestry assets (34) (17) Felling costs 54 55 Profit on disposal of property, plant and equipment and - (2)intangible assets Other adjustments (2) - Cash generated from operations 1,033 1,036 (b) Cash and cash equivalents € million 2014 2013 Cash and cash equivalents per combined and consolidated 56 130statement of financial position Bank overdrafts included in short-term borrowings (47) (66) Net cash and cash equivalents per combined and consolidated 9 64statement of cash flows The fair value of cash and cash equivalents approximate their carrying valuespresented. (c) Movement in net debt The composition of net debt has been revised to take into account the Group'sdebt related derivative instruments. Comparative information has been restatedaccordingly. The Group's net debt position is as follows: € million Cash and Debt Debt Current Debt Total cash due due financial related net equivalents within after asset derivative debt one one investments financial year year instruments At 1 January 2013 (37) (188) (1,648) 1 (3) (1,875)(Restated) Cash flow 87 77 10 - - 174 Movement in - - 18 - - 18unamortised loan costs Net movement in - - - - 5 5derivative financialinstruments Reclassification - (34) 34 - - - Currency movements 14 30 15 - - 59 At 31 December 2013 64 (115) (1,571) 1 2 (1,619)(Restated) Cash flow (54) 375 (354) (1) - (34) Business combinations - (30) (2) - - (32)(see note 13) Movement in - - 16 - - 16unamortised loan costs Net movement in - - - - 70 70derivative financialinstruments Reclassification - (388) 388 - - - Currency movements (1) 29 (42) - - (14) At 31 December 2014 9 (129) (1,565) - 72 (1,613) 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. The following table shows the amounts available to draw down on the Group'scommitted loan facilities: € million 2014 2013 Expiry date Within one year 59 42 One to two years - - Two to five years 397 750 Total credit available 456 792 15 Capital commitments (Restated) € million 2014 2013 Contracted for but not provided 344 330 Approved, not yet contracted for 1,009 889 Total capital commitments 1,353 1,219 These capital commitments relate to the following categories of non-currentnon-financial assets: (Restated) € million 2014 2013 Intangible assets 26 19 Property, plant and equipment 1,327 1,200 Total capital commitments 1,353 1,219 The expected maturity of these capital commitments is: (Restated) € million 2014 2013 Within one year 570 509 One to two years 451 412 Two to five years 332 298 Total capital commitments 1,353 1,219 Capital commitments are based on capital projects approved to date and thebudget approved by the Boards. Major capital projects still require furtherapproval before they commence. These capital commitments are expected to befinanced from existing cash resources and borrowing facilities. 16 Contingent liabilities Contingent liabilities comprise aggregate amounts as at 31 December 2014 of€26 million (2013: €25 million) in respect of loans and guarantees given to banksand other third parties. No acquired contingent liabilities have been recordedin the Group's combined and consolidated statement of financial position forboth years presented. 17 Fair value disclosures Financial instruments that are measured in the combined and consolidatedstatement of financial position at fair value or where the fair value offinancial instruments have been disclosed in notes to the combined andconsolidated financial statements require disclosure of fair value measurementsby level based on the following fair value measurement hierarchy: * level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; * level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and * level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The Group does not hold any financial instruments categorised as level 3financial instruments. The only assets measured at fair value on level 3 of thefair value measurement hierarchy are the Group's forestry assets as set out innote 10. There have also been no transfers of assets or liabilities between levels ofthe fair value hierarchy during the year. The fair values of financial instruments that are not traded in an activemarket (for example, over-the-counter derivatives) are determined usingstandard valuation techniques. These valuation techniques maximise the use ofobservable market data where available and rely as little as possible on Groupspecific estimates. Specific valuation methodologies used to value financial instruments include: * the fair values of interest rate swaps and foreign exchange contracts are calculated as the present value of expected future cash flows based on observable yield curves and exchange rates; * the Group's commodity price derivatives are fair valued by independent third parties, who in turn calculate the fair values as the present value of expected future cash flows based on observable market data; and * other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments. Except as detailed in the following table, the directors consider that thecarrying values of financial assets and financial liabilities recorded atamortised cost in the combined and consolidated financial statements areapproximately equal to their fair values. Carrying amount Fair value € million 2014 2013 2014 2013 Financial liabilities Borrowings 1,741 1,752 1,852 1,836 18 Related party transactions The Group and its subsidiaries, in the ordinary course of business, enter intovarious sale, purchase and service transactions with equity accounted investeesand others in which the Group has a material interest. These transactions areunder terms that are no less favourable than those arranged with third parties.These transactions, in total, are not considered to be significant.Transactions between Mondi Limited, Mondi plc and their respectivesubsidiaries, which are related parties, have been eliminated on consolidation. There have been no significant changes to the related parties as disclosed innote 36 of the Group's annual financial statements for the year ended 31December 2013. 19 Events occurring after 31 December 2014 With the exception of the proposed final dividend for 2014, included in note 9,there have been no material reportable events since 31 December 2014. Production statistics (Restated) 1 2014 2013 Packaging Paper Containerboard Tonnes 2,160,485 2,138,714 Kraft paper Tonnes 1,130,220 1,010,885 Softwood pulp Tonnes 2,085,191 2,007,959 Internal consumption Tonnes 1,970,491 1,859,597 Market pulp Tonnes 114,700 148,362 Fibre Packaging Corrugated board and boxes Mm2 1,343 1,344 Industrial bags M units 4,446 4,032 Extrusion coatings Mm2 1,401 1,472 Consumer Packaging Consumer packaging Mm2 6,397 6,387 Uncoated Fine Paper Uncoated fine paper Tonnes 1,361,243 1,381,141 Newsprint Tonnes 201,998 207,228 Hardwood pulp Tonnes 1,127,594 1,087,615 Internal consumption Tonnes 1,041,104 1,013,790 Market pulp Tonnes 86,490 73,825 South Africa Division Containerboard Tonnes 252,526 254,714 Uncoated fine paper Tonnes 258,083 258,751 Hardwood pulp Tonnes 648,635 645,611 Internal consumption Tonnes 332,085 331,928 Market pulp Tonnes 316,550 313,683 Softwood pulp - internal consumption Tonnes 138,640 166,101 Newsprint Tonnes 117,087 145,498 Note: 1 Restated to reflect the change in the Group's segmental reporting. Refer tonote 3 of the condensed combined and consolidated financial statements. Exchange rates Average Closing versus euro 2014 2013 2014 2013 South African rand 14.42 12.83 14.04 14.57 Czech koruna 27.53 25.99 27.74 27.43 Polish zloty 4.18 4.20 4.27 4.15 Pounds sterling 0.81 0.85 0.78 0.83 Russian rouble 50.73 42.32 72.34 45.32 Turkish lira 2.91 2.53 2.83 2.96 US dollar 1.33 1.33 1.21 1.38 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, market growthand developments, expectations of growth and profitability and plans andobjectives of management for future operations, are forward-looking statements.Forward-looking statements are sometimes identified by the use offorward-looking terminology such as "believe", "expects", "may", "will","could", "should", "shall", "risk", "intends", "estimates", "aims", "plans","predicts", "continues", "assumes", "positioned" or "anticipates" or thenegative thereof, other variations thereon or comparable terminology. Suchforward-looking statements involve known and unknown risks, uncertainties andother factors which may cause the actual results, performance or achievementsof Mondi, or industry results, to be materially different from any futureresults, performance or achievements expressed or implied by suchforward-looking statements. Such forward-looking statements and otherstatements contained in this document regarding matters that are not historicalfacts involve predictions and are based on numerous assumptions regardingMondi's present and future business strategies and the environment in whichMondi will operate in the future. These forward-looking statements speak onlyas of the date on which they are made. No assurance can be given that such future results will be achieved; variousfactors could cause actual future results, performance or events to differmaterially from those described in these statements. Such factors include inparticular but without any limitation: (1) operating factors, such as continuedsuccess of manufacturing activities and the achievement of efficienciestherein, continued success of product development plans and targets, changes inthe degree of protection created by Mondi's patents and other intellectualproperty rights and the availability of capital on acceptable terms; (2)industry conditions, such as strength of product demand, intensity ofcompetition, prevailing and future global market prices for Mondi's productsand raw materials and the pricing pressures thereto, financial condition of thecustomers, suppliers and the competitors of Mondi and potential introduction ofcompeting products and technologies by competitors; and (3) general economicconditions, such as rates of economic growth in Mondi's principal geographicalmarkets or fluctuations of exchange rates and interest rates. Mondi expressly disclaims a) any warranty or liability as to accuracy orcompleteness of the information provided herein; and b) any obligation orundertaking to review or confirm analysts' expectations or estimates or toupdate any forward-looking statements to reflect any change in Mondi'sexpectations or any events that occur or circumstances that arise after thedate of making any forward-looking statements, unless required to do so byapplicable law or any regulatory body applicable to Mondi, including the JSELimited and the LSE. Any reference to future financial performance included in this announcement hasnot been reviewed or reported on by the Group's auditors. Editors' notes We are Mondi: In touch every day Mondi is an international packaging and paper Group, employing around 25,000people across more than 30 countries. Our key operations are located in centralEurope, Russia, North America and South Africa. We offer over 100 packaging andpaper products, customised into more than 100,000 different solutions forcustomers and end consumers. In 2014, Mondi had revenues of €6.4 billion and areturn on capital employed of 17.2%. The Mondi Group is fully integrated across the packaging and paper value chain- from managing forests and producing pulp, paper and compound plastics, todeveloping effective and innovative industrial and consumer packagingsolutions. Our innovative technologies and products can be found in a varietyof applications including hygiene components, stand-up pouches, super-strongcement bags, clever retail boxes and office paper. Our key customers are inindustries such as automotive; building and construction; chemicals; food andbeverage; home and personal care; medical and pharmaceutical; packaging andpaper converting; pet care; and office and professional printing. Mondi has a dual listed company structure, with a primary listing on the JSELimited for Mondi Limited under the ticker code MND and a premium listing onthe London Stock Exchange for Mondi plc, under the ticker code MNDI. For us, acting sustainably makes good business sense. We don't just talk aboutsustainability; we make it part of the way we work every day. We have beenincluded in the FTSE4Good Index Series since 2008 and the JSE's SociallyResponsible Investment (SRI) Index since 2007.

Sponsor in South Africa: UBS South Africa Proprietary Limited