Final Results

28 February 2014 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 2013 Highlights * Record financial performance * + Underlying operating profit of €699 million, up 22% + Underlying earnings of 95 euro cents per share, up 37% + ROCE of 15.3%, up 170 basis points * 2012 packaging acquisitions integrated and synergies on track * Strategic capital investments on track, with a number of projects completed * Strong de-leveraging with net debt down by €251 million to €1,621 million * + Cash generated from operations exceeded €1 billion for the first time * Total dividend proposed of 36 euro cents per share, up 29% Financial Summary € million, except for (Restated) (Restated)percentages and per share 4 4measures Year ended Year ended Six months Six months 31 31 ended 31 ended 31 December December Change December December Change 2013 2012 % 2013 2012 % Group revenue 6,476 5,790 12 3,134 2,971 5 Underlying EBITDA1 1,068 927 15 514 490 5 Underlying operating 699 574 22 333 302 10profit1 Operating profit 605 547 11 320 275 16 Profit before tax 499 368 36 270 146 85 Per share measures Basic underlying earnings 95.0 69.2 37per share2 (€ cents) Basic earnings per share 79.8 50.1 59(€ cents) Total dividend per share 36.0 28.0 29(€ cents) Free cash flow per share2 64.1 52.7 22(€ cents) Cash generated from 1,036 849 22operations Net debt 1,621 1,872 Group return on capital 15.3% 13.6%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. 4 The Group has restated comparative information following the adoption ofrevised IFRS standards. Full details of the restatements are set out in note 2bof the condensed financial statements. David Hathorn, Mondi Group chief executive, said: "I am pleased to report a record financial performance, driven by our low costposition, exposure to higher growth markets and ongoing focus on operationalexcellence. While growth in demand for the Group's key products has remainedgenerally subdued, supply-side constraint has been supportive of pricing. It is particularly pleasing to see how well the integration of the businessesacquired in late 2012 has gone, with synergies delivered in line with target.Despite a difficult trading environment, the new business segment of ConsumerPackaging has demonstrated its resilience. With order books strengthening inthe new year and the structural growth dynamics still very much in place, weremain confident in the future development of this business. A further priority in 2013 was the successful development of the variouscapital expenditure projects initiated over the past two years. It is againpleasing to report that a number of these were delivered during the year, allwithin budget. The projects that are still in progress remain within budget andon target for their scheduled completion dates over the coming two years. The trading environment in the Group's main markets remains mixed. The increasein the price of recycled containerboard in the second half of 2013 on soliddemand growth is encouraging, and should lend support to our other keycontainerboard grades. However, price pressure in most virgin paper grades inthe second half of 2013 means that we start the new year with lower pricingthan the average for 2013. The near-term outlook for pricing is largelydependent on the strength of the European macroeconomic recovery. In thisregard it is encouraging to see a recent pick-up in orders in some of our mainproduct segments and we are in discussions with customers on price increases incertain virgin packaging grades. Recent exchange rate volatility in several of the emerging markets in which weoperate does create its challenges. However, the Group's positioning as a netexporter from most of these markets typically allows us to benefit from thedevaluation of these currencies relative to the euro. We are confident that the ongoing capital investment programme will contributemeaningfully to our performance going forward. Our proven ability to generatestrong cash flow through the cycle provides valuable optionality. As such, weremain confident in the Group's ability to continue delivering industry-leadingperformance." 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 / Sophie McMillan +44 20 7269 7186 / +44 20 7909 684 466 Bheki Mpofu / Lerato Matsaneng +27 88 552 2109 / +27 11 214 2407 Conference call dial-in and audio cast details Please see below details of our dial-in conference call and audio cast thatwill be held at 09:00 (UK) and 11:00 (SA). The conference call dial-in numbers are: South Africa 0800 200 648 (toll-free) UK 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/FYResults13. 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 28 February 2014. Editors' notes Mondi is an international packaging and paper Group, employing around 24,000people in production facilities across 30 countries. In 2013, Mondi hadrevenues of €6.5 billion and a ROCE of 15.3%. The Group's key operations arelocated in central Europe, Russia, the Americas and South Africa. The Mondi Group is fully integrated across the packaging and paper value chain- from the management of its own forests and the production of pulp and paper(packaging paper and uncoated fine paper), to the conversion of packaging paperinto corrugated packaging, industrial bags, extrusion coatings and releaseliner. Mondi is also a supplier of innovative consumer packaging solutions,advanced films and hygiene products components. Mondi has a dual listed company structure, with a primary listing on the JSELimited for Mondi Limited under the ticker code MND and a premium listing onthe London Stock Exchange for Mondi plc, under the ticker code MNDI. TheGroup's performance, and the responsible approach it takes to good businesspractice, has been recognised by its inclusion in the FTSE4Good Global,European and UK Index Series (since 2008) and the JSE's Socially ResponsibleInvestment (SRI) Index since 2007. 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. Overview Mondi delivered a record financial performance in 2013, benefiting from astrong operating performance and the strategic acquisitions completed in thelatter part of 2012. Underlying operating profit of €699 million was up 22% on that achieved in2012. Excluding the effects of acquisitions made in the prior year, underlyingoperating profit was still up 11%, driven by particularly strong performancesfrom Packaging Paper and the South Africa Division. Return on capital employed (ROCE), a key performance metric for the Group, was15.3%, a record for the Group despite the dilutive effect of the acquisitionsmade in 2012. ROCE over the past three years, averaging 14.6%, has beenconsistently above the Group's through-the-cycle hurdle rate of 13%. The focus over the last year has been on integrating and optimising thesignificant acquisitions made towards the end of 2012 and delivering the majorcapital projects initiated over the past two years. Excellent progress has beenmade in this regard, with synergy targets delivered, a number of the capitalprojects having been completed in the latter part of 2013, and the remainingprojects on track for completion within budget and on schedule over the nexttwo years. The Packaging Paper business was the standout performer, benefiting from higheraverage pricing in all key grades and good volume growth. The downstream FibrePackaging business was challenged by rising paper prices, but generally madegood progress in recovering margins. The Uncoated Fine Paper business continuedto deliver strong results despite the structural demand decline seen in maturewestern European markets, a testament to the business' superior cost and marketpositioning. The South Africa Division made very good progress during the yearand is now delivering well in excess of the Group's 13% through-the-cyclehurdle rate. The Group benefited from currency weakness in certain of the emerging marketsin which it operates, most significantly in the South Africa Division from therand's devaluation relative to the euro and US dollar. The strong culture of continuous productivity improvement, relentless focus oncost management and the benefits of restructuring activities completed duringthe year ensured that fixed cost increases were contained to well belowinflationary levels. The Group remains strongly cash generative with net debt reducing to€1,621 million, compared to €1,872 million at 31 December 2012, notwithstandingthe €405 million (2012:€294 million) invested in capital expenditure projectsduring the year. Cash generated from operating activities exceeded €1 billionfor the first time. Underlying earnings of 95 euro cents per share grew 37% compared to 2012, withhigher finance charges offset by a lower effective tax rate and reducednon-controlling interest charges. We continue to refine our product and geographic mix in line with our strategicfocus. Our emphasis is on growing our packaging interests, which currentlyaccount for around 70% of the Group's revenues, while at the same timecontinuing to invest appropriately to maintain and improve the competitivenessof our uncoated fine paper business. Within the broader packaging sphere, wesee greater opportunities to develop those segments offering exposure toconsumer related packaging. This includes both our Consumer Packaging business,and the corrugated packaging value chain. We continue to develop our presencein emerging markets, which offer us inherent cost and growth benefits, whilerecognising in some areas, most notably Consumer Packaging, that there are alsoopportunities to develop and leverage our competencies in mature markets.Overall, approximately 62% of the Group's net operating assets and 51% ofrevenue by destination are currently in emerging markets. The Boards are recommending payment of a final dividend of 26.45 euro cents pershare, bringing the total dividend for the year to 36 euro cents per share, anincrease of 29% on 2012. Europe & International - Packaging Paper € million Six Six Year Year months months ended 31 ended 31 ended 31 ended 31 December December Change December December Change 2013 2012 % 2013 2012 % Segment revenue 2,000 1,896 5 957 936 2 Underlying EBITDA 394 321 23 199 171 16 Underlying operating profit 298 227 31 150 123 22 Underlying operating profit 14.9% 12.0% 15.7% 13.1%margin Capital expenditure 139 89 84 55 Net segment assets 1,484 1,466 ROCE 21.9% 17.9% Packaging Paper benefited from positive trading conditions in all key papergrades and a strong operating performance, resulting in an underlying operatingprofit of €298 million, an increase of 31%, and ROCE of 21.9%. The average benchmark selling price for recycled containerboard was 4% higherthan the comparable prior year period, and by December was 14% up on the samestage in the prior year, with increases being implemented at various stagesthroughout the year. Price increases were driven by reasonable demand growthsupported by limited net capacity additions, with new capacity brought onstream during the year largely offset by closures. Selling prices for the virgin containerboard grades increased modestly over thefirst half of the year before coming under some pressure during the secondhalf. At year-end benchmark selling prices were around 2% lower than theaverage levels during the year. The price weakness in the second half was seenas a reaction to increased substitution towards recycled grades due to theabnormally high price differential that developed between virgin and recycledcontainerboard grades, competition from imports due to the weaker US dollar andan increase in supply as producers converted production from less profitablegrades. The price differential has now reduced to levels towards the lower halfof the historic trading range, typically seen as supportive of virgincontainerboard pricing. With improving demand seen in early 2014, discussionsare underway with customers around price increases in unbleached kraftlinergrades. Kraft paper prices were relatively stable for much of the year while volumeswere up on the prior year, supported by stable European markets and stronggains in export markets. As anticipated, there was some price erosion seentowards the end of the fourth quarter and into early 2014 on the back ofseasonally weaker demand in Europe and increased competition in key exportmarkets. By the end of the year, average selling prices had declined by around9% from their highs in mid-2013. It is, however, encouraging to note a recentpick-up in orders. Sack kraft paper price increases are currently underdiscussion with customers. The uncertain regulatory environment surrounding renewable energy in Poland ledto a significant decline in market prices for green energy in the first quarterof the year. As a consequence, the Group recognised an €11 million write downin the value of its existing green energy credits in the first quarter. Thelower market prices prevailed throughout the year and income from the sale ofgreen energy credits in the Packaging Paper business was €17 million lower thanin 2012 (excluding the impact of the one-off write-down). Input costs were well contained. The cost of paper for recycling was relativelystable throughout the year following a sharp drop in prices seen in the secondhalf of 2012, although there was some regional pressure in Poland following thestart-up of new competitor capacity. The average benchmark price wasapproximately 7% lower than in 2012. Wood costs in central Europe weregenerally well contained. Following the acquisitions, in Fibre Packaging, of the Duropack corrugatedpackaging plants in the latter part of 2012, Packaging Paper benefited from therealisation of supply chain synergies. A strong operating performance and significant productivity improvements, mostnotably in Syktyvkar, ensured that increases in fixed costs were contained wellwithin inflation. Europe & International - Fibre Packaging € million Six Six Year Year months months ended 31 ended 31 ended 31 ended 31 December December Change December December Change 2013 2012 % 2013 2012 % Segment revenue 1,967 1,860 6 965 914 6 Underlying EBITDA 163 168 (3) 80 88 (9) Underlying operating profit 93 101 (8) 45 54 (17) Underlying operating profit 4.7% 5.4% 4.7% 5.9%margin Special items (3) (16) (3) (16) Capital expenditure 78 76 43 48 Net segment assets 903 958 ROCE 10.8% 12.5% Underlying operating profit declined by 8% to €93 million as the business wasimpacted by rising input costs, adverse currency movements and market andoperational challenges in the coatings segment. Corrugated packaging benefited from higher sales volumes and higher prices,although margins were squeezed by the lag in passing on increasing paper inputcosts to customers, currency effects and aggressive competitor activity incertain markets. The business benefited from the successful integration of theacquisitions of the Duropack corrugated plants in Germany and the CzechRepublic in the latter part of 2012. Industrial bags continued to deliver solid results. Selling prices and paperinput costs were at similar levels to 2012, while the business realised thebenefits of its restructuring activities, mainly in western Europe, with fixedcosts reducing significantly compared to 2012. Sales volumes increased withgood demand in Russia and the CIS as well as in Africa, Middle East and northand central America. Sales volumes in Europe were marginally down on theprevious year. The weaker export currencies relative to the euro had a negativeimpact on margins. The coatings business experienced volume declines and margin pressures, mainlydue to weak demand in the industrial and automotive markets and increasedcompetitor activity in the main European markets. Europe & International - Consumer Packaging € million Year Year Six months Six months ended 31 ended 31 ended 31 ended 31 December December December December 2013 2012 2013 2012 Segment revenue 1,153 502 571 352 Underlying EBITDA 129 45 63 30 Underlying operating profit 74 19 35 9 Underlying operating profit 6.4% 3.8% 6.1% 2.6%margin Special items (13) (11) - (11) Capital expenditure 56 28 32 21 Net segment assets 855 872 ROCE - adjusted 9.1% 10.8% ROCE for 2012 has been adjusted to exclude one-off costs related to theacquisition of Nordenia. The benefits of the acquisition of Nordenia in October 2012 are reflected inthe increase in underlying operating profit of €55 million to €74 million. On apro-forma basis, assuming Nordenia was acquired at the beginning of 2012, andexcluding the effects of acquisition accounting, the underlying operatingprofit of the combined business was in line with the prior year, with synergygains offset by a weaker trading performance, the impact of some one-off costs,and higher fixed costs. Synergies related to the Nordenia acquisition of €16 million were realisedduring the year, well on track to achieve the targeted €20 million in 2014.One-off costs of €5 million were incurred in achieving these synergies. Sales volumes in the commoditised segments of the films business were lowerthan the previous year. With focus on higher value added products, it ispleasing to see volumes for fully converted packaging products held up well, up2%, with good performances from the emerging European and north Americanoperations. It is encouraging to note a pick-up in order intake in early 2014following a weak finish to 2013. An increase in fixed costs, excluding synergy effects, due in part to costsincurred on new product launches and a new plant start-up further impacted theunderlying result. The closure of the Lindlar operation and redirection of production to existingConsumer Packaging facilities in Germany and Hungary and to the Fibre Packagingbusiness in the Czech Republic was completed. Europe & International - Uncoated Fine Paper € million Six Six Year Year months months ended 31 ended 31 ended 31 ended 31 December December Change December December Change 2013 2012 % 2013 2012 % Segment revenue 1,388 1,466 (5) 648 717 (10) Underlying EBITDA 277 300 (8) 120 146 (18) Underlying operating profit 172 191 (10) 70 91 (23) Underlying operating profit 12.4% 13.0% 10.8% 12.7%margin Special items (60) - (10) - Capital expenditure 80 58 44 34 Net segment assets 1,135 1,248 ROCE 16.2% 16.7% Uncoated Fine Paper continued to deliver robust results, with underlyingoperating profit of €172 million and a ROCE of 16.2%. Sales volumes in uncoated fine paper were around 1.5% down on the prior year,reflecting mainly the effects of the decision to restructure the Neusiedlermill. In May 2013, Mondi announced plans to restructure the non-integratedNeusiedler operation to improve the competitiveness of the mill. Therestructuring was successfully completed and the mill is now focused onproduction of speciality paper grades enjoying higher margins. Selling prices were largely unchanged in the first part of the year compared tothe levels at the end of 2012, but decreased in the second half in the face ofcontinuing weak demand and the introduction of additional capacity fromindustry competitors in an already oversupplied market. Average benchmarkselling prices for uncoated fine paper were around 2% lower than the prioryear, while prices at the year-end were around 1% below the average for theyear. Input costs increased, with higher wood costs in Ruzomberok, higher pulp inputcosts at the unintegrated Neusiedler mill in Austria and higher gas andtransportation costs in Syktyvkar. In Syktyvkar, wood costs reduced as a resultof a number of cost reduction initiatives. On average, own wood costs inSyktyvkar have decreased by more than 10% from 2012 average costs. Profit improvement initiatives and productivity improvements more than offsetinflationary fixed cost increases, enabling the business to realise a netreduction in fixed costs compared to 2012. South Africa Division (Restated) (Restated) € million Year ended Year ended Six months Six months 31 31 ended 31 ended 31 December December Change December December Change 2013 2012 % 2013 2012 % Segment revenue 624 702 (11) 299 354 (16) Underlying EBITDA 135 125 8 68 69 (1) Underlying operating 93 69 35 49 40 23profit Underlying operating 14.9% 9.8% 16.4% 11.3%profit margin Special items (11) 6 7 - Capital expenditure 52 43 38 26 Net segment assets 622 821 ROCE 16.0% 9.6% The South Africa Division delivered a very strong performance. Underlyingoperating profit was €93 million, an increase of 35%, and ROCE was 16.0%,despite net fair value gains from the revaluation of the Division's forestryassets being around €23 million lower than those realised in the prior year. The business benefited from higher domestic selling prices, good domesticcontainerboard volume growth, and improved export margins due to the weakerSouth African rand coupled with higher average export pulp prices. In May 2013, the closure of one of the two newsprint machines located inMerebank was announced as a result of the continued decline in demand fornewsprint in South Africa. The machine stopped production with effect from 1July 2013. The South African rand came under significant pressure during the year, closingthe year more than 30% weaker against the euro than in December 2012. TheDivision generates approximately 40% of its revenue from exports, with apredominantly rand cost base and thus benefited from the weakening currency. The Division has continued to invest in the modernisation of its forestryoperations, with a focus on silviculture and harvesting in the current year.The benefits of these investments, further productivity improvements and strongcost management ensured that fixed costs were contained to well withininflationary levels. Tax The Group's underlying effective tax rate of 17% is below that of the prioryear, and reflects a favourable underlying profit mix, the continued benefitsarising from the utilisation of certain tax incentives available to the Group,most notably in Poland, and further tax incentives received during the yearrelated to the recovery boiler investment project in Slovakia. Non-controlling interests The non-controlling interest charge of €28 million is €7 million lower than theprevious year, primarily due to the impact of the acquisition of the remainingminority interest in Mondi Swiecie during the first half of 2012. 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 €87 million before tax, the cash component ofwhich amounted to €20 million, included the following: * Closure of Consumer Packaging's Lindlar operation in Germany (€13 million); * Closure of the Newsprint machine in Merebank, South Africa and related restructuring activities (€18 million); * Impairment of Uncoated Fine Paper's Neusiedler mill in Austria and related restructuring costs (€51 million); * Write-down of unutilised assets in Uncoated Fine Paper's Syktyvkar mill in Russia (€9 million); * Gain from the sale of land in South Africa Division (€7 million); and * Further restructuring and impairment costs in the Industrial Bags segment of Fibre Packaging in France and Mexico (€3 million). Further detail is provided in note 5 of the condensed financial statements. After taking special items into consideration, earnings of €386 million (79.8euro cents per share) were 59% higher than the previous year (€242 million,50.1 euro cents per share). Cash flow The Group is strongly cash generative with EBITDA of €1,068 million, reflectingan increase of 15% compared to the prior year. The Group generated€1,036 million of cash from operations (2012: €849 million) after taking intoaccount a net increase in working capital of €27 million. Working capital as apercentage of revenue was 11%, in line with the target of 10-12% of turnover,and represents a reduction on the prior year comparable figure of 11.9%(adjusted for acquisitions). The strong cash flow generation was applied to fund the Group's capitalexpenditure of €405 million, the payment of finance charges of €124 million,and the payment of dividends to holders of non-controlling interests of€60 million and to shareholders of €138 million. The net cash flow generated bythe Group of €174 million was applied to reduce the Group's net debt. Capital investments Capital expenditure of €405 million was €111 million higher than the prior yearas expenditure on a number of the Group's previously announced energy anddebottlenecking investments ramped up. The capital expenditure to depreciationratio was 113%. The major strategic investments initiated over the past two years and completedduring 2013 include the rebuild of the bark boiler at the Syktyvkar uncoatedfine paper and containerboard mill in Russia, a new recovery boiler at theGroup's Frantschach kraft paper mill in Austria, a recovery boiler economiserand turbine at the Stambolijski kraft paper mill in Bulgaria and a new steamturbine at the Richards Bay pulp and containerboard mill in South Africa. Withthe exception of the bark boiler, completed in the first half of 2013, theseprojects were completed in the second half of the year, with the benefits ofreduced energy costs, improved efficiencies and improved electricityself-sufficiency expected to be realised from 2014 onwards. In total,approximately €140 million has been invested in these, and other smaller energyrelated projects. Early in 2013, the construction of a 150,000 tonne bleached kraft paper machineat the Steti kraft paper mill in the Czech Republic was approved. This willenable the mill to integrate its remaining open market pulp production on site,providing further growth opportunities for this business. The €70 millionproject is expected to be completed in the first half of 2014. Good progress is being made on the €30 million investment in a 100,000 tonnepulp dryer in the Syktyvkar mill and the project is on schedule for completionin the second half of 2014. In the first half of the year, a €128 million project to replace the recoveryboiler at the Ruzomberok uncoated fine paper mill in Slovakia commenced.Completion is scheduled towards the end of 2014. The project will reduce themill's environmental footprint and improve its overall cost position. Some ofthe benefits from this project also result from avoiding otherwise essentialstay-in-business capital expenditure. In the second half of the year, the Boards approved a €166 million investmentat the Mondi Swiecie containerboard mill in Poland, bringing forward theplanned replacement of the recovery boiler and the mill's coal fired boilers.The investment will result in a reduction of ongoing maintenance costs, animprovement in overall energy efficiency and a reduction in CO2e emissions. Theproject is expected to be completed towards the end of 2015. These investments are all proceeding according to schedule. As a consequence of the major capital projects approved during 2013, coupledwith some delay in the expected spend on previously approved projects, capitalexpenditure is expected to increase to around €500 million per annum, onaverage, over the next two years. Treasury and borrowings Net debt at 31 December of €1,621 million decreased by €251 million from 31December 2012 as a consequence of the Group's strong cash flow generation andcurrency effects. The weakening of a number of the emerging market currenciesin which the Group's debt is denominated resulted in a net currency gain of€59 million being recorded. Gearing reduced to 36.3% at the end of 2013, down from 39.5% at the end of2012. The net debt to 12 month trailing EBITDA ratio was 1.5 times, well withinthe Group's key financial covenant requirement of 3.5 times. Finance charges of €115 million were €5 million higher than the previous year,with higher average net debt as a consequence of the acquisitions made at theend of 2012 offset by a lower effective interest rate. Mondi's public credit ratings, first issued in March 2010, were againreaffirmed during the year at BBB- (Standard and Poor's) and Baa3 (Moody'sInvestors Service). The Group actively manages its liquidity risk by ensuring it maintainsdiversified sources of funding and debt maturities. The weighted averagematurity of the Eurobonds and committed debt facilities was 3.7 years at31 December 2013. At the end of the year €792 million of the Group's€2.5 billion committed debt facilities remained undrawn. 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 of26.45 euro cents per share (2012: 19.1 euro cents per share), payable on 22 May2014 to shareholders on the register on 25 April 2014. Together with theinterim dividend of 9.55 euro cents per share, paid on 17 September 2013, thisamounts to a total dividend for the year of 36.0 euro cents per share. In 2012,the total dividend for the year was 28.0 euro cents per share. The finaldividend is subject to the approval of the shareholders of Mondi Limited andMondi plc at the respective annual general meetings scheduled for 14 May 2014. Outlook The trading environment in the Group's main markets remains mixed. The increasein the price of recycled containerboard in the second half of 2013 on soliddemand growth is encouraging, and should lend support to the other keycontainerboard grades. However, price pressure in most virgin paper grades inthe second half of 2013 means that the new year started with lower pricing thanthe average for 2013. The near-term outlook for pricing is largely dependent onthe strength of the European macroeconomic recovery. In this regard it isencouraging to see a recent pick-up in orders in some of the Group's mainproduct segments and discussions are underway with customers on price increasesin certain virgin packaging grades. Recent exchange rate volatility in several of the emerging markets in which theGroup operates does create some challenges. However, the Group's positioning asa net exporter from most of these markets typically allows it to benefit fromthe devaluation of these currencies relative to the euro. The Group is confident that its ongoing capital investment programme willcontribute meaningfully to Mondi's performance going forward. Mondi's provenability to generate strong cash flows through the cycle provides valuableoptionality. As such, the Group remains confident in its ability to continuedelivering industry-leading performance. Principal risks and uncertainties It is in the nature of Mondi's business that the Group is exposed to risks anduncertainties which may have an impact on future performance and financialresults, as well as on its ability to meet certain social and environmentalobjectives. The executive committee, mandated by the Boards, has established a Group-widesystem of internal control to manage Group risks. The Group-wide system, whichcomplies with corporate governance codes in South Africa and the UK, supportsthe Boards in discharging their responsibility for ensuring that the wide rangeof risks associated with Mondi's diverse international operations iseffectively managed. Continuous monitoring of risk and control processes across all key risk areasprovides the basis for regular reports to management, the executive committeeand the Boards. On an annual basis, the executive committee, the auditcommittee and the Boards conduct a formal systematic review of the Group's mostsignificant risks and uncertainties and the monitoring of and response to thoserisks. These risks are assessed against pre-determined risk tolerance limits,established by the Boards, taking both the likelihood and severity of the riskfactors into consideration. The risk management framework addresses all significant strategic,sustainability, financial, operational and compliance-related risks which couldundermine the Group's ability to achieve its business objectives in asustainable manner. The risk management framework is designed to be flexible,to ensure that it remains relevant at all levels of the business given thediversity of the Group's locations, markets and production processes; anddynamic, to ensure that it remains current and responsive to changing businessconditions. The directors are satisfied that the Group has effective systems and controlsin place to manage its key risks within the risk tolerance levels establishedby the Boards. Competitive environment in which Mondi operates The industry in which Mondi operates is highly competitive and selling pricesare subject to significant volatility. New capacity additions are usually inlarge increments which, combined with product substitution towards lighterweight products, electronic substitution, alternative packaging solutions andincreasing environmental considerations, have a significant impact on thesupply-demand balance and hence on market prices. The Group monitors industry developments in terms of changes in capacity aswell as trends and developments in its product markets and potentialsubstitutes. Mondi's strategic focus on low-cost production in growing marketswith consistent investment in its operating capacity ensures that the Groupremains competitive. Mondi invests in research and development activities toimprove existing processes and to identify new markets and new products. The locations in which the Group operates The Group operates in a number of geographical locations in countries withdiffering levels of political, economic and legal systems. The Group continues to actively monitor and adapt to changes in theenvironments in which it operates. Management engages in regular formal andinformal interaction with the authorities to ensure they remain abreast of newdevelopments. Thorough country risk assessments are conducted and returnrequirements adjusted to take country risk into consideration. The Group's geographical diversity and decentralised management structure,utilising local resources in countries in which it operates, reduces exposureto any specific jurisdiction. The Boards have established limits on exposure toany particular geographic environment and new investments are subject torigorous strategic and commercial evaluation. Capital intensive operations Mondi operates large facilities, often in remote locations. The ongoing safetyand sustainable operation of all its facilities is critical to the success ofthe Group. The management systems in place ensure ongoing monitoring of all operations toensure they meet the requisite standards and performance requirements. TheGroup has adequate insurance in place to cover material property damage,business interruption and liability risks. A structured maintenance programmeis in place under the auspices of the Group technical director. Emergencypreparedness and response procedures are in place and subject to periodicdrills. Cost and availability of a sustainable supply of fibre Paper for recycling and wood account for approximately one-third of inputcosts. It is the Group's objective to acquire fibre from sustainable sourcesand to avoid the use of any illegal or controversial supply. International market prices are constantly monitored and, where possible, costpass through mechanisms are in place with customers. The Group maintains strong forestry management teams in Russia and South Africato actively monitor environmental influences impacting its owned sources offibre. Mondi's relatively high levels of integration and access to own FSCTMcertified wood in Russia and South Africa serve to mitigate this risk. All theGroup's mills have chain-of-custody certificates in place ensuring that woodprocured is from non-controversial sources. Cost of energy and related input costs Energy and related input costs comprise approximately a third of the Group'svariable costs. Increasing energy costs, and the consequential impact thereofon both chemical and transport costs, may impact profit margins. Energy usage levels, emission levels and usage of renewable energy aremonitored and energy costs are benchmarked against external sources. The Groupcontinues to invest in energy infrastructure at its key operating facilities inorder to improve energy efficiency and electricity self-sufficiency as well asto reduce its environmental footprint. Attraction and retention of key skills and talent The complexity of operations and geographic diversity of the Group is such thathigh-quality, experienced employees are required in all locations. The Group monitors its staff turnover levels, diversity and training activitiesand conducts regular employee surveys. Appropriate reward and retentionstrategies are in place to attract and retain talent across the organisation.At more senior levels, these include a share based incentive scheme. Employee and contractor safety The Group's employees work in potentially dangerous environments where hazardsare ever-present and must be managed. The Group engages in extensive safety communication sessions, involvingemployees and contractors, at all operations. The Nine Safety Rules to Live By,applied across the Group, are integral to the safety strategy. Operationsconduct statutory safety committee meetings where management and employees arerepresented. A risk-based approach underpins all safety and health programmes. All businessunits and operations are required to have safety improvement plans in place. Governance risks The Group operates in a number of legal jurisdictions and non-compliance withlegal and governance requirements in these jurisdictions could expose the Groupto significant risk if not adequately managed. The Group operates a comprehensive training and compliance programme, supportedby regular self-certification and reporting as well as its confidentialreporting hotline for all stakeholders, Speakout. Financial risks Mondi's trading and financing activities expose the Group to financial risksthat, if left unmanaged, could adversely impact current or future earnings.These risks relate to the currencies in which the Group conducts itsactivities, interest rate and liquidity risks as well as exposure to customercredit risk. 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€792 million of undrawn committed debt facilities as at 31 December 2013 whichshould provide sufficient liquidity in the medium term. The Group's debtfacilities have maturity dates of between 1 and 12 years, with a weightedaverage maturity of 3.7 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 2014 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. 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 set of combined and consolidated financial statements has been prepared in accordance with International Financial Reporting Standards and in particular with International Accounting Standard 34, `Interim Financial Reporting'; * the full year results report includes a fair review of the important events during the year ended 31 December 2013 and a description of the principal risks and uncertainties; 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 2013. The Group's condensed combined and consolidated financial statements, andrelated notes, were approved by the Boards and authorised for issue on 27February 2014 and were signed on its behalf by: David Hathorn Andrew King Director Director 27 February 2014 27 February 2014 Audited financial information The condensed combined and consolidated financial statements for the year ended31 December 2013 have been audited by the Group's auditors, Deloitte LLP andDeloitte & Touche. Their unqualified audit reports are available for inspectionat the Group's registered offices. Condensed combined and consolidated income statementfor the year ended 31 December 2013 (Restated) 2013 2012 € million Notes Before Special After Before Special After special items special special items special items (note 5) items items (note 5) items Group revenue 3 6,476 - 6,476 5,790 - 5,790 Materials, energy and (3,391) - (3,391) (3,024) - (3,024)consumables used Variable selling expenses (523) - (523) (527) - (527) Gross margin 2,562 - 2,562 2,239 - 2,239 Maintenance and other (278) - (278) (279) - (279)indirect expenses Personnel costs (940) (17) (957) (834) (16) (850) Other net operating (276) (10) (286) (199) (10) (209)expenses Depreciation, amortisation (369) (67) (436) (353) (1) (354)and impairments Operating profit/(loss) 3 699 (94) 605 574 (27) 547 Non-operating special items 5 - 7 7 - (64) (64) Net profit/(loss) from 2 - 2 (5) - (5)associates Total profit/(loss) from 701 (87) 614 569 (91) 478operations and associates Net finance costs 6 (115) - (115) (110) - (110) Investment income 3 - 3 4 - 4 Foreign currency losses (1) - (1) (2) - (2) Finance costs (117) - (117) (112) - (112) Profit/(loss) before tax 586 (87) 499 459 (91) 368 Tax (charge)/credit 7 (98) 13 (85) (90) (1) (91) Profit/(loss) for the year 488 (74) 414 369 (92) 277 Attributable to: Non-controlling interests 28 35 Shareholders 386 242 Earnings per share (EPS)for profit attributable toshareholders Basic EPS (€ cents) 8 79.8 50.1 Diluted EPS (€ cents) 8 79.6 49.9 Basic underlying EPS (€ 8 95.0 69.2cents) Diluted underlying EPS (€ 8 94.8 68.9cents) Basic headline EPS (€ 8 91.3 62.9cents) Diluted headline EPS (€ 8 91.1 62.7cents) Condensed combined and consolidated statement of comprehensive incomefor the year ended 31 December 2013 (Restated) 2013 2012 € million Before Net of Before Net of tax Tax tax tax Tax tax amount expense amount amount benefit amount Profit for the year 414 277 Other comprehensive(expense)/income Items that maysubsequently bereclassified to thecombined and consolidatedincome statement: Effect of cash flow (2) - (2) 2 - 2hedges: Gains on 2 - 2 1 - 1available-for-saleinvestments Exchange differences on (233) - (233) 49 - 49translation of foreignoperations Share of other (1) - (1) - - -comprehensive income ofassociates1 Items that will notsubsequently bereclassified to thecombined and consolidatedincome statement: Remeasurements on 19 (6) 13 (33) 8 (25)retirement benefits plans Other comprehensive (215) (6) (221) 19 8 27(expense)/income for theyear Other comprehensive(expense)/incomeattributable to: Non-controlling interests (11) - (11) 7 - 7 Shareholders (204) (6) (210) 12 8 20 Total comprehensive 193 304income for the year Total comprehensiveincome attributable to: Non-controlling interests 17 42 Shareholders 176 262 Note: 1 Associates' share of exchange differences on translation of foreignoperations. Condensed combined and consolidated statement of financial positionas at 31 December 2013 (Restated) (Restated) € million Notes 2013 2012 At 1 January 2012 Intangible assets 675 695 238 Property, plant and equipment 3,428 3,709 3,355 Forestry assets 10 233 311 309 Investments in associates 6 6 19 Financial asset investments 27 26 22 Deferred tax assets 4 10 5 Net retirement benefits asset - - 8 Derivative financial instruments 1 - 3 Total non-current assets 4,374 4,757 3,959 Inventories 746 783 633 Trade and other receivables 954 1,010 814 Current tax assets 26 10 6 Financial asset investments 1 1 1 Cash and cash equivalents 13b 130 56 193 Derivative financial instruments 5 4 10 Assets held for sale 4 2 - Total current assets 1,866 1,866 1,657 Total assets 6,240 6,623 5,616 Short-term borrowings 11 (181) (281) (268) Trade and other payables (989) (1,029) (877) Current tax liabilities (76) (66) (78) Provisions (46) (67) (44) Derivative financial instruments (4) (4) (8) Total current liabilities (1,296) (1,447) (1,275) Medium and long-term borrowings 11 (1,571) (1,648) (746) Net retirement benefits liability 12 (211) (253) (202) Deferred tax liabilities (264) (344) (313) Provisions (32) (33) (30) Derivative financial instruments (1) (1) - Other non-current liabilities (19) (24) (18) Total non-current liabilities (2,098) (2,303) (1,309) Total liabilities (3,394) (3,750) (2,584) Net assets 2,846 2,873 3,032 Equity Share capital and stated capital 542 542 542 Retained earnings and other reserves 2,049 2,030 2,044 Total attributable to shareholders 2,591 2,572 2,586 Non-controlling interests in equity 255 301 446 Total equity 2,846 2,873 3,032 The Group's condensed combined and consolidated financial statements, andrelated notes, were approved by the Boards and authorised for issue on 27February 2014 and were signed on its behalf by: David Hathorn Andrew King Director Director Mondi Limited company registration number: 1967/013038/06 Mondi plc company registered number: 6209386 Condensed combined and consolidated statement of cash flowsfor the year ended 31 December 2013 (Restated) € million Notes 2013 2012 Cash generated from operations 13a 1,036 849 Dividends from associates 1 1 Dividends from other investments - 1 Income tax paid (126) (109) Net cash generated from operating activities 911 742 Cash flows from investing activities Investment in property, plant and equipment (405) (294) Investment in intangible assets (12) (9) Investment in forestry assets 10 (41) (51) Investment in financial asset investments (4) (7) Proceeds from the disposal of tangible and intangible 36 15assets Proceeds from the disposal of financial asset 1 4investments Acquisition of subsidiaries, net of cash and cash - (381)equivalents Investment in associates - (43) Proceeds from disposal of associates 4 - Proceeds from the disposal of businesses, net of cash 2 1and cash equivalents Loan repayments from related parties 1 - Loan repayments from external parties 2 16 Interest received 3 3 Net cash used in investing activities (413) (746) Cash flows from financing activities Repayment of short-term borrowings 13c (77) (114) Proceeds from medium and long-term borrowings 13c 107 613 Repayment of medium and long-term borrowings 13c (117) (65) Interest paid (124) (92) Dividends paid to shareholders (138) (128) Purchases of treasury shares (30) (34) Dividends paid to non-controlling interests (60) (29) Non-controlling interests bought out (4) (298) Net realised gain/(loss) on held-for-trading 30 (9)derivatives Government grants received 2 - Net cash used in financing activities (411) (156) Net increase/(decrease) in cash and cash equivalents 87 (160) Cash and cash equivalents at beginning of year (37) 119 Cash movement in the year 13c 87 (160) Effects of changes in foreign exchange rates 13c 14 4 Cash and cash equivalents at end of year 13b 64 (37) Condensed combined and consolidated statement of changes in equityfor the year ended 31 December 2013 € million Combined share capital Total and attributable Non- stated Retained Other to controlling Total capital earnings reserves shareholders interests equity At 31 December 2011, 542 2,041 3 2,586 449 3,035as previously reported Effect of restatement - - - - (3) (3) At 1 January 2012 542 2,041 3 2,586 446 3,032(restated) Total comprehensive - 242 20 262 42 304income for the year Dividends paid - (128) - (128) (29) (157) Issue of shares under - 9 (9) - - -employee share schemes Purchases of treasury - (34) - (34) - (34)shares Non-controlling - (141) - (141) (157) (298)interests bought out Disposal of businesses - - 15 15 - 15 Reclassification - (12) 12 - - - Other - 2 10 12 (1) 11 At 31 December 2012 542 1,979 51 2,572 301 2,873(restated) Total comprehensive - 386 (210) 176 17 193income/(expense) forthe year Dividends paid - (138) - (138) (60) (198) Issue of shares under - 12 (11) 1 - 1employee share schemes Purchases of treasury - (30) - (30) - (30)shares Non-controlling - (1) - (1) (3) (4)interests bought out Reclassification - 1 (1) - - - Other - - 11 11 - 11 At 31 December 2013 542 2,209 (160) 2,591 255 2,846 Other reserves1(restated) € million Share- Cumulative Cash Post- based translation flow retirement payment adjustment hedge benefits Statutory reserve reserve reserve reserve reserves2 Total At 1 January 2012 17 (208) (2) (56) 252 3 Total comprehensive - 42 2 (25) 1 20income/(expense) forthe year Mondi share schemes' 10 - - - - 10charge Issue of shares under (9) - - - - (9)employee share schemes Disposal of businesses - 15 - - - 15 Reclassification - - - 12 - 12 At 31 December 2012 18 (151) - (69) 253 51 Total comprehensive - (223) (2) 13 2 (210)income/(expense) forthe year Mondi share schemes' 11 - - - - 11charge Issue of shares under (11) - - - - (11)employee share schemes Reclassification - - - (1) - (1) At 31 December 2013 18 (374) (2) (57) 255 (160) Notes: 1 All movements in other reserves are disclosed net of non-controllinginterests. The movement in non-controlling interests as a direct result of themovement in other reserves for the year ended 31 December 2013 was a decreasein non-controlling interests related to total comprehensive income for the yearof €11 million (2012: increase of €7 million). 2 Statutory reserves consist of the merger reserve of €259 million (2012: €259million) and other sundry reserves in deficit of €4 million (2012: deficit of €6 million). Notes to the condensed combined and consolidated financial statementsfor the year ended 31 December 2013 1 Basis of preparation The Group has two separate legal parent entities, Mondi Limited and Mondi plc,which operate under a dual listed company (DLC) structure. The substance of 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 includedin this preliminary announcement have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as issued by theInternational Accounting Standards Board (IASB) and contain the informationrequired by IAS 34, `Interim Financial Reporting'. There are no differences forthe Group in applying IFRS as issued by the IASB and IFRS as adopted by theEuropean Union (EU) and therefore the Group also complies with Article 4 of theEU IAS Regulation. The Group has also complied with the South African Instituteof Chartered Accountants Financial Reporting Guides as issued by the AccountingPractices Committee and Financial Reporting Pronouncements as issued by theReporting Standards Council of South Africa. The condensed combined andconsolidated financial statements have been prepared on a going concern basisas set out above. The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2013, 2012 or 2011 but isderived from those accounts. Statutory accounts for 2011 and 2012 have beendelivered to the registrar of companies, and those for 2013 will be deliveredin due course. The auditors have reported on those accounts; their reports were(i) unqualified, (ii) did not include a reference to any matters to which theauditors drew attention by way of emphasis without qualifying their report and(iii) did not contain a statement under section 498 (2) or (3) of the UKCompanies Act 2006. Copies of their unqualified auditors' reports on theIntegrated report and financial statements 2013 as well as the condensedcombined and consolidated financial statements are available for inspection atthe Mondi Limited and Mondi 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. 2a 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 2012, except as set outbelow. Standards and Interpretations early adopted by the Group There were no Standards or Interpretations early adopted by the Group in thecurrent year. An amendment to IAS 36 - Impairment of Assets which clarifiescertain disclosure requirements, was adopted with effect from 1 January 2013. Standards, amendments to published Standards and Interpretation effectiveduring 2013 The Group has adopted the following Standards and amendments to publishedStandards during the current year, and their impact on the Group's results aredetailed in note 2b: * IFRS 10 - Consolidated Financial Statements * IFRS 11 - Joint Arrangements * IAS 19 (revised) - Employee Benefits The following Standards, amendments to published Standards and Interpretationwhich the Group has adopted during the current year, had no significant impacton the Group's results except for the addition of certain disclosures: * IFRS 1 - First-time Adoption of International Financial Reporting Standards * IFRS 7 - Financial Instruments: Disclosure * IFRS 12 - Disclosure of Interests in Other Entities * IFRS 13 - Fair Value Measurement * IAS 1 - Presentation of Financial Statements * IAS 16 - Property, Plant and Equipment * IAS 27 - Separate Financial Statements * IAS 28 - Investments in Associates and Joint Ventures * IAS 32 - Financial Instruments: Presentation * IAS 34 - Interim Financial Reporting * IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine 2b Restatement of comparative information IFRS 10 and IFRS 11 broadened the concept of control and eliminated the optionof proportionate consolidation for joint ventures, except in certaincircumstances. The impact of these Standards has been that Mondi ShandukaNewsprint Proprietary Limited has been consolidated whilst Aylesford NewsprintLimited has been accounted for using the equity method up to the date of salein 2012. Comparative information has been restated. IAS 19 (revised) impacted the measurement of the various componentsrepresenting movements in the defined benefit pension obligation and associateddisclosures. As the Group has always recognised actuarial gains and lossesimmediately, the Group's total obligation was unchanged. This Standard has beenadopted with effect from 1 January 2012 as it was impractical to completerevised actuarial valuations prior to that date. Following the replacement ofexpected returns on plan assets with a net finance cost in the combined andconsolidated income statement, the profit for the period was reduced andaccordingly other comprehensive income increased in 2012. Comparativeinformation for the year ended 31 December 2012 has been restated. The following tables summarise the impacts resulting from the changes inaccounting policies above on the Group's financial position, comprehensiveincome and cash flows. Combined and consolidated income statement Year ended 31 December 2012 € million As previously Effect of As reported restatement restated Group revenue 5,807 (17) 5,790 Gross margin 2,235 4 2,239 Operating profit 541 6 547 Non-operating special items (64) - (64) Net profit/(loss) from associates 1 (6) (5) Total profit from operations and associates 478 - 478 Net finance costs (107) (3) (110) Investment income 10 (6) 4 Foreign currency losses (2) - (2) Finance costs (115) 3 (112) Profit before tax 371 (3) 368 Tax charge (92) 1 (91) Profit for the year 279 (2) 277 Attributable to: Non-controlling interests 35 - 35 Shareholders 244 (2) 242 The restatement had no impact on special items. Earnings per share (EPS) for profit attributable Asto shareholders previously Effect of As reported restatement restated Basic EPS (€ cents) 50.5 (0.4) 50.1 Diluted EPS (€ cents) 50.3 (0.4) 49.9 Basic (€ cents) 69.6 (0.4) 69.2underlying EPS Diluted (€ cents) 69.3 (0.4) 68.9underlying EPS Basic headline (€ cents) 63.4 (0.5) 62.9EPS Diluted (€ cents) 63.1 (0.4) 62.7headline EPS Combined and consolidated statement ofcomprehensive income Year ended 31 December 2012 € million As previously Effect of As reported restatement restated Profit for the year 279 (2) 277 Other comprehensive income/(expense): Items that may subsequently be reclassified to 52 - 52the combined and consolidated income statement Items that will not subsequently be reclassified (27) 2 (25)to the combined and consolidated income statement Other comprehensive income for the year, net of 25 2 27tax Total comprehensive income for the year 304 - 304 Attributable to: Non-controlling interests 42 - 42 Shareholders 262 - 262 Combined andconsolidated statementof financial position As at 31 December 2012 As at 1 January 2012 € million As As previously Effect of As previously Effect of As reported restatement restated reported restatement restated Non-current assets 4,755 2 4,757 3,971 (12) 3,959 Current assets 1,859 7 1,866 1,674 (17) 1,657 Total assets 6,614 9 6,623 5,645 (29) 5,616 Current liabilities (1,443) (4) (1,447) (1,306) 31 (1,275) Non-current liabilities (2,295) (8) (2,303) (1,304) (5) (1,309) Total liabilities (3,738) (12) (3,750) (2,610) 26 (2,584) Net assets 2,876 (3) 2,873 3,035 (3) 3,032 Equity Share capital and 542 - 542 542 - 542stated capital Retained earnings and 2,030 - 2,030 2,044 - 2,044other reserves Total attributable to 2,572 - 2,572 2,586 - 2,586shareholders Non-controlling 304 (3) 301 449 (3) 446interests in equity Total equity 2,876 (3) 2,873 3,035 (3) 3,032 Net debt (1,864) (8) (1,872) (831) 11 (820) Combined and consolidated statement of cashflows Year ended 31 December 2012 € million As previously reported Effect of As restatement restated Net cash generated from operating activities 740 2 742 Net cash used in investing activities (725) (21) (746) Net cash used in financing activities (173) 17 (156) Net decrease in cash and cash equivalents (158) (2) (160) Cash and cash equivalents at beginning of year 117 2 119 Cash movement in the year (158) (2) (160) Effects of changes in foreign exchange rates 4 - 4 Cash and cash equivalents at end of year (37) - (37) 3 Operating segments Mondi Shanduka Newsprint was incorporated into the South Africa Division during2012 due to similarities in geographical location, production processes and theintegrated nature of the production facilities and is now consolidated as asubsidiary. The effects of this change on the comparative periods are set outin note 2b. The Group's segmental information for the comparative periods hasbeen restated to reflect this change in accounting policy. Year ended 31 December 2013 Europe & International South Corporate Intersegment Segments Africa & other elimination total Division € million, unless Uncoatedotherwise stated Packaging Fibre Consumer Fine Paper Packaging Packaging Paper Segment revenue 2,000 1,967 1,153 1,388 624 - (656) 6,476 Internal revenue (503) (33) (5) (14) (101) - 656 - External revenue 1,497 1,934 1,148 1,374 523 - - 6,476 EBITDA 394 163 129 277 135 (30) - 1,068 Depreciation, (96) (70) (55) (105) (42) (1) - (369)amortisation andimpairments1 Operating profit/ 298 93 74 172 93 (31) - 699(loss) fromoperations beforespecial items Special items - (3) (13) (60) (11) - - (87) Operating segment 1,837 1,156 993 1,311 731 2 (140) 5,890assets Operating net 1,484 903 855 1,135 622 1 - 5,000segment assets Additions to 155 72 60 94 93 - - 474non-currentnon-financial assets Capital expenditure 139 78 56 80 52 - - 405cash payments Operating margin (%) 14.9 4.7 6.4 12.4 14.9 - - 10.8 Return on capital 21.9 10.8 9.1 16.2 16.0 - - 15.3employed (%) Note: 1 Excluding impairments included in special items (see note 5). Year ended 31 December 2012 (restated) Europe & International South Corporate Intersegment Segments Africa & other elimination total Division € million, unless Uncoatedotherwise stated Packaging Fibre Consumer Fine Paper Packaging Packaging Paper Segment revenue 1,896 1,860 502 1,466 702 - (636) 5,790 Internal revenue (469) (42) (4) (13) (108) - 636 - External revenue 1,427 1,818 498 1,453 594 - - 5,790 EBITDA 321 168 45 300 125 (32) - 927 Depreciation, (94) (67) (26) (109) (56) (1) - (353)amortisation andimpairments1 Operating profit/ 227 101 19 191 69 (33) - 574(loss) fromoperations beforespecial items Special items - (16) (11) - 6 (70) - (91) Operating segment 1,829 1,229 1,019 1,450 975 5 (150) 6,357assets Operating net 1,466 958 872 1,248 821 1 - 5,366segment assets Additions to 249 144 621 60 94 - - 1,168non-currentnon-financial assets Capital expenditure 89 76 28 58 43 - - 294cash payments Operating margin (%) 12.0 5.4 3.8 13.0 9.8 - - 9.9 Return on capital 17.9 12.5 6.2 16.7 9.6 - - 13.6employed (%) Note: 1 Excluding impairments included in special items (see note 5). The description of each business segment reflects the nature of the mainproducts they sell. In certain instances the business segments sell minorvolumes of other products and due to this reason the external segment revenueswill not necessarily reconcile to the external revenues by product typepresented below. External revenue by product type (Restated) € million 2013 2012 Products Fibre packaging products 1,891 1,785 Packaging paper products 1,482 1,393 Uncoated fine paper 1,284 1,355 Consumer packaging products 1,148 498 Pulp 269 276 Newsprint 177 215 Other 225 268 Group total 6,476 5,790 External revenue by External revenue by Location of customer Location of production (Restated) (Restated) € million 2013 2012 2013 2012 Revenue Africa South Africa 432 448 623 702 Rest of Africa 231 242 11 8 Africa total 663 690 634 710 Western Europe Austria 161 145 958 1,025 Germany 1,003 783 993 486 United Kingdom 262 230 48 53 Rest of western Europe 1,390 1,287 720 693 Western Europe total 2,816 2,445 2,719 2,257 Emerging Europe Poland 450 364 877 766 Rest of emerging Europe 893 816 1,168 1,086 Emerging Europe total 1,343 1,180 2,045 1,852 Russia 608 592 741 729 North America 349 270 274 196 South America 57 41 - - Asia and Australia 640 572 63 46 Group total 6,476 5,790 6,476 5,790 Reconciliation of operating profit before special items (Restated) € million 2013 2012 Operating profit before special items 699 574 Special items (see note 5) (87) (91) Net profit/(loss) from associates 2 (5) Net finance costs (115) (110) Group profit before tax 499 368 Reconciliation of operating segment assets (Restated) (Restated) 2013 2013 2012 2012 € million Net Net Segment segment Segment segment assets assets assets assets Segments total 5,890 5,000 6,357 5,366 Unallocated: Investments in associates 6 6 6 6 Deferred tax assets/(liabilities) 4 (260) 10 (334) Other non-operating assets/(liabilities) 182 (306) 167 (319) Group capital employed 6,082 4,440 6,540 4,719 Financial asset investments 27 27 26 26(non-current) Cash and current financial asset 131 (1,621) 57 (1,872)investments/(net debt) Group 6,240 2,846 6,623 2,873 4 Write-down of inventories to net realisable value (Restated) € million 2013 2012 Write-down of inventories to net realisable value (21) (19) Aggregate reversal of previous write-down of inventories 12 13 5 Special items € million 2013 2012 Operating special items Asset impairments (67) (1) Restructuring and closure costs: Restructuring and closure costs excluding related personnel (10) (4)costs Personnel costs relating to restructuring (17) (16) Transaction costs incurred on the acquisition of Nordenia - (11) Gain on insurance settlement - 5 Total operating special items (94) (27) Non-operating special items Loss on disposals - (70) Gain on sale of land 7 6 Total non-operating special items 7 (64) Total special items before tax and non-controlling interests (87) (91) Tax (see note 7) 13 (1) Total special items attributable to shareholders (74) (92) Operating special itemsDuring the first quarter of the year a decision was taken to close the Lindlaroperation in Germany and redirect production to existing plants in Germany,Hungary and the Czech Republic. An impairment charge of €2 million andrestructuring and closure costs amounting to €11 million were recognised. In May 2013, Mondi announced the closure of one of the two newsprint machineslocated in Merebank, South Africa. Further restructuring activities in theMerebank mill as a result of the closure of the newsprint machine were alsoimplemented. An impairment charge of €13 million and associated closure andrestructuring costs of €5 million were recognised. In May 2013, Mondi announced plans to restructure the Neusiedler operation inAustria to improve the cost base of this mill. An impairment charge of €42million and restructuring costs of €9 million were recognised. During the third quarter of the year, unutilised assets amounting to €9 millionin the Syktyvkar mill, Russia were written off. Additional impairment charges of €1 million, and restructuring costs of €2million were recognised in the Industrial Bags segment of the Fibre Packagingbusiness in France and Mexico. Non-operating special items In December 2013, land in the South Africa Division with a carrying value of €1million was sold for €8 million, realising a gain of €7 million. 6 Net finance costs (Restated) € million 2013 2012 Total investment income 3 4 Foreign currency losses (1) (2) Finance costs Interest expense Interest on bank overdrafts and loans (108) (98) Net interest expense on net retirement benefits liability (11) (15) Total interest expense (119) (113) Less: interest capitalised 2 1 Total finance costs (117) (112) Net finance costs (115) (110) 7 Tax charge (Restated) € million 2013 2012 UK corporation tax at 23.25% (2012: 24.5%) 1 - SA corporation tax at 28% (2012: 28%) 21 19 Overseas tax 105 66 Current tax 127 85 Deferred tax in respect of the current period (1) 13 Deferred tax in respect of prior period over provision (28) (8) Total tax charge before special items 98 90 Current tax on special items (5) 2 Deferred tax on special items (8) (1) Total tax (credit)/charge on special items (see note 5) (13) 1 Total tax charge 85 91 The Group's effective rate of tax before special items for the year ended 31December 2013, calculated on profit before tax before special items andincluding net profit from associates, is 17% (2012: 20%). 8 Earnings per share (Restated) € cents per share 2013 2012 Profit for the year attributable to shareholders Basic EPS 79.8 50.1 Diluted EPS 79.6 49.9 Underlying earnings for the year Basic EPS 95.0 69.2 Diluted EPS 94.8 68.9 Headline earnings for the year Basic EPS 91.3 62.9 Diluted EPS 91.1 62.7 The calculation of basic and diluted EPS, basic and diluted underlying EPS andbasic and diluted headline EPS is based on the following data: Earnings (Restated) € million 2013 2012 Profit for the year attributable to shareholders 386 242 Special items (see note 5) 87 91 Related tax (see note 5) (13) 1 Underlying earnings for the year 460 334 Special items: restructuring and closure costs (27) (20) Transaction costs incurred on the acquisition of Nordenia - (11) Profit on disposal of tangible and intangible assets (2) (4) Impairments not included in special items 4 4 Related tax 7 1 Headline earnings for the year 442 304 Weighted average number of shares million 2013 2012 Basic number of ordinary shares outstanding 484 483 Effect of dilutive potential ordinary shares 1 2 Diluted number of ordinary shares outstanding 485 485 9 Dividends An interim dividend for the year ended 31 December 2013 of 126.03689 rand cents/9.55 euro cents per share was paid on 17 September 2013 to all Mondi Limitedand Mondi plc ordinary shareholders on the relevant registers on 23 August2013. A proposed final dividend for the year ended 31 December 2013 of 26.45 eurocents per ordinary share will be paid on 22 May 2014 to those shareholders onthe register of Mondi plc on 25 April 2014. An equivalent South African randfinal dividend will be paid on 22 May 2014 to shareholders on the register ofMondi Limited on 25 April 2014. The final dividend is subject to the approvalof the shareholders of Mondi Limited and Mondi plc at the respective annualgeneral meetings scheduled for 14 May 2014. The proposed final dividend for the year ended 31 December 2013 of 26.45 eurocents per share will be paid in accordance with the following timetable: Mondi Limited Mondi plc Last date to trade sharescum-dividend JSE Limited 16 April 2014 16 April 2014 London Stock Exchange Not applicable 22 April 2014 Shares commence trading ex-dividend JSE Limited 17 April 2014 17 April 2014 London Stock Exchange Not applicable 23 April 2014 Record date JSE Limited 25 April 2014 25 April 2014 London Stock Exchange Not applicable 25 April 2014 Last date for receipt of Dividend 2 May 2014 2 May 2014Reinvestment Plan (DRIP) electionsby Central Securities DepositoryParticipants Last date for DRIP elections to UK 5 May 2014 27 April 2014*Registrar and South AfricanTransfer Secretaries byshareholders of Mondi Limited andMondi plc Payment Date South African Register 22 May 2014 22 May 2014 UK Register Not applicable 22 May 2014 DRIP purchase settlement dates 30 May 2014 27 May 2014** Currency conversion date ZAR/euro 28 February 2014 28 February 2014 Euro/sterling Not applicable 6 May 2014 *5 May 2014 for Mondi plc South African branch register shareholders **30 May 2014 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 17 April 2014 and 28April 2014, both dates inclusive, nor may transfers between the UK and SouthAfrican registers of Mondi plc take place between 16 April 2014 and 28 April2014, 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 28 February 2014. 10 Forestry assets (Restated) € million 2013 2012 At 31 December 2011, as previously reported 297 Effect of restatement 12 At 1 January (restated) 311 309 Capitalised expenditure 39 42 Acquisition of assets 2 9 Fair value gains 17 40 Disposal of assets (9) (3) Felling costs (55) (66) Currency movements (72) (20) At 31 December 233 311 The fair value of forestry assets is a level 3 measure in terms of the fairvalue measurement hierarchy and this category is consistent with prior years.The fair value of forestry assets is calculated on the basis of future expectednet cash flows arising on the Group's owned forestry assets, discounted using adiscount rate relevant in the local country, based on a pre tax real yield onlong-term bonds over the last five years. All fair value gains originate fromSouth Africa. 11 Borrowings (Restated) 2013 2012 € million Current Non-current Total Current Non-current Total Secured Bank loans and 4 2 6 5 3 8overdrafts Obligations under 1 6 7 2 9 11finance leases Total secured 5 8 13 7 12 19 Unsecured Bank loans and 156 216 372 253 251 504overdrafts Bonds - 1,289 1,289 - 1,310 1,310 Bonds - 1,340 1,340 - 1,357 1,357 Call option derivative - (51) (51) - (47) (47) Other loans 20 58 78 21 75 96 Total unsecured 176 1,563 1,739 274 1,636 1,910 Total borrowings 181 1,571 1,752 281 1,648 1,929 Financing facilities Group liquidity is provided through a range of committed debt facilities. Theprincipal loan arrangements in place include the following: €750 million Syndicated Revolving Credit Facility (RCF) The RCF is a five year multi-currency revolving credit facility which wassigned on 14 April 2011. Interest is charged on the balance outstanding atmarket-related rates linked to EURIBOR/LIBOR. €500 million 2017 Eurobond Mondi Finance plc launched a seven year publicly traded bond, guaranteed byMondi plc, in March 2010. The €500 million bond, which matures on 3 April 2017,was issued at a discount of €5.63 million and pays a fixed coupon of 5.75% perannum. The bond contains a coupon step-up clause whereby the coupon will beincreased by 1.25% per annum if Mondi fails to maintain at least one investmentgrade credit rating from either Moody's Investors Service or Standard & Poor's.Mondi currently has investment grade credit ratings from both Moody's InvestorsService (Baa3, outlook stable) and Standard & Poor's (BBB-, outlook stable). €500 million 2020 Eurobond In September 2012 Mondi Finance plc launched an eight year publicly tradedbond, guaranteed by Mondi plc. The €500 million bond, which matures on 28September 2020, was issued at a discount of €0.1 million and pays a fixedcoupon of 3.375% per annum. The bond contains the same 1.25% per annum couponstep-up clause as the €500 million 2017 Eurobond. €280 million Eurobond As part of the acquisition of Nordenia in 2012 Mondi assumed Nordenia's €280million Eurobond, paying a coupon of 9.75% per annum and maturing on 15 July2017. The bond was recognised at its fair value of €324 million at date ofacquisition. The value of the bond includes the fair value of an option to callthe bond early at the following redemption rates: % Redemption rate Redemption date 15 July 2014 104.875 15 July 2015 102.438 15 July 2016 and thereafter 100.000 The option is valued at €51 million at 31 December 2013 (2012: €47 million). €160 million Export Credit Agency Facility (ECAF) The ECAF is used to part finance expansionary capital expenditure in Russia.The facility has an amortising repayment until 2020 and interest is charged onthe balance outstanding at a market-related rate linked to EURIBOR. PLN 474 million European Investment Bank Facility (EIBF1) The EIBF1 is used to part finance expansionary capital expenditure at MondiSwiecie in Poland. The facility has an amortising repayment until 2017 andinterest is charged at a market-related rate linked to WIBOR (Warsaw InterbankOffered Rate). €100 million European Investment Bank Facility (EIBF2) The EIBF2 facility was fully drawn on 28 June 2013 and is used to part financeexpansionary capital expenditure in Russia. The facility amortises over 12years with a two year grace period and interest is charged on the balanceoutstanding at a market-related rate linked to EURIBOR. RUB 1.6 billion European Bank for Reconstruction and Development Facility(EBRDF) The EBRDF is used to part finance expansionary capital expenditure in Russia.The facility has an amortising repayment until 2019 and interest is charged onthe balance outstanding at a market-related rate linked to MOSPRIME (MoscowPrime Offered Rate). In addition to the facilities above, the Group has a revolving committed bankfacility amounting to ZAR500 million in South Africa. This facility isrepayable on its maturity date of 11 June 2014 and bears interest at one monthJIBAR plus a margin. On 31 October 2013 the Group repaid and cancelled a ZAR700million revolving loan that was outstanding at 31 December 2012. The Group's borrowings as at 31 December are analysed by nature and underlyingcurrency as follows: 2013/€ million Floating Non-interest Total rate Fixed rate bearing carrying Fair borrowings borrowings borrowings value 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 2012/€ million (restated) Floating Non-interest Total rate Fixed rate bearing carrying Fair borrowings borrowings borrowings value value Euro 126 1,322 - 1,448 1,559 South African rand 180 - 8 188 188 Pounds sterling 116 - - 116 116 Polish zloty 84 - - 84 84 Russian rouble 41 - - 41 41 Turkish lira 29 - - 29 29 Other currencies 22 1 - 23 23 Carrying value 598 1,323 8 1,929 Fair value 598 1,434 8 2,040 In addition to the above, the Group swaps euro debt into other currenciesthrough the foreign exchange market. The currencies swapped into/(out of) andthe amounts as at 31 December were as follows: € million 2013 2012 Long-dated contracts with tenures of more than 12 months Russian rouble 27 59 Short-dated contracts with tenures of less than 12 months Russian rouble 179 127 Czech koruna 81 51 US dollar 80 62 Pounds sterling 62 (59) Swedish krona 34 13 Polish zloty 94 128 Other 57 29 Total swapped 614 410 The fair values of the €500 million 2017 Eurobond, €500 million 2020 Eurobondand €280 million Eurobond are estimated with reference to the last price quotedin the secondary market. All other financial liabilities are estimated bydiscounting the future contractual cash flows at the current market interestrate that is available to the Group for similar financial instruments. 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 decreased by €42 million mainly due tochanges in assumptions and an exchange rate impact of €22 million. The assetsbacking the defined benefit scheme liabilities reflect their market values asat 31 December 2013. Any movements in the assumptions have been recognised as aremeasurement in the condensed combined and consolidated statement ofcomprehensive income. 13 Consolidated cash flow analysis (a) Reconciliation of profit before tax to cash generated from operations (Restated) € million 2013 2012 Profit before tax 499 368 Depreciation and amortisation 365 349 Impairment of tangible and intangible assets (not included 4 4in special items) Share-based payments 11 10 Non-cash effect of special items 60 91 Net finance costs 115 110 Net (profit)/loss from associates (2) 5 Decrease in provisions and net retirement benefits (25) (22) Increase in inventories (7) (16) Increase in operating receivables (14) (38) Decrease in operating payables (6) (29) Fair value gains on forestry assets (17) (40) Felling costs 55 66 Profit on disposal of tangible and intangible assets (2) (4) Other adjustments - (5) Cash generated from operations 1,036 849 (b) Cash and cash equivalents (Restated) € million 2013 2012 Cash and cash equivalents per combined and consolidated 130 56statement of financial position Bank overdrafts included in short-term borrowings (66) (93) Net cash and cash equivalents per combined and consolidated 64 (37)statement of cash flows The fair value of cash and cash equivalents approximate the carrying valuespresented. (c) Movement in net debt (restated) The Group's net debt position is as follows: € million Debt due Current Cash and within Debt due financial Total cash one after one asset net equivalents1 year year investments debt At 31 December 2011, as 117 (212) (737) 1 (831)previously reported Effect of restatement 2 18 (9) - 11 At 1 January 2012 (restated) 119 (194) (746) 1 (820) Cash flow (160) 114 (548) - (594) Business combinations - (67) (393) - (460) Movement in unamortised loan - - 3 - 3costs Reclassification - (46) 46 - - Currency movements 4 5 (10) - (1) At 31 December 2012 (restated) (37) (188) (1,648) 1 (1,872) Cash flow 87 77 10 - 174 Movement in unamortised loan - - 18 - 18costs Reclassification - (34) 34 - - Currency movements 14 30 15 - 59 At 31 December 2013 64 (115) (1,571) 1 (1,621) Note: 1 The Group operates in certain countries (principally South Africa) where theexistence of exchange controls may restrict the use of certain cash balances.These restrictions are not expected to have any material effect on the Group'sability to meet its ongoing obligations. The following table shows the amounts available to draw down on the Group'scommitted loan facilities: € million 2013 2012 Expiry date In one year or less 42 27 In more than one year 750 735 Total credit available 792 762 14 Capital commitments (Restated) € million 2013 2012 Contracted for but not provided 366 129 Approved, not yet contracted for 625 589 These capital commitments relate to the following categories of non-currentnon-financial assets: (Restated) € million 2013 2012 Intangible assets 4 9 Property, plant and equipment 987 709 Total capital commitments 991 718 The expected maturity of these capital commitments is: (Restated) € million 2013 2012 Within one year 544 445 One to two years 392 263 Two to five years 55 10 Total capital commitments 991 718 Capital commitments are based on capital projects approved to date and thebudget approved by the Boards. Major capital projects still require further approval before they commence.These capital commitments are expected to be financed from existing cashresources and borrowing facilities. 15 Contingent liabilities Contingent liabilities comprise aggregate amounts as at 31 December 2013 of €25million (2012: €15 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. 16 Financial instruments' 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 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. The significant inputs required to fair value all of the Group's financialinstruments are either quoted prices or are observable. The Group only holdslevel 1 and 2 financial instruments and therefore does not hold any financialinstruments categorised as level 3 financial instruments. There have also beenno transfers of assets or liabilities between levels of the fair valuehierarchy during the year. 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. The only assets or liabilities measured at fair value on level 3 of the fairvalue measurement hierarchy represent forestry assets. Refer to note 10 formore details on fair value measurement. 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 (Restated) (Restated) € million 2013 2012 2013 2012 Financial liabilities Borrowings 1,752 1,929 1,836 2,040 17 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. The Group has a related party relationship with its equity accounted investees.Transactions between Mondi Limited, Mondi plc and their respectivesubsidiaries, which are related parties, have been eliminated on consolidationand are not disclosed in this note. With effect from 3 May 2013, Cyril Ramaphosa ceased to be a director of MondiLimited and Mondi plc. As a result, all transactions with the Shanduka GroupProprietary Limited, in which Mr Ramaphosa held a 29.6% interest, and itssubsidiaries are no longer classified as related party transactions from thatdate. Other than the paragraph above, there have been no significant changes to therelated parties as disclosed in note 39 of the Group's annual financialstatements for the year ended 31 December 2012. 18 Events occurring after 31 December 2013 With the exception of the proposed final dividend for 2013, included in note 9,there have been no material reportable events since 31 December 2013. Production statistics (Restated) 2013 2012 Europe & International Containerboard Tonnes 2,138,714 2,079,005 Kraft paper Tonnes 1,010,885 980,637 Softwood pulp Tonnes 2,007,959 1,978,583 Internal consumption Tonnes 1,859,597 1,825,916 External Tonnes 148,362 152,667 Corrugated board and boxes Mm² 1,344 1,213 Industrial bags M units 3,997 3,829 Coating and release liners Mm² 3,348 3,352 Consumer packaging1 Tonnes 283,161 121,127 Uncoated fine paper Tonnes 1,381,141 1,417,709 Newsprint Tonnes 207,228 201,278 Hardwood pulp Tonnes 1,087,615 1,059,140 Internal consumption Tonnes 1,013,790 972,883 External Tonnes 73,825 86,257 South Africa Division Containerboard Tonnes 254,714 263,468 Uncoated fine paper Tonnes 258,751 257,747 Hardwood pulp Tonnes 645,611 658,368 Internal consumption Tonnes 331,928 337,596 External Tonnes 313,683 320,772 Softwood pulp2 - internal consumption Tonnes 166,101 215,828 Newsprint2 Tonnes 145,498 198,024 Notes: 1 Includes Nordenia from October 2012. 2 Restated to include 100% of the Mondi Shanduka Newsprint production. Exchange rates 2013 2012 Closing rates against the euro South African rand 14.57 11.17 Czech koruna 27.43 25.15 Polish zloty 4.15 4.07 Pounds sterling 0.83 0.82 Russian rouble 45.32 40.33 Turkish lira 2.96 2.36 US dollar 1.38 1.32 Average rates for the period against the euro South African rand 12.83 10.55 Czech koruna 25.99 25.14 Polish zloty 4.20 4.18 Pounds sterling 0.85 0.81 Russian rouble 42.32 39.91 Turkish lira 2.53 2.31 US dollar 1.33 1.29

Sponsor in South Africa: UBS South Africa Proprietary Limited