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MONDI PLC: Final Results


21 February 2013

Mondi Limited

(Incorporated in the Republic of South Africa)

(Registration number: 1967/013038/06)

JSE share code: MND ISIN: ZAE000156550

Mondi plc

(Incorporated in England and Wales)

(Registered number: 6209386)

JSE share code: MNP ISIN: GB00B1CRLC47

LSE share code: MNDI

As part of the dual listed company structure, Mondi Limited and Mondi plc (together `Mondi Group') notify both the JSE Limited and the London Stock Exchange of matters required to be disclosed under the Listings Requirements of the JSE and/or the Disclosure and Transparency and Listing Rules of the United Kingdom Listing Authority.

Full year results for the year ended 31 December 2012

Financial highlights

* Strong profitability despite challenging start to the year


      * Supported by excellent operating performance and cost management
      * ROCE of 13.7%, in excess of the Group's through-the-cycle target of 13%
      * Strong cash generation from operations of €845 million
      * Total dividend for the year of 28.0 euro cents per share, up 8%
    Strategic highlights

  * Significant progress with strategic initiatives

+ €1.2 billion spent on acquisitions increasing exposure to higher growth


        packaging segments
       
      + Disposal of interest in non-core Aylesford Newsprint
       
      + Capital employed in packaging businesses now 67% of Group total (57% at
        end of 2011)

* Integration of acquisitions on track


      * Cost synergies from recent acquisitions now estimated at €30 million per
    annum, up 33%
    Financial Summary
                                   Year     Year             Six      Six       
                                                          months   months       
                                                                                
                               ended 31 ended 31        ended 31 ended 31       
                                                                                
                               December December        December December       
                                                                                

€ million, except for              2012     2011 Change     2012     2011 
Change
percentages and per share                             %                        
%
measures                                                                        
                                                                                

From continuing operations                                                      
                                                                                

Group revenue                     5,807    5,739      1    2,967    2,797      
6
                                                                                

Underlying EBITDA1                  923      964    (4)      487      438     
11
                                                                                

Underlying operating profit1        568      622    (9)      299      268     
12
                                                                                

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

Operating profit                    541      568    (5)      272      213     
28
                                                                                

Profit before tax                   371      457   (19)      148      157    
(6)
                                                                                

Per share measures                                                              
                                                                                

Basic earnings per share -         69.6     71.8    (3)                         

alternative measure2 (€ cents)                                                
                                                                                   

Basic earnings per share from      50.5     57.5   (12)                         

continuing operations (€                                                      
  
cents)                                                                          
                                                                                

Total dividend per share (€        28.0     26.0      8                       
  
cents)                                                                          
                                                                                

Free cash flow per share3 (€       51.3     78.8   (35)                       
  
cents)                                                                          
                                                                                

Cash generated from operations      845      917    (8)                         
                                                                                

Net debt                          1,864      831                                
                                                                                

Group return on capital           13.7%    15.0%                                

employed (ROCE)4                                                                


Notes:

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

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

3 Free cash flow per share is the net increase in cash and cash equivalents
before the effects of acquisitions and disposals of businesses, changes in net
debt and dividends paid divided by the net number of shares in issue at year
end.

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

David Hathorn, Mondi Group chief executive, said:

`Mondi delivered a solid financial performance in what remains an uncertain
economic environment. While the early part of the year was particularly
challenging, trading picked up as the year progressed, culminating in a strong
final quarter.

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

Our focus in the near term is on the integration and optimisation of the recent
acquisitions and successful delivery of the significant capital investment
projects we have initiated over the course of the past year. I am very pleased
to see the progress we have already made in integrating our recent
acquisitions, exemplified by the fact we have revised upwards by 33% our
estimate of expected synergies to €30 million per annum within two years.

Fundamentals for our core segments remain sound, although recently announced
capacity additions by various manufacturers in selected paper grades are a
concern, exacerbated by the prevailing demand softness as Europe remains
affected by the macroeconomic slowdown. However, with the strong finish to the
year, coupled with the expected contribution from the recent acquisitions, we 
remain confident of making progress in the year ahead.'

Contact details

Mondi Group                                                                    

David Hathorn +27 11 994 5418

Andrew King +27 11 994 5415

Lora Rossler +27 11 994 5400 / +27 83 627 0292

FTI Consulting

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

466

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

Conference call dial-in and audio cast details

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

The conference call dial-in numbers are:

South Africa 0800 200 648 (toll-free)

UK Primary 0808 162 4061 (toll-free)

UK Alternative 0800 917 7042 (toll-free)

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

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

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

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

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

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

Editors' notes

Mondi is an international packaging and paper Group, with production operations across 30 countries and revenues of €5.8 billion in 2012. The Group's key operations are located in central Europe, Russia and South Africa and as at the end of 2012, Mondi employed 25,700 people.

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

Mondi Group has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker code MND and a premium listing on the London Stock Exchange for Mondi plc, under the ticker code MNDI. The Group has been recognised for its sustainability through its inclusion in the FTSE4Good Global, European and UK Index Series (since 2008) and the JSE's Socially Responsible Investment (SRI) Index since 2007. The Group was also included in the Carbon Disclosure Project's (CDP) Carbon Disclosure Leadership Index for the third year and in CDP's Carbon Performance Leadership Index (CPLI) for the first time in 2012.

Forward-looking statements

This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi's financial position, business strategy, plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Mondi's present and future business strategies and the environment in which Mondi will operate in the future. Among the important factors that could cause Mondi's actual results, performance or achievements to differ materially from those in the forward-looking statements include, but are not limited to, those discussed under `Principal risks and uncertainties'. These forward-looking statements speak only as of the date on which they are made. Mondi expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Mondi's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

Financial review

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

Fundamentals for each of the Group's core businesses remain good, although recently announced capacity additions in segments that remain in oversupply are a concern. While the uncoated fine paper business remains in structural decline in the mature western European region, prices have remained stable due to continued supply side contraction in the face of poor profitability among the more marginal players. Such rationalisation will need to continue in order to ensure market stability. On the packaging side, fundamentals for growth in the medium term remain firmly in place with only the kraft paper/industrial bags value chain in western Europe suffering some secular demand decline, offset by strong export markets.

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

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

At the underlying earnings per share level, results were down only 3% on the comparable prior year figure, supported by lower interest charges and a reduction in the non-controlling interest charge, primarily due to the acquisition of the remaining minority interest in Mondi Swiecie in the first half of the year. This strong performance bears testament not only to the strength of our strategic positioning, but also the unrelenting focus on cost management and strong operating performance achieved across the Group.

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

Progress on strategy

During the year good progress was made in the ongoing process of shifting Mondi's portfolio to higher growth products. This included €1.2 billion of acquisitions in the growing corrugated packaging and consumer packaging value chains and the disposal of the 50% interest in Aylesford Newsprint, which operates in the structurally challenged newsprint sector.

Key acquisitions included:

* Packaging Paper


          + the acquisition of the remaining minority interest in Mondi Swiecie;
       
      + Mondi Swiecie acquired a combined heat and power generating plant,
        providing the bulk of its electricity requirements and all of its heat
        and steam needs;

* Consumer Packaging

+ the acquisition of a 99.93% interest in Nordenia; and

* Fibre Packaging


          + the acquisition of Duropack's two corrugated packaging plants in
        Germany and the Czech Republic.

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

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

Europe & International - Packaging Paper


                                   Year     Year             Six      Six       
                                                          months   months       
                                                                                
                               ended 31 ended 31        ended 31 ended 31       
                                                                                
                               December December        December December       
                                                                                

€ million                          2012     2011 Change     2012     2011 
Change

% %

Segment revenue 1,896 2,006 (5) 936 943 (1)

- of which inter-segment 469 469 220 209

revenue

Underlying EBITDA 321 392 (18) 171 168 2

Underlying operating profit 227 295 (23) 123 122 1

Special items - (11) - (11)

Capital expenditure 89 67 55 47

Net segment assets 1,466 1,249


                                                                                

ROCE                              17.9%    24.4%                                


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

The early part of the year was characterised by weak demand, with market
related downtime continuing from the end of 2011 into the first quarter of
2012. Demand improved during the first half, enabling the business to implement
price increases in the virgin containerboard and kraft paper grades, which
became effective during the second half of the year. Sales volumes of
containerboard were similar to those of the previous year whilst volumes of
kraft paper increased as a result of stronger export markets.

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

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

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

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

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

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

The containerboard business is expected to benefit from synergies from the
acquisition of the Duropack corrugated packaging plants in Germany and the
Czech Republic, completed in November 2012, primarily through reduced
transportation costs (refer to Europe & International - Fibre Packaging for
more detail).

Europe & International - Fibre Packaging
                                    Year     Year             Six      Six      
                                                             months   months      
                                                                                  
                                  ended 31 ended 31        ended 31 ended 31      
                                                                                  
                                  December December        December December      

€ million 2012 2011 Change 2012 2011 Change

% %

Segment revenue 1,860 1,881 (1) 914 908 1

- of which inter-segment 42 33 23 15

revenue

Underlying EBITDA 168 149 13 88 72 22

Underlying operating profit 101 86 17 54 40 35

Special items (16) (8) (16) (10)

Capital expenditure 76 72 48 38

Net segment assets 958 866

ROCE 12.5% 11.0%

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

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

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

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

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

Europe & International - Consumer Packaging


                                    Year     Year             Six      Six      
                                                             months   months      
                                                                                  
                                  ended 31 ended 31        ended 31 ended 31      
                                                                                  
                                  December December        December December      

€ million 2012 2011 Change 2012 2011 Change

% %

Segment revenue 502 372 35 352 165 113

- of which inter-segment 4 5 3 2

revenue

Underlying EBITDA 45 37 22 30 17 76

Underlying operating profit 19 25 (24) 9 11 (18)

Special items (11) (5) (7) (5)

Capital expenditure 28 15 21 8

Net segment assets 872 131

ROCE 6.2% 15.0%

Adjusted for non-recurring

items in 2012 and the effect of

the disposal of Unterland in

2011

Adjusted underlying EBITDA 54 30 80

Adjusted underlying operating 33 20 65

profit

Adjusted ROCE 10.8% 16.9%

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

Nordenia, as an international supplier of innovative consumer packaging solutions and hygiene components, enables the Group to develop a leading consumer packaging business, building on existing deep, long-term customer relationships. Nordenia enjoys a strong competitive advantage through its proprietary technology, global presence and a proven track record of innovation and growth.

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

On acquisition, the Group recognised the net assets of Nordenia at their fair market value (the details of which are set out in note 12 of the condensed financial statements) resulting in a higher depreciation and amortisation charge than recognised in the stand-alone Nordenia business. In the three months to 31 December 2012, this charge amounted to €4 million. The increase in depreciation and amortisation from 2013 will be approximately €13 million per year.

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

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

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

Consumer Packaging has a strong product pipeline in development. The business expects its plant in Taicang, China to commence operations towards the end of 2013 with full capacity being reached by 2015.

Europe & International - Uncoated Fine Paper


                                    Year     Year             Six      Six      
                                                             months   months      
                                                                                  
                                  ended 31 ended 31        ended 31 ended 31      
                                                                                  
                                  December December        December December      

€ million 2012 2011 Change 2012 2011 Change

% %

Segment revenue 1,466 1,429 3 717 695 3

- of which inter-segment 13 20 5 7

revenue

Underlying EBITDA 300 309 (3) 146 140 4

Underlying operating profit 191 205 (7) 91 87 5

Special items - 2 - -

Capital expenditure 58 61 34 28

Net segment assets 1,248 1,283

ROCE 16.7% 16.7%

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

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

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

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

The business benefited from lower input costs, driven by lower pulp costs for the unintegrated Neusiedler operation, partially offset by higher wood costs in Russia and generally higher energy costs. Fixed costs were higher, largely due to a higher depreciation charge offset by ongoing cost optimisation initiatives.

South Africa Division


                                    Year     Year             Six      Six      
                                                             months   months      
                                                                                  
                                  ended 31 ended 31        ended 31 ended 31      
                                                                                  
                                  December December        December December      

€ million 2012 2011 Change 2012 2011 Change

% %

Segment revenue 653 645 1 330 339 (3)

- of which inter-segment 109 155 52 64

revenue

Underlying EBITDA 123 117 5 68 62 10

Underlying operating profit 68 63 8 40 36 11

Special items 6 - - -

Capital expenditure 46 29 30 14

Net segment assets 811 860

ROCE 9.9% 8.7%

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

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

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

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

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

Financial review

Special items

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

* Loss of €70 million on disposal of Aylesford Newsprint;

* Transaction costs of €11 million attributable to the Nordenia acquisition;


      * Restructuring activities and asset impairment in Fibre Packaging amounting
    to €21 million;
      * Profit of €6 million on sale of land in South Africa Division; and
      * A €5 million gain on settlement of an insurance claim.
    Further detail is provided in note 4 of the condensed financial statements.

Input costs

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

Wood costs decreased on average for both hardwood and softwood (1% and 5%
respectively) versus the prior year. On average benchmark European recovered
paper prices in 2012 were around 16% lower than in 2011 with an increase in the
early part of the year followed by a significant drop off in the second half of
the year. Current recovered paper prices are at their lowest levels since March
2010.

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

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

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

Currencies

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

Tax

The effective tax rate before special items was 20% - consistent with that of
2011. The low tax rate continues to be a result of profitability in regions
with lower statutory tax rates and the benefits of tax incentives granted in
certain countries in which the Group operates, notably those related to the
major Polish and Russian projects.

Non-controlling interests

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

Cash flow

Despite the challenging economic environment, EBITDA from continuing operations
of €923 million was only 4% lower than in 2011. The strong cash generation
reflects the contribution in the fourth quarter from the acquisition of
Nordenia and the successful profit improvement and cost management initiatives
throughout the Group.

Mondi generated €845 million in cash from operations (2011: €917 million) 
after
taking into account a net increase in working capital of €80 million. The
increase in working capital includes the settlement of a number of short-term
obligations recognised as part of the acquisition of Nordenia as well as the
cancellation of the factoring arrangements that were in place prior to the
acquisition.

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

Capital expenditure

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

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

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

The Ruzomberok investment, including a new recovery boiler at the mill, will
increase pulp production, reduce the mill's environmental footprint and improve
the overall cost position. The project will also include improvements in
chemical recovery and green energy and heat production during the pulp
production process. Some of the project benefits also result from avoiding
otherwise essential stay-in-business capital expenditure. The project is
expected to be completed in the fourth quarter of 2014, delivering an after-tax
internal rate of return in excess of 40%.

The Boards also approved a €70 million project in the Steti kraft paper mill
which will enable the mill to integrate the remaining open market pulp
production on site by producing additional volumes of bleached kraft paper and
will provide growth opportunities for the kraft business. The project is
expected to be completed in the latter part of 2014 delivering an after tax
internal rate of return of around 20%.

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

Treasury and borrowings

Net debt at the end of the year was €1,864 million, a €1,033 million 
increase
from the prior year end. Gearing increased to 39.3% at the end of 2012, up from
21.5% at the end of 2011, and the net debt to 12 month trailing EBITDA ratio
was 2.0, well within the Group's key financial covenant requirements.

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

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

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

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

The weighted average maturity of the Eurobonds and committed debt facilities
increased to 4.8 years as at 31 December 2012 compared to 4.3 years a year
earlier.

Principal risks and uncertainties

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

On an annual basis, the DLC executive committee and Boards conduct a formal
systematic review of the most significant risks and uncertainties and the
Group's responses to those risks. These risks are assessed against
pre-determined risk tolerance limits, established by the Boards. In addition,
the DLC audit committee reviews each of the principal risks in detail over the
course of the year. Additional risk reviews are undertaken on an ad-hoc basis
for significant investment decisions and when changing business conditions
dictate.

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

The Group believes that it has effective systems and controls in place to
manage the key risks identified below within the risk tolerance levels
established by the Boards.

Competitive environment in which Mondi operates

The industry in which Mondi operates is highly competitive and subject to
significant volatility. New capacity additions are usually in large increments
which, combined with product substitution towards lighter weight products and
alternative packaging solutions and increasing environmental considerations,
have an impact on the supply-demand balance and hence on market prices.

Mondi monitors industry developments in terms of changes in capacity as well as
trends and developments in its own product range and potential substitutes. A
flexible and responsive approach to market and operating conditions and the
Group's strategic focus on low-cost production in growing markets, with
consistent investment in its operating capacity serve to mitigate this risk.

In 2012, the acquisitions of Nordenia and the corrugated packaging plants in
Germany and the Czech Republic, as well as the disposal of Aylesford Newsprint,
further position the Group in its selected strategic growth areas.

Cost and availability of a sustainable supply of raw materials

Fibre (wood, pulp and recovered paper) and resins accounts for approximately
one-third of the Group's input costs. It is the Group's objective to acquire
fibre from sustainable sources and to avoid the use of any illegal or
controversial supply.

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

Cost of energy and related input costs

Non-fibre input costs comprise approximately a third of the Group's total
variable costs. Increasing energy costs, and the consequential impact thereof
on both chemical and transport costs, may impact the Group's operating profit
margins.

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

Capital intensive operations

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

Mondi's management system ensures ongoing monitoring of all operations to
ensure they meet the requisite standards and performance requirements. The
Group has adequate insurance in place to cover material property damage,
business interruption and liability risks. A structured maintenance programme
is in place under the auspices of the Group technical director. Emergency
preparedness and response procedures are in place and subject to periodic
drills.

The locations in which the Group operates

Mondi operates in a number of countries with differing political, economic and
legal systems. In some countries, such systems are less predictable than in
countries with more developed institutional structures. In addition, economic
risks in certain regions are heightened following the macroeconomic
uncertainties experienced in recent years.

Mondi is invested in a number of geographical locations, with a strategic focus
on low-cost high-growth markets. This geographical diversity and decentralised
management structure utilising local resources in countries in which the Group
operates reduces its exposure to any specific jurisdiction. Mondi continues to
actively monitor and adapt to changes in the environments in which it operates.

Attraction and retention of key skills and talent

The complexity of operations and geographic diversity of the Group is such that
high-quality, experienced employees are required in all locations.

Appropriate reward and retention strategies 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

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

The Group engages in extensive safety training sessions, involving employees
and contractors, at all its operations. The Nine Safety Rules to Live By,
applied across the Group, are integral to the safety strategy. Operations
conduct statutory safety committee meetings where management and employees are
represented. A risk-based approach underpins safety and health programmes. All
business units and operations are required to have safety improvement plans in
place. Mondi's Total Recordable Case Rate (TRCR per 200,000 hours worked) was
0.79 (2011: 0.92). Regrettably, there were two fatalities at our operations
during the year - one in Finland and one in Russia.

Environmental footprint

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

Mondi's approach to product stewardship is based on the Life-Cycle Initiative
set out in the United Nations Environmental Programme (UNEP). The Group's
certified products carry clear and informative labelling to ensure that its
customers are aware of the environmental process controls and health and safety
assessments conducted throughout the life cycles of Mondi's products. In 2012,
no incidents of non-compliance relating to the regulation and voluntary codes,
to which the Group subscribes, concerning product and service information and
labelling were recorded. Mondi does not convert natural forests, riparian
areas, wetlands or protected areas into plantations. HCV areas are identified
and preserved or enhanced, as is biological diversity. In Russia 522,260
hectares have been set aside for conservation (24.8% of our landholding) and
76,398 hectares in South Africa (25% of our landholding). Mondi uses biomass
energy sources such as black liquor as an alternative to fossil fuels at all of
its mills. Some 58% of Mondi's fuel consumption comes from biomass and a number
of operations are completely energy self-sufficient.

Governance risks

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

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

Financial risks

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

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

Going concern

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

Mondi's geographical spread, product diversity and large customer base mitigate
potential risks of customer or supplier liquidity issues. Ongoing initiatives
by management in implementing profit improvement initiatives which include
plant optimisation, cost-cutting, and restructuring and rationalisation
activities have consolidated the Group's leading cost position in its chosen
markets. Working capital levels and capital expenditure programmes are strictly
monitored and controlled.

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

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

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

Dividend

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

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

Outlook

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

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

Directors' responsibility statement

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

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

The Boards confirm that to the best of their knowledge:

  * the financial statements, prepared in accordance with the relevant
    financial reporting framework, give a true and fair view of the assets,
    liabilities, financial position and profit and loss of Mondi Limited, Mondi
    plc and the undertakings included in the consolidation taken as a whole;
    and
      * the management report, which is incorporated into the directors' report,
    includes a fair view of the development and performance of the business and
    the position of the Group and the undertakings included in the
    consolidation taken as a whole, together with a description of the
    principal risks and uncertainties that they face.

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

David Hathorn Andrew King

Director Director

20 February 2013 20 February 2013

Audited financial information

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

Condensed combined and consolidated income statement for the year ended 31 December 2012


                                               2012                    2011     
                                                                                    

€ million Notes Before Special After Before Special After

special items special special items special

items (note 4) items items (note 4) items


                                                                                
                                                                                
    Continuing operations                                                           
                                                                                    

Group revenue 3 5,807 - 5,807 5,739 - 5,739

Materials, energy and (3,049) - (3,049) (2,998) - (2,998) consumables used

Variable selling expenses (523) - (523) (511) - (511)

Gross margin 2,235 - 2,235 2,230 - 2,230

Maintenance and other (279) - (279) (272) - (272) indirect expenses

Personnel costs (840) (16) (856) (808) (4) (812)

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

Depreciation, amortisation (355) (1) (356) (342) (48) (390) and impairments

Operating profit/(loss) 3 568 (27) 541 622 (54) 568

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

Net income from associates 1 - 1 1 - 1

Total profit/(loss) from 569 (91) 478 623 (55) 568 operations and associates

Net finance costs (107) - (107) (111) - (111)

Investment income 10 - 10 30 - 30

Foreign currency losses (2) - (2) - - -

Finance costs (115) - (115) (141) - (141)

Profit/(loss) before tax 462 (91) 371 512 (55) 457

Tax (charge)/credit 5 (91) (1) (92) (102) 2 (100)

Profit/(loss) from continuing 371 (92) 279 410 (53) 357 operations

Discontinued operation 6 - 43

Profit from discontinued 14 operation

Net gain on distribution of 29 discontinued operation

Profit for the financial year 279 400


                                                                                
    Attributable to:                                                                
                                                                                    

Non-controlling interests 35 70

Equity holders of the parent 244 330 companies


                                                                                    
    Earnings per share (EPS) for                                                    
    profit attributable to equity                                                   
    holders of the parent                                                           
    companies                                                                       
                                                                                    
    From continuing operations                                                      
                                                                                    

Basic EPS (€ cents) 7 50.5 57.5

Diluted EPS (€ cents) 7 50.3 56.8

Basic underlying EPS (€ 7 69.6 68.1 cents)

Diluted underlying EPS (€ 7 69.3 67.3 cents)


                                                                                    
    From continuing and                                                             
    discontinued operations                                                         
                                                                                    

Basic EPS (€ cents) 7 50.5 66.1

Diluted EPS (€ cents) 7 50.3 65.3

Basic headline EPS (€ cents) 7 63.4 69.9

Diluted headline EPS (€ 7 63.1 69.1 cents)

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

€ million 2012 2011

Profit for the financial year 279 400

Other comprehensive income/(expense):

Items that may subsequently be reclassified to the combined and consolidated income statement:

Effect of cash flow hedges 2 12

Gains on available-for-sale investments 1 -

Exchange differences on translation of foreign 49 (196) operations

Share of other comprehensive income of associates - (1)

Tax effect thereof - (4)

Items that will not subsequently be reclassified to the combined and consolidated income statement:

Actuarial losses on post-retirement benefit schemes (61) (18)

Surplus restriction on post-retirement benefit schemes 26 (3)

Tax effect thereof 8 4

Other comprehensive income/(expense) for the financial 25 (206) year, net of tax

Total comprehensive income for the financial year 304 194

Attributable to:

Non-controlling interests 42 43

Equity holders of the parent companies 262 151

Condensed combined and consolidated statement of financial position as at 31 December 2012

€ million Notes 2012 2011

Intangible assets 695 238

Property, plant and equipment 3,706 3,377

Forestry assets 311 297

Investments in associates 6 10

Financial asset investments 27 33

Deferred tax assets 10 5

Retirement benefits surplus 11 - 8

Derivative financial instruments - 3

Total non-current assets 4,755 3,971

Inventories 779 637

Trade and other receivables 1,007 829

Current tax assets 10 6

Financial asset investments 1 1

Cash and cash equivalents 56 191

Derivative financial instruments 4 10

Assets held for sale 2 -

Total current assets 1,859 1,674

Total assets 6,614 5,645

Short-term borrowings 10 (281) (286)

Trade and other payables (1,025) (891)

Current tax liabilities (66) (78)

Provisions (67) (43)

Derivative financial instruments (4) (8)

Total current liabilities (1,443) (1,306)

Medium and long-term borrowings 10 (1,640) (737)

Retirement benefits obligation 11 (253) (202)

Deferred tax liabilities (344) (310)

Provisions (33) (35)

Derivative financial instruments (1) -

Other non-current liabilities (24) (20)

Total non-current liabilities (2,295) (1,304)

Total liabilities (3,738) (2,610)

Net assets 2,876 3,035

Equity

Ordinary share capital and stated capital 542 542

Retained earnings and other reserves 2,030 2,044

Total attributable to equity holders of the parent 2,572 2,586 companies

Non-controlling interests in equity 304 449

Total equity 2,876 3,035

The Group's combined and consolidated financial statements, and related notes, were approved by the Boards and authorised for issue on 20 February 2013 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 flows for the year ended 31 December 2012

€ million Notes 2012 2011

Cash generated from operations 15a 845 917

Dividends from associates 1 2

Dividends from other investments 1 -

Income tax paid (107) (85)

Net cash generated from operating activities 740 834

Cash flows from investing activities

Investment in property, plant and equipment 3 (298) (263)

Investment in intangible assets (9) (5)

Investment in forestry assets (60) (42)

Investment in financial asset investments (7) (13)

Proceeds from the disposal of property, plant and 15 9 equipment and intangible assets

Proceeds from the sale of financial asset investments 4 8

Acquisition of subsidiaries, net of cash and cash (381) (12) equivalents

Acquisition of associates, net of cash and cash - (2) equivalents

Proceeds from the disposal of businesses, net of cash (16) 17 and cash equivalents

Disposal of discontinued operation's cash and cash - (38) equivalents

Loan repayments from related parties 9 -

Loan repayments from/(advances to) external parties 16 (1)

Interest received 3 9

Other investing activities (1) 2

Net cash used in investing activities (725) (331)

Cash flows from financing activities

Repayment of short-term borrowings 15c (132) (135)

Proceeds from medium and long-term borrowings 15c 614 123

Repayment of medium and long-term borrowings 15c (65) (127)

Interest paid (92) (106)

Dividends paid to equity holders of the parent (128) (126) companies

Purchases of treasury shares (34) (12)

Dividends paid to non-controlling interests (29) (43)

Non-controlling interests bought out 13 (298) (1)

Net realised (loss)/gain on cash and asset management (9) 9 swaps

Other financing activities - (1)

Net cash used in financing activities (173) (419)

Net (decrease)/increase in cash and cash equivalents (158) 84

Cash and cash equivalents at beginning of year1 117 24

Cash movement in the year 15c (158) 84

Effects of changes in foreign exchange rates 15c 4 9

Cash and cash equivalents at end of year1 (37) 117

Note:

1 Cash and cash equivalents include overdrafts and cash flows from disposal groups and are reconciled to the combined and consolidated statement of financial position in note 15b.

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

€ million Combined Retained Other Total Non-controlling Total

share earnings reserves2 attributable interests equity


                       capital                       to equity                  
     
                           and                      holders of                  
     
                        stated                      the parent                  
     
                      capital1                       companies                  
     
                                                                                

At 1 January 2011 646 1,916 201 2,763 461 3,224

Total comprehensive - 330 (179) 151 43 194 income for the year


     
                                                                                

Dividends paid - (126) - (126) (43) (169)

Effect of dividend in (104) (101) - (205) - (205) specie distributed

(see note 6)


     
                                                                                

Issue of shares under - 12 (12) - -

- employee share

schemes


     
                                                                                

Purchases of treasury - (12) - (12) - (12) shares


     
                                                                                

Disposal of treasury - 4 - 4 -

4 shares


     
                                                                                

Disposal of - - (5) (5) (6) (11) discontinued

operation (see note

6)


     
                                                                                

Disposal of - - (1) (1) - (1) businesses


     
                                                                                

Non-controlling - 5 - 5 (6) (1) interests bought out


     
                                                                                

Reclassification - 13 (13) - -


    -
                                                                                

Other - - 12 12 -

12

At 31 December 2011 542 2,041 3 2,586 449 3,035

Total comprehensive - 244 18 262 42 304 income 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


     
                                                                                

Disposal of - - 15 15 -

15 businesses (see note

14)


     
                                                                                

Non-controlling - (141) - (141) (157) (298) interests bought out


     
                                                                                

Reclassification - (12) 12 - -


    -
                                                                                

Other - 2 10 12 (1)

11

At 31 December 2012 542 1,981 49 2,572 304 2,876


     

Notes:

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

2 Other reserves are analysed further below.
                                                      Other reserves1           
      
                                                                                

€ million Share-based Cumulative Cash Post-retirement Statutory Total


                          payment translation    flow        benefits reserves2 
      
                          reserve  adjustment   hedge         reserve           
      
                                      reserve reserve                           
      
                                                                                

At 1 January 2011 17 (31) (10) (40) 265

201

Total comprehensive - (171) 8 (16) - (179) income for the year


      
                                                                                

Mondi share schemes' 12 - - - -

12 charge


      
                                                                                

Issue of shares under (12) - - - - (12) employee share

schemes


      
                                                                                

Disposal of - (5) - - -

(5) discontinued

operation (see note

6)


      
                                                                                

Disposal of - (1) - - -

(1) businesses


      
                                                                                

Reclassification - - - - (13) (13)

At 31 December 2011 17 (208) (2) (56) 252


     3
                                                                                

Total comprehensive - 42 2 (27) 1

18 income for the year


      
                                                                                

Mondi share schemes' 10 - - - -

10 charge


      
                                                                                

Issue of shares under (9) - - - -

(9) employee share

schemes


      
                                                                                

Disposal of - 15 - - -

15 businesses (see note

14)


      
                                                                                

Reclassification - - - 12 -


    12
                                                                                

At 31 December 2012 18 (151) - (71) 253


    49
                                                                                
      

Notes:

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

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

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

1 Basis of preparation

Basis of preparation

The Group has two separate legal parent entities, Mondi Limited and Mondi plc,
which operate under a dual listed company (DLC) structure. The substance of the
DLC structure is such that Mondi Limited and its subsidiaries, and Mondi plc
and its subsidiaries, operate together as a single economic entity through a
sharing agreement, with neither parent entity assuming a dominant role.
Accordingly, Mondi Limited and Mondi plc are reported on a combined and
consolidated basis as a single reporting entity.

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

The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2012 or 2011 but is derived
from those accounts. Statutory accounts for 2011 have been delivered to the
registrar of companies, and those for 2012 will be delivered in 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 the auditors 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 UK Companies Act
2006. Copies of their unqualified auditors' reports are available for
inspection at the Mondi Limited and Mondi plc registered offices.

2 Accounting policies

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

3 Operating segments

Identification of the Group's externally reportable operating segments

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

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

Product revenues

The material product types from which the Group's externally reportable
segments derive both their internal and external revenues are presented as
follows:

Operating segments                      Revenues1                              

Europe & International

Packaging Paper - Packaging paper

Fibre Packaging - Fibre packaging products

Consumer Packaging - Consumer packaging products

Uncoated Fine Paper - Uncoated fine paper


                                                                               
                                        - Pulp                                 
                                                                               
                                        - Newsprint                            

South Africa Division - Uncoated fine paper


                                                                               
                                        - Pulp                                 
                                                                               
                                        - Packaging paper                      
                                                                               
                                        - Newsprint2                           

Notes:

1 Revenues are generated from both internal and external sales. The Group
operates a vertically-integrated structure in order to benefit from economies
of scale and to more effectively manage the risk of adverse price movements in
key input costs. Internal revenues are therefore generated across the supply
chain.

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

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

Management has regard to certain operating segment measures in making resource
allocation decisions and monitoring segment performance. The operating segment
measures required to be disclosed adhere to the recognition and measurement
criteria presented in the Group's accounting policies. In addition, the Group
has presented certain non-IFRS measures by segment to supplement the user's
understanding. All intra-group transactions are conducted on an arm's length
basis.

The Group's measure of net segment assets includes the allocation of retirement
benefits surpluses and deficits on an appropriate basis. The measure of segment
results exclude, however, the financing effects of the Group's defined benefit
pension plans. In addition, the Group's measure of net segment assets does not
include an allocation for derivative assets and liabilities, non-operating
receivables and payables and assets held for sale and associated liabilities.
The measure of segment results includes the effects of certain movements in
these unallocated balances.

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

  * continental; or
      * sub-continental; or
      * by individual country (if greater than 10% of the Group total).

There has been no change in the basis of measurement of segment profit and loss in the financial year.

Operating segment revenue


                                                             (Restated)         
                                                                                
                                      2012                         2011         
                                                                                

€ million                 Segment Internal External  Segment   Internal 
External

revenue revenue1 revenue2 revenue revenue1 revenue2

Europe & International

Packaging Paper 1,896 (469) 1,427 2,006 (469) 1,537

Fibre Packaging 1,860 (42) 1,818 1,881 (33) 1,848

Consumer Packaging 502 (4) 498 372 (5) 367

Uncoated Fine Paper 1,466 (13) 1,453 1,429 (20) 1,409

Intra-segment (528) 528 - (526) 526 -

elimination

Total Europe & 5,196 - 5,196 5,162 (1) 5,161 International

South Africa Division 653 (109) 544 645 (155) 490

Segments total 5,849 (109) 5,740 5,807 (156) 5,651

Unallocated:

Disposed operation 67 - 67 88 - 88

Inter-segment (109) 109 - (156) 156 -

elimination

Group total 5,807 - 5,807 5,739 - 5,739

Notes:

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

2 The description of each business segment reflects the nature of the main products they sell. In certain instances the business segments sell minor volumes of other products and due to this reason the external segment revenues will not necessarily reconcile to the external revenues by type of product presented below.

External revenue by product type

(Restated)

€ million 2012 2011

Products

Fibre packaging products 1,785 1,810

Packaging paper 1,393 1,438

Uncoated fine paper 1,355 1,337

Consumer packaging products 498 367

Pulp 276 263

Newsprint 233 251

Other1 267 273

Group total 5,807 5,739

Note:

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

External revenue by location of customer

€ million 2012 2011

Revenue

Africa

South Africa1 405 303

Rest of Africa 236 268

Africa total 641 571

Western Europe

Germany 791 810

United Kingdom1 271 278

Rest of western Europe 1,445 1,529

Western Europe total 2,507 2,617

Emerging Europe 1,180 1,144

Russia 592 556

North America 270 243

South America 41 30

Asia and Australia 576 578

Group total 5,807 5,739

Note:

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

External revenue by location of production

€ million 2012 2011

Revenue

Africa

South Africa1 652 617

Rest of Africa 8 10

Africa total 660 627

Western Europe

Austria 1,025 1,110

United Kingdom1 120 147

Rest of western Europe 1,179 1,090

Western Europe total 2,324 2,347

Emerging Europe

Poland 766 794

Rest of emerging Europe 1,086 1,075

Emerging Europe total 1,852 1,869

Russia 729 703

North America 196 159

Asia and Australia 46 34

Group total 5,807 5,739

Note:

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

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

Operating profit from continuing operations before special items

(Restated)

€ million 2012 2011

Europe & International

Packaging Paper 227 295

Fibre Packaging 101 86

Consumer Packaging 19 25

Uncoated Fine Paper 191 205

Total Europe & International 538 611

South Africa Division 68 63

Corporate & other businesses (33) (33)

Segments total 573 641

Disposed operation (5) (19)

Operating profit from continuing operations before special 568 622 items

Special items (see note 4) (91) (55)

Net income from associates 1 1

Net finance costs (107) (111)

Group profit from continuing operations before tax 371 457

Significant components of operating profit from continuing operations before special items

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

Depreciation, amortisation

EBITDA and impairments1

(Restated) (Restated)

€ million 2012 2011 2012 2011


                                                                                
    Europe & International                                                          
                                                                                    

Packaging Paper 321 392 94 97

Fibre Packaging 168 149 67 63

Consumer Packaging 45 37 26 12

Uncoated Fine Paper 300 309 109 104


                                                                                
                                                                                    
                                                                                    

Total Europe & International 834 887 296 276

South Africa Division 123 117 55 53

Corporate & other businesses (32) (32) 1 1

Segments total 925 972 352 330


                                                                                
    Unallocated:                                                                    
                                                                                    

Disposed operation (2) (8) 3 12

Group total from continuing 923 964 355 342 operations

Note:

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

Green energy

sales and

Operating lease disposal emissions


                                                                    of          
                                                                                  
                                             charges             credits          
                                                                                  

(Restated) (Restated)

€ million 2012 2011 2012 2011

Europe & International

Packaging Paper 13 32 67 79

Fibre Packaging 8 9 - -

Consumer Packaging 3 1 - -

Uncoated Fine Paper 7 7 9 5

Total Europe & International 31 49 76 84

South Africa Division 5 6 - -

Corporate & other businesses 2 1 - -

Group total from continuing operations 38 56 76 84

Reconciliation of total profit from operations and associates to EBITDA

€ million 2012 2011

Total profit from operations and associates 478 568

Special items (excluding associates) (see note 4) 91 55

Depreciation, amortisation and impairments1 355 342

Share of associates' net income (1) (1)

EBITDA 923 964

Note:

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

Operating segment assets

(Restated)

2012 2011

€ million Segment Net Segment Net

assets1 segment assets1 segment

assets assets

Europe & International

Packaging Paper 1,829 1,466 1,593 1,249

Fibre Packaging 1,229 958 1,131 866

Consumer Packaging 1,019 872 175 131

Uncoated Fine Paper 1,450 1,248 1,473 1,283

Intra-segment elimination (120) - (131) -

Total Europe & International 5,407 4,544 4,241 3,529

South Africa Division 962 811 1,007 860

Corporate & other businesses 5 1 6 3

Inter-segment elimination (30) - (40) -

Segments total 6,344 5,356 5,214 4,392

Unallocated:

Disposed operation - - 51 27

Investments in associates 6 6 10 10

Deferred tax assets/(liabilities) 10 (334) 5 (305)

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

Group trading capital employed 6,530 4,713 5,420 3,833

Financial asset investments 27 27 33 33

Net debt 57 (1,864) 192 (831)

Group assets 6,614 2,876 5,645 3,035


                                                                                


Notes:

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

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

Non-current non-financial assets
                                                                  (Restated)    
    
                                                                                
    
                                       2012                             2011    
    
                                                                                

€ million Non-current Segment Net Non-current Segment

Net

non-financial assets segment non-financial assets segment

assets1 assets assets1 assets

Africa


    
                                                                                

South Africa2 793 938 786 825 974 827

Rest of Africa 7 20 19 6 17 16

Africa total 800 958 805 831 991 843

Western Europe


    
                                                                                

Austria 477 828 611 453 796 576

United Kingdom2 39 69 60 37 77 66

Rest of western 929 1,359 1,136 398 671 525 Europe


    
                                                                                

Western Europe total 1,445 2,256 1,807 888 1,544 1,167

Emerging Europe


    
                                                                                

Poland 623 805 703 469 594 511

Slovakia 408 456 388 439 490 427

Rest of emerging 451 628 511 342 482 388 Europe


    
                                                                                

Emerging Europe total 1,482 1,889 1,602 1,250 1,566 1,326

Russia 855 985 925 836 957 917

North America 84 162 136 57 105 91

Asia and Australia 46 94 81 19 51 48

Segments total 4,712 6,344 5,356 3,881 5,214 4,392

Notes:

1 Non-current non-financial assets are non-current assets and consist of property, plant and equipment, intangible assets and forestry assets, but exclude retirement benefits surplus, deferred tax assets and non-current financial assets.

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

Additions to non-current non-financial assets

Additions to non-current Capital expenditure

non-financial assets1 cash payments2

(Restated) (Restated)

€ million 2012 2011 2012 2011


                                                                                
    Europe & International                                                          
                                                                                    

Packaging Paper 249 66 89 67

Fibre Packaging 144 82 76 72

Consumer Packaging 620 15 28 15

Uncoated Fine Paper 60 51 58 61

Total Europe & International 1,073 214 251 215

South Africa Division 106 71 46 29

Segments total 1,179 285 297 244


                                                                                
    Unallocated:                                                                    
                                                                                    

Disposed and discontinued operations 1 20 1 19

Group total 1,180 305 298 263

Notes:

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

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

4 Special items

€ million 2012 2011

Operating special items

Asset impairments (1) (48)

Restructuring and closure costs:

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

Personnel costs relating to restructuring (16) (4)

Reversal of restructuring and closure costs excluding - 3 related personnel costs

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

Gain on insurance settlement 5 -

Total operating special items (27) (54)

Non-operating special items

Loss on disposals (see note 14) (70) (1)

Gain on sale of land 6 -

Total non-operating special items (64) (1)

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

Tax (see note 5) (1) 2

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

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

(Restated)

€ million 2012 2011

Europe & International

Packaging Paper - (11)

Fibre Packaging (16) (8)

Consumer Packaging (11) (5)

Uncoated Fine Paper - 2

Total Europe & International (27) (22)

South Africa Division 6 -

Segments total (21) (22)

Unallocated:

Disposed operation (70) (33)

Group total from continuing operations (91) (55)

Operating special items

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

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

Non-operating special items

A gain of €6 million was realised on the sale of land in the South Africa Division as part of its ongoing settlement of land claims. The settlements were reached using the sale and leaseback framework developed by Mondi and the South African Government which ensures that title to the land is transferred to the claimant and that Mondi is paid a fair price for the land and secures a continued fibre supply for its mills.

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

5 Tax charge

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

€ million 2012 2011

UK corporation tax at 24.5% (2011: 26.5%) - 1

SA corporation tax at 28% (2011: 28%) 17 7

Overseas tax 66 84

Current tax (excluding tax on special items) 83 92

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

Deferred tax in respect of prior period over provision (8) (12)

Total tax charge before special items 91 102

Current tax on special items 2 -

Deferred tax on special items (1) (2)

Total tax charge/(credit) on special items (see note 4) 1 (2)

Total tax charge from continuing operations 92 100

(b) Factors affecting tax charge for the year

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

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

€ million 2012 2011

Profit from continuing operations before tax 371 457

Tax on profit from continuing operations before tax 92 121 calculated at the weighted average UK and SA corporation tax rate of 24.9%1 (2011: 26.6%1)

Tax effect of net income from associates, calculated at - - 24.9% (2011: 26.6%)

Tax effects of:

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

Expenses not deductible/(taxable) for tax purposes 6 (7)

Intangible amortisation and non-qualifying depreciation (7) (11)

Special items not deductible 5 1

Other non-deductible expenses 8 3

Non-taxable income (1) (1)

Temporary difference adjustments 35 14

Changes in tax rates2 7 -

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

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

Other adjustments (40) (31)

Current tax prior period adjustments (11) 6

South African Secondary Tax on Companies - 4

Tax incentives (20) (20)

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

Other adjustments 10 7

Tax charge from continuing operations for the financial year 92 100

Note:

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

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

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

6 Discontinued operation

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

Subsequent to the demerger, a consolidation of the Mondi Limited ordinary shares owned by Mondi Limited shareholders, the effect of which was to reduce their proportionate interest in the Mondi Group, was undertaken in order to compensate Mondi plc shareholders for the value distributed to Mondi Limited shareholders in terms of the demerger.

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

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

The results of the discontinued operation were:

€ million 2011

Revenue 296

Expenses (282)

Profit before tax 14

Related tax charge -

Profit after tax from discontinued operation 14

Gain on distribution of discontinued operation 29

Related tax charge -

Net gain on distribution of discontinued operation 29

Total profit attributable to discontinued operation 43

Attributable to:

Non-controlling interests -

Equity holders of the parent companies 43

Earnings per share from the discontinued operation were:

€ cents per share 2011

Profit from discontinued operation for the financial year attributable to equity holders of the parent companies

Basic EPS 8.6

Diluted EPS 8.5

Details of the discontinued operation disposed were as follows:

€ million 2011

Net assets disposed 181

Cumulative translation adjustment reserve realised (5)

Non-controlling interests disposed (6)

Net carrying value of discontinued operation distributed 170

Dividend in specie distributed to Mondi Limited shareholders 205

Net carrying value of discontinued operation distributed (170)

Fair value gain on discontinued operation distributed 35

Transaction costs (6)

Net fair value gain on discontinued operation distributed 29


                                                                               

7 Earnings per share

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

IFRS requires that the number of shares subject to the consolidation be
adjusted from the effective date of the consolidation, hence for the years
under review the effect of the share consolidation was included from 1 August
2011.
                                                             Number of shares  

million 2012 2011

Basic number of ordinary shares outstanding1 483 499

Effect of dilutive potential ordinary shares 2 6

Diluted number of ordinary shares outstanding 485 505

Note:

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

(a) From continuing operations

€ cents per share 2012 2011

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

Basic EPS 50.5 57.5

Diluted EPS 50.3 56.8

Underlying earnings for the financial year

Basic EPS 69.6 68.1

Diluted EPS 69.3 67.3


                                                                              

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

€ million 2012 2011

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

Profit from discontinued operation (see note 6) - (14)

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

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

Special items (see note 4) 91 55

Related tax (see note 4) 1 (2)

Underlying earnings for the financial year 336 340

(b) From continuing and discontinued operations

€ cents per share 2012 2011

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

Basic EPS 50.5 66.1

Diluted EPS 50.3 65.3

Headline earnings for the financial year1

Basic EPS 63.4 69.9

Diluted EPS 63.1 69.1


                                                                              

Note:

1 The presentation of headline EPS is mandated under the JSE Listings
Requirements. Headline earnings has been calculated in accordance with Circular
3/2012, `Headline Earnings', as issued by the South African Institute of
Chartered Accountants.

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

€ million 2012 2011

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

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

Special items (see note 4) 91 55

Special items: restructuring and closure costs (20) (6)

Transaction costs attributable to the acquisition of (11) - Nordenia (see note 12)

Profit on disposal of tangible and intangible assets (4) -

Impairments not included in special items 4 1

Related tax 2 (2)

Headline earnings for the financial year 306 349


                                                                               

8 Alternative measure of earnings per share

The directors elected to present an alternative, non-IFRS measure of earnings
per share from continuing operations in order to provide shareholders with a
comparison of the continuing operations of the Group as if the demerger and
related share consolidation had occurred on 1 January 2011. This is deemed
appropriate as it is the continuing operations of the Group, after taking the
impact of the share consolidation into consideration, which form the basis of
the performance of the Group. This approach enables a useful comparison of
earnings per share from continuing operations, based on the consolidated
shares, for all future periods.

The presentation of such an alternative, non-IFRS measure of earnings per share
is classified by the JSE Limited as pro-forma financial information. Refer to
the Mondi Group Integrated report and financial statements for the year ended
31 December 2011 for the pro-forma financial information and independent
reporting accountants' report thereon.

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

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

€ million 2012 2011

Underlying earnings for the financial year 336 340

Tax saving by Mondi Limited on intercompany interest - 4 received from Mpact1

Saving of interest paid on net debt at 8.6% per annum - 3

Tax at 28% on saving of interest paid - (1)

Adjusted earnings for the financial year 336 346


                                                                               

Note:

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

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

million 2012 2011

Basic number of ordinary shares outstanding 483 499

Adjustment for Mondi Limited share consolidation1 - (17)

Adjusted basic number of ordinary shares outstanding2 483 482

Effect of dilutive potential ordinary shares 2 6

Diluted number of ordinary shares outstanding after Mondi 485 488 Limited share consolidation

Notes:

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

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

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

€ cents per share 2012 2011

Earnings per share - alternative measure for the financial year

Basic EPS - alternative measure 69.6 71.8

Diluted EPS - alternative measure 69.3 70.9


                                                                              

9 Dividends

Dividend payments

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

A proposed final dividend for the year ended 31 December 2012 of 19.1 euro
cents per ordinary share will be paid on 16 May 2013 to all those shareholders
on the register of Mondi plc on 19 April 2013. An equivalent South African rand
final dividend will be paid on 16 May 2013 to shareholders on the register of
Mondi Limited on 19 April 2013. The final dividend is subject to the approval
of the shareholders of Mondi Limited and Mondi plc at the respective annual
general meetings scheduled for 3 May 2013.

Dividend timetable

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

Last date to trade shares cum-dividend

JSE Limited 12 April 2013 12 April 2013

London Stock Exchange Not applicable 16 April 2013

Shares commence trading ex-dividend

JSE Limited 15 April 2013 15 April 2013

London Stock Exchange Not applicable 17 April 2013

Record date

JSE Limited 19 April 2013 19 April 2013

London Stock Exchange Not applicable 19 April 2013

Last date for receipt of Dividend 25 April 2013 25 April 2013 Reinvestment Plan (DRIP) elections by Central Securities Depository Participants

Last date for DRIP elections to UK 26 April 2013 21 April 2013* Registrar and South African Transfer Secretaries by shareholders of Mondi Limited and Mondi plc

Payment Date

South African Register 16 May 2013 16 May 2013

UK Register Not applicable 16 May 2013

DRIP purchase settlement dates 24 May 2013 21 May 2013**

Currency conversion date

ZAR/euro 21 February 2013 21 February 2013

Euro/sterling Not applicable 30 April 2013

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

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

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

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

10 Borrowings

2012 2011

€ million Current Non-current Total Current Non-current Total

Secured

Bank loans and 5 3 8 9 1 10 overdrafts

Obligations under 2 9 11 2 10 12 finance leases

Total secured 7 12 19 11 11 22

Unsecured

Bank loans and 253 251 504 253 155 408 overdrafts

Bonds - 1,310 1,310 - 492 492

Bonds - 1,357 1,357 - 492 492

Embedded call option - (47) (47) - - - derivative

Other loans 21 67 88 22 79 101

Total unsecured 274 1,628 1,902 275 726 1,001

Total borrowings 281 1,640 1,921 286 737 1,023

Obligations under finance leases

The maturity of obligations under finance leases is:

€ million 2012 2011

Not later than one year 3 3

Later than one year but not later than five years 8 10

Later than five years 5 -

Future value of finance lease liabilities 16 13

Future finance charges (5) (1)

Present value of finance lease liabilities 11 12

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

Financing facilities

Group liquidity is provided through a range of committed debt facilities. The principal 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 was signed on 14 April 2011. Interest is charged on the balance outstanding at market-related rates linked to EURIBOR.

€500 million 2017 Eurobond

Mondi Finance plc launched its inaugural seven year publicly traded bond, guaranteed by Mondi plc, in March 2010. The €500 million bond, which matures on 3 April 2017, was issued at a discount of €5.63 million and pays a fixed coupon of 5.75% per annum. The bond contains a coupon step up clause whereby the coupon will be increased by 1.25% per annum if Mondi fails to maintain at least one investment grade credit rating from either Moody's Investors Service or Standard & Poor's. Mondi currently has investment grade credit ratings from both Standard & Poor's (BBB-, outlook stable) and Moody's Investors Service (Baa3, outlook stable).


    €500 million 2020 Eurobond

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

€280 million Eurobond

As part of the acquisition of Nordenia (see note 12) Mondi assumed Nordenia's 
€
280 million Eurobond, paying a coupon of 9.75% per annum and maturing on 15
July 2017. The bond was recognised at its fair value of €324 million at date 
of
acquisition. The fair value of the bond includes the fair value of an option to
call the 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 €47 million at 31 December 2012.

€160 million Export Credit Agency Facility (ECAF)

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

PLN 474 million European Investment Bank Facility (EIBF1)

The EIBF1 is used to part finance expansionary capital expenditure at Mondi Swiecie in Poland. The facility has an amortising repayment until 2017 and interest is charged at a market-related rate linked to WIBOR (Warsaw Interbank Offered Rate).

€100 million European Investment Bank Facility (EIBF2)

The EIBF2 is used to part finance expansionary capital expenditure in Russia. The facility is currently undrawn and is available to be drawn until 28 May 2013. Once drawn, the facility amortises over 12 years with a two year grace period. Interest is charged on the balance outstanding 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 on the balance outstanding at a market-related rate linked to MOSPRIME (Moscow Prime Offered Rate).

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

The Group's borrowings as at 31 December are analysed by nature and underlying currency as follows:

2012/€ million Floating Fixed rate Non-interest Total Fair

rate borrowings bearing carrying value

borrowings borrowings value

Euro 126 1,322 - 1,448 1,559

South African rand 180 - - 180 180

Polish zloty 84 - - 84 84

Russian rouble 41 - - 41 41

Turkish lira 29 - - 29 29

Pounds sterling 116 - - 116 116

Other currencies 22 1 - 23 23

Carrying value 598 1,323 - 1,921

Fair value 598 1,434 - 2,032

2011/€ million Floating Fixed rate Non-interest Total Fair

rate borrowings bearing carrying value

borrowings borrowings value

Euro 152 503 - 655 682

South African rand 178 - - 178 178

Polish zloty 94 - - 94 94

Russian rouble 39 - - 39 39

Turkish lira 26 - - 26 26

Pounds sterling 19 - - 19 19

Other currencies 3 9 - 12 12

Carrying value 511 512 - 1,023

Fair value 511 539 - 1,050

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

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

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

€ million 2012 2011

Assets held under finance leases

Property, plant and equipment 9 9

Assets pledged as collateral for other borrowings

Property, plant and equipment 8 21

Inventories 4 5

Financial assets 2 17

Other - 17

Total value of assets pledged as collateral 23 69

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

11 Retirement benefits

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

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

The assets backing the defined benefit scheme liabilities reflect their market values as at 31 December 2012. Any movements in the assumptions have been recognised as an actuarial movement in the combined and consolidated statement of comprehensive income.

12 Business combinations

To 31 December 2012

Acquisition of Nordenia

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

Nordenia generated operating profits prior to its acquisition by Mondi, but was highly geared and as a result had an equity deficit. The premium of €268 million paid over the fair values of Nordenia's identifiable net assets was recognised as goodwill on acquisition and can be attributed to significant synergies to be realised from combining Nordenia's existing consumer packaging activities with those of Mondi, the ability to leverage Nordenia's existing competencies in high-growth emerging markets, exposure to Nordenia's proven innovation and product development processes and access to Nordenia's long-term relationships with a broad blue chip customer base. It is not expected that any portion of the goodwill will be deductible for tax purposes.

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

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

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

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

€ million Book Revaluation Fair

value value

Net assets acquired:

Intangible assets 2 100 102

Property, plant and equipment 224 (3) 221

Financial asset investments 17 - 17

Deferred tax assets 4 - 4

Inventories 113 7 120

Trade and other receivables 127 - 127

Cash and cash equivalents 33 - 33

Other current assets 1 - 1

Short-term borrowings (56) - (56)

Trade and other payables (134) - (134)

Current tax liabilities (6) - (6)

Provisions (27) - (27)

Medium and long-term borrowings (300) (45) (345)

Retirement benefits obligation (20) - (20)

Deferred tax liabilities (14) (17) (31)

Other non-current liabilities (15) - (15)

Net assets acquired (51) 42 (9)

Goodwill arising on acquisition 268

Total cost of acquisition 259

Transaction costs expensed 11

Cash acquired net of overdrafts (33)

Net cash paid per combined and consolidated 237 statement of cash flows

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

Other acquisitions

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

In line with Mondi's existing strategy to strengthen its leading market position in corrugated packaging in central and eastern Europe, Mondi acquired two corrugated box plants in Germany and the Czech Republic, consuming 130,000 tonnes of containerboard per annum, and a 105,000 tonne recycled containerboard mill in the Czech Republic from Duropack GmbH (Duropack) for a cash consideration of €133 million on 5 November 2012. On 19 November 2012 the Group announced its intention to close the recycled containerboard mill. Closure costs of €3 million were recognised in the combined and consolidated income statement.

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

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

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

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

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

€ million Book Revaluation Fair

value value

Net assets acquired:

Intangible assets - 3 3

Property, plant and equipment 100 25 125

Inventories 10 (2) 8

Trade and other receivables 16 - 16

Cash and cash equivalents 20 - 20

Short-term borrowings (11) - (11)

Trade and other payables (22) - (22)

Current tax liabilities (1) - (1)

Provisions (1) (1) (2)

Medium and long-term borrowings (48) - (48)

Retirement benefits obligation (1) - (1)

Deferred tax liabilities (1) (9) (10)

Other non-current liabilities (1) - (1)

Net assets acquired1 60 16 76

Goodwill arising on acquisitions2 88

Total cost of acquisitions 164

Cash acquired net of overdrafts (20)

Net cash paid per combined and consolidated 144 statement of cash flows3

Notes:

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

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

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

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

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

To 31 December 2011

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

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

13 Non-controlling interests bought out

On 18 April 2012, Mondi concluded an all cash public tender offer for the ordinary shares in Mondi Swiecie S.A. that it did not already own, increasing its shareholding to 93.2% from 66%. On 18 May 2012, Mondi acquired the remaining shares it did not already own. The total consideration paid by Mondi was €296 million including transaction costs of approximately €1 million which were expensed.

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

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

14 Disposal of joint ventures and subsidiaries

To 31 December 2012

Disposal of Aylesford Newsprint

On 2 October 2012, Mondi and Svenska Cellulosa Aktiebolaget (SCA) sold their 100% interest in the jointly owned Aylesford Newsprint to The Martland Holdings for a nominal consideration. Aylesford Newsprint specialises in newsprint production from recycled fibre. The loss on disposal of €70 million was recognised in special items in the combined and consolidated income statement. Transaction costs were insignificant and were expensed.

Other disposals

There were no other significant disposals during the year ended 31 December 2012.

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

€ million 2012

Net assets disposed:

Property, plant and equipment 30

Inventories 7

Trade and other receivables 11

Cash and cash equivalents 17

Trade and other payables (11)

Provisions (4)

Retirement benefits obligation (1)

Other non-current liabilities (1)

Total net assets disposed 48

Guarantee liability retained 7

Cumulative translation adjustment reserve realised 15

Loss on disposal of businesses (see note 4) (70)


                                                                               
                                                                               

Disposal proceeds -

Cash disposed (17)

Deferred consideration received in respect of the sale of Mondi 1 Frohnleiten in 2010

Net cash outflow from disposal of businesses during the year (16)

To 31 December 2011

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

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

15 Consolidated cash flow analysis

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

€ million 2012 2011

Profit from continuing operations before tax 371 457

Depreciation and amortisation 355 342

Share-based payments 10 10

Non-cash effect of special items 91 36

Net finance costs 107 111

Net income from associates (1) (1)

Decrease in provisions and post-employment benefits (23) (25)

Increase in inventories (14) (55)

Increase in operating receivables (31) (32)

(Decrease)/increase in operating payables (35) 19

Fair value gains on forestry assets (40) (49)

Felling costs 64 65

Profit on disposal of tangible and intangible assets (4) -

Other adjustments (5) 5

Cash generated from continuing operations 845 883

Cash generated from discontinued operation - 34

Cash generated from operations 845 917

(b) Cash and cash equivalents

€ million 2012 2011

Cash and cash equivalents per combined and consolidated 56 191 statement of financial position

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

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

The fair value of cash and cash equivalents approximate the carrying values presented.

(c) Movement in net debt

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

€ million Cash and Debt due Debt due Current Total net

cash within one after financial debt


                             equivalents1      year2      one       asset       
                                                             year investments       
                                                                                    

At 1 January 2011 24 (351) (1,037) - (1,364)

Cash flow 84 135 4 1 224

Business combinations - (4) (1) - (5)

Disposal of discontinued - 15 195 - 210 operation (see note 6)

Disposal of businesses - 30 12 - 42

Movement in unamortised loan - - (6) - (6) costs

Reclassification - (64) 64 - -

Currency movements 9 27 32 - 68

At 31 December 2011 117 (212) (737) 1 (831)

Cash flow (158) 132 (549) - (575)

Business combinations (see - (67) (393) - (460) note 12)

Movement in unamortised loan - - 3 - 3 costs

Reclassification - (46) 46 - -

Currency movements 4 5 (10) - (1)

At 31 December 2012 (37) (188) (1,640) 1 (1,864)

Notes:

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

2 Excludes overdrafts, which are included in cash and cash equivalents. As at 31 December 2012, short-term borrowings in the combined and consolidated statement of financial position of €281 million (2011: €286 million) include € 93 million of overdrafts (2011: €74 million).

16 Capital commitments

€ million 2012 2011

Contracted for but not provided 129 140

Approved, not yet contracted for 589 372

These capital commitments relate to the following categories of non-current non-financial assets:

€ million 2012 2011

Intangible assets 9 13

Property, plant and equipment 709 499

Total capital commitments 718 512

The expected maturity of these capital commitments is:

€ million 2012 2011

Within one year 445 339

One to two years 263 141

Two to five years 10 32

Total capital commitments 718 512


                                                                               

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

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

17 Contingent liabilities and contingent assets

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

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

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

18 Related party transactions

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

The Group and its subsidiaries, in the ordinary course of business, enter into
various sale, purchase and service transactions with joint ventures and
associates and others in which the Group has a material interest. These
transactions are under terms that are no less favourable than those arranged
with third parties. These transactions, in total, are not considered to be
significant.

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

19 Events occurring after 31 December 2012

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

Unaudited financial information

Production statistics
                                                                     (Restated)
                                                                               
                                                               2012       2011 

Europe & International

Containerboard Tonnes 2,079,005 2,009,984

Kraft paper Tonnes 980,637 955,741

Softwood pulp Tonnes 1,978,583 1,954,284

Internal consumption Tonnes 1,825,916 1,799,577

External Tonnes 152,667 154,707

Corrugated board and boxes Mm² 1,213 1,213

Industrial bags M units 3,829 3,958

Coating and release liners Mm² 3,352 3,357

Consumer packaging1 Tonnes 121,127 69,005

Uncoated fine paper Tonnes 1,417,709 1,400,991

Newsprint Tonnes 201,278 199,337

Hardwood pulp Tonnes 1,059,140 1,033,226

Internal consumption Tonnes 972,883 975,121

External Tonnes 86,257 58,105

South Africa Division

Containerboard Tonnes 263,468 257,680

Uncoated fine paper Tonnes 257,747 233,837

Hardwood pulp Tonnes 658,368 637,205

Internal consumption Tonnes 320,772 316,388

External Tonnes 337,596 320,817

Softwood pulp2 Tonnes 169,724 182,651

Internal consumption Tonnes 169,724 182,651

Newsprint Tonnes 114,854 124,914


                                                                               

Notes:

1 Includes Nordenia from October 2012.

2 Restated to include proportionate share of Mondi Shanduka Newsprint
production.

Exchange rates
                                                                 2012      2011

Closing rates against the euro

South African rand 11.17 10.48

Czech koruna 25.15 25.79

Polish zloty 4.07 4.46

Pounds sterling 0.82 0.84

Russian rouble 40.33 41.77

Turkish lira 2.36 2.44

US dollar 1.32 1.29

Average rates for the period against the euro

South African rand 10.55 10.10

Czech koruna 25.14 24.59

Polish zloty 4.18 4.12

Pounds sterling 0.81 0.87

Russian rouble 39.91 40.88

Turkish lira 2.31 2.34

US dollar 1.29 1.39

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

END

-0- Feb/21/2013 07:00 GMT

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