Mondi Group Integrated report and financial statements 2017

1 Mondi Group Integrated report and financial statements 2 017 Mondi Group Integrated report and financial statements 2017 Front cover Premium glassware gift pack Premium glassware deserves sophisticated packaging. High-quality printing and an eye-catching open design attract attention in-store, showcase the glasses and add to the sense of style. Our gift packs also feature an innovative snap open and close mechanism and strong carrying handles. The custom fit protects the glasses to ensure that they are in perfect condition when presented as a gift. ScopeMondi s Integrated report and financial statements 2017 is our primary report to shareholders. The scope of this report covers the Group s main business and operations, and provides an overview of the performance of the Group for the year ended 31 December significant items are reported on a like-for-like Integrated report is prepared in accordance with the requirements of both the Listings Requirements of the JSE Limited and the Disclosure Guidance and Transparency and Listing Rules of the United Kingdom Listing Authority.

2 We also prepare a detailed Sustainable development report , in accordance with the GRI G4 core requirements and externally assured, which is available at Performance MeasuresThe Group presents certain measures of financial performance, position or cash flows in this report that are not defined or specified according to International financial Reporting Standards (IFRS). These measures, referred to as Alternative Performance Measures (APMs), are defined in note 33 and where relevant reconciled to IFRS in the notes to the combined and consolidated financial statements , and are prepared on a consistent basis for all periods s Integrated report and financial statements 2017 aims to provide a fair, balanced and understandable assessment of our business model, strategy, performance and prospects in relation to material financial , economic, social, environmental and governance issues.

3 The material focus areas were determined considering the following: e Specific quantitative and qualitative criteria e Matters critical in relation to achieving our strategic objectives ePrincipal risks identified through our risk management process e Feedback from key stakeholders during the course of the yearCountries31 Certified forests 100%Customers9,000+Employees26,300 Mondi Group Integrated report and financial statements 2016 Forward-looking statementsThis 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, market growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements .

4 Forward-looking statements are sometimes identified by the use of forward-looking terminology such as believe , expects , may , will , could , should , shall , risk , intends , estimates , aims , plans , predicts , continues , assumes , positioned or anticipates or the negative thereof, other variations thereon or comparable terminology. 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 and other statements contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi s present and future business strategies and the environment in which Mondi will operate in the future.

5 These forward-looking statements speak only as of the date on which they are assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements . Such factors include in particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes in the degree of protection created by Mondi s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for Mondi s products and raw materials and the pricing pressures thereto, financial condition of the customers, suppliers and the competitors of Mondi and potential introduction of competing products and technologies by competitors.

6 And (3) general economic conditions, such as rates of economic growth in Mondi s principal geographical markets or fluctuations of exchange rates and interest expressly disclaims a) any warranty or liability as to accuracy or completeness of the information provided herein; and b) any obligation or undertaking to review or confirm analysts expectations or estimates or to update any forward-looking statements to reflect any change in Mondi s expectations or any events that occur or circumstances that arise after the date of making any forward-looking statements , unless required to do so by applicable law or any regulatory body applicable to Mondi , including the JSE Limited and the document includes market share estimates prepared by the Group based on industry publications and management estimates.

7 Main industry publication sources are: RISI, P yry, Henry Poole Consulting, Eurosac, Freedonia, Alexander Watson Associates, PCI Wood Mackenzie, EMGE, Eurograph and Eastconsult. Overview2017 at a glance 4 Where we operate 8 Joint Chairmen s statement 10 Strategic reportOur business model 14 Chief Executive Officer s letter 18 Strategy review 20 Our key performance indicators 28 Our external context 30 Our principal risks 34 Sustainability performance 42 Group financial performance 56 Business reviews 60 GovernanceIntroduction from Joint Chairmen 80 Board of directors 82 Corporate governance report 84 DLC nominations committee 94 DLC audit committee 97 DLC sustainable development committee 105 Mondi Limited social and ethics committee 107 DLC executive committee 108 Remuneration report 113 Other statutory information 134 financial statementsDirectors responsibility statement 139 Independent auditors reports

8 140 financial statements 150 Group financial record 214 Production statistics 216 Exchange rates 216 Additional information for Mondi plc shareholders 217 Shareholder information 220 Glossary of terms IBCC ontentsFor more information reportGovernanceFinancial statementsOverviewStrategic reportGovernanceFinancial statementsOverview2-11 Strategic report12-77 Governance78 -13 5 financial statements136-224 Delighting our customers with innovative and sustainable packaging and paper solutions. As a global leader in packaging and paper, we offer a world of opportunities. Our expertise lies in finding the most dynamic and reliable solutions. Delivering value to our stakeholders is always top of Integrated report provides an overview of how our strategy, governance.

9 People and performance combine to generate value in a sustainable out the flap on the back cover to view the content of this document Mondi Group Integrated report and financial statements 20171 Overview2017 at a glance 4 Where we operate 8 Joint Chairmen s statement 10 The award-winning CornerPack has intuitive tear lines that make it easy for consumers of all ages to open their reportGovernanceFinancial statementsA global packaging and paper GroupMondi is a global Integrated packaging and paper Group with a dual listed company structure primary listing on the JSE Limited and premium listing on the London Stock Exchange. financial highlights 2017 eRobust financial performance eOver 750 million of approved major capital expenditure projects in progress, securing a strong growth pipeline eAcquisitions totalling over 400 million completed or announced, expanding the Group s product offering to better serve our customers eRecommended special dividend of euro cents per share in addition to euro cents per share total ordinary dividend Revenue 7,096m q7%Profit before tax 887m q5%Underlying EBITDA 1,444m q6%Capital expenditure 611mUnderlying operating profit 1.

10 018 m q4%Underlying earnings per cents q8%Return on capital dividend per cents q9% 20 56 Our businessesPackaging Paper 62 Fibre Packaging 66 Consumer Packaging 70 Uncoated Fine Paper 74 Mondi Group Integrated report and financial statements 201742017 at a glanceHow we create valueOur Integrated value chain shows how we convert raw materials into innovative and sustainable packaging and paper solutions. We use the Mondi Way as our framework to create sustainable value. 14 The Mondi Way PurposeStrategyOperating frameworkCulture and valuesOur value chainProduction processesRaw materialsProductsPulp and paper millsConverting operationsPackaging and paper solutionsRaw materialsWood fibre Paper for recycling Resins, films, otherOur strategyOur plan of action to build on our competitive advantages.