Mondi Plc · LSE:MNDI

Mondi — Merger or Acquisition (July 2007)

28 slides from Mondi's merger presentation, July 2007

  1. Slide 1: Overview Presentation on Demerger

    OVERVIEW PRESENTATION ON DEMERGER July 2007 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (th

  2. Slide 2: Overview of the Mondi Demerger

    OVERVIEW OF THE MONDI DEMERGER Dual listed company structure (DLC) Primary listings: Listing Mondi plc – LSE main market Mondi LTD – Johannesburg Stock Exchange Secondary listing – Mondi plc on the Johannesburg Stock Exchange 100% demerger No capital raising by either Mondi or Anglo American Structu

  3. Slide 3: Experienced Management Team

    EXPERIENCED MANAGEMENT TEAM David Hathorn Paul (CEO) Mervyn Walker Hollingworth 45 years old (HR/Legal) (CFO) 48 years old 47 years old Relevant experience Relevant experience Relevant experience CEO Mondi Europe CFO BPB plc Chairman Pensions Financial Director Mondi Group Trustees AMEC plc CFO De L

  4. Slide 4: Mondi at a Glance

    MONDI AT A GLANCE merchant /newsprint South Africa Sales(1)/ 3.2B 1.9B 0.4B 0.5B EBITDA Margin (2006) 13% 13% 13% 9% Products No. 1 Kraft Paper(2) No. 1 Office Paper(2) No. 1 Corrugated No. 1 Newsprint in No. 2 Kraftliner(2) No. 2 UCWF(2) Packaging in South South Africa(2) Positions No. 1 Bag Conver

  5. Slide 5: Mondi Group Outperformance vs. Peers

    MONDI GROUP OUTPERFORMANCE VS. PEERS Leading market ROCE Mondi 18% 21% 17% 11% 9% 8% position Group + Mondi 147 197 203 144 131 109 Group Strong asset vs. Ø peer = 100 base peers (index) 2001 2002 2003 2004 2005 2006 + Weighted Average ROCE3 2001-2006 14.0% Mondi Focus on 12.0% PCA DS Smith performa

  6. Slide 6: Mondi Strategic Drivers

    MONDI STRATEGIC DRIVERS Strong market Leading market positions position High exposure to attractive product segments and geographies + Strong asset Upstream production cost advantages base Vertically integrated + Comprehensive Business Excellence programmes Focus on Proven M&A/integration track reco

  7. Slide 7: Leading Market Shares

    LEADING MARKET SHARES Strong market Packaging Office Paper position Corrugated Top 5 Uncoated Woodfree Kraftliner(1) Corrugated Packaging(2)(3) Stora Enso 16% 1. Smurfit Kappa 27% 1. Smurfit Kappa 18% 2. Mondi 12% 2. SCA 9% Mondi 13% 3. SCA 11% 3. Mondi 4% 4. Ilim Pulp 8% 4. DS Smith 4% 5. Europac 5

  8. Slide 8: Significant Exposure to Good Growth Segments

    SIGNIFICANT EXPOSURE TO GOOD GROWTH SEGMENTS Strong market Mondi Group Sales 2006 Mondi Group Net Operating Assets 2006 position + 38% 45% 55% 62% Strong asset base Capital Expenditures ( M)(1) Mature markets: 0.5B 600 ~47% maintenance 500 30% ~53% expansion 25% 400 Emerging markets: 39% 1.1B 300 20

  9. Slide 9: Upstream Production Cost Advantages

    UPSTREAM PRODUCTION COST ADVANTAGES LOW-COST POSITIONS Strong market White-top Kraftliner Unbleached Kraftliner position /t 800 /t 500 + Strong asset 100% of Mondi Unbleached 100% of Mondi base White-top Kraftliner Kraftliner capacity capacity 0 0 0 0 3,000 Cumulative capacity (Kt/a) 1,400 Cumulativ

  10. Slide 10: Superior Access to Low-Cost Wood

    SUPERIOR ACCESS TO LOW-COST WOOD Strong market Average Hardwood and Softwood Costs ( /m3, Q4 2006) position + 48 Strong asset ~ 35% of Mondi’s base 40 41 wood consumption 37 from Russia and 31 South Africa 29 30 23 24 Russian and South 21 African costs are largely under our own control. Therefore, f

  11. Slide 11: Planned Major Investments

    PLANNED MAJOR INVESTMENTS SYKTYVKAR MILL EXPANSION CONTAINERBOARD EXPANSION Strong market Modernisation and Expansion New 470,000t lightweight recycled Investment cost of 525M containerboard machine and corrugated position 3-4 yr investment period box plant Capacity of c.250M m2/year + Completion ex

  12. Slide 12: Benefiting from Integrated Value Chain

    BENEFITING FROM INTEGRATED VALUE CHAIN Strong market position Forestry Pulp Paper + Strong asset Mondi’s own base 7.6mm3 3.5Mt 5.8Mt availability Packaging: 3.3Mt Mondi’s own 14.8mm3 3.8Mt 2.1Mt(1) demand Potential self 51% 91% 154%(1) sufficiency (1) Refers to Mondi’s demand and self-sufficiency of

  13. Slide 13: Disciplined and Value-Oriented M&A

    DISCIPLINED AND VALUE-ORIENTED M&A Strong market M&A Strategy Major M&A Deals since 2000 position Target Business Year + Napiag (A) Flexibles 2007 Strong asset S&E (D, ITA), NBG (A) Flexibles 2006 base Sustainable low-cost Stambolijski (BG) Bag 2006 advantage + Akrosil (US, NL) Flexibles 2006 EV/EBI

  14. Slide 14: Performance Improvements in Acquired Companies

    PERFORMANCE IMPROVEMENTS IN ACQUIRED COMPANIES Swiecie (tonnes per capita) Strong market Integration Principles position p.a. (3) 24% + 902 132 Leverage synergies with Strong asset existing operations 1997 (1) 2006 base Ruzomberok (tonnes per capita) Transfer know-how + (3) p.a. Focus on 20% Improve

  15. Slide 15: Acquisitions Primary Growth Driver

    ACQUISITIONS PRIMARY GROWTH DRIVER Strong market Breakdown of Paper Production Volume Growth (Kt) position ( 1 ) : 13 % + CAGR 8% 5,784 Strong asset base 5% + 2,768 Total Focus on Growth: 3,016 performance Organic: 1,206 Acquired: 1,810 Of which 542 subsequent to M&A(2) 2000 Organic Acquired 2006 gr

  16. Slide 16: Rigorous Asset Management

    RIGOROUS ASSET MANAGEMENT Strong market Reduced Testliner capacity by 11% in 2004 position (~110Kt; 2 plants) + Strong asset Closed 11% of corrugated board capacity base (~280mm2) since 2004 + Focus on Sale/conversion of Dunaújváros in 2006 represents performance a substantial capacity reduction in

  17. Slide 17: Five Year Record

    FIVE YEAR RECORD 2002 2003 2004 2005 2006 UK GAAP UK GAAP IFRS IFRS IFRS /tonne Group Revenue 5,051 5,005 5,385 5,364 5,751 1,200 EBITDA N/A 873 779 718 726 % Margin N/A 17.4% 14.5% 13.4% 12.6% 900 Underlying Operating Profit 686 579 459 386 377 % Margin 13.6% 11.7% 8.5% 7.2% 6.6% 600 Capital Employ

  18. Slide 18: Business Unit Three Year Record

    BUSINESS UNIT THREE YEAR RECORD Group Revenue ( M) EBITDA Margin (%) Operating Margin(1) (%) 2004 2005 2006 CAGR 2004 2005 2006 2004 2005 2006 Mondi Packaging 2,848 2,902 3,167 5.5% 14.9 14.1 13.0 8.7 7.8 7.1 Business Paper 1,766 1,752 1,889 3.4% 14.5 14.1 12.5 8.1 7.4 5.5 MPSA 348 359 360 1.7% 14.7

  19. Slide 19: Mondi Group Key Financials

    MONDI GROUP KEY FINANCIALS Capital Expenditure Cost Base Cost Structure 2006 Mature Markets M Emerging Markets Capex/Sales Wood, Personnel Pulp and Costs 17% 700 618 16% Fibre 33% 600 551 14% Variable Selling 11.5% 460 12% Expense 10% 500 10.3% 8.0% 10% 400 Energy 7% 8% 300 Depreciation/ 6% Maintena

  20. Slide 20: Mondi Group Key Financials

    MONDI GROUP KEY FINANCIALS Borrowing Facilities Dividends Net debt at demerger estimated at circa 1.5B Would expect to make an interim dividend payment in 2007 Targeting investment grade rating Dividends will be determined by new board going forward, and expected to take into account: Negotiating a

  21. Slide 21: Overview Presentation on Demerger Appendix

    OVERVIEW PRESENTATION ON DEMERGER APPENDIX July 2007

  22. Slide 22: Industry Fundamentals: European Containerboard and Corrugated Packaging

    INDUSTRY FUNDAMENTALS: EUROPEAN CONTAINERBOARD AND CORRUGATED PACKAGING Demand Demand for corrugated packaging in Europe grew by 650 Kraftliner 175g 2.7% per annum from 2000 to 2006, driven by strong Testliner 2 growth in Emerging Europe of 11% per annum(1). 600 Over the 2004 to 2006 period, demand

  23. Slide 23: Industry Fundamentals: European Uncoated Woodfree Paper

    INDUSTRY FUNDAMENTALS: EUROPEAN UNCOATED WOODFREE PAPER Demand European uncoated woodfree demand grew by 3% 1,200 UCWF per annum in the period from 2000 to 2006, driven by strong growth in the office paper segment of around 4% per annum(1) 1,100 Within the office paper segment, growth mainly attribu

  24. Slide 24: Mondi Well Placed to Benefit from Upturn in Paper Pricing

    MONDI WELL PLACED TO BENEFIT FROM UPTURN IN PAPER PRICING Average Delivered Strong market 1,200 Prices in Europe position 1,100 + 1,000 Strong asset 900 base 800 /tonne + 700 Focus on 600 performance 500 = 400 Outperforming 300 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 20

  25. Slide 25: Office Paper Demand Growth Expected to Continue

    OFFICE PAPER DEMAND GROWTH EXPECTED TO CONTINUE Strong market Detailed Understanding of Usage Patterns Growth of Office PCs Drives Office Paper Growth position Office Paper consumption per Paper with inherent 20 head (kg, 2003) advantages Office Paper Flexibility/portability 18 used for Possibility

  26. Slide 26: Key Features of the DLC Structure

    KEY FEATURES OF THE DLC STRUCTURE Equalisation Ratio 1:1 Single Corporate Group MPLC Ordinary MLTD Ordinary Shareholders Shareholders MPLC and MLTD separate legal entities with separate stock exchange listings Sharing Unified boards and management Agreement MPLC MLTD Head office located in South Afr

  27. Slide 27: Material Minority & Joint Venture Interests

    MATERIAL MINORITY & JOINT VENTURE INTERESTS Profit for the 2006 financial period attributable to minorities amounted to Mondi 51m Mondi Packaging Mondi Mondi Newsprint/ South Africa Business Paper Packaging Merchant (55% share) Ruzomberok Swiecie Europapier (51% share) (66% share) (90% share) Hadera

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Mondi — Merger or Acquisition (July 2007) on 6ix