Corporate governance report

Introduction from joint chairmen

Dear shareholder

Governance remains high on the public agenda with further governance code changes effective for this reporting year and more emphasis on applying the spirit of the governance principles. At Mondi we take our duties in this regard very seriously. Good governance is not an additional matter considered by the Boards but is embedded in everything we do.

The dual listed company (DLC) structure, with Mondi Limited registered in South Africa and listed on the JSE Limited (JSE) and Mondi plc registered in England and listed on the London Stock Exchange (LSE), means we are cognisant of the governance, accounting, legislative and regulatory requirements of both South Africa and the UK. This presents a challenge for the Boards that we meet through having a clear annual board programme and open dialogue with executive management. We take note of the guidance issued by regulatory and governance bodies and ensure that we tailor implementation to our Group and what we believe is right for us, taking into account not just our operational requirements but also the environment in which we operate and the impact on all our stakeholders.

A strong social and ethical value system is a key cornerstone of the Group’s culture. Our operations touch many lives in many ways and your directors understand that instilling the correct values and ethics throughout Mondi starts at the top with the Boards. Visiting sites and meeting as many employees as possible gives us the opportunity to see and hear for ourselves how our culture helps us meet the challenges we face as a business. We had the opportunity to visit two sites this year – Mondi Gronau in Germany in June and Mondi Inncoat also in Germany in August and, in addition, we visited the corporate centres in South Africa and the UK.

With the volume of regulation and governance it is easy to spend a disproportionate amount of time reviewing and overseeing these matters. While we recognise their importance it is critical that we ensure appropriate controls are in place, that we are on the right strategic path and that we keep shareholder value to the fore. In the latter part of 2012 the Boards approved the acquisition of Nordenia as a major step in the development of the growing consumer packaging segment. During 2013 the Boards have monitored the integration of the former Nordenia into Mondi’s Consumer Packaging business, including our visit to the key site in Gronau. A full day spent focusing on the Group’s strategy in November retested the areas of focus and growth.

We are fortunate that we have directors with varied international experience who contribute their own perspectives and are happy to openly debate important issues with management. They have attended all meetings and are always well prepared. Meeting papers are distributed in a timely manner so, with the background reading done, the meetings are free to debate what is important.

We conduct an annual evaluation of the Boards, committees and directors. The review in 2013 was an independent external evaluation conducted by Independent Audit Limited. The outcome of the review is given in more detail below, although we are pleased to report that no material weaknesses were identified. There were some areas highlighted for consideration and these will be incorporated into our agendas as we move forward.

We continue to believe that providing the shareholders with the opportunity each year to consider the re-election of each director is important, so each director will seek re-election at the 2014 annual general meetings.

We hope that the following report provides you with more meaningful insight into how we operate and the matters on which we have focused during the year.

Fred Phaswana
Joint chairman

David Williams
Joint chairman